Earnings Release • Jun 5, 2020
Earnings Release
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Sonae Sierra diluted its shareholding in six core assets, through the creation of Sierra Prime, a new leading retail real estate JV with APG, Allianz and Elo. This was a key milestone in the company's capital recycling strategy, enabling very significant cash proceeds for Sonae while ensuring that Sonae Sierra retains the management of these assets.
The start of the year was very positive for Sonae, with all our businesses posting strong growth and improving their profitability levels until February, proving yet again the robustness of our strategies and value propositions. At the end of February, Sonae Sierra completed the Prime transaction, a very important milestone in its capital recycling strategy which further strengthened Sonae's capital structure.
In March the Covid-19 pandemic hit our main geographies and we began experiencing an unprecedented and challenging situation. Although all our businesses have been strongly impacted by this situation, I am proud to say that our reaction has been quite outstanding.
In the last two months, I have witnessed the way in which each of our businesses and teams has rapidly adjusted to this new context. Since day one, our main concern has been the health and safety of our people, while continuing to provide essential services to society and to support our communities. Early on, we implemented solutions to protect our people who are in the frontlines and also remote working for all office functions. However, and despite all the implemented safety measures, some of our people were naturally hit by this virus. Once again, we strictly followed all the recommendations from the national health authority to ensure that our people have the best possible care, while minimizing the possibility of contagion. This is a daily and permanent monitoring process which we will continue to follow until we are free from this pandemic.
I would like to thank our people again for their generosity and perseverance. And I would also like to take this opportunity to acknowledge the efforts and commitment of our ecosystem of partners, without whom we would not have been able to continue to fulfil our mission.
This situation puts us all to the test and our collective response is testament to the ability that we have to join forces and act together for a common purpose. I would like to highlight, in particular, the remarkable efforts we have made to: (i) maintain our grocery and electronics stores open, (ii) revamp our entire e-commerce operations to sustain a sudden 3-5x surge in online sales, and (iii) keep our telco networks operating under record traffic levels.
This context proves the quality and resilience of our portfolio of assets. In challenging times for many companies around the World, Sonae's diversified portfolio of leading businesses provides great reassurance that we will navigate this storm and come out of it stronger. This confidence is amplified by our conservative approach to leverage and financing, which allows us to face the coming months with our eyes set in the aftermath of the downturn.
Nevertheless, the coming months will be harsh and all our businesses will be materially affected in one way or another. Therefore, and out of prudence, we have already registered significant non-cash contingencies in Q1 so as to anticipate future impacts, namely at NOS, Sonae Fashion, Worten and Sonae Sierra. Additionally, all our businesses are implementing cash preservation initiatives at this stage while honouring previously assumed commitments and without losing sight of attractive investment opportunities.
Given the ability that our people and our businesses have shown to adapt to these changing circumstances, I am more certain than ever that we will overcome this adversity and be prepared to readily respond to the structural changes that will undoubtedly shape our future.
Cláudia Azevedo
CEO, Sonae
Sonae has been monitoring all developments related to the Covid-19 pandemic which has led to highly restrictive measures in all geographies to minimize the spread of the virus and its impacts.
Considering the implied risk level, a specific governance model was implemented early on to manage this crisis. This effort was led by Sonae's Executive Committee in close alignment with the CEOs of each business unit, in order to regularly track the impacts on each business and define actions plans.
Therefore, Sonae has developed prevention/contingency plans covering the entire organisation, from the operational areas to the central structures, across all the Group's businesses.
Below is a summary of impacts and measures underway in several areas:
The creation of social value is a critical element of our mission. In this extraordinary context, initiatives of solidarity and community support continue to multiply within the group and the value donated to society so far has already exceeded €1 M. While it is practically impossible to provide an accurate account of all the actions underway, there are some initiatives that are worth mentioning:
monthly premium sports channels (given the lack of live sports events), the drop in equipment sales (resulting from the closure of all retail activity), and the offer/reduction of mobile data sales.
• Regarding the sports and fashion retail businesses (Sonae Fashion and ISRG), all stores were forced to close down temporarily to ensure social distancing (290 stores at Sonae Fashion and 345 stores at ISRG), with a severe impact on sales of offline channels (including franchising and wholesale) and on the planning of new collections. Regarding the online channel, it has been registering a solid performance in all brands, as a result of not only the growing demand, but also the capacity to reinforce the value proposition and the operational response.
In terms of financing, Sonae, in compliance with its internal policies and given the current high uncertainty context, has privileged the increase of the group's liquidity, the reduction of debt amortization in the coming years and the expansion of maturities. Therefore, since the beginning of 2020, ca. €500 M in debt facilities were refinanced and, as of the end March, Sonae had €573 M of available credit lines and €623 M of cash. In this context, and regardless of any impacts that might exist in terms of the performance of each business, we do not foresee any additional financing needs in the short term and we believe to have the adequate liquidity levels even under more adverse scenarios. We do not foresee any situation of debt covenant breach in the short term, either at Sonae MC or at Sonae SGPS.
At this stage, it is not possible to provide accurate estimates of the financial impacts of this pandemic in the full-year accounts. These effects are highly dependent on the economy relaunch, which in turn is subordinated to the duration and depth of the social containment measures, as well as to the economic stimulus measures that will be implemented. However, Sonae has been executing all the measures considered appropriate to minimise the potential impacts of this crisis, in line with the recommendations of the competent authorities and in the best interest of all its stakeholders.
During 1Q20, Sonae Sierra created Sierra Prime, a new leading retail real estate JV with APG, Allianz and Elo, resulting in €525 M of cash proceeds to Sonae Sierra and APG. As a result, Sonae Sierra diluted its stake on a portfolio of leading Iberian assets (down to 25%), whilst maintaining the management of these assets.
Sonae's consolidated performance in 1Q20 was marked by two different moments: i) the period between January and February, with positive performances across all of our businesses and ii) the period from March onwards with the Covid-19 outbreak which was marked by a strong impact in some of our businesses, positive in terms of sales performance for Sonae MC and negative, for Sonae Sierra, Worten in Spain, and Sonae Fashion, that had to pratically close down their operations, since the middle of the month.
From a statutory point of view, 1Q20 consolidated turnover grew 7.1% versus last year, to €1,552 M, mainly driven by the strong contribution from Sonae MC (+14% yoy). In terms of underlying EBITDA, Sonae ended the 1Q20 with €100 M, -2.4% vs 1Q19. This slight decrease was more than explained by the deconsolidation of two core shopping centres (consequence of the Prime transaction) in Sonae Sierra's statutory accounts. Without this accounting impact, the group's underlying EBITDA would have increased 5%, despite the strong impact of the pandemic on Sonae Fashion's operating profitability since mid-March.
1Q20 consolidated EBITDA, decreased 4.6% yoy to €128 M, as lower equity method results offset the positive impact of the capital gains from the Prime transaction at Sonae Sierra. The equity method results line was negatively impacted by the 1Q20 net result of NOS, that already included contingencies related to the pandemic outbreak.
| Stake | Consolidation method |
|---|---|
| 100% | Full consolidation |
| 70% | Full consolidation |
| 23% | Equity method |
| 100% | Full consolidation |
| 30% | Equity method |
| 100% | Full consolidation |
| 100% | Full consolidation |
| 90% | Full consolidation |
| Sonae consolidated results | |||
|---|---|---|---|
| Million euros | 1Q19 | 1Q20 | yoy |
| Turnover | 1,449 | 1,552 | 7.1% |
| Underlying EBITDA | 102 | 100 | -2.4% |
| margin | 7.0% | 6.4% -0.6 p.p. | |
| Equity method results (1) | 26 | 7 | -72.8% |
| Non-recurrent items | 7 | 22 | - |
| EBITDA | 134 | 128 | -4.6% |
| margin | 9.3% | 8.3% -1.0 p.p. | |
| Covid-19 related provisions | 0 | -44 | - |
| D&A | -51 | -53 | -4.5% |
| D&A - RoU | -26 | -31 | -21.9% |
| Other provisions and impairment | -1 | -2 | - |
| EBIT | 57 | -3 | - |
| Net financial results - lease liabilities | -18 | -18 | -1.2% |
| Net financial results - financing | -10 | -11 | -4.2% |
| EBT | 29 | -32 | - |
| Taxes | 4 | 7 | - |
| Direct results | 33 | -25 | - |
| Indirect results | -1 | -20 | - |
| Net income | 32 | -45 | - |
| Non-controlling interests | -13 | -13 | - |
| Net income group share | 18 | -59 | - |
(1) Equity method results: includes direct income by equity method results from Sonae Sierra statutory accounts, income related to investments consolidated by the equity method (mainly NOS/Zopt and ISRG) and discountinued operations results.
Direct result was also significantly impacted by extraordinary stock provisions at both Worten and Sonae Fashion, directly related to the Covid-19 outbreak – as mentioned in the previous section. In total, and taking a prudent view in a time of great uncertainty, €44 M of accelerated stock provisioning was accounted for in the quarter. Indirect result was impacted by a total of €18 M in provisions related to Sonae Sierra's development projects – again as a result of a prudent view of the impact of the current pandemic on ongoing projects. All in all, these impacts led Sonae's Net result (group share) to a negative value of €59 M, highly influenced by total non-cash contingencies of €76 M directly related to Covid-19.
In what concerns Sonae's capital structure, total net debt reduced €468 M yoy, from €1,701 M to €1,233 M, underpinned by the cash-in from Sonae Sierra's Prime transaction, which represented €188 M (net of dividends paid to Grosvenor) in the 1Q20, and the debt deconsolidation of these assets from Sonae's balance sheet.
The group's gearing at book value stood at 0.5x and market value gearing slightly increased yoy to 0.9x, mainly impacted by the negative share price performance during the last 12 months that offset the decrease in average net debt during the same period.
Sonae's financing conditions continued to be characterized by a low cost of debt, which stood at 1.2% during 1Q20 (1.0% excluding Sonae Sierra), and an average maturity profile of around 4 years. In addition, since the end of 2019, Sonae has already refinanced ca. €500 M in long term facilities. With these operations, Sonae increased the average debt maturity, increased the diversification of relationship banks and significantly reinforced its capital structure. The increased resilience of the balance sheet in the current adverse context allows Sonae to face the coming months with greater confidence and to pursue the group's strategic objectives in better conditions.
Additionally, all the companies in the portfolio continued to hold conservative and solid balance sheets. Similar to the YE19 picture, both Sonae MC and NOS were able to post comfortable ratios of net debt to EBITDA (post-IFRS16), Sonae MC with 3.4x and NOS with 2.1x. Sonae Sierra's loan-to-value decreased to 23%, reducing by 320bps vs last year. At the holding level, loan-to-value stood at 12%.
Total capex decreased yoy to €60 M, mainly explained by the impact of Arenal's acquisition by Sonae MC in the 1Q19.
| Sonae net invested capital | |||
|---|---|---|---|
| Million euros | 1Q19 | 1Q20 | yoy |
| Net invested capital | 5,944 | 4,975 | -16.3% |
| Shareholders funds | 3,124 | 2,550 | -18.4% |
| Net debt (exc. lease liabilities) | 1,701 | 1,233 | -27.5% |
| Lease liabilities | 1,118 | 1,193 | 6.6% |
| Sonae Capex | |||
|---|---|---|---|
| Million euros | 1Q19 | 1Q20 | yoy |
| Capex | 116 | 60 | -48.0% |
| Sonae MC | 101 | 46 | -54.2% |
| Sonae Sierra | 4 | 2 | - |
| Worten | 5 | 4 | -27.4% |
| Sonae Fashion | 2 | 4 | 72.1% |
| Sonae FS | <1 | <1 | - |
| Sonae IM | 9 | 4 | -49.8% |
Sonae MC's performance in the 1Q20 was naturally impacted by the Covid-19 outbreak, and the priority has been to protect the health of its employees and its customers while continuing to provide the Portuguese families with everyday essentials. After a good start of the year, with a strong sales performance in January and February, the first half of March saw unprecedented levels of growth, impacted by the fast spread of the pandemic which led to great uncertainty among the population, with people flocking to supermarkets and hypermarkets to stock up with emergency supplies. In this period, food retail formats posted double-digit LfL sales growth, with the online channel reaching extraordinary order levels, leading Sonae MC to triple its delivery capacity. Once
Note: 1Q19 margin is pro-forma, to include the effect of transportation contracts accounted under IFRS16.
lockdown measures were implemented on March 15th, with only four customers per 100 sqm allowed in stores, food retail sales came back to more normal LfL levels. Some of the remaining non-food formats were considered non-essential services, and therefore were forced to close, namely Bagga coffee shops, Go Natural restaurants, Dr. Wells and Arenal stores in Spain. All in all, Sonae MC's turnover amounted to €1,194 M, +14.0% versus last year, with a LfL growth of 10.6%.
Regarding operating profitability, underlying EBITDA amounted to €96.5 M, representing a broadly stable margin of 8.1%. The positive top line growth impact was offset by the increase in operating costs related to Covid-19, namely with new hygiene and safety measures, staff bonuses to reward exceptional work in the frontline, a less favourable sales mix (owing to shopping baskets with more basic products, and to a shift away from discretionary and non-food categories), and the forced closure of non-food formats.
Sonae Sierra's 1Q20 can also be divided into 2 periods. The first period, up to the end of February, was quite remarkable with i) the creation of the Sierra Prime JV with Allianz, APG and Elo, and ii) the strong consistent performance of its portfolio which recorded footfall and sales growth of 5.0% and 7.1% yoy, respectively.
During the month of March, the Covid-19 outbreak significantly impacted the commercial real estate sector. Sonae Sierra's portfolio, which today has a strong bias towards core / dominant assets and is spread across 7 geographies, was also affected mainly towards the end of
the month, thereby having a limited impact on 1Q20 results. While the main impacts are expected to occur in the remainder
1 For more information please see Sonae MC 1Q20 results report in www.sonae.pt.
of the year, the level of sales turnover in Sonae Sierra's shopping centres and rents for the rest of the year is very difficult to predict. However, the company is working closely with its tenants with the same mindset that guided them throughout the 2008-14 crisis – a long-term partnership approach.
On a proportional accounting basis, Sonae Sierra's Net Result was positively impacted by the higher Indirect Results when compared to last year, mainly benefiting from the capital gain resulting from the Prime transaction, which was partially offset by a development projects provision, as the Covid-19 crisis has increased the uncertainty for development activity.
Regarding NAV, Sonae Sierra ended the 1Q20 with €1,021 M. Compared to 2019YE, NAV decreased 26.2%, mainly impacted by the sale of the Prime Portfolio and its respective dividend distribution, coupled with the adverse impact from FX differences (mainly the Brazilian real).
NOS published its 1Q20 results on May 6th and already disclosed important impacts from Covid-19 imposed restrictions.
1Q20 turnover fell 3% yoy to €345 M mainly reflecting: the closure of cinema theatres in mid-March and the postponement of a number of movie premieres; the negative effect on traffic and revenues in roaming and international calls; and the reduction in revenues from premium sports channels as these began to be offered for free.
356 345 45.0% 44.2% 1Q19 1Q20 -3.0%
Turnover and EBITDA margin (€M)
Consolidated EBITDA fell by 4.6% to €152.7 M, resulting from a decline in both Telco and Audiovisuals & Cinemas. Net Results in 1Q20 were negative €10.4 M, mainly impacted by the non-recurrent
items of €45.7M, mostly related to the Covid-19 potential impacts, namely the reinforcement of operating provisions for customer bad debt, onerous contracts and personal protective equipment.
Notwithstanding, a robust capital structure and strong liquidity position, with cash and unused credit lines in excess of €415 M, should enable NOS to face the crisis and bounce forward. This solid financial position will be further enhanced with the sale of NOS Towering to Cellnex, announced already in 2Q.
2020 started strong for Worten, registering a positive sales growth (+6% LfL) until the end of February. This result occurs in a context of closing three loss-making stores in Spain mainland, adding to the eleven closures concluded in the second half of 2019.
In March, the context changed significantly with the emergence of Covid-19 and Worten had to rapidly respond to the lockdown measures. In Portugal, all stores remained open except for Worten Mobile and iServices stores located in shopping centres. However, due to more restrictive confinement rules and a more acute impact of the outbreak, in Spain mainland all stores were closed, although still supporting the online operation, while in Canary Islands only six stores were closed, two of which were adapted to serve online orders.
Turnover and underlying EBITDA margin (€M)
Across all geographies, online presented very significant growth, reaching record highs and, consequently, putting Worten's supply chain under high pressure. Regarding best-selling products, IT and entertainment were in high demand and no relevant stock outs occurred during this period. Thanks to the agility of Worten's omnichannel business model, it was possible to rapidly reallocate resources to strengthen digital and services capabilities. To better respond to online orders, Worten significantly increased its capacity in the warehouse while securing impeccable performance in terms of delivery time and customer satisfaction.
As a result, 1Q20 turnover stood at €232 M, practically aligned with last year, while underlying EBITDA stood above last year, benefiting from the good performance attained up to the onset of the pandemic and the closing of loss-making stores in Spain.
Given that JD Sports, the majority shareholder of ISRG, will only publish its full-year results on July 7th, the company does not yet have fully audited accounts for 4Q19 (the quarter which is consolidated in Sonae's 1Q20 accounts). Therefore, and on an exceptional basis, Sonae will not provide detail on ISRG's operational results for the quarter. In any case, the business maintained the same level of performance as in previous quarters, with double-digit sales and EBITDA growth yoy. The company's equity method contribution to Sonae's results amounts to €2.6 M in the quarter.
Meanwhile, ISRG has been severely impacted by the Covid-19 outbreak as sales started to slow down since the beginning of March and, from mid-March onwards, all the company's stores have been closed. As of today, stores are already starting to reopen in both Portugal and Spain.
For Sonae Fashion the first 2 months of the year were very positive, both in top line and underlying EBITDA, showing improvements from both value propositions and business models.
However, the spread of the Covid-19 pandemic had a very significant impact in the businesses. In the first two weeks of March sales dropped sharply and, following the implementation of lockdown measures in all geographies, all the stores were forced to close. This complete shutdown led to a 49% yoy drop in sales in March. Part of this severe impact in top line was offset Turnover and underlying EBITDA margin (€M)
by a very positive performance of the online business and Sonae Fashion ended the 1Q20 with €78 M of Turnover, down 19% yoy. Looking to the cost side, Sonae Fashion rapidly focused on cash preservation initiatives and was able to end the 1Q20 with an underlying EBITDA of €0.9 M.
As of today, Sonae Fashion has already opened some of its stores and is preparing the reopening of the remaining ones. The necessary measures regarding employee and customer safety have been implemented accordingly.
Although not as impacted as some businesses in our portfolio, Sonae FS also started to feel negative impacts from the pandemic crisis in March.
In fact, since mid-March the Universo operation registered a drop in credit card transactions not only due to the overall reduction in consumer spending but also due to deeper impacts in credit card transactions in some relevant categories, such as travel and fuel. Personal loans, payments of services at ATMs, as well as cash withdrawals also went down. One additional effect was the reduction in new subscriptions, partially because part of the Universo branch network had to close to comply with the lockdown
Turnover and underlying EBITDA margin (€M)
measures. On average, the Universo card was recording 7k to 8k new subscriptions per month and in March it did not reach 5k new subscriptions.
However, the Universo operation benefits from having a digital-oriented value proposition and it has been implementing several initiatives to further develop its digital offering to mitigate the impact of the current crisis. All in all, thanks to the performance up to mid-March (and some initial positive impacts of reactive measures), Sonae FS was able to end the quarter with a significant growth when compared to last year, with turnover increasing by 14.4% to €9.4 M and an underlying EBITDA of €2.1 M with a margin of 22.4%.
Sonae IM did not feel significant impacts from Covid-19 crisis on its 1Q20 results, but the magnitude and degree of uncertainty that an event of this nature involves may have negative impacts in the coming quarters, namely on Professional Services revenues, on Technology Reselling (either due to a reduction in demand or a drop in supply) and on the value of some minority stakes.
In terms of investment activity, and despite the short-term activity reassessment due to this new context, Sonae IM maintained its committed investment and, in the first quarter of 2020, made some follow-on investments in portfolio companies and entered in the share capital of a retail tech company.
Regarding operational performance, turnover stood at €26 M, down when compared to 2019, as the solid growth of cybersecurity services only partially offset the decrease in technology resale. Underlying EBITDA was -€1.5 M, with a slight improvement vs 1Q19.
January 17th, February 5th, 13th, 14th and 19th and March 13th, 20th
Sonae informed on qualified shareholdings.
Sonae announced that its subsidiary Sonae Sierra SGPS, SA created Sierra Prime.
Sonae informed about bond issue and refinancing of medium and long-term debt.
Sonae announced that Wonder Investments SGPS informed that it has executed the contractual right to sell its 50% stake in IVN – Serviços Partilhados SA which trades under the trademark "Salsa" to Sonae Fashion.
Sonae informed on transaction by person discharging managerial responsibilities.
Sonae informed on Resolutions taken at Sonae's Shareholders' Annual General Meeting.
Sonae informed on dividend payment.
Sonae informed on qualified shareholding.
Sonae informed on refinancing of medium and long-term debt.
| Sonae statement of financial position | ||||||||
|---|---|---|---|---|---|---|---|---|
| Million euros | 1Q19 | 1Q20 | yoy | |||||
| TOTAL ASSETS | 8,757 | 7,924 | -9.5% | |||||
| Non current assets | 7,074 | 6,254 | -11.6% | |||||
| Net fixed assets | 2,038 | 2,088 | 2.5% | |||||
| Net Rights of Use | 1,021 | 1,055 | 3.4% | |||||
| Goodwill | 825 | 680 | -17.6% | |||||
| Investment properties | 999 | 348 | -65.2% | |||||
| Other investments | 2,030 | 1,692 | -16.7% | |||||
| Deferred tax assets | 78 | 337 | - | |||||
| Others | 84 | 53 | -36.6% | |||||
| Current assets | 1,684 | 1,670 | -0.8% | |||||
| Stocks | 674 | 623 | -7.5% | |||||
| Trade debtors | 146 | 119 | -18.1% | |||||
| Liquidity | 582 | 625 | 7.4% | |||||
| Others | 282 | 302 | 7.1% | |||||
| SHAREHOLDERS' FUNDS | 3,124 | 2,550 | - -18.4% |
|||||
| Equity holders | 2,081 | 2,035 | -2.2% | |||||
| Attributable to minority interests | 1,043 | 515 | -50.6% | |||||
| LIABILITIES | 5,633 | 5,374 | -4.6% | |||||
| Non-current liabilities | 3,025 | 3,420 | 13.1% | |||||
| Bank loans | 1,095 | 1,170 | 6.9% | |||||
| Lease liabilities | 973 | 1,083 | 11.3% | |||||
| Other loans | 515 | 562 | 9.1% | |||||
| Deferred tax liabilities | 290 | 469 | 61.4% | |||||
| Provisions | 41 | 41 | 0.0% | |||||
| Others | 110 | 95 | -13.4% | |||||
| Current liabilities | 2,608 | 1,954 | -25.1% | |||||
| Bank loans | 519 | 149 | -71.2% | |||||
| Lease liabilities | 145 | 109 | -24.5% | |||||
| Other loans | 215 | 4 | -98.2% | |||||
| Trade creditors | 1,111 | 1,084 | -2.4% | |||||
| Others | 619 | 607 | -1.9% | |||||
| SHAREHOLDERS' FUNDS + LIABILITIES | 8,757 | 7,924 | -9.5% |
The consolidated financial information contained in this report was prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union. The financial information regarding quarterly and semi-annual figures was not subject to audit procedures.
Note: Sonae implemented the following changes in its reporting structure:
(i) Adoption of the IFRS16 accounting standard in 2019;
(ii) Discontinued operations: Saphety and WeDo following the sale from Sonae IM in 1Q19 and 3Q19, respectively; Temasa following the sale from Sonae Fashion and Deeply as an asset available for sale.
| Sonae Sierra consolidated results | ||
|---|---|---|
| Million euros | 1Q19 | 1Q20 |
| Turnover | 45 | 27 |
| Underlying EBITDA | 14 | 5 |
| margin | 32% | 17% |
| Equity method results | 16 | 9 |
| Non-recurrent items | 2 | 59 |
| EBITDA | 32 | 73 |
| margin | 71% | 269% |
| Provisions and impairment losses | 0 | 0 |
| D&A | -1 | -1 |
| EBIT | 31 | 72 |
| Net financial results | -3 | -3 |
| EBT | 28 | 69 |
| Taxes | -1 | 0 |
| Direct results | 27 | 69 |
| Indirect results | -1 | -20 |
| Net income | 26 | 49 |
| Non-controlling interests | -7 | -1 |
| Net income group share | 19 | 48 |
| Capex | Investments in tangible and intangible assets and investments in acquisitions. For NOS it includes right of use. |
|---|---|
| Direct results | Results before non-controlling interests excluding contributions to indirect results. |
| (Direct) EBIT | Direct EBT - financial results. |
| EBITDA | Underlying EBITDA + equity method results + non-recurrent items. |
| EBITDA margin | EBITDA / turnover. |
| (Direct) EBT | Direct results before taxes. |
| EoP | End of period. |
| Financial net debt | Net debt excluding shareholders' loans. |
| Gearing (book value) | Average of the last four quarters considering, for each quarter, total net debt (EoP) / total shareholders' funds (EoP). |
| Gearing (market value) | Average of the last four quarters considering, for each quarter, total net debt (EoP) / equity value considering the closing price of Sonae shares on the last day of each quarter. |
| Indirect results | Includes Sonae Sierra's results, net of taxes, arising from: (i) investment property valuations; (ii) capital gains (losses) on the sale of financial investments, joint ventures or associates; (iii) impairment losses of non-current assets (including goodwill) and (iv) provision for assets at risk. Additionally and concerning Sonae's portfolio, it incorporates: (i) impairments in retail real estate properties; (ii) reductions in goodwill; (iii) provisions (net of taxes) for possible future liabilities and impairments related with non-core financial investments, businesses, assets that were discontinued (or in the process of being discontinued/repositioned); (iv) results from mark to market methodology of other current investments that will be sold or exchanged in the near future; and (v) other non-relevant issues. |
| Investment properties | Shopping centres in operation owned and co-owned by Sonae Sierra. |
| Lease Liabilities | Net present value of payments to use the asset. |
| Like for Like sales (LfL) | Sales made by stores that operated in both periods under the same conditions. Excludes stores opened, closed or which suffered major upgrade works in one of the periods. |
| Loan to Value (LTV) - Holding |
Holding net debt (average) / NAV of the investment portfolio plus Holding net debt (average). |
| Loan to Value (LTV) – Sonae Sierra |
Net debt / (Investment properties + properties under development), on a proportional basis. |
| INREV Net asset value (NAV) Sonae Sierra |
Open market value attributable to Sonae Sierra - net debt - minorities + deferred tax liabilities. |
| Net debt | Bonds + bank loans + other loans + financial leases + shareholder loans - cash - bank deposits - current investments - other long-term financial applications. |
| Net invested capital | Total net debt + total shareholders' funds. |
| Online sales | Total e-commerce sales, including online marketplaces. |
| Open Market Value (OMV) | Fair value of properties in operation (% of ownership), provided by independent international entities and book value of development properties (% of ownership). |
| Other loans | Bonds, leasing and derivatives. |
| Right of use (RoU) | Lease liability at the beginning of the lease adjusted for, initial direct costs, advance rent payments and possible lease discounts. |
| RoIC | Return on invested capital. |
| Underlying EBITDA | Recurrent EBITDA from the businesses consolidated using the full consolidation method. |
| Underlying EBITDA margin | Underlying EBITDA / turnover. |
Condensed Consolidated Financial Statements
Notes 31 Mar 20 31 Mar 19 31 Dec 2019
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 MARCH 2020 AND 2019 AND 31 DECEMBER 2019
(Amounts expressed in euro)
ASSETS
(Translation of consolidated financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails.)
| 020 | |
|---|---|
| NON-CURRENT ASSETS: | ||||
|---|---|---|---|---|
| Property, plant and equipment | 6 | 1,690,241,869 | 1,676,727,559 | 1,688,284,139 |
| Intangible assets | 7 | 398,051,773 | 360,866,340 | 401,667,381 |
| Right of use assets | 8 | 1,055,444,242 | 1,020,988,483 | 1,060,191,250 |
| Investment properties | 347,948,654 | 998,577,368 | 347,859,459 | |
| Goodwill | 680,232,194 | 825,192,982 | 678,895,512 | |
| Investments in joint ventures and associates | 9 | 1,608,604,206 | 1,975,807,808 | 1,607,581,376 |
| Other investments | 10 | 83,165,623 | 54,119,787 | 79,248,786 |
| Deferred tax assets | 11 | 337,183,834 | 77,503,910 | 331,385,376 |
| Other non-current assets | 53,106,522 | 83,684,638 | 53,982,880 | |
| Total Non-Current Assets | 6,253,978,917 | 7,073,468,875 | 6,249,096,159 | |
| CURRENT ASSETS: | ||||
| Inventories | 623,489,335 | 674,202,012 | 663,919,735 | |
| Trade receivables and other current assets | 307,450,423 | 333,556,679 | 309,556,149 | |
| Income tax assets | 45,690,933 | 48,774,072 | 42,283,336 | |
| Other tax assets | 39,186,847 | 44,947,691 | 42,600,020 | |
| Investments | 10 | 2,634,324 | 1,990,620 | 665,213 |
| Cash and bank balances | 622,499,907 | 580,149,838 | 609,830,153 | |
| Total Current Assets | 1,640,951,769 | 1,683,620,912 | 1,668,854,606 | |
| Assets classified as held for sale | 4 | 28,744,576 | - | 1,126,364,434 |
| TOTAL ASSETS | 7,923,675,262 | 8,757,089,787 | 9,044,315,199 | |
| EQUITY AND LIABILITIES | ||||
| EQUITY: | ||||
| Share capital | 2,000,000,000 | 2,000,000,000 | 2,000,000,000 | |
| Own shares | (99,806,645) | (104,204,112) | (99,806,645) | |
| Legal reserve | 268,028,145 | 251,937,767 | 268,028,145 | |
| Reserves and retained earnings | (74,626,825) | (84,726,022) | (201,594,204) | |
| Profit/(Loss) for the period attributable to the equity holders of the Parent Company | (58,732,063) | 18,303,821 | 165,221,904 | |
| Equity attributable to the equity holders of the Parent Company | 2,034,862,612 | 2,081,311,454 | 2,131,849,200 | |
| Equity attributable to non-controlling interests | 12 | 514,891,850 | 1,042,764,147 | 974,714,342 |
| TOTAL EQUITY | 2,549,754,462 | 3,124,075,601 | 3,106,563,542 | |
| LIABILITIES: | ||||
| NON-CURRENT LIABILITIES: |
| Loans | 13 | 1,732,337,509 | 1,610,343,736 | 1,592,307,452 |
|---|---|---|---|---|
| Lease liabilities | 8 | 1,083,105,560 | 973,240,324 | 1,088,290,449 |
| Other non-current liabilities | 94,920,788 | 109,525,989 | 89,970,758 | |
| Deferred tax liabilities | 11 | 468,623,848 | 290,326,384 | 472,289,494 |
| Provisions | 14 | 41,165,881 | 41,166,966 | 42,652,254 |
| Total Non-Current Liabilities | 3,420,153,586 | 3,024,603,399 | 3,285,510,407 | |
| CURRENT LIABILITIES: | ||||
| Loans | 13 | 153,025,137 | 733,515,240 | 196,268,470 |
| Lease liabilities | 8 | 109,456,912 | 144,968,051 | 102,781,525 |
| Trade payables and other current liabilities | 1,568,053,759 | 1,613,904,082 | 1,847,952,492 | |
| Income tax liabilities | 16,257,732 | 27,421,506 | 13,464,954 | |
| Other tax liabilities | 84,294,132 | 83,239,107 | 100,751,716 | |
| Provisions | 14 | 20,955,937 | 5,362,801 | 4,405,596 |
| Total Current Liabilities | 1,952,043,609 | 2,608,410,787 | 2,265,624,753 | |
| Liabilities directly associated with assets classified as held for sale | 4 | 1,723,605 | - | 386,616,497 |
| TOTAL LIABILITIES | 5,373,920,800 | 5,633,014,186 | 5,937,751,657 | |
| - | - | - | ||
| TOTAL EQUITY AND LIABILITIES | 7,923,675,262 | 8,757,089,787 | 9,044,315,199 |
The accompanying notes are part of these condensed consolidated financial statements.
(Translation of consolidated financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails.)
| (Amounts expressed in euro) | Notes | 31 Mar 20 | 31 Mar 19 Restated Note 3 |
|---|---|---|---|
| Sales | 1,471,272,921 | 1,354,989,635 | |
| Services rendered | 80,461,066 | 94,008,027 | |
| Income or expense rela=ng to investments | 15 | 21,840,237 | (107,665) |
| Financial income | 3,159,620 | 3,325,525 | |
| Other income | 24,301,535 | 23,174,898 | |
| Cost of goods sold and materials consumed | (1,120,040,462) | (982,065,724) | |
| (Increase) /Decrease in prodution | 421,923 | (2,193,458) | |
| External supplies and services | (160,512,245) | (153,506,627) | |
| Employee benefits expense | (224,376,679) | (212,694,027) | |
| Depreciation and amortisation expenses | 6, 7 and 8 | (84,369,480) | (76,429,176) |
| Impairment losses | (849,451) | (724,142) | |
| Provisions | 14 | (19,180,265) | (47,146) |
| Financial expense | (32,515,533) | (32,022,709) | |
| Other expenses | (16,566,654) | (17,881,479) | |
| Share of results of joint ventures and associates | 9.2 | 7,493,466 | 27,358,210 |
| Profit/(Loss) before taxation from continuing operations | (49,460,001) | 25,184,142 | |
| Income tax expense | 5,777,662 | 2,501,166 | |
| Profit/(Loss) after taxation from continuing operations | (43,682,339) | 27,685,308 | |
| Profit/(Loss) from discontinued operations after taxation | 3 | (1,778,316) | 4,040,973 |
| Consolidated profit/(Loss) for the period | (45,460,655) | 31,726,281 | |
| Attributable to equity holders of the Parent Company: | |||
| Continuing operations | (56,953,747) | 14,769,123 | |
| Discontinued operations | (1,778,316) | 3,534,698 | |
| (58,732,063) | 18,303,821 | ||
| Attributable to non-controlling interests | |||
| Continuing operations | 13,271,408 | 12,916,185 | |
| Discontinued operations | - | 506,275 | |
| 12 | 13,271,408 | 13,422,460 | |
| Profit/(Loss) per share | |||
| From continuing operations | |||
| Basic | 17 | (0.029912) | 0.007791 |
| Diluted | 17 | (0.027986) | 0.008284 |
| From discontinued operations | |||
| Basic | 17 | (0.000934) | 0.001865 |
| Diluted | 17 | (0.000874) | 0.001738 |
The accompanying notes are part of these condensed consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE PERIODS ENDED 31 MARCH 2020 AND 2019
(Translation of consolidated financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails.)
| (Amounts expressed in euro) | Notes | 31 Mar 20 | 31 Mar 19 |
|---|---|---|---|
| Net Profit / (Loss) for the period | (45,460,655) | 31,726,281 | |
| Items that may be reclassified subsequently to profit or loss: | |||
| Exchange differences on translation of foreign operations | 8,191,675 | 3,727,095 | |
| Share of other comprehensive income of joint ventures and associates | 9.2 | (64,097,394) | 184,795 |
| Changes in cash flow hedging reserve Income tax relating to items that may be reclassified subsequently to profit or loss Others |
398,078 (228,414) 126,653 (55,609,402) |
431,344 - (222,922) 4,120,312 |
|
| Items that were reclassified subsequently to profit or loss: | - | - | |
| Total other comprehensive income for the period | (55,609,402) | 4,120,312 | |
| Total comprehensive income for the period | (101,070,057) | 35,846,593 | |
| Attributable to: | |||
| Equity holders of parent company | (97,108,901) | 21,390,502 | |
| Non controlling interests | (3,961,156) | 14,456,091 | |
The accompanying notes are part of these consolidated financial statements.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE PERIODS ENDED 31 MARCH 2020 AND 2019
(Translation of consolidated financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails.)
| Rese | and aine d Ea Ret rves |
rning s |
||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Am sed in eu ro) ount s ex pres |
Note s |
Shar e Capi tal |
Own Shar es |
l Rese Lega rve |
Curr ency Tran slati on Rese rve |
Inve nts Fair stme Valu e Rese rve |
Cash -flow Hedg ing Rese rve |
Opti on Prem ium Conv ertib le Bond s |
Othe r Re serv es and Reta ined Earn ings |
Tota l Res erve s and Reta ined Earn ings |
Net Prof it/(L oss) |
Tota l |
Non troll ing con Inte rests (Not e 12 ) |
Tota l Equi ty |
| Attr ibut able to E |
quity Hol ders of P |
t Co aren mpa ny |
||||||||||||
| Bala 1 Jan 201 9 s at nce a uary |
2,00 0,00 0,00 0 |
(104 ) ,204 ,112 |
251 ,937 ,767 |
4,16 0,38 5 |
2,14 6,50 0 |
123 ,615 |
22,3 13,0 00 |
(236 ,806 ,688 |
) (208 ) ,063 ,188 |
221 ,653 ,131 |
2,16 1,32 3,59 8 |
1,12 7,49 3,09 0 |
3,28 8,81 6,68 8 |
|
| Impa ct of IFRS 16 a pplic ation |
- | - | - | - | - | - | - | (96,6 54,8 44) |
(96,6 54,8 44) |
(15,0 01,7 02) |
(111 ,656 ,546 ) |
1,76 7,36 1 |
(109 ,889 ,185 ) |
|
| Bala 1 Jan 201 9 - R ted s at esta nce a uary |
2,00 0,00 0,00 0 |
(104 ,204 ,112 ) |
251 ,937 ,767 |
4,16 0,38 5 |
2,14 6,50 0 |
123 ,615 |
22,3 13,0 00 |
(333 ,461 ,532 |
) (304 ,718 ,032 ) |
206 ,651 ,429 |
2,04 9,66 7,05 2 |
1,12 9,26 0,45 1 |
3,17 8,92 7,50 3 |
|
| l com preh ensiv e inc for t he p eriod Tota ome iatio n of olida ted n ofit o f 201 App et pr 8 ropr cons |
- | - | - | 530 ,474 |
- | 430 ,932 |
- | 2,12 5,27 5 |
3,08 6,68 1 |
18,3 03,8 21 |
21,3 90,5 02 |
56,0 91 14,4 |
35,8 46,5 93 |
|
| sfer to le gal r nd re d ea Tran taine rning eser ves a s Divid ends dist ribut ed me d istrib from nt fu nds Inco ution inve stme Oblig fulfi eld b y sh ttrib mplo ation ution to e are a yees Aqu isitio ns of affil iated pani com es |
- - - - - |
- - - - |
- - - - |
- - - - |
- - - - |
- - - - |
- - - - |
206 ,651 ,429 - - 790 ,015 |
206 ,651 ,429 - - 790 ,015 |
(206 ) ,651 ,429 - - - |
- - - 790 ,015 |
- (98,8 92) 70,0 (60,0 52) 10,3 61 3,55 4 |
- (98,8 92) 70,0 (60,0 52) 800 ,376 3,55 4 |
|
| Impa ct of IFRS 16 a pplic ation Othe rs |
- - |
- - - |
- - - |
- - - |
- - - |
- - - |
- - - |
- 4,03 0,45 7 5,43 3,42 8 |
- 4,03 0,45 7 5,43 3,42 8 |
- - - |
- 4,03 0,45 7 5,43 3,42 8 |
3,08 707 ,976 (5,82 4,14 2) |
3,08 4,73 8,43 3 (390 ,714 ) |
|
| Bala arch s at 31 M 201 9 nce a |
2,00 0,00 0,00 0 |
(104 ) ,204 ,112 |
251 ,937 ,767 |
4,69 0,85 9 |
2,14 6,50 0 |
554 ,547 |
22,3 13,0 00 |
(114 ) ,430 ,928 |
(84,7 22) 26,0 |
18,3 03,8 21 |
2,08 1,31 1,45 4 |
1,04 2,76 4,14 7 |
3,12 4,07 5,60 1 |
|
| Bala 1 Jan 202 0 s at nce a uary |
2,00 0,00 0,00 0 |
(99,8 45) 06,6 |
268 ,028 ,145 |
(7,40 7) 0,43 |
4,13 7,94 2 |
(673 ) ,747 |
- | (197 ,657 ,962 |
) (201 ) ,594 ,204 |
165 ,221 ,904 |
2,13 1,84 9,20 0 |
974 ,714 ,342 |
3,10 6,56 3,54 2 |
|
| Tota l com preh ensiv e inc for t he p eriod ome |
- | - | - | 6,85 8,05 8 |
- | 466 ,740 |
- | (45,7 01,6 36) |
(38,3 76,8 38) |
(58,7 32,0 63) |
(97,1 08,9 01) |
(3,96 1,15 6) |
(101 ,070 ,057 ) |
|
| App iatio n of olida ted n ofit o f 201 9 et pr ropr cons Tran sfer to le gal r nd re taine d ea rning eser ves a s Divid ends dist ribut ed Oblig ation fulfi eld b y sh ttrib ution mplo to e are a yees |
12 | - - - |
- - |
- - |
- - |
- - |
- - |
- - |
165 ,221 ,904 - 8,61 5 |
165 ,221 ,904 - 8,61 5 |
(165 ,221 ,904 ) - |
- - 8,61 5 |
- (75,7 53,4 38) 51 |
- (75,7 53,4 38) 9,26 6 |
| tal d Capi ecre ase of c ol of sub sidia Lose ontr ries Othe rs |
12 4 |
- - - |
- - - - |
- - - - |
- - - - |
- - - - |
- - - - |
- - - - |
1,24 - - (1,12 2) 6,30 |
1,24 - - (1,12 2) 6,30 |
- - - - |
1,24 - - (1,12 2) 6,30 |
20,6 (23,9 84) 52,8 (356 ) ,522 ,582 346 ,917 |
1,26 (23,9 84) 52,8 (356 ) ,522 ,582 (779 ) ,385 |
| Bala arch s at 31 M 202 0 nce a |
2,00 0,00 0,00 0 |
(99,8 45) 06,6 |
268 ,028 ,145 |
(542 ) ,379 |
4,13 7,94 2 |
(207 ) ,007 |
- | (78,0 81) 15,3 |
(74,6 25) 26,8 |
(58,7 63) 32,0 |
2,03 4,86 2,61 2 |
514 ,891 ,850 |
2,54 9,75 4,46 2 |
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIOD ENDED 31 MARCH 2020 AND 2019
(Translation of consolidated financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
| (Amounts expressed in euro) | Notes | 31 Mar 2020 | 31 Mar 2019 |
|---|---|---|---|
| OPERATING ACTIVITIES | |||
| Net cash generated from operating activities (1) | (178,595,055) | (106,812,560) | |
| INVESTMENT ACTIVITIES | |||
| Receipts arising from: Investments Property, plant and equipment and intangible assets Interests and similar income Loans granted |
4 | 268,696,156 7,583,435 502,693 2,368,303 |
20,078,711 933,024 558,029 - |
| Dividends | 3,947,017 | 810,000 | |
| Others | - | 12,826,974 | |
| 283,097,604 | 35,206,738 | ||
| Payments arising from: Investments Property, plant and equipment and intangible assets Loans granted Others |
(6,410,749) (70,673,244) (2,164,209) (19,650,150) (98,898,352) |
(66,860,099) (91,455,727) (861,253) (4,540,430) (163,717,509) |
|
| 184,199,252 | (128,510,771) | ||
| Net cash used in/ generated by investment activities (2) | |||
| FINANCING ACTIVITIES | |||
| Receipts arising from: Loans, bonds and finance leases Capital increases, additional paid in capital and share premiums Others |
13 | 1,629,586,898 19,050,000 - |
2,254,053,783 3,829,261 - |
| 1,648,636,898 | 2,257,883,044 | ||
| Payments arising from: Lease contracts Loans, bonds and finance leases Interests and similar charges |
13 | (46,739,632) (1,533,103,774) |
(27,710,468) (2,079,530,335) |
| Dividends | 12 | (5,656,759) (74,522,088) |
(7,260,016) (89,880,052) |
| Others | - | - | |
| (1,660,371,051) | (2,204,380,871) | ||
| Net cash used in financing activities (3) | (11,734,153) | 53,502,173 | |
| Net increase (decrease) in cash and cash equivalents (4) = (1) + (2) + (3) Effect of exchange rate changes on the balance of cash held in foreign currencies Effect of discontinued operations Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period |
(6,129,956) 167,058 (131,653) 623,269,608 616,840,941 |
(181,821,158) (215,691) (676,276) 696,297,516 514,015,773 |
|
The accompanying notes are part of these financial statements.
(Translation of consolidated financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
(Amounts stated in euro)
SONAE, SGPS, SA ("Sonae Holding") has its head-office at Lugar do Espido, Via Norte, Apartado 1011, 4470-909 Maia, Portugal, and is the parent company of a group of companies. Sonae´s operations and operating segments are described in Note 5.
The principal accounting policies adopted in preparing the accompanying consolidated financial statements are described below. These policies have been consistently applied in comparative periods.
The accompanying consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union, issued by the International Accounting Standards Board ("IASB"), and interpretations issued by the IFRS Interpretations Committee ("IFRIC") or by the previous Standing Interpretations Committee ("SIC"), as adopted by the European Union as from the consolidated financial statements issuance date.
Interim financial statements are presented quarterly, in accordance with IAS 34 – "Interim Financial Reporting". As such, they do not include all the information to be disclosed in the annual consolidated financial statements and should therefore be read in conjunction with the consolidated financial statements for the previous year.
The accompanying condensed consolidated financial statements have been prepared from the books and accounting records of the company and subsidiaries, adjusted in the consolidation process, on a going concern basis and under the historical cost convention, except for some financial instruments and properties investments which are stated at fair value.
Up to the date of approval of these consolidated financial statements, the European Union endorsed the following standards, interpretations, amendments and revisions some of which become mandatory during the year 2020:
| With mandatory application during the year 2020: | Effective date (for financial years beginning on or after) |
|
|---|---|---|
| IFRS 3 (amendment) | Business combinations (Change of business definition) | 01 Jan 2020 |
| IFRS 9, IAS 39 and IFRS 7 (amendment) |
Reform of reference interest rates (Introduction of exemptions from hedge accounting so that the reform of reference interest rates does not lead to the termination of hedge accounting) |
01 Jan 2020 |
| IAS 19 (amendment) | Employee benefits (Obliges to use updated assumptions for the calculation of the remaining liabilities after actualization, curtailment or settlement of benefits, with impact on the income statement, except for the decrease of any excess within the scope of the asset ceiling) |
01 Jan 2020 |
| IAS 1 and IAS 8 (amendment) |
Presentation of financial statements and accounting policies, changes in accounting estimates and errors (Update of material definition in the application of the standards to the financial statements as a whole) |
01 Jan 2020 |
| Concetual structure - Changes in the reference to other IFRS (Amendment to some IFRS regarding cross references and clarifications on the application of the new definitions of assets / liabilities and expenses / income) |
01 Jan 2020 |
These standards were first applied by the Group in 2020, however there were no significant impacts on these financial statements.
The following standards, interpretations, amendments and revisions were not at to the date of approval of these consolidated financial statements endorsed by the European Union:
| With mandatory application after 2020 | Effective date (for financial years beginning on or after) |
|
|---|---|---|
| IFRS 17 | Insurance contracts (New accounting for insurance contracts, reinsurance contracts and investment contracts with discretionary participation features). |
01 Jan 2021 |
| IAS 1 (amendment) | Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-Current | 01 Jan 2022 |
The Group did not proceed with the early implementation of any of these standards in the financial statements for the year ended 31 March 2020 since their application is not mandatory, lying in the process of analysing expected effects of those standards.
In 2019, the Group disposed of the We Do Group and Saphety and considered as discontinued activities some operations that are in the process of liquidation. To maintain the comparability of the financial statements and as required by IFRS 5, changes to the consolidated income statements by nature for the period ended 31 March 2019 were made to reflect in a single caption (Consolidated net profit for the period from discontinued operations), on the income statement face, the post-tax profit or loss from discontinued operations.
The impacts on the consolidated financial statements at 31 March 2019 are as follows:
| 31 Mar 2019 | ||||
|---|---|---|---|---|
| Amounts in euro | Before the restatement |
Discontinued operations |
After the restatement |
|
| Sales | 1,354,577,869 | 411,766 | 1,354,989,635 | |
| Services rendered | 106,148,655 | (12,140,628) | 94,008,027 | |
| Income or expenses related to investments | (107,665) | - | (107,665) | |
| Other income and financial income | 3,880,521 | (554,996) | 3,325,525 | |
| Other income | 24,419,540 | (1,244,642) | 23,174,898 | |
| Cost of good sold and materials consumed | (981,249,792) | (815,932) | (982,065,724) | |
| (Increase) /Decrease in prodution | (2,127,253) | (66,205) | (2,193,458) | |
| External supplies and service | (157,943,534) | 4,436,907 | (153,506,627) | |
| Employee benefits expense | (221,003,335) | 8,309,308 | (212,694,027) | |
| Depreciation and amortisation expenses | (78,128,776) | 1,699,600 | (76,429,176) | |
| Provisions and impairment losses | (789,510) | 18,222 | (771,288) | |
| Financial expenses | (32,635,100) | 612,391 | (32,022,709) | |
| Other expenses | (18,049,392) | 167,913 | (17,881,479) | |
| Share of results of joint ventures and associates | 27,358,210 | - | 27,358,210 | |
| Profit (loss) from continuing operations, before tax | 24,350,438 | 833,704 | 25,184,142 | |
| Income tax expense | 2,522,818 | (21,652) | 2,501,166 | |
| Consolidated profit (loss) for the period from continuing operations | 26,873,256 | 812,052 | 27,685,308 | |
| Profit/(Loss) from discountinuing operations, after tax | 4,853,025 | (812,052) | 4,040,973 | |
| Consolidated profit /(loss) for the period | 31,726,281 | - | 31,726,281 |
In February 2020, Sonae Sierra diluted its stake in its subsidiary Sierra B.V. from 50.1% to 25.1%. Sierra B.V. participates in the companies that own 4 assets in Portugal (Colombo, Vasco da Gama, Cascaishopping and Norteshopping) and two assets in Spain (Plaza Mayor and, the asset inaugurated in February 2020, Designer Outlet, both in Malaga). These entities were classified as held for sale in 2019. Sonae Sierra maintained the management service contracts for all assets.
The effects of these transactions on the consolidated financial statements can be analyzed as follows:
| Amounts in euro | At the disposal date |
|---|---|
| Non-current assets and liabilities held for sale | 1,097,147,948 |
| Other assets/liabilities with movements after 31 December 2019 | (18,026,817) |
| Capital decrease after 31 December 2019 | (47,287,831) |
| Dividends distributed after 31 December 2019 | 8,062,901 |
| Transfer to joint ventures and associates (Note 9.2) | (69,591,682) |
| Non-controlling interests | (356,522,582) |
| Liabilities directly related to assets classified as held for sale | (385,591,820) |
| Total net assets disposed | 228,190,118 |
| Gain/(Loss) on disposal (Note 15) | 34,793,583 |
| Disposal price | 262,983,701 |
| Expenses incurred with the disposal (Note 15) | (14,065,964) |
| Net receipt | 248,917,737 |
| Effective receipts Amounts receivable in future |
248,917,737 - |
| 248,917,737 |
The change in the period ended 31 March 2020 in the assets and non-current liabilities held for sale is related to this operation.
Sonae has in its portfolio 8 business segments:
These operating segments have been identified taking into consideration that each of these segments have separate identifiable revenues and costs, separate financial information is produced, and its operating results are reviewed by management on which it makes decisions.
The main operating segment information as at 31 March 2020 and 2019 can be detailed as follows:
| 31 Mar 2020 | Turnover | Depreciation and amortisation (3) |
Provisions and impairment losses (3)(4) |
EBIT (3) | Financial results (2) | Income tax (2) |
|---|---|---|---|---|---|---|
| Sonae MC | 1,194,272,151 | (60,866,107) | (744,461) | 33,601,309 | (20,557,315) | (2,837,882) |
| Worten | 231,655,289 | (9,928,486) | (669,818) | (25,270,250) | (1,541,213) | 2,334,880 |
| Sonae Fashion | 77,930,885 | (9,086,792) | (331,678) | (35,072,434) | (1,404,818) | 5,195,744 |
| Sonae Sierra | 27,025,764 | (778,180) | 121,678 | 35,082,923 | (3,142,244) | (287,925) |
| NOS | - | - | - | (1,000,368) | - | - |
| ISRG | - | - | - | 2,612,708 | - | - |
| Sonae IM | 25,700,308 | (1,924,845) | (104,743) | (3,595,115) | (462,569) | 391,869 |
| Sonae FS | 9,360,329 | (214,850) | - | (1,147,031) | 66,178 | 115,948 |
| Other, eliminations and adjustments (1) | (14,210,739) | (1,570,220) | - | (7,746,015) | (2,313,932) | 1,814,392 |
| Total consolidated - Direct | 1,551,733,987 | (84,369,480) | (1,729,022) | (2,534,273) | (29,355,913) | 6,727,026 |
| 31 Mar 2019 - Restated | Turnover | Depreciation and amortisation (3) |
Provisions and impairment losses (3) |
EBIT (3) | Financial results (2) | Income tax (2) |
|---|---|---|---|---|---|---|
| Sonae MC | 1,047,799,011 | (54,010,353) | (52,996) | 25,838,440 | (18,853,601) | 3,648,716 |
| Worten | 237,062,137 | (9,058,415) | (19,513) | (4,291,216) | (1,330,303) | (800,361) |
| Sonae Fashion | 95,720,993 | (9,256,060) | (274,464) | (2,545,137) | (2,309,900) | 810,387 |
| Sonae Sierra | 44,807,203 | (815,582) | (376,942) | 30,856,246 | (2,659,356) | (3,063,024) |
| NOS | - | - | - | 9,587,500 | - | - |
| ISRG | - | - | - | 2,896,829 | - | - |
| Sonae IM | 30,658,705 | (1,528,913) | 85,257 | 1,734,349 | 187,405 | 2,295,411 |
| Sonae FS | 8,180,218 | (312,872) | - | 493,907 | 29,052 | 3,100 |
| Other, eliminations and adjustments (1) | (15,230,605) | (1,446,981) | - | (7,266,074) | (3,760,481) | 1,345,937 |
| Total consolidated - Direct | 1,448,997,662 | (76,429,176) | (638,658) | 57,304,844 | (28,697,184) | 4,240,166 |
| 31 March 2020 | 31 March 2019 Reststed | |||||
|---|---|---|---|---|---|---|
| Investment (CAPEX) | Invested capital | Financial net debt (2) | Investment (CAPEX) | Invested capital | Financial net debt (2) | |
| Sonae MC | 46,421,212 | 2,526,910,449 | 1,689,234,296 | 101,406,660 | 2,405,927,938 | 1,672,900,000 |
| Worten | 3,895,170 | 110,969,753 | - | 5,368,066 | 137,291,065 | - |
| Sonae Fashion | 3,728,168 | 349,073,940 | - | 2,166,592 | 368,155,307 | - |
| Sonae Sierra | 1,563,540 | 1,009,037,774 | 17,298,833 | 4,436,160 | 2,057,108,911 | 221,133,976 |
| Sonae IM | 4,286,461 | 187,461,617 | 25,471,841 | 8,544,156 | 202,634,332 | 40,383,681 |
| NOS | - | 640,416,097 | - | - | 685,548,394 | - |
| ISRG | - | 84,319,339 | - | - | 77,477,360 | - |
| Sonae FS | 166,000 | 10,553,781 | - | 138,331 | 13,422,038 | - |
| Other, eliminations and adjustments (1) | 240,476 | 56,621,906 | 693,605,205 | (5,994,951) | (3,999,222) | 885,072,849 |
| Total consolidated | 60,301,027 | 4,975,364,656 | 2,425,610,175 | 116,065,014 | 5,943,566,123 | 2,819,490,506 |
1) Include Sonae individual accounts;
2) These captions are accompanied by management in more aggregated form, and not allocated to individual operating segments identified above;
3) Reconciled information in note 18;
4) These provisions do not include the provisions related to Covid-19 mentioned in note 18.
| Investment | Invested capital | ||||
|---|---|---|---|---|---|
| 31 Mar 2020 | 31 Mar 2019 Restated |
31 Mar 2020 | 31 Mar 2019 Restated |
||
| Inter-segment intra-groups and contributions of entities non individualized entities as segments |
240,476 | (5,994,951) | 124,577,013 | 88,395,074 | |
| Cash settled equity swap | - | - | (67,955,107) | (92,394,296) | |
| 240,476 | (5,994,951) | 56,621,906 | (3,999,222) |
All performance measures are reconciled to the financial statements in Note 18.
Glossary:
Net Invested capital = Net debt + Shareholder funds;
Net Financial Debt = Bonds + bank loans + other loans + financial leases - cash, bank deposits, current investments, and other long-term financial applications + Lease liabilities;
Others, eliminations and adjustments = Intra-groups + consolidation adjustments + contributions from other companies not included in the disclosed segments by do not fit in any reportable segment, i.e., companies other than Sonae SGPS are included in the consolidated financial statements as of 31 December 2019;
Investments (CAPEX) = Gross investments in Property, Plant and equipment and intangible assets and investments in acquisitions.
During the three months period ended 31 March 2020, the movements in Property, plant and equipment as well accumulated depreciation and impairment losses are made up as follows:
| Others | Tangible | Total | |||
|---|---|---|---|---|---|
| Land and | Plant and | tangibles | assets | tangible | |
| Buildings | Machinery | assets | in progress | assets | |
| Gross costs: | |||||
| Opening balance as at 1 January 2020 | 1,348,619,669 | 1,648,025,471 | 260,385,129 | 28,714,268 | 3,285,744,537 |
| Investment | 622,884 | 1,022,433 | 611,277 | 43,886,555 | 46,143,149 |
| Disposals | (277,780) | (12,879,935) | (4,388,724) | (352,108) | (17,898,547) |
| Exchange rate effect | (540) | (9,859) | (70,442) | (251) | (81,092) |
| Assets available for sale | (8,000) | (358,026) | (162,799) | (42,140) | (570,965) |
| Transfers | 3,969,756 | 37,724,506 | 4,505,739 | (47,744,855) | (1,544,854) |
| Closing balance as at 31 March 2020 | 1,352,925,989 | 1,673,524,590 | 260,880,180 | 24,461,469 | 3,311,792,228 |
| Accumulated depreciation and impairment losses | |||||
| Opening balance as at 1 January 2020 | 431,417,270 | 977,594,714 | 188,271,095 | 177,319 | 1,597,460,398 |
| Depreciation of the period | 5,790,417 | 29,592,727 | 5,658,176 | - | 41,041,320 |
| Disposals | (125,220) | (11,717,788) | (4,289,633) | - | (16,132,641) |
| Exchange rate effect | (249) | (6,231) | (49,746) | - | (56,226) |
| Depreciation of assets available for sale | - | (259,773) | (128,361) | - | (388,134) |
| Transfers | (86,642) | (194,740) | (92,976) | - | (374,358) |
| Closing balance as at 31 March 2020 | 436,995,576 | 995,008,909 | 189,368,555 | 177,319 | 1,621,550,359 |
| Carrying amount as at 31 March 2020 | 915,930,413 | 678,515,681 | 71,511,625 | 24,284,150 | 1,690,241,869 |
The investment includes the acquisition of assets of approximately 44 million euro (42 million euro in 2019), associated with the opening and remodelling of stores of Sonae retail operating segments.
During the three months period ended 31 March 2020, the movement occurred in intangible assets and in the corresponding accumulated amortisation and impairment losses, was as follows:
| Patents | Other | Intangible | Total | ||
|---|---|---|---|---|---|
| and other | intangible | assets | intangible | ||
| similar rights | Software | assets | in progress | assets | |
| Gross assets: | |||||
| Opening balance as at 1 January 2020 | 241,856,153 | 466,224,251 | 77,751,740 | 32,889,599 | 818,721,743 |
| Investment | - | 452,408 | 76,520 | 8,433,946 | 8,962,874 |
| Disposals | - | (1,889,710) | - | (283,601) | (2,173,311) |
| Exchange rate effect | (141,785) | (7,171) | (315) | (235) | (149,506) |
| Assets available for sale | (313,954) | (875,657) | - | (37,404) | (1,227,015) |
| Transfers | 21,265 | 12,173,744 | 4,306 | (12,062,705) | 136,610 |
| Closing balance as at 31 March 2020 | 241,421,679 | 476,077,865 | 77,832,251 | 28,939,600 | 824,271,395 |
| Accumulated depreciation and impairment losses | |||||
| Opening balance as at 1 January 2020 | 50,033,645 | 323,803,172 | 43,217,545 | - | 417,054,362 |
| Depreciation of the period | 656,306 | 10,012,809 | 1,241,923 | - | 11,911,038 |
| Disposals | - | (1,911,586) | - | - | (1,911,586) |
| Exchange rate effect | (141,785) | (4,137) | (315) | - | (146,237) |
| Depreciation of assets available for sale | (290,684) | (582,135) | - | - | (872,819) |
| Transfers | (43,574) | 228,452 | (14) | - | 184,864 |
| Closing balance as at 31 March 2020 | 50,213,908 | 331,546,575 | 44,459,139 | - | 426,219,622 |
| Carrying amount as at March 2020 | 191,207,771 | 144,531,290 | 33,373,112 | 28,939,600 | 398,051,773 |
As at 31 March 2020 the Investment related to intangible assets in progress includes 8.4 million euro related to IT projects and development software. Within that amount it is included 3.6 million euro of capitalizations of personnel costs related to own work.
During the period of three months ended on 31 March 2020, the detail and the movement in the value of the rights of use, as well as in the respective depreciations, was as follows:
| Land and Buildings | Vehicles | Others tangible assets |
Total tangible assets | |
|---|---|---|---|---|
| Cost | ||||
| Opening balance as at 1 January 2020 | 1,435,043,433 | 99,076,538 | 1,072,141 | 1,535,192,112 |
| Additions | 26,275,836 | 2,010,941 | 158,817 | 28,445,594 |
| Effect of foreign currency exchange differences | (145,171) | (8,741) | - | (153,912) |
| Write-offs and decreases | (5,100,166) | (3,094,080) | (359,849) | (8,554,095) |
| Closing balance as at 31 March 2020 | 1,456,073,932 | 97,984,658 | 871,109 | 1,554,929,699 |
| Accumulated depreciation and impairment | ||||
| Opening balance as at 1 January 2020 | 441,004,350 | 33,252,081 | 744,431 | 475,000,862 |
| Depreciation of the period | 25,434,231 | 5,929,492 | 53,399 | 31,417,122 |
| Effect of foreign currency exchange differences | (105,225) | (8,652) | (1,292) | (115,169) |
| Write-offs and tranfers | (3,675,321) | (2,814,800) | (327,237) | (6,817,358) |
| Closing balance as at 31 March 2020 | 462,658,035 | 36,358,121 | 469,301 | 499,485,457 |
| Carrying amount as at 31 March 2020 | 993,415,897 | 61,626,537 | 401,808 | 1,055,444,242 |
Liabilities related to rights of use are recorded under non-current and current lease liabilities of 1.083 million euro and 109 million euro respectively (1.088 million euro and 103 million euro at 31 December 2019).
In the consolidated income statement, 31.4 million euros were recognised for depreciation of the period (25.8 million euros in 31 March 2019) and 18.4 million of euros of interest relating to the adjusted debt (18.2 million in 31 March 2019).
The value of investments in joint ventures and associates can be analysed as follows:
| Investments in joint ventures and associates | 31 Mar 2020 | 31 Dec 2019 |
|---|---|---|
| Investments in joint ventures | 796,418,315 | 976,280,761 |
| Investments in associates | 812,185,891 | 631,300,615 |
| Total | 1,608,604,206 | 1,607,581,376 |
The detail per company of investments in joint ventures is as follows:
| COMPANY | 31 Mar 2020 | 31 Dec 2019 |
|---|---|---|
| Sonae MC | ||
| Sohi Meat Solutions - Distribuição de Carnes, SA | 3,441,498 | 3,356,985 |
| Maremor Beauty & Fragances, S.L. | 117,112 | 120,649 |
| Sonae Sierra | ||
| Arrábidashopping- Centro Comercial, S.A. | 29,330,339 | 29,991,113 |
| 1) DOC Malaga Holdings S.L | - | 2,070,074 |
| Gaiashopping I- Centro Comercial, S.A. | 30,603,093 | 35,358,528 |
| Madeirashopping- Centro Comercial, S.A. | 14,562,526 | 15,670,288 |
| 1) Norte Shopping Retail and Leisure Centre B.V. | - | 32,206,931 |
| Pantheon Plaza B.V. | 5,077,799 | 4,994,201 |
| Park Avenue Development of Shopping Centres S.A. | (462,412) | (461,277) |
| Parque Atlântico Shopping - Centro Comercial, S.A. | 16,799,300 | 17,754,571 |
| Proyecto Cúcuta S.A.S. | 6,992,869 | 8,467,686 |
| Pud Srl | 5,684,969 | 5,695,813 |
| SC Aegean B.V. | 4,900,478 | 4,907,766 |
| 1) Shopping Centre Colombo Holding B.V. | - | 63,277,363 |
| Sierra Central S.A.S. | 21,834 | 57,222 |
| Sierra Balmain Asset Management sp. zo.o. | 1,705,240 | 1,708,766 |
| Sierra LM, SGPS, S.A. | 702,783 | 774,000 |
| 1) VdG Holding BV | - | 28,429,747 |
| Via Catarina- Centro Comercial, S.A. | 10,236,206 | 10,043,274 |
| L.C. Malheiro II, SGPS, SA | 1,825,775 | 1,818,083 |
| Goodwill related to assets available for sale that will be recognized as 1) associates |
- | 38,550,000 |
| NOS | ||
| ZOPT, SGPS, SA (consolidated) | 640,416,097 | 642,224,343 |
| Sonae IM | ||
| Unipress - Centro Gráfico, Lda | 612,925 | 604,053 |
| Sonae FS | ||
| MDS SGPS, S.A. (consolidated) | 21,684,042 | 25,936,780 |
| Sonae SGPS | ||
| Mktplace- Comércio Eletronico, SA | 2,165,842 | 2,723,802 |
| Investments in joint ventures | 796,418,315 | 976,280,761 |
1) Joint venture "Sierra Prime" resulting from the dilution of the percentage of Sierra BV (Note 4).
The value on the income statement related to Zopt results from net income of NOS, the net income of Zopt and the impact on results of the process of allocating the fair value to the assets and liabilities acquired by Zopt
With regard to ZOPT's financial participations in Finstar and ZAP Media (Finstar consolidated), the Board of Directors of ZOPT is certain that the patrimony seizure to Mrs. Isabel dos Santos, in the specific case of the shares held by her in Finstar and ZAP Media (where she holds 70% of the capital), does not change the control profile, in this case joint control as defined in IFRS 11, it is not expected to have relevant consequences for the operational management of companies, in addition to restrictions on the distribution of dividends in these companies
In February 2020, ZOPT became aware that, with the exception of the Caixa Geral de Depósitos account (in which NOS' shares are deposited), its bank accounts are unavailable, which may have resulted from requests for international judicial cooperation issued by the Angolan State. Such apprehensions were not even legally notified to ZOPT, and no action was taken by the Company, namely for the purpose of eventual pronouncement. Without prejudice to this, on 27 March, the arrest of ZOPT bank accounts was lifted, by court order, which was informed that most of its bank accounts were already available again.
In the beginning of April, NOS announced that it had entered into an agreement with Tofane Global, SAS for the sale of the entire share capital of NOS International Carrier Services SA to iBasis, a wholly-owned subsidiary of Tofane and another, for the provision of Group companies. NOS for international voice and SMS wholesale services, which were previously provided by NOS ICS. The conclusion of this agreement is subject to non-opposition by the Competition Authority. Considering that the approval of the transaction occurred before 31 March 2020, NOS' accounts were restated for the period ended in March 2020 and for the year 2019.
As described in Note 19.3, on 4 April 2020, SONAECOM was informed by its subsidiary ZOPT of the communication received from the Central Criminal Investigation Court of Lisbon to proceed to the preventive arrest of 26.075% of NOS share capital.
The evolution in provisions occurred during the first quarter of 2020 compared to 31 December 2019 was as follows:
Actions by MEO against NOS Madeira and NOS Açores and by NOS S.A. against MEO
At the beginning of March 2020, the parties were notified of the scheduled judicial due diligence for 17 April 2020, with a view to scheduling the acts to be carried out at the final hearing, establishing the number of sessions and their likely duration, as well as the designation of the respective dates and, also, attempted conciliation. However, in view of the contingency period in which we find ourselves, this judicial process was cancelled. It is the understanding of the Board of Directors, corroborated by the attorneys accompanying the process, that it is, in formal and substantive terms, likely that NOS SA will be able to win the lawsuit, due to MEO already having been convicted for the same offences by ANACOM, however, it is not possible to determine the outcome of the action.
The process has already been redistributed and the previous hearing was scheduled for 23 April 2020. However, in view of the contingency period in which we find ourselves, the above mentioned judicial procedure was cancelled. The Board of Directors is convinced that the arguments used by the author are not justified, which is why it is believed that the outcome of the proceeding should not result in significant impacts for the Group's financial statements.
In 2020, due to the foreseeable sharp reduction in the collection of these penalties, as a direct consequence of the slowdown in the Portuguese economy due to the measures adopted to combat the new coronavirus COVID-19, NOS recognised expected credits losses to all penalties billed to customers and not provisioned, in the amount of approximately 7.0 million.
With the emergence, spread and infection of the new coronavirus COVID-19, several measures were taken to contain the virus with very significant estimated impacts on the Portuguese economy, as well as in other economies, namely, limitations on travel rights and closure of several facilities and establishments.
This is a situation of uncertainty and very dynamic, which makes it extremely difficult to estimate impacts, which always have to consider several scenarios and countless variables. Evidence of this difficulty is the historical drops and sharp volatility of exchanges, all over the world.
The impacts on ZOPT through participation in NOS were already felt in the results of the first quarter of 2020, with a drop in consolidated EBITDA of 4.6%, which show a reduction in activity in:
(i) Cinemas and Audiovisuals: reduction in attendance at movie theaters and closure since March 16, with the postponement of the debut of several titles;
NOS is committed to supporting its customers during the current public health crisis COVID-19. At a time when many Portuguese are changing their habits and routines and working remotely, keeping our customers connected is the main objective of NOS. To this end, we facilitate access to services, through data offers, suspension of monthly payment of premium sports channels, reinforcement of the ability to implement business services and guaranteeing a safe and secure service in our stores, in order to safeguard our customers, employees and partners. The NOS Telecommunications Network supports a set of basic services of our society, which include our National Health System. In this context of global health emergency, the maintenance of Portuguese communications is a fundamental task.
Thus, as a result of the negative impacts estimated with the spread of the new Covid-19 coronavirus, the following impacts were recognized in the first quarter of 2020 in NOS accounts:
In terms of the projection of future impacts, these will depend on the extent, namely timing, of the spread of the virus and the respective containment measures, making it difficult to predict the scale of the impact, in the knowledge, however, that it will occur in the areas mentioned above. NOS 'capital structure is within the 2x Net Financial Debt / EBITDA After Leasings Payments (EBITDA - Leasings Payments (Capital and Interest)) threshold, so the Board of Directors believes that the company will overcome the negative impacts caused by this crisis, without jeopardizing business continuity.
The detail per company of investments in associates is as follows:
| COMPANY | 31 Mar 2020 | 31 Dec 2019 |
|---|---|---|
| Sonae MC | ||
| Sempre a Postos - Produtos Alimentares e Utilidades, Lda | 986,796 | 960,282 |
| Sonae Sierra | ||
| 3shoppings - Holding, SGPS, S.A. | 12,933,222 | 12,749,317 |
| Aliansce Sonae Shopping Centers, S.A. | 95,483,065 | 118,535,408 |
| Area Sur Shopping, S.L. | 7,341,880 | 7,469,872 |
| Fundo Investimento Imobiliário Parque Dom Pedro Shopping Center ("FIIPDPSH") |
12,511,392 | 15,784,000 |
| Fundo Investimento Imobiliário Shop. Parque Dom Pedro ("FIISHPDP") |
121,633,264 | 153,438,522 |
| Le Terrazze - Shopping Centre 1 Srl | 7,289,670 | 7,196,941 |
| Iberia Shop.C. Venture Coöperatief U.A. ("Iberia Coop") | 15,775,889 | 16,112,511 |
| Sierra Portugal Real Estate ("SPF") | 21,900,514 | 21,655,244 |
| Olimpo Real Estate SOCIMI, S.A. | 8,053,688 | 7,932,798 |
| Olimpo Real Estate Portugal, SIGI, S.A. | 2,524,035 | 2,528,224 |
| Serra Shopping- Centro Comercial, S.A. | 1,066,289 | 1,050,037 |
| Sierra Cevital Shopping Center, Spa | - | 38,543 |
| Sierra Portugal Feeder 1 | 2,349,475 | 3,491,812 |
| Trivium Real Estate Socimi, S.A. | 30,841,557 | 30,707,669 |
| Zenata Commercial Project | 2,018,688 | 2,041,966 |
| 1) Mercado Urbano – Gestão Imobiliária, S.A. | 1,271,505 | - |
| 2) Sierra European Retail Real Estate Assets Holdings, BV ("Sierra BV") | 235,575,948 | - |
| Sonae SGPS | ||
| Iberian Sports Retail Group (ISRG) | 84,319,339 | 81,540,597 |
| Sonae IM | ||
| Armilar Venture Partners - Sociedade de Capital de Risco, SA (Armilar) | 1 | 1 |
| Fundo de Capital de Risco Armilar Venture Partners II (Armilar II) | 94,230,381 | 94,176,915 |
| Fundo de Capital de Risco Armilar Venture Partners III (Armilar III) | 32,997,387 | 32,707,854 |
| Fundo de Capital de Risco Espirito Santo Ventures Inovação e Internacionalização (AVP I+I) |
17,042,384 | 17,056,948 |
| Secucloud GMBH | 3,646,808 | 3,731,809 |
| Probe.ly - Soluções de Cibersegurança, Lda | 341,866 | 342,497 |
| Alfaros SARL | 10,379 | 10,379 |
| Suricate Solutions | 25,843 | 25,843 |
| Others | 14,626 | 14,626 |
| Investment in associates companies | 812,185,891 | 631,300,615 |
1) Associate acquired in the period;
2) Joint venture "Sierra Prime" resulting from the dilution of the percentage of Sierra BV (Note 4).
During the period ended at 31 March 2020, movements in investments in joint ventures and associates are as follows:
| 31 Mar 2020 | |||
|---|---|---|---|
| Proportion on equity |
Goodwill | Total investment |
|
| Investments in joint ventures | |||
| Balance as at 1 January | 409,263,098 | 567,017,663 | 976,280,761 |
| Transfer to Associates | (125,984,114) | (38,550,000) | (164,534,114) |
| Increases during the period | 128,000 | - | 128,000 |
| Equity method | |||
| Effect in gains or losses in joint controlled | (1,895,185) | - | (1,895,185) |
| Distributed dividends | (9,278,785) | - | (9,278,785) |
| Effect in equity capital and non-controlling interests | (4,282,363) | - | (4,282,363) |
| Other effects in net income | - | - | - |
| 267,950,652 | 528,467,663 | 796,418,315 | |
| 31 Mar 2020 | |||
| Proportion on equity |
Goodwill | Total investment |
|
| Investments in associates companies | |||
| Initial balance as at 1 January | 610,439,640 | 20,860,975 | 631,300,615 |
| Transfer from joint ventures | 125,984,114 | 38,550,000 | 164,534,114 |
| Change of method by percentage dilution (Note 4) | 69,591,682 | - | 69,591,682 |
| Acquisitions during the period | 1,273,178 | - | 1,273,178 |
| Capital reduction in associated companies | (1,992,301) | - | (1,992,301) |
| Period disposals | (38,543) | - | (38,543) |
| Equity method | - | ||
| Effect in gains or losses in associated companies | 9,460,184 | - | 9,460,184 |
| Distributed dividends | (2,128,006) | - | (2,128,006) |
| Effect in equity capital and non-controlling interests | (59,815,032) | - | (59,815,032) |
| 752,774,916 | 59,410,975 | 812,185,891 |
The effect on equity and non-controlled interests results fundamentally from the exchange rate conversion effect of companies with a different functional currency than the euro.
As at 31 March 2020, the value of transfers from joint ventures to associates and change of method by dilution of percentage is related to the operation in Sonae Sierra that diluted its participation in the subsidiary Sierra B.V. from 50.1% to 25.1% (Note 4).
Dividend distributions related to Investments in Joint Ventures refer to Sonae Sierra's joint ventures and associates.
At 31 March 2020 it was understood that the assumptions made in the impairment tests performed in 2019 did not change significantly.
Other non-current investments, their head offices and book value as at 31 March 2020 and 31 December 2019, are as follows:
| Statment of financial position | |||
|---|---|---|---|
| Company | Head Office | 31 Mar 2020 | 31 Dec 2019 |
| Sonae MC | |||
| Dispar - Distrib. de Participações, SGPS, SA | Lisbon | 9,976 | 9,976 |
| Insco - Insular de Hipermerc., SA | Ponta Delgada | 5,345,040 | 5,345,040 |
| Other financial assets | 16,768,227 | 15,526,748 | |
| Financial assets at fair value through profit or loss | 22,123,243 | 20,881,764 | |
| Sonae IM | |||
| Arctic Wolf Networks, Inc | Delaware | 12,101,193 | 12,101,193 |
| Ometria, Ltd. | Londres | 8,095,985 | 8,095,985 |
| Sixgill Ltd | Israel | 5,415,162 | 5,415,162 |
| CelllWise | Singapura | 5,357,593 | 5,357,593 |
| ViSenze | Singapura | 5,260,238 | 5,260,238 |
| CB4 | Israel | 4,368,720 | 4,368,720 |
| Case on IT | Madrid | 2,930,744 | 2,930,744 |
| Daisy Intelligence | Canadá | 2,406,623 | 2,406,623 |
| Reblaze | St. Louis | 2,352,438 | 2,352,438 |
| Nextail Labs, SL | Madrid | 2,300,000 | 2,300,000 |
| ciValue | Yokneam (Israel) | 1,970,097 | 1,970,097 |
| StyleSage, Inc. | Delaware | 1,848,578 | 1,848,578 |
| Jscrambler | Porto | 1,250,000 | 1,250,000 |
| Whitefantasy | Évora | 640,804 | 640,804 |
| Fyde | Califórnia | 443,687 | 443,687 |
| Sales Layer | Valência | 2,500,358 | - |
| Other financial assets | 1,800,160 | 1,625,160 | |
| Financial assets at fair value through other comprehensive income |
61,042,380 | 58,367,022 | |
| 83,165,623 | 79,248,786 |
At 31 March 2020, "Other financial assets" related to "Financial assets at fair value through profit or loss", 9,809,379 euros (9,823,569 euros at 31 December 2019), related to amounts deposited in an Escrow Account and which are invested in units in a higher rated monetary investment fund, which arise as guarantees for contractual liabilities assumed on the sale of the Brazil Retail segment and for which provisions have been set up in the applicable situations.
During the period ended 31 March 2020 Sonae IM acquired a stake in Sales Layer, a company based in Spain and whose main asset is PIM (Product Information Manager) software that centralizes product information and automatically synchronizes it across all sales channels.
At 31 March 2020, the movements in "Other Investments" made up as follows:
| March 2020 | |||
|---|---|---|---|
| Non current | Current | ||
| Other investments: | |||
| Fair value (net of impairment losses) as at 1 January | 79,248,786 | - | |
| Acquisitions in the period | 4,130,213 | - | |
| Disposals in the period | (196,502) | - | |
| Transfers to available for sale | (16,874) | - | |
| Discontinued operations | - | - | |
| Fair value (net of impairment losses) as at 31 March | 83,165,623 | - | |
| Derivative financial instruments | |||
| Fair value as at 1 January | - | 588,747 | |
| Increase/(decrease) in fair value | - | 1,995,954 | |
| Fair value as at 31 March | - | 2,584,702 | |
| Financial instruments others | |||
| Fair value as at 1 January | - | 76,466 | |
| Increase/(decrease) in fair value | - | (26,843) | |
| Fair value as at 31 March | 49,622 | ||
| 83,165,623 | 2,634,324 |
Deferred tax assets and liabilities as at 31 March 2020 and 31 December 2019 may be described as follows considering the different natures of temporary differences:
| Deferred tax assets | Deferred tax liabilities | |||
|---|---|---|---|---|
| 31 Mar 2020 | 31 Dec 2019 | 31 Mar 2020 | 31 Dec 2019 | |
| Difference between fair value and acquisition cost | 4,468,688 | 4,468,688 | 97,687,735 | 102,130,077 |
| Temporary differences on property, plant and equipment and intangible assets |
1,143,286 | 1,208,423 | 79,342,934 | 78,169,489 |
| Temporary difference of negative goodwill and equity method | - | - | 21,863,322 | 21,804,204 |
| Provisions and impairment losses not accepted for tax purposes | 14,776,735 | 15,808,902 | - | - |
| Write off of deferred income relating entrance fees (key money) and expenses relating the opnening of shopping centres |
- | - | (407,359) | (404,094) |
| Impairment of assets | - | - | 639,053 | 639,053 |
| Valuation of hedging derivatives | 59,217 | 107,345 | 173,083 | 67,639 |
| Amortisation of Goodwill for tax purposes in Spain | - | - | 29,374,133 | 27,919,963 |
| Revaluation of tangible assets | - | - | 660,789 | 684,588 |
| Tax losses carried forward | 40,852,574 | 31,966,592 | - | - |
| Reinvested capital gains/losses | - | - | 255,290 | 267,585 |
| Tax Benefits | 4,319,599 | 6,732,857 | - | - |
| Rights of use | 266,607,302 | 267,892,456 | 237,953,308 | 240,187,489 |
| Others | 4,956,433 | 3,200,113 | 1,081,560 | 823,501 |
| 337,183,834 | 331,385,376 | 468,623,848 | 472,289,494 |
As at 31 March 2020 and 31 December 2019, the tax rate to be used in Portuguese companies, for the calculation of the deferred tax assets relating to tax losses is 21%. The tax rate to be used to calculate deferred taxes in temporary differences in Portuguese companies is 22.5% increased by the state surcharge in companies in which the expected reversal of those deferred taxes will occur when those rates will be applicable. For companies or branches located in other countries, rates applicable in each jurisdiction were used.
During the period ended 31 March 2020, the movement in non-controlling interests are detailed as follows:
| 31 March 2020 | |||||||
|---|---|---|---|---|---|---|---|
| Sonae MC | Worten | Sonae Fashion | Sonae IM - Sonaecom, SGPS, SA |
Sonae Sierra | Others | Total | |
| Opening balance as at 1 January 2020 | 54,885,160 | 478,103 | 28,838,691 | 109,174,875 | 782,072,434 | (734,921) | 974,714,342 |
| Distributed dividends | (1,231,350) | - | - | - | (74,522,088) | - | (75,753,438) |
| Change in currency translation reserve | 7,258 | - | - | 353,854 | 1,255,161 | - | 1,616,273 |
| Participation in other comprehensive income (net of tax) related to joint ventures and associated companies included in consolidation by the equity method |
- | - | - | (81,064) | (18,441,261) | - | (18,522,325) |
| Capital decrease | - | - | - | - | (23,952,884) | - | (23,952,884) |
| Loss of control of subsidiaries | - | - | - | - | (356,522,582) | - | (356,522,582) |
| Changes in hedging reserves | (392,145) | - | - | - | 95,069 | - | (297,076) |
| Others | (7,455) | (0) | 238,619 | 107,050 | (84) | 2 | 338,131 |
| Profit for the period attributable to non-controlling interests | 541,706 | (368,281) | (1,257,513) | (1,025,564) | 15,454,432 | (73,371) | 13,271,408 |
| Closing balance as at 31 March | 53,803,175 | 109,821 | 27,819,796 | 108,529,151 | 325,438,197 | (808,291) | 514,891,850 |
As at 31 March 2020 and 31 December 2019, loans are made up as follows:
| 31 Mar 2020 | 31 Dec 2019 | |||
|---|---|---|---|---|
| Outstanding amount | Outstanding amount | |||
| Current | Non Current | Current | Non Current | |
| Bank loans | ||||
| Sonae, SGPS, SA - commercial paper | 66,350,000 | 360,000,000 | 143,350,000 | 285,000,000 |
| Sonae SGPS, SA 2016/2023 | 10,000,000 | 40,000,000 | 10,000,000 | 40,000,000 |
| Sonae MC, SGPS,SA - commercial paper | 13,500,000 | 335,000,000 | 13,500,000 | 266,000,000 |
| Sonae MC affiliated /2014/2023 | - | 50,000,000 | - | 50,000,000 |
| Sonae MC affiliated /2015/2023 | - | 20,000,000 | - | 20,000,000 |
| Sonae MC affiliated /2017/2025 | 3,333,333 | 13,333,333 | 3,333,333 | 16,666,667 |
| Sonae MC /2018/2031 | - | 55,000,000 | - | 55,000,000 |
| Sonae MC affiliated /2020 | 30,000,000 | - | - | - |
| Sonae Holding affiliated /2014/2021 | - | 20,000,000 | - | 20,000,000 |
| Sonae Holding affiliated /2019/2023 | - | 50,000,000 | - | 50,000,000 |
| Sonae Holding affiliated - commercial paper | 5,000,000 | 28,000,000 | 5,000,000 | 27,500,000 |
| Sonae Sierra SGPS, SA - commercial paper | - | 25,000,000 | - | 25,000,000 |
| Sonae Sierra / 2018/2022 | - | 10,000,000 | - | 10,000,000 |
| Sonae Sierra affiliated /2016/2021 | - | 41,300,000 | - | 41,300,000 |
| Sonae Sierra affiliated /2015/2023 | 5,200,000 | 117,000,000 | 5,200,000 | 118,300,000 |
| Others | 10,646,858 | 6,719,958 | 8,776,056 | 6,566,657 |
| 144,030,191 | 1,171,353,291 | 189,159,389 | 1,031,333,324 | |
| Bank overdrafts | 5,658,966 | - | 2,698,070 | - |
| Up-front fees beard with the issuance of borrowings | (498,301) | (1,243,567) | (407,610) | (1,226,479) |
| Bank loans | 149,190,856 | 1,170,109,724 | 191,449,849 | 1,030,106,845 |
| Bonds | ||||
| Bonds Sonae SGPS/ 2015/2022 | - | 100,000,000 | - | 100,000,000 |
| Bonds Sonae SGPS/ 2016/2023 | - | 60,000,000 | - | 60,000,000 |
| Bonds Sonae SGPS/ 2019/2026 | - | 50,000,000 | - | 50,000,000 |
| Bonds Sonae MC / December 2015/2020 | - | 50,000,000 | - | 50,000,000 |
| Bonds Sonae MC / May 2015/2022 | - | 75,000,000 | - | 75,000,000 |
| Up-front fees beard with the issuance of borrowi Bonds Sonae MC / December 2015/2020 ngs |
- | 30,000,000 | - | 30,000,000 |
| Up-front fees beard with the issuance of borrowi Bonds Sonae MC / June 2016/2021 ngs |
- | 95,000,000 | - | 95,000,000 |
| Up-front fees beard with the issuance of borrowi Bonds Sonae MC / September 2016/2021 ngs |
3,000,000 | 3,000,000 | 3,000,000 | 3,000,000 |
| Up-front fees beard with the issuance of borrowi Bonds Sonae Sierra / January 2018/2025 ngs |
- | 50,000,000 | - | 50,000,000 |
| Bonds Sonae Sierra / January 2018/2023 | - | 25,000,000 | - | 25,000,000 |
| Bonds Sonae Sierra / January 2018/2023 | - | 25,000,000 | - | 25,000,000 |
| Up-front fees beard with the issuance of borrowings | (153,665) | (2,424,803) | (153,665) | (2,670,667) |
| Bonds | 2,846,335 | 560,575,197 | 2,846,335 | 560,329,333 |
| Other loans | 467,563 | 1,510,065 | 908,663 | 1,706,802 |
| Derivates | 311,889 | - | 773,784 | - |
| Derivative instruments (Note 26) Other loans |
779,452 | 1,510,065 | 1,682,447 | 1,706,802 |
| Obligations under finance leases | 208,494 | 142,523 | 289,839 | 164,472 |
| 153,025,137 | 1,732,337,509 | 196,268,470 | 1,592,307,452 |
It is estimated that the book value of all loans does not differ significantly from its fair value, determined based on discounted cash flows methodology.
The interest rate at 31 March 2020 on bond loans and bank loans averaged approximately 1.18% (1.30% at 31 December 2019). Most of the bond loans and variable-rate bank loans are indexed to Euribor.
The derivatives are recorded at fair value.
The loans face value, maturities and interests are as follows (including obligations under financial leases):
| 31 Mar 2020 | 31 Dec 2019 | |
|---|---|---|
| N+1 a) | 153,365,214 | 196,055,960 |
| N+2 | 407,757,128 | 378,265,906 |
| N+3 | 540,313,200 | 350,293,255 |
| N+4 | 314,666,336 | 431,409,483 |
| N+5 | 264,813,617 | 239,721,238 |
| After N+5 | 208,455,599 | 196,514,715 |
| 1,889,371,093 | 1,792,260,558 |
a) Includes amounts used from commercial paper programs when classified as current.
The maturities presented above were estimated according to the contractual clauses of the loans and considering Sonae's best expectation as to its amortization date.
As at 31 March 2020, Sonae has, as detailed below, cash and bank balance equivalents in the amount of 622 million euro (610 million euro as at 31 December 2019) and available credit lines as follows:
| 31 Mar 2020 | 31 Dec 2019 | ||||
|---|---|---|---|---|---|
| Commitments of less than one year |
Commitments of more than one year |
Commitments of less than one year |
Commitments of more than one year |
||
| Unused credit facilities | |||||
| Sonae MC | 41,500,000 | 267,500,000 | 124,000,000 | 284,000,000 | |
| Sonae Sierra | 54,969,346 | - | 54,719,947 | - | |
| Holding & Others | 122,413,936 | 87,000,000 | 55,777,214 | 67,500,000 | |
| 218,883,282 | 354,500,000 | 234,497,161 | 351,500,000 | ||
| Agreed credit facilities | |||||
| Sonae MC | 46,500,000 | 657,500,000 | 129,000,000 | 550,000,000 | |
| Sonae Sierra | 54,969,346 | 25,000,000 | 54,719,947 | 25,000,000 | |
| Holding & Others | 196,750,000 | 475,000,000 | 207,750,000 | 380,000,000 | |
| 298,219,346 | 1,157,500,000 | 391,469,947 | 955,000,000 |
Movements in "Provisions and impairment losses" during the period ended 31 March 2020 are as follows:
| Caption | Balance as at 01 Jan 2020 |
Increase | Decrease | Transfer to help for sale |
Balance as at 31 Mar 2020 |
|---|---|---|---|---|---|
| Accumulated impairment losses on investments | 4,501,208 | 17,706 | - | - | 4,518,914 |
| Impairment losses on property, plant and equipment | 114,081,043 | - | (2,148,006) | (166,738) | 111,766,299 |
| Impairment losses on intangible assets | 30,008,630 | 18,868 | (35,553) | (246,909) | 29,745,036 |
| Accumulated impairment losses on other current debtors | 26,630,737 | 972,695 | (1,115,904) | (935,219) | 25,552,309 |
| Non - current provisions | 42,652,254 | 670,430 | (2,156,803) | - | 41,165,881 |
| Current provisions | 4,405,596 | 18,077,178 | (1,485,945) | (40,892) | 20,955,937 |
| 222,279,468 | 19,756,877 | (6,942,211) | (1,389,758) | 233,704,376 |
The increase in current provisions relates mainly to development projects in Sonae Sierra, which were made prudent in the context of the Covid 19 pandemic.
Impairment losses are deducted from the value of the corresponding asset.
Income or expenses related to investments for the periods ended March 31, 2020 and 2019 can be detailed as follows:
| 31 Mar 2020 | 31 Mar 2019 Restated |
|
|---|---|---|
| Dividends | 100,000 | - |
| Sierra Prime% Dilution (Note 4) Others |
20,727,619 1,110,100 |
- (107,798) |
| Gains / (losses) on the sale of investments in subsidiaries, joint ventures and associates |
21,837,719 | (107,798) |
| Others | (100,367) | - |
| Impairment of investments in subsidiaries | - | - |
| Impairment reversal on financial investments | 2,885 | 133 |
| Impairment reversal/(losses) on investments | 2,885 | 133 |
| Total income and (expenses) related to investments | 21,840,237 | (107,665) |
Balances and transactions with related entities can be detailed as follows:
| Turnover and other income 31 Mar 2019 31 Mar 2020 Restated |
Purchases and services obtained | |||
|---|---|---|---|---|
| Transactions | 31 Mar 2020 | 31 Mar 2019 Restated |
||
| Parent Company | 68,380 | 65,964 | 119,605 | 122,380 |
| Jointly controlled companies | 8,100,755 | 9,511,266 | 73,307,498 | 67,325,872 |
| Associated companies | 17,850,363 | 20,225,416 | 1,818,511 | 885,822 |
| Other related parties | 12,514,998 | 11,996,863 | 2,894,161 | 2,643,168 |
| 38,534,497 | 41,799,507 | 78,139,775 | 70,977,242 |
| Interest income | Interest expenses | |||
|---|---|---|---|---|
| Transactions | 31 Mar 2020 | 31 Mar 2019 Restated |
31 Mar 2020 | 31 Mar 2019 Restated |
| Parent Company | - | - | - | - |
| Jointly controlled companies | 108,022 | 108,542 | 99,979 | 120,712 |
| Associated companies | 116,469 | 497,051 | 1,324,139 | 1,232,979 |
| Other related parties | 9,346 | - | 29,120 | 66,049 |
| 233,837 | 605,593 | 1,453,239 | 1,419,740 |
| Accounts receivable | Accounts payable | ||||
|---|---|---|---|---|---|
| Balances | 31 Mar 2020 | 31 Dec 2019 | 31 Mar 2020 | 31 Dec 2019 | |
| Parent Company | 33,314 | 38,875 | 102,092 | 466,133 | |
| Jointly controlled companies | 9,899,547 | 7,429,858 | 80,357,336 | 80,692,278 | |
| Associated companies | 15,808,975 | 15,222,656 | 2,751,097 | 3,205,693 | |
| Other related parties | 10,286,823 | 16,061,643 | 5,698,171 | 7,768,566 | |
| 36,028,659 | 38,753,032 | 88,908,696 | 92,132,670 |
| Loans | ||||||
|---|---|---|---|---|---|---|
| Obtained | Granted | |||||
| Balances | 31 Mar 2020 | 31 Dec 2019 | 31 Mar 2020 | 31 Dec 2019 | ||
| Jointly controlled companies | - | - | 15,228,655 | 15,785,680 | ||
| Associated companies | 287 | 287 | 10,601,687 | 19,218,261 | ||
| Other related parties | - | - | 1,760,000 | 2,160,000 | ||
| 287 | 287 | 27,590,342 | 37,163,940 |
The related parties include subsidiaries and jointly controlled companies or associated companies of Sonae Sierra SGPS, SA, ZOPT SGPS, SA, Sonae Indústria, SGPS, SA and Sonae Capital, SGPS, SA, as well as other shareholders of subsidiaries or jointly controlled companies by Sonae, and other subsidiaries of the parent company Efanor Investimentos, SGPS, SA.
Earnings per share for the periods ended 31 March 2020 and 2019 were calculated taking into consideration the following amounts:
| 31 Mar 2020 | 31 Mar 2019 Restated |
||||
|---|---|---|---|---|---|
| Continuing Operations |
Descontinuing Operations |
Continuing Operations |
Descontinuing Operations |
||
| Net profit | |||||
| Net profit taken into consideration to calculate basic earnings per share (consolidated profit for the period) |
(56,953,747) | (1,778,316) | 14,769,122 | 3,534,698 | |
| Effect of dilutive potential shares | - | - | - | - | |
| Interest related to convertible bonds (net of tax) | - | - | 2,082,268 | - | |
| Net profit taken into consideration to calculate diluted earnings per share | (56,953,747) | (1,778,316) | 16,851,390 | 3,534,698 | |
| Number of shares | |||||
| Weighted average number of shares used to calculate basic earnings per share | 1,904,018,211 | 1,904,018,211 | 1,895,593,392 | 1,895,593,392 | |
| Effect of dilutive potential ordinary shares from convertible bonds | 128,667,482 | 128,667,482 | 128,667,482 | 128,667,482 | |
| Outstanding shares related with share based payments | 3,885,211 | 3,885,211 | 10,630,179 | 10,630,179 | |
| Shares related to performance bonus that can be bought at market price | (1,486,370) | (1,486,370) | (773,338) | (773,338) | |
| Weighted average number of shares used to calculate diluted earnings per share | 2,035,084,534 | 2,035,084,534 | 2,034,117,715 | 2,034,117,715 | |
| Earnings per share | |||||
| Basic | (0.029912) | (0.000934) | 0.007791 | 0.001865 | |
| Diluted | (0.027986) | (0.000874) | 0.008284 | 0.001738 |
In the Management Report, and for the purposes of calculating financial indicators as EBIT, EBITDA and Underlying EBITDA the consolidated income statement is divided between Direct Income and Indirect Income.
The Indirect Income includes the contribution of Sonae Sierra, net of taxes that result from: (i) valuation of investment properties; (ii) gains (losses) with the sale of financial investments, joint ventures or associates; (iii) impairment losses relating to non-current assets (including Goodwill) and (iv) provisions for assets at risk. Additionally and with regard to the portfolio of Sonae, it includes: (i) impairment of real estate assets for retail, (ii) decreases in Goodwill, (iii) negative Goodwill (net of taxes) related to acquisitions in the financial year, (iv) provisions (net of tax) for possible future liabilities, and impairments related to noncore investments, businesses and discontinued assets (or to be discontinued / repositioned), (v) valuation results based on the methodology "mark-to-market" of other current investments that will be sold or traded in the near future and (vi) other irrelevant issues.
The value of EBITDA, Underlying EBITDA and EBIT are calculated in the direct income component, i.e. excluding the indirect contributions.
The reconciliation between the two presentation formats for the consolidated income statement for the periods ended 31 March 2020 and 2019 can be summarized as follows:
| 31 Mar 2020 | 31 Mar 2019 Restated |
|||||
|---|---|---|---|---|---|---|
| Consolidated | Indirect Income | Direct Income | Consolidated | Indirect income | Direct income | |
| Turnover | 1,551,733,987 | - | 1,551,733,987 | 1,448,997,662 | - | 1,448,997,662 |
| Investment income | ||||||
| Dividends and others adjustments | 100,000 | - | 100,000 | - | - | - |
| Impairments losses | - | - | - | 133 | - | 133 |
| Others | (24,244) | - | (24,244) | (107,798) | - | (107,798) |
| Others income | ||||||
| Reversal of impairment losses | 165,807 | - | 165,807 | 258,950 | - | 258,950 |
| Reversal of provisions for warranty extensions | 560,754 | - | 560,754 | 771,710 | - | 771,710 |
| Others | 23,743,104 | - | 23,743,104 | 22,144,238 | - | 22,144,238 |
| Total income | 1,576,279,409 | - | 1,576,279,409 | 1,472,064,895 | - | 1,472,064,895 |
| Total expenses | (1,475,883,866) | - | (1,475,883,866) | (1,369,074,124) | - | (1,369,074,124) |
| Depreciation and amortisation | (84,369,480) | - | (84,369,480) | (76,429,176) | - | (76,429,176) |
| Impairments of inventories - Covid-19 | (44,100,000) | - | (44,100,000) | - | - | - |
| Losses on property, plant and equipment and intangible assets | (1,073,534) | - | (1,073,534) | (833,991) | - | (833,991) |
| Impairment losses and provisions | ||||||
| Provisions for warranty extensions | (135,081) | - | (135,081) | (132,630) | - | (132,630) |
| Others | (19,894,635) | (18,165,613) | (1,729,022) | (638,658) | - | (638,658) |
| Profit before financial results and results of joint ventures and associates and non recurrent items |
(49,177,187) | (18,165,613) | (31,011,574) | 24,956,316 | - | 24,956,316 |
| Non-recurrent items | 21,579,633 | - | 21,579,633 | 1,566,800 | (5,031,033) | 6,597,833 |
| Financial profit/(loss) | (29,355,913) | - | (29,355,913) | (28,697,184) | - | (28,697,184) |
| Share of results of joint ventures and associated undertakings | ||||||
| Associates and joint ventures of Sonae Sierra | 8,514,666 | (645,266) | 9,159,932 | 16,077,179 | 549,456 | 15,527,723 |
| Armilar Venture Funds | 262,749 | 262,749 | - | 121,055 | 121,055 | - |
| ZOPT | (1,000,368) | - | (1,000,368) | 9,587,500 | - | 9,587,500 |
| Others | (283,581) | - | (283,581) | 1,572,476 | - | 1,572,476 |
| Profit before income tax | (49,460,001) | (18,548,131) | (30,911,870) | 25,184,142 | (4,360,522) | 29,544,664 |
| Income Tax | 5,777,662 | (949,364) | 6,727,026 | 2,501,166 | (1,739,000) | 4,240,166 |
| Profit/(Loss) from continued operations | (43,682,339) | (19,497,495) | (24,184,844) | 27,685,308 | (6,099,522) | 33,784,830 |
| Profit/(Loss) from discontinued operations | (1,778,316) | (900,000) | (878,316) | 4,094,029 | 5,031,033 | (937,004) |
| Profit/(Loss) for the period | (45,460,655) | (20,397,495) | (25,063,160) | 31,779,337 | (1,068,489) | 32,847,826 |
| Attributable to equity holders of Sonae | (58,732,063) | (20,451,698) | (38,280,365) | 18,356,876 | (1,785,928) | 20,142,804 |
| Non-controlling interests | 13,271,408 | 54,203 | 13,217,205 | 13,422,461 | 717,439 | 12,705,022 |
| "Underlying" EBITDA (b) | 99,599,707 | 102,086,430 | ||||
| EBITDA (a) | 128,177,008 | 134,434,959 | ||||
| EBIT (c) | (2,534,273) | 57,304,844 |
Sonae has been monitoring all developments related to the Covid-19 pandemic which has led to highly restrictive measures in all geographies to minimize the spread of the virus and its impacts.
Considering the implied risk level, a specific governance model was implemented early on to manage this crisis. This effort was led by Sonae's Executive Committee in close alignment with the CEOs of each business unit, in order to regularly track the impacts on each business and define actions plans.
Therefore, Sonae has developed prevention/contingency plans covering the entire organisation, from the operational areas to the central structures, across all the Group's businesses.
Below is a summary of impacts and measures underway in several areas:
and business segments in conjunction with all operational partners, while providing all the necessary support to government entities.
mitigate these effects, businesses have been focusing on reviewing new collections, namely through order adjustments or cancellations, and have been implementing measures to preserve financial liquidity as well as to reduce operational costs.
• With the end of the state of emergency, several banners are progressively reopening their stores according to the criteria defined by governments.
In terms of financing, Sonae, in compliance with its internal policies and given the current high uncertainty context, has privileged the increase of the group's liquidity, the reduction of debt amortization in the coming years and the expansion of maturities. Therefore, since the beginning of 2020, circa 500M euro in debt facilities were refinanced and, as of the end March, Sonae had 573M euro of available credit lines and 623M[1] euro of cash. In this context, and regardless of any impacts that might exist in terms of the performance of each business, we do not foresee any additional financing needs in the short term and we believe to have the adequate liquidity levels even under more adverse scenarios. We do not foresee any situation of debt covenant breach in the short term, either at Sonae MC or at Sonae SGPS.
At this stage, it is not possible to provide accurate estimates of the financial impacts of this pandemic in the full-year accounts. These effects are highly dependent on the economy relaunch, which in turn is subordinated to the duration and depth of the social containment measures, as well as to the economic stimulus measures that will be implemented. However, Sonae has been executing all the measures considered appropriate to minimise the potential impacts of this crisis, in line with the recommendations of the competent authorities and in the best interest of all its stakeholders.
On 10 April 2020, Sonae SGPS informed that Wonder Investments SGPS, S.A. has announced that it has exercised its contractual right to sell to Sonae Fashion 50% of IVN - Serviços Partilhados, S.A., a company that sells clothing under the brand "Salsa", whose implementation is conditional on the non-opposition of the Competition Authority. With this transaction and following the acquisition of 50% of the share capital in 2016, Sonae SGPS now owns the entire share capital of the company.
On 4 April 2020, Sonaecom, SGPS, S.A., was informed by its subsidiary ZOPT of the communication received from the Central Criminal Investigation Court of Lisbon ('Tribunal') of the preventive seizure of 26.075% of the share capital of NOS, corresponding to half of the share capital in NOS held by ZOPT and indirectly, by Unitel International Holdings, BV and Kento Holding Limited", controlled by Isabel dos Santos. Under the terms of the referred communication, the seized shares (134,322,268.5 shares) are deprived of the exercise of voting rights and of the right to receive dividends, the latter to be deposited at Caixa Geral de Depósitos, S.A. at the Court order. The other half of ZOPT's share capital, corresponding to the same percentage of 26.075% - which, at least in line with the Court's criteria, embodies the 50% held in ZOPT by Sonaecom - was not subject to seizure, nor were its inherent rights subject to any limitation.
Although ZOPT has not been notified of the grounds for the preventive seizure, based on the preliminary information at its disposal, it is the understanding of ZOPT's and Sonaecom's board of directors that the seizure order is illegitimate and offends several fundamental rights of ZOPT, not being legally able to determine the deprivation of voting rights, nor even to inhibit the holder of the shares seized from continuing to exercise these rights, a deprivation which we consider to be null and void and of no effect. For these reasons, the Boards of Directors of ZOPT and Sonaecom consider that the conditions of control of ZOPT over the NOS are met, and the aforementioned measure has no material effects on the control of this company.
[1] Adjusted by the receipt in March of the Sierra Dividends
ZOPT is thus adopting the necessary procedures for the lifting of the seizure and has already issued third party embargoes in the framework of this process.
On 8 April 2020, Sonae SGPS informed that, together with its subsidiary Sonae MC, it has entered into a number of refinancing operations which will reduce the future funding needs of both companies, substantially improve their liquidity positions and keep the average cost of debt at attractive levels.
Sonae SGPS concluded a bond issue, by private subscription, in the amount of 160 million euro, without guarantees, for a final term of 7 years, organized by Caixa - Banco de Investimento, S.A. with the purpose of refinancing the following loans maturing in 2022 and 2023. Further informed that it acquired and redeemed 1,000 bonds, corresponding to the total amount of "Sonae SGPS / 2015 - 2022", issued by Sonae SGPS on 9 June 2015 for a total amount of 100 million euros and the acquisition and redemption of 600 bonds, corresponding to the total amount of "Sonae SGPS / 2016 - 2023" bonds issued by Sonae SGPS on 25 February 2016, totalling 60 million euro.
On 18 May 2020, Sonae SGPS informed that, together with its subsidiary Sonae MC, it has completed two additional medium- and long-term refinancing operations amounting to 150 million euro.
These loans have an average maturity of about 5 years and have allowed the reduction of most of the debt repayments scheduled for the next 2 years and the increase of the average debt maturity, substantially reducing the pressure on liquidity in the next 24 months and strengthening the Group's liquidity position. With these operations, Sonae SGPS and Sonae MC have significantly reduced their future financing needs, even in the most adverse macroeconomic scenarios, and have strengthened the resilience of their balance sheets, to pursue the Group's strategic objectives under better conditions.
The financial statements were approved by the Board of Directors in a meeting held on May 19, 2020.
The Board of Directors, Duarte Paulo Teixeira de Azevedo Ângelo Gabriel Ribeirinho dos Santos Paupério José Manuel Neves Adelino Margaret Lorraine Trainer Marcelo Faria de Lima Carlos António Rocha Moreira da Silva Fuencisla Clemares Philippe Cyriel Elodie Haspeslagh Maria Cláudia Teixeira de Azevedo João Pedro Magalhães da Silva Torres Dolores
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This document may contain forward-looking information and statements, based on management's current expectations or beliefs. Forward-looking statements are statements that should not be regarded as historical facts.
These forward-looking statements are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements, including, but not limited to, changes in regulation, industry and economic conditions; and the effects of competition. Forward-looking statements may be identified by words such as "believes," "expects," "anticipates," "projects," "intends," "should," "seeks," "estimates," "future" or similar expressions.
Although these statements reflect our current expectations, which we believe are reasonable, investors and analysts, and generally all recipients of this document, are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond our control, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. You are cautioned not to put undue reliance on any forward-looking information or statements. We do not undertake any obligation to update any forward-looking information or statements.
Patrícia Vieira Pinto Head of Investor Relations [email protected] Tel.: + 351 22 010 4794
External Communication [email protected] Tel.: + 351 22 010 4747
Lugar do Espido Via Norte 4471-909 Maia Portugal Tel.: +351 22 948 7522
Sonae is listed on the Euronext Stock Exchange. Information may also be accessed on Reuters under the symbol SONP.IN and on Bloomberg under the symbol SON PL
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