Annual Report • Apr 29, 2009
Annual Report
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Head Office: R. João Mendonça, 529 - 4464-501 SENHORA DA HORA
Porto Commercial Registry and Fiscal Number 501 532 927
31 DECEMBER 2008
The year of 2008 was marked by the worsening of the financial crisis which began with the collapse of the subprime system in the USA mid 2007. The crisis spread to the real economy when, in the summer of 2008, the bankruptcy of various renowned financial institutions shook the confidence of economic agents and lead to the hardening of credit concession conditions and to a lack of liquidity crisis.
These difficulties rapidly disseminated and affected the overall economy, leading to rise in unemployment and a situation of increased insecurity and volatility. These circumstances worsened during the course of the year, and from the onset the crisis manifested itself in the form of a severe slowing down in private consumption. Although the true magnitude of the crisis remains to be determined, it is expected that the ripples will continue to be felt throughout 2009.
Given that it concerns a crisis on a global scale, its effects have also been felt in the Portuguese Economy, with the growth in Gross Domestic Product practically stagnating over the year and in fact registering a negative figure in the last quarter of 2008. Effectively, the decrease in external demand together with greater difficulties in financing meant Portuguese companies were faced with new challenges, with the immediate impact in retraction of investment levels. Associated with this, unemployment levels rose at the end of 2008, and negatively influenced private consumption. This was reflected in the retail activity, particularly in the more discretionary categories where purchases could be postponed.
Symptomatic of a market slowdown is also the behaviour of inflation rates, which after the high levels registered during the first half of the year, have consecutively slowed down, even providing signs of stagnation for 2009.
Analysing in greater detail the modern retail market in Portugal, we note that the evolution of the store base portfolio maintained a strong pace of growth as in recent years, having increased by circa 9% with the opening of an additional 130,000 sqm of food based formats and 145,000 sqm of the main non- food based formats. This increase surpassed once again the nominal growth rate of the demand, which according to official sources should not have exceeded 6%. This development put an additional competitive pressure on the Portuguese market, accentuating the imbalance between the dynamics of demand and supply.
In the current environment, the results for 2008 confirm the Company´s capacity to sustainably generate value for all its stakeholders.
In 2008, the Company realized a total turnover of 4,220 million Euro, with a very significant growth of 25% compared to the previous year.
This development reflects a marginally positive like-for-like (heavily penalized throughout the year with the worsening of the family´s confidence index), and a strong programme of organic growth in Portugal in addition to the entry into the Spanish market, and the integration of ex-Carrefour Portugal hypermarkets. This enabled the Company to achieve a turnover of 4,068 million Euro and a growth of 20% ex-fuel.
In perspective, this evolution clearly stands out in the current context of world business retraction, and is particularly relevant because it affirms Sonae Distribuição´s capacity to progress over an already prominent leadership position in the Portuguese retail market.
Additionally, the turnover of the petrol filling stations associated with Continente hypermarkets totalled 151 million Euro, contributing to an increase of 5% in the consolidated turnover of the Company.
The good performance achieved in 2008 was demonstrated also on the level of operational cash-flow generation. In consolidated terms, Sonae Distribuição´s EBITDA reached 355 million Euro. This figure
represents an increase of 56 million Euro in relation to 2007 and translates as a ratio over total net sales of 8.4%
The overall figure for the year includes a non-recurring gain of 9 million Euro associated with the sale of a real estate asset in Florianópolis, in Brazil, which was not involved in the divestment operation completed in December of 2005. Similarly, in 2007, this referential was impacted by the non recurring net gain of 12 million Euro resulting from the sale of the commercial galleries in Albufeira and Portimão in Portugal.
Excluding these two extraordinary impacts, the recurrent EBITDA of the Company reached 346 million Euro, which corresponds to an increase of around 20%. Thus the referential 8.5% of EBITDA generation over net sales ex-fuel is maintained compared to 2007.
The Company therefore fulfilled another guideline set for the year, and demonstrated its ability to safeguard the demanding equilibrium between growth and operational profitability.
Taking a closer look at the development of the Company´s activity over the course of the year, the following aspects can be highlighted:
In 2008, Sonae Distribuição´s food based formats presented a turnover of 2,889 million Euro. This represents an increase of 22% compared to the previous year, and significantly strengthens the Company´s market share in Portugal. This evolution includes a growth of 1% in a universe of comparable stores. In this evolution, the very positive performance of the perishable goods category is highlighted, as a result of the current requalification project and enrichment of its offer structure. Equally important is the increase in the portfolio of private label and value products which stand out because of the value and differentiation which they bring to the Company.
In this same period, the contribution of the food based formats to the consolidated operational cash-flow reached 262 million Euro, strengthening the indicator to 9.1% of the respective turnover.
This level of turnover is particularly significant in the sense that it is reached within a fiercely competitive market environment and is intricately linked to the programmes for improved productivity and development of synergies inherent to the acquisition of the ex-Carrefour Portugal operation, in accordance with the rationale which supported the valuation of this acquisition.
Still in 2008, the non food formats universe turnover registered an annual increase of 16% to an overall value of 1,172 million Euro.
The year was marked by a decrease of 2% of the activity of comparable stores, mainly centred on the final period of the year. In a particularly adverse market environment, this business portfolio presented mixed signals – where very positive behaviour was noted on part of the Modalfa, Zippy and Sport Zone chains but on the other hand the sales evolution for Vobis and Maxmat brands were less favourable when compared to 2007. The way the latter chains are evolving reflects a reduced availability on part of the consumer to acquire less essential goods. Still in 2008, the total contribution of the non-food based formats to the consolidated cash-flow of the Company totalled 76 million Euro. This figure, which occurs at the centre of economic volatility, and incorporates start-up costs pertaining to the Company´s entry into Spain, corresponds to an increase of 6% compared to 2007.
This reflects a referential of 6.4% over the respective net sales, which if it weren´t for the very specific impact regarding the entry in the Spanish market, would have maintained the same level as the previous year incorporating increasing gains from the productivity and efficiency of these still "young" brands.
For the same period, net profit attributable to Sonae Distribuição's equity holders reached 171 million Euros, exceeding the figure registered for the same period the previous year by 4 million Euro. The very positive development thus enabled Sonae Distribuição to overcome the most significant financial charges resulting from the considerable investment efforts carried out over the last years.
During the course of 2008, Sonae Distribuição made an overall net investment of circa 350 million Euro. This amount financed the Company´s expansion plan and allowed it to end the year with 793 operating untis and 809.000 sqm of sales area (+14% compared to the end of the previous year). In this period the Company:
inaugurated 74,000sqm of sales area in Portugal, corresponding to its portfolio of more developed formats;
presented four new business concepts in Portugal, representing a total of 3,000 new sqm of sales area. These were Book.it – bookshop and stationary chain, Loop – casual footwear brand, Bom Bocado – chain of coffee shops, and Seguros Continente (Continente Insurance) – which manages a portfolio of car insurance and motorcycle insurance products in partnership with Grupo Fidelidade Seguros;
entered into the Spanish market with the opening of 6 new Sport Zone stores and the acquisition of a 9 operating units of consumer electronics and household appliances (to which a new store was already added), making a total of 34,000 sqm of installed sales area;
formalized an agreement with Grupo RAR with the aim of creating a joint travel agency operation detained in 50% by each of the shareholders and benefitting from shared management.
Additionally, the Company dedicated part of its investment effort to the store remodelling programme so as to guarantee that the store portfolio remain a benchmark in the sector. In this sense, it carried out more than 40 important interventions, highlighting those linked to the ex-Carrefour units which allowed for the re-adaption of the area dedicated to the food component and the creation of individual Worten units.
In the overall investments for the year, there are also funds destined for the execution of the Company´s structural projects, with particular emphasis on the important restructuring of the logistics platform which supports the operation in Portugal.
As at 31st December 2008, Sonae Distribuição's net capital employed was 2,160 million Euro. This figure contemplates the gross real estate assets of the Company which at the close of balance totalled 1,606 million Euro, largely valued according to book value.
In the same period, the consolidated net debt of the Company reached 1,228 million Euro which was below the valuation of the gross real estate assets mentioned above. This figure implies a referential over operational cash-flow for the year of 3.5x and an average yearly figure of 3.7x
The Company considers that it has a solid financing structure, given that the debt is totally supported on medium and long term financing (with an average maturity of circa 5 years) and is not subject to immediate refinancing needs.
No significant changes took place in the year that are worthy of mention, and the guidelines set out in the Consolidated Management Report for the year 2006, concerning Corporate Governance remained unchanged.
We remember that information concerning Corporate Governance is presented in a specific annex to this report.
Despite the exceptional economic circumstances, the Company is confident in the robustness of its strategic plans which privilege growth and strengthen value proposal.
In this sense, the aim for the end of 2010 is to reach 1,000,000 sqm of sales area in order to support the Company´s activity.
In this respect, it anticipates maintaining a sustainable organic growth in the Portuguese market by means of making the most of opportunities in new locations where it is perceived that appealing levels of value creation can be achieved, in addition to the development of synergies of new concepts and partnerships.
Likewise the Company will continue committed to the important challenge of creating a renowned international operation. In this sense, by 2010 it anticipates reaching more than 80,000 sqm of sales area in the Spanish market through its sports and consumer electronics chains.
In spite of the challenging market context, the Company will continue to invest as long as there are assurances of high profitability levels and clear value creation. In this sense, it opted to significantly increase the minimum internal hurdle rate on all projects, thus assuring that those chosen add value and guarantee value generation.
Over the next months, Sonae Distribuição will remain focused on the development of an important number of issues which potentially will increase operational profitability and capacity to generate cash flow, particularly significant at the level of:
development of the private label programme which has been distinguished in the Portuguese market because of its added value and innovation;
strengthening of the sourcing skills, with the aim of increasing competitiveness and variety of commercial offer for each format;
development of greatly innovative and exclusive campaigns leveraged on the experience and knowledge derived from the loyalty programmes, and of the ever more sophisticated information systems (which will remain as a vector of strategic development for the Company);
promotion of the programmes to continuously improve productivity in store operations;
development of the logistics infrastructure which will continue to positively contribute to the gains in productivity and operational efficiency of the Company over the next years.
The Company will equally keep focused on guaranteeing the use of discipline in the allocation of funds via the optimization of the working capital management.
Sonae Distribuição does not anticipate increasing its financial exposure in 2009. Maintaining its financial debt levels, in conjunction with long term maturity levels of its financing, offers the Company complete tranquillity in the current context of volatile financial markets.
Sonae Distribuição aspires to continue to be a reference in terms of corporate social responsibility, be it on an environmental level, or be it in terms of creating a relationship based on trust with all of its stakeholders, particularly its clients, suppliers and employees.
A dividend distribution of 85 million Euro will be proposed at the Shareholders' Annual General Meeting for shares not held directly or indirectly by Sonae Distribuição – S.G.P.S., S.A., which corresponds to a dividend pay-out ratio of approximately 50% of the consolidated net profits for the year.
The net profits for the year of Sonae Distribuição – S.G.P.S., S.A. as a standalone holding company, totaled 266,112,080.73 Euro, for which the Board of Directors propose the following distribution:
| Legal Reserve _____ | 14,700,000.00 Euros |
|---|---|
| Free Reserves ____ | 166,412,080.73 Euros |
| Dividends ________ | 85,000,000.00 Euros |
| Total _______ | 266,112,080.73 Euros |
The dividends to distribute correspond to the attribution of 0.085 Euro to each one of the 1,000,000,000 shares that constitute the total share capital of the Company.
We thank all our customers, suppliers, financial institutions and shareholders for their support and their preference during the year. We also thank the external auditors and statutory auditors for all their co-operation throughout the year. And finally, a special word of thanks to all of Sonae Distribuição's employees for the enthusiasm, dedication and competence that they demonstrated once again.
Matosinhos, 03 March 2009
The Board of Directors
Duarte Paulo Teixeira de Azevedo (President)
Nuno Manuel Moniz Trigoso Jordão (CEO)
Ângelo Gabriel Ribeirinho dos Santos Paupério
Álvaro Carmona e Costa Portela
sales of articles + services rendered.
operating results - amortisations and depreciation - provisions and losses and reversal of impairment as well as negative consolidation differences.
consolidated net profit for the period - income tax + investment profit/losses + profits/losses of associated companies - net financial expenses.
operating results + net financial expenses.
increase in gross fixed assets (tangible and intangible) + changes in perimeter (as a result of acquisitions and disposals) + disposals in gross fixed assets (tangible and intangible) + increases in goodwill. To calculate the investment in acquisitions (measured by changes occurred in consolidation perimeter) it was considered the net accumulated amortizations.
current borrowings + non current borrowings + financial leasing creditors – cash and cash equivalents – other current investments under negotiation + borrowings from participating and/or participated companies.
average of net debt at end of last four quarters.
evolution of turnover in a comparable store universe
goodwill net of impairment losses/gains (positive variances between the acquisition cost of investments in Group and associated companies, and the fair value of identifiable assets and liabilities of these companies at the date of their acquisition) + gross Fixed Assets owned by real estate companies of the Group (value of tangible and intangible assets booked at acquisition cost, or acquisition cost re-valued in accordance with generally accepted accounting principles in Portugal).
customer debts (receivables derived from sales in the normal course of the Group's business) – suppliers (sums to pay resulting from purchases in the normal course of the Group's business) + inventories (goods booked at acquisition cost, less quantity discounts and impairment losses) + other assets and liabilities (State and other public entities + associated companies + accruals and prepayments + deferred taxes + provisions for risks and charges + fixed asset suppliers + sundry debtors and creditors).
ratio between net debt and the company's shareholders' funds.
gross real estate assets + other gross real estate assets + amortisations and impairment losses + financial investments + working capital.
EBIT / Net Capital Employed.
sum of net profits attributed to shareholders of the last four quarters / average of the equity at end attributable to shareholders of the last four quarters.
This report contains a brief description of Sonae Distribuição, SGPS, S.A.'s, Corporate Governance practices. Sonae Distribuição is Company that does not issues shares with the intent of negotiation in a regulated market1 , nevertheless it voluntarily discloses a report of its practices, with the aim of better informing the Market.
This document, regarding its structure and content, was prepared with reference to the CMVM (Portuguese Securities Market Commission) code of corporate governance, pursuant to the terms laid down in the Portuguese Securities Market Commission Regulation No. 1 / 2007, with the amendments carried out by the Portuguese Securities Market Commission Regulation No. 5 / 2008. Given the voluntary nature of the publication of the herein report and the fact that Sonae Distribuição, SGPS, SA, is not a Company open to public investment, non-compliance of adopted situations of CMVM recommendations have not been identified.
Given that this document is an appendix to the sole management report, it should be read together with the same. Certain aspects of this appendix are cross referenced to the main body of the management report, as it was felt it was more appropriate to deal with them in the main body of the report to avoid repetition.
The texts of the corporate governance codes that the Company voluntarily chose to bind itself are disclosed on the Company´s website, on the Portuguese Securities Market Commission website or, in the printed version at the Company's facilities.
The implementation of the Portuguese Securities Market Commission recommendations on corporate governance is expressed in the body of the report, in each of the Chapters in which it is organized.
Pursuant to section II.9, all members of the Board of Directors are "not independent".
The members of the Shareholders General Meeting are:
1 Given that the Company lost its status as a publicly quoted company and as of 22nd September 2006, is not listed on the Euronext Lisbon stock Exchange, date on which Sonae SGPS, S.A. acquired total control of the company.
Members of the General Shareholders Meeting began their duties on the date of the Annual General Meeting, held on 2nd May 2007, remaining in office until the end of the current mandate, at the term of the year 2009.
During the year 2008, the President of the General Shareholders Meeting earned 3,750 Euro.
As set in paragraph 1,Article 19 of the Company's Articles of Association : "The General Shareholders Meeting is made up of shareholders with voting rights, holders of shares or securities for subscription that, until five business days prior to the Assembly taking place, prove to the Company their shareholding, under the terms established by Law.
The shares are untitled shares.
As stated in section a), number 1 of Article 72 of the Portuguese Securities Code, the blocking of the shares of the issuer, operates from the date of issuance of the certificates of ownership of the shares until the date of exercise of their rights.
Given the inexistence of Company rules, the blocking of shares upon suspension of the General Meeting will be in compliance of article 72, number 1, section a) of the Portuguese Securities Code- under the terms referred to in the previous provisions 1.4
Pursuant to what is set in the Articles of Association, one share equals one vote.
The Shareholders General Meeting is made up of shareholders with the right to vote, who hold shares or subscription rights, which in the five business days prior to the General Meeting taking place, have provided proof of shareholding to the Company, as required by the terms established in the law.
In the case of private individuals, they may be represented in the Shareholders' General Meeting by sending a letter addressed to the Chairman of the General Meeting whereby they state their name, the representative's address and date of the Assembly. In the case of a corporate entity, they can be represented by an authorized signatory mandated for the purpose. This authenticity will be verified by the Chairman of the General Meeting. The Shareholders' General Meeting may only adopt resolutions the first time it convenes if there are shareholders present, or represented, who hold more than fifty percent of the Company´s share capital. Unless the law requires otherwise, the Shareholder´s General Meeting resolutions will be taken by the simply majority.
Each share equals a vote.
If the Company were listed on the Portuguese Stock Exchange, shareholders could vote by mail, but only in relation to changes to the Articles of Association and elections of the Company Governing Bodies. Postal votes will only be considered when received at the Company's registered office by registered mail, with receipt notice, addressed to the Chairman of the Board of the Shareholders´ General Meeting at least 3 days prior to the date of the General Meeting, notwithstanding the requirement of proof of shareholding, under the terms set in article nineteen, section one, of the of the Company's Articles of Association. In other words, at
least five business days prior to the General Meeting being held, proof of shareholding must be presented to the Company.
The voting declaration must be signed by the shareholder or by his legal representative. In the case of a private individual, it should be accompanied by certified copy of his/her identity card. In the case of a corporate entity, the signature should be notarised and should specify that the signatory is authorised and mandated for that purpose.
Voting declarations will only be considered valid when they clearly and unequivocally set out:
a) The item or items of agenda they refer to;
b) The specific proposal to which they relate to with an indication of the respective proposer or proposers;
c) The precise and unconditional voting intention on each proposal.
Notwithstanding what is set the section b) herein above, a shareholder is permitted to include in a written voting declaration, regarding an identified proposal, the intention to vote against all alternative proposals, in relation to the same item on the agenda, without further specification.
The shareholders who sent their voting declaration by mail shall be deemed to have abstained from voting on any proposals that are not specifically included in their written voting declarations.
Postal votes count as negative votes regarding resolution proposals presented after the date on which the same votes were issued.
It is the responsibility of the Chairman of the Board of the Shareholders' General Meeting, or the person replacing him, to verify voting declarations sent by mail, disregarding any votes relating to declarations that have not accepted.
It is the Company´s responsibility to guarantee the confidentiality of votes sent by mail, until voting takes place.
Under the terms of the law, the shareholders have at their disposal for consultation, at the Company's registered office and on the Company´s website "www.sonaedistribuicao.com", 15 days prior to the date of the Annual General Meeting taking place, the individual and consolidated accounts and other mandatory documents, as well as proposals to be submitted by the Board of Directors to the General Meeting, unless the General Meeting is set up under the terms of article 54 of the Company´s Commercial Code.
Ever since Sonae, SGPS, S.A., has directly or indirectly been the sole shareholder of the Company's shares, a voting by mail template has not been made available, since the General Meeting is set under the terms of article 54 of the Company's Commercial Code.
Mail voting shall only be accepted if received at the Company's registered office, by means of registered mail, with receipt notice, addressed to the Chairman of the Board of the Shareholders General Meeting, three days as of the date of the General Meeting, shareholding must be proved.
The company's Articles of Association do not provide for the right to vote electronically. In the previously referred to herein above provision 1.8 of this Chapter, under the articles of association of the company, the shareholders are entitled to vote by mail.
The Shareholders' General Meeting is not specifically competent in this matter, because that is the Remuneration Committee's responsibility, which section II.19 of this document refers to. The majority shareholder of the Company determines who makes up and the respective remuneration of the members of the Remuneration Committee.
The Company does not have defensive measures that have as an effect to automatically trigger serious erosion in the value of the Company's assets in case of change in control or a change in management.
Approximately 25% of the structural loans contracted by Sonae Distribuição, SGPS, S.A., have change of control clauses whereby the maintenance of these financial instruments may be dependent on the maintenance of the direct or indirect control of the current shareholder- Sonae Distribuição, SGPS, S.A.
The Company does not have, on this level, any agreement with the members of the Board of Directors.
On the 31st of December 2008, Sonae Distribuição, SGPS, S.A.'s corporate bodies were as follows: Shareholders General Meeting:
Board of directors:
Statutory Audit Board:
Statutory External Auditor:
• Deloitte & Associados, SROC, S.A, represented by António Marques Dias or by António Manuel Martins Amaral.
There are no Committees with management or auditing competencies. Nevertheless, the Company has a Remuneration Committee as described in provision 2.19.
The members of the Board of Directors have collective duties of co-ordination and management of various functional departments. During 2008, the functional organisation of the company was as follows:
| Board of Directors | ||
|---|---|---|
| Functional Departments | ||
| Operations | ||
| Commercial | ||
| Logistics | ||
| Procurement | ||
| Store development | ||
| Marketing | ||
| Human resources | ||
| Information systems | ||
| Finance | ||
| Management Planning and Control | ||
| Audit and Risk management | ||
| Legal | ||
| Environment | ||
| Loss prevention | ||
| International |
Risk Management is an important management support tool, and represents a decisive role for the business sustained development.
This activity is developed with the goal of creating value by identifying the uncertainties and threats that may affect the Company's businesses with the aim of managing and minimizing the impacts.
The analysis and management of the Company's main risks are carried out on various levels and by different people within the organisation.
The strategic risks are analysed and managed in the context of the annual planning carried out by Sonae Distribuição's Board of Directors.
Operations, Human Resources, Integrity and Information Systems are the risks, hence the various business units of the Company, identify, minimise and develop control plans for the same.
The Risk Management of a financial nature is carried out in a more operational manner, by the finance department, and the responsibility of implementation and follow-up is of a wide-ranging multifunctional committee which is supervised by the Group's Treasury.
To support its activity, Sonae Distribuição's Risk Management adopts the international methodology based on the COSCO Enterprise Risk Management- Integrated Framework (The Committee of Sponsoring Organizations of the Treadway Commission).
In Sonae Distribuição, Risk Management is a systematic process which is carried out according to the following stages:
All the top divisions of the Company are involved in the development of the process.
By means of interviews, questionnaires and workshops, the risk matrix is validated and these are prioritised in two categories: impact and likelihood of occurrence, originating in the Sonae Distribuição's Risk Model.
The Risk Management activity is directly supported by the Auditing and Risk Management Departments. Their main activities, in 2008, are summarised herein below:
In order to minimise and control physical safety risks, as of 2008, the periodic process of auto control via intranet includes all the Food and Non Food Retail.
The last enquiry included 542 stores with a 100% response rate. For non-complying matters which are detected, corrective measures are developed.
Additionally, audits are carried out to verify the effective implementation of the measures to reduce the risks.
In the administrative buildings and selected warehouses, the physical risk analysis follow up was carried out to identify the evolution of the risk profile and evaluation of the implementation of corrective measures.
A formal handover of the Risk Management Manual was made to the Continente stores, Store Managers and persons responsible for Security took part, in addition to participants from other areas of the Company, such as Human Resources, Marketing, Logistics and Store Development Department. External speakers and public authorities also intervened in the formal handover.
Each Continente store, in turn, relayed the information to its employees, having carried out specific actions for head of sectors and operators, which equal more than 7000 hours of training in Risk Management.
In the area of Client Security, a project of risk analysis of client physical safety was developed.
The project involved a multi-skilled team, and the main output was a standards document to be applied in the different Store areas, so as to minimise the probability of accidents involving clients from occurring.
A system was set up so as to gather all incidents in the store with the aim of obtaining a more systemized view of their causes.
The Auditing of Procedures and Compliance systematically monitors various risk indicators in the Sales and Purchases areas, namely:
A compliance audit with pre-defined programs was carried out in the stores, in the following areas: purchasing, sales, consumer service, correct marking of sales price, labelling of products, complaints book etc.
For the seasonal/main themed leaflets, audits were carried out regarding the shortage in supply of the products featured in the leaflets, so as to follow the evolution of the average rate of items in shortage of supply and identify their causes.
The monitoring and audit, upon completion of stores physical inventories, checking its reliability and compliance with procedures defined in the operational and financial areas.
Audits on the most important procedures of the Company were also carried out, to identify opportunities for improving control and efficiency gains.
Given that food safety audits, which include all of the food retail stores, warehouses, processing centres and cafeterias in Sonae Distribuição are of great importance to the Company, the same are being carried out permanently.
Furthermore, food safety risk analysis were carried out in the store opening and also in the procedures established for Continente on-line.
The main areas addressed, in 2008, by the Audit Department of Information Technology, are related to the User and Access Management, Business Continuity, Security Applications and Databases, Data Confidentiality / Protecting the Image of the Company, the Intrusion of the Internet Platform and Internal Network. .
In the area related to the Management of Users and Access, a review was made of users and profiles in the most critical business applications.
Regarding the Continuity of Business, in 2008, the Crisis Management Manual for the risk of total disaster of the Information Technology Centre of the Company was implemented.
On the Applications Security a Norm for the safe development of applications, risk analysis and data validation regarding the application of Price Management and risk analysis of the loyalty programme has been developed.
Regarding Data Security the degree of exposure of critical databases was analysed in order to warrant confidentiality and protection of the image of the Company.
With regards to the risk of inappropriate access, the current state of information systems platform security supports the Web Sites was assessed
So as to minimise, in an initial phase of project development, the Company's risk, under the Department of Auditing and Risk Management, the Role of Management Procedures was included, which is responsible for the design, specification and publication of procedures.
Interest rate and Exchange rate risks are of particular importance in the area of market risk management. The Group uses derivatives in the management of the market risks to which it is exposed as a means of ensuring their cover, not with the objective of negotiation or speculation.
Group exposure to interest rates arises mainly from long term loans, which are made up in large part by debt indexed to Euribor. The aim of the Group is to limit the volatility of cash flows and profits, given the profile of its operational activity, through the use of the appropriate combination of fixed rate and variable rate debt. The group policy allows the use of interest rate derivatives to reduce exposure to variations in the Euribor and not for speculative purposes.
The derivatives used by the group to manage interest rate risks are defined as cash flow cover instruments since they provide perfect cover. The indices, the calculation methods, dates for re-fixing interest rates and repayment schedules for the interest rate cover derivatives, are exactly the same as the conditions established for the underlying loans contracted.
The impact on the financial statements of variations in exchange rates is limited, given that the majority of operational cash flows are based in Euro. The Group is only exposed to exchange rate risks in relation to transactions for goods from international markets in dollars.
Exchange rate risk management aims to provide a solid basis for decision making on the purchase of goods to establish cost prices that are stable and known. The cover embraces the entire purchasing decision from the time of choosing suppliers up to formal negotiation of purchase.
Exposure is controlled through a programme of forward purchases of foreign currencies with the goal of minimising the negative impact from the company's responsibilities as a result of imports in currencies other than the Euro.
The main goal of liquidity risk management is to ensure that at any time the group has the financial resources available in order for it to meet its responsibilities and follow its defined strategies, honouring all of its commitments to third parties when they fall due, through an appropriate financing cost and maturity management.
Hence the group follows an active policy of refinancing, focused on maintaining a high level of free cash flow and its immediate availability to meet short term needs, and on extending or maintaining debt maturity dates, in accordance with forecast cash flows and the leverage capacity of its balance sheet.
Other important tools for dealing with liquidity risks is limiting the scope for contractual clauses which can give way to early maturity dates for payments on loans. The group also ensures that it has a highly varied contact with financial institutions which allows it flexibility to negotiate new loans and limit the negative impact of any relationship which is terminated.
The group is exposed to credit risks in its relationships with financial institutions, concerning the application of funds, placing of debt instruments, derivatives, among others. The credit risk is limited by concentration of risks managing, and through a rigorous selection of alternatives, which have high prestige, international and Portuguese recognition with minimum A- ratings, issued by an international rating agency or equivalent.
The Group is also exposed to the credit risk of its daily operational activities. This risk is controlled through a financial and in terms of quality information gathering system, provided by recognized entities which provide risk information, which allows the ability of customers to meet their obligations to be evaluated, aiming at reducing the risk of granting credit.
Regarding the process of disclosure of financial information, the confidentiality undertaking is very much present throughout the team as part of the professionalism of all employees. Specifically:
It is the Board of Directors' responsibility for managing company businesses and carry out all procedures related to the company object for which it is given the broadest of powers, including and namely the following:
Represent the Company in and out of court, file and dispute any claims / proceedings, settle and waive the same and commit to arbitration. For this effect, the Board of Directors may delegate its powers in a single proxy; approve the budget and the Company's plan; take leases, acquire, sell and encumber any asset or
real estate, including shares, stocks or bonds; decide that the Company concede to the Companies in which it holds shares, stock or company parts of the company, technical and financial support; decide that the Company associate with persons or entities in accordance with the Articles of Association; decide that the issue of bonds and the acquisition of loans in the national or international financial markets; designate other people, individual or companies for the corporate positions in other Companies.
The Articles of Association also allow for an increase in share capital by new entries in cash of up to five billion Euro, on one or more occasions, by resolution of the Board of Directors that shall establish, in accordance with the law, the conditions of subscription and the categories of shares to issue from the existing ones.
Neither an incompatibility list nor a limit to the number of positions held by the directors in other Companies was defined, in the sense that in most cases, the directors exert management functions in Companies which belong to or are subsidiaries of Sonae, SGPS, S.A.
The Company adopted a Code of Conduct designed to guarantee its ethical and responsible behaviour, and the same was approved by the Board of Directors, in 2008.
This Code of Conduct includes topics ranging from integrity, transparency, respect, social responsibility, environmental commitment, health and safety, confidentiality and use of privileged information, to managing conflicts of interest and communicating irregularities. Employees and suppliers are required to comply with these principles and follow them in the carrying out of their activities.
The Articles of Association state that in case of death, resignation or temporary or permanent incapacity of any member, the Board of Directors will provide a substitute. If a Director does not take part in two meetings (one after the other or random) without providing a justification for these absences that is accepted by the Board of Directors, such a Director shall be deemed as permanently unavailable. In the event of an elected director being permanently unavailable, in the scope of the Company being considered an utility company, or equivalent entity, an election will take place. In all other cases, amongst which are the Statutory Audit Board and the Statutory External Auditor, these are regulated by the Companies' Commercial Code.
The Board of Directors met 13 times during the course of 2008 and the Statutory Audit Board met 4 times. There are no other committees related to administration and inspection matters of the Company.
II.9, II.10 e II.11 Board of Directors, respective Professional qualifications and functions carried out in other companies of the Group
On the 31st of December 2007, the Sonae Distribuição SGPS, S.A., Board of Directors of was made up as follows:
| Executive | Non Executive |
Not Independent |
Date first elected |
End of Mandate |
|
|---|---|---|---|---|---|
| Duarte Paulo Teixeira de Azevedo (President) | x | x | 31.03.2006 | 2009 | |
| Nuno Manuel Moniz Trigoso Jordão (CEO) | x | 1. | x | 31.03.1989 | 2009 |
| Ângelo Gabriel Ribeirinho dos Santos Paupério | x | x | 29.08.1995 | 2009 | |
| Álvaro Carmona e Costa Portela | x | x | 31.03.2006 | 2009 |
The mandate of this Board of Directors is four years and ends in 2009. The directors were elected from a single list. No alternative list was presented by any shareholder. During 2008, the Board met 13 times, and the respective minutes were written up in the minute book. In the business executive decision making process, Nuno Jordão has broad overall coordination duties in the company, in line with the traditional duties of a CEO. The Members of the Board of Directors are not shareholders of any of the company's shares.
A brief curriculum vitae of each director follows herein below, with details of the most significant companies in which they hold directorships.
• Duarte Paulo Teixeira de Azevedo Place of birth: Porto Date of birth: 31-12-1965 Marital status: married Children: 3 University degree in Chemical Engineering - Ecole Polytechnique Féderále de Lausanne, 1986 Masters in Business Administration - MBA (ISEE), 1989 Executive Retailing Program - Babson College, 1994 Strategic Uses of Information Technology Program - Stanford Business School, 1996 IMD - Breakthrough Program for Senior Executives – Lausanne, 2002 CEO of Sonae, SGPS, SA and chairman of the Board of Directors of most of the companies controlled or in which Sonae SGPS has a majority shareholding (listed in the Notes to the Financial Statements of the companies concerned)
• Nuno Manuel Moniz Trigoso Jordão Place of birth: Lisbon Date of birth: 27-04-1956 Marital status: married Children: 4 University degree in Economics – ISCTE (University of Lisbon), 1978 CEO of Sonae Distribuição, SGPS, SA and chairman of the Board of Directors of most of the companies controlled or in which this company has a majority shareholding (listed in the Notes to the Financial Statements of the companies concerned). Member of the Board of Directors of Sonae, SGPS, SA
• Ângelo Gabriel Ribeirinho dos Santos Paupério Place of birth: Vila Nova de Gaia Date of birth: 14-09-1959 Marital status: married Children: 4 University degree in Civil Engineering (FEUP), 1982 Masters in Business Administration - MBA (ISEE), 1988 CEO of Sonaecom, SGPS, SA and chairman of the Board of Directors of most of the companies controlled or in which this company has a majority shareholding (listed in the Notes to the Financial Statements of the companies concerned). Member of the Board of Directors of Sonae, SGPS, SA
• Álvaro Carmona e Costa Portela Place of birth: Porto Date of birth: 04-07-1951 Marital status: married Children: 3 University degree in Mechanical Engineering (FEUP), 1974 Masters in Business Administration - MBA (Universidade Nova de Lisboa), 1983 AMP / ISMP - Harvard Business School, 1997 CEO of Sonae Sierra, SGPS, SA and chairman of the Board of Directors of most of the companies controlled or in which this company has a majority shareholding (listed in the Notes to the Financial Statements of the companies concerned). Member of the Board of Directors of Sonae, SGPS, SA
Neither of the previously mentioned directors directly hold shares of the Company Sonae Distribuição, SGPS, S.A.
Herein below follows a summary of the history of each of the above mentioned directors as members of the Board of Directors of Sonae Distribuição, SGPS, S.A.:
As previously mentioned, the Statutory Audit Board is composed of the following:
The members comply with the incompatibility rules set in number 1 of article 414-A and the criteria of independence established in number 5 of article 414, both from the Portuguese Companies Code.
Chairman of the Statutory Audit Board
• UHY & Associados, SROC, Lda. Represented by António Francisco Barbosa dos Santos: University degree in Auditing from the Instituto Superior de Contabilidade e Administração do Porto and advanced course in Management for Executives at the Universidade Católica Portuguesa. For a number of years, taught Auditing at establishments of Higher Education and carried out functions in Auditing/revision for various companies.
Does not hold any shares of the company and was elected as Chairman of the Statutory Audit Board to represent UHY & Associados, SROC, Lda., on 31st of March 2008, for which the mandate ends on 31st December 2009.
Effective non executive director of the Statutory Audit Board
.
Held various positions in administrative and financial areas in a number of companies where his services were used in the context of external auditing and Statutory Auditor. Since 1990 he has been exclusively dedicated to the role of Statutory Auditor.
Chairman of the Statutory Audit Board
• Fiscal agent representing SROC UHY in the companies belonging to Grupos Têxtil Nortenha, S.A.; Sociedade Distribuidora de Vestuário, S.A.; Real Companhia Vinícola do Norte de Portugal, S.A.; Cia. Geral da Agricultura das Vinhas do Alto Douro, S.A.; Investimentos e Gestão da Água, S.A.; Grupo D. Pedro (Saviotti); Grupo Nasamotor and Grupo RDC – Investimentos SGPS, S. A.
Effective non executive director of the Statutory Audit Board : Arlindo Dias Duarte Silva:
• Member of the Statutory Audit Board of Sonae, SGPS, S.A. and Sonaecom, SGPS, S.A.
Statutory Auditor and Fiscal Agent in companies: Sintigraf II – Tintas gráficas, S.A.; DMJB - Consultadoria de Gestão, S.A.; Orbirio – Imobiliário e Empreendimentos Turísticos, S.A. e Loisir – Equipamentos de Diversão e Ocupação de Tempos livres, S.A.
Member of the Statutory Audit Board of the company Rochinvest – Investimentos Imobiliários e Turísticos, S.A.
Member of the Statutory Audit Board in Social Solidarity Member of the Statutory Audit Board of in non-profit making Associations
Effective non executive director of the Statutory Audit Board: Óscar José Alçada da Quinta
Member of the company Óscar Quinta, Canedo da Mota & Pires Fernandes, SROC.
Considering what was referred to herein above, on the structure adopted by the company regarding its governing bodies to the sections herein under appreciation, are inapplicable.
The Company´s remuneration policy aims to accurately assess each individual's activity, performance and contribution to the organization's success, and to align Executive Directors' and employees' interests with those of shareholders
The remuneration policy for all Executive Directors and employees includes two basic components
(i) Fixed remuneration, which is granted on an annual basis but paid as Monthly Salary (salaries are paid 14 times per annum in Portugal);
(ii) An annual performance bonus, which is paid in the first quarter of the following year.
In addition, a discretionary third component may be awarded to Executive Directors and senior managers, in April of the following year, in the form of deferred compensation, as a Medium Term Performance Bonus under Sonae's Deferred Performance Bonus Plan
Annual remuneration and other elements of the compensation package are defined in view of each Executive Director's and employee's level of responsibility and are reviewed annually. Each Executive Director and employee is classified under a "Group Level" grid, with 9 Management Levels, designed using Hay's international model for classification of job functions to allow easier market comparisons as well as to promote internal equity.
The annual performance bonus is aimed at rewarding the achievement of certain pre-defined annual objectives, which are linked the Business (Key Performance Indicators)
The target annual performance bonus amount is based on a percentage of the Executive Director's and employees fixed remuneration, which varies according to their Management Level. Of this amount, part is determined by the business KPI´s, which are objective indicators such as economic and financial indicators defined based on the budget, the Company's share price performance, individual business unit performance as well as the performance of the Group as a whole. The remaining amount of the annual performance bonus is determined by Personal KPIs, which are a mix of objective and subjective indicators.
The Remuneration Committee is responsible for approving the remuneration of the Board. The composition and functioning of the Remuneration Committee are described in II.19 of the Corporate Governance Report. The remuneration of Executive Directors comprises of a fixed and an Annual Performance Bonus, also benefiting from a Medium Term Performance Bonus. The Annual Performance Bonus is indexed to a group of financial indicators that align the interests of Executive Directors with the Company and its shareholders. The Medium Term Performance Bonus is deferred and only paid three years after the date which it is granted, and may increase or decrease depending on the performance of the share price.
The Shareholders' General Meeting appoints a Remuneration Committee with the same term of office as that of the statutory bodies. Its mission, in accordance with paragraph 2 of Article twenty-six of the company's articles of association, is to approve the members of the Board of Directors' remuneration. At Sonae Distribuição, SGPS, SA, the current Remuneration Committee is made up of Sonae SGPS, SA represented by Duarte Paulo Azevedo, and by Bruno Walter Lehmann.
Duarte Paulo Teixeira de Azevedo is a member of the Company's Board of Directors.
In 2008, the members of the Board of Directors of Sonae Distribuição were paid a total of 1,015,360 Euros, of which 606,700 Euros were performance bonuses. In 2007, and in the same perspective, these remunerations totalled 1,040,400 Euros, of which 670,800 Euros as performance bonuses.
The remuneration of staff with responsibilities for the strategic management of the main companies of the Group (excluding members of the Board of Directors) totalled 2,686,574 (3.480.756 Euros in 2007), divided between 1,541,260 Euros of fixed remuneration (1.973.160 Euros in 2007) and 1,145,314 Euros of performance bonuses (1.507.596 Euros in 2007).
Sonae Distribuição, SGPS, SA is part of the Sonae Group and the directors of the Company also assume the administrative functions within Sonae, SGPS, SA and its respective sub-holdings – entitling them to remuneration in accordance with their responsibilities.
No amount was paid to former directors regarding the termination of their functions. The Company has no supplementary pensions or early retirement schemes for Directors, and there is no relevant non-monetary benefit.
When a member of the Board of Directors no longer holds this position, it is the Groups policy to pay whatever legal compensation is owed, or negotiate in each situation, an amount considered fair and appropriate for both parties involved.
Sonae Distribuição pays very special attention to detecting, taking responsibility for and correcting in a timely manner irregularities that may occur within its organisation. The most frequent issues are concerned with
mistakes from time to time in store operations (concerning consumer treatment, the range of products or equipment, among others). The main ways in which these are detected are through consumer themselves in the company stores, in Portugal. Many of these consumers present a complaint or make a suggestion to the store team where the wrongdoing took place.
Sonae Distribuição values these contacts very highly, since the consumer is giving the company an opportunity to resolve a problem and identify areas of improvement that directly benefit that particular consumer and others who are also affected.
In order to deal with these issues in a just and timely manner, the company developed some ten years ago a Suggestions and Complaints System, with a decentralised structure of contact persons in various departments of the organization and under the direct responsibility and follow up of the Board of Directors. The Marketing department is responsible for the central coordination and control of the entire process, although the issues are dealt with and answers given to the consumer by the unit directly concerned, with the knowledge and co-responsibility of the specific areas involved (e.g. Quality Control, Legal Department etc).
Furthermore, in 2006, Decree Law 156/2005, published on the 1st of January 2006, came in into force, which regulated that the complaints book become mandatory in most stores, thus reinforcing, the system described herein above.
At the same time, Sonae Distribuição SGPS, S.A. (as part of the Sonae Group) has an Ombudsman available to its employees and to the public in general. The Ombudsman functions are that of an entity that complements the suggestions and complaints procedure. He/she reports directly to the Chairman of the Sonae Group, and his/her mission is to ensure that claims, complaints and suggestions that are made by consumers, suppliers and employees of the company are appropriately dealt with.
The position of the Ombudsman asserts and promotes, in an appropriate manner the consumers or suppliers of the company's legally protected rights and interests are, guaranteed and that justice is carried out, wrongs righted and improve the quality and efficiency of services provided by the company. He/she can be contacted at the following e mail address [email protected], or at the following address:
Lugar do Espido, Via Norte Apartado 1011 - 4471-909 Maia - Portugal Tel: +351 22 010 4631 - Fax: +351 22 010 4784
By the Shareholders' General Meeting resolution taken on the 22/12/08 and effective on the same date, the Company reduced its share capital from 1.100.000.000 Euro to 1.000.000.000 Euro through the extinction of 100.000.000 own shares.
Sonae Distribuição, SGPS, S.A., share capital is ,1,000,000,000 Euro, represented by 1,000,000,000 shares, ordinary shares, book value, at the nominal value of 1 euro each. These 1,000,000,000 shares are not admitted to trading, nor confer special rights. On the 31st of December 2008, Sonae, SGPS, SA, detained 824,780,810 shares, representing 82.48% of the share capital and Sonae Investments, BV, detained 175,219,190 shares, representing 17.52% of the share capital.
Sonae Distribuição, SGPS, S.A. does not have any shareholders with special rights
There are no limitations or restrictions in the transfer or in the ownership of shares in the Company
The Company is not aware of any agreement between shareholders that may affect the transfer of shares. The share capital of the Company is held, completely, directly or indirectly, by Sonae, SGPS, SA.
Amendments to the Articles of Association depend on its approval during the Shareholders' General Meeting, taken by a majority vote. The Company meets during the first call, so long as shareholders who detain more than fifty percent of the share capital are present or represented, as stated in section 1 of article twenty first of the articles of association.
There are no rules in the articles of association regarding mechanisms of control
With the acquisition of total control of Sonae Distribuição, SGPS, SA (previously named Modelo Continente SGPS, S.A.) by Sonae, SGPS, SA, the company lost its status as a publicly quoted company, and was excluded from the official Lisbon Euronext stock exchange as of 22nd of September 2006. However, up until the above mentioned date, the shares of Modelo Continente, SGPS, S.A, were traded on the Euronext Lisbon stock exchange with the following key technical information:
| Sonae Distribuição, SGPS, S.A. |
|---|
| Modelo Continente, SGPS, S.A. |
A dividend distribution of 0.05 Euro per share in relation to year 2006 was made, totalling 75 million Euro. In 2007, a distribution of 85 million Euro was made. In relation to 2008, a dividend distribution of 85 million Euro will be proposed at the Shareholders' General Meeting for those shares not held directly or indirectly by Sonae Distribuição, SGPS, S.A., which corresponds to a dividend pay-out ratio of approximately 50% of the consolidated net profits for the year.
The Sonae Distribuição SGPS, S.A., Remuneration Committee approved, on March, 16th, 2005 the rules defining the conditions for the granting a deferred compensation plan. The goal of this plan is to give managers the opportunity to share in the value created by their direct involvement in the definition of strategy and management of the businesses. Those eligible are directors and managers of the Company whose involvement has the most impact on the performance of the businesses.
Deferred compensation is awarded by the management body concerning managers and by the Remuneration Committee concerning directors, as a percentage of the value of the annual performance premium awarded.
The amount of the deferred compensation varies in direct proportion to a portfolio of shares of Sonae, SGPS, SA.. The compensation plans are valued on the date they are awarded at the share prices quoted on the Portuguese stock exchange of those shares making up the portfolio. For this, the lower of the following share prices is used: that at the close of business on the first business day after the Shareholder' General Meeting or the average closing price of the 30 days prior to the Shareholders' General meeting.
The Director/manager can choose between:
In either case, the acquisition can be made between exactly three years after the date of the award and the end of that year. The company reserves the right to give the equivalent value in cash instead of shares. The right to deferred compensation expires when the Director/manager leaves Sonae Distribuição group but continues up to the date of payment in the case of retirement. In case of death or permanent disability, the deferred compensation plan is valued at market prices and given to the individual or his/her heirs.
The company did not have business dealings with any member of the Board of Directors. The only transactions with the Statutory Auditor were those related to his official duties. Transactions with group companies or those controlled by Sonae Distribuição were made at arms length, were part of the normal business activity of the company.
Up until 21 September 2006, the company was a publicly quoted company listed on the Euronext Lisbon stock Exchange. As such, the company always followed the rule of expeditiously informing the capital markets of all relevant facts about the company, thus ensuring equal treatment to all parties' involved and equal access to information by investors.
For that purpose, it used the normal channels of communication, putting special emphasis on using new information technologies. Here, the main highlight is the company website (www.sonaedistribuicao.pt) that acts as a focal point for a wide range of questions put by investors and the general public, as well as being a repository of historical information about the company, in particular financial statements, earnings announcements and the most important corporate presentations.
Although the company was de-listed from the Lisbon stock exchange on the 22nd of September 2006, following a public sales offer for the entire share capital of the company by its majority shareholder, Sonae, SGPS, S.A, such practices of transparency and information sharing have continued unaltered. Also continuing its work unchanged is the Investor Relations Office, which is technically well equipped and has a dedicated team, acting as a focal point for the Portuguese and international investment community.
The Representative for Market Relations is Adriano Virgílio Guimarães Ribeiro.
The Office helps a wide range of parties involved with the capital markets, in particular small private investors and the university community, as well as the main financial analysis teams in the Portuguese and international retail sector. Contact information is as follows:
Rua João Mendonça, 529 – 4º 4464-501 Senhora da Hora (Matosinhos – Portugal) Telephone: +351 229 561 877 Fax: +351 229 561 984 Email: [email protected]
The company's auditors are Deloitte & Associados, SROC, who, in 2008, billed the company and its affiliated and associated companies included in the consolidation, a total of 1,967,097 Euros, divided as follows:
| a) | % | ||
|---|---|---|---|
| b) | Statutory Audit | c) | 21.5% |
| d) | Other Compliance & Assurance services | e) | 13.9% |
| f) | Tax Consultancy Services | g) | 4.4% |
| h) | Other Services | i) | 60.2% |
The other services are provided by different specialists than those who are involved in audit, so that we believe that the independence of the auditor is assured.
Matosinhos, 3rd of March 2009
The Board of Directors
Duarte Paulo Teixeira de Azevedo (President)
Nuno Manuel Moniz Trigoso Jordão (CEO)
Ângelo Gabriel Ribeirinho dos Santos Paupério
Álvaro Carmona e Costa Portela
The signatories individually declare that, to their knowledge, the Management Report, the Consolidated and Individual Financial Statements and other accounting documents required by law or regulation were prepared meeting the standards of the applicable International Financial Reporting Standards, giving a truthful (fairly) and appropriate image, in all material respects, of the assets and liabilities, financial position and the consolidated and individual results of the issuer and that the Management Report faithfully describes the business evolution and position of the issuer and of the companies included in the consolidation perimeter and contains a description of the major risks and uncertainties that they face.
Matosinhos, 03 March 2009
Duarte Paulo Teixeira de Azevedo (President)
Nuno Manuel Moniz Trigoso Jordão (CEO)
Ângelo Gabriel Ribeirinho dos Santos Paupério
Álvaro Carmona e Costa Portela
Disclosure of shares and other securities held by members of the Board of Directors and by people discharging managerial responsibilities, as well as by people closely connected with them (article 248 B of the Portuguese Securities Code), and disclosure of the respective transactions during the year involving such shares and other securities.
Appendix to the Report of the Board of Directors as of 31 December 2008 required by article 447 of the Portuguese Companies Act and of article 14, paragraph 7 of CMVM Regulation nr. 05/2008A
| Date | Additions | Reductions | Balance as of 31.12.2008 |
|||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Quantity | Aver. Price € |
Quantity | Aver. Price € |
Quantity | ||||||
| Duarte Paulo Teixeira de Azevedo ()()(**) | ||||||||||
| Efanor Investimentos, SGPS, SA (1) | 1 | |||||||||
| Migracom, SGPS, SA (3) | 1.00 | |||||||||
| Capital increase | 27.11.2008 | 1,900,000 | 0 | 1,969,996 | ||||||
| Sonae, SGPS, SA | 3,293 | (a) | ||||||||
| Ângelo Gabriel Ribeirinho dos Santos Paupério (*) | ||||||||||
| Sonae, SGPS, SA | ||||||||||
| Purchase | 11.01.2008 | 245,436 | 0 | 1.30 | 250,000 | |||||
| Alvaro Carmona e Costa Portela (*) | ||||||||||
| Sonae, SGPS, SA | ||||||||||
| Purchase | 11.06.2008 | 100,000 | 0 | 0.91 | 125,934 | |||||
| (1) Efanor Investimentos, SGPS, SA | ||||||||||
| Sonae, SGPS, SA | ||||||||||
| Purchase | 19.09.2008 | 845,576 | 0.603 | 659,650,000 | ||||||
| Pareuro, BV (2) | ||||||||||
| Capital increase | 21.01.2008 | 1,980,000 | 151.510 | 2,000,000 | ||||||
| (2) Pareuro, BV | ||||||||||
| Sonae, SGPS, SA | 400,000,000 | |||||||||
| (3) Migracom, SGPS, SA | ||||||||||
| Sonae, SGPS, SA | ||||||||||
| Purchase | 17.01.2008 | 193,500 | 1.290 | |||||||
| Purchase | 18.01.2008 | 1,500 | 1.240 | 1,485,000 | ||||||
| Imparfin, SGPS, SA (4) | 150,000 | |||||||||
| (4) Imparfin, SGPS, SA | ||||||||||
| Sonae, SGPS, SA | ||||||||||
| Purchase | 03.01.2008 | 7 | 1.920 | 4,105,280 |
(*) Member of the Board of Directors of Sonae, SGPS, SA
(**) Member of the Board of Directors of Efanor Investimentos, SGPS, SA ( indirectly dominant company) (1)
(***) Member of the Board of Directors of Imparfin, SGPS, SA (4)
(a) Shares held by underage descendents under his/her charge
Number of shares held by shareholders, owning more than 10%, 33% and 50% of the company's share capital.
Appendix to the Report of the Board of Directors as of 31 December 2008 required by article 448 of the Portuguese Companies Act
| Shareholders | Number of shares held as of 31.12.2008 |
|---|---|
| Sonae, SGPS, SA | 824,780,810 |
| Sonae Investments, BV | 175,219,190 |
Shares held and voting rights of companies owning more than 2% of the share capital of the company.
| Shareholders | Nr. of shares | % of Share Capital |
% of Voting Rights |
|
|---|---|---|---|---|
| Sonae, SGPS, SA | 824,780,810 | 82.48% | 82.48% | |
| Sonae Investments, BV | 175,219,190 | 17.52% | 17.52% | |
| Total attributable | 1,000,000,000 | 100.00% | 100.00% |
| IFRS | ||||
|---|---|---|---|---|
| 31-12-2008 | 31-12-2007 | |||
| ASSETS | Notes | (Note 1) | ||
| NON CURRENT ASSETS | ||||
| Tangible assets | 10 | 1,924,301,269 | 1,690,102,105 | |
| Goodwill Intangible assets |
11 10 |
521,020,094 164,289,356 |
520,354,909 153,136,765 |
|
| Investments in associated companies | 6 | 64,671,483 | 39,082,244 | |
| Other investments | 7 and 9 | 2,358,971 | 999,170 | |
| Deferred tax assets | 19 | 67,426,816 | 36,003,939 | |
| Other non-current assets | 9 and 13 | 2,284,632 | 1,820,126 | |
| Total non-currents assets | 2,746,352,621 | 2,441,499,258 | ||
| CURRENT ASSETS | ||||
| Inventory | 14 | 530,819,483 | 444,655,534 | |
| Trade accounts receivable | 9 and15 | 33,237,057 | 32,409,579 | |
| Other accounts receivable | 9 and 16 | 109,795,744 | 121,819,762 | |
| Taxes recoverable | 17 | 31,480,470 35,391,992 |
51,067,860 23,492,179 |
|
| Other currents assets Investments |
9 and 18 9 and 12 |
62,805,722 | 57,208,737 | |
| Cash and cash equivalents | 9 and 20 | 115,119,080 | 67,853,490 | |
| Total current assets | 918,649,548 | 798,507,141 | ||
| Non current assets held for sale | 5,863,383 | 6,006,580 | ||
| TOTAL ASSETS | 3,670,865,552 | 3,246,012,979 | ||
| EQUITY AND LIABILITIES | ||||
| EQUITY | ||||
| Share Capital | 21 | 1,000,000,000 | 1,100,000,000 | |
| Own Shares | 21 | - | (205,000,000) | |
| Reserves and retained earnings | 21 | (250,902,510) | (223,444,442) | |
| Net profit for the year attributable to the Shareholders of Parent company | 170,993,512 | 167,492,214 | ||
| Total equity attributable to the Shareholders of Parent company | 920,091,002 | 839,047,772 | ||
| Minority interests | 22 | 11,201,548 | 12,141,277 | |
| TOTAL EQUITY | 931,292,550 | 851,189,049 | ||
| LIABILITIES | ||||
| NON-CURRENT LIABILITIES | ||||
| Bank Loans | 9 and 23 | 230,000,000 | - 1,100,672,731 |
|
| Bonds Obligations under finance leases |
9 and 23 9, 23 and 24 |
1,001,716,603 11,109,980 |
5,554,636 | |
| Other Loans | 9 and 23 | 241,328 | 276,330 | |
| Other non-current liabilities | 9 and 26 | 11,688,394 | 12,702,606 | |
| Deferred tax liabilities | 19 | 81,182,365 | 50,612,269 | |
| Provisions | 31 | 12,953,754 | 17,600,362 | |
| Total non-current liabilities | 1,348,892,424 | 1,187,418,934 | ||
| CURRENT LIABILITIES | ||||
| Bank Loans | 9 and 23 | 43,249,021 | 83,834,903 | |
| Bonds | 9 and 23 | 99,978,611 | - | |
| Obligations under finance leases | 9, 23 and 24 | 4,280,464 | 6,783,670 | |
| Other Loans | 9 and 23 | 5,405,467 | 317,352 | |
| Trade accounts payable | 9 and 28 | 898,101,628 | 836,356,284 | |
| Other accounts payable | 9 and 29 | 152,429,549 | 85,958,723 | |
| Taxes and contributions payable | 17 | 35,975,550 | 44,222,307 | |
| Other current liabilities | 9 and 30 | 148,945,725 | 147,467,643 | |
| Provisions | 31 | 2,314,563 | 2,464,114 | |
| Total current liabilities | 1,390,680,578 | 1,207,404,996 | ||
| TOTAL LIABILITIES | 2,739,573,002 | 2,394,823,930 | ||
| TOTAL EQUITY AND LIABILITIES | 3,670,865,552 | 3,246,012,979 |
The accompanying notes are part of these consolidated financial statements
| IFRS | ||||||
|---|---|---|---|---|---|---|
| 2008 | 2007 | |||||
| 4th Quarter | 4th Quarter | |||||
| Notes | Unaudited | 31-12-2008 | Unaudited | 31-12-2007 | ||
| Operational income: | ||||||
| Sales | 37 | 1,193,690,754 | 4,074,314,020 | 956,306,560 | 3,238,947,595 | |
| Services rendered | 37 | 34,333,511 | 145,379,164 | 34,476,166 | 145,720,912 | |
| Other operational income | 38 | 126,971,693 | 429,296,097 | 94,931,305 | 317,911,045 | |
| Total Operational income | 1,354,995,958 | 4,648,989,281 | 1,085,714,031 | 3,702,579,552 | ||
| Operational expenses: | ||||||
| Cost of sales | 14 | (906,020,884) | (3,178,152,943) | (729,296,975) | (2,517,317,555) | |
| External supplies and services | (152,097,089) | (562,471,047) | (130,624,744) | (458,137,503) | ||
| Staff costs | (132,549,252) | (474,318,470) | (101,314,911) | (376,092,288) | ||
| Depreciation and amortisation | 10 | (32,297,294) | (115,026,896) | (22,613,472) | (87,048,798) | |
| Provisions and impairment losses | 31 | (8,025,341) | (10,962,955) | (1,206,500) | (1,737,549) | |
| Other operational expenses | 39 | (20,042,054) | (67,655,276) | (19,816,594) | (51,286,979) | |
| Total operational expenses | (1,251,031,914) | (4,408,587,587) | (1,004,873,196) | (3,491,620,672) | ||
| Operational profit/(loss) | 103,964,044 | 240,401,694 | 80,840,835 | 210,958,880 | ||
| Financial income | 40 | 4,845,671 | 15,254,408 | 9,596,429 | 19,471,969 | |
| Financial expenses | 40 | (25,264,273) | (87,266,824) | (18,350,145) | (54,153,947) | |
| Net financial expenses | 40 | (20,418,602) | (72,012,416) | (8,753,716) | (34,681,978) | |
| Profit/(loss) related to associated companies | 6 | 12,712,424 | 13,403,420 | 147,455 | 247,316 | |
| Profit/(loss) related to investments | 370,430 | 520,599 | - | (587,173) | ||
| Profit/(loss) before income tax | 96,628,296 | 182,313,297 | 72,234,574 | 175,937,045 | ||
| Income Tax | 41 | (5,980,265) | (11,497,975) | (2,976,589) | (7,121,200) | |
| Consolidated profit/(loss) for the perio | 90,648,031 | 170,815,322 | 69,257,985 | 168,815,845 | ||
| Attributable to: | ||||||
| Equity holders of Parent Company | 91,035,606 | 170,993,512 | 68,764,950 | 167,492,214 | ||
| Minority interests | (387,575) | (178,190) | 493,035 | 1,323,631 | ||
| Profit/(Loss) per share (Basic and Diluted | 42 | 0.09 | 0.17 | 0.07 | 0.17 | |
The accompanying notes are part of these consolidated financial statements
(Amounts expressed in Euro)
| Attr ibut able to Sha reh olde f Pa t Co rs o ren mp any |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Cur ren cy |
Oth er |
Min orit y |
Tot al |
|||||||
| Not es |
Sha re |
Ow n |
Leg al |
Tra nsla tion |
Hed ging |
Res nd erv es a |
Net | Inte rest s |
Equ ity |
|
| Cap ital |
Sha res |
Res erv es |
Res erv e |
Res erv e |
Ret aine d E ings arn |
Pro fit/( Los s) |
Tot al |
(No te 1 ) |
||
| Bal s at 1 J 20 07 21 anc e a anu ary |
1,1 00, 000 ,00 0 |
(20 5,0 00, 000 ) |
90, 200 ,00 0 |
510 ,70 9 |
- | (39 8,6 81, 758 ) |
158 ,079 ,602 |
745 ,108 ,55 3 |
10,9 30, 910 |
756 ,039 ,46 3 |
| of c rofit of App riat ion olid ate d p 200 6 rop ons |
||||||||||
| Tra nsfe r to leg al r nd reta ined rnin ese rve s a ea gs |
- | - | 4,8 00, 000 |
- | - | 153 ,279 ,602 |
(15 8,0 79, 602 ) |
- | - | - |
| Div iden ds d istri but ed 43 |
- | - | - | - | - | (75 ,000 ,000 ) |
- | (75 ,000 ,000 ) |
(10 ,256 ) |
(75 ,010 ,256 ) |
| Acq uisi tion of sh own are s |
||||||||||
| Cha s in fai lue nge r va |
- | - | - | - | 919 ,624 |
- | - | 919 ,624 |
- | 919 ,624 |
| Gen ted in the era ye ar |
- | - | - | 593 ,91 3 |
- | - | - | 593 ,91 3 |
- | 593 ,91 3 |
| Tra nsfe rs t et i o n nco me |
- | - | - | (38 1,45 5) |
- | - | (38 1,45 5) |
- | (38 1,45 5) |
|
| New anie qui red (N 1 a nd 8) 22 ote co mp s ac |
- | - | - | - | - | - | - | - | 161 ,672 |
161 ,672 |
| Oth ers |
- | - | - | - | - | 314 ,92 3 |
- | 314 ,92 3 |
(26 4,6 80) |
50, 243 |
| Net Co lida ted fit f or t he iod nso pro per |
- | - | - | - | - | - | 167 ,492 ,214 |
167 ,492 ,214 |
1,32 3,6 31 |
168 ,815 ,84 5 |
| Bal s at 31 De ber 20 07 (No te 1 ) anc e a cem |
1,1 00, 000 ,000 |
(20 5,0 00, 000 |
) 9 5,0 00, 000 |
1,1 04, 622 |
538 ,169 |
(32 0,0 87, 233 ) |
167 ,492 ,214 |
839 ,04 7,7 72 |
12, 141 ,27 7 |
851 ,189 ,049 |
| Bal 1 J 20 08 21 s at anc e a anu ary |
1,1 00, 000 ,00 0 |
(20 5,0 00, 000 ) |
95, 000 ,00 0 |
1,10 4,6 22 |
538 ,16 9 |
(32 0,0 87, 233 ) |
167 ,492 ,214 |
839 ,04 72 7,7 |
12, 141 ,27 7 |
851 ,189 ,04 9 |
| App riat ion of c olid ate d p rofit of 200 7 ons |
||||||||||
| rop Tra nsfe r to leg al r nd reta ined rnin ese rve s a ea |
- | 4,3 00, 000 |
- | 163 ,192 ,214 |
(16 7,4 92, 214 ) |
- | - | |||
| gs Div iden ds d istri but ed 43 |
- | - | (85 ) ,000 ,000 |
- | (85 ) ,000 ,000 |
(13 1) ,74 |
- (85 1) ,013 ,74 |
|||
| Cha s in nge res erv es |
- | - | - | - | - | |||||
| Ow n sh rtisa tion 21 are s a mo |
(10 0,0 00, 000 ) |
205 ,000 ,00 0 |
- | - | - | (10 5,0 00, 000 ) |
- | - | - | |
| Cha s in fai lue nge r va |
- | - | - | - | (3,2 10,9 85) |
- | - | (3,2 10,9 85) |
- | - (3,2 10,9 85) |
| Gen ted in the era ye ar |
- | - | - | (1,1 00, 956 ) |
- | - | - | (1,1 00, 956 ) |
- | (1,1 00, 956 ) |
| nsfe Tra rs t et i o n nco me |
- | - | - | (64 26) 3,5 |
- | - | (64 26) 3,5 |
- | (64 26) 3,5 |
|
| Cha s in the rim ete 22 nge pe r |
- | - | - | - | - | - | - | - | (74 7,7 98) |
(74 7,7 98) |
| Oth ers |
- | 5,1 85 |
- | 5,1 85 |
- | 5,1 85 |
||||
| Net Co lida ted fit f or t he iod nso pro per |
- | - - |
- - |
- - |
- - |
- | 170 ,993 ,512 |
170 ,993 ,512 |
(17 8,1 90) |
170 ,815 ,322 |
| Bal 31 De ber 20 08 s at anc e a cem |
1,0 00, 000 ,000 |
- | 99, 300 ,000 |
3,6 66 |
(3,3 16,3 42) |
(34 6,8 89, 834 ) |
170 ,993 ,512 |
920 ,09 1,00 2 |
11, 201 ,548 |
931 ,292 ,550 |
The accompanying notes are part of these consolidated financial statement
(Translation of consolidated financial statements originally issued in Portuguese - Note 46)
| Notes | 31-12-2008 | 31-12-2007 | |
|---|---|---|---|
| OPERATING EXPENSES | |||
| Cash receipts from trade debtors | 4,191,025,400 | 3,379,348,706 | |
| Cash paid to trade creditors | (3,447,780,899) | (2,718,261,054) | |
| Cash paid to employees | (460,481,254) | (367,381,880) | |
| Cash flow generated by operations | 282,763,247 | 293,705,772 | |
| Income taxes paid/(received) | (89,598) | (5,664,945) | |
| Other cash receipts/payments from operating activities | 4,189,570 | 1,672,760 | |
| Net cash flow operating activities (1) | 286,863,219 | 289,713,587 | |
| INVESTMENT ACTIVITIES | |||
| Cash receipts related to: | |||
| Investments | |||
| Disposal of subsidiaries | 8.3 | 9,356,566 | 10,137,318 |
| Other investments | 37,909,420 | 22,369,435 | |
| Tangible and intangible assets | 32,004,262 | 44,005,165 | |
| Interest and similar income | 8,883,443 | 13,574,458 | |
| Dividends | 150,169 | 225,169 | |
| Loans granted | 281,582,000 | 359,425,000 | |
| 369,885,860 | 449,736,545 | ||
| Cash payments related to: Investments |
|||
| Acquisition of subsidiaries | 8.2 | (11,649,459) | (612,720,553) |
| Capital increase in subsidiaries | (14,878,381) | (21,011,577) | |
| Other investments | (13,987,185) | (24,870,137) | |
| Tangible and intangible assets | (293,662,868) | (236,120,750) | |
| Loans granted | (288,387,257) | (359,433,190) | |
| Others | (31) | ||
| (622,565,181) | (1,254,156,207) | ||
| Net cash flow used in investment activities (2) | (252,679,321) | (804,419,662) | |
| FINANCING ACTIVITIES | |||
| Cash receipts related to: | |||
| Loans obtained | 5,963,981,220 | 2,297,644,251 | |
| Capital increases in subsidiaries | 50,036 | ||
| 5,963,981,220 | 2,297,694,287 | ||
| Cash payments related to: | |||
| Loans obtained | (5,804,741,308) | (1,956,125,925) | |
| Interest and similar charges | (80,159,356) | (45,346,651) | |
| Dividends | (85,013,741) | (75,010,292) | |
| Others | (434,986) | ||
| (5,970,349,391) | (2,076,482,868) | ||
| Net cash flow from/(used in) financing activities (3) | (6,368,171) | 221,211,419 | |
| Net increase/(decrease) in cash and equivalents (4) = (1) + (2) + (3) | 27,815,727 | (293,494,656) | |
| Effect of foreign exchange rate | 214,608 | (72,602) | |
| Cash and cash equivalents at the beginning of the year | 20 | 64,268,940 | 357,690,994 |
| Cash and cash equivalents at the end of the year | 20 | 91,870,059 | 64,268,940 |
The accompanying notes are part of these consolidated financial statements
(Translation of consolidated financial statements originally issued in Portuguese – Note 46)
SONAE DISTRIBUIÇÃO, SGPS, S.A. ("the Company" or "Sonae Distribuição"), formerly known as Modelo Continente, SGPS, S.A., is a Portuguese Corporation, holds its head-office in Rua João Mendonça nº 529, 4464-501 Senhora da Hora, Portugal is the Parent-company of a group of companies, as detailed in Notes 4, 5 and 6 ("Sonae Distribuição Group") which main activities are detailed in the Report of the Board of Directors and in Note 44.
The subsidiary Continente Hipermercados (corresponding to the ex-Carrefour portfolio) was acquired by the end of 2007 not having, as noticed, concluded at that time the fair value imputation and the respective goodwill allocation. Such process was finished during 2008, hence a retrospective allocation of the fair value related to the referred Business Combination as required by IFRS 3 – Business Combinations was performed. Consequently the consolidated Balance Sheet at 31 December 2007 and the Consolidated Statements of Change in Equity for the year ended 31 December 2007, have been restated to consider right now the new figures. The detail of the changes made is presented in Note 8.
The attached financial statements are presented in Euro as it is the preferentially used currency in the economic environment where the Group operates. The foreign operations which functional currency is not the Euro are included in the final statements according to the policy described in Note 2.2.e).
The principal accounting policies adopted in preparing the accompanying consolidated financial statements are as follows:
The accompanying consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards ("IFRS"). These standards were issued by the International Accounting Standards Board (IASB) and interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC") or by the previous Standing Interpretation Committee ("SIC"), that have been adopted by the European Union at the date of preparation of these financial statements.
Interim financial statements are presented quarterly, in accordance with IAS 34 – "Interim Financial Reporting".
The accompanying consolidated financial statements have been prepared from the books and accounting records of the Company, subsidiaries and joint ventures on a going concern basis and under the historical cost convention, except for financial instruments which are stated at fair value.
Up to the financial statements approval date, the following Standards and Interpretations, some of which have became effective during the year 2008, have been endorsed by the European Union:
| Effective Date |
|
|---|---|
| With mandatory application in 2008: | |
| IAS 39/IFRS 7 - Amendments: Reclassification of Financial Assets | 01-07-08 |
| IFRIC 14/IAS 19 - The Limit on Defined Benefit Asset, Minimum Funding | 01-01-08 |
| Requirements and their Interaction | |
| With mandatory application after 2008: | |
| IFRS 8 – Operating Segments | 01-01-09 |
| IFRS 2 - Amendments: Share-based Payment | 01-01-09 |
| IAS 1 - Amendments: First-time Adoption of International Financial Reporting | 01-01-09 |
| Standards | |
| IAS 23 - Amendments: Borrowing Costs | 01-01-09 |
| IAS 32/IAS 1 - Amendments: Puttable Financial Instruments and Obligations Arising on Liquidation |
01-01-09 |
| Amendments to International Financial Reporting Standards (2007) | 01-01-09 |
| IFRS 1/IAS 27 - Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate |
01-01-09 |
| IFRIC 13 - Customer Loyalty Programmes | 01-07-08 |
The adoption of these Standards has not led to any relevant changes in the Company's financial statements.
It is not expected to arise any material impacts to the consolidated financial statements of the Company from the application of the above mentioned standards, with the exception of presentation and disclosure improvements as a result of the application of IAS 1 amendments and IFRS 8.
As at this date, the following standards and interpretations have already been issued by the IASB /IFRIC but have not yet been endorsed by the European Union:
| Effective Date |
|
|---|---|
| Amendments to IFRS 3 – Business Combinations | 01-07-09 |
| Amendments to IFRS 1 – First-time Adoption of International Financial Reporting Standards |
01-07-09 |
| Amendments to IAS 27 - Consolidated and Separate Financial Statements | 01-07-09 |
| Amendments to IAS 39 – Qualifying hedging instruments. | 01-07-09 |
| Amendments to IAS 39 – Reclassification of Financial Assets | 01-07-09 |
| Amendments to IFRS 7 – Financial Instruments: Disclosures | 01-01-09 |
| IFRIC 12 - Service Concession Arrangements | 01-01-09 |
| IFRIC 15 – Agreements for the Construction of Real Estate | 01-01-09 |
| IFRIC 16 – Hedges of a Net Investment in a Foreign Operation | 01-10-08 |
| IFRIC 17 – Distributions of Non-cash Assets to Owners | 01-07-09 |
| IFRIC 18 – Transfer of Assets from Customers | 01-07-09 |
The future application of the standards mentioned above, which have not been yet endorsed by de European Union, is not expected to produce material impacts to the consolidated financial statements, except for the IFRS 3 revision which will produce significant changes in what goodwill computation is concerned.
The consolidation methods adopted by the Group are as follows:
Investments in companies in which the Group owns, directly or indirectly, more than 50% of the voting rights at Shareholders' General Meetings or is able to govern the financial and operational policies so as to benefit from its activities (definition of control normally used by the Group), are included in the
consolidated financial statements using the full consolidation method. Equity and net profit attributable to minority shareholders are shown separately, under the caption Minority interests, in the consolidated balance sheet and in the consolidated income statement, respectively. Companies included in the consolidated financial statements are listed in Note 4.
When losses attributable to minority interests exceed the minority interest in the equity of the Group company, the excess, and any further losses attributable to minority interests, are charged against the equity holders of the Group except to the extent that minority shareholders have a binding obligation and are able to cover such losses. If the Group Company subsequently reports profits, such profits are allocated to the equity holders of the Group until the minority's share of losses previously absorbed by the equity holders of the Group has been recovered.
Assets and liabilities of each Group company are measured at their fair value at the date of acquisition. Any excess of the cost of acquisition over the Group's interest in the fair value of the identifiable net assets acquired is recognised as goodwill (Note 2.2.d)). Any excess of the Group's share in the fair value of the identifiable net assets acquired over cost, is recognised as income in profit or loss for the period of acquisition in the caption "Other operational income", after reassessment of the estimated fair value. Minority interests include their proportion of the fair value of net identifiable assets and liabilities recognised.
The results of Subsidiaries acquired or disposed during the period are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.
Adjustments to the financial statements of Group companies are performed, whenever necessary, in order to adapt accounting policies to those used by the Group. All intra-group transactions, balances, income and expenses and distributed dividends are eliminated on consolidation.
Whenever the Group has, in substance, control over other entities created for a specific purpose, even if no share capital interest is directly held in those entities, these are consolidated by the full consolidation method.
Investments in jointly controlled companies were included in the accompanying consolidated financial statements in accordance with the proportionate consolidation method as from the date joint control is acquired. In accordance with this method, the Group includes in the accompanying consolidated financial statements its share of assets, liabilities, income and expenses of these companies, on a line-by-line basis.
Any excess of the cost of acquisition over the Group's interest in the fair value of identifiable net assets acquired is recognised as goodwill (Note 2.2.d)). Any excess of the Group's share in the fair value of net assets acquired over cost is recognised as income in the profit or loss for the period of acquisition after reassessment of the estimated fair value of the net assets acquired in the caption "Other Operational income".
The share of Sonae Distribuição in the inter-company balances, transactions and dividends distributed are eliminated.
Investments in jointly controlled companies are classified as such based on shareholders' agreements that establishes joint control.
Companies included in the accompanying consolidated financial statements in accordance with the proportionate method are listed in Note 5.
.
Investments in associated companies (companies where the Group holds a significant influence but does not hold the control or the joint control over the decisions, through the participation in the financial and operating decisions – usually corresponding to holdings between 20% and 50% in a company's share capital) are accounted for in accordance with the equity method.
Under the equity method, investments are recorded at cost, adjusted by the amount corresponding to the Group's share of changes in equity (including net profit) of the associated companies and to dividends received.
Any excess of the cost of acquisition over the Group's share in the fair value of the identifiable net assets acquired is recognised as goodwill (Note 2.2.d), which is included in the caption Investment in associated companies. Any excess of the Group's share in the fair value of the identifiable net assets acquired over cost is recognised as income in the profit or loss for the period of acquisition, after reassessment of the estimated fair value of the net assets acquired under the caption Share of profit of associates.
An assessment of investments in associated companies is performed when there is an indication that the asset might be impaired. Any impairment loss is recorded in the income statement. Impairment losses recorded in prior years that are no longer justifiable are reversed.
When the Group's share of losses exceeds the carrying amount of the investment, the investment is reported at nil value, unless the Group is committed beyond the associate, in which case a provision is recorded on that amount.
The Group's share in unrealized gains arising from transactions with associated companies is eliminated, proportionately to the Group's interest in the associated companies against the carrying amount of the investment in the same associated company. Unrealized losses are similarly eliminated, but only to the extent that there is no evidence of impairment of the asset transferred.
Investments in associated companies are disclosed in Note 6.
d) Goodwill
The excess of the cost of acquisition of investments in subsidiaries, jointly controlled and associated companies over the Group's share in the fair value of the assets and liabilities of those companies at the date of acquisition is shown as Goodwill (Note 11) or as Investments in associated companies (Note 6). The excess of the cost of acquisition of investments in foreign companies over the fair value of their identifiable assets and liabilities at the date of acquisition is calculated using the functional currency of each of those companies. Translation to the Group's currency (Euro) is made using the closing exchange rate. Exchange rate differences arising from this translation are disclosed in Reserves and Retained Earnings
Goodwill is not amortised, but it is subject to impairment tests on an annual basis. Impairment losses recognized in the period are recorded in the income statement under the caption Provisions and impairment losses.
Impairment losses related with goodwill cannot be reversed.
Any excess of the Group's share in the fair value of identifiable assets and liabilities in group and associated companies over cost, is recognised as income in the profit or loss for the period, at the date of acquisition, after reassessment of the fair value of the identifiable assets and liabilities acquired.
Goodwill arising from acquisitions made prior to the date of transition to IFRS (1 January 2004) is stated using the carrying amounts, net of accumulated amortisation, calculated in accordance with generally accepted accounting principles in Portugal, adjusted for intangible assets which do not meet IFRS criteria, and is subject to impairment tests. Impacts of these adjustments were recorded in Retained earnings, in accordance with IFRS 1. Goodwill arising from foreign companies was recalculated retrospectively using the functional currency of each such company. Exchange rate differences generated in the translation were also recorded against Retained earnings (IFRS 1).
Assets and liabilities denominated in foreign currencies in the financial statements of foreign companies are translated to euro using exchange rates at the balance sheet date. Profit and loss and cash flows are converted to euro using the average exchange rate for the period. Exchange rate differences originated after 1 January 2004 are recorded as equity under Currency translation reserves in Reserves and
retained earnings. Exchange rate differences that were originated prior to 1 January 2004 (date of transition to IFRS) were written-off through Retained Earnings.
Goodwill and fair value adjustments arising from the acquisition of foreign companies are recorded as assets and liabilities of those companies and translated to euro using exchange rates at the balance sheet date.
Whenever a foreign company is sold, accumulated exchange rate differences are recorded in the income statement as a gain or loss from the disposal of financial investments.
Exchange rates used on translation of foreign group and associated companies are listed below:
| 31.12.2008 | 31.12.2007 | |||
|---|---|---|---|---|
| End of Period | Average of Period |
End of Period | Average of Period |
|
| Brazilian real | 0.30830 | 0.37657 | 0.38516 | 0.37577 |
Tangible assets acquired up to 1 January 2004 (transition date to IFRS) are recorded at acquisition cost, or revaluated acquisition cost, in accordance with generally accepted accounting principles in Portugal until that date, net of depreciation and accumulated impairment losses.
Tangible assets acquired after that date are recorded at acquisition cost, net of depreciation and accumulated impairment losses.
Depreciation is calculated on a straight line basis, as from the date the asset becomes ready for use, over the expected useful life for each class of assets and recorded in "Depreciation and Amortisation" on the consolidated financial statements.
Impairment losses detected on tangible assets are recorded in the year estimated against the income statement caption "Provisions and impairment losses".
The depreciation rates used correspond to the following estimated useful lives:
| Years | |
|---|---|
| Buildings | 50 |
| Basic equipment | 10 a 15 |
| Transport equipment | 5 |
| Tools | 4 |
| Fixture and fittings | 10 |
| Other tangible assets | 5 |
Maintenance and repair costs related to tangible assets are recorded directly as costs in the year they are incurred.
Tangible assets in progress represent fixed assets still in course of construction/promotion and are stated at acquisition cost net of eventual impairment losses. These assets are depreciated from the date they are completed or become ready for use.
Gains or losses on sale or disposal of tangible assets are calculated as difference between the selling price and the carrying amount of the asset at the date of its sale/disposal. These are recorded in the income statement under either "Other operational income" or "Other operational expenses".
Intangible assets are stated at acquisition cost, net of depreciations and accumulated impairment losses. Intangible assets are only recognized if, inherent to these, it is probable those future economic benefits will flow for the Group, are controlled by the Group and if their cost can be reliably measured.
Expenditure on research associated with new technical know-how is recognised as an expense recorded in the income statement when it is incurred.
Expenditure on development is recognised as an intangible asset if the Group demonstrates the technical feasibility and its intention to complete the asset, its ability to sell or use it and the probability that the asset will generate future economic benefits. Expenditure on development which does not fulfil these conditions is recorded as an expense in the period in which it is incurred.
Internal costs associated to the maintenance and development of software are recorded as an expense in the period in which they are incurred. Only the costs directly attributable to projects for which the existence of future economic benefits is probable are capitalized as intangible assets.
Depreciation is computed, starting from the date of completion or from the date the assets are available for use, on a straight line basis in accordance with the estimated useful life, usually 5 years and recorded in "Depreciation and Amortisation" on the consolidated financial statements.
Brands and patents with undefined useful lives are not amortised, but are subject to impairment tests on an annual basis.
Lease contracts are classified as (i) a finance lease if the risks and rewards incidental to ownership lie with the lessee and (ii) as an operating lease if the risks and rewards incidental to ownership do not lie with the lessee.
Whether a lease is classified as finance or as operating lease depends on the substance of transaction rather than the form of the contract.
Tangible assets acquired through finance lease agreements are recorded as assets and corresponding obligations as liabilities in the balance sheet. Lease payments are apportioned between the finance charge and the reduction of the outstanding liability. Both the finance charge and the depreciation expenses for depreciable assets are recorded in the income statement in the period in which they are incurred.
Lease payments under operating lease agreements are recognised as an expense on a straight line basis over the lease term.
For operating lease agreements where the Group is lessor, assets remain recorded in the Group's balance sheet, and the revenue is recognized on a straight line basis during the period of the agreement.
Government grants are recorded at fair value when there is reasonable assurance that they will be received and that the Group will comply with the conditions attaching to them.
Grants received as compensation for expenses, namely grants for personnel training, are recognised as income in the same period as the relevant expense.
Grants related to depreciable assets are disclosed as "Other non-current liabilities" and are recognised as income on a straight line basis over the expected useful lives of those underlying assets.
Grants related to incurred costs are recorded as profit in the extent there is a reasonable assurance that these will be received, that the granted costs have already been incurred and that the Company will comply with the conditions necessary for its grant.
Assets are assessed for impairment at each balance sheet date whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recorded in the income statement under Provisions and impairment losses.
The recoverable amount is the higher of an asset's net sale price less costs to sell and its value in use. Net sale price less costs to sell is the amount obtainable from the sale of an asset in an arm's length transaction less the costs of disposal. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Recoverable amounts are estimated for individual assets or, if this is not possible, for the cash-generating unit to which the asset belongs.
Reversal of impairment losses recognised in prior years is only recorded when it is concluded that the impairment losses recognised for the asset no longer exist or have decreased. This analysis is performed whenever there is an indication that the impairment loss previously recognised has been reversed. The reversal is recorded in the income statement as Operational income. However, the increased carrying amount of an asset due to a reversal of an impairment loss is recognised to the extent it does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognised for that asset in prior years.
Borrowing costs are usually recognized as an expense in the period in which they are incurred.
Borrowing costs relating directly to the acquisition, construction or production of fixed assets are capitalized as part of the cost of the qualified asset. Borrowing costs are capitalized from the time of preparation of the activities to construct or develop the asset to the time the production or construction is completed or when the asset is suspended. Any eventual financial income derived from a loan obtained and allocable to a qualifying asset, are deducted to the financial expenses that qualify for capitalization.
Inventories held by the group are stated at acquisition cost, deducted from quantity discounts received or to be received from suppliers, which is lower than their market value. Inventories are valued at the last purchase price. Considering the rotation level of inventories at the stores this method is not materially different from FIFO or weighted average cost.
The difference between the inventory cost and its net realizable value, if negative, is recorded as an operating expense under Cost of sales.
Provisions are recognized when, and only when, the Group has an obligation (legal or constructive) resulting from a past event, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of that obligation. Provisions are reviewed and adjusted at the balance sheet to reflect the best estimate as of that date.
Restructuring provisions are recorded by the Group whenever a formal and detailed restructuring plan exists and that plan has been communicated to the involved parties.
The Group classifies the financial instruments in the categories presented and conciliated with the Consolidated Balance Sheet as disclosed in Note 9.
Investments are classified into the following categories:
Held to maturity investments are classified as non-current assets unless they mature within 12 months of the balance sheet date. Investments classified as held to maturity have defined maturities and the Group has the intention and ability to hold them until the maturity date.
The investments measured at the fair value through profit or loss include the investments held for trading that the Group acquires with the purpose of trading in the short term. They are classified in the consolidated balance sheet as current assets.
The Company classifies an available-for-sale investment as non-current assets.
All purchases and sales of investments are recognised on the trade date, independently of the settlement date.
Investments are initially measured at fair value, which is the fair value of the consideration paid for them, including transaction costs in the case of available for sale assets and held to maturity investments.
Available-for-sale investments and investments measured at fair value through profit or loss are subsequently recorded at fair value excluding any deduction of transaction costs which may be incurred during its sale taking into consideration the stock market price at the balance sheet date. Investments in equity instruments that do not have a market price and whose fair value cannot be reliably measured are stated at cost less impairment losses.
Gains or losses arising from changes in fair value of available-for-sale investments are recorded directly under the Fair value reserve in Equity, until the investment is sold or otherwise disposed of, or until it is considered to be impaired, at which time the cumulative gain or loss previously recorded in equity is transferred to net profit or loss for the period.
Changes in the fair value of investments measured at fair value through profit or loss are included in the consolidated income statement for the period under financial expenses or gains.
Held to maturity investments are carried at amortized cost using the effective interest rate method, net of capital reimbursements and interest income received.
b) Accounts receivable
Trade accounts receivables and other accounts receivable are recorded at their nominal value and presented in the consolidated balance sheet net of eventual impairment losses, recognised under the allowance account Impairment losses on accounts receivable , in order to reflect its net realisable value.
Impairment is recognised if there is objective and measurable evidence that, as a result of one or more events that occurred, the balance will not be fully received. For this purpose, each group company takes into consideration market information that evidences that the client is not accomplishing its responsibilities as well as historic information about due and not received balances.
Recognized Impairment losses equal the difference between the carrying amount of the receivable and the corresponding present value of the estimated future cash-flows, discounted at the initial effective interest rate. The initial effective interest rate is considered null when the collection is expected within one year.
Financial liabilities and equity instruments are classified and accounted for based upon their contractual substance, independently from the legal form they assume.
Loans are recorded as liabilities at their nominal value net of up-front fees and commissions related to the issuance of those instruments. Financial expenses are calculated based on the effective interest rate and are recorded in the income statement on an accrual basis, in accordance with the accounting policy defined in Note 2.8. The portion of the interest charge regarding up-front fees and commissions, if not paid in the period, is added to the book value of the loan.
e) Trade accounts payable and other accounts payable
Trade and other accounts payable are stated at their nominal value, as they do not bear interests and the discount effect is considered immaterial.
The Group uses derivatives in the management of its financial risks, only to hedge such risks. Derivatives are not used by the Group for trading purposes.
The Group's criteria for classifying a derivative instrument as a cash flow hedge instrument include:
Cash flow hedge instruments used by the Group to hedge the exposure to changes in the interest rates of its loans are initially accounted for at value and subsequently adjusted to the corresponding fair value. Changes in fair value of these cash flow hedge instruments are recorded in equity under the caption Hedging reserves, and then recorded in the income statement over the same period in which the hedged instrument affects the income statement.
The fair value of these instruments is estimated by the Group using specific software based on the discounted cash flow of the difference between the fixed interest rate of the fixed leg and the indexed variable interest rate inherent to the variable leg.
Hedge accounting of derivative instruments is discontinued when the instrument matures or is sold. Whenever a derivative instrument can no longer be qualified as a hedging instrument, the fair value differences recorded and deferred in equity under the caption Hedging reserve are transferred to profit and loss of the year or in the carrying amount of the asset that resulted from the hedged forecast transaction. Subsequent changes in fair value are recorded in the income statement.
In those cases in which the derivatives, despite being negotiated to hedge financial risks inherent to the business (essentially, currency "forwards" to hedge future imports), do not fulfil the criteria for hedge accounting under IAS 39, changes in the fair value are recorded directly in the income statement.
When embedded derivatives exist, they are accounted for as separate derivatives when the risks and the characteristics are not closely related to economic risks and characteristics of the host contract and when these are not stated at fair value. Gains and losses which are not realizable are recorded in the Income statement.
Additionally, the Group also negotiates, in specific situations, interest rate derivatives and foreign exchange rate derivatives directed to hedge fair values. In these cases, the derivatives are stated at fair value through the Income statement. When the hedged instrument is not measured at fair value (i.e. loans which are recorded at amortized cost) the book value is adjusted by the amount which is effectively hedged through the profit and loss.
Equity instruments are those that represent a residual interest upon the Group's net assets and are recorded by the amount received, net of costs incurred with their issuance.
Cash and cash equivalents includes cash on hand, cash at banks, term deposits and other treasury applications which mature in less than three months and that are subject to insignificant risk of changes in value.
In the consolidated statement of cash flows, cash and cash equivalents also include bank overdrafts, which are included in the consolidated balance sheet caption bank loans.
Own shares are recorded at acquisition cost as a deduction to equity. Profits or losses resulting from disposal of own shares are recorded directly in equity not affecting the profit or loss for the period.
The non-current assets (or disposal group) are recorded as held for sale if it is expected that the book value will be recovered through the sale and not through the use in the operations. This condition is achieved only if the sale is highly probable and the asset (or disposal group) is available for the immediate sale in the actual conditions. Additionally, there must be in progress actions that should allow concluding the sale within 12 months counting from the classification´s date in this caption. The noncurrent assets (or disposal group) recorded as held for sale are booked at the lower amount of the historical cost or the fair value deducted from costs, not being amortized after being classified as held for sale.
Share based payments result from Deferred Performance Bonus Plans that are referenced to the evolution of the Sonae SGPS, SA shares' price.
Share based payments liabilities are measured at fair value on the date they are granted (usually in March each year) and are subsequently remeasured at the end of each reporting period based on the number of shares granted and the corresponding fair value at the closing date. These obligations are stated as staff costs and other current and non-current liabilities, and are recorded on a straight line basis, between the date the shares are granted and their vesting date, taking into consideration the time elapsed between these dates when referring to shares or call options which can be net settled through down payment. In the case of equity-settled share-based payment transactions, these obligations are stated as Personnel expenses and Reserves and are recorded on a straight line basis between the date the shares are granted and their vesting date.
Contingent liabilities are not recorded in the consolidated financial statements, being disclosed, unless the probability of a cash outflow is remote, in which case, no disclosure is made.
Contingent assets are not recorded in the consolidated financial statements but disclosed when the existence of future economic benefit is probable.
The tax charge for the year is determined based on the taxable income of each company included in the consolidation perimeter taking into consideration deferred taxes when applicable.
Current income tax is determined based on the taxable income of companies included in the consolidation, in accordance with the tax rules in force in their respective country of incorporation.
Deferred taxes are calculated using the balance sheet liability method, reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are calculated and annually remeasured using the tax rates that have been enacted or substantively enacted and therefore expected to apply in the periods when the temporary differences are expected to reverse.
Deferred tax assets are recognized only when it is probable that sufficient taxable profits will be available against which the deferred tax assets can be used, or when taxable temporary differences are recognized and expected to reverse in the same period.
Deferred tax assets and liabilities are not recognized when the temporary differences arise from goodwill or from the initial recognition of assets and liabilities except if the referred assets and liabilities are recognized in result of a business combination.
At each balance sheet date a review is made of the deferred tax assets recognized, being reduced whenever their future use is no longer probable.
Deferred tax assets and liabilities are recorded in the income statement, except if they relate to items directly recorded in equity. In these cases the corresponding deferred tax is recorded in Equity.
Revenue from the sale of goods is recognized in the consolidated income statement when the risks and benefits have been transferred to the buyer and the amount of the revenue can be measured reasonably. Sales are recorded net of sales taxes and discounts and other expenses arising from the sale, and are measured as the fair value of the amount received or receivable.
Revenue from services rendered is recorded in the consolidated income statement taking into consideration the stage of completion of the transaction at the balance sheet date.
Revenue related to services rendered by travel agencies is recognized with the issuance of invoice. At balance sheet date, adjustments are made under Other current assets and Other current liabilities in order to accrue for revenue of the services already rendered but whose billing had not occurred yet, as well as for the associated expenditures.
Dividends are recognized as income in the year in which they are attributed to the shareholders.
Income and expenses are recorded in the year to which they relate, independently of the date of the corresponding payment or receipt. Income and expenses for which their real amount is not known are estimated.
Other current assets and Other current liabilities include income and expenses of the reporting year which will only be invoiced in the future. Those captions also include receipts and payments that have already occurred but will only correspond to income or expenses in future years, thus being recorded in the income statement of the future period.
Transactions are recorded in the financial statements of each subsidiary based on the functional currency of that subsidiary using the exchange rates on the date of each transaction.
At each balance sheet date, all monetary assets and liabilities expressed in foreign currencies are translated to the functional currency of each entity at the foreign exchange rates prevailing as of that date. All non-monetary assets and liabilities recorded at fair value and stated in foreign currencies are converted to the functional currency of each subsidiary, using the exchange rate at the date the fair value was determined.
Exchange gains and losses arising from differences between the historical foreign exchange rates and those prevailing at the date of collection, payment or the date of the balance sheet, are recorded as profits or loss for the period, except those related to non-monetary assets or liabilities, in which, the adjustments to the fair value are directly recorded under equity.
When exposure to currency risk is aimed to be minimized, the Group negotiates hedging currency derivatives (Note 2.11.f).
Post-balance-sheet events that provide additional information about conditions that existed at the balance sheet date (adjusting events), are reflected in the consolidated financial statements. Post-balance-sheet events that are not adjusting events are disclosed in the notes to the consolidated financial statements when considered to be material.
The most significant accounting estimates reflected in the consolidated financial statements include:
Estimates used are based on the best information available during the preparation of consolidated financial statements and are based on best knowledge of past and present events. Although future events are neither controlled by the Group nor foreseeable, some could occur and have impact on the estimates. Changes to the estimates used by the management that occur after the date of these consolidated financial statements, will be recognised in net income, in accordance with IAS 8, using a prospective methodology.
The main estimates and assumptions in relation to future events included in the preparation of consolidated financial statements are disclosed in the correspondent notes.
In each year the segments applicable to the group are identified. As at 31 December 2008, no secondary segment was identified, considering that the Group operates mainly in Portugal, and that a business segment was chosen as a primary segment.
Portuguese commercial legislation requires that at least 5% of annual net profit must be appropriated to a legal reserve, until such reserve reaches at least 20% of the share capital. This reserve is not distributable, except in the case of liquidation of the Company, but it may be used to absorb losses, after all the other reserves are exhausted, or to increase the share capital.
The Hedging reserve reflects the changes in fair value of "cash flow" hedging derivatives that are considered as effective (Note 2.11.f) and is not distributable or used to absorb losses.
The currency translation reserve corresponds to exchange differences relating to the translation from the functional currencies of the Group's foreign subsidiaries and joint ventures into Euro, in accordance with the accounting policy described in Note 2.17.
This reserve arises on the revaluation of available-for-sale financial assets as mentioned in Note 2.11.a).
Risk management general principles are approved by the Board of Directors, and its implementation is supervised by the group's finance department.
The interest and exchange rate risk have a decisive importance in the Group's market risk management.
The Group uses derivatives to hedge certain exposures related to its market risk and does not enter into derivatives or other financial instruments for trading or for speculative purposes.
The group exposure to the interest rate risk arises mainly from the long term loans which bear interests indexed to Euribor.
The group aim is to limit the cash-flow and net income volatility having in mind their operational activity profile by the use of an adequate combination of variable and fix rate debt. Group's policy allows interest rate derivates usage in order to reduce Euribor's variability exposure and not for speculative purposes.
Derivatives used by the group in interest rate risk management qualify as hedging instruments as they configure perfect hedging operations. Conditions established for these cash flow hedge instruments are identical to those of the corresponding loans in terms of base rates, calculation rules, rate setting dates and repayment schedules of the loans and for these reasons they qualify as perfect hedges.
The interest rate sensitivity analysis is based on the following assumptions:
Changes in market interest rates affect the interest income or expense of variable interest financial instruments (the interest payments of which are not designated as hedged items of cash flow hedges against interest rate risks). As a consequence, they are included in the calculation of income-related sensitivities;
Changes in market interest rates only affect interest income or expense in relation to financial instruments with fixed interest rates if these are recognised at their fair value. As such, all financial instruments with fixed interest rates that are carried at amortised cost are not subject to interest rate risk as defined in IFRS 7;
In the case of fair value hedges designated for hedging interest rate risks, when the changes in the fair values of the hedged item and the hedging instrument attributable to interest rate movements are offset almost completely in the income statement in the same period, these financial instruments are also not exposed to interest rate risk;
Changes in the market interest rate of financial instruments that were designated as hedging instruments in a cash flow hedge (to hedge payment fluctuations resulting from interest rate movements) affect the hedging reserve in equity and are therefore taken into consideration in the equity-related sensitivity calculations;
Changes in the fair value of derivative financial instruments and other financial assets and liabilities are estimated by discounting the future cash flows to net present values using appropriate market rates prevailing at the year end, and assuming a parallel shift in interest rate curves;
For the purposes of sensitivity analysis, such analysis is performed based on all financial instruments outstanding during the year.
Under the previously mentioned assumptions, it is expected that the individual exposure to interest rate risk is low. If interest rates of euro had been 75 bp higher (lower) during 2008, the company net profit before tax at 31 December 2008 would decrease/ increase by approximately 6.4 million euro (4.1 million in 2007). The impact in equity would be an increase (decrease) of, approximately, 2.5 million Euro (2.4 million Euro), considering the contractual fixing dates and excluding other effects arising from the company operations.
The impact on the financial statements of changes in exchange rate is immaterial, as the most part of the transactions are denominated in Euro. Sonae Distribuição is only exposed to foreign exchange risk due to inventories imports made and denominated in US Dollars.
The exchange risk management purpose is to provide a stable decision platform when deciding and negotiating the purchases of inventories establishing fixed exchange rates. The hedging follows all the purchase process, since procurement up to the formal agreement of purchase.
The exchange risk exposure is monitored through the purchase of forwards with the goal of minimising the negative impacts of volatility in exposure level as a consequence of changes of the amounts of imports denominated in other currencies rather than euro.
As at 31 December 2008 and 2007 the assets and liabilities denominated in a currency different from the subsidiary functional currency were the following (amounts in Euro):
| ASSETS | LIABILITIES | |||
|---|---|---|---|---|
| 31.12.2008 | 31.12.2007 | 31.12.2008 | 31.12.2007 | |
| Brazilian real | 13,746,578 | 1,311,595 | 1,972,126 | 4,585,100 |
| British pound | 99,811 | - | 165,548 | 113,478 |
| US dollar | 2,380,245 | 877,150 | 6,977,103 | 3,574,320 |
| Hungarian Florins | 838 | 61,351 | - | - |
The amounts presented above, only include assets and liabilities expressed in different currency than the functional currency used by the affiliated or jointly controlled company. Therefore it does not represent any risk of financial statements translation. Considering the exposure above, which is considered immaterial, no sensitivity analysis is disclosed.
The purpose of liquidity risk management is to ensure, at all times, that the group has the financial capacity to fulfil its commitments as they become due and to carry on its business activities and strategy, through the management of the trade off cost and maturity of debt.
The group follows an active policy of re-financing its debts by maintaining a high level of unused and available on demand resources to face short term needs and by increasing or maintaining an adequate debt maturity, according to the estimated cash-flows, and to the capability of leveraging its balance sheet.
Negotiating contractual terms which reduce the possibility of the lenders being able to demand an early termination is also considered as an important mean of managing liquidity risk. The group also assures, in its relationship with financial institutions, a high level of diversification of financing sources and counterparties, in order to ease the ability of entering new loan agreements and to minimize the effects of any relationship discontinuance.
The liquidity analysis of each class of financial liabilities is presented in the corresponding notes.
The group is exposed to the credit risk in its current operational activity. The credit risk in the scope of its current operational activity is managed through a system of gathering financial and qualitative information from independent entities that supply risk information, in order to allow the assessment of credit risk from debtors. The credit risk from suppliers arises from advances made to or discounts billed to suppliers and is mitigated by the expectation of maintaining the commercial relationship. The amounts presented in the balance sheet are net of impairment losses, thus reflect its fair value.
The group is also exposed to the credit risk in its relationship with financial institutions, in result of bank deposits, debt instruments available facilities, derivates, among others.
The credit risk is limited by risk concentration management, and by a selection of counterparties, which have a high national and international prestige, with at least a credit rating of BBB or an equivalent rating issued by other international agencies.
The subsidiaries, its head offices and percentage of capital held as of 31 December 2008 and 2007 are as follows:
| Head | % held 31.12.2008 |
% held 31.12.2007 |
|||||
|---|---|---|---|---|---|---|---|
| Company | Office | Direct | Total | Direct | Total | ||
| Parent Cmpany | |||||||
| Sonae Distribuição SGPS, S.A. Sonae Distribuição |
Matosinhos | ||||||
| Arat Inmuebles, S.A. a) |
Madrid(Spain) | 100,00% | 100,00% | - | - | ||
| Azulino - Imobiliária, S.A. b) |
Maia | 100,00% | 100,00% | - | - | ||
| Best Offer – Prestação de Informações pela Internet, S.A. | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Bertimóvel - Sociedade Imobiliária, S.A. | Matosinhos | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Bikini, Portal de Mulheres, S.A. | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Canasta – Empreendimentos Imobiliários, S.A. | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Carnes do Continente – Industria e Distribuição Carnes, S.A. | Santarém | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Chão Verde - Sociedade de Gestão Imobiliária, S.A. | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Citorres - Sociedade Imobiliária, S.A. | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Cumulativa - Sociedade Imobiliária, S.A. | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Contibomba - Comércio e Distribuição de Combustíveis, S.A. | Matosinhos | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Contimobe - Imobiliária de Castelo de Paiva, S.A. | Castelo de Paiva | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Continente Hipermercados, S.A. | Lisbon | 100,00% | 100,00% | 99,86% | 99,86% | ||
| Difusão - Sociedade Imobiliária, S.A. | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Sport Zone España- Comercio de Artículos de Deporte, S.A. | Madrid (Spain) | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Edições Book.it, S.A. c) |
Matosinhos | 100,00% | 100,00% | - | - | ||
| Efanor – Design e Serviços, S.A. | Matosinhos | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Efanor - Industria de Fios, S.A. | Matosinhos | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Estevão Neves - Hipermercados da Madeira, S.A. | Funchal | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Farmácia Selecção, S.A. d) |
Matosinhos | 100,00% | 100,00% | - | - | ||
| Fozimo - Sociedade Imobiliária, S.A. | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Fozmassimo - Sociedade Imobiliária, S.A. | Matosinhos | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Fundo de Investimento Imobiliário Imosonae Dois | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Global S Hipermercado, Lda. | Matosinhos | 100,00% | 100,00% | 100,00% | 100,00% | ||
| IGI – Investimento Imobiliário, S.A. | Porto | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Igimo – Sociedade Imobiliária, S.A. | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Iginha – Sociedade Imobiliária, S.A. | Matosinhos | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Imoconti – Sociedade Imobiliària, S.A. | Matosinhos | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Imoestrutura – Sociedade Imobiliária, S.A. | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Imomuro – Sociedade Imobiliária, S.A. | Matosinhos | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Imoresultado – Sociedade Imobiliária, S.A. | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Imosistema – Sociedade Imobiliária, S.A. | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Infofield – Informática, S.A. | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Inventory - Acessórios de Casa, S.A. | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Marcas MC, zRT | Budapest (Hungary) | 100,00% | 100,00% | 100,00% | 100,00% | ||
| MJLF-Empreendimentos Imobiliários, S.A. | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Modelo - Distribuição de Materiais de Construção, S.A. | Maia | 50,00% | 50,00% | 50,00% | 50,00% | ||
| Modalfa – Comércio e Serviços, S.A. | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Modelo.Com - Vendas por Correspondência, S.A. | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Modelo Continente Hipermercados, S.A. | Matosinhos | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Modelo Continente – Operações de Retalho, S.G.P.S., S.A. | Matosinhos | 100,00% | 100,00% | 100,00% | 100,00% |
| % of capital held 31.12.2008 |
Head | % of capital held 31.12.2007 |
||||||
|---|---|---|---|---|---|---|---|---|
| Company | Office | Direct | Total | Direct | Total | |||
| Modelo Continente Seguros – Sociedade de Mediação, S.A. | Porto | 75,00% | 75,00% | 75,00% | 75,00% | |||
| Modelo Hiper Imobiliária, S.A. | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |||
| Modelo Hipermercados Trading, S.A. | Madrid (Spain) | 100,00% | 100,00% | 100,00% | 100,00% | |||
| NA - Equipamentos para o Lar, S.A. | Matosinhos | 100,00% | 100,00% | 100,00% | 100,00% | |||
| NA - Comércio de Artigos de Desporto, S.A. | Matosinhos | 100,00% | 100,00% | 100,00% | 100,00% | |||
| Pharmacontinente-Saúde e Higiene, S.A. | Matosinhos | 100,00% | 100,00% | 100,00% | 100,00% | |||
| Predicomercial – Promoção Imobiliária, S.A. | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |||
| Peixes do Continente-Indústria e Distribuição de Peixes, S.A. | Matosinhos | 100,00% | 100,00% | 100,00% | 100,00% | |||
| Solaris Supermercados, S.A. | Matosinhos | 100,00% | 100,00% | 100,00% | 100,00% | |||
| Selifa - Sociedade de Emprendimentos Imobiliários de Fafe, S.A. | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |||
| Sempre à Mão - Sociedade Imobiliária, S.A. | Matosinhos | 100,00% | 100,00% | 100,00% | 100,00% | |||
| Sesagest – Projectos e Gestão Imobiliária, S.A. | Porto | 100,00% | 100,00% | 100,00% | 100,00% | |||
| e) | SIAL Participações, Ltda | São Paulo (Brazil) | 100,00% | 100,00% | - | - | ||
| Sociloures – Sociedade Imobiliária, S.A. | Matosinhos | 100,00% | 100,00% | 100,00% | 100,00% | |||
| Socijofra – Sociedade Imobiliária, S.A. | Gondomar | 100,00% | 100,00% | 100,00% | 100,00% | |||
| Soflorin, B.V. | Amsterdam (Holand) | 100,00% | 100,00% | 100,00% | 100,00% | |||
| Sonae Capital Brasil, Ltda | São Paulo (Brazil) | 100,00% | 100,00% | 100,00% | 100,00% | |||
| f) | SM Empreendimentos Imobiliários, Ltda | Porto Alegre (Brazil) | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Sonae Retalho España – Servicios Generales, S.A. | Madrid (Spain) | 100,00% | 100,00% | 100,00% | 100,00% | |||
| g) | Sonaecor- Comércio Y Distribución, S.A. | Madrid (Spain) | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Sondis Imobiliária, S.A. | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |||
| Sontária - Empreendimentos Imobiliários, S.A. | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |||
| Sonvecap, B.V. | Amsterdam (Holand) | 100,00% | 100,00% | 100,00% | 100,00% | |||
| Sport Zone – Comércio de Artigos de Desporto, S.A. | Matosinhos | 100,00% | 100,00% | 100,00% | 100,00% | |||
| Tlantic Portugal - Sistemas de Informação, S.A. | Matosinhos | 100,00% | 100,00% | 100,00% | 100,00% | |||
| Tlantic Sistemas de Informação, Ltda | Porto Alegre (Brazil) | 100,00% | 100,00% | 100,00% | 100,00% | |||
| Todos os Dias – Comércio Ret. E Explor.Centros Comerciais, S.A. | Matosinhos | 100,00% | 100,00% | 100,00% | 100,00% | |||
| Valor N, S.A. | Matosinhos | 100,00% | 100,00% | 100,00% | 100,00% | |||
| Worten – Equipamentos para o Lar, S.A. | Matosinhos | 100,00% | 100,00% | 100,00% | 100,00% | |||
| a) | Worten España Distribución, S.L. | Madrid (Spain) | 100,00% | 100,00% | - | - |
These companies have been included in the consolidation by the integral consolidation method.
Jointly controlled companies included in the consolidated financial statements, their head offices and the percentage of share capital held by the Group as at 31 December 2008 and 2007 are as follows:
| % of capital held | % of capital held | ||||
|---|---|---|---|---|---|
| Head | 31.12.2008 | 31.12.2007 | |||
| Company | Office | Direct | Total | Direct | Total |
| a) Equador & Mendes-Agencia de viagens e Turismo, Lda | Lisbon | 50.00% | 50.00% | 75.00% | 67.50% |
| a) Nova Equador Internacional-Agencia de Viagens e Turismo, Lda | Lisbon | 50.00% | 50.00% | 75.00% | 67.50% |
| a) Nova Equador P.C.O. E Eventos, Sociedade Unipessoal, Lda | Lisbon | 50.00% | 50.00% | 75.00% | 67.50% |
| a) Star Viagens e Turismo, S.A. | Lisbon | 50.00% | 50.00% | 90.00% | 90.00% |
| b) Raso, SGPS, S.A. | Lisbon | 50.00% | 50.00% | - | - |
| c) Geotur - Viagens e Turismo, S.A. | Lisbon | 50.00% | 50.00% | - | - |
| c) Marcas do Mundo - Viagens e Turismo, Sociedade Unipessoal, lda | Lisbon | 50.00% | 50.00% | - | - |
| c) Movimento Viagens - Viagens e Turismo, Sociedade Unipessoal, Lda | Lisbon | 50.00% | 50.00% | - | - |
| c) Viajens y Turismo de Geotur España, S.L. | Madrid(Spain) | 50.00% | 50.00% | - | - |
Companies included in the consolidation by the integral consolidation method in the last period:
These entities are consolidated using the proportionate consolidation method, as referred to in Note 2.2.b).
Aggregate amounts, excluding intragroup eliminations, corresponding to the percentage of capital held in these jointly controlled companies included in the financial statements for the period, using the proportionate consolidation method, can be summarised as follows:
| 31.12.2008 | |
|---|---|
| Non-current assets | 32,979,413 |
| Current Assets | 23,608,916 |
| Non-current liabilities | 3,384,155 |
| Current liabilities | 24,677,123 |
| Income | 26,367,368 |
| Expenses | 27,296,543 |
Associated companies, their head offices and the percentage of share capital held as at 31 December 2008 and 2007 are as follows:
| Head | 31.12.2008 | 31.12.2007 | ||||||
|---|---|---|---|---|---|---|---|---|
| Company | Office | Direct | Total | Direct | Total | 31.12.2008 | 31.12.2007 | |
| Fundo de Investimento Imobiliário Fechado | ||||||||
| Imosede | Maia | 49.00% | 49.00% | 42.16% | 42.16% | 62,809,585 | 34,616,937 | |
| a) | Mundo Vip - Operadores Turísticos, S.A. Sonaegest - Soc. Gestora de Fundos de |
Lisbon | - | - | 33.33% | 33.33% | 2,851,706 | |
| Investimento,S.A. Sempre a Postos - Produtos Alimentares e |
Maia | 40.00% | 40.00% | 40.00% | 40.00% | 719,654 | 669,644 | |
| Utilidades, S.A. | Lisbon | 25.00% | 25.00% | 25.00% | 25.00% | 1,142,244 | 943,957 | |
| 64,671,483 | 39,082,244 |
a) Associated company sold in 2009, and classified as Available for sale.
Associated companies are consolidated using the equity method, as referred to in Note 2.2.c).
As at 31 December 2008 and 2007, aggregated values of main financial indicators of associated companies are as follows:
| Total Assets | Total Liabilities | Income | Net profit for the year | |||||
|---|---|---|---|---|---|---|---|---|
| 31.12.08 | 31.12.07 | 31.12.08 | 31.12.07 | 31.12.08 | 31.12.07 | 31.12.08 | 31.12.07 | |
| Fundo de Investimento Imobiliário Fechado Imosede |
145,208,519 | 86,008,228 | 17,721,259 | 5,333,873 | 47,387,840 | 4,340,775 | 25,606,150 | (504,340) |
| Sonaegest - Soc. Gestora de Fundos de Investimento,S.A. |
1,939,235 | 1,858,032 | 140,099 | 183,920 | 840,555 | 714,241 | 125,023 | 276,873 |
| Sempre a Postos - Produtos Alimentares e Utilidades, S.A. |
16,226,862 | 13,396,531 | 11,657,883 | 9,931,743 | 64,178,125 | 64,482,822 | 1,104,191 | 1,437,602 |
| 163,374,616 | 101,262,791 | 29,519,241 | 15,449,536 | 112,406,520 | 69,537,838 | 26,835,364 | 1,210,135 |
During the periods ended 31 December 2008 and 2007, movements in Investments in associated companies, are made up as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Non-current | Non-current | |
| Investiments in associated companies | ||
| Opening balance | 39,082,244 | 17,823,351 |
| Acquisitions during the period | 14,878,381 | 21,011,577 |
| Disposals during the period | - | - |
| Transfers | (2,851,706) | - |
| Equity method | 13,562,564 | 247,316 |
| 64,671,483 | 39,082,244 |
Investments in other companies, their head offices, percentage of share capital held and book value as at 31 December 2008 and 2007 are as follows:
| % of capital held | % of capital held | Book Value | |||||
|---|---|---|---|---|---|---|---|
| Head | 31.12.2008 | 31.12.2007 | |||||
| Company | Office | Direct | Total | Direct | Total | 31.12.2008 | 31.12.2007 |
| Dispar-Distrib. De Participações, SGPS, S.A. | Lisbon | 7.14% | 7.14% | 7.14% | 7.14% | 9,976 | 9,976 |
| Insco - Insular de Hipermercados, S.A. | Ponta Delgada | 10.00% | 10.00% | 10.00% | 10.00% | 748,197 | 748,197 |
| Puravida - Viagens e Turismo, Lda | Lisbon | 50.00% | 50.00% | - | - | 1,584,193 | - |
| Outros | - | - | - | - | 16,605 | 240,997 | |
| 2,358,971 | 999,170 |
During the periods ended 31 December 2008 and 2007, movements in non-current investments, are made up as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Investments in other companies | ||
| Initial balance as at January,1 | 785,486 | 33,804,781 |
| Increases | 1,000 | 4,988 |
| Changes in the perimeter - Acquisitions | 14,608 | - |
| Changes in the perimeter - Disposals | (13,158) | (523,913) |
| Transfers (note 8) | (32,500,370) | |
| Closing balance as at December, 31 | 787,936 | 785,486 |
| Accumulated impairment losses (note 31) | (13,158) | (26,316) |
| 774,778 | 759,170 | |
| Advanced payments made for financial investments | ||
| Initial balance as at January,1 | 240,000 | 900,000 |
| Changes in the perimeter - Acquisitions | 1,584,193 | - |
| Transfers (note 8) | (240,000) | (660,000) |
| Closing balance as at December, 31 | 1,584,193 | 240,000 |
The amount of investments in other companies is mainly related with investments in non listed companies, whose fair value was not estimated because it can't be measured in a reliable way. Therefore, they are recorded by their acquisition cost, net of impairment losses.
8.1 - Changes made to the allocation of Fair Value of concentration of company activities done on the previous period
The subsidiary Continente Hipermercados S.A. (ex-Carrefour Portugal) was acquired by the end of 2007, and therefore no fair value allocation to the acquired assets was made at that date. This process was concluded over the twelve months period ended 31 December 2008, reported to 31 December 2007, and is reflected in the new referential shown in accordance with the International Financial Reporting Standards ("IFRS").
| Acquisition Date | ||||
|---|---|---|---|---|
| Book | Adjustments to Fair | Fair | Published on | |
| Value | Value | Value | 31.12.2007 | |
| Acquired net assets | ||||
| Tangible and intangible assets | 272,281,660 | 59,195,468 | 331,477,128 | 267,013,229 |
| Inventories | 34,475,424 | (13,211,127) | 21,264,297 | 34,475,424 |
| Other current assets | 5,788,904 | 5,788,904 | 5,788,904 | |
| Cash and cash equivalents | 1,347,294 | 1,347,294 | 1,347,294 | |
| Deferred tax | 449,449 | 924,902 | 1,374,351 | 1,845,583 |
| Loans | (83,038,919) | (83,038,919) | (83,038,919) | |
| Other liabilities | (150,218,081) | (7,188,445) | (157,406,526) | (150,218,081) |
| 81,085,731 | 39,720,798 | 120,806,529 | 77,213,434 | |
| Goodwill (Note 11) | 39,675,995 | 464,661,539 | 504,847,714 | |
| Minority interests | 44,803 | (149,196) | (104,393) | |
| Acquisition price | 39,720,798 | 585,318,872 | 581,956,755 | |
| Total consideration paid | 611,200,000 | 611,200,000 | ||
| Price adjustment | (30,113,103) | (30,414,000) | ||
| Costs that arise from acquisition | 4,231,975 | 1,170,755 | ||
| 585,318,872 | 581,956,755 | |||
| Net cash outflow arising from acquisition | ||||
| Payments made | 611,200,000 | 611,200,000 | ||
| Costs that arose from acquisition | 4,231,975 | 1,170,755 | ||
| Cash and cash equivalents acquired | (1,347,294) | (1,347,294) | ||
| Amount received as a result of the price adjustment | (30,113,103) | - | ||
| 583,971,578 | 611,023,461 |
In the consolidated statement of cash flows for the twelve months period ended 31 December 2008, the caption "Cash receipts related to Investments" includes a price adjustment in the amount of 30,113,103 Euro.
Main acquisitions of Companies over the twelve month period ended 31 December 2008 are as follows:
| % of capital held | |||
|---|---|---|---|
| Head | 31.12.2008 | ||
| Company | Office | Direct | Total |
| Arat Inmuebles, S.A. | Madrid (Spain) | 100.00% | 100.00% |
| Azulino - Imobiliária, S.A. | Maia | 100.00% | 100.00% |
| Worten España Distribución, S.L. | Madrid (Spain) | 100.00% | 100.00% |
| Geotur - Viagens e Turismo, S.A. | Lisbon | 50.00% | 50.00% |
| Marcas do Mundo -Viagens e Turismo, Unipessoal, Lda | Lisbon | 50.00% | 50.00% |
| Movimento Viagens - Viagens e Turismo, Unipessoal, Lda | Lisbon | 50.00% | 50.00% |
| Viajens y Turismo de Geotur España, S.L. | Madrid (Spain) | 50.00% | 50.00% |
8.2.1 – The acquisitions of Arat – Inmuebles e Worten España had the following impact on the consolidated financial statements as at 31 December 2008:
| Book | Fair value | Total | |
|---|---|---|---|
| Value | allocation | Adjusted | |
| Acquired net assets | |||
| Tangible and Intangible Assets | 24,588,655 | 17,049,979 | 41,638,634 |
| Inventories | 13,437,316 | (6,810,447) | 6,626,869 |
| Other assets | 5,389,541 | (188,708) | 5,200,833 |
| Cash and cash equivalents | 1,256,349 | 1,256,349 | |
| Deferred taxes | - | 10,149,074 | 10,149,074 |
| Loans | (9,127,271) | (9,127,271) | |
| Other liabilities | (35,437,840) | (3,482,495) | (38,920,335) |
| 106,750 | 16,717,403 | 16,824,153 | |
| Negative Goodwill | (9,864,000) | ||
| Acquisition price | 6,960,153 | ||
| Payments made | 1 | ||
| Price adjustment | 6,514,481 | ||
| Costs that arose from acquisition | 445,671 | ||
| 6,960,153 | |||
| Net cash outflow arising from acquisition | |||
| Payments made | 1 | ||
| Costs that arose from acquisition | 445,671 | ||
| Cash and cash equivalents acquired | (1,256,349) | ||
| (810,677) |
The impact of the acquisitions on the consolidated income statement was as follows:
| Operational income | 25,248,006 | |
|---|---|---|
| Operational expenses | (28,051,593) | |
| Net financial expenses | (389,875) | |
| Profit/(loss) before income tax | (3,193,462) | |
| Income tax | 4,867,821 | |
| Net profit/(loss) for the year | 1,674,359 |
If the above mentioned purchases had been reported with reference to 1 January 2008, the total operational income would have increased by 102,864,512 Euro.
8.2.2. - The acquisitions of Azulino-Imobiliária, S.A. and the Travel agencies Companies had the following impact on the consolidated financial statements as at 31 December 2008:
| Acquisition date | |||||
|---|---|---|---|---|---|
| Travel | |||||
| Azulino | Agencies | Total | |||
| Book | Fair value | Total | Book | ||
| Value | Allocation | Fair Value | Value | ||
| Acquired net assets | |||||
| Tangible and intangible assets | 3,749,652 | 920,348 | 4,670,000 | 811,479 | 5,481,479 |
| Other financial investments | - | 14,607 | 14,607 | ||
| Payments made in advance for financial investments | - | 1,584,193 | 1,584,193 | ||
| Other current assets | 82,450 | 82,450 | 13,642,800 | 13,725,250 | |
| Cash and cash equivalents | 10,552 | 10,552 | 55,837 | 66,389 | |
| Deferred taxes | 26,103 | (243,892) | (217,789) | (23,992) | (241,781) |
| Loans | - | - | (1,118,443) | (1,118,443) | |
| Other liabilities | (4,250,293) | (4,250,293) | (12,952,393) | (17,202,686) | |
| (381,536) | 676,456 | 294,920 | 2,014,089 | 2,309,009 | |
| Goodwill (Note 11) | 203,106 | 10,014,411 | 10,217,517 | ||
| Acquisition price | 498,026 | 12,028,500 | 12,526,526 | ||
| Payments made | 498,026 | 12,028,500 | 12,526,526 | ||
| 498,026 | 12,028,500 | 12,526,526 | |||
| Net cash flow arising from acquisition | |||||
| Payments made | 498,026 | 12,028,500 | 12,526,526 | ||
| Cash and cash equivalents | (10,552) | (55,837) | (66,389) | ||
| 487,474 | 11,972,663 | 12,460,137 |
The impact of the acquisitions on the consolidated income statement was as follows:
| Operational income Operational expenses |
13.011.388 (13.186.673) |
|
|---|---|---|
| Net Financial expenses | (31.480) | |
| Profit/(loss) before income tax | (206.765) | |
| Income tax | 23.051 | |
| Net profit/(loss) for the year | (183.714) | |
If the above mentioned purchases had been reported with reference to 1 January 2008, the total operational income would have increased by 56,677,116 Euro.
Main disposals of companies over the twelve month period ended 31 December 2008 are as follows:
| % of held capital | % of held capital | |||||
|---|---|---|---|---|---|---|
| Head | At disposal date | 31.12.2007 | ||||
| Company | Office | Direct | Total | Direct | Total | |
| Equador & Mendes-Agencia de viagens e Turismo, Lda | Lisbon | 50.00% | 50.00% | 75.00% | 67.50% | |
| Nova Equador Internacional-Agencia de Viagens e Turismo, Lda | Lisbon | 50.00% | 50.00% | 75.00% | 67.50% | |
| Nova Equador P.C.O. E Eventos, Sociedade Unipessoal, Lda | Lisbon | 50.00% | 50.00% | 75.00% | 67.50% | |
| Star Viagens e Turismo, S.A. | Lisbon | 50.00% | 50.00% | 90.00% | 90.00% | |
The net assets of the affiliated companies at the disposal date and 31 December 2008 are as follows:
| Disposal date | |
|---|---|
| Disposal net assets | |
| Tangible and intangible assets | 2,710,506 |
| Goodwill (Note 11) | 9,394,261 |
| Deferred taxes | 39,616 |
| Other current assets | 14,058,148 |
| Cash and cash equivalents | 122,787 |
| Other liabilities | (14,089,442) |
| 12,235,875 | |
| Minority interests | (78,917) |
| Assets accounted as Available for Sale | (4,863,383) |
| Gain/(loss) in disposal | 2,062,991 |
| Disposal price | 9,356,566 |
| Net cash inflow arising from disposals | |
| Cash consideration received | 9,356,566 |
| Cash and cash equivalents disposed of | (122,787) |
| 9,233,779 |
The net income of that subsidiary until its disposal date is as follows. After that date those companies were consolidated using the proportionate method.
| 2008 | |
|---|---|
| Services rendered | 101,395,269 |
| Other operational income | 624,364 |
| Other operational expenses | (98,631,551) |
| Net financial expenses | (145,900) |
| Net profit before income tax | 3,242,182 |
| Income tax | (875,463) |
| Net profit/(loss) | 2,366,719 |
Main acquisitions of Companies over the twelve month period ended 31 December 2007 are as follows:
| % of capital held | |||
|---|---|---|---|
| Head | 31.12.2007 | ||
| Company | Office | Direct | Total |
| Iginha-Sociedade Imobiliária, S.A | Matosinhos | 100.00% | 100.00% |
| Modelo Continente Seguros-Sociedade de Mediação, Ldª | Porto | 75.00% | 75.00% |
| Valor N, S.A. | Matosinhos | 100.00% | 100.00% |
| Continente Hipermercados, S.A. | Lisbon | 99.86% | 99.86% |
The acquisitions referred above, had the following impact on the consolidated financial statements as at 31 December 2007:
| Others | Others | Others | Continente Hipermercados |
Total | 31.12.2007 | |
|---|---|---|---|---|---|---|
| Book | Fair Value | Total | ||||
| Value | Allocation | Fair Value | 31.12.2007 | |||
| Acquired net assets | ||||||
| Tangible and intangible | ||||||
| assets (Note 10) | 14,120,204 | 1,341,202 | 15,461,406 | 267,013,229 | 282,474,635 | 285,320,526 |
| Other current assets | 1,735,726 | 1,735,726 | 40,264,328 | 42,000,054 | 40,399,583 | |
| Cash and cash equivalents | 510,473 | 510,473 | 1,347,294 | 1,857,767 | 1,801,528 | |
| Deferred taxes | 8,808 | (355,418) | (346,610) | 1,845,583 | 1,498,973 | 1,564,950 |
| Loans | (6,821,755) | (6,821,755) | (83,038,919) | (89,860,674) | (83,038,919) | |
| Other liabilities | (8,696,570) | (8,696,570) | (150,218,081) | (158,914,651) | (167,654,589) | |
| 856,886 | 985,784 | 1,842,670 | 77,213,434 | 79,056,104 | 78,393,079 | |
| Goodwill (Note 11) | 377,371 | 504,847,714 | 505,225,085 | |||
| Minority Interests | (12,476) | (104,393) | (116,869) | |||
| Acquisition price | 2,207,565 | 581,956,755 | 584,164,320 | |||
| Payments made | 9,029,320 | 611,200,000 | 620,229,320 | |||
| Price adjustment | (30,414,000) | (30,414,000) | ||||
| Financial debt at the acquisition date | (6,821,755) | (6,821,755) | ||||
| Costs that arose from acquisition | 1,170,755 | 1,170,755 | ||||
| 2,207,565 | 581,956,755 | 584,164,320 | ||||
| Net cash outflow from acquisition | ||||||
| Payments made | 9,029,320 | 611,200,000 | 620,229,320 | |||
| Costs that arose from acquisition | 1,170,755 | 1,170,755 | ||||
| Intragroup loans at acquisition date | (6,821,755) | (6,821,755) | ||||
| Cash and cash equivalents | (510,473) | (1,347,294) | (1,857,767) | |||
| 1,697,092 | 611,023,461 | 612,720,553 |
The impact of the above mentioned acquisitions on the consolidated income statement is as follows:
| Operational income | 791,800 | |
|---|---|---|
| Operational expenses | (1,139,987) | |
| Net financial expenses | (605,994) | |
| Net profit before income tax | (954,181) | |
| Income tax | 64,730 | |
| Net profit/(loss) | (889,451) | |
If the above mentioned purchases had been reported with reference to 1 January 2007 the operating income would have increased by 589,137,736 Euro.
Main disposals of companies over the twelve month period ended 31 December 2007 are as follows:
| % of capital held | % of capital held | ||||
|---|---|---|---|---|---|
| Head | At disposal date | 31.12.2006 | |||
| Company | Office | Direct | Total | Direct | Total |
| Imoponte-Sociedade Imobiliária, S.A. | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
The net assets of affiliated companies at the disposal date are as follows:
| Affiliated companies | ||||||
|---|---|---|---|---|---|---|
| Disposal Date | 31-12-2006 | |||||
| Net assets disposed of | ||||||
| Tangible assets | 9,928,909 | 9,700,630 | ||||
| Deferred tax (note 19) | 910,749 | 871,280 | ||||
| Other current assets | 150,897 | 150,544 | ||||
| Cash and cash equivelents | 3,683 | 421 | ||||
| Other non current liabilities | (4,316,000) | (11,837,000) | ||||
| Other current liabilities | (10,396) | (920,356) | ||||
| 6,667,842 | (2,034,481) | |||||
| Loss on disposal | (842,841) | |||||
| Disposal price | 5,825,001 | |||||
| Net cash inflow from the disposal | ||||||
| Cash received | 10,141,001 | |||||
| Cash and cash equivalents disposed of | (3,683) | |||||
| 10,137,318 | ||||||
| Intra-group loans at disposal date | (4,316,000) | |||||
| Enterprise Value | 5,821,318 |
The Intra-group loan above refers to inter-company loans granted by the parent company of the disposed subsidiary, which is included in the cash received 10,141,001 Euro.
The net income of that subsidiary until its disposal date, is as follows:
| Disposal of a Subsidiary 2007 |
|
|---|---|
| Services rendered | 57 |
| Other operational costs | 102 |
| Net financial expenses | (265,584) |
| Net profit before income tax | (265,425) |
| Income tax | 39,470 |
| Net profit/(loss) | (225,955) |
| (225,955) |
The accounting policies disclosed in Note 2.11 have been applied to the line items below:
| Notes | Loans and accounts receivable |
Available for sale |
Assets recorded at fair value through profit or loss (Note 25) |
Hedging derivates (Note 25) |
Sub-total | Assets not within scope of IFRS 7 |
Total | |
|---|---|---|---|---|---|---|---|---|
| Non-current assets | ||||||||
| Other investments | 7 | 1,584,193 | 774,778 | 2,358,971 | 2,358,971 | |||
| Other non-current assets | 13 | 2,284,632 | 2,284,632 | 2,284,632 | ||||
| 3,868,825 | 774,778 | 4,643,603 | 4,643,603 | |||||
| Current assets | ||||||||
| Trade accounts receivable | 15 | 33,237,057 | 33,237,057 | 33,237,057 | ||||
| Other debtors | 16 | 109,795,744 | 109,795,744 | 109,795,744 | ||||
| Other current assets | 18 | 20,432,973 | 20,432,973 | 14,959,019 | 35,391,992 | |||
| Other financial investments | 12 | 60,956,594 | 72,494 | 1,776,634 | 62,805,722 | 62,805,722 | ||
| Cash and cash equivalents | 20 | 115,119,080 | 115,119,080 | 115,119,080 | ||||
| 339,541,448 | 72,494 | 1,776,634 | 341,390,576 | 14,959,019 | 356,349,595 | |||
| Total | 343,410,273 | 774,778 | 72,494 | 1,776,634 | 346,034,179 | 14,959,019 | 360,993,198 | |
| As at 31 December 2007 | ||||||||
| Assets recorded |
| Loans and accounts |
Available for | at fair value through profit or |
Hedging derivates |
Assets not within scope |
||||
|---|---|---|---|---|---|---|---|---|
| Notes | receivable | sale | loss | (Note 23) | Sub-total | of IFRS 7 | Total | |
| Non-current assets | ||||||||
| Other investments | 7 | 240,000 | 759,170 | 999,170 | 999,170 | |||
| Other non-current assets | 13 | 1,820,126 | 1,820,126 | 1,820,126 | ||||
| 2,060,126 | 759,170 | 2,819,296 | 2,819,296 | |||||
| Current assets | ||||||||
| Trade accounts receivable | 15 | 32,409,579 | 32,409,579 | 32,409,579 | ||||
| Other debtors | 16 | 121,819,762 | 121,819,762 | 121,819,762 | ||||
| Other current assets | 18 | 11,829,490 | 11,829,490 | 11,662,689 | 23,492,179 | |||
| Other financial investments | 12 | 56,093,108 | 1,971 | 1,113,658 | 57,208,737 | 57,208,737 | ||
| Cash and cash equivalents | 20 | 67,853,490 | 67,853,490 | 67,853,490 | ||||
| 290,005,429 | 1,971 | 1,113,658 | 291,121,058 | 11,662,689 | 302,783,747 | |||
| Total | 292,065,555 | 759,170 | 1,971 | 1,113,658 | 293,940,354 | 11,662,689 | 305,603,043 |
| As at 31 December 2008 | Notes | Liabilities at fair value through profit or loss |
Hedging Derivatives |
Other financial liabilities |
Sub-total | Liabilities not within scope of IFRS7 |
Total |
|---|---|---|---|---|---|---|---|
| Non current liabilities | |||||||
| Bank loans | 23 | 230,000,000 | 230,000,000 | 230,000,000 | |||
| Bonds | 23 | 1,001,716,603 | 1,001,716,603 | 1,001,716,603 | |||
| Obligations under financial leases | 24 | 11,109,980 | 11,109,980 | 11,109,980 | |||
| Other loans | 23 | 241,328 | 241,328 | 241,328 | |||
| Other non-current liabilities | 26 | 11,165,308 | 11,165,308 | 523,086 | 11,688,394 | ||
| 1,254,233,219 | 1,254,233,219 | 523,086 | 1,254,756,305 | ||||
| Current liabilities | |||||||
| Bank loans | 23 | 43,249,021 | 43,249,021 | 43,249,021 | |||
| Bonds | 23 | 99,978,611 | 99,978,611 | 99,978,611 | |||
| Obligations under finance leases | 24 | 4,280,464 | 4,280,464 | 4,280,464 | |||
| Other loans | 23 | 475,848 | 4,894,132 | 35,487 | 5,405,467 | 5,405,467 | |
| Trade creditors | 28 | 898,101,628 | 898,101,628 | 898,101,628 | |||
| Other accounts payable | 29 | 152,429,549 | 152,429,549 | 152,429,549 | |||
| Other current liabilities | 30 | 148,437,461 | 148,437,461 | 508,264 | 148,945,725 | ||
| 475,848 | 4,894,132 | 1,346,512,221 | 1,351,882,201 | 508,264 | 1,352,390,465 | ||
| Total | 475,848 | 4,894,132 | 2,600,745,440 | 2,606,115,420 | 1,031,350 | 2,607,146,770 |
| As at 31 December 2007 | Notes | Liabilities at fair value through profit or loss |
Other financial liabilities |
Sub-total | Liabilities not within scope of IFRS7 |
Total |
|---|---|---|---|---|---|---|
| Non current liabilities | ||||||
| Bank loans | ||||||
| Bonds | 23 | 1,100,672,731 | 1,100,672,731 | 1,100,672,731 | ||
| Obligations under financial leases | 24 | 5,554,636 | 5,554,636 | 5,554,636 | ||
| Other loans | 23 | 276,330 | 276,330 | 276,330 | ||
| Other non-current liabilities | 26 | 10,830,596 | 10,830,596 | 1,872,010 | 12,702,606 | |
| 1,117,334,293 | 1,117,334,293 | 1,872,010 | 1,119,206,303 | |||
| Current liabilities | ||||||
| Bank loans | 23 | 83,834,903 | 83,834,903 | 83,834,903 | ||
| Obligations under finance leases | 24 | 6,783,670 | 6,783,670 | 6,783,670 | ||
| Other loans | 23 | 281,123 | 36,229 | 317,352 | 317,352 | |
| Trade creditors | 28 | 835,856,284 | 835,856,284 | 835,856,284 | ||
| Other accounts payable | 29 | 80,848,547 | 80,848,547 | 80,848,547 | ||
| Other current liabilities | 30 | 144,777,374 | 144,777,374 | 2,690,269 | 147,467,643 | |
| 281,123 | 1,152,137,007 | 1,152,418,130 | 2,690,269 | 1,155,108,399 | ||
| Total | 281,123 | 2,269,471,300 | 2,269,752,423 | 4,562,279 | 2,274,314,702 |
As at 31 December 2008 and 2007, the financial instruments recorded at fair value through profit or loss are only derivatives that do not qualify for hedge accounting.
During the periods ended 31 December 2008 and 2007, movements in tangible and intangible assets as well as depreciation and accumulated impairment losses, were made up as follows:
| Ot her | Tangible | A dvances on | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Land | Basic | Transport | Tools | Off ice | tangible | ass et s | a ccount of | Total | |
| and buildings | E quipm ent | Equipmen t | and fitt ings | Equipm ent | assets | in progress a) tangible assets | tangible | ||
| G ross cost: | |||||||||
| O pening balance | 1, 321,081,939 | 586,492,798 | 17,525,84 0 | 29,837,028 | 101,287,132 | 1,776,285 | 125,567,424 | 14,404,376 | 2,197 ,972,822 |
| Fair valu e allocation (Note 1) | 54,111,446 | 21,825,730 | (165,821) | (3,879,838) | (1,478,767) | (37,908,515) | 26,650,000 | 5 9,154,235 | |
| Restated Opening balance | 1, 375,193,385 | 608,318,528 | 17,360,01 9 | 25,957,190 | 99,808,365 | 1,776,285 | 87,658,909 | 41,054,376 | 2,257 ,127,057 |
| Changes in consolidation p erime ter - Ac quisitions | 43,382,873 | 7,902,569 | 317,333 | 92,778 | 2,037,630 | 66,253 | 1,090,769 | - | 5 4,890,205 |
| Changes in consolidation p erime ter - Sales | (348,113) | (825,536) | (620) | (90,136) | (1,090,137) | (40,939) | (144,084) | - | (2,539,565) |
| Capit al E xpenditure | 12,281,854 | 794,593 | 87,70 3 | 112,761 | 3,764,790 | 17 | 292,772,527 | 14,117,440 | 323 ,931,685 |
| Disposals c) | (17,373,082) | (22,436,750) | (733,709) | (1,369,995) | (2,416,761) | (21,294) | (352,772) | (44,704,363) | |
| E xchange rate effet | (73,196) | (209,195) | (8,27 8) | - | (138,129) | - | - | - | (428,798) |
| Trans fers / write-off d) | 83,874,799 | 124,095,781 | 2,221,27 8 | 4,326,631 | (1,527,721) | 18,021 (230,698,000) | (9,736,656) | (27,425,867) | |
| E nding balance | 1, 496,938,520 | 717,639,990 | 19,243,72 6 | 29,029,229 | 100,438,037 | 1,798,343 | 150,327,349 | 45,435,160 | 2,560 ,850,354 |
| Amor tisation and losses for | |||||||||
| accum ulated impairm ent | |||||||||
| O pening balance | 194,037,229 | 278,847,315 | 13,568,93 5 | 20,362,366 | 65,309,111 | 1,632,160 | - | - | 573 ,757,116 |
| Fair valu e allocation (Note 1) | (17,599,079) | 15,488,517 | (156,772) | (3,223,824) | (1,241,006) | - | - | - | (6,732,164) |
| Restated Opening balance | 176,438,150 | 294,335,832 | 13,412,16 3 | 17,138,542 | 64,068,105 | 1,632,160 | - | - | 567 ,024,952 |
| Changes in consolidation p erime ter - Ac quisitions | 2,651,583 | 3,971,079 | 218,643 | 25,128 | 1,249,187 | 58,891 | - | - | 8 ,174,511 |
| Changes in consolidation p erime ter - Sales | (177,254) | (228,724) | (620) | (29,776) | (704,908) | (32,956) | - | - | (1,174,238) |
| P eriod depreciation | 22,782,486 | 58,695,133 | 1,582,10 6 | 4,513,898 | 14,206,032 | 47,549 | - | - | 101 ,827,204 |
| Disposals | (2,503,587) | (16,353,144) | (671,360) | (1,267,911) | (1,885,722) | (20,743) | - | - | (22,702,467) |
| E xchange rate effet | (39,116) | (81,671) | (3,95 0) | - | (44,598) | - | - | - | (169,335) |
| Trans fers / write-off | (6,671,482) | 623,314 | (4,05 0) | (34,202) | (10,345,077) | (45) | - | - | (16,431,542) |
| E nding balance | 192,480,780 | 340,961,819 | 14,532,93 2 | 20,345,679 | 66,543,019 | 1,684,856 | - | - | 636 ,549,085 |
| Net book value | 1, 304,457,740 | 376,678,171 | 4,710,79 4 | 8,683,550 | 33,895,018 | 113,487 | 150,327,349 | 45,435,160 | 1,924 ,301,269 |
| Development costs |
Industrial property and other rights |
Software | Premium period for property occupation rights |
Other intangible assets |
Intangible assets in progress a) |
Advances on account of tangible assets |
Total intangible |
|
|---|---|---|---|---|---|---|---|---|
| Gross cost: | ||||||||
| Opening balance | 469,507 | 88,603,953 | 107,561,601 | 13,863,815 | - | 16,263,339 | - | 226,762,215 |
| Fair value allocation (Note 1) | - | - | - | - | - | (1,422,500) | - | (1,422,500) |
| Restated Opening balance | 469,507 | 88,603,953 | 107,561,601 | 13,863,815 | - | 14,840,839 | - | 225,339,715 |
| Changes in consolidation perimeter - Acquisitions | 1,186,461 | 884,987 | 998,542 | 4,250,161 | 17,457 | - | - | 7,337,608 |
| Changes in consolidation perimeter - Sales | - | (364,185) | (1,282,959) | (1,067,256) | - | (327,837) | - | (3,042,237) |
| Capital expenditure | 117,000 | 718,856 | 171,790 | 49,861 | - | 21,375,793 | - | 22,433,300 |
| Disposals | - | (188,864) | (5,044) | - | - | (719,330) | - | (913,238) |
| Exchange rate effect | - | - | (37,579) | - | - | - | - | (37,579) |
| Transfers/ write-off | - | 3,491,616 | 15,207,731 | - | (352,471) | (14,965,186) | - | 3,381,690 |
| Saldo final | 1,772,968 | 93,146,363 | 122,614,082 | 17,096,581 | (335,014) | 20,204,279 | - | 254,499,259 |
| Amortisation and losses for accumulated impairment |
||||||||
| Opening balance | 241,993 | 5,175,682 | 53,824,561 | 12,960,714 | - | - | - | 72,202,950 |
| Changes in consolidation perimeter - acquisitions | 1,154,086 | 647,383 | 881,560 | 4,250,160 | - | - | - | 6,933,189 |
| Changes in consolidation perimeter - Sales | - | (89,895) | (768,135) | (839,028) | - | - | - | (1,697,058) |
| Period depreciation | 119,973 | 2,343,572 | 10,640,357 | 108,260 | - | - | - | 13,212,162 |
| Disposals | - | (66,143) | (2,792) | - | - | - | - | (68,935) |
| Exchange rate effect | - | - | (19,445) | - | - | - | - | (19,445) |
| Transfers/ write-off | - | (5) | (483) | (352,472) | (352,960) | |||
| Ending balance | 1,516,052 | 8,010,594 | 64,555,623 | 16,127,634 | - | - | - | 90,209,903 |
| Net book value | 256,916 | 85,135,769 | 58,058,459 | 968,947 | (335,014) | 20,204,279 | - | 164,289,356 |
a) Most significant values included in "Tangible and intangible assets in progress" refer to the following projects:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Refurbishment and expansion of stores in Portugal Installation licenses Software projects |
146,344,713 7,445,825 12,841,147 |
122,900,793 4,467,338 11,726,539 |
| 166,631,685 | 139,094,670 |
b) The most significant amounts under the caption "Advance on account of tangible assets" mainly refer to projects of stores Modelo and Continente for which advance payments were made.
c) The most significant amounts recorded under the caption "Land and Buildings" concerning to disposals, refer to the disposal of stores in Eiras and Lagoas and part of Leiria's shopping centre, for approximately a net value of 17,800,000 Euro.
The gains generated by these disposals amounted to approximately 3 million Euro as at 31 December 2008 and are recorded under the caption "Other operational income".
During the periods ended 31 December 2007 and 2006, movements in tangible and intangible assets as well as depreciation and accumulated impairment losses, were made up as follows:
| O ther | Tangible | Advances on | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Land | Basic | T ransport | O ffice | Tools | Reusable | tangible | assets | account of | Total | |
| and buildings | Equipment | Equipment | Equipment | and fittings | Containers | assets | in progress a) | tangible assets b) | tangible | |
| Gross cost | ||||||||||
| Opening balance | 1.027.788.651 | 479.043.575 | 15.346.401 | 96.146.283 | 8.319.375 | 80.429 | 2.006.122 | 29.402.940 | 17.147.599 | 1.675.281.375 |
| Changes in consolidation perimeter - Acquisitions |
249.123.401 | 38.721.989 | 1.580.910 | 6.937.941 | 18.401.874 | - | 57.869.991 | 372.636.106 | ||
| Changes in consolidation perimeter - Sales |
( 9.928.909) | - | - | (9.928.909) | ||||||
| Capital Expenditure | 19.776.057 | 1.356.472 | 193.909 | 1.887.220 | 36.629 | - | 176.083.396 | 20.475.574 | 219.809.257 | |
| Disposals c) | (20.919.134) | (12.825.079) | (685.495) | (5.638.660) | (117.645) | (13.862) | (296.020) | (537.922) | - | (41.033.817) |
| Exchange rate effet | 330.893 | 81.728 | 4.190 | 45.019 | - | - | 9.189 | - | 471.019 | |
| Transfers / write-off d) | 54.910.980 | 80.114.113 | 1.085.925 | 1.909.329 | 3.196.795 | - | (384) | (137.260.170) | (23.218.797) | (19.262.209) |
| Ending balance | 1.321.081.939 | 586.492.798 | 17.525.840 | 101.287.132 | 29.837.028 | 66.567 | 1.709.718 | 125.567.424 | 14.404.376 | 2.197.972.822 |
| Amortisation and losses for | ||||||||||
| accu mulated impairment | ||||||||||
| Opening balance | 128.715.051 | 224.445.608 | 12.011.068 | 58.138.134 | 4.544.535 | 80.429 | 1.824.070 | - | - | 429.758.895 |
| Changes in consolidation perimeter - Acquisitions |
50.162.578 | 20.137.861 | 1.057.863 | 5.345.648 | 14.072.537 | - | - | - | 90.776.487 | |
| Period depr eciation | 17.525.551 | 46.228.506 | 1.165.413 | 9.457.540 | 1.852.113 | - | 47.054 | - | - | 76.276.177 |
| Disposals | ( 2.366.778) | ( 9.411.081) | (654.067) | (4.682.029) | (100.334) | (13.862) | (295.921) | - | - | (17.524.072) |
| Exchange rate effet | 13.174 | 16.124 | 1.074 | 9.523 | - | - | - | 39.895 | ||
| Transfers / write-off | (12.347) | ( 2.569.703) | (12.416) | (2.959.705) | (6.485) | - | (9.610) | - | - | (5.570.266) |
| Ending balance | 194.037.229 | 278.847.315 | 13.568.935 | 65.309.111 | 20.362.366 | 66.567 | 1.565.593 | - | - | 573.757.116 |
| Net boo k value | 1.127.044.710 | 307.645.483 | 3.956.905 | 35.978.021 | 9.474.662 | - | 144.125 | 125.567.424 | 14.404.376 | 1.624.215.706 |
Intangible assets - 2007
| Development costs |
Industrial property and other rights |
Software | Premium paid for property occupation rights |
Other intangible assets |
Intangible assets in progress a) |
Advances on account of intangible assets b) |
Total intangible |
|
|---|---|---|---|---|---|---|---|---|
| Gross cost: Opening balance Changes in consolidated perimeter - acquisitions Capital expenditures Disposals Exchange rate effect |
464.840 1.217 |
83.989.039 1.076.817 |
98.303.747 1.300.626 71.056 10.652 |
13.908.707 | - | 13.319.370 14.762.392 (40.491) |
275.000 | 210.260.703 1.300.626 15.911.482 (40.491) 10.652 |
| Transfers/ write-off Ending balance |
3.450 469.507 |
3.538.097 88.603.953 |
7.875.520 107.561.601 |
(44.892) 13.863.815 |
- | (11.777.932) 16.263.339 |
(275.000) - |
(680.757) 226.762.215 |
| Amortisation and losses for accumulated impairment |
||||||||
| Opening balance Changes in consolidation perimeter - acquisitions |
148.308 | 3.329.177 | 44.882.011 685.610 |
12.736.678 | - | - | - | 61.096.174 685.610 |
| Period depreciation Disposals Exchange rate effet |
93.685 | 1.860.365 | 8.549.643 3.431 |
268.928 | 10.772.621 - 3.431 |
|||
| Transfers/ write-off | (13.860) | (296.134) | (44.892) | (354.886) | ||||
| Ending balance | 241.993 | 5.175.682 | 53.824.561 | 12.960.714 | - | - | - | 72.202.950 |
| Net book value | 227.514 | 83.428.271 | 53.737.040 | 903.101 | - | 16.263.339 | - | 154.559.265 |
a) Most significant values included in "Tangible and intangible assets in progress" refer to the following projects:
| 31.12.2007 | 31.12.2006 | |
|---|---|---|
| Refurbishment and expansion of stores in Portugal Installation licenses Software projects |
122,900,793 4,467,338 11,726,539 |
27,214,918 3,352,407 8,752,631 |
| 139,094,670 | 39,319,956 |
The increase of the "Refurbishment and expansion of stores in Portugal" caption is explained by the acquisition of Continente Hipermercados, S.A., which had contributed with an amount of 57,582,766 Euro.
This caption includes 2,400,000 Euro related to advances made in previous periods which were received as result of the agreement annulment.
In the years ended 31 December 2008 and 2007, movements in goodwill, as well as in the corresponding impairment losses, are as follows:
| 31.12.2007 | ||
|---|---|---|
| Gross value: | 31.12.2008 | Rexpressed |
| Opening balance | 521.729.135 | 63.980.187 |
| New companies in the consolidation perimeter (Note 8.2.2) | 10.217.517 | 461.676.793 |
| Increases | 6.659.286 | |
| Decreases (Note 8.3.) | (9.394.261) | (3.927.845) |
| Closing balance | 529.211.677 | 521.729.135 |
| Impairment accumulated losses (Note 21): |
||
| Opening balance | 1.374.226 | 2.838.583 |
| Increases | 6.817.357 | - |
| Decreases | (1.464.357) | |
| Closing balance | 8.191.583 | 1.374.226 |
| Net book value | 521.020.094 | 520.354.909 |
The amount under Increases includes costs that arose with the acquisition of subsidiaries and also the Goodwill generated by the increase of the percentage of capital held in subsidiaries.
Goodwill is allocated to each business concept (Retail brands), being afterwards distributed by each cash generating unit inside each format.
Goodwill allocation to real estate, is done by each existing real-estate at acquisition date.
Impairment tests on Goodwill are performed on an annual basis.
For this purpose, the segment uses the internal valuation results of its business concepts, using annual planning methodologies, supported in 5 year business plans that consider cash-flow projections for each unit which depend on detailed assumptions properly supported. These plans take in consideration the impact of main actions that will be carried out by each business concept as well as study of resources allocation to the Company.
The case scenarios are elaborated with an average capital cost of 7% to 10% depending on the market and business concept. Perpetuity growth rate was considered to be between 0% and 1%.
The company carried out during the period, a detailed analysis of all its assets, having been identified some assets where that assessment was done with the help of specialists, in order to confront the perceived internal value of each asset (value in use) and its market value with its carrying amount.
Following the assessment, it was booked an impairment loss of 6,817,357 Euro, relating to "Real estate assets with income".
As at 31 December 2008 and 2007, goodwill is as follows:
| 31.12.2008 | 31.12.2007 Reexpressed |
|
|---|---|---|
| Food retail brands | 404,466,932 | 399,851,492 |
| Non food retail brands | 84,184,028 | 80,939,555 |
| Real estate assets with income | 3,069,134 | 9,886,491 |
| Real estate assets without income | - | 377,371 |
| Others | 29,300,000 | 29,300,000 |
| 521,020,094 | 520,354,909 |
As at 31 December 2008 and 2007, this caption is as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Other financial investments | ||
| Opening balance at 1 January | 56.093.108 | 33.211.904 |
| Purchases during the year | 6.029.076 | 6.444.626 |
| Disposals during the year | (27.829) | (16.063.792) |
| Increase/(decrease) in fair value | (1.137.760) | |
| Transfers | - | 32.500.370 |
| Closing balance at 31 December | 60.956.595 | 56.093.108 |
| Accumulated impairment losses (Note 29) | - | - |
| 60.956.595 | 56.093.108 | |
| Derivative financial instruments | ||
| Fair value at 1 January 2007 | 1.115.629 | 49.458 |
| Purchases during the year | 72.494 | 1.971 |
| Disposals during the year | (1.971) | (49.458) |
| Increase/(decrease) in fair value | 662.976 | 1.113.658 |
| Closing balance at 31 December | 1.849.128 | 1.115.629 |
| Total in other investments | 62.805.723 | 57.208.737 |
Under the caption other financial investments is recorded an amount of 56,042,299 Euro (56,093,108 Euro as of 31 December 2007) related to deposited amounts on an Escrow Account which are applied in investment funds with superior rating and guarantee contractual liabilities assumed by the Group which may arise from the sale of Sonae Distribuição Brasil, S.A. and for which provisions were recorded (Note 31).
In accordance with the guarantee schedule, the amount deposited in the Escrow account should have already been fully paid to the Company, however there are some differences of opinion that are being negotiated between parties implying the delay of its release. The management, based on Portuguese and Brazilian lawyer's legal opinions, believes that no impairment loss should be recognized and that the amount deposited in the Escrow account will be fully paid in the short term.
As at 31 December 2008 and 2007, other non current assets are detailed as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Granted loans to associates | - | 1,015,475 |
| Trade accounts receivable and other debtors | 2,284,632 | 804,651 |
| 2,284,632 | 1,820,126 |
Most significant values included in "Trade accounts receivable and other debtors" refer to:
As at 31 December 2008 and 2007, Inventories are as follows:
| 31.12.2007 | ||
|---|---|---|
| 31.12.2008 | Reexpressed | |
| Goods for sale | 549,329,990 | 460,751,262 |
| Accumulated impairment losses on Inventories (Note 31) | (18,510,507) | (16,095,728) |
| 530,819,483 | 444,655,534 |
Cost of goods sold as at 31 December 2008 and 2007 may be detailed as follows:
| 31.12.2007 | |
|---|---|
| 31.12.2008 | Reexpressed |
| 460.751.262 | 352.193.769 |
| 6.626.869 | 24.063.488 |
| 3.263.407.621 | 2.604.690.994 |
| 4.893.306 | 4.633.499 |
| 549.329.990 | 460.751.262 |
| 3.176.562.456 | 2.515.563.490 |
| 1.590.487 | 1.754.065 |
| 2.517.317.555 | |
| Changes in consolidation perimeter - aquisitions (Note 8.2.1) 3.178.152.943 |
The amounts recorded under "Inventory adjustments" for the years ended 31 December 2008 and 2007 correspond mainly to donation to social solidarity institutions.
As at 31 December 2008 and 2007, trade accounts receivable are detailed as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Current clients | 33.535.398 | 33.218.618 |
| Doubtful receivables | 12.418.928 | 11.962.348 |
| 45.954.326 | 45.180.966 | |
| Accumulated impairment losses on Trade Debtors (Note 31) | (12.717.269) | (12.771.387) |
| 33.237.057 | 32.409.579 |
Current clients caption includes 11,420,811 Euro (15,549,379 Euro as at 31 December 2007) related to travel agency clients, as well as 12,366,082 Euro (11,231,975 Euro as at 31 December 2007) related to gross sales to participated companies.
The values presented above mainly refer to debts originated by the group current activity. The amounts presented on the face of the balance sheet are net of impairment losses, do not bear interests and the discount effect is immaterial. As a result, amounts disclosed are considered to reflect their fair value.
| Trade accounts receivable | ||
|---|---|---|
| 31.12.2008 | 31.12.2007 | |
| Not due | 14,208,471 | 20,174,169 |
| Due but not impaired | ||
| 0 - 30 days | 4,165,062 | 2,404,680 |
| 30 - 90 days | 9,927,462 | 4,932,343 |
| + 90 days | 3,971,796 | 4,493,884 |
| 18,064,320 | 11,830,907 | |
| Due and impaired | ||
| 0 - 90 days | 221,725 | 77,339 |
| 90 - 180 days | 713,896 | 204,254 |
| 180 - 360 days | 643,027 | 660,725 |
| + 360 days | 12,102,887 | 12,233,572 |
| 13,681,535 | 13,175,890 | |
| Total | 45,954,326 | 45,180,966 |
As at 31 December 2008 and 2007, Other debtors are as follows:
| 31.12.2007 | ||
|---|---|---|
| 31.12.2008 | Reexpressed | |
| Other debtors | ||
| a) Accounts receivable from suppliers |
74.985.105 | 66.725.484 |
| c) Sale of fixed assets |
8.770.261 | 747.614 |
| b) Credit sales sold to third parties |
3.608.238 | 5.536.607 |
| e) Grants related to incurred costs |
1.286.546 | 1.434.458 |
| Special regime for the Settlement of Debts to the Tax authorities and | ||
| Social Security d) |
14.576.053 | 14.576.053 |
| VAT - Real Estate assets | 5.217.586 | 2.887.859 |
| Price Adjustment (Note 8) | 30.414.000 | |
| Jointly Controlled Companies | 2.627.454 | |
| Associated Companies | 1.000.000 | |
| Others | 9.475.173 | 8.359.157 |
| Advances to fixed assets suppliers | 389.736 | 381.319 |
| 121.936.152 | 131.062.551 | |
| Accumulated Impairment losses (Note 31) | (12.140.408) | (9.242.789) |
| Total of Financial Instruments (Note 9) | 109.795.744 | 121.819.762 |
| Current suppliers with debtor balances |
Other debtors | ||||||
|---|---|---|---|---|---|---|---|
| 31.12.2008 | 31.12.2007 | 31.12.2008 | 31.12.2007 | ||||
| Not Due | 273,014 | 3,855,045 | 28,063,171 | 48,865,428 | |||
| Due but not impaired | |||||||
| 0 - 30 days | 36,337,854 | 19,872,653 | 1,503,329 | 4,203,042 | |||
| 30 - 90 days | 22,223,996 | 30,218,156 | 10,113,443 | 8,784,758 | |||
| + 90 days | 4,969,145 | 3,675,137 | 6,494,445 | 1,143,910 | |||
| 63,530,995 | 53,765,946 | 18,111,217 | 14,131,710 | ||||
| Due and impaired | |||||||
| 0 - 90 days | 16,390 | ||||||
| 90 - 180 days | 914 | 2,816 | |||||
| 180 - 360 days | 2,259,182 | 1,444,067 | 4,564 | 509,848 | |||
| + 360 days | 8,921,001 | 7,660,426 | 752,888 | 208,164 | |||
| 11,181,097 | 9,104,493 | 776,658 | 718,012 | ||||
| 74,985,106 | 66,725,484 | 46,951,046 | 63,715,150 |
As at 31 December 2008 there is no indication that the debtors not due will not fulfil their obligations on usual conditions. The carrying amount of other debtors is estimated to be approximately its fair value.
As at 31 December 2008 and 2007, Taxes recoverable and taxes and contributions payable are made up as follows:
| Assets | 31.12.2008 | 31.12.2007 |
|---|---|---|
| Income taxation - advance payments and taxes withheld | 10,266,097 | 13,256,014 |
| Value Added tax | 20,176,000 | 36,910,417 |
| Other taxes | 1,038,373 | 901,429 |
| 31,480,470 | 51,067,860 | |
| Liabilities | ||
| Income tax | 8,563,639 | 6,388,566 |
| Value Added tax | 14,962,758 | 25,828,419 |
| Staff income taxes withheld | 2,097,197 | 3,055,163 |
| Social security contributions | 9,787,580 | 8,206,536 |
| Other taxes | 564,376 | 743,623 |
| 35,975,550 | 44,222,307 |
As at 31 December 2008 and 2007, Other current assets are made up as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Commercial income | 17.377.253 | 4.222.318 |
| Receivable interests | 1.469.109 | 741.938 |
| Receivable commissions | 1.586.611 | 6.865.234 |
| Financial Instruments (Note 9) | 20.432.973 | 11.829.490 |
| Claims | 47.106 | 231.480 |
| Rents | 4.407.778 | 3.259.833 |
| Condominiums management fee's | 1.712.853 | 1.684.282 |
| Insurance premiums paid in advance | 2.714.292 | 2.058.068 |
| Others | 6.076.990 | 4.429.026 |
| 35.391.992 | 23.492.179 |
The caption "Others" includes 569,700 Euro related to VAT receivable arising from travel agencies operations, according to Decree Law 221/85 (1,127,913 Euro as at 31 December 2007).
The amounts identified as financial instruments refer to contractual based and not due and unbilled amounts.
Deferred tax assets and liabilities as at 31 December 2008 and 2007 are as follows, taking into consideration its temporary differences:
| Deferred tax assets | Deferred tax liabilities | |||
|---|---|---|---|---|
| 31.12.2008 | 31.12.2007 Reexpressed |
31.12.2008 | 31.12.2007 Reexpressed |
|
| Fair value allocation | 3.845.829 | 6.353.991 | 24.038.802 | 16.132.406 |
| Amortisation and Depreciation harmonisation adjustments | 16.129 | 70.513 | 39.264.318 | 29.290.837 |
| Provisions and impairment losses not accepted for tax purposes | 6.773.980 | 4.320.121 | - | |
| Writte-off of tangible and intangible assets | 9.289.029 | 9.517.092 | ||
| Goodwill amortisation | - | 6.980.016 | - | |
| Write-off of deferred costs | 9.644 | 26.697 | 32.267 | |
| Valuation of derivatives | 1.423.045 | 74.497 | 490.019 | 194.556 |
| Reinvested capital gains | - | 2.257.793 | 2.394.039 | |
| Revaluation of tangible fixed assets | - | 2.279.573 | 2.523.410 | |
| Exchange differences | - | 5.326.355 | 44.754 | |
| Tax losses carried forward | 44.487.390 | 15.374.448 | ||
| Others | 1.591.414 | 283.633 | 518.792 | |
| 67.426.816 | 36.003.939 | 81.182.365 | 50.612.269 |
During the periods ended 31 December 2008 and 2007, movements in deferred tax assets and liabilities are made up as follows:
| 31.12.2008 | 31.12.2007 Reexpressed | |||
|---|---|---|---|---|
| Assets | Liabilities | Assets | Liabilities | |
| Opening balance | 36,003,939 | 50,612,269 | 23,413,248 | 36,985,189 |
| Effects in net income: | ||||
| Fair value allocation to tangible assets | - | (371,250) | - | - |
| Fair value allocation in subsidiaries | (5,699,762) | - | - | - |
| Write-off of intangible assets | (614,183) | - | 59,661 | - |
| Write-off of tangible assets | 421,843 | 768,125 | (421,461) | - |
| Revaluation of tangible assets | - | (238,251) | - | (97,355) |
| Amortisation and Depreciation harmonisation adjustments | (1,692,041) | 9,803,023 | (110,591) | 1,384,243 |
| Goodwill amortisation | - | 6,980,016 | - | - |
| Accruals write-off | (9,646) | (5,570) | (10,516) | (11,665) |
| Provisions and impairment losses not accepted for tax purpose | 2,920,784 | - | (760,889) | - |
| Derivate financial instruments | 51,602 | 18,689 | 43,746 | (12,584) |
| Tax losses carried forward | 17,612,719 | - | (1,537,964) | - |
| Reinvestement of capital gains | - | (136,246) | - | (1,118,666) |
| Exchange differences on brazilian subsidiaries | - | 6,462,069 | (1,642,013) | |
| Others | 1,314,108 | 1,433,999 | 276,716 | - |
| 14,305,424 | 24,714,604 | (2,461,298) | (1,498,040) | |
| Effects on equity: | ||||
| Valuation of hedging derivatives | 1,296,945 | 276,774 | - | 194,034 |
| Foreign exchange rate effect | (817,364) | (1,192,218) | 98,303 | 94,392 |
| Revaluations | - | (5,586) | - | - |
| Others | (6,326) | - | - | - |
| 473,255 | (921,030) | 98,303 | 288,426 | |
| Perimeter changes effect (Note 8) | ||||
| Acquisitions | 26,103 | 23,992 | 750,594 | 292,337 |
| Disposals | (40,723) | (1,107) | (910,761) | (12) |
| Fair value adjustments | 16,658,818 | 6,753,637 | 15,113,853 | 14,544,369 |
| 16,644,198 | 6,776,522 | 14,953,686 | 14,836,694 | |
| Closing balance | 67,426,816 | 81,182,365 | 36,003,939 | 50,612,269 |
During 2008, deferred tax assets amounting 18,240,000 Euro were recorded related to tax losses carried forward from the subsidiary Worten España, S.A. (acquired in 2008 - Note 8) generated in the current and in past years (11,829,000 Euro were previous to the acquisition, and therefore had impact in the calculated negative goodwill). The deferred tax losses calculation is supported by the Company business plans that estimate its use in a period from 5 to 8 years (the last in a more conservative perspective).
During 2008, the fair value allocation to the acquisition of Continente Hipermercados S.A. (Note 8) was completed. In this process, and supported by the Company's business plan, besides the tax impact created by the valuation of acquired assets and liabilities, the Company recorded deferred tax assets (7,363,727 Euro) arising from tax losses carried forward amounting to 29,454,907 Euro. The values of 2007 were reexpressed to include that effect.
As at 31 December 2008 and 2007, and in accordance with the tax statements presented by companies that recorded deferred tax assets arising from tax losses carried forward and using exchange rates effective at that time, tax losses carried forward can be summarised as follows:
| 31-12-2008 | 31-12-2007 | |||||
|---|---|---|---|---|---|---|
| Tax | Deferred tax | Expiry | Tax | Deferred tax | Expiry | |
| losses | assets | Date | losses | assets | Date | |
| With limited time use | ||||||
| Generated in 2002 | - | - | 2008 | 12,423,840 | 3,105,960 | 2008 |
| Generated in 2003 | 464,904 | 116,226 | 2009 | 9,065,672 | 2,266,418 | 2009 |
| Generated in 2004 | 212,609 | 53,152 | 2010 | 1,567,260 | 391,815 | 2010 |
| Generated in 2005 | 196,781 | 49,196 | 2011 | 7,341,505 | 1,835,377 | 2011 |
| Generated in 2006 | 387,074 | 96,768 | 2012 | 387,074 | 96,768 | 2012 |
| Generated in 2007 | 23,480,028 | 5,870,008 | 2013 | 30,712,438 | 7,678,110 | 2013 |
| Generated in 2008 | 4,624,321 | 1,156,080 | 2014 | |||
| 29,365,717 | 7,341,430 | 61,497,789 | 15,374,448 | |||
| With a time limit different | 118,469,447 | 35,540,834 | ||||
| from the above mentioned | ||||||
| Without limited time use | 4,720,959 | 1,605,126 | ||||
| 152,556,123 | 44,487,390 | 61,497,789 | 15,374,448 |
Deferred tax assets recognized were assessed and only recognized to the extent it was probable that sufficient taxable profits will be available in the future against which the deferred tax assets can be used, or when taxable temporary differences are recognized by the same entity and expected to reverse in the same period. This assessment was based on business plans of Sonae Distribuição companies, which are periodically reviewed and updated, and on identified and available tax planning opportunities.
As at 31 December 2008 the Company had carried forward tax losses in the amount of 35,431,056 Euro (67,479,658 Euro as of 31 December 2007) for which no deferred tax asset were recognized for prudential reasons.
| 31-12-2008 | 31-12-2007 | |||||
|---|---|---|---|---|---|---|
| Tax | Deferred tax assets not |
Expiry | Tax | Deferred tax assets not |
Expiry | |
| Losses | recognized | Date | Losses | recognized | Date | |
| With limited time use | ||||||
| Generated in 2002 | - | - | 2008 | 1,814,987 | 453,747 | 2008 |
| Generated in 2003 | 297,644 | 74,411 | 2009 | 200,291 | 50,074 | 2009 |
| Generated in 2004 | 329,687 | 82,422 | 2010 | 329,687 | 82,422 | 2010 |
| Generated in 2005 | - | - | 2011 | 36,519,737 | 9,129,934 | 2011 |
| Generated in 2006 | 161,837 | 40,459 | 2012 | 161,837 | 40,459 | 2012 |
| Generated in 2007 | 754,657 | 188,664 | 2013 | 741,708 | 185,427 | 2013 |
| Generated in 2008 | 4,358,286 | 1,089,571 | 2014 | |||
| 5,902,111 | 1,475,527 | 39,768,247 | 9,942,063 | |||
| With limit timed use different | ||||||
| from the mentioned above | 27,046,989 | 7,459,955 | 19,571,433 | 5,619,101 | ||
| Without limited time use | 2,481,956 | 843,865 | 8,139,978 | 2,767,592 | ||
| 35,431,056 | 9,779,347 | 67,479,658 | 18,328,756 |
As at 31 December 2008 and 2007 cash and cash equivalents are as follows:
| 31.12.2007 | |
|---|---|
| 5,715,220 | 5,723,805 |
| 109,368,864 | 62,094,598 |
| 34,996 | 35,087 |
| 115,119,080 | 67,853,490 |
| (23,249,021) | (3,584,549) |
| 91,870,059 | 64,268,941 |
Bank overdrafts, are recorded in the balance sheet under the caption Current loans.
As at 31 December 2008, the share capital, which is fully subscribed and paid for, is made up by 1,000,000,000 ordinary shares which do not hold right to any fixed reimbursement, with a nominal value of 1 Euro each.
As at 31 December 2008, the subscribed share capital was held as follows:
| Entity | % |
|---|---|
| Sonae, SGPS, S.A. | 82,48 % |
| Sonae Investments, BV | 17,52 % |
As of 31 December 2007, Efanor Investimentos S.G.P.S., S.A. and its subsidiaries held 52,94% of the share capital of Sonae, SGPS, S.A..
As of 31 December 2008 and 2007, own shares are as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Own shares - nominal value | - | 100,000,000 |
| Own shares - premium and discounts | - | 105,000,000 |
| Cash and cash equivalents in the cash-flow statments | - | 205,000,000 |
During 2008 the Company reduced its share capital in 100,000,000 shares through the extinction of own shares acquired. The difference between the written reserves "Reserves under article 324 of CSC (own shares)" and acquisition cost of the own shares was transferred to Other Reserves and Retained Earnings.
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Legal Reserves | 99,300,000 | 95,000,000 |
| Currency conversion reserves | 3,666 | 1,104,622 |
| Sub-total | 99,303,666 | 96,104,622 |
| Reserves under Article 324 of the CSC (own shares) | - | 205,000,000 |
| Fair value reserves | - | - |
| Hedging reserves | (3,316,342) | (538,169) |
| Other Reserves and Retaining Earnings | (346,889,834) | (524,010,895) |
| Sub-total | (350,206,176) | (319,549,064) |
| Total | (250,902,510) | (223,444,442) |
As at 31 December 2008, the company had legal reserves amounting to 99,300,000 Euro (95,000,000 Euro at 31 December 2007). These reserves cannot be distributed except upon dissolution of the company, but can be used to absorb losses after all the other reserves have been used up or to increase capital.
The caption "Hedging Reserves" includes the portion of cash flow hedging derivative instruments fair value considered to be effective, net of tax effect.
Movements in minority interests during the year ended 31 December 2008 and 2007 are as follows:
| 31.12.2007 | ||
|---|---|---|
| 31.12.2008 | Reexpressed | |
| Opening balance on 1 January | 12,141,277 | 10,930,910 |
| Acquisition of subsidiaries (Note 8) | - | 161,672 |
| Change in % of capital held - acquisition of shares | (159,047) | |
| Disposal of subsidiaries (Note 8.2) | (78,917) | - |
| Dividends distributed | (13,741) | (10,256) |
| Others | (509,834) | (264,680) |
| Profit for the year attributable to minority interests | (178,190) | 1,323,631 |
| Closing balance on 31 December | 11,201,548 | 12,141,277 |
As at 31 December 2008 and 2007, loans are made up as follows:
| 31.12.2008 | 31.12.2007 | |||||||
|---|---|---|---|---|---|---|---|---|
| Book value | Nominal value | Book value | Nominal value | |||||
| Current | Non current | Current | Non current | Current | Non current | Current | Non current | |
| Bank loans | 20.000.000 | 230.000.000 | 20.000.000 | 230.000.000 | 80.250.354 | - | 80.250.354 | - |
| Bonds Bank overdrafts (Note 20) |
99.978.611 23.249.021 |
1.001.716.603 | 100.000.000 23.249.021 |
1.006.925.000 - |
- 3.584.549 |
1.100.672.731 - |
- 3.584.549 |
1.106.925.000 - |
| 143.227.632 | 1.231.716.603 | 143.249.021 | 1.236.925.000 | 83.834.903 | 1.100.672.731 | 83.834.903 | 1.106.925.000 | |
| Other loans | 35.487 | 241.328 | 35.487 | 241.328 | 36.229 | 276.330 | 36.229 | 276.329 |
| Derivatives (Note 25) | 5.369.980 | - | - | - | 281.123 | - | - | - |
| 5.405.467 | 241.328 | 35.487 | 241.328 | 317.352 | 276.330 | 36.229 | 276.329 | |
| Obligations under finance leases (Note 24) | 4.280.464 | 11.109.980 | 4.280.464 | 11.109.980 | 6.783.670 | 5.554.636 | 6.783.670 | 5.554.636 |
| 152.913.563 | 1.243.067.911 | 147.564.972 | 1.248.276.308 | 90.935.925 | 1.106.503.697 | 90.654.802 | 1.112.755.965 |
The repayment schedule of Borrowings (including bank loans and obligations under finance leases) is summarized as follows:
| 2008 | 2007 | |||
|---|---|---|---|---|
| Capital | Interests | Capital | Interests | |
| 2008 | 90,654,802 | 58,412,491 | ||
| 2009 | 147,564,972 | 66,716,594 | 103,146,003 | 54,804,262 |
| 2010 | 68,728,626 | 55,769,267 | 67,370,839 | 51,752,185 |
| 2011 | 82,894,574 | 53,805,885 | 82,065,244 | 48,381,029 |
| 2012 | 350,766,043 | 43,237,233 | 350,042,467 | 38,775,565 |
| 2013 | 155,789,127 | 33,010,729 | 155,036,229 | 25,634,467 |
| 2014 | 230,820,063 | 24,427,383 | 355,095,183 | 35,317,289 |
| +2015 | 359,277,875 | 13,405,473 | ||
| 1,395,841,280 | 290,372,564 | 1,203,410,767 | 314,255,338 |
As of 31 December 2008 bond loans are made up as follows:
| Modelo Continente / 2003 | 82,000,000 EUR |
|---|---|
| Modelo Continente / 2004 | 100,000,000 EUR |
| Modelo Continente / 2005/2010 | 64,925,000 EUR |
| Modelo Continente / 2005/2012 | 150,000,000 EUR |
| Modelo Continente / 2007/2012 | 200,000,000 EUR |
| Sonae Distribuição, SGPS, S.A. /2007/2015 | 200,000,000 EUR |
| Sonae Distribuição Setembro / 2007/2015 | 310,000,000EUR |
1,640,000 bonds – Nominal Value: 50 euro.
Maximum term: 8 (eight) years.
Annual interest rate: the interest rate which is variable is indexed to the EURIBOR 6 month rate on the second working day preceding the interest period, with a spread of 0.75% p.a.
Interest Payment: half yearly in arrears, on 15 April and 15 October of each year.
Redemption: at par, in one payment on 15 October 2011, the maturity date of the loan. Early redemption is not possible, either by initiative of the issuer or the bondholders.
Bonds - MODELO CONTINENTE / 2004
10,000,000 bonds – Nominal Value: 10 euro.
Maximum term: 5 (five) years.
Annual interest rate: the interest rate, which is variable, is indexed to the EURIBOR 6 month rate on the second working day preceding the interest period, with a spread of 1.15% p.a..
Interest Payment: half yearly in arrears, on 18 March and 18 September of each year.
Redemption: at par, in one payment on 18 March 2009, the maturity date of the loan. Early redemption is not possible, either by initiative of the issuer or the bondholders.
265,000 bonds – Nominal Value: 245 Euro.
Maximum term: 5 (five) years.
Annual interest rate: the interest rate, which is variable, is indexed to the EURIBOR 6 month rate on the second working day preceding the interest period, with a spread of 0.70% p.a..
Interest Payment: half yearly in arrears, on 3 February and 3 August of each year.
Redemption: at par, in one payment on 5th year in one payment on 3 August 2010, the maturity date of the loan, except if it an early redemption occurs.
Early redemption (call-option): early redemption is possible by initiative of the issuer, either totally or partially (by reducing the nominal value of the bonds), on the 2nd, 3rd or 4th year of maturity. In this situation the issuer is obliged to pay a prize of 0.125% over de reimbursed value.
On the 3rd August 2007, the Company partially reimbursed the bonds, according to their conditions. The amount reimbursed per bond was 755 Euro plus a premium of 0.94375 Euro.
After the reimbursement, the loan will be reduced to 64,925,000 Euro (265,000 bonds with a 245 Euro nominal value).
15,000,000 bonds – Nominal Value: 10 Euro.
Maximum term: 7 (seven) years.
Annual interest rate: the interest rate, which is variable, is indexed to the EURIBOR 6 month rate on the second working day preceding the interest period, with a spread of 0.85% p.a..
Interest Payment: half yearly in arrears, on 2 February and 2 August of each year.
Redemption: at par, in one payment on 2 August 2012 the payment dates of the 14th coupon, except if it an early redemption occurs.
Early redemption (call-option): early redemption is possible by initiative of the issuer, either totally or partially (by reducing the nominal value of the bonds), on the reimbursed dates of 10th, 11th, 12th and 13th coupon, without the obligation of paying any prize.
4,000 bonds – Nominal Value: 50,000 Euro.
Maximum term: 5 (five) years.
Annual interest rate: the interest rate, which is variable, is indexed to the EURIBOR 6 month rate on the second working day preceding the interest period, with a spread of 0.5% p.a..
Interest Payment: half yearly in arrears, on 30 April and 30 October of each year.
Redemption: at par, in one payment on 30 April 2012 the payment date of the 10th coupon.
Early redemption (call-option): early redemption is not possible.
4,000,000 bonds - Nominal Value: 50 Euro.
Maximum term: 8 (eight) years
Annual interest rate: the interest rate, which is variable, is indexed to the EURIBOR 6 month rate on the second working day preceding the interest period, with a spread of 0.48% p.a..
Interest Payment: half yearly in arrears, on 10 February and 10 August of each year.
Redemption: at par, in one payment on 10 August 2015 the payment date of the 16th coupon.
Early redemption (call-option): early redemption is possible by initiative of the issuer, totally, on the payment date of the 10th, 12th or 14th coupons, without the obligation of paying any prize.
31,000,000 Bonds – Nominal Value: 10 Euro.
Maximum term: 8 (eight) years.
Annual interest rate: the interest rate, which is variable, is indexed to the EURIBOR 6 month rate on the second working day preceding the interest period, with a spread of 0.25% p.a. in the first 3 interest payment dates and 0.55% p.a. from the 4th interest payment date on.
Interest Payment: half yearly in arrears, on 10 March and 10 September of each year.
Redemption: at par in the following terms:
50% on the date of the 12th coupon payment (10 September 2013);
50% on the date of the 16th coupon payment (10 September 2015).
Early redemption (call-option): early redemption is possible by initiative of the issuer, either totally or partially, on the payment dates of the 10th, 11th, 12th, 13th, 14th or 15th coupons, without the obligation of paying any prize.
Extraordinary early redemption (Call-Option): until the end of the 18th month of the loan, within the following conditions:
(i) the loan may be reimbursed total or partially, with no penalization, in each interest payment date;
ii) the loan may be reimbursed total or partially, subject to Breakage Costs, with a 30 previous days notice during each interest period.
At 31 December 2008 this caption corresponded to repayable grants from IAPMEI under the Measure of Support to the Energy Potential and Rationalization (MAPE).These grants do not bear interests and had been attributed by a 12 years period, with a grace period of 3 years redemption after attribution. The grants will be redempted in half-yearly instalments, occurring the first six months after the grace period. 35,486 Euro are now classified in the caption "Other loans – currents".
This caption includes the issue of short term commercial paper in the amount of 20,000,000 Euro which bears interests at normal market rates. Additionally, includes 230,000,000 Euro related with the issue of commercial paper programmes available for 6 years commitment. Since Sonae Distribuição intends to keep these loans for a period superior to one year, those were recorded as non-current.
As at 31 December 2008 and 2007 the amount of the available credit facilities in order to manage liquidity risk, can be summarized as follows:
| 31.12.2008 | 31.12.2007 | ||||
|---|---|---|---|---|---|
| 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 amounts | 331,361,827 | 170,000,000 | 317,737,441 | 400,000,000 | |
| Agreed credit facilities | 374,610,849 | 400,000,000 | 401,572,344 | 400,000,000 |
The commitments of more than one year refer to commercial paper programs available for 6 years.
As at 31 December 2008 and 2007, the accounting value of the financial liabilities is similar to their fair value.
Additionally, the group has other loans in the amount of 115,119,080 Euro (67,853,490 Euro) as detailed in Note 20.
As at 31 December 2008 and 2007, this caption is made up as follows:
| 31.12.2008 | 31.12.2007 | |||
|---|---|---|---|---|
| Net book value of assets acquired under finance leases |
||||
| Land and buildings | 31,389,745 | 19,649,684 | ||
| Transport Equipment | 85,190 | - | ||
| Office equipment | 4,252,561 | 4,274,323 | ||
| 35,727,496 | 23,924,007 | |||
| Minimun lease | Present value of | |||
| Leasing creditors | payments | minimum lease payments | ||
| Leasing payable amounts | 31.12.2008 | 31.12.2007 | 31.12.2008 | 31.12.2007 |
| 2008 | 7,190,501 | 6,783,670 | ||
| 2009 | 4,880,462 | 3,280,731 | 4,280,431 | 3,111,462 |
| 2010 | 4,238,393 | 2,465,786 | 3,805,515 | 2,407,922 |
| 2011 | 1,508,582 | 35,921 | 1,222,858 | 35,252 |
| 2012 | 1,060,137 | - | 833,536 | - |
| 2013 | 875,130 | - | 682,634 | - |
| >+ 5 years | 5,102,134 | - | 4,565,470 | - |
| 17,664,838 | 12,972,939 | 15,390,444 | 12,338,306 | |
| Future finance charges | (2,274,394) | (634,633) | ||
| 15,390,444 | 12,338,306 | |||
| Amount due for settlement within 12 months (current liabilities) | 4,280,464 | 6,783,670 | ||
| Amount due for settlement after 12 months (non-current liabilities) | 11,109,980 | 5,554,636 |
Lease agreements bear interest at usual market rates, have defined life time lessee and the lessee has call options over the leased assets.
As of 31 December 2008 and 2007, the fair value of financial obligations under financial lease contracts is similar to its book value.
The Group's obligations under finance leases are secured by the lessors' title of the leased assets.
The Group uses exchange rate derivatives, according to its risk management policy.
As at 31 December 2008, the fair value of the exchange rate derivatives, calculated taking into consideration present market value of equivalent financial instruments, is estimated as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Assets (Note 12) | 72,494 | 1,971 |
| Liabilities (Note 23) | (475,848) | (281,123) |
| (403,354) | (279,152) |
Gains and losses for the year arising from changes in the fair value of instruments that did not qualify for hedging accounting treatment, amounting to (124,202) Euro (212,567 Euro as of 31 December 2007), were recorded directly in the income statement under "Other operational expenses".
The fair value of the derivatives is detailed as follows:
| Assets (Note 12) | Liabilities (Note 23) | |||
|---|---|---|---|---|
| 31.12.2008 | 31.12.2007 | 31.12.2008 | 31.12.2007 | |
| Hedging derivatives | 1,776,634 | 1,113,658 | 4,894,132 | - |
| Other derivatives | 72,494 | 1,971 | 475,848 | 281,123 |
| 1,849,128 | 1,115,629 | 5,369,980 | 281,123 |
The derivatives recorded as liabilities were swaps and zero cost dollars. According to the accounting principles, those instruments meet all the requirements in 2008 to be designated as interest rate hedging instruments.
The fair value is as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Assets | 1,776,634 | 1,113,658 |
| Liabilities | (4,894,132) | |
| (3,117,498) | 1,113,658 |
These interest rate derivatives were valued at fair-value, at the balance sheet date, based on valuations performed within the Group using specific software and on external valuations when this software does not deal specific instruments. The fair value of the swaps was calculated, with reference to the balance sheet date, based upon the discounted cash flow of the difference between the fixed interest rate of the fixed leg and the indexed variable interest rate inherent to the variable leg.
As at 31 December 2008 and 2007 other non-current liabilities were made up as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Participating companies (Note 35) | 10.500.460 | 10.000.000 |
| Other non-current trade accounts payable | 664.848 | 830.596 |
| Share-based payments (Note 27) | 523.086 | 1.872.010 |
| 11.688.394 | 12.702.606 |
As at 31 December 2008 and 2007, the caption "Other non-current liabilities" refers mainly to the estimated amounts to fulfil the legal and tax obligations of a Brazilian subsidiary which were considered appropriate to face future losses on lawsuits and for which legal deposits exist, which are recorded under the caption "Other non-current trade accounts receivable" (Note 13), with no defined maturity.
The amount payable to participating companies refers to a shareholders' loan granted by a minority shareholder to a subsidiary that bears interest at usual market rate. The fair value of this loan is similar to its book value, with no defined maturity.
In 2008 and in previous years, Sonae Distribuição Group granted deferred performance bonuses to its directors and eligible employees. These are based on shares to be acquired at nil cost, three years after they were attributed to the employee. The purchase can be exercised during the period commencing on the third anniversary of the grant date and the end of that year. The company has the choice to settle its responsibilities in cash rather than through shares. The option can only be exercised if the employee still works for the Sonae Group at the vesting date.
Liabilities arising from deferred performance bonuses as at 31 December 2008 and 2007 are made up as follows:
| Year of | Vesting | Number of | Fair value | ||
|---|---|---|---|---|---|
| grant | year | participants | 31.12.2008 | 31.12.2007 | |
| Shares | |||||
| 2005 | 2008 | 38 | - | 2.690.269 | |
| 2006 | 2009 | 40 | 508.264 | 1.958.101 | |
| 2007 | 2010 | 40 | 429.971 | 1.699.820 | |
| 2008 | 2011 | 42 | 709.315 | ||
| Total | 1.647.550 | 6.348.190 |
The amount recorded in the financial statements as at 31 December 2008 and 2007, that are related to the responsabilities incurred from the date in which each plan was granted to the period then ended, can be presented as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| R ecorded as Other non-current liabilities (Note 26) | 523.086 | 1.872.010 |
| R ecorded as Other current liabilities (Note 30 ) | 508.264 | 2.690.269 |
| R ecorded in profit and loss in previous years | (2.735.184) | (628.007) |
| R ecorded in Staff costs | (1.703.834) | 3.934.272 |
The share based payment plans costs are recognized during the years between the grant and vesting date as payroll costs.
As at 31 December 2008 and 2007 this caption can be detailed as follows:
| Payable | ||||
|---|---|---|---|---|
| 31.12.2008 | 0-90 days | 90-180 days | >180 days | |
| Suppliers - current account | 678.898.891 | 675.810.040 | 1.795.762 | 1.293.089 |
| Suppliers - invoices w aiting approval | 219.202.737 | 216.906.894 | 912.987 | 1.382.856 |
| 898.101.628 | 892.716.934 | 2.708.749 | 2.675.945 | |
| Payable | ||||
| 31.12.2007 | ||||
| Reexpressed | 0-90 days | 90-180 days | >180 days | |
| Suppliers - current account | 582.816.649 | 580.936.348 | 1.853.302 | 26.999 |
| Suppliers - invoices w aiting approval | 253.539.635 | 252.349.750 | 1.189.885 | |
| 836.356.284 | 833.286.098 | 3.043.187 | 26.999 |
At 31 December 2008 and 2007 the caption Trade accounts payable resulted from the ordinary course of business. The Board of Directors understands that the book value of these accounts payable is similar to its fair value.
As at 31 December 2008 and 2007 Other accounts payable were made up as follows:
| Payable | ||||
|---|---|---|---|---|
| 31.12.2008 | 0-90 days | 90-180 days | >180 days | |
| Participated and participating companies | 782,843 | 156,198 | 626,645 | |
| Suppliers of fixed assets | 104,851,843 | 103,454,878 | 731,163 | 665,802 |
| Other debts | 46,794,863 | 33,785,410 | 1,248,552 | 11,760,901 |
| 152,429,549 | 137,240,288 | 2,135,913 | 13,053,348 | |
| Payable | ||||
| 31.12.2007 | ||||
| Reexpressed | 0-90 days | 90-180 days | >180 days | |
| Participated and participating companies | 408,665 | 408,665 | ||
| Suppliers of fixed assets | 42,158,108 | 39,529,576 | 1,965,146 | 663,386 |
| Other debts | 43,391,950 | 36,989,188 | 2,199,326 | 4,203,436 |
| 85,958,723 | 76,927,429 | 4,164,472 | 4,866,822 |
The caption Other accounts payable includes:
As at 31 December 2008 and 2007 "Other current liabilities" were made up as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Personnel costs | 81,422,113 | 65,890,374 |
| Share-based payments (Note 27) | 508,264 | 2,690,269 |
| Accrued interests | 22,419,351 | 18,887,751 |
| Advertising and promotion | 7,886,789 | 19,792,292 |
| Other external supplies and services | 22,305,374 | 29,607,645 |
| Rents | 6,151,609 | 5,146,700 |
| Real Estate Municipality tax | 3,287,268 | 3,658,053 |
| Other liabilities | 4,964,957 | 1,794,559 |
| 148,945,725 | 147,467,643 |
The caption "Personnel costs" refers mainly to payroll amounts to be paid during next year as holiday and holiday pay.
Movements in provisions and impairment losses for the year ended 31 December 2008 and 2007 are as follows:
| Opening Balance | ||||||
|---|---|---|---|---|---|---|
| Opening | Reexpressed | Perimeter | ||||
| CAPTIONS | balance | (Note 8) | Increases | variation | Decreases a) | Final |
| Accumulated impairment losses on investments (Note 7) | 26,316 | 26,316 | - | (13,158) | 13,158 | |
| Accumulated impairment losses on goodwill (Note 11) | 1,374,226 | 1,374,226 | 6,817,357 | - | 8,191,583 | |
| Accumulated impairment losses on trade accounts receivable (Note 15) | 12,771,387 | 12,771,387 | 1,269,602 | (237,740) | (1,085,980) | 12,717,269 |
| Accumulated impairment losses on other debtors (Note 16) | 8,620,872 | 9,242,789 | 2,875,996 | 628,444 | (606,821) | 12,140,408 |
| Accumulated impairment losses - inventory (Note 14) | 16,095,728 | 16,095,728 | 8,902,597 | 824,292 | (7,312,110) | 18,510,507 |
| Provisions | 18,486,207 | 20,064,476 | - | 3,105,967 | (7,902,126) | 15,268,317 |
| 57,374,736 | 59,574,922 | 19,865,552 | 4,307,805 | (16,907,037) | 66,841,242 |
| Opening | Perimeter | ||||
|---|---|---|---|---|---|
| CAPTIONS | balance | Increases a) | variation | Decreases | Final |
| Accumulated impairment losses on investments (Note 10) | 474,728 | - | - | (448,412) | 26,316 |
| Accumulated impairment losses on goodwill (Note 9) | 2,838,583 | - | - | (1,464,357) | 1,374,226 |
| Accumulated impairment losses on trade accounts receivable (Note 13) | 11,167,140 | 315,392 | 1,760,215 | (471,360) | 12,771,387 |
| Accumulated impairment losses on other debtors (Note 14) | 6,463,190 | 1,422,157 | 974,704 | (239,179) | 8,620,872 |
| Accumulated impairment losses - inventory (Note 12) | 11,542,472 | 3,988,050 | 2,799,191 | (2,233,985) | 16,095,728 |
| Provisions | 22,117,496 | 1,600,648 | 3,719,073 | (8,951,010) | 18,486,207 |
| 54,603,609 | 7,326,247 | 9,253,183 | (13,808,303) | 57,374,736 |
a) Decreases include 1,600,577 Euro of exchange rate effect over opening balances.
Impairment losses are deducted from the corresponding asset carrying amount.
Provisions caption includes 6,016,688 Euro (14,628,032 Euro as of 31 December 2007) relating to contingencies assumed by the company, when selling the subsidiary Sonae Distribuição Brasil, S.A. in 2005. This provision is being used as costs are incurred.
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Guarantees rendered: | ||
| related to tax claims awaiting outcome | 113,907,257 a) | 79,895,859 |
| related to local and municipal claims awaiting outcome | 23,255,089 | 11,687,093 |
| Others | 43,437,911 b) | 45,649,202 |
During the period ended 31 December 2008, a Retail segment company Sonae Capital Brasil, Ltda granted a guarantee amounting to 21,856,170 Euro (BRL 70,892,539), (25,255,265 Euro - BRL 65,570,840, as at 31 December 2007) on a tax claim related to income tax, which is being judged by tax courts.
As a consequence of the sale of a subsidiary company in Brazil, the Group guaranteed the buyer all the losses incurred by that company arising on unfavourable decisions not open for appeal, concerning tax lawsuits on transactions that took place before the sale date (13 December 2005) and that exceed 40 million euro. As at 31 December 2008, the amount claimed by the Brazilian Tax Authorities concerning the tax lawsuits still in progress, which the company's lawyers assess as having a high probability of loss, amount to near 2.3 million euro. Furthermore, there are other tax lawsuits totalling 65 million euro for
which the Board of Directors, based on the lawyers' assessment, understand will not imply losses to the sold subsidiary above the referred 40 million euro.
No provision has been recorded for the liabilities that could arise from these processes, as the Board of Directors believes that they will be resolved without loss to the Company.
As at 31 December 2008 the Group did not hold any contractual commitments concerning fixed assets acquisition or other kind of financial commitments not reflected in the balance sheet.
As of 31 December 2008 an amount of 57,403,222 Euro (45,141,687 Euro on 31 December 2007) was recorded as cost for the period concerning rents due to operational lease contracts, mainly referring to leased real estate.
Additionally, as at that date, the group held as lessee operational lease contracts whose minimum lease payments schedule is made up as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Due in: | ||
| Annual contracts: | ||
| Automatically renewal | 16,899,357 | 19,734,050 |
| Pluri-annual contracts | ||
| N+1 | 37,803,245 | 25,737,279 |
| N+2 | 36,141,981 | 23,645,115 |
| N+3 | 32,280,359 | 21,104,187 |
| N+4 | 27,723,908 | 17,632,325 |
| N+5 | 22,730,974 | 14,529,304 |
| After N+5 | 121,389,612 | 66,535,895 |
| 294,969,436 | 188,918,155 |
During 2008 it was recognized as period income the amount of Euro 8,793,408 (2007: 8,116,056 Euro) related to received rents from operational leases, mainly connected with shopping centres explored by others in group property stores.
Additionally, as at balance sheet date, the group held as lessor operational lease contracts whose minimum lease payments schedule is made up as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Due in: | ||
| Automatically renewal | 2,508,455 | 2,276,129 |
| N+1 | 6,120,683 | 5,000,076 |
| N+2 | 4,882,857 | 4,360,617 |
| N+3 | 3,855,570 | 4,093,186 |
| N+4 | 3,112,041 | 3,660,316 |
| N+5 | 2,378,234 | 3,064,699 |
| Afer N+5 | 1,447,335 | 2,755,955 |
| 24,305,175 | 25,210,978 |
Balances and transactions with related parties as of 31 December 2008 and 2007 are detailed as follows:
| Sales and services rendered | Purchase and services attained | Interest income | Interest expense | |||||
|---|---|---|---|---|---|---|---|---|
| Transactions | 31.12.2008 | 31.12.2007 | 31.12.2008 | 31.12.2007 | 31.12.2008 | 31.12.2007 | 31.12.2008 | 31.12.2007 |
| Parent company | 576,912 | 375,401 | 619,228 | 761,892 | 121,540 | 2,793,622 | 225,440 | 2,459 |
| Associated companies | 16,772,288 | 679,597 | 3,402,844 | 3,525,507 | 239,377 | |||
| Participated companies | 54,110,955 | 51,527,903 | ||||||
| Participating companies | 481,188 | 408,597 | ||||||
| Jointly controlled companies | 224,497 | 727,936 | 59,955 | 3,216 | - | |||
| Other related parties(1) | 13,385,302 | 16,753,595 | 95,561,588 | 100,736,447 | 155,711 | 41,969 | ||
| 85,069,954 | 69,336,496 | 100,311,596 | 105,023,846 | 181,495 | 3,188,710 | 709,844 | 453,025 | |
| Purchase of assets | Disposal of assets | |||||||
| Transactions of fixed assets | 31.12.2008 | 31.12.2007 | 31.12.2008 | 31.12.2007 | ||||
| Parent company | 11,768 | 50,267 | 573,913 | |||||
| Associated companies | 14,878,381 | 205,504 | 18,760 | |||||
| Jointly controlled companies | 18,644,537 | 10,625,688 | ||||||
| Other related parties(1) | 44,241,931 | 93,163,597 | 12,700,924 | 37,896,448 | ||||
| 77,776,617 | 93,163,597 | 23,582,383 | 38,489,121 | |||||
| Loans | ||||||||
| Accounts receivable | Accounts payable | Payables | Receivable | |||||
| Balances | 31.12.2008 | 31.12.2007 | 31.12.2008 | 31.12.2007 | 31.12.2008 | 31.12.2007 | 31.12.2008 | 31.12.2007 |
| Parent company | 343,935 | 108,794 | 168,426 | 499,045 | ||||
| Associated companies | 4,918,113 | 894,968 | 166,252 | 42,936 | ||||
| Participated companies | 10,623,607 | 12,090,910 | ||||||
| Jointly controlled companies | 5,029,706 | 6,614,454 | 126,000 | 4,223,500 | ||||
| Participating companies (Note 24) | 432,656 | 10,481,188 | 10,000,000 | 15,475 | ||||
| Other related parties(1) | 15,411,521 | 9,288,023 | 43,592,262 | 30,450,671 | 1,000,000 | 1,000,000 |
(1) The affiliated or jointly controlled companies of Grupo Efanor, not included in Sonae Distribuição Group are considered as Other related parties.
Apart from the above mentioned transactions there are no other transactions with related companies
As of 31 December 2008 and 2007, there were no transactions with key management staff or Directors of the Company, nor were loans granted to them.
36,326,882 22,382,695 50,541,394 31,425,308 10,607,188 10,000,000 5,223,500 1,015,475
During the period, short term loans were granted to Sonae SGPS, S.A. amounting to 280,997,000 Euro (359,425,000 Euro in 2007), which were received during the period.
During the period, short term loans were obtained from Sonae SGPS, S.A., amounting 85,500,000 Euro, which were paid during the period.
The recorded amounts as Receivable Loans from participating companies refer to loans conceded to subsidiaries by its shareholders, which bear interests at market rates.
During 2008 period, the total remuneration attributed to the members of the Board of Directors, amounted to 1,015,360 Euro (1,040,400 Euro as at 31 December 2007) from which 606,700 Euro (670,800 Euro as at 31 December 2007) relates to performance bonus.
Additionally, the remuneration of the staff with responsibilities in the strategic management of the main group companies (excluding the Board of Directors members) amounted to 2,686,574 Euro (3,480,756 Euro as at 31 December 2007), from which 1,541,260 Euro relates to fixed remuneration (1,973,160 Euro in 2007) and 1,145,314 Euro to performance bonus (1,507,596 Euro in 2007).
Sales and Services rendered in 2008 and 2007 were as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Sales | 4,074,314,020 | 3,238,947,595 |
| Services rendered (a) | 145,379,164 | 145,720,912 |
| 4,219,693,184 | 3,384,668,507 |
a) Mainly corresponds to the travelling agencies contribution.
As at 31 December 2008 and 2007 the caption "Other operational income" was made up as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Suplementary revenues | 372,781,489 | 288,997,874 |
| Benefits from contractual penalties | 81,082 | 104,032 |
| Subventions received ( Note 16) | 338,226 | 182,473 |
| Gains on disposals of tangible and intangible assets | 20,023,586 | 13,806,875 |
| Reversal of impairment losses (Note 31) | 1,692,801 | 710,540 |
| Exchange differences | 13,428,814 | 5,021,010 |
| Own work capitalised | 8,517,884 | 7,127,098 |
| Negative Goodwill (Note 8.2.1) | 9,864,000 | - |
| Other income | 2,568,215 | 1,961,143 |
| 429,296,097 | 317,911,045 |
As at 31 December 2008 and 2007 the caption "Other operational expenses" was made up as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Costs of Automatic payment terminals | 23,841,339 | 20,086,220 |
| Local government tax over Real Estate properties | 3,188,087 | 2,518,676 |
| Other tax | 4,840,505 | 1,808,327 |
| Losses on the Disposal of tangible assets | 5,873,910 | 6,054,799 |
| Losses on the Disposal of intangible assets | 53,801 | - |
| Donations | 6,011,128 | 5,962,769 |
| Fines and penalities | 243,646 | 257,289 |
| Uncollectible debts | 1,267,282 | 610,642 |
| Exchange differences | 12,428,545 | 5,501,787 |
| Other costs | 9,907,033 | 8,486,470 |
| 67,655,276 | 51,286,979 | |
Net financial profit / (loss) for the years ended 31 December 2008 and 2007 are made up as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Expenses: Interest payable |
||
| related with bank loans and overdrafts | (16,297,172) | (3,242,014) |
| related with non convertible bonds | (59,690,981) | (40,916,098) |
| related with financial leases | (440,411) | (413,827) |
| Others | (1,066,290) | (471,801) |
| (77,494,854) | (45,043,740) | |
| Exchange losses | (3,033,662) | (3,063,881) |
| Losses with debt emission | (2,429,807) | (1,941,330) |
| Others | (4,308,501) | (4,104,996) |
| (6,738,308) | (6,046,326) | |
| Total | (87,266,824) | (54,153,947) |
| Income: | ||
| Interests receivable | ||
| related with bank deposits | 1,704,162 | 10,111,607 |
| related with loans to affiliated companies | 121,540 | 2,793,622 |
| Others | 8,111,144 | 3,496,740 |
| 9,936,846 | 16,401,969 | |
| Exchange gains | 5,138,572 | 2,831,286 |
| Other financial income | 178,990 | 238,714 |
| Total | 15,254,408 | 19,471,969 |
| Net financial expenses | (72,012,416) | (34,681,978) |
Income tax for the period ended 31 December 2008 and 2007 is as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Current tax | 9,919,305 | 8,500,098 |
| Deferred tax | 1,578,670 | (1,378,897) |
| 11,497,975 | 7,121,200 |
Under the caption Deferred Tax is included 8,830,510 Euro (2,342,238 as at 31 December 2007) related to these credits resulting from the collection of income generated by Real estate Investment Funds.
The reconciliation between the profit before taxation and the tax change for the periods ended 31 December 2008 and 2007 is summarized as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Profit/(loss) before income tax | 182,313,297 | 175,937,046 |
| Income tax rate | 25.00% | 25.00% |
| 45,578,324 | 43,984,262 | |
| Provisions and impairment losses not accepted for tax purposes | (2,928,719) | 242,198 |
| Goodwill impairment losses | 2,127,479 | - |
| Negative Goodwill | (2,466,000) | - |
| Differences in profit/(loss) in the disposal of assets for tax and accounting purposes | (1,424,667) | (2,216,129) |
| Use of tax losses for which no deferred taxes assets were recognised in the past Tax losses of the current year which did not give place to the recognition of deferred tax |
(5,635,993) | (33,740,922) |
| assets | 2,836,183 | 2,788,320 |
| Tax rates different from portuguese tax rate | (5,217,095) | (692,745) |
| Tax credit related to Real Estate Investment Funds income | (1,444,315) | 2,342,238 |
| Use or reversal of deferred tax | (10,224,993) | (2,070,110) |
| Autonomous taxation and tax benefits | (1,275,304) | 571,618 |
| Shortage / (excess) of previous years income tax estimate | (4,381,093) | (1,123,987) |
| Others | (4,045,832) | (2,963,543) |
| Income tax | 11,497,975 | 7,121,200 |
Earnings per share for the years ended 31 December 2008 and 2007 were calculated taking into consideration the following amounts:
| 4th Quarter.2008 | 31.12.2008 | 4th Quarter.2007 | 31.12.2007 | |
|---|---|---|---|---|
| Net profit | ||||
| Net profit taken into consideration to calculate basic earnings per share (Net profit for the period) |
91,035,606 | 170,993,512 | 68,764,950 | 167,492,214 |
| Net profit taken into consideration to calculate diluted earnings per share | 91,035,606 | 170,993,512 | 68,764,950 | 167,492,214 |
| Number of shares | ||||
| Weighted average number of shares used to calculate basic Earnings per share |
1,000,000,000 | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 |
| Weighted average number of shares used to calculate the diluted earnings per share |
1,000,000,000 | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 |
| Earning per share (basic and diluted) | 0.09 | 0.17 | 0.07 | 0.17 |
As at 31 December 2008 and 2007 there are no diluting effects on the number of circulating shares.
In the annual General Meeting held on 31 March of 2008 a gross dividend of 85,000,000 Euro was approved.
The contribution of the main segments for the years ended 31 December 2008 and 2007 can be detailed as follows:
| 31 December 2008 | Turnover | EBITDA | EBIT | Net capital employed |
Sales area ['.000m2] |
|---|---|---|---|---|---|
| Food retail brands | 2,888,958,227 | 261,516,557 | 181,692,293 | 1,334,426,107 | 483 |
| Non food retail brands | 1,172,060,208 | 75,538,471 | 45,679,242 | 466,482,306 | 326 |
| Real estate assets with income | 7,392,090 | 7,310,661 | 4,230,216 | 59,869,522 | |
| Real estate assets without income | - | 9,106,319 | 8,791,738 | 153,542,102 | |
| Financial investments | - | - | - | 67,030,454 | |
| Other | 151,282,658 | 1,287,757 | 8,204 | 78,257,864 | |
| 4,219,693,183 | 354,759,765 | 240,401,693 | 2,159,608,355 | 809 |
| 31 December 2007 | Turnover | EBITDA | EBIT | Net capital employed |
Sales area ['.000m2] |
|---|---|---|---|---|---|
| Food retail brands | 2,368,424,461 | 207,733,018 | 145,411,650 | 1,240,541,499 | 374 |
| Non food retail brands | 1,009,076,913 | 71,410,251 | 47,246,242 | 367,084,898 | 239 |
| Real estate assets with income | 7,167,133 | 19,571,890 | 18,044,840 | 58,328,232 | |
| Real estate assets without income | 292,688 | 229,356 | 158,110,077 | ||
| Financial investments | 40,081,414 | ||||
| Others | 26,842 | 26,792 | 68,855,501 | ||
| 3,384,668,507 | 299,034,689 | 210,958,880 | 1,933,001,621 | 613 |
Includes the contribution of the business activity of the company related to food retail brands.
Includes the contribution of the business activity of the company related to non food retail brands.
Includes the contribution of real estate assets managed by Sonae Distribuição, in particular commercial galleries near to Continente and Modelo units.
Includes the contribution of real estate assets which in most cases will be useful to accommodate the organic growth of Sonae Distribuição
Includes the percentage of capital held in other companies (Note 6 and 7).
Amounts that, by their nature, do not fit in any of the other categories, such as the contribution of gas stations beside Continente hypermarket's and Goodwill.
Operational income – amortisations and depreciations – provisions and impairment losses – impairment losses reversion – negative Goodwill.
Consolidated profit – income tax + profit/(loss) related to investments + profit/(loss) related to associated companies – net financial income.
Gross fixed assets [includes Ex-Carrefour] + other non-current assets + amortisations and impairment losses + financial investments + working capital
The accompanying consolidated financial statements were approved by the Board of Directors and authorized for issue on 3 March 2009, nevertheless they are still subject to approval at the Shareholders Annual General Meeting as defined in Portuguese Commercial Law.
These financial statements are a translation of financial statements originally issued in Portuguese in accordance with International Financial Reporting Standards as adopted by European Union. In the event of discrepancies, the Portuguese language version prevails.
Matosinhos, 3 March 2009
The Board of Directors,
Duarte Paulo Teixeira de Azevedo (President)
Nuno Manuel Moniz Trigoso Jordão (CEO)
Ângelo Gabriel Ribeirinho dos Santos Paupério
Álvaro Carmona e Costa Portela
(Amounts expressed in Euro)
| IFRS | IFRS | ||
|---|---|---|---|
| ASSETS | Notes | 31-12-08 | 31-12-07 |
| NON CURRENT ASSETS | |||
| Intagible assets | 6 | 9,392 | 140,483 |
| Tangible fixed assets | 6 | 4,766 | 7,296 |
| Investments | 5 | 2,328,609,041 | 2,009,050,391 |
| Deferred tax assets | 7 | 1,296,945 | 304 |
| Loans granted to group companies | 4 and 8 | 1,263,332,780 | 774,196,909 |
| Total non-current assets | 3,593,252,924 | 2,783,395,383 | |
| CURRENT ASSETS | |||
| Trade accounts receivable | 4 and 9 | 1,506,614 | 3,540,891 |
| Group companies | 4 and 10 | 321,814,399 | 734,444,255 |
| Other accounts receivable | 4 and 12 | 7,404,536 | 7,101,105 |
| Taxes recoverable | 4 and 11 | 7,528,261 | 9,916,188 |
| Other currents assets | 4 and 13 | 2,937,398 | 2,051,090 |
| Derivatives | 4 and 14 | 1,776,634 | 1,113,658 |
| Cash and cash equivalen | 4 and 15 | 51,426,604 | 48,033 |
| Total currents assets | 394,394,446 | 758,215,220 | |
| TOTAL ASSETS | 3,987,647,370 | 3,541,610,603 | |
| EQUITY AND LIABILITIES | |||
| EQUITY: | |||
| Share Capital | 16 | 1,000,000,000 | 1,100,000,000 |
| Legal Reserves | 17 | 99,300,000 | 95,000,000 |
| Other Reserves | 17 | 661,498,223 | 825,514,961 |
| Net Profit for the year | 31 | 266,112,081 | 84,137,774 |
| TOTAL EQUITY | 2,026,910,304 | 2,104,652,735 | |
| LIABILITIES | |||
| NON-CURRENT ASSETS | |||
| Bank loans | 4 and 18 | 230,000,000 | - |
| Bonds | 4 and 18 | 1,001,716,603 | 1,100,672,731 |
| Deferred tax liabilities | 7 | 472,363 | 233,406 |
| Total non-current liabilities | 1,232,188,966 | 1,100,906,137 | |
| CURRENT ASSETS | |||
| Bank loans | 4 and 18 | 21,476,433 | 2,809 |
| Short term portion of non-current bonds | 4 and 18 | 99,978,611 | - |
| Derivatives | 4 and 14 | 4,894,132 | - |
| Suppliers | 4 and 19 | 101,260 | 104,307 |
| Group Companies | 4 and 10 | 575,639,729 | 310,274,622 |
| Other accounts payable | 4 and 20 | 5,650 | 3,965,364 |
| Taxes payable | 11 | 2,152,100 | 1,184,698 |
| Other current liabilities | 4 and 21 | 24,300,185 | 20,519,931 |
| Total current liabilities | 728,548,100 | 336,051,731 | |
| TOTAL LIABILITIES | 1,960,737,066 | 1,436,957,868 | |
| TOTAL EQUITY AND LIABILITIES | 3,987,647,370 | 3,541,610,603 |
The accompanying notes are part of these financial statement
| IFRS | IFRS | |||||
|---|---|---|---|---|---|---|
| 31-12-08 | 31-12-07 | |||||
| Notes | 4th Quarter 08 | YTD | 4th Quarter 07 | YTD | ||
| (Unaudited) | (Unaudited) | |||||
| Operatinal Income: | ||||||
| Services rendered | 25 | 399,222 | 1,590,069 | 775,579 | 3,128,682 | |
| Other operational income | 26 | 1,471,397 | 3,747,733 | 920,225 | 3,179,931 | |
| Total Operational income | 1,870,619 | 5,337,802 | 1,695,804 | 6,308,613 | ||
| Operational expenses: | ||||||
| External supplies and services | (447,702) | (1,829,373) | (327,133) | (1,373,646) | ||
| Staff costs | (187,269) | (608,088) | (982,494) | (2,548,664) | ||
| Amortisation and depreciation | 6 | (1,246) | (144,511) | (70,631) | (283,101) | |
| Other operational expenses | 27 | (1,412,465) | (3,190,196) | (955,966) | (3,289,754) | |
| Total operational expenses | (2,048,682) | (5,772,168) | (2,336,224) | (7,495,165) | ||
| Net Operational profit / (loss) | (178,063) | (434,366) | (640,420) | (1,186,552) | ||
| Financial income | 28 | 25,621,891 | 93,227,964 | 21,298,447 | 70,793,951 | |
| Financial expenses | 28 | (23,190,607) | (84,545,200) | (20,566,945) | (57,734,847) | |
| Financial profit/(loss) | 28 | 2,431,284 | 8,682,764 | 731,502 | 13,059,104 | |
| Profit/(loss) related to investments | 29 | 12,029,772 | 248,329,909 | - | 49,345,485 | |
| Profit/(loss) before taxes | 14,282,993 | 256,578,307 | 91,082 | 61,218,037 | ||
| Income tax | 30 | 4,435,717 | 9,533,774 | 17,783,674 | 22,919,737 | |
| Net profit/(loss) for the year | 31 | 18,718,710 | 266,112,081 | 17,874,756 | 84,137,774 | |
| Profit/(loss) per share (basic and diluted) | 31 | 0.02 | 0.266 | 0.02 | 0.084 |
The accompanying notes are part of these financial statements
COMPANY STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED 31 DECEMBER 2008 AND 2007
(Amounts expressed in Euro)
(Translation of financial statements originally issued in Portuguese - Note 34)
| Share | Own | Legal | Other | Hedging | Net | Total | ||
|---|---|---|---|---|---|---|---|---|
| Notes | Capital | Shares | Reserves | Reserves | Reserves | Profit/Loss | Equity | |
| Balance at 1 January 2007 | 1,100,000,000 | (205,000,000) | 90,200,000 | 905,536,702 | - | 80,335,955 | 1,971,072,657 | |
| Appropriation of net profit of 2006: | ||||||||
| Appropriation of net profit/(loss) of 2006 | - | - | 4,800,000 | 535,955 | - | (5,335,955) | - | |
| Distributed dividends | 31 | - | - | - | - | - | (75,000,000) | (75,000,000) |
| Changes in reserves | ||||||||
| Changes in fair value | - | - | - | - | 919,625 | - | 919,625 | |
| Others | - | - | - | - | (381,455) | - | (381,455) | |
| Delivery of own shares | - | 205,000,000 | - | - | - | - | 205,000,000 | |
| Merging by incorporation | - | - | - | (81,095,866) | - | - | (81,095,866) | |
| Net profit/(loss) for the year | ||||||||
| ended 31 December 2007 | 31 | - | - | - | - | - | 84,137,774 | 84,137,774 |
| Others | - | - | - | - | - | - | - | |
| Balance at 31 December 2007 | 1,100,000,000 | - | 95,000,000 | 824,976,791 | 538,170 | 84,137,774 | 2,104,652,735 | |
| Balance at 1 January 2008 | 1,100,000,000 | - | 95,000,000 | 824,976,791 | 538,170 | 84,137,774 | 2,104,652,735 | |
| Appropriation of net profit of 2007: | ||||||||
| Appropriation of net profit/(loss) of 2007 | - | - | 4,300,000 | - | - | (4,300,000) | - | |
| Distributed dividends | 31 | - | - | - | (5,162,226) | - | (79,837,774) | (85,000,000) |
| Acquisition of own shares | 16 | - | (255,000,000) | - | - | - | - | (255,000,000) |
| Changes in reserves | ||||||||
| Changes in fair value | - | - | - | - | (4,874,682) | - | (4,874,682) | |
| Others | - | - | - | - | 1,020,170 | - | 1,020,170 | |
| Extinction of own shares | 16 | (100,000,000) | 255,000,000 | - | (155,000,000) | - | - | - |
| Net profit/(loss) for the year | ||||||||
| ended 31 December 2008 | 31 | - | - | - | - | - | 266,112,081 | 266,112,081 |
| Balance at 31 December 2008 | 1,000,000,000 | - | 99,300,000 | 664,814,565 | (3,316,342) | 266,112,081 | 2,026,910,304 | |
The accompanying notes are part of these financial statements
| Notes | 31-12-08 | 31-12-07 | |
|---|---|---|---|
| OPERATING ACTIVITIES: Cash receipts from trade debtors |
3,627,159 | 20,733,278 | |
| Cash payments to trade suppliers | 1,912,428 | 1,657,683 | |
| Cash paid to employees | 1,696,053 | 3,157,405 | |
| Net cash flow generated by operations | 18,678 | 15,918,190 | |
| Income taxes paid/(received) | (29,820,959) | (25,983,895) | |
| Other cash receipts/payments from operating activities | 116,549 | (4,195,902) | |
| Net cash flow from operating activities (1) | 29,956,186 | 37,706,183 | |
| INVESTING ACTIVITIES | |||
| Cash receipt related to: | |||
| Financial investments | 23,817,756 | 97,058,064 | |
| Intangible assets | - | 275,000 | |
| Interests and similar income | 80,155,518 | 53,873,687 | |
| Dividends | 255,629,909 | 18,193,658 | |
| Other | 611,200,000 | 75,000,000 | |
| Loans granted | 3,608,374,675 | 3,191,397,022 | |
| 4,579,177,858 | 3,435,797,431 | ||
| Cash payments related to: | |||
| Financial investments | (350,676,406) | (274,741,772) | |
| Tangible assets | (33) | (42) | |
| Intangible assets | (171,415) | - | |
| Other | - | (616,169,473) | |
| Loans granted | (4,299,615,546) | (3,129,991,937) | |
| (4,650,463,400) | (4,020,903,224) | ||
| Net cash flow used in investing activities (2) | (71,285,542) | (585,105,793) | |
| FINANCING ACTIVITIES | |||
| Cash receipt related to: | |||
| Loans obtained | 5,918,191,730 | 3,255,876,455 | |
| 5,918,191,730 | 3,255,876,455 | ||
| Cash payments related to: | |||
| Loans obtained | (5,407,496,230) | (2,631,418,155) | |
| Interests and similar charges | (79,461,198) | (50,742,069) | |
| Dividends | (85,000,000) | (75,000,036) | |
| Purchase of own shares | (255,000,000) | - | |
| (5,826,957,428) | (2,757,160,260) | ||
| Net cash flow used in financing activities (3) | 91,234,302 | 498,716,195 | |
| Net increase/(decrease) in cash and equivalents (4) = (1) + (2) + (3) | 49,904,946 | (48,683,415) | |
| Cash and cash equivalents at the beginning of the year | 15 | 45,224 | 50,030,583 |
| Cash and cash equivalents - Merger with subsidiaries | - | (1,301,944) | |
| Cash and cash equivalents at the end of the year | 15 | 49,950,171 | 45,224 |
The accompanying notes are part of these financial statements
(Translation of Notes to the Company Financial Statements originally issued in Portuguese – Note 34)
SONAE DISTRIBUIÇÃO, SGPS, S.A. ("the Company" or "Sonae Distribuição") is a Portuguese Corporation, with head-office in Rua João Mendonça nº 529, 4464-501 Senhora da Hora, Portugal.
The Company's main activity is the management of shareholdings (Note 5).
The company financial statements are presented as required by Commercial Companies Code. According to Decree-Law 35/2005 of 17th February, the Company financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union.
The principal accounting policies adopted in preparing the accompanying individual financial statements are as follows:
The accompanying financial statements have been prepared in accordance with the International Financial Reporting Standards ("IFRS") applicable on 1 January 2008, as adopted by the European Union. These standards were issued by International Financial Reporting Interpretations Committee ("IFRIC") or by the previous Standing Interpretation Committee ("SIC"), that have been adopted by the European Union.
Interim financial statements are presented quarterly, in accordance with IAS 34 – "Interim Financial Reporting".
The accompanying financial statements have been prepared from the books and accounting records under a going concern assumption and under the historical cost convention, except for some financial instruments which are measured at their fair value.
Up to the financial statements approval date, the following Standards and Interpretations, some of which have became effective during the year 2008, have been endorsed by European Union:
| Effective Date |
|
|---|---|
| With mandatory application in 2008: | |
| IAS 39/IFRS 7 - Amendments: Reclassification of Financial Instruments IFRIC 14/ IAS 19 - The Limit on Defined Benefit Asset, Minimum Funding |
01-07-08 |
| Requirements and their Interaction | 01-01-08 |
With mandatory application after 2008:
| IFRS 8 – Operating Segments IFRS 2 - Amendments: Share-based Payment |
01-01-09 01-01-09 |
|||
|---|---|---|---|---|
| IAS 1 - Amendments: Fist-time Adoption of International Financial Reporting | ||||
| Standards | 01-01-09 | |||
| IAS 23 - Amendments: Borrowing Costs | 01-01-09 | |||
| IAS 32/ IAS 1 - Amendments: Puttable Financial Instruments and | ||||
| Obligations Arising on Liquidation | 01-01-09 | |||
| Amendments to International Financial Reporting Standards (2007) IFRS 1/ IAS 27 - Cost of an Investment in a Subsidiary, Jointly Controlled |
||||
| Entity or Associate | 01-01-09 | |||
| IFRIC 13 - Customer Loyalty Programmes | 01-07-08 |
The adoption of these Standards has not led to any relevant changes in the Company's financial statements.
It is not expected for material impacts to arise to the Company's financial statements from the application of the above mentioned standards.
As at this date, the following standards and interpretations have already been issued by the IASB/IFRIC but have not yet been endorsed by the European Union:
| Effective | |
|---|---|
| Date | |
| Amendments to IFRS 3 – Business Combinations Amendments to IFRS 1 – First-time Adoption of International Financial |
01-07-09 |
| Reporting Standards | 01-07-09 |
| Amendments to IAS 27 - Consolidated and Separate Financial |
|
| Statements | 01-07-09 |
| Amendments to IAS 39 – Qualifying hedging instruments | 01-07-09 |
| Amendments to IAS 39 – Reclassification of Financial Assets | 01-07-09 |
| Amendments to IFRS 7 – Financial Instruments: Disclosures | 01-01-09 |
| IFRIC 12 - Service Concession Arrangements | 01-01-09 |
| IFRIC 15 – Agreements for the Construction of Real Estate | 01-01-09 |
| IFRIC 16 – Hedges of a Net Investments in a Foreign Operation | 01-10-08 |
| IFRIC 17 – Distributions of Non-cash Assets to Owners | 01-07-09 |
| IFRIC 18 – Transfer of Assets from Customers | 01-07-09 |
The future application of the standards mentioned above, which have not been yet endorsed by the European Union, is not expected to produce material impacts to the Company's financial statements.
Tangible assets acquired up to 1 January 2004 (transition date to IFRS) are recorded at acquisition cost, or revalued acquisition cost in accordance with generally accepted accounting principles in Portugal until that date, net of depreciation and accumulated impairment losses.
Tangible assets acquired after that date, are recorded at acquisition cost, net of amortisation and accumulated impairment losses.
Depreciation is computed on a straight line basis, from the date the asset is first used, over the expected useful life for each class of assets.
The depreciation rates used correspond to the following estimated useful lives:
| Years | |
|---|---|
| Machinery and Equipment | 10 to 15 |
| Transport equipment | 5 |
| Office equipment | 10 |
| Other tangible assets | 5 |
Intangible assets are stated at acquisition cost, net of amortisation and accumulated impairment losses. Intangible assets are only recognized if it is probable that future economic benefits will flow from them, if they are controlled by the Company and if their cost can be reliably measured.
Depreciation is computed on a straight line basis, from the date the asset is available for use, taking into consideration the estimated useful life for each class of assets.
Borrowing costs are usually recognized as an expense in the period in which they are incurred on an accrual basis.
The Company classifies the financial instruments in the presented categories conciliated with the Balance Sheet as disclosed in Note 4.
Investments in subsidiaries and associated companies are recorded according to IAS 27, at acquisition cost net of impairment losses if any.
Investments are classified into the following categories:
Held to maturity investments are classified as non-current assets unless they mature within 12 months of the balance sheet date. Investments classified as held to maturity have defined maturities and the Company has the intention and ability to hold them until the maturity date. Investments measured at the fair value through profit or loss include the investments held for trading that the Company acquires with the purpose of trading in the short term. They are classified in the balance sheet as current investments. The Company classifies the available-for-sale investments as non-current assets.
All purchases and sales of investments are recognised at the trade date, independently of the settlement date.
Investments are initially measured at cost, which is its fair value at acquisition date, including transaction costs if related to Held to maturity and Available-for-sale investments.
Available-for-sale investments and investments measured at fair value through profits or loss are subsequently recorded at fair value excluding any deduction of transaction costs
which may be incurred during its sale taking into consideration the market price at the balance sheet date. Investments in equity instruments that do not have a market price and whose fair value cannot be reliably measured are stated at cost less impairment losses.
Gains or losses arising from changes in fair value of available-for-sale investments are recorded directly under the Fair value reserve in Equity, until the investment is sold or otherwise disposed of, or until it is considered to be impaired, at which time the cumulative gain or loss previously recorded in equity is transferred to net profit or loss for the period.
Gains or losses arising from change in fair value of investments measured at fair value through profit and loss are recorded directly in the income statement.
Held to maturity investments are carried at amortized cost using the effective interest rate method, net of capital reimbursements and interest income received.
Loans and non current accounts receivables are measured at amortised cost using the effective interest rate method, less any impairment.
Interest income is recognised by applying the effective interest rate, except for short-term receivables as the recognition of interest would be immaterial.
These financial instruments arise when the Company provides funds or renders services to its subsidiaries and associated companies with no intention of trading the receivables.
Loans and receivables are recorded as current assets, except when its maturity is greater than 12 months from the balance sheet date, when they are classified as non-current assets. Loans and receivables are included in the captions presented in Note 4.
Other accounts receivable are stated in the balance sheet at their nominal value net of impairment losses, recognised under an allowance account "Impairment losses on accounts receivable", in order to reflect its net realizable value.
Impairment losses are recorded as a result of events occurred that indicate, objectively and in a quantifiable way, that the total or part of the account receivable will not be received.
Recognized impairment losses correspond to the difference between the carrying amount of the receivable and the present value of the estimated future cash-flows, discounted at the initial effective interest rate that, in those cases where it is estimated to be received in the short term (less than 1 year), it is considered to be null.
Financial liabilities and equity instruments are classified and accounted for based upon their contractual substance, independently from the legal form they assume.
f) Loans
Loans are recorded as liabilities at their nominal value net of up-front fees and commissions related to the issuance of those instruments. Financial expenses are calculated based on the effective interest rate and are recorded in the income statement on an accrual basis, in accordance with the accounting policy defined in Note 2.8. The portion of interest regarding up-front fees and commissions, if not paid in the period, is added to the book value of the loan.
Trade and other accounts payable are stated at their nominal value.
The Company enters into derivatives in order to manage its financial risks, as hedging instruments.
Derivatives used by the group that qualify as cash flow hedging instruments relate, mainly, with interest rate and foreign exchange instrument to hedge the risks arising on loans obtained. Derivatives classified as cash flow hedge instruments are used by the Company mainly to hedge interest risks on loans obtained. Conditions established for these cash flow hedge instruments are identical to those of the corresponding loans in terms of base rates, calculation rules, rate setting dates and repayment schedules of the loans and for these reasons they qualify as perfect hedges. The inefficiency of the hedging, in case of existence, is recorded in the income statement caption "Financial Results".
The Company's criteria for classifying a derivative instrument as a cash flow hedge instrument include:
The forecasted transaction that is being hedged is highly probable.
Cash flow hedge instruments used by the company to hedge the exposure to changes in the interest and exchange rates of its loans are initially accounted for at fair value, if any, and subsequently at fair value. Changes in fair value of these cash flow hedge instruments are recorded in equity under the caption Hedging reserves, and then transferred to the income statement over the same period in which the hedged instrument affects profit or loss.
The fair value of these instruments is estimated by the Company using specific software based on the discounted cash flow of the difference between the fixed interest rate of the fixed leg and the indexed variable interest rate inherent to the variable leg.
Hedge accounting of derivative instruments is discontinued when the instrument matures or is sold. Whenever a derivative instrument can no longer be qualified as a hedging instrument, the fair value differences recorded in equity under the caption Hedging reserve are transferred to profit or loss of the year or to the carrying amount of the asset that have been recognized as a result of the hedged forecast transaction, if applicable. Subsequent changes in fair value are recorded in the income statement.
When embedded derivatives exist, they are accounted for as separate derivatives when the risks and the characteristics are not closely related to economic risks and characteristics of the host contract and when these are not stated at fair value. Gains and losses which are not realizable are recorded in the Income statement.
Own shares are recorded at acquisition cost as a deduction to equity. Profit or losses resulting from disposal of own shares are recorded directly in equity.
Cash and cash equivalents includes cash at hand, cash at banks by means of in demand and term deposits and other treasury applications which mature in less than three months and that are subject to insignificant risk of changes in its value.
For the preparation of the statement of cash flows, cash and cash equivalents caption also includes bank overdrafts, which are included in the balance sheet caption Loans.
Financial assets, other than Investments measured at fair value through profit or loss, are assessed for indicators of impairment at each balance sheet date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.
For non-quoted equity instruments determining whether the investment is impaired requires an estimation of the value in use of the investment. The value in use calculation requires the entity to estimate the future cash flows expected to arise for the entity and a suitable discount rate in order to calculate present value.
For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate.
For investments of subsidiaries (equity investments and loans granted) the impairment analysis is based on the fair value estimate of its net assets, mainly equity investments in other Company's subsidiaries.
The above mentioned estimate is based on the fair value computation of the value in use of its holdings by means of discounted cash flow models.
It is the Board of Directors understanding that the use of the above mentioned methodology is adequate to conclude on the eventual existence of financial investments impairment as it incorporates the best available information as at the date of the financial statements.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.
In respect of equity available for sale securities, impairment losses previously recognised through profit or loss are not reversed. Any increase in fair value subsequent to an impairment loss is recognised directly in equity.
Share based payments result from Deferred Performance Bonus Plans that are referenced to the evolution of the Sonae, SGPS, S.A. shares' price (parent company of Sonae Distribuição, SGPS, S.A.).
Share based payments liabilities are measured at fair value on the date they are granted (usually in March each year) and are subsequent re-evaluated at the end of each reporting period based on the number of shares granted and the corresponding fair value at the closing date. The obligations are recorded under personnel costs and other current and non-current liabilities, under a straight line basis, between the date the shares were granted and their vesting date, taking into a consideration the time elapsed between these dates.
Contingent liabilities are not recorded in the financial statements, being disclosed, unless the probability of a cash outflow is remote, in which case, no disclosure is made.
Contingent assets are not recorded in the financial statements but disclosed when the existence of future economic benefit is probable
Revenue from services rendered is recorded in the income statement taking into consideration the stage of completion of the transaction at the balance sheet date.
Dividends are recognized as income in the year in which they are attributed to the shareholders.
Income and expenses are recognized in the year to which they relate, independently of the date of the corresponding payment or receipt. Income and expenses for which their real amount is not known are estimated.
Other current assets and Other current liabilities include income and expenses of the reporting year which will only be invoiced in the future. Those captions also include receipts and payments that have already occurred but will only correspond to income or expenses in future years, thus being recorded in the income statement of the future period.
Post-balance-sheet events that provide additional information about conditions that existed at the balance sheet date (adjusting events), are reflected in the financial statements. Postbalance-sheet events that are not adjusting events are disclosed in the notes to the financial statements when considered to be material.
The most significant accounting estimates reflected in the income statements include:
Estimates used are based on the best information available during the preparation of financial statements and are based on best knowledge of past and present events. Although future events are neither controlled by the Company nor foreseeable, some could occur and have impact on the estimates. Changes to the estimates used by the management that occur after the date of these financial statements, will be recognised in net income, in accordance with IAS 8, prospectively.
Sonae Distribuição is taxed in accordance with Special Regime of Taxing Groups of Companies (Parent company). Each company included in this regime records income tax for the year in its individual accounts in the caption "Group companies". When a subsidiary contributes with a tax loss, it reflects, in its individual accounts, the amount of tax corresponding to the loss to be compensated by the profits of the other companies covered by this regime.
Deferred taxes are calculated using the balance sheet liability method, reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are calculated and annually remeasured using the tax rates that have been enacted or substantively enacted and therefore expected to apply in the periods when the temporary differences are expected to reverse.
Deferred tax assets are recognized only when it is probable that sufficient taxable profits will be available against which the deferred tax assets can be used, or when taxable temporary differences are recognized and expected to reverse in the same period. At each balance sheet date an assessment of the deferred tax assets recognized is made, being reduced whenever their future use is no longer probable.
Deferred tax assets and liabilities are recorded in the income statement, except if they relate to items directly recorded in equity. In these cases the corresponding deferred tax is recorded in Equity.
Risk management general principles are approved by the Board of Directors, and its implementation is supervised by group's finance department.
The interest and exchange rate risk have a decisive importance in the Company's market risk management.
Derivatives are used to hedge certain exposures related to its operating business and, as a rule, Sonae Distribuição does not enter into derivatives or other financial instruments that are unrelated to its operating business or for speculative purposes.
The group exposure to the interest rate risk arises mainly from the long term loans which bear interests indexed to Euribor.
The group aim is to limit the cash-flow and net income volatility having in mind their operational activity profile by the use of an adequate combination of variable and fix rate debt. Group's policy allows interest rate derivates usage in order to reduce Euribor's variability exposure and not for speculative purposes.
Derivatives used by the group in interest rate risk management qualify as hedging instruments as they configure perfect hedging operations. Conditions established for these cash flow hedge instruments are identical to those of the corresponding loans in terms of base rates, calculation rules, rate setting dates and repayment schedules of the loans and for these reasons they qualify as perfect hedges.
The interest rate sensitivity analysis is based on the following assumptions:
Changes in market interest rates affect the interest income or expense of variable interest financial instruments (the interest payments of which are not designated as hedged items of cash flow hedges against interest rate risks). As a consequence, they are included in the calculation of income-related sensitivities;
Changes in market interest rates only affect interest income or expense in relation to financial instruments with fixed interest rates if these are recognised at their fair value. As such, all financial instruments with fixed interest rates that are carried at amortised cost are not subject to interest rate risk as defined in IFRS 7;
In the case of fair value hedges designed for hedging interest rate risks, when the changes in the fair values of the hedged item and the hedging instrument attributable to interest rate movements are offset almost completely in the income statement in the same period, these financial instruments are also not exposed to interest rate risk;
Changes in the market interest rate of financial instruments that were designated as hedging instruments in a cash flow hedge (to hedge payment fluctuations resulting from interest rate movements) affect the hedging reserve in equity and are therefore taken into consideration in the equity-related sensitivity calculations;
Changes in the fair values of derivative financial instruments and other financial assets and liabilities are estimated by discounting the future cash flows to net present values using appropriate market rates prevailing at the year end, and assuming a parallel shift in interest rate curves;
For the purposes of sensitivity analysis, such analysis is performed based on all financial instruments outstanding during the year.
Under the previously mentioned assumptions, it is expected that the individual exposure to interest rate risk is low. If interest rates of euro had been 75 b.p. higher (lower) during 2008, the company net profit before tax at 31 December 2008 would decrease (increase) by approximately 3.4 million EUR (0.7 million in 2007). The impact in equity would be an increase (decrease) of, approximately, 2.5 million EUR (2.4 million EUR), taking into consideration the current contracts and excluding any other effects on the Company's activity.
Sonae does not have any material foreign exchange rate exposure at holding level, since almost all assets and liabilities are denominated in Euro.
The purpose of liquidity risk management is to ensure, at all times, that the group has the financial capacity to fulfil its commitments as they become due and to carry on its business activities and strategy, through the management of the trade off cost and maturity of debt.
The Company follows an active policy of re-financing its debt by maintaining a high level of unused and available on demand resources to face short term needs and by increasing or maintaining an adequate debt maturity, according to the estimated cash-flows, and to the capability of leveraging its balance sheet.
Negotiating contractual terms which reduce the possibility of the lenders being able to demand an early termination is also considered as an important mean of managing liquidity risk. The group also assures, in its relationship with financial institutions, a high level of diversification of financing sources and counterparties, in order to ease the ability of entering new loan agreement and to minimize the effects of any relationship discontinuance
The liquidity analysis for financial instruments is presented in each related class note.
The company is mainly exposed to credit risk, as a result of the loans granted to participation Companies.
The company is also exposed to credit risk in its relationship with financial institutions, in result of bank deposits, debt instruments available facilities, derivates, among others.
The credit risk is limited by risk concentration management, and by a selection of counterparties, which have a high national and international prestige, with at least a credit rating of BBB or an equivalent rating issued by other international agencies.
The accounting policies disclosed in Note 2.5 as at 31 December 2008, have been applied to the line items below:
| FINANCIAL ASSETS | |
|---|---|
| ------------------ | -- |
| Note | Loans and accounts receivable |
Hedging derivatives |
Subtotal | Assets not within IFRS 7 scope |
Total | |
|---|---|---|---|---|---|---|
| NON-CURRENT ASSETS | ||||||
| Loans granted to group companies | 8 | 1,263,332,780 | 1,263,332,780 | 1,263,332,780 | ||
| 1,263,332,780 | 1,263,332,780 | 1,263,332,780 | ||||
| CURRENT ASSETS | ||||||
| Trade receivables | 9 | 1,506,614 | 1,506,614 | 1,506,614 | ||
| Group companies | 10 | 321,814,399 | 321,814,399 | 321,814,399 | ||
| Other debtors | 12 | 7,404,536 | 7,404,536 | 7,404,536 | ||
| Other current assets | 13 | 1,870,069 | 1,870,069 | 1,067,329 | 2,937,398 | |
| Derivatives | 14 | 1,776,634 | 1,776,634 | 1,776,634 | ||
| Cash and cash equivalents | 15 | 51,426,604 | 51,426,604 | 51,426,604 | ||
| 384,022,222 | 1,776,634 | 385,798,856 | 1,067,329 | 386,866,185 |
| FINANCIAL LIABILITIES | ||||||
|---|---|---|---|---|---|---|
| Note | Loans and accounts payable |
Hedging derivatives |
Subtotal | Liabilities not within IFRS 7 scope |
Total | |
| NON-CURRENT LIABILITIES | ||||||
| Bank loans | 18 | 230,000,000 | 230,000,000 | 230,000,000 | ||
| Bonds | 18 | 1,001,716,603 | 1,001,716,603 | 1,001,716,603 | ||
| 1,231,716,603 | 1,231,716,603 | - | 1,231,716,603 | |||
| CURRENT LIABILITIES | ||||||
| Bank loans | 18 | 21,476,433 | 21,476,433 | 21,476,433 | ||
| Bonds | 18 | 99,978,611 | 99,978,611 | 99,978,611 | ||
| Derivatives | 14 | 4,894,132 | 4,894,132 | 4,894,132 | ||
| Trade creditors | 19 | 101,260 | 101,260 | 101,260 | ||
| Group companies | 10 | 575,639,729 | 575,639,729 | 575,639,729 | ||
| Other creditors | 20 | 5,650 | 5,650 | 5,650 | ||
| Other non-current liabilities | 21 | 24,099,255 | 24,099,255 | 200,930 | 24,300,185 | |
| 721,300,938 | 4,894,132 | 726,195,070 | 200,930 | 726,396,000 |
According to the accounting policies described in note 2.5 as at 31 December 2007, the financial instruments were classified as follows:
| Note | Loans and accounts receivable |
Hedging derivatives |
Subtotal | Assets not within IFRS 7 scope |
Total | |
|---|---|---|---|---|---|---|
| NON-CURRENT ASSETS | ||||||
| Loans granted to group companies | 8 | 774,196,909 | 774,196,909 | 774,196,909 | ||
| 774,196,909 | 774,196,909 | 774,196,909 | ||||
| CURRENT ASSETS | ||||||
| Trade receivables | 9 | 3,540,891 | 3,540,891 | 3,540,891 | ||
| Group companies | 10 | 734,444,255 | 734,444,255 | 734,444,255 | ||
| Other debtors | 12 | 7,101,105 | 7,101,105 | 7,101,105 | ||
| Other current assets | 13 | 1,451,118 | 1,451,118 | 599,972 | 2,051,090 | |
| Derivatives | 14 | 1,113,658 | 1,113,658 | 1,113,658 | ||
| Cash and cash equivalents | 15 | 48,033 | 48,033 | 48,033 | ||
| 746,585,402 | 1,113,658 | 747,699,060 | 599,972 | 748,299,032 |
| FINANCIAL LIABILITIES | ||||||
|---|---|---|---|---|---|---|
| Note | Loans and accounts payable |
Hedging derivatives |
Subtotal | Liabilities not within IFRS 7 scope |
Total | |
| NON-CURRENT LIABILITIES | ||||||
| Bonds | 18 | 1,100,672,731 | 1,100,672,731 | 1,100,672,731 | ||
| 1,100,672,731 | 1,100,672,731 | - | 1,100,672,731 | |||
| CURRENT LIABILITIES | ||||||
| Bank loans | 18 | 2,809 | 2,809 | 2,809 | ||
| Trade creditors | 19 | 104,307 | 104,307 | 104,307 | ||
| Group companies | 10 | 310,274,622 | 310,274,622 | 310,274,622 | ||
| Other creditors | 20 | 3,965,364 | 3,965,364 | 3,965,364 | ||
| Other currente liabilities | 21 | 19,613,486 | 19,613,486 | 906,445 | 20,519,931 | |
| 333,960,588 | 333,960,588 | 906,445 | 334,867,033 |
As at 31 December 2008 and 2007, the investments caption is made up as follows:
| 31.December.2008 | 31.December.2007 | |||
|---|---|---|---|---|
| Company | % held | Final balance | % held | Final balance |
| Participated Companies | ||||
| Azulino - Imobiliária, S.A. | 100,00% | 498.025 | ||
| Bertimóvel - Sociedade Imobiliária, S.A. | 100,00% | 1.375.000 | 100,00% | 875.000 |
| Edições Book.it - S.A. | 100,00% | 1.000.000 | ||
| Canasta - Empreendimetos Imobiliários, S.A. | 100,00% | 1.579.375 | 100,00% | 1.579.375 |
| Chão Verde - Sociedade de Gestão Imobiliária, S.A. | 100,00% | 2.244.591 | 100,00% | 2.244.591 |
| Citorres - Sociedade Imobiliária, S.A. | 100,00% | 477.848 | 100,00% | 477.848 |
| Contibomba - Comércio e Distribuição de Combustíveis, S.A. | 100,00% | 372.000 | 100,00% | 372.000 |
| Contimobe - Imobiliária Castelo Paiva, S.A. | 100,00% | 231.318.722 | 100,00% | 231.318.722 |
| Cumulativa - Sociedade Imobiliária, S.A. | 100,00% | 2.095.191 | 100,00% | 2.095.191 |
| Difusão - Sociedade Imobiliária, S.A. | 100,00% | 50.000 | 100,00% | 50.000 |
| Farmácia Selecção, S.A. | 100,00% | 100.000 | ||
| Fozimo - Sociedade Imobiliária, S.A. | 100,00% | 24.940 | 100,00% | 24.940 |
| Fozmassimo - Sociedade Imobiliária, S.A. | 100,00% | 6.264.902 | 100,00% | 6.264.902 |
| Fundo de Investimento Imobiliário Imosonae Dois | 100,00% | 158.410.389 | 100,00% | 182.228.145 |
| Fundo de Investimento Imobiliário Fechado Imosede | 49,00% | 49.414.958 | 42,16% | 34.536.577 |
| IGI - Investimento Imobiliário, SA | 100,00% | 114.495.350 | 100,00% | 114.495.350 |
| Igimo - Sociedade Imobiliária, S.A. | 100,00% | 220.000 | 100,00% | 220.000 |
| Iginha - Sociedade imobiliária, S.A. | 100,00% | 109.000 | 100,00% | 109.000 |
| Imoconti - Sociedade Imobiliária, S.A. | 100,00% | 50.000 | 100,00% | 50.000 |
| Imoestrutura - Sociedade Imobiliária,S.A. | 100,00% | 24.940 | 100,00% | 24.940 |
| Imomuro - Sociedade Imobiliária, S.A. | 100,00% | 539.940 | 100,00% | 539.940 |
| Imoresultado - Sociedade Imobiliária, S.A. | 100,00% | 109.736 | 100,00% | 109.736 |
| Imosistema - Sociedade Imobiliária, S.A. | 100,00% | 280.000 | 100,00% | 280.000 |
| Infofield - Informática, S.A. | 10,00% | 530.459 | 10,00% | 530.459 |
| Marcas MC zRt | 100,00% | 72.784.761 | 100,00% | 72.784.761 |
| MJLF - Empreendimetos Imobiliários, S.A. | 100,00% | 1.719.397 | 100,00% | 1.719.397 |
| Modalfa - Comércio e Serviços, S.A. | 10,00% | 27.933 | 10,00% | 27.933 |
| Modelo Continente - Operações de Retalho, SGPS, S.A. | 100,00% | 1.050.000.000 | 100,00% | 1.050.000.000 |
| Modelo Continente Hipermercados, S.A. | 56,00% | 284.190.240 | 56,00% | 174.990.240 |
| Modelo Continente Seguros - Sociedade de Mediação, Lda | 75,00% | 161.250 | 75,00% | 161.250 |
| Modelo-Com - Vendas por Correspondência, S.A. | 100,00% | 12.637.016 | 100,00% | 12.637.016 |
| Predicomercial - Promoção Imobiliária, S.A. | 100,00% | 6.372.293 | 100,00% | 6.372.293 |
| Raso, SGPS, S.A. | 50,00% | 24.500.000 | ||
| Selifa - Sociedade de Empreendimentos Imobililiários, S.A. | 100,00% | 1.408.379 | 100,00% | 1.408.379 |
| Sempre à Mão - Sociedade Imobiliária, S.A. | 100,00% | 125.000 | 100,00% | 125.000 |
| Sempre a Postos - Produtos Alimentares e Utilidades, Lda | 25,00% | 249.399 | 25,00% | 249.399 |
| Sesagest - Projectos e Gestão Imobiliária, S.A. | 100,00% | 36.677.088 | 100,00% | 36.677.088 |
| Socijofra - Sociedade Imobiliária, S.A. | 100,00% | 550.000 | 100,00% | 550.000 |
|---|---|---|---|---|
| Sociloures - Sociedade Imobiliária, S.A. | 100,00% | 10.000.000 | 100,00% | 10.000.000 |
| Soflorin, B.V. | 100,00% | 257.309.037 | 100,00% | 57.309.037 |
| Sonae Capital Brasil, S.A. | 37,00% | 23.334.858 | 37,00% | 23.334.858 |
| Sonae Retalho España, S.A. | 100,00% | 2.549.831 | 100,00% | 2.549.831 |
| Sonaegest - Soc. Gest. de Fundos de Investimentos, S.A. | 20,00% | 159.615 | 20,00% | 159.615 |
| Sondis Imobiliária, S.A. | 100,00% | 49.940 | 100,00% | 49.940 |
| Sontária - Empreendimentos Imobiliários, S.A. | 100,00% | 10.600.000 | 100,00% | 10.600.000 |
| Sonvecap, B.V. | 100,00% | 3.000.000 | 100,00% | 3.000.000 |
| Sportzone - Comércio de Artigos de Desporto, S.A. | 10,00% | 706.326 | 10,00% | 706.326 |
| Todos os Dias-Comércio Ret. e Expl. de Centros Comerciais, S.A. | 100,00% | 1.180.000 | 100,00% | 1.180.000 |
| Tlantic Portugal - Sistemas de Informação, S.A. | 100,00% | 50.000 | 100,00% | 50.000 |
| Valor N, S.A. | 100,00% | 2.087.315 | 100,00% | 2.087.315 |
| Worten - Equipamentos para o Lar, S.A. | 10,00% | 462.494 | 10,00% | 462.494 |
| 2.374.477.538 | 2.047.618.888 | |||
| Impairment of Investments (Note 22) | (45.868.497) | (38.568.497) | ||
| 2.328.609.041 | 2.009.050.391 | |||
During periods ended 31 December 2008 and 2007, the movements of the caption Investments are as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Non-current | Non-current | |
| Investments in group companies | ||
| Opening balance | 1,720,117,152 | 1,163,752,000 |
| Purchases | 123,298,025 | 83,712,782 |
| Disposals | (12,148,502) | |
| Recognition of investments as result of the merger | 493,563,316 | |
| Investments estinguished as a result of the merger | (8,762,444) | |
| Final balance | 1,843,415,177 | 1,720,117,152 |
| Accumulated impairment losses (Note 22) | (45,868,497) | (38,568,497) |
| 1,797,546,680 | 1,681,548,655 | |
| Investments in associated companies | ||
| Opening balance | 409,014 | 249,399 |
| Recognition of investments as result of the merger | - | 159,615 |
| Final balance | 409,014 | 409,014 |
| Accumulated impairment losses | - | - |
| 409,014 | 409,014 | |
| Suplementary Capital | ||
| Opening balance | 2,480,000 | 2,480,000 |
| Additions | 212,000,000 | - |
| Final balance | 214,480,000 | 2,480,000 |
| Investment Funds | 216,764,722 | 174,864,432 |
| Opening balance | ||
| Increases | 14,878,381 (23,817,756) |
85,813,990 (43,913,700) |
| Dividends | 207,825,347 | 216,764,722 |
| Final balance | - | - |
| Accumulated impairment losses | 207,825,347 | 216,764,722 |
| Contributions of capital | ||
| Opening balance | 107,848,000 | 8,773,000 |
| Additions | 500,000 | 98,675,000 |
| Disposals | - | (2,075,000) |
| Recognition of investments as result of the merger | - 108,348,000 |
2,475,000 107,848,000 |
| Final balance | - | - |
| Accumulated impairment losses | 108,348,000 | 107,848,000 |
| Advances on financial investments acquisition | ||
| Opening balance | - | - |
| Purchases | - | 660,000 |
| Recognition of investments as result of the merger | - | 660,000 |
| Advances regularization | - | (1,320,000) |
| - | - | |
| 2,328,609,041 | 2,009,050,391 |
The increase of 123,298,025 Euro in the caption Investments on Group companies includes the share capital increase in Modelo Continente Hipermercados, S.A. amounting to 109,200,000; the incorporation of Edições Book it, S.A. amounting 1,000,000 Euro; the incorporation of Raso, SGPS, S.A. amounting 12,500,000 Euro; the incorporation of Farmácia Selecção, S.A. amounting 100,000 Euro; and the purchase of 100% of Azulino – Imobiliária, S.A. amounting 498,025 Euro.
The increase of 212,000,000 Euro in the caption Supplementary Capital is related to Soflorin B.V. in (200,000,000 Euro) as well as Raso, SGPS, S.A. (12,000,000 Euro).
The increase of 14,878,381 Euro recorded in the caption Investment Funds relates to the capital subscription of Fundo de Investimento Imobiliário Fechado Imosede.
The amount of (23,817,756) Euro recorded in the caption "Investment Funds" refers to the net profits received from Fundo Investimento Imobiliário Imosonae Dois accumulated until the date of its acquisition.
During the year ended 31 December 2008, movements in tangible and intangible assets as well as depreciation and accumulated impairment losses, are as follows:
| Intangible assets: | |||||
|---|---|---|---|---|---|
| Opening balance | Increases | Decreases | Transfers | Closing balance | |
| Acquision cost: | 31.12.2007 | 31.12.2008 | |||
| Industrial property and other rights | 1,401,602 | 10,890 | 136 | 1,412,628 | |
| Software | 479 | 479 | |||
| Intangible assets in progress | 136 | 160,389 | 160,389 | (136) | - |
| 1,402,217 | 171,279 | 160,389 | 0 1,413,107 |
||
| Opening balance | Increases | Decreases | Transfers | Closing balance | |
| Amortisations and accumulated impairment losses | 31.12.2007 | 31.12.2008 | |||
| Industrial property and other rights | 1,261,255 | 141,981 | 1,403,236 | ||
| Software | 479 | 479 | |||
| 1,261,255 | 141,981 | - | - 1,403,715 |
||
| Tangible assets: | |||||
| Opening balance | Increases | Decreases | Transfers | Closing balance | |
| Acquision cost: | 31.12.2007 | 31.12.2008 | |||
| Machinery and equipment | 2,464 | 2,464 | |||
| Transport equipment | 19,062 | 19,062 | |||
| Office equipment | 24,805 | 24,805 | |||
| Other tangible assets | 679 | 679 | |||
| 47,010 | - | - | - 47,010 |
||
| Opening balance | Increases | Decreases | Transfers | Closing balance | |
| Amortisations and accumulated impairment losses | 31.12.2007 | 31.12.2008 | |||
| Machinery and equipment | 657 | 246 | 903 | ||
| Transport equipment | 19,062 | 19,062 | |||
| Office equipment | 19,316 | 2,284 | 21,600 | ||
| Other tangible assets | 679 | 679 | |||
| 39,714 | 2,530 | - | - 42,244 |
||
| Opening balanc | Increases | Decreases | Transfers | Final balance | |
|---|---|---|---|---|---|
| Total net assets | 31.12.2007 | 31.12.2008 | |||
| Intangible assets | 140,483 | 29,298 | 160,389 | 9,392 | |
| Tangible assets | 7,296 | (2,530) | 4,766 | ||
During the year ended 31 December 2007, movements in tangible and intangible assets as well as depreciation and accumulated impairment losses, are made up as follows:
| Intangible assets: | |||||
|---|---|---|---|---|---|
| Opening balance | Increases | Decreases | Merger | Closing balance | |
| Acquision cost: | 31.12.2006 | Effect | 31.12.2007 | ||
| Industrial property and other rights | 1,401,602 | 1,401,602 | |||
| Software | 479 | 479 | |||
| Intangible assets in progress | 136 | 136 | |||
| Advanced payments for intagible assets | 275,000 | 275,000 | - | ||
| 1,676,602 | 136 | 275,000 | 479 | 1,402,217 | |
| Opening balance | Increases | Decreases | Merger | Closing balance | |
| Amortisations and accumulated impairment losses | 31.12.2006 | Effect | 31.12.2007 | ||
| Industrial property and other rights | 980,934 | 280,321 | 1,261,255 | ||
| Software | 479 | 479 | |||
| 980,934 | 280,321 | 479 | 1,261,734 | ||
| Tangible assets: | |||||
| Opening balance | Increases | Decreases | Merger | Closing balance | |
| Acquision cost: | 31.12.2006 | Effect | 31.12.2007 | ||
| Machinery and equipment | 2,464 | 2,464 | |||
| Transport equipment | 19,062 | 19,062 | |||
| Office equipment | 16,653 | 33 | 8,119 | 24,805 | |
| Other tangible assets | 679 | 679 | |||
| 38,858 | 33 | 8,119 | 47,010 | ||
| Opening balance | Increases | Decreases | Merger | Closing balance | |
| Amortisations and accumulated impairment losses | 31.12.2006 | Effect | 31.12.2007 | ||
| Machinery and equipment | 411 | 246 | 657 | ||
| Transport equipment | 19,062 | 19,062 | |||
| Office equipment | 8,663 | 2,534 | 8,119 | 19,316 | |
| Other tangible assets | 679 | 679 | |||
| 28,815 | 2,780 | 8,119 | 39,714 |
| Total net assets | Opening balance 31.12.2006 |
Increases | Decreases | Merger Effect |
Final balance 31.12.2007 |
|---|---|---|---|---|---|
| Intangible assets | 695,668 | (280,185) | 275,000 | - 140,483 |
|
| Tangible assets | 10,043 | (2,747) | - 7,296 |
Deferred tax assets and liabilities as at 31 December 2008 and 2007 are as follows, split between the different types of temporary differences:
| Assets | Liabilities | |||
|---|---|---|---|---|
| 31.12.2008 | 31.12.2007 | 31.12.2008 | 31.12.2007 | |
| Financial instruments | 1,296,945 | 470,808 | 194,034 | |
| Write off of intangible assets | 304 | |||
| Differences between amortisations for accounting and tax purposes | 1,555 | 39,372 | ||
| 1,296,945 | 304 | 472,363 | 233,406 |
During the periods ended 31 December 2008 and 2007, movements in deferred tax assets and liabilities are as follows:
| Assets | Liabilities | ||||
|---|---|---|---|---|---|
| 31.12.2008 | 31.12.2007 | 31.12.2008 | 31.12.2007 | ||
| Opening balance | 304 | 1,649 | 233,406 | 115,282 | |
| Effects on income: | |||||
| Write off of intangible assets (Note 30) | (304) | (1,345) | |||
| Harmonised adjustments (Note 30) | (37,818) | (75,910) | |||
| (304) | (1,345) | (37,818) | (75,910) | ||
| Effects on equity: | |||||
| Financial instruments valuation | 1,296,945 | 276,775 | 194,034 | ||
| Final balance | 1,296,945 | 304 | 472,363 | 233,406 |
| 31.12.2008 | 31.12.2007 | ||||||
|---|---|---|---|---|---|---|---|
| Tax | Deferred tax | Limit use | Tax | Deferred tax | Limit use | ||
| loss | not recognized | date | loss | not recognized | date | ||
| Originated in 2005 | - | - | 2011 | 36,519,737 | 9,129,934 | 2011 | |
| - | - | 36,519,737 | 9,129,934 |
According to Portuguese law, on Corporate Income tax declarations are subject to review and change by tax authorities during a four-year period (10 year for Social Security and five since 2001) except when there were tax losses carried forward, have been granted tax credits, or there are ongoing inspections or claims. In these cases the four year period is enlarged or suspended.
It is the Board of Directors understanding that eventual claims by the Tax Authorities will not result in any liabilities for the company.
As at 31 December 2008 and 2007 the non-current assets were as follows (Note 33):
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Loans to group companies | 1,263,332,780 | 774,196,909 |
These loans earn interests at market rates and their fair value is similar to their carrying amount. The loans refer to loans granted to subsidiaries with no defined maturity.
The amount of trade accounts receivable refers to Management Fee's, invoiced, mainly, to Sonae Distribuição, SGPS, S.A. Group companies.
Up to the balance sheet date there are no due accounts receivable and there were no impairment losses recorded, as there are no indications that clients will not fulfil their obligations.
As at 31 December 2008 and 2007, this caption is as follows:
| Receivables: | ||
|---|---|---|
| 31.12.2008 | 31.12.2007 | |
| Short term loans (Note 33) | 263,578,000 | 61,473,000 |
| Interests charged but not received | 44,636,742 | 32,629,586 |
| Taxes - Special Regime for Taxation of Groups of Companies (a) | 13,599,657 | 29,141,669 |
| Others (b) | - | 611,200,000 |
| 321,814,399 | 734,444,255 | |
| Payables: | ||
| 31.12.2008 | 31.12.2007 | |
| Short term loans (Note 33) | 568,836,000 | 308,140,500 |
| Interest charged but not paid | 12,428 | |
| Taxes - Special Regime for Taxation of Groups of Companies (a) | 6,791,301 | 2,134,122 |
| 575,639,729 | 310,274,622 |
There were no past due assets thus no impairment loss was recognized as at 31 December 2008 and 2007. The fair value of loans granted is similar to its carrying amount.
As at 31 December 2008 and 2007 this caption is detailed as follows:
| Assets: | ||
|---|---|---|
| 31.12.2008 | 31.12.2007 | |
| Income tax | 7,528,261 | 9,916,188 |
| 7,528,261 | 9,916,188 | |
| Liabilities: | ||
| 31.12.2008 | 31.12.2007 | |
| VAT | 239,631 | 565,698 |
| Social security | 2,144 | 2,110 |
| Withholding tax - Capital gains | 16,923 | 413,455 |
| Other | 1,893,402 | 203,435 |
| 2,152,100 | 1,184,698 |
As at 31 December 2008 and 2007, the caption Other current assets can be detailed as follows:
| Other debtors | |||
|---|---|---|---|
| 31.12.2008 | 31.12.2007 | ||
| Not due | 7,404,536 7,101,105 |
The caption Other debtors includes, approximately, 5,790,887 Euro (the same amount in 2007) related to taxes claimed from tax authorities, being an understanding by the Sonae Distribuição Board of Directors that the result of such claim will favour the company. Therefore, there was no
impairment losses recognized. The remainder amounts refer to accounts receivable from Sonae Distribuição Group companies, not due and without any indication of impairment.
As at 31 December 2008 and 2007, the caption "Other current assets" can be detailed as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Deferred costs | 1,067,329 | 599,972 |
| Accrued income | 1,870,069 | 1,451,118 |
| 2,937,398 | 2,051,090 |
As at 31 December 2008 the heading Deferred costs is made up as follows:
As at 31 December 2008 the heading accrued income is made up as follows:
As at 31 December 2007, the fair value of the derivatives, estimated taking into consideration present market value of equivalent financial instruments, is estimated as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Assets | 1,776,634 | 1,113,658 |
| Liabilities | 4,894,132 | - |
The value of derivatives recorded as assets are interest rate swaps that have the financial effect of converting floating rates to fixed rates in order to obtain a fixed interest rate in the respective borrowings.
The derivatives recorded as liabilities are interest rate zero cost dollars and have the purpose to hedge the volatility of interest rates from the obtained loans.
These interest rate derivatives are valued at fair value, at the balance sheet date, based on valuations using specific software. The fair value of swaps was calculated, as at the balance sheet date, based on the discounted cash flow of the difference between the fixed interest rate of the fixed leg and the indexed variable interest rate inherent to the variable leg.
The calculation of the fair value of options was based on the Black-Scholes model and similar models.
The profits and losses of the period associated to the variation of fair value of the financial instruments amounted a net loss of 3,955,057 Euro, exempt of deferred tax, and were recorded under the caption equity.
As at 31 December 2008 and 2007 cash and cash equivalents can be detailed as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Bank deposits | 51,391,607 | 13,036 |
| Treasury applications | 34,997 | 34,997 |
| Cash and cash equivalents on the balance sheet | 51,426,604 | 48,033 |
| Bank overdrafts (Note 18) | (1,476,433) | (2,809) |
| Cash and cash equivalents on the cash flow statement | 49,950,171 | 45,224 |
Bank overdrafts are disclosed in the balance sheet in the caption Loans.
As at 31 December 2008, the share capital, which is fully subscribed and paid for, is made up by 1,000,000,000 ordinary shares (1,100,000,000 as at 31 December 2007) which do not hold right to any fixed dividend, with a nominal value of 1 Euro each.
During 2008, Sonae Distribuição acquired 100,000,000 shares to an affiliated company by 255,000,000 Euro.
On 22 December 2008 the Company reduced its share capital in 100,000,000 shares through the extinction of own shares acquired.
As at 31 December 2008, the subscribed share capital was held as follows:
| Entity | % |
|---|---|
| Sonae, SGPS, S.A. | 82.48 |
| Sonae Investments, B.V. | 17.52 |
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Legal reserves | 99,300,000 | 95,000,000 |
| 99,300,000 | 95,000,000 | |
| Reserves and Retained earnings | ||
| Reserves under the artº 324 CSC | - | 205,000,000 |
| Fair value reserves | - | - |
| Hedging reserves | (3,316,342) | 538,170 |
| Other reserves | 664,814,565 | 619,976,791 |
| 661,498,223 | 825,514,961 | |
| 760,798,223 | 920,514,961 |
As of 31 December 2008 the company held 99,300,000 Euro (95,000,000 as at 31 December 2007) of Legal reserves. According to Commercial Companies Code ("Código das Sociedades Comerciais") these reserves cannot be distributed except upon dissolution of the company, but can be used to absorb retained losses after all the other reserves have been used, or to increase capital.
As a result of the extinction of own shares (Note 16), the value of the Reserve written up, in accordance with the article 324 of Commercial Companies Code ("Código das Sociedades Comerciais"), was made available. The difference between that Reserve and acquisition cost of the own shares amounts to 50,000,000 and was transferred to Other Reserves.
As at 31 December 2008 and 2007, this caption included the following loans:
| 31.12.2008 | 31.12.2007 | |||||||
|---|---|---|---|---|---|---|---|---|
| Book value | Nominal value | Book value | Nominal value | |||||
| Current | Non current | Current | Non current | Current | Non current | Current | Non current | |
| Bank loans | 20,000,000 | 230,000,000 | 20,000,000 | 230,000,000 | ||||
| Bank overdrafts | 1,476,433 | 1,476,433 | 2,809 | 2,809 | ||||
| Bonds | 99,978,611 | 1,001,716,603 | 100,000,000 | 1,006,925,000 | 1,100,672,731 | 1,106,925,000 | ||
| 121,455,044 | 1,231,716,603 | 121,476,433 | 1,236,925,000 | 2,809 | 1,100,672,731 | 2,809 | 1,106,925,000 |
| 31.12.2008 | 31.12.2007 | ||||
|---|---|---|---|---|---|
| Capital | Interests | Capital | Interests | ||
| 2008 | 2008 | 2,809 | 57,954,762 | ||
| 2009 | 121,476,433 | 66,148,798 | 2009 | 100,000,000 | 54,619,895 |
| 2010 | 64,925,000 | 55,384,580 | 2010 | 64,925,000 | 51,688,373 |
| 2011 | 82,000,000 | 53,519,269 | 2011 | 82,000,000 | 48,380,361 |
| 2012 | 350,000,000 | 42,985,468 | 2012 | 350,000,000 | 38,775,565 |
| 2013 | 155,000,000 | 32,794,303 | 2013 | 155,000,000 | 25,634,467 |
| 2014 | 230,000,000 | 24,247,911 | +2014 | 355,000,000 | 35,317,289 |
| +2015 | 355,000,000 | 13,070,720 | |||
| 1,358,401,433 | 288,151,049 | 1,106,927,809 | 312,370,710 |
The borrowing and interests beared shall be reimbursed as follows:
As of 31 December 2008 bonds are made up as follows:
| 82,000,000 |
|---|
| 100,000,000 |
| 64,925,000 |
| 150,000,000 |
| 200,000,000 |
| 200,000,000 |
| 310,000,000 |
1,640,000 bonds – Nominal Value: 50 Euro.
Maximum term: 8 (eight) years.
Annual interest rate: the interest rate which is variable is indexed to the EURIBOR 6 month rate on the second working day preceding the interest period, with a spread of 0.75% p.a. Interest Payment: half yearly in arrears, on 15 April and 15 October of each year. Redemption: at par, in one payment on 15 October 2011, the maturity date of the loan. Early
redemption is not possible, either by initiative of the issuer or the bondholders.
10,000,000 bonds – Nominal Value: 10 Euro.
Maximum term: 5 (five) years.
Annual interest rate: the interest rate, which is variable, is indexed to the EURIBOR 6 month rate on the second working day preceding the interest period, with a spread of 1.15% p.a.. Interest Payment: half yearly in arrears, on 18 March and 18 September of each year. Redemption: at par, in one payment on 18 March 2009, the maturity date of the loan. Early
redemption is not possible, either by initiative of the issuer or the bondholders.
265,000 bonds – Nominal Value: 245 Euro.
Maximum term: 5 (five) years.
Annual interest rate: the interest rate, which is variable, is indexed to the EURIBOR 6 month rate on the second working day preceding the interest period, with a spread of 0.70% p.a.. Interest Payment: half yearly in arrears, on 3 February and 3 August of each year. Redemption: at par, in one payment on 5th year in one payment on 3 August 2010, the
maturity date of the loan, except if it an early redemption occurs.
Early redemption (call-option): early redemption is possible by initiative of the issuer, either totally or partially (by reducing the nominal value of the bonds), on the 2nd, 3rd or 4th year of maturity. In this situation the issuer is obliged to pay a prize of 0.125% over de reimbursed value.
On the 3rd August 2007, the Company partially reimbursed the bonds, according to their conditions. The amount reimbursed per bond was 755 Euro plus a premium of 0.94375 Euro. After the reimbursement, the loan will be reduced to 64,925,000 Euro (265,000 bonds with a 245 Euro nominal value).
15,000,000 bonds – Nominal Value: 10 Euro.
Maximum term: 7 (seven) years.
Annual interest rate: the interest rate, which is variable, is indexed to the EURIBOR 6 month rate on the second working day preceding the interest period, with a spread of 0.85% p.a.. Interest Payment: half yearly in arrears, on 2 February and 2 August of each year.
Redemption: at par, in one payment on 2 August 2012 the payment date of the 14th coupon, except if it an early redemption occurs.
Early redemption (call-option): early redemption is possible by initiative of the issuer, either totally or partially (by reducing the nominal value of the bonds), on the reimbursed dates of 10th, 11th, 12th and 13th coupon, without the obligation of paying any prize.
4,000 bonds – Nominal Value: 50,000 Euro.
Annual interest rate: the interest rate, which is variable, is indexed to the EURIBOR 6 month rate on the second working day preceding the interest period, with a spread of 0.5% p.a.. Interest Payment: half yearly in arrears, on 30 April and 30 October of each year. Redemption: at par, in one payment on 30 April 2012 the payment date of the 10th coupon. Early redemption (call-option): early redemption is not possible.
4,000,000 bonds – Nominal Value: 50 Euro.
Annual interest rate: the interest rate, which is variable, is indexed to the EURIBOR 6 month rate on the second working day preceding the interest period, with a spread of 0.48% p.a.. Interest Payment: half yearly in arrears, on 10 February and 10 August of each year.
Redemption: at par, in one payment on 10 August 2015 the payment date of the 16th coupon. Early redemption (call-option): early redemption is possible by initiative of the issuer, either totally or partially (by reducing the nominal value of the bonds), on the reimbursed dates of 10th, 12th and 14th, without the obligation of paying any prize.
31,000,000 bonds – Nominal Value: 10 Euro.
Annual interest rate: the interest rate, which is variable, is indexed to the EURIBOR 6 month rate on the second working day proceeding the interest period, with a spread of 0.25% p.a. in the first three interest payment dates and 0.55% from the 4th interest payment date.
Interest Payment: half yearly in arrears, on 10 March and 10 September of each year.
Redemption: at par, in two payments: 50% on 10 September 2013 the payment date of the 12th coupon, and 50% on 10 September 2015 the payment date of the 16th coupon.
Early redemption (call-option): early redemption is possible by initiative of the issuer, either totally or partially (by reducing the nominal value of the bonds), on the reimbursed dates of 10th, 11th, 12th, 13th, 14th and 15th, without the obligation of paying any prize.
Extraordinary early redemption (call-option): until the end of the 18th bond life month in the following conditions:
i) the bond can be reimbursed total or partially, without the obligation of paying any prize, in each interest payment date;
ii) the bond can be reimbursed total or partially, subject to breakage costs, with a pre-advise of 30 days during each interest period.
As at 31 December 2008 and 2007 the amount of the available credit facilities in order to manage liquidity risk, can be summarized as follows:
| 31.12.2008 | 31.12.2007 | ||||
|---|---|---|---|---|---|
| Commitments of less than one year |
Commitments of more than one year |
Commitments of less than one year |
Commitments of more than one year |
||
| Agreed amounts | 308,370,074 | 400,000,000 | 257,280,525 | 400,000,000 | |
| Available credit facilities | 286,893,641 | 170,000,000 | 260,870,074 | 400,000,000 |
The commitments of more than one year refer to commercial paper programmes available for 6 years. As the Company intends to keep these loans for a period superior to one year, those were classified as non-current.
As at 31 December 2008 and 2007 the trade accounts payable caption presents amounts payable within 90 days, arising on the normal course of activity.
As at 31 December 2008 and 2007 Other current liabilities were made up as follows:
| 31.12.2008 31.12.2007 |
||
|---|---|---|
| Olther account payables | 5,650 | 3,965,364 |
Theses liabilities are payable on demand.
As at 31 December 2008 and 2007 Other current liabilities were made up as follows:
| Accruals | 31.12.2008 | 31.12.2007 |
|---|---|---|
| Staff costs | 330,879 | 302,466 |
| Accrued interests | 23,610,332 | 19,220,778 |
| Deferred performance bonuses | 200,930 | 906,445 |
| Others | 158,044 | 90,242 |
| 24,300,185 | 20,519,931 |
In 2008 and in previous years, the Company granted Deferred Performance Bonuses to its directors and eligible employees. These are based on shares to be acquired at nil cost, three years after they were attributed to the employee. The purchase can be exercised during the period commencing on the third anniversary of the grant date and the end of that year. The company has the choice to settle its responsibilities in cash rather than through shares. The option can only be exercised if the employee still works for the Group at the vesting date. Liabilities arising from deferred performance bonuses are valued in accordance with that referred to in Note 2.6. On the Notes to the consolidated financial statements is made a full description of the programme.
Movements in provisions and impairment losses for the year ended 31 December 2008 are as follows:
| Caption | Opening balance | Incrases | Decreases | Final balance |
|---|---|---|---|---|
| Investments impairment | 38,568,497 | 7,300,000 | 45,868,497 |
The recorded increase of 7,300,000 Euro was recorded against Profit/ (loss) related to investments caption (Note 29), taking into consideration the evaluation of the net assets of the related subsidiary (mainly real estate).
As at 31 December 2008 and 2007 the contingent assets and liabilities were made up as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Guarantees rendered: | ||
| related to tax claims awaiting outcome | 53,558,849 | 18,821,550 |
| related to local and municipal claims awaiting outcome | 289,380 | 289,380 |
| others | 14,638,113 | |
| 68,486,342 | 19,110,930 |
No provision has been recognized for these tax additional assessments as the Board of Directors expects them to be decided with no additional liability to the company.
Following the disposal of a Brazilian subsidiary company, the group guaranteed to that subsidiary company buyer all the losses it will have as consequence of tax additional assessments as it is described in the Note 32. The Board of Directors believes that from the resolution of the mentioned claims will not result any liabilities for the Company.
Balances and transactions with related parties as of 31 December 2008 and 2007 are detailed as follows:
| Transactions | Services rendered | Other operating profits | ||
|---|---|---|---|---|
| 31.12.2008 | 31.12.2007 | 31.12.2008 | 31.12.2007 | |
| Parent company Subsidiaries and Associated companies |
1,590,069 | 3,128,682 | 3,074,421 | 3,170,758 |
| 1,590,069 | 3,128,682 | 3,074,421 | 3,170,758 | |
| Transactions | Interest income | Interest incurred | ||
| 31.12.2008 | 31.12.2007 | 31.12.2008 | 31.12.2007 | |
| Parent company Subsidiaries and Associated |
120,748 | 2,787,374 | 176,861 | |
| companies | 90,285,103 | 60,102,568 | 8,257,961 | 11,235,553 |
| Other related parties | 148,517 | 6,516 | ||
| 90,554,368 | 62,889,942 | 8,441,338 | 11,235,553 |
| Transactions Received dividends |
||||
|---|---|---|---|---|
| 31.12.2008 | 31.12.2007 | |||
| Parent company Subsidiaries and Associated |
||||
| companies | 255,629,909 | 18,193,658 | ||
| 255,629,909 | 18,193,658 | |||
| Balances | Accounts receivable | Accounts payable | ||
| 31.12.2008 | 31.12.2007 | 31.12.2008 | 31.12.2007 | |
| Parent company Subsidiaries and Associated |
||||
| companies | 61,089,045 | 678,868,933 | 2,637,449 | 3,386,950 |
| Other related parties | 56,028 | 8,735 | 17,065 | 4,646 |
| 61,145,073 | 678,877,668 | 2,654,514 | 3,391,596 | |
| Balances | Granted loans | Obtained loans | ||
| 31.12.2008 | 31.12.2007 | 31.12.2008 | 31.12.2007 | |
| Parent company Subsidiaries and Associated |
||||
| companies | 1,521,713,780 | 835,669,909 | 568,790,000 | 308,140,500 |
| Other related parties | 5,197,000 | 46,000 | ||
| 1,526,910,780 | 835,669,909 | 568,836,000 | 308,140,500 |
Sonae, SGPS, S.A. and Efanor Investimentos, SGPS, S.A. are considered related parties included in the parent company category. All the companies within the consolidation perimeter of Sonae Distribuição, SGPS, S.A. as it is described in the notes to the consolidated financial statements are considered in Subsidiaries and associated companies category. In the Other related parties are included the subsidiaries and entities under common control of Sonae, SGPS, S.A. and Efanor Investimentos, SGPS, S.A..
Apart from the above mentioned transactions there are no other transactions with related companies.
During the period, the Company granted loans to Sonae, SGPS, S.A. amounting 280,997,000 Euro (359,425,000 Euro as at 31 December 2007), which were reimbursed during the year; there were also loans obtained from Sonae, SGPS, S.A. amounting to 85,500,000 Euro which were reimbursed during the year.
In 2008 and 2007 did not occur any transactions including granted loans, with the Company's Directors.
As at 31 December 2008 and 2007 there were no balances with Company's Directors.
The amount related to services rendered in 2008 and 2007 relate with services rendered to Sonae Distribuição group companies in Portugal.
The caption "Other operational income" for the years 2008 and 2007 is as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Charges retrieve (a) | 3,137,897 | 3,170,758 |
| Gains on disposals of intangible assets | 539,611 | - |
| Other operational income | 70,224 | 9,173 |
| 3,747,732 | 3,179,931 |
a) Income related to costs paid by the Company on behalf of participated companies (Note 27) and billed back to those companies.
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Indirect taxes | 2,955,438 | 3,164,210 |
| Bank services | 217,798 | 110,964 |
| Others | 16,960 | 14,580 |
| 3,190,196 | 3,289,754 |
The indirect tax amounts supported in the year ended as at 31 December 2008 and 2007 includes, mainly, costs and opening retail stores taxes which were then billed back to the group companies which own those new stores' operations (Note 26).
Net financial profit/ (loss) for the years ended in 31 December 2008 and 2007 are made up as:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Losses: | ||
| Interests beared | ||
| Bank overdrafts and Loans | 13,760,219 | 3,080,111 |
| Bonds | 59,690,981 | 40,916,098 |
| Losses in the valuation of derivatives | 131,509 | - |
| Loans obtained from Group Companies | 8,441,338 | 11,235,553 |
| Others | 273 | 5,586 |
| 82,024,320 | 55,237,348 | |
| Exchange losses | ||
| Others | 23 | |
| 23 | ||
| Other financial losses: | ||
| Debt issuing charges | 2,378,916 | 1,941,330 |
| Others | 141,941 | 556,169 |
| 84,545,200 | 57,734,847 | |
| Net financial income | 8,682,764 | 13,059,104 |
| 93,227,964 | 70,793,951 | |
| Income: | ||
| Interests earned | ||
| Bank deposits | 59,530 | 7,418,942 |
| Investment funds units | - | 6,779,673 |
| Loans granted to Group Companies | 90,554,368 | 56,110,269 |
| Others | 2,613,793 | 103,527 |
| Profits in the valuation of derivatives | - | 381,455 |
| Other financial income | 273 | 85 |
| 93,227,964 | 70,793,951 |
As at 31 December 2008 and 2007 investment income is made up as follows:
| 2008 | 2007 | |||
|---|---|---|---|---|
| 4th quarter | Accumulated | 4th quarter | Accumulated | |
| Dividends | 19,329,772 | 255,629,909 | 18,193,658 | |
| Gains on disposal of investments | 35,728,616 | |||
| Losses on disposal of investments | (5,454,530) | |||
| Impairment losses on investments (Note 22) |
(7,300,000) | (7,300,000) | (3,422,506) | |
| Reversal of impairment losses on investments (Note 22) |
4,300,247 | |||
| 12,029,772 | 248,329,909 | 49,345,485 |
During the period the Company recorded an impairment loss over its participation in Sontária – Empreendimentos Imobiliários, S.A., amounting to 7,300,000 Euro (Note 22).
As at 31 December 2007, the amount recorded under the caption Reversal of impairment losses was a result of the disposal of the financial instrument which had the impairment loss associated to.
Income tax charge for the year ended 31 December 2008 and 2007 is made up as follows:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Income tax estimate | (504,626) | (135,073) |
| Excess / (Shortage) of last year estimate | 55,645 | (9,245,971) |
| Others | 1,087,487 | |
| Current income tax | (448,981) | (8,293,557) |
| Intangible assets write off (Note 8) | (304) | (1,345) |
| Difference of amortisation for accounting and tax purposes (Note 5) | 37,817 | 75,910 |
| Taxation of Real Estate Investment Funds | 6,868,777 | |
| Tax losses (used at RETGS level) | 3,076,465 | 31,138,729 |
| Others | - | - |
| Deferred tax | 9,982,755 | 31,213,294 |
| 9,533,774 | 22,919,737 |
The reconciliation between the profit before taxation and the tax charge for the periods ended 31 December 2008 and 2007 is as follows
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Profit/(loss) before income tax | 256,578,307 | 61,218,037 |
| Income tax rate | 25.00% | 26.50% |
| 64,144,577 | 16,222,780 | |
| Use of tax losses for which no deferred taxes assets were recognised in the past | (10,858,858) | (35,390,551) |
| Impairment losses not accepted for tax purposes | 1,825,000 | 232,601 |
| Shortage / (excess) of income tax estimate | (55,644) | 9,245,971 |
| Differences between gains and losses on disposal of assets for tax and accouting purposes | (8,070,333) | |
| Dividends received exempted from taxation | (57,655,439) | (4,821,319) |
| Taxation of real estate investment funds | (6,868,777) | |
| Others | 1,752,649 | (338,886) |
| Tax benefits | (1,817,281) | |
| Income tax | (9,533,774) | (22,919,737) |
The amount recorded as Taxation of real estate investment funds is related to the tax credit that results from the collection of dividends related to the income generated by the investment funds prize to its acquisition. Those dividends were recorded under the caption Financial Investments (Note 5).
Earnings per share for the years ended 31 December 2008 and 2007 were calculated taking into consideration the following amounts:
| 31.12.2008 | 31.12.2007 | |
|---|---|---|
| Net profit Net profit taken into consideration to calculate basic earnings per share (Net profit for the period) |
266,112,081 | 84,137,774 |
| Net profit taken into consideration to calculate diluted earnings per share | 266,112,081 | 84,137,774 |
| Number of shares Weighted average number of shares used to calculated basic earnings per share |
1,000,000,000 | 1,000,000,000 |
| Weighted average number of shares used to calculated the diluted earnings per share |
1,000,000,000 | 1,000,000,000 |
| Earning per share (basic and diluted) | 0.266 | 0.084 |
In the Annual General Meeting held on 31 March of 2008 a gross dividend of 85,000,000 Euro was approved.
These financial statements were approved by the Board of Directors and authorized for issue on 03 March 2009.
The Sonae Distribuição, SGPS, S.A. net profit was 266,112,080.73 Euro, and the Board of Directors proposed the following distribution:
| Legal Reserve | 14,700,000.00 |
|---|---|
| Free Reserves | 166,412,080.73 |
| Dividends | 85,000,000.00 |
| Total | 266,112,080.73 |
In the twelve months ended 31 December 2008 shareholders' loan contracts were entered into with the following companies:
Azulino Imobiliária, S.A. Bertimóvel – Sociedade Imobiliária, S.A. Canasta – Empreendimentos Imobiliários, S.A. Chão Verde – Sociedade de Gestão Imobiliária, S.A. Contibomba – Comércio e Distribuição de Combustíveis, S.A. Contimobe – Imobiliária Castelo Paiva, S.A. Cumulativa – Sociedade Imobiliária, S.A. Difusão – Sociedade Imobiliária, S.A. Fozimo – Sociedade Imobiliária, S.A. IGI – Investimento Imobiliário, S.A.
Iginha – Sociedade Imobiliária, S.A. Imoconti – Sociedade Imobiliária, S.A. Imomuro – Sociedade Imobiliária, S.A. Imoresultado – Sociedade Imobiliária, S.A. Imosistema – Sociedade Imobiliária, S.A. MJLF – Empreendimentos Imobiliários, S.A. Modelo Continente Hipermercados, S.A. Modelo Continente Seguros – Sociedade de Mediação, Lda Predicomercial – Promoção Imobiliária, S.A. Raso, SGPS, S.A. Selifa – Sociedade de Empreendimentos Imobiliários, S.A. Sempre à Mão – Sociedade Imobiliária, S.A. Sociloures – Sociedade Imobiliária, S.A. Sondis Imobiliária, S.A. Soflorin, B.V. Sonae Retalho España, S.A. Sontária – Empreendimentos Imobiliários, S.A. Sonvecap, B.V. Sportzone – Comércio de Artigos de Desporto, S.A.
In the twelve months ended 31 December 2008 short-term loan contracts were entered into with the following companies:
Bertimóvel – Sociedade Imobiliária, S.A. Best Offer – Prestação de Informação pela Internet, S.A. Bikini – Portal de Mulheres, S.A. Carnes do Continente – Indústria e Distribuição de Carnes, S.A. Citorres – Sociedade Imobiliária, S.A. Contibomba – Comércio e Distribuição de Combustíveis, S.A. Contimobe – Imobiliária Castelo Paiva, S.A. Continente Hipermercados, S.A. Difusão – Sociedade Imobiliária, S.A. Edições Book.it – S.A. Efanor – Design e Serviços, S.A. Efanor – Indústria de Fios, S.A. Equador & Mendes – Agência de Viagens e Turismo, S.A. Estevão Neves – Hipermercados da Madeira, S.A. Farmácia Selecção, S.A. Fozimo – Sociedade Imobiliária, S.A. Fozmassimo – Sociedade Imobiliária, S.A. Global S – Hipermercados, S.A. IGI – Investimento Imobiliário, S.A. Igimo – Sociedade Imobiliária, S.A. Iginha – Sociedade Imobiliária, S.A. Imoconti – Sociedade Imobiliária, S.A. Imoestrutura – Sociedade Imobiliária, S.A. Imoresultado – Sociedade Imobiliária, S.A. Infofield – Informática, S.A. Inventory – Acessórios de Casa, S.A. Modalfa – Comércio e Serviços, S.A. Modelo.Com – Vendas por Correspondência, S.A. Modelo Continente – Operações de Retalho, SGPS, S.A. Modelo Continente Hipermercados, S.A. Modelo Continente Hipermercados, S.A. – Sucursal España Modelo Continente Seguros – Sociedade de Mediação, Lda. Modelo Hiper – Imobiliária, S.A. NA – Comércio e Artigos de Desporto, S.A. NA – Equipamentos para o Lar, S.A.
Nova Equador Internacional – Agência de Viagens e Turismo, Lda. Nova Equador P.C.O Organização de Eventos, Sociedade Unipessoal, Lda Peixes do Continente – Indústria e Distribuição de Peixe, S.A. Pharmacontinente – Saúde e Higiene, S.A. Predicomercial – Promoção Imobiliária, S.A. Sempre à Mão – Sociedade Imobiliária, S.A. Sesagest – Projectos e Gestão Imobiliária, S.A. Socijofra – Sociedade Imobiliária, S.A. Sociloures – Sociedade Imobiliária, S.A. Solaris – Supermercados, S.A. Sonae, SGPS, S.A. Sondis Imobiliária, S.A. Sontária – Empreendimentos Imobiliários, S.A. Sonvecap, B.V. Sportzone – Comércio de Artigos de Desporto, S.A. Star – Agência de Viagens e Turismo, S.A. Tlantic Portugal – Sistemas de Informação, S.A. Todos os Dias – Comércio Retalhista e Exploração de Centros Comercias, S.A. Valor N, S.A. Worten – Equipamentos para o Lar, S A.
As at 31 December 2008 amounts owed by affiliated companies can be detailed as follows:
Current loans granted (Note 10) and non-current (Note 8)
| COM PANIES | 31.12.2008 | 31.12.2007 |
|---|---|---|
| Azulino - Imobiliária, S.A. | 4,193,256 | - |
| Bertimóvel - Sociedade Imobiliária, S.A. | 18,910,000 | 15,934,000 |
| Canasta - Empreendimentos Imobiliários, S.A. | 2,916,000 | 3,006,000 |
| Chão Verde - Sociedade de Gestão Imobiliária, S.A. | 2,622,584 | 2,791,584 |
| Citorres - Sociedade Imobiliária, S.A. | 3,662,000 | 3,973,000 |
| Contibomba - Comércio e Distribuição de Combustíveis, S.A. | 134,000 | 214,000 |
| Contimobe - Imobiliária Castelo Paiva, S.A. | 72,759,000 | 75,909,000 |
| Continente Hipermercados, S.A. - Sucrussal | 180,735,000 | - |
| Cumulativa - Sociedade Imobiliária, S.A. | 2,961,000 | 3,056,000 |
| Difusão - Sociedade Imobiliária, S.A. | 28,726,000 | 25,527,000 |
| Efanor - Indústria de fios, S.A. | 375,000 | 1,253,000 |
| Equador & M endes - Agência Viagens e Turismo, Lda | 354,000 | 213,000 |
| Fozimo – Sociedade Imobiliária, S.A. | 1,809,000 | 1,932,000 |
| Global S - Hipermercados, Lda | - | 735,000 |
| IGI - Investimento Imobiliário, S.A, | 227,072,000 | 183,902,000 |
| Igimo – Sociedade Imobiliária, S.A. | 557,000 | 595,000 |
| Iginha – Sociedade Imobiliária, S.A. | 14,179,500 | 14,277,500 |
| Imoconti – Sociedade Imobiliária, S.A. | 17,904,222 | 18,761,222 |
| Imoestrutura - Sociedade Imobiliária, S.A. | 491,000 | 621,000 |
| Imomuro - Sociedade Imobiliária, S.A. | 4,160,897 | 4,106,897 |
| Imoresultado – Sociedade Imobiliária, S.A. | 404,000 | 388,000 |
| Imosistema - Sociedade Imobiliária, S.A. | 4,421,000 | 4,565,000 |
| Infofield - Informática, S.A. | 9,980,000 | 5,000,000 |
| M JLF - Empreendimentos Imobiliários, S.A. | 3,785,000 | 3,981,000 |
| M odalfa - Comércio e Serviços, S.A. | 1,604,000 | 11,139,000 |
| M odelo Continente Hipermercados, S.A. | 154,022,000 | 103,322,000 |
| M odelo Continente Seguros - Sociedade de M ediação, Lda | 5,390,000 | 1,400,000 |
| M odelo Continente - Operações de Retalho, SGPS, S.A. | 46,280,000 | - |
| NA - Equipamentos para o Lar, S.A. | 735,000 | - |
| Nova Equador Internacional - Agência de Viagens e Turismo, Lda | - | 176,000 |
| Pharmacontinente - Saúde e Higiene, S.A. | 9,995,000 | 4,854,000 |
| Predicomercial - Promoção Imobiliária, S.A. | 11,277,000 | 10,950,000 |
| Raso, S.G.P.S., S.A. | 3,250,000 | - |
| Selifa - Sociedade de Empreendimentos Imbiliários, S.A. | 3,977,000 | 4,189,000 |
| Sempre à M ão - Sociedade Imobiliária, SA | 24,294,128 | 17,128 |
| Sesagest - Projectos e Gestão Imobiliária, S.A. | 36,775,183 | 47,354,000 |
| Socijofra - Sociedade Imobiliária, S.A. | 7,865,000 | 8,131,000 |
| Sociloures - Sociedade Imobiliária, S.A. | 30,083,347 | 31,635,347 |
| Soflorin, B.V. | 536,540,000 | 34,276,568 |
| Solaris Supermercados, S.A. | - | 1,171,000 |
| Sonae Retalho España, S.A. | 235,002 | 13,002 |
| Sondis Imobiliária, S.A. | 22,317,159 | 20,278,159 |
| Sontária - Empreendimentos Imobiliários, S.A. | 3,243,502 | 3,639,502 |
| Sonvecap, B.V. | - | 150,976,000 |
| Sportzone - Comércio de Artigos de Desporto, S.A. | 17,323,000 | 23,336,000 |
| Star Viagens e Turismos, S.A. | 4,843,000 | - |
| SRE - Projectos de Consultoria, S.A. | - | - |
| Tlantic Portugal - Sistemas de Informação, S.A. | 83,000 | 4,000 |
| Todos os Dias - Comércio Ret. e Expl. de Centros Comerciais, S.A. | 81,000 | 1,067,000 |
| Valor N, S.A. | 3,586,000 | |
| Worten - Equipamentos para o Lar, S A. | - | 7,000,000 |
| 1,526,910,780 | 835,669,909 |
From the above mentioned balances 1,263,332,780 Euro (774,196,909 Euro in 2007) are recorded as non-current assets.
The amounts due to group companies as at 31 December 2008 and 2007 related to the mentioned contracts were the following:
Current loans obtained (Note 10):
| COMPANIES | 31.12.2008 | 31.12.2007 |
|---|---|---|
| Best Offer - Prestação de Informações pela Internet, S.A. | (2,120,000) | - |
| Bikini - Portal de Mulheres, S.A. | (3,173,000) | (3,250,000) |
| Carnes Continente - Indústria e Distribuição de Carnes, S.A. | (6,867,000) | (526,000) |
| Edições Book.it - S.A. | (1,023,000) | - |
| Efanor - Design e Serviços, S.A. | (1,211,000) | (701,000) |
| Estevão Neves - Hipermercados da Madeira, S.A. | (1,319,000) | (6,448,000) |
| Farmácia Selecção, S.A. | (100,000) | - |
| Fozmassimo - Sociedade Imobliária, S.A. | (2,853,000) | (4,670,000) |
| Global S - Hipermercados, Lda | (1,808,000) | - |
| Infofield - Informática, S.A. | - | (2,076,000) |
| Inventory - Acessórios de Casa, S.A. | (1,186,000) | (1,161,000) |
| Marcas MC ZRT | - | (10,178,000) |
| Modelo Continente - Operações de Retalho, SGPS, SA | - | (216,459,000) |
| Modelo Continente Hipermercados, S.A. | (198,432,000) | (25,124,500) |
| Modelo Hiper - Imobiliária, S.A. | (1,859,000) | (40,000) |
| Modelo.Com - Vendas por Correspondência, S.A. | (8,696,000) | - |
| NA - Comércio e Artigos de Desporto, S.A. | (49,000) | - |
| Nova Equador Internacional - Agência de Viagens e Turismo, Lda | (46,000) | - |
| Nova Equador P.C.O Organização de Eventos, S.U, Lda | (206,000) | - |
| Peixes Continente - Indústria e Distribuição de Peixes, S.A. | (1,060,000) | (639,000) |
| Solaris Supermercados, S.A. | (284,000) | - |
| Sonvecap, B.V. | (291,686,000) | - |
| Worten - Equipamentos para o Lar, S.A. | (44,858,000) | (36,868,000) |
| (568,836,000) | (308,140,500) |
These financial statements are a translation of financial statements originally issued in Portuguese in accordance with International Financial Reporting Standards. In the event of discrepancies, the Portuguese language version prevails.
Matosinhos, 3 March 2009
The Board of Directors
Duarte Paulo Teixeira de Azevedo (Presidente)
Nuno Manuel Moniz Trigoso Jordão (CEO)
Ângelo Gabriel Ribeirinho dos Santos Paupério
Álvaro Carmona e Costa Portela
(This is a translation of a report originally issued in Portuguese. In the event of discrepancies, the Portuguese language version prevails.)
Page 2 of 2
Porto, 3 March 2009
DELOITTE & ASSOCIADOS, SROC S.A. Represented by António Manuel Martins Amaral
(Translation of a Report and Opinion originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
To the Shareholders of Sonae Distribuição, S.G.P.S, S.A.
In compliance with the applicable legislation, the Statutory Audit Board issues its Report and Opinion which covers the Management Report and remainder consolidated and individual financial statements of Sonae Distribuição, SGPS, S.A. ("Company") for the year ended 31 December 2008, presented by the Company's Board of Directors.
During the year under analysis, the Statutory Audit Board accompanied in detail the management of the Company on matters that are within the scope of its competencies. The Statutory Audit Board has also oversaw, with the scope considered adequate under the circumstances, the evolution of the operations, having met, with the periodicity considered adequate, with the managers responsible for finance, accounting, internal audit and risk management issues, as well as with the External Auditor who is also the Statutory Auditor of the Company. These entities have always contributed for the proper exercise by the Statutory Audit Board of its competencies in accordance with Portuguese Companies Act ("Código das Sociedades Comerciais").
In furtherance of its functions, the Statutory Audit Board examined the consolidated and individual Balance sheets as at 31 December 2008, the consolidated and individual Statements of profit and loss by nature, of cash flows and of changes in equity for the year then ended and the related notes. Additionally, the Statutory Audit Board examined the Management Report for the year under analysis and the Statutory Audit and Auditors' Report issued by the Statutory Auditor and agreed with their content.
By the end of the year, the Statutory Audit Board examined, with special attention the accounting treatment of all circumstances of patrimonial nature that had material economic or financial impacts in the development of operations reflected in the financial statements under analysis. For the examination of those circumstances, the Statutory Audit Board relied on the collaboration of the services of the Company as well as on the Statutory Auditor, namely, in what respects the consolidated financial statements, having obtained explanations considered to be fully satisfactory.
Considering the above, the Statutory Audit Board is of the opinion that the information presented on the financial statements under analysis, was prepared in accordance with the applicable accounting standards and give a true and fair view, of the assets and liabilities, financial position and results of Sonae Distribuição, S.G.P.S., S.A. and the companies included in consolidation perimeter and that the Management report faithfully describes the business performance and position of the Company, both individually and consolidated, and contains a description of the major risks and uncertainties that they face.
Considering the above, in the opinion of the Statutory Audit Board the Management Report, the consolidated and individual financial statements, and the net result appropriation proposal presented by the Board of Directors, are in accordance with the accounting, legal and statutory requirements and consequently recommends that those should be approved by the Shareholders' General Meeting.
In accordance with paragraph a), number 1 of article 8º of the Regulation of CMVM nr. 5/2008 ("Disclosure Duties"), the members of the Statutory Audit Board declare that, to their knowledge, the information contained in the Management Report and the financial statements were prepared in accordance with applicable accounting standards, giving a true and fair view of the assets and liabilities, financial position and the results of the Company and companies included in the consolidation perimeter. Also it is their understanding that the Management Report faithfully describes the business evolution, performance and financial position of the Company and of the companies included in the consolidation perimeter and contains a description of the major risks and uncertainties that they face.
Matosinhos, 16 March 2009
The Statutory Audit Board
UHY & Associados, SROC, Lda. Represented by António Francisco Barbosa dos Santos
_______________________________________________
_______________________________________________
_______________________________________________
Arlindo Dias Duarte Silva
Óscar José Alçada da Quinta
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