Annual Report • Mar 26, 2009
Annual Report
Open in ViewerOpens in native device viewer
Sonae Sierra SGPS, SA Lugar do Espido Via Norte Apartado 1197 4471-909 Maia Portugal
Tel (+351) 22 010 44 58 (+351) 22 010 44 36 Geral (+351) 22 948 75 22 FAX (+351) 22 010 46 98
The consolidated Net Profit of Sonae Sierra, in the first half of 2008, was €1.3 million - this compares with €163.7 million booked in the same period of 2007.
This variation in Net Profit is mainly driven by Indirect Net Profits that were adversely affected by increases in market capitalization yields in Europe, namely in Iberia.
The Company measures its performance, fundamentally, on the basis of changes in Net Asset Value (NAV) plus dividends distributed. In this period, the Company decided to calculate its NAV on the basis of the guidelines published in 2007 by INREV (European Association for Investors in Nonlisted Real Estate Vehicles), an association of which the Company is a member.
On the basis of this methodology, the NAV of Sonae Sierra, as of the 30th June 2008, was €1.729 billion and this corresponds to €53.17 per share.
The main events during the first eight months of 2008 were the following:
largest shopping centres, located in Bucharest, Romania, and scheduled to open in April 2011. The shopping center will have a GLA of around 110,000m2 for a total gross investment, excluding VAT, of €591 million. This innovative shopping centre, in Sector 3 of the Eastern part of Bucharest, will be only at a 5 minutes drive from the city centre, and will benefit from substantial road frontage on the four-lane Liviu Rebreanu road. The project shall comprise a five-level shopping centre, with 443 shops and 3,300 spaces of underground car parking. The location is served by all kind of public transportation including Bus, Tram and Metro.
Prenatal, Primor Perfurmería, Soloptical and Mayoral. After the expansion is concluded, shopping and leisure centre Plaza Mayor will have a total of 53,100 m2 of GLA, 153 shops, 3,480 parking spaces, 20 cinemas, 35 restaurants, 1 bowling alley with 20 lanes, 1 Mercadona supermarket, 1 autocenter, 1 gas station, 1 music school and 1 gymnasium.
• Sonae Sierra Brasil announces the development of its 12th shopping and leisure centre in Brazil, located in the city of Uberlândia, in the Minas Gerais state. Scheduled to be inaugurated in 2010, the development represents an investment of about € 43.5 million. The project will have 33.000 m2 of GLA in a first stage, with a total of 191 shops including 4 large dimension shops, 20 restaurants, 1 hypermarket and one cinema with 6 lastgeneration screens, besides a car park with 2.000 parking spaces. In its second stage, the development will reach 47.000 m2 of GLA and a total of 258 shops.
• Sonae Sierra concluded an additional closing of the Sierra Portugal Fund (SPF), with investments made by two clients of Aberdeen Property Investors. These investments correspond to a combined gross commitment in excess of €55 million, corresponding to an interest of approximately 18% in the SPF. This brings the total commitments raised from third party investors in the Fund to €175 million. With this closing, Sonae Sierra's interest in the SPF decreased to approximately 42%. Further closings are planned after the summer. The Fund's main objectives are to provide investors with capital growth and
income return through the investment in a portfolio of high-quality Portuguese shopping and leisure centres. This transaction reinforces Sonae Sierra's goal of increasing its asset management activity, while leveraging its investments through long term partnerships.
• Sonae Sierra announced a new development project in Brazil, located in Goiânia, state of Goiás, which will represent an investment of around € 123 million and should open in 2011. The development, which will be the largest and most modern of its kind in the city and its metropolitan area, will consist of 78,500 m2 of GLA and 260 shops, including 10 large shops, 172 satellite shops, 38 fast food outlets, 11 restaurants, one hypermarket, a multiplex cinema and a theatre, as well as a car park with 5,700 parking places.
Sierra Investments has now a solid portfolio of properties – a total of 39 centres – with centres in operation in all the European markets where Sonae Sierra is present. During the period, Freccia Rossa (Brescia, Italy) was added to the operating portfolio. The table below shows the main indicators for the portfolio, on a 100% basis. To note that, even as European economies were slowing down, the Iberian portfolio delivered a fixed rental growth, on a like-for-like basis, of around 2%.
| Nº of Centres |
GLA (m2) | Fix. Rents 6M08 (€ mil.) |
Var. Fix. Rents (L-F-L) |
|
|---|---|---|---|---|
| Portugal | 20 | 784,737 | 92.2 | 2% |
| Spain | 12 | 525,318 | 38.1 | 2% |
| Italy | 3 | 104,941 | 5.1 | _ |
| Germany | 2 | 56,341 | 12.1 | _ |
| Greece | 1 | 45,970 | 8.5 | 10.5% |
| Romania | 1 | 12,304 | 1.5 | _ |
Sierra Developments just started the construction of LeiriaShopping (Leiria), a new shopping and leisure centre which is the result of the expansion of current hypermarket Continente and shopping gallery in Leiria, and is scheduled to open in the spring of 2010. With a GLA of 43,200 m2, the new Shopping and Leisure Centre represents an investment of € 75 million.
Plaza Mayor expansion will be inaugurated on September 30th. Plaza Mayor's expansion represents an investment of € 58 million and will add to the existing and operating Plaza Mayor leisure centre some 18,800m2 of GLA, and 1,130 extra parking spaces.
Sonae Sierra and Miller Developments, established in 2007 a joint venture for the development of a new shopping and leisure centre, to be called Puerta Granada, in the Las Pulianas neighbourhood of the city of Granada, with a total investment of € 107 million. The centre is under construction and it is scheduled to open to the public in 2010.
In April 2008, Sierra Developments in partnership with AIG (40%) and Coimpredil (10%) inaugurated Freccia Rossa, in Brescia. The new centre has a shopping and leisure area of 29,679 m2 representing a total investment of € 144 million.
The second investment in Italy, the Gli Orsi commercial and leisure centre in Biella, resulted from a partnership with NovaCoop, who will own and operate a supermarket of 13,500 m2. Development is progressing in Gli Orsi and opening is now scheduled for October 2008.
Sonae Sierra and ING Real Estate Development established a 50/50 partnership for the development of a new shopping and leisure centre, named "Le Terrazze", in La Spezia, with opening planned for 2010. With a GLA of 39,100 m2 and representing an investment of € 105 million, the centre will have a hypermarket operated by Coop Liguria as its main anchor shop.
Sonae Sierra and Foncière Euris joined forces again to develop Loop5 (Weiterstadt) on a 50/50 basis, investing in excess of €200 million in the project.
Loop5 is the second project which the company has undertaken in the country, the first being Alexa on Berlin's world-famous Alexanderplatz, likewise a partnership with Foncière Euris. Alexa opened its doors to the public on last September 12th and received more than 1 million visits in the first two weeks of operation.
The 50/50 partnership between Sonae Sierra and Rockspring is currently developing the largest shopping and leisure centre in Larissa, to serve a population of 197,000 inhabitants. Pantheon Plaza, a €76.3 million investment, will host approximately 120 units in a total of 22,000m2 GLA, including the main international and national brands. Opening is scheduled for the next 23rd October.
In a 50/50 partnership with the Greek group Acropole Charagionis, Sonae Sierra won a 40 year concession to develop the Galatsi Olympic Hall in Athens – one of the 2004 Olympic Games
premises. The project is for a new commercial and leisure centre with a GLA of 38,695 m2 with an investment of € 69 million. This project is forecasted to open in the spring of 2010.
Sierra Management continues to strengthen its structures in Italy, Greece, Germany and Romania in order to respond to the constant increase in the portfolio of assets being let and under management. The company added a new centre in Italy in April (Freccia Rossa) and now manages 6,338 contracts in Europe, covering 1.747 million m2 of GLA, with three new centres expected for the second half of 2008.
With a portfolio of 31 shopping centres and galleries under management, its performance was affected by the current macroeconomic scenario and consequent decrease in consumer confidence, with a total of 98 million visits and tenant sales reaching € 1,015 million, a slight decrease of 0.8% when compared to the first half of 2007. Sierra Management manages a total of 877 thousand m2 GLA, equal to 3,700 tenant contracts. The portfolio occupancy rate was 97.2%.
Sierra Management has a total of 15 shopping centres and galleries under management, with 1,579 tenant contracts, covering 595 thousand m2 of GLA. Performance was affected by the fall in consumer confidence due to the economic slowdown in Spain. During this period, the Spanish portfolio had € 439 million in tenant sales and 39 million visits, an increase of 5.8% over the same period last year. The occupancy rate increased to 90.1%. Plaza Mayor Shopping, an expansion of the Plaza Mayor leisure centre in Malaga, is expected to open this year.
Sonae Sierra inaugurated Freccia Rossa (Brescia) in April, the largest downtown shopping centre in Italy and the first conceived by Sonae Sierra in this market. Valecenter (Marcon) was also extended and refurbished. Sierra Management now has 3 centres under management, with 218 tenant contracts and 105 thousand m2 of GLA. Sales rose to € 37 million with 3.3 million visits and occupancy reached 93%. A 4th centre, Gli Orsi, located in Biella, is expected to open later this year.
Sierra Management has 1 shopping centre under management, with 314 tenant contracts and 46 thousand m2 of GLA. A second centre, Pantheon Plaza, in Larissa, is expected to open next October.
Sales during this period reached € 83.1 million, an increase of 25.7% over the 1st half of 2007, with 4 million visits. The occupancy rate reached 99.2%.
Sierra Management currently manages 2 shopping centres in Germany, including one acquisition (Munster Arkaden, in Munster) and one developed by Sonae Sierra (Alexa, in Berlin), representing 342 tenant contracts and 93 thousand m2 of GLA. Sales during this period reached € 134.1 million from 7.4 million visits. occupancy rate reached 99.2%.
Sierra Management has 2 shopping centres under management in Romania, one of which from a third party owner, with a total of 185 tenant contracts and around 31 thousand m2 of GLA. Visits reached 2.1 million and the occupancy rate was 93.2%.
In Brazil, Sonae Sierra Brasil is the owner (or co-owner) of 9 shopping centres, equal to a total of 317,745 m2 of GLA.
The aim of Sonae Sierra Brasil is to become one of Brazil's leading companies and a partner of choice in the shopping and leisure centre sector. This objective is being achieved through a combination of organic growth and acquisitions, which is being accelerated following the acquisition of 50% of Sonae Sierra Brazil by DDR (Developers Diversified Realty from USA).
On the development front, the company continues the construction of its 10th shopping centre – Manauara Shopping - located in Manaus, the capital of the state of Amazon. Total investment will be approximately € 60 million for 43,000 m2 of GLA distributed over three floors, with 252 shops and 2,716 parking places.
During March 2008, Sonae Sierra announced the company's 11th shopping and leisure centre in the city of Londrina, state of Paraná. The development will be a part of a hotel, residential, commercial and cultural complex. The investment in the shopping centre is estimated at € 53 million.
Recently, Sonae Sierra Brasil announced two new developments. The first one is located in the city of Uberlândia, in the Minas Gerais state. This project will have two levels with 33,000 m2 of GLA representing an investment of about € 43.5 million. Opening date is scheduled to 2010. The company's other announced project is located in Goiânia, state of Goiás, and will represent an investment of around € 123 million and should open in 2011. The development, which will be the largest and most modern of its kind in the city and its metropolitan area, will consist of 78,500 m2 of GLA and 260 shops, including 10 large shops, 172 satellite shops, 38 fast food
outlets, 11 restaurants, one hypermarket, a multiplex cinema and a theatre, as well as a car park with 5,700 parking places.
The Net Profit for the first six months of 2008 was €1.3 million whereas the Net Profit attributable to Equity Holders was €17.5 million. When comparing with the same period of the previous year, the negative variation in Net Profit is mainly driven by Indirect Net Profits that were adversely affected by increases in market capitalization yields in Europe, namely in Iberia.
The direct income from investment in the first half of 2008 was €34.9 million, versus €44.2 million during the same period of last year. This reduction is basically explained by increased Net Financial Costs, and this is explained by two factors. The first is the increase in interest rates in the period. The second relates to non-recurrent financial income connected with the Company's operations in Brazil. In the first half of 2007, the Company booked gains resulting from hedging contracts on its operations in Brazil, in the amount of €6.9 million. In the first half of 2008, it booked a corresponding loss of €0.4 million.
Net Operating Margin was €89.7 million versus €70.8 million in the first half of 2007. The increase of 27% is explained by the improvement of the operating performance of the existing assets plus the contribution of the openings occurred in the 2nd half of 2007, namely Alexa (Berlin, Germany), 8ª Avenida (S.João da Madeira, Portugal) and El Rosal (Ponferrada, Spain). To note that, on a likefor-like basis, the rents booked by the Company, grew in the period by 4.5% versus the same period of 2007. The average occupancy rate in the portfolio was stable, reaching 96.3% as of 30th June 2008 versus 96.5% as of 30 June 2007.
The big shift in the Company's Results happened at the level of Indirect Results. In this area, the Company booked a loss of €33.5 million in the first half of 2008 whereas it had booked a gain of €119.5 million in the same period of 2007.
This Indirect Result has two main components. In the first (Gains Realized on Investments), the Company shows a profit, in the period, of €13.6 million - corresponding basically to the gains made on the sale of positions to third party investors in the Sierra Portugal Fund.
The second component (Value Created on Investments) corresponds to changes in value, on the basis of independent valuations, of the properties in the portfolio. In this component, the Company booked a loss, in the period, of €47 million.
The valuations of the properties, as of 30th June 2008, were affected by the negative climate now prevailing in the property markets of most of the developed countries where the Company operates. This context led to an upwards shift of the capitalization yields applied in the valuations on those countries, implying a reduction in the value of the corresponding property. The losses of the Company were mitigated however by valuation gains in Brazil, a market that was not affected by the crisis and where yields are still going down.
In the case of Sonae Sierra, the increase in the yields led to a reduction in the value of the Investment Properties of 3.3% or €126.6 million. The main impacts were in Portugal (loss of €60.9 million) and Spain (loss of €66.9 million) whereas other European countries had a loss of €10.5 million and Brazil had a gain of €11.7 million.
The potential loss of €126.6 million, resulting from changes in yields, was significantly mitigated by a favourable evolution at operating level. The combined effect of changes in the projections of rents, key money, other net income and maintenance and capital expenditures, led to an increase in the value of the properties of €75.4 million.
The Consolidated Balance Sheet continues to show a solid financial position. The total assets amounted to €4,682 million at the end of June 2008; the increase in Investment Properties of €77 million versus 31 December 2007, relates with the opening of Freccia Rossa that more than compensated the decrease in the valuations of the existing portfolio.
The increase in Bank Debt amounts to €117.9 million and results from the re-financing of investment properties and the financing of the projects under development. The Leverage (measured as net indebtedness less cash and equivalents, as a percentage of total assets) increased from 38.3% to 38.7%, a level still far from the target of 50%.
As referred in the introduction, the Company uses NAV as its basic performance metric. In this period, the Company adopted, for the first time, the INREV guidelines for NAV calculation.
The three main differences between the INREV NAV and the statutory NAV are the following.
The first relates to Deferred Tax Liabilities (DTLs). INREV indicates that no deduction for DTLs should be made if the Company´s track record and expectations indicate that sales of properties will, in all likelihood, attract no tax. Sierra was already in line with this proposal since it reported an adjusted NAV without deduction for DTLs on its properties.
The second adjustment relates to Promote Fees (or performance fees) in Funds. INREV recommends that, both the Fund and the Manager, accrue this type of fees, over time, on the basis of performance to date. Sierra booked an amount of € 29 million corresponding to the fees accrued to date on the Sierra Fund.
The third adjustment relates to grossing-up of property valuations. INREV recommends that properties be booked on the basis of gross values if transactions of funds are usually done on that basis. Valuers calculate a property value that is net of acquisition costs, taxes on the transaction, etc. Sierra increased its NAV by € 35 million, to allow for this adjustment
On the basis of these guidelines from INREV, the NAV of Sonae Sierra, as of the 30th June 2008, was €1.729 billion. This corresponds to €53.17 per share and the performance in the period (change in NAV + dividends) was 3.8%. If the NAV was calculated on the same basis used in 31 December 2007, the total amount was €1.665 billion, the value per share was € 51.20 and the performance in the period was 0.1%.
The NAV assesses the value of the portfolio of the Company but does not capture the value of the service activities undertaken by its operating companies. The value metrics for those service activities are the Net Operating Income generated by each of them. In the period, the NOIs generated were as follows,
| (€ 000) | |||
|---|---|---|---|
| NOI | |||
| 6M08 | 6M07 | ||
| Developments | -27,516 | 10,009 | |
| Asset Management | 6,263 | 4,308 | |
| Property Management | 2,833 | 2,442 | |
| Total | -18,420 | 16,760 |
The activities Asset Management and Property Management show an improving performance as a consequence of the increase of the portfolio under management.
The Developments activity shows a loss of €27.5 million – this compares with a gain of €10 million in the same period of 2007. Under this activity, we book both project development services and margins accrued in projects under development held by Sierra Developments.
The negative result in the period has to do with this second component. The Company adjusted down the estimates for value created until inauguration in a number of projects. As a consequence, the Company cancelled margins accrued in previous periods relating to those projects.
| Sonae Sierra | |||
|---|---|---|---|
| Consolidated Profit and Loss Account (€ 000) |
6M08 | 6M07 | % 08/07 |
| Direct Income from Investments | 156,820 | 128,900 | 22% |
| Operating costs | 63,874 | 55,620 | 15% |
| Other costs | 3,282 | 2,505 | 31% |
| Direct costs from investments | 67,156 | 58,125 | 16% |
| Net Operating Margin | 89,664 | 70,775 | 27% |
| Depreciation | 1,015 | 892 | 14% |
| Net financial costs | 44,157 | 15,629 | 183% |
| Direct profit before taxes | 44,493 | 54,255 | -18% |
| Corporate tax | 9,624 | 10,081 | -5% |
| Direct profit | 34,869 | 44,174 | -21% |
| Gains realized on investments | 13,595 | 65 | - |
| Value created on investments | -47,040 | 182,553 | -126% |
| Indirect income | -33,445 | 182,618 | -118% |
| Deferred tax | 87 | 63,141 | -100% |
| Indirect profit | -33,532 | 119,478 | -128% |
| Net profit before minorities | 1,337 | 163,652 | -99% |
| Attributable to : | |||
| Equity holders | 17,479 | 100,505 | -83% |
| Minority interests | -16,142 | 63,146 | -126% |
| Consolidated Balance Sheet (€ 000) |
30/06/2008 | 31/12/2007 | Var. (08 - 07) |
|---|---|---|---|
| Investment properties | 3,851,841 | 3,774,495 | 77,346 |
| Properties under development and others | 477,222 | 428,618 | 48,604 |
| Goodwill | 71,782 | 81,338 | -9,556 |
| Deferred taxes | 24,967 | 22,194 | 2,773 |
| Other assets | 164,652 | 139,288 | 25,364 |
| Deposits | 91,513 | 48,848 | 42,666 |
| Total assets | 4,681,977 | 4,494,782 | 187,195 |
| Net worth Minorities |
1,322,906 594,356 |
1,339,137 448,970 |
-16,231 145,387 |
| Bank loans | 1,868,408 | 1,750,513 | 117,895 |
| Shareholder loans from minorities | 20,128 | 88,636 | -68,508 |
| Deferred taxes | 612,208 | 598,956 | 13,252 |
| Other liabilities | 263,970 | 268,570 | -4,599 |
| Total liabilities | 2,764,715 | 2,706,675 | 58,039 |
| Net worth, minorities and liabilities | 4,681,977 | 4,494,782 | 187,195 |
We present pro-forma financial statements (un-audited) by businesses.
In the first six months of 2008, Sierra Investments had a negative contribution to the Consolidated Results of €13.8 million. As portfolio owner, it was mostly affected by the upwards adjustment on European market yields.
Net Operating Income totalled €89.6 million, an increase of 29% on the same period of last year. The positive variance is related with (i) the increased operational margin as a result of openings occurred during the 2nd half of 2007 and Freccia Rossa (Brescia, Italy) inaugurated in April 2008 (ii) the increase of the asset management activity. In fact, the Asset Management Net Operating Income increased by 45%, versus the same period of 2007, a direct outcome of the increased number of shopping centres under management.
Net Financial Costs increased by 85% versus the same period of last year, mainly due to the increase in interest rates in the period.
| Sierra Investments | (un-audited accounts) | ||
|---|---|---|---|
| Profit & Loss Account (€ 000) |
6M08 | 6M07 | % 08/07 |
| Fixed Rental Income | 100,486 | 79,870 | 26% |
| Turnover Rental Income | 3,173 | 2,514 | 26% |
| Key-Money Income | 3,516 | 3,079 | 14% |
| Other Income | 4,472 | 3,602 | 24% |
| Retail Operating Income | 111,648 | 89,065 | 25% |
| Property Management Services | 5,748 | 4,712 | 22% |
| Asset Management Services | 12,163 | 9,661 | 26% |
| Letting & Promotion | 849 | 596 | 42% |
| Capital Expenditures | 1,843 | 2,066 | -11% |
| Other Costs | 9,881 | 8,971 | 10% |
| Retail Operating Costs | 30,485 | 26,007 | 17% |
| Retail Net Operating Margin | 81,163 | 63,058 | 29% |
| Parking Net Operating Margin | 1,482 | 1,368 | 8% |
| Co-generation Net Operating Margin | 637 | 585 | 9% |
| Shopping Centre Net Operating Income | 83,281 | 65,011 | 28% |
| Offices Net Operating Income | 100 | 195 | -49% |
| Income from Asset Management Services | 12,683 | 10,164 | 25% |
| Overheads | 6,419 | 5,855 | 10% |
| Asset Management Net Operating Income | 6,263 | 4,308 | 45% |
| Net Operating Income (NOI) | 89,645 | 69,514 | 29% |
| Depreciation | 1,223 | 454 | 169% |
| Recurrent net financial costs/(income) | 42,234 | 22,785 | 85% |
| Non-Recurring costs/(income) | (101) | 7 | - |
| Results Before Corporate Taxes | 46,289 | 46,268 | 0% |
| Corporate Taxes | 10,134 | 8,875 | 14% |
| Direct Profit | 36,154 | 37,393 | -3% |
| Realized Property Profit | 2,078 | (3,428) | 161% |
| Non-Realised Property Profit | (56,738) | 154,568 | -137% |
| Total Indirect Income from Investments | (54,661) | 151,140 | -136% |
| Deferred tax | (4,682) | 52,639 | -109% |
| Indirect Profit | (49,979) | 98,502 | -151% |
| Net Profit for the Period | (13,824) | 135,894 | -110% |
| Attributable to : | |||
| Equity holders | (80) | 73,318 | -100% |
| Minority interests | (13,744) | 62,576 | -122% |
| Sierra Investments | (un-audited accounts) | ||
|---|---|---|---|
| Consolidated Balance Sheet (€ 000) |
30/06/2008 | 31/12/2007 | Var. (08 - 07) |
| Investment properties & others | 3,686,209 | 3,661,027 | 25,183 |
| Tenants | 15,309 | 14,158 | 1,152 |
| Deferred taxes | 21,305 | 18,655 | 2,650 |
| Other assets | 115,056 | 100,956 | 14,100 |
| Deposits & short term investments | 198,606 | 208,495 | -9,889 |
| Total assets | 4,036,486 | 4,003,291 | 33,195 |
| Net worth | 897,666 | 930,795 | -33,129 |
| Minorities | 556,276 | 440,212 | 116,064 |
| Bank loans | 1,746,652 | 1,679,884 | 66,768 |
| Shareholder loans | 53,759 | 97,318 | -43,559 |
| Deferred taxes | 561,648 | 561,079 | 568 |
| Other liabilities | 220,486 | 294,003 | -73,517 |
| Total liabilities | 2,582,544 | 2,632,284 | -49,740 |
| Net Worth, minorities and liabilities | 4,036,486 | 4,003,291 | 33,195 |
This business had a loss of €22 million in the first half of 2008. The Developments activity shows a loss in the Net Operating Income of €27.5 million - this compares with a gain of €10 million in the same period of 2007. This concept includes both project development services and margins accrued in projects under development held by Sierra Developments.
The negative result in the period has to do with this second component. The Company adjusted down the estimates for value created until inauguration in a number of projects. As a consequence, the Company cancelled margins accrued in previous periods relating to those projects. To note that this second component is not IFRS-compliant and is excluded from the Consolidated Accounts.
The variance in operating costs reflects the continued efforts of Sierra Developments to set-up solid teams in the markets where it operates. The increase in the income resulting from project developments services rendered is mainly related with a strong pipeline of projects under development.
| Sierra Developments | (un-audited accounts) | ||
|---|---|---|---|
| Profit & Loss Account (€ 000) |
6M08 | 6M07 | % 08/07 |
| Project Development Services Rendered | 6,412 | 5,109 | 26% |
| Value created in projects | (18,585) | 17,895 | -204% |
| Operating Income | (12,173) | 23,004 | -153% |
| Personnel costs | 5,859 | 4,423 | 32% |
| Other costs | 9,484 | 8,573 | 11% |
| Operating costs | 15,343 | 12,995 | 18% |
| Net Operating Income (NOI) | (27,516) | 10,009 | -375% |
| Depreciation and provisions | 16 | 7 | 138% |
| Net financial costs/(income) | 2,572 | (1,469) | 275% |
| Non-recuring costs/(income) | - | ||
| Profit Before Taxes | (30,104) | 11,471 | -362% |
| Corporate taxes | (3,697) | (1,108) | -233% |
| Deferred tax | (4,385) | 1,597 | -375% |
| Net Profit for the Period | (22,023) | 10,983 | -301% |
| Attributable to : | |||
| Equity holders | (22,023) | 10,983 | -301% |
| Minority interests | 0 | (0) | - |
| Sierra Developments | (un-audited accounts) | ||
|---|---|---|---|
| Consolidated Balance Sheet (€ 000) |
30/06/2008 | 31/12/2007 | Var. (08 - 07) |
| Properties under development | 487,391 | 470,341 | 17,050 |
| Customers | 4,099 | 1,876 | 2,223 |
| Deferred taxes | 0 | ||
| Other assets | 96,744 | 155,505 | -58,761 |
| Deposits | 100,348 | 34,171 | 66,176 |
| Total assets | 688,582 | 661,894 | 26,689 |
| Net worth | 187,584 | 148,695 | 38,889 |
| Minorities | 1,225 | 1,225 | 0 |
| Bank loans | 118,829 | 83,951 | 34,877 |
| Shareholder loans | 286,563 | 342,119 | -55,556 |
| Deferred taxes | 24,248 | 28,050 | -3,802 |
| Other liabilities | 70,134 | 57,854 | 12,280 |
| Total liabilities | 499,774 | 511,974 | -12,200 |
| Net worth, minorities and liabilities | 688,582 | 661,894 | 26,689 |
This business contributed with €2.1 million to the Consolidated Results of Sonae Sierra during the first half of 2008, which compares with €2.0 million in the same period of last year.
Net Operating Income (NOI) for this period was €2.8 million versus €2.4 million for the same period last year (up 16%). The increase in NOI was mostly driven by the 23% increase in letting services income due to openings both during this period and expected for the second half of 2008. But Property Management Services continue also to show a steady growth - up 15% versus the first half of 2007.
The increase of 14% in operating costs, compared to the same period of last year, results from the reinforcement of the local management structures in Italy, Greece and Spain, where new openings will occur in the near future, and Germany and Romania, where several projects are under development and expected for 2009. This strengthening of the international teams is aligned with the Company´s internationalization strategy.
| Sierra Management | (un-audited accounts) | ||
|---|---|---|---|
| Profit & Loss Account (€ 000) |
6M08 | 6M07 | % 08/07 |
| Property Management Income | 14,647 | 12,735 | 15% |
| Letting Services Income | 2,159 | 1,750 | 23% |
| Other Income | 1,357 | 1,448 | -6% |
| Total Income from Management Services | 18,162 | 15,933 | 14% |
| Operating Costs | 15,330 | 13,490 | 14% |
| Net Operating Income (NOI) | 2,833 | 2,442 | 16% |
| Depreciation and Provisions | 418 | 415 | 1% |
| Net financial costs/(income) | (888) | (729) | -22% |
| Non-recurring costs/(income) | (30) | (33) | 10% |
| Results Before Corporate Taxes | 3,333 | 2,789 | 20% |
| Corporate taxes | 1,179 | 821 | 44% |
| Net Profit for the Period | 2,154 | 1,968 | 9% |
| Atributable to : | |||
| Equity holders | 2,103 | 1,935 | 9% |
| Minority interests | 51 | 33 | 56% |
| Sierra Management | (un-audited accounts) | ||
|---|---|---|---|
| Consolidated Balance Sheet (€ 000) |
30/06/2008 | 31/12/2007 | Var. (08 - 07) |
| Net Fixed Assets | 382 | 433 | -52 |
| Goodwill | 5,068 | 5,472 | -404 |
| Tenants | 13,904 | 13,240 | 664 |
| Other Assets | 10,100 | 7,024 | 3,076 |
| Deposits | 20,890 | 21,551 | -661 |
| Total Assets | 50,863 | 48,122 | 2,740 |
| Net Worth | 2,514 | 5,979 | -3,464 |
| Minorities | 134 | 84 | 51 |
| Other Liabilities | 48,164 | 42,060 | 6,104 |
| Total Liabilities | 48,213 | 42,060 | 6,153 |
| Net Worth, Minorities and Total Liabilities | 50,863 | 48,122 | 2,740 |
Sonae Sierra Brasil comprises development, investment and property management activities in Brazil.
Retail Operating Income reached €18.7 million, an increase of 20% compared with the same period of 2007, mainly due to the exceptional performance of the operating portfolio: 18% increase in the fixed rents and 55% increase in the turnover rents.
The NOI rose from €11.5 million to €13.7 million, an increase of 19% compared to the first half of 2007. Besides the higher retail operating income, this growth is also sustained by growing income from service activities, namely at property management level.
Value created on properties totalled €63 million in 2008, mainly due to a weighted average yield compression of 48 bp in the shopping centres in operation. The value created on properties under developments relates with the development margin accrued on the Manauara project.
| Sonae Sierra Brasil (un-audited accounts) |
|||
|---|---|---|---|
| Profit & Loss Account (€ 000) |
6M08 | 6M07 | % 08/07 |
| Fixed Rental Income Turnover Rental Income |
15,666 1,290 |
13,323 832 |
18% 55% |
| Key-Money Income | 1,049 | 999 | 5% |
| Other Income | 658 | 386 | 71% |
| Retail Operating Income | 18,662 | 15,539 | 20% |
| Property Management Services | 898 | 287 | 212% |
| Letting & Promotion Services | 266 | 142 | 88% |
| Other Costs | 2,719 | 2,258 | 20% |
| Retail Operating Costs | 3,883 | 2,687 | 44% |
| Parking Net Operating Margin | 441 | 280 | 58% |
| Shopping Centre Net Operating Margin | 15,220 | 13,132 | 16% |
| Income from Project Development Services | 236 | 88 | 167% |
| Income from Property Management Services | 3,589 | 2,445 | 47% |
| Total Income from Services Rendered | 3,825 | 2,533 | 51% |
| Overheads | 5,331 | 4,173 | 28% |
| Net Operating Income (NOI) | 13,715 | 11,492 | 19% |
| Depreciation | 90 | 62 | 45% |
| Provisions | 480 | 326 | 47% |
| Net financial costs/(income) | (353) | (459) | 23% |
| Non-recurring costs/(income) | 719 | 214 | 236% |
| Results Before Corporate Taxes | 12,779 | 11,349 | 13% |
| Corporate taxes | 2,594 | 2,443 | 6% |
| Direct Profit | 10,185 | 8,906 | 14% |
| Realised Property Profit | 1,073 | 0 | - |
| Non-Realised Property Profit | 53,059 | 32,907 | 61% |
| Non-Realised Property Profit (Under Dev.) | 8,823 | 2,886 | 206% |
| Total Indirect Income from Investments | 62,955 | 35,793 | 76% |
| Deferred tax | 20,125 | 11,968 | 68% |
| Indirect profit | 42,830 | 23,824 | 80% |
| Net Profit for the Period | 53,015 | 32,730 | 62% |
| Atributable to: | |||
| Equity holders | 51,292 | 31,655 | 62% |
| Minority interests | 1,722 | 1,075 | 60% |
| Sonae Sierra Brasil | (un-audited accounts) | ||
|---|---|---|---|
| Consolidated Balance Sheet (€ 000) |
30/06/2008 | 31/12/2007 | Var. (08 - 07) |
| Properties | 532,778 | 434,242 | 98,536 |
| Tenants | 5,508 | 6,018 | -509 |
| Tax Shelter | 4,736 | 4,994 | -258 |
| Other Assets | 8,360 | 4,183 | 4,177 |
| Deposits | 7,073 | 5,304 | 1,769 |
| Total Assets | 558,455 | 454,740 | 103,715 |
| Net Worth | 431,094 | 365,753 | 65,341 |
| Minorities | 17,192 | 14,895 | 2,297 |
| Bank Loans | 14,554 | 673 | 13,882 |
| Shareholder Loans | 0 | 0 | 0 |
| Deferred Taxes | 85,274 | 62,986 | 22,288 |
| Other Liabilities | 10,341 | 10,433 | -92 |
| Total liabilities | 110,169 | 74,092 | 36,077 |
| Net Worth, Minorities and Total Liabilities | 558,455 | 454,740 | 103,715 |
Maia, 4 September 2008.
The Board of Directors
Duarte Paulo Teixeira de Azevedo Chairman (non-executive)
_______________________
Ângelo Ribeirinho Paupério Director (non-executive)
_______________________
Mark Robin Preston Director (non-executive)
__________________________
Neil Leslie Jones Director (non-executive)
_______________________
Benoit Prat-Stanford Director (non-executive)
_______________________
Álvaro Carmona e Costa Portela President
____________________________
João Gonçalo Sassetti Pessoa Jorge Director
_______________________________
José Edmundo Medina Barroso de Figueiredo Director
_______________________________________
Pedro José D'Hommée Caupers Director
____________________________
Fernando Maria Guedes Machado Antunes Oliveira Director
__________________________________________
__________________________________________
__________________________________________
António José Santos Silva Casanova Director
Ana Maria Guedes Antunes de Oliveira Director
| ASSETS | Notes | 30 June 2008 |
31 December 2007 |
30 June 2007 |
|---|---|---|---|---|
| NON CURRENT ASSETS: | ||||
| Investment properties | 4 | 3,816,882,527 | 3,740,142,951 | 3,186,602,652 |
| Investment properties in progress | 4 | 435,975,456 | 385,204,256 | 463,786,786 |
| Property, plant and equipment | 3,207,928 | 2,352,189 | 2,069,521 | |
| Goodwill | 5 | 71,781,832 | 82,963,317 | 48,314,473 |
| Intangible assets | 6,697,138 | 7,107,368 | 7,449,854 | |
| Investments in associates | 6 | 17,025,644 | 24,210,873 | 22,094,188 |
| Deferred tax assets | 27,010,421 | 24,337,165 | 30,142,190 | |
| Derivative financial instruments State and other public entities |
7 | 36,717,011 101,954 |
14,696,011 101,954 |
21,157,113 101,954 |
| Other non current assets | 19,230,330 | 35,090,965 | 18,290,832 | |
| Total non current assets | 4,434,630,241 | 4,316,207,049 | 3,800,009,563 | |
| CURRENT ASSETS: | ||||
| Inventories | - | - | 101,653 | |
| Trade receivables | 26,699,654 | 23,827,629 | 20,447,786 | |
| Other shareholders | - | - | 111,788,880 | |
| State and other public entities | 46,958,159 | 44,756,186 | 36,696,801 | |
| Other receivables | 67,457,741 | 22,449,427 | 18,167,012 | |
| Other current assets | 21,574,661 | 22,952,381 | 21,025,587 | |
| Derivative financial instruments | 7 | 4,349,678 | 4,298,729 | 6,591,601 |
| Cash and cash equivalents | 87,887,596 | 65,690,438 | 143,014,735 | |
| Total current assets | 254,927,489 | 183,974,790 | 357,834,055 | |
| Total assets | 4,689,557,730 | 4,500,181,839 | 4,157,843,618 | |
| EQUITY, MINORITY INTERESTS AND LIABILITIES | ||||
| EQUITY: | ||||
| Share capital | 162,244,860 | 162,244,860 | 162,244,860 | |
| Reserves | 57,329,112 | 57,329,112 | 57,329,112 | |
| Translation Reserve | 9,198,973 | 2,642,409 | 4,224,423 | |
| Hedging Reserve | 14,410,225 | 5,697,406 | 10,389,920 | |
| Retained earnings | 1,062,248,497 | 896,326,381 | 896,380,904 | |
| Consolidated net profit for the period attributable to the shareholders of Sonae Sierra | 17,478,759 | 214,896,663 | 100,505,133 | |
| Equity attributable to the shareholders of Sonae Sierra | 1,322,910,426 | 1,339,136,831 | 1,231,074,352 | |
| Minority interests | 8 | 594,356,289 | 448,969,565 | 447,735,113 |
| Total Equity | 1,917,266,715 | 1,788,106,396 | 1,678,809,465 | |
| LIABILITIES: | ||||
| NON CURRENT LIABILITIES: | ||||
| Long term debt - net of current portion | 7 | 1,804,861,745 | 1,670,868,626 | 1,549,555,946 |
| Derivative financial instruments | 7 | 1,220,426 | 1,656,398 | 49,130 |
| Other shareholders | 12,106,881 | 28,486,087 | 32,129,076 | |
| Trade payables | 26,095,976 | 23,194,006 | 24,171,413 | |
| Other non current liabilities | 13,586,863 | 13,799,187 | 12,853,013 | |
| Deferred tax liabilities | 610,809,107 | 598,072,642 | 546,466,600 | |
| Total non current liabilities | 2,468,680,998 | 2,336,076,946 | 2,165,225,178 | |
| CURRENT LIABILITIES: Current portion of long term debt |
7 | 67,000,362 | 67,165,130 | 44,219,433 |
| Short term debt and other borrowings | 41,474 | 9,701,790 | 45 | |
| Derivative financial instruments | - | - | 33,393 | |
| Other shareholders | 10,139,281 | 60,435,757 | 43,388,137 | |
| Trade payables | 70,163,792 | 64,708,703 | 58,292,048 | |
| State and other public entities | 22,413,579 | 16,808,381 | 24,228,574 | |
| Other payables | 29,560,321 | 25,217,338 | 20,748,326 | |
| Other current liabilities | 104,182,026 | 131,816,833 | 106,651,583 | |
| Provisions | 109,182 | 144,565 | 16,247,436 | |
| Total current liabilities | 303,610,017 | 375,998,497 | 313,808,975 | |
| Total equity, minority interests and liabilities | 4,689,557,730 | 4,500,181,839 | 4,157,843,618 |
The accompanying notes form an integral part of these consolidated balance sheets.
| Notes | 2008 | 2007 | |
|---|---|---|---|
| Operating revenue: | |||
| Services rendered | 181,849,665 | 147,072,680 | |
| Variation in fair value of the investment properties | 4 | (43,331,078) | 198,852,902 |
| Other operating revenue | 9,869,530 | 9,325,824 | |
| Total operating revenue | 148,388,117 | 355,251,406 | |
| Operating expenses: | |||
| Cost of inventories sold | - | - | |
| External supplies and services | (70,643,569) | (59,478,838) | |
| Personnel expenses | (26,424,490) | (22,551,917) | |
| Depreciation and amortisation | (1,068,073) | (949,218) | |
| Provisions and impairment | (1,969,992) | (14,890,104) | |
| Other operating expenses | (10,010,717) | (9,531,522) | |
| Total operating expenses | (110,116,841) | (107,401,599) | |
| Net operating profit | 38,271,276 | 247,849,807 | |
| Financial income | 14,170,948 | 18,610,687 | |
| Financial expenses | (57,271,521) | (33,842,053) | |
| Share of results of associated undertakings | 6 | 521,850 | 1,807,517 |
| Investment income | 3 | 14,779,749 | 1,905,042 |
| Profit before income tax | 10,472,302 | 236,331,000 | |
| Income tax | (9,135,297) | (72,679,462) | |
| Profit after income tax | 1,337,005 | 163,651,538 | |
| Net profit after tax from discontinuing operations | - | - | |
| Consolidated net profit for the period | 1,337,005 | 163,651,538 | |
| Attributable to: | |||
| Shareholders of Sonae Sierra | 17,478,759 | 100,505,133 | |
| Minority interests | 8 | (16,141,754) | 63,146,405 |
| 1,337,005 | 163,651,538 | ||
| Consolidated net profit per share: | |||
| Basic | 0.538 | 3.091 | |
| Diluted | 0.538 | 3.091 |
The accompanying notes form an integral part of these consolidated statements of profit and loss.
| Attr ibut abl e to Eq uity Ho lde f So Sie rs o nae rra |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Res erv es |
||||||||||
| Sha re |
Leg al |
Tra nsla tion |
He dg ing |
Re tain ed |
Ne t |
Min orit y |
||||
| Not es |
ital cap |
Re ser ves |
res erv e |
res erv e |
ning ear s |
fit pro |
Tot al |
Inte ts res |
Tot al |
|
| Bal t 31 De ber 20 06 anc e a cem |
162 ,24 4,8 60 |
57, 329 ,11 2 |
(5,9 68, 021 ) |
2,9 45, 233 |
766 ,02 4,9 49 |
160 ,31 7,9 10 |
1,1 42, 894 ,04 3 |
405 ,51 2,6 40 |
1,5 48, 406 ,68 3 |
|
| App riat ion of c olid ate d n et p rofi t fo r 20 06: rop ons |
||||||||||
| Tra nsfe leg al r nd ine d e ings r to reta ese rve s a arn |
- | - | - | - | 130 ,73 0,1 70 |
(13 0,7 30, 170 ) |
- | - | - | |
| Div ide nds dis trib d ute |
- | - | - | - | - | (29 40) ,58 7,7 |
(29 40) ,58 7,7 |
(25 63) ,27 6,6 |
(54 03) ,86 4,4 |
|
| Cur slat ion diff cy t ren ran ere nce s: |
||||||||||
| Cre d d urin he iod ate g t per |
- | - | 10, 192 ,44 4 |
- | - | - | 10, 192 ,44 4 |
525 ,80 8 |
10, 718 ,25 2 |
|
| Fai lue of h edg ing inst ent r va rum s |
6 | - | - | - | 10, 224 ,45 8 |
- | - | 10, 224 ,45 8 |
5,0 04, 027 |
15, 228 ,48 5 |
| in lue he dg ing inst Def d ta x in fair val of h edg ing ins trum ent ent erre va ue rum s s |
6 | - | - | - | (2 7 (2,7 79 79, 771 771 ) ) |
- | - | (2 7 (2,7 79 79, 771 771 ) ) |
(1 2 (1,2 96 96, 204 204 ) ) |
(4 0 (4,0 75, 975 975 ) ) 75 |
| Con sol idat ed fit f erio d e nde d 3 0 J net 20 07 pro or p une |
- | - | - | - | - | 100 ,50 5,1 33 |
100 ,50 5,1 33 |
63, 146 ,40 5 |
163 ,65 1,5 38 |
|
| Oth ers |
- | - | - | - | (37 4,2 15) |
- | (37 4,2 15) |
119 ,10 0 |
(25 5,1 15) |
|
| Bal t 30 Ju 200 7 anc e a ne |
162 ,24 4,8 60 |
329 ,11 2 57, |
4,2 24, 423 |
10, 389 ,92 0 |
896 ,38 0,9 04 |
100 ,50 5,1 33 |
1,2 31, 074 ,35 2 |
447 ,73 5,1 13 |
1,6 78, 809 ,46 5 |
|
| Bal De ber t 31 20 07 anc e a cem |
162 ,24 4,8 60 |
57, 329 ,11 2 |
2,6 42, 409 |
5,6 97, 406 |
896 ,32 6,3 81 |
214 ,89 6,6 63 |
1,3 39, 136 ,83 1 |
448 ,96 9,5 65 |
1,7 88, 106 ,39 6 |
|
| App riat ion of c olid d n rofi t fo r 20 07: ate et p rop ons |
||||||||||
| nsfe Tra r to ret ain ed ning ear s |
- | - | - | - | 165 ,15 0,2 43 |
(16 ) 5,1 50, 243 |
- | - | - | |
| Div ide nds dis trib d ute |
- | - | - | - | - | (49 ,74 6,4 20) |
(49 ,74 6,4 20) |
(6,7 04, 366 ) |
(56 ,45 0,7 86) |
|
| Cur slat ion diff cy t ren ran ere nce s |
- | - | 6,5 56, 564 |
- | - | - | 6,5 56, 564 |
280 ,90 9 |
6,8 37, 473 |
|
| Fai lue of h edg ing inst ent r va rum s |
6 | - | - | - | 12, 758 ,69 4 |
- | - | 12, 758 ,69 4 |
9,4 54, 464 |
22, 213 ,15 8 |
| Def d ta x in fai lue of h edg ing inst ent erre r va rum s |
6 | - | - | - | (3,2 67, 418 ) |
- | - | (3,2 67, 418 ) |
(2,3 38, 764 ) |
(5,6 06, 182 ) |
| Cap ital incr e in bsid iari eas su es |
- | - | - | - | - | - | - | 78, 065 ,96 0 |
78, 065 ,96 0 |
|
| Effe f sa les of s ubs idia ries ct o |
3 | - | - | - | (77 8,4 57) |
778 ,45 7 |
- | - | 82, 770 ,45 3 |
82, 770 ,45 3 |
| Con sol idat ed fit f erio d e nde d 3 0 J net 20 08 pro or p une |
- | - | - | - | - | 17, 478 ,75 9 |
17, 478 ,75 9 |
(16 54) ,14 1,7 |
1,3 37, 005 |
|
| Oth ers |
- | - | - | - | (6,5 84) |
- | (6,5 84) |
(17 8) |
(6,7 62) |
|
| Bal Ju t 30 200 8 anc e a ne |
162 ,24 4,8 60 |
57, 329 ,11 2 |
9,1 98, 973 |
14, 410 ,22 5 |
1,0 62, 248 ,49 7 |
17, 478 ,75 9 |
1,3 22, 910 ,42 6 |
594 ,35 6,2 89 |
1,9 17, 266 ,71 5 |
|
The accompanying notes form an integral part of these consolidated statement of changes in equity.
(Amounts stated in Euro)
| Notes | 2008 | 2007 | |||
|---|---|---|---|---|---|
| OPERATING ACTIVITIES: | |||||
| Received from clients Paid to suppliers Paid to personnel |
182,660,521 (64,785,970) (28,506,081) |
150,128,636 (51,711,750) (24,744,501) |
|||
| Flows from operations | 89,368,470 | 73,672,385 | |||
| (Payments)/receipts of income tax Other (payments)/receipts relating to operating activities |
(7,005,772) 268,153 |
(6,291,732) (1,076,674) |
|||
| Flows from operating activities [1] | 82,630,851 | 66,303,979 | |||
| INVESTING ACTIVITIES: | |||||
| Receipts relating to: | |||||
| Sale of 40% Sierra PTF Investments Tangible fixed assets Interest income Other |
3 | 91,019,760 10,469,625 1,078,273 13,572,963 - |
116,140,621 | - 125,830 22,198 11,380,808 2,775,353 |
14,304,189 |
| Payments relating to: | |||||
| Investments Tangible fixed assets Intangible fixed assets Other Variation in Loans granted |
4 | (6,697,565) (174,764,115) (391,510) (6,430,823) |
(188,284,013) (14,848,527) |
(34,747,028) (355,814,073) (204,280) (4,575,604) |
(395,340,985) 7,127,463 |
| Flows from investing activities Flows from investing activities [2] |
(86,991,919) | (373,909,333) | |||
| FINANCING ACTIVITIES: | |||||
| Receipts relating to: | |||||
| Capital increase and share premiums Other |
8 | 3,216,000 - |
3,216,000 | - - |
- |
| Payments relating to: | |||||
| Interest expenses Dividends Decrease of share capital - nominal value and discounts and premiums Other Variation in Loans obtained |
(53,145,225) (54,330,036) - - |
(107,475,261) 140,473,565 |
(33,960,264) (54,530,073) (176,685) - |
(88,667,022) 318,266,773 |
|
| Flow from financing activities [3] | 36,214,304 | 229,599,751 | |||
| Variation in cash and cash equivalents [4]=[1]+[2]+[3] | 31,853,236 | (78,005,603) | |||
| Effect of exchange differences | 3,933 | 384,735 | |||
| Effect of the acquisitions and sales of companies | 305 | 1,208,201 | |||
| Cash and cash equivalents at the beginning of the period | 55,988,648 | 219,427,357 | |||
| Cash and cash equivalents at the end of the period | 87,846,122 | 143,014,690 |
The accompanying notes form an integral part of these consolidated statements of cash flows.
Sonae Sierra SGPS, SA Lugar do Espido Via Norte Apartado 1197
4471-909 Maia Portugal
Tel. (+351) 22 010 44 58 (+351) 22 010 44 36 Geral (+351) 22 948 75 22 Fax (+351) 22 010 46 98 www.sonaesierra.com
(Amounts expressed in Euro)
SONAE SIERRA, S.G.P.S., S.A. ("the Company" or "Sonae Sierra"), which has its head office in Lugar do Espido, Via Norte, Apartado 1197, 4471-909 Maia – Portugal, is the parent company of a group of companies ("the Group").
The Group's operations consist of investment, management and development of shopping centres.
The Group operates in Portugal, Brazil, Spain, Greece, Germany, Italy, Romania and Netherlands.
These financial statements are presented in Euro because that is the currency of the primary economic environment in which the Group operates.
The annual consolidated financial statements of Sonae Sierra are prepared on a going concern basis, from the accounting records of the companies included in the consolidation, maintained in accordance with generally accepted accounting principles in the countries of each company, adjusted, in the consolidation process, to International Financial Reporting Standards ("IFRS"), as adopted by the European Union, applicable to economic years beginning on 1 January 2008.
The accompanying consolidated financial statements relate to the Sonae Sierra's interim consolidated accounts, being the financial information disclosed prepared under International Financial Reporting Standards ("IFRS"), as adopted by the European Union, for the purpose of Interim Financial Reporting (IAS 34).
The Board of Directors of the Company consider that the accompanying consolidated financial statements and their notes have, under IAS 34 – Interim Financial Reporting, an adequate presentation of the interim consolidated information. For additional information about the accounting policies and other information, consult the consolidated financial statements of the Company and their notes for the year 2007.
Estimates were used in the preparation of the accompanying financial statements, that affect the reporting amounts of the assets and liabilities, as well the reporting amounts of income and expenses. All the estimates and assumptions made by the Board of Directors were however made, based on the best knowledge existing, as of the approval date of the financial statements, of the events and transaction in course.
The main acquisitions and sales of companies occurred during the half years ended 30 June 2008 and 2007 were as follows:
In June 2008 the Group acquired 100% of the company S.C. SRP Development S.A.("Ploiesti") by the amount of Ron 81,430,113 (Euro 22,361,523), creating a Goodwill of Ron 13,110,514 (Euro 3,600,278, as of 30 June 2008).
In January 2007 the jointly controlled company Sonae Sierra Brasil BV sold the company Project Sierra Brasil 1 BV (which was dormant at the date of the sale) to Sierra Investments Holding BV (owned by the Group in 100%). Before this operation the financial statements of this company were included in the consolidated financial statements by the proportional consolidation method and after this operation by the full consolidated method. The "Goodwill" related to this operation in the amount of Euro 15,676, was expensed as an operational cost.
In March 2007 the company Larissa Development of Shopping Centers, SA ("Larissa") (owned by the Group in 50%), acquired 100% of the companies Athienitis Larissa, SA, Kamares, SA and Dory, SA ("Larissa subsidiaries") by the amount of Euro 7,729,500 creating a Goodwill of Euro 1,956,461.
In April 2007 the Group acquired 100% of the company S.C. Setler Mina, Srl (owner of the shopping centre "River Plaza" in Romania) by the amount of Ron 77,286,069 (Euro 24,660,439), creating a Goodwill of Ron 4,055,728 (Euro 1,333,614).
On the 27th March and 27th June, 2008 the Group sold 40% and 9.692%, respectively, of the share capital of its subsidiary SPF - Sierra Portugal Real Estate ("SPF"), which holds the following investments:
| Percentage of share | ||
|---|---|---|
| Company | Head office | capital held by SPF |
| 8ª Avenida Centro Comercial, SA. | Maia | 100.00% |
| Arrábidashopping- Centro Comercial, S.A. ("Arrábidashopping") | Maia | 50.00% |
| Gaiashopping I- Centro Comercial, S.A. ("Gaiashopping I") | Maia | 50.00% |
| Gaiashopping II- Centro Comercial, S.A. ("Gaiashopping II") | Maia | 50.00% |
| Loureshopping- Centro Comercial, S.A. | Maia | 50.00% |
| Oeste Retail Park - Gestão Galerias Comerciais, SA | Maia | 50.00% |
| Rio Sul- Centro Comercial, S.A. | Lisbon | 50.00% |
| Serra Shopping- Centro Comercial, S.A. | Covilhã | 50.00% |
| Sol Retail Park - Gestão Galerias Comerciais, SA | Maia | 50.00% |
The sale of the 40% and the 9.692% of the share capital of SPF, generated a net gain of Euro 14,839,680, recorded under the caption "Investment income" on the consolidated statement of profit and loss.
As after the sales above, SPF is still being controlled by Sonae Sierra, the consolidated financial statements of SPF are included on the consolidated financial statements of Sonae Sierra by the full consolidation method.
In January 2007, the company Sierra Investments Holdings, BV (held at 100% by the Group) sold the 50% of the investment held in the companies Oeste Retail Park, SA and Sol Retail Park, SA by Euro 25,000 each and a gain of Euro 15 each was recorded. Those companies were included in the group accounts using the proportional consolidation method.
In January 2007 the Group sold 50% of the investment held in the company Project Sierra Spain 3, SA by Euro 61,000 and a gain of Euro 2,397 was booked. The company was included in the group accounts using the proportional consolidation method.
In March 2007 the Group sold 50% of the investment held in the company Project Sierra Spain 5, BV by Euro 9,100 and a gain of Euro 1,429 was booked. The company was included in the group accounts using the proportional consolidation method.
In May 2007 the company Sierra Development Holding, BV (held at 100% by the Group) sold to third parties 50% of the investment held in the company Shopping Centre Colombo Holding, BV (ex. Project Sierra Spain 4, BV) by Euro 9,100 and a gain of Euro 1,429 was booked. Also on this date the same company sold the remaining 50% to the company Sierra BV (held at 50.1% by the Group) and a gain of Euro 713 was recorded. The company was included in the group accounts using the proportional consolidation method.
During the first half year ended 30 June 2008, Sierra Developments Holding BV granted a loan to RI Management SPV 6 Sarl, a development property company in Romania, that is expected to be acquired during the second half year of 2008. As of 30 June 2008, the loan granted amounts to Euro 15,000,000 and is recorded in the balance sheet under the caption "Other receivables".
The effect of the acquisitions and sales occurred during the half years ended 30 June 2008 and 30 June 2007 was as detailed below:
| 30.06.2008 | ||
|---|---|---|
| Acquisitions 50% | ||
| Ploiesti | ||
| Cash and cash equivalents | (I) | 302 |
| Investment properties in progress (Note 4) | 32,095,596 | |
| Tangible and intangible fixed assets | 357 | |
| Other current assets | 17,740 | |
| Deferred tax liabilities | (3,600,278) | |
| Accounts payable and other liabilities - current | (9,752,472) | |
| Minorities | - | |
| Identifiable assets and liabilities at acquisition date | 18,761,245 | |
| Goodwill: | ||
| Recorded as asset (Note 5) | 3,600,278 | |
| Purchase amount | (II) | 22,361,523 |
| Net cash flow | (II-I) | 22,361,221 |
| 30.06.2007 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Acquisitions | ||||||||||
| Acquisitions 50% | ||||||||||
| Project Sierra Brasil 1, BV |
Larissa Subsidiaries |
River Plaza |
Total | |||||||
| Cash and cash equivalents | (I) | 650 | 1,304,371 | 215,560 | 1,520,581 | |||||
| Investment properties (Note 4) | - | - | 42,122,616 | 42,122,616 | ||||||
| Investment properties in progress (Note 4) | - | 12,792,000 | - | 12,792,000 | ||||||
| Tangible fixed assets | - | 292 | - | 292 | ||||||
| Other non current assets | - | 189,311 | - | 189,311 | ||||||
| Trade receivables | - | - | 40,181 | 40,181 | ||||||
| Other current assets | - | 4,631 | 60,077 | 64,708 | ||||||
| Bank loans and shareholder loans - non current | - | (5,324,967) | (15,620,422) | (20,945,389) | ||||||
| Deferred tax liabilities | - | (1,956,461) | (4,044,288) | (6,000,749) | ||||||
| Other non current liabilities | - | - | - | |||||||
| Accounts payable and other liabilities - current | (7,226) | (1,236,138) | (861,009) | (2,104,373) | ||||||
| Identifiable assets and liabilities at acquisition date | (6,576) | 5,773,039 | 21,912,715 | 27,679,178 | ||||||
| Translation reserve | - | - | 1,453,622 | 1,453,622 | ||||||
| Goodwill: | ||||||||||
| Recorded as asset (Note 6) | - | 1,956,461 | 1,294,102 | 3,250,563 | ||||||
| Recorded as cost | 15,676 | - | 15,676 | |||||||
| Purchase amount | (II) | 9,100 | 7,729,500 | 24,660,439 | 32,399,039 | |||||
| Net cash flow | (II-I) | 8,450 | 6,425,129 | 24,444,879 | 30,878,458 |
The effect of sale of 40% and of the 9.692% of the share capital of SPF was reported to 31 March 2008 and 30 June 2008, respectively, and can be demonstrated as follows:
| 31.03.08 | 30.06.08 | Total | ||
|---|---|---|---|---|
| Cash and cash equivalents | (I) | 6,594,942 | 8,244,193 | |
| Investment properties | 419,751,000 | 425,876,000 | ||
| Investment properties under construction | 3,589,678 | 47,831 | ||
| Deferred tax assets | 2,352,305 | 2,534,201 | ||
| Derivative financial instruments | 894,746 | 7,235,079 | ||
| Other non current assets | - | 4,254,590 | ||
| Trade receivables | 1,794,493 | 1,746,304 | ||
| Other current assets | 1,798,445 | 3,062,894 | ||
| Deferred tax liabilities | (59,458,181) | (61,880,188) | ||
| Bank loans and shareholder loans - non current | (189,542,658) | (195,071,946) | ||
| Bank loans and shareholder loans - current | (5,628,432) | (3,807,169) | ||
| Accounts payable and other liabilities - current | (18,271,697) | (14,563,324) | ||
| Identifiable assets and liabilities at sales date | 163,874,641 | 177,678,465 | ||
| % sold | 40.000% | 9.692% | ||
| Minorities | 65,549,856 | 17,220,597 | 82,770,453 | |
| Profit/ (loss) on sale | 25,469,904 | 6,041,039 | 31,510,943 | |
| Gross sale amount | (II) | 91,019,760 | 23,261,636 | 114,281,396 |
| Goodwill related with the proportion sold | (12,212,238) | (2,959,025) | (15,171,263) (*) | |
| Transaction costs | (III) | (1,207,438) | (292,562) | (1,500,000) (**) |
| Net cash flow | (II+III-I) | 71,005,143 | 11,765,855 | 97,610,133 |
Resume of the computation of the net profit on the sale of SPF:
| Gross profit / (loss) on sale | 25,469,904 | 6,041,039 | 31,510,943 |
|---|---|---|---|
| Goodwill related with the proportion sold | (12,212,238) | (2,959,025) | (15,171,263) |
| Transaction costs | (1,207,438) | (292,562) | (1,500,000) |
| Net profit / (loss) on sale | 12,050,228 | 2,789,452 | 14,839,680 |
(*) During the second half of the year 2007, Sonae Sierra has acquired 50% of the share capital of ArrabidaShopping and GaiaShopping I and II, generating a goodwill on these purchases of Euro 12,229,864 (adjusted in 2008 by Euro 389,500) and Euro 17,911,231, respectively. In 2008, with the sale of 49.692% of the share capital of SPF (that owns the 50% of share capital of ArrabidaShopping and GaiaShopping I and II), the Group derecognised 49.692% of these goodwills by the amounts of Euro 6,270,814 and Euro 8,900,449, respectively (Note 5).
(**) Transaction cost to be paid, in respect to this sale transaction.
The amount of Euro 23,261,636 corresponds to the sale price of 9.692% of SPF to third parties occurred at the end of June 2008, was received only in July 2008, and as so, as of 30 June 2008, it is classified in the balance sheet, under the caption "Other receivables". .
As mentioned before, after the sales above, SPF is still being controlled by Sonae Sierra and as so, those sales had no impact on the consolidated assets and liabilities and consolidated revenues and expenses of Sonae Sierra.
| 30.06.2007 | |||||||
|---|---|---|---|---|---|---|---|
| Sales of 50% | |||||||
| Sol Retail | Oeste Retail | Shopping C. | Project Sierra | Pantheon | |||
| Park, SA | Park, SA | Colombo, BV | Spain 3, SA | Plaza, BV | Total | ||
| Cash and cash equivalents | (I) | 25,000 | 25,000 | 8,177 | 246,026 | 8,177 | 312,380 |
| Investment properties in progress (Note 4) | - | - | - | 1,289,297 | - | 1,289,297 | |
| Other current assets | - | - | - | 234,079 | - | 234,079 | |
| Accounts payable and other liabilities - current | (15) | (15) | (506) | (1,741,299) | (506) | (1,742,341) | |
| Identifiable assets and liabilities at sales date | 24,985 | 24,985 | 7,671 | 28,103 | 7,671 | 93,415 | |
| Payment made by the acquirer through a capital increase | - | - | - | 30,500 | - | 30,500 | |
| Profit/ (loss) on sale | 15 | 15 | 1,429 | 2,397 | 1,429 | 5,285 | |
| Sale amount | (II) | 25,000 | 25,000 | 9,100 | 61,000 | 9,100 | 129,200 |
| Net cash flow | (II-I) | - | - | 923 | (185,026) | 923 | (183,180) |
The movement in investment properties during the period ended 30 June of 2008 and 2007 was as follows:
| 30.06.2008 | |||||
|---|---|---|---|---|---|
| Investment properties | |||||
| In operation | "Fit Out" | In progress | Advances | Total | |
| Opening balance | 3,730,358,451 | 9,784,500 | 380,985,835 | 4,218,421 | 4,125,347,207 |
| Increases | 24,397,178 | - | 111,792,482 | - | 136,189,660 |
| Impairment | - | - | (3,748,952) | - | (3,748,952) |
| Sales | - | - | (1,035,000) | - | (1,035,000) |
| Fit-out billed | - | (425,325) | - | - | (425,325) |
| Regularizations | - | - | (195,706) | - | (195,706) |
| Increases by transfer from investment properties in progress: | |||||
| Production cost | 87,220,211 | 1,400,000 | (86,994,698) | (1,625,513) | - |
| Adjustment to fair value | 19,318,370 | (129,500) | - | - | 19,188,870 |
| Variation in fair value of the investment properties between | |||||
| years : | |||||
| Gains | 35,721,041 | 63,702 | - | - | 35,784,743 |
| Losses | (97,210,637) | (1,094,054) | - | - | (98,304,691) |
| Increases through acquisitions of companies (Note 3) | - | - | 32,095,596 | - | 32,095,596 |
| Currency translation differences | 7,478,590 | - | 482,991 | - | 7,961,581 |
| Closing balance | 3,807,283,204 | 9,599,323 | 433,382,548 | 2,592,908 | 4,252,857,983 |
The gain shown as "Adjustment to fair value", in the amount of Euro 19,188,870 relates to the transfer from "in progress" (and as so stated at cost under IAS 16) to "in operation" (and as so, stated at fair value, under IAS 40), of the investment properties Freccia Rossa and Arrábida expansion, which have opened to the public during the first half year ended 30 June 2008.
The amount of Euro 3,748,952 detailed as "Impairment" relates to the increase during the first half year of 2008 of the provision for "Development Funds at Risk". The total increase of this provision during this period amounts to Euro 4,327,000 and was recorded by debit to "Other Operating Expenses" (Euro 3,748,952) and "External supplies and services" (Euro 578.048).
| 30.06.2007 | |||||
|---|---|---|---|---|---|
| Investment properties | |||||
| In operation | "Fit Out" | In progress | Advances | Total | |
| Opening balance | 2,687,017,137 | 10,910,802 | 344,216,421 | 2,330,408 | 3,044,474,768 |
| Increases | 228,853,858 | 63,955 | 114,609,121 | 458,065 | 343,984,999 |
| Write-off | - | (650,000) | (1,741,475) | - | (2,391,475) |
| Fit-out billed | - | (1,911,227) | - | - | (1,911,227) |
| Regularizations | - | - | (60,921) | - | (60,921) |
| Increases by transfer from investment properties in progress: | |||||
| Production cost | 7,743,522 | - | (7,743,522) | - | - |
| Adjustment to fair value | 1,238,762 | - | - | - | 1,238,762 |
| Variation in fair value of the investment properties between | |||||
| years : | |||||
| Gains | 209,340,317 | 1,075,970 | - | - | 210,416,287 |
| Losses | (12,570,147) | (232,000) | - | - | (12,802,147) |
| Increases through acquisitions of companies (Note 3) | 42,122,616 | - | 12,792,000 | - | 54,914,616 |
| Sales of companies (Note 3) | - | - | (1,289,297) | - | (1,289,297) |
| Currency translation differences | 13,599,087 | - | 215,986 | - | 13,815,073 |
| Closing balance | 3,177,345,152 | 9,257,500 | 460,998,313 | 2,788,473 | 3,650,389,438 |
At 30 June 2008, 31 December 2007 and 30 June 2007 investment properties in operation corresponded to the fair value of the Group's proportion on the following shopping centres:
| 30.06.2008 | 31.12.2007 | 30.06.2007 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| % of | % of | % of | |||||||
| consolidation | Yield | Amount | consolidation | Yield | Amount | consolidation | Yield | Amount | |
| Portugal: | |||||||||
| 8ª Avenida | 100% | 6.55% | 68,342,000 | 100% | 6.35% | 70,838,000 | - | - | - |
| AlgarveShopping | 100% | 5.25% | 156,397,000 | 100% | 5.15% | 157,632,000 | 100% | 5.15% | 156,230,000 |
| ArrábidaShopping | 100% | 5.65% | 196,128,000 | 100% | 5.55% | 179,032,000 | 50% | 5.75% | 83,501,500 |
| C C Continente de Portimão | 50% | 6.65% | 12,380,000 | 50% | 6.50% | 11,804,000 | 50% | 6.50% | 11,709,000 |
| C C Modelo de Albufeira | 50% | 6.80% | 7,001,000 | 50% | 6.60% | 7,001,000 | 50% | 6.60% | 6,816,000 |
| CascaiShopping | 50% | 5.10% | 188,309,500 | 50% | 4.95% | 191,232,500 | 50% | 4.95% | 187,457,000 |
| Centro Colombo | 50% | 5.10% | 399,701,500 | 50% | 4.90% | 408,755,500 | 50% | 4.90% | 408,273,500 |
| Centro Vasco da Gama | 50% | 5.05% | 159,267,500 | 50% | 4.90% | 156,939,500 | 50% | 4.90% | 155,653,500 |
| CoimbraShopping | 100% | 6.65% | 29,512,000 | 100% | 6.40% | 35,120,000 | 100% | 6.40% | 35,043,000 |
| Estação Viana | 100% | 6.10% | 86,290,000 | 100% | 6.00% | 85,757,000 | 100% | 6.00% | 84,922,000 |
| GaiaShopping | 100% | 5.55% | 184,868,000 | 100% | 5.40% | 185,249,000 | 50% | 5.40% | 89,481,500 |
| GuimarãeShopping | 100% | 6.15% | 48,918,000 | 100% | 6.00% | 49,730,000 | 100% | 6.00% | 48,981,000 |
| Lima Retail Park | - | - | - | - | - | - | 50% | 6.75% | 7,983,000 |
| LoureShopping MadeiraShopping |
50% 50% |
5.70% 6.50% |
63,052,000 39,474,500 |
50% 50% |
5.50% 6.30% |
64,734,000 40,090,500 |
100% 50% |
5.50% 6.30% |
128,960,000 39,879,000 |
| MaiaShopping | 100% | 6.45% | 61,230,000 | 100% | 6.20% | 60,827,000 | 100% | 6.20% | 59,020,000 |
| NorteShopping | 50% | 5.05% | 210,004,500 | 50% | 4.90% | 212,746,500 | 50% | 4.90% | 208,347,000 |
| Parque Atlântico | 50% | 6.50% | 36,818,500 | 50% | 6.30% | 36,855,000 | 50% | 6.30% | 36,529,500 |
| RioSul Shopping | 50% | 5.60% | 59,364,500 | 50% | 5.50% | 57,773,000 | 50% | 5.50% | 57,334,500 |
| Serra Shopping | 50% | 6.10% | 23,232,000 | 50% | 6.00% | 23,339,500 | 50% | 6.00% | 23,002,000 |
| Torre Ocidente | 25% | 7.15% | 1,759,500 | 25% | 7.00% | 1,801,250 | - | - | - |
| Torre Oriente | 25% | 7.15% | 1,547,000 | 25% | 7.00% | 1,576,500 | - | - | - |
| ViaCatarina | 50% | 6.30% | 33,226,000 | 50% | 6.10% | 34,348,500 | 50% | 6.10% | 37,093,000 |
| 2,066,823,000 | 2,073,182,250 | 1,866,216,000 | |||||||
| Brazil: Parque D. Pedro |
50% | 8.00% | 131,185,017 | 50% | 10.50% | 111,297,374 | 50% | 9.50% | 93,088,351 |
| Pátio Boavista | 50% | 9.25% | 13,689,160 | 50% | 9.50% | 11,960,687 | 50% | 10.50% | 10,906,089 |
| Shopping Metrópole (83%) | 50% | 8.00% | 33,634,361 | 50% | 8.50% | 30,246,860 | 50% | 9.50% | 25,462,703 |
| Shopping Penha (73,18%) | 50% | 8.75% | 20,757,175 | 50% | 9.00% | 18,353,723 | 50% | 10.00% | 15,422,232 |
| Shopping Plaza Sul (30%) | 50% | 8.00% | 14,245,126 | 50% | 8.50% | 11,084,751 | 50% | 10.00% | 8,961,516 |
| Sierra Enplanta | 50% | 15,496,865 | 50% | 12,384,806 | 50% | 0.00% | 10,613,486 | ||
| 229,007,704 | 195,328,201 | 164,454,377 | |||||||
| Spain: | |||||||||
| Avenida M40 | 100% | 7.65% | 46,149,000 | 100% | 6.45% | 63,820,000 | 100% | 5.80% | 77,254,000 |
| Dos Mares | 100% | 5.65% | 59,762,000 | 100% | 5.45% | 59,329,000 | 100% | 5.60% | 58,293,000 |
| El Rosal | 100% | 6.60% | 125,859,000 | 100% | 6.15% | 131,130,000 | - | - | - |
| Grancasa | 50% | 5.40% | 101,760,000 | 50% | 5.00% | 100,507,000 | 50% | 5.00% | 93,724,500 |
| Max Center | 50% | 5.50% | 90,121,000 | 50% | 5.35% | 90,584,500 | 50% | 5.25% | 90,033,000 |
| La Farga | 50% | 6.65% | 30,930,500 | 50% | 5.95% | 31,673,500 | 50% | 6.15% | 31,512,500 |
| Luz del Tajo | 100% | 5.65% | 107,983,000 | 100% | 5.35% | 106,904,000 | 100% | 5.35% | 105,556,000 |
| Plaza Éboli | 100% | 6.50% | 56,359,000 | 100% | 6.10% | 57,994,000 | 100% | 6.10% | 57,394,000 |
| Plaza Mayor - Parque de Ócio | 100% | 7.80% | 64,876,000 | 100% | 6.90% | 76,381,000 | 100% | 6.90% | 78,389,000 |
| Parque Principado Valle Real |
50% 50% |
5.55% 5.90% |
95,437,500 49,528,500 |
50% 50% |
5.10% 5.35% |
95,554,500 49,573,500 |
50% 50% |
5.05% 5.35% |
95,539,795 49,270,000 |
| Zubiarte | 50% | 6.35% | 35,800,000 | 50% | 5.95% | 41,600,000 | 50% | 5.95% | 44,034,000 |
| Italy: | 864,565,500 | 905,051,000 | 780,999,795 | ||||||
| Airone | 100% | 6.40% | 19,129,000 | 100% | 6.15% | 18,642,000 | 100% | 6.15% | 18,556,000 |
| Valecenter/Warner Village | 100% | 5.75% | 155,001,000 | 100% | 5.50% | 149,868,000 | 100% | 5.15% | 139,453,000 |
| Freccia Rossa | 50% | 5.05% | 88,987,000 | - | - | - | - | ||
| 263,117,000 | 168,510,000 | 158,009,000 | |||||||
| Germany: | |||||||||
| Alexa | 50% | 5.50% | 176,473,000 | 50% | 5.50% | 176,950,000 | - | - | - |
| Münster Arkaden | 100% | 5.50% | 167,231,000 | 100% | 5.50% | 168,634,000 | 100% | 5.50% | 165,005,000 |
| 343,704,000 | 345,584,000 | 165,005,000 | |||||||
| Romania: River Plaza Mall |
100% | 7.00% | 40,066,000 | 100% | 6.75% | 42,703,000 | 100% | 7.00% | 42,660,980 |
| 40,066,000 | 42,703,000 | 42,660,980 | |||||||
| 3,807,283,204 | 3,730,358,451 | 3,177,345,152 |
The fair value of each investment property was determined by means of a valuation as of the balance sheet date made by an independent specialised entity (Cushman & Wakefield).
The valuation of these investment properties was made in accordance with the Practice Statements of the RICS Appraisal and Valuation Manual published by The Royal Institution of Chartered Surveyors ("Red Book"), located in England.
The methodology used to compute the market value of the investment properties consists in preparing 10 years projections of income and expenses of each shopping mall which are then discounted to the balance sheet date using a discount market rate. The residual amount at the end of year 10 is computed by applying a return rate ("Exit yield" or "cap rate") on the projected net income of year 11. The market values so obtained are then tested by calculating and analyzing the capitalization yield that is implicit in those values – corresponding to the yield shown in the list above. Projections are intended to reflect the actual best estimate of the valuator regarding future revenues and costs of each shopping mall. Both the return rate and discount rate are defined in accordance to the real estate local and institutional market conditions, being the reasonability of the market value thus obtained tested in terms of initial gain.
In the valuation of investment properties some assumptions, that in accordance with the Red Book are considered to be special, were in addition considered, namely in the case of recently inaugurated shopping malls, in which the possible costs still to be incurred were not considered, as the accompanying financial statements already include a provision for them.
| 30.06.2008 | 31.12.2007 | 30.06.2007 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| % of | % of | % of | ||||||||
| consolidation | Yield | Amount | consolidation | Yield | Amount | consolidation | Yield | Amount | ||
| Portugal: | ||||||||||
| 8ª Avenida | 100% | 6.55% | 633,000 | 100% | 6.55% | 647,000 | - | - | - | |
| AlgarveShopping | 100% | 5.25% | 310,000 | 100% | 5.25% | 357,000 | 100% | 5.15% | 403,000 | |
| Estação Viana | 100% | 6.10% | 1,080,000 | 100% | 6.10% | 1,222,000 | 100% | 6.00% | 1,243,000 | |
| GaiaShopping | 100% | 5.55% | 135,000 | 100% | 5.55% | 182,000 | 50% | 5.40% | 113,500 | |
| LoureShopping | 50% | 5.70% | 576,500 | 50% | 5.70% | 628,000 | 100% | 5.50% | 1,289,000 | |
| MadeiraShopping | 50% | 6.50% | 148,500 | 50% | 6.50% | 172,000 | 50% | 6.30% | 168,500 | |
| NorteShopping | 50% | 5.05% | 674,823 | 50% | 5.05% | 675,000 | 50% | 4.90% | 701,500 | |
| Parque Atlântico | 50% | 6.50% | 485,500 | 50% | 6.50% | 526,500 | 50% | 6.30% | 546,500 | |
| RioSul Shopping | 50% | 5.60% | 484,000 | 50% | 5.60% | 505,500 | 50% | 5.50% | 513,000 | |
| Serra Shopping | 50% | 6.10% | 245,500 | 50% | 6.10% | 249,500 | 50% | 6.00% | 253,500 | |
| 4,772,823 | 5,164,500 | 5,231,500 | ||||||||
| Spain: | ||||||||||
| Avenida M40 | 100% | 7.65% | 945,000 | 100% | 7.65% | 1,286,000 | 100% | 5.80% | 1,378,000 | |
| Dos Mares | 100% | 5.65% | 51,000 | 100% | 5.65% | 62,000 | 100% | 5.60% | 73,000 | |
| El Rosal | 100% | 6.60% | 555,000 | 100% | 6.60% | 800,000 | - | - | - | |
| Luz del Tajo | 100% | 5.65% | - | 100% | 5.65% | - | 100% | 5.35% | - | |
| Plaza Mayor | 100% | 7.80% | 2,006,000 | 100% | 7.80% | 2,472,000 | 100% | 6.90% | 2,575,000 | |
| 3,557,000 | 4,620,000 | 4,026,000 | ||||||||
| Italy: | ||||||||||
| Freccia Rossa | 50% | 5.05% | 1,269,500 | - | - | - | - | - | - | |
| 1,269,500 | - | - | ||||||||
| 9,599,323 | 9,784,500 | 9,257,500 |
As of 30 June 2008, 31 December 2007 and 30 June 2007 the fair value of the fit out contracts existing in each investment property was as follows:
The fair value of the fit out contracts was determined by means of a valuation as of the balance sheet date made by an independent specialised entity (Cushman & Wakefield). The methodology used to compute the fair value of the fit out contracts consisted in determining the discounted estimated cash flows of each one of the fit out contracts, using a discounted marked rate, similar to the one used in determining the fair value of the investment property to which each fit out contract relates.
Investment properties in progress at 30 June 2008, 31 December 2007 and 30 June 2007 are made up as follows:
| 30.06.2008 | 31.12.2007 | 30.06.2007 | |
|---|---|---|---|
| Portugal: | |||
| 8ª Avenida | - | - | 39,461,702 |
| Alverca | 6,031,303 | 5,990,071 | 5,717,599 |
| Arrábidashopping - expansion | - | 4,750,022 | 275,672 |
| Maiashopping - expansion | - | - | 1,521,945 |
| Cacém Shopping | 2,165,427 | 2,073,838 | 1,949,254 |
| Caldas da Rainha Shopping | 2,074,840 | 2,385,075 | 1,899,492 |
| Leiria | 570,213 | 528,462 | - |
| Parque de Famalicão | 1,255,000 | 1,255,000 | 1,255,000 |
| Setubal Retail Park | 1,572,307 | 1,572,328 | 1,570,035 |
| Torres Oriente e Ocidente | 2,222,695 | 384,851 | 2,484,897 |
| Others | 47,831 | 171,180 | 446,135 |
| Germany: | |||
| Alexa | 14,641,984 | 14,641,984 | 135,712,501 |
| Loop 5 | 61,617,090 | 51,224,568 | 35,937,948 |
| Others | 280,922 | - | 478,603 |
| Brazil: | |||
| Manauara Shopping | 21,070,448 | 11,257,692 | 4,857,741 |
| Pátio Uberlândia | 3,202,481 | 3,061,213 | 133,375 |
| Others | 691,029 | - | - |
| Spain: | |||
| El Rosal | - | - | 86,605,303 |
| Plaza Mayor Shopping | 44,888,215 | 35,467,867 | 29,036,593 |
| Puerta Granada | 10,444,311 | 11,493,694 | 3,823,234 |
| Dos Mares - expansion | 2,809,804 | 2,809,804 | 3,338,703 |
| Alfaz del Pi | 19,606,841 | - | - |
| Greece: | |||
| Aegean Park | 9,754,260 | 9,690,412 | 9,621,763 |
| Pantheon Plaza | 27,303,602 | 27,711,214 | 17,301,756 |
| Galatsi Shopping | 6,646,206 | 6,318,553 | 4,629,454 |
| Ioannina | 22,592,802 | 20,791,597 | - |
| Others | - | - | 24,435 |
| Italy: | |||
| Freccia Rossa | - | 64,526,976 | 49,828,153 |
| Gli Orsi | 74,903,675 | 46,795,459 | 17,353,118 |
| Le Terraze | 3,308,593 | 3,782,358 | 2,678,437 |
| Caldogno | 8,944,828 | 8,277,310 | - |
| Pavia | 7,290,500 | 7,282,978 | 5,691,491 |
| Others | 139,862 | - | 152,447 |
| Romania: | |||
| Craiova | 46,012,819 | 40,959,750 | - |
| Ploiesti | 33,885,568 | - | - |
| 435,975,456 | 385,204,256 | 463,786,786 |
The investment property in progress related with Alexa, in amount of Euro 14,641,984 corresponds to the Alexa's premises that the Group intends to sell to an external investor during the second half year of 2008.
At 30 June 2008 and 31 December 2007 the following investment properties had been given in guarantee of bank loans:
Coimbrashopping Plaza Mayor
Estação Viana Rio Sul
Guimarãeshopping Viacatarina
La Farga Zubiarte
8ª Avenida Loureshopping
On 30 June 2008 and 31 December 2007 the detail of Goodwill was as follows:
| 30.06.2008 | 30.06.2007 | |||||
|---|---|---|---|---|---|---|
| Year of aquisition |
Amount | Depreciation and impairment losses of the year |
Accumulated depreciation and impairment losses |
Book value |
Book value |
|
| Sierra Management Spain, SA | ||||||
| 1999 | 1,518,231 | - | 1,518,231 | - | - | |
| 2000 | 45,211 | - | 45,211 | - | - | |
| 2002 | 1,274,080 | - | 1,274,080 | - | - | |
| 2003 | 9,542 | - | 9,542 | - | - | |
| 2,847,064 | - | 2,847,064 | - | - | ||
| Iberian Assets, S.A: | ||||||
| Grancasa | 2002 | 2,673,793 | 1,203,207 | 1,470,586 | 1,470,586 | |
| Max Center | 2002 | 8,287,406 | 3,729,334 | 4,558,072 | 4,558,072 | |
| Valle Real | 2002 | (1,014,298) | - | (456,434) | (557,864) | (557,864) |
| Valle Real | 2003 | 1,667,583 | - | 667,034 | 1,000,549 | 1,000,549 |
| 11,614,484 | - | 5,143,141 | 6,471,343 | 6,471,343 | ||
| La Farga | 2002 | 132,194 | - | 59,488 | 72,706 | 72,706 |
| 2005 | 406,310 | - | 159,433 | 246,877 | 246,877 | |
| 538,504 | - | 218,921 | 319,583 | 319,583 | ||
| Parque Principado | 2004 | 997,416 | - | - | 997,416 | 997,416 |
| Alexa | 2004 | 10,876,616 | - | - | 10,876,616 | 10,876,616 |
| 2005 | (7,995,503) | - | - | (7,995,503) | (7,995,503) | |
| 2,881,113 | - | - | 2,881,113 | 2,881,113 | ||
| Avenida M40 | 2005 | 1,180,575 | - | 1,180,575 | - | - |
| Plaza Eboli | 2005 | 3,355,876 | - | 2,190,514 | 1,165,362 | 1,165,362 |
| Luz del Tajo | 2005 | 3,655,115 | - | 736,126 | 2,918,989 | 2,918,989 |
| Dos Mares | 2005 | 1,298,307 | - | - | 1,298,307 | 1,298,307 |
| Valecenter | 2005 | 29,355,532 | - | 1,015,102 | 28,340,430 | 28,340,430 |
| ArrábidaShopping (Note 3) | 2007 | 6,348,550 | - | - | 6,348,550 | 12,229,864 |
| GaiaShopping (Note 3) | 2007 | 9,010,782 | - | - | 9,010,782 | 17,911,231 |
| River Plaza Mall | 2007 | 1,333,614 | - | - | 1,333,614 | 1,333,614 |
| Craiova | 2007 | 5,139,604 | - | - | 5,139,604 | 5,139,604 |
| Larissa | 2007 | 1,956,461 | - | - | 1,956,461 | 1,956,461 |
| Ploiesti (Note 3) | 2008 | 3,600,278 | - | - | 3,600,278 | - |
| 85,113,275 | - | 13,331,443 | 71,781,832 | 82,963,317 |
As of 30 June 2008 and 31 December 2007, this caption is made up as follows:
| % | 30.06.2008 | 31.12.2007 |
|---|---|---|
| 19.95% | 13,896,938 | 21,498,878 |
| 3,128,706 | 2,711,995 | |
| 17,025,644 | 24,210,873 | |
During the first half year ended 30 June 2008 the movement in the associate Mediterranean Cosmos Shopping Centre, S.A. was as follows:
| Opening balance | 21,498,878 |
|---|---|
| Capital decrease | (7,783,079) |
| Appropriation of net result | 181,139 |
| Closing balance | 13,896,938 |
| 30.06.2008 | 31.12.2007 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Used amount | Used amount | ||||||||
| Financing | Medium and | Medium and | |||||||
| Entity | Limit | Short term | long term | Limit | Short term | long term | Due date | ||
| Bank Loans: | |||||||||
| 3shoppings - Holding, SGPS, S.A | Eurohypo | (b) | 60,304,665 | 1,296,875 | 59,007,790 | 60,304,665 | 1,296,875 | 59,007,790 | Jul/2026 |
| 8ª Avenida - C.C., SA | Santander | (b), (c) | 41,500,000 | - | 36,500,000 | 41,500,000 | - | 32,735,458 | Dec/2019 |
| Airone Shopping Centre, SA | Eurohypo | (b), (c) | 8,000,000 | - | 8,000,000 | 8,000,000 | - | 8,000,000 | May/2012 |
| ALEXA Shopping Centre GmbH | Eurohypo | (a), (b), (c) | 100,000,000 | - | 98,653,024 | 100,000,000 | - | 98,479,582 | Oct/2015 |
| ALEXA Shopping Centre GmbH | Eurohypo | (a), (b) | 4,000,000 | - | - | 4,000,000 | 9,909 | - | Sep/2009 |
| Algarveshopping- C.C., S.A. | European Property Capital 3 p.l.c. | 1,541,000 | 13,312,496 | 1,502,000 | 14,092,496 | ||||
| Sierra B.V. | European Property Capital 3 p.l.c. | (b), (c) | 60,524,629 | 423,163 | 45,247,970 | 61,474,697 | 419,321 | 45,460,880 | May/2010 |
| Arrábidashopping - C.C., S.A. | Eurohypo | (b), (c) | 36,555,000 | 2,537,500 | 34,017,500 | 37,815,000 | 2,520,000 | 35,295,000 | Mar/2017 |
| Arrábidashopping - C.C., S.A. | Eurohypo | (b) | 19,404,181 | 679,146 | 18,725,035 | 19,404,181 | 679,146 | 18,725,035 | Mar/2017 |
| Arrábidashopping - C.C., S.A. | Eurohypo | - | - | - | 3,250,000 | 2,304,000 | - | Jun/2008 | |
| Avenida M-40, S.A. | Westdeutsche Immobank | (b) | 56,970,313 | 12,761,113 | 44,209,200 | 57,823,438 | 12,249,238 | 45,574,200 | Dec/2014 |
| Cascaishopping - C.C., S.A. | Eurohypo | (a), (b) | 56,206,620 | 1,535,700 | 54,670,920 | 57,742,500 | 1,535,700 | 56,206,620 | May/2027 |
| Cascaishopping - C.C., S.A. | Eurohypo | (a), (b), (c) | 26,000,000 | - | 26,000,000 | 26,000,000 | - | 26,000,000 | Jan/2016 |
| Centro Colombo - C.C., S.A. | Eurohypo, ING | (a), (b) | 112,250,000 | - | 112,250,000 | 112,250,000 | - | 112,250,000 | May/2017 |
| Centro Colombo - C.C., S.A. | Eurohypo, ING | (a), (b), ( c) | - | 500,000 | - | 500,000 | |||
| Shopping C. Colombo, BV | Eurohypo, ING | (a), (b), ( c) | 50,000,000 | - | 49,500,000 | 50,000,000 | - | 49,500,000 | May/2017 |
| Centro Vasco da Gama, S.A. | ING Belgium SA/NV | (a), (b), (c) | 59,150,000 | 1,950,000 | 57,200,000 | 60,125,000 | 1,950,000 | 58,175,000 | Aug/2016 |
| Dos Mares - Shop. Centre S.A. | Aareal Bank | (b) | 20,075,000 | 900,000 | 19,175,000 | 20,525,000 | 900,000 | 19,625,000 | Sep/2012 |
| El Rosal Shopping, SA | Eurohypo | (b) | 83,000,000 | 5,602,500 | 77,397,500 | 83,000,000 | 2,621,774 | 71,438,226 | Jul/2017 |
| El Rosal Shopping, SA | Eurohypo | - | 12,132,000 | 2,245,390 | - | 12,132,000 | 6,942,000 | - | Oct/2008 |
| Estação Viana- C.C., S.A. | BES | (b), (c) | 37,632,000 | 2,016,000 | 35,616,000 | 38,640,000 | 2,016,000 | 36,624,000 | Dec/2015 |
| Freccia Rossa - Shop.C. S.r.l. | Unicredit | (a), (b), (c) | 55,039,500 | 620,436 | 53,460,157 | 55,039,500 | 620,436 | 39,641,481 | Dec/2025 |
| Freccia Rossa - Shop.C. S.r.l. | Unicredit | (a), (b), (c) | 13,250,000 | - | 11,169,008 | 13,250,000 | - | 8,856,155 | Dec/2012 |
| Gaiashopping I- C.C., S.A. | Eurohypo | (b) | 52,525,000 | 825,000 | 51,700,000 | 52,525,000 | 825,000 | 51,700,000 | Nov/2026 |
| Gaiashopping I- C.C., S.A. | Eurohypo | (b) | 19,775,000 | 375,000 | 19,400,000 | 19,925,000 | 325,000 | 19,600,000 | Aug/2016 |
| Gli Orsi - Shopping Centre S.r.l. | Bayern LB | (a), (b), (c) | 80,000,000 | - | 55,203,568 | - | - | - | Dec/2017 |
| Iberian Assets, SA | Eurohypo | (a), (b) | 22,537,954 | 1,803,037 | 20,734,917 | 23,364,346 | 1,727,910 | 21,636,436 | Jun/2019 |
| Iberian Assets, SA | Eurohypo | (a), (b) | 23,194,406 | 800,000 | 22,394,406 | 23,569,406 | 750,000 | 22,819,406 | Nov/2020 |
| Iberian Assets, SA | Eurohypo | (a), (b) | 10,986,000 | 147,500 | 10,838,500 | 10,986,000 | 147,500 | 10,838,500 | Jul/2018 |
| Iberian Assets, SA | Eurohypo | (a), (b) | 8,500,000 | 275,000 | 8,225,000 | 8,500,000 | 275,000 | 8,225,000 | Jul/2018 |
| Iberian Assets, SA | Eurohypo | (a), (b) | 5,712,500 | 76,500 | 5,636,000 | 5,712,500 | 76,500 | 5,636,000 | Jul/2018 |
| Iberian Assets, SA | Eurohypo | (a), (b) | 15,025,303 | - | 15,025,303 | 15,025,303 | - | 15,025,303 | Jan/2026 |
| Iberian Assets, SA | BBVA | (a) | 4,500,000 | 3,483,886 | - | 4,500,000 | 4,207,971 | - | May/2010 |
| La Farga - Shopping Center, SL | Eurohypo | (a), (b) | 15,000,000 | - | 15,000,000 | 15,000,000 | - | 15,000,000 | Apr/2014 |
| Loop 5-Shopping Centre, Gmbh | Bayern LB | (a), (b) | 93,750,000 | - | 31,898,991 | 93,750,000 | - | 22,405,043 | Jan/2017 |
| Loureshopping- C.C., S.A. | CGD | (b) | 36,250,000 | 543,750 | 35,706,250 | 36,250,000 | - | 36,250,000 | Oct/2020 |
| Luz del Tajo C.C. S.A. | Hypo Real Estate | (b), (c) | 45,700,000 | - | 45,700,000 | 45,700,000 | - | 45,700,000 | Jun/2014 |
| Madeirashopping- C.C., S.A. | ING Real Estate Finance | (a), (b) | 18,000,000 | - | 18,000,000 | 18,000,000 | - | 18,000,000 | Aug/2015 |
| Münster Arkaden, BV | Nord LB | (b), (c) | 128,196,333 | 1,759,136 | 126,437,197 | 140,000,000 | 1,651,475 | 127,358,053 | Dec/2016 |
| Norteshopping - C.C., S.A. | BPI | (a), (b) | 458,162 | 458,162 | - | 686,277 | 456,229 | 230,048 | Jun/2009 |
| Norteshopping - C.C., S.A. | Eurohypo, BPI | (a), (b) | 11,226,560 | 2,338,867 | 8,887,693 | 12,162,106 | 2,104,980 | 10,057,126 | Jun/2011 |
| Norteshopping - C.C., S.A. | Eurohypo | (a), (b) | 78,717,916 | - | 35,397,970 | 79,125,781 | - | 35,397,970 | Dec/2014 |
| Norte Shopping B.V. | Eurohypo | (a), (b) | 815,730 | 42,504,216 | 815,730 | 42,912,081 | |||
| Oeste Retail Park-C.C., SA | BPI | (a), (b) | 11,700,000 | - | 6,300,000 | 11,700,000 | - | 6,300,000 | Mar/2014 |
| Park Avenue, Develop. Sh.C., SA | Eurohypo | (a), (c) | 15,000,000 | 5,550,000 | - | 15,000,000 | 2,750,000 | - | Sep/2008 |
| Parque Atlântico Shop.- C.C., SA | CGD, BCP | (a), (b) | 17,500,000 | 700,000 | 16,800,000 | 17,500,000 | - | 17,500,000 | Dec/2015 |
| Parque Principado S.L. | Calyon | (a), (b), (c) | 56,700,000 | - | 56,700,000 | 57,352,050 | - | 56,700,000 | Jul/2013 |
| Pátio Sertório Shopping Ltda | Banco Itaú | - | 4,977,750 | 2,126,715 | - | - | - | - | Feb/2009 |
| Plaza Eboli - C.C. S.A. | Hypo Real Estate | (b), (c) | 35,267,170 | 1,070,083 | 34,197,087 | 35,775,000 | 1,033,591 | 34,741,409 | Nov/2010 |
| Plaza Mayor Shopping, SA | Eurohypo | (b) | 37,000,000 | - | 23,399,600 | 37,000,000 | - | - | Apr/2019 |
| Plaza Mayor Shopping, SA | Eurohypo | (b) | 4,500,000 | 2,776,466 | - | 4,500,000 | - | - | Oct/2009 |
| Plaza Mayor Shopping, SA | Eurohypo | - | - | - | - | 4,000,000 | 4,000,000 | - | - |
| Plaza Mayor Shopping, SA | Eurohypo | - | - | - | - | 2,000,000 | 2,000,000 | - | - |
| Plaza Mayor Shopping, SA | Eurohypo | - | - | - | - | 5,000,000 | 5,000,000 | - | - |
| Plaza Mayor - Parque de Ocio, S.A. | Eurohypo | (b) | 29,149,087 | 1,442,429 | 27,706,658 | 30,531,415 | 1,382,328 | 29,149,087 | Apr/2018 |
| Project Sierra Srl | Société Générale/BRD | (b), (c ) | 18,000,000 | - | 15,000,008 | - | - | - | May/2018 |
| Rio Sul - C.C., S.A. | Eurohypo | (a), (b), (c) | 20,175,000 | 650,000 | 19,525,000 | 20,500,000 | 650,000 | 19,850,000 | Apr/2015 |
| Rio Sul - C.C., S.A. | Eurohypo | (a), (b), (c) | 12,000,000 | - | 12,000,000 | 12,000,000 | - | 12,000,000 | Apr/2015 |
| Rio Sul - C.C., S.A. | Eurohypo | (a), (b), (c) | 5,000,000 | - | 5,000,000 | 5,000,000 | - | 5,000,000 | Apr/2015 |
| River Plaza, Srl | Société Générale/BRD | (b), (c ) | 15,000,000 | - | 15,000,008 | - | - | - | May/2018 |
| Serra Shopping - C.C., S.A. | CGD | (a), (b) | 11,550,000 | 510,000 | 11,040,000 | 11,775,000 | 480,000 | 11,295,000 | May/2016 |
| Sierra Investimentos Brasil Ltda | Banco Itaú | (a) | 4,977,750 | 4,843,820 | - | - | - | - | Feb/2009 |
| Sol Retail Park-C.C., SA | BPI | (a), (b) | 6,300,000 | - | 3,950,000 | 6,300,000 | - | 3,950,000 | Mar/2014 |
| Torre Ocidente Imobiliária, S.A. | CGD | (a), (b) | 12,250,000 | - | 1,937,311 | - | - | - | Feb/2017 |
| Torre Oriente Imobiliária, S.A. | CGD | (a), (b) | 12,500,000 | - | 3,081,155 | - | - | - | Feb/2017 |
| Valecenter Srl | Eurohypo | (b), (c) | 6,600,000 | 41,250 | 6,558,750 | 6,600,000 | - | 6,600,000 | Jun/2015 |
| Valecenter Srl | Eurohypo | (b), (c) | 14,250,000 | 89,063 | 14,160,937 | 14,250,000 | - | 14,250,000 | Jun/2015 |
| Valecenter Srl | Eurohypo | (b), (c) | 52,750,000 | 329,687 | 52,420,313 | 52,750,000 | - | 52,750,000 | Jun/2015 |
| Valecenter Srl | Eurohypo | (b), (c) | 24,000,000 | 150,000 | 23,850,000 | 24,000,000 | - | 19,239,682 | Jun/2015 |
| Via Catarina- C.C., S.A. | Eurohypo | (a), (b) | 18,718,000 | 294,000 | 18,424,000 | 19,012,000 | 294,000 | 18,718,000 | Feb/2027 |
| Zubiarte Inversiones Inmobil.,SL. | ING Real Estate Finance | (a), (b) | 27,300,000 | - | 27,300,000 | 29,800,000 | - | 29,800,000 | Jun/2017 |
| Total Bank Loans | 2,055,213,799 | 68,383,904 1,817,652,438 | 1,949,403,165 | 68,519,613 1,682,821,067 | |||||
| Deferred bank expenses incurred on the issuance of bank debt | (1,383,542) | (12,790,693) | (1,354,483) | (11,952,441) | |||||
| 67,000,362 1,804,861,745 | 67,165,130 1,670,868,626 | ||||||||
| Fair value of the financial hedging instruments - asset | - | (36,717,011) | - | (14,696,011) | |||||
(a) These amounts are considered at the control proportion held by the Group (b) To guarantee the repayment of these loans, the Group pledged the real estate properties owned by these companies
(c) To guarantee the repayment of this loan, the Group pledged the shares of this subsidiary
67,000,362 1,769,365,160 67,165,130 1,657,829,013
Fair value of the financial hedging instruments - liability - 1,220,426 - 1,656,398
At 30 June 2008 and 31 December 2007 loans were repayable as follows:
| 31.12.2007 |
|---|
| 68,383,904 68,519,613 |
| 104,105,007 38,493,365 |
| 85,471,171 134,833,935 |
| 61,698,540 49,040,486 |
| 84,991,381 84,511,776 |
| 1,481,386,339 1,375,941,505 |
| 1,886,036,342 1,751,340,680 |
At 30 June 2008 and 31 December 2007, the Group's financial instruments related to interest rate swaps, collars and Non Deliverable Forwards of exchange rate and were as follows:
| 30.06.2008 | 31.12.2007 | |||||
|---|---|---|---|---|---|---|
| Fair value of the financial | Fair value of the financial | |||||
| instrument | instrument | |||||
| Loan | Asset | Liability | Loan | Asset | Liability | |
| Financial hedging instruments: | ||||||
| "Swaps": | ||||||
| Airone / BBVA | 8,000,000 | (198,517) | - | 8,000,000 | (19,177) | - |
| ArrábidaShopping / BBVA | 36,555,000 | (221,670) | - | 37,815,000 | (174,478) | - |
| ArrábidaShopping / BBVA | 19,404,181 | (875,562) | - | - | - | - |
| Colombo / BBVA | 112,750,000 | (1,567,964) | - | 112,750,000 | - | 1,146,099 |
| Shopping Colombo BV/ BBVA | 49,500,000 | - | 1,220,426 | 49,500,000 | - | 503,165 |
| El Rosal / BES | 41,500,000 | (1,755,091) | - | - | - | - |
| El Rosal / BES | 41,500,000 | (1,647,435) | - | - | - | - |
| Estação Viana / BES | 37,632,000 | (2,106,532) | - | 38,640,000 | (1,800,246) | - |
| Freccia Rossa / Unicredit | 33,504,627 | (1,891,601) | - | 33,504,627 | (1,319,534) | - |
| Freccia Rossa / Unicredit | 5,022,970 | (119,408) | - | 3,500,000 | (2,223) | - |
| Gaiashopping / Caixa BI | 52,525,000 | (2,577,954) | - | - | - | - |
| Iberian / Eurohypo | 10,986,000 | (190,877) | - | 10,986,000 | (158,797) | - |
| Iberian / Eurohypo | 8,500,000 | (141,201) | - | 8,500,000 | (116,014) | - |
| Iberian / Eurohypo | 5,712,500 | (99,255) | - | 5,712,500 | (82,573) | - |
| Iberian / Eurohypo | 15,025,303 | (257,492) | - | 15,025,303 | (172,676) | - |
| Loureshopping / BBVA | 72,500,000 | (1,755,352) | - | - | - | - |
| Münster Arkaden / BPI | 128,196,333 | (6,109,182) | - | 129,009,529 | (3,323,290) | - |
| Norteshopping / BPI | ||||||
| Norteshopping / Eurohypo / BPI | 47,082,922 | (2,468,393) | - | 48,246,353 | (1,836,907) | - |
| Norteshopping / Eurohypo | ||||||
| Norteshopping BV / Eurohypo | 43,319,946 | (2,476,816) | - | 43,727,811 | (1,821,659) | - |
| Oeste Retail Park / BES | 6,300,000 | (159,117) | - | 6,300,000 | (5,789) | - |
| Parque Atlântico / BBVA | 17,500,000 | (187,107) | - | 17,500,000 | (45,953) | - |
| Rio Sul / BPI | 32,175,000 | (1,062,517) | - | 32,500,000 | (430,331) | - |
| Serra Shopping / BPI | 11,550,000 | (534,966) | - | - | - | - |
| Sol Retail Park / BES | 3,950,000 | (99,764) | - | 3,950,000 | (3,630) | - |
| Viacatarina / BPI | 18,718,000 | (425,313) | - | 19,012,000 | (361) | - |
| Valecenter / Eurohypo | 6,600,000 | (332,633) | 6,600,000 | (244,636) | ||
| Valecenter / Eurohypo | 14,250,000 | (718,184) | 14,250,000 | (554,214) | ||
| (29,979,903) | 1,220,426 | (12,112,488) | 1,649,264 | |||
| "Collars": | ||||||
| 8ª Avenida / BBVA | 18,500,000 | (1,468,853) | - | 15,500,000 | (690,177) | - |
| Cascaishopping / Santander | 26,000,000 | (942,531) | - | 26,000,000 | (566,057) | - |
| Centro Vasco da Gama / ING | 59,150,000 | (560,484) | - | 60,125,000 | (261,079) | - |
| Dos Mares / BBVA | 20,075,000 | (344,916) | - | 20,525,000 | (96,433) | - |
| Gaiashopping / BBVA | 19,775,000 | (467,472) | - | 19,925,000 | (148,742) | - |
| Luz del Tajo / Hypo Real Estate | 36,560,000 | (776,249) | - | 45,700,000 | (320,000) | - |
| MadeiraShopping / BBVA | 9,000,000 | (80,298) | - | 18,000,000 | (14,464) | - |
| Parque Principado / Calyon | 56,700,000 | (1,250,221) | - | 56,700,000 | (514,571) | - |
| Plaza Eboli / Hypo Real Estate | 30,485,000 | (96,676) | - | 35,775,000 | (4,000) | - |
| Rio Sul / BBVA | 5,000,000 | (83,181) | - | 5,000,000 | - | 7,134 |
| Valecenter / Eurohypo | 52,750,000 | (666,227) | - | 52,750,000 | 32,000 | - |
| (6,737,108) | - | (2,583,523) | 7,134 | |||
| (36,717,011) | 1,220,426 | (14,696,011) | 1,656,398 | |||
| Foreign exchange instruments: | ||||||
| NDF / BNP Paribas | R\$ 11,900,000 | (704,283) | - | R\$ 11,900,000 | (472,398) | - |
| NDF / BNP Paribas | - | - | R\$ 5,200,000 | (197,963) | - | |
| NDF / BNP Paribas | R\$ 13,642,000 | (864,056) | - | R\$ 13,642,000 | (533,447) | - |
| NDF / Citibank | - | - | R\$ 184,397,050 | (2,475,458) | - | |
| NDF / Citibank | R\$ 89,500,000 | (2,781,339) | - | R\$ 14,900,000 | (619,463) | - |
| (4,349,678) | - | (4,298,729) | - | |||
| (41,066,689) | 1,220,426 | (18,994,740) | 1,656,398 |
The fair value of the financial hedging instruments was recorded under hedging reserves of the Group (Euro 19,526,254 and Euro 7,834,221 in 30 June 2008 and 31 December 2007, respectively) and hedging reserves of the minorities (Euro 15,970,331 and Euro 5,205,392 in 30 June 2008 and 31 December 2007 respectively).
As of 30 June 2008 and 31 December 2007, the amounts of Euro 4,349,678 and Euro 4,298,729 relates to the fair value of the Non Deliverable Forwards ("NDF") in the amount of BRL 115,042,000 and BRL 230,039,050. These NDF's were negotiated in 2007, by Sonae Sierra, as a consequence of the share purchaser agreement with the jointly partner in Brazil (DDR), to reinvest the amount of BRL 300,000,000 in Brazil until the end of 2009. Because in this case the conditions for perfect hedging were not fulfilled, the fair value was recorded directly in the consolidated statements of profit and loss.
The non-deliverable forward foreign exchange contracts (NDFs) are stated at their fair value at the balance sheet date, determined by the valuation made by the bank entities with which the NDF's were contracted. The computation of the fair value of these financial instruments was made taking into consideration the actualisation to the balance sheet date of the forward settlement amount of the relevant NDF contract. The settlement amount considered in the valuation, is equal to the reference currency notional amount (foreign currency) multiplied by the difference between the contracted forward exchange rate and the forward exchange market rate to the settlement date as at the valuation date.
The interest rate swaps and collars are stated at their fair value at the balance sheet date, determined by the valuation made by the bank entities with which the interest swaps were contracted. The computation of the fair value of these financial instruments was made taking into consideration the actualisation to the balance sheet date of the future cash-flows relating the difference between the interest rate to be paid by the Company to the bank entity with which the swap or collar was negotiated and the variable interest rate to be received by the Company from the bank entity that granted the loan.
| B/S | P/L | ||||||
|---|---|---|---|---|---|---|---|
| % | 30.06.2008 | 31.12.2007 | 30.06.2008 | 31.12.2007 | 30.06.2008 | ||
| Sierra BV | 49.900% | 495,954,284 | 438,887,375 | (12,863,853) | 82,475,658 | 62,545,107 | |
| SPF | 49.962% | 88,291,971 | - | 1,460,797 | - | - | |
| Brazialian companies | 3.0740% | 8,429,940 | 7,449,517 | 861,196 | 1,513,014 | 546,543 | |
| Others | 1,680,094 | 2,632,673 | (5,599,894) | 1,261,401 | 54,755 | ||
| 594,356,289 | 448,969,565 | (16,141,754) | 85,250,073 | 63,146,405 |
As of 30 June 2008 and 31 December 2007, minorities can be detailed as follows:
During the first half year ended 30 June 2008 Sierra BV has made a share premium increase of Euro 150,000,000 subscribed proportionally by all its shareholders.
On the 28th of July 2008 the Group has concluded an additional sale of the share capital of SPF - Sierra Portugal Real Estate (SPF) corresponding to 8.305% of its share capital. With this closing, Sonae Sierra's interest in the SPF has decreased to approximately 42% and as a consequence, the Group lost, after that date, its control on SPF and its participated companies. Considering as reference date, the 30 June 2008 accounts, the effect of this lost in control in SPF, would represent a decrease in consolidated assets and liabilities of, approximately, Euro 378,000,000 and Euro 275,000,000, respectively.
The accompanying financial statements were approved by the Board of Directors and authorised to issue on the 4 of September 2008.
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.