Consolidated

Transcrição

Consolidated

CONSOLIDATED
ANNUAL REPORT
2009
SAG GEST – Soluções Automóvel Globais, SGPS, SA – Sociedade Aberta
C.R.C. Amadora nº 503219886 – Capital Social: EUR 169.764.398 – Contribuinte Nº 503 219 886
Sede: Estrada de Alfragide, nº. 67 – 2614-519 Amadora
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SAG GEST – Soluções Automóvel Globais, SGPS,SA
Listed Company
Registered Share Capital: EUR 169,764,398
Taxpayer no. 503 219 886
Registered at the Amadora Registrar of Companies under no. 503 219 886
Headquarters: Estrada de Alfragide, nº. 67 – 2614-519 Amadora
Offices: Alfrapark – Edifício SGC, Piso 2
2614-519 Amadora
Tel: 21 359 66 64
Fax: 21 359 66 74
E-mail: [email protected]
Web: http://www.sag.pt
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CONSOLIDATED
MANAGEMENT REPORT
2009
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TABLE OF CONTENTS
I. MACROECONOMIC BACKGROUND
A. INTERNATIONAL CONTEXT
B. PORTUGUESE ECONOMY
C. BRAZILIAN ECONOMY
II. INDUSTRY BACKGROUND – AUTOMOTIVE MARKET
A. EUROPE
B. PORTUGAL
C. BRAZIL
III. BUSINESSES REPORT
A. AUTOMOTIVE DISTRIBUTION AND RETAIL
1 - Automotive Distribution - SIVA
2 – Automotive Retail – New Cars - SOAUTO
B. AUTOMOTIVE SERVICES
1 – Brazil - Unidas
2 – Europe
a) “Renting”
b) Car auctions
C. INDUSTRY
IV. HUMAN RESOURCES
V. ECONOMIC AND FINANCIAL ANALYSIS
VI. OUTLOOK FOR 2010
A. MACROECONOMIC DEVELOPMENT PROSPECTS
1 – International background
2 – Portuguese economy
3 – Brazilian economy
B. AUTOMOTIVE MARKET EVOLUTION FORECAST FOR 2010
1 – Portugal
2 – Brazil
C. GROUP ACTIVITY EVOLUTION FORECAST
4
1 - Automotive Distribution and Retail
2 - Automotive services
a. Brazil - Unidas
b. Europe
i. “Renting”
ii. Car auctions
3 - Industry
VII. FINAL NOTE
5
I. MACROECONOMIC BACKGROUND
A. INTERNATIONAL CONTEXT
The world economy has been facing the worst crisis of the last 80 years since the 3rd Quarter of
2008. Contagion of the financial crisis to the real economy, deterioration of growth and global
demand prospects, scarcity of liquidity in financial markets and the resulting decrease in credit
have caused a serious downturn in the evolution of economic activity.
World GDP saw a historic drop in 2009 (-0.8%, after 3.0% growth in 2008). Developed economies
saw a 3.2% decrease (+0.5% in 2008), while emerging and developing countries grew 2.1%
(+6.1% in 2008). China (+8.7%) and India (+5.6%) saw the strongest growth, while Russia had
one of the worst results (-9.0%).
Table 1. International background – Main indicators
2008
2009 (E)
World GDP (% change)
3.0
-0.8
Euro area GDP (% change)
0.6
-4.0
External demand (goods, % change)
2.5
-14.7
Oil spot price (Brent, USD / barrel)
96.4
62.5
USD/EUR exchange rate (annual average)
1.5
1.4
Short term interest rate (annual average, %)1
4.6
1.2
Euro area inflation rate (HICP, %)
3.3
0.3
Sources: FMI, European Commission and Ministry of Finance estimates
1
3 month Euribor rate
According to European Commission estimates, the Euro zone GDP saw a strong decrease.
Unemployment rose from 7.5% in 2008 to 9.5% in 2009, and inflation was 0.3%, vs. 3.3% in
2008.
To minimize the effects of the crisis, governments of most countries launched programs to
support economic activity that caused a strong deterioration of public finances and created
serious problems for the near future.
Table 2. Budget indicators (GDP %)
Budget Balance
Public debt
20071
2009
20071
2009
Global
-0.5
-6.7
-
-
Euro area
-0.6
-6.4
66.0
78.2
Germany
0.2
-3.4
65.0
73.1
Ireland
0.2
-12.5
25.1
65.8
Greece
-4.0
-12.7
95.6
112.7
Spain
1.9
-11.2
36.1
54.3
Italy
-1.5
-5.2
103.5
114.6
Portugal
-2.6
-8.0
63.6
77.4
1
Sources: European Commission, IMF and OECD, Pre-crisis
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B. THE PORTUGUESE ECONOMY
The Portuguese economy saw a strong decrease in GDP. All the components, with the exception
of public consumption, had a negative performance, particularly as concerns investment and
exports.
Table 3. Portugal – Main macroeconomic indicators
GDP (% change)
Private consumption (% change)
2008
2009 (E)
0.0
-2.6
1.7
-0.9
Public consumption (% change)
1.1
2.6
Investment (GFCF) (% change)
-0.7
-11.8
Domestic demand (% change)
Exports (% change)
Imports (% change)
1.2
-2.9
-0.5
-12.0
2.7
-10.7
Inflation (CPI) – average (% change)
2.6
-0.8
Unemployment rate (%)
7.6
9.5
Public deficit (% GDP)
-2.7
-9.3
Public debt (% GDP)
66.3
76.6
Sources: Ministry of Finance, 2010 Draft state budget
Private consumption decreased 0.9% after a 1.7% increase in 2008 - in spite of an increase in
disposable income as a result of the decrease in interest rates and in spite of a 2.8% decrease in
the employment rate. The savings ratio strengthened the increase that had taken place in 2008,
interrupting the downward trend seen between 2002 and 2008.
Inflation (CPI) was negative for the first time in decades, at the same time that the unemployment
rate rose from 7.6% in 2008, to 9.5% in 2009.
Public deficit reached 9.3% as a percentage of GDP. Public deficit debt increased 10.3 pp, also
as a percentage of GDP.
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C. THE BRAZILIAN ECONOMY
In spite of the adverse macroeconomic environment caused by the crisis in the international
financial markets, the Brazilian economy showed in 2009 a 0.2% increase in GDP, albeit smaller
than the increase achieved in 2008 (5.1%). Following a slowdown in the first semester, domestic
demand showed some signs of recovery during the second half of the year, with private
consumption and investment featuring as the main factors contributing to the growth achieved.
Inflation rate (HICP) in 2009 was 4.3%, a 1.59 pp decrease vs. 2008.
The basic interest rate (SELIC) saw a progressive reduction throughout 2009, from 13.75% at the
beginning of the year, to 8.75% at the end of December.
The labour market showed an increase in the number of jobs during the first three quarters in
2009. However, the last quarter of the year showed a decrease that left the rate of employment at
the same levels as in 2008.
Net public debt represented approximately 42.9% of GDP (37.3% in 2008).
The Trade Balance showed in 2009 a surplus of US$ 25.3 billion, a 0.5 pp increase vs. 2008
(US$ 24.8 billion).
Table 4. Brazil – Main indicators in 2008 and 2009
GDP (% change)
Interest Rate (SELIC) (%)
2008
2009 (E)
5.1
0.2
13.75
8.75
Inflation (HICP) (% change)
5.9
4.31
Public debt (% of GDP)
37.3
42.9
Sources: Unidas
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II. INDUSTRY BACKGROUND – AUTOMOTIVE MARKET
A. EUROPE
In Western Europe (EU-15 + EFTA), sales of passenger vehicles (PC) showed a slight increase
vs. sales in 2008, with clear recovery throughout the year due to strong state support provided to
demand.
While sales of light passenger cars totalled 13,633 million vehicles, light commercial vehicles saw
a -27.9% drop (vs. –12.0% in 2008), falling to 1.308 million units sold (1.813 million in 2008).
Chart 1 – Sales Volume – Light Vehicle Market in Western Europe
(EU-15 + EFTA) (in ‘000s of vehicles)
16,202
14,399
15,970
14,534
14,213
1,804
2002
16,456
1,757
2003
16,491
2004
Light Passenger Vehicles
16,855
15,374
14,794
14,763
14,505
1,922
16,711
13,561
1,986
2005
1,948
2006
2,062
2007
Light Commercial Vehicles
1,813
2008
14,941
13,633
1,308
2009
Total Light Vehicles
Sources: ACEA
Behaviour of the European PC market was highly influenced by the development in the German
market, where sales grew 23.2% boosted by a strong incentive car-scrapping scheme. Excluding
Germany, the market decreased 6.2% during the year.
Volkswagen strengthened its advantage as market leader in Europe, both in terms of groups and
brands. Worldwide, Volkswagen achieved a new record in sales, with 6.29 million units sold,
+1.1% more than in the previous year.
Outside Europe, China became the world’s largest market to the detriment of the USA, with 13.5
million cars sold.
B. PORTUGAL
Sales of light vehicles (LV) reached their lowest level in the last 22 years: 199,919 units, a 25.6%
decrease vs. the volume achieved in 2008.
The Portuguese passenger car (PC) market also reached its lowest level since 1987 – the year
before market liberalization, and saw a 24.5% decrease vs. 2008, with 161,013 units sold.
Sales of light commercial vehicles (LCV) decreased 29.8% to 38,906 units, the lowest level since
1986.
The LCV ABC market (which excludes Passenger Derivatives and Pick-ups) decreased 27.0%, to
22,460 units.
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Chart 2 – Sales Volume – Light Vehicle Market (units)
305,387
258,860
268,875
273,126
259,189
270,237
228,956
192,308
200,241
206,488
194,702
201,816
268,793
213,389
199,919
161,013
76,431
2002
66,552
2003
68,634
2004
Light Passenger Vehicles
66,638
2005
64,487
2006
68,421
2007
Light Commercial Vehicles
55,404
2008
38,906
2009
Total Light Vehicles
Sources: ACAP
The following were the most significant factors affecting the behaviour of the PC market in 2009:
• Increase of approximately 14% of the Vehicle Tax (ISV) in January: this measure
which was announced still in 2008, artificially inflated demand which manifested itself
particularly during the month of December 2008, drastically reducing the number of new
registrations during the first months of 2009;
• New reduction in average levels of carbon dioxide emissions in new vehicles, with the
consequent increase in the amount of taxes affecting the purchase (ISV) and use (IUC)
of vehicles;
• New increase in sales following the car-scrapping scheme, following strong campaigns
by different brands and the boosting of the State program in support of the scheme;
Chart 3 – Sales of PC under the car-scrapping scheme, 2002-2009
10
60,000
25.0%
16.2%
50,000
2.3%
10.00%
34,587
3.0%
1.9%
1.5%
1.6%
20.00%
40,207
7.3%
40,000
30.00%
30,000
0.00%
20,000
-10.00%
14,671
10,000
5,314
3,050
2,928
3,915
-20.00%
5,747
0
-30.00%
2002 2003 2004 2005 2006 2007 2008 2009
Units
% Passenger Vehicles
• Decrease in the weight of sales to companies, with a decrease in the Operational
Vehicle Renting (AOV/OVR) and Rent-a-Car vs. the previous year at a higher rate than
the market overall.
Chart 4 – Diesel powered vehicles in total PC sales
28.9%
28.1%
38.5%
40.3%
40.2%
38.4%
2006
2007
2008
2009
25.0%
26.5%
38.2%
2005
27.9%
27.5%
24.6%
26.0%
29.6%
19.7%
8.7%
2002
2003
2004
Diesel < 1,6 / MTM
Diesel > 1,6 / MTM
Sources: ACAP
The percentage of diesel vehicles in the overall PC market decreased for the 2nd consecutive
year, to 66.3%, due to a higher fiscal burden than the one for gasoline powered vehicles.
In what concerns the evolution in terms of PC segments, lower segments showed again an
increase, thus confirming a growing trend in demand for less polluting vehicles.
The three lower segments represent 77.6% of the market, against 79.5% in 2008 and 75.7% in
2007.
11
Chart 5 – PC Segment 2002-2009
1.3%
1.6%
2.7%
1.3%
1.7%
2.9%
1.5%
2.2%
2.8%
3.0%
2.3%
3.7%
14.8%
14.4%
14.5%
13.2%
34.2%
37.6%
39.5%
36.0%
4.4%
5.8%
35.2%
36.0%
5.4%
2.5%
3.3%
1.4%
5.4%
2.8%
1.7%
2.7%
3.0%
13.4%
12.5%
13.2%
38.3%
34.9%
5.3%
6.9%
7.6%
33.8%
34.3%
35.2%
36.7%
2.7%
4.0%
42.7%
38.1%
2003
2004
A0
2005
A00
A
2006
B
C+D
2007
G
2008
2009
MPV
Sources: ACAP / SIVA
In the LCV segment, the Passenger Derivatives segment, where the tax burden plays a
determining role, is no longer the segment with a larger volume and has now been replaced by
the A segment (vans up to 2 tons). These segments accounted in 2009 for 24.9% and 27.2% of
the total market, respectively. The Pick-up segment recovered the position it held in 2007 (12.8%,
vs. 10.8% in 2008). The ABC market represented 57.7% of the LCV market (55.5% in 2008).
Chart 6 – LCV segments 2002-2009
10.1%
15.6%
17.0%
21.0%
10.0%
9.2%
15.1%
15.3%
16.7%
16.0%
19.8%
23.2%
12.3%
14.4%
13.8%
22.3%
12.8%
16.2%
13.9%
3,2%
10.8%
17.4%
15.7%
2003
38.4%
2004
36.3%
2005
37.3%
2006
16.3%
14.2%
19.4%
22.5%
36.3%
4.6%
12.8%
37.7%
2007
30.5%
2008
27.2%
24.9%
2009
Der.Pass.
A - Vans <2 t
B - Fg+Ch.-Cab. 2-3 t
C - Fg+Ch.-Cab. 3-3.5 t
Pick-ups
A0
Sources: ACAP / SIVA
For the first time ever, in the 2nd semester of 2009 it was possible to ascertain the actual number
of vehicles in circulation. Until then, all there was were estimates made by ACAP.
12
The resulting total of PC in circulation in August 2009 was 4,456,595, and the estimate for the
end of 2008 was 4,408,000 units. Average estimated age was 10 years (9 years in the previous
year).
As for LCV, the global sum was 1,264,528 vehicles, against an estimated 1,200,000 LCV at the
end of 2008.
Total number of vehicles in circulation sold by SIVA was 694,281 vehicles in August 2009,
116,974 units up to 4 years old (segment I), 112.562 aged between 4 and 7 years (segment II)
and 464,745 aged 8 or more (segment III).
Chart 7 – SIVA brand vehicles in circulation by age segment
54.6%
58.2 %
24.7%
67.0%
21.5 %
16.2%
20.7%
20.3 %
16.8%
D ec 07
Dec 08
D e c 09
s egm . I ( < 4 ye ars )
segm . II ( 4-7 years )
se gm . I (> 7ye ars )
C. BRAZIL
Sales of passenger vehicles and light commercial vehicles in the Brazilian market grew 12.7% in
2008, totalling 3.0 million units.
2009 would not have been the best year ever in car sales in Brazil had it not been for the decisive
measure adopted by the Government in December 2008 to decrease the tax (IPI) which applies
to the vehicle’s purchase value.
Chart 8 – Sales Volume – Total domestic sales (millions of units)
3,008
2,670
2,361
1,837
1,283
1,274
2002
2003
1,419
1,534
2004
2005
2006
2007
2008
2009
Domestic Sales (PV & LCV)
Sources: ANFAVEA
13
As it reduced the cost of acquisition of new cars, the temporary reduction of the IPI tax also
caused a direct negative effect on the price of semi-new and used cars.
The following chart (Chart 9) shows the devaluation which occurred between October 2008 and
July 2009, both in the value of new cars and in the value of 1 or 2-year old semi-new cars.
The price of semi-new cars dropped significantly more than the price of new cars, i.e.,
depreciation in the value of semi-new cars increased against the price of a new car.
With stabilization of automotive inflation at a low level, and with increased purchasing power
among Brazilian households, depreciation in the value of semi-new cars in Brazil is likely to move
towards levels seen in other more mature markets, i.e., the low level of depreciation of semi-new
cars seen in Brazil until mid-2008 is not likely to repeat itself in the future.
Therefore, a short-term measure of temporary (IPI) tax reduction had a structural impact in the
Brazilian semi-new and used car market.
This fact was the consequence of the global economic crisis that more significantly affected the
Rent-a-Car and Renting companies’ business in Brazil, with impacts at two levels:
- High losses following a devaluation of these companies’ main asset;
- Significant increase in the rents of Renting contracts,
Chart 9 – Evolution of prices for new and semi-new cars (2007 – 2009)
Source: Molicar
14
III. BUSINESSES REPORT
A. AUTOMOTIVE DISTRIBUTION AND RETAIL
1. Automotive Distribution - SIVA
In 2009, SIVA led simultaneously in the light vehicle and the passenger car markets and
strengthened its leadership position in the latter among importers active in the Portuguese light
vehicle market.
Siva’s total sales of light vehicles reached 24,928 units, a 22.2% decrease vs. 2008 which,
however, was lower than the 25.6% decrease seen in the market overall. Consequently, the
market share of brands represented by SIVA saw a 0.6 pp increase (from 11.9% in 2008 to
12.5% in 2009).
In the PC market, sales of brands represented by SIVA totalled 23,466 units, a 20.0% decrease
vs. 2008 which, in the face of a 24.5% decrease in the market, enabled an increase in market
share from 13.8% in 2008 to 14.6% in 2009.
Still as concerns this market, the Volkswagen brand’s market share increased from 8.2% to 8.5%,
reaching second place in the total ranking, while Audi’s market share progressed from 3.7% to
4.3%, the best ever market share achieved by the brand.
Chart 10 – SIVA Total Sales, 2008-2009 (in units)
32,047
24,928
17,461
13,727
7,818
2,676
VW - VP
6,922
4,082
1,447
VW - VCL
Audi
2008
2009
2,817
Skoda
SIVA - Total **
** Inc. Luxury Brands
Source: ACAP
Volkswagen - Light Passenger Vehicles
In 2009, Volkswagen was the 2nd best selling brand in the Portuguese passenger car market, with
a volume of 13,727 vehicles sold and a market share of 8.5%.
The success of the new Golf, leader of the medium segment since its launch at the end of 2008,
as well as the Golf Variant’s excellent performance was the main factors supporting the Brand’s
very positive behaviour.
The new Polo, which reached the market after the summer, has now established itself as the
benchmark in terms of quality in the small commercial vehicle segment, and has been elected
International Car of the Year and won this same award in Portugal.
The Passat, although at the descending stage of its life cycle, positioned itself still in the 3rd place
of a segment that is led by premium brands.
15
Chart 11 – Volkswagen Sales – Light passenger cars (units and market shares)
30,000
8.0%
7.5%
25,000
20,000
15,415
15,000
7.9%
8.5%
8.2%
15,645
15,881
17,461
2006
2007
2008
13,727
10,000
5,000
0
2005
Units
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
2009
Market Share
Source: ACAP
Volkswagen - Commercial Vehicles
2009 was a particularly difficult year for the Brand because practically the entire product line
entered a run-out stage, at a moment where the macroeconomic environment hit the corporate
segment in a particularly serious way.
Chart 12 – Volkswagen Sales – Commercial vehicles (units and market shares)
5.7%
7,000
6,000
4.4%
4.9%
5,000
4,000
6.0%
4.8%
5.0%
3.7%
3,913
2,908
3,169
2,676
3,000
3.0%
1,447
2,000
4.0%
2.0%
1.0%
1,000
0
0.0%
2005
2006
Units
2007
2008
2009
Market Share
Source: ACAP
Audi
As mentioned above, the Audi brand achieved in 2009 its best market share ever: 4.3% against
3.7% in 2008, with a sales volume of 6,922 units.
This performance was sustained throughout the Brand’s range of models and, particularly, as
regards the A4 and A5 models – which now include the Sportback – and Q5, market leaders in
the relevant segments.
16
Chart 13 – Audi sales (units and market shares)
15,000
13,000
11,000
9,000
7,000
5,000
3,000
1,000
-1,000
3.5%
3.3%
3.4%
7,259
6,422
6,883
2005
2006
2007
Units
3.7%
7,818
2008
4.3% 6.0%
6,922
4.0%
2.0%
0.0%
-2.0%
-4.0%
-6.0%
-8.0%
-10.0%
2009
Market Share
Source: ACAP
Also to be highlighted is the 2009 launch of the new 1.6 TDI engine in the Audi A3 range and of
the new 2.0 TDIe engine version with 136 HP. These engines have evolved significantly in
environmental terms and have now reduced CO2 emissions to 109 and 119 g/km.
Škoda
Škoda sold 2,817 units, a reduction in volume of 31% in comparison with 2008, with a
corresponding share in the PC market of 1.74% (1.9% in 2008). However, in the last quarter, and
following the introduction of new, more efficient engine versions, the Brand’s sales volume
increased on a year-on-year basis, reaching a 2.1% share in the PC market.
Chart 14 – Škoda sales (units and market shares)
7,000
6,000
5,000
4,000
1.8%
3,810
1.8%
3,640
1.9%
3,820
1.9%
1.7%
1.5%
4,082
2,817
3,000
2.0%
2,000
1.0%
0.5%
1,000
0
0.0%
2005
2006
Units
2007
2008
2009
Market Share
Source: ACAP
17
Luxury brands - Bentley and Lamborghini
Bentley
11 new and 2 used Bentley cars were sold, with sales of new cars increasing 10% versus 2008.
Lamborghini
4 new and 1 used Lamborghini cars were sold.
Spares and Accessories
Sales of Spares and Accessories exceeded €74 million, in line with sales made in 2008.
This figure is all the more positive when one considers that the number of vehicles in circulation
less than 8 years old decreased from 45.4% of the total, at the end of 2007, to 32.7% of the total
in December 2009.
The Degree of Service (an indicator that measures the level of Spares and Accessories supplied
by SIVA to its Authorized Repair shop Network) showed a very favourable evolution in the annual
average, above 95%, with important effects on the level of Customer Satisfaction.
During 2009, several actions were implemented that became decisive for the performance
achieved, such as:
• significant strengthening in the promotion and advertising of the Accessories line;
• price repositioning of the more competitive parts;
• launch of new products;
• increased number of Authorized Repair shops benefiting from same-day spare part
ordering and delivery;
• careful monitoring of procedures involving orders for broken down vehicles;
After Sales Service
The After Sales Service, measured in terms of hours sold in the Authorized Repair Shop Network,
saw an increase of 2.3% vs. 2008.
This is a positive result given the adverse economic environment and the reduction in the number
of vehicles in circulation that are less than 8 years old.
Clients
In 2009, SIVA continued work on two strategic projects in the area of Relationship Marketing, with
the aim to increase benefits provided by its Distribution Networks:
•
Increased client loyalty rates for each of the brands represented by SIVA
•
Increased business productivity in the entire Official Dealer network, measured by
sales made to potential Clients.
These programs are in line with the positioning of each of the Brands represented by SIVA. The
customer loyalty program called Customer Care Management (CCM) now has approximately
40,000 Clients who were included in the last two years.
In parallel, SIVA continued to ensure a consistent multi-channel approach between the platforms
of each of the Brands and the proprietary gateway – SIVAonline.pt – for B2C and B2B, privileging
interaction with its partners and Clients.
18
2. Automotive Retail – New Cars - SOAUTO
In 2009, several companies that were fully owned by SAG Gest in the area of Automotive Retail
(J.M. Seguro SA, Castelimo SA, Cervag SA, Cercascais SA and Justocar SA) were merged into
a single entity named Soauto SA.
As a result of this operation, the Automotive Retail area of the Group now includes 4 Companies Soauto SA, Rolporto SA, Loures Automóveis Lda and Rolvia SA – however, there has been no
change to the number of previously existing dealer stands and authorized workshops.
The management model for the Group’s Operational Units in this area was redefined, and now
has a special focus on the Brand / Location combination, with increased separation and
specialization in the management of each of the Brands represented by SIVA, consistently
safeguarding the specificity of the local management and Client proximity.
SAG’s Automotive Retail business operates under two Retail brands – Soauto, for the VW brand,
and Expocar for the Audi brand.
3,992 new cars were sold – a 7.2% decrease vs. the previous year which, however, was
significantly lower than the decrease seen in the total market – and 1,926 used cars (17.8% more
than in the previous year).
The volume of hours sold at Workshops totalled 211,031, a 2.7% increase vs. 2008.
19
B. AUTOMOTIVE SERVICES
1. Brazil - Unidas
In 2009, and subject to the economic and financial environment, Unida’s business activity was
marked by a strategy that focused on profitability to the detriment of growth.
Fleet Management
The Fleet Management (Renting) business, which accounts for approximately 75% of Unidas'
total revenue, showed an increase in net billings, from BRL 218 million in 2008 to BRL 241 million
in 2009, which absorbed the increased depreciation costs and resulted in an increase in the
global margin.
It was thus possible to increase the return on the average asset allocation to this business, which
decreased 2.1% vs. the average fleet in 2008.
Chart 15 - Fleet management - No. of vehicles – Average contract number
400,000
25,089
350,000
20,715
300,000
250,000
15,216
100,000
217,789
10,164
200,000
150,000
24,553
126,632
241,345
30,000
25,000
20,000
15,000
10,000
156,283
5,000
89,944
0
50,000
-5,000
0
-10,000
2005
2006
2007
Gross Turnover
2008
2009
Average Fleet
Source: Unidas
7,743 new renting contracts were signed, 50.7% less than the 15,701 signed in 2008. However,
5,166 existing contracts were extended, since the increase in the depreciation of semi-new cars
in their first year moved the optimum point of average depreciation to more extended terms.
Rent-a-Car and Franchises
The company’s own Rent-a-Car business network saw a significant increase in consolidated
revenue, based on an action strategy focused on the more profitable segments (Tourism and
Private clients) and privileging the use of web channels, reducing the unit cost per booking.
A partnership was established with GOL (a Brazilian airline) under the “Fly and Drive” concept,
which enables GOL passengers to get discounted rates for Unidas car rentals.
20
Chart 16 - Rent-a-Car – Net Billing and No. of daily rentals
1,401.9 1,400.0
170,000
150,000
982.9
130,000
529.1
800.0
93,032
593.7
600.0
64,735
70,000
50,000
1,000.0
813.4
110,000
90,000
1,200.0
131,006
44,928
400.0
53,843
200.0
30,000
0.0
2005
2006
2007
2008
Gross Turnover ($R' 000)
2009
Daily Rentals
Source: Unidas
As was the case in the own network, the business of the franchisee network also saw a positive
performance (Chart 17), with the number of dailies increasing from approximately 600,000 in
2008 to approximately 800,000 in 2009
Chart 17 Fleet – Franchises – No. of daily rentals and no. of shops
120
597.7
100
80
800.9
357.9
173.8
66
68
54
60
39
1,000.0
800.0
600.0
400.0
200.0
0.0
-200.0
40
-400.0
-600.0
20
-800.0
-1,000.0
0
2006
2007
2008
Franchised Stores
2009
Daily Rentals
Source: Unidas
21
Semi-New
The semi-new car business was affected by the macroeconomic environment affecting demand
during the first months of the year. Demand picked up around mid-year and returned to levels
existing before October 2008.
However, and as explained in point II C, the fact that most affected Unidas’s semi-new car
business in 2009 was the reduction in the price of semi-new and used cars in the Brazilian market
which occurred after October 2008 and continued throughout most of 2009, with prices stabilizing
only from last October onwards.
Although devaluation of Unidas’s vehicles was slightly lower than the 16% average for the market
as a whole, the Company’s asset value nevertheless decreased around 14.5% in 2009, with a
direct impact on its costs and affecting its results.
In 2009, 15,592 vehicles were sold, of which 12,528 (80.3%) directly to End Customers and 3,064
(19.7%) to used car dealers.
Chart 18 – Sales of semi-new cars
3,064
2,334
2,497
2,354
2,317
11,083
9,792
4,199
5,003
2005
2006
2007
Private Consumers
2008
12,528
2009
Dealers
Source: Unidas
2. Europe
a) “Renting”
The Group’s business in the European Renting market (Operational Vehicle Renting, or
AOV/OVR) is conducted under the partnership established in 2006 with Santander Consumer
Finance. This partnership, in which SAG holds a 40% stake, is present in Portugal (through
Santander Consumer Multirent, SA), in Spain (Santander Consumer Iber-Rent SL) and in
Poland (Santander Consumer Multirent Sp.z.o.o.).
This business area was negatively affected in 2009 by the behaviour of two critical variables
which, in spite of geographical diversity, evolved in a similar manner in the three countries
where the Group had a presence:
22
•
Price evolution in the used and semi-new car market: the strong contraction of the
automotive market in Portugal and in Spain caused a strong pressure on prices of
used and semi-new cars, and prices decreased gradually throughout the year.
Consequences of this situation were (a) losses (actual or potential) were posted
which affected in particular existing portfolios, where the residual value of the cars
under renting contracts had been established on more favourable economic
conditions, and (b) loss of competitiveness of the Renting business vis-à-vis other
alternative methods for buying or using cars, in view of the increase in the amount of
the monthly instalments, since residual values defined for new contracts considered
more conservative amounts than those used until then.
•
Increased credit risk: most of the Clients in this business are, both in Portugal and
Spain, small or medium sized companies that were particularly affected by negative
developments in the economic environment and which came to face financial
difficulties. Consequently, the rate of default in Renting contracts increased
substantially, and this determined a significant reinforcement of provisions, in
Portugal, Spain and Poland.
These two variables greatly affected the portfolio and profitability of the three units that
contributed negatively to the Group’s consolidated result.
Below is the evolution of the portfolio and results of the three Companies in which the Group
holds a stake:
Table 5 – Portfolios and Results - Renting
2008
2009
% Variation
Santander Consumer Iber-Rent (Spain)
Portfolio – No. of contracts
Portfolio – Invested capital (Eur 000's)
Net result (100%) (Eur 000's)
16,633
12,590
(24.3)
246,353
148,570
(39.7)
2,289
(2,503)
(209.4)
10,917
10,159
(6.9)
180,607
155,551
(13.9)
2,027
(2,924)
(244.3)
2,571
225.4
126,712
170.4
(1,375)
(79.9)
Santander Consumer Multirent (Portugal)
Portfolio – Invested capital (Eur 000's)
Net result (100%) (Eur 000's)
Santander Consumer Multirent (Poland)
790
Portfolio – Invested capital (PLN ,000)
Net result (100%) (PLN ,000)
(764)
b) Car auctions
The Group established a partnership with Manheim – the world’s largest remarketing
operator – for the development of car auctions in Portugal through Manheim Portugal, a
Company where the Group holds a 40% minority stake.
Activities by this Company that, in 2009, completed its second full year of operations in
Portugal were conducted in a market context defined by short supply of used cars.
This situation was particularly a result of the generalized contract extension policy adopted by
major Suppliers in this market (particularly those operating in the Renting business).
As a consequence, the number of vehicles available for auction in 2009 saw a decrease of
approximately 17.7% vs. the previous year, while Company efficiency (measured by the
23
relationship between the number of vehicles sold and vehicles put up for auctioning) showed
significant improvement that brought it closer to international industry standards.
The contribution of Manheim Portugal to the consolidated result was still not very significant,
given the maturity stage of the unit and the above-mentioned operational difficulties.
C. INDUSTRY
Grupo SAG’s industrial activities are conducted by Ecometais, a company acquired in 2007
that operates in the recycling (fragmentation) of end of life vehicles and other types of scrap.
Ecometais operates in a market which, apart from an informal component that naturally
affects the Companies’ competitiveness, essentially functions based on the evolution of
commodity prices such as the metals originated by the fragmentation process.
In 2009, prices of metals showed high levels of volatility that seriously affected the
Company’s business and profitability, and contributed negatively to the Group’s consolidated
results.
During 2009, Ecometais processed a total of 52,123 tons of raw materials, corresponding to
39,462 tons of metallic products (in particular, fragmented iron). These volumes represent
decreases of 20% and 5.5%, respectively, vs. the volumes achieved in 2008.
IV. HUMAN RESOURCES
2009 was strongly conditioned by the downturn that affected the automotive industry in general
and led to the need to restructure some areas and businesses.
In seeking efficiency and business optimisation, the Human Resources area supported the
different restructuring projects at Group level and at the level of the different companies it
comprises.
To reduce red tape, some procedures were reviewed and others facilitated so that each
employee and manager can focus on the core of his/her business and job.
Furthermore, in 2009 the “Gradings” project was implemented. This project of global scope and in
line with market practice created transversal internal levels, therefore adopting a vision and a
global perspective in the management of each Employee’s compensation package, which
comprises fixed and variable components, as well as benefits (Total Compensation package).
24
V. ECONOMIC AND FINANCIAL ANALYSIS
Total Revenue and Margins
Grupo SAG’s Consolidated Turnover in 2009 totalled Eur 874 million, a 7.7% decrease vs. 2008.
Table 6 – Consolidated revenue by business area
Sales
Consolidated sales decreased 11.9% (approx. Eur 98 million) vs. 2008, in the context of a strong
contraction in economic activity in the geographical areas where the Group has a presence
(Portugal and Brazil).
It is worth to highlight the positive evolution of sales in the Retail business area in Portugal that
grew 1.0%, and in the Automotive Services business area in Brazil (corresponding to sales of
semi-new and used vehicles by Unidas) which increased 4.6%.
25
On the other hand, there was a significant decrease in sales in the Distribution area that reached
16.5% vs. the previous year. However, it must be said that this reduction occurred in a context
where the market decreased 25.6% and where the number of vehicles registered by SIVA saw a
22.2% decrease.
Sales made by the areas active in the Portuguese semi-new and used car market (Specialized
Retail and Residual Value Unit) also saw a very substantial decrease vs. 2008 (a decrease of
approximately Eur 12.7 million), reflecting a strategic change of deliberate scaling-down of the
Group’s involvement in the face of the market’s inherent risks and adverse macro-economic
conditions.
Services
The total for services which, in 2009, corresponded to 17.3% of the Consolidated Turnover
(13.3% in 2008), increased in absolute value approximately Eur 24.8 million.
Unidas’s business accounted in 2009 for approximately 90% of the total for Services, and had a
16.1% increase vs. 2008. This growth is mainly due to increase in the Rent-a-Car business,
which resulted in a 34.4% increase in billings. The Renting business was conditioned by the
reduction in its contract portfolio but, even under these circumstances, it showed an increase in
billings of approximately 11.2% resulting from the reduction in the residual value of semi-new and
used cars on the one hand and, on the other hand, from an increase in margins.
A favourable evolution in the Brazilian Real’s exchange rate vs. the Euro also contributed to the
above-mentioned increases.
Table 7 – Consolidated Income Statement
26
Operating Expenses
Operating Expenses totalled Eur 138.1 million in 2009, a 1.2% increase (Eur 1.7 millions) vs. the
previous year.
In 2009, the need for advertising support for the launch of the Brands represented by SIVA was
significantly lower than in 2008 and, consequently, the relevant business costs decreased
approximately Eur 6.1 million, an amount that roughly corresponds to the decrease seen in the
OSS – Consolidated Commercial Expenses.
On the other hand, the average time of permanence in the fleet and the average age of Unidas’s
vehicles saw an increase, particularly due to the high number of contract extensions in the
Renting business. As a consequence, there was a natural increase in the costs of vehicle
maintenance that basically explains the largest part of the increase seen in OSS – Car Expenses.
The OSS – Structural Costs item (which totalled Eur 34.8 million in 2009, a 6% increase or Eur
2.0 million more) includes business support expenses.
Payroll Costs saw a 3.7% decrease (Eur 1.9 million) vs. 2008, in spite of the fact that, in 2009, the
Group incurred in restructuring costs which totalled around Eur 3.0 million.
EBITDA
With the above mentioned increase in weight of the services area, namely at Unidas,
Consolidated EBITDA increased 22.4% vs. 2008, totalling Eur 95.1 million, with the EBITDA
margin reaching 10.9% of Consolidated Turnover (8.2% in the previous year).
Depreciation and Provisions
Depreciation (Eur 48.4 million) increased approximately Eur 27.6 million vs. 2008 (Eur 20.8
million), essentially reflecting the deterioration in prices of used and semi-new vehicles in the
Brazilian market, together with the IPI tax exemption that was temporarily introduced in Brazil
during the 2nd Semester of 2008 with the aim of boosting new car sales. At that time, the said
exemption was expected to end during the 1st Quarter of 2009.
That situation had already caused a negative impact on Unidas’s results in 2008 which reflected a
strengthening of the depreciation posted during that financial year totalling approximately BRL 17
million. However, and unlike what was to be expected, the exemption was extended throughout
the entire year in 2009, which caused a continued deterioration of the prices of used and seminew vehicles – which is estimated to have reached 16%.
Due to this situation, the increased depreciation expense posted in the 4th Quarter of 2008 proved
to be inadequate, and losses posted in car sales in 2009 totalled approximately BRL 47.7 million
(approx. Eur 22.4 million in 2008).
Due to their weight in the structure of the Consolidated Financial Statement, the strengthening in
depreciation of Unidas’s fleet had a decisive impact on the consolidated results of SAG Gest in
the 2009 financial year.
Vehicles acquired by Unidas during the 2009 financial year were depreciated according to
depreciation rates that were significantly higher that those used so far, in order to adequately
reflect market conditions existing at the time of their acquisition.
Net Financial Income / (Expenses)
Consolidated Net Financial Income / (Expenses) in 2009 (Eur -56 million) represents a 6.3%
increase in costs (Eur 3.3 million) vs. 2008.
27
Table 8 – Consolidated Net Financial Income / (Expenses)
It is worth highlighting that negative contributions from Partly Held Companies operating in the
Operational Vehicle Renting (OVR) segment were particularly the result of the significant
degradation in prices of used vehicles in the markets where they operate (Portugal, Spain and
Poland), as well as of an increase in default levels, which caused significant increases of
provisions for bad debts by those Partly Held Companies.
Interest costs supported by Unidas increased 5.9% vs. the previous year, a direct consequence
of the evolution of financing conditions in Brazil, namely the increase in credit spreads that had
started already in the 2nd Semester of 2008.
In Portugal, in 2009, finance conditions saw significant changes, due to i) the decrease in market
interest rates, and ii) increased credit spreads. In the case of Grupo SAG, the effect of the
reduction of reference interest rates exceeded the increase in costs resulting from the general
worsening of credit spreads applied to the lines used by the Group. For this reason, net financial
costs incurred in Portugal decreased approximately 13.8% vs. the previous year.
Consolidated Net Profit
Consolidated Net Result assignable to SAG was negative by approximately € 6.9 million, which
corresponds to a decrease of approximately € 7.9 million vs. the result achieved in 2008 (Eur 1.1
million).
Balance Sheet and Financial Structure
The decrease in business growth in Brazil reflected itself in a decrease of approximately BRL
63.2 million in the amount of Fleet Investment. The decrease in Net Fixed Assets was even
higher (BRL 92.7 million) as a consequence of the FY 2009 increased depreciation, following a
negative evolution of used cars market value. It is worth noting that strong the appreciation of the
Brazilian Real vs. the Euro meant that, on the Consolidated Balance Sheet, Unidas’s Net Assets
increased by Eur 60 million.
The above-mentioned effect, together with a strong reduction in Current Assets led to a BRL
133.7 million reduction in Unidas’s bank debt.
28
In Grupo SAG’s Consolidated Balance Sheet (in Euros), debt engaged locally by Unidas
accounts for 45.5% of the total and saw an increase of € 14.2 million, which is the result of (i) a
reduction of Eur 53.3 million – the equivalent of the BRL 133.7 million reduction in the debt
amount expressed in Reals, and (ii) the increase of Eur 67.5 million as a consequence of the
exchange rate variation.
The evolution of SAG’s automotive business in Portugal made it possible to reduce inventories by
approximately Eur 70 million, with a net release of funds through a reduction of Current Assets of
approximately Eur 18.6 million. Funds generated by operations, together with approximately Eur
56,4 million new borrowing facilities obtained at Financial Institutions, made it possible to make
short-term investment transactions, under market conditions, involving other Companies included
in the SGC Group.
SAG’s consolidated total debt rose to Eur 531.5 million, a Eur 70.6 million increase vs. December
2008, as follows (amounts in millions of Eur):
•
Consolidated Debt as at 31/12/08
460.9
•
Eur equivalent of Unidas’s debt reduction
(53.3)
•
Impact of BRL revaluation on Unidas’s debt
67.5
•
Short-term transactions involving SGC Group Companies as at 31/12/09
75.0
•
Reduction of SAG’s structural debt in Portugal
(18.6)
•
Consolidated Debt as at 31/12/09
531.5
The SAG-2004 and the SIVA-2004 bonds, totalling Eur 58 million, matured in June 2009. These
borrowing facilities were totally refinanced through short-term lines in the domestic market. Also
in Brazil the USD 60 million Eurobond issue matured in October 2009, and was refinanced
through short-term credit lines.
Engagement of these new short-term credit lines occurred in a context of reduced liquidity in the
financial markets and high spreads, which particularly affected medium and long term debt
issues. Consequently, SAG chose to resort to short-term debt issuing which, apart from
representing an immediate reduction of the relevant financial expenses, could enable the Group
to benefit from developments in the economy that may take place in the financial markets and
enable access to more adequate financing structures.
Consolidated Net Equity on 31 December 2009 is € 97.8 million, showing a positive variation of
approximately 58.3% (€ 36.0 million) vs. 2008, in spite of the negative Results achieved in 2009.
This substantial increase is the result of favourable impacts from the conversion into Euros of the
Group’s investment in Unidas (whose functional currency is the Brazilian Real) and is linked to
the appreciation of the Brazilian Real’s exchange rate vs. the Euro. In comparison with the
position at the end of 2008, this situation generated an increase in Consolidated Net Equity of
approximately Eur 44.1 million.
29
Financial Ratios
The evolution of the major consolidated financial ratios was as follows:
Table 9 – Financial ratios
Profitability ratios are naturally affected by the amount of the negative net result, originating from
the above described situations.
In what concerns debt ratios, there is a positive evolution in the “Interest Coverage” (EBITDA /
Net Interest) ratio, due to the positive evolution of Unidas’s and SIVA’s EBITDA. The ‘Net Debt /
EBITDA’ ratio only had a slight deterioration vs. last year’s amount.
Ratios regarding debt structure reflect the consequences of the strategy adopted for the
refinancing of debt maturities occurred in 2009, as explained above.
The following amounts were considered in the calculation of the above ratios:
Table 10 – Basis for calculation of financial ratios
30
Shareholder Profitability and Dividends
The Board of Directors will not propose the payment of any dividend for FY 2009 given the
negative results achieved.
Table 11 – Shareholder ratios
Description of the stock’s market performance
On the first business day of the year, SAG’s stock price was € 0,98, having reached the price of €
1,30 on the last day at the stock exchange, a valuation of 32.7%. The average daily number of
traded stock was 23,594 during FY 2009.
Chart 19 – SAG stock price evolution at the Stock Exchange
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
ec
-0
9
D
ov
-0
9
N
O
ct
-0
9
Se
p09
Au
g09
Ju
l- 0
9
Ju
n09
ay
-0
9
M
Ap
r- 0
9
M
ar
-0
9
Fe
b09
Ja
n09
0.00
31
VI. PROSPECTS FOR 2010
A. MACROECONOMIC DEVELOPMENT PROSPECTS
1. International Background
In an environment with yet higher levels of uncertainty than before, institutions and analysts in
general are expecting a recovery in world economy in 2010.
Table 12 – International context – Main indicators in 2009 and 2010
2009 (E)
World GDP (% change)
1
2010 (F)
-0.8
3.9
Euro area GDP (% change)
-4.0
0.7
External demand (goods, % change)
-14.7
1.7
Oil spot price (Brent, USD/barrel)
62.5
76.6
USD/EUR exchange rate (annual average)
1.4
1.4
1.2
1.2
Short term interest rate (annual average, %)
2
Sources: Ministry of Finance, Draft State Budget for 2010, January 2010
1
2
Sources: International Monetary Fund 3 month Euribor rate
The main risks identified regarding how strong the recovery will be are stagnation in private
demand in developed economies, scepticism regarding interventions in credit institutions and
deterioration of public finances.
The short-term interest rate will maintain its historically low levels following efforts by national
governments to re-launch the economy.
2. The Portuguese Economy
Reflecting some recovery signs, albeit modest in global demand, the Ministry of Finance and
the Bank of Portugal predict that GDP growth in Portugal will be 0.7% in 2010.
Table 13. Portugal – Main indicators in 2009 and forecast for 2010
2009 (E)
2010 (F)
GDP (% change)
-2.6
0.7
Private consumption (% change)
-0.9
1.0
Public consumption (% change)
2.6
-0.9
Investment (GFCF) (% change)
-11.8
-1.1
Exports (% change)
-12.0
3.5
Imports
-10.7
1.5
Inflation (HICP) – average (% change)
-0.8
0.8
Unemployment rate (% of labour force)
9.5
9.8
Public deficit (% GDP)
-9.3
-8.3
Public debt (% GDP)
76.6
85.4
Sources: (Min. Finance, 2010 Draft state budget, January 2010
32
This growth will reflect improved foreign demand that has occurred since the 2nd semester of
2009. Different components will, in general, show a positive behaviour, with the exception of
public consumption.
There will be increased need for financing for the economy due to the increase deficit in the
balance of goods and to the deterioration of the income balance following both the increased
external indebtedness and the expected increase in interest rates.
Inflation will increase to 0.8%, reflecting an increase in raw materials in international markets
and the expected economic recovery expected in Portugal and its major partners.
Employment will show a further decrease in 2010, causing a new increase in the
unemployment rate and following the usual lag vis-à-vis the economic cycle.
3. The Brazilian Economy
The Brazilian economy is expected to post a high growth rate, recovering the path it had
been following until the 3rd Quarter of 2008.
GDP growth is likely to be around 5%, mainly supported by private consumption.
This economic growth will bring with it increased inflation, which should be of around 4.5%,
and which is influenced by increased commodity prices and resulting from a decrease in
excessive existing production capacity.
This inflationary scenario will probably bring about an increase in interest rates (SELIC)
throughout 2010, and it is expected to reach 11% at the end of the year.
Table 14. Main indicators in 2009 and forecast for 2010
2009 (E)
2010 (F)
GDP (% change)
0.2
5.0
Interest Rate (SELIC) (% )
8.75
11.0
Inflation (HICP) (%)
4.3
4.5
Sources: Unidas
B. AUTOMOTIVE MARKET EVOLUTION FORECAST FOR 2010
1 - Portugal
Markets will remain stagnated in 2010 due to the historically low levels seen in the previous
years. Forecasts for 2010 for Light Vehicles (LV) sales is 199.000 units, with volumes for both
the PC (161,000 units) and LCV (38,000 units) markets remaining unchanged.
The Government’s draft state budget for 2010 has established greater environmental
restrictions for access to the car-scrapping scheme, with reduction of the minimum CO2
emission level from de 140 g/km to 130 g/km, apart from a request for legislative
authorization to replace the value-added tax on the Vehicle Tax (ISV) with a corresponding
increase in the latter, which should not have any impact on car sales prices, nor on the total
of the significant tax burden which, in Portugal, applies to motor vehicles.
2 – Brazil
The automotive sector in Brazil is expected to contribute positively to private consumption
growth, although at a considerably more moderate pace than in the previous year.
In fact, prospects of strong acceleration of the Brazilian economy in 2010, together with
inflationary pressures should dictate a suspension of tax incentives earlier provided by the
Brazilian government.
33
The price of Semi-new cars which stabilized in October 2009 is expected to remain at that
level in 2010.
34
C. GROUP ACTIVITIES EVOLUTION FORECAST
1. Automotive Distribution and Retail
The different Brands represented by SIVA generally expect to strengthen their market share
because they consider that they have conditions (such as the perceived value of the Brands
and strategies targeting Client satisfaction and loyalty) to better face the market’s adverse
conditions, and therefore can look at the future with confidence.
Another factor that is expected to contribute decisively to this expected development is the
new launches scheduled for 2010. Business of the Group’s automotive retail companies will
be in line with the business performance of SIVA brands.
2 - Automotive services
a. Brazil / Unidas
For 2010, Unidas will continue its line of action focusing on profitability to the detriment of
pure growth, developing a strategy aiming at efficiency gains through intensive technology
usage, streamlining of processes and strengthening of its competitive positioning in the
market.
b. Europe
i. “Renting”
No substantial changes are expected to take place in this business area in Spain and
Portugal following the loss in competitiveness of the ‘renting’ business vs. other
alternatives for financing the acquisition or usage of vehicles.
In Poland, and due to the reduced dimension of the operation, a moderate pace of growth
is expected to continue due to credit risk related aspects.
ii. Car auctions
Manheim Portugal will continue to increase its relative weight in the market in which it
operates, increasing its efficiency levels.
3 - Industry
The evolution of the market in which Ecometais operates has progressively reduced the initial
prospects of its logical integration in the automotive value chain. Together with the
unsatisfactory results achieved by the Company since it was acquired by SAG, this situation
demands that the strategy defined for the Company be reconsidered, as well as its
integration in the Group’s business portfolio.
35
VII. FINAL NOTE
In compliance with the legal and statutory provisions, the Board of Directors submits to the
Shareholders’ approval the Annual Consolidated Report 2009, in the firm belief that, to the
best of its knowledge, information contained in it was prepared in compliance with the
applicable accounting standards and gives an accurate and adequate image of the
Company’s assets and liabilities, financial situation and results of SAG Gest and of the
companies included in the consolidation perimeter, and that the Management Report
accurately reflects the development of business, performance and position of SAG Gest and
of the companies included in the consolidation perimeter and contains a description of the
main risks and uncertainties that confront them.
Alfragide, 1 April 2010
THE BOARD OF DIRECTORS
João Manuel de Quevedo Pereira Coutinho
Esmeralda da Silva Santos Dourado
Carlos Alexandre Antão Valente Coutinho
Fernando Jorge Cardoso Monteiro
António Carlos Romeiras de Lemos
Rui Eduardo Ferreira Rodrigues Pena
José Maria Cabral Vozone
Pedro Roque de Pinho de Almeida
36
CONSOLIDATED FINANCIAL
STATEMENTS
2009
37
38
39
40
41
NOTES
TO THE CONSOLIDATED
FINANCIAL STATEMENTS
2009
42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2009
1. GENERAL INFORMATION REGARDING THE GROUP’S ACTIVITY
The Consolidated Financial Statements of SAG Gest as at 31 December 2009 have been
approved and authorized for presentation by the Board of Directors on 28 February 2010.
The Financial Statements are consolidated in Portugal.
Grupo SAG, of which SAG Gest - Soluções Automóvel Globais SGPS, SA (SAG GEST SGPS
SA in short) is the Parent Company, comprises Companies operating in different business areas,
in Portugal, Spain, Brazil and Poland, which include:
•
distribution and retail operations in Portugal of the Volkswagen, Audi, Škoda, Bentley
and Lamborghini brands
•
sales of multi-brand used cars
•
preparation of new vehicles and body repairs
•
Operational Vehicle Renting– medium and long-term car rental products and services
without driver
•
rent-a-car services
•
insurance brokerage
•
semi-new and used car auctions
•
recycling of end-of-life vehicles
SAG GEST SGPS SA is a holding Company with headquarters in Estrada de Alfragide, 67 –
Alfragide, Amadora.
2. SUMMARY OF THE MAIN ACCOUNTING POLICIES
2.1 Bases for preparation
Consolidated Financial Statements were prepared on the basis of historical cost, except as
regards Land and Buildings and Derivative Financial Instruments that are measured at a fair
value.
The Consolidated Financial Statements, as well as the Separate Financial Statements of the
Companies that fall within SAG GEST SGPS, SA's current scope of consolidation concern the
period ending on 31 December 2009, and were prepared using accounting policies that are
consistent among them.
Exceptions are Globalrent – Sociedade Portuguesa de Rent-a-car, Lda. and Unidas, S.A., where
vehicles allocated to the operation are recognized as basic equipment due to the fact that these
Companies have a specific character that differs from the operations of the remaining companies
included in the consolidation.
Hence, the criterion and depreciation rates used in connection with assets used by said
Companies and included in the Consolidated Financial Statements are different from those that
are used in depreciating assets by the remaining Companies included in the consolidation
perimeter. Such depreciation criteria are, however, applied uniformly to all Group Companies
conducting similar business, as is the case of the above Companies.
All amounts shown in the Notes herein are expressed in Euros, except where otherwise stated.
43
2.2 Compliance statement
The Consolidated Financial Statements were prepared according to the International Financial
Reporting Standards (IFRS).
2.3 Consistency statement
The adopted accounting policies are consistent with those applied in the annual Financial
Statements as at 31 December 2008, except for those affected by the adoption, as of 1 January
2009, of the new Standards and Interpretations and of the amendments to existing standards,
namely:
•
IFRS 8 – Operational Segments
•
Amendments to IAS 1 – Presentation of Financial Statements
•
Amendments to IAS 16 – Property, Plant and Equipment
•
Amendments to IAS 27 – Separate and Consolidated Financial Statements
•
Amendments to IAS 39 – Financial Instruments: Recognition and Valuation
•
Amendments to IFRS 7 – Financial Instruments: Disclosures
With the exception of change relating to IAS 16 – Property, Plant and Equipment, which
impacted the Consolidated Financial Statements as described on Notes 8 and 12, and which
required the restatement of the Financial Statements related to previous periods (without any
change being made to the Group’s consolidated results), the adoption of these changes did not
have any significant material effect on the Group’s equity and consolidated results.
2.4 Bases for Consolidation
After 1 January 2009
The Consolidated Financial Statements include the accounts of SAG GEST SGPS SA and its
Affiliates where it holds a direct and majority stake or controls management. The Financial
Statements of these companies were included in the Consolidated Financial Statements using
the integral consolidation method. Affiliates where the Group has a significant influence, namely
Santander Consumer Iber-Rent SL, Santander Consumer Multirent, Sp.z.o.o., Autolombos, Lda.,
CRE SGPS and Manheim, Lda. were consolidated using the equity method.
Affiliates are consolidated according to the integral method from the date when the Group
obtains control until the date when the control is lost. Financial Statements of these Affiliates are
prepared with reference to the same period of the Financial Statements of the Parent Company
and use consistent accounting principles between them.
Changes in the percentage of ownership in those Affiliates without loss of control are booked as
capital transactions, in accordance with the terms of IAS 27.
Losses are assigned to minority interests even if that results in a negative minority interest.
When, as a consequence of completion of a transaction, the Group loses control of an Affiliate,
the following procedures are adopted:
•
Derecognises the assets (including goodwill) and liabilities of the subsidiary
•
Derecognises the carrying amount of any non-controlling interest
•
Derecognises the cumulative translation differences, recorded in equity
•
Recognises the fair value of the consideration received
•
Recognises the fair value of any investment retained
44
•
Recognises any surplus or deficit in profit or loss
•
Reclassifies the parent’s share of components previously recognised in other
comprehensive income to profit or loss
Prior to 1 January 2009
In comparison to the above mentioned requirements which were applied on a prospective basis,
the following differences applied:
•
Non-controlling interests represented the portion of profit or loss and net assets that
were not held by the Group and were presented separately in the consolidated income
statement and within equity in the consolidated statement of financial position,
separately from the parent shareholders’ equity. Acquisitions of non-controlling interests
were accounted for using the parent entity extension method, whereby, the difference
between the consideration and the book value of the share of the net assets acquired
were recognised in goodwill.
•
Losses incurred by the Group were attributed to the non-controlling interest until the
balance was reduces to nil. Any further excess losses were attributable to the parent,
unless the non-controlling interest had a binding obligation to cover these.
•
Upon loss of control, the Group accounted for the investment retained according to its
proportionate share of net asset value at the date control was lost.
Inter-company balances and significant inter-company transactions (with their corresponding
income and expenses) between the Companies included in the consolidation perimeter were
eliminated in the consolidation process.
Differences between the book value of financial investments and the acquisition values of the
Companies consolidated through the integral consolidation or equity equivalence method are
recognized as follows:
•
Where the acquisition price is higher than the acquired company’s equity value, such
difference is booked as goodwill;
•
Where the acquisition price is lower than the acquired Company’s equity value, such
differences affect Net Income in the financial year in which the acquisition takes place.
Differences determined on the date of the first consolidation, regardless of their (positive or
negative) nature, were recognized directly against Consolidated Shareholders Equity.
The consolidation of Companies using the integral consolidation or the equity method originated
the recognition of the following goodwill amounts:
•
Goodwill credit, included as Intangible Assets (Note 9) arising from Companies
acquired between 1999 and 2009:
45
•
Goodwill assets, reflected in Net Equity, and resulting from the first consolidation
performed in 1998:
The amounts representing third party stakes are included in the Consolidated Financial
Statement under “Minority Interests”.
Minority interests represent the interests of unrelated third parties in affiliates Rolporto –
Comércio e Indústria de Automóveis, S.A., Inovision – Tecnologias de Informação, S.A. and
Rolvia - Sociedade de Automóveis, SA. and Loures Automóveis, S.A.
The Group applied IFRS 3 – Business Combinations, effective 1st January 2004. From that date,
amortization of goodwill and Consolidation Differences generated by the acquisition of the
aforementioned investments is no longer considered. The value of goodwill and Consolidation
Differences became subject to impairment tests on an annual basis. The amount shown in the
Consolidated Balance Sheet is considered to be close to the relevant fair value.
From 1 January 2009 onwards, the Group has applied the revised IFRS 3. Acquisitions of
businesses are booked using the purchase method, the cost being measured by the sum of the
fair value at the date of acquisition, the consideration paid and the value of any minority interest
in the acquired entity.
Minority interests are valued at the fair value or according to the acquired proportion of the
identifiable net assets. Acquisition related expenses are recognized as costs.
If acquisitions of businesses are made by stages, the fair value on the date of each purchase of
previously acquired interests is re-measured to the fair value at the date of each subsequent
purchase and gains or losses are recognized in the results for the year.
Any contingent consideration is measured at fair value at acquisition date. Any subsequent
change to this fair value that is considered as an asset or a liability will be recognized according
to IAS 39 in the Financial Statement or in any other integral result item. If that contingency is
considered as Equity, it shall not be re-measured until it is established as a component of Equity.
2.5 Main accounting policies
Land, Buildings and Equipment
Land, Buildings and Equipment are recognized at cost, or at their corresponding revalued
amount.
All land belonging to the Group has been evaluated every two years since 2001, based on
technical evaluations made by independent experts. These valuations are used as the basis for
the execution of the impairment tests required by the IFRS.
46
Depreciation is calculated based on cost or re-valued amounts, using the straight-line method,
except in the cases mentioned below, in order to fully depreciate the assets during their
estimated useful life, as follows:
%
Buildings and other constructions
2,00
to
16,66
Machinery and equipment
10,00
to
31,25
Autos and trucks
14,28
to
25,00
Tools
10,00
to
25,00
Office equipment
10,00
to
33,33
Other tangible assets
10,00
to
33,33
In Unidas, S.A., depreciation of vehicles included as basic equipment that are assigned to the
Renting business, is calculated in such a way as to reflect the estimated loss in value of the
vehicle during the term of the relevant contract.
At Globalrent and Unidas, S.A., depreciation of vehicles included as basic equipment assigned,
respectively, to Rent-a-Car (short-term car rental without a driver), is booked so as to reflect the
estimated loss in value of the car between its date of purchase and its expected sales date,
using the straight-line method.
Expenses incurred in connection with the repair and maintenance of equipment are recognized
as expenses in the period in which they are incurred.
Intangible Assets
Intangible Assets are valued at cost. Depreciation is calculated on a straight-line basis, using
depreciation rates that allow full depreciation of these assets until the end of their useful life.
This account includes the differences (Consolidation Differences) between book value of the
Companies included in the consolidation perimeter through the integral method, and the value of
the respective equity at the date they became part of the Group.
Under the terms of IFRS 1 Appendix B (“First Time Adoption of International Financial Reporting
Standards”), it was decided to neither apply calculations retroactively to determine the value of
goodwill in accordance with IFRS 3 (“Business Combinations”), nor the retroactive calculation of
IAS 21 (“The Effects of Changes in Foreign Exchange Rates”) with regard to acquisitions made
before 1 January 2004.
Investments in Affiliates
The Group’s investments in Affiliates are recognized through the equity method. Therefore, the
investments are recognized at their cost of acquisition, adjusted by the percentage held by the
Group in eventual subsequent alterations occurring in the stake held by the Group in the assets
of those Companies. The corresponding goodwill is not depreciated nor is it subject to individual
impairment tests.
The results of the period reflect the appropriation by the Group of its share in the results of
affiliate operations.
Dividends received during the year are deducted from the amount of Financial Investments.
When the Group loses significant influence, the retained Financial Investment is recognized at
the fair value (with impact on the year’s results).
47
Financial Assets
Financial Assets are classified in the following manner depending on the intention of the Board
of Directors at the time of their acquisition:
a) Loans and Receivables
b) Held-to-maturity investments
c) Investments held for trading measured at their fair value through results
d) Financial assets available for sale
e) Other Financial Assets.
a) Loans and Receivables
These include non-derivative Financial Assets, with fixed or determinable payments. Customer
and Other Debtors are recognized at their nominal value, after deduction of any imparity loss, so
that the amounts included in the Financial Statements reflect their net market value.
b) Held-to-maturity investments
Investments held to maturity are booked as Non-current Investments, except if their maturity
occurs less than 12 months from the date of the balance sheet. Investments with a set maturity,
which the Group has the intention and capacity to keep until such date, are booked under this
item. Held-to-maturity Investments are recognized at their depreciated cost, deducted of imparity
losses, if any.
c) Investments held for trading measured at their fair value through profit and loss
This category includes non-derivative Financial Assets held for trading, and derivatives that do
not qualify for hedge accounting purposes and are presented as Current Assets.
A Financial Asset is considered to be held for trading:
•
when it was acquired or incurred on with the main purpose of selling or repurchasing
within a very short term
•
when it is part of a portfolio of identified financial instruments that are managed together
and for which there is evidence of a real recent profit-taking transaction;
•
a derivative (except in the case of a derivative which is a designated and effective
coverage instrument)
Gains or losses resulting from changes in the fair value of investments measured at fair value
through profit and loss are included in the Income Statement for the period.
d) Financial assets available for sale
Investments available for sale are the non-derivative Financial Assets that:
•
the Group intends to keep for undetermined time, or
•
are designated as such at the moment of acquisition, or
•
do not fit any of the remaining categories comprised under Financial Assets.
These Assets are presented as Non Current Assets, except if there is an intention to sell them
within 12 months of the Balance Sheet date.
48
After the initial recognition, Investments Available for Sale are re-evaluated for their fair value, by
reference to the market value on the date of the Balance Sheet, with no deduction of transaction
costs which may occur until their sale.
Investments that are not listed and whose fair value is impossible to determine are kept as cost
with deduction of eventual imparity losses.
Gains or losses resulting from changes in the fair value of Investments Available for Sale are
booked in Net Equity under Reserves until:
•
the Investment is sold, proceeds are received or the investment is disposed of any other
way, or
•
the fair value of the Investment is below its acquisition cost and that corresponds to an
impairment loss
When any of these situations occurs, gains or losses accumulated are booked in the Income
Statement.
Inventories
Inventories are valued at cost or market value, whichever is lowest. Market value represents the
normal sales price less sale costs.
Cost is determined as follows:
•
New cars – acquisition cost plus any other additional purchase expenses;
• Used Cars:
•
•
When cars recognized as Inventory result from trade-in transactions, they are valued
at the purchase cost defined at the trade-in valuation
•
Cars in inventory that have been the object of expired renting contracts and are
available for sale are recognized at their corresponding net book value on the date
of termination of the relevant renting contract. Eventual impairment losses are
deducted from this amount.
Spare parts and other saleable goods – average cost of acquisition plus any other
expenses incurred prior to the respective entry into stock.
Income Tax
The Companies included in the consolidation that comply with the provisions of section 63 of the
Portuguese Income Tax Code chose to apply the Portuguese Special Regime for the Taxation of
Groups of Companies (“Regime Especial de Tributação de Grupos de Sociedades” – “RETGS”)
to the 2009 fiscal year.
Accordingly, Portuguese Income tax is the result of the addition of all individual income taxes
due by each of the Companies included in consolidation.
In accordance with current legislation, tax returns can be subject to revision and correction by
the tax authorities within a four-year period (five to ten years for Social Security, depending on
the application of the transitional regime). Hence, the tax returns of the Companies included in
the consolidation in respect to the years 2006 to 2009, may still be subject to review, although
SAG Group considers that any possible corrections resulting from tax reviews to such tax returns
will not have any material impact on the Consolidated Financial Statements as at 31 December
2009.
The Group adopted the recognition of deferred taxes, in accordance with the terms and
conditions set forth in IAS 12 (“Income Taxes”), as a way of suitably matching the tax effects of
49
its operations and to exclude distortions associated with tax criteria that would affect the
economic results of certain transactions.
The changes recorded during the period, and the reconciliation between the Provision for
Income Taxes for the period and current income tax, as well as the breakdown of deferred taxes
are described in Note 6 below.
Cash and Cash Equivalents
The Cash and Banks amounts shown in the Consolidated Balance Sheet include values with a
maturity of three months or less, and are net of bank overdrafts.
Financial Liabilities
Financial Liabilities are classified according to contract terms, regardless of their legal form, and
are classified as follows:
c) Financial liabilities measured to their fair value through results
b) Bank loans
c) Accounts payable
c) Financial liabilities measured to their fair value through results
This category includes Financial Liabilities held for trading, and derivatives that do not qualify for
hedge accounting purposes and that are presented in this manner in their initial recognition.
Gains or losses resulting from a change in the fair value of Financial Liabilities measured at the
fair value through the profit and loss are booked in the Income Statement of the relevant period.
b) Bank Loans
Loans are recognized as Liabilities at their nominal value. Financial charges are calculated
according to the actual interest rate and booked in the Income Statement according to the
principle of specification of the fiscal years.
c) Accounts Payable
Suppliers and other Creditors are initially booked at their nominal value which is understood to
correspond to their fair value, and are subsequently booked, where applicable, at their
depreciated cost, according to the effective interest rate method.
Contingent assets and liabilities
Contingent Liabilities are not recognized in the Consolidated Financial Statements and are
presented in these Notes, unless the likelihood of an outflow of funds is remote, in which case
they are not disclosed.
Contingent Assets are not recognized, and are only divulged when there is likelihood of a future
economic benefit.
Provisions
Provisions are booked when the Company has an obligation (of legal or implicit nature) resulting
from past actions, that is likely to involve a future outflow of economic resources in connection
with such obligation, and the latter can be measured reliably.
50
Professional opinions
In the preparation of the Consolidated Financial Statements in accordance with the IFRS, the
Board of Directors uses estimates and assumptions that affect the application of policies and
reported amounts. Estimates and opinions are consistently evaluated and are based on the
experience of past events and other factors, including expectations regarding future events that
are considered to be likely in view of the circumstances on which the estimates were based or
the result of an acquired information or experience. The more significant accounting estimates
contained in the Consolidated Financial Statements are as follows:
a) Analysis of Goodwill impairment
The Group tests annually, and whenever circumstances arise which may lead to believe that the
book value could be in a situation of impairment, whether goodwill has suffered any impairment.
The recoverable amounts of cash-generating units have been determined based on value-in-use
calculations. The use of this method requires the estimate of future cash flows expected to arise
from the continuing operation of the cash generating unit and the choice of a suitable discount
rate in these estimates.
b) Valuation and useful life of Intangible Assets
The Group has used various assumptions in the estimation of future cash flows resulting from
Intangible Assets acquired as part of processes of acquisition of Companies, which include the
estimate of future revenues, discount rates and useful life of the said assets.
c) Recognition of Provisions and Adjustments
The Group is currently party to various legal cases for which, based on the opinion of its Legal
Advisors, an assessment is made to determine whether a Provision should be recorded in
respect of such contingencies.
Adjustments for Accounts Receivable are computed based primarily on the ageing of the open
items that correspond to the balances of Accounts Receivable, Clients’ risk profile and their
financial condition. Estimates related to adjustments for Accounts Receivable differ from
business to business.
Adjustments for Inventory are calculated on the basis of the expected sales price of the relevant
goods.
d) Assessment of the market value of Financial Instruments
The Group chooses the valuation method that it considers appropriate to determine the market
value o Financial Instruments not listed in an active market based on its best knowledge of the
market and the assets. In this process, the Group applies the valuation techniques commonly
used by market practitioners and uses assumptions based on market rates.
Equity instruments
Equity Instruments are classified according to contract terms, regardless of their legal form.
Equity Instruments issued by Group Companies are booked for the value received, net of the
costs incurred with their issuing.
Income Recognition
Income is recognized as such to the extent that the Company is likely to derive future economic
gains and that the value of that income can be assessed reliably.
51
In order for Income to be recognized, the following criteria also have to be fulfilled:
Sales of goods
Income is recognized when the significant risks and benefits resulting from the
ownership of the asset have been passed to the Buyer and the said income can be
measured accurately.
In the case of cars, Income recognition coincides with the transfer of car ownership,
which occurs, in most cases, simultaneously with the issuing of the corresponding sales
invoice.
In transactions where, simultaneously with the issuing of the sales invoice, the Selling
Company or any other Company included in the consolidation perimeter, undertakes a
repurchase commitment for the same vehicle, the principles specified in IAS 18
(“Revenue”) have been applied. Hence, neither Income from revenues nor any other
Income or Expenses relating to this kind of transaction have been recognized. Such
income and expenses were recognized on a straight-line basis during the period in
which these commitments are maintained, which generally corresponds to the period of
time between the invoice date and the date on which the vehicle is repurchased.
Services
Income from Services is recognized during the period in which they are actually
provided, regardless of whether or not an invoice was issued.
Interest
Interest Income is accrued so that it is recognized in the corresponding period,
regardless of whether or not the corresponding support document was generated.
Dividends
Dividend income is recognized when, in substance, the reporting Company has an
obligation to declare a Dividend.
Leases
Fixed Assets acquired under financing contracts, or other contractual instruments that, in their
substance, represent financial leases, are booked as financial leases, in accordance with the
provisions set forth in IAS 17 (“Leases”).
Under these terms, on the one hand, Tangible Assets are recognized after deduction of the
respective cumulative depreciation and, on the other, outstanding principal payments in
accordance with the agreed financial plan. Interest expenses included in contractual instalments
and depreciation are recognized as expenses in the relevant period.
Impairment of Assets
On each reporting date, the Group evaluates any signs of impairment that may affect the value
of its Assets. Whenever these occur, or whenever the IFRS require the performance of
impairment tests, the Group makes an estimate of the recoverable value of the Asset
corresponding to the highest of the corresponding fair value, after deducting eventual sales costs
or the asset’s usage value. In the event of an impairment situation, the value of the asset is
reduced in order to reflect its recovery value.
Foreign Exchange Transactions
The functional currency used in the preparation of the Consolidated Financial Statements of
SAG GEST SGPS, SA and its Subsidiaries and Affiliates is the Euro, except for its affiliate
52
Unidas, SA, whose functional currency is the Brazilian Real, and affiliate Santander Consumer
Multirent Sp. z.o.o., whose functional currency is the Polish zloty.
The Financial Statements of Unidas, SA are translated into Euros in accordance with the
following criteria:
•
The Balance Sheet is converted to Euros using the exchange rate prevailing at year-end.
•
The Income Statement in Euros is the result of adding all monthly Income Statements after
each one of them is converted to Euros using the exchange rate prevailing at the end of
each month.
Transactions denominated in foreign currencies (outside the Euro zone) are converted into
Euros using the exchange rate prevailing on the date of the transaction. Foreign currency
denominated accounts receivable and payable are converted into Euros using the exchange rate
prevailing on the Balance Sheet date.
All exchange rate differences are recognized as Income or Expense for the period, except for the
differences determined as a result of translating the Financial Statements of Unidas, SA, which
are recorded against Consolidated Shareholders Equity.
Financial Instruments (and Derivative Financial Instruments)
Certain Group Companies regularly use Financial Instruments or Derivative Financial
Instruments in the regular course of their operations, exclusively in order to minimize their
exposure to risks related to the fluctuation of interest and exchange rates, and not for negotiation
or speculation purposes.
The most commonly used Coverage Instruments of said interest rates fluctuation risks are
recognized as follows:
Coverage of interest rate fluctuation risks
Interest rate swaps and Forward Rate Agreements – The fair value of Derivative
Financial Instruments is recognized in Equity and subsequently recognized as Income
for the period as the cash flows associated with these operations occur. Interests paid
and/or received are recognised on a monthly basis during the period of the operation.
Coverage of exchange rate fluctuation risks
•
Exchange rate options or exchange rate forwards regarding Investments in foreign
Affiliates – the fair value of such Derivative Financial Instruments is recognized in
the Balance Sheet as Net Equity, together with the adjustments resulting from the
conversion into Euros of the Financial Statements of such foreign Affiliates;
•
Exchange rate forwards to cover exchange rate fluctuation risks associated to
financing in foreign currency – the fair value of Derivative Financial Instruments
is recognized as Net Equity and subsequently recognized in the Income
Statement on a monthly basis, simultaneously with the monthly recognition of
exchange rate variances associated with the corresponding Liabilities.
These procedures were adopted by the Group in accordance with the corresponding written
policy approved by the Board of Directors, which came into effect on 1 January 2004.
The de-recognition of Financial Instruments occurs when the Group no longer controls the
contractual rights that govern them, which occurs regularly when Financial Instruments are sold
or when cash-flows from said Instruments are transmitted to a third party.
Calculation of the Fair Value of Financial Instruments (and Derivative Financial Instruments)
The principles and procedures defined in IAS 32 (“Financial Instruments: Disclosure and
Presentation”) and IAS 39 (“Financial Instruments: Recognition and Measurement”) have been
fully adopted.
53
2.6. Companies included in consolidation
The Subsidiaries included in the Consolidated Financial Statements as well as their main
financial indicators are as follows:
These Affiliates were consolidated using the integral method, with the exception of Santander
Consumer Iber-Rent SL, Santander Consumer Multirent, Sp.z.o.o., Autolombos, Lda., CRE
SGPS and Manheim, Lda. which were consolidated using the equity method.
No significant changes have occurred as regards the consolidation perimeter during the FY
2009. The Companies included in the perimeter are the same as in December 2008, with the
exception of 5 companies operating in the Automotive Retail area which are fully owned by SAG
GEST SGPS SA which were merged into a single entity.
Thus, companies Castelimo, Justocar, Cervag, Cercascais and JM Seguro have been integrated
in a new Company called Soauto Comércio de Automóveis S.A. This merger operation followed
the tax neutrality principle and did not have any impact on the Group’s Consolidated Financial
Statements.
3. REPORTING BY BUSINESS SEGMENT
For management purposes, the Group is organized by geographical areas and, within these, by
business segments, namely:
•
The new car, used car and spare parts segment corresponds namely to
distribution and retail sales in Portugal of the Volkswagen, Škoda, Audi and
54
Bentley and Lamborghini brands, sale of multi-brand used cars, as well as sale
of spare parts and accessories for those brands.
•
The car rental (without driver) service segment represents essentially the “fleet
management”, “Renting”, “Rent-a-car” and “Daily” services – medium to longterm car rental products and services, maintenance contracts, and short-term
car rental services.
Other operations include namely insurance brokerage, and the preparation and repair of
vehicles, as well as the recycling of end of life vehicles and scrap.
Operating results of business units are monitored separately with the aim of decisions being
taken regarding resource allocation and performance evaluation. Performance of each segment
is evaluated on the basis of the operating result and on their contribution to the consolidated
operational result. However, Group financing and taxes are mostly managed on a Group basis
and are not allocated to each operational segment.
Transfer prices between business segments are determined on an arm’s length basis, and are
equivalent to prices used in transactions performed with bona fide unrelated third parties.
55
Business segments
The following chart represents the results, assets and liabilities as at 31 December 2009 and their comparison with identical information as at 31
December 2008, with regard to the various Group business segments:
56
4. OTHER OPERATING INCOME AND EXPENSES
Other income and expenses are as follows:
Other Operating Income includes Income from car credit and insurance brokerage, and Income
from preparation and transportation of new cars.
Other Operating Income includes Income from car preparation and transportation of new cars
and Expenses incurred in connection with the extension of the original guarantees of new cars.
57
Other Financial Expenses and Losses include Expenses concerning bank guarantees issued at
the request of Group Companies, commission on financing and the Stamp Tax involved in bank
operations.
The amount for Losses in Sales of Fixed Assets for FY 2008 was readjusted to reflect changes
in IAS 16, which are detailed under Note 8.
58
5. PAYROLL EXPENSES
Payroll Expenses are detailed as follows:
During FY 2009, the Group implemented several restructuring and reorganization measures,
which included the elimination of several positions at all levels of its organizational structure, and
which translated into added functions and responsibilities for several positions.
These measures which involved all the Group’s operational units both in Portugal and Brazil, are
at the base of the reduction in consolidated Personnel Costs, in spite of the fact that these
already include costs incurred with the implementation of those same changes.
59
6. INCOME TAX
The estimated Income Tax recorded in the Consolidated Financial Statement for 2009 is
calculated as follows:
The tax has been calculated according to tax rates in force in each country where results are
generated that are taxable under the relevant tax regulations.
60
Deferred Tax balances are detailed in the table below, where differences between the tax and
the reporting bases for the relevant Assets and/or Liabilities are also identified:
The total net change recorded in the year includes adjustments in the amount of Eur 368.783,
which were booked directly as Consolidated Shareholders equity and which, therefore, did not
affect the net profit for the year as well as the effect of reclassification between items in the
Balance Sheet in the amount of 28.290.611.
61
7. EARNINGS PER SHARE
As at 31 December 2009, Grupo SAG had 16,771,015 treasury stocks. During FY2009, no
transactions were made (purchases or sales) involving treasury stocks, and for that reason the
number of treasury stock held on 31 December 2008 has not changed.
The nominal value of SAG stock is € 1 each.
62
8. PROPERTY, PLANT AND EQUIPMENT
The changes in the Tangible Fixed Assets accounts during 2009 and 2008 were the following:
63
Land and Buildings include € 7,316,338 and € 22,129,012, respectively, booked in respect of
assets covered by sale and lease-back agreements.
Changes introduced to IAS – Property, Plant and Equipment apply to those cases where a
company, in the normal course of its business, usually sells assets which are assigned to rental
agreements to third parties. In those cases, the value of those goods, when the relevant rental
expires and these goods become available for sale should be transferred to Inventory.
Consequently, the sales amount for these goods shall be recognized as Income according to
IAS 18 (Revenue) and the cost of the assets sold shall be recognized as cost of sales.
These changes have covered the processing of semi-new and used car sales activities
conducted by Unidas SA and impacted the Consolidated Financial Statements as at 31
December 2009 and 2008, as follows:
At Unidas, the book value of vehicles comprised in the Company’s fleet is corrected by
increasing depreciation which is booked at the moment when vehicles become available for sale
so that, on this date, the book value of the vehicles (after booking this increased depreciation)
corresponds to the corresponding market value.
The amount for increased depreciation booked in 2009 totalled Eur 26,786,976.
The Group considers that, as at 31 December 2009, no impairment signs exist that may affect
the value of its Tangible Assets.
9. INTANGIBLE ASSETS
IAS 38 (“Intangible Assets”) defines an Intangible Asset as a non-currency, identifiable Asset
without physical substance, for use in production or supply of goods or services, leasing to
others, or for administrative purposes. An asset is a resource that is:
•
controlled by the Company as a result of past events;
•
expected to produce future economic benefits for the Company.
64
The changes in the Intangible Assets accounts during 2009 and 2008 were the following:
65
The Group considers that, as at 31 December 2009, there are no impairment signs regarding the value of
booked goodwill.
10. INVESTMENT IN AFFILIATES
Investments in Affiliates are detailed as follows:
11. OTHER FINANCIAL ASSETS
Other Financial Assets represent other securities and treasury operations.
66
12. INVENTORIES
Inventories are detailed as follows:
As a consequence of the adoption, effective January 1st 2009, of the changes introduced to IAS 16
(Property, Plant and Equipment), the amount of Inventories as at 31 December 2008 has been adjusted
as shown on the table included with Note 8.
67
13. DEBTORS
Accounts receivable are detailed as follows:
Other Accrued Income mainly includes amounts collectable from VAG concerning sale support to “rent–acar” Companies and Fleet Managing Companies, and VAG´s share of Guarantees of the different brands
represent by SIVA.
The nature of the Group Companies balances is indicated under Note 23.
68
The information detailed above reconciles to the Balance Sheet as follows:
The detailed ageing of Client Accounts Receivable as at 31 December 2009 is as follows:
The Company considers that are no signs of impairment in these receivables.
14. CURRENT INCOME TAX RECEIVABLE
The balance receivable in respect of Current Taxes on Income is as follows:
15. OTHER TAXES RECEIVABLE
The balance of Other Taxes Receivable is detailed as follows:
69
16. CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents are detailed as follows:
The amounts included in Cash and Cash Equivalents are determined in order to only include amounts that
can be realized within no more than three months from the Balance Sheet date, and include creditor
balances of bank accounts on the same date.
As at 31 December 2009, Group Companies had a total of EUR 73,532,394 in bank facilities available for
use in order to fulfil operating requirements.
70
17. ISSUANCE OF CAPITAL AND RESERVES
As at 31 December 2009, Registered Share Capital was represented by 169,764,398 ordinary shares with
a par value of 1 euro each, and was fully paid up.
Treasury stock is owned by the Group’s Parent Company which, as at 31 December 2009, held
16,760,815 shares, and by affiliate Rolporto S.A. and Loures Automóveis S.A, which, on the same date,
held 5,100 shares each of SAG SGPS.
The amount of € 44,081,988 recognized as Cumulative Translation Adjustments corresponds to the
positive variance that occurred during FY 2009 in the conversion to Euros, for consolidation purposes, of
the investment and results of the Unidas, SA subsidiary, due to the valuation of the Brazilian Real vs. the
Euro which occurred during the same period.
The recognition at fair value, in accordance with IAS 39 (“Financial Instruments: Recognition and
Measurement”), of Derivative Financial Instruments purchased to provide coverage in respect of interest
rate fluctuation risks (considered as Cash Flow Hedging Instruments) produced a decrease in Other
Reserves of € 1,022,850.
These Instruments were engaged in accordance with the Exchange Rate Risk Coverage Policy approved
by the Board of Directors, as specified in Note 24.
71
18. BANK DEBT
On 31 December 2009, Bank Debt is detailed as follows:
72
Notes:
(1) These balances relate to several short term credit facilities such as Bank Overdrafts, or Credit Bank
Account Balances, which are used as required and have short term maturities (revolving facilities on
monthly, quarterly or semestral bases).
(2) Balances shown concern several credit lines with less than one-year term, engaged with several
Financial Institutions. The relevant interest rates are between 13.19% and 19.51%, maturing between
December 2009 and December 2010.
(3) Balances shown concern several credit lines with less than one-year term in USD and JPY, engaged
with several Financial Institutions. The relevant interest rates are between 10.41% and 16.87%, maturing
between December 2009 and December 2010.
(4) Balances shown concern several credit lines with a term of over one year, engaged with several
Financial Institutions. The relevant interest rates are between 13.90% and 19.51%, maturing between
November 2010 and September 2013.
(5) Balances shown concern several credit lines with a term over one year in USD and JPY, engaged with
several Financial Institutions. The relevant interest rate in December 2009 was 10.413%, and the maturity
date is March 2012.
73
On 31 December 2008, Bank Debt is detailed as follows:
74
19. PROVISIONS FOR OTHER RISKS AND CHARGES
Provisions refer to specific risks that are reassessed each year.
Contingencies associated with these provisions refer mainly to operating risks related with the possibility
of the Group incurring losses, namely as a result of:
•
court proceedings, including of a fiscal nature;
•
situations of misappropriation of assets;
75
20. CREDITORS
Creditors are broken down as follows:
The amount of Debt to Suppliers of Tangible Assets mostly reflects the Group’s responsibility vis-à-vis the
Real Estate Investment Fund Imocar regarding the “sale and lease-back” of land and building used by
Affiliate SIVA in its operations. The relevant purchasing obligation reaches maturity in 2014. This
operation is described in greater detain in Note 8.
Other Accrued Expenses mainly includes amounts concerning Bonuses, Incentives and sharing in
Guarantees to be paid to the Dealer network of the different Brands represented by SIVA.
The information detailed above reconciles with the appropriate item in the Balance Sheet as follows:
76
21. CURRENT INCOME TAX PAYABLE
The balance of Current Income Tax Payable is as follows:
22. OTHER TAXES PAYABLE
The balance of Other Taxes Payable is as follows:
23. RELATED PARTY DISCLOSURES
In addition to the balances between, and the transactions performed with Companies included in
Consolidation, as mentioned in Note 2 herein, which were eliminated during the preparation of the
Consolidated Financial Statements, there are other balances and transactions performed with related
parties, namely:
Nature of
Transaction
Amount of transactions
conducted during the
period
SGC – S.G.P.S., S.A.
Treasury Operations
74.983.000 €
SGC – S.G.P.S., S.A.
Accrued Interest
4.798.345,46 €
Volpe Participações Ltda.
Currency Operations
149,361.22 BRL
Treasury Operations
8.600.000 €
Accrued Interest
12.517,78 €
Autolombos, Lda.
Treasury Operations
820.000 €
Autolombos, Lda.
Accrued Interest
43.154,67 €
Entity
Amounts regarding transactions with SGC – SGPS, SA relate to short-term treasury operations (with less
than one-year maturity) made by SAG, and related financial income (interest). Conditions under which
these transactions are conducted are, in every way, equivalent to those existing in the market on the
dates they are engaged.
77
As at 31 December 2009, Unidas had engaged exchange options with Volpe Participações Ltda. in the
total amount of BRL 13,226,421 million. These options contracts aim to eliminate exchange rate
fluctuation risks as mentioned in Note 24.
In accordance with Paragraph 16 of IAS 24 – Related Party Disclosures, information relative to
compensation to the 39 Employees who hold key positions in the Group’s management in Portugal (“Key
Management Personnel”) is as follows:
Amount
Fixed Remuneration
Variable Remuneration
Compensation (*)
TOTAL
3.049.787
33.197
1.442.045
4.525.029
(*) Compensation paid as part of work contract
termination processes
24. FINANCIAL RISKS
A)
Market risk
In the course of their regular activities, Grupo SAG Companies are exposed to interest and exchange rate
variations that are monitored dynamically in order to guarantee the fulfilment of policies established to
manage such financial risks.
The ALCO (“Assets and Liabilities Committee”) is in charge of defining Grupo SAG's financial risk
management policies, and it is also responsible for monitoring and assessing the implementation of
recommended coverage strategies on a regular basis.
In order to implement the risk coverage strategies, Derivative Financial Instruments are negotiated from
time to time, if so decided by ALCO, in order to freeze interest or exchange rates or, alternatively, to limit
the fluctuation range of such variables.
The following are the Derivative Financial Instruments that are normally used in these hedging operations:
•
Interest rate fluctuation risk coverage – “Interest Rate Swaps” (IRS) and “Forward Rate
Agreements” (FRA);
•
Exchange rate fluctuation risk coverage – “Forwards” and exchange rate options.
Grupo SAG suitably documents its exposure to exchange or interest rate fluctuation risks in accordance
with IAS 39 (“Financial Instruments”: Recognition and Measurement”).
•
the existing relation between the hedged item and the hedging instrument.
•
the objectives to be achieved with the coverage;
•
the method used to assess the efficiency of the hedge; and
•
the accounting method used.
78
The Group currently has the following types of positions that generate exposure to interest and exchange
rate fluctuations risks, for which policies have been defined.
1. Investment in Foreign Currency
During each reporting period, the Financial Statements of Unidas, SA, a Brazilian Grupo SAG Company
whose functional currency is the Brazilian Real, are converted using the exchange rate as at the date of
the Financial Statements, in accordance with Note 2 – Summary of Main Accounting Policies
(Transactions in Foreign Currency).
Market exchange rate fluctuations and the consequent use of different exchange rates in each reporting
period, generate exchange differences that are registered in Equity (Cumulative Translation Adjustments).
Because there is no liquid market actively performing transactions between the Brazilian Real and the
Euro, SAG analyses and manages the exchange risk generated by this Investment in two different ways,
considering that its entire exchange rate exposure from investments in foreign currency comprises two
different, unrelated risks:
•
Risk of variation between the Brazilian Real and US Dollar; and
•
Risk of variation between US Dollar and Euro.
Therefore, decisions regarding the coverage of both risks are independent and usually, risk coverage is
implemented through the engagement of different Financial Instruments regarding the risks inherent to
each of these aspects.
The results obtained with such coverage are recognized in Equity.
On the other hand, in accordance with the defined policies, the transaction costs associated to the
engagement of Financial Instruments of coverage may imply that, at certain times, certain exposures are
not covered or are only partially covered.
As at 31 December 2009, the Group did not have any active coverage operation.
As a result of exchange rate variations occurred during the year, the value of the said Group’s investment
showed a total exchange rate valuation of EUR 44,081,988 in the translation of Reals into Euros, which
can be broken down as follows:
•
EUR 49,039,723 profit as a result of the valuation of the BRL vs. the USD;
•
EUR 4,957,735 loss as a result of the valuation of the USD vs. the Euro;
Sensitivity Analysis:
For the purpose of sensitivity tests regarding SAG GEST SGPS, SA’s exposure to currency variations
resulting from the investment in Unidas, two alternative scenarios were considered for each of the risks
involved:
Variations vis-à-vis 31/Dec/09
Scenario 1
Scenario 2
- Variation of the Brazilian Real against the US Dollar
25%
50%
- Variation of the US Dollar against the Euro
10%
20%
Therefore, four alternative scenarios were considered for an unfavourable evolution of the Brazilian Real
exchange rate against the Euro. These potential exchange rate variations would have the following effects
on Consolidated Shareholders Equity:
79
2. Foreign Currency Liabilities - Brazil
As at 31 December 2009, several foreign currency loans (US dollar and Japanese yen) had been
engaged by Unidas SA, in Brazil. To eliminate the exposure to exchange rate variations involving the
conversion of those operations into Brazilian Reals, Derivative Financial Instruments were simultaneously
entered into which made it possible to exchange the financial flows in foreign currency into Brazilian
Reals.
On the same date, the value of the said foreign currency financing operations for Unidas SA totalled BRL
99.8 million, corresponding to the nominal value of the relevant currency coverages. Currency coverage
operations as at 31 December 2009 had a market value of BRL 97.1 million.
Unidas also had currency option contracts negotiated with Financial Institutions. The notional value of
these options totalled BRL 13.3 million. These operations had a negative market value of BRL 0.57
million. The accrued result of the Derivative Financial Instruments in 2009 was negative in the amount of
2.9 million Brazilian Reals. Gains obtained with these contracts were offset with losses of an equal
amount obtained from symmetrical options renegotiated between Unidas SA and Volpe Participações
Ltda.
In addition, Unidas SA negotiated the following NDF (“non-deliverable forwards”) contracts:
- Acquisition of US dollars / sale of Brazilian Reals – notional value of USD 28,858,025.00, maturity date 4
January 2010, at the exchange rate of 1,7510
- Acquisition of Euros / sale of Brazilian Reals – notional value of USD 5,000,000.00, maturity date 9
February 2010, at the exchange rate of 2.579
For the purpose of the development of sensitivity tests, two alternative scenarios were considered for the
evolution of the currency involved:
i)
25% devaluation of the Brazilian Real against each currency
ii)
50% devaluation of the Brazilian Real against each currency
80
The following results were obtained:
Operations in USD:
Operations in JPY:
Currency operations:
3. Variable Interest Rate Liabilities – Portugal
Financing negotiated by Grupo SAG in Portugal is, in its entirety, remunerated on the basis of the Euribor
interest rate to which a risk spread is added. For some of those financing Liabilities which are not meant to
finance Assets that are directly sensitive to interest rate variations, Financial Instruments were engaged to
cover the risk of interest rate fluctuations. The decision to obtain this type of coverage is taken on a caseby-case basis and depends on the expected evolution of market interest rates.
81
On 31 December 2009, certain coverage instruments were in force using Interest Rate Swaps (IRS),
through which Grupo SAG aims to cover the portion of interest on the issued loans that depends on the
future value of the Euribor rate.
These coverage instruments are considered as Cash Flow Hedges and the fair value of the corresponding
Derivative Financial Instruments affects Grupo SAG's Equity. This amount is progressively transferred to
the Income Statement, as and when the corresponding interest is recognized in Financial Results.
Covered operations, all of which are subject to six-monthly or monthly re-pricing, were as follows:
The following were the Derivative Financial Instruments involving these Liabilities which were in force
during the period in review:
To gauge the effectiveness of the hedge, adequate tests were developed which made it possible to show
that:
•
On the date when the coverage Financial Instruments were established, it was expectable that
there would be a coverage relationship throughout the length of the contracts;
•
Since the date of the engagement of each coverage Financial Instrument and until this reporting
date, existence of an actual coverage relationship was confirmed, shown in the correlation
between the fair value of the Financial Instruments and of the covered Liabilities.
To gauge the effect that interest rate variations in Europe have on Grupo SAG’s financial position, a
sensitivity analysis was made.
The aim of the sensitivity analysis that was conducted was to quantify the effect of a 100 bp variation in
euro interest rates (constant variation throughout all interest rate curve terms) on Grupo SAG’s Financial
Result and Equity. For this purpose, it was considered that Grupo SAG’s bank debt engaged in Portugal
82
will remain unchanged during the period in review and that there will not be any changes to credit spreads
in force on 31 December 2009.
4. Variable Interest Rate Liabilities – Brazil
The majority of financing operations and Unida’s cash balances are remunerated based on an interest
rate indexed to CDI’s variation.
On 31 December 2009, the cash balance subject to variations in CDI was 43.8 million Brazilian Reals
(17.5 million Euros) and the amount for loans under similar conditions was 662.3 Brazilian Reals (264.0
million Euros).
None of the current operations is covered as regards the CDI variations.
For the purpose of sensitivity tests and to evaluate the effects of CDI variations on Unidas SA’s financial
statements, two alternative scenarios were considered for each of the risks involved: 1) 25% increase of
the CDI and ii) 50% increase of the CDI.
The results can be summarized as follows:
83
B)
Credit Risk
The Group’s policy as regards the establishment of thresholds on financing both nationally and
internationally is done via Companies specializing in credit risk analysis.
A detailed analysis of the variation of Provisions and Adjustments for Accounts Receivable clearly shows
that Customer credit risk practically does not exist. Furthermore, the Group has access to major
databases on the market which, together with its team of technical experts, enable it to assess and clearly
minimize credit risk.
Note 16 presents an ageing of Accounts Receivable.
C)
Liquidity Risk
This risk can occur when financing sources (cash available, cash generated by operations, proceeds from
divestments, credit lines, additional Shareholders contributions) do not meet the cash requirements of
meeting obligations involving operational and finance activities, investments and debt repayment.
The main contractual obligations of the Group involve loans obtained (Note 18) and relevant interest.
Some of the financing listed on Note 18 are subject to several covenants, namely:
•
Financial Covenants:
1) Portugal, as regards Consolidated Financial Statements
Net Debt / EBITDA < 6
EBITDA / Net Interest > 1,3
2) Brazil, as regards Unidas SA’s Consolidated Financial Statements
Net Debt / EBITDA < 3.5 on 31/03/2010;
Net Debt / EBITDA < 3,25 from 30/06/2010 to 31/12/2010;
Net Debt / EBITDA < 2.75 from 31/03/ 2011 to 30/06/2012
Net Debt / [EBITDA + Total Amount of the Released Fleet] < 1,25
Total Fleet Value / Net Debt > 1,50
Net Debt / Equity < 1.50
Net Debt / Equity < 225%
Net Debt / Tangible Assets < 125%
EBITDA > R$ 13 million
EBITDA / Net Interest < 1,10
TD / CT Ratio < 57%, where:
TD = Total Debt – Cash Available – Balance of the Mezzanine Loan
CT = TD + Net Worth.
•
Ownership:
Ownership by SAG Gest – Soluções Automóvel Globais SGPS SA of the Registered Capital and
voting rights of companies SIVA – Sociedade de Importação de Veículos Automóveis S.A.,
Soauto SGPS, S.A. and Unidas S.A.
84
Ownership by SAG Gest – Soluções Automóvel Globais SGPS SA of at least 40% of the
Registered Capital and voting rights of Santander Consumer Iber-Rent SL
Ownership by SGC SGPS SA of at least 50,1% of the Registered Capital and voting rights of SAG
Gest – Soluções Automóvel Globais SGPS S.A.
Ownership, by SGC SGPS SA of the 75.94% stake that SGC SGPS S.A. holds in SAG Gest
SGPS S.A. Registered Capital and of 84,26% of the corresponding voting rights.
Ownership of the 99,8% stake held by Dr. João Manuel de Quevedo Pereira Coutinho in the
Registered Capital and voting rights of SGC SGPS S.A
•
Other
Maintenance of Import Agreements for the Volkswagen, Audi and Škoda Brands by SIVA S.A.
“Negative Pledge”
“Cross Default”
“Pari Passu”
Merger or De-merger
25. COMMITMENTS AND CONTINGENCIES
Guarantees
As at 31 December 2009, several bank guarantees had been issued on behalf of Group Companies by
Banking Institutions in the amount of approximately EUR 51,019,345. Group Companies’ liability for
issued bank guarantees totals EUR 134,033,010.
Contingencies
Portuguese Tax Authorities issued additional Income Tax assessment notes to SAG GEST SGPS, SA
and other Companies within the consolidation perimeter, with regard to Income Tax and Income Tax
Surtax (“Derrama”) for the years 2005 to 2004, totalling € 11,992,346, as shown in the following table:
(*) Includes administrative fines calculated on the date the claim was issued
85
The said Companies disagree with the basis for the issuance of such additional assessments and have
initiated, within the applicable legal deadlines, legal proceedings in respect of each of the said
assessments. Therefore these costs have not been reflected in the Consolidated Financial Statements as
at 31 December 2009. Bank guarantees have been submitted to ensure suspension of all executive
processes.
In the opinion of the Board of Directors, based on opinions issued by renowned independent entities, the
probabilities of success of the contest proceedings are high.
The Board’s opinion was further corroborated by the unappealed Opinion issued on 10 March 2009 by the
Central Administrative Court which was favourable to SAG GEST SGPS, SA, regarding the impeachment
of the tax adjustment request regarding the 1997 financial year.
Also, the Brazilian Tax Administration issued a claim to Unidas SA for the collection of debits concerning
Brazilian Corporate Income Taxes (“Imposto de Renda Sobre Pessoa Jurídica” and “Contribuição Social
Sobre o Lucro Líquido”) involving fiscal years 2004 to 2007, in the total amount of BRL 31,837 million.
Because Unidas SA disagrees with the basis for the issuance of such additional tax assessments, it has
initiated, within the applicable legal deadlines, legal proceedings in respect of each of the said
assessments.
In the opinion of the Board of Directors, based on recommendations issued by its legal consultants, there
are good chances that such legal proceedings will be successful, and therefore no provision has been
created concerning this matter.
26. LEGALLY REQUIRED ADDITIONAL INFORMATION
Under the terms of Article 508-F of the Company Act it is hereby informed that:
- Apart from the operation described in the above notes, as well as on the Management Report, no other
operations exist that are considered relevant that are not reflected on the balance sheet or described in its
annex;
- The total fees paid to the External Auditor and Audit Company during FY2009 was 832.071 Euros, of
which 632.602 Euros correspond to legal review of accounts, and the remaining 199.469 Euros concern
tax consultancy services and other services to ensure reliability.
27. SUBSEQUENT EVENTS
No events have taken place after the Balance Sheet date that could have a material impact on the
financial statements.
86
STATUTORY AND AUDITOR’S
REPORT
STATEMENTS
2009
87
REPORT AND OPINION OF THE
AUDIT BOARD
STATEMENTS
2009
88
Report and Statement of the Audit Board
on the consolidated accounts reports
In accordance with the law, the memorandum of association and the mandate assigned to us, we present
our report on the auditing activity conducted, as well as our opinion about the management report and
consolidated financial statements presented by the Board of Directors of SAG GEST - Soluções
Automóvel Globais, SGPS, SA, a listed company (the Company), concerning the financial year ended on
31 December 2009.
1.
Report
1.1
We regularly monitored the Company’s activity throughout the year to the extent that we deemed
adequate. We had contacts with the Board and other responsible staff of the Company, who were
always available to provide all the required explanations about the Company and its Affiliates.
1.2
All checks that were considered due and adequate were conducted, and no situation was brought
to our knowledge that could be in breach of the applicable by-laws and legal precepts.
1.3
We reviewed the Legal Certification of the Consolidated Accounts and the Audit Report prepared
by Ernst & Young Audit & Associados, SROC, SA, which have our approval, and we have taken
note of the relevant Annual Audit Report issued by that Auditing Company about the auditing that
was conducted.
1.4
The consolidated accounts, including the balance sheet, financial statements, the relevant Annex
and other statements provide a good understanding of the financial situation and results of the
group of companies.
1.5
The adopted accounting policies and valuation criteria are adequate and comply with the
International Financial Reporting Standards (IFRS).
1.6
The management report is sufficiently clear about the development of the businesses and
situation of the companies included in the consolidation, in each of the markets where they
operate, and it provides evidence about the most significant aspects of the relevant activity and
prospects as regards the evolution in the present environment.
2.
Opinion
In view of the above, and considering the information received from the Board of Directors and the
conclusions contained in the Legal Certification of Accounts and Audit Report, our opinion is that
the management report, the balance sheet and the consolidated financial statements for the 2009
financial year are in a position to be approved
3.
Compliance Statement
As provided for by law, we announce that, to the best of our knowledge, the consolidated
management report, the consolidated annual accounts and relevant legal certification and other
reporting documents that are legally required were prepared in accordance with the relevant
89
accounting standards and give an accurate and adequate image of the assets and liabilities,
financial situation and earnings of the Company and of the companies included in the
consolidation perimeter, and that the information provided on the relevant consolidated
management report accurately describes the development of business operations, the
performance and position of the Company and of the companies included in the consolidation
perimeter and contains a description of the main risks and uncertainties facing them.
Alfragide, 15 April 2010
The Audit Board
João José Martins da Fonseca George (Chairman)
Duarte Manuel Palma Leal Garcia (Voting Member)
Martinho Lobo de Almeida Melo de Castro (Voting Member)
90

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