SAG GEST – Soluções Automóvel Globais, SGPS, SA
Listed Company
Capital Stock: EUR 169 764 398
Tax No.: 503 219 886
CRC da Amadora nº 503 219 886
Headquarters: Estrada de Alfragide, nº 67 Alfragide
Amadora
Office: Estrada de Alfragide, nº 67 – Alfrapark – Edifício SGC, 2º Floor
Alfragide
2614-519 Amadora
Tel: 21 359 66 64 / 71Fax: 21 359 66 74
Individual Financial Statements
1st Half 2007
MANAGEMENT REPORT
1ST HALF 2007
INDIVIDUAL FINANCIAL STATEMENTS
In accordance with the applicable regulations and the Company’s Articles of Incorporation, we hereby submit to the Shareholders the Management Report and the Individual Financial Statements of SAG for the six months ended 30 June 2007.
General Considerations
After the first six months of 2007, Grupo SAG achieved a consolidated net profit of € 8.9 million, a 20.5% increase vs. the same period last year as a result of the assertiveness of its strategy focusing on international expansion, service areas, strengthening of partnerships and increased efficiency in all its business units.
EBITDA, which totalled € 33.4 million, shows a 47.2% increase when compared with the results achieved in the same period last year.
Consolidated revenues were € 361 million in the semester, in line with the amount recorded in the same period in 2006, but with a very significant increase as regards services (which correspond in 2007 to 12.9% of revenue, whilst in the same period in 2006 services only accounted for 11.9% of revenue).
Special mention should be made of the contribution from the Automobile Services area to Net Profit, which now represents 49% of the total (41% in the same period last year), while the relative weight of the Group's business in distribution and retail of new and used cars was 51% (59% in the 1st Semester of 2006).
Consolidated net debt totalled € 382 million at the end of the semester, an increase of approximately € 46 million vs. the amount as at 30 June 2006 (€ 337 million) and of approximately € 60 million in comparison with the amount recorded on 31 December 2006 (€ 322 million). The increase in the 1st Semester of 2006 has a strong seasonal nature as a result of the increase of approximately € 11,8 million in working capital requirements in the Distribution Area, and it includes additional finance needs (€ 38.1 million) resulting from the fast pace of growth of SAG do Brasil (where the portfolio increased of approximately BRL 75.8 million – 23.4%), as well as needs related to SAG's € 13.2 million contribution for the capital increase of Banco Santander Consumer Portugal/Interbanco.
Automobile Retail
In the area of Automobile Distribution, SIVA ranked 1st at the end of the semester in sales of passenger cars (LPV), with a 13.52% market share (12.87% at the end of the 1st Semester of 2006), corresponding to a total of 14,544 units sold. As regards light commercial vehicles (LCV), SIVA also strengthened its market share which now stands at 5.70% (4.88% in the same period last year), with 2,321 vehicles sold.
Therefore, with a total of 16,865 vehicles sold in the light vehicle market (LPV + LCV), SIVA recorded a market share increase to 11.37% (up from 11.03% in the 1st Semester of 2006), in a total total market which saw a 4.11% increase vs. the same period last year.
Overall, it is worth mentioning the absolute sales volume growth of the represented brands. Thus, in the first semester of this year, Audi sold 4,056 vehicles (+14,2 % vs. same period last year), Volkswagen LPV sold 8,668 vehicles (+ 0.32%) and Volkswagen LCV sold 2,289 vehicles (+ 47,11%).
In Automobile Retail area, Soautodealerships sold 1,918 new cars and 621 used cars during the first six months of the year.
In what concerns Specialised Retail, Globalcar, the Group company whose business is the sale of semi-new and used cars to the end Consumers, sold 858 vehicles this semester.
Automobile Services
a) Portugal
In the Operational Lease (OL) business in Portugal, which is conducted through Santander Consumer Multirent, a Company where SAG holds a 40% stake, key indicators show that the Company achieved significant progress during the period, when compared with the same period last year, both as concerns the contract portfolio and financed capital, variables which totalled 10,422 (+10.9%) and € 177 million (+14.0%), respectively.
As for the Financial Services business conducted by Banco Santander Consumer Portugal/Interbanco, where SAG has a 40% stake, there was an increase in the various business segments vs. the first semester last year. Therefore, in Car Finance, total financed capital rose to € 210 million (+11%). In those segments where SAG only started to be present following completion of the integration of all operations of Santander Consumer in Portugal into Interbanco, financed capital in Consumer Finance operations totaled € 29.2 million (+14.5%) and production of Credit Cards reached approximately € 13.8 million (+29.2%).
The Car Auctioning (Remarketing) business conducted through Manheim Portugal is also worth noting, with SAG holding a 40% share in a partnership with Manheim. 5,460 vehicles were sold during the semester.
b) Spain
In Spain, Santander Consumer Iber-Renthad, at the end of the first semester of 2007, a fleet of 17,621 vehicles, a 3.9% increase vs. the same period last year. Production of new contracts saw a 33.2% increase in the number of contracts and approximately 40% increase in financed capital, to 6,089 and € 101 million, respectively.
b) Brazil
Business in Brazil, conducted through SAG do Brasil under the Unidas brand name, saw high growth levels during the semester, as was the case throughout 2006. Therefore, in the OL and Fleet Management (Fleet) business, the number of contracts rose to 19,259, i.e., 45.4% more than at the end of the first half of 2006. In addition, total financed capital reached 400 million Reals (approx. € 125 million), a 47.5% increase vs. the same period in 2006. The Rent-a-Carbusiness also saw increased business, with the number of rental days increasing 22.2% year on year, particularly in travel agency and corporate rentals, where growth rates were 24.6% and 43.6%, respectively vs. the same period in 2006.
Earnings
The Company’s Net Profit for the first six months ending 30 June 2007 recorded a negative amount of EUR 9,133,561.
Dividends distribution
The board of Directors, in line with the approved Dividends policy, will recommend that Shareholders approve at the next Shareholders Meeting the payment of an interim dividend for the 1st half 2007 of EUR 0,0314 (three cents and fourteen tenths of a cent) per share corresponding to a total dividend of EUR 5.330.602.10,35, which represents approximately 60% of the Consolidated Net Profits for the period.
Perspectives for the 2nd Half 2007
During the 2nd half, SAG expects to continue in the trend of the results achieved in the first half of the year, by strengthening the competitive positioning of its business operations in the various markets it is present.
Treasury stock( Clause 66 of the Portuguese Company Act) Portuguese Company Act)
On 31 December 2006, the Company held 8,478,415 shares in treasury stock, of which 8,473,315 were held directly and 5,100 were held by affiliate Rolporto, SA, with a nominal value of € 1 each.This portfolio of Treasury Stock shares represented 4.9942% of the total of shares representing the registered share capital of the Company as at 31 December 2006, with an average acquisition unit price of € 1.6277.
During the period, SAG Gest acquired 1,200,000 shares at an average unit price of € 1,896.
On 30 June 2007, the Company held 9,678,415 shares in treasury stock, of which 9,673,315 were held directly and 5,100 were held by affiliate Rolporto, SA, with a nominal value of € 1 each.This portfolio of Treasury Stock shares represented 6% of the total of shares representing the registered share capital of the Company as at 30 June 2007, with an average acquisition unit price of € 1.6604.
The aim of these acquisitions was to contribute to increased liquidity of the shares in the market under the agreement signed with Banco de Investimento Global as Liquidity Provider with the aim of fostering SAG stock liquidity in the market, through which the commitment was made to buy stock under specific circumstances.
Alfragide, 21 September 2007
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
Manuel Ferro da Silva Meneses
Rui Eduardo Ferreira Rodrigues Pena
José Maria Cabral Vozone
Pedro Roque de Pinho de Almeida
QUALIFIED OWNERSHIP POSITIONS
30 June 2007
SGC Investimentos - SGPS, SA (*)
Direct ownership 17,391,110 shares, representative of 10.24% of the share capital and corresponding to 10.86% of voting rights.
(*)100% owned by SGC - SGPS, SA
SGC - SGPS, SA (**)
Direct ownership 111,221,824 shares, representative of 65.52% of the share capital and corresponding to 69.48% of voting rights.
Indirect ownership 17,391,110 shares held by SGC Investimentos – SGPS, SA, representative of 10.24% of share capital and corresponding to 10.86% of voting rights.
(**)99.80% owned by Dr. João Manuel de Quevedo Pereira Coutinho
Dr. João Manuel de Quevedo Pereira Coutinho
Direct ownership 3,915 shares, representative of 0.0023% of the share capital and corresponding to 0.0024% of voting rights.
Indirect ownership 111,221,824 shares held by SGC – SGPS, SA, representative of 65.52% of share capital and corresponding to 69.48% of voting rights.
17,391,110 shares held by SGC Investimentos – SGPS, SA, representative of 10.24% of share capital and corresponding to 10.86% of voting rights.
Global Sum 128,616,849 shares, representative of 75.76% of the share capital and corresponding to 80.34% of voting rights.
Pasley United Ltd
Direct ownership 9,375,000 shares, representative of 5.52% of the share capital and corresponding to 5.86% of voting rights.
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
Headquarters:Estrada de Alfragide, Nº 67 Amadora
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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
Headquarters:Estrada de Alfragide, Nº 67 Amadora
1
NOTES TO THE FINANCIAL STATEMENTS
AS AT 30 JUNE 2007
INTRODUCTION
The following Notes were prepared closely bearing in mind the requirements set forth in the International Financial Reporting Standards, since it is considered that the additional information provided in accordance with the latter exceeds the minimum requirements established in the local standards (Portuguese Official Chart of Accounts - POC).
Therefore, and except in what concerns their numbering, the Notes to the Financial Statements comply with the criteria defined in the POC.
1.GENERAL INFORMATION REGARDING THE COMPANY’S ACTIVITY
Financial Statements as at 30 June 2007 were approved by the Board of Directors.
The main activity of SAG GEST SGPS, SA is the management of investments in other Companies, as an indirect form of conducting economical activities.
2.SUMMARY OF MAIN ACCOUNTING POLICIES
Basis for Preparation
The Financial Statements of SAG SGPS, SA were prepared in accordance with accounting principles that are generally accepted in Portugal.Therefore, this report was prepared in accordance with the historical cost convention (modified by the re-evaluation of tangible assets), on the basis of the continuity of operations in accordance with the accounting principles of prudence, consistency, substance over form and materiality.
All amounts shown in the Notes herein are expressed in euros, except where otherwise stated.
Changes in accounting policies
The accounting policies are consistent with those applied in previous years (except where stated otherwise). Instead of adopting the minimum requirements set forth in the Portuguese accounting regulations, it was decided to implement certain adaptations, which were deemed to be necessary for a better understanding of the Company’s economic and financial situation as explained herein.
Investments in affiliates
Investments in Affiliated Companies are recognized at cost.
Investments in the share capital of Affiliated Companies, as well as securities, are recognized at cost.
The corresponding dividends are only recognized when their payment has been secured. Any interest from securities is booked in the corresponding period.
Foreign Exchange Transactions
The functional currency used in the preparation of SAG SGPS, SA’s Financial Statements is the Euro.
Transactions 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 prevailing on Balance Sheet date.
All exchange rate differences are recognized as income or expense during the period in which they occur.
Land, Buildings and Equipment
Buildings and Equipment are recognized at cost, net of the corresponding accumulated depreciation.
Depreciation is calculated using the straight-line method, in compliance with the provisions of Decree no. 2/90, dated 12 January 1990. The value of fixed assets is fully depreciated during the assets’ useful life, and the following depreciation rates apply:
%Buildings and Other Constructions / 2,00
Basic Equipment / 25,00 / to / 31,25
Office Equipment / 12,50 / to / 25,00
Autos and Trucks / 25,00
Other Tangible Assets / 20,00 / to / 33,33
Financial costs
Loans are recognized as liabilities at their nominal value, and their costs are recognized as expenses in the period to which they relate.
Intangible assets
Intangible assets are valued at cost.Depreciation is calculated on a straight-line basis, using depreciation rates that allow the complete depreciation of these assets during their respective useful lives.
Debtors
Accounts Receivable are recognized at invoice value after deducting any reserves for bad or doubtful accounts.
Reserves for bad and doubtful accounts are booked when there are doubts regarding the possibility to collect debt, when collecting is not probable or on the basis of their respective ageing.
Creditors
Accounts Payable are booked at invoice value.
Cash and cash equivalents
The Cash and Cash equivalents amount shown includes money and highly liquid investments that can be quickly converted into cash with an insignificant impact to their value.
Bank Debt
Bank debt recognized in the Company’s Balance Sheet is exclusively engaged with financial entities that conduct their operations in Portugal.
Provisions
Provisions are made when the Company has a present (legal or constructive) obligation based on past actions, when it is probable there may be a future financial payment in connection with such obligation, and the latter can be measured reliably.
Income Recognition
Income is recognized as such and to the extent that it is possible that the Company will obtain a future economic benefit and that the latter value can be assessed reliably.
In order for income to be recognized, the following criteria also have to be fulfilled:
Services
Income from services is recognized during the period in which they are provided, regardless of whether or not the relevant 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 the Shareholder’s right to receive such dividends is established.
Income tax
In accordance with current legislation, tax returns can be subject to revision and correction by the tax authorities for a four-year period (five to ten years for Social Security, depending on the application of the transitional regime).
Therefore, the Company’s tax returns in respect of the years 2004 to 2007 could still be subject to revisions, although the Company considers that any possible corrections resulting from tax revisions to such tax returns will not have any material impact on the Financial Statements as at 31 December 2007.
The Company recognizes deferred taxes as a procedure, in accordance with the terms and conditions set forth in Portuguese Accounting Standard no. 28, as a way of suitably matching the tax effects of its operations to exclude distortions associated with tax criteria that would affect the economic results of certain transactions.
The movement recognized 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 5 below.
Financial instruments
The Company regularly uses financial instruments or derivative financial instruments in the regular course of its operations, with the single and explicit purpose of minimizing its exposure to risks related to the fluctuation of interest and exchange rates, and not for negotiation or speculation purposes.
The Company’s preferential coverage instrument to protect against the said interest rate fluctuation risks is interest rate swap operations.Interest payable or receivable with regard to these instruments is balanced against income or expenses until maturity of the operations.
De-recognition of financial instruments occurs when the Company no longer controls the contractual rights that govern such financial instruments, which regularly occurs when they are sold or when cash-flows from said instruments are transmitted to a third party.
The Company normally engages forwards or currency options to cover exchange rate fluctuations.A mark-to-market assessment is made on a monthly basis as regards these instruments.The result of this assessment is recognized in the income statement (Note 4).
3.REPORTING BY BUSINESS SEGMENT
The Company’s main reporting format is the report by business segments.
The identified business areas are managed separately based on the nature of the products or services provided.Each segment represents a strategic business unit that offers different products and serves various markets.
The presented segment refers to legal, financial and tax consultancy services provided to the Affiliated Companies.
Business segments
The following chart represents the results, assets and liabilities as at 30 June 2007 and their comparison to identical information as at 31 June 2006, with regard to the several business segments in which the Company does business:
Geographical Segments
All services were performed in the Portuguese domestic market, and therefore information by geographic segment is not relevant.
4.OTHER INCOME AND EXPENSES
Other Income and Operational Expenses are detailed as follows:
Financial Income and Expenses are detailed as follows:
5.INCOME TAX