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Transcript of Sustainability Report - Luís Simões · 3 Sustainability Report | ENGLISH This report focuses on...
Sustainability Report
© M
ACEO
/FO
TOLI
A
About this report
“This report focuses on the
activity developed by the company
Luís Simões in 2008, within the
following business fields: semi-
trailer transport, logistics and
maintenance.„
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Sustainability Report | ENGLISH
This report focuses on the activity developed by the company Luís Simões in 2008, within the following business fields: semi-trailer transport, logistics and maintenance.This is Luis Simões first Sustainability Report, and includes the Financial Statements (in the “Financial Strength” chapter and Annex – Accounts).Data and economic targets (Financial Statements) are to be updated on an annual basis, with the other key figures being updated on a biannual basis.The report is in accordance with the Global Reporting Initiative (GRI) G3 Protocol and its content is based on Grupo Luís Simões sustainability strategy, the drawing of which took into account GRI principles, mainly those of materiality and stakeholders. For more details on the means of application of these principles, refer to the chapter “LS on the road to sustainability”.
About this report
The reported key figures, reflecting the reality of all business fields, were collected for the Group, based on GRI G3 Indicators Protocols, the documents referred to therein, specifically the GHG Protocol, and the data published in the legislation.Since this is Luís Simões’ first Sustainability Report, to be considered as an initial exercise in diagnosis and definition of strategies, the decision was taken not to have it externally examined, in this phase. The person to be contacted for clarification of doubts is: Cláudia Simões (E-mail: [email protected])Application levels of Global Reporting Initiative guidelines (associated to the reporting degree attained by the reporting organisation in view of the protocol).
C C+ B B+ A A+
Self declaration
Verified by external entity
Verified by the GRI
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LS Universe
“LS’ main branches of activity
are: the transport of goods,
logistics, vehicles maintenance and
sale, as well as the rent-a-cargo
and insurance branches.„
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Sustainability Report | ENGLISH
LS Universe
PRESENCELuís Simões’ activity is mainly developed within the Iberian Peninsula, where it is present in 22 locations or sites, as shown below:
BRANCHES OF ACTIVITYLS’ main branches of activity are: the transport of goods, logistics, vehicles maintenance and sale, as well as the rent-a-cargo and insurance branches, which are not part of this document due to their lesser extent.
Head Office
Insurances
Cross-DockingPlatforms
LogisticsOperations Centers
TransportOperations Centers
TechnicalsAssistance Centers
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Sustainability Report | ENGLISH
KEY INDICATORS OF THE GROUP
EMPLOYEE TRAININGConcerning employees training, LS counts on:
Two decades of structured training;• Around 34,000 hours per year for more than 1,758 employees.•
60 Years of entrepreneurship, ethical values, strategic vision, technology and innovation... to go further... wherever the future may lead us.
INNOVATION AND TECHNOLOGYConcerning Innovation and Technology, LS has:
Information systems integrated with clients and with business • applications, enabling the traceability of goods from their origin to their destination (inside and outside of the warehouses); Automatic route division into expedition tunnels;• Pallet displacement automation;• Traceability of batches throughout the supply chain;• Follow-up of operations showing standards of acceptability, enabling the • control to focus on the exceptions; Mastery of Business intelligence applications supporting the different • Balanced Score Cards.
Warehouse area (m2) 250,000
Euro pallet spaces 263,000
Picking units/month 3,146,680
Co-packaging units/month 502,000
Average age of the LS fleet (years) 2.5
Number of daily routes 1,700
Metric tons transported per year (millions) 6,150,000
Kilometres covered per year (millions) 148,000,000
Maintenance
Total area of the 3 Assistance Centres (m2) 19,000
Truck wash installations 2
Maintenance installed capacity (hours) 107,000
Logistics and Transport 2008
IndexSustainability Report
Message from the Chairman
| LS Profile 01| LS Profile Vision Mission Values Policies 01.1| Flowchart 01.2| Governance 01.3| Businesses
| LS on the Road to Sustainability 02| LS on the Road to Sustainability 02.1| Strategy development 02.2| Sector framework and management guidelines 02.3| Stakeholders Involvement 02.4| Materiality Matrix 02.5| Sustainability Strategy
| Principles of Sustainability Performance and Commitments
03| A Service of Enhanced Quality and Responsibility 03.1| Framework 03.2| Food Safety 03.3| Quality of the subcontracted fleet 03.4| Service levels 03.5| External Audits 03.6| Communication with clients 03.7| Engagements 04| Ensuring Financial Health 04.1| Framework 04.2| Main consolidated indicators 04.3| Macroeconomic analysis 2008 04.4| Analysis of the Transport Sector 04.5| Analysis of the Logistics Sector 04.6| Main events in 2008
10
1313131313141516
222222242626
292929293030303133333334343435
04.7| Economic Performance 04.8| Prospects for the future 04.9| Engagements05| Innovation and being at the Forefront 05.1| Framework 05.2| Innovation in Transport and Logistics 05.3| Carregado 2: A Warehouse for the future 05.4| Engagements06| Employee Recruitment, Training and Retention 06.1| Framework 06.2| Employees 06.3| Qualifications 06.4| Distribution per age and sex 06.5| Selection, retention and professional development 06.6| LS decentralization 06.7| Social benefits 06.8| Culture and Organisational Environment 06.9| Relations with the worker representative organisations 06.10| Conciliating family and professional responsibilities 06.11| Engagements07| Occupational Health and Safety 07.1| Framework 07.2| Monitoring and Mitigating Risks associated to the activity 07.3| Health Surveillance 07.4| Engagements08| Promoting Road Safety 08.1| Framework 08.2| Training for Safety 08.3| Ergonomic Conditions for Drivers 08.4| Fleet Renewal and Preventive Maintenance 08.5| Outsourced Fleet 08.6| Recognition 08.7| Engagements
363737393939404143434344444546464647474749494951515353535354545454
Transportes Reunidos, Lda Management Report Financial Statements Registered Auditors’ Report Distribuição Luís Simões, S.A. Management Report Financial Statements Report and Opinion of The Single Auditor and Registered Auditors’ Report LS - Luís Simões SGPS, S.A. Management Report Financial Statements Report and Opinion of The Single Auditor and Registered Auditors’ Report RETA - Locação e Gestão de Frotas, S.A. Management Report Financial Statements Report and Opinion of The Single Auditor and Registered Auditors’ Report SOCAR - Equipamentos de Transporte e Serviços Técnicos, S.A. Management Report Financial Statements Report and Opinion of The Single Auditor and Registered Auditors’ Report Lusiseg - Mediadores de Seguros, Lda Management Report Financial Statements LS - Gestão Empresarial e Imobiliária, S.A. Management Report Financial Statements Report and Opinion of The Single Auditor and Registered Auditors’ Report Solmoninhos - Consultoria, Gestão e Execução Imobiliária, Lda Management Report Financial Statements Patrimundus - Investimentos Imobiliários, S.A. Management Report Report and Opinion of The Single Auditor and Registered Auditors’ ReportGlossary of termsGRI Table
148148150160161161163175178178179185188188190202205205207219222222224231231233247250250251258258258262264
09| Energy Efficiency in the Transport of Goods 09.1| Framework 09.2| Investment in own fleet 09.3| Driver’s performance 09.4| Vehicle Occupancy 09.5| LS Outsourced Fleet 09.6| Innovation towards Eco-efficiency 09.7| Engagements10| Environment Performance of the Facilities 10.1| Framework 10.2| Energy Efficiency and associated Emissions 10.3| Waste management 10.4| Water consumption 10.5| Engagements11| Promoting Internal and External Citizenship 11.1| Framework 11.2| Main actions in 2008 – Internal public 11.3| Main actions in 2008 – External public 11.4| Engagements12| Internal and External communication 12.1| Framework 12.2| Internal Communication Channels 12.3| External Communications Channels 12.4| Ways in which to involve stakeholders 12.5| Engagements13| Accounts Report and Opinion of The Single Auditor and Registered Auditors’ Report Transportes Luís Simões, S.A. Management Report Financial Statements Report and Opinion of The Single Auditor and Registered Auditors’ Report Luís Simões Logística Integrada, S.A. (Sociedade Unipessoal) Management Report Accounts Annual Accounts Audit Report
5656565758585859616161626363656565666769696970737375979999
102115118118120147
Administrators LS
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Sustainability Report | ENGLISH
Message from the Chairman
As a Group with 60 years of history, we believe our prosperity depends on the profitability of our business and the quality assurance of services rendered, sustained by the best conditions of environmental preservation and respect for the surrounding community. This is the credo that has moved us from the very beginning.
Being fundamental parts of the consumables supply chain, the logistics and transport sectors, such as warehousing and delivery, are key elements connecting the producer and the consumer, even though this stage of the chain may not be a very visible one.
As a result of their purpose of connection, these sectors have increased responsibilities in terms of sustainability: their activity must be effective, with the lowest possible costs for the final consumer and the environment; and safe, guaranteeing the punctual delivery of goods in the same conditions as when entrusted to them, as well as civilised conduct on the roads.
Within this context, we endorse the search for differentiation and leadership, seeking to provide efficient answers to the sector’s main challenges. These challenges include the guarantee of the Group’s financial strength in relation to our competitors, the satisfaction of clients whose demands are increasingly governed by rigour and quality, the decrease of the weight of fuel in the costs and impact of transport, the promotion of road safety, employee motivation and safety, and the involvement with the community and with other stakeholders.
This year we celebrate our 60th Anniversary and publish our first Sustainability Report, with which we celebrate the past and commit ourselves to the future, by presenting our practices, ever capable of improvement, to other players who may participate with us to some degree in the construction of a more sustainable future. In exposing our activities, we also believe that they may move the rest to share with us the creation of sustainable prosperity.
José Luís Simões President
LS Profile
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LS Profile
“Mission - Guarantee efficient
and competitive Transport,
Logistics and supporting service
solutions, promoting the client’s
satisfaction and that of society in
general, from the economic, social
and environmental point of view.„
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Sustainability Report | ENGLISH
LS Profile01|
VISIONLS’ has the following vision:“To be the Iberian company of reference in terms of quality of service for the Transports and Logistics sector.”
MISSIONConcerning its mission, LS seeks to:“Guarantee efficient and competitive Transport, Logistics and supporting service solutions, promoting the client’s satisfaction and that of society in general, from the economic, social and environmental point of view.”
VALUESTo successfully fulfil this mission, it is essential to disclose and share the following core values:
• Client Orientation: To exceed client expectations by providing value-added services supported by flexible, innovative and technologically advanced solutions; • Respect for people: To guarantee the continuous qualification of all employees, developing their skills for different and challenging performances of their activity, with quality and security;• Sustainability: To support the organisation’s sustained development through transparent and socially and ethically responsible conduct;• Trust: To imbue Group and employee performance with respect towards colleagues, clients and suppliers, believing in each one’s working skills and in the advocacy of LS values; • Loyalty: To base day-to-day practice upon the professionalism, operational rigour and transparent relationships, placing LS interests above personal interests, in order to protect our institutional credibility and positive image;• Innovation: To focus management into structured processes, supported by modern technological systems, contributing for the development of competitive advantages in relation to the market;• Environment: To implement good environmental practices, reducing the adverse effects resulting from our activity and protecting the surrounding environment;• Concern for safety: To guarantee the best working conditions through preventive actions, in order to eliminate risks inherent to the activity and preserve the employees’ well-being;
• Property: To uphold the quality of our facilities, equipment and brands, ensuring the valuation and respect of all, particularly the employees, by dignifying their jobs.
POLICIESIn order to carry out its Mission and its Vision, the company management is engaged in pursuing these policies:Quality
To offer the relevant resources for the increase of businesses quality and • its continuous improvement; To favour gains in process efficiency and efficacy, a competitive • advantage for companies and an increase in value for the client, aiming at securing their loyalty;To develop our employees’ competence and motivation regarding • business targets, in terms of quality, occupational health and safety, environment and food safety.
Food SafetyTo preserve the quality and food safety of the products, within the scope • of operations and services provided, ensuring the communication with all parties intervening in the food chain: suppliers, employees, customers and competent authorities.
Occupational Health and SafetyTo offer the necessary resources for preventing occupational risks, • improving security conditions when performing activities and the promotion and surveillance of the employees’ health, thereby developing their capacities and strengthening awareness in terms of occupational health and safety.
EnvironmentTo implement measures for reducing the environmental impacts • resulting from the activity, and for management and control of the waste produced, teaching employees conduct and habits that promote environment protection.
Social AccountabilityTo develop initiatives aimed at employees, in order to promote their • personal, professional and family valuation, as well as information, awareness and/or solidarity activities aimed at the external entities with which we interact.
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Sustainability Report 2008 | ENGLISH
01.1| FLOWCHART
The LS organisational structure is allocated as follows:
Direction of CorporateShared Services
Innovation Corporate Direction
Business AreasSupport Areas
CommunicationDepartment
CEO
Board of Directors
Reta - Locação e Gestão de Frotas, S. A.
Lusiseg - Mediadora de Seguros, Lda.
Socar - Equip. de Transp. eServ. Técnicos, S.A.
Diversification
Real Estate
Financial Control
Accounting
Planning and Controling
Legal
Procurement
Human Resources and Training
Quality
Safety and Health at Work
Environment and Sustainable Development
Information Systems
Luís Simões Logística Integrada, S. A.(logística)
DLS - Distribuição Luís simões, S. A.
Transportes Luís Simões, S. A.
Transport
Logistics
Transportes Reunidos, Lda.
Luís Simões Logística Integrada, S. A.(transporte)
LS - Gestão Empresarial eImobiliária, S. A.
Patrimundus - Investimentos Imobiliários, S.A.
ISM - Imobiliária Solmoninhos, Lda.
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Sustainability Report | ENGLISH
01.2| GOVERNANCE
Luís Simões SGPS Board of Directors considers that the driving of Group Business is done according to appropriate patterns, which promote the correct administration of the companies.
Luís Simões companies are 100% held by Luís Simões family. The Board of Directors includes the three 2nd-generation family members, and half of the 3rd-generation family members are already on the company’s staff.
BOARD OF DIRECTORS| Composed by:
Three Group Director - Leonel Simões, José Luís Simões and • Jorge Simões;Corporate Financial Directress; • Three External Consultants.•
| Frequency: 4 times a year.| Targets:
Approval of the Group’s Strategy, specifically the strategic • plans of the group and of each company;Analysis of the Group’s major priorities: Income; Investment; • Governance Structure and Associated Subjects.
ExECUTIVE COMMITTEES (per company)| Composed by:
Managing Director• 1• st line Managers.
| Frequency: 3 to 4 times a year| Targets:
To guarantee that the sales and income targets of each • company are exceeded;To guarantee that action plans are implemented;• To ensure the assessment of the teams’ Performance • Management;To ensure that communication occurs at the different • management levels;
GOVERNANCE COMMITTEE| Composed by:
Executive Chairman;• General and Corporate Directors.•
| Frequency: 4 times a year.| Targets:
To guarantee that the sales and income targets of each company • are exceeded;Approve Investment Plans;• Approve Human Resources Policies.•
CHAIRMAN VISIT| Undertaken by the Executive Chairman of the Group to each site/company/corporate area of LS.| Frequency: 1 time/year| Targets:
To ascertain relevant situations in advance, for later • decision making;To communicate criteria;• To promote the coexistence between employees.•
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Sustainability Report | ENGLISH
01.3| BUSINESSES
1| Coimbra, Alicante and Granada Platforms.
Target
Development of integrated logistic activities, comprising primary transport, warehousing, preparation of orders, inventory control, product delivery and other added-value services such as product handling or promotional event logistics.
Geographic location
Iberian Peninsula.
Dimension
15 operations’ centres (7 in Portugal and 8 in Spain), 3 cross-docking1 platforms and 13 outsourced cross-docking platforms (3 in Portugal and 10 in Spain), corresponding to a total area of over 250 000 sqm.4 co-packing centres (2 in Portugal and 2 in Spain)
300 handling equipment units involved in warehousing activities.
Delivery network with over 800 delivery daily routes.
Over 700 employees in Portugal and Spain
Client portfolio
300 companies from the most varied sectors: food and beverages, hygiene and cleaning, PLV domestic power and electronic appliances, automotive sector.Our 24 major clients represent 79% of total sales.Client retention rate (2008):DLS - 80% of turnover ensured by clients of 3 years or more.LSL - 92% of turnover ensured by clients of 3 years or more.
Turnover development
2008 2007 2006
Sales (Millions of Euros) 62 62 51
LS Logistics Business
LS L
ogis
tics
Bus
ines
s
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Sustainability Report | ENGLISH
Target
The transport of goods by road and, merely as a complementary system for certain flows, by vessel and train. It comprises three companies operating in Portugal and Spain: Transportes Luís Simões SA, Luís Simões Logística Integrada SA and Transportes Reunidos Lda.
Geographic location
Higher incidence in Iberian flows, where LS Transport business is a market leader.
Dimension
10 operational centres in Portugal (3) and Spain (7).
Management of around 900 journeys per day.
845 Employees (TLS+TR+LST).
Client Portfolio
Food and beverages, paper, large-scale delivery and automotive parts. 1471 clients in 2008.106 clients are responsible for 80% of sales.Client retention rate (2008): 84% of turnover ensured by clients of 3 years or more.
Turnover development
2008 2007 2006
Sales (Millions of Euros) 102 101 99
LS Transport Business
TargetSemi-trailer assembly and marketing.Heavy vehicles maintenance and repair.
Geographic location
Carregado, Gaia and Perafita.
Dimension
Total area of 19,000 m2.
Two truck wash installations, at the technical assistance centres in Carregado and Gaia
75 operational workers (LS workers and from a partnership system), with a maintenance installed capacity of 107,000 hours/year.
Client Portfolio
The products and services traded by Socar are designed for companies from the following sector: transport of goods by road, whether private or public.Socar has a highly fragmented client portfolio from the transport and logistics sectors.
Turnover development
2008 2007 2006
Sales (Millions of Euros) 9 10 8
LS Business Diversification
Ls S
tand
in S
il -
Inte
rnat
iona
l Hal
l of
Logi
stic
s in
Bar
celo
na,
2008
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Sustainability Report 2008 | ENGLISH
Below we present the way in which LS has evolved since its foundation in the 30s up until today, as well as what took place in the world and in Portugal during that same period of time.
LS History
Luís Simões
Decade/Year
World/Portugal
60 70 90 | 19951997 | 199830 40 50 199980
Economic crisis.
UNO approves the Declaration of Human Rights.
Open growth of the civil works sector.
Computing Technology advance.
Boom on the Public Works of the Estado Novo (Portuguese government in the sixties)Development of the animal feed industry.
Recession at the United States of America due to the oil crisis. Portuguese revolution of 25 April 1974.
Research is carried out on a worldwide basis, with the aim of making the use of low-cost RFID tags feasible on all products.
Economic crisis.
With a cart, Fernando Luís Simões transports vegetables and fruit into the Lisbon markets.
Entry at the cereal bulk cargo market.Foundation of the company Transportes Luís Simões Limitada (1968).
Consolidation of the presence upon the Spanish market.Beginning of the Logistics Activity in order to anticipate the logistics results of the European market.Business segmentation and diversification.TLS: ISO 9002:1994 Certification – 1st transport company to achieve certification.Creation of the holding and structuring of the different businesses.Inauguration of the Centro de Operações Logísticas do Carregado (Carregado Logistics Operations Centre).ISO 9002:1994 Certification of the companies DLS e LSE (Luís Simões España).
Purchase of the first truck.
Fleet increase.Appearance of Novobra, a civil works company, a critical client for Luís Simões Commercial dynamics.Diversification on the cargo services of vegetable products into civil works materials.
Fernando Luís Simões transfers management of Transportes Luís Simões Limitada to his sons (1973).First steps towards the use of computers in the company.Beginning of special transport of undividable cargo.The first home delivery experience was carried out, covering the entire Portuguese territory.
First training action given to drivers.Internationalisa-tion to Spain.Investment on activity diversification.
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Sustainability Report 2008 | ENGLISH
Luís Simões
Decade/Year
World/Portugal
20082000 2001 2002 2003 2004 2005 2006 2007
Amendment of Community Legislation regarding driving times and rest periods.
Ratification of Kyoto Protocol.
Use of digital tacographs in Europe.
DLS, TLS, RETA, LSE: Transition into ISO 9001:2000 quality certifications.
Inauguration of the new Centro de Operações Logísticas do Futuro (Centre of Logistics Operations for the Future), in Carregado.
RETA: ISO 9002:1994 Certification.Replacement of all computerised business support applications.
Acquisition of LOALSA and positioning as logistics operator integrated at an Iberian scale.
Exponential growth of logistics in Spain – invoicing doubles compared to 2005.
LS, SGPS Group (DLS, LSLI, TLS e RETA) audit: ISO 9001:2000 Standard Certification renewal.
Introduction of computing into the vehicles with GPS.Deployment, at the arehouses, of radiofre-quency and barcode optical reading.
Merger of LOALSA and “Luís Simões España”, into Luís Simões – Logística Integrada, S.A.Creation of the LSnet Web Portal – an advanced technological tool for web-based management and a privileged source of information for clients to consult.
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LS on the Road to Sustainability
LS on the Road to Sustainability
“The development of Luís
Simões’ sustainability strategy is
based on the analysis of the results
of stakeholder involvement, sector
framing, management guidelines
and good internal practices, as
well as the benchmarking of
congeneric companies.„
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Sustainability Report | ENGLISH
LS on the Road to Sustainability02|
02.1| STRATEGY DEVELOPMENT
The development of Luís Simões’ sustainability strategy is based on the analysis of the results of stakeholder involvement, sector framing, management guidelines and good internal practices, as well as the benchmarking of congeneric companies.
02.2| SECTOR FRAMEWORK AND MANAGEMENT GUIDELINES
02.2.1| TransportChallenges
A supply surplus, both in Portugal and Spain, in view of the existing • demand - a fact made worse by the economic instability we are currently
experiencing. As a result, a natural company selection process is to be expected over the next few years, accelerating a profound restructuring of the sector which has already become perceivable through the many environmental, legal and tax measures imposed on the sector;A greater tendency towards company focus as a weapon to reduce fixed • structures and increase geographical coverage and competitiveness in providing for clients’ needs;Existence of market peaks; the LS strategy involves a mix of its own fleet • and third party fleets (outsourcing), enabling greater flexibility in order to meet this challenge and providing enough strength to merit the trust of major clients, where LS’ strategic investment undoubtedly now lies.
The LS differenceService flexibility, proving itself to be a company constantly geared • towards client solutions;Permanent innovation in creating and managing transport, investing • in technology and information as a complement to the core capacity for efficiency in the transport of goods;A modern and well-prepared fleet, complying with the most demanding • European standards;Drivers with high skills and training levels, in order to fulfil safety • standards and reduce the environmental impact resulting from transport activity;Experienced professionals in the management of transport.•
Sector Framework and Benchmarking
Analysis of Management Guidelines and
Good Internal Practices
Stakeholders InvolvementMateriality
Matrix Identification of challenges CommitmentsPositioning and
sustainability principles
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Sustainability Report | ENGLISH
02.2.2| LogisticsChallenges
The market search for global solutions;• The demand for ever-inceasing added-value from logistics;• The demand for high levels of control, rigour and quality in processes;• The energy eficiency of logistic operations;• The accomplishment of environmental requirements regarding waste;• Guarantees regarding product security, especially concerning • foodstuffs.
The LS differenceCoverage of the Iberian Peninsula through proximity to direct and • indirect clients (Our clients’ clients);Technological solutions adapted to process control and suited to • clients needs; Innovation geared towards the design of solutions with a higher • added-value for the client;Focus on the Quality of service, renowned by the market, especially • regarding Food Safety;Involvement in the reduction of energy consumption at our • facilities;Waste management solution, with a significant reduction in quantity • and the resulting decrease in the environmental impact associated to waste transport.
02.2.3| DiversificationChallenges
The economic and financial frailty of most transport companies – our main • clients – particularly relevant in small and medium-sized companies;The increase of fuel prices and the economic downturn, resulting in • accrued difficulties in the transport sector, causing a pronounced decrease of the activity at maintenance and repair level and in the acquisition of new equipment;An 24h/day operational demand and the need to alter schedules • according to clients needs; the conciliation between the flexibility of schedules required in the activity sector with the employees’ personal life;Increasingly higher demands in terms of the fulfilment of environmental • requirements.
The LS differenceA restructured process, with a new layout of the Carregado • workshop, enabling the development of activities with higher levels of productivity;All employees in operational areas work every Saturday, in order • to promptly answer to clients needs (Teams 100% active). As a compensatory measure, these workers are given two consecutive rest days per week (e.g. Tuesday and Wednesday), besides Sunday. In this way, LS seeks to promote the family well-being of these employees and at the same time enable the development of several leisure activities and the possibility of handling personal matters at several entities (Banks; Social Security; Finance Offices, etc).
Inte
rior
Sto
rage
Cent
er f
or T
echn
ical
Ass
ista
nce,
in C
arre
gado
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Sustainability Report | ENGLISH
02.3| STAKEHOLDERS INVOLVEMENT
The identification of the stakeholders, especially their worries and expectations, are vitally important for the process of defining a sustainability strategy, as well as for the content of a Sustainability Report. To this end, LS mapped out all stakeholders based on the analysis of LS’ importance to those stakeholders and vice-versa.Within the scope of this report, 12 interviews to external stakeholders were carried out and two focus groups of internal stakeholders were created, to ascertain their perception of the company and their expectations.
Pres
iden
t of
the
Por
tugu
ese
Repu
blic
Clients Employees Permanent Outsourced Companies
NGOs Unions Associations
Universities
Mass Media
Banks
Other Suppliers
Potential Outsourced Companies
National/Regional/Local Authorities
Message from the President of the Portuguese Republic
“(…) Social accountability, a form of responsibility which, when one has it, is evidenced by the relationship with one’s employees, concern shown with having an environmentally friendly fleet incorporating the most advanced technologies in order to meet the demands, as has been said, of a sustainable development, and furthermore, the support it has generously given to the Food Bank (Banco Alimentar contra a Fome). Therefore, these are the aspects I want to underline here today. In first place, the company’s competitive capacity on an international scale. Secondly, the non-postponement of investments and the way in which it prepares itself to face the challenges in a time of international crisis. But at the same time, the upholding of its sense of social accountability (…)”.
Extract from the speech made by the President of the Portuguese Republic, Prof. Dr. Aníbal Cavaco
Silva, at the inauguration of the Centre of Logistics Operations for the Future in Carregado, on 17
November 2008.
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Sustainability Report | ENGLISH
We point out that the interviews made to the stakeholders enabled the identification of LS’ strengths, weaknesses, opportunities and threats, as described in the following table:
Table 1 - Results of Interviews to Internal and External Stakeholders
• Communication and image;• Training and talent retaining;• Investment in transport options with fewer greenhouse gas emissions;• Innovation and internationalisation:• Client satisfaction;• Financial health;• Road Safety;• Environmental management.
• Environmental impacts of the activity – fossil fuels consumption; • Community impacts – noise, traffic and parking in the roads;• Labour stress (driving profession); • Access to facilities by public transport;• Internal communication;• Variations in driver conduct – LS fleet versus third parties fleets;• Lack of strategic communication with clients in Spain.
• Development of Information and Communication Technologies for business support;• Extension of the Quality Management System (QMS) to the occupational safety and environment fields;• Intermodal, break-bulk cargo and urban delivery;• Environmental performance and effectiveness as a way of making a difference in a society with a growing environmental awareness;• Development of technologies for renewable energies;• Implementation of driver support systems;• Standardisation of arrangements with Spain;• Strengthening of relationships with universities.
• Supply surplus on the market;• Current crisis;• Financial liquidity of outsourced transport companies;• Fuel price fluctuation;• Low availability on the market of qualified labour (mechanical engineering technicians and drivers); • Inflexible labour laws;• Peripheral position (Iberian Peninsula) regarding the legislation concerning driving times;• Pressure from legislation and from society.
Strengths
Opportunities
Weaknesses
Threats
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Sustainability Report | ENGLISH
02.4| MATERIALITY MATRIx
The analysis of the results from the interviews to stakeholders, as well as its sector background, enabled the construction of the following materiality matrix:
LS’ sustainability strategy in terms of values and policies was developed based on this matrix, and consolidated into principles and their corresponding engagements.
02.5| SUSTAINABILITY STRATEGY
LS’ principles of sustainability are in sync with its values, with their performance being closely related to the policies already developed by the group. LS has promoted its business activities in order to make them profitable and sustainable, simultaneously creating prosperity in the activities it develops with less adversity every day.
LS’ sustainability strategy, published in the year of its 60th anniversary, enables an analysis of its activities (always susceptible to improvement) under a new perspective, by allowing a greater involvement of stakeholders, who are invited to participate with LS in the creation of a more sustainable future.LS’ strategy sustainability principles are as follows:
To provide a service of high quality and responsibility;1. To guarantee the group’s financial strength;2. To promote innovation and being at the fore-front;3. To garner, train and retain staff;4. To promote Professional Health and Safety;5. To Promote Road Safety;6. To promote Energy Efficiency in the Transport of Goods;7. Improvement of the environmental performance of facilities and 8. operations;Internal and External Citizenship;9. Promoting internal and external communication.10.
These principles are carried out through the definition of goals and objectives and monitored through periodically assessed indicators. The manner in which they are implemented and the LS performance regarding them is described in the following chapters.
Logi
stic
s O
pera
tion
s Ce
nter
in C
arre
gado
Figu
re 1
– M
ater
ialit
y m
atri
x fo
r LS
• Energy efficiency of Goods Transport• Innovation and being at the Fore-Front• Road Safety• Communication and Image• Customer Satisfaction• Employee Training, Garnering and Retaining
• Community integration• Internal Communication
• Financial strength of outsourced transport companies
• Environmental performance of the facilities• Flexibility• Fierce competition
• Internationalisation• Peripheral Position• Suppliers’ Environmental accountability
Importance for LS Group
Stak
ehol
ders
con
cern
© F
OxY
_A/F
OTO
LIA
Sustainability PrinciplesPerformance and Commitments
A Service of Enhanced Quality
and Responsibility
“Quality is one of the main ways
in which LS makes a difference; as
such, it is part of its sustainability
strategy. „
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Sustainability Report | ENGLISH
03.1| FRAMEWORK
Quality is one of the main ways in which LS makes a difference; as such, it is part of its sustainability strategy. This implies putting client expectations at the core of its values:
Client-oriented Approach
To exceed client expectations through the supply of added-value services,
supported by flexible, innovative and technologically advanced solutions
In LS Values
LS’ concerns with Quality have always been present since the beginning of its activity; however, it was not until the 90’s that concrete objectives were developed and achieved in this area. The history of these certifications has marked the path taken by LS (which can be analysed through the timeline presented at the beginning of this report). LS distinguishes itself by being the first transport company to obtain an IPQ (Portuguese body for quality) certification, and a Group certification is currently held.
The practice of Quality is the responsibility of every member of the staff in the group, in accordance with the defined Policy (refer to LS Profile).
The LS is constant monitoring of the operation of this policy through its Directorate of Total Quality, assessing the levels of service provided, levels of customer satisfaction, the results of internal and external audits, complaints received and the various channels of communication close established with their customers.
By developing a service with high levels of responsibility and Quality, LS works towards:
Meeting clients’ expectations by offering flexible and innovative • solutions;Ensuring high quality standards for its own fleet and to outsourced • fleets, for the internal logistic operations and the sales and technical
A Service of Enhanced Quality and Responsibility03|
assistance to semi-trailers services;Ensuring high safety standards of products, including food safety, in the • course of our involvement in the supply chain.
03.2| FOOD SAFETY
Considering that logistics and transport are part of the supply chain of food products, LS companies have been developing his work for many years with a focus on food quality and safety.
Food safety is also included in the LS Policy (refer to LS Profile).
For this reason, the Management System for Food Safety (ISO 22000:2005 Standard) is a strategic factor in terms of product quality and client service, currently being implemented in the Transport, Logistic and Vehicle Maintenance areas (disinfection).
03.3| QUALITY OF THE OUTSOURCED FLEET
The transport activity is currently supported to a degree of 50% by own fleet and 50% by outsourcers. In 2008, with respect to the permanently outsourced fleet, 62% are trailers (40 metric tons of gross weight), with the remaining 38% being distributed among trucks with gross weights of between 3.5 and 26 metric tons.
Compliance with own fleet quality criteria is ensured by the LS Quality management system, whose transport branch has been certified since 1995. As for the outsourced fleet, LS’ partnership relationship with these suppliers is based on models which guarantee compliance with the levels of quality and with the operating requirements promoted by the company.
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LS´ constant endeavours to continuously supply a high-quality service to the client has led the company to develop and adopt a system of continuous selection and evaluation of its transport suppliers, based on:
Verification of the fulfilment of settled situation next to the public • administration, namely Finances, Social Security and insurances; Compliance with the criteria on vehicle age and standardisation of the • company’s image (defined per service type); Regular audits to vehicles;• Positive results on initial and continuous training programs.•
03.3.1| TRAININGTraining provided to transport providers has the main objective of disclosing all the necessary procedures and techniques for compliance with LS criteria and the standards arising from legislation or specific client requirements, namely pertaining to road safety. This training process comprises two clearly distinct parts: integration training (before the start of the activity) and continuous training.In parallel with training, LS has implemented a system for evaluating supplier performance, which ensures the conformity of the service provided by the outsourced transporter during the contract’s validity period.
03.4| SERVICE LEVELS
The service level indicators are measured on a daily basis, thus allowing a monthly reflection on the quality of the supplied services and potential actions to be developed.
03.5| ExTERNAL AUDITS
LS clients regularly perform audits to their processes. During 2008, nine clients performed 21 audits to the operational procedures in LS.
03.6| COMMUNICATION WITH CLIENTS
In the course of the contractual relationship with the Clients, meetings are held to analyse technical issues, organise the development of partnerships, plan for future compromises and/or establish the basis for new business deals.
OUTSOURCER TRAINING MODULESThe quality policy in LS;• The commercial role of the driver;• Filling-in and delivery of transport documents;• Use of LS semi-trailers;• Good defensive driving practices;• Procedure in the event of accidents involving vehicles and goods;• Fuel-saving tips;• Audits to vehicles;• Relationship procedures with LS;• Use of onboard console (if applicable);• Driving and Rest periods (Portuguese Decree Law No. 145/2007).•
INNOVATION AT THE SERVICE OF CONTINUOUS IMPROVEMENTTo facilitate the management of business quality, a computer application (Gestão XXI) was developed, which controls in real time the activities to be developed in terms of process improvement: audits, continuous improvement dynamics, indicators, etc. In 2008, 1221 improvement opportunities were registered and implemented, in several business areas.
Logistics
DLS 98%
Service Level
On-time
LSL 96% On-time
Transport TI 98% Global
Table 2 - Average Value of Service Level for 2008
Business Area Companies Indicators
Vehi
cle
LS
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Sustainability Report | ENGLISH
03.6.1| Client satisfaction surveys (CSS)
Since 1997, Client Satisfaction Surveys are carried out on an annual basis, aimed at the main Clients in the different business activities, in Spain and in Portugal. These surveys enable the measurement of the level of Client satisfaction regarding the different areas assessed: client assistance, operations, delivery, information systems, vehicles, drivers, workshops, etc.).
In ISC 2008, the flexibility and capacity to respond to new or unexpected situations was one of the most relevant factors in the evaluation of LS’ performance, as carried out by its clients.
03.6.2| Complaints managementComplaints are always an opportunity for improvement, as they allow the company to find out in which situations it did not fully fulfil client expectations.Through the complaints management process, every complaint is examined and answers are given to the clients, and suitable corrective measures are implemented according to each situation.
03.6.3| Quality Forums Quality Forums are privileged events for sharing knowledge with clients in areas that affect the supply chain and the competitiveness of companies that operate inside it. Thus it is important that the concepts and quality strategies are aligned between clients and suppliers in the search for the most effective solutions for the logistic process. In 2008, the 3rd edition of the Quality Forum was held in Portugal and the 1st
edition of the “Forum de Calidad” was held in Spain.
Table 3 - Evolution of client satisfaction levels in the ISC
Empresa 2006 2007 2008
DLS 71% 75% 74%
LSL 57% 74% 78%
R&S 72% 74% 72%
TI 83% 87% 88%
LS 73% 80% 80%
03.7| ENGAGEMENTS
3rd E
diti
on o
f th
e Q
ualit
y Fo
rum
TO PROVIDE A SERVICE
OF HIGH QUALITY AND
RESPOnSIBILITy:
FOR 2009
SERVICE LEVEL:
On tIme DLS: 98% ▪ On tIme LSL:
96% ▪ GLOBAL TI: 98%
ENGAGEMENTS
Ensuring Financial Health
“The progress of LS’ economic
performance results from a
sustained business strategy which
granted it the leading position
it has occupied in the sector of
Transport of goods by road in
Portugal.„
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Ensuring Financial Health04|
04.1| FRAMEWORK
The progress of LS’ economic performance results from a sustained business strategy which granted it the leading position it has occupied in the sector of Transport of goods by road in Portugal, and has also allowed it to set the foundations of LS’ positioning as one of the most important Logistic and Transport providers in the whole of the Iberian Peninsula.
To promote the revenues coming from its activity and ensure the financial health of the group, LS is committed to:
Promoting a policy of income retention, reinforcing its Equity and • subsequent financial balance;Adjusting the provisional structure of capital resources foreign to the • nature of financial investments;Efficiently managing client portfolios with emphasis on PMR reduction, • ensuring the funding of the operation cycle.
04.2| MAIN CONSOLIDATED INDICATORS
The main consolidated economic key figures associated to LS activity for the past years are shown in the following table:
LS H
ead
Offi
ce
Table 4 – Main consolidated economic key figures
Sales + Provision of Services
149.575 158.190 173.225 172.539
Net Income 1.503 3.348 2.641 -663
Depreciation 9.512 9.751 9.624 10.739
EBITDA 9.672 11.790 12.905 10.731
Fixed Assets 45.075 47.264 58.709 71.723
Customers 41.358 45.757 49.685 45.161
Total Assets 103.145 112.822 130.926 136.616
Equity 26.973 30.351 32.944 32.094
Total Liabilities 76.170 82.468 97.980 104.521
Staff Costs 29.383 31.448 37.419 42.119
Employees 1377 1376 1612 1731
Financial Autonomy 26% 27% 25% 23%
Thousand Euros
2005 2006 2007 2008
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04.3| MACROECONOMIC ANALYSIS 2008
The year of 2008 started out with the belief that the effects of the “subprime crisis” would be restricted to the USA only, and with the idea that the robustness of emerging markets and Continental Europe’s resistance would be sufficient to uphold the global growth dynamics. However, worsening financial conditions began to steadily choke economic activity, putting paid to a five-year cycle of great global prosperity with low levels of volatility in financial markets and abundant liquidity. This year of 2008 will thus go down as one of the most turbulent years in finance, and the results are clear: the three greatest world economies – USA, the Euro Area and Japan – are in recession, China is experiencing an accelerated economic slowdown and no country or geographical area has remained unscathed by this turmoil. Governments have fallen over themselves to present economic and tax stimulus plans in the hope of reversing the situation, but this has not prevented the situation from deteriorating.According to IMF predictions, World GIP growth should be approximately 0.5% in 2009, compared to 3.7% in 2008 and 5.0% in 2007. Should this be confirmed, it will be the worst performance since the Second World War.
04.4| ANALYSIS OF THE TRANSPORT SECTOR
The Road Transport of Goods Sector has enjoyed a period of relative stability in the past few years, favoured by a steady increase in trade within the European area, a stable economic climate as well as controlled production costs in terms of fuel. This climate has been particularly favourable in the Iberian Peninsula, with Spain clearly being the Peninsula’s economic engine, showing economic growth rates well above the European average, with the added advantage of favouring sectors with a high potential for transport of goods, as is clearly in the case with civil construction. Indeed, with Spain being the major partner for Portuguese imports and exports, the benefits for the transport sector, especially in Portugal, have been extremely relevant. On an Iberian level, a total of around 131 000 companies operate in this sector, of which 122 000 are based in Spain, with the overwhelming majority of these companies operating with only one vehicle. The concentration rate is reduced, since the five largest companies together achieve a market share of only 10%.
The year of 2008 puts an end to this period of higher growth in the transport market in relation to that of the general economy. Indeed, in a year where the entire international scenario was strongly shaken, the transport sector could never remain unaffected. In fact, the year of 2008 was marked by a global shrinkage in the transport market to the order of 4% in terms of the Iberian Peninsula, with special emphasis in Spain, where the reduction reached 6%. The market is currently worth around 23 500 million Euros. This market behaviour, in tandem with greater tax and legal pressures in the transport sector, will surely lead to a reduction in the number of operating companies, and will certainly cause some movement in terms of business concentration, ultimately determining a market with a greater balance between transport supply and demand. When analysing the sector in 2008, we must always refer to the strong instability which took place at the end of the first semester, which culminated in the paralysation of transport companies on a European level, with strong repercussions in Portugal and Spain. This standstill, unparalleled in recent years, was the result of a strong imbalance between production costs and transport prices, and undoubtedly marked the year under analysis. For 2009, it is expected that the tendencies started in the previous year will be reinforced, more specifically a feeble economic growth and a certain tendency towards protectionism shown by each country’s government in relation to foreign transporters, which will predictably dictate a reduction of around 5% in the value of the transport market, i.e. a reduction stronger than that of the economy.
04.5| ANALYSIS OF THE LOGISTICS SECTOR
The logistics sector has shown extremely dynamic characteristics: in the last 15 years, the average annual growth of the logistics market in the Iberian peninsula was greater than 15%. In 2008, this market represents over 4 000 million Euros, corresponding to around 300 companies. The concentration level of this market is high, as the ten largest logistics operators represent over 50% of this invoicing. It should be noted that only a small number of these operators have the capacity to provide integral logistics services within the entirety of the Iberian Peninsula. This concentration has been increasing on both an Iberian and an international scale, with mergers and acquisitions occurring among logistics operators from several regions/countries, with the objective of broadening services and
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geographical coverage and increasing the critical mass. At the same time, this is a market which presents significant obstacles to the entry of new operators: it demands critical mass, size, know-how and mastery of processes and information technology.
The growth dynamic which has characterised this market has clearly been supported by the continuous tendency shown by clients to outsource logistics operations, with the clients choosing to transfer the warehousing, handling and delivery of their goods to logistics operators. With this decision, clients choose to concentrate on the management of their core business by outsourcing the management of increasingly complex logistics operations, whose overall efficiency level has been growing in the hands of specialised operators. These, in turn, are faced with new regulatory demands, such as the implementation of the new legislation concerning traceability and food safety.
This tendency towards outsourcing should continue throughout the forthcoming years, since, despite the Iberian Peninsula has registered annual growth rates of 9% in terms of logistics operations outsourcing, the weight of external operations in the totality of the market is still lower than that of many developed countries. The market will keep growing with the entry of new clients.
However, the market growth rate is expected to be far lower in 2009 and the forthcoming years than it has been in the recent past. A visible slowdown of logistics flows has already been registered during the second semester of 2008, a consequence of the shrinking economy which has clearly influenced the sectors that support this market: food and beverages, vehicles / parts, electronics / household appliances, hygiene and cleaning products.
In this context, new obstacles will doubtlessly be encountered, but there will also be opportunities. From the logistics operators, clients expect competitive and variable costs; the capacity to deliver goods to their sales points on a daily basis, complying with deadlines and delivery requirements; and permanent technological innovation, making the logistics variable a distinctive factor, capable of being incorporated in their value chain and increasing their competitiveness. A context of economic shrinkage may clearly promote decisions in favour of outsourcing, thus benefiting those operators who have the capacity to meet clients’ expectations.
04.6| MAIN EVENTS IN 2008
The performance of the various LS Group companies are the reflection of the combination of several efforts. Many of the projects that were being developed have been consolidated and strategies have been outlined that will be determinant in the stability and strength which are attributes of LS, placing it among the top logistic and Transport providers in the Iberian peninsula. Examples are:
Opening of the Centre of Logistics Operations for the Future, at the LS • Logistics Park in Carregado, which will be officially inaugurated on 17th
november. This new semi-automatic warehouse will allow DLS to:▪ Increase Cross-Docking operations;▪ Increase complementary activities of Co-packing;▪ Centralise operations with a significant reduction of space requirements;▪ Automate route preparation operations working in Just in Time production;▪ Enable the engagement of clients with high freight volumes.
Great commercial dynamics, with the acquisition of new clients during • 2008, who have outsourced their logistic operation or switched from competitor providers, and who will ensure the growth of the logistic activity and a larger occupation of warehouses in 2009;The successful implementation of a Business Intelligence tool which • has provided the different management levels with more and improved information, making it possible to follow the activity level on a daily basis and anticipate the capacity to make better decisions;In the Transport business area, the operational organisation of the • company has suffered some adjustments leading to a greater verticality in decisions and an enhanced capacity for action in a market increasingly organised on an Iberian level. The new structure provides offices with a better capacity for commercial action, which along with the potentially centralised Resource Management area, provide a more efficient market response;The organisation of flows in operating formats, known as “Strategic • Corridors”, has taken important steps towards the affirmation of its simplicity, profitability assurance and competitive response to the clients. It was a year of consolidation regarding this matter, with conditions being created for a greater vehicle management centralisation in the forthcoming years;
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Sustainability Report | ENGLISH
The “Eco-driving” project was launched, aiming at a fuel cost reduction. • Some interesting results were obtained in terms of a greater control of this item, with the different areas of the company being made aware of the need to manage this variable more efficiently;In the Diversification area, a specific plan has been developed in order • to increase the rental of refrigerated semi-trailers.
04.7| ECONOMIC PERFORMANCE
LS Group has registered a Consolidated Turnover of 173 million Euros
The activities of LS’ core business have grown 1.1% in a year in which their main clients have reduced their activity, as a result of the economic crisis. The Iberian Transport Business Unit grew 1.7%. The Iberian Logistics Business Unit kept its turnover. Still in 2008, an array of business development measures were set in motion, culminating in the signing of new contracts to the amount of 25 million Euros. This turnover will ensure sales growth in 2009.
Diversification, a Business Unit which is complementary to the other Group activities, registered a decrease of 20.9% in its turnover. This was a reflex of the financial difficulties felt by small-scale transporters, the target clients of this business area, who witnessed fuel prices skyrocketing to record levels. The Net Consolidated Income was less than 663 thousand Euros, negatively influenced to the amount of 2,016 thousand Euros by a financial product linked hedging the Brent index. If this effect were to be excluded, Income would have been positive, to the amount of 1,353 thousand Euros.The financial operation was carried out at a time when Brent prices were skyrocketing, a situation which came to an end in July, with an average maximum price of 134,55 Dollars. Faced with this scenario and predictions from global investment banks that the Brent oil price would rise to between 150 and 200 Dollars before year end, the company took measures considered to be of prudence, fixing the Brent price. Contrary to analysts’ expectations, Brent’s international market rates reverted this tendency at the end of Summer, having reached the minimum value of 43.15 Dollars in December, a reduction of 68% compared to June. This market behaviour gave rise to a financial cost of 2,016 thousand Euros. Extraordinary Income registered the best performance of the last three years – 2,282 thousand Euros – mostly referring to added values generated by the sale of vehicles.
Turnover by Business Area (Million Euros)Iberian Transport
Iberian Logistics
Diversification
Legend
62 102
9
Development of the Results (Thousand Euros)Net
Extraordinary
Legend
1.503
2.251
4.0003.5003.0002.5002000
1.5001.000
5000
(500)(1000)
3.348
1.817
2.641
1.075
2.282
Swap Effect
(663)
1.353
2005 2006 2007 2008
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In a year characterised by a turbulent economic conjuncture, the EBITDA kept a good level, having registered a value of 10,731 thousand Euros. Assets registered an increase of 4%, amounting to 135,668 thousand Euros. These, coupled with the level of Equity, place the Luís Simões Group in a position of financial solidity, with a Solvency Ratio of 31% and a Financial Autonomy Ratio of 23%.
04.8| PROSPECTS FOR THE FUTURE
On the one hand, LS views the year 2009 with some concern, and on the other hand with confidence. In terms of concern for the current year, LS refers to the current economic crisis, particularly the uncertainty as to its strength and duration. As for the confidence in 2009, LS considers that this is a great opportunity to consolidate its position among its business partners. Thus, in 2009, performance will be based on the following assumptions:
Strong focus on clients and the market, giving priority to business • growth through the engagement of new clients, both in current and new market segments. The economic environment may favour the processes of logistic outsourcing on the part of the clients;Consolidation of several commercial projects during the first semester • of 2009, which will place the company in a better position, especially on the Iberian market, due to their complexity and dimension;The successful completion of the new Centre of Logistics Operations for • the Future at Luís Simões’ logistics park in Carregado, assuring levels of occupancy and efficiency greater than 90%;Maintenance of investments in the development of new information • technologies in support of a structured control of all logistical processes, enabling more and improved information management. In this context, we highlight the following:
▪ Development of an application to manage co-packing activity;▪ Continued implementation of Radiofrequency and Mobidis (mobile communications for Delivery use); ▪ Introduction of new management information modules within the business intelligence tool (Human Resources and Productivity Indicators).
Implementation of a loyalty programme of transport companies through • a number of tiered benefits, according to the degree of partnership established by those companies. Within the scope of this program, new
relationship connections will become apparent in terms of transport material sales, anticipated payments and fuel sales;Strong focus on Intermodal transport, which has become increasingly • determinant for the development of greater productivity within the transport system.
04.9| ENGAGEMENTS
The Financial Statements and the Annex to the Balance Sheet and to the Statement of Consolidated Income are at the end of this Report in Chapter 13 (Accounts).
ENSURE FINANCIAL STRENGTH
FOR 2009
▪ FInAnCIAL AUTOnOMy – 24%
▪ eBItDA – GROWTH OF 10%
COMPARED TO 2008
ENGAGEMENTS
Innovation and being
at the Forefront
“For LS, Innovation is a strategic
factor to gain competitiveness, and
one of its core values.„
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05.1| FRAMEWORK
For LS, Innovation is a strategic factor to gain competitiveness, and one of its core values:
Innovation
To focus management on structured processes supported by modern technological systems,
contributing to the development of competitive advantages in the market.
In LS Values
LS began its computerisation process in the 80s, having supported its activity for a decade with resort to technological tools that enable it to not only efficiently manage the business but also offer its clients innovative service solutions.
In organisational terms, LS has a structure which can be considered as the incubator of innovative projects and process improvements:
Corporate Management for Innovation (DCI - • Direcção Corporativa de Inovação), which includes the areas of Information Systems, Total Quality, Hygiene & Safety and Environment & Sustained Development;Process areas in each Group company, which establish the link between • business and client needs and the area of Information Systems, ensuring the innovation or streamlining of processes and services.
LS promotes innovation and being at the fore-front in the following manner:By implementing a culture of innovation in terms of organisation, process • and service, increasing efficiency and creating value for the Client and LS;By adopting the best solutions available for the performance of its • activities, predicting, whenever possible, the needs of the clients and the fulfilment of regulatory requirements.
Innovation and being at the Forefront05|
05.2| INNOVATION IN TRANSPORT AND LOGISTICS
The technical solutions adopted by LS cover electronic interfaces for the exchange of messages between partners, real-time information on fleet positioning, radiofrequency for the control of warehouse operation, voice picking, B2B portal and, most recently, an intelligent warehouse. The existing workflow enables the streamlined performance of Transport and Logistics businesses by radiofrequency monitoring of the flow of goods, using barcode readings, from the reception of stock at the Logistics warehouses to its storage, subsequent picking and dispatch. The Transport operation to the final client is monitored by data communication and SMS.
In this way, these structured processes supported by modern technological tools allow us to:
Reduce inoperative processes (delivery mistakes, kilometres in empty, • etc) which generate economic and environmental costs; Promote the study of new computer methods and tools, in order to • identify those which can bring competitive advantages or differentiating factors to the business, by adopting the best available solutions for performing the activity, and whenever possible, the needs of the clients and the observance of regulatory requirements;Implement a culture of innovation in terms of service, process and on an • organisational level,
Innovation and Development was ensured in 2008 through an investment amounting to 1.7% of the turnover.
ENERGY EFFICIENCY IN TECHNOLOGYIn terms of computer technology, LS has adhered to recent technologies which enable it to have a green data center through the use of recent computer applications and the use of virtualization for server concentration purposes, with a consequent reduction in environmental impact due to reduced energy consumption.
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05.3| CARREGADO 2: A WAREHOUSE FOR THE FUTURE
In 2004, LS initiated a project with which it intended to establish the company’s difference in relation to its direct competitors.The objectives of this project aimed at:
Increasing storage capacity;• Increasing logistic operations productivity;• Centralising Operations hitherto scattered throughout other • warehouses.
In order to realize this project, the “Carregado 2” warehouse was built, integrated in LS’ Logistics Park in Carregado.
“Carregado 2” is an innovative project, developed in partnership with Efacec Automação e Robótica, which aims to unite the concepts of automatic warehouse and conventional warehouse. In contrast to an automatic warehouse (which resembles a restricted-access closed box), this concept enables the warehouse to
Figu
re 1
– A
ctiv
ity
Wor
kflow
HANDLINGSTORAGE
PICKING SHIPPINGRECEIPTCHECKING
RADIO FREQUENCY
DELIVERY
On-BOARD COMPUTERS
TRANSPORT
SMSDATA
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Sustainability Report | ENGLISH
become a common work area, where human resources and automatic equipment share the same space in an organised and controlled manner.
As a result of the compacted storage space achieved and the concept of hanging equipment, the total storage space used for warehousing is 95% of the total construction area. In terms of equipment level we must highlight the 16 CPA’s, automatons for handling pallets up to 1,000 kg, as well as the four cars for transfer between rows, which allow the delivery of pallets by means of the 40 shipment conveyors and the eight reception conveyors which support the whole railway platform.The set of equipment this logistic solution enables the transport and production capacity to be much higher than the standard performance of an automatic warehouse, and can be translated into the following figures:
Total loading and unloading capacity of approximately 600 pallets per • hour;
Capacity for 800 pallets on the loading docks, placed on conveyors;• Picking production capacity of 1,350,000 boxes a month.•
Regarding the remaining equipment allocated to this installation, we highlighted:
A network of sprinklers that covers all storage levels, as well as the • coverage of the roof of the building;Two emergency generators, each with the capacity to support the full • operation of the unit;Solar panels for water heating.•
This reality, which will come to influence the future of new logistics warehouses, marks LS’ passage to a higher level within the realm of logistics operators.
05.4| ENGAGEMENTS
Carr
egad
o 2:
A W
areh
ouse
of
the
Futu
re
CPA
Equi
pmen
t
Table 5 – Specifications of Carregado 2 Warehouse
Features Carregado 2
End of construction July 2008
Area 20,000 m2
Height 19 metres
Storage 56,000 pallets
Total area for storage effects 95%
PROMOTE INNOVATION AND
BEInG AT THE FORE-FROnT
PARA 2009
▪ QUANTIFY THE INNOVATION
SCORING (COTEC) INDICATOR
▪ INVESTMENT RATE IN I&D (under the
Turnover) LS ≥ 1,7%
ENGAGEMENTS
Employee Recruitment,
Training and Retention
“Throughout its 60 years of
existence, LS has contributed
to the creation of jobs at the
22 locations (sites) where it has
established its presence, as well
as in the interior regions of the
Iberian Peninsula.„
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Employee Recruitment, Training and Retention06|
06.1| FRAMEWORK
At LS, employees are a core value:
Respect for People
To ensure the continuous qualification of all employees, developing skills for the diverse and
challenging performance of activities, with quality and in safety.
In LS Values
Throughout its 60 years of existence, LS has contributed to the creation of jobs at the 22 locations (sites) where it has established its presence, as well as in the interior regions of the Iberian Peninsula.
The Corporate Shared Services Management is in charge of the assessment and fulfilment of the Human Resources and Training Policies.
LS intends to continue to:Encourage selection and retention of employees who show potential;• Ensure management continuity through staff qualification and • motivation;Enhance professional development and personal accomplishment;• Convey the image of a company engaged with its professionals and their • development.Creating jobs in socially depressed areas through the hiring of drivers.•
06.2| EMPLOYEES
The LS population consists of around 1,753 employees, allocated between Portugal (1,292) and Spain (461). All LS employees work full-time and most of them belong to the company’s permanent staff.
Table 6 – Number of employees per gender and type of contract
Type of Contract
Permanent Staff 766 294 1060
Fixed-term contract
526 167 693
Total 1292 461 1753
Gender
Male 1030 345 1375
Female 262 116 378
Type of Job
Full time 100% 100% 100%
Part-time 0% 0% 0%
DLS 441 441
LSG 78 78
Lusiseg 14 14
Reta 10 10
Socar 60 60
Solmoninhos 1 1
TLS 684 684
TR 4 4
LSL 304 304
LST 157 157
Total LS 461 1292 1753
LS P
ortu
gal
2008
Tota
l
Spai
n
Company
Port
ugal
2008
Tota
l LS
LS S
pain
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At LS there is no discrimination in recruitment. In 2008, the employees’ origins revealed the dispersion reflected in the diagram (corresponding to 31 countries), a sign of the multicultural character of LS.
06.3| QUALIFICATIONS
Employee professionalization has always been an essential factor in the strategy of LS.
The activity sectors of LS require specialised staff in Logistics and Transport. Therefore, most employees are very skilled in these fields. Concerning diversification, LS employs qualified professionals in several areas, from locksmiths or mechanics to insurance technicians.The positions of warehouse operator (391) and drivers (638) are the most representative ones within the LS employee population (comprising around 60% of this universe).The LS management has 136 employees, of which 38 are directors, 35 are managers and 63 are coordinators.
06.4| DISTRIBUTION PER AGE AND SEx
The average age at LS is 35; almost half of the employees are between 30 and 40 years of age, and 24% are under 30 years of age. Although the team is young, around 42% of employees have been working at LS for more than five years. At LS, the wage policy is clear and consistent, not allowing any type of wage discrimination due to gender, origin, religion, etc...The female population represents 22% of the total number of employees.
% Female Operators in the Warehouse:DLS - 22%LSL - 18%
Allocation of employees by nationality
Portugal and Spain
Africa
Eastern Europe
Latin America
Other
Legend
Char
t 1
3%87%
5%4%
1%
Table 7 - Employee allocation by academic qualifications
Qualifications %Quantity
Elementary/Obligatory 1027 59%
Secondary/Professional 564 32%
Higher Education 148 8%
Post graduation/Masters 14 1%
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Sustainability Report | ENGLISH
Interestingly, in the Transport area we do have one female employee working as a Driver.
“Rosete is in the Iberian route for 10 years(…) ‘since I do what I like, for me everything is easy (…)’”
In Program 30 minutos, RTP 1
In the teams ensuring the 24h/24h operation of logistics activities, over 20% of the employees are women. Approximately 24% of management positions are held by women, which supersedes the female representativeness in the LS universe. The number of women (eight) in positions of high responsibility represent around 21% of the management board.
06.5| SELECTION, RETENTION AND PROFESSIONAL DEVELOPMENT
The investment made by LS in selecting, developing and retaining its employees has allowed to meet the increasing needs of its business.
Hiring new employees is a crucial moment for the success of their integration in LS. Therefore, most new admissions are supported by specific Welcome and Integration Plans for each job position.
Regarding Training, LS strongly focuses on the qualification and development of its operational positions - Operational Training. The pool of internal trainers reflects the strong investment made by LS in the qualification of its employees through In-house Training.
Accreditation by the General Directorate for Labour and Work Relations (DGeRt - Direcção Geral de emprego e das Relações de trabalho) as a training entity has enabled LS to value and guarantee the quality and efficiency of in-house training (e.g.: annual training initiatives for warehouse operators and drivers).
In 2008, more than five thousand hours of training were given to drivers. The contents of such courses included themes such as defensive driving and driving hours, or ecological and efficient driving.
Trai
ning
Cou
rse
Distribution per age
Under 30
30 to 40
40 to 50
Over 50
Legend
Char
t 2
22% 49%5%
24%
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Sustainability Report | ENGLISH
Staff Training is also a constant concern, through the annual participation of staff with strong potential in company management programs, held at institutions such as AESE (Advanced Business Studies Association) or the “San Telmo” Institute.
Apart from training in operational terms, in 2008 LS further invested in:Behavioural training (communication, teamwork and time • management)Training on computer applications for business support • Language training•
Under the several training protocols made with local learning establishments, in 2008 LS welcomed more than ten trainees from those establishments.
06.6| LS DECENTRALISATION
LS understands the important role it plays in the 22 localities where it is present (8 in Portugal and 14 in Spain), and fully assumes its contribution towards their development.
In 2008, LS took in around 30 employees in the Guarda region and another 30 in the Alentejo frontier region, contributing towards the creation of jobs in areas with few job opportunities.
06.7| SOCIAL BENEFITS
Within the scope of the Human Resources policy, LS ensures a set of benefits for its employees that complement the global remuneration package and contribute towards their motivation and satisfaction.
Part of the LS population (10%) has a complementary health plan provided by the National Health Service. For the other employees of LS Portugal, this health plan is also available in a non-contributive regime. LS is going to extend this benefit in a non-contributive regime to the employees in Spain, during 2009.
Life insurance (death or invalidity allowance) is another benefit given to all permanent employees in the company.
06.8| CULTURE AND ORGANISATIONAL ENVIRONMENT
The employee satisfaction survey, known as the Culture and Ambience Diagnosis, is one of the “barometers” used to measure employee satisfaction with the LS organisation. This survey is undertaken every two years with the support of the Human Resources national Office (OnRH - Observatório nacional de Recursos Humanos), of which LS is a member. In the survey carried out in 2007, LS presented results which were slightly above ONRH average values, as shown in the following graph.
Company Hours of Training Hours per Employee
Table 8 - number of hours of training per company
TLS 7.272 11
DLS 9.454 21
DIVER 2.377 28
LSG 3.983 50
LSL 6.749 22
LST 4.487 29
Total of Hours 34.321 27
In order to promote training on sustainability, one of the female employees of LS’ Environment and Sustainable Development division took part in the Young Managers Team Project (yMT 2007-2008), organised by BCSD Portugal, which has the main objective of incorporating sustainable development within the perspective of concrete advantages for the company.
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06.9| RELATIONS WITH THE WORKER REPRESENTATIVE ORGANISATIONS
In Portugal, only the company Transportes Luís Simões (TLS) is covered by a Collective Work Convention between ANTRAM and FESTRU. In the other companies, the Individual Labour Contract regime is applied. The activity in Spain is ruled by over 13 Worker Agreements.LS regards dialogue and negotiation with the trade unions as the best way of minimising and avoiding work conflict. The legal minimum notice periods concerning operational changes are those included in the principles of the Labour Code.
06.10| CONCILIATING FAMILY AND PROFESSIONAL RESPONSIBILITIES
In the Transport sector, enabling mechanisms were established to conciliate the professional and family life of drivers, such as organisation in Strategic Lanes, which allows the driver to sleep at home, by planning in advance. The work is organised according to the legislation in force, by planning the journeys in order to respect driving hours and rest periods, thus avoiding situations of fatigue
which affect the health of the workers as well as road safety.Due to its importance, this topic is included in the training given to drivers.
06.11| ENGAGEMENTS
Customer Satisfaction Survey Results
GLS
Maximun of ONRH
Average of ONRH
Minimum of ONRH
Legend
Char
t 3
Aver
age
Valu
e
OrganisationalContext
WorkStation
Recognition And Reward
Cooperationand Commun.
Politics andStrategy
Change and Innovation
Quality Relationshipwith
Management
Expectations Satisfaction Loyalty Engagement
8
6
4
2
10
6,3 6,35,5
5,96,9
5,9
7,16,5 6,6 6,5
7,17,9
Source: OnRH 2007
SELECT, TRAIN
AND RETAIN STAFF
FOR 2009
▪ STREnGTHEn TALEnT MAnAGEMEnT
FOR HIGH POTENTIAL EMPLOYEES;
▪ EnHAnCE THE HR MAnAGEMEnT
INDICATORS REPORT.
ENGAGEMENTS
Occupational Health and Safety
“LS tries to promote and maintain
in the workplace the conditions
which ensure the workers’ physical
and mental integrity.„
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Sustainability Report | ENGLISH
Occupational Health and Safety07|
07.1| FRAMEWORK
The concern for safety is part of the values at LS:
To ensure the best working conditions through preventive measures,
in order to eliminate risks inherent to the activity and preserve the employees’ well-being.
In LS Values
LS tries to promote and maintain in the workplace the conditions which ensure the workers’ physical and mental integrity, by helping them to monitor their health.The practice of Occupational Health and Safety is the responsibility of all employees, in accordance with the defined policy (see LS Profile), and its follow-up is ensured by the Occupational Health and Safety Office, which investigates work-related accidents, ensures compliance with medical examination requirements and assesses working practices in terms of their ergonomics.
Health and Safety at Work are a necessary condition for a sustainable future. Therefore, LS has developed efforts in order to:
Monitor and reduce risks linked to the activity;• Provide the adequate means to promote safety and health during • professional performance;Improve ergonomic conditions and the environment at the workplace;•
07.2| MONITORING AND MITIGATING RISKS ASSOCIATED TO THE ACTIVITY
07.2.1| Listing of RisksAt the beginning of 2008, LS had already completed the Risk Assessment of the activities carried out at all sites where it operates, in Spain. In Portugal, the Risk Assessment of all activities carried out at all companies and
sites was carried out in 2008. The Risk Evaluation Matrix for each Activity/Task and the Risk Chart were created, as well as Safety Instructions related to tasks with higher risk levels.
07.2.2| Risk Prevention Training sessions took place, in order to create awareness in the hierarchical chain of the main hazards and risks associated to the activities performed in the organisation.In addition, a module of Safety and Health at the Workplace was included in the eco-driving training for drivers, and other training sessions were developed regarding techniques in Emergency situations.
Training Sessions Participants Objectives
Table 9 – Training Sessions on Safety
“Prevention and Safety and Health at the Workplace”, “Prevention Management I”, “Prevention Management II”.
177 employees (Directors; Managers; Middle Management)
Awareness of the most significant hazards and risks and introduction to prevention.
Prevention Management
55 directors and managers and 115 middle management(599 hours of training in Portugal and 170 hours in Spain)
Awareness of the most significant hazards and risks and introduction to prevention.
Eco-Driving: Training on Safety and in the Workplace
532 Drivers Awareness of the importance of the best practices and fulfilment of safety procedures for drivers.
Internal Emergency Plan 71 employees Techniques in cases of emergency.
Intervention Brigades 12 employees Certification of fire brigades.
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07.2.3| Ergonomic and environmental conditions at the workplaceThe Occupational Doctor made 7 visits in 2008 to assess in loco the work conditions affecting employees’ health, at the various LS sites in Portugal.
The main recommendations resulting from these visits are related to the use of PPE (Personal Protective Equipment), as well as the need to provide information to employees on the adoption of correct postures during the performance of the various activities, in order to prevent muscular-skeletal disorders. To improve environmental conditions at the workplace, LS has distributed protection clothes to those employees working in climate controlled warehouses.
07.2.4| Monitoring Work-Related Accidents and their causesIn 2008, 171 work-related accidents took place (117 in Portugal and 54 in Spain), and the severity2 rate for Portugal and Spain was of 15,8 and 14,8 respectively. The following Frequency3 Indexes corresponded to such accidents:
Gla
ss H
ouse
of
Pain
ting
in t
he C
ente
r of
Tec
hnic
al A
ssis
tanc
e in
Car
rega
do
Bike
s fo
r Pi
ckin
gTr
aini
ng in
“In
terv
enti
on B
riga
des”
2| Severity rate = No. accumulated days of absence/Total no. of working days3| Frequency Index = no. of work-related accidents/no. of workers
Frequency Index of work-related accidents at LS
Char
t 4
WA: Frequency Rateof LS Companies
0,25
0,20
0,15
0,10
0,05
0,00TLS DLS LSLI Socar LSG
0,09 0,10
0,13
0,24
0,04
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Sustainability Report | ENGLISH
Absenteeism associated to work-related accidents was as follows:
The main causes of work-related accidents are the unsafe actions of some workers and the unsafe internal and external conditions under which some activities take place.
07.2.5| Risk MitigationPPE (Personal Protective Equipment) was given to those employees performing activities with some associated risks. Steel capped shoes were given to those employees working in warehouses for adequate protection. In the workshops, the staff has the following PPE available: gloves, goggles, safety shoes, welding masks, ear protection, etc.
07.3| HEALTH SURVEILLANCE
LS has carried out periodic medical exams to its staff, during the last years.In 2008, 1,210 medical exams were carried out to LS staff in Portugal and 172 in Spain (in Spain it is not compulsory to have periodic medical exams).
Besides the normal health surveillance to its employees, every year LS undergoes other prevention and health protection activities, available to all employees in Portugal, of which we highlight:
Checkups: PSA and mammogram• Blood Sugar Testing• Flu shot• Random alcohol screening test•
07.4| ENGAGEMENTS
HEALTH AND SAFETY AT WORK
FOR 2009
▪ REDUCTIOn OF 5% OF THE nO.
OF WORk-RELATED ACCIDEnTS In
RELATION TO 2008.
▪ 190 HOURS OF TRAInInG In
PREVENTION OF SAFETY AT WORK.
ENGAGEMENTS
Absenteeism associated to work-related accidents at LS
Char
t 5
WA: Absenteeism in Days and Working Hours
Legend
Days
TotalHours
18001600140012001000800600400200
0
14000
12000
10000
8000
6000
4000
2000
0
TLS DLS LSLISocar LSG
12408h
7080h
1560h
6408h
216h
1551
d
885
d
195 d 801
d
27 d
Day
s
Hours
Promoting Road Safety
“The safety of these employees
and suppliers, as well as of
the other users of the roads is
naturally one of the top concerns
of LS.„
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Sustainability Report | ENGLISH
Promoting Road Safety08|
08.1| Framework
The nature of the activity of LS implies that every year hundreds of people drive over 120 million kilometres during work. The safety of these employees and suppliers, as well as of the other users of the roads is naturally one of the top concerns of LS.
This engagement towards safety has led LS to become one of the first companies of logistics and transport of goods in the Iberian Peninsula to subscribe to the European Road Safety Charter (CESS).
The Road Safety indicator used by LS was the “Percentage of drivers with 500 or more days without any type of accidents”. The target mentioned in the engagements was of 60% by the end of 2009. However, the results obtained are encouraging: 52% in 2007 and 53% in 2008 (we consider this variation positive in a year in which there was a 9% increase in the number of drivers compared to the previous year).
Road safety is a priority in which LS intends to continue investing:Promoting good practices in terms of driving, through training and • monitoring performance, rewarding good conduct;Ensuring adequate working conditions for the drivers regarding • ergonomics, driving hours and rest periods;Ensuring preventive maintenance of the vehicles;• Establishing communication channels on road safety, monitoring • accidents and undertaking engagements towards their reduction.
08.2| TRAINING FOR SAFETY
In 2008, a continuous training program entitled Eco-Driving was administered to all drivers, where the following modules were covered, amongst others: Driving Styles, Occupational Health and Safety.
08.3| ERGONOMIC CONDITIONS FOR DRIVERS
The fleet’s low average age ensures not only a more efficient control but also modern cabins that include the best practices in terms of ergonomics and resting conditions, with regard to long distance vehicles.
3,190 hours of training were given to drivers on specific contents of Driving Styles, quite geared behaviour.
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08.4| FLEET RENEWAL AND PREVENTIVE MAINTENANCE
Regarding technical aspects, the policy of LS fleet renewal and standardisation, which saw an investment of 4,588 thousand Euros in 2008, is based on the principle of “less than five years or one million kilometres”, with renewal occurring according to whichever criterion comes first. This policy, responsible for the maintenance of the average fleet age at levels close to 2.5 years, is also one of the variables of the LS safety program. The standardisation of the fleet has quite positive effects on several levels, namely:
During driver training, as it enabled the reduction of disparities in the • correct use of vehicles;During driver performance evaluations – the evaluation criteria is more • easily compared.
Along with standardisation, preventive maintenance based on the number of times and predictability of the interventions undertaken by the vehicles, is another factor which contributes in a positive manner to the safety and control of fleet maintenance costs.
08.5| OUTSOURCED FLEET
The training of outsourced staff, given before they begin their work, includes issues regarding road safety, such as the best practices of defensive driving, driving hours and rest periods (refer to Chapter 3).
08.6| RECOGNITION
In 2008, the IRU (International Road Transport Union) Diploma of Honour was awarded to João da Mata Isidoro, a driver at LS for 27 years.
This award is attributed on a yearly basis by the Presidency of the IRU. From the criteria taken into consideration by IRU, we highlight the following:
a) A minimum of 20 years working without interruption in the profession and having driven as a professional driver a minimum of one million km
IRU Logo
in national or international transport;b) The driver, in the last 20 years, must not have been responsible for any
serious road accident;c) The driver must not have seriously infringed the road, customs or
administrative rules of his/her country and of other countries in the last five years.
08.7| ENGAGEMENT
PROMOTING ROAD SAFETY
FOR 2009
▪ 60% OF DRIVERS WITHOUT
ACCIDENTS UNDER THEIR
RESPONSIBILITY OVER 500 DAYS
▪ AvERAGE AGE OF FLEET
OWn: 2 ½ yEARS
OUTSOURCED:
TRANSPORT 8 YEARS,
LOGISTICS 8 YEARS
ENGAGEMENT
FOR 2010
▪ DEVELOP COMMUnICATIOn
CHANNEL WITH DRIVERS REGARDING
ROAD SAFETY
Del
iver
y of
the
Dip
lom
a of
Hon
or o
f IR
U
Energy Efficiency in the
Transport of Goods
“To implement good
environmental practices, in order
to reduce the adverse effects of
the activity.„
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Energy Efficiency in the Transport of Goods09|
09.1| FRAMEWORK
One of the characteristics of the transport sector is the consumption of fuel by-products and the resulting greenhouse gas emissions. This concern is expressed in LS values:
To implement good environmental practices, in order to reduce the adverse effects of the activity
(...).
In LS Values
LS considers the management of these impacts as a challenge and a factor of differentiation in relation to competitors, and as such has anticipated the application of environmental legislation concerning this issue, by investing in more eco-efficient engines when renewing its fleet.
LS achieves energy efficiency in the Transport activity in the following way:• Promoting efficient power units, non-conventional fuel and inter and
co-modality solutions;• Optimising routes, reducing kilometres in empty and increasing vehicle
occupation rates;• Investing in eco-driving training;• Monitoring fuel consumption, greenhouse gas emissions and particles.• Investing in the relationship with the outsourced Transport staff and other
suppliers, assisting them in increasing compliance with sustainability criteria.
09.2| INVESTMENT IN OWN FLEET
In 2008, LS strengthened its investment in vehicles equipped with engines that comply with the Euro V Limits of the Community Directive concerning emissions of polluting gases. The anticipated use of vehicles complying with this standard, which will be mandatory in Europe only as of 1 September 2009, reveals the continuous concern of the company at an environmental (reduction of greenhouse
gas emissions) and energy efficiency level.Compared to the previous year, the percentage of the fleet featuring Euro V power units increased from 14.7% at the end of 2007, to 33% at the end of 2008. This series of more environment friendly vehicles features an automatic gear box and standard Euro V engine with SCR technology (Selective Catalytic Reduction).
Vehi
cle
to S
uppl
y AD
BLU
E
Development of the LS fleet allocation per type of Euro Standard
Char
t 6
Legend
2008
200790,0%
80,0%
70,0%
60,0%
50,0%
40,0%
30,0%
20,0%
10,0%
0,0%
33,0%
Euro IVEuro V Euro III Euro II Euro I
14,7%
4,5% 3,1%
62,3%
81,8%
0,2% 0,2% 0,2%0,0%
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Sustainability Report | ENGLISH
These vehicles, in comparison to those vehicles which comply with Euro III standard, enable reductions of around 60% of NOx emissions (Nitrogen Oxide) and around 80% of particle emissions, through a greater effectiveness in the combustion system along with selective catalytic reduction (treatment of exhaust gas with Adblue additives).
This investment is also reflected in the ratio of average age of the fleet fell from 2.9 years recorded in 2007 to 2.6 years in 2008.
09.3| DRIVER’S PERFORMANCE
Along with the appropriate equipment, the driver’s performance is another key principle for the reduction of energy consumption and associated environmental impact.Being well aware of this fact, LS launched the Eco-Driving project in February 2008, aimed at reducing fuel consumption by 500,000 litres.The activities developed within the scope of this project were supported by a strong process of training and development of applications, as well as reports for the assessment and follow-up of data and a team to control results and correct deviations, with a focus on three major guidelines:
• Definition of ideal driving profile per type of vehicle, service and flow;• Conversion of the eco-driving style into a way of life;• Reduction of the fleet’s average consumption of fuel.
Currently, LS has the necessary data for the development of an energy efficiency reporting model, which will not only enable the monitoring of the specific performance of drivers but also to define the reference values per vehicle and service typology, for the selected indicators.Indicators of drivers’ performance:
• Average fuel consumption (l/100km);• % of driving time under, above and within the economic results span;• % of driving time with engine running idle;• % of freewheel driving time.
The following results were obtained in 2008 (in comparison with 2007):• Decrease of the average consumption of fuel by 2.3%, • Savings of 509,798 litres per year (exceeding the established
objective), • Reduction of GHG emissions of 1,417 metric tons CO2eq/l. Note: Gross values are calculated according to the total consumption without considering the
kms covered. Average amounts based on all records. When calculating the monthly accumulated
averages in Eco-Driving, vehicles joining or leaving the fleet during that month were excluded.
On-
boar
d Co
mpu
ter
in t
he T
ruck
Type of Vehicle AC* 2007 AC* 2008 Variation
Table 10 – Fleet Average Consumption (l/100km)* Average consumption – Litres per 100 kms
Truck 3.5 tons 17,3 16,6 -4,2%
Truck 12 tons 29,3 27,5 -6,1%
Truck 19 tons 32,6 32,6 0,2%
Truck 26 tons 32,6 28,8 -11,5%
Mega Tractor 38,4 37,8 -1,6%
Normal Tractor 37,7 36,9 -2,1%
TI Fleet 37,4 36,5 -2,3%
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09.4| VEHICLE OCCUPANCY
A higher vehicle occupancy rate means lower fuel consumption and consequently a reduced volume of pollutant emissions per transported unit. In 2008, in terms of the pallet unit, the occupancy rate was 95%, although in terms of weight the occupancy rate was 53%.
09.5| LS OUTSOURCED FLEET
The average age of the outsourced fleet is 8 years.
On analysing vehicle allocation per Euro standard, clearly the most significant group is that of Euro III vehicles, but it is important to highlight the weight of Euro IV and V, which together already represent 18% of the outsourced fleet.
09.6| InnOVATIOn TOWARDS ECO-EFFICIEnCy
09.6.1| EurocombiNowadays, road transport ensures over 80% of the goods transported within the European space, despite all the efforts developed for transferring part of this to complementary transport means.Studies undertaken show that within the next ten years, road transport in Europe will increase by around 20%. Given that no similar infrastructure development is foreseen, and that the main road network is fast approaching congestion levels,
GHG Emissions (ton CO2eq/l) 60.080 61.611 -2,5%
2008 2007 Δ 08/07
Table 11 – GHG emissions associated to the fleet
Distribution of outsourced the fleet per average age
Char
t 7
Legend
TI
DLS
LSL
Truck 3.5 tons
Truck12 tons
Truck19 tons
Truck26 tons
Mega Tractor
Normal Tractor
20
15
10
5
0
-5
Year
s
Allocation of Outsourced Fleet by type of Euro Standard
Euro I
Euro II
Euro III
Euro IV
Euro V
S/ Euro
Legend
Char
t 8
3% 6% 12%17%
45%
17%
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Sustainability Report | ENGLISH
the answer must perforce lie in the development of solutions which will increase transport efficiency without increasing traffic volume. In an attempt to respond to this challenge, LS is undertaking Project GLSxxI, an innovation project of great importance to LS competitiveness, and a forerunner project with a high impact on the environmental sustainability of the transport sector. This project is based on the use of a new type of vehicle – the Eurocombi – which lies within the framework of a new vehicle typology consisting of either a tractor and two trailers or a three-axle truck and a semi-trailer. These vehicles have a maximum length of 25.25m, with the former configuration having a maximum gross combination weight of 48 metric tons and the latter of 60 metric tons. The use of the Eurocombi will enable a significant reduction in road vehicles (33%) and a record reduction in fuel consumption per ton/km (estimated at 15%), and represents an alternative of high environmental impact. This vehicle typology is as yet unauthorised in Portugal and Spain, but functions in some northern European countries, Canada, Australia, etc. Thus, the continuity of the GLSxxI project depends on measures taken by regulatory authorities.
09.6.2| Intermodal transportThe term ‘intermodality’ is referred to when more than one form of transport is used in the transport of goods.
In terms of intermodality, LS has been managing the SIMxxI operation for the past four years, with daily trains from the port of Sines to Bobadela (Lisbon) and/or Riachos, transporting containers for the MSC shipping company, destined for export or import.
A major factor when selecting a means of transport is the “energy cost”. High fuel costs favours the use of railway. The transport of goods using a power railway for most of the route while operating the terminals (at origin and destination points) using trucks is an intermodal course option, where advantages are derived from both of the means of transport.
Together with goods transport by sea and road, goods trains complete modern intermodal transport. A good use of intermodality is the combination of trains for long-distance transport and trucks for regional delivery.Intermodality enables, through overall planning, a more rational use of the available transport capacity. nevertheless, the combined road-railway solution will have to stay competitive. At this point, railways will have to increase their competitiveness for this intermodality solution to be cost-effective.
09.6.3| Strategic Transport CorridorsCreated in 2005 and consolidated during the following years, Strategic Transport Corridors have originated a new structuring process of transport management based on the flows between two regions, taking the following into account:
• Optimal quantity of material and human resources;• Optimal location of drivers’ residences.
This management format was translated into:• Reduction of kilometres in empty;• Optimisation of driver driving times, that is to say, the increase of hours
spent undertaking driving activities in relation to daily work hours.
09.7| ENGAGEMENTS
PROMOTING ENERGY
EFFICIENCY IN THE
TRANSPORT OF GOODS
FOR 2009
▪ FuEL COnSumPTIOn REDuCTIOnREDuCTIOn AT 0.5L/100 Km (LS FLEET)▪ RATE OF InCREASE In EuRO 4 AnD 5 vEHICLES: LS FLEET 6%,▪ REDuCTIOn OF KmS In EmPTyLS FLEET AnD PERmAnEnT OuTSOuRCED FLEET (TRAnSPORT):KmS In EmPTy <8.1% OF TOTAL KmvEHICLE OCCuPATIOn RATE:≥ 60% (WEIGHT) (LOGISTICS)▪ ECO-DRIvInG TRAInInG (H)1000 mAn HOuRS - LS FLEET (TRAnSPORT)600 mAn HOuRS - PERmAnEnT OuTSOuRCED FLEET (TRAnSPORT)800 mAn HOuRS - PERmAnEnT OuTSOuRCED FLEET (DLS)
ENGAGEMENTS
Environment Performance
of the Facilities
“The environmental performance
of the facilities, especially
their energy efficiency,
water consumption and waste
management, is one of LS’ main
concerns and is reflected in its
business management.„
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Sustainability Report | ENGLISH
10.1| FRAMEWORK
The environmental performance of the facilities, especially their energy efficiency, water consumption and waste management, is one of LS’ main concerns and is reflected in its business management.
To implement measures to reduce the environmental impact resulting from our activity, and to
manage and control the waste produced, by making employees aware of conducts and habits that
promote environment protection.
In LS Environmental Policy
The implementation of this policy is the responsibility of all employees, and is coordinated by the Environment and Sustained Development Office after 2007.
The fulfilment of the environmental policy is ensured as follows:By promoting energy efficiency in warehouses, heavy vehicles technical • assistance centres and officesBy promoting correct management and valuation of waste;• By monitoring water consumption and promoting its recycling.•
10.2| ENERGY EFFICIENCY AND ASSOCIATED EMISSIONS
The electrical energy consumption shown below includes the Logistics Operation Centres, the Technical Assistance centres and the administrative areas in Portugal and Spain.
We highlight that the logistics sector units show higher energy consumption (DLS and LSLI).
The energy consumptions shown result in the emission of harmful gases into the atmosphere, especially GHG.
Environment Performance of the Facilities10|
The following table shows GHG emissions associated to LS facilities, namely direct emissions associated to diesel oil consumption and indirect emissions resulting from electric energy consumption.
Direct GHG emissions (ton CO2eq) 52,76
Indirect GHG emissions (ton CO2eq) 4.219
Total GHG Emissions (ton CO2eq) 4.271
GHG emissions (ton CO2eq)
Table 12 – Direct and indirect emissions of GHG associated to LS facilities
Char
t 9
Energy Consumption - Facilities (2008)
9000
8000
7000
6000
5000
4000
3000
2000
1000
0LusisegLS TOTAL LSLI SOCAR DLS LSG
MWh
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10.3| WASTE MANAGEMENT
At LS, waste management procedures ensure the collection and final destination of hazardous and non-hazardous wastes at the various facilities. LS is concerned with suitably managing their destination and working with waste management operators who assist in finding solutions for new waste products.
10.3.1| Waste per typologyIn 2008, 46 different types of waste were collected by the many LS companies: 20 were hazardous and 26 were non-hazardous. Their distribution among LS companies is as follows:
In 2008, about 108 metric tons of hazardous waste were produced, most of which was produced at the technical assistance centres and at the fuel stations of the transport company.
Out-of-use electric and electronic equipment, in particular the company’s obsolete computer equipment, represented 1.32 metric tons of waste which were sent for recycling.
In 2008 about 1,595 metric tons of non-hazardous waste was produced, allocated as follows:
Logistic Operations Centres and Administrative Departments (85%);• Technical Assistance Centres (14%).•
Char
t 10
Waste produced by LS
100%
80%
60%
40%
20%
0%LSGTLS DLS SOCAR LSLI LS TOTAL
Hazardous Waste
non-HazardousWaste
Legend non-Hazardous Waste produced per company (2008)
TLS
LSG
DLS
SOCAR
LSLI
Legend
Char
t 12
21%
14%64%
1%0%
Hazardous Waste produced per company (2008)
TLS
LSG
DLS
SOCAR
LSLI
Legend
Char
t 11
0%
94%
4%1% 1%
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Sustainability Report | ENGLISH
10.3.2| Waste per dumping methodThe waste produced is forwarded by approved waste operators, with recycling as the privileged destination (51%).
As can be verified through the analysis of the following chart, decontamination treatments are associated to the companies that produce hazardous waste (12%). Landfill disposal applies to undifferentiated waste rated as Urban Industrial Waste, produced at the different facilities.
10.4| WATER CONSUMPTION
Water consumed within LS facilities comes from the water delivery system, except the water used for irrigation in four of the facilities, which comes from duly authorised wells.
Water Consumption is higher at the Logistics units, where administrative departments are included. In Portugal, these represent 42% of the units and 83% of the water consumption.
DLS is responsible for the greater water consumption, as it represents several units with administrative departments, where washrooms/toilets and cleaning have the highest preponderance of water use.
Destination given to waste produced by LS companies
Char
t 13
Recycling
Landfill
Treatment/Decontamination
Legend
100%90%80%70%60%50%40%30%20%10%0%
LSGTLS DLS SOCAR LSLI LS TOTAL
10.5| ENGAGEMENTS
Char
t 14
Water Consumption - Facilities (2008)
12000
10000
8000
6000
4000
2000
0LusisegLS TOTAL LSLI SOCARDLS LSG
(m3/ano)
IMPROVEMENT OF
THE ENVIRONMENTAL
PERFORMANCE
OF FACILITIES
AND OPERATIONS
FOR 2009
▪ DECREASE EnERGy COnSUMPTIOn
BY MEANS OF GOOD PRACTICES (DLS
– 5%)
▪ InCREASE RECyCLABLE WASTE By
10%
▪ DEFInITIOn OF EnVIROnMEnTAL
REQUIREMENTS FOR SUPPLIERS
▪ MOnITORInG OF WATER
CONSUMPTION USED FOR TRUCK
WASHING
ENGAGEMENTS
FOR 2010
▪ IMPLEMEnTATIOn OF THE ISO
14001:2004
Promoting Internal
and External Citizenship
“ Involvement with employees and
with other stakeholders is part of
LS politics and practices.„
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Promoting Internal and External Citizenship 11|
11.1| FRAMEWORK
Involvement with employees and with other stakeholders is part of LS politics and practices:
To develop actions aimed at employees, in order to promote personal, professional and familiar
valuation, as well as activities for information, awareness and/or solidarity, aimed at the external
entities with which we interact.
In LS Social Responsibility Policy
All companies participate in implementing this Policy, coordinated by the Corporate Management for Innovation (DCI) since 2006.
The promotion of internal and external citizenship is carried out in the following manner:
By promoting a growing approach to the community, with a strategy of • patronage and support to social initiatives;By supporting institutions, organisations and projects of public interest, • offering technical capacities and financial and human resources;By encouraging its employees’ citizenship, promoting their health and • investing in partnerships that benefit them.
11.2| MAIN ACTIONS IN 2008 – INTERNAL PUBLIC
11.2.1| Blood donations LS, together with the Portuguese Blood Institute (IPS – Instituto Português do Sangue) has been promoting blood donations at its facilities in Carregado and Gaia.During the 2008 campaign, LS had 32 participations.
11.2.2| Enrolment for Bone Marrow donators Two campaigns for blood collection for the enrolment of bone marrow donators were performed in 2008, from which resulted 146 new potential bone marrow donators.
11.2.3| Mini-marathonsLS stimulates its employees to practice sports. We promote participation in the Mini Marathon which crosses Lisbon’s “25 de Abril” bridge, a 7,200-metre-long social and competitive event, by coordinating the enrolments and paying 50% of employee enrolment fees.
11.2.4| LS-CUPEvery year, LS promotes football tournaments between its employees, on an Iberian level. We organise teams (male and female) that give their best during the championship.
Bloo
d D
onat
ion
The
Bloo
d Co
lect
ion
Team
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Sustainability Report | ENGLISH
The winning team earns the right to have its name engraved on the LS Cup, which consists on a crystal trophy where the names of winning teams are always stamped, and also the privilege of exhibiting the trophy at its Centre until the following year’s tournament.
In 2008, 224 athletes participated, distributed among 16 male teams, 4 female teams and 2 mixed teams (in Portugal) and 4 male teams (in Spain). A total of 34 games were played.
11.2.5| Christmas Presents deliveryAt Christmas, LS encourages its employees to show solidarity to needy children by collecting donations at the many centres in Portugal, which are afterwards given to local institutions.
11.2.6| ProtocolsLS has been developing several protocols with companies, aiming to make everyday life easier for its employees. We highlight the following:
Optimus• AxA (health insurance)• BESParceiro (Protocol with the Espírito Santo bank)• Get Healthy gymnasium (in Carregado)•
11.3| MAIN ACTIONS IN 2008 – ExTERNAL PUBLIC
11.3.1| Transport Services in a patronage regimeLS carries out transport initiatives at the service of several institutions in its role as a patron, from which the collaboration with the Food Bank (Banco Alimentar contra a Fome) can be highlighted.
In 2008, several institutions benefited from this measure:Food bank - Banco Alimentar Contra a Fome• Castelo de Sonhos• Associação Nacional de Combate à Pobreza• Associação Humanitária Mãos Abertas• Fundação Rotária Portuguesa (Rotary Clube de Sintra)• Entrajuda• Associação Dianova Portugal• ANAP• Prosalis• Associação Mão Amiga•
11.3.2| Danone World Cup Patronage In 2008, LS sponsored the Portuguese National Danone World Cup Football Tournament, a fundraiser for the SOS Children’s Village of Guarda, in collaboration with our client Milupa, who runs an international Support Program for SOS Children’s Villages.
LS C
up W
inne
rs
Fem
ale
Team
Port
ugue
se N
atio
nal D
anon
e W
orld
Cup
Fo
otba
ll To
urna
men
t
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Sustainability Report | ENGLISH
11.3.3| Memberships in institutions and associations Aware of its role within the business environment where it is inserted, LS performs its duties of citizenship by being a member of several institutions, amongst which:
Further to these memberships, LS is a member of the General Board of the José Afonso secondary school, in Loures, representing the Local Community in this management body.
LS Logística Integrada (integrated logistics) subscribed to the Good Practices of Lógica’s Logistic Providers.
• AEP–AssociaçãoEmpresarialdePortugal(Portuguesebusinessassociation);• CCILE–CâmaraComércioe IndústriaLuso-Espanhola(PortugueseandSpanish
commercialandindustrialchamber);• COTEC – Associação Empresarial para a Inovação (business association for
innovation);• APEF–AssociaçãoPortuguesaparaasEmpresasFamilares(Portugueseassociation
forfamilybusinesses);• ACICA –AssociaçãoComercial e Industrial do Concelho deAlenquer (regional
commercialandindustrialassociation);• CasadeRepousodosMotoristasdePortugaleProfissõesAfins(residentialcare
institutionfordrivers);• ACEGE–AssociaçãoCristãdeEmpresárioseGestores(Christianassociationfor
businessmenandmanagers);• Amigaia–AgênciaMunicipaldeInvestimento(regionalinvestmentagency);• BCSD Portugal – Conselho Empresarial para o Desenvolvimento Sustentável
(businesscounselforsustainabledevelopment);• APLOG–AssociaçãoPortuguesadeLogística(Portugueselogisticsassociation);• ANTRAM – Associação Nacional de Transportadores (Portuguese transport
companiesassociation);• AESE–AssociaçãodeEstudosSuperioresdeEmpresa(corporateadvancedstudies
association;• ICIL–InstitutoCatalándeLogistica(Spanishregionallogisticsinstitute);• Lógica –Organización Empresarial deOperadores Logísticos (Spanish business
organisationforlogisticproviders);• ASTIC–AsociacióndeTransportesInternacionalesporCarretera(Spanishroad
transportassociation);• AECOC–AsociaciónEspañoladeCodificaciónComercial(Spanishassociationfor
businesscoding);• CHP–CámaraHispanoPortuguesa(SpanishandPortuguesechamber);• AEC–AsociaciónEspañolaparalacalidad(Spanishqualityassociation).
11.4| ENGAGEMENTS
PROMOTING INTERNAL AND
ExTERNAL CITIzENSHIP
FORA 2009
▪ REnDER TRAnSPORT SERVICES TO THE FOOD BANK (BAnCO ALImentAR COntRA A FOme) AND OTHER SOCIAL ASSOCIATIONS▪ PERFORM TWO BLOOD DOnATIOn CAMPAIGNS ▪ PERFORM TWO BLOOD SUGAR SCREENING CAMPAIGNS ▪ PERFORM OnE CAMPAIGn TO BREAk THE TOBACCO HABIT ▪ DEVELOP PARTnERSHIPS WITH SUPPLIERS TO OBTAIN PRIVILEGES FOR EMPLOYEES E.G. HEALTH INSURANCE FOR EMPLOYEES AND THEIR FAMILIES IN SPAIN▪ EnCOURAGEMEnT OF SPORTS PRACTICE THROUGH THE PARTICIPATION IN MINI MARATHONS, LONG WALKS, ETC.▪ MAInTEnAnCE OF ADDITIOnAL ACTIONS FOR HEALTH PROMOTION REFERRED TO IN THE CHAPTER CONCERNING OCCUPATIONAL HEALTH AND SAFETY▪ PROMOTIOn OF VOLUnTEERInG IN SCHOOLS THROUGH ACTIONS ENCOURAGING ENTREPRENEURSHIP
ENGAGEMENTS
Internal and External
Communication
“...communication is
fundamental in converging
everyone’s efforts around the
same objectives, as well as
encouraging their participation and
enhancing their motivation.„
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Sustainability Report | ENGLISH
12.1| FRAMEWORK
Efficient internal and external communication promotes the dissemination of the company culture to all stakeholders, namely Clients, Employees, Suppliers and Institutions, thereby strengthening the established partnership relationship. As for employees, communication is fundamental in converging everyone’s efforts around the same objectives, as well as encouraging their participation and enhancing their motivation.
Through a Communication strategy, the Management ensures the disclosure of all necessary
information... to ensure effectiveness to all recipients.
In LS Communication Plan
Responsibility for the implementation of the communications plan is shared by all persons responsible, and is coordinated by the Communication Department.
Aware that communication with its stakeholders is an essential tool to get them involved in their activity, LS promotes Internal and External Communication in the following way:
By structuring internal communication channels and promoting face-to-• face activities for drivers and other employees;By promoting strategic communication and operational communication • web platforms with suppliers and clients; By communicating in a transparent way with the media, local and • national authorities; By promoting visits from education establishments, staff’s family and/or • other stakeholders to the sites (towns) of LS.
12.2| INTERNAL COMMUNICATION CHANNELS
In terms of internal communication channels, LS circulates an internal newspaper called LS News. Staff and their family members participate in this newspaper, which is distributed to all LS employees.
Internal and External Communication12|
Other Internal Communications ChannelsPlacards displaying the LS Mission, Vision, Values and Policies, posted at • all delegations;A Best Practices Database, a tool enabling the disclosure of the many • events and initiatives to employees (social accountability and sustainable development, safety and information services, human resources).
12.2.1| Events for employees 2208• nLS anniversary party (may)The Notícias LS newspaper promotes an annual anniversary party, aiming at socialisation between collaborators of the newspaper.• managers meeting (January)It is an annual forum for presentation of the year’s strategy, for middle and top management.• Seniority awards (January)Included in the Managers Meeting event, an award is given to all employees who during the previous year completed 15, 20, 25, 30, 35 and 40 years of continuous collaboration with LS. In 2008 40 LS employees were distinguished.• Open Doors – Carregado and Seville (September and October)
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In 2008, a new type of informal internal communication tool was created for LS employees and outsourcers – Open Doors – which enables the integration of the employees’ families with LS through guided tours to the facilities (warehouses and administrative areas), with the objective of showing them the inside of the organisation. This event involved around 650 participants in Carregado and 110 in Seville.• Discussion of LS Case Study (november) Based on the LS Case Study elaborated by AESE for the Company Management Courses, its study and discussion was promoted by the management team in Spain, under the guidance of Prof. Lucas Tomás.• LS Cup (november and December)The LS employee football tournament took place in Carregado, Gaia and Madrid with male and female teams, involving a total number of 224 employees.• Christmas EventsTo celebrate this season, lunches or dinners are held, with the participation of LS employees. In 2008 this initiative particularly included the commemoration of Luís Simões’ 60th anniversary. In Portugal, these were held in Gaia (501 participants) and in Carregado (759 participants). In Spain, they were held in Madrid (187 participants), Barcelona (36 participants), Seville (33 participants), Valencia (44 participants), Granada (10 participants) and Bilbao (11 participants).
12.3| ExTERNAL COMMUNICATIONS CHANNELS
In order to promote the communication with its external stakeholders, LS has developed several communications tools, including:
LS website (www.luis-simoes.com) – LS web portal aimed at the general • public;Lsnet web portal (www.luis-simoes.net) – B2B portal for clients;• Digital newsletter for clients – Delivery of updated information concerning • LS;Annual Report – published and made available to the public as a • communication tool since 1997.
LS also promotes numerous events for its external stakeholders, as follows:
12.3.1| Events for external stakeholders in 2008• Presentation of the Centre of Logistics Operations for the Future (LOC), Lisbon (September)A formal presentation event of the Carregado LOC took place after reconfiguration due to the construction of a new intelligent warehouse for the main Logistics and Transport clients of LS.• Inauguration of the LOC – Carregado - novemberThe Centre of Logistics Operations for the Future was inaugurated by the President of the Portuguese Republic and involved the participation of 256 people, among them the main clients, suppliers, authorities and institutions of the sector, as well as employees. This inauguration was
Ope
n D
oors
in S
evill
e
Man
ager
s M
eeti
ng in
Lis
bon
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Sustainability Report | ENGLISH
the high point of LS’ 60th anniversary celebrations, and allowed the company to draw closer to its many stakeholders (entities, clients, employees, partners and the media). • visits to operations centresIn 2008, LS received the following visits at the logistics operation centres:
▪ COL Gaia – three institutional visits: two high schools and one professional school, totalling 79 visitors; ▪ COL Carregado - 26 institutional visits, of which can be highlighted: three from clients, four business schools, one professional school, five high schools, one kindergarten and three universities, totalling 404 visitors.
Commercial and Institutional Presence.• ▪ Ascensão Fair – Alenquer – May 2008LS was present at the regional Fair which has exhibitions on the economic activity of Alenquer District. • SIL - Barcelona –June 2008LS was also present at the logistics fair, having included an event commemorating its 60 years with clients. • Stand Reta&Socar – AnTRAM Meetings - Porto – September 2008LS’ stand at the ANTRAM Meetings ensured the institutional presence of LS and the commercial presence of Reta&Socar, representing a channel for contact with transporters, one of LS’ stakeholders. • Logitrans - Madrid – november 2008LS was present at this first edition of a long-awaited exhibition in the Madrid region.
Concerning communication with Clients there are privileged “moments of knowledge”, promoted by LS, of which our clients are an integral part.
III Quality Forum - Portugal, October 2008• I Quality Forum – madrid, november 2008• “Grease Party”•
In 2008 an informal event for Logistics clients also took place in Portugal, an event that promoted a social meeting with the main clients of DLS, allowing bonds of confidence to be established, which can only be achieved at an informal gathering and on “neutral ground”.
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Tabl
e 13
– K
ey is
sues
and
invo
lvem
ent
wit
h st
akeh
olde
rs
Objectives Ways of involvement Communication tools
Clients
Com
mun
icat
e in
a t
rans
pare
nt a
nd e
ffici
ent
man
ner
• Recruit and retain• Meet expectations• Provide an added-value service
• Client satisfaction survey• LS net web portal• Digital newsletter • Presentations• Quality forums• Meetings
• Site• Annual Report and Accounts• Sustainability Report
Employees• Recruit and retain• Promote continuous qualification• Develop skills
• notícias LS - newspaper• Employee satisfaction survey• Training actions• Manager meetings• Placards• Events• Open Doors• LS net web portal• Intranet
Permanent outsourcers • Develop skills• Training actions• Open doors • LS net web portal
Possible outsourcers • Develop skills• Open doors• LS net web portal
Banks • Meet guidelines • Regular meetings
Other suppliers• Comply with payment deadlines• Simplification of processes• Future web communication platform
• Placards• Open doors• Regular communication• LS net web portal
Syndicates • Constructive dialogue• Work convention negotiations• Possible meetings
Associations• Partnerships• Patronage
• Development of protocols• Participation in associations• Events
Social Communication • Disclosure• Possible communication• Commercial and institutional presence
Universities • Partnerships• Visits to operations centres• Partnerships• Possible communication
NGOs• Partnerships• Patronage
• Development of protocols• Events
National, Regional and Local Authorities • Partnerships • Possible communication
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Sustainability Report | ENGLISH
12.4| WAYS IN WHICH TO INVOLVE STAKEHOLDERS
Considering the influence, dependency and power that some stakeholders have in relation to LS, and in order to promote the transparent communication between all interested parties, the following table shows the ways in which the Group involves itself with its stakeholders.
It should be noted that the consultation of stakeholders, developed and described in subchapter 2.3 within the scope of the definition of the Group’s sustainability strategy, was also an important moment of involvement between LS and its interested parties.
12.5| ENGAGEMENTS
PROMOTING INTERNAL AND
ExTERNAL COMMUNICATION
FOR 2009
▪ NEW WEB PLATFORM FOR
COMMUNICATION WITH SUPPLIERS.
ENGAGEMENTS
Ope
n D
oors
Eve
nt
© J
EFF
MET
ZGER
/FO
TOLI
A
Accounts
“The financial statements
prepared observe the
characteristics of relevance,
reliability and comparability,
and provide users with useful
information on the financial
situation and its changes, as
well as on the income of the
operations.„
75
Sustainability Report | ENGLISH
Accounts13|
13.1| CONSOLIDATED BALANCE SHEET
Amounts in Euros
ASSETS Notes2008 2007
Gross AssetsDepreciation and
AdjustmentsNet Assets Net Assets
Fixed Assets
Intangible Fixed Assets
Installation Expenses 27 1.185.945 1.133.525 52.420 132.059
Research and Development Expenses 27 3.000 2.167 833 26.992
Industrial Property and Other Rights 27 38.000 9.500 28.500 36.100
Fixed Assets in Progress 27 174.550
Consolidation Differences 27 8.037.115 5.224.125 2.812.990 3.214.846
9.264.060 6.369.317 2.894.743 3.584.547
Tangible Fixed Assets:
Land and Natural Resources 27 2.323.482 2.323.482 2.385.058
Buildings and Other Constructions 27 12.744.941 5.541.832 7.203.109 7.217.058
Machinery and Equipment 27 66.120.222 25.203.695 40.916.527 33.182.329
Transport Equipment 27 864.762 765.188 99.574 157.253
Tools and Dies 27 641.815 228.753 413.062 110.320
Administrative Equipment 27 8.381.970 7.075.166 1.306.804 1.221.793
Other Tangible Fixed Assets 27 1.136.447 560.686 575.761 192.506
Fixed Assets in Progress 27 15.900.670 15.900.670 10.541.106
Advances to Tangible Fixed Assets 27 27.132
108.114.309 39.375.320 68.738.989 55.034.555
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Sustainability Report | ENGLISH
Financial Investments:
Securities and Other Investments 27 88.970 88.970 89.947
88.970 88.970 89.947
Current Assets
Inventories
Raw Material, Subsidiary Materials and Consumables 1.138.356 1.138.356 950.906
Work in Progress 628.130 628.130 690.684
Finished and Intermediate Goods 187.082 187.082 187.082
Goods 3.750 3.750 7.868
1.957.318 1.957.318 1.836.540
Current Accounts Receivable - Medium and Long-Term:
Customers, Doubtful Debts 32 2.617.938 2.614.806 3.132 0
Group Companies 6.375.000 6.375.000 6.120.000
Shareholder Companies and Associated Companies 1.500.000 1.500.000 1.400.000
10.492.938 2.614.806 7.878.132 7.520.000
Current Accounts Receivable - Short-Term:
Customers, c/a 43.925.780 43.925.780 49.684.862
Group Companies 570.785 570.785 1.031.799
Shareholder Companies and Associated Companies 263.224 263.224 303.503
Advances to Suppliers 5.372
Public Entities 53 619.581 619.581 852.601
Other Debtors 51 5.021.068 5.021.068 8.041.070
50.400.438 50.400.438 59.919.207
Bank Deposits and Cash:
Bank Deposits 122.810 122.810 215.424
Cash 21.296 21.296 13.161
144.106 144.106 228.585
Accruals and Deferrals
Accrued Income 52 945.688 945.688 1.554.496
Deferred Costs 52 245.149 245.149 426.587
Deferred Tax Assets 38 2.374.910 2.374.910 941.651
3.565.747 3.565.747 2.922.734
Total Depreciation 45.744.637
Total Adjustments 2.614.806
Total Assets 184.027.886 48.359.443 135.668.443 131.136.115
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Equity and Liabilities Notes 2008 2007
Equity
Share Capital 50 16.650.000 16.650.000
Consolidation Differences 118.794 118.794
Revaluation Reserves 113.248
Reserves:
Legal Reserves 1.778.993 389.551
Other Reserves 13.959.881 13.144.284
Retained Earnings 126.852
Subtotal 32.747.768 30.302.629
net Profit for the year -662.863 2.641.384
Total Equity 32.084.905 32.944.013
Minority Interests 1.616 2.098
Liabilities
Provisions:
Other Provisions 46 365.375 86.833
365.375 86.833
Medium and Long-Term Liabilities
Debenture Loans:
Bank Loans 55 5.060.943 1.701.626
Suppliers of Fixed Assets, c/a 27.779.916 22.900.882
32.840.859 24.602.508
Short-Term Liabilities
Debenture Loans:
Bank Loans 55 26.338.196 22.479.601
Suppliers, c/a 21.868.767 29.951.291
Suppliers, Pending Invoices 190.705 1.587.925
Advances from Customers 4.484
Suppliers of Fixed Assets, c/a 12.076.946 8.706.703
Public Entities 53 2.503.539 2.269.995
Other Creditors 51 227.054 617.568
63.205.207 65.617.567
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The Certified AccountantDiogo João Belo Sabino
The Board of DirectorsJosé Luís Soares Simões - Chairman | Leonel Fernando Soares Simões - Member | Jorge Manuel Soares Simões - Member
Accruals and Deferrals
Accrued Costs 6.315.587 6.925.927
Deferred Income 188.125 222.849
Deferred Tax Liabilities 38 666.769 734.320
7.170.481 7.883.096
Total Liabilities 103.581.922 98.190.004
Total Equity, minority Interests and Liabilities 135.668.443 131.136.115
13.2| CONSOLIDATED STATEMENT OF INCOME BY NATURE
Losses and Costs 2008 2007
Costs of Sold Goods and Consumed Materials:
Goods 83.316 407.529
Materials 17.389.110 17.472.426 17.850.691 18.258.220
Supplies and External Services 112.004.383 113.630.677
Staff Costs
Remunerations 33.719.924 30.238.932
Other 8.398.925 42.118.849 7.180.029 37.418.961
Tangible and Intangible Fixed Assets Depreciation 10.739.227 9.623.758
Adjustments 517.866 922.080
Provisions 316.024 11.573.117 42.015 10.587.853
Taxes 437.420 402.532
Other Operating Losses and Costs 97.069 534.489 195.438 597.970
(A) 183.703.264 180.493.681
Amounts in Euros
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The Certified AccountantDiogo João Belo Sabino
The Board of DirectorsJosé Luís Soares Simões - Chairman | Leonel Fernando Soares Simões - Member | Jorge Manuel Soares Simões - Member
Interest and Other Similar Costs:
Other 4.913.869 4.913.869 1.944.896 1.944.896
(C) 188.617.133 182.438.577
Extraordinary Losses and Costs 926.418 1.315.900
(E) 189.543.551 183.754.477
Corporate Income Tax for the Financial Year -1.332.062 310.430
(G) 188.211.489 184.064.907
Net Consolidated Income for the Year -662.863 2.641.384
187.548.626 186.706.291
Income
Sales
Goods 608.700 401.769
Products 1.649.611 5.013.450
Provision of Services 170.342.831 172.601.142 167.747.826 173.163.045
Change in Production -62.554 62.358
Production for Own Company 288.047 246.630
Supplementary Income 8.898.350 8.598.155
Operating Subventions 218.838 77.602
Other Operating Income 393.921 294.912
Reversals from Depreciation and Adjustments 523.654 10.034.763 368.242 9.338.911
(B) 182.861.398 182.810.944
Income from Shareholdings 278.590 177.497
Other Interest and Similar Income
Related to Group Companies 498.840 419.182
Other 701.329 1.478.759 907.976 1.504.655(D) 184.340.157 184.315.599
Extraordinary Income 3.208.469 2.390.692(F) 187.548.626 186.706.291
Summary:
Operating Income: (B)-(A) -841.866-3.435.110-4.276.976-1.994.925
-662.863
2.317.263-440.241
1.877.0222.951.8142.641.384
Financial Income: (D-B)-(C-A)
Current Income: (D)-(C)
Income Before Taxes: (F)-(E)
net Consolidated Income for the year: (F)-(G)
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13.3| ANNEx TO THE BALANCE SHEET AND TO THE INCOME STATEMENT
0 - INTRODUCTORY NOTEGrupo Luís Simões (“Group”) consists of LS - Luís Simões, SGPS, S.A. and subsidiaries. LS – Luís Simões, SGPS, S.A., a public company with head office at Moninhos, Loures, Portugal, was set up on 5 August 1996 and has as its company object the management of shares from other companies, as a direct means of exercising economic activities.
The Group operates in the following business areas: 1 - The business of transport of goods by road, which represents approximately 59% of the Group’s turnover; the company leads the Portuguese transport market and the market of road traffic flow in the Iberian Peninsula.
2 - The logistics activity which represents approximately 36% of the Group’s turnover, is leader in the field of Logistics and Delivery of fast-moving consumer goods in Portugal, providing integrated services of transport, storage, preparation of orders, control of inventories and delivery, as well as other added-value services. In Spain, this business is also specialised in Logistics and Delivery of fast moving consumer goods.
3 - The other activities, which represent 5% of the Group global invoicing, meet two core objectives: support for the main activities of the Group and the development of standalone businesses within their specific markets.
The financial statements were prepared in accordance with the accounting principles set out in the official Portuguese accounting plan (PlanoOficialdeContabilidade), as amended by decree law no. 238/91, of 2 July and decree law no. 35/2005, of 17 February, according to the historical costs convention, based on the continuity of operations and in accordance with the principles of prudence, accruals, consistency, substance over form and materiality.
The financial statements prepared observe the characteristics of relevance, reliability and comparability, and provide users with useful information on the financial situation and its changes, as well as on the income of the operations.
The following notes observe the sequential numbering set out in the official Portuguese accounting plan (PlanoOficialdeContabilidade) for the presentation of consolidated financial statements. notes whose numbering are not included in this annex are either not applicable to the Group or their presentation is irrelevant for the reading of the annexed consolidated financial statements.
All amounts are expressed in Euros.
I - INFORMATION RELEVANT TO COMPANIES INCLUDED IN THE CONSOLIDATION AND OTHER COMPANIES
1. COmPAnIES InCLuDED In THE COnSOLIDATIOn
The consolidation perimeter did not change in comparison to the previous year.
Head officeAssociated Companies
Firm %
Comprehensive method
LS – Luís Simões, SGPS, S.A. Moninhos – Loures
Transportes Luís Simões, S.A. Moninhos – Loures LS - Luís Simões, SGPS, S.A. 100%
DLS – Distribuição Luís Simões, S.A.
Moninhos – Loures LS - Luís Simões, SGPS, S.A. 100%
Transportes Reunidos, Lda. Moninhos – Loures LS - Luís Simões, SGPS, S.A. 100%
Luís Simões Logística Integrada, S.A.
Guadalajara– España LS - Luís Simões, SGPS, S.A. 100%
RETA – Gestão e Locação de Frotas, S.A.
Moninhos – Loures LS - Luís Simões, SGPS, S.A. 100%
SOCAR - Equip. Transp. Serv. Técnicos, S.A.
Moninhos – Loures LS - Luís Simões, SGPS, S.A. 100%
LUSISEG – Mediadores de Seguros, Lda.
Moninhos – Loures LS - Luís Simões, SGPS, S.A. 100%
SOLMOnInHOS - Consultoria, Gestão e Execução Imobiliária , Lda.
Moninhos – Loures LS - Luís Simões, SGPS, S.A. 99%
Proportional Method
LS - Gestão Empresarial e Imobiliária, S.A.
Moninhos – Loures LS - Luis Simões SGPS, S.A 49%
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5. InFORmATIOn RELEvAnT TO THE COmPAny OBJECT OF PROPORTIOnAL COnSOLIDATIOn
Firm: LS-Gestão Empresarial e Imobiliária, SA.Head office: Moninhos – Loures, PortugalShare Capital: 500,000Shareholdings: 49%
In the above company, management is divided between the respective shareholders, therefore the method of proportional consolidation is considered to be the one that best represents the effect of these activities on the Group’s consolidated financial statements.
7. AvERAGE numBER OF EmPLOyEES In SERvICE, DuRInG SERvICEThe average number of employees in the service of the companies included in the consolidation during the financial year was 1,731.
III - InFORMATIOn RELATInG TO THE COnSOLIDATIOn PROCEDURES
10. BREAKDOWn OF ITEm “COnSOLIDATIOn DIFFEREnCES” The consolidation differences, expressed in the maps below, correspond to the difference between the acquisition values of the shareholdings and the respective proportional share in the opening net situation of the first year of consolidation.
The positive consolidation differences occurring in intangible fixed assets, in the item “Consolidation differences” are as follows:
The negative consolidation differences occurring in equity are as follows:
12. COnSOLIDATIOn OPERATIOnSThe margins included in inventories, as well as gains in fixed assets transactions between group companies, were eliminated when materially relevant.
13. COnSOLIDATIOn REFEREnCE DATESAll the financial statements of the companies included in the consolidation were prepared with reference to 31 December 2008.
14. CHAnGES TO THE GROuP OF COmPAnIES InCLuDED In THE PERImETERThere were no changes to the consolidation perimeter.
2008 2007
Corporate Bodies 3 3
Production Staff 1.202 1.125
Staff from Other Sections 526 484
1.731 1.612
Acquisition Year
GrossAssets
Cumulative Depreciation
NetAssets
Transportes Luís Simões, S.A.
1996 5.760.826 3.744.537 2.016.289
DLS - Distribuição Luís Simões, S.A.
1996 1.407.149 914.647 492.502
Luís Simões Logística Integrada, S.A.
1996 348.026 226.217 121.809
RETA – Locação e Gestão de Frotas, S.A.
1996 352.999 229.449 123.550
SOCAR - Carroçarias de Carga, S.A.
1996 2.469 1.605 864
LS – Gestão Empresarial e Imobiliária, S.A.
1996 165.646 107.670 57.976
8.037.115 5.224.125 2.812.990
Acquisition year Gross Assets
Transportes Reunidos, Lda. 1996 112.818
Luisiseg – Mediadores de Seguros, Lda. 1996 5.976
118.794
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15. vALuATIOn CRITERIA DIFFEREnT TO THOSE ADOPTED In THE COnSOLIDATIOnThe main valuation criteria used by group companies were applied in a manner consistent between them and are stated in note 23 of this annex.
17. JuSTIFICATIOn OF THE DEPRECIATIOn OF THE AmOunT In ITEm “COnSOLIDATIOn DIFFEREnCES” BEyOnD THE PERIOD OF 5 yEARSThe amount stated in Assets on item Consolidation Differences “Goodwill” is being depreciated at an annual rate of 5% due to the fact that investment is expected to be recovered within 20 years.
18. ACCOunTInG PRInCIPLES OF SHAREHOLDInGS In ASSOCIATED COmPAnIESFinancial investments in Group and associated companies are stated at the cost of acquisition in the financial statements of the holding companies.
IV - InFORMATIOn RELATInG TO EnGAGEMEnTS
22 - LIABILITIES FOR GRAnTED GuARAnTEES Liabilities for granted guarantees of the companies included in the consolidation is of 580,992 Euros and refers exclusively to bank guarantees. In addition, the companies issued promissory notes to third parties as a guarantee for the payment of debts, amounting to 44,928,554 Euros as at 31 December 2008.
V - InFORMATIOn RELATInG TO THE ACCOUnTInG POLICIES
23 – PRESEnTATIOn BASES AnD mAIn vALuATIOn CRITERIA uSEDPresentation Bases The annexed consolidated financial statements were prepared under the assumption of the continuity of operations, from the accounting books and records of the companies included in the consolidation (Note 1), and were kept in accordance with the accounting principles generally accepted in Portugal.Main valuation criteriaThe main valuation criteria used in the preparation of the consolidated financial statements were as follows:
23.1 Intangible Fixed AssetsIntangible fixed assets are stated at the cost of acquisition. Depreciation is calculated using the straight-line method, in compliance with the legal decrees in force.Assets consolidation differences (“Goodwill”) and their respective accumulated depreciation are another component of intangible fixed assets, the explanation of which refers to Note 17.
23.2 Tangible Fixed AssetsTangible Fixed Assets are stated in the balance sheet at their cost of acquisition, except for assets revalued in compliance with the legislation relevant to that end. Depreciation is calculated using the straight-line method, counting from the date the goods enter into operation, in compliance with the legal decrees in force.Goods acquired under financial leasing are included in the tangible fixed assets at contract amounts, and are depreciated on the same basis as the remaining fixed assets. Fixed asset maintenance and repair spending are considered as a cost during the year they occur. All acquisitions and benefits of significant amount are capitalised and depreciated in accordance with the useful life of the corresponding goods.
23.3 Financial Investments 23.3.1 Shareholdings in Group CompaniesGroup Companies are companies controlled by Grupo Luís Simões. Control exists when Grupo Luís Simões has the direct or indirect power to run the financial and operating policies of the company, aiming at influencing benefits arising from its activity. The existence of potential voting rights which are exercisable is taken into account when determining the existence or inexistence of control. It is assumed that there is control when the percentage of shareholding is above 50%.Group companies are included in the consolidation by means of the comprehensive consolidation method, from the date in which the control is acquired to the date in which the control effectively ends.Accounting methods using the cost of acquisition are employed to account for the acquisition of Group subsidiaries. The cost of acquisition is measured according to the fair value of the goods, equity instruments used and risks incurred or assumed at the date of acquisition, plus the costs directly attributable to the acquisition. Identifiable goods acquired, and risks and contingencies taken on in a business combination, are initially measured at the fair value at the date of
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acquisition, regardless of the extension of some minority interest. The excess of the cost of acquisition compared to the fair value of the Group parcel of the acquired identifiable goods is stated as Goodwill. If the cost of acquisition is less than the fair value of the net amount of the goods of the subsidiary acquired, the difference is stated directly in the income statement.Inter-group balances and transactions, as well as unrealised gains in transactions between Group companies, are excluded. Unrealised losses are also excluded except if the transaction reveals evidence of imparity of a transferred good. The accounting policies of the subsidiaries are changed whenever necessary, so as to ensure consistency with the policies adopted by the Group. 23.3.2 Other ShareholdingsOther shareholdings (securities and other investments) are stated in the balance sheet at the cost of acquisition.
23.4 InventoriesInventories are valued at the cost of acquisition of production or at the net realisable value, whichever is lowest. Net realisable value corresponds to the selling price (market) deducted from the costs of sale. The cost is calculated as follows: 23.4.1 Raw Material, Subsidiary Materials and ConsumablesThese are valued according to their price of acquisition, and the weighted average cost was used as the method for measuring output costs. 23.4.2 Work in ProgressThese are valued at the cost of production, in which all manufacturing direct costs and general charges are included.
23.5 Accruals of profits and costsProfits inherent to sales are stated in the income statement when the risks and advantages inherent to the ownership of the goods sold are transferred to the buyer. Profits related to the provision of services are stated when they are provided. All profits and costs, related to revenues and expenses, ate stated in accordance with the accruals principle of accruals accounting basis, by which they are stated insofar as they are generated, regardless of the point in time when they are received or paid. Any differences between the two moments generate a record in items Accruals and Deferrals. Holidays and holiday leave are stated as costs pertaining to the year in which the employees acquire the right to receive them. Thus, the amount of the holidays and holiday leave taken and unpaid at the date of the balance sheet was estimated and included in the item of cost accruals.
23.6 ReceivablesReceivables are referenced according to the values of corresponding invoices, less the adjustments carried out in relation to doubtful debts, and are based on the limits allowed in no.2 of article 35 of the CIRC (Corporate Income Tax Code). We consider that they do not significantly differ from collectability risk estimates from a commercial point of view. Debts regarded as uncollectable or bad debts are eliminated from the receivables corresponding to the period in which they were identified.
23.7 ProvisionsProvisions are considered when the Group has a legal engagement, or one which results from a formal management decision, where it is probable that resources will be spent in order to fulfil that engagement, and where the estimate can be calculated with reasonable reliability. Provisions for restructuring, including compensation to be paid to employees, losses incurred due to the deactivation or disposal of tangible assets and other predictable losses, are recognised relative to the period in which the Group makes the engagement, or in which there is a large possibility of an outflow of resources incorporating economic benefits, required to fulfil the obligation, and a reliable estimation can be made of the amount of the obligation. Its recognition presupposes a high degree of irreversibility, including the existence of a formal plan which identifies the business or part of it, the localities, functions and number of employees to be compensated for contract termination, expenses to be paid and the date in which the plan will be implemented.
23.8 SubventionsSubventions are only considered when they are received, or when the company has the guarantee of they being granted, and that the associated contractual terms will be fulfilled. Operating subventions are considered in the income statement during the periods in which the costs to be compensated are considered. Subventions relative to investments are registered under “deferred income”, and are transferred to the income (extraordinary income) throughout the useful life of the goods, in proportion to the depreciation of the relevant subvented goods.
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23.9 Foreign currency Payables and ReceivablesAmounts expresses in foreign currency for which no exchange rate is fixed are updated according to the exchange rates fixed at the date of the balance. Emerging exchange rate differences are accounted for in income (except for positive exchange rate differences related to medium- and long-term operations which are deferred due to being deemed reversible).
23.10 Medium- and long-term presentationAssets receivable and liabilities payable more than a year after the balance sheet date are classified as medium and long term in the balance sheet.
23.11 Income Taxes 23.11.1 Current TaxCurrent tax is determined based on the adjusted income, in compliance with tax legislation. In accordance with the laws in force, tax statements are subject to audit and amendment by the Finance Administration for a period of four years (six in cases of tax loss) and 5 to 10 years by Social Security. In this way, the Group company tax statements from the years 2005 to 2008 may yet be subject to audit, although the respective Boards of Directors consider that any amendments resulting from audits carried out to those tax statements cannot have any significant impact on the Tax Statements of 31 December 2008. 23.11.2 Deferred TaxDeferred tax resulting from significant time differences between the assets and liabilities for the effect of accounting reports and their taxable base, as well as tax losses and credits to be retained to the following years (when applicable). Tax losses and credits subject to future use are revalued at the end of each financial year, and only those deferred tax assets which have the possibility of recuperation are considered.
23.12 Financial toolsIn order to cover the risk of fuel price fluctuations, the Group has signed fuel coverage contracts (swaps) for the duration of the year. The results of these operations were registered in financial costs or income at the moment of liquidation of the corresponding operation.
24 - RATES uSED FOR THE COnvERSIOn InTO PORTuGuESE CuRREnCy OF ACCOunTS InCLuDED In THE BALAnCE SHEET AnD THE InCOmE STATEmEnT, ORIGInALLy ExPRESSED In FOREIGn CuRREnCy
VI - InFORMATIOn RELATED TO CERTAIn ITEMS
25 - COmmEnTS On THE “InSTALLATIOn ExPEnSES” ITEm Installation expenses essentially correspond to those incurred from the onboard computer project, international franchising study, ISO 9001:2000 Quality Standard and clienting project.
MAD
Amounts Payable 11.316
Amounts Receivable 11.212
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27 - CHAnGES TO THE FIxED ASSETS ITEmS COnTAInED In THE BALAnCE SHEET AnD In CORRESPOnDInG DEPRECIATIOnS AnD ADJuSTmEnTS
GROSS ASSETS
Items Opening Balance Increases Disposals Transfer and Deductions Closing Balance
INTANGIBLE FIxED ASSETS
Installation Expenses 1.234.426 -48.481 1.185.945
Research and Development Expenses 78.462 -75.462 3.000
Industrial Property and Other Rights 38.000 38.000
Fixed Assets in Progress 174.550 -174.550
Consolidation Differences 8.037.115 8.037.115
9.562.553 -298.493 9.264.060
TANGIBLE FIxED ASSETS
Land and Natural Resources 2.385.058 61.576 2.323.482
Buildings and Other Constructions 12.633.456 441.078 314.809 -14.783 12.744.941
Machinery and Equipment 58.495.164 14.860.245 11.830.804 4.595.617 66.120.222
Transport Equipment 885.204 20.442 864.762
Tools and Dies 311.106 332.007 1.298 641.815
Administrative Equipment 7.710.374 556.124 13.680 129.152 8.381.970
Other Tangible Fixed Assets 708.994 209.353 218.100 1.136.447
Fixed Assets in Progress 10.541.106 11.247.553 7.000 -5.880.988 15.900.670
Advances to Tangible Fixed Assets 27.132 -27.132
93.697.594 27.646.358 12.249.609 -980.035 108.114.309
FINANCIAL INVESTMENTS
Securities and Other Investments 89.947 -977 88.970
89.947 -977 88.970
Total 103.350.094 27.646.358 12.249.609 -1.279.505 117.467.339
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We highlight the investment of 9,079,211 Euros made in the new logistic operations centre at the automated warehouse in Carregado, as well as the acquisition of vehicles to the amount of 4,773,627 Euros in order to maintain the low average age of the fleet.
DEPRECIATIOn AnD ADJuSTmEnTS
32 – CHAnGES TO CuRREnT ASSETSADJuSTmEnTS
33 – LIABILITIES PAyABLE AFTER FIvE yEARS OR mORELiabilities payable after 5 years are exclusively related to leasing, as explained in note 47.
36 – PARTITIOnInG OF THE COnSOLIDATED nET vALuE OF SALES AnD PROvISIOn OF SERvICES By mARKET
Items OpeningBalance
IncreaseCancellation/
ReversalSaldo Final
INTANGIBLE FIxED ASSETS
Installation Expenses 1.102.366 31.158 1.133.524
Research and Development Expenses
51.470 1.000 -50.302 2.168
Industrial Property and Other Rights
1.900 7.600 9.500
Consolidation Differences 4.822.270 401.855 5.224.125
5.978.006 441.613 -50.302 6.369.317
TANGIBLE FIxED ASSETS
Buildings and Other Constructions
5.416.398 433.332 -307.898 5.541.832
Machinery and Equipment 25.312.835 9.131.709 -9.240.849 25.203.695
Transport Equipment 727.951 42.127 -4.890 765.188
Tools and Dies 200.786 29.263 -1.296 228.753
Administrative Equipment 6.488.581 613.074 -26.489 7.075.166
Other Tangible Fixed Assets 516.488 48.109 -3.911 560.686
38.663.039 10.297.614 -9.585.333 39.375.320
Total 44.641.045 10.297.227 -9.635.635 45.744.637
ItemsOpening Balance
Increase ReversalClosingBalance
Current Accounts Receivable:
Customers, Doubtful Debts 2.642.887 517.866 545.947 2.614.806
2.642.887 517.866 545.947 2.614.806
InternalMarket
External Market
Total
Sales 2.258.311 2.258.311
Provision of Services 119.170.077 51.172.754 170.342.831
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38 – DEFERRED TAxESThe reconciliation between the accounting income and the taxable income, and between current tax and the year’s corporate income tax is as follows:
Changes occurring during the financial year as a result of the adoption of this standard, and in relation to their nature and impact, are as follows:
41 - InDICATIOn OF THE LEGAL DIRECTIvES On WHICH THE REvALuATIOn OF FIxED ASSETS OR FInAnCIAL InvESTmEnTS WERE BASEDTangible Assets were revalued during their several phases based on the following directives: Portuguese Decree-Law no. 430/78 of 27/12
Portuguese Decree-Law no. 118/86 of 27/02
Portuguese Decree-Law no. 219/82 of 02/06
Portuguese Decree-Law no. 111/88 of 02/04
Portuguese Decree-Law no. 31/98 of 11/02
Portuguese Decree-Law no. 329-G/84 of 28/12
Portuguese Decree-Law no. 49/91 of 25/01
Portuguese Decree-Law no. 264/92 of 24/11
2008 2007
Current Tax
Income Before Taxes 62.936 5.397.945
Provisional Differences 539.577 615.169
Permanent Differences -5.316.164 -5.024.406
Taxable Income -4.713.651 988.708
Tax Losses (Provisional Difference) 4.952.201 704.935
Tax Losses Deduction (Provisional Difference) -73.173 -664.587
165.377 1.029.056
Tax Rate
- Companies with Head office in Portugal
Corporate Income Tax 25% 25%
Municipal Tax (“Derrama”) 1.5% 1,5%
Tax Amount 9.227 222.897
- Company with Head office in Spain
Corporate Income Tax 30% 32,50%
Tax Amount 49.613 76.700
Total Tax Amount 58.840 299.597
Tax Benefits Use -15.027 -176.761
Autonomous Taxation 56.952 44.570
Current Tax (I) 100.765 167.406
Deferred Tax
Employed in the Financial year - RETGS (Special taxation system for groups of companies)
-1.413.878 143.024
Tax Benefit SIFIDE (system of tax benefit to business-related R&D)
-18.950
Deferred Tax (II) -1.432.828 143.024
Corporate Income Tax for the Financial Year (I) + (II) -1.332.063 310.430
Description Opening Balance
Effect on the Financial
Year
ClosingBalance
Deferred Tax Assets:
Tax Losses 804.616 1.249.511 2.054.127
Adjustments 137.035 56.588 193.623
Tax Benefits SIFIDE (system of tax benefit to business-related R&D
77.522 77.522
Spanish POC (official accounting plan) Conversion
49.638 49.638
941.651 1.433.259 2.374.910
Deferred Tax Liabilities:
Gains not Taxed due to Reinvestment 118.535 -76.633 41.902
40% of Unrealised Revaluation 18.028 -550 17.478
Fixed Assets Financial Leaseback 97.629 97.629
Unrealised Income in Intra-Group Operations
500.128 9.632 509.760
734.320 -67.551 666.769
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42 - TABLE OF REvALuATIOnS
(a) Amount net of depreciation
(b) Include successive revaluations
44 - FInAnCIAL InCOmE STATEmEnT
The item “Reversals and other financial income” refers to gains obtained through anticipated payments to suppliers.
45 - ExTRAORDInARy InCOmE STATEmEnT
ItemsHistoricalCosts (a)
Revaluations(a) (b)
Revalued Book
values (a)
TANGIBLE FIxED ASSETS
Lands 1.073.474 52.613 1.126.087
Buildings and Other Constructions 1.088.682 84.240 1.172.922
Machinery and Equipment 231 102 231
2.162.387 136.853 2.299.240
Losses and CostsFinancial Year
2008 2007
681 Interest Paid 2.754.584 1.806.760
685 Unfavourable Exchange Differences 29 4.347
686 Cash Payments Discounts Granted 208
688 Other Financial Losses and Costs 2.159.256 133.581
Financial Income -3.435.110 -440.241
1.478.759 1.504.655
IncomeFinancial Year
2008 2007
781 Interest Received 500.303 422.397
783 Fixed Assets Income 2.545 1.431
784 Shareholdings Income 278.590 177.497
785 Favourable Exchange Differences 287 590
788 Reversals and Other Financial Income 697.034 902.740
1.478.759 1.504.655
Losses and CostsFinancial Year
2008 2007
691 Donations 81.510 134.325
692 Bad Debts 307.334 296.543
694 Fixed Assets Losses 76.446 27.704
695 Fines and Penalties 50.314 162.198
697 Prior Years’ Adjustments 3.129 32.894
698 Other Extraordinary Losses and Costs 407.685 662.236
Extraordinary Income 2.282.051 1.074.792
3.208.469 2.390.692
IncomeFinancial Year
2008 2007
791 Tax Refunding 669
792 Debt Collection 10.006 211
793 Inventory Gains 2.147 1.430
794 Fixed Assets Gains 2.730.987 1.838.586
795 Benefits from Contractual Penalties 9.404 128.584
796 Provisions Reduction 36.130
797 Other Extraordinary Income 14.558 88.069
798 Other Extraordinary Income 405.237 333.143
3.208.469 2.390.692
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Legal persons holding share capital are as follows:46 - ExPLAnATIOn OF ACCumuLATED PROvISIOnS AnD CHAnGES WHICH OCCuRRED DuRInG THE FInAnCIAL yEAR
The balance refers to ongoing judicial processes
47 – InDICATIOn OF THE GOODS uSED In THE REGImE OF FInAnCIAL LEASInG, WITH REFEREnCE TO THEIR BOOK vALuES
Debts outstanding for more than a year are tiered as follows:
VII – OTHER INFORMATION
50 – EQuITyOn 31 December 2008, the share capital of LS – Luís Simões, SGPS, S.A., fully subscribed and paid up, consisted of 3,330,000 shares with a nominal value of 5 Euros each.
ACCOunTSOPEnInG BALAnCE
InCREASE REDuCTIOnCLOSInG BALAnCE
Other Provisions 86.833 316.024 37.482 365.375
Net AmountLiability Amount
Short-TermMedium and Long-Term
Lands 1.052.255 1.064.970 64.531 1.000.439
Machinery and Equipment 20.969.175 22.733.168 7.736.876 14.996.292
Fixed Assets in Progress 11.528.383 11.503.286 1.044.566 10.458.720
Total 33.549.814 35.301.424 8.845.973 26.455.451
Years Portugal Spain Total
2010 8.292.985 0 8.292.985
2011 5.731.737 0 5.731.737
2012 3.574.433 0 3.574.433
2013 Onwards 8.856.296 0 8.856.296
Total 26.455.451 0 26.455.451
ShareholderAcções Subscritas Participação
no capital %Direitos de
voto %Número %
Leonel Simões & Filhas SGPS. S.A.
1.019.079 30.6 30.6 30.6
Varanda do Vale SGPS. S.A. 1.019.079 30.6 30.6 30.6
Mira Serra SGPS. S.A. 1.019.079 30.6 30.6 30.6
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Changes in equity are explained as follows:
Legal Reserve: Commercial legislation establishes that at least 5% of the annual net income must be directed towards the reinforcement of the legal reserve, until it represents at least 20% of share capital. This reserve is non-distributable except in the case of company liquidation, but may be used in order to absorb losses after other reserves have been exhausted, or incorporated in the share capital.
Revaluation Reserve: This item results from the revaluation of tangible assets, in accordance with the applicable legislation. In compliance with current legislation and accounting practices followed in Portugal, these reserves cannot be distributed among shareholders, and may only be used, under certain circumstances, in future increases to the company share capital or in other situations specified in the legislation.
The application of the net income from 2008 financial year was approved by resolution of the Company General Meeting, held on 26 March 2009.
51 – OTHER DEBTORS AnD CREDITORS
Equity ItemsEquity
31-12-07Income 2007
Distribution of Dividends
Rewards to Staff
Income 2008 Reclassifications Other ChangesEquity
31-12-08
Share Capital 16.650.000 16.650.000
Revaluation Reserves 113.248 113.248
Legal Reserves 389.551 116.015 1.273.427 1.778.993
Others Reserves 13.144.284 2.525.369 -13.000 -174.091 -1.513.527 -9.154 13.959.881
Consolidation Differences 118.794 118.794
Retained Earnings 126.852 126.852
net Profit for the year 2.641.384 -2.641.384 -662.863 -662.863
32.944.013 0 -13.000 -174.091 -662.863 0 -9.154 32.084.905
Other Debtors 2008 2007
Debit Balances, Suppliers 136.157 64.671
Debit Balances, Suppliers of Fixed Assets
Other 4.884.911 7.976.399
5.021.068 8.041.070
Other Creditors 2008 2007
Commission Agents, Consultants
Staff 467 9.811
Credit Balances, Customers 29.068 39.259
Other 197.529 568.498
227.064 617.568
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52 – ACCRuALS AnD DEFERRALS 53 – PuBLIC EnTITIES
54 – SHAREHOLDER AnD SHAREHOLDInG COmPAnIESBalances between the GLS companies, eliminated during the consolidation process, are as follows:
Accruals and Deferrals 2008 2007
Accrued Income
Provision of Services 819.309 1.275.937
Other 126.378 278.559
945.687 1.554.496
Deferred Costs
Interest 3.090 10.446
Insurances 139.979 61.035
Technical Support Contracts 404 167.820
Rents and Leases 0 98.013
Other 101.676 89.273
245.149 426.587
Accrued Costs
Remunerations Payable 3.556.132 3.295.531
Outsourcings 899.355 2.693.594
Interest Payable 268.155 141.827
Vehicle Assistance Contracts 0 124.072
Other 1.591.945 670.903
6.315.587 6.925.927
Deferred Income
Investment Subventions, not yet depreciable 121.523 124.026
Other 66.602 98.823
188.125 222.849
Deferred Taxes (See Note 38)
Asset Deferred Taxes 2.374.910 941.651
Liability Deferred Taxes 666.769 734.320
1.708.141 207.331
2008 2007
DebitBalances
CreditBalances
DebitBalances
CreditBalances
Income Tax 287.502 40.518 209.832
Tax Withheld by Third Parties 356.073 380.116
Value Added Tax 332.079 536.709 642.769 856.993
Stamp Duty 240 175
Social Security Contributions 1.569.998 1.032.711
619.591 2.503.538 852.601 2.269.995
CompaniesClients Suppliers
2008 2007 2008 2007
Transportes Luís Simões, S.A. 755.620
422.563
421.837
776.998
DLS - Distribuição Luís Simões, S.A.
421.482
394.135
707.736
476.899
Reta - Gestão e Locação de Frotas S.A.
134.028
390.202
70.461
274.369
Transportes Reunidos, Lda. 13.647
2.255
1.895
15.161
Lusiseg - Mediadores de Seguros, Lda.
6.445
7.043
Socar - Equip. Transp. e Serv. Técnicos S.A.
299.048
518.262
166.425
274.723
LS - Gestão Empresarial e Imobiliária S.A.
429.355
432.226
7.281
39.469
Solmoninhos, Lda. 525
559
Luís Simões Logística Integrada S.A.
-29.574
61.326
641.001
355.746
TOTAL 2.023.606
2.220.968
2.023.606
2.220.968
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Transactions between the GLS companies, eliminated during the consolidation process, are as follows:
55 – BAnK LOAnS
56 – SuBSEQuEnT EvEnTSno events are known of after 31.12.2008 that may influence the presentation and interpretation of the financial statements reported on that date.
58 – InFORmATIOn COnSIDERED RELEvAnTDiscrimination of derivative products subscribed by the Group in 2008, namely coverage of the Brent index price:
Companies
Supplies and External Services
Sales and Provisionof Services
2008 2007 2008 2007
Transportes Luís Simões, S.A.
4.937.275 5.915.629 25.675.909 30.560.461
DLS - Distribuição Luís Simões, S.A.
3.223.242 3.682.643 2.468.809 1.898.625
Reta - Gestão e Locação de Frotas S.A.
1.766.303 1.329.182 4.623.505 112.694
Transportes Reunidos, Lda. 443.673 411.118 267.573 353.361
Lusiseg - Mediadores de Seguros, Lda.
82.506 74.077
Socar - Equip. Transp. e Serv. Técnicos S.A.
282.388 416.533 4.632.171 8.907.521
LS - Gestão Empresarial e Imobiliária S.A.
43.135 78.299 3.471.000 3.738.731
Solmoninhos, Lda. 5.110 5.402 0 0
Luís Simões Logística Integrada S.A.
27.388.447 29.211.872 598.890 776.291
TOTAL 38.172.079 41.124.755 41.737.857 46.347.684
2008 2007
Short-Term
Bank Loans 9.791.823 7.474.109
Overdrafts 17.781.822 15.005.492
27.573.645 22.479.601
Medium and Long-Term
Bank Loans
Banco Português de Investimento 490.112 1.431.224
Banco Popular 37.180 252.692
Caja Duero 17.710
BES-España 2.643.171
Banco Caixa Geral 1.890.480
5.060.943 1.701.626
Medium and Long-Term Repayment Deadlines
2009 1.174.334
2010 1.390.067 527.292
2011 878.519
2012 Onwards 2.792.357
5.060.943 1.701.626
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13.4| CONSOLIDATED INCOME STATEMENT BY FUNCTIONS
Product Quantity Start date End DateIncomein 2008
6-month swap 634 Metric tons 01-06-2008 30-11-2008 -726.582
6-month swap 317 Metric tons 01-08-2008 31-01-2009 -572.763
3wayextendible 317 Metric tons 01-06-2008 31-12-2009 -239.631
24-month swap 317 Metric tons 01-06-2008 31-05-2010 -477.699
-2.016.674
The Certified AccountantDiogo João Belo Sabino
The BoardJosé Luís Soares Simões - Chairman
Leonel Fernando Soares Simões – MemberJorge Manuel Soares Simões – Member
ITEmSFInAnCIAL yEAR
2008 2007
Sales and Provision of Services 172.601.142 173.163.045
Cost of Sales and Provision of Services -166.989.494 -164.287.098
Gross Income 5.611.648 8.875.948
Other Operating Income 15.010.040 13.480.887
Administrative Costs -15.539.409 -14.392.464
Other Operating Losses and Costs -5.278.363 -3.965.039
Operating Income -196.084 3.999.333
Net Financing Cost -1.798.841 -1.047.519
Current Income -1.994.925 2.951.814
Taxes on Current Income 1.332.062 -310.430
Current Income After Taxes -662.863 2.641.384
Consolidated net Profit for the year -662.863 2.641.384
Net Earnings per Share -0.20 0.79
The Certified AccountantDiogo João Belo Sabino
The BoardJosé Luís Soares Simões - Chairman
Leonel Fernando Soares Simões – MemberJorge Manuel Soares Simões – Member
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13.5| CONSOLIDATED STATEMENT OF CASH FLOWS
DIRECT mETHOD
OPERATInG ACTIvITIES 2008 2007
RECEIVED FROM CUSTOMERS
Received from Customers 225.957.458 225.957.458 217.134.666 217.134.666
PAID TO SUPPLIERS
Paid to Suppliers -170.392.884 -170.392.884 -159.283.339 -159.283.339
PAID TO STAFF
Remunerations -29.731.211 -26.396.564
Advances to Staff -74.787 -59.851
Paid to Staff, Other -140.342 -29.946.340 -103.068 -26.559.483
Flow from Operations 25.618.234 31.291.844
CORPORATE INCOME TAx PAID/RECEIVED
Corporate Income Tax Paid -41.687 -114.098
Corporate Tax Advance and Special Advance Paid -178.261 -280.156
Corporate Income Tax Refunding 97.889 -122.059 504.821 110.567
OTHER RECEIPTS RELATED TO OPERATING ACTIVITIES
Received from Other Debtors 18.911.322 11.836.146
Received from Other Creditors 443.405 901.567
VAT Reimbursements
Received from Other Taxes 10.948 19.365.675 8.773 12.746.486
OTHER PAYMENTS RELATED TO OPERATING ACTIVITIES
Paid to Other Debtors -6.226.274 -4.129.471
Paid to Other Creditors -10.682.471 -10.567.718
VAT Paid -9.001.336 -10.335.008
Withholding Tax Retaining Paid -2.878.826 -2.496.562
TSU (social tax) Paid -8.444.233 -7.513.836
Other Taxes Paid -443.328 -37.676.468 -313.372 -35.355.967
Flows Before Extraordinary Items 7.185.382 8.792.930
RECEIPTS RELATED TO ExTRAORDINARY ITEMS
Bad Debts Received 3.979 211
Settlement of Claims 581.899 501.110
Contractual Penalties Received 2.324
Other Extraordinary Receipts 6.136 592.014 4.150 507.795
Valores em Euros
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PAYMENTS RELATED TO ExTRAORDINARY ITEMS
Donations -40.867 -29.718
Fines and Penalties Paid -136.684 -85.379
Other Extraordinary Payments -22.988 -200.539 -1.154 -116.251
Flow from Extraordinary Activities 391.475 391.544
(1) FLOW FROm OPERATInG ACTIvITIES 7.576.857 9.184.474
InvESTInG ACTIvITIES
RECEIVED FROM:
Tangible Fixed Assets 7.322.843 4.524.245
Investment Subventions 38.826
Interest and Other Similar Income 898 288.042
Dividends 278.600 177.496
Real Estate Income 3.243 7.644.410 1.431 4.991.214
PAyMEnTS RELATED TO:
Financial Investments -4.073
Tangible Fixed Assets -11.098.802 -2.933.636
Total Tangible Fixed Assets -11.098.802 -2.937.709
Intangible Fixed Assets -15.200
Subventions Refunding -11.114.002 -2.937.709
(2) FLOW FROm InvESTInG ACTIvITIES -3.469.592 2.053.505
FInAnCInG ACTIvITIES
RECEIVED FROM:
Loans Received 61.166.950 40.217.836
Subventions and Donations 162.427 90.641
Interest from Loans Granted 419.182 61.748.559 323.933 40.632.410
PAyMEnTS RELATED TO:
Loans Received -60.969.254 -47.018.937
Depreciation of Financial Leasing Contracts -9.106.261 -6.528.707
Interest and Other Similar Costs -3.039.349 -1.857.296
Dividends -13.000 -2.550
Interest from Loans Received -73.127.864 -406 -55.407.896
(3) FLOW FROM FINANCING ACTIVITIES -11.379.305 -14.775.486
Change in Cash and Equivalents (1)+(2)+(3) -7.272.040 -3.537.507
Cash and Equivalents at the Beginning of year -14.776.929 -11.239.400
Cash and Equivalents at the End of year -22.048.969 -14.776.907
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ANNEx TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
BREAKDOWn OF CASH AnD CASH EQuIvALEnTS COmPOnEnTS, RECOnCILInG THE AmOunTS EvIDEnCED In THE CASH FLOW STATEmEnT AnD THE BALAnCE SHEET ITEmS
Description 2008 2007
Cash in Hand 21.296 13.161
Overnight Bank Cash Deposits 122.810 215.424
Cash Equivalents:
Cash and Equivalents (Bank Overdrafts) -22.193.075 -15.005.514
-22.048.969 -14.776.929
The Certified AccountantDiogo João Belo Sabino
The BoardJosé Luís Soares Simões - Chairman
Leonel Fernando Soares Simões – MemberJorge Manuel Soares Simões – Member
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Opinion of the Single Auditor
Dear Shareholders,
We have audited the company LS – Luís Simões, S.G.P.S., S.A., in accordance with article 420 of the Commercial Companies Code and the company’s Articles of Association, the results of which lead us to opine that you should approve the Consolidated Management Report and the Consolidated Accounts for the year of 2008.
Lisbon, 13 March 2009
The Single Auditor
Ernst & young Audit & Associados - Sroc, S.A.Registered Auditor Company (No. 178)Represented by:
João Carlos Miguel Alves (Registered Auditor no. 896)
Public Company – Share Capital 1,105,000 Euros – registered on the Portuguese Board of Registered Auditors under No. 178 – Registered on CMVM (Portuguese Securities Market Commission) under No. 9011 – Tax Payer No. 505 988 283 – Registered on Lisbon Companies Registry under No. 505 988 283 – A member firm of Ernst & young Global Limited
Ernst & youngAudit & Associados - SROC, S.A.
Avenida da República, 90-6°1600-206 Lisboa, Portugal
Telf: +351 217 912 000Fax: +351 217 957 586
www.ey.com
| REPORT AND OPINION OF THE SINGLE AUDITOR (Consolidated Accounts)
Dear Shareholders,
In compliance with the legal and applicable provisions, it is incumbent on us to issue the annual report on the audit of the consolidated accounts of LS – Luís Simões, S.G.P.S., S.A., regarding the financial year ended on 31 December 2008, which the Board of Directors submitted to us, together with the consolidated Management Report, so as to be audited in accordance with the provisions laid down on Article 508-D, no. 1 of the Code of Commercial Companies.
We verified that the consolidation perimeter was defined by LS – Luís Simões, S.G.P.S., S.A., as Consolidant Company, in accordance with the provisions laid down in Decree Law no. 238/91 of 2 July, and that, in its essecial aspects, the standards of account consolidation published in Annex 1 to the abovementioned Decree Law were appropriately apllied.
With regards to the companies integrated in the consolidation perimeter, we assessed their respective Reports, Opinions and Registered Auditor’s Report issued by their audit bodies in accordance with the legal and statutory provisions apllicable to them. Under the Code of Commercial Companies, we have issued on the consolidated accounts audita and whithin the scope of our duties as Registered Auditors, the Registered Auditor’s Report on the Consolidated Accounts and on the Annual Report and Accounts on the Audit Performed, which is now an integral part of our Report.
The management consolidated report generally meets the requirements of the Code of Commercial Companies and we verified that its content and the consolidated accounts are in accordance.
Given the above, and as if we have not encountered any issue that materially affects the true and fair financial position and results of all companies included in consolidation, making deliberate on the consolidated annual report and the consolidated accounts the following opinion:
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Ernst & youngAudit & Associados - SROC, S.A.
Avenida da República, 90-6°1600-206 Lisboa, Portugal
Telf: +351 217 912 000Fax: +351 217 957 586
www.ey.com
| REGISTERED AUDITOR’S REPORT
IntroductionWe have audited the consolidated financial statements of LS – Luís Simões, 1. S.G.P.S. which comprise the Balance Sheet as at 31 December 2008 (reflecting a total of 135,668,443 Euros and total equity of 32,084,905 Euros, including a net loss of 662,863 Euros) the Consolidated Income Statement by Natures and By Functions and the Consolidated Cash Flow Statement for the year then ended, and the related Annexes.
ResponsibilitiesThe Board of Directors is responsible for preparing the consolidated financial 2. statements giving a true and fair view of the financial position of the group of companies included in the consolidation, the consolidated profits of its operations and the consolidated cash flows, as well as for adopting appropriate accounting policies and criteria and keeping an appropriate internal control system.
Our responsibility is to express a professional and independent opinion based 3. on our audit to those financial statements.
Scope4. We conducted our audit in accordance with the Technical Standards and
Guidelines of Revision/Audit of the Portuguese Board for Registered Auditors, which require the planning and performance of the audit so as to obtain reasonable assurance that the consolidated financial statements are free from material misstatements. In order to do so, the audit included:- the examination of whether the financial statements of the companies included in the consolidation were adequately audited and, for those significant cases where they have not, the examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements and the assessment of the estimates based on judgements and criteria made by the Board of Directors and used in the preparation of the financial statements; - the examination of the consolidation operations;
- the assessment of whether the adopted accounting policies are appropriate to the company’s circumstances and if their application was regular and if they were adequately disclosed;- the examination of the applicability of the principle of continuity; and - the evaluation of the overall adequacy of the presentation of information in the consolidated financial statements.
5. The audit also included our opinion on whether the information given in the consolidated Management Report is consistent with the consolidated financial statements.
6. We believe that the audit carried out provides an acceptable basis for expressing our opinion.
Opinion7. In our opinion, the consolidated financial statements give a true and fair view,
in all aspects materially relevant, of the state of LS – Luís Simões, S.G.P.S., S.A. consolidated affairs as at 31 December 2008, the consolidated profits of its operations and consolidated cash flows for the financial year then ended, in accordance with the accounting principles generally accepted in Portugal.
Lisbon, 13 March 2009
Ernst & young Audit & Associados - SROC, S.A.Independent Registered Auditors Firm (No. 178)Represented by:
João Carlos Miguel Alves (Registered Auditor no. 896)
Public Company – Share Capital 1,105,000 Euros – registered on the Portuguese Board of Registered Auditors under No. 178 – Registered on CMVM (Portuguese Securities Market Commission) under No. 9011 – Tax Payer No. 505 988 283 – Registered on Lisbon Companies Registry under No. 505 988 283 – A member firm of Ernst & young Global Limited
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A| MANAGEMENT REPORT
ACTIVITY DURING THE FINANCIAL YEARTransportes Luís Simões is a renowned company in Portugal, operating in the sector of road transport of goods. The company’s core business is the full cargo service, especially within Portugal and in Spain (through Luís Simões Logística Integrada SA).
Together, these two companies are at the forefront of the flow of goods by road between Portugal and Spain. In addition, the company also provides international transport services, namely to France, Italy, Germany the United Kingdom and the Benelux countries.
The increasingly relevant contribution of other added-value transport services should be highlighted, such as Flow Management and the rental of vehicles to clients, which already account for around 20% of company invoicing.In terms of sectors, the main ones are Food and Beverages, Large-scale Distribution, Paper and Automobile Components.
Throughout 2008, some projects were consolidated, developed with the objective of increasing the company’s competitiveness:
▪ The company’s functional organization underwent a few adjustments, aiming at an improved verticality in decision-making and a greater capacity for performance in a market which is increasingly becoming organized on an Iberian scale. The new structure endows the delegations with a greater performance capacity from a commercial viewpoint, which, in conjunction with the potentially centralized area of resource management, enables a more efficient response to market requirements;
▪ An upgrade to our fleet management tool was undertaken, enabling a more rigorous control of vehicles, with more reliable information;
▪ The organisation of flows in exploration formats, named as “Strategic Corridors”, has taken safe steps towards the affirmation of its simplicity, profitability guarantee and competitive response to the clients. This
Transportes Luís Simões, S.A.
Transportes Luís Simões, S.A.Legal Person no. 500 289 050 | Share Capital: 7,000,000.00 Euros | Registered in Loures Companies’ Register under no. 1059 | Moninhos 2671-951 Loures, Portugal
was a year of consolidation regarding this issue, in which conditions were created for an improved centralization of fleet management in forthcoming years;
▪ The “Ecodriving” project was launched with positive results, with the objective of reducing fuel costs. There have been some interesting results at the level of a greater control on this subject, having the different areas of the company become aware of the need to manage this variable in a more efficient way;
▪ A sales policy aiming at clients with limited credit was implemented, a factor which contributed towards the control of uncollectability, in a year in which almost all clients experienced greater difficulties in honouring their financial commitments;
▪ From the point of view of human resources, it was a rich year in terms of training provided in all areas of the company, from several training initiatives for drivers, especially related to Ecodriving, to the resource management areas, where training was provided regarding the new laws on maximum driving hours and rest periods, and further including several managers who took part in company management programs.
ECONOMIC AND FINANCIAL ANALYSISTransportes Luís Simões obtained a turnover of 81,199 thousand Euros. 2008 was an economically turbulent year, with additional difficulties in the transport sector such as the June strike, which had repercussions on an Iberian scale; the global economic downturn and the reduction in activity of some of the company’s core clients. Nonetheless, the company managed to maintain its turnover at the level of the preceding year, guaranteeing a sound client portfolio.
82.476
2006
81.683
2007
81.199
2008
Sales Development (Thousands of Euros)
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The company’s net Income was - 1.287 thousand Euros, negatively influenced to the tune of 2.016 thousand Euros by a financial product linked to the Brent index; if this were to be excluded, the Income would be positive and would amount to 729 thousand Euros.
The financial operation was carried out at a time when Brent oil prices were skyrocketing, a situation which reached its peak in July, with an average maximum price of 134.55 Dollars.Faced with this scenario and predictions from global investment banks that the Brent oil price would rise to between 150 and 200 Dollars before year end, the company took measures considered to be of prudence, setting the Brent price.
Contrary to the analysts’ expectations, the Brent price on international markets inverted this tendency towards the end of summer, falling to a minimum value of 43.15 Dollars in December, a 68% decrease compared to June. This erratic market behaviour led to financial expenses amounting to 2.016 thousand Euros.
Our Extraordinary Income showed their best performance of the past three years, totalling 2.017 thousand Euros, mostly as a result of gains generated from the disposal of vehicles.
In 2008, the company’s Cash Flow totalled 5.597 thousand Euros. The value of Investment amounted to 6.969 thousand Euros, and mostly refers to vehicle acquisition.
The Financial Autonomy and Solvency indexes were 23% and 30% respectively.
PERSPECTIVES FOR 2009 The year of 2009 is, on the one hand, being met with the required amount of preoccupation due to the ongoing crisis and the uncertainty as to its strength and duration; on the other hand, the year is being faced with the confidence that this is a wonderful opportunity for consolidation among our business partners – the clients and suppliers who have brought us to where we are now. Therefore, our activities in 2009 will be based on the following assumptions:
▪ Consolidation of the awarding of a number of large sales projects during the first semester of 2009, which will bolster the company’s Iberian market relevance, the result of its complexity and size;
▪ The launch of a program aiming at the loyalty of transport companies through the offer of an array of tiered benefits, in accordance with the degree of partnership which those companies establish with our company;
▪ Within the scope of the aforementioned program, new ways of relating to transport agents will be implemented in terms of transport material sales, anticipated payments and fuel sales;
▪ The implementation of a project which will endow us with one of the most professional tools for the analysis of management information. We expect this to increase our capacity for analysis as well as elaborate quicker and more solid action plans.
▪ We will continue to look towards intermodal transport, an increasingly determinant factor in the development of greater productivity within the transport system.
Income Development (Thousand Euros)
2006 2007 2008
2.0001.5001.000
5000
(500)(1000)
(1.500)(2.000)(2.500)(3.000)
2.0171.577
620
(1.287)
6961.077
(2.665)
(310) (188)
Net
Extraordinary
Financial
Legend
Cash Flow and Investment Development (Thousand Euros)
Cash Flow
Investment
Legend
7.118
8.9087.233
2006 2007 2008
10.035
5.5976.969
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CORPORATE BODIES
ALLOCATION OF THE PROFITSThe company Transportes Luís Simões, S.A. ended 2008 with negative net Profits to the amount of 1,286,744.34 Euros.In compliance with applicable legal and statutory provisions, the following application of income is proposed:
Retained Earnings -1,286,744.34
Moninhos, 10 February 2009
José Luís Soares SimõesLeonel Fernando Soares SimõesJorge Manuel Soares Simões
Chairman/ExecutiveDirector MemberMember
Board of Directors:
Clara Maria Campos Monteiro RibeiroIsabel Maria Blazquez Pereira Silva
ChairmanSecretary
General meeting Committee
Ernst & Young Audit & AssociadosRui Abel Serra Martins
In officeAlternate
Single Auditor
Leonel Fernando Soares Simões - Member Jorge Manuel Soares Simões - Member
José Luís Soares SimõesChairman
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B| FINANCIAL STATEMENTSBALANCE SHEET Amounts in Euros
Accounts Code 2008 2007
EEC Portuguese OAP Gross AssetsDepreciation and
AdjustmentsNet Assets Net Assets
ASSETSC Fixed Assets
I Intangible Fixed Assets:1 431 Installation Expenses 525.502,62 525.502,62 0,00 0,001 432 Research and Development Expenses 3.000,00 2.166,58 833,42 1.833,38
528.502,62 526.669,24 833,42 1.833,38II Tangible Fixed Assets:
1 422 Buildings and Other Constructions 371.964,74 3.364,67 368.600,072 423 Machinery and Equipment 38.538.685,45 17.952.500,73 20.586.184,72 18.149.183,232 424 Transport Equipment 50.510,98 50.510,98 0,00 0,003 425 Tools and Dies 19.907,62 17.657,32 2.250,30 1.167,793 426 Administrative Equipment 2.267.535,20 2.237.732,99 29.802,21 136.360,443 429 Other Tangible Fixed Assets 22.438,26 22.438,26 0,00 0,004 441/6 Fixed Assets in Progress 396.059,26 396.059,26 3.872.404,91
41.667.101,51 20.284.204,95 21.382.896,56 22.159.116,37III Financial Investments:
5 4113+414+415 Securities and Other Investments 2.298,46 2.298,46 2.298,462.298,46 0,00 2.298,46 2.298,46
D Current AssetsI Inventories:
1 36 Raw Material, Subsidiary Materials and Consumables 119.025,64 119.025,64 123.410,77119.025,64 0,00 119.025,64 123.410,77
II Current Accounts Receivable - Medium and Long-Term:1 218 Customers, Doubtful Debts 804.114,01 800.980,78 3.133,23 0,00
804.114,01 800.980,78 3.133,23 0,00II Current Accounts Receivable - Short-Term:
1 211 Customers, c/a 14.393.137,54 14.393.137,54 15.555.264,362 252 Group Companies 1.576.995,47 1.576.995,47 350.432,744 24 Public Entities 432.314,814 262+266+267+ Other Debtors 2.984.786,08 2.984.786,08 5.551.031,81
267+221 18.954.919,09 0,00 18.954.919,09 21.889.043,72Iv Bank Deposits and Cash:
Bank Deposits 524.356,21 524.356,21 1.445.991,0712+13+14 524.356,21 524.356,21 1.445.991,07
E Accruals and Deferrals Accrued Income 1.574.669,72 1.574.669,72 2.612.205,44
271 Deferred Costs 3.688,82 3.688,82 23.117,47272 Deferred Tax Assets 921.982,01 921.982,01 32.278,60276 2.500.340,55 2.500.340,55 2.667.601,51
Total de Amortizações 20.811.874,15Total de Ajustamentos 800.980,78
Total do Activo 65.100.658,09 21.612.854,93 43.487.803,16 48.289.295,28
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BALANCE SHEET (Continued) Amount in Euros
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsJosé Luís Soares Simões - Chairman | Leonel Fernando Soares Simões - Member | Jorge Manuel Soares Simões - Member
Accounts Code2008 2007
EEC Portuguese OAP
EQuITy AnD LIABILITIESA Equity
I 51 Share Capital 7.000.000,00 7.000.000,00
Iv Reserves:
1 571 Legal Reserves 481.858,22 427.992,98
4 574 a 579 Other Reserves 3.731.194,55 3.282.785,40
V 59 Retained Earnings 24.508,65 24.508,65
Subtotal 11.237.561,42 10.735.287,03
vI 88 net Profit for the year -1.286.744,34 1.077.304,78
Total Equity 9.950.817,08 11.812.591,81
Liabilities
B Provisions for Risks and Costs:
3 293/8 Provisions for Other Risks and Costs 62.108,80 42.015,00
62.108,80 42.015,00
C Medium and Long-Term Liabilities
2 231+12 Bank Loans 160.407,97 831.223,89
6 252 Group Companies 700.000,00 700.000,00
8 2611 Suppliers of Fixed Assets, c/a 12.268.677,75 14.268.375,30
13.129.085,72 15.799.599,19
C Short-Term Liabilities
2 231+12 Bank Loans 809.257,76 733.325,82
4 221 Suppliers, c/a 9.504.210,46 11.510.767,53
4 228 Suppliers, Pending Invoices 3.796,01 71.538,53
8 2611 Suppliers of Fixed Assets, c/a 5.961.344,28 4.776.593,31
8 24 Public Entities 565.567,97 438.523,84
8 262+263+264+265 Other Creditors 359.271,47 185.515,29
267+268+211 17.203.447,95 17.716.264,32
D Accruals and Deferrals
273 Accrued Costs 2.966.984,23 2.679.248,03
274 Deferred Income 133.457,21 121.523,21
276 Deferred Tax Liabilities 41.902,17 118.053,72
3.142.343,61 2.918.824,96
Total Liabilities 33.536.986,08 36.476.703,47
Total Equity and Liabilities 43.487.803,16 48.289.295,28
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INCOME STATEMENT BY NATURES Amounts in Euros
Accounts Code2008 2007
EEC Portuguese OAP
A LOSSES AnD COSTS
2.a) 61 Costs of Sold Goods and Consumed Materials:
Goods 3.900,00 4.628,40
Materials 11.934.732,43 11.938.632,43 9.996.558,69 10.001.187,09
2.b) 62 Supplies and External Services 56.127.140,97 57.167.282,92
3 Staff Costs
3.a) 641+642 Remunerations 14.742.704,92 13.735.052,79
3.b) Social Charges:
645/8 Other 2.759.005,94 17.501.710,86 2.491.618,66 16.226.671,45
4.a) 662+663 Tangible and Intangible Fixed Assets Depreciation 6.667.321,93 5.836.050,16
4.b) 666+667 Adjustments 159.791,31 277.472,17
5 67 Provisions 56.223,60 6.883.336,84 42.015,00 6.155.537,33
5 63 Taxes 247.325,75 252.316,15
5 65 Other Operating Losses and Costs 23.229,05 270.554,80 5.740,36 258.056,51
(A) 92.721.375,90 89.808.735,3
7 681+685+686+687+688
Interest and Other Similar Costs: Related to Group Companies 50.065,28 52.792,40
Other 3.009.833,24 3.059.898,52 751.608,55 804.400,95
(C) 95.781.274,42 90.613.136,25
10 69 Extraordinary Losses and Costs 550.988,83 685.010,58
(E) 96.332.263,25 91.298.146,83
8+11 86 Corporate Income Tax for the Financial Year -1.064.153,43 15.321,50
(G) 95.268.109,82 91.313.468,33
13 88 net Profit for the year -1.286.744,34 1.077.304,78
93.981.365,48 92.390.773,11
B InCOmE
1 71 Sales
Goods 2.688,00 7.708,00
1 72 Provision of Services 81.195.955,98 81.198.643,98 81.675.307,66 81.683.015,66
3 75 Production for Own Company 49.499,60
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ANNEx TO THE BALANCE SHEET AND TO THE INCOME STATEMENTFINANCIAL YEAR 2008 (Information in Euros)
0 - InTRODUCTORy nOTE0.1.Company Transportes Luís Simões, S.A. Head office: Moninhos – Loures, Portugal Set Up Date: 14 november 1968 Activity: Occasional Public Transport of Goods Tax Payer no.: 500 289 050
The company belongs to Grupo Luís Simões, being LS – Luís Simões SGPS, SA its mother company, as for the other companies in the group.
0.2. The Financial Statements were prepared according to the historical costs convention, as modified to account for the revaluation of tangible fixed assets, and based on the continuity of operations and in accordance with the core accounting principles of consistency, prudence, accruals, substance on form and materiality. Furthermore, they also respect the qualitative characteristics of relevance, reliability and comparability.
4 73 Supplementary Income 9.114.447,20 8.356.497,15
4 74 Operating Subventions 112.788,16 47.199,60
4 76 Other Operating Income 356.550,70 135.389,97
4 77 Reversals from Depreciation and Adjustments 201.887,62 9.785.673,68 246.963,44 8.786.050,16
(B) 91.033.817,26 90.469.065,82
7 7811+7813+7814+7818+785+786+
787+788
Other Interest and Similar Income
Related to Group Companies 50.777,23 75.690,06
Other 344.234,72 395.011,95 540.717,77 616.407,83
(D) 91.428.829,21 91.085.473,65
9 79 Extraordinary Income 2.552.536,27 1.305.299,46
(F) 93.981.365,48 92.390.773,11
Summary:
Operating Income: (B)-(A) -1.687.558,64 660.330,52
Financial Income: (D-B)-(C-A) -2.664.886,57 -187.993,12
Current Income: (D)-(C) -4.352.445,21 472.337,40
Income Before Taxes: (F)-(E) -2.350.897,77 1.092.626,28
net Profit for the year: (F)-(G) -1.286.744,34 1.077.304,78
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsJosé Luís Soares Simões - Chairman | Leonel Fernando Soares Simões - Member | Jorge Manuel Soares Simões - Member
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0.3. Notes which have not been mentioned either do not apply to the Company, do not apply to materially relevant accounting standards, or did not occur during the financial year to which this annex refers.
3 - ACCOUnTInG PRInCIPLES AnD VALUATIOn CRITERIA USED3.1. Inventories 3.1.1. Raw Material, Subsidiary Materials and ConsumablesThese are valued according to their price of acquisition, and the weighted average cost was used as the method for measuring output costs.
3.2. Fixed Assets 3.2.1. Intangible Fixed AssetsIntangible Fixed Assets are stated at the cost of acquisition. Depreciation is calculated using the straight line method, in conformity with the legal decrees in force. 3.2.2. Tangible Fixed AssetsTangible Fixed Assets are stated in the balance sheet according to their cost of acquisition, except for assets revalued in accordance with the legislation published to that end. Depreciation is calculated using the straight line method, in conformity with the legal decrees in force. 3.2.3. Financial Investments Financial Investments are stated on the balance sheet according to their cost of acquisition.
3.3. Foreign Currency Liabilities and ReceivablesDebts and Credits of this nature, pertaining to the currencies of countries outside the Euro Area, were adjusted according to the exchange rates in force as at 31 December 2008.
3.4. Receivables AdjustmentsThe value of adjustments corresponds to the risk inherent to the collection of the relevant debts.
3.5. Deferred TaxesDeferred Taxes refer to the provisional differences between the amounts of assets and liabilities for the purposes of accounting reports and their respective amounts for taxation purposes.Deferred Tax Assets and Liabilities are calculated and valued, using taxation rates which are expected to be in force at the time of the reversal of the provisional
differences.
Since 2007, the company has been included in the Special Taxation System for Groups of Companies (“RETGS”) led by the shareholder LS – Luís Simões, SGPS, S.A.
4 - EXCHAnGE RATES USED In THE COnVERSIOn InTO PORTUGUESE CURREnCy OF THE ACCOUNTS INCLUDED IN THE BALANCE SHEET AND IN THE INCOME STATEMENT, ORIGINALLY ExPRESSED IN FOREIGN CURRENCY
6 – DISCLOSURE OF THE MAIN TAx COST (INCOME) COMPONENTSThe company is subject to Corporate Income Tax (“IRC”), at the current rate of 25%, plus a municipal tax (“Derrama”) at a maximum rate of 1.5% on taxable profits, reaching an aggregated income tax of 26.5%.
Under Article 81 of the Corporate Income Tax Code (“CIRC”), the company is subject to autonomous taxation on a host of charges provided for therein.
As was referred in note 3.5, ever since the financial year of 2007 the Group companies have been included in the Special Taxation System for Groups of Companies (“RETGS”) under Article 63 et seq. of the CIRC, led by the shareholder LS – Luís Simões, SGPS, S.A., whereby individually obtained taxes are reflected in the shareholder balance included in the item “Group Companies”.
In accordance with the legislation in force, tax statements are subject to audit and correction by tax authorities for a period of four years (ten years for Social Security up to and including 2000 and five years from 2001 onwards), unless tax losses occurred or inspections, complaints or impugnments are in course; in these cases, and depending on the circumstances, these deadlines are extended or suspended.The reconciliation between the accounting income and the taxable income, and between current tax and the income tax for the year, is as follows:
Description MAD
Amounts Payable 11,316
Amounts Receivable 11,212
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The Company has applied the provisions of Accounting Guideline no. 28, which pertains to the accounting for Deferred Taxes.
Changes occurred during the financial year as a result of the adoption of this directive, in terms of their nature and impact, are as follows:
7 - AVERAGE nUMBER OF PERSOnS AT THE COMPAny’S SERVICEEmployees .............................................................................. 712
8 - COMMEnT On ACCOUnTS 431 “InSTALLATIOn EXPEnSES”8.1. Installation ExpensesThe balance of the Installation Expenses item essentially includes expenses related to the “InformáticaEmbarcada” Project (use of on-board computers), the International Franchising Study, ISO 9001-2000 Standard Quality Project and Clienting Project.
2008 2007
Current Tax
Income Before Taxes -2.350.897,77 1.092.626,28
Provisional Differences 267.886,80 511.048,75
Permanent Differences -1.941.079,43 -828.078,58
Taxable Income -4.024.090,40 775.596,45
Tax Losses (Provisional Difference) 3.579.459,81 -485.448,85
Tax Losses (Provisional Difference) – RETGS (Special Taxation System for Groups of Companies)
444.630,59
0,00 290.147,60
Tax Rate
Corporate Income Tax 25,00% 25,00%
Municipal Tax (“Derrama”) 1,50% 1,50%
0,00 84.170,85
Tax Benefits Use 0,00 -72.536,90
Autonomous Taxation 19.528,63 17.753,26
Current Tax (I) 19.528,63 29.387,21
Deferred Tax
Effect on the Financial Year -965.854,95 -14.065,71
Effect on the Financial Year – RETGS (Special Taxation System for Groups of Companies)
-117.827,11
Deferred Tax (II) -1.083.682,06 -14.065,71
Corporate Income Tax for the Financial Yea (I) + (II) -1.064.153,43 15.321,50
DescriptionOpening Balance
Effect on the Financial
Year
Closing Balance
Deferred Tax Assets:
Tax Losses 0,00 894.864,95 894.864,95
Current Accounts Receivable Adjustments
32.278,61 -5.161,55 27.117,06
32.278,61 889.703,40 921.982,01
Deferred Tax Liabilities:
Gains not Taxed due to Reinvestment 118.053,72 -76.151,55 41.902,17
118.053,72 -76.151,55 41.902,17
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10 - CHAnGES REGISTERED In THE FIXED ASSETS ITEMS OF THE BALAnCE SHEET AND IN THE RELEVANT DEPRECIATION AND PROVISIONSGROSS ASSETS
DEPRECIATION AND PROVISIONS
Items Opening Balance Revaluation/Adjustment Increases DisposalsTransfers and Deductions
Closing Balance
INTANGIBLE FIxED ASSETS
Installation Expenses 525.502,62 525.502,62
Research and Development Expenses 3.000,00 3.000,00
528.502,62 0,00 0,00 0,00 0,00 528.502,62
TANGIBLE FIxED ASSETS
Buildings and Other Constructions 0,00 365.979,47 5.985,27 371.964,74
Machinery and Equipment 36.540.062,49 6.200.287,65 8.033.952,33 3.832.287,64 38.538.685,45
Transport Equipment 50.510,98 50.510,98
Tools and Dies 18.597,62 1.310,00 19.907,62
Administrative Equipment 2.262.432,05 5.103,15 2.267.535,20
Other Tangible Fixed Assets 22.438,26 22.438,26
Fixed Assets in Progress 3.872.404,91 396.059,26 7.000,00 -3.865.404,91 396.059,26
42.766.446,31 6.968.739,53 8.040.952,33 -27.132,00 41.667.101,51
FINANCIAL INVESTMENTS
Securities and Other Investments 2.298,46 2.298,46
2.298,46 0,00 0,00 0,00 0,00 2.298,46
Items Opening Balance Increase Cancellation/Reversal Closing Balance
INTANGIBLE FIxED ASSETS
Installation Expenses 525.502,62 525.502,62
Research and Development Expenses 1.166,62 999,96 2.166,58
526.669,24 999,96 0,00 527.669,20
TANGIBLE FIxED ASSETS
Buildings and Other Constructions
Machinery and Equipment 18.390.879,26 3.364,67 3.364,67
Transport Equipment 50.510,98 6.551.068,41 6.989.446,94 17.952.500,73
Tools and Dies 17.429,83 50.510,98
Administrative Equipment 2.126.071,61 227,49 17.657,32
Other Tangible Fixed Assets 22.438,26 111.661,38 2.237.732,99
20.607.329,94 6.666.321,95 6.989.446,94 20.284.204,95
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23 - GLOBAL AMOUnT OF DOUBTFUL DEBTS InCLUDED In EACH OF THE CURREnT ACCOUNTS RECEIVABLE ITEMS CONTAINED IN THE BALANCE SHEETCustomers, Doubtful Debts ..................................................804.114,01
25 - GLOBAL AMOUnT OF RECEIVABLES AnD PAyABLES RELATED TO COMPAny STAFFReceivables (Accounts 2624/2627) ............................................6.665,07Payables (Accounts 2622/2629) ................................................1.383,67
29- AMOUnT OF LIABILITIES FOR PERIODS OVER FIVE yEARS
32 - GRAnTED GUARAnTEES
In addition, the company issued promissory notes to third parties as a guarantee of payment of debts, amounting to 11,812,516.84 Euros as at 31 December 2008.
34 – CHANGES REGISTERED IN PROVISIONS ITEMS
14 - OTHER InFORMATIOn RELATED TO FIXED ASSETSAll Fixed Assets are affected to the company’s activity.
15 - InDICATIOn OF THE GOODS USED UnDER THE FInAnCIAL LEASInG SySTEM, WITH MENTION OF THE RELEVANT BOOK VALUES
Debts running for over a year are scaled in time as follows:
16 - TABLE OF GROUP COMPAnIES - ASSOCIATED COMPAnIES AnD SHAREHOLDER COMPANIESThis company’s Financial Statements are included in the Consolidated Financial Statements of the following company:
Firm: LS – Luís Simões, SGPS, S.A.Head Office: Moninhos – LouresTax Payer no: 503 717 789
21 - DEVELOPMEnT OF CURREnT ASSET ACCOUnTSADJUSTMEnTS
Descriptionnet Fixed
AssetsLiability Amount
Short-TermMedium and Long-Term
Machinery and Equipment
15.611.068,33 17.698.462,10 5.429.784,35 12.268.677,75
15.611.068,33 17.698.462,10 5.429.784,35 12.268.677,75
Year Liability Amount
2010 4.703.046,59
2011 3.825.438,15
2012 2.095.857,94
2013 1.608.609,06
2014 35.726,01
12.268.677,75
ItemsOpening Balance
Increase ReversalClosing Balance
Current Accounts Receivable:
Customers, Doubtful Debts 843.077,09 159.791,31 201.887,62 800.980,78
843.077,09 159.791,31 201.887,62 800.980,78
Balance Sheet ItemsLiabilities
1 to 5 years (medium-Term)
Liabilitiesmore than 5(Long-Term)
Total
Suppliers of Fixed Assets (Lessors)
12.232.951,75 35.726,01 12.268.677,75
AccountsOpening Balance
Increase ReductionClosing Balance
293 – Provisions for Current Lawsuits
42.015,00 56.223,60 36.129,80 62.108,80
Guarantor Amount BeneficiaryType of
Guarantee
Banco Espírito Santo 30.050,61 Servisa Targetas, S.A. Bank
Banco Espírito Santo 230.124,00 API Bank
BBVA 90.710,00 CTT Bank
BBVA 65.064,85 AICEP Bank
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36 - nUMBER OF SHARES FROM EACH CATEGORy InTO WHICH THE COMPAny SHARE CAPITAL IS DIVIDED AND THEIR NOMINAL VALUEThe Share Capital consists of 1,400,000 shares, with a nominal value of 5.00 Euros each.
37 - SHAREHOLDInG In THE SUBSCRIBED SHARE CAPITAL OF EACH OF THE CORPORATE BODIES HOLDING AT LEAST 20% OF THE SHARE CAPITAL
40 -DETAILED EXPLAnATIOn AnD JUSTIFICATIOn OF CHAnGES OCCURRED DURInG THE FINANCIAL YEAR IN EACH OF THE EQUITY ITEMS CONTAINED IN THE BALANCE SHEET
41 - STATEMEnT OF THE COST OF GOODS SOLD AnD MATERIAL COnSUMED
44 – ALLOTMENT OF THE NET AMOUNT OF SALES AND PROVISION OF SERVICES OBTAINED IN ACCOUNTS 71 AND 72
45 - FInAnCIAL InCOME STATEMEnT
46 - EXTRAORDInARy InCOME STATEMEnT
ShareholderSubscribed Shares Shareholding
%Voting
Rights %Quantity %
LS – Luís Simões, SGPS, S.A. 1.400.000 100 100 100
AccountsOpeningBalance
Increase ReductionsClosingBalance
51 Share Capital 7,000.000.00 7,000,000.00
57 Reserves
571 Legal Reserves 427,992,98 53,865.24 481,858.22
574 Free Reserves 3,255,282.92 448,409.15 3,703,692.07
575 Subventions 27,502.48 27,502.48
59 Retained Earnings 24,508.65 24,508.65
88 Net Income 1,077,304.78 -1,286,744.34 1.077.304,78 -1,286,744.34
Changes GoodsRaw material, Subsidiary
materials and Consumables
Opening Inventories 123.410,77
Purchases 11.934.247,30
Inventory Clearing 3.900,00
Closing Inventories 119.025,64
Cost for the Year 3.900,00 11.938.632,43
Description Amount
Internal Market 51.937.682,83
External Market 29.260.961,15
Total 81.198.643,98
Losses and CostsFinancial Years
2008 2007
681 Interest Paid 986.275,65 744.073,90
685 Unfavourable Exchange Differences 16,89 4.334,41
686 Cash Payments Discounts Granted 203,01
688 Other Financial Losses and Costs 2.073.605,98 55.789,63
Financial Income -2.664.886,57 -187.993,12
395.011,95 616.407,83
Losses and CostsFinancial Years
2008 2007
691 Donations 62.098,78 14.144,47
692 Bad Debts 166.379,99 231.819,88
694 Fixed Assets Losses 4.500,00 17.302,70
695 Fines and Penalties 17.310,52 96.883,14
697 Prior Years’ Adjustments 1.400,00 1.171,97
698 Other Extraordinary Losses and Costs 299.299,54 323.688,42
Extraordinary Income 2.016.547,44 620.288,88
2.552.536,27 1.305.299,46
IncomeFinancial Years
2008 2007
781 Interest Received 50.777,23 76.813,92
785 Favourable Exchange Differences 286,80 589,82
788 Reversals and Other Financial Income 343.947,92 539.004,09
395.011,95 616.407,83
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48 - OTHER InFORMATIOn DEEMED RELEVAnTA) Changes involving group companies and associated companies
(*) – Includes 1,040,413.72 Euros acquired through leasing from entities within the group.
B) Breakdown of by-products subscribed by the company in 2008, namely coverage of the Brent oil price:
C) Global amounts of R&D effort:R&D Investments - Summary
The values presented refer to expenses with Investigation and Development related to projects involving the reduction of consumed fuel costs and the enhancement of operational efficiency.
D) SIFIDEWithin the scope of its application for benefits from the System of Tax Benefits to Research and Development (“SIFIDE”) – Decree-Law no. 40/2005 of 3 August, Transportes Luís Simões obtained tax savings of 71,521.56 Euros during 2007 financial year. However, as the company falls under the Special Taxation System for Groups of Companies (“RETGS”) referred to in Note 3, the aforementioned savings could not be used in the amount of 66,194.11 Euros.
Items Amounts
Receivables:
Customers, c/a 535.371,99
Shareholders 1.576.995,47
Other Debtors 55.384,66
Payables:
Suppliers, c/a 697.953,67
Shareholders 700.000,00
Other Creditors 219.211,30
Acquisitions of Goods from Tangible Fixed Assets (*) 1.610.819,44
Operating Costs 5.770.597,59
Financial Expenditure 50.065,28
Extraordinary Costs 242.843,61
Operating Profits 25.021.701,09
Financial Gains 50.777,23
Extraordinary Profits 602.327,10
Product Quantity Start Date End Date Income 2008
Swap 6 months 634 Tons 01-08-2008 31-01-2009 -726.582
Swap 6 months 317 Tons 01-08-2008 31-01-2009 -572.763
3 way extendible 317 Tons 01-06-2008 31-12-2009 -239.631
Swap 24 months 317 Tons 01-06-2008 31-05-2010 -477.699
-2.016.674
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsJosé Luís Soares Simões - Chairman
Leonel Fernando Soares Simões - MemberJorge Manuel Soares Simões - Member
Items 2006 2007 2008
Staff Costs 216.721,66 227.557,74 238.935,63
General Costs 87.126,15 91.482,46 96.056,58
Fixed Assets 7.906,60
Total R&D Investment 311.754,41 319.040,20 334.992,21
Turnover 82.475.627,64 81.683.015,66 81.198.643,98
Staff Costs 14.839.344,71 16.212.832,67 17.501.710,86
IncomeFinancial Years
2008 2007
792 Debt Collection 7.596,19 210,73
794 Fixed Assets Gains 2.432.586,68 1.115.113,55
795 Benefits from Contractual Penalties 3.306,50 111.831,37
796 Reductions from Depreciation and Adjustments 36.129,80
797 Prior Years’ Adjustments 14,34 250,00
798 Other Extraordinary Income 72.902,76 77.893,81
2.552.536,27 1.305.299,46
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INCOME STATEMENT BY FUNCTIONS
ItemsFinancial Year
2008 2007
Sales and Provision of Services 81.198.643,98 81.683.015,66
Cost of Sales and Provision of Services -86.427.994,02 -83.318.161,94
Gross Income -5.229.350,04 -1.635.146,28
Other Operating Income 12.782.721,50 10.707.757,45
Administrative Costs -5.946.013,95 -6.013.745,39
Other Operating Losses and Costs -2.971.979,63 -1.222.165,60
Operating Income -1.364.622,12 1.836.700,18
Net Financing Cost -986.275,65 -744.073,90
Current Income -2.350.897,77 1.092.626,28
Taxes on Current Income 1.064.153,43 -15.321,50
Current Income After Taxes -1.286.744,34 1.077.304,78
Net Income -1.286.744,34 1.077.304,78
Earnings per Share -0,92 0,77
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsJosé Luís Soares Simões - Chairman | Leonel Fernando Soares Simões - Member | Jorge Manuel Soares Simões - Member
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CASH FLOW STATEMENTDirect Method
OPERATInG ACTIvITIES 2008 2007
RECEIVED FROM CUSTOMERS
Received from Group Customers 31.141.970,70 33.132.289,34
Received from Other Customers 79.703.473,96 110.845.444,66 76.297.291,05 109.429.580,39
PAID TO SUPPLIERS
Paid to Group Suppliers -11.353.827,87 -12.254.063,90
Paid to Other Suppliers -79.935.403,45 -91.289.231,32 -72.316.916,71 -84.570.980,61
PAID TO STAFF
Remunerations -13.438.223,60 -12.677.513,96
Advances to Staff -46.471,83 -43.247,89
Paid to Staff, Other -70.846,95 -13.555.542,38 -46.865,26 -12.767.627,11
Flow from Operations 6.000.670,96 12.090.972,67
CORPORATE INCOME TAx PAID/RECEIVED
Corporate Income Tax Paid -12.881,64
Corporate Income Tax Refunding 22.027,22 22.027,22 -12.881,64
OTHER RECEIPTS RELATED TO OPERATING ACTIVITIES
Received from Other Debtors 8.503.204,15 3.028.799,53
Received from Other Creditors 106.945,32 160.080,64
Received from Other Taxes 1.774,82 8.611.924,29 441,05 3.189.321,22
OTHER PAYMENTS RELATED TO OPERATING ACTIVITIES
Paid to Other Debtors -636.018,40 -200.410,54
Paid to Other Creditors -4.469.179,31 -3.903.922,57
VAT Paid -335.893,34 -611.771,48
Withholding Tax Retaining Paid -553.927,30 -530.870,10
TSU (social tax) Paid -2.893.360,52 -2.522.860,49
Other Taxes Paid -266.869,22 -9.155.248,09 -231.467,82 -8.001.303,00
Flows Before Extraordinary Items 5.479.374,38 7.266.109,25
RECEIPTS RELATED TO ExTRAORDINARY ITEMS
Bad Debts Received 2.921,15 210,73
Settlement of Claims 411.944,35 295.643,24
Contractual Penalties Received 1.513,12
Other Extraordinary Receipts 1.409,50 416.275,00 1.274,92 298.642,01
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PAYMENTS RELATED TO ExTRAORDINARY ITEMS
Donations -14.189,60 -160,00
Fines and Penalties Paid -1.682,87 778,45
Other Extraordinary Payments -48.274,33 -64.146,80 -3.365,84 -2.747,39
Flow from Extraordinary Activities 352.128,20 295.894,62
(1) FLOW FROm OPERATInG ACTIvITIES 5.831.502,58 7.562.003,87
InvESTInG ACTIvITIES
RECEIVED FROM:
Tangible Fixed Assets 4.791.821,47 1.367.256,94
Interest and Other Similar Income 286,80 4.792.108,27 1.707,82 1.368.964,76
PAyMEnTS RELATED TO:
Tangible Fixed Assets – Group Companies -662.232,53 -300.913,46
Tangible Fixed Assets - Other Companies -2.864.001,71 -312.472,82
Total Tangible Fixed Assets -3.526.234,24 -3.526.234,24 -613.386,28 -613.386,28
(2) FLOW FROm InvESTInG ACTIvITIES 1.265.874,03 755.578,48
FInAnCInG ACTIvITIES
RECEIVED FROM:
Loans Received from Group Companies 53.509.779,94 58.945.915,11
Loans Received from Other 5.641.631,85
Total Loans Received 53.509.779,94 53.509.779,94 64.587.546,96 64.587.546,96
Subventions and Donations 91.126,32 36.649,14
Interest from Loans Granted 64.336,55 155.462,87 60.268,91 96.918,05
PAyMEnTS RELATED TO:
Loans Received from Group Companies -54.670.873,72 -58.740.197,67
Loans Received from Other -510.407,96 -10.000.000,00
Total Loans Received -55.181.281,68 -68.740.197,67
Depreciation of Financial Leasing Contracts -4.967.402,89 -2.879.096,58
Interest and Other Similar Costs -859.648,92 -672.239,35
Dividends -538.652,39 -629.536,17
Interest from Loans Received -52.792,38 -61.599.778,26 -30.779,01 -72.951.848,78
(3) FLOW FROm FInAnCInG ACTIvITIES -7.934.535,45 -8.267.383,77
Change in Cash and Equivalents (1)+(2)+(3) -837.158,84 (1)+(2)+(3) 50.198,58
Cash and Equivalents at the Beginning of year 1.223.073,21 1.172.874,53
Cash and Equivalents at the End of year 385.914,37 1.223.073,11
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsJosé Luís Soares Simões - Chairman | Leonel Fernando Soares Simões - Member | Jorge Manuel Soares Simões - Member
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ANNEx TO THE CASH FLOW STATEMENT
2-DISCRIMInATIOn OF CASH AnD CASH EQUIVALEnTS COMPOnEnTS, RECOnCILInG THE AMOUNTS EVIDENCED IN THE CASH FLOW STATEMENT AND THE BALANCE SHEET ITEMS
Amounts in Euros
C| REPORT AND OPINION OF THE SINGLE AUDITOR AND REGISTERED AUDITORS’ REPORT
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsJosé Luís Soares Simões - Chairman
Leonel Fernando Soares Simões - MemberJorge Manuel Soares Simões - Member
Ernst & youngAudit & Associados - SROC, S.A.
Avenida da República, 90-6°1600-206 Lisboa, Portugal
Telf: +351 217 912 000Fax: +351 217 957 586
www.ey.com
| REPORT AND OPINION OF THE SINGLE AUDITOR
Dear Shareholders,
In compliance with the legal provisions and the Company’s Articles of Association, it is incumbent on us to issue the annual report on the audit of Company Transportes Luís Simões, S.A., regarding the financial year ended on 31 December 2008, and issue an opinion on the report, accounts and the proposal for the allocation of the profits presented by the Board of Directors.
In the course of the financial year and as part of our appointed duties, we carried out, with satisfactory results and with the frequency and extent deemed most adequate, a general audit of all accounting procedures, as well as surveys of their corresponding records and other probative elements.
The Board of Directors’ report explains the orientation of the Company’s policy during the financial year, as well as the policy proposal for 2009 financial year.
The Balance Sheet, Income Statements, Cash Flow Statement and their respective Annexes, respecting all legal requirements, reflect the position of the accounting records at the end of the financial year and attest to the Company’s financial situation.
The valuation criteria used for the preparation of accounts are laid down in the Annex to the Balance Sheet and to the Income Statements, and lead to a suitable assessment of company assets
All regulatory formalities as well as those from the Articles of Association with regards to the accountability and auditing of the Company were complied, whereby we issue the following Opinion, which shall be presented to shareholders and published as required by law:
Description 2008 2007
Overnight Bank Cash Deposits 524.356,21 1.445.991,07
Cash Equivalents
Cash and Equivalents (Bank Overdrafts) -138.441,84 -222.917,86
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Opinion of the Single Auditor
Dear Shareholders,
We have audited the company Transportes Luís Simões, S.A., in accordance with article 420 of the Commercial Companies Code and the company’s Articles of Association, the results of which lead us to opine as follows:
(a) The Management Report and the Accounts for the financial year of 2008 should be approved; (b) The Board of Directors’ proposal on the allocation of the profits of the financial year should be approved.
Lisbon, 13 March 2009
The Single Auditor
Ernst & young Audit & Associados - Sroc, S.A.Independent Registered Auditor’s Firm (No. 178)Represented by:
João Carlos Miguel Alves (Registered Auditor no. 896)
Public Company – Share Capital 1,105,000 Euros – registered on the Portuguese Board of Registered Auditors under No. 178 – Registered on CMVM (Portuguese Securities Market Commission) under No. 9011 – Tax Payer No. 505 988 283 – Registered on Lisbon Companies Registry under No. 505 988 283 – A member firm of Ernst & young Global Limited
Ernst & youngAudit & Associados - SROC, S.A.
Avenida da República, 90-6°1600-206 Lisboa, Portugal
Telf: +351 217 912 000Fax: +351 217 957 586
www.ey.com
| REGISTERED AUDITORS’ REPORT
IntroductionWe have audited the financial statements of Transportes Luís Simões, S.A., 1. which comprise the Balance Sheet as at 31 December 2008 (reflecting a total of 43,487,803 Euros and total equity of 9,950,817 Euros, including a net loss of 1,286,744 Euros) the Income Statement by Natures and By Functions and the Cash Flow Statement for the year then ended, and the related Annexes.
Responsibilities2. The Board of Directors is responsible for preparing the financial statements
giving a true and fair view of the Company’s financial position, the profits of its operations and cash flows, as well as for adopting appropriate accounting policies and criteria and keeping an appropriate internal control system.
3. Our responsibility is to express a professional and independent opinion based on our audit to those financial statements.
Scope4. We conducted our audit in accordance with the Technical Standards and
Guidelines of Revision/Audit of the Portuguese Board for Registered Auditors, which require the planning and performance of the audit so as to obtain reasonable assurance that the financial statements are free from material misstatements. In order to do so, the audit included:- the examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements and the assessment of the estimates based on judgements and criteria made by the Board of Directors and used in the preparation of the financial statements;- the assessment of whether the adopted accounting policies and their disclosure are appropriate to the company’s circumstances;- examination of the applicability of the principle of continuity; and- evaluation of the overall adequacy of the presentation of information in the financial statements.
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5. The audit also included our opinion on whether the information given in the Management Report is consistent with the financial statements.
6. We believe that the audit carried out provides an acceptable basis for expressing our opinion.
Opinion7. In our opinion, the financial statements give a true and fair view, in all
aspects materially relevant, of the state of Transportes Luís Simões, S.A. affairs as at 31 December 2008, the profits of its operations and cash flows for the financial year then ended, in accordance with the accounting principles generally accepted in Portugal.
Lisbon, 13 March 2009
Ernst & young Audit & Associados - SROC, S.A.Independent Registered Auditors Firm (No. 178)Represented by:
João Carlos Miguel Alves (Registered Auditor no. 896)
Public Company – Share Capital 1,105,000 Euros – registered on the Portuguese Board of Registered Auditors under No. 178 – Registered on CMVM (Portuguese Securities Market Commission) under No. 9011 – Tax Payer No. 505 988 283 – Registered on Lisbon Companies Registry under No. 505 988 283 – A member firm of Ernst & young Global Limited
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A| MANAGEMENT REPORT
ACTIVITY DURING THE FINANCIAL YEAR Logistics and transport is increasingly becoming a strategic added-value process, which enables a company to stand out from and create advantages among its competitors. These business areas are based less and less on physical assets, but are rather becoming a service based increasingly on advanced, sophisticated information systems, with the aim of providing the highest levels of service and satisfaction to the client.Luís Simões Logística Integrada carries out its activities in two different but complementary fields: The Transport business area is based on the transport of goods from Spain, and its core business is the Iberian Transport. The company provides full-cargo services, from and to the entire Iberian Peninsula.Its activities are carried out in demanding market segments, such as products of mass consumption, packaged products and the automotive sector.2008 saw the consolidation of a few projects which were undertaken with the aim of increasing the company’s competitiveness:
▪ The fleet management tool was updated, enabling greater accuracy in the follow-up of our vehicles, with more reliable information.
▪ A sales policy with credit limits was implemented for clients, which helped control uncollectability rates, in a year where almost all clients experienced difficulties in fulfilling their financial commitments.
The Logistics Business Area has an established presence in Spain, identifying itself as an operator specialising in the logistics and delivery of products of mass consumption, while also carrying out its activity in the automotive parts segment.In the course of 2008, the company devloped a series of strategies based on the following activity guidelines:
▪ Consolidation of the management team, based on the large investment made in preceding years in the reorganisation and reinforcement of the management teams. The current management team has vast know-how and expertise regarding processes, is oriented towards satisfying and complying with client needs, and consistently adopts a significant attitude for concquering the market. The past year has clearly been one
Luis Simões Logística Integrada, S.A. (Sole Partnership)Tax Payer number: A79502357 | Share Capital: 6,000,000.00 Euros | Registered in the Companies Register of Guadalajara - Spain, under Volume 403, Book 0, Folio 52, Leaf GU-4744, Registration 2 | Av. de la Industria n.º 5 | 19200 Azuqueca de Henares (Guadalajara) Spain
Luís Simões Logística Integrada, S.A. (Sole Partnership)
of personal and professional achievement for the managers.▪ Increase of the scale of business in Madrid, with the inauguration of the
new warehouse. Total surface managed in this region now amounts to 82 000 sqm.▪ Greater stability in the operating management of own platforms, ensuring
process quality, and the structured increase of service levels provided to clients. The opening of the Granada and Alicante platforms during the preceding year, as well as moving to new installations with better conditions in Seville, has fulfilled the greatest of expectations.
ECONOMIC AND FINANCIAL ANALYSISLuís Simões Logística Integrada registered, in 2008, a turnover of 72 739 thousand Euros. In a year of great economic difficulty, which adversely affected both the Iberian Peninsula and the activities of the company’s core clients, the company registered an increase in turnover. This performance reflects not only gaining new clients, but also our unwavering concern with answering to the demands and requirements of our current client portfolio.
As for LSLI’s net income, it registered an increase of 17% and amounted to 126 million Euros. The restructuring measures put in place by the company were fundamental to the good performance of this income.Assets totalled 28 868 one thousand Euros, showing an increase of 19% compared to 2007. This increase is mainly due to the investment in vehicles, as a result of the increase of activities for 2009 due to the garnering of a new large-scale client.
44.293
2005
55.867
2006
72.133
2007
72.739
2008
Sales Development (Thousand Euros)
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A financial autonomy index of 19% and a solvency index of 24% ensure the required financial soundness for the company to maintain its position as one of reference within the entire Iberian Peninsula.
PERSPECTIVES FOR 2009 The year of 2009 is being faced, on the one hand, with the concern warranted by the ongoing crisis and the uncertainty as to its intensity and duration, but on the other hand it is also being met with the confidence that this is an excellent opportunity to emphasize among our business partners - clients and suppliers - the values which have allowed us to reach our current position. In this way, company activities in 2009 will be based on the following assumptions:
Iberian Transport Business Area: ▪ Consolidation of the awarding of a number of large sales projects during
the first half of 2009, which will bolster the company’s Iberian market relevance, the result of their complexity and size.
▪ Implementation of a project which will endow us with one of the most professional tools of information management. Through this program, we expect to increase our capacity for analysis and elaboration of faster and sounder plans of action.
▪ The organisation of flows in the operating formats will aim at simplifying and ensuring a greater profitability and competitive response for clients. Conditions will be created for a greater degree of centralisation in the management of vehicles during the years to come.
▪ Greater attention will be paid to intermodal transport, increasingly considered as fundamental to the enhancement of greater productivity within the transport system.
Iberian Logistics Business Area: ▪ Our clients and the market should be given greater attention, with priority
being given to business growth through conquering of new clients, both in current and new market segments. The economic environment may favour the logistic outsourcing of processes by our clients.
▪ Improvement of conditions at our Barcelona facilities, enabling the structural performance and growth of our logistics activities in Catalonia.
▪ Implementation of a tool whose purpose is to provide all the management levels with more and improved information, allowing them to follow up on activity levels on a daily basis and providing the capacity to make decisions based on more sound data. This tool will enhance the management capacity and performance of the managers.
▪ Maintenance of investment in information technologies supporting the structured control of all logistics processes, providing more and improved management information. Within this context, the following should be highlighted:
▪ The implementation of a tool geared towards the management of the Co-Packing business;
▪ A continuous investment in the implementation of Radiofrequency and Mobidis (mobile communications for delivery);
CORPORATE BODIES
ALLOCATION OF THE PROFITSThe company Luís Simões Logística Integrada, S.A. ended 2008 with net Profits to the amount of 126 069 38 Euros.In compliance with applicable legal and statutory provisions, the following allocation of income is proposed:
Legal reserve 12.606,94Free Reserves 113.462,44
Madrid, 10 February 2009
José Luís Soares SimõesLeonel Fernando Soares SimõesJorge Manuel Soares Simões
Chairman/Managing DirectorMember/Managing DirectorSecretary/Managing Director
Board of Directors
Leonel Fernando Soares SimõesMember/Managing Director
Jorge Manuel Soares SimõesSecretary/Managing Director
José Luís Soares Simões - Chairman/Managing Director
2007 2008
Assets Structure (Thousand Euros)
922 1.518
21.74818.743
3.8808.607
Ot.Act.
Clients
Fixed Assets
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B| ACCOUNTSBALANCE SHEETBalance Sheet at the end of 2008 Balance Sheet at the en of 2008 (continued)
ASSETSREPORT nOTES
2008
A) FIxED ASSETS 9.493.805
Intangible fixed assets 100
Computer applications 6 100
Tangible fixed assets 5 8.123.106
Buildings and other constructions 6.493.717
Fixed assets in progress and advances 1.629.388
Financial investments – long-term 483.408
Other financial assets 8 483.408
Deferred tax assets 12 887.191
B) CuRREnT ASSETS 19.448.349
Inventories 10 63.513
Raw material, subsidiary materials and consumables 63.513
Current accounts receivable – short-term 8 19.337.204
Customers, c/a 8 18.743.115
Group companies and associated companies 16 246.303
Other debtors 8 347.786
Accruals and deferrals – short-term 22.863
Cash and equivalents 11 24.769
Cash 24.769
TOTAL ASSETS (A + B) 28.942.154
EQuITy AnD LIABILITIESREPORT nOTES
2008
A) EQuITy 5.571.850
Equity 5.571.850
Share Capital 9 6.000.000
Issued capital 6.000.000
Reserves 9 1.365.817
Legal reserves 234.875
Other reserves 1.130.942
Retained earnings (4.220.036)
Negative retained earnings (4.220.036)
Other shareholders’ contributions 2.300.000
Income for the year 126.069
B) nOn-CuRREnT LIABILITIES 4.570.831
Long-Term Liabilities 8 4.570.831
Bank loans 4.570.831
B) CuRREnT LIABILITIES 18.799.473
Short-term provisions 15 259.801
Short-term liabilities 8 7.737.090
Bank loans 5.308.776
Other financial liabilities 2.428.314
Short-term liabilities, group companies and associated companies
16 872.135
Commercial and other payables 8 9.930.447
Suppliers 5.736.069
Suppliers, group companies and associated companies 16 448.366
Other creditors 2.136.614
Staff (remunerations payable) 352.197
Current tax liabilities 12 34.585
Liabilities, public entities 12 1.222.616
TOTAL EQuITy AnD LIABILITIES (A + B + C) 28.942.154
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INCOME STATEMENT Income Statement for the Year Ended 31 DECEMBER 2008
Note(Payable) Receivable
2008
COnTInuED OPERATIOnS
Net amount of turnover 72.738.573
Provision of services 14 72.738.573
Supplies (48.212.828)
Goods consumed and other materials consumed 14 (419.114)
Works performed for other companies (47.793.713)
Other operating income 179.254
Supplementary income and other current management income 179.254
Staff costs 14 (12.999.924)
Other similar payments and salaries (10.071.533)
Social charges (2.928.392)
Other operating costs 14 (10.634.384)
External services (10.004.763)
Taxes (41.566)
Losses, depreciation and change of commercial operations provisions 15 (250.018)
Other current management costs (338.036)
Intangible fixed assets depreciation 5 (729.465)
Excess of amounts 1.352
Fixed assets disposals’ depreciation and income 5 26.783
Disposal income and other income 26.783
OPERATInG InCOmE (1+2+3+4+5+6+7+8+9+10+11) 369.362
Financial gains 14 170.892
Securities and other investments 170.892
Third parties 170.892
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STATEMENT OF CHANGES ON EQUITYB) Total Statement of Changes on Equity for the year Ended 31 DECEMBER 2008
Shar
e Ca
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l
Shar
e pr
emiu
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and
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er s
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the
year
Prov
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and
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ed
Not
re
quir
ed
C. BALAnCE, EnD OF yEAR 2007 6.000.000 0 0 1.431.733 0 (4.220.036) 2.300.000 107.817 0 0 0 5.619.514
I. Adjustments for criterion change 2007. (173.733) (173.733)
D. ADJuSTED BALAnCE, BEGInnInG OF yEAR 2008
6.000.000 0 0 1.258.000 0 (4.220.036) 2.300.000 107.817 0 0 0 5.445.781
I. Total Revenues and Expenses registered 126.069 126.069
III. Other changes is Equity instruments 107.817 (107.817) 0
E. BALAnCE, EnD OF yEAR 2008 6.000.000 0 0 1.365.817 0 (4.220.036) 2.300.000 126.069 0 0 0 5.571.850
Financial expenditure 14 (368.812)
Related to group companies and associates companies (17.091)
Third parties’ liabilities (351.721)
Exchange differences 0
FInAnCIAL InCOmE (12+13+14+15+16) (197.919)
InCOmE BEFORE TAxES (A1+A2) 171.442
Profits taxes 12 (45.373)
COnTInuED OPERATIOnS’ InCOmE FOR THE yEAR (A3+A17) 126.069
InCOmE FOR THE yEAR (A4+18) 3 126.069
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CASH FLOW STATEMENTCash Flow Statement for the Year Ended 31 DECEMBER 2008
Notes 2008
A) OPERATInG ACTIvITIES
1. Income before taxes for the year 171.442
2. Income adjustments 1.149.267
a) Fixed assets depreciation (+). 729.465
b) Valuation amendments for depreciation (+/-). (9.782)
c) Changes in provisions (+/-). 259.801
e) Income for transfers and disposals of fixed assets (+/-). (26.783)
g) Financial gains (-). (170.892)
h) Financial expenditure (-). 368.812
k) Other revenues and expenses (-/+). (1.352)
3. Changes in working capital (2.093.157)
a) Inventories (+/-). (7.434)
b) Debts and other accounts receivable (+/-). 313.090
c) Other current assets (+/-). 2.867
d) Debts and other accounts payable (+/-). (2.699.411)
e) Other current liabilities (+/-). 331.936
f) Other fixed assets and liabilities (+/-). (34.205)
4. Other flows from operating activities (349.287)
a) Interest paid (+/-). (299.877)
b) Interest received (+/-). 15
c) Profits tax received (paid) (+/-) (49.425)
5. Flows from operating activities (+/-1+/-2+/-3+/-4) (1.121.735)
B) FLOWS FROm InvESTInG ACTIvITIES
6. Investment payments (-) (3.817.782)
c) Tangible fixed assets (3.817.782)
7. Disinvestments received (+/-). 309.696
c) Tangible fixed assets 309.696
8. Flows from investing activities (7-6) (3.508.086)
C) FLOWS FROm FInAnCInG ACTIvITIES
10. Financial liabilities’ instruments received/paid 4.646.611
a) Premium accounts
2. Bank loans (+) 9.611.422
3. Payables to group companies and associated companies 800.000
b) Refund and amortisation of
2. Bank loans (-) (5.764.811)
12. Flows from financing activities (+/-9+/-10-11) 4.646.611
D) Effect of exchange rates changes
E) nET InCREASE/REDuCTIOn OF CASH AnD EQuIvALEnTS (+/-5+/-8+/-12+/-D)
16.790
Cash and equivalents at the beginning of year 7.979
Cash and equivalents at the end of year 11 24.769
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ANNEx TO THE BALANCE SHEET AND TO THE FINANCIAL STATEMENTSFINANCIAL YEAR 2008
1 - COmPAny ACTIvITyLuís Simões Logística Integrada, S.A. (Sole partnership)Avenida de la Indústria, n.º 5Azuqueca de Henares (Guadalajara), Spain
This company carries out its activities in the following locations:▪ 7 Centres of Transport Operations: Madrid, Barcelona, Seville, Lugo, Valladolid, zaragoza and Fuenlabrada▪ 10 Centres of Logistic Operations: Azuqueca de Henares, Valencia, Bilbao, Seville, Barcelona, Daganzo,
Alicante, Granada, Alovera and Seseña.
The company’s object consists of the warehousing and delivery, handling and logistics of goods, including the activities of transport operator, logistics operator, customs management, national and international transport of goods by road, as well as the intermediation of road transport with any other means of transport, and any other commissioning activities and auxiliary and complementary activities to the transport of goods, including those pertaining to transport agencies, both full cargo and break-bulk cargo; dispatchers; transport outsourcing and vehicle renting (expressly excluding leasing); the publicity of own and external products or services on its vehicles or facilities; the construction, operation, purchase and sale of all types of real estate, furniture and vehicles of all classes; the commercialization, both national and import/export, of all kinds of products, both own products and from other companies; and all other related licit activities agreed to by the Managerial Body.
The company’s duration is for an undefined period of time.
2 - BASES FOR THE PRESEnTATIOn OF AnnuAL ACCOunTSThe annexed Annual Accounts, of which this report is an integral part, were prepared from the Company’s accounting books and records, and are presented in accordance with the Amended Text of the Public Companies Law – Texto Refundido de la Ley de Sociedades Anónimas (Royal Legislative Decree 1514/2007 of 16 November). These Annual Accounts were submitted to approval by the Shareholders’ General Meeting.
a) Faithful ImageThe Annual Accounts were prepared based on the accounting books and records of the company, which were closed on 31 December 2008, and the legal provisions in force regarding accounting issues were applied, so as to present a faithful image of the assets, the financial position and the income of its operations, as well as the veracity of the flows incorporated in the cash flow statement.
b) Mandatory accounting principlesno mandatory accounting principle with a significant effect on the elaboration of the Annual Accounts was left unapplied.
c) Critical aspects regarding the valuation and estimation of uncertainty
For the elaboration of the annexed annual accounts, estimates made by the Company’s Directors were used in order to value some of the assets, liabilities, gains, expenses and commitments which are registered therein. In general, these estimates refer to:
• The useful life of tangible and intangible assets (refer to note 4)• The calculation of provisions (refer to note 15)
1.c.1. Comparison between the information and aspects arising from the transition to the new Spanish official accounting plan
The annual accounts for the financial year of 2008 are the first to be prepared by the Company applying the new Spanish Official Accounting Plan approved by Royal Decree 1514/2007. In this way, and in accordance with Provision 4 (2), point 1 of this plan, the accounts presented herein are considered as initial annual accounts, and as such no comparative figures have been included.The annual accounts pertaining to the financial year of 2007 were prepared in accordance with the Spanish Official Accounting Plan approved by Royal Decree 1643/1990, and therefore in Note 5 Aspects arising from the transition to the new Spanish Official Accounting Plan), the main differences between the accounting criteria applied in both financial years are included, as well as a quantification of the impact produced by this change on the company’s Equity in the opening Balance sheet of 1 January 2008.
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The quantification of the impact produced by the new Spanish Official Accounting Plan (NPGC – NuevoPlanGeneraldeContabilidad) on the Company’s equity as at 1 January 2008, date of closure of the opening Balance, is as follows:
Euros
The following table states the opening Balance as at 1 January 2008, in accordance with the new criteria established by the new Spanish Official Accounting Plan:
ASSETS 01.01.2008
FIxED ASSETS 3.632.105
Installation expenses 0
Intangible fixed assets 484
Research and Development expenses 0
Franchises, patents, licenses, brands and similar 0
Computer applications 5.789
Depreciation (5.305)
Tangible fixed assets 3.184.732
Transport equipment 2.846.759
Tools and dies 1.595.121
Other tangible fixed assets 915.174
Depreciation (2.172.322)
Financial fixed assets 446.888
Bank deposits and bank guarantees, long-term 455.904
Provisions (9.015)
CuRREnT ASSETS 22.670.000
Inventories 56.079
Raw Material, Subsidiary Materials and Consumables 56.079
Current accounts receivable 22.630.376
Customers, c/a 21.747.517
Other debtors 444.935
Staff (2.636)
Public entities 898.406
Provisions for insolvencies of traffic (457.846)
Cash 7.979
Accruals and deferrals adjustments 50.023
TOTAL 26.376.562
Description Amount (Euros)
Equity as at 31 December 2007 5.619.514
Installation expenses (19.487)
Costs of increases in share capital (28.994)
R&D projects expenditure (199.709)
Deferred tax assets 74.457
(173.733)
Equity as at 1 January 2008 5.272.048
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Annex 1 and 2 state the Balance sheet as at 31 December 2007 and the Income Statement, calculated in accordance with the previous Spanish Official Accounting Plan.
d) Grouping of itemsSome of the items of the Balance Sheet, Income Statement, Statement of changes in equity and cash flow statement are presented in grouped format for easier understanding, although, insofar as it was significant, the breakdown information was included in the corresponding notes of the report.
3. ALLOCATIOn OF THE PROFITSThe proposal for the allocation of the profits presented by the Director and pending approval by the Shareholders’ General Meeting is as follows, expressed in Euros:
4. PRESEnTATIOn BASES AnD vALuATIOn CRITERIAThe main valuation criteria used in the elaboration of the Annual Accounts for 2008, in accordance with the criteria laid down in the Spanish Official Accounting Plan, have been as follows:
LIABILITIES 01.01.2008
Equity 5.445.781
Issued capital 6.000.000
Reserves 224.093
Legal reserve 224.093
Merger unfavourable difference (886.129)
Other reserves (3.012.396)
Adjustments for applying NPGC (173.733)
Shareholders’ contributions for compensation of losses 2.300.000
Gains and losses 107.817
LOnG-TERm LIABILITIES 252.692
Bank loans 252.692
SHORT-TERm LIABILITIES 20.678.089
Bank loans 7.806.457
Loans and other payables 7.800.333
Interest liabilities 6.124
Commercial accounts payable 11.720.200
Customers, c/a payable 11.720.200
Other commercial accounts payable 1.127.139
Public entities 717.506
Other debts 23.287
Remunerations payable 386.347
Accruals and deferrals adjustments 24.293
TOTAL 26.376.562
Base of allocation Amount
Balance of the income statement (profits) 126.069
Total base of allocation 126.069
Allocation Amount
Legal reserve 12.607
Compensation for retained losses 113.462
Total allocation 126.069
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a) Intangible fixed assetsIntangible assets are initially stated at their cost of acquisition or production, and are afterwards valued at the net cost of their corresponding accumulated depreciation and of the losses through depreciation which they might have suffered. Intangible assets are depreciated throughout their useful lives, which in most cases are estimated as three years.
b) Tangible fixed assetsTangible assets are initially stated at their cost of acquisition or production, and are afterwards valued at the net cost of their corresponding accumulated depreciation and of the losses through depreciation which they might have suffered.Tangible assets are depreciated by linearly allocating the cost of the different elements which comprise them, between the estimated years of useful life which make up the period during which the company expects to use them.Below we show the periods of useful life used for the depreciation of assets:
c) Operating LeasingThe expenses arising from operating lease agreements are charged on the income statement of the financial year in which they occur.Any receipts or payment which may result from the contracting of an operating lease will be treated as an advanced payment, to be charged on income during the lease period while the benefits of the leased asset are being received.
d) Financial investmentsi) Financial assets.
The Company classifies its financial assets, whether short-term or long-term, in the following categories:
• Loans granted and accounts receivable: these are financial assets generated from the sale of goods or the provisioning of services by business activities of the company, or those which, not having a commercial source, are not asset instruments or derivatives, whose payments are fixed or ascertainable and are not negotiated in an active market.
Initial valuation:The financial assets are initially stated at the fair value of the payment made, plus directly attributable transaction costs.
Subsequent valuation:Loans granted, accounts receivable and investments maintained until their maturity are valued according to their depreciated cost.
In particular, and with respect to the valuation amendments regarding commercial and other accounts receivable, the criterion used by the Company to calculate the corresponding valuation amendments, if any, takes into account the maturity of such accounts and the specific situation of those debtors in terms of their assets.The Company writes off its financial assets when these expire or when the cash flow rights of the corresponding financial asset have been transferred, and the risks and benefits inherent to their ownership have been substantially transferred, such as assets outright purchases.
ii) Financial liabilities.Financial liabilities are those loans obtained and accounts payable by the Company and which were generated by the purchase of goods or services through the company commercial activity, as well as those which, having no commercial source, cannot be considered as financial derivatives.
Loans obtained and accounts payable are initially valued at the fair value of the payment received, adjusted by directly attributable transaction costs. Subsequently, these liabilities are valued according to their
Rates Years
Transport equipment:
Trucks and Tractors 10 % 10
Semi-Trailers 10 % 10
Furniture 10 % 10
Administrative equipment 12,5 %-14,5 % 7 – 8
Facilities 4 % – 12, 5 % 8 – 25
Machinery and equipment 5,5 % 18
Computer equipment 25 % 4
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depreciated cost.
Financial investments arising from liabilities are valued at their fair value, and the result of the variations in that fair value is stated income statement.
The company writes off its financial liabilities when the bonds which generated them are extinguished. valorizados de acordo com o custo amortizado.
e) Classification of assets and liabilities as current and non-currentIn the annexed balance sheet, the classification of balances, both receivable and payable, is carried out depending on the period elapsing between the maturing date of the respective balances and that of the closing of the annual accounts. Accounts whose preceding time period does not exceed twelve months, as well as debts linked to promotions, even those with long-term maturity, whose subrogation is foreseen within a period of less than 12 months, are classified as current assets. Otherwise, they are classified as non-current.
f) InventoriesInventory items are valued according to their price of acquisition or production, and the weighted average cost is used as the method for valuating output costs.
g) Profits taxCompany corporate tax expenses for the year are determined as the sum of the Company’s current tax, which results from the application of the tax rate to the base of assessment for that year, after the admissible tax deductions have been applied, plus the variation of deferred tax assets and liabilities and tax benefits, from negative tax bases and from deductions. Thedifferences between the book value of assets and liabilities and their tax base generate the asset and liability deferred tax balances, which are calculated using the tax rates expected to be in force when the assets and liabilities are realized.
Deferred tax assets and tax benefits are stated only when it is considered probable that the Company will earn sufficient future tax gains to recover the deductions due to temporary differences and make tax benefits effective.
Deferred tax liabilities are stated for all taxable temporary differences, except those deriving from the initial statement of commerce funds or other assets and liabilities, in an operation that affects neither the taxable income nor the accounting income and is not a business combination, as well as those associated to investments in dependent, associated companies and in joint business deals, where the Company can control the moment of reversal and where it is probable that they will not revert in the predictable future.
Deductions to basis of assessment resulting from economic events occurred during the financial year will reduce corporate tax accrued expenses, except when there are doubts related to their realisation, in which case they are not stated until their effective materialisation.
Deferred taxes, both stated assets and liabilities, are subjected to audit at the closing of each financial year, with the aim of verifying that they are still up to date, and the necessary amendments to them are carried out in accordance with the result of that audit.
h) Revenues and expensesRevenues and expenses are imputed according to the accrual criterion, independent of the payment or receipts date. Ordinary revenues are registered when gross income of economic benefits occurs during the course of the Company’s ordinary activities throughout the year, whenever that entry of benefits causes an increase in equity unrelated to the contributions of the owners of those assets and these benefits are able to be reliably valued. Ordinary revenues are valued at the fair price of the payment already received or receivable, arising from thereof.
Ordinary revenues from services rendered are registered only when it can be reliably estimated depending on the degree of completion of the service rendered, at Balance Sheet date.
Revenues from interest are valued at the effective interest rate applicable to the principal to be depreciated during the corresponding accrual period.
i) Provisions and contingenciesLiabilities existing at the Balance Sheet date, arising as a consequence of past events, and which may result in the company suffering probable asset losses whose amounts and dates of settlement are uncertain, are stated in the Balance Sheet as provisions, at the current value of the most probable amount which it
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is estimated the Company will have to pay out in order to settle the liability. The provisions are quantified taking into account the best available information at the date of accounts formulation regarding the consequences of the event that created it, and are estimated again at each closing of accounts. Contingent liabilities are not stated in the annual accounts, but are referred to in the report notes, insofar as they are not considered remote.
j) Transactions with associated entitiesThe company carries out its operations with associated entities by means of the following methods:
• Provision of services between the companies of the group: cost price of operations plus a margin;
• Transport, warehousing and delivery services: market price;
k) Cash and equivalentsUnder this item of the balance sheet, cash flow, deposits on demand and other short-term highly liquid investments, which can be rapidly paid up and whose value does not have exchange risks, are stated.
l) Depreciation in financial asset valuesA financial asset or group of financial assets has depreciated and a loss has been produced through depreciation, whenever there is objective evidence that the depreciation is the result of one or more events which took place after the initial statement of the asset, and when the event or events causing the loss have an impact on the future estimated cash flow of the financial asset or group of financial assets, which can be reliably estimated.
The company follows the criterion of stating timely valuation amendments by depreciation of loans obtained and accounts receivable, and debt instruments, when a reduction or delay in the future estimated cash flow has occurred, caused by the debtor’s insolvency.
5.TAnGIBLE FIxED ASSETSThe composition of and changes to the tangible fixed assets during the financial year of 2008 were as follows:
In Euros
2008 Financial Year Balance as at
01/01/08Increases
Business combinations increases
Deductions TransfersBalance as at
31/12/08
Costs
Machinery and equipment 243.563 330.022 573.585
Other installations 1.383.494 850.115 49.169 2.184.440
Furniture and administrative equipment 211.627 27.580 5.477 233.730
Information equipment and processes 338.491 31.829 1.277 3.073 372.116
Transport equipment 2.545.799 2.917.462 801.752 300.960 4.962.469
Other fixed assets 108.022 140.804 2.368 222.024 468.482
Technical installations in progress 225.097 (225.097) 0
Transport equipment in progress 300.960 1.629.388 (300.960) 1.629.388
Total 5.357.054 5.927.200 860.043 0 10.424.211
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Main acquisitions of tangible fixed assets: In Euros
Principais transferências no imobilizado corpóreo: In Euros
Detail of Assets acquired from the Group companies: In Euros
Fully depreciated tangible fixed asset items:In Euros
Main deductions on tangible fixed assets:In Euros
During the financial year of 2008, tangible fixed assets amounting to a net book value of 262,153 Euros were disposed, with these transactions having generated a benefit of 27,297 Euros.
Description Costs
Tractors and semi-trailers (including assembling equipment) 4.533.132
Book-shelves and other installations 650.055
Automated unloading equipment 321.732
Total 5.504.919
Description Acquisition value
Furniture and administrative equipment 31.247
Other installations 73.730
Information equipment and processes 277.927
Other fixed assets 3.931
Total 386.835
Description Costs
Assiduity and access system 92.493
Radiofrequency system 127.418
Tractors 300.960
Total 520.871
Description Costs Cumulative depreciation
Equipamento de Transporte 986.000 33.253
Total 986.000 33.253
Description Acquisition valueCumulative
depreciationNet amount
Tractors and semi-trailers 801.752 568.527 233.225
Book-shelves 49.169 20.241 28.928
Total 850.921 588.768 262.153
Cumulative depreciation
Machinery and equipment 138.092 27.702 165.794
Other installations 524.827 243.932 20.241 748.518
Furniture and administrative equipment 96.175 30.247 5.477 120.944
Information equipment and processes 270.625 31.474 1.277 300.822
Transport equipment 1.065.182 385.736 568.527 882.391
Other fixed assets 77.422 7.583 2.368 82.637
Total 2.172.322 726.674 0 597.891 0 2.301.106
Net book value 3.184.732 5.200.526 0 262.153 0 8.123.106
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The company holds insurance policies covering own damages to the several items comprising the company’s tangible fixed assets, with limits and coverage suitable to the type of risk involved. Possible complaints made to the company regarding the performance of its activities are likewise covered.
6. InTAnGIBLE FIxED ASSETSComputer applications are stated at their cost of acquisition, and are depreciated according to the straight-line method within a period of three years. The composition of and changes to intangible fixed assets during the financial year of 2008 were as follows:
We also inform that the fully depreciated intangible asset items have an acquisition cost of 5,489 Euros.
7. LEASInG AnD OTHER OPERATIOnS OF SImILAR nATuREm) Operating Leasing
2008 Financial Year Balance as at
01/01/08Increases
Business combinations increases
Deductions TransfersBalance as at
31/12/08
Costs
Computer applications 5.789 5.789
Total 5.789 0 0 0 5.789
Cumulative depreciation
Computer applications 5.305 384 5.689
Total 5.305 384 0 0 5.689
Net book value 484 (384) 0 0 100
Operating leasing: lessee information
Payments stated as expenditure
Minimum future payments for non-settled leases, from which:
Up to 1 year 1 to 5 years over 5 years
Amounts of minimum future payments for non-settled leases, from which:
- Real estate 2.725.510 171.434 8.291.186 0
- Vehicle renting 77.270 63.771 50.595 0
- Renting of lifting equipment 770.553 1.159.797 381.718 0
Total 3.573.334 1.395.001 8.723.499 0
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n) General description of the most significant operating lease agreements:
Building lease agreements mainly refer to warehouses and offices, in which the Company carries out its activities.Contracts signed by the Company are valid from two to seven years. If the Company has the intention of not renewing a specific contract, this intent must be communicated with prior notice of not less than 1 month, 3 months, 6 months or 12 months.Operating lease agreements pertaining to vehicle renting are valid for three years. Operating lease agreements pertaining to lifting equipment are valid for a maximum period of five years.No contract includes a purchase option.The clauses concerning the update of prices have the IPC (Indice de Precios de Consumo – Consumption prices index) as reference, with specific points being added to the reference index, in some cases.No constraints have been imposed on the Company by virtue of leasing contracts.
8. FInAnCIAL InSTRumEnTSo) Financial Assets
i) non-current financial assets
This item refers to long-term bank guarantees.
ii) Current financial assets
Categories
Classes
Financial instruments long-term
Financial instrumentsshort-term
Ass
ets
inst
rum
ents
Deb
t re
pres
ent.
se
curi
ties
Loan
s D
eriv
ativ
es
Oth
er
Ass
ets
inst
rum
ents
Deb
t re
pres
ent.
se
curi
ties
Loan
s D
eriv
ativ
es
Oth
er
Tota
l
Loans granted and accounts receivable
483.408 19.337.204 19.820.612
Total 483.408 19.337.204 19.820.612
Categories
Classes
Financial instruments – long-term
Ass
ets
inst
rum
ents
Deb
t re
pres
ent.
se
curi
ties
Loan
s D
eriv
ativ
es
Oth
er
Tota
l
Loans granted and accounts receivable
483.408 483.408
Total 483.408 483.408
Categories
Classes
Financial instruments – short-term
Ass
ets
inst
rum
ents
Deb
t re
pres
ent.
se
curi
ties
Loan
s D
eriv
ativ
es
Oth
er
Tota
l
Loans granted and accounts receivable
19.337.204 19.337.204
Total 19.337.204 19.337.204
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1) Accounts receivable from commercial operations
Changes in doubtful debts items:
2) Cash and equivalents
Description Amount
Clients:
Customers, c/a 18.317.345
Clients, doubtful accounts 425.770
Group companies and associated companies 246.303
18.989.418
Other debtors
VAT to be reclaimed 142.231
Other debtors 205.555
347.786
Total 19.337.204
Description Balance 01/01/2008 Increases Reductions Balance 31/12/08
Clients, doubtful accounts 457.846 138.319 170.394 425.770
457.846 138.319 170.394 425.770
Description Amount
Cash 7.432
Bank deposits 17.337
Total cash 24.769
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p) Financial liabilities
i) non-current financial liabilities 1) Long-term bank loansThe detail of the balances maintained with credit entities as at 31 December is as follows:
The breakdown by maturity of terms is as follows:Euros
The rates of interest paid by the Company during 2008 for loans and subscription of credit next to credit entities are for the most part indexed to the Euribor.
Categories
Classes
Financial instruments – long-term Financial instruments short-term
TotalBank loans
Liabilities and other tradable
securities
Derivatives Other
Bank loans
Liabilities and other tradable
securities
Derivatives Other
Debts and accounts receivable
Commercial operations paid 10.802.582 10.802.582
Bank loans 4.570.831 5.308.776 9.879.607
Fair value liabilities with changes in the income statement
- kept for negotiation 0
- Other 2.428.314 2.428.314
Resulting from coverage 0
Total 4.570.831 5.308.776 13.230.896 23.110.503
Categories
Classes
Financial instruments – long-term
Bank
loan
s
Liab
iliti
es a
nd o
ther
tr
adab
le s
ecur
itie
s
Der
ivat
ives
Oth
er
Tota
l
Debts and accounts receivable
Bank loans 4.570.831 4.570.831
Total 4.570.831 4.570.831
Description Used part
Loans subscriptions 4.570.831
4.570.831
2010 2011 2012 2013 2014 2015 TOTAL
Long-term Liabilities
899.955 878.519 895.983 909.977 478.711 507.686 4.570.831
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ii) Current financial liabilities
1) Short-term liabilities with Credit entities:The detail of the balances maintained with credit entities as at 31 December is as follows:
(1) Credit subscriptions in current accounts with variable interest rates.
The amount of incurred and undue interest which has been provided for is 45,503 Euros. The rates of interest paid by the Company during 2008 for loans and subscription of credit next to credit entities are for the most part indexed to the Euribor.
2) Accounts payable for commercial operations
3) Other financial liabilities
9. EQuITy AnD SHAREHOLDERS’ FunDS
a) Share capitalThe share capital of the company as at 31 December 2008 is 6,000,000 Euros, and is represented by 60,000 shares with a nominal value of 100 Euros each, fully subscribed and paid up.All shares are the property of the Portuguese company LS-Luís Simões, SGPS, S.A.
Categories
Classes
Financial instruments short-term
Bank
loan
s
Liab
iliti
es a
nd o
ther
tr
adab
le s
ecur
itie
s
Der
ivat
ives
Oth
er
Tota
l
Debts and accounts receivable
Commercial operations paid 10.802.582 10.802.582
Bank loans 5.308.776 5.308.776
Fair value liabilities with changes in the income statement
0
- kept for negotiation 0
- Other 2.428.314 2.428.314
Total 5.308.776 13.230.896 18.539.672
Description Amount Granted (1)Used part
Short-term
Loans subscriptions 882.117
Overdrafts 13.401.518 4.411.422
13.401.518 5.293.539
Interests incurred payable 15.237
Total 5.308.776
Description Amount
Payables, group companies and associated companies 872.135
Commercial and other accounts payable:
Suppliers 5.736.069
Suppliers, group companies and associated companies 448.366
Other creditors 2.136.614
Remunerations payable 352.197
Current tax liabilities 34.585
Other liabilities, public entities 1.222.616
Subtotal 9.930.447
Total 10.802.582
Description Amount
Suppliers of fixed assets, short-term 2.428.314
Total 2.428.314
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b) Legal reserveThis reserve is constituted in accordance with the public companies legislation, with the contribution of at least 10% of the annual net income, until it represents 20% of the share capital, which is the required minimum amount. The legal reserve may be used to increase the share capital in the balance portion exceeding 10% of the increased capital. Except for the abovementioned end, and as long as it does not exceed 20% of the share capital, this reserve may be used only to absorb losses and, in case of company dissolution and liquidation, shall be distributed among the shareholders.
c) Other reservesThe balance of this Balance sheet item for the year ended 31 December 2008 is 1,130,942 Euros, and refers to free reserves.
d) Retained IncomeThe balance of this item, amounting to 4,220,036.20 Euros, results from the merger operation carried out in 2004, in which the shareholder company Logística Alimentaria Loal, S.A., which had presented negative assets, was acquired.
10. InvEnTORIESThe detail of inventories as at 31 December 2008 is as follows:
Euros
11. CASH AnD EQuIvALEnTSCash and equivalents at the end of the year are broken down according to the following items:
12. TAx SITuATIOnAccording to legal provisions in force, tax settlements cannot be considered as definitive until they have been audited by tax authorities or until the 4-year prescription period has elapsed. As at 31 December the Chas all its taxes submitted during the last four years pending auditing. In the event of audit, the Company Directors do not expect any significant additional liabilities to arise.
a) Public entities balancesThe detail of the balances kept with public entities as at 31 December 2008 is as follows:
Euros
In compliance with the resolution of 26 June 2008 issued by the TesoreríaGeneral de la Seguridad Social (Spanish Social Security General Treasury), which authorizes the deferral of payment of the company’s Social Security contributions to legal persons who carry out their activities within the road transport sector, the Company has postponed for 24 months the payment of the contributions corresponding to the period between October 2008 to May 2009. In this way, the contributions corresponding to October will be due in November 2010, and so forth.
2008
Miscellaneous material:
Miscellaneous material used in warehouses 63.513
Inventories balance 63.513
Description2008
Financial Year
Cash 7.432
Bank deposits 17.337
Cash and equivalents at the end of year 24.769
2008
Current:
Public entities accounts receivable 2
Tax liabilities on current income (34.587)
Public entities accounts payable:
VAT (305.125)
Tax withheld (144.065)
Social security (773.426)
non-Current:
Deferred tax assets 887.191
Deferred tax liabilities 0
Balance (370.010)
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Euros
b) Profits taxThe conciliation between the net value of the years’ revenues and expenses and the assessment base (taxable income) for the financial year of 2008 is as follows:
(1) The tax rate for the year ending 31/12/08 is 30%
The conciliation between profits tax expenses and the product of the applicable tax rates with the total stated revenues and expenses, making the difference of the income statement balance, is as follows:
The permanent differences are mainly the result of non-tax-deductible expenses corresponding to penalties and fines.
The provisional differences are mainly the result of expenses generated by provisions to losses and client debts’ depreciation and provisions for other commercial operations.
Contributions Maturity
Postponed social security contributions:
October 2008 234.858 November 2010
November 2008 232.343 December 2010
December 2008 216.698 January 2011
683.899
Income statementRevenues and
expenses directly imputed on equity
Increases/
(Reductions)Increases/
(Reductions)
Balance of revenues and expenses for the year
171.442 (248.190)
Corporate Income Tax 45.373
Permanent differences 29.888
Provisional differences
- from the financial year 261.633 165.460
- from previous financial years (141.682)
Compensation for negative assessment basis from previous years
(73.173)
Assessment basis (taxable income) 248.107 (82.730)
Assessment (1) 74.432 (24.819)
Deductions (15.026) 0
Net assessment 59.406 (24.819)
Income
statement
Revenues and expenses directly imputed on equity
Income before taxes, continued operations 171.442 (248.190)
Applicable tax rate 30% 30%
Theoretical tax charge 51.433 (74.457)
Effect of:
non-deductible expenses 8.966
Deductions and other (15.026) 74.457
Effective tax cost 45.373 0
Detail:
Current (21.952) (24.819)
Differed 35.985
Effective tax cost 59.406 (24.819)
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c) Calculation of corporate income taxDetermination of the assessment basis for Corporate Income Tax for the financial year of 2008:
d) Deferred taxDeferred taxes as at 31 December 2008 are as follows:
2008
BOOK InCOmE 126.069
Amendments to the book income:
Adjustments for the application of the new Spanish Official Accounting Plan (82.730)
Book provisions not deductible at tax level 119.950
Corporate Income Tax 45.373
Expenses non-deductible at tax level 29.888
Negative assessment basis from previous years (73.173)
ASSESSmEnT BASIS 165.377
Tax rate 30%
POSITIvE ASSESSmEnT 49.613
Other deductions (15.026)
nET POSITIvE ASSESSmEnT 34.587
Deferred tax assets 2008
Provisional differences:
Conversion into the new Spanish Official Accounting Plan 49.638
Credits for Losses to be Compensated 759.063
Book provisions not deductible at tax level 78.490
887.191
Euros
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Changes to deferred tax assets and liabilities for the financial year of 2008 are as follows:
Deferred tax assets referring to credit for losses to be compensated and compensatory periods are as follows:
13. InFORmATIOn On THE EnvIROnmEnTConsidering the nature of the company’s activity, it has no environmental responsibilities, expenses, assets, provisions or contingencies of significance in relation to its assets, its financial position or its income. For this reason, this annual report contains no specific annual cost breakdowns concerning environmental issues.
01/01/2008 Increases Deductions 31/12/2008
Deferredtaxassets:
Credits for Losses to be Compensated 780.941 74 21.952 759.063
Accounted provisions not deductible at tax level 42.505 78.490 42.505 78.490
Conversion into the new Spanish Official Accounting Plan 74.457 24.819 49.638
897.903 78.564 89.276 887.191
Source year Negative assessment basis Up to year
2003 2.214.006 2018
2002 317.513 2017
Corporate Income Tax Rate 30%
Profits Tax Adjustments 759.063
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14. REvEnuES AnD ExPEnSESa) Net amount of turnover
The distribution of the net value of the Company’s turnover which corresponds to its ordinary activities, per activity category as well as per geographic market, is as follows:
Euros
b) PurchasesThe breakdown of purchases for the year ended 31 December 2008 is as follows:
Euros
c) Staff costsThe detail of costs with Company staff for the year ended 31 December 2008 is as follows:
Euros
d) External servicesThe detail of the Company’s external services for the year ended 31 December 2008 is as follows:
Euros
2008
Breakdown by activity category:
Transport 44.651.759
Logistics 28.086.814
Total 72.738.573
Breakdown by geographical market:
Internal market 45.945.824
Community market 26.742.281
Extra-Community market 50.468
Total 72.738.573
2008
Purchases and other supplies 419.114
Works performed by other companies:
Transport outsourcing 46.463.055
Other outsourcings 1.330.658
Total purchases 48.212.828
2008
Payments and salaries 9.923.039
Compensations 148.494
Social charges:
Social security 2.758.121
Other social charges 170.271
Staff costs 12.999.924
2008
Leasing and charges 3.591.784
Cession of staff 1.544.349
Fuels 1.412.658
Specialised works 780.737
Repairs and preservation 664.196
Communications 328.574
Insurance premiums 256.852
Advertisement, publicity and public relations 137.095
Cleaning, hygiene and safety 392.163
Other supplies and services 896.356
Total External services 10.004.763
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e) Financial gainsEuros
f) Financial expenditureEuros
15. PROvISIOnS AnD OTHER COnTInGEnT LIABILITIES During their formulation of the annual accounts, the Company’s Directors distinguish between:
• Provisions: credit balances covering current liabilities resulting from past events, whose settlement will probably originate an outflow of resources, but which are undetermined as regards their amounts and/or date of settlement.
• Contingent liabilities: possible liabilities arising as a consequence of past events, whose future materialisation depends on the occurrence, or lack thereof, of one or more future events which are foreign to the will of the Company.
The annual accounts state all provisions in relation to whom the probability of having to fulfil the liability is greater than the probability of the contrary. Contingent liabilities are not stated in the annual accounts, but are referred to in the report notes, insofar as they are not considered remote.
Provisions are valued according to the current value of the best possible estimation of the amount required to settle or transfer the liability, considering the available information on the event and its consequences, and stating the adjustments resulting from the updating of these provisions as a financial expense as they are constituted.
Third-party compensation to be received at the date of settlement of the liability, whenever there are no doubts about whether the refund will be received, will be stated as an asset, except in cases where a legal bond exists, in relation to which part of the risk has been externalised, and by virtue of which the Company is not obliged to respond; in this situation, compensation will be considered in order to estimate the amount by which, in that case, the provision will be stated.
Allocations of Provisions for risks and costs accounted during the year ended 31 December 2008:
The allocation of provisions for risks and costs refers to the value of a bank guarantee activated by a client to the amount of 120,000 Euros, with the remaining 139,801 Euros referring to possible amendments to the invoicing issued to that client, as a result of possible non-fulfilments of contractual clauses.
2008
Financial gains for advanced payments 170.877
Other financial gains 15
Total Financial gains 170.892
2008
Interest paid:
Group companies 17.091
Credit entities 351.721
Total Financial expenditure 368.812
Balance
01/01/2008Increases Reductions
Balance 31/12/2008
Provisions for risks and costs
0 259.801 0 259.801
0 259.801 0 259.801
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16. OPERATIOnS WITH RELATED PARTIESa) Related companies
The related parties with whom the Company has carried out transactions during 2008, as well as the nature of these relations, is as follows:
b) Balance among related companiesThe balances maintained with the related parties, detailed in the previous table as at 31 December 2008, are as follows:
Loans granted to group companies amount to 246,303 Euros and refer to commercial operations.
c) Operations carried out between related CompaniesTransactions carried out with the related parties and previously detailed for the financial year of 2008 are as follows:
During the financial year of 2008, the Company acquired tangible fixed assets amounting to 1,019,277 Euros to the Group companies Transportes Luís Simões, S.A.
d) Directors and top managementRemunerations and other payments:i) Remunerations to the members of the Board of Directors during the financial year of 2008:
The members of the Board of Directors did not receive any remuneration during the financial year of 2008.
No advances or credits were granted to the members of the Company’s Board of Directors, as well as no guaranteed operations or contracted obligations in terms of pensions and life insurance policies.
ii) Total remuneration of the members of the top management:The company has no members of the top management in its staff.
Other information regarding the Board of Directors:As at 31 December 2008, the directors hold no shares in the share capital of other companies other than the Companies of the Group, exercising the same activities or activities similar or complementary to those stated in the object of the company Luís Simões Logística Integrada. S.A.
Name nature of the Relation
Luís Simões, SGPS, SA Sole Shareholder
Transportes Luís Simões, SA Group company
Distribuição Luís Simões, SA Group company
Socar, SA Group company
Reta, SA Group company
Transportes Reunidos, Lda. Group company
Lusiseg, Lda. Group company
LS - Gestão Empresarial e Imobiliária, SA Group company
Name
Clients, Group
companies and
associated companies
Suppliers, Group
companies and associated
companies
Accounts payable to group
companies
Luís Simões, SGPS, SA (817.092)
Transportes Luís Simões, SA 219.211 (53.884)
Distribuição Luís Simões, SA 26.190 (380.598)
Socar, SA (11.346)
Reta, SA (850)
Transportes Reunidos, Lda. (2.581) (1.160)
Lusiseg, Lda. (6.500)
LS - Gestão Empresarial e Imobiliária, SA 902 (46.492)
246.303 (448.366) (872.135)
NamePurchases and External
ServicesSales
Transportes Luís Simões, SA 22.629.143 514.642
Distribuição Luís Simões, SA 2.643.153 14.081
Socar, SA 33.981
Transportes Reunidos, Lda. 14.928 9.105
LS - Gestão Empresarial e Imobiliária, SA 504.795
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Furthermore, the directors have confirmed the same in relation to the exercise of duties or functions in companies with the same activities or activities similar or complementary to those stated in the object of the Company, nor do they carry out, independently or for other parties, the same activities or activities similar or complementary to those stated in the object of the Company.
17. 17. OTHER InFORmATIOn
a) Average number of employees during the financial year:
Staff structure:
b) Amount of fees for accounts auditing:In compliance with the provisions laid down in Additional Provision 14 to Law no. 44/2002 of 22 November, on Financial System Reform Measures, we inform that the total amount of fees received by the auditors of the company’s accounts during the 2008 financial year was 15,067.50 Euros.
Board Director Duty/Function Company
José Luís Soares Simões Board Director - Chairman Transportes Luís Simões, SA
José Luís Soares Simões Board Director - Chairman Distribuição Luís Simões, SA
Jorge Manuel Soares Simões Board Director Transportes Luís Simões, SA
Jorge Manuel Soares Simões Board Director Distribuição Luís Simões, SA
Leonel Fernando Soares Simões Board Director Transportes Luís Simões, SA
Leonel Fernando Soares Simões Board Director Distribuição Luís Simões, SA
At year-endYear average
Male Female Total
Directors, engineers and technicians 33 17 50 59,25
Administrative staff 55 62 117 122
Production staff 206 30 236 252
Sales and delivery staff 1 0 1 1
Total 295 109 404 434,25
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18. InFORmATIOn On THE nATuRE AnD THE LEvEL OF RISK ARISInG FROm FInAnCIAL InSTRumEnTSThe management of the Company’s financial risks is centralised on the Corporate Finance Management, which has established the required mechanisms for controlling the exposure to fluctuations in interest rates, as well as to credit and liquidity risks. The main financial risks affecting the Company are as follows:
• Credit riskIn general terms, the Company has entrusted its cash and equivalent to highly renowned financial credit institutions.no significant third-party credit risk exists. The most relevant exposure to credit risk is related to balances of commercial and other accounts receivable. The credit risk management policy was designed to minimise the possible impacts of non-payments on the part of its clients. A sales policy with credit limits to clients was also implemented, which has helped to control uncollectability.
• Liquidity riskThe Company maintains a liquidity policy which consists on the contracting of credit lines and provisional financial investments sufficient to cover the financing needs based on business evolution expectations.For the purpose of ensuring liquidity and fulfil all payment commitments deriving from its activity, the Company has a cash which displays its balance, as well as that of the credit and financing lines which are detailed in Note 8.
• market riskDue to its activity sector, the Company is subject to market risk as a result of fluctuations in fuel prices and consequently diesel prices. This risk is reduced due to the company’s fleet outsourcing policy, which represents over 70% of the managed fleet.
19. EvEnT AFTER CLOSuREno occurrences of importance were registered after the closure of the financial year on 31 December 2008, capable of significantly affecting the financial statements presented herein.
Azuqueca de Henares, 10 February 2009.
Leonel Fernando Soares SimõesMember/Managing Director
Jorge Manuel Soares SimõesSecretary/Managing Director
José Luís Soares Simões - Chairman/Managing Director
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AnnEx 1 – Balance Sheet as at 31 December 2007BALAnCE SHEET AS AT 31 DECEmBER 2007
ASSETS 2007
FIxED ASSETS 3.880.295 Installation expenses 48.481 Intangible fixed assets 200.193 Research and Development expenses 250.012 Franchises, patents, licenses, brands and similar 0 Computer applications 5.789 Depreciation (55.608)
Tangible fixed assets 3.184.732 Transport equipment 2.846.759 Tools and dies 1.595.121 Other fixed assets 915.174 Depreciation (2.172.322)
Financial fixed assets 446.888 Other credits 0 Bank deposits and bank guarantees, long-term 455.904 Provisions (9.015)
CuRREnT ASSETS 22.670.000
Inventories 56.079 Raw Material, Subsidiary Materials and Consumables 56.079
Current accounts receivable 22.555.919 Customers, c/a 21.747.517 Other debtors 444.935 Staff (2.636) Public entities 823.949 Provisions for insolvencies of traffic (457.846)
Provisional financial investments 0 Bank deposits and bank guarantees, short-term 0
Cash 7.979
Accruals and deferrals adjustments 50.023
TOTAL 26.550.295
LIABILITIES 2007
EQuITy 5.619.514
Issued capital 6.000.000
Reserves 224.093
Legal reserve 224.093
Merger unfavourable difference (712.396)
Other reserves (3.012.396)
Shareholders’ contributions for compensation of losses 2.300.000
Gains and losses 107.817
LOnG-TERm LIABILITIES 252.692
Bank loans 252.692
SHORT-TERm LIABILITIES 20.678.089
Bank loans 7.806.457
Loans and other payables 7.800.333
Interest paid 6.124
Commercial accounts payable 11.720.200
Customers, c/a payable 11.720.200
Other commercial accounts payable 1.127.139
Public entities 717.506
Other debts 23.287
Remunerations payable 386.347
Accruals and deferrals adjustments 24.293
TOTAL 26.550.295
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AnnEx 2 – Income Statement for the year ended 31 December 2007InCOmE STATEmEnT FOR THE yEAR EnDED 31 DECEmBER 2007
PAymEnTS 2007COSTS 72.306.986
Supplies 51.626.805 Goods consumed and other materials consumed 407.029 Other external costs 51.219.776
Staff costs 10.521.679 Other similar payments and salaries 8.164.850 Social charges 2.356.829
Provisions for depreciation 450.446
Changes on commercial operations’ provisions 195.449 Changes in other commercial operations’ provisions 195.449
Other operating costs 8.769.877 External services 8.728.791 Taxes 41.085
Operating Income 650.420
Financial expenditure and similar costs 174.035 Third party debts and similar costs 174.035Unfavourable exchange differences 13.00
Positive financial income 0
Ordinary activities profits 637.997
Changes on tangible and intangible fixed assets and control portfolio provisions
0
Losses from tangible intangible fixed assets and control port-folio
9.140
Extraordinary costs 502.583
Retained losses and costs 2.510
Income before taxes 162.266
Corporate Income Tax 54.449
Income for the year 107.817
RECEIPTS 2007REvEnuES 72.414.803
Net amount of turnover 72.132.533
Provision of services 72.167.533
Refunds and “rappels” on sales (35.000)
Other operating income 82.143
Supplementary income and other current management income
82.143
Interest and other similar income 161.625
Other interest 161.625
negative financial income 12.423
Income from tangible and intangible fixed assets and control portfolio disposal
0
Extraordinary income 37.708
Retained income 794
negative extraordinary income 475.732
Leonel Fernando Soares SimõesMember/Managing Director
Jorge Manuel Soares SimõesSecretary/Managing Director
José Luís Soares Simões - Chairman/Managing Director
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C| ANNUAL ACCOUNTS AUDIT REPORT
Ernst & young, S.L.Torre Picasso
Plaza Pablo Ruiz Picasso, 128020 Madrid
Tel: 902 365 456Fax: 915 727 300www.ey.com/es
| ANNUAL ACCOUNTS AUDIT REPORT
To the shareholders ofLuís Simões Logística Integrada, S.A. (Sole Partnership)
We have audited the annual accounts of Luís Simões Logística Integrada, S.A. 1. (Sole Partnership), which comprise the Balance Sheet as at 31 December 2008 and the Income Statement, statement of movements in equity, cash flow statement and the report corresponding to the financial year then ended, the preparation of which is the responsibility of the directors of the Company. Our responsibility is to express an opinion on the referred annual accounts as a whole, based on the work carried out in accordance with generally accepted audit standards, which require the examination, on a test basis, of the evidence relevant to the annual accounts and the assessment of their presentation, the accounting principles applied and the estimations carried out.The annual accounts in annex for the financial year of 2008 are the first to be 2. formulated by the directors by application of the Spanish General Accounting Plan approved by Real Decreto no. 1514/2007. In this sense, in accordance with item 1 of the Fourth Transitory Provision of the aforementioned Royal Decree, these annual accounts have been considered as initial annual accounts, and as such contain no comparative values. Note 2 of the attached report, “comparison between the information and aspects deriving from the transition to the new general accounting plan”, incorporates the balance sheet and the income statement included in the approved annual accounts for the financial year of 2007, which were prepared applying the accounting principles and rules generally accepted by the Spanish legislation in force during that year, as well as an explanation of the main differences between the accounting criteria used in the previous financial year and the current criteria, and the quantification of the impact caused by this change in accounting criteria on the equity as at 1 January 2008, the transition date. Our opinion refers exclusively to the annual accounts of 2008. We issued
our audit report dated 14 March 2008 concerning the annual accounts for the financial year of 2007, established in conformity with the accounting principles and rules generally accepted by the Spanish legislation in force during that year, in which we expressed a favourable opinion. In our opinion, the attached annual accounts for the financial year of 2008 3. give a true and fair view, in all aspects materially relevant, of the state Luís Simões Logística Integrada, S.A. (Sole Partnership) affairs as at 31 December 2008, the profits of its operations, movements in equity and cash flows corresponding to the financial year then ended, and that furthermore they contain the necessary and sufficient information for their suitable interpretation and comprehension, in conformity with the applied accounting principles and rules generally accepted by the Spanish legislation.
4. The attached management report for the financial year of 2008 contains the explanations considered by the directors as being pertinent to the position of Luís Simões Logística Integrada, S.A. (Sole Partnership), to the development of its business as well as to other issues, and is not an integral part of the annual accounts. We have ascertained that the accounting information contained in the referred management report conforms to that of the annual accounts for the financial year of 2008. Our task as auditors is limited to the verification of the management report to the extent stated in this paragraph, and does not include the verification of any information other than that obtained from Company accounting records.
Ernst & Young, S.L.(Member no. S0530 of the Certified Auditors Register)
Rafael Páez Martínez
Stamp: InSTITUTO DE CEnSORES JURADOS DE CUEnTAS DE ESPAÑA; TO BE InCORPORATED In THE PROTOCOL;
Registered member: ERnST & yOUnG, S.L.; year 2009 no. 01/09/21738; FREE COPy; This report is subject to
the rate applicable in Law 44/2002 of 22 November.
13 March 2009
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A| MANAGEMENT REPORT
ACTIVITY DURING THE FINANCIAL YEAR Transportes Reunidos has maintained its international road transport activity within a specific market segment: it is an intermediate channel for forwarding agents and transport companies, and also collaborates with the companies of the Group. From the centre of Portugal to Europe, the company offers a transport service of great flexibility and efficiency.
Throughout 2008 a number of projects that were being developed with the aim of increasing company competitiveness were consolidated. The main ones are:
▪ Our sales policy to clients with credit limits, a factor which contributed to the control of uncollectability, in a year during which almost every client experienced greater difficulties in honouring their financial commitments;
▪ An upgrade to our fleet management tool was undertaken, enabling a more rigorous control of vehicles, with more reliable information;
▪ The implementation of concrete measures geared towards target clients in Strategic Markets, focusing on the improvement of the quality of our client structure.
ECONOMIC AND FINANCIAL ANALYSISTransportes Reunidos’ 2008 Turnover amounted to 2,761 thousand Euros. The financial and economic progress registered in 2008 proved to be unfavourable to this type of activity. Skyrocketing fuel prices, coupled with the strike held by workers in this sector, were determining factors for the destabilization of transport flows, which drastically reduced external and potential subcontracting channels.
Transportes Reunidos, Lda
Transportes Reunidos, LdaLegal Person no. 500 289 433 | Share Capital: 1,496,394.00 Euros | Registered in Loures Companies’ Registry under no. 6245 | Moninhos 2671-951 Loures, Portugal
The company’s Net Income inverted the tendency registered in the past few years and presented a negative value of 16 thousand Euros. The positive performance of the item “Supplies and External Services” should be highlighted, which, despite a reduction of 18%, was not enough to ensure positive earnings.
At the end of 2008, the company’s Total Net Assets amounted to 1,859 thousand Euros, which represents a reduction of 10% in comparison to the preceding year, a reflection of the deceleration of the activity. The financial structure of the company is synonymous with stability and solidity, with 73% Financial Autonomy and 272% Solvency ratios.
4.159
2005
4.015
2006
3.407
2007
2.761
2008
Sales Development (Thousand Euros)
39
2005
32
2006
70
2007
(16)
2008
Net Income Development (Thousand Euros)
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PERSPECTIVES FOR 2009 Despite the current economic downturn and the difficulties being encountered in the sector, the company foresees some interesting results for 2009, embodied within the following assumptions:
▪ The identification of relevant business deals and processes for improvement able to ensure competitive advantages in relation to our competitors, in which the uniqueness of our service and our cost competitiveness will be determining factors;
▪ The launch of a program aiming at the loyalty of transport companies through the offer of an array of tiered benefits, in accordance with the degree of partnership which those companies establish with our company;
▪ The implementation of a project which will endow us with one of the most professional tools for the analysis of management information. We expect this to increase our capacity for analysis as well as elaborate quicker and more solid action plans.
CORPORATE BODIES
ALLOCATION OF THE PROFITS
The company Transportes Reunidos, Lda. ended 2008 with negative Net Income to the amount of 16,306.96 Euros.In compliance with applicable legal and statutory provisions, the following application of income is proposed:
Retained Earnings -16 306,96
Moninhos, 10 February 2009
José Luís Soares SimõesLeonel Fernando Soares SimõesJorge Manuel Soares Simões
ManagerManagerManager
Board of Directors:
Clara Maria Campos Monteiro RibeiroIsabel Maria Blazquez Pereira Silva
ChairmanSecretary
General meeting Committee
Leonel Fernando Soares Simões - Manager Jorge Manuel Soares Simões - Manager
José Luís Soares Simões - Manager
2007 2008
Current Assets (Thousand Euros)
Current Assets
Current Assets
100%
80%
60%
40%
20%
0%
1.025 900
1.055 958
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B| FINANCIAL STATEMENTSBALANCE SHEET Amounts in Euros
Accounts Code 2008 2007
EEC Portuguese OAP Gross AssetsDepreciation and
AdjustmentsNet Assets Net Assets
ASSETS
C Fixed Assets
II Tangible Fixed Assets:
2 423 Machinery and Equipment 109.308,21 109.308,21 0,00 0,00
109.308,21 109.308,21 0,00 0,00
III Financial Investments:
5 4113+414+415 Securities and Other Investments 498,80 498,80 498,80
498,80 0,00 498,80 498,80
D Current Assets
II Current Accounts Receivable - Medium and Long-Term:
1 218 Customers, Doubtful Debts 184.106,17 184.106,17 0,00 0,00
2 252 Group Companies 900.000,00 900.000,00 1.025.000,00
1.084.106,17 184.106,17 900.000,00 1.025.000,00
II Current Accounts Receivable - Short-Term:
1 211 Customers, c/a 642.806,59 642.806,59 766.260,79
2 252 Group Companies 54.994,76 54.994,76 35.448,88
4 24 Public Entities 163.832,19 163.832,19 143.609,89
4 262+266+267+221
Other Debtors 1.161,07 1.161,07 6.653,00
862.794,61 0,00 862.794,61 951.972,56
Iv Bank Deposits and Cash:
12+13+14 Bank Deposits 61.899,25 61.899,25 73.865,58
61.899,25 61.899,25 73.865,58
E Accruals and Deferrals
271 Accrued Income 28.845,88 28.845,88 28.973,64
272 Deferred Costs 111,68 111,68 377,69
276 Deferred Tax Assets 4.801,62 4.801,62 156,76
33.759,18 33.759,18 29.508,09
Total Depreciation 109.308,21
Total Adjustments 184.106,17
Total Assets 2.152.366,22 293.414,38 1.858.951,84 2.080.845,03
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BALANCE SHEET (Continued)
Valores em Euros
Accounts Code2008 2007
EEC Portuguese OAP
EQuITy AnD LIABILITIES
A Equity
I 51 Share Capital 1.496.394,00 1.496.394,00
56 Revaluation Reserves
Iv Reserves:
1 571 Legal Reserves 19.960,99 16.477,72
4 574 a 579 Other Reserves 49.385,33 49.385,33
V 59 Retained Earnings -188.583,31 -188.583,31
Subtotal 1.377.157,01 1.373.673,74
vI 88 net Profit for the year -16.306,96 69.665,35
Total Equity 1.360.850,05 1.443.339,09
Liabilities
B Provisions for Risks and Costs:
3 293/8 Provisions for Other Risks and Costs 35.802,82 35.802,82
35.802,82 35.802,82
C Short-Term Liabilities
4 221 Suppliers, c/a 410.458,32 520.301,94
6 252 Group Companies 71,56 13.109,76
8 24 Public Entities 5.641,34 6.923,63
8 262+263+264+265 Other Creditors 566,75 2.255,43
267+268+211 416.737,97 542.590,76
D Accruals and Deferrals
273 Accrued Costs 45.561,00 59.112,36
45.561,00 59.112,36
Total Liabilities 498.101,79 637.505,94
Total Equity and Liabilities 1.858.951,84 2.080.845,03
The Certified AccountantVítor José Caetano de Sousa
The ManagementJosé Luís Soares Simões - Manager | Leonel Fernando Soares Simões - Manager | Jorge Manuel Soares Simões - Manager
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INCOME STATEMENT BY NATURES
Valores em Euros
Amounts in Euros
ANNEx TO THE BALANCE SHEET AND TO THE INCOME STATEMENT
Accounts Code2008 2007
EEC Portuguese OAPA LOSSES AnD COSTS
2.b) 62 Supplies and External Services 2.681.488,41 3.266.385,723 Staff Costs
3.a) 641+642 Remunerations 98.374,39 107.188,163.b) Social Charges:
645/8 Other 64.640,43 163.014,82 26.824,48 134.012,644.b) 666+667 Adjustments 200,00 200,00 2.366,20 2.366,20
5 63 Taxes 1.344,59 1.086,625 65 Other Operating Losses and Costs 234,74 1.579,33 237,47 1.324,09
(A) 2.846.282,56 3.404.088,657 681+685+686+ Interest and Other Similar Costs:
687+688 Other 12.108,38 12.108,38 7.969,00 7.969,00(C) 2.858.390,94 3.412.057,65
10 69 Extraordinary Losses and Costs 167,16 14.283,41(E) 2.858.558,10 3.426.341,06
8+11 86 Corporate Income Tax for the Financial Year -4.573,30 24.010,49(G) 2.853.984,80 3.450.351,55
13 88 net Profit for the year -16.306,96 69.665,352.837.677,84 3.520.016,90
B InCOmE1 72 Provision of Services 2.761.054,88 2.761.054,88 3.407.326,19 3.407.326,194 73 Supplementary Income 3.984,724 77 Reversals from Depreciation and Adjustments 10.440,31 14.425,03
(B) 2.761.054,88 3.421.751,227 7811+7813+7814+
7818+785+786+787+788
Other Interest and Similar Income Related to Group Companies 54.994,76 41.704,57 Other 20.615,64 75.610,40 26.301,33 68.005,90
(D) 2.836.665,28 3.489.757,129 79 Extraordinary Income 1.012,56 30.259,78
(F) 2.837.677,84 3.520.016,90
Summary:Operating Income: (B)-(A) -85.227,68 17.662,57Financial Income: (D-B)-(C-A) 63.502,02 60.036,90Current Income: (D)-(C) -21.725,66 77.699,47Income Before Taxes: (F)-(E) -20.880,26 93.675,84net Profit for the year: (F)-(G) -16.306,96 69.665,35
The Certified AccountantVítor José Caetano de Sousa
The ManagementJosé Luís Soares Simões - Manager | Leonel Fernando Soares Simões - Manager | Jorge Manuel Soares Simões - Manager
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FINANCIAL YEAR 2008 (Information in Euros)
0 - InTRODUCTORy nOTE0.1.Company Transportes Reunidos, Lda. Head office: Moninhos – Loures, Portugal Set Up Date: 11 September 1959 Activity: Occasional Public Transport of Goods. Tax Payer no.: 500 289 433
The company belongs to Grupo Luís Simões, being LS – Luís Simões SGPS, SA its mother company, as for the other companies in the group.
0.2. The Financial Statements were prepared according to the historical costs convention, as modified to account for the revaluation of tangible fixed assets, and based on the continuity of operations and in accordance with the core accounting principles of consistency, prudence, accruals, substance on form and materiality. Furthermore, they also respect the qualitative characteristics of relevance, reliability and comparability.
0.3. Notes which have not been mentioned either do not apply to the Company, do not apply to materially relevant accounting standards, or did not occur during the financial year to which this annex refers.
3 - ACCOUnTInG PRInCIPLES AnD VALUATIOn CRITERIA USED3.1. Fixed Assets 3.1.1. Tangible Fixed AssetsTangible Fixed Assets are stated in the balance sheet according to their cost of acquisition, except for assets revalued in accordance with the legislation published to that end. Depreciation is calculated according to the straight-line and degressive depreciation method in conformity with legal decrees in force. 3.1.2. Financial InvestmentsFinancial Investments are stated on the balance sheet according to their cost of acquisition.
3.2. Receivables AdjustmentsThe value of adjustments corresponds to the collection risk of the relevant debts.3.3. Deferred Taxes
Deferred Taxes refer to the provisional differences between the amounts of assets and liabilities for the purposes of accounting reports and their respective amounts for taxation purposes.
Deferred Tax Assets and Liabilities are calculated and valued, using taxation rates which are expected to be in force at the time of the reversal of the provisional differences.
Since 2007, the company has been included in the Special Taxation System for Groups of Companies (“RETGS”) led by the shareholder LS – Luís Simões, SGPS, S.A.
6 – DISCLOSURE OF THE MAIN TAx COST (INCOME) COMPONENTSThe company is subject to Corporate Income Tax (“IRC”), at the current rate of 25%, plus a municipal tax (“Derrama”) at a maximum rate of 1.5% on taxable profits, reaching an aggregated income tax of 26.5%.
Under Article 81 of the Corporate Income Tax Code (“CIRC”), the company is subject to autonomous taxation on a host of charges provided for therein.
As was referred in note 3.3, ever since the financial year of 2007 the Group companies have been included in the Special Taxation System for Groups of Companies (“RETGS”) under Article 63 et seq. of the CIRC, led by the shareholder LS – Luís Simões, SGPS, S.A., whereby individually obtained taxes are reflected in the shareholder balance included in the item “Group Companies”.
In accordance with the legislation in force, tax statements are subject to audit and correction by tax authorities for a period of four years (ten years for Social Security up to and including 2000 and five years from 2001 onwards), unless tax losses occurred or inspections, complaints or impugnments are in course; in these cases, and depending on the circumstances, these deadlines are extended or suspended.
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The reconciliation between the accounting income and the taxable income, and between current tax and the income tax for the year, is as follows:
The Company has applied the provisions of Accounting Guideline no. 28, which pertains to the accounting for Deferred Taxes.
Changes occurred during the financial year as a result of the adoption of this directive, in terms of their nature and impact, are as follows:
7 - AVERAGE nUMBER OF PERSOnS AT THE COMPAny’S SERVICEEmployees ................................................................................. 4
10 - CHAnGES REGISTERED In THE FIXED ASSETS ITEMS OF THE BALAnCE SHEET AND IN THE RELEVANT DEPRECIATION AND PROVISIONS GROSS ASSETS
2008 2007
Current Tax
Income Before Taxes -20.880,26 93.675,84
Provisional Differences -491,55 591,55
Permanent Differences -101,27 -5.558,73
Taxable Income -21.473,08 88.708,66
Tax Losses (Provisional Difference) 19.100,47
Tax Losses (Provisional Difference) – RETGS (Special Taxation System for Groups of Companies)
2.372,61
0,00 88.708,66
Tax Rate
Corporate Income Tax 25,00% 25,00%
Municipal Tax (“Derrama”) 1,50% 1,50%
0,00 23.507,79
Autonomous Taxation 700,30 659,45
Current Tax (I) 700,30 24.167,24
Deferred Tax
Effect on the Financial Year -4.644,86 -156,76
Effect on the Financial Year – RETGS (Special Taxation System for Groups of Companies)
-628,74
Deferred Tax (II) -5.273,60 -156,76
Corporate Income Tax for the Financial Year (I) + (II) -4.573,30 24.010,48
Opening Balance
Effect on the Financial
Year
Closing Balance
Deferred Tax Assets:
Tax Losses 4.775,12 4.775,12
Current Accounts Receivable Adjustments 156,76 -130,26 26,50
156,76 4.644,86 4.801,62
Item
s
Ope
ning
Ba
lanc
e
Incr
ease
s
Dis
posa
ls
Tran
sfer
s an
d D
educ
tion
s
Clos
ing
Bala
nce
TANGIBLE FIxED ASSETS
Machinery and Equipment 109.308,21 109.308,21
109.308,21 0,00 0,00 0,00 109.308,21
FINANCIAL INVESTMENTS
Securities and Other Investments 498,80 498,80
498,80 0,00 0,00 0,00 498,80
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DEPRECIATION AND PROVISIONS
14 - OTHER InFORMATIOn RELATED TO FIXED ASSETSAll Fixed Assets are affected to the company’s activity.
16 - TABLE OF GROUP COMPAnIES, ASSOCIATED COMPAnIES AnD SHAREHOLDER COMPANIESThis company’s Financial Statements are included in the Consolidated Financial Statements of the following company:
Firm: LS – Luís Simões, SGPS, S.A.Head office: Moninhos – LouresTax Payer no.: 503 717 789
21 - DEVELOPMEnT OF CURREnT ASSET ACCOUnTSADJUSTMEnTS
23 - GLOBAL AMOUnT OF DOUBTFUL DEBTS InCLUDED In EACH OF THE CURREnT ACCOUNTS RECEIVABLE ITEMS CONTAINED IN THE BALANCE SHEETCustomers, Doubtful Debts ..................................................184.106,17
34 – CHANGES REGISTERED IN PROVISIONS ITEMS
36 - nUMBER OF SHARES FROM EACH CATEGORy InTO WHICH THE COMPAny SHARE CAPITAL IS DIVIDED AND THEIR NOMINAL VALUEThe Share Capital consists of 4 shares, one amounting to 935,246.25 Euros and three amounting to 187,049.25 Euros each.
37 - SHAREHOLDInG In THE SUBSCRIBED SHARE CAPITAL OF EACH OF THE CORPORATE BODIES HOLDING AT LEAST 20% OF THE SHARE CAPITAL
40 - DETAILED EXPLAnATIOn AnD JUSTIFICATIOn OF CHAnGES OCCURRED DURInG THE FINANCIAL YEAR IN EACH OF THE EQUITY ITEMS CONTAINED IN THE BALANCE SHEET
44 - ALLOTMEnT OF THE nET AMOUnT OF SALES AnD PROVISIOn OF SERVICES OBTAINED IN ACCOUNTS 71 AND 72
ItemsOpening Balance
Increase SettlementsClosing Balance
TANGIBLE FIxED ASSETS
Machinery and Equipment 109.308,21 109.308,21
109.308,21 0,00 0,00 109.308,21
ItemsOpening Balance
Increase ReversalClosing Balance
Current Accounts Receivable:
Customers, Doubtful Debts 183.906,17 200,00 184.106,17
183.906,17 200,00 184.106,17
AccountsOpening Balance
Increase ReductionClosing Balance
293 – Provisions for Current Lawsuits
35.802,82 0,00 0,00 35.802,82
ShareholderSubscribed Shares Shareholding
%Voting
Rights %Quantity %
LS – Luís Simões, SGPS, S.A. - 100 100 100
AccountsOpening Balance
Increase ReductionsClosing Balance
51 Share Capital 1.496.394,00 1.496.394,00
57 Reserves
571 Legal Reserves 16.477,72 3.483,27 19.960,99
574 Free Reserves 49.385,33 49.385,33
59 Retained Earnings -188.583,31 -188.583,31
88 Net Income 69.665,35 -16.306,96 69.665,35 -16.306,96
Description Amount
Internal Market 2.649.637,92
External Market 111.416,96
Total 2.761.054,88
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45 - FInAnCIAL InCOME STATEMEnT
46 - EXTRAORDInARy InCOME STATEMEnT
48 - OTHER InFORMATIOn DEEMED RELEVAnTA) Changes involving Group Companies and Associated Companies
The Certified AccountantVítor José Caetano de Sousa
The ManagementJosé Luís Soares Simões - Manager
Leonel Fernando Soares Simões - ManagerJorge Manuel Soares Simões - Manager
Losses and CostsFinancial Years
2008 2007
681 Interest Paid 11.296,36 7.127,17
688 Other Financial Losses and Costs 812,02 841,83
Financial Income 63.502,02 60.036,90
75.610,40 68.005,90
Losses and CostsFinancial Years
2008 2007
692 Bad Debts 10.440,31
697 Prior Years’ Adjustments 16,10 1.737,91
698 Other Extraordinary Losses and Costs 151,06 2.105,19
Extraordinary Income 845,40 15.976,37
1.012,56 30.259,78
IncomeFinancial Years
2008 2007
781 Interest Received 54.994,76 41.704,57
788 Reversals and Other Financial Income 20.615,64 26.301,33
75.610,40 68.005,90
IncomeFinancial Years
2008 2007
797 Prior Years’ Adjustments 1.000,00 14.975,47
798 Other Extraordinary Income 12,56 15.284,31
1.012,56 30.259,78
Items Amounts
Receivables:
Customers, c/a 11.066,20
Shareholders 954.994,76
Other Debtors 1.161,07
Payables:
Suppliers, c/a 7.066,59
Shareholders 71,56
Operating Costs 465.580,22
Operating Profits 244.558,62
Financial Gains 54.994,76
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INCOME STATEMENT BY FUNCTIONS
ITEmSFInAnCIAL yEAR
2008 2007
Sales and Provision of Services 2.761.054,88 3.407.326,19
Cost of Sales and Provision of Services -2.608.696,12 -3.185.561,25
Gross Income 152.358,76 221.764,94
Other Operating Income 76.622,96 112.690,71
Administrative Costs -237.151,70 -215.923,73
Other Operating Losses and Costs -1.413,92 -17.728,91
Operating Income -9.583,90 100.803,01
Net Financing Cost -11.296,36 -7.127,17
Current Income -20.880,26 93.675,84
Taxes on Current Income 4.573,30 -24.010,49
Current Income After Taxes -16.306,96 69.665,35
Net Income -16.306,96 69.665,35
Earnings per Share -0,01 0,05
The Certified AccountantVítor José Caetano de Sousa
The ManagementJosé Luís Soares Simões - Manager | Leonel Fernando Soares Simões - Manager | Jorge Manuel Soares Simões - Manager
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CASH FLOW STATEMENTDirect Method Amounts in Euros
OPERATInG ACTIvITIES 2008 2007RECEIVED FROM CUSTOMERS Received from Group Customers 374.587,60 476.242,74 Received from Other Customers 3.221.799,26 3.596.386,86 4.216.811,92 4.693.054,66PAID TO SUPPLIERS Paid to Group Suppliers -790.130,75 -831.870,94 Paid to Other Suppliers -2.555.246,66 -3.345.377,41 -3.278.888,03 -4.110.758,97PAID TO STAFF Remunerations -116.710,85 -100.666,50 Paid to Staff, Other -85,00 -116.795,85 -85,00 -100.751,50
Flow from Operations 134.213,60 481.544,19CORPORATE INCOME TAx PAID/RECEIVED Corporate Income Tax Paid -13.109,76 0,00 Corporate Tax Advance and Special Advance Paid -4.801,80 Corporate Income Tax Refunding -13.109,76 1.012,94 -3.788,86OTHER RECEIPTS RELATED TO OPERATING ACTIVITIES Received from Other Debtors 34.267,74 Received from Other Creditors 10.440,80 Received from Other Taxes 6,06 44.714,60OTHER PAYMENTS RELATED TO OPERATING ACTIVITIES Paid to Other Debtors -24.134,08 -39.160,29 Paid to Other Creditors -156.411,51 -164.718,23 Withholding Tax Retaining Paid -16.205,27 -16.230,76 TSU (social tax) Paid -32.319,13 -33.189,44 Other Taxes Paid -1.344,59 -230.414,58 -1.091,36 -254.390,08
Flows Before Extraordinary Items -109.310,74 268.079,85RECEIPTS RELATED TO ExTRAORDINARY ITEMS Bad Debts Received 1.000,00 Settlement of Claims 15.206,67 Other Extraordinary Receipts 0,06 1.000,06 0,46 15.207,13PAYMENTS RELATED TO ExTRAORDINARY ITEMS Other Extraordinary Payments -2,58 -2,58 -1.301,64 -1.301,64
Flow from Extraordinary Activities 997,48 13.905,49FLOW FROm OPERATInG ACTIvITIES -108.313,26 281.985,34
InvESTInG ACTIvITIESFLOW FROm InvESTInG ACTIvITIES 0,00 0,00
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ANNEx TO THE CASH FLOW STATEMENT
2-DISCRIMInATIOn OF CASH AnD CASH EQUIVALEnTS COMPOnEnTS, RECOnCILInG THE AMOUNTS EVIDENCED IN THE CASH FLOW STATEMENT AND THE BALANCE SHEET ITEMS
Amounts in Euros
FInAnCInG ACTIvITIESRECEIVED FROM: Loans Received from Group Companies 765.000,00 500.000,00 Total Loans Received 765.000,00 765.000,00 500.000,00 500.000,00 Interest from Loans Granted 35.448,88 35.448,88 28.500,84 28.500,84PAyMEnTS RELATED TO: Loans Received from Group Companies -640.000,00 -900.034,32 Total Loans Received -640.000,00 -900.034,32 Interest and Other Similar Costs -3.359,87 -8.378,89 Dividends -60.742,08 -704.101,95 -908.413,21
FLOW FROm FInAnCInG ACTIvITIES 96.346,93 -379.912,37Change in Cash and Equivalents (1)+(2)+(3) -11.966,33 (1)+(2)+(3) -97.927,03Cash and Equivalents at the Beginning of year 73.865,58 171.792,61Cash and Equivalents at the End of year 61.899,25 73.865,58
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsJosé Luís Soares Simões - Chairman
Jorge Manuel Soares Simões - MemberLeonel Fernando Soares Simões - Member
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsJosé Luís Soares Simões - Chairman
Jorge Manuel Soares Simões - MemberLeonel Fernando Soares Simões - Member
Description 2008 2007
Overnight Bank Cash Deposits 61.899,25 73.865,58
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C| REGISTERED AUDITORS’ REPORT
Ernst & youngAudit & Associados - SROC, S.A.
Avenida da República, 90-6°1600-206 Lisboa, Portugal
Telf: +351 217 912 000Fax: +351 217 957 586
www.ey.com
| REGISTERED AUDITORS’ REPORT
IntroductionWe have audited the financial statements of Transportes Reunidos, Lda., 1. which comprise the Balance Sheet as at 31 December 2008 (reflecting a total of 1,858,952 Euros and total equity of 1,360,850 Euros, including a net loss of 16,307 Euros) the Income Statement by Natures and By Functions and the Cash Flow Statement for the year then ended, and the related Annexes.
Responsibilities2. The Management is responsible for preparing the financial statements
giving a true and fair view of the Company’s financial position, the profits of its operations and cash flows, as well as for adopting appropriate accounting policies and criteria and keeping an appropriate internal control system.
3. Our responsibility is to express a professional and independent opinion based on our audit to those financial statements.
Scope4. We conducted our audit in accordance with the Technical Standards and
Guidelines of Revision/Audit of the Portuguese Board for Registered Auditors, which require the planning and performance of the audit so as to obtain reasonable assurance that the financial statements are free from material misstatements. In order to do so, the audit included:- the examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements and the assessment of the estimates based on judgements and criteria made by the Management and used in the preparation of the financial statements;- the assessment of whether the adopted accounting policies and their
disclosure are appropriate to the company’s circumstances;- examination of the applicability of the principle of continuity; and- evaluation of the overall adequacy of the presentation of information in
the financial statements.
5. The audit also included our opinion on whether the information given in the management Report is consistent with the financial statements.
6. We believe that the audit carried out provides an acceptable basis for expressing our opinion.
Opinion7. In our opinion, the financial statements give a true and fair view, in all
aspects materially relevant, of the state of Transportes Reunidos, Lda. affairs as at 31 December 2008, the profits of its operations and cash flows for the financial year then ended, in accordance with the accounting principles generally accepted in Portugal.
Lisbon, 13 March 2009
Ernst & young Audit & Associados - SROC, S.A.Independent Registered Auditors Firm (No. 178)Represented by:
João Carlos Miguel Alves (ROC nº 896)
Public Company – Share Capital 1,105,000 Euros – registered on the Portuguese Board of Registered Auditors under No. 178 – Registered on CMVM (Portuguese Securities Market Commission) under No. 9011 – Tax Payer No. 505 988 283 – Registered on Lisbon Companies Registry under No. 505 988 283 – A member firm of Ernst & young Global Limited
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Distribuição Luís Simões, S.A.
A| MANAGEMENT REPORT
ACTIVITY DURING THE FINANCIAL YEAR Distribuição Luís Simões (DLS), as the Logistics Operator of Grupo Luís Simões in Portugal, provides integrated services of transport, storage, preparation of orders, control of inventories and distribution, as well as other added-value services such as packaging, labelling, elaboration of promotional packs and product customization. In Portugal, DLS is at the forefront in the Logistics and Distribution of Products of Mass Consumption, also operating in the automobile, home appliance and high-technology products fields.2008 was an outstanding year for Grupo Luís Simões’ Logistics Strategy. The following reasons can be highlighted:
▪ Opening of the new Centre of Logistical Operations for the Future (“COL - CentrodeOperaçõesLogísticasdoFuturo”) at Luís Simões’ logistics park in Carregado, officially inaugurated on 17 november. This new semi-automatic warehouse will enable DLS to:
▪ Increase Cross-Docking operations;▪ Increase Co-packing complementary activities;▪ Centralize operations with a significant reduction in space requirements;▪ Automate route preparation operations, working with Just In Time production;▪ Engage clients requiring a large volume of transportation.
▪ The reinforcement of the company’s position in specific segments of the market: business increase in the beverage and controlled temperature storage segments, which required the expansion of existing cold chambers;
▪ A strong commercial dynamic, with the securing of new clients in 2008 who outsourced their logistics operations or switched from competing providers, and who will ensure the growth of our logistical activities and a greater degree of warehouse occupancy in 2009;
▪ The successful implementation of a Business Intelligence tool has endowed all management levels with more and improved information, enabling
Distribuição Luís Simões, S.A.Legal person no.: 502 375 574 | Share Capital: 2,500,000.00 Euros | Registered in Loures Companies’ Registry under no. 7823 | Moninhos 2671-951 Loures, Portugal
the daily follow-up of the activity level and an anticipated capacity to make more informed decisions. This tool has greatly enhanced the management and development capacities of our managers;
▪ An experienced management team with vast expertise in logistical processes, which has demonstrated the capacity to uphold the quality of service provided to current customers, as well as to ensure the securing of new clients in new segments.
ECONOMIC AND FINANCIAL ANALYSISWithin the current context, where the level of demand encountered by the logistics operator is ever-increasing, not only as a result of clients seeking specialized services but also due to the strong competition in the sector, Distribuição Luís Simões registered a Turnover of 36,439 thousand Euros in 2008.
In spite of the impact which the global economic downturn has had on the activities of some of our core clients, the company kept its Turnover on a par with the preceding year, benefiting not only from the addition of new clients but also from the renewal of some existing contracts.
The company’s Net Income amounted to 628 thousand Euros, whereas the Operating Income totalled 960 thousand Euros. The company has kept the positive levels of income obtained in previous years, with highlight being given to the excellent Operating Income performance. A strict control of certain cost items, i.e. by way of the renegotiation of Supplies and External Services contracts, were key factors in this performance.
30.477
2005
32.744
2006
36.989
2007
36.439
2008
Sales Development (Thousand Euros)
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▪ The successful completion of the new Centre of Logistical Operations for the Future at Luís Simões’ logistics park in Carregado, guaranteeing levels of occupancy and efficiency greater than 90%;
▪ Maintenance of investments in the development of new information technologies in support of a structured control of all logistical processes, which enable greater and improved information management. In this context, we highlight the following:
▪ Development of an application to manage Co-packing activity;▪ Continued implementation of Radio Frequency and Mobidis (mobile communications for Distribution use); ▪ Introduction of new management information modules within the Business Intelligence tool (Human Resources and Productivity Indicators).
CORPORATE BODIES
ALLOCATION OF THE PROFITSThe company Distribuição Luís Simões, S.A. ended 2008 with net Profits to the amount of 627,869.09 Euros.In compliance with applicable legal and statutory provisions, the following application of income is proposed:
Legal Reserves 31.393,45Dividends 559.180,64Rewards to employees 37.295,00
Moninhos, 10 February 2009
In 2008, company Cash Flow amounted to 1,468 thousand Euros. With an investment of 4,863 thousand Euros having been made, this value resulted from the acquisition of the logistical equipment required for the new COL in Carregado.The company ended 2008 with a Financial Autonomy of 19% and a Solvency Ratio of 30%, values which reflect the substantial investments made by the company within the past two years.
PERSPECTIVES FOR 2009 DLS has set itself ambitious objectives for 2009, the main guidelines of which are as follows:
▪ The identification and implementation of projects for process improvement and enhancement of consumption levels in order to reduce costs, in response to the predictable reduction in client activity resulting from the economic environment;
▪ A deep strong on clients and the market; priority should be given to business growth, by way of securing new clients in the current market segments and in new ones, as the economic downturn may favour logistics outsourcing by clients;
José Luís Soares SimõesLeonel Fernando Soares SimõesJorge Manuel Soares Simões
Chairman/Executive MemberMember
Board of Directors:
Clara Maria Campos Monteiro RibeiroIsabel Maria Blazquez Pereira Silva
ChairmanSecretary
General meeting Committee
Ernst & Young Audit & AssociadosRui Abel Serra Martins
In officeAlternate
Single Auditor
Leonel Fernando Soares Simões - Member Jorge Manuel Soares Simões - Member
José Luís Soares Simões - Chairman
Income Development (Thousand Euros)
Operating
Net Income
Legend
2005
514
2006 2007 2008
362
816913
539415
960
628
Cash Flow and Investment Development (Thousand Euros)
Cash Flow
Investment
Legend
2005
1.4881.968
2006 2007 2008
255574
1.331
3.473
1.468
4.863
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Amounts in EurosB| FINANCIAL STATEMENTSBALANCE SHEET
Accounts Code 2008 2007
EEC Portuguese OAP Gross Assets Depreciation and Adjustments Net Assets Net Assets
ASSETSC Fixed Assets
I Intangible Fixed Assets:1 431 Installation Expenses 566.952,16 566.952,16 0,00 0,00
566.952,16 566.952,16 0,00 0,00II Tangible Fixed Assets:
1 422 Buildings and Other Constructions 751.400,06 449.186,67 302.213,39 319.422,782 423 Machinery and Equipment 3.356.080,22 2.109.931,72 1.246.148,50 999.043,982 424 Transport Equipment 657.719,46 656.880,76 838,70 1.613,183 425 Tools and Dies 17.065,09 14.183,81 2.881,28 3.302,763 426 Administrative Equipment 3.826.655,50 3.062.267,14 764.388,36 628.397,923 429 Other Tangible Fixed Assets 187.269,57 114.727,32 72.542,25 34.127,704 441/6 Fixed Assets in Progress 6.800.656,03 6.800.656,03 2.999.699,96
15.596.845,93 6.407.177,42 9.189.668,51 4.985.608,28D Current Assets
I Inventories:1 36 Raw Material, Subsidiary Materials and Consumables 75.564,00 75.564,00 46.570,27
75.564,00 0,00 75.564,00 46.570,27II Current Accounts Receivable - Medium and Long-Term:
1 218 Customers, Doubtful Debts 16.138,71 16.138,71 0,00 0,0016.138,71 16.138,71 0,00 0,00
II Current Accounts Receivable - Short-Term:1 211 Customers, c/a 10.475.716,53 10.475.716,53 10.419.478,102 252 Group Companies 38.388,71 38.388,71 15.963,134 24 Public Entities 116.572,44 116.572,44 0,004 262+266+267+268+221 Other Debtors 768.787,93 768.787,93 1.044.056,17
11.399.465,61 0,00 11.399.465,61 11.479.497,40Iv Bank Deposits and Cash:
12+13+14 Bank Deposits 44.516,85 44.516,85 21.888,0544.516,85 44.516,85 21.888,05
E Accruals and Deferrals271 Accrued Income 22.396,49 22.396,49 269.436,59272 Deferred Costs 24.361,98 24.361,98 196.829,77276 Deferred Tax Assets 834,96 834,96 12.170,02
47.593,43 47.593,43 478.436,38Total Depreciation 6.974.129,58Total Adjustments 16.138,71
Total Assets 27.747.076,69 6.990.268,29 20.756.808,40 17.012.000,38
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BALANCE SHEET (Continued) Amounts in Euros
Accounts Code 2008 2007
EEC Portuguese OAP
EQuITy AnD LIABILITIESA Equity
I 51 Share Capital 2.500.000,00 2.500.000,0056 Revaluation Reserves 3.539,05 4.378,48
Iv Reserves:1 571 Legal Reserves 222.474,66 201.716,764 574 a 579 Other Reserves 407.120,86 279.726,71
V 59 Retained Earnings 96.588,62 95.749,19Subtotal 3.229.723,19 3.081.571,14
vI 88 net Profit for the year 627.869,09 415.158,11Total Equity 3.857.592,28 3.496.729,25
LiabilitiesC Medium and Long-Term Liabilities
2 231+12 Bank Loans 0,00 600.000,006 239 Other Loans Received 329.704,42 821.891,148 2611 Suppliers of Fixed Assets, c/a 4.680.610,60 2.725.500,00
5.010.315,02 4.147.391,14C Short-Term Liabilities
2 231+12 Bank Loans 1.069.599,56 744.123,594 221 Suppliers, c/a 5.905.786,02 5.246.674,184 228 Suppliers, Pending Invoices 100.770,97 860.967,016 252 Group Companies 484.126,06 125.465,078 239 Other Loans Received 492.186,72 162.482,308 2611 Suppliers of Fixed Assets, c/a 1.603.780,43 266.565,358 24 Public Entities 345.006,25 496.332,948 262+263+264+265+267+268+211 Other Creditors 7.472,41 19.978,29
10.008.728,42 7.922.588,73D Accruals and Deferrals
273 Accrued Costs 1.879.387,68 1.441.914,73274 Deferred Income 0,00 2.502,55276 Deferred Tax Liabilities 785,00 873,98
1.880.172,68 1.445.291,26Total Liabilities 16.899.216,12 13.552.512,33
Total Equity and Liabilities 20.756.808,40 17.012.000,38
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsJosé Luís Soares Simões - Chairman | Leonel Fernando Soares Simões - Member | Jorge Manuel Soares Simões - Member
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INCOME STATEMENT BY NATURE
Valores em Euros
Amounts in Euros
Accounts Code2008 2007
EEC Portuguese OAPLOSSES AnD COSTS
2.a) 61 Costs of Sold Goods and Consumed Materials: Materials 457.712,38 457.712,38 445.712,66 445.712,66
2.b) 62 Supplies and External Services 27.138.811,04 28,140,572.993 Staff Costs
3.a) 641+642 Remunerations 6.124.572,37 5.780.137,663.b) Social Charges:
645/8 Other 1.637.232,70 7.761.805,07 1.590.026,96 7.370.164,624.a) 662+663 Tangible and Intangible Fixed Assets Depreciation 658.949,05 795.637,674.b) 666+667 Adjustments 8.629,40 667.578,45 119.872,57 915.510,24
5 63 Taxes 9.211,04 10.814,295 65 Other Operating Losses and Costs 10.885,39 20.096,43 4.868,49 15.682,78
(A) 36.046.003,37 36.887.643,297 681+685+686+687+688
Interest and Other Similar Costs: Related to Group Companies 3.242,44 7.162,71 Other 371.183,37 374.425,81 116.591,63 123.754,34
(C) 36.420.429,18 37.011.397,6310 69 Extraordinary Losses and Costs 193.044,66 203.764,46
(E) 36.613.473,84 37.215.162,098+11 86 Corporate Income Tax for the Financial Year 172.980,05 164.700,74
(G) 36.786.453,89 37.379.862,8313 88 net Profit for the year 627.869,09 415.158,11
37.414.322,98 37.795.020,94B InCOmE
1 72 Provision of Services 36.438.947,91 36.438.947,91 36.988.562,09 36.988.562,094 73 Supplementary Income 249.391,94 318.741,324 74 Operating Subventions 70.985,72 28.302,884 76 Other Operating Income 15.281,67 22.635,814 77 Reversals from Depreciation and Adjustments 231.078,52 566.737,85 68.628,15 438.308,16
(B) 37.005.685,76 37.426.870,25
77811+7813+7814+7818
+785+786+ 787+788
Other Interest and Similar Income Related to Group Companies 41.631,15 27.206,87 Other 152.490,00 194.121,15 167.016,72 194.223,59
(D) 37.199.806,91 37.621.093,849 79 Extraordinary Income 214.516,07 173.927,10
(F) 37.414.322,98 37.795.020,94Summary:Operating Income: (B)-(A) 959.682,39 539.226,96Financial Income: (D-B)-(C-A) -180.304,66 70.469,25Current Income: (D)-(C) 779.377,73 609.696,21Income Before Taxes: (F)-(E) 800.849,14 579.858,85net Profit for the year: (F)-(G) 627.869,09 415.158,11
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsJosé Luís Soares Simões - Chairman | Leonel Fernando Soares Simões - Member | Jorge Manuel Soares Simões - Member
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ANNEx TO THE BALANCE SHEET AND TO THE INCOME STATEMENTFINANCIAL YEAR 2008 (Information in Euros)
0 - InTRODUCTORy nOTE0.1. Company Distribuição Luís Simões, S.A. Head office: Moninhos – Loures, Portugal Set Up Date: 2 March 1990 Activity: Storage, Distribution and Occasional Transport of Goods. Tax Payer no.: 502 375 574 The company belongs to Grupo Luís Simões, being LS – Luís Simões SGPS, SA its mother company, as for the other companies in the group.
0.2. The Financial Statements were prepared according to the historical costs convention, as modified to account for the revaluation of tangible fixed assets, and based on the continuity of operations and in accordance with the core accounting principles of consistency, prudence, accruals, substance on form and materiality. Furthermore, they also respect the qualitative characteristics of relevance, reliability and comparability.
0.3. Notes which have not been mentioned either do not apply to the Company, do not apply to materially relevant accounting standards, or did not occur during the financial year to which this annex refers.
3 - ACCOUnTInG PRInCIPLES AnD VALUATIOn CRITERIA USED3.1. Inventories 3.1.1. Raw Material, Subsidiary Materials and ConsumablesThese are valued according to their price of acquisition, and the weighted average cost was used as the method for measuring output costs.
3.2. Fixed Assets 3.2.1. Intangible Fixed AssetsIntangible Fixed Assets refer to installation expenses and are valued according to their cost of acquisition. Depreciation is calculated using the straight line method, in conformity with the legal decrees in force. 3.2.2. Tangible Fixed AssetsTangible Fixed Assets are stated in the balance sheet according to their cost
of acquisition, except for assets revalued in accordance with the legislation published to that end. Depreciation is calculated using the straight line method, in conformity with the legal decrees in force.
3.3. Adjustments for Doubtful DebtsThe value of adjustments corresponds to the collection risk of the relevant debts.
3.4. Deferred TaxesDeferred Taxes refer to the provisional differences between the amounts of assets and liabilities for the purposes of accounting reports and their respective amounts for taxation purposes.
Deferred Tax Assets and Liabilities are calculated and valued, using taxation rates which are expected to be in force at the time of the reversal of the provisional differences.
Since 2007, the company has been included in the Special Taxation System for Groups of Companies (“RETGS”) led by the shareholder LS – Luís Simões, SGPS, S.A.
6 – DISCLOSURE OF THE MAIN TAx COST (INCOME) COMPONENTSThe company is subject to Corporate Income Tax (“IRC”), at the current rate of 25%, plus a municipal tax (“Derrama”) at a maximum rate of 1.5% on taxable profits, reaching an aggregated income tax of 26.5%.
Under Article 81 of the Corporate Income Tax Code (“CIRC”), the company is subject to autonomous taxation on a host of charges provided for therein.
As was referred in note 3.4, ever since the financial year of 2007 the Group companies have been included in the Special Taxation System for Groups of Companies (“RETGS”) under Article 63 et seq. of the CIRC, led by the shareholder LS – Luís Simões, SGPS, S.A., whereby individually obtained taxes are reflected in the shareholder balance included in the item “Group Companies”.
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In accordance with the legislation in force, tax statements are subject to audit and correction by tax authorities for a period of four years (ten years for Social Security up to and including 2000 and five years from 2001 onwards), unless tax losses occurred or inspections, complaints or impugnments are in course; in these cases, and depending on the circumstances, these deadlines are extended or suspended.
The reconciliation between the accounting income and the taxable income, and between current tax and the income tax for the year, is as follows:
The Company has applied the provisions of Accounting Guideline no. 28, which pertains to the accounting for Deferred Taxes.
Changes occurred during the financial year as a result of the adoption of this directive, in terms of their nature and impact, are as follows:
2008 2007
Current Tax
Income Before Taxes 800.849,12 579.858,85
Provisional Differences -42.438,03 -13.083,82
Permanent Differences -223.988,05 -14.279,89
Taxable Income 534.423,04 552.495,14
Tax Rate
Corporate Income Tax 25,00% 25,00%
Municipal Tax (“Derrama”) 1,50% 1,50%
141.622,11 146.411,21
Autonomous Taxation 20.111,86 14.822,33
Current Tax (I) 161.733,97 161.233,54
Deferred Tax
Effect on the Financial Year 11.246,08 3.467,20
Deferred Tax (II) 11.246,08 3.467,20
Corporate Income Tax for the Financial Year (I) + (II) 172.980,05 164.700,74
Opening Balance
Effect on the Financial Year
Closing Balance
Deferred Tax Assets:
Current Accounts Receivable Provisions and Adjustments
12.170,02 -11.335,06 834,96
12.170,02 -11.335,06 834,96
Deferred Tax Liabilities:
40% of Unrealised Revaluation Reserves
873,98 -88,98 785,00
873,98 -88,98 785,00
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7 - AVERAGE nUMBER OF PERSOnS AT THE COMPAny’S SERVICEEmployees .............................................................................. 401
10 – CHANGES REGISTERED IN THE FIxED ASSETS ITEMS OF THE BALANCE SHEET AND IN THE RELEVANT DEPRECIATION AND PROVISIONS GROSS ASSETS
DEPRECIATION AND PROVISIONS
Items Opening Balance Increases Disposals Transfers and Deductions Closing Balance
INTANGIBLE FIxED ASSETS
Installation Expenses 566.952,16 566.952,16
566.952,16 0,00 0,00 0,00 566.952,16
TANGIBLE FIxED ASSETS
Buildings and Other Constructions 709.594,83 41.805,23 751.400,06
Machinery and Equipment 2.865.865,22 490.215,00 3.356.080,22
Transport Equipment 657.719,46 657.719,46
Tools and Dies 16.390,41 674,68 17.065,09
Administrative Equipment 3.359.609,38 321.570,12 145.476,00 3.826.655,50
Other Tangible Fixed Assets 124.957,39 62.312,18 187.269,57
Fixed Assets in Progress 2.999.699,96 3.946.432,07 -145.476,00 6.800.656,03
10.733.836,65 4.863.009,28 0,00 0,00 15.596.845,93
Items Opening Balance Increase Settlements Closing Balance
INTANGIBLE FIxED ASSETS
Installation Expenses 566.952,16 566.952,16
566.952,16 0,00 0,00 566.952,16
TANGIBLE FIxED ASSETS
Buildings and Other Constructions 390.172,05 59.014,62 449.186,67
Machinery and Equipment 1.866.821,24 243.110,48 2.109.931,72
Transport Equipment 656.106,28 774,48 656.880,76
Tools and Dies 13.087,65 1.096,16 14.183,81
Administrative Equipment 2.731.211,46 331.055,68 3.062.267,14
Other Tangible Fixed Assets 90.829,69 23.897,63 114.727,32
5.748.228,37 658.949,05 0,00 6.407.177,42
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12 – INDICATION OF THE LEGAL DECREES ON WHICH THE REVALUATION OF TANGIBLE FIxED ASSETS OR FINANCIAL INVESTMENTS WAS BASEDA) Tangible Fixed Assets were revalued in their several phases, based on the provisions set out in the following decrees:Portuguese Decree-Law no. 264/92 of 24/11Portuguese Decree-Law no. 31/98 of 11/02
13 – TABLE OF REVALUATIONS
(a) Net of depreciation
(b) Include successive revaluations
14 – OTHER INFORMATION RELATED TO FIxED ASSETSAll Fixed Assets are affected to the company’s activity.
15 – INDICATION OF THE GOODS USED UNDER THE FINANCIAL LEASING SYSTEM, WITH MENTION OF THE RELEVANT BOOK VALUES
Debts running for over a year are scaled in time as follows:
16 – TABLE OF GROUP COMPAnIES - ASSOCIATED COMPAnIES AnD SHAREHOLDER COMPANIESThis company’s Financial Statements are included in the Consolidated Financial Statements of the following company:
Firm: LS – Luís Simões, SGPS, S.A.Head office: Moninhos – Loures, PortugalTax Payer no.: 503 717 789
21 - DEVELOPMEnT OF CURREnT ASSET ACCOUnTSADJUSTMEnTS
23 – GLOBAL AMOUNT OF DOUBTFUL DEBTS INCLUDED IN EACH OF THE CURRENT ACCOUNTS RECEIVABLE ITEMS CONTAINED IN THE BALANCE SHEETCustomers, Doubtful Debts ....................................................16.137,71
25 – GLOBAL AMOUNT OF RECEIVABLES AND PAYABLES RELATED TO COMPANY STAFFReceivables (Accounts 2624/2629).............................................1.313,64Payables (Accounts 2624/2629)..................................................868,80
ItemsHistoricalCosts (a)
Revaluations (a) (b)
RevaluedBook Values
(a)
TANGIBLE FIxED ASSETS
Buildings and Other Constructions 43.054,59 8.421,67 51.476,26
Machinery and Equipment 231,15 0,00 231,15
43.285,74 8.421,67 51.707,41
Descriptionnet Fixed
AssetsLiability Amount
Short-TermMedium and Long-Term
Fixed Assets in Progress (Machinery and Equipment)
5.451.000,00 5.352.470,35 671.859,75 4.680.610,60
5.451.000,00 5.352.470,35 671.859,75 4.680.610,60
Years Liability Amount
2010 753.906,00
2011 794.464,92
2012 837.432,73
2013 882.767,90
2014 1.412.039,05
4.680.610,60
ItemsOpening Balance
Increase ReversalClosing Balance
Current Accounts Receivable:
Customers, Doubtful Debts 238.587,83 8.629,42 231.078,54 16.138,71
238.587,83 8.629,42 231.078,54 16.138,71
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29 – AMOUNT OF LIABILITIES FOR PERIODS OVER FIVE YEARS
32 – GRANTED GUARANTEES
In addition, the company issued promissory notes to third parties as a guarantee of payment of debts, amounting to 6,401,736.62 Euros as at 31 December 2008.
35 – SHARE CAPITALThe subscribed Share Capital is fully paid up.
36 – NUMBER OF SHARES FROM EACH CATEGORY INTO WHICH THE COMPANY SHARE CAPITAL IS DIVIDED AND THEIR NOMINAL VALUEThe Share Capital consists of 500,000 shares, with a nominal value of 5.00 Euros each.
37 – SHAREHOLDING IN THE SUBSCRIBED SHARE CAPITAL OF EACH OF THE CORPORATE BODIES HOLDING AT LEAST 20% OF THE SHARE CAPITAL
39 – CHANGES IN THE REVALUATION RESERVES OCCURRED DURING THE FINANCIAL YEAR
40 – DETAILED EXPLAnATIOn AnD JUSTIFICATIOn OF CHAnGES OCCURRED DURInG THE FINANCIAL YEAR IN EACH OF THE EQUITY ITEMS CONTAINED IN THE BALANCE SHEET
Balance Sheet ItemsLiabilities
- 1 to 5 years (medium-Term)
Liabilities– over 5 years (Long-Term)
Total
Suppliers of Fixed Assets (Lessors)
3.940.431,31 1.412.039,04 5.352.470,35
Guarantor Amount BeneficiaryType of
Guarantee
Banco Bilbao Viscaya Argentaria 3.337,00 EDP Bank
Banco Espírito Santo 5.513,00 EDP Bank
Banco Espírito Santo 5.339,00 EDP Bank
Banco Espírito Santo 10.250,00 EDP Bank
Banco Bilbao Viscaya Argentaria 69.964,00 EDP Bank
Banco Espírito Santo 33.319,65 ADI Bank
ShareholderSubscribed Shares Shareholding
%Voting
Rights %Quantity %
LS – Luís Simões, SGPS, S.A. 500,000 100 100 100
Port
ugue
se D
ecre
e-La
w
Ope
ning
Bal
ance
Creation in the Financial Year
Employed in the Financial year
Clos
ing
Bala
nce
Lega
l
Free
Cove
rage
for
Loss
es
Incr
ease
sin
Sha
re C
apit
al
Free
Res
erve
s
Def
erre
d Ta
xes
Reta
ined
Ear
ning
s Se
ttle
men
t of
ex
cess
am
ount
s
31/98 4.378,48 -839,43 3.539,05
AccountsOpening Balance
Increase ReductionsClosing Balance
51 Share Capital 2.500.000,00 2.500.000,00
56 Revaluation Reserves 4.378,48 839,43 3.539,05
57 Reserves
571 Legal Reserves 201.716,76 20.757,90 222.474,66
574 Free Reserves 279.726,71 127.394,15 407.120,86
59 Retained Earnings 95.749,19 839,43 96.588,62
88 Net Income 415.158,11 627.869,07 415.158,11 627.869,07
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41 – STATEMENT OF THE COST OF GOODS SOLD AND MATERIAL CONSUMED
44 – ALLOTMENT OF THE NET AMOUNT OF SALES AND PROVISION OF SERVICES OBTAINED IN ACCOUNTS 71 AND 72
45 – FINANCIAL INCOME STATEMENT
46 – ExTRAORDINARY INCOME STATEMENT
48 – OTHER INFORMATION DEEMED RELEVANTA) Changes involving Group Companies and Associated Companies
Changes GoodsRaw material, Subsidiary
materials and Consumables
Opening Inventories 46.570,27
Purchases 486.706,11
Closing Inventories 75.564,00
Cost for the Year 457.712,38
Description Amount
Internal Market 33.929.725,86
External Market 2.509.222,05
Total 36.438.947,91
Losses and CostsFinancial Years
2008 2007
681 Interest Paid 369.369,91 117.059,02
686 Cash Payments Discounts Granted 5,40
688 Other Financial Losses and Costs 5.055,90 6.689,92
Financial Income -180.304,66 70.469,25
194.121,15 194.223,59
IncomeFinancial Years
2008 2007
781 Interest Received 41.631,15 27.212,82
785 Favourable Exchange Differences 0,04
788 Other Financial Income 152.490,00 167.010,73
194.121,15 194.223,59
Losses and CostsFinancial Years
2008 2007
691 Donations 18.813,00 83.027,63
692 Bad Debts 105.834,32 53.977,49
695 Fines and Penalties 173,00
697 Prior Years’ Adjustments 843,60 11.090,61
698 Other Extraordinary Losses and Costs 67.380,74 55.668,73
Extraordinary Income 21.471,41 -29.837,36
214.516,07 173.927,10
IncomeFinancial Years
2008 2007
791 Tax Refunding 668,47
794 Fixed Assets Gains 2.303,67
795 Benefits from Contractual Penalties 4.712,01 12.632,89
797 Prior Years’ Adjustments 6.028,71
798 Other Extraordinary Income 209.804,06 152.293,36
214.516,07 173.927,10
Items Amounts
Receivables:
Customers, c/a 426.064,79
Shareholders 38,388.71
Payables:
Suppliers, c/a 965.515,10
Shareholders 484.126,06
Operating Costs 5,530,020.26
Financial Expenditure 3.242,44
Operating Profits 2,751,436.09
Financial Gains 41.631,15
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B) Global amounts of R&D effort
The amounts shown refer to expenses with Research and Development related to the following projects:
- Expansion and renovation of the Portal- Warehouse of the Future- Product traceability- Renovation and expansion of the provision of new services to clients
C) SIFIDE (System of Tax Benefit to Business-related R&D)Within the scope of its application for benefits from the System of Tax Benefits to Research and Development (“SIFIDE”) – Decree-Law no. 40/2005 of 3 August - DLS would have obtained tax savings of 30,446.87 Euros during 2007 financial year. However, as the company falls under the Special Taxation System for Groups of Companies (“RETGS”) referred to in Note 3, the aforementioned savings could not be applied.
INCOME STATEMENT BY FUNCTIONS
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsJosé Luís Soares Simões - Chairman
Leonel Fernando Soares Simões - MemberJorge Manuel Soares Simões - Member
Items 2006 2007 2008
Staff Costs 354.789,88 437.034,69 458.886,42
General Costs 185.369,72 132.530,32 139.156,84
Fixed Assets 130.145,22 166.376,00 997.986,80
Total R&D Investment 670.304,82 735.941,01 1.596.030,06
Turnover 32.743.922,29 36.988.562,09 36.438.947,91
Staff Costs 6.051.749,78 7.370.164,62 7.761.805,07
ItemsFinancial Year
2008 2007
Sales and Provision of Services 36.438.947,91 36.988.562,09
Cost of Sales and Provision of Services -30.420.330,68 -31.002.150,62
Gross Income 6.018.617,23 5.986.411,47
Other Operating Income 975.375,07 806.458,85
Administrative Costs -5.274.034,99 -5.464.251,11
Other Operating Losses and Costs -550.950,04 -631.701,34
Operating Income 1.169.007,27 696.917,87
Net Financing Cost -368.158,13 -117.059,02
Current Income 800.849,14 579.858,85
Taxes on Current Income -172.980,05 -164.700,74
Current Income After Taxes 627.869,09 415.158,11
Extraordinary Income 0,00 0,00
Net Income 627.869,09 415.158,11
Earnings per Share 1,26 0,83
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsJosé Luís Soares Simões - Chairman
Leonel Fernando Soares Simões - MemberJorge Manuel Soares Simões - Member
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CASH FLOW STATEMENTDirect Method
OPERATInG ACTIvITIES 2008 2007
RECEIVED FROM CUSTOMERS
Received from Group Customers 3.351.224,90 2.220.952,94
Received from Other Customers 45.397.135,44 48.748.360,34 44.854.413,39 47.075.366,33
PAID TO SUPPLIERS
Paid to Group Suppliers -11.255.979,75 -12.187.547,91
Paid to Other Suppliers -26.806.945,64 -38.062.925,39 -25.801.333,68 -37.988.881,59
PAID TO STAFF
Remunerations -5.185.301,38 -4.776.541,04
Advances to Staff -4.486,61 -5.435,85
Paid to Staff, Other -13.345,54 -5.203.133,53 -19.882,34 -4.801.859,23
Flow from Operations 5.482.301,42 4.284.625,51
CORPORATE INCOME TAx PAID/RECEIVED
Corporate Income Tax Paid -1.397,71 -85.681,99
Corporate Income Tax Advance and Special Advance -126.337,08
Income Tax Refunding 144.658,72 143.261,01 395.081,21 183.062,14
OTHER RECEIPTS RELATED TO OPERATING ACTIVITIES
Received from Other Debtors 223.040,63 658.808,53
Received from Other Creditors 13.638,53 25.406,63
Received from Other Taxes 9,68 236.688,84 25,15 684.240,31
OTHER PAYMENTS RELATED TO OPERATING ACTIVITIES
Paid to Other Debtors -316.999,33 -605.033,42
Paid to Other Creditors -3.978,59 -10.039,42
VAT Paid -1.202.423,79 -1.483.407,90
Withholding Tax Retaining Paid -595.527,19 -565.100,89
TSU (social tax) Paid -1.878.439,84 -1.711.379,04
Other Taxes Paid -8.881,38 -4.006.250,12 -10.017,97 -4.384.978,64
Flow Before Extraordinary Items 1.856.001,15 766.949,32
RECEIPTS RELATED TO ExTRAORDINARY ITEMS
Settlement of Claims 22.504,09 22.134,61
Other Extraordinary Receipts 3.222,68 25.726,77 489,12 22.623,73
Amounts in Euros
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PAYMENTS RELATED TO ExTRAORDINARY ITEMS
Donations -1.080,00
Other Extraordinary Payments -6.124,77 -7.204,77 -2.323,27 -2.323,27
Flow from Extraordinary Activities 18.522,00 20.300,46
(1) FLOW FROm OPERATInG ACTIvITIES 1.874.523,15 787.249,78
InvESTInG ACTIvITIES
RECEIVED FROM:
Interest and Other Similar Income 2,85 2,85 154.933,48 154.933,48
PAyMEnTS RELATED TO:
Tangible Fixed Assets – Group Companies -1.769,50
Tangible Fixed Assets - Other Companies -1.073.135,95 -638.335,84
Total Tangible Fixed Assets -1.074.905,45 -1.074.905,45 -638.335,84 -638.335,84
(2) FLOW FROm InvESTInG ACTIvITIES -1.074.905,45 -638.329,89
InvESTInG ACTIvITIES
RECEIVED FROM:
Loans Received from Group Companies 27.543.217,26 24.674.202,73
Total Loans Received 27.543.217,26 27.543.217,26 24.674.202,73 24.674.202,73
Subventions and Donations 71.301,24 51.892,40
Interest from Loans Granted 23.125,84 94.427,08 4.462,17 56.354,57
PAyMEnTS RELATED TO:
Loans Received from Group Companies -27.315.498,21 -23.887.440,82
Loans Received from Other -762.544,91
Total Loans Received -28.078.043,12 -23.887.440,82
Depreciation of Financial Leasing Contracts -98.529,65
Interest and Other Similar Costs -348.794,67 -95.754,47
Dividends -207.579,06 -28.732.946,50 -811.711,51 -24.794.906,80
Interest from Loans RECEIVED -7.162,71 -7.162,71 -16.221,72 -16.221,72
(3) FLOW FROm FInAnCInG ACTIvITIES -1.102.464,87 -80.571,22
Change in Cash and Equivalents (1)+(2)+(3) -302.847,17 68.348,67
Cash and Equivalents at the Beginning of year -122.235,54 -190.584,21
Cash and Equivalents at the End of year -425.082,71 -122.235,54
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsJosé Luís Soares Simões - Chairman | Leonel Fernando Soares Simões - Member | Jorge Manuel Soares Simões - Member
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ANNEx TO THE CASH FLOW STATEMENT
2 – DISCRIMINATION OF CASH AND CASH EQUIVALENTS COMPONENTS, RECONCILING THE AMOUNTS EVIDENCED IN THE CASH FLOW STATEMENT AND THE BALANCE SHEET ITEMS
Amounts in Euros
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsJosé Luís Soares Simões - Chairman
Leonel Fernando Soares Simões - MemberJorge Manuel Soares Simões - Member
Description 2008 2007
Overnight Bank Cash Deposits 44.516,85 21.888,05
Cash Equivalents
Cash and Equivalents (Bank Overdrafts) -469.599,56 -144.123,59
C| REPORT AND OPINION OF THE SINGLE AUDITOR
Ernst & youngAudit & Associados - SROC, S.A.
Avenida da República, 90-6°1600-206 Lisboa, Portugal
Telf: +351 217 912 000Fax: +351 217 957 586
www.ey.com
| REPORT AND OPINION OF THE SINGLE AUDITOR
Dear Shareholders,
In compliance with the legal provisions and the Company’s Articles of Association, it is incumbent on us to issue the annual report on the audit of Company Distribuição Luís Simões, S.A., regarding the financial year ended on 31 December 2008, and issue an opinion on the report, accounts and the proposal for the allocation of the profits presented by the Board of Directors.
In the course of the financial year and as part of our appointed duties, we carried out, with satisfactory results and with the frequency and extent deemed most adequate, a general audit of all accounting procedures, as well as surveys of their corresponding records and other probative elements.
The Board of Directors’ report explains the orientation of the Company’s policy during the financial year, as well as the policy proposal for 2009 financial year.
The Balance Sheet, Income Statements, Cash Flow Statement and their respective Annexes, respecting all legal requirements, reflect the position of the accounting records at the end of the financial year and attest to the Company’s financial situation.
The valuation criteria used for the preparation of accounts are those laid down in the Annex to the Balance Sheet and to the Income Statements, and enable a suitable assessment of company assets.
All regulatory formalities as well as those from the Articles of Association with regards to the accountability and auditing of the Company were complied, whereby we issue the following Opinion, which shall be presented to shareholders and published as required by law:
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Opinion of the Single Auditor
Dear Shareholders,
We have audited the company Distribuição Luís Simões, S.A., in accordance with article 420 of the Code of Commercial Companies and the company’s Articles of Association, the results of which lead us to opine as follows:
(a) The Management Report and the Accounts for the financial year of 2008 should be approved;(b) The Board of Directors’ proposal on the allocation of the profits of the financial year should be approved.
Lisbon, 13 March 2009
The Single Auditor
Ernst & young Audit & Associados - Sroc, S.A.Independent Registered Auditors Firm (No. 178)Represented by:
João Carlos Miguel Alves (Registered Auditor no. 896)
Public Company – Share Capital 1,105,000 Euros – registered on the Portuguese Board of Registered Auditors under No. 178 – Registered on CMVM (Portuguese Securities Market Commission) under No. 9011 – Tax Payer No. 505 988 283 – Registered on Lisbon Companies Registry under No. 505 988 283 – A member firm of Ernst & young Global Limited
Ernst & youngAudit & Associados - SROC, S.A.
Avenida da República, 90-6°1600-206 Lisboa, Portugal
Telf: +351 217 912 000Fax: +351 217 957 586
www.ey.com
| REGISTERED AUDITORS’ REPORT
Introduction We have audited the financial statements of Distribuição Luís Simões, S.A., 1. which comprise the Balance Sheet as at 31 December 2008 (reflecting a total of 20,756,808 Euros and total equity of 3,857,592 Euros, including a net income of 627,869 Euros) the Income Statement by Natures and By Functions and the Cash Flow Statement, for the year then ended, and the related Annexes.
Responsibilities2. The Board of Directors is responsible for preparing the financial statements
giving a true and fair view of the Company’s financial position, the profits of its operations and cash flows, as well as for adopting appropriate accounting policies and criteria and keeping an appropriate internal control system.
3. Our responsibility is to express a professional and independent opinion based on our audit to those financial statements.
Scope4. We conducted our audit in accordance with the Technical Standards and
Guidelines of Revision/Audit of the Portuguese Board for Registered Auditors, which require the planning and performance of the audit so as to obtain reasonable assurance that the financial statements are free from material misstatements. In order to do so, the audit included:
- the examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements and the assessment of the estimates based on judgements and criteria made by the Board of Directors and used in the preparation of the financial statements;- the assessment of whether the adopted accounting policies and their disclosure are appropriate to the company’s circumstances;- examination of the applicability of the principle of continuity; and- evaluation of the overall adequacy of the presentation of information in the financial statements.
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5. The audit also included our opinion on whether the information given in the Management Report is consistent with the financial statements.
6. We believe that the audit carried out provides an acceptable basis for expressing our opinion.
Opinion7. In our opinion, the financial statements give a true and fair view, in all
aspects materially relevant, of the state of Distribuição Luís Simões, S.A. affairs as at 31 December 2008, the profits of its operations and cash flows for the financial year then ended, in accordance with the accounting principles generally accepted in Portugal.
Lisbon, 13 March 2009
Ernst & young Audit & Associados - SROC, S.A.Independent Registered Auditors Firm (No. 178)Represented by:
João Carlos Miguel Alves (Registered Auditor no. 896)
Public Company – Share Capital 1,105,000 Euros – registered on the Portuguese Board of Registered Auditors under No. 178 – Registered on CMVM (Portuguese Securities Market Commission) under No. 9011 – Tax Payer No. 505 988 283 – Registered on Lisbon Companies Registry under No. 505 988 283 – A member firm of Ernst & young Global Limited
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LS – Luís Simões SGPS, S.A. maintains a balanced financial structure, registering a Financial Autonomy Index of 60% and a Solvency Ratio of 149%.These two indicators show a slight increase when compared to 2007.
PERSPECTIVES FOR 2009 In 2009, the company intends to maintain its role as corporate negotiator and procurer of financing for Grupo Luís Simões, maintaining its focus on the reduction of financing costs.
CORPORATE BODIES
ALLOCATION OF THE PROFITSThe company LS - Luís Simões, SGPS, S.A. ended 2008 with net Profits to the amount of 1,750,679.31 Euros.In compliance with applicable legal and statutory provisions, the following application of income is proposed:
Legal Reserves 87.534,00Dividends 1.653.145,31Free Reserves 10.000,00
Moninhos, 10 February 2009
A| MANAGEMENT REPORT
ACTIVITY DURING THE FINANCIAL YEARThe activities of LS- Luís Simões SGPS consist of the management of Grupo Luís Simões’ shareholdings and of centralized negotiation with regard to financing. These funds are afterwards channelled to the several group companies in the form of short-term or medium and long-term loans granted at a rate which reflects the average cost of borrowed capital.
ECONOMIC AND FINANCIAL ANALYSISConsidering its activity, the company essentially presents Financial Costs and Gains.In 2008, the net Income was 1,751 thousand Euros. The decrease verified during the year was the result of a reduction in obtained dividends, which were retained by the Group companies as a consequence of investments made throughout the year. The company Equity maintains the tendency for growth, amounting to 28,975 thousand Euros, which in percentage terms translates as an accrual of 6% in relation to 2007.
This growth is due to the significant increase of Reserves and Retained Earnings, the result of a policy of retention of earnings pursued by the company.This year, Liabilities amounted to a total of 19,455 thousand Euros, showing that Bank Liabilities were similar to those occurring in 2007, a sign that the financing needs of the GLS companies did not increase during the year.
LS-Luis Simões SGPS, S.A.Register no./Tax Payer: 503 717 789 | Loures Companies’ Registry | Share Capital: 16,650,000.00 Euros | Moninhos 2671-951 Loures, Portugal
LS - Luís Simões SGPS, S.A.
José Luís Soares SimõesLeonel Fernando Soares SimõesJorge Manuel Soares Simões
Chairman/ExecutiveMemberMember
Board of Directors:
Clara Maria Campos Monteiro RibeiroIsabel Maria Blazquez Pereira Silva
ChairmanSecretary
General meeting Committee
Ernst & Young Audit & AssociadosRui Abel Serra Martins
In officeAlternate
Single Auditor
Leonel Fernando Soares Simões -Member Jorge Manuel Soares Simões - Member
José Luís Soares Simões - Chairman
23.409
2005
24.920
2006
27.237
2007
28.975
2008
Equity Development (Thousand Euros)
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B| FINANCIAL STATEMENTSBALANCE SHEET Amounts in Euros
Accounts Code 2008 2007
EEC Portuguese OAP Gross AssetsDepreciation and
AdjustmentsNet Assets Net Assets
ASSETS
III Financial Investments:
1 4111 Shareholdings in Group Companies 26.744.971.55 26.744.971.55 26.744.971.55
5 4113+414+ 415 Securities and Other Investments 64.995.00 64.995.00 64.995.00
26.809.966.55 26.809.966.55 26.809.966.55
II Current Accounts Receivable - Medium and Long-Term:
2 252 Group Companies 15.865.000.00 15.865.000.00 14.325.000.00
3 253+254 Shareholder Companies and Associated Companies 1.500.000.00 1.500.000.00 1.400.000.00
17.365.000.00 17.365.000.00 15.725.000.00
II Current Accounts Receivable - Short-Term:
2 252 Group Companies 3.661.346.46 3.661.346.46 2.774.904.16
3 253+254 Shareholder Companies and Associated Companies 263.224.37 263.224.37 296.953.26
4 24 Public Entities 257.484.83 257.484.83 262.443.62
4 262+266+ 267+221 Other Debtors 5.891.60
4.182.055.66 4.182.055.66 3.340.192.64
Iv Bank Deposits and Cash:
12+13+14 Bank Deposits 11.918.44 11.918.44 13.469.89
11.918.44 11.918.44 13.469.89
E Accruals and Deferrals
272 Deferred Costs 3.090.13 3.090.13 10.445.64
276 Deferred Tax Assets 58.572.62 58.572.62
61.662.75 61.662.75 10.445.64
Total Depreciation
Total Adjustments
Total Assets 48.430.603.40 48.430.603.40 45.899.074.72
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BALANCE SHEET (Continued) Amounts in Euros
Accounts Code2008 2007
EEC Portuguese OAP
EQuITy AnD LIABILITIES
A Equity
I 51 Share Capital 16.650.000.00 16.650.000.00
Iv Reserves:
1 571 Legal Reserves 505.566.00 389.551.16
4 574 a 579 Other Reserves 10.068.914.41 7.877.632.47
Subtotal 27.224.480.41 24.917.183.63
vI 88 net Profit for the year 1.750.679.31 2,320.296.78
Total Equity 28.975.159.72 27.237.480.41
Liabilities
C Medium and Long-Term Liabilities
1 Debenture Loans:
2 231+12 Bank Loans 17.709.96
6 252 Group Companies 900.000.00 4.025.000.00
900.000.00 4.042.709.96
C Short-Term Liabilities
1 Debenture Loans:
2 231+12 Bank Loans 15.632.194.15 12.931.523.54
6 252 Group Companies 2.917.194.22 1.639.870.21
8 24 Public Entities 41.686.77
8 262+263+264+265+267+268+211
Other Creditors 2.989.31 1.753.31
18.552.377.68 14.614.833.83
D Accruals and Deferrals
273 Accrued Costs 3.066.00 4.050.52
3.066.00 4.050.52
Total Liabilities 19.455.443.68 18.661.594.31
Total Equity and Liabilities 48.430.603.40 45.899.074.72
The Certified AccountantDiogo João Belo Sabino
The Board of DirectorsJosé Luís Soares Simões - Chairman | Leonel Fernando Soares Simões - Member | Jorge Manuel Soares Simões - Member
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INCOME STATEMENT BY NATURES
Valores em Euros
Amounts in Euros
Accounts Code2008 2007
EEC Portuguese OAP
A LOSSES AnD COSTS
2.b) 62 Supplies and External Services 6.601.88 6.684.38
5 63 Taxes 65.824.18 43.445.12
5 65 Other Operating Losses and Costs 25.000.00 90.824.18 43.445.12
(A) 97.426.06 50.129.50
7 681+685+686+687+ 688 Interest and Other Similar Costs:
Related to Group Companies 244.323.81 277.911.82
Other 720.894.02 965.217.83 511.024.21 788.936.03
(C) 1.062.643.89 839.065.53
10 69 Extraordinary Losses and Costs 915.97 26.261.20
(E) 1.063.559.86 865.326.73
8+11 86 Corporate Income Tax for the Financial Year 17.812.05 25.723.29
(G) 1.081.371.91 891.050.02
13 88 net Profit for the year 1.750.679.31 2.320.296.78
2.832.051.22 3.211.346.80
B InCOmE
(B) 1.727.192,05 2.273.951,06
5 784 Income from Shareholdings
7 7811+7813+7814+7818+785+786+
787+788
Other Interest and Similar Income
Related to Group Companies 1.015.099.52 857.941.60
Other 89.759.65 2.832.051.22 79.453.46 3.211.346.12
(D) 2.832.051.22 3.211.346.12
9 79 Extraordinary Income 0.68
(F) 2.832.051.22 3.211.346.80
Summary:
Operating Income: (B)-(A) -97.426.06 -50.129.50
Financial Income: (D-B)-(C-A) 1.866.833.39 2.422.410.09
Current Income: (D)-(C) 1.769.407.33 2.372.280.59
Income Before Taxes: (F)-(E) 1.768.491.36 2.346.020.07
net Profit for the year (F)-(G) 1.750.679.31 2.320.296.78
The Certified AccountantDiogo João Belo Sabino
The Board of DirectorsJosé Luís Soares Simões - Chairman | Leonel Fernando Soares Simões - Member | Jorge Manuel Soares Simões - Member
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ANNEx TO THE BALANCE SHEET AND TO THE INCOME STATEMENTFINANCIAL YEAR 2008 (Information in Euros)
0 - InTRODUCTORy nOTE0.1. Company LS – Luis Simões. SGPS. S.A. Head office: Moninhos – Loures, Portugal Set Up Date: 05 August 1996 Activity: Holding Company. Tax Payer no.: 503 717 789
0.2. The notes mentioned refer to the individual accounts of the company.
0.3. The Financial Statements were prepared according to the historical costs convention, as modified to account for the revaluation of tangible fixed assets, and based on the continuity of operations and in accordance with the core accounting principles of consistency, prudence, accruals, substance on form and materiality. Furthermore, they also respect the qualitative characteristics of relevance, reliability and comparability.
0.4. Notes which have not been mentioned either do not apply to the Company, do not apply to materially relevant accounting standards, or did not occur during the financial year to which this annex refers.
3 – ACCOUNTING PRINCIPLES AND VALUATION CRITERIA USED
3.1. Financial investments are presented according to the value of acquisition.
3.2. In accordance with the applicable legal provisions, the Company presents consolidated financial statements showing the values of consolidation differences and their accounting treatment.
3.3. Deferred TaxesDeferred Taxes refer to the provisional differences between amounts of assets and liabilities for the purposes of accounting reports and their respective amounts for taxation purposes.Deferred Tax Assets and Liabilities are calculated and valued, using taxation rates which are expected to be in force at the time of the reversal of the provisional differences.Since 2007, the company has been included in the Special Taxation System for
Group of Companies (“RETGS”).
6 – DISCLOSURE OF THE MAIN TAx COST (INCOME) COMPONENTSThe company is subject to Corporate Income Tax (“IRC”), at the current rate of 25%, plus a municipal tax (“Derrama”) at a maximum rate of 1.5% on taxable profits, reaching an aggregated income tax of 26.5%.Under Article 81 of the Corporate Income Tax Code (“CIRC”), the company is subject to autonomous taxation on a host of charges provided for therein.As was referred in note 3.3, ever since the financial year of 2007 the Group companies have been included in the Special Taxation System for Groups of Companies (“RETGS”) under Article 63 et seq. of the CIRC, led by the shareholder LS – Luís Simões, SGPS, S.A., whereby individually obtained taxes are reflected in the shareholder balance included in the item “Group Companies”.In accordance with the legislation in force, tax statements are subject to audit and correction by tax authorities for a period of four years (ten years for Social Security up to and including 2000 and five years from 2001 onwards), unless tax losses occurred or inspections, complaints or impugnments are in course; in these cases, and depending on the circumstances, these deadlines are extended or suspended.The reconciliation between the accounting income and the taxable income, and between current tax and the income tax for the year, is as follows:
2008
Current Tax
Income Before Taxes 1.768.491.36
Permanent Differences -1.701.276.08
Taxable Income 67.215.28
Tax Rate
Corporate Income Tax 25,00%
Municipal Tax (“Derrama”) 1,50%
17.812.05
Current Tax (I) 17.812.05
Deferred Tax (II) 0
Corporate Income Tax for the Financial Year (I) + (II) 17.812.05
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The Company has applied the provisions of Accounting Guideline no. 28, which pertains to the accounting for Deferred Taxes.Changes occurred in the financial year, in terms of deferred taxes, were as follows:
10 – CHANGES REGISTERED IN THE FIxED ASSETS ITEMS OF THE BALANCE SHEET AND IN THE RELEVANT DEPRECIATION AND PROVISIONS GROSS ASSETS
16 – TABLE OF THE GROUP COMPANIES
Opening Balance Effect on the Financial year Closing Balance
Deferred Tax Assets:
Tax Benefit SIFIDE (system of tax benefit to business-related R&D) – Associated Companies
58.573 58.573
58.573 58.573
Items Opening Balance Revaluation/Adjustment Increases DisposalsTransfers and Deductions
Closing Balance
FINANCIAL INVESTMENTS
Shareholdings in Group Companies 26.744.972 26.744.972
Securities and Other Investments 64.995 64.995
26.809.967 26.809.967
Items ShareholdingsEquity
(excluding 2008 net Income)Income for 2008
Transportes Luis Simões. S.A. Head office: Moninhos – Loures, Portugal 100% 11.237.561 -1.286.744
D.L.S.-Distribuição Luis Simões. S.A. Head office: Moninhos – Loures, Portugal 100% 3.229.723 627.869
RETA-Gestão e Locação de Frotas. SA. Head office: Moninhos – Loures, Portugal 100% 2.493.589 302.841
Transportes Reunidos. Lda Head office: Moninhos – Loures, Portugal 100% 1.377.157 -16.307
LUSISEG- Mediadores de Seguros. Lda. Head office: Moninhos – Loures, Portugal 100% 44.489 -1.063
SOCAR-Equip.de Transp.e Serv.Técnicos SA. Head office: Moninhos – Loures, Portugal 100% 879.212 -49.260
LS-Gestão Empresarial e Imobiliária. SA. Head office: Moninhos – Loures, Portugal 49% 2.454.743 -113.226
Solmoninhos. Lda. Head office: Moninhos – Loures, Portugal 99% 161.578 -49.867
Luis Simões Logística Integrada. S.A. Head office: Guadalajara – Spain 100% 5.445.781 126.069
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32 – GRANTED GUARANTEESThe company issued promissory notes to third parties as a guarantee of payment of debts to group companies, amounting to 18,206,568 Euros as at 31 December 2008. In addition, the company issued promissory notes to third parties as a guarantee of payment of debts, amounting to 16,263,776 Euros as at 31 December 2008.
35 – SHARE CAPITALThe subscribed Share Capital is fully paid up.
36 – NUMBER OF SHARES FROM EACH CATEGORY INTO WHICH THE COMPANY SHARE CAPITAL IS DIVIDED AND THEIR NOMINAL VALUEThe Share Capital consists of 3,330,000 shares, with a nominal value of 5.00 Euros each.
37 - SHAREHOLDInG In THE SUBSCRIBED SHARE CAPITAL OF EACH OF THE CORPORATE BODIES HOLDING AT LEAST 20% OF THE SHARE CAPITAL
40 – DETAILED EXPLAnATIOn AnD JUSTIFICATIOn OF CHAnGES OCCURRED DURInG THE FINANCIAL YEAR IN EACH OF THE EQUITY ITEMS CONTAINED IN THE BALANCE SHEET
45 – FINANCIAL INCOME STATEMENT
46 - EXTRAORDInARy InCOME STATEMEnT
ShareholderSubscribed Shareholding
%Voting
Rights %Shares %
Leonel Simões & Filhas SGPS. S.A. 1.019.079 % 30.6 30.6
Varanda do Vale SGPS. S.A. 1.019.079 30.6 30.6 30.6
Mira Serra SGPS. S.A. 1.019.079 30.6 30.6 30.6
AccountsOpening Balance
Increase ReductionsClosing Balance
51 Share Capital 16.650.000 16.650.000
57 Reserves
571 Legal Reserves 389.551 116.015 505.566
574 Free Reserves 7.877.632 2.191.282 10.068.914
88 Net Income 2.320.297 1.750.679 2.320.297 1.750.679
Losses and CostsFinancial Years
2008 2007
681 Interest Paid 954.371 759.469
688 Other Financial Losses and Costs 10.847 29.467
Financial Income 1.866.833 2.422.410
2.832.051 3.211.346
IncomeFinancial Years
2008 2007
781 Interest Received 1.104.859 937.395
784 Income from Shareholdings 1.727.192 2.273.951
2.832.051 3.211.346
Losses and CostsFinancial Years
2008 2007
691 Donations 0 25.000
698 Other Extraordinary Losses and Costs 916 1.261
Extraordinary Income -916 -26.261
0 0
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48 – OTHER INFORMATION DEEMED RELEVANTA) Changes involving group companies and associated companies:
C| REPORT AND OPINION OF THE SINGLE AUDITOR AND REGISTERED AUDITORS’ REPORT
Ernst & youngAudit & Associados - SROC, S.A.
Avenida da República, 90-6°1600-206 Lisboa, Portugal
Telf: +351 217 912 000Fax: +351 217 957 586
www.ey.com
| REPORT AND OPINION OF THE SINGLE AUDITOR
Dear Shareholders,
In compliance with the legal provisions and the Company’s Articles of Association, it is incumbent on us to issue the annual report on the audit of Company LS – Luís Simões, S.G.P.S., S.A., regarding the financial year ended on 31 December 2008, and issue an opinion on the report, accounts and the proposal for the allocation of the profits presented by the Board of Directors.
In the course of the financial year and as part of our appointed duties, we carried out, with satisfactory results and with the frequency and extent deemed most adequate, a general audit of all accounting procedures, as well as surveys of their corresponding records and other probative elements.
The Board of Directors’ report explains the orientation of the Company’s policy during the financial year, as well as the policy proposal for 2009 financial year.
The Balance Sheet, Income Statements by Nature and respective Annex, respecting all legal requirements, reflect the position of the accounting records at the end of the financial year and attest to the Company’s financial situation.
The valuation criteria used for the preparation of accounts are those laid down in the Annex to the Balance Sheet and to the Income Statements by Nature, and lead to a suitable assessment of company assets
All regulatory formalities as well as those from the Articles of Association with regards to the accountability and auditing of the Company were complied, whereby we issue the following Opinion, which shall be presented to shareholders and published as required by law:
Items Amounts
Receivables:
Shareholders 19.526.260
Payables:
Shareholders 3.826.335
Financial Expenditure 244.324
Financial Gains 2.742.292
The Certified AccountantDiogo João Belo Sabino
The Board of DirectorsJosé Luís Soares Simões - Chairman
Leonel Fernando Soares Simões - MemberJorge Manuel Soares Simões - Member
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Opinion of the Single Auditor
Dear Shareholders,
We have audited the company LS – Luís Simões, S.G.P.S., S.A., the results of which lead us to opine that:
(a) The Management Report and the Accounts for the financial year of 2008 should be approved;
(b) The Board of Directors’ proposal on the allocation of the profits of the financial year should be approved.
Lisbon, 13 March 2009
The Single Auditor
Ernst & young Audit & Associados - Sroc, S.A.Independent Registered Auditor’s Firm (No. 178)Represented by:
João Carlos Miguel Alves (Registered Auditor no. 896)
Public Company – Share Capital 1,105,000 Euros – registered on the Portuguese Board of Registered Auditors under No. 178 – Registered on CMVM (Portuguese Securities Market Commission) under No. 9011 – Tax Payer No. 505 988 283 – Registered on Lisbon Companies Registry under No. 505 988 283 – A member firm of Ernst & young Global Limited
Ernst & youngAudit & Associados - SROC, S.A.
Avenida da República, 90-6°1600-206 Lisboa, Portugal
Telf: +351 217 912 000Fax: +351 217 957 586
www.ey.com
| REGISTERED AUDITORS’ REPORT
IntroductionWe have audited the financial statements of LS – Luís Simões, S.G.P.S., S.A., 1. which comprise the Balance Sheet as at 31 December 2008 (reflecting a total of 48,430,603 Euros and total equity of 28,975,160 Euros, including a net income of 1,750,679 Euros) the Income Statement by Natures for the year then ended, and the related Annex.
ResponsibilitiesThe Board of Directors is responsible for preparing the financial statements 2. giving a true and fair view of the Company’s financial position and the profits of its operations, as well as for adopting appropriate accounting policies and criteria and keeping an appropriate internal control system. Our responsibility is to express a professional and independent opinion 3. based on our audit to those financial statements.
ScopeWe conducted our audit in accordance with the Technical Standards and 4. Guidelines of Revision/Audit of the Portuguese Board for Registered Auditors, which require the planning and performance of the audit so as to obtain reasonable assurance that the financial statements are free from material misstatements. In order to do so, the audit included:- the examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements and the assessment of the estimates based on judgements and criteria made by the Board of Directors and used in the preparation of the financial statements;- the assessment of whether the adopted accounting policies and their disclosure are appropriate to the company’s circumstances;- examination of the applicability of the principle of continuity; and- evaluation of the overall adequacy of the presentation of information in the financial statements.
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The audit also included our opinion on whether the information given in the 5. Management Report is consistent with the financial statements.
We believe that the audit carried out provides an acceptable basis for 6. expressing our opinion.
OpinionIn our opinion, the financial statements give a true and fair view, in all 7. aspects materially relevant, of the state of LS – Luís Simões, S.G.P.S., S.A. affairs as at 31 December 2008, the profits of its operations for the financial year then ended, in accordance with the accounting principles generally accepted in Portugal.
Lisbon, 13 March 2009
Ernst & young Audit & Associados - SROC, S.A.Independent Registered Auditors Firm (No. 178)Represented by:
João Carlos Miguel Alves (Registered Auditor no. 896)
Public Company – Share Capital 1,105,000 Euros – registered on the Portuguese Board of Registered Auditors under No. 178 – Registered on CMVM (Portuguese Securities Market Commission) under No. 9011 – Tax Payer No. 505 988 283 – Registered on Lisbon Companies Registry under No. 505 988 283 – A member firm of Ernst & young Global Limited
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A| MANAGEMENT REPORT
ACTIVITY DURING THE FINANCIAL YEAR RETA’s activities are related to “Rent-a-Cargo”, that is to say, the rental of heavy vehicles without a driver. Its specialty is the rental of Semi-Trailers, providing a diversity of equipment and flexible contractual provisions depending on its clients’ specific needs. RETA is at the forefront of the Portuguese national Semi-Trailer rental market.
The difficulties encountered by RETA in 2008 are similar to those felt in previous years, namely those resulting from the crisis which has been affecting the Transport and Logistics Sector, RETA’s main clients. In spite of this, RETA fulfilled its sales objectives and fully complied with its objective of being a business facilitating agent for its clients.
The most relevant factors of the previous year were as follows:
▪ An increase in the number of solutions for the client, focused in one direction: the sale of used vehicles and renting;
▪ The Reta&Socar brand, renowned on the Portuguese national market and led by a structured and market-savvy Commercial Management;
▪ Sales training for all employees;▪ The development of a specific plan aiming at increasing the rental of
refrigerated semi-trailers.
ECONOMIC AND FINANCIAL ANALYSISDespite the constraints felt in this market, due not only to the difficult economic situation experienced by transporters but also the difficulty in accepting rentals as being an advantageous option in the transport business, RETA obtained a turnover of 5,135 thousand in 2008, an 11% increase compared to the previous year. The market rentals segment is worthy of highlight, with a 29% growth.
RETA - Locação e Gestão de Frotas, S.A.
RETA – Locação e Gestão de Frotas, S.A.Legal Person no. 502.611.308 | Share Capital: 750,000.00 Euros | Registered in Loures Companies’ Registry under no. 8830 | Moninhos 2671-951 Loures, Portugal
The Income performance of the last few years reflects the rigorous control of certain cost items, particularly fleet fixed costs, which along with an efficient sales policy has ensured the company good levels of performance. This year, the Net Income amounted to 303 thousand Euros, and we highlight the contribution of Extraordinary income, to the tune of 1,759 thousand Euros.
The Investment Level is similar to that of 2007, and is essentially destined to the acquisition of semi-trailers. Amounting to 6,153 thousand Euros, its main objective is the reduction in the average age of the fleet.
The Cash Flow level remained stable in 2008, attaining the amount of 3,777 thousand Euros. The company ended the year with a 21% Financial Autonomy index and a Solvency ratio of 26%.
3.820
2005
4.012
2006
4.635
2007
5.135
2008
Sales Development (Thousand Euros)
Income Development (Thousand Euros)
2005 2006 2007 2008
1.8001.5001.200
900600300
0
892
1.2361.567
1.759
354 479 572303
Net
Extraordinary
Legend
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PERSPECTIVES FOR 2009 In 2009, RETA foresees a 17% increase in rental sales based on partnerships with clients according to a win-win strategy, while also aiming at rationalizing investment by improving a larger optimization of the fleet occupancy rate, as well as reducing credit risk.
Considering the scenario envisaged for 2009, in a context of economic contraction hostile to investments, vehicle rentals may prove to be a competitive advantage for logistical and transport operators.
CORPORATE BODIES
ALLOCATION OF THE PROFITSRETA – Locação e Gestão de Frotas, S.A. ended 2008 with net Profits to the amount of 302,841.48 Euros.In compliance with applicable legal and statutory provisions, the following application of income is proposed:
Legal Reserves 15.142,07Retained Earnings 287.699,41
Moninhos, 10 February 2009
Leonel Fernando Soares SimõesJosé Luís Soares SimõesJorge Manuel Soares Simões
Chairman/Executive DirectorMemberMember
Board of Directors:
Clara Maria Campos Monteiro RibeiroIsabel Maria Blazquez Pereira Silva
ChairmanSecretary
General meeting Committee
Ernst & Young Audit & AssociadosRui Abel Serra Martins
In officeAlternate
Single Auditor
Cash Flow and Investment Development Thousand Euros
Investment
Cash Flow
Legend
2005
3.041 2.805
4.810
3.036
2006 2007 2008
6.273
3.611
6.153
3.777
José Luís Soares SimõesMember
Jorge Manuel Soares SimõesMember
Leonel Fernando Soares SimõesChairman
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B| FINANCIAL STATEMENTSBALANCE SHEET Amounts in Euros
Accounts Code 2008 2007
EEC Portuguese OAP Gross AssetsDepreciation and
AdjustmentsNet Assets Net Assets
ASSETSC Fixed Assets
II Tangible Fixed Assets:
2 423 Machinery and Equipment 17.279.505,29 5.717.183,81 11.562.321,48 9.684.491,97
3 425 Tools and Dies 1.541,84 1.541,84 0,00 0,00
3 426 Administrative Equipment 6.572,94 2.073,75 4.499,19 2.462,34
4 441/6 Fixed Assets in Progress 116.517,00 0,00 116.517,00 951.441,39
17.404.137,07 5.720.799,40 11.683.337,67 10.638.395,70
III Financial Investments:
5 4113+414+415 Securities and Other Investments 997,60 997,60 997,60
997,60 0,00 997,60 997,60
D Current Assets
II Current Accounts Receivable - Medium and Long-Term:
1 218 Customers, Doubtful Debts 822.136,49 822.136,49 0,00 0,00
822.136,49 822.136,49 0,00 0,00
II Current Accounts Receivable - Short-Term:
1 211 Customers, c/a 906.664,97 906.664,97 1.089.646,78
2 252 Group Companies 39.792,69 39.792,69 171.965,42
4 24 Public Entities 0,00 63.818,79
4 262+266+ Other Debtors 404.711,52 404.711,52 798.526,07
267+221 1.351.169,18 0,00 1.351.169,18 2.123.957,06
Bank Deposits and Cash:
12+13+14 Bank Deposits 118,88 118,88 2.472,45
11 Cash 0,00 0,00 0,00
E 118,88 118,88 2.472,45
Accruals and Deferrals:
271 Accrued Income 125,00 125,00 4.571,44
272 Deferred Costs 11.462,90 11.462,90 8.395,69
276 Deferred Tax Assets 396.281,07 396.281,07 66.468,23
407.868,97 407.868,97 79.435,36
Total Depreciation 5.720.799,40
Total Adjustments 822.136,49
Total Assets 19.986.428,19 6.542.935,89 13.443.492,30 12.845.258,17
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BALANCE SHEET (Continued) Amounts in Euros
Accounts Code2008 2007
EEC Portuguese OAP
EQuITy AnD LIABILITIES
A Equity
I 51 Share Capital 750.000,00 750.000,00
Iv Reserves:
1 571 Legal Reserves 148.580,85 119.986,34
4 574 a 579 Other Reserves 1.543.958,58 1.296.171,99
V 59 Retained Earnings 51.049,15 51.049,15
Subtotal 2.493.588,58 2.217.207,48
vI 88 net Profit for the year 302.841,48 571.890,20
Total Equity 2.796.430,06 2.789.097,68
Liabilities
C Medium and Long-Term Liabilities
6 252 Group Companies 2.500.000,00 1.500.000,00
8 2611 Suppliers of Fixed Assets, c/a 2.727.613,80 3.588.727,67
5.227.613,80 5.088.727,67
C Short-Term Liabilities
2 231+12 Bank Loans 1.260.876,64 205.749,96
4 221 Suppliers, c/a 151.617,69 435.442,40
4 228 Suppliers, Pending Invoices 574,75 530.133,40
6 252 Group Companies 1.186.569,52 590.338,93
8 2611 Suppliers of Fixed Assets, c/a 2.615.067,34 2.885.517,13
8 24 Public Entities 50.152,41 124.532,87
8 262+263+264+265+ Other Creditors 18.694,23 29.583,48
267+268+211 5.283.552,58 4.801.298,17
D Accruals and Deferrals
273 Accrued Costs 81.365,24 94.379,91
274 Deferred Income 54.530,62 71.273,28
276 Deferred Tax Liabilities 0,00 481,46
135.895,86 166.134,65
Total Liabilities 10.647.062,24 10.066.577,99
Total Equity and Liabilities 13.443.492,30 12.845.258,17
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsLeonel Fernando Soares Simões - Chairman | José Luís Soares Simões - Member | Jorge Manuel Soares Simões - Member
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INCOME STATEMENT BY NATURES Amounts in Euros
Accounts Code2008 2007
EEC Portuguese OAP
A LOSSES AnD COSTS
2.a) 61 Costs of Sold Goods and Consumed Materials:
Goods 461.451,54 461.451,54 277.393,01 277.393,01
2.b) 62 Supplies and External Services 2.370.961,48 2.082.678,40
3 Staff Costs
3.a) 641+642 Remunerations 145.733,05 144.622,07
3.b) Social Charges:
645/8 Other 58.608,57 204.341,62 34.382,86 179.004,93
4.a) 662+663 Tangible and Intangible Fixed Assets Depreciation 3.293.550,04 2.790.841,45
4.b) 666+667 Adjustments 180.138,22 3.473.688,26 248.694,52 3.039.535,97
5 63 Taxes 3.497,69 1.294,65
5 65 Other Operating Losses and Costs 21.076,82 24.574,51 19.730,67 21.025,32
(A) 6.535.017,41 5.599.637,63
7 681+685+686+687+688
Interest and Other Similar Costs:
Related to Group Companies 133.569,52 122.338,93
Other 328.240,37 461.809,89 210.351,80 332.690,73
(C) 6.996.827,30 5.932.328,36
10 69 Extraordinary Losses and Costs 15.522,07 13.458,41
(E) 7.012.349,37 5.945.786,77
8+11 86 Corporate Income Tax for the Financial Year -370.086,99 -217.150,27
(G) 6.642.262,38 5.728.636,50
13 88 net Profit for the year 302.841,48 571.890,20
6.945.103,86 6.300.526,70
B InCOmE
71 Sales:
Goods 468.542,75 306.843,52
1 72 Provision of Services 4.665.978,31 5.134.521,06 4.328.603,96 4.635.447,48
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4 73 Supplementary Income 17.627,09 42.792,58
4 76 Other Operating Income 341,78 12,40
4 77 Reversals from Depreciation and Adjustments 15.722,82 33.691,69 36.650,58 79.455,56
(B) 5.168.212,75 4.714.903,04
7 7811+7813+7814+7818+785+786+787+788
Other Interest and Similar Income
Other 2.776,75 2.776,75 5.096,98 5.096,98
(D) 5.170.989,50 4.720.000,02
9 Extraordinary Income 1.774.114,36 1.580.526,68
(F) 6.945.103,86 6.300.526,70
Summary:
Operating Income: (B)-(A) -1.366.804,66 -884.734,59
Financial Income: (D-B)-(C-A) -459.033,14 -327.593,75
Current Income: (D)-(C) -1.825.837,80 -1.212.328,34
Income Before Taxes: (F)-(E) -67.245,51 354.739,93
net Profit for the year: (F)-(G) 302.841,48 571.890,20
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsLeonel Fernando Soares Simões - Chairman | José Luís Soares Simões - Member | Jorge Manuel Soares Simões - Member
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3.3. Deferred TaxesDeferred Taxes refer to the provisional differences between the amounts of assets and liabilities for the purposes of accounting reports and their respective amounts for taxation purposes.
Deferred Tax Assets and Liabilities are calculated and valued, using taxation rates which are expected to be in force at the time of the reversal of the provisional differences.
Since 2007, the company has been included in the Special Taxation System for Groups of Companies (“RETGS”) led by the shareholder LS – Luís Simões, SGPS, S.A.
6 – DISCLOSURE OF THE MAIN TAx COST (INCOME) COMPONENTSThe company is subject to Corporate Income Tax (“IRC”), at the current rate of 25%, plus a municipal tax (“Derrama”) at a maximum rate of 1.5% on taxable profits, reaching an aggregated income tax of 26.5%.
Under Article 81 of the Corporate Income Tax Code (“CIRC”), the company is subject to autonomous taxation on a host of charges provided for therein.
As was referred in note 3.3, ever since the financial year of 2007 the Group companies have been included in the Special Taxation System for Groups of Companies (“RETGS”) under Article 63 et seq. of the CIRC, led by the shareholder LS – Luís Simões, SGPS, S.A., whereby individually obtained taxes are reflected in the shareholder balance included in the item “Group Companies”.
In accordance with the legislation in force, tax statements are subject to audit and correction by tax authorities for a period of four years (ten years for Social Security up to and including 2000 and five years from 2001 onwards), unless tax losses occurred or inspections, complaints or impugnments are in course; in these cases, and depending on the circumstances, these deadlines are extended or suspended.
ANNEx TO THE BALANCE SHEET AND TO THE INCOME STATEMENTFINANCIAL YEAR 2008 (Information in Euros)
0 - InTRODUCTORy nOTE0.1. Company RETA – Locação e Gestão de Frotas, S.A Head office: Moninhos – Loures, Portugal Set Up Date: 26 August 1991 Activity: Vehicle rentals with and without drivers Tax Payer no.: 502 611 308 The company belongs to Grupo Luís Simões, being LS – Luís Simões SGPS, SA its mother company, as for the other companies in the group.
0.2. The Financial Statements were prepared according to the historical costs convention, as modified to account for the revaluation of tangible fixed assets, and based on the continuity of operations and in accordance with the core accounting principles of consistency, prudence, accruals, substance on form and materiality. Furthermore, they also respect the qualitative characteristics of relevance, reliability and comparability.
0.3. Notes which have not been mentioned either do not apply to the Company, do not apply to materially relevant accounting standards, or did not occur during the financial year to which this annex refers.
3 – ACCOUNTING PRINCIPLES AND VALUATION CRITERIA USED3.1. Fixed Assets 3.1.1. Tangible Fixed AssetsTangible Fixed Assets are stated in the balance sheet according to their cost of acquisition, except for assets revalued in accordance with the legislation published to that end. Depreciation is calculated using the straight line method, in conformity with the legal decrees in force. 3.1.2. Financial investments Financial investments are stated in the balance sheet according to cost of acquisition.
3.2. Adjustments for Doubtful DebtsThe value of adjustments corresponds to the risk inherent to the collection of the relevant debts.
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Changes occurred during the financial year as a result of the adoption of this directive, in terms of their nature and impact, are as follows:
The reconciliation between the accounting income and the taxable income, and between current tax and the income tax for the year, is as follows:
The Company has applied for the financial year the provisions of Accounting Guideline no. 28, which pertains to the accounting for Deferred Taxes.
DescriptionOpening Balance
Effect on the Financial Year
Closing Balance
Deferred Tax Assets:
Tax Losses 23.675,09 316.961,75 340.636,84
Adjustments and Provisions 42.793,14 12.851,09 55.644,23
66.468,23 329.812,84 396.281,07
Deferred Tax Liabilities:
Gains not Taxed due to Reinvestment
481,46 -481,46 0,00
481,46 -481,46 0,00
2008 2007
Current Tax
Income Before Taxes -67.245,51 354.739,93
Provisional Differences 50.311,15 199.989,85
Permanent Differences -1.408.401,51 -1.217.041,42
Taxable Income -1.425.335,87 -662.311,64
Tax Losses (Provisional Difference) 1.267.847,38 662.311,64
Tax Losses (Provisional Difference) – RETGS ( Special Taxation System for Groups of Companies)
157.488,49 662.311,64
0,00 0,00
Tax Rate
Corporate Income Tax 25,00% 25,00%
Municipal Tax (“Derrama”) 1,50% 1,50%
0,00 0,00
Autonomous Taxation 1.941,76 1.815,57
Current Tax (I) 1.941,76 1.815,57
Deferred Tax
Employed in the Financial Year -330.294,30 -218.965,84
Employed in the Financial Year RETGS (Special Taxation System for Groups of Companies)
-41.734,45 -218.965,84
Deferred Tax (II) -372.028,75 -218.965,84
Corporate Income Tax for the Financial Year (I) + (II) -370.086,99 -217.150,27
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7 – AVERAGE NUMBER OF PERSONS AT THE COMPANY’S SERVICEEmployees ................................................................................. 6
10 – CHANGES REGISTERED IN THE FIxED ASSETS ITEMS OF THE BALANCE SHEET AND IN THE RELEVANT DEPRECIATION AND PROVISIONS GROSS ASSETS
DEPRECIATION AND PROVISIONS
14 – OTHER INFORMATION RELATED TO FIxED ASSETSAll Fixed Assets are affected to the company’s activity.
Items Opening Balance Increases Disposals Transfers and Deductions Closing Balance
TANGIBLE FIxED ASSETS
Machinery and Equipment 14.773.263,72 6.009.357,64 4.071.237,46 568.121,39 17.279.505,29
Tools and Dies 1.541,84 1.541,84
Administrative Equipment 9.893,55 3.429,53 -6.750,14 6.572,94
Other Tangible Fixed Assets 1.555,84 -1.555,84 0,00
Fixed Assets in Progress 951.441,39 116.517,00 -951.441,39 116.517,00
15.737.696,34 6.129.304,17 4.071.237,46 -391.625,98 17.404.137,07
FINANCIAL INVESTMENTS
Securities and Other Investments 997,60 997,60
997,60 0,00 0,00 0,00 997,60
Items Opening Balance Increase Settlements Closing Balance
TANGIBLE FIxED ASSETS
Machinery and Equipment 5.088.771,74 3.292.157,14 -2.663.745,07 5.717.183,81
Tools and Dies 1.541,84 1.541,84
Administrative Equipment 7.431,21 1.392,68 -6.750,14 2.073,75
Other Tangible Fixed Assets 1.555,84 -1.555,84 0,00
5.099.300,63 3.293.549,82 -2.672.051,05 5.720.799,40
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15 – INDICATION OF THE GOODS USED UNDER THE FINANCIAL LEASING SYSTEM, WITH MENTION OF THE RELEVANT BOOK VALUES
Debts running for over a year are scaled in time as follows:
16 – TABLE OF GROUP COMPAnIES - ASSOCIATED COMPAnIES AnD SHAREHOLDER COMPANIESThis company’s Financial Statements are included in the Consolidated Financial Statements of the following company:
Firm: LS – Luís Simões, SGPS, S.A.Head office: Moninhos – Loures, PortugalTax Payer no.: 503 717 789
21 - CHAnGES REGISTERED In THE CURREnT ASSETS ITEMS:
23 - GLOBAL AMOUnT OF DOUBTFUL DEBTS InCLUDED In EACH OF THE CURREnT ACCOUNTS RECEIVABLE ITEMS CONTAINED IN THE BALANCE SHEETCustomers, Doubtful Debts...................................................822.136,49
32 - GRAnTED GUARAnTEESThe company issued promissory notes to third parties as a guarantee of payment of debts, amounting to 2,027,552 Euros as at 31 December 2008.
35 – SHARE CAPITALThe subscribed Share Capital is fully paid up.
36 - nUMBER OF SHARES FROM EACH CATEGORy InTO WHICH THE COMPAny SHARE CAPITAL IS DIVIDED AND THEIR NOMINAL VALUEThe Share Capital consists of 150,000 shares, with a nominal value of 5.00 Euros each.
37 - SHAREHOLDInG In THE SUBSCRIBED SHARE CAPITAL OF EACH OF THE CORPORATE BODIES HOLDING AT LEAST 20% OF THE SHARE CAPITAL
40 - DETAILED EXPLAnATIOn AnD JUSTIFICATIOn OF CHAnGES OCCURRED DURInG THE FINANCIAL YEAR IN EACH OF THE EQUITY ITEMS CONTAINED IN THE BALANCE SHEET
Descriptionnet Fixed
AssetsLiability Amount
Short-TermMedium and Long-Term
Machinery and Equipment
5.358.107,05 5.034.705,85 2.307.092,04 2.727.613,81
Years Liability Amount
2010 2.236.167,47
2011 491.446,34
2.727.613,81
ItemsOpening Balance
Increase ReversalClosing Balance
Current Accounts Receivable:
Customers, Doubtful Debts 657.721,09 180.138,22 15.722,82 822.136,49
657.721,09 180.138,22 15.722,82 822.136,49
ShareholderSubscribed Shares Shareholding
%Voting
Rights %Quantity %
LS – Luís Simões, SGPS, S.A. 150.000 100 100 100
AccountsOpening Balance
Increase ReductionsClosing Balance
51 Share Capital 750.000,00 750.000,00
57 Reserves
571 Legal Reserves 119.986,34 28.594,51 148.580,85
574 Free Reserves 1.296.171,99 247.786,59 1.543.958,58
59 Retained Earnings 51.049,15 51.049,15
88 net Profit for the year 571.890,20 302.841,48 571.890,20 302.841,48
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44 - ALLOTMEnT OF THE nET AMOUnT OF SALES AnD PROVISIOn OF SERVICES OBTAINED IN ACCOUNTS 71 AND 72
45 - FInAnCIAL InCOME STATEMEnT
46 - EXTRAORDInARy InCOME STATEMEnT
48 - OTHER InFORMATIOn DEEMED RELEVAnTA) Changes involving group companies and associated companies
(*) Includes 2,452,853.55 Euros acquired through leasing from entities within the group
Description Amount
Internal Market 5.041.963,96
External Market 92.557,10
Total 5.134.521,06
Losses and CostsFinancial Years
2008 2007
681 Interest Paid 458.795,59 329.416,54
688 Other Financial Losses and Costs 3.014,30 3.274,19
Financial Income -459.033,14 -327.593,75
2.776,75 5.096,98
IncomeFinancial Years
2008 2007
781 Interest Received 589,60 1.486,09
786 Cash Payments Discounts Received 0,01
788 Reversals and Other Financial Income 2.187,15 3.610,88
2.776,75 5.096,98
Losses and CostsFinancial Years
2008 2007
692 Bad Debts 5.549,84 52,18
694 Fixed Assets Losses 3.448,42
695 Fines and Penalties 1.150,29 1.734,95
697 Prior Years’ Adjustments 6.809,28
698 Other Extraordinary Losses and Costs 5.373,52 4.862,00
Extraordinary Income 1.758.592,29 1.567.068,27
1.774.114,36 1.580.526,68
IncomeFinancial Years
2008 2007
794 Fixed Assets Gains 1.755.194,67 1.482.291,54
797 Prior Years’ Adjustments 5.200,00 66.254,68
798 Other Extraordinary Income 13.719,69 31.980,46
1.774.114,36 1.580.526,68
Items Amounts
Receivables:
Customers, c/a 134.028,13
Shareholders 39.792,69
Payables:
Suppliers, c/a 103.425,69
Shareholders 3.686.569,52
Acquisitions of Goods from Tangible Fixed Assets (*) 2.699.800,25
Operating Costs 2.288.105,35
Financial Expenditure 133.569,52
Extraordinary Costs 2.820,00
Operating Profits 1.923.704,76
Extraordinary Profits 3.624,72
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsLeonel Fernando Soares Simões - Chairman
José Luís Soares Simões - MemberJorge Manuel Soares Simões - Member
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INCOME STATEMENT BY FUNCTIONS
ItemsFinancial Year
2008 2007
Sales and Provision of Services 5.134.521,06 4.635.447,48
Cost of Sales and Provision of Services -5.580.334,95 -4.726.193,40
Gross Income -445.813,89 -90.745,92
Other Operating Income 1.810.582,80 1.665.079,22
Administrative Costs -749.459,52 -603.496,82
Other Operating Losses and Costs -223.759,31 -286.680,01
Operating Income 391.550,08 684.156,47
Net Financing Cost -458.795,59 -329.416,54
Current Income -67.245,51 354.739,93
Taxes on Current Income 370.086,99 217.150,27
Current Income After Taxes 302.841,48 571.890,20
Net Income 302.841,48 571.890,20
Earnings per Share 2,02 3,81
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsLeonel Fernando Soares Simões - Chairman | José Luís Soares Simões - Member | Jorge Manuel Soares Simões - Member
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CASH FLOW STATEMENTDirect Method
Amounts in Euros
OPERATInG ACTIvITIES 2008 2007
RECEIVED FROM CUSTOMERS
Received from Group Customers 2.367.782,65 2.833.009,26
Received from Other Customers 4.459.077,38 6.826.860,03 2.964.462,64 5.797.471,90
PAID TO SUPPLIERS
Paid to Group Suppliers -2.968.422,86 -2.091.683,67
Paid to Other Suppliers -637.339,84 -3.605.762,70 -600.875,05 -2.692.558,72
PAID TO STAFF
Remunerations -167.388,80 -135.597,61
Advances to Staff -3.647,47 -3.612,72
Paid to Staff, Other -1.206,00 -172.242,27 -895,20 -140.105,53
Flow from Operations 3.048.855,06 2.964.807,65
CORPORATE INCOME TAx PAID/RECEIVED
Corporate Income Tax Paid 171.965,42 -1.802,51
Income Tax Refunding 0,00 171.965,42 0,00 -1.802,51
OTHER RECEIPTS RELATED TO OPERATING ACTIVITIES
Received from Other Debtors 64.760,64 242.334,45
Received from Other Creditors 212,22 4.953,20
Received from Other Taxes 3.580,09 68.552,95 15,25 247.302,90
OTHER PAYMENTS RELATED TO OPERATING ACTIVITIES
Paid to Other Debtors -138.016,62 -124.803,75
Paid to Other Creditors -383.798,24 -323.633,59
VAT Paid -229.256,45 -223.454,65
Withholding Tax Retaining Paid -26.156,53 -20.748,25
TSU (social tax) Paid -46.528,73 -43.999,79
Other Taxes Paid -3.050,31 -826.806,88 -1.263,93 -737.903,96
Flows Before Extraordinary Items 2.462.566,55 2.472.404,08
RECEIPTS RELATED TO ExTRAORDINARY ITEMS
Settlement of Claims 95.173,57 165.136,27
Other Extraordinary Receipts 3,71 95.177,28 15,72 165.151,99
PAYMENTS RELATED TO ExTRAORDINARY ITEMS
Other Extraordinary Payments -1.088,16 -1.088,16 -4.926,29 -4.926,29
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Flow from Extraordinary Activities 94.089,12 160.225,70
(1) FLOW FROm OPERATInG ACTIvITIES 2.556.655,67 2.632.629,78
InvESTInG ACTIvITIES
RECEIVED FROM:
Tangible Fixed Assets 4.128.053,00 3.614.671,22
Interest and Other Similar Income 42,42 4.128.095,42 0,00 3.614.671,22
PAyMEnTS RELATED TO:
Tangible Fixed Assets – Group Companies -360.211,18 -2.074.193,03
Tangible Fixed Assets - Other Companies -4.426.126,54 -1.059.313,72
Total Tangible Fixed Assets -4.786.337,72 -4.786.337,72 -3.133.506,75 -3.133.506,75
(2) FLOW FROm InvESTInG ACTIvITIES -658.242,30 481.164,47
FInAnCInG ACTIvITIES
RECEIVED FROM:
Loans Received from Group Companies 4.024.000,00 1.853.000,00
Total Loans Received 4.024.000,00 4.024.000,00 1.853.000,00 1.853.000,00
PAyMEnTS RELATED TO:
Loans Received from Group Companies -2.439.000,00 -2.035.000,00
Total Loans Received -2.439.000,00 -2.035.000,00
Depreciation of Financial Leasing Contracts -3.813.919,00 -1.994.594,03
Interest and Other Similar Costs -441.029,52 -6.693.948,52 -201.314,65 -4.230.908,68
Interest from Loans Received 0,00 -88.569,87
Dividends -285.945,10 -285.945,10 -453.651,15 -542.221,02
(3) FLOW FROm FInAnCInG ACTIvITIES -2.955.893,62 -2.920.129,70
Change in Cash and Equivalents (1)+(2)+(3) -1.057.480,25 193.664,55
Cash and Equivalents at the Beginning of year -203.277,51 -396.942,06
Cash and Equivalents at the End of year -1.260.757,76 -203.277,51
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsLeonel Fernando Soares Simões - Chairman | José Luís Soares Simões - Member | Jorge Manuel Soares Simões - Member
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ANNEx TO THE CASH FLOW STATEMENT
2- DISCRIMInATIOn OF CASH AnD CASH EQUIVALEnTS COMPOnEnTS, RECOnCILInG THE AMOUNTS EVIDENCED IN THE CASH FLOW STATEMENT AND THE BALANCE SHEET ITEMS
Amounts in Euros
C| REPORT AND OPINION OF THE SINGLE AUDITOR AND REGISTERED AUDITORS’ REPORT
Ernst & youngAudit & Associados - SROC, S.A.
Avenida da República, 90-6°1600-206 Lisboa, Portugal
Telf: +351 217 912 000Fax: +351 217 957 586
www.ey.com
| REPORT AND OPINION OF THE SINGLE AUDITOR
Dear Shareholders,
In compliance with the legal provisions and the Articles of Association of the Company, it is incumbent on us to issue the annual report on the audit of the Company RETA – Locação e Gestão de Frotas, S.A., regarding the financial year ended on 31 December 2008, and issue an Opinion on the report, accounts and the proposal for the allocation of the profits presented by the Board of Directors.
In the course of the financial year and as part of our appointed duties, we carried out, with satisfactory results and with the frequency and extent deemed most adequate, a general audit of all accounting procedures, as well as surveys of their corresponding records and other probative elements.
The Board of Directors’ report explains the orientation of the Company’s policy during the financial year, as well as the policy proposal for 2009 financial year.
The Balance Sheet, Income Statements, Cash Flow Statement and their respective Annexes, respecting all legal requirements, reflect the position of the accounting records at the end of the financial year and attest to the Company’s financial situation.
The valuation criteria used for the preparation of accounts are laid down in the Annex to the Balance Sheet and to the Income Statements, and lead to a suitable assessment of company assets
All regulatory formalities as well as those from the Articles of Association with regards to the accountability and auditing of the Company were complied, whereby we issue the following Opinion, which shall be presented to shareholders and published as required by law:
Description 2008 2007
Overnight Bank Cash Deposits 118,88 0,00
Cash Equivalents
Cash and Equivalents (Bank Overdrafts) -1.260.876,64 -203.277,51
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsLeonel Fernando Soares Simões - Chairman
José Luís Soares Simões - MemberJorge Manuel Soares Simões - Member
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Opinion of the Single Auditor
Dear Shareholders,
We have audited the company RETA – Locação e Gestão de Frotas, S.A., in accordance with article 420 of the Code of Commercial Companies and the company’s Articles of Association, the results of which lead us to opine as follows:
(a) The Management Report and the Accounts for the financial year of 2008 should be approved;
(b) The Board of Directors’ proposal on the allocation of the profits of the financial year should be approved.
Lisbon, 13 March 2009
The Single Auditor
Ernst & young Audit & Associados - Sroc, S.A.Independent Registered Auditor’s Firm (No. 178)Represented by:
João Carlos Miguel Alves (Registered Auditor no. 896)
Public Company – Share Capital 1,105,000 Euros – registered on the Portuguese Board of Registered Auditors under No. 178 – Registered on CMVM (Portuguese Securities Market Commission) under No. 9011 – Tax Payer No. 505 988 283 – Registered on Lisbon Companies Registry under No. 505 988 283 – A member firm of Ernst & young Global Limited
Ernst & youngAudit & Associados - SROC, S.A.
Avenida da República, 90-6°1600-206 Lisboa, Portugal
Telf: +351 217 912 000Fax: +351 217 957 586
www.ey.com
| REGISTERED AUDITORS’S REPORT
IntroductionWe have audited the financial statements of RETA – Locação e Gestão de 1. Frotas, S.A., which comprise the Balance Sheet as at 31 December 2008 (reflecting a total of net assets of 13,443,492 Euros and total equity of 2,796,430 Euros, including a net profit of 302,841 Euros) the Income Statement by Natures and By Functions and the Cash Flow Statement for the year then ended, and the related Annexes.
ResponsibilitiesThe Board of Directors is responsible for preparing the financial statements 2. giving a true and fair view of the Company’s financial position, the profits of its operations and cash flows, as well as for adopting appropriate accounting policies and criteria and keeping an appropriate internal control system.Our responsibility is to express a professional and independent opinion based 3. on our audit to those financial statements.
ScopeWe conducted our audit in accordance with the Technical Standards and 4. Guidelines of Revision/Audit of the Portuguese Board for Registered Auditors, which require the planning and performance of the audit so as to obtain reasonable assurance that the financial statements are free from material misstatements. In order to do so, the audit included:- the examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements and the assessment of the estimates based on judgements and criteria made by the Board of Directors and used in the preparation of the financial statements;- A apreciação sobre se são adequadas as politicas contabilísticas adoptadas e a sua divulgação, tendo em conta as circunstâncias;- the assessment of whether the adopted accounting policies and their disclosure are appropriate to the company’s circumstances;- examination of the applicability of the principle of continuity; and- evaluation of the overall adequacy of the presentation of information in the financial statements.
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The audit also included our opinion on whether the information given in the 5. Management Report is consistent with the financial statements.
We believe that the audit carried out provides an acceptable basis for 6. expressing our opinion.
OpinionIn our opinion, the financial statements give a true and fair view, in all 7. aspects materially relevant, of the state of RETA – Locação e Gestão de Frotas, S.A. affairs as at 31 December 2008, the profits of its operations and cash flows for the financial year then ended, in accordance with the accounting principles generally accepted in Portugal.
Lisbon, 13 March 2009
The Single Auditor
Ernst & young Audit & Associados - SROC, S.A.Independent Registered Auditors Firm (No. 178)Represented by:
João Carlos Miguel Alves (Registered Auditor no. 896)
Public Company – Share Capital 1,105,000 Euros – registered on the Portuguese Board of Registered Auditors under No. 178 – Registered on CMVM (Portuguese Securities Market Commission) under No. 9011 – Tax Payer No. 505 988 283 – Registered on Lisbon Companies Registry under No. 505 988 283 – A member firm of Ernst & young Global Limited
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A| MANAGEMENT REPORT
ACTIVITY DURING THE FINANCIAL YEARSOCAR is a company specializing in semi–trailer transport and transport equipment. It produces and commercializes Integrated Products and Services for the Road Transport of Goods, with a large portfolio of Products and Services concentrated in one place.
In 2008, Socar operated under the following guidelines:▪ A focus on the acquisition of semi-trailers from a smaller range of brands,
favouring companies with greater capacity and dynamism;▪ A strong investment in after-sales service as a way of guaranteeing the
increasing loyalty of clients;▪ The Reta&Socar brand, renowned on the Portuguese national market
and led by a structured and market-savvy Commercial Management;▪ The reinforcement of operational capacity, based on a combination of
specialized partnerships;▪ Implementation of training and qualification plans in order to value
Human Resources, consequently improving productivity and raising the levels of service provided.
ECONOMIC AND FINANCIAL ANALYSISIn 2008, Socar’s turnover amounted to 11,952 mil Euros. The decrease was attributed to a 49% fall in new semi-trailer sales, whereas the Maintenance and Repair segment registered a positive growth, with market invoicing increasing by 8%.
Despite the excellent quality of the Lecibérica product and the great flexibility of the vehicle sales financing process, the economic hardships felt by small and medium-sized transport companies - target clients in this segment - ended up penalizing Socar, due to the reduction in the investments made by these clients.
SOCAR - Equipamento de Transporte e Serviços Técnicos, S.A.
SOCAR – Equipamentos de Transporte e Serviços Técnicos, S.A.Legal Person no. 502 219 556 | Share Capital: 600,000.00 Euros | Registered in Loures Companies’ Registry under no. 7393 | Moninhos 2671-951 Loures, Portugal
Despite the restructuring measures undertaken by the company, such as the extension of Carregado workshop working hours and the adaptation of employee working hours, this sector of activity was not immune to the contraction of the economy. This was reflected not only in a reduction of the company activity but also in the increase in uncollectable client debts, resulting in a negative Net Income of 49 thousand Euros.
Assets totalled 2,880 thousand Euros, a decrease in comparison to 2007, the result of a drop in activity during the year.
Socar ended 2008 in a stable financial situation, with a Financial Autonomy ratio of 29% and Solvency ratio of 40%.
7.744
2005
9.661
2006
16.276
2007
11.952
2008
Sales Development (Thousand Euros)
-71
2005
14
2006
110
2007
-49
2008
Net Income Development (Thousand Euros)
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PERSPECTIVES FOR 2009In 2009, Socar will direct its activities towards two main areas: the level of service to be offered to its clients, and the diversity of available services. These two strong bets will be decisive to Socar’s continued position as a company of reference on the market.
Activities to be developed include:▪ A continued investment in the growth of sales to the market;▪ Development of competences regarding the approach and follow-up of
key Clients, based on negotiation and sales techniques;▪ A greater control of credit risks;▪ The redefinition of internal processes;▪ A continued investment in employee training.
CORPORATE BODIES
ALLOCATION OF THE PROFITSThe company SOCAR – Equipamento de Transporte e Serviços Técnicos, S.A. ended 2008 with negative net Profits to the amount of 49,259.74 Euros.In compliance with applicable legal and statutory provisions, the following application of income is proposed:
Retained Earnings -49.259,74
Moninhos, 10 February 2009
Jorge Manuel Soares SimõesJosé Luís Soares SimõesLeonel Fernando Soares Simões
Chairman/Executive MemberMember
Board of Directors:
Clara Maria Campos Monteiro RibeiroIsabel Maria Blazquez Pereira Silva
ChairmanSecretary
General meeting Committee
Ernst & Young Audit & AssociadosRui Abel Serra Martins
In officeAlternate
Single Auditor
José Luís Soares Simões - Member Leonel Fernando Soares Simões - Member
Jorge Manuel Soares SimõesChairman
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B| FINANCIAL STATEMENTSBALANCE SHEET Amounts in Euros
Accounts Code 2008 2007
EEC Portuguese OAP Gross AssetsDepreciation and
AdjustmentsNet Assets Net Assets
ASSETSC Fixed Assets
I Intangible Fixed Assets
1 431 Installation Expenses 93.490,00 41.069,96 52.420,04 83.577,70
93.490,00 41.069,96 52.420,04 83.577,70
II Tangible Fixed Assets:
1 422 Buildings and Other Constructions 47.817,82 42.335,00 5.482,82 9.869,07
2 423 Machinery and Equipment 267.594,19 227.281,29 40.312,90 26.942,01
2 424 Transport Equipment 3.651,20 3.651,20 0,00 18.685,35
3 426 Administrative Equipment 60.200,02 47.584,21 12.615,81 8.766,20
3 429 Other Tangible Fixed Assets 65.447,26 12.345,66 53.101,60 58.816,69
4 441/6 Fixed Assets in Progress 1.077,50 1.077,50 0,00
445.787,99 333.197,36 112.590,63 123.079,32
D Current Assets
I Inventories:
1 36 Raw Material, Subsidiary Materials and Consumables
416.507,11 416.507,11 265.569,55
2 35 Work in Progress 628.130,43 628.130,43 690.684,30
1.044.637,54 0,00 1.044.637,54 956.253,85
IICurrent Accounts Receivable - Medium and Long-Term:
1 218 Customers, Doubtful Debts 365.510,50 365.510,50 0,00
2 252 Group Companies 3.000.000,00
365.510,50 365.510,50 0,00 3.000.000,00
II Current Accounts Receivable - Short-Term:
1 211 Customers, c/a 1.200.044,46 1.200.044,46 3.116.207,65
2 252 Group Companies 202.872,65 202.872,65 962.318,47
4 24 Public Entities 48.679,13 48.679,13
4 262+266+267+267+221 Other Debtors 22.202,66 22.202,66 22.286,99
1.473.798,90 0,00 1.473.798,90 4.100.813,11
Iv Bank Deposits and Cash:
12+13+14 Bank Deposits 96.444,15 96.444,15 193.889,35
11 Cash 8.048,50 8.048,50 200,00
104.492,65 104.492,65 194.089,35
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Amounts in EurosBALANCE SHEET (Continued)
Accounts Code2008 2007
EEC Portuguese OAPEQuITy AnD LIABILITIES
A Equity
I 51 Share Capital 600.000,00 600.000,00
Iv Reserves:
1 571 Legal Reserves 59.492,68 53.970,25
4 574 a 579 Other Reserves 279.684,87 279.684,87
V 59 Retained Earnings -59.965,58 -59.965,58
Subtotal 879.211,97 873.689,54
vI 88 net Profit for the year -49.259,74 110.448,51
Total Equity 829.952,23 984.138,05
Liabilities
C Short-Term Liabilities
4 221 Suppliers, c/a 1.682.061,46 6.837.473,08
4 228 Suppliers, Pending Invoices 59.376,66 109.542,10
6 252 Group Companies 4.328,56 10.879,72
8 24 Public Entities 115.653,33 325.020,72
8 262+263+264+265 Other Creditors 4.367,51 40.108,82
267+268+211 1.865.787,52 7.323.024,44
D Accruals and Deferrals
273 Accrued Costs 183.810,37 219.258,69
274 Deferred Income 27.550,26
183.810,37 246.808,95
Total Liabilities 2.049.597,89 7.569.833,39
Total Equity and Liabilities 2.879.550,12 8.553.971,44
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsJorge Manuel Soares Simões - Chairman| José Luís Soares Simões - Member | Leonel Fernando Soares Simões - Member
E Accruals and Deferrals
271 Accrued Income 28.919,21 28.919,21 56.878,25
272 Deferred Costs 5.464,93 5.464,93 32.147,84
276 Deferred Tax Assets 57.226,22 57.226,22 7.132,02
91.610,36 91.610,36 96.158,11
Total Depreciation 374.267,32
Total Adjustments 365.510,50
Total Assets 3.619.327,94 739.777,82 2.879.550,12 8.553.971,44
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INCOME STATEMENT BY NATURES Amounts in Euros
Accounts Code2008 2007
EEC Portuguese OAP
A LOSSES AnD COSTS
2.a) 61 Costs of Sold Goods and Consumed Materials:
Materials 8.099.146,68 8.099.146,68 12.424.621,80 12.424.621,80
2.b) 62 Supplies and External Services 2.632.408,35 2.817.338,51
3 Staff Costs
3.a) 641+642 Social Charges: 1.171.479,73 991.742,33
3.b) Encargos Sociais:
645/8 Other 346.870,22 1.518.349,95 285.645,49 1.277.387,82
4.a) 662+663 Tangible and Intangible Fixed Assets Depreciation 67.545,12 34.846,85
4.b) 666+667 Adjustments 139.827,73 207.372,85 73.624,63 108.471,48
5 63 Taxes 2.351,38 2.933,31
5 65 Other Operating Losses and Costs 336.418,78 338.770,16 136.321,84 139.255,15
(A) 12.796.047,99 16.767.074,76
7 681+685+686+ Interest and Other Similar Costs:
687+688 Other 13.814,75 13.814,75 5.617,76 5.617,76
(C) 12.809.862,74 16.772.692,52
10 69 Extraordinary Losses and Costs 38.655,66 4.658,44
(E) 12.848.518,40 16.777.350,96
8+11 86 Corporate Income Tax for the Financial Year -45.612,56 22.776,53
(G) 12.802.905,84 16.800.127,49
13 88 net Profit for the year -49.259,74 110.448,51
12.753.646,10 16.910.576,00
B InCOmE
1 71 Sales:
Goods 246.366,10 179.738,55
Products 5.795.929,07 10.640.463,51
1 72 Provision of Services 5.909.944,09 11.952.239,26 5.455.739,03 16.275.941,09
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2 Change in Production -62.553,87 62.358,13
3 75 Production for Own Company 1.171,93
4 73 Supplementary Income 289.177,89 267.572,27
4 74 Operating Subventions 35.064,47 0,00
4 76 Other Operating Income 334.298,98 137.872,73
4 77 Reversals from Depreciation and Adjustments 33.534,72 692.076,06 3.490,20 408.935,20
(B) 12.581.761,45 16.748.406,35
7 7811+7813+7814+7818+785+786+787+788
Other Interest and Similar Income
Related to Group Companies 83.872,65 126.257,02
Other 6.161,51 90.034,16 3.787,95 130.044,97
(D) 12.671.795,61 16.878.451,32
9 79 Extraordinary Income 81.850,49 32.124,68
(F) 12.753.646,10 16.910.576,00
Summary:
Operating Income: (B)-(A) -214.286,54 -18.668,41
Financial Income: (D-B)-(C-A) 76.219,41 124.427,21
Current Income: (D)-(C) -138.067,13 105.758,80
Income Before Taxes: (F)-(E) -94.872,30 133.225,04
net Profit for the year: (F)-(G) -49.259,74 110.448,51
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsJorge Manuel Soares Simões - Chairman | José Luís Soares Simões - Member | Leonel Fernando Soares Simões - Member
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ANNEx TO THE BALANCE SHEET AND TO THE INCOME STATEMENTFINANCIAL YEAR 2008 (Information in Euros)
0 - InTRODUCTORy nOTE0.1. Company SOCAR – Equipamentos de Transporte e Serviços Técnicos, S.A. Head office: Moninhos – Loures, Portugal Set Up Date: 14 July 1989 Activity: Manufacture, Assembly, Sale, Repair and Service of Motor Vehicles, Trailers and Semi-Trailers. Tax Payer no.: 502 219 556
The company belongs to Grupo Luís Simões, being LS – Luís Simões SGPS, SA its mother company, as for the other companies in the group.
0.2. The Financial Statements were prepared according to the historical costs convention, as modified to account for the revaluation of tangible fixed assets, and based on the continuity of operations and in accordance with the core accounting principles of consistency, prudence, accruals, substance on form and materiality. Furthermore, they also respect the qualitative characteristics of relevance, reliability and comparability.
0.3. Notes which have not been mentioned either do not apply to the Company, do not apply to materially relevant accounting standards, or did not occur during the financial year to which this annex refers.
3 - ACCOUnTInG PRInCIPLES AnD VALUATIOn CRITERIA USED3.1. Inventories 3.1.1. Raw Material, Subsidiary Materials and ConsumablesThese are valued according to their price of acquisition, and the weighted average cost was used as the method for measuring output costs. 3.1.2. Work in ProgressThese are valued at production cost.
3.2. Fixed Assets 3.2.1. Intangible Fixed AssetsIntangible Fixed Assets are stated at the cost of acquisition. Depreciation is calculated using the straight line method, in conformity with the legal decrees in force.
3.2.2. Tangible Fixed AssetsTangible Fixed Assets are stated in the balance sheet according to their cost of acquisition, except for assets revalued in accordance with the legislation published to that end. Depreciation is calculated using the straight line method, in conformity with the legal decrees in force.
3.3. Receivables AdjustmentsThe value of adjustments corresponds to the collection risk of the relevant debts.
3.4. Deferred TaxesDeferred Taxes refer to the provisional differences between the amounts of assets and liabilities for the purposes of accounting reports and their respective amounts for taxation purposes.Deferred Tax Assets and Liabilities are calculated and valued, using taxation rates which are expected to be in force at the time of the reversal of the provisional differences.Since 2007, the company has been included in the Special Taxation System for Groups of Companies (“RETGS”) led by the shareholder LS – Luís Simões, SGPS, S.A.
6 – DISCLOSURE OF THE MAIN TAx COST (INCOME) COMPONENTSThe company is subject to Corporate Income Tax (“IRC”), at the current rate of 25%, plus a municipal tax (“Derrama”) at a maximum rate of 1.5% on taxable profits, reaching an aggregated income tax of 26.5%.Under Article 81 of the Corporate Income Tax Code (“CIRC”), the company is subject to autonomous taxation on a host of charges provided for therein.As was referred in note 3.4, ever since the financial year of 2007 the Group companies have been included in the Special Taxation System for Groups of Companies (“RETGS”) under Article 63 et seq. of the CIRC, led by the shareholder LS – Luís Simões, SGPS, S.A., whereby individually obtained taxes are reflected in the shareholder balance included in the item “Group Companies”.In accordance with the legislation in force, tax statements are subject to audit and correction by tax authorities for a period of four years (ten years for Social Security up to and including 2000 and five years from 2001 onwards), unless tax losses occurred or inspections, complaints or impugnments are in course; in these cases, and depending on the circumstances, these deadlines are extended or suspended.
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The reconciliation between the accounting income and the taxable income, and between current tax and the income tax for the year, is as follows:
The Company has applied the provisions of Accounting Guideline no. 28, which pertains to the accounting for Deferred Taxes.
Changes occurred during the financial year as a result of the adoption of this directive, in terms of their nature and impact, are as follows:
7 -AVERAGE nUMBER OF PERSOnS AT THE COMPAny’S SERVICEEmployees ................................................................................ 65
2008 2007
Current Tax
Income Before Taxes -94.872,30 133.225,04
Provisional Differences 91.994,70 26.913,29
Permanent Differences -27.546,66 -19.106,94
Taxable Income -30.424,26 141.031,39
Tax Losses (Provisional Difference) 27.062,62 -49.918,18
Tax Losses (Provisional Difference) – RETGS (Special Taxation System for Groups of Companies)
3.361,64
0,00 91.113,21
Tax Rate
Corporate Income Tax 25,00% 25,00%
Municipal Tax (“Derrama”) 1,50% 1,50%
0,00 24.893,77
Autonomous Taxation 5.372,47 5.014,78
Current Tax (I) 5.372,47 29.908,55
Deferred Tax
Effect on the Financial Year -31.144,25 -7.132,02
Effect on the Financial Year – RETGS (Special Taxation System for Groups of Companies)
-890,83
Tax Benefit SIFIDE (system of tax benefit to business-related R&D)
-18.949,95
Deferred Tax (II) -50.985,03 -7.132,02
Imposto Sobre o Rendimento do Exercício (I) + (II) -45.612,56 22.776,53
Opening Balance
Effect on the Financial Year
Closing Balance
Deferred Tax Assets:
Tax Losses 6.765,65 6.765,65
Tax Benefit SIFIDE (system of tax benefit to business-related R&D)
18.949,95 18.949,95
Current Accounts Receivable Adjustments
7.132,02 24.378,60 31.510,62
7.132,02 50.094,20 57.226,22
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10 - CHAnGES REGISTERED In THE FIXED ASSETS ITEMS OF THE BALAnCE SHEET AND IN THE RELEVANT DEPRECIATION AND PROVISIONS GROSS ASSETS
DEPRECIATION AND PROVISIONS
Items Opening Balance Increases Disposals Transfers and Deductions Closing Balance
INTANGIBLE FIxED ASSETS
Installation Expenses 93.490,00 93.490,00
93.490,00 93.490,00
TANGIBLE FIxED ASSETS
Buildings and Other Constructions 47.817,82 47.817,82
Machinery and Equipment 249.494,49 35.090,08 16.990,38 267.594,19
Transport Equipment 24.093,68 20.442,48 3.651,20
Administrative Equipment 49.764,62 10.435,40 60.200,02
Other Tangible Fixed Assets 63.098,54 2.348,72 65.447,26
Fixed Assets in Progress 0,00 1.077,50 1.077,50
434.269,15 48.951,70 37.432,86 0,00 445.787,99
Items Opening Balance Increase Cancellation/Reversal Closing Balance
INTANGIBLE FIxED ASSETS Closing Balance
Installation Expenses 9.912,30 31.157,66 41.069,96
9.912,30 31.157,66 41.069,96
TANGIBLE FIxED ASSETS
Buildings and Other Constructions 37.948,75 4.386,25 42.335,00
Machinery and Equipment 222.552,48 14.219,16 -9.490,35 227.281,29
Transport Equipment 5.408,33 3.132,43 -4.889,56 3.651,20
Administrative Equipment 40.998,42 6.585,79 47.584,21
Other Tangible Fixed Assets 4.281,86 8.063,80 12.345,66
311.189,84 36.387,43 -14.379,91 333.197,36
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14 - OTHER InFORMATIOn RELATED TO FIXED ASSETSAll Fixed Assets are affected to the company’s activity.
16 - TABLE OF GROUP COMPAnIES - ASSOCIATED COMPAnIES AnD SHAREHOLDER COMPANIESThis company’s Financial Statements are included in the Consolidated Financial Statements of the following company: Firm: LS – Luís Simões, SGPS, S.A. Head office: Moninhos – Loures, Portugal Tax Payer no.: 503 717 789
21 - CHAnGES REGISTERED In THE CURREnT ASSETS ITEMS:ADJUSTMEnTS
23 - GLOBAL AMOUnT OF DOUBTFUL DEBTS InCLUDED In EACH OF THE CURREnT ACCOUNTS RECEIVABLE ITEMS CONTAINED IN THE BALANCE SHEETCustomers, Doubtful Debts...................................................365.510,50
25 - GLOBAL AMOUnT OF RECEIVABLES AnD PAyABLES RELATED TO COMPAny STAFFReceivables (Accounts 2624)....................................................1.215,60Payables (Accounts 2629)..........................................................192,00
32 - GRAnTED GUARAnTEES
35 – SHARE CAPITALThe subscribed Share Capital is fully paid up.
36 - nUMBER OF SHARES FROM EACH CATEGORy InTO WHICH THE COMPAny SHARE CAPITAL IS DIVIDED AND THEIR NOMINAL VALUEThe Share Capital consists of 120,000 shares, with a nominal value of 5.00 Euros each.
37 - SHAREHOLDInG In THE SUBSCRIBED SHARE CAPITAL OF EACH OF THE CORPORATE BODIES HOLDING AT LEAST 20% OF THE SHARE CAPITAL
40 - DETAILED EXPLAnATIOn AnD JUSTIFICATIOn OF CHAnGES OCCURRED DURInG THE FINANCIAL YEAR IN EACH OF THE EQUITY ITEMS CONTAINED IN THE BALANCE SHEET
41 - STATEMEnT OF THE COST OF GOODS SOLD AnD MATERIAL COnSUMED
ItemsOpening Balance
Increase ReversalClosing Balance
Current Accounts Receivable:
Customers, Doubtful Debts 259.217,49 139.827,73 33.534,72 365.510,50
259.217,49 139.827,73 33.534,72 365.510,50
Guarantor Amount BeneficiaryType of
Guarantee
Banco Espírito Santo 32.021,40 ADI Bank
Banco Espírito Santo 5.298,00 EDP – Distribuição Energia Bank
ShareholderSubscribed Shares Shareholding
%Voting
Rights %Quantity %
LS – Luís Simões, SGPS, S.A. 120.000 100 100 100
AccountsOpening Balance
Increase ReductionsClosing Balance
51 Capital 600.000,00 600.000,00
57 Reservas
571 Reservas Legais 53.970,25 5.522,43 59.492,68
574 Reservas Livres 279.684,87 279.684,87
59Resultados Transitados
-59.965,58 -59.965,58
88Resultado Líquido do Exercício
110.448,51 -49.259,74 110.448,51 -49.259,74
Changes GoodsRaw material, Subsidiary
materials and Consumables
Opening Inventories 265.569,55
Purchases 8.247.936,73
Inventory Clearing 2.147,51
Closing Inventories 416.507,11
Cost for the Year 0.00 8.099.146,68
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42 - STATEMEnT OF CHAnGES In PRODUCTIOn
44 - ALLOTMEnT OF THE nET AMOUnT OF SALES AnD PROVISIOn OF SERVICES OBTAINED IN ACCOUNTS 71 AND 72
45 - FInAnCIAL InCOME STATEMEnT
46 - EXTRAORDInARy InCOME STATEMEnT
48 - OTHER InFORMATIOn DEEMED RELEVAnTA) Changes involving group companies and associated companies
ChangesFinished and Intermediate
Goods
By-products, Waste, Residues
and Scrap
Work in Progress
Closing Inventories 628.130,53
Opening Inventories 690.684,30
Increase/Reduction for the Year 0,00 0,00 -62.553,77
Description Amount
Internal Market 11.766.612,75
External Market 185.626,51
Total 11.952.239,26
Losses and CostsFinancial Years
2008 2007
681 Interest Paid 10.907,36 2.628,13
688 Other Financial Losses and Costs 2.907,39 2.989,63
Financial Income 76.219,41 124.427,21
90.034,16 130.044,97
IncomeFinancial Years
2008 2007
781 Interest Received 84.656,97 126.708,40
788 Reversals and Other Financial Income 5.377,19 3.336,57
90.034,16 130.044,97
Losses and CostsFinancial Years
2008 2007
691 Donations 150,00
692 Bad Debts 26.969,70 253,63
695 Fines and Penalties 10.778,64 334,52
697 Prior Years’ Adjustments 869,77 2.805,96
698 Other Extraordinary Losses and Costs 37,55 1.114,33
Extraordinary Income 43.194,83 27.466,24
81.850,49 32.124,68
IncomeFinancial Years
2008 2007
792 Debt Collection 57,50
793 Inventory Gains 2.147,51 1.429,27
794 Fixed Assets Gains 6.351,53 10.000,00
795 Benefits from Contractual Penalties 1.386,04 3.309,38
797 Prior Years’ Adjustments 9.000,00 38,59
798 Other Extraordinary Income 62.907,91 17.347,44
81.850,49 32.124,68
Items Amounts
Receivables:
Customers, c/a 299.892,53
Shareholders 202.872,65
Payables:
Suppliers, c/a 247.084,22
Shareholders 4.328,56
Operating Costs 1.341.047,52
Extraordinary Costs 9.000,00
Operating Profits 7.172.845,93
Financial Gains 83.872,65
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B) Global amounts of R&D effort:
The amounts shown refer to expenses with Research and Development related to the following projects:
- IS Suppliers: Integrated information system including an extensive database of parts, suppliers and semi-trailers;
- Info Truck: System for the acquisition of semi-trailer data- Wireless Workshop: Creation of a wireless network in the workshops
C) SIFIDEWithin the scope of its application for benefits from the System of Tax Benefits to Research and Development (“SIFIDE”) – Decree-Law no. 40/2005 of 3 August, Socar would have obtained tax savings of 22,778.30 Euros during 2007 financial year. However, as the company falls under the Special Taxation System for Groups of Companies (“RETGS”) referred to in Note 3, the aforementioned savings could not be applied.
INCOME STATEMENT BY FUNCTIONS
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsJorge Manuel Soares Simões - Chairman
José Luís Soares Simões - MemberLeonel Fernando Soares Simões - Member
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsJorge Manuel Soares Simões - Chairman
José Luís Soares Simões - MemberLeonel Fernando Soares Simões - Member
Items 2006 2007 2008
Staff Costs 45.219,64 123.451,50 129.624,08
General Costs 13.342,14 22.678,59 23.812,52
Fixed Assets 1.050,00
Total R&D Investment 59.611,78 146.130,09 153.436,59
Turnover 9.661.403,34 16.275.941,09 11.952.239,26
Staff Costs 1.038.703,25 1.277.387,82 1.518.349,95
ItemsFinancial Year
2008 2007
Sales and Provision of Services 11.952.239,26 16.275.941,09
Cost of Sales and Provision of Services -10.420.118,10 -14.737.298,07
Gross Income 1.532.121,16 1.538.643,02
Other Operating Income 863.960,71 572.276,78
Administrative Costs -1.812.068,57 -1.650.317,47
Other Operating Losses and Costs -667.978,24 -324.749,16
Operating Income -83.964,94 135.853,17
Net Financing Cost -10.907,36 -2.628,13
Current Income -94.872,30 133.225,04
Taxes on Current Income 45.612,56 -22.776,53
Current Income After Taxes -49.259,74 110.448,51
Net Income -49.259,74 110.448,51
Earnings per Share -0,41 0,92
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CASH FLOW STATEMENTDirect Method Amounts in Euros
OPERATInG ACTIvITIES 2008 2007
RECEIVED FROM CUSTOMERS
Received from Group Customers 6.902.126,58 7.539.040,18
Received from Other Customers 10.926.624,93 17.828.751,51 12.851.819,72 20.390.859,90
PAID TO SUPPLIERS
Paid to Group Suppliers -1.869.017,45 -1.559.134,24
Paid to Other Suppliers -15.868.413,39 -17.737.430,84 -13.381.467,48 -14.940.601,72
PAID TO STAFF
Remunerations -1.064.667,27 -887.582,10
Advances to Staff -4.649,09 -5.272,11
Paid to Staff, Other -10.833,24 -1.080.149,60 -9.874,55 -902.728,76
Flow from Operations -988.828,93 4.547.529,42
CORPORATE INCOME TAx PAID/RECEIVED
Corporate Income Tax Paid -1.145,15
Corporate Income Tax Refunding 16.898,45 16.898,45 -1.145,15
OTHER RECEIPTS RELATED TO OPERATING ACTIVITIES
Received from Other Debtors 9.470,67 79.435,82
Received from Other Creditors 8.361,51 8.978,48
Received from Other Taxes 6,36 17.838,54 24,33 88.438,63
OTHER PAYMENTS RELATED TO OPERATING ACTIVITIES
Paid to Other Debtors -91.222,13 -53.644,39
Paid to Other Creditors -901.952,84 -856.429,47
VAT Paid -1.489.583,76 -1.957.733,28
Withholding Tax Retaining Paid -153.761,99 -119.026,28
TSU (social tax) Paid -292.358,87 -264.235,51
Other Taxes Paid -1.580,61 -2.930.460,20 -1.620,62 -3.252.689,55
Flows Before Extraordinary Itemss -3.884.552,14 1.382.133,35
RECEIPTS RELATED TO ExTRAORDINARY ITEMS
Bad Debts Received 57,50
Settlement of Claims 977,81 2.848,22
Other Extraordinary Receipts 1.060,42 2.095,73 6,04 2.854,26
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PAYMENTS RELATED TO ExTRAORDINARY ITEMS
Donations -150,00
Fines and Penalties Paid -1.348,14
Other Extraordinary Payments -17,53 -1.365,67 -10,40 -160,40
Flow from Extraordinary Activities 730,06 2.693,86
(1) FLOW FROm OPERATInG ACTIvITIES -3.883.822,08 1.384.827,21
InvESTInG ACTIvITIES
RECEIVED FROM:
Tangible Fixed Assets – Group Companies 34.555,74
Tangible Fixed Assets – Other Companies 12.100,00
Investment Subventions 38.826,41
Interest and Other Similar Income 526,14 73.908,29 0,00 0,00
PAyMEnTS RELATED TO:
Tangible Fixed Assets – Group Companies -206,91
Tangible Fixed Assets – Other Companies -25.059,05 -92.501,73
Total Tangible Fixed Assets -25.265,96 -92.501,73
Intangible Fixed Assets 0,00 -25.265,96 -102.837,90 -195.339,63
(2) FLOW FROm InvESTInG ACTIvITIES 48.642,33 -183.239,63
FInAnCInG ACTIvITIES
RECEIVED FROM:
Loans Received from Group Companies 8.353.000,00 6.100.000,00
Total Loans Received 8.353.000,00 6.100.000,00
Interest from Loans Granted 107.318,47 8.460.318,47 54.625,42 6.154.625,42
PAyMEnTS RELATED TO:
Loans Received from Group Companies -4.617.000,00 -7.950.000,00
Total Loans Received -4.617.000,00 -7.950.000,00
Interest and Other Similar Costs -9.717,34 -12.342,55
Dividends -88.018,08 -4.714.735,42 -7.962.342,55
(3) FLOW FROm FInAnCInG ACTIvITIES 3.745.583,05 -1.807.717,13
Change in Cash and Equivalents (1)+(2)+(3) -89.596,70 -606.129,55
Cash and Equivalents at the Beginning of year 194.089,35 800.218,90
Cash and Equivalents at the End of year 104.492,65 194.089,35
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsJorge Manuel Soares Simões - Chairman | José Luís Soares Simões - Member | Leonel Fernando Soares Simões - Member
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ANNEx TO THE CASH FLOW STATEMENT
2- DISCRIMInATIOn OF CASH AnD CASH EQUIVALEnTS COMPOnEnTS, RECOnCILInG THE AMOUNTS EVIDENCED IN THE CASH FLOW STATEMENT AND THE BALANCE SHEET ITEMS
Amounts in Euros
C| REPORT AND OPINION OF THE SINGLE AUDITOR AND REGISTERED AUDITORS’ REPORT
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsJorge Manuel Soares Simões - Chairman
José Luís Soares Simões - MemberLeonel Fernando Soares Simões - Member
Ernst & youngAudit & Associados - SROC, S.A.
Avenida da República, 90-6°1600-206 Lisboa, Portugal
Telf: +351 217 912 000Fax: +351 217 957 586
www.ey.com
| REPORT AND OPINION OF THE SINGLE AUDITOR
Dear Shareholders,
In compliance with the legal provisions and the Company’s Articles of Association, it is incumbent on us to issue the annual report on the audit of Company SOCAR – Equipamentos de Transporte e Serviços Técnicos, S.A., regarding the financial year ended on 31 December 2008, and issue an opinion on the report, accounts and the proposal for the allocation of the profits presented by the Board of Directors.
In the course of the financial year and as part of our appointed duties, we carried out, with satisfactory results and with the frequency and extent deemed most adequate, a general audit of all accounting procedures, as well as surveys of their corresponding records and other probative elements.
The Board of Directors’ report explains the orientation of the Company’s policy during the financial year, as well as the policy proposal for 2009 financial year.
The Balance Sheet, Income Statements, Cash Flow Statement and their respective Annexes, respecting all legal requirements, reflect the position of the accounting records at the end of the financial year and attest to the Company’s financial situation.
The valuation criteria used for the preparation of accounts are those laid down in the Annex to the Balance Sheet and to the Income Statements, and enable a suitable assessment of company assets.
All regulatory formalities as well as those from the Articles of Association with regards to the accountability and auditing of the Company were complied, whereby we issue the following Opinion, which shall be presented to shareholders and published as required by law:
Description 2008 2007
Cash in Hand (Cash Fixed Funds) 8.048,50 200,00
Overnight Bank Cash Deposits 96.444,15 193.889,35
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Opinion of the Single Auditor
Dear Shareholders,
We have audited the company SOCAR – Equipamentos de Transporte e Serviços Técnicos, S.A., in accordance with article 420 of the Code of Commercial Companies and the company’s Articles of Association, the results of which lead us to opine as follows:
(a) The Management Report and the Accounts for the financial year of 2008 should be approved;
(b) The Board of Directors’ proposal on the allocation of the profits of the financial year should be approved.
Lisbon, 13 March 2009
The Single Auditor
Ernst & young Audit & Associados - Sroc, S.A.Independent Registered Auditors Firm (No. 178)Represented by:
João Carlos Miguel Alves (Registered Auditor no. 896)
Public Company – Share Capital 1,105,000 Euros – registered on the Portuguese Board of Registered Auditors under No. 178 – Registered on CMVM (Portuguese Securities Market Commission) under No. 9011 – Tax Payer No. 505 988 283 – Registered on Lisbon Companies Registry under No. 505 988 283 – A member firm of Ernst & young Global Limited
Ernst & youngAudit & Associados - SROC, S.A.
Avenida da República, 90-6°1600-206 Lisboa, Portugal
Telf: +351 217 912 000Fax: +351 217 957 586
www.ey.com
| REGISTERED AUDITORS’ REPORT
IntroductionWe have audited the financial statements of SOCAR – Equipamentos de 1. Transporte e Serviços Técnicos, S.A., which comprise the Balance Sheet as at 31 December 2008 (reflecting a total of 2,879,550 Euros and total equity of 829,952 Euros, including a net negative income of 49,260 Euros) the Income Statement by Natures and By Functions and the Cash Flow Statement, for the year then ended, and the related Annexes.
ResponsibilitiesThe Board of Directors is responsible for preparing the financial statements 2. giving a true and fair view of the Company’s financial position, the profits of its operations and cash flows, as well as for adopting appropriate accounting policies and criteria and keeping an appropriate internal control system.
Our responsibility is to express a professional and independent opinion based 3. on our audit to those financial statements.
ScopeWe conducted our audit in accordance with the Technical Standards and 4. Guidelines of Revision/Audit of the Portuguese Board for Registered Auditors, which require the planning and performance of the audit so as to obtain reasonable assurance that the financial statements are free from material misstatements. In order to do so, the audit included:- the examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements and the assessment of the estimates based on judgements and criteria made by the Board of Directors and used in the preparation of the financial statements;- the assessment of whether the adopted accounting policies and their disclosure are appropriate to the company’s circumstances;- examination of the applicability of the principle of continuity; and- evaluation of the overall adequacy of the presentation of information in the financial statements.
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The audit also included our opinion on whether the information given in the 5. Management Report is consistent with the financial statements.
We believe that the audit carried out provides an acceptable basis for 6. expressing our opinion.
OpinionIn our opinion, the financial statements give a true and fair view, in all aspects 7. materially relevant, of the state of SOCAR – Equipamentos de Transporte e Serviços Técnicos, S.A. affairs as at 31 December 2008, the profits of its operations and cash flows for the financial year then ended, in accordance with the accounting principles generally accepted in Portugal.
Lisbon, 13 March 2009
Ernst & young Audit & Associados - SROC, S.A.Independent Registered Auditors Firm (No. 178)Represented by:
João Carlos Miguel Alves (Registered Auditor no. 896)
Public Company – Share Capital 1,105,000 Euros – registered on the Portuguese Board of Registered Auditors under No. 178 – Registered on CMVM (Portuguese Securities Market Commission) under No. 9011 – Tax Payer No. 505 988 283 – Registered on Lisbon Companies Registry under No. 505 988 283 – A member firm of Ernst & young Global Limited
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A| MANAGEMENT REPORT
ACTIVITY DURING THE FINANCIAL YEAR LUSISEG’s activities are related to Insurance Mediation specifically for the transport companies market.
In 2006, it was in 10th place in the ranking of insurance mediation companies in Portugal, by volume of commissions.
2008 was a turbulent year and one involving profound changes, in which the main objectives of Insurance Companies were the recovery of stability regarding Technical Activities, as well as the containment of Administrative and Distribution Costs.
It was a year of stringent conditions of acceptance and subscription rules, tariff increases, client portfolio purging policies – in short, a particularly volatile year full of profound transformations.
Currently, all players involved in mediation and all insurance companies are competing in the transport market segment, in a frenzied search for market shares. Mergers and acquisitions are taking place not only among insurance companies but also among the major insurance brokers.
The market has followed a policy of reduction in prices and tariffs, motivated by the need for market volume in order to generate critical mass.
With the accumulation of the financial problems experienced by transporters, the difficulties that this segment encounters regarding collection have become evident, and as a result the amount of premium invoice returns due to lack of payment has increased steadily.
In 2008, as was the case in the preceding years, Lusiseg has consolidated the importance of its Market Portfolio, which represents 55% of the totality of the company portfolio.
Lusiseg - Mediadores de Seguros, Lda
Lusiseg - Mediadores de Seguros, LdaLegal Person no. 502 274 085 | Share Capital: 49,880.00 Euros | Registered in Loures Companies’ Registry under no. 7550 | Moninhos 2671-951 Loures, Portugal
ECONOMIC AND FINANCIAL ANALYSIS In 2008, Lusiseg had a turnover of 643 thousand Euros, equivalent to a growth of 3%. Although seemingly of little significance, this percentage becomes relevant when one considers the adversity felt by Lusiseg’s main clients – small-scale transport agencies who had to contend with skyrocketing fuel prices during the first semester of the year.
Client portfolio reviews have also penalized this activity, by implying a reduction in insurance premiums and consequently in commissions; however, this is one of the ways in which to increase client loyalty.
In 2008, Lusiseg’s Net Income was negative at One thousand Euros, which represents a positive variation of this index. This evolution was the result of a rigorous control of the “Supplies and External Services” item, with a 3% reduction, as well as a reduction in “Staff Costs”.
The Assets structure showed an increase of 13% compared to 2007, the result of an increase in activity. Lusiseg ended 2008 with a Financial Autonomy Ratio of 15% and a Solvency Ratio of 17%.
684
2005
671
2006
621
2007
643
2008
Sales Development (Thousand Euros)
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PERSPECTIVES FOR 2009 Despite the constraints to the insurance and reinsurance activities, Lusiseg will be maintaining the Sustained Development Strategy which has become a characteristic of the company, based on the following activity guidelines:
▪ Consolidation of the Business Operational Management Program, which main structural points are:
▪ Customer Relationship Management (CRM) – positioning the client at the centre of all business;▪ Definition of a sales plan, based on standardised criteria and on a common policy, in order to make the most of the company’s sales capacity;▪ Creation of new production and collection processes.
▪ Continuing GLS insurance negotiation activities, finding the best market solution regarding cost reduction versus increase of coverage;
▪ Enhancement of the assessment of business and quality indicators, taken from the Visual Seg computer tool, thereby increasing business management capacity.
CORPORATE BODIES
ALLOCATION OF THE PROFITSThe company LUSISEG – Mediadores de Seguros, Lda. ended 2008 with negative net Profits to the amount of 1,062.71 Euros.In compliance with applicable legal and statutory provisions, the following application of income is proposed:
Retained Earnings -1.062,71
Moninhos, 10 February 2009
Jorge Manuel Soares SimõesRogério Paulo Farinha Henriques Morato
ManagerManager
Management
Clara Maria Campos Monteiro RibeiroIsabel Maria Blazquez Pereira Silva
ChairmanSecretary
General meeting Committee
Jorge Manuel Soares SimõesManager
Rogério Paulo Farinha Henriques MoratoManager
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B| FINANCIAL STATEMENTS BALANCE SHEET Amounts in Euros
Accounts Code 2008 2007
EEC Portuguese OAP Gross AssetsDepreciation and
AdjustmentsNet Assets Net Assets
ASSETS
C Fixed Assets
I Intangible Fixed Assets:
2 433 Industrial Property and Other Rights 38.000,00 9.499,95 28.500,05 36.100,01
38.000,00 9.499,95 28.500,05 36.100,01
II Tangible Fixed Assets:
3 426 Administrative Equipment 60.344,46 36.676,52 23.667,94 40.285,77
3 429 Other Tangible Fixed Assets 359,08 359,08
60.703,54 37.035,60 23.667,94 40.285,77
III Financial Investments:
5 4113+414+415 Securities and Other Investments 18.952,60 18.952,60 19.929,52
18.952,60 18.952,60 19.929,52
II Current Accounts Receivable - Short-Term:
1 211 Customers, c/a 872,74 872,74
2 252 Group Companies 11.817,36 11.817,36 75.441,23
4 262+266+267+ 267+221 Other Debtors 155.751,44 155.751,44 28.833,19
168.441,54 168.441,54 104.274,42
Bank Deposits and Cash:
Iv 11 Cash 303,94 303,94 667,14
303,94 303,94 667,14
E Accruals and Deferrals
271 Accrued Income 49.327,80 49.327,80 59.815,08
272 Deferred Costs 6.705,72 6.705,72 1.859,30
56.033,52 56.033,52 61.674,38
Total Depreciation 46.535,55
Total Adjustments
Total Assets 342.435,14 46.535,55 295.899,59 262.931,24
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BALANCE SHEET (Continued) Amounts in Euros
Accounts Code2008 2007
EEC Portuguese OAP
EQuITy AnD LIABILITIES
A Equity
I 51 Share Capital 49.880,00 49.880,00
Iv Reserves:
1 571 Legal Reserves 19.009,76 19.009,76
4 574 a 579 Other Reserves 174,69 174,69
V 59 Retained Earnings -24.575,68 348,78
Subtotal 44.488,77 69.413,23
vI 88 net Profit for the year -1.062,71 -24.924,46
Total Equity 43.426,06 44.488,77
Liabilities
C Short-Term Liabilities
2 231+12 Bank Loans 130.584,72 100.861,02
4 221 Suppliers, c/a 16.500,13 29.584,82
4 228 Suppliers, Pending Invoices 114,20
6 252 Group Companies 42.173,13
8 2611 Suppliers of Fixed Assets, c/a 15.200,00
8 24 Public Entities 16.626,42 22.390,46
8 262+263+264+265 Other Creditors 87,22 828,14
267+268+211 206,085.82 168.864,44
D273
Accruals and Deferrals
Accrued Costs 46.387,71 49.578,03
46.387,71 49.578,03
Total do Passivo 252.473,53 218.442,47
Total do Capital Próprio e do Passivo 295.899,59 262.931,24
The Certified AccountantVítor José Caetano de Sousa
The ManagementJorge Manuel Soares Simões - Manager | Rogério Paulo Farinha Henriques Morato - Manager
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Valores em EurosINCOME STATEMENT BY NATURES
Accounts Code2008 2007
EEC Portuguese OAP
A LOSSES AnD COSTS2.b) 62 Supplies and External Services 250.396,75 256.881,80
3 Staff Costs3.a) 641+642 Remunerations 280.099,39 300.096,883.b) Social Charges:
645/8 Other 88.870,21 368.969,60 84.095,79 384.192,674.a) 662+663 Tangible and Intangible Fixed Assets Depreciation 24.114,19 24.114,19 13.392,14 13.392,14
5 63 Taxes 12.535,28 11.234,265 65 Other Operating Losses and Costs 400,00 12.935,28 400,24 11.634,50
(A) 656.415,82 666.101,117 681+685+686+687+688 Interest and Other Similar Costs:
Related to Group Companies 1.230,66 4.086,90 Other 12.447,46 13.678,12 7.195,50 11.282,40
(C) 670.093,94 677.383,5110 69 Extraordinary Losses and Costs 39,56 1.789,33
(E) 670.133,50 679.172,848+11 86 Corporate Income Tax for the Financial Year 7.173,13 -3.899,66
(G) 677.306,63 675.273,1813 88 net Profit for the year -1.062,71 24.924,46
676.243,92 650.348,72B InCOmE
1 72 Provision of Services 642.792,08 642.792,08 620.782,16 620.782,164 74 Operating Subventions 0,00 2.099,604 76 Other Operating Income 19.371,09 19.371,09 19.735,32 21.834,92
(B) 662.163,17 642.617,087 7811+7813+
7818+785+786+787+788
Other Interest and Similar Income Related to Group Companies 13.048,02 7.053,30 Other 421,75 13.469,77 6,03 7.059,33
(D) 675.632,94 649.676,419 79 Extraordinary Income 610,98 672,31
(F) 676.243,92 650.348,72Summary:Operating Income: (B)-(A) 5.747,35 -23.484,03Financial Income: (D-B)-(C-A) -208,35 -4.223,07Current Income: (D)-(C) 5.539,00 -27.707,10Income Before Taxes: (F)-(E) 6.110,42 -28.824,12net Profit for the year: (F)-(G) -1.062,71 -24.924,46
The Certified AccountantVítor José Caetano de Sousa
The ManagementJorge Manuel Soares Simões - Manager | Rogério Paulo Farinha Henriques Morato - Manager
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ANNEx TO THE BALANCE SHEET AND TO THE INCOME STATEMENTFINANCIAL YEAR 2008 (Information in Euros)
0 - InTRODUCTORy nOTE0.1. Company LUSISEG – Mediadores de Seguros, Lda. Head office: Moninhos – Loures, Portugal Set Up Date: 23 november 1989 Activity: Insurance Mediators Tax Payer no.: 502 274 085 The company belongs to Grupo Luís Simões, being LS – Luís Simões SGPS, SA its mother company, as for the other companies in the group.
0.2. The Financial Statements were prepared according to the historical costs convention, as modified to account for the revaluation of tangible fixed assets, and based on the continuity of operations and in accordance with the core accounting principles of consistency, prudence, accruals, substance on form and materiality. Furthermore, they also respect the qualitative characteristics of relevance, reliability and comparability.
0.3. Notes which have not been mentioned either do not apply to the Company, do not apply to materially relevant accounting standards, or did not occur during the financial year to which this annex refers.
3 - ACCOUnTInG PRInCIPLES AnD VALUATIOn CRITERIA USED3.1. Fixed Assets 3.1.1. Intangible Fixed AssetsIntangible Fixed Assets refer to the acquisition of a portfolio of insurances, and they are stated at the cost of acquisition. Depreciation is calculated using the straight line method, in conformity with the legal decrees in force.
3.1.2. Tangible Fixed AssetssAs in previous years, Intangible Fixed Assets are registered in the balance sheet according to cost of acquisition, with the exception of goods that have been revalued in accordance with the relevant legislation. Depreciation is calculated according to the straight-line and degressive depreciation method in conformity with legal decrees in force.
3.2. Deferred TaxesDeferred Taxes refer to the provisional differences between the amounts of assets and liabilities for the purposes of accounting reports and their respective amounts for taxation purposes.
Deferred Tax Assets and Liabilities are calculated and valued, using taxation rates which are expected to be in force at the time of the reversal of the provisional differences.
Since 2007, the company has been included in the Special Taxation System for Groups of Companies (“RETGS”) led by the shareholder LS – Luís Simões, SGPS, S.A.
6 – DISCLOSURE OF THE MAIN TAx COST (INCOME) COMPONENTSThe company is subject to Corporate Income Tax (“IRC”), at the current rate of 25%, plus a municipal tax (“Derrama”) at a maximum rate of 1.5% on taxable profits, reaching an aggregated income tax of 26.5%.
Under Article 81 of the Corporate Income Tax Code (“CIRC”), the company is subject to autonomous taxation on a host of charges provided for therein.
As was referred in note 3.2, ever since the financial year of 2007 the Group companies have been included in the Special Taxation System for Groups of Companies (“RETGS”) under Article 63 et seq. of the CIRC, led by the shareholder LS – Luís Simões, SGPS, S.A., whereby individually obtained taxes are reflected in the shareholder balance included in the item “Group Companies”.
In accordance with the legislation in force, tax statements are subject to audit and correction by tax authorities for a period of four years (ten years for Social Security up to and including 2000 and five years from 2001 onwards), unless tax losses occurred or inspections, complaints or impugnments are in course; in these cases, and depending on the circumstances, these deadlines are extended or suspended.
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The reconciliation between the accounting income and the taxable income, and between current tax and the income tax for the year, is as follows:
The Company has applied the provisions of Accounting Guideline no. 28, which pertains to the accounting for Deferred Taxes.
Changes occurred during the financial year as a result of the adoption of this directive, in terms of their nature and impact, are as follows:
7 - AVERAGE nUMBER OF PERSOnS AT THE COMPAny’S SERVICEEmployees ................................................................................ 14
10 - CHAnGES REGISTERED In THE FIXED ASSETS ITEMS OF THE BALAnCE SHEET AND IN THE RELEVANT DEPRECIATION AND PROVISIONS GROSS ASSETS
2008 2007
Current Tax
Income Before Taxes 6.110,42 -28.824,12
Permanent Differences 7.399,96 3.414,70
Taxable Income 13.510,38 -25.409,42
Tax Losses (Provisional Difference) 0,00 25.409,42
13.510,38 0,00
Tax Rate
Corporate Income Tax 25,00% 25,00%
Municipal Tax (“Derrama”) 1,50% 1,50%
3.580,25
Autonomous Taxation 3.592,87 2.452,70
Current TAx (I) 7.173,12 2.452,70
Deferred Tax
Effect on the Financial Year -6.352,36
Deferred Tax (II) 0,00 -6.352,36
Corporate Income Tax for the Financial Year (I) + (II) 7.173,12 -3.899,66
Opening BalanceEffect on the Financial Year
Closing Balance
Group Companies:
Tax Losses 6.352,36 -6.352,36 0,00
6.352,36 -6.352,36 0,00
Item
s
Ope
ning
Ba
lanc
e
Incr
ease
s
Dis
posa
ls
Tran
sfer
s an
d D
educ
tion
s
Clos
ing
Bala
nce
INTANGIBLE FIxED ASSETS
Industrial Property and Other Rights
38.000,00 38.000,00
38.000,00 0,00 0,00 0,00 38.000,00
TANGIBLE FIxED ASSETS
Administrative Equipment 60.448,06 -103.60 60,344.46
Other Tangible Fixed Assets 359,08 359.08
60.807,14 0,00 0,00 -103.60 60,703.54
FINANCIAL INVESTMENTS
Securities and Other Investments
19.929,52 -976.92 18,952.60
19.929,52 0,00 0,00 -976.92 18,952.60
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DEPRECIATION AND PROVISIONS
14 - OTHER InFORMATIOn RELATED TO FIXED ASSETSAll Fixed Assets are affected to the company’s activity.
16 - TABLE OF GROUP COMPAnIES - ASSOCIATED COMPAnIES AnD SHAREHOLDER COMPANIESThis company’s Financial Statements are included in the Consolidated Financial Statements of the following company:
Firm: LS – Luís Simões, SGPS, S.A.Head office: Moninhos – Loures, PortugalTax Payer no.: 503 717 789
32 - GRAnTED GUARAnTEESThe company issued promissory notes to third parties as a guarantee of payment of debts, amounting to 21,694 Euros as at 31 December 2008.
35 – SHARE CAPITALThe subscribed Share Capital is fully paid up.
37 - SHAREHOLDInG In THE SUBSCRIBED SHARE CAPITAL OF EACH OF THE CORPORATE BODIES HOLDING AT LEAST 20% OF THE SHARE CAPITAL
40 - DETAILED EXPLAnATIOn AnD JUSTIFICATIOn OF CHAnGES OCCURRED DURInG THE FINANCIAL YEAR IN EACH OF THE EQUITY ITEMS CONTAINED IN THE BALANCE SHEET
44 - ALLOTMEnT OF THE nET AMOUnT OF SALES AnD PROVISIOn OF SERVICES OBTAINED IN ACCOUNTS 71 AND 72
45 - FInAnCIAL InCOME STATEMEnT
ItemsOpening Balance
Increase SettlementsClosing Balance
INTANGIBLE FIxED ASSETS
Industrial Property and Other Rights
1.899,99 7.599,96 9.499,95
1.899,99 7.599,96 0,00 9.499,95
TANGIBLE FIxED ASSETS
Administrative Equipment 20.162,29 16.514,23 36.676,52
Other Tangible Fixed Assets 359,08 359,08
20.521,37 16.514,23 0,00 37.035,60
ShareholderSubscribed Shares Shareholding
%Voting
Rights %Quantity %
LS – Luís Simões, SGPS, S.A. - 100 100 100
AccountsOpening Balance
Increase ReductionsClosing Balance
51 Share Capital 49,880.00 49,880.00
57 Reserves
571 Legal Reserves 19,009.76 19,009.76
574 Free Reserves 174.69 174.69
59 Retained Earnings 348.78 24,924.46 (24,575.68)
88net Profit for the Year
(24,924.46) (23,861.75) (1,062.71)
Description Amount
Internal Market 642.792,08
Losses and CostsFinancial Years
2008 2007
681 Interest Paid 11.378,19 8.816,40
688 Other Financial Losses and Costs 2.299,93 2.466,28
Financial Income (208,35) (4.223,35)
13.469,77 7.059,33
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48 - OTHER InFORMATIOn DEEMED RELEVAnTA) Changes involving Group Companies and Associated Companies
46 - EXTRAORDInARy InCOME STATEMEnT
Losses and CostsFinancial Years
2008 2007
691 Donations 500,00
692 Bad Debts 38,34
695 Fines and Penalties 53,48
698 Other Extraordinary Losses and Costs 1,22 1.235,85
Extraordinary Income 571,42 (1.117,02)
610,98 672,31
IncomeFinancial Years
2008 2007
797 Prior Years’ Adjustments 250,00
798 Other Extraordinary Income 610,98 422,31
610,98 672,31
Items Amounts
Receivables:
Customers, c/a 152.521,98
Payables:
Suppliers, c/a 12.656,71
Shareholders 30.355,77
Operating Costs 145.661,63
Financial Expenditure 1.230,66
Operating Profits 290.211,80
Financial Gains 13.048,02
The Certified AccountantVítor José Caetano de Sousa
The ManagementJorge Manuel Soares Simões - Manager
Rogério Paulo Farinha Henriques Morato - Manager
IncomeFinancial Years
2008 2007
781 Interest Received 13.048,02 7.053,30
788 Other Financial Income 421,75 6,03
13.469,77 7.059,33
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LS - Gestão Empresarial e Imobiliária, S.A.
A| MANAGEMENT REPORT
ACTIVITY DURING THE FINANCIAL YEARThe current framework of companies and businesses in Grupo Luís Simões is characterized by the clear distinction between a structure that unites all business support operations, focused on the company LS – Gestão Empresarial e Imobiliária, and on the companies exclusively geared towards exploring the many business areas in which the Group has a foothold.This Organization has pursued the following objectives:
▪ To enable each company to focus exclusively on business, concentrating on client follow-up, ventures into new markets and the optimization of the business operations management;
▪ To professionalize the management of all business support services, garnering knowledge and having the capacity to impart it to the LS companies;
▪ To increase the competence of services exterior to Grupo Luís Simões’ core business, ensuring the increase of productivity and the capacity to absorb new activities, businesses or companies;
▪ To concentrate, optimize and make flexible the use of available resources, which were hitherto spread out over the Group’s many companies;
In addition, the company holds and manages Grupo Luís Simões’ Real Estate Assets, which are allocated to operational activities.LS – Gestão Empresarial e Imobiliária, S.A., has decisively contributed to the growth of Grupo Luís Simões’ productivity and competitive capacity.
ECONOMIC AND FINANCIAL ANALYSISThe company’s Turnover totalled 7,086 thousand Euros. LSG renders its services exclusively to the companies of the Group, and as such its sales performance is a consequence of the consolidation of some of the projects initiated in previous years. The INSTAL Project should be highlighted, which ended with the inauguration of the new COL (Centre for Logistical Operations) in Carregado towards the end of 2008, to which the company allocated a significant part of its resources during the past two years.
LS-Gestão Empresarial e Imobiliária, S.A.Legal Person no. 502,626,976 | Share Capital: 500,000.00 Euros | Registered in Loures Companies’ Registry under no. 8904 | Moninhos | 2671-951 Loures, Portugal
The company’s Net Income registered a decrease in value, ending the year on -113 thousand Euros. The Operating Income also inverted its previous tendency to increase, influenced by an accrual of 18% in the “Staff Costs” item resulting from the admission of new employees in areas such as Human Resources, Information Systems and Real Estate Management, thus strengthening the corporate resources available for the support of GLS’ several companies.
Equity amounted to 2,342 thousand Euros; the level of income that has been generated by the company has contributed to the levels of Financial Autonomy and Solvency attained, the year of 2008 being a good indicator of the significant investment made in the new Carregado warehouse.
8.000
2005
7.989
2006
7.633
2007
7.086
2008
Sales Development (Thousand Euros)
Income Development (Thousand Euros)
Net
Operating
Legend
2005 2006 2007 2008
1.9001.6001.3001.000
700400100
(200)
1.052 1.107
1.748
526379
1.093
373
(113)
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PERSPECTIVES FOR 2009In 2009, LSG intends to implement several projects with the objective of increasing the productivity of corporate areas, and consequently that of the GLS companies to which it renders services. The most important projects are:
▪ The development, in partnership with the areas of Management and Accounting Control, of two projects which will have a major impact, not only due to the simplification of administrative tasks but also the speed with which information is accessed both internally and in relation to suppliers. These are:
▪ Digitization of invoices;▪ Suppliers’ web portal.
▪ The implementation by the Corporate Board for Innovation, using the “Gestão XXI” application, of a Meeting Management module, aiming at increasing the efficiency of internal meetings and facilitating the follow-up of measures resulting therefrom;
▪ The development of activities by the Department of Human Resources, which include:
▪ The introduction of programs aiming at the integration and reception of new employees;▪ The identification of employees showing a high level of potential (EEPs) and the definition of their individual development plans (PIDs);▪ The monitoring of productivity bonuses/ performance assessment; ▪ The application of indicators which enhance the capacity for Management analysis, providing information to the different areas and enabling them to take timely action.
▪ The implementation by the Information Systems Management of a Service Desk application and a new version of Lotus Notes V, as well as business follow-up with the identification of new technologies able to make a difference;
▪ The optimization and development of processes in the area of Financial Control, which will enable growth in productivity while at the same time systemizing and simplifying relationships with all companies in the Luís Simões group.
CORPORATE BODIES
ALLOCATION OF THE PROFITSThe company LS – Gestão Empresarial e Imobiliária, S.A. ended 2008 with negative net Profits to the amount of 113,226.43 Euros.In compliance with applicable legal and statutory provisions, the following application of income is proposed:
Retained Reserves -113.226,43
Moninhos, 10 February 2009
José Luís Soares SimõesLeonel Fernando Soares SimõesJorge Manuel Soares Simões
Chairman/Executive MemberMember
Board of Directors:
Clara Maria Campos Monteiro RibeiroIsabel Maria Blazquez Pereira Silva
ChairmanSecretary
General meeting Committee
Ernst & Young Audit & AssociadosRui Abel Serra Martins
In officeAlternate
Single Auditor
Leonel Fernando Soares Simões - Member Jorge Manuel Soares Simões - Member
José Luís Soares Simões - Chairman
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B| FINANCIAL STATEMENTSBALANCE SHEET Amounts in Euros
Accounts Code 2008 2007
EEC Portuguese OAP Gross AssetsDepreciation and
AdjustmentsNet Assets Net Assets
ASSETS
C Fixed Assets
II Tangible Fixed Assets:
1 421 Land and Natural Resources 4,741,799.48 4,741,799.48 4.867.465,91
1 422 Buildings and Other Constructions 23,619,915.16 10,299,890.07 13,320,025.09 14.056.664,59
2 423 Machinery and Equipment 754,032.59 616,458.04 137,574.55 171.386,57
2 424 Transport Equipment 312,000.03 110,500.01 201,500.02 279.500,03
3 425 Tools and Dies 60,643.52 60,359.36 284.16 768,83
3 426 Administrative Equipment 3,173,094.22 2,574,237.72 598,856.50 452.483,47
3 429 Other Tangible Fixed Assets 800,920.09 669,752.42 131,167.67 140.739,24
4 441/6 Fixed Assets in Progress 14,197,902.78 14,197,902.78 3.700.272,96
47,660,307.87 14,331,197.62 33,329,110.25 23.669.281,60
III Financial Investments:
5 4113+414+415 Securities and Other Investments 2,505.00 2,505.00 2.505,00
2,505.00 0.00 2,505.00 2.505,00
D Current Assets
I Inventories:
3 33 Finished and Intermediate Goods 381,800.48 381,800.48 381.800,48
3 32 Goods 7,652.86 7,652.86 16.056,60
389,453.34 0.00 389,453.34 397.857,08
II Current Accounts Receivable - Short-Term:
1 211 Customers, c/a 876,707.56 876,707.56 886.343,85
1 218 Customers, Doubtful Debts 331.54 331.54 0.00
4 229 Advances to Suppliers 9.775,00
4 24 Public Entities 48,448.46 48,448.46 15.158,26
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BALANCE SHEET (Continued)Amounts in Euros
Accounts Code2008 2007
EEC Portuguese OAP
EQuITy AnD LIABILITIES
A Equity
I 51 Share Capital 500,000.00 500,000.00
56 Revaluation Reserves 223,895.59 232,276.78
Iv Reserves:
1 571 Legal Reserves 175,864.03 121,236.50
4 574 a 579 Other Reserves 897,536.67 500,531.86
V 59 Retained Earnings 657,447.00 649,065.81
Subtotal 2,454,743.29 2,003,110.95
vI 88 net Profit for the year -113,226.43 1,092,550.68
Total Equity 2,341,516.86 3,095,661.63
4 262+266+267+ Other Debtors 523,369.61 523,369.61 5.561,69
267+221 1,448,857.17 331.54 1,448,525.63 916.838,80
Iv Bank Deposits and Cash:
Bank Deposits 231.25 231.25 5.377,33
12+13+14 Cash 11,249.02 11,249.02 16.050,61
11 11,480.27 11,480.27 21.427,94
E Accruals and Deferrals
Accrued Income 2.072,74
271 Deferred Costs 180,281.52 180,281.52 200.987,41
272 Deferred Tax Assets 68,037.40 68,037.40
276 248,318.92 248,318.92 203.060,15
Total Depreciation 14,331,197.62
Total Adjustments 331.54
Total Assets 49,760,922.57 14,331,529.16 35,429,393.41 25.210.970,57
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Liabilities
C Medium and Long-Term Liabilities
6 252 Group Companies 12,500,000.00 12,000,000.00
8 2611 Suppliers of Fixed Assets, c/a 13,833,773.37 4,731,181.54
26,333,773.37 16,731,181.54
C Short-Term Liabilities
2 231+12 Bank Loans 2,406,763.39 1,003,718.41
4 221 Suppliers, c/a 497,654.44 553,409.50
4 228 Suppliers, Pending Invoices 53,208.63 32,290.56
6 252 Group Companies 1,119,187.16 2,023,134.51
8 2611 Suppliers of Fixed Assets, c/a 1,618,173.21 738,452.49
8 24 Public Entities 286,031.98 297,335.39
8 262+263+264+265 Other Creditors 687.65 4,253.48
267+268+211 5,981,706.46 4,652,594.34
D Accruals and Deferrals
273 Accrued Costs 538,806.99 497,281.98
274 Deferred Income 280.00
276 Deferred Tax Liabilities 233,309.73 234,251.08
772,396.72 731,533.06
Total Liabilities 33,087,876.55 22,115,308.94
Total Equity and Liabilities 35,429,393.41 25,210,970.57
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsJosé Luís Soares Simões - Chairman | Leonel Fernando Soares Simões - Member | Jorge Manuel Soares Simões - Member
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INCOME STATEMENT BY NATURES Valores em Euros
Accounts Code2008 2007
EEC Portuguese OAP
A LOSSES AnD COSTS
2.a) 61 Costs of Sold Goods and Consumed Materials:
Goods 58.499,39 58.499,39 49.329,58 49.329,58
2.b) 62 Supplies and External Services 2.262.577,87 1.995.895,47
3 Staff Costs
3.a) 641+642 Remunerations 2.463.850,62 2.150.271,17
3.b) Social Charges:
645/8 Other 782.544,62 3.246.395,24 576.346,36 2.726.617,53
4.a) 662+663 Tangible and Intangible Fixed Assets Depreciation 1.050.253,96 1.114.771,13
4.b) 666+667 Adjustments 331,54 1.050.585,50 5.165,72 1.119.936,85
5 63 Taxes 108.752,59 77.852,67
5 65 Other Operating Losses and Costs 1.061,50 109.814,09 30.438,02 108.290,69
(A) 6.727.872,09 6.000.070,12
7 681+685+686+ Interest and Other Similar Costs:
687+688 Related to Group Companies 802.187,16 666.134,51
Other 61.358,98 863.546,14 263.338,91 929.473,42
(C) 7.591.418,23 6.929.543,54
10 Extraordinary Losses and Costs 37.161,27 47.524,85
69 (E) 7.628.579,50 6.977.068,39
8+11 Corporate Income Tax for the Financial Year -58.280,49 395.862,48
86 (G) 7.570.299,01 7.372.930,87
13 net Profit for the year -113.226,43 1.092.550,68
88 7.457.072,58 8.465.481,55
B InCOmE
1 Sales:
71 Goods 17.678,18 13.847,75
1 Provision of Services 7.068.499,23 7.086.177,41 7.619.616,64 7.633.464,39
4 72 Supplementary Income 9.172,37 114.463,88
4 73 Reversals from Depreciation and Adjustments 5.165,72 14.338,09 114.463,88
77 (B) 7.100.515,50 7.747.928,27
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ANNEx TO THE BALANCE SHEET AND TO THE INCOME STATEMENTFINANCIAL YEAR 2008 (Information in Euros)
0 - InTRODUCTORy nOTE0.1. Company LS – Gestão Empresarial e Imobiliária, S.A. Head office: Moninhos – Loures, Portugal Set Up Date: 17 September 1991 Activity: Purchasing, Sale, Resale, Management and
Administration of Real Estate and the Provision of Services in the area of Business Management.
Tax Payer no.: 502 626 976
The company belongs to Grupo Luís Simões, being LS – Luís Simões SGPS, SA its mother company, as for the other companies in the group.
0.2. The Financial Statements were prepared according to the historical costs convention, as modified to account for the revaluation of tangible fixed assets, and based on the continuity of operations and in accordance with the core accounting principles of consistency, prudence, accruals, substance on form and materiality. Furthermore, they also respect the qualitative characteristics of relevance, reliability and comparability.
0.3. Notes which have not been mentioned either do not apply to the Company, do not apply to materially relevant accounting standards, or did not occur during the financial year to which this annex refers.
3 - ACCOUnTInG PRInCIPLES AnD VALUATIOn CRITERIA USED
3.1. Inventories 3.1.2.GoodsThese are valued according to their price of acquisition, and the weighted average cost was used as the method for measuring output costs.
7 7811+7813+7814+7818+785+786+
787+788
Other Interest and Similar Income
Other 7.553,31 7.553,31 6.988,70 6.988,70
(D) 7.108.068,81 7.754.916,97
9 79 Extraordinary Income 349.003,77 710.564,58
(F) 7.457.072,58 8.465.481,55
Summary:
Operating Income: (B)-(A) 372.643,41 1.747.858,15
Financial Income: (D-B)-(C-A) -855.992,83 -922.484,72
Current Income: (D)-(C) -483.349,42 825.373,43
Income Before Taxes: (F)-(E) -171.506,92 1.488.413,16
net Profit for the year: (F)-(G) -113.226,43 1.092.550,68
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsJosé Luís Soares Simões - Chairman | Leonel Fernando Soares Simões - Member | Jorge Manuel Soares Simões - Member
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3.1.3. Finished GoodsThese are valued at production cost.3.2. Fixed Assets 3.2.2. Tangible Fixed AssetsTangible Fixed Assets are stated in the balance sheet according to their cost of acquisition, except for assets revalued in accordance with the legislation published to that end. Depreciation is calculated using the straight line method, in conformity with the legal decrees in force. 3.2.3. Financial InvestmentsFinancial Investments are detailed in the balance sheet according to acquisition cost
3.3. Deferred TaxesDeferred Taxes refer to the provisional differences between the amounts of assets and liabilities for the purposes of accounting reports and their respective amounts for taxation purposes.Deferred Tax Assets and Liabilities are calculated and valued, using taxation rates which are expected to be in force at the time of the reversal of the provisional differences.
6 – DISCLOSURE OF THE MAIN TAx COST (INCOME) COMPONENTSThe company is subject to Corporate Income Tax (“IRC”), at the current rate of 25%, plus a municipal tax (“Derrama”) at a maximum rate of 1.5% on taxable profits, reaching an aggregated income tax of 26.5%.
Under Article 81 of the Corporate Income Tax Code (“CIRC”), the company is subject to autonomous taxation on a host of charges provided for therein.
In accordance with the legislation in force, tax statements are subject to audit and correction by tax authorities for a period of four years (ten years for Social Security up to and including 2000 and five years from 2001 onwards), unless tax losses occurred or inspections, complaints or impugnments are in course; in these cases, and depending on the circumstances, these deadlines are extended or suspended.
Income tax as registered during this financial year essentially corresponds to:
2008 2007
Current Tax
Income Before Taxes -171.506,92 1.488.413,16
Provisional Differences 275.701,88 -654.888,18
Permanent Differences -104.194,96 -6.918,92
Taxable Income 0,00 826.606,06
Tax Rate
Corporate Income Tax 25,00% 25,00%
Municipal Tax (“Derrama”) 1,50% 1,50%
0,00 219.050,60
Tax Benefits Use -168.325,51
Autonomous Taxation 10.698,26 3.266,51
Current Tax (I) 10.698,26 53.991,60
Defered Tax
Effect on the Financial Year -68.978,75 341.870,88
Defered Tax (II) -68.978,75 341.870,88
Corporate Income Tax for the Financial Year (I) + (II) -58.280,49 395.862,48
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Changes occurred during the financial year as a result of the adoption of this directive, in terms of their nature and impact, are as follows:
7 - AVERAGE nUMBER OF PERSOnS AT THE COMPAny’S SERVICEEmployees ................................................................................ 81
10 - CHAnGES REGISTERED In THE FIXED ASSETS ITEMS OF THE BALAnCE SHEET AND IN THE RELEVANT DEPRECIATION AND PROVISIONS GROSS ASSETS
Description Opening Balance Effect on the Financial year Closing Balance
Deferred Tax Assets:
Tax Loss 2008 68.037,40 68.037,40
68.037,40 68.037,40
Deferred Tax Liabilities:
40% of Unrealised Revaluation Reserves 35.008,75 -941,35 34.067,40
Fixed Assets Financial Leaseback 199.242,33 199.242,33
234.251,08 -941,35 233.309,73
Items Opening Balance Increases DisposalsTransfers and Deductions
Closing Balance
TANGIBLE FIxED ASSETS
Land and Natural Resources 4.867.465,91 125.666,43 4.741.799,48
Buildings and Other Constructions 24.236.822,85 67.946,42 642.467,87 -42.386,24 23.619.915,16
Machinery and Equipment 1.083.420,19 329.387,60 754.032,59
Transport Equipment 312.000,03 312.000,03
Tools and Dies 63.289,64 2.646,12 60.643,52
Administrative Equipment 2.882.282,43 318.729,55 27.917,76 3.173.094,22
Other Tangible Fixed Assets 792.985,96 7.934,13 800.920,09
Fixed Assets in Progress 3.700.272,96 10.526.691,48 -29.061,66 14.197.902,78
37.938.539,97 10.921.301,58 1.128.085,78 -71.447,90 47.660.307,87
FINANCIAL INVESTMENTS
Securities and Other Investments 2.505,00 2.505,00
2.505,00 0,00 0,00 0,00 2.505,00
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DEPRECIATION AND PROVISIONS
12 - InDICATIOn OF THE LEGAL DECREES On WHICH THE REVALUATIOn OF TANGIBLE FIxED ASSETS OR FINANCIAL INVESTMENTS WAS BASEDA) Intangible Fixed Assets was revalued in accordance with the provisions laid down in Decree Law No. 31/98 of 11/02.
13 - TABLE OF REVALUATIOnS
(a) Net of depreciation
(b) Include successive revaluations
14 - OTHER InFORMATIOn RELATED TO FIXED ASSETSAll Fixed Assets are affected to the company’s activity.
Items Opening Balance Increase Settlements Closing Balance
TANGIBLE FIxED ASSETS
Buildings and Other Constructions 10.180.158,26 748.095,04 -628.363,23 10.299.890,07
Machinery and Equipment 912.033,62 33.812,02 -329.387,60 616.458,04
Transport Equipment 32.500,00 78.000,01 110.500,01
Tools and Dies 62.520,81 484,67 -2.646,12 60.359,36
Administrative Equipment 2.429.798,96 172.382,35 -27.943,59 2.574.237,72
Other Tangible Fixed Assets 652.246,72 17.479,87 25,83 669.752,42
14.269.258,37 1.050.253,96 -988.314,71 14.331.197,62
ItemsHistorical Costs
(a)Revaluations
(a) (b)Revalued Book Amounts (a)
TANGIBLE FIxED ASSETS
Land and Natural Resources 2.190.764,47 107.374,32 2.298.138,79
Buildings and Other Constructions 2.133.931,70 154.730,93 2.288.662,63
4.324.696,17 262.105,25 4.586.801,42
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15 - InDICATIOn OF THE GOODS USED UnDER THE FInAnCIAL LEASInG SySTEM, WITH MENTION OF THE RELEVANT BOOK VALUES
Debts running for over a year are scaled in time as follows:
16 - TABLE OF GROUP COMPAnIES - ASSOCIATED COMPAnIES AnD SHAREHOLDER COMPANIESThis company’s Financial Statements are included in the Consolidated Financial Statements of the following company:
Firm: LS – Luís Simões, SGPS, S.A.Head office: Moninhos – Loures, PortugalTax Payer no.: 503 717 789
21 - DEVELOPMEnT OF CURREnT ASSET ACCOUnTSADJUSTMEnTS
23 - GLOBAL AMOUnT OF DOUBTFUL DEBTS InCLUDED In EACH OF THE CURREnT ACCOUNTS RECEIVABLE ITEMS CONTAINED IN THE BALANCE SHEETCustomers, Doubtful Debts........................................................331,54
25 - GLOBAL AMOUnT OF RECEIVABLES AnD PAyABLES RELATED TO COMPAny STAFFReceivables (Accounts 2624/2627)…………………………………………..….……..…2,134.20Payables (Accounts 2629)…………………………..………………..……………………..……268.43
29- AMOUnT OF LIABILITIES FOR PERIODS OVER FIVE yEARS
32 - GRAnTED GUARAnTEESIn addition, the company issued promissory notes to third parties as a guarantee of payment of debts, amounting to 17,128,916.00 Euros as at 31 December 2008.
Descriptionnet Fixed
AssetsLiability Amount
Short-Term
Medium and Long-Term
Land and Natural Resources
2.147.460,20
Fixed Assets in Progress 12.402.822,76
14.550.282,96 14.726.094,49 892.321,12 13.833.773,37
Year Liability Amount
2010 1.224.213,83
2011 1.266.094,53
2012 1.308.455,57
2013 1.354.285,03
2014 1.400.567,08
2015 1.448.426,42
2016 1.497.522,56
2017 1.549.353,47
2018 1.602.553,66
2019 1.182.301,22
13.833.773,37
ItemsOpening Balance
Increase ReversalClosing Balance
Current Accounts Receivable:
Customers, Doubtful Debts 5.165,72 331,54 5.165,72 331,54
5.165,72 331,54 5.165,72 331,54
Balance Sheet ItemsLiabilities
1 to 5 years
Liabilitiesmore than 5 years (Long-Term)
Total
Suppliers of Fixed Assets (Lessors) 6,045,370.08 8,680,724.41 14,726,094.49
6,045,370.08 8,680,724.41 14,726,094.49
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35 – SHARE CAPITALThe subscribed Share Capital is fully paid up.
36 - nUMBER OF SHARES FROM EACH CATEGORy InTO WHICH THE COMPAny SHARE CAPITAL IS DIVIDED AND THEIR NOMINAL VALUE
37 - SHAREHOLDInG In THE SUBSCRIBED SHARE CAPITAL OF EACH OF THE CORPORATE BODIES HOLDING AT LEAST 20% OF THE SHARE CAPITAL
39-CHAnGES In THE REVALUATIOn RESERVES OCCURRED DURInG THE FInAnCIAL YEAR
40 - DETAILED EXPLAnATIOn AnD JUSTIFICATIOn OF CHAnGES OCCURRED DURInG THE FINANCIAL YEAR IN EACH OF THE EQUITY ITEMS CONTAINED IN THE BALANCE SHEET
41 - STATEMEnT OF THE COST OF GOODS SOLD AnD MATERIAL COnSUMED
42 - STATEMEnT OF CHAnGES In PRODUCTIOn
Category Shares Qty Nominal Value Total Value
A – Registered Shares 90.000 5,00 € 450.000,00
B – Bearer Shares 10.000 5,00 € 50.000,00
100.000 500.000,00
Port
ugue
se
Dec
ree-
Law
Ope
ning
Bal
ance
Creation in the Financial
YearEmployed in the Financial year
Clos
ing
Bala
nce
Lega
l
Free
Cove
rage
for
Lo
sses
Incr
ease
s in
Sha
re
Capi
tal
Free
Res
erve
s
Reta
ined
Ear
ning
s Se
ttle
men
t of
ex
cess
am
ount
s
31/98 232.276,78 -8.381,19 223.895,59
ShareholderSubscribed Shares Shareholding
%voting Rights
%Quantity %
LS – Luís Simões, SGPS, S.A. 49.000 49 49 49
AccountsOpening Balance
Increase ReductionsClosing Balance
51 Share Capital 500.000,00 500.000,00
56 Revaluation Reserves 232.276,78 8.381,19 223.895,59
57 Reserves:
571 Legal Reserves 121.236,50 54.627,53 175.864,03
574 Free Reserves 476.766,18 397.004,81 873.770,99
575 Subventions 23.765,68 23.765,68
59 Retained Earnings 649.065,81 8.381,19 657.447,00
88 Net Income 1.092.550,68 -113.226,43 1.092.550,68 -113.226,43
Changes GoodsRaw material, Subsidiary materials
and Consumables
Opening Inventories 16.056,60 0,00
Purchases 50.095,65 0,00
Inventory Clearing 0,00
Closing Inventories 7.652,86 0,00
Cost for the Year 58.499,39 0,00
ChangesFinished and Intermediate
Goods
By-products, Waste, Residues
and Scrap
Work in Progress
Closing Inventories 381.800,48 0,00 0,00
Inventory Clearing 0,00 0,00 0,00
Opening Inventories 381.800,48 0,00 0,00
Increase/Reduction for the Year 0,00 0,00 0,00
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43 - REMUnERATIOnS ALLOCATED TO MEMBERS OF THE CORPORATE BODIES, RELATED TO THE PERFORMANCE OF THEIR DUTIES
44 - ALLOTMEnT OF THE nET AMOUnT OF SALES AnD PROVISIOn OF SERVICES OBTAINED IN ACCOUNTS 71 AND 72
45 - FInAnCIAL InCOME STATEMEnT
46 - EXTRAORDInARy InCOME STATEMEnT
48 - OTHER InFORMATIOn DEEMED RELEVAnTA) Changes involving Group Companies and Associated Companies
Corporate Bodies Remunerations Granted to Current members
Directors 301.395,55
Description Amount
Internal Market 6.581.382,04
External Market 504.795,37
Total 7.086.177,41
Losses and CostsFinancial Years
2008 2007
681 Interest Paid 861.676,60 925.397,79
685 Unfavourable Exchange Differences 24,64
688 Other Financial Losses and Costs 1.844,90 4.075,63
Financial Income -855.992,83 -922.484,72
7.553,31 6.988,70
IncomeFinancial Years
2008 2007
783 Fixed Assets Income 80,90
785 Favourable Exchange Differences 5.195,14 2.920,00
788 Other Financial Income 2.277,27 4.068,70
7.553,31 6.988,70
Losses and CostsFinancial Years
2008 2007
691 Donations 1.220,00 23.474,96
692 Bad Debts 5.228,09
694 Fixed Assets Losses 30.681,53
695 Fines and Penalties 28,54 2.117,60
697 Prior Years’ Adjustments 13.812,00
698 Other Extraordinary Losses and Costs 3,11 8.120,29
Extraordinary Income 311.842,50 663.039,73
349.003,77 710.564,58
IncomeFinancial Years
2008 2007
794 Fixed Assets Gains 348.665,56 708.577,37
795 Benefits from Contractual Penalties 1.654,53
798 Other Extraordinary Income 338,21 332,68
349.003,77 710.564,58
Items Amounts
Receivables:
Customers, c/a 876,507.58
Payables:
Suppliers, c/a 14,858.98
Shareholders 13,619,187.16
Operating Costs 88,030.80
Financial Expenditure 802,187.16
Operating Profits 7,086,177.41
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B) Global amounts of R&D effortR&D Investments - Summary
The values shown refer to expenses incurred in Research and Development, in relation to the Information Systems Management team and the support they have provided for the group’s several projects.
C) SIFIDE (System of Tax Benefit to Business-related R&D)Within the scope of its application for benefits from the System of Tax Benefits to Research and Development (“SIFIDE”) – Decree-Law no. 40/2005 of 3 August – the company obtained tax savings of 81,083.48 Euros in 2006 and 167,164.76 Euros in 2007.
INCOME STATEMENT BY FUNCTIONS
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsJosé Luís Soares Simões - Chairman
Leonel Fernando Soares Simões - MemberJorge Manuel Soares Simões - Member
Items 2006 2007 2008
Staff Costs 408.322,93 170.772,92 179.311,57
General Costs 133.813,55 70.701,36 74.236,42
Shareholdings 15,00 15,00 15,00
Total R&D Investment 542.151,48 241.489,28 253.562,99
Turnover 7.988.978,79 7.633.464,39 7.086.177,41
Staff Costs 2.773.271,85 2.726.617,53 3.246.395,24
ItemsFinancial Year
2008 2007
Sales and Provision of Services 7.086.177,41 7.633.464,39
Cost of Sales and Provision of Services -4.438.967,25 -4.176.784,92
Gross Income 2.647.210,16 3.456.679,47
Other Operating Income 370.895,17 832.017,16
Administrative Costs -2.167.803,19 -1.702.185,79
Other Operating Losses and Costs -160.132,46 -173.034,69
Operating Income 690.169,68 2.413.476,15
Net Financing Cost -861.676,60 -925.062,99
Current Income -171.506,92 1.488.413,16
Taxes on Current Income 58.280,49 -395.862,48
Current Income After Taxes -113.226,43 1.092.550,68
Net Income -113.226,43 1.092.550,68
Earnings per Share -1,13 10,93
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsJosé Luís Soares Simões - Chairman
Leonel Fernando Soares Simões - MemberJorge Manuel Soares Simões - Member
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CASH FLOW STATEMENTDirect Method
OPERATInG ACTIvITIES 2008 2007
RECEIVED FROM CUSTOMERS
Received from Group Customers 8.835.146,14 10.136.112,73
Received from Other Customers 10.970,38 8.846.116,52 16.298,96 10.152.411,69
PAID TO SUPPLIERS
Paid to Group Suppliers -385.124,27 -323.122,95
Paid to Other Suppliers -2.596.717,07 -2.981.841,34 -2.574.452,87 -2.897.575,82
PAID TO STAFF
Remunerations -2.158.526,88 -1.864.352,36
Advances to Staff -730,80 -88,95
Paid to Staff, Other -8.956,48 -2.168.214,16 -8.142,13 -1.872.583,44
Flow from Operations 3.696.061,02 5.382.252,43
CORPORATE INCOME TAx PAID/RECEIVED
Corporate Income Tax Advance and Special Advance -57.865,08 -67.888,80
Income Tax Refunding 15.227,90 -42.637,18 200.292,27 132.403,47
OTHER RECEIPTS RELATED TO OPERATING ACTIVITIES
Received from Other Debtors 7.669,79 180.253,38
Received from Other Creditors 505,08 94,90
Received from Other Taxes 8.174,87 723,66 181.071,94
OTHER PAYMENTS RELATED TO OPERATING ACTIVITIES
Paid to Other Debtors -176.713,39 -433.985,08
Paid to Other Creditors -24.763,24 -32.344,83
VAT Paid -895.516,62 -1.000.710,23
Withholding Tax Retaining Paid -451.855,68 -378.798,00
TSU (social tax) Paid -677.078,71 -637.966,01
Other Taxes Paid -158.226,84 -2.384.154,48 -25.978,83 -2.509.782,98
Flows Before Extraordinary Items 1.277.444,23 3.185.944,86
RECEIPTS RELATED TO ExTRAORDINARY ITEMS
Settlement of Claims 289,00
Contractual Penalties Received 1.654,53
Other Extraordinary Receipts 244,91 244,91 0,02 1.943,55
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PAYMENTS RELATED TO ExTRAORDINARY ITEMS
Donations -1.220,00 -7,075.00
Fines and Penalties Paid -28,54 -421,60
Other Extraordinary Payments 0,01 -1.248,53 -0,04 -8.396,64
Flow from Extraordinary Activities -1.003,62 -6.453,09
(1) FLOW FROm OPERATInG ACTIvITIES 1.276.440,61 3.179.491,77
RECEIVED FROM:
Interest and Other Similar Income 4.625,14 4.625,14
Fixed Assets Income 2.920,00 2.920,00
PAyMEnTS RELATED TO: -1.948,68
Tangible Fixed Assets - Other Companies -359.146,89 -1.519.318,65
Total Tangible Fixed Assets -361.095,57 -361.095,57 -1.519.318,65 -1.519.318,65
(2) FLOW FROm InvESTInG ACTIvITIES -356.470,43 -1.516.398,65
RECEIVED FROM:
Loans Received from Group Companies 5.305.000,00 8.102.000,00
Loans Received from Other 600.000,00
Total Loans Received 5.905.000,00 5.905.000,00 8.102.000,00 8.102.000,00
PAyMEnTS RELATED TO:
Loans Received from Group Companies -5.845.000,00 -5.320.000,00
Total Loans Received -5.845.000,00 -5.320.000,00
Depreciation of Financial Leasing Contracts -462.061,57 -3.377.584,37
Interest and Other Similar Costs -718.491,41 -383.023,50
Interest from Loans Received -666.134,51 -561.319,34
Dividends -546.275,34 -8.237.962,83 -348.031,96 -9.989.959,17
(3) FLOW FROm FInAnCInG ACTIvITIES -2.332.962,83 -1.887.959,17
Change in Cash and Equivalents (1)+(2)+(3) (1)+(2)+(3) -1.412.992,65 -224.866,05
Cash and Equivalents at the Beginning of year -982.290,47 -757.424,42
Cash and Equivalents at the End of year -2.395.283,12 -982.290,47
O Técnico Oficial de ContasVítor José Caetano de Sousa
A AdministraçãoJosé Luís Soares Simões - Chairman | Leonel Fernando Soares Simões - Member | Jorge Manuel Soares Simões - Member
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ANNEx TO THE CASH FLOW STATEMENT
2- DISCRIMInATIOn OF CASH AnD CASH EQUIVALEnTS COMPOnEnTS, RECOnCILInG THE AMOUNTS EVIDENCED IN THE CASH FLOW STATEMENT AND THE BALANCE SHEET ITEMS
Amounts in Euross
C| REPORT AND OPINION OF THE SINGLE AUDITOR AND REGISTERED AUDITORS’ REPORT
Ernst & youngAudit & Associados - SROC, S.A.
Avenida da República, 90-6°1600-206 Lisboa, Portugal
Telf: +351 217 912 000Fax: +351 217 957 586
www.ey.com
| REPORT AND OPINION OF THE SINGLE AUDITOR
Dear Shareholders,
In compliance with the legal provisions and the Company’s Articles of Association, it is incumbent on us to issue the annual report on the audit of the Company LS – Gestão Empresarial e Imobiliária, S.A., regarding the financial year ended on 31 December 2008, and issue an Opinion on the report, accounts and the proposal for the allocation of the profits presented by the Board of Directors.
In the course of the financial year and as part of our appointed duties, we carried out, with satisfactory results and with the frequency and extent deemed most adequate, a general audit of all accounting procedures, as well as surveys of their corresponding records and other probative elements.
The Board of Directors’ report explains the orientation of the Company’s policy during the financial year, as well as the policy proposal for 2009 financial year.
The Balance Sheet, Income Statements, Cash Flow Statement and their respective Annexes, respecting all legal requirements, reflect the position of the accounting records at the end of the financial year and attest to the Company’s financial situation.
The valuation criteria used for the preparation of accounts are laid down in the Annex to the Balance Sheet and to the Income Statements, and lead to a suitable assessment of company assets
All regulatory formalities as well as those from the Articles of Association with regards to the accountability and auditing of the Company were complied, whereby we issue the following Opinion, which shall be presented to shareholders and published as required by law:
Description 2008 2007
Cash in Hand 11.249,02 16.050,61
Overnight Bank Cash Deposits 231,25 5.377,33
Cash Equivalents
Cash and Equivalents (Bank Overdrafts) -2.406.763,39 -1.003.718,41
The Certified AccountantVítor José Caetano de Sousa
The Board of DirectorsJosé Luís Soares Simões - Chairman
Leonel Fernando Soares Simões - MemberJorge Manuel Soares Simões - Member
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Opinion of the Single Auditor
Dear Shareholders,
We have audited the company Distribuição Luís Simões, S.A., in accordance with article 420 of the Code of Commercial Companies and the company’s Articles of Association, the results of which lead us to opine as follows:
(a) The Management Report and the Accounts for the financial year of 2008 should be approved;
(b) The Board of Directors’ proposal on the allocation of the profits of the financial year should be approved.
Lisbon, 13 March 2009
The Single Auditor
Ernst & young Audit & Associados - Sroc, S.A.Independent Registered Auditors Firm (No. 178)Represented by:
João Carlos Miguel Alves (Registered Auditor no. 896)
Public Company – Share Capital 1,105,000 Euros – registered on the Portuguese Board of Registered Auditors under No. 178 – Registered on CMVM (Portuguese Securities Market Commission) under No. 9011 – Tax Payer No. 505 988 283 – Registered on Lisbon Companies Registry under No. 505 988 283 – A member firm of Ernst & young Global Limited
Ernst & youngAudit & Associados - SROC, S.A.
Avenida da República, 90-6°1600-206 Lisboa, Portugal
Telf: +351 217 912 000Fax: +351 217 957 586
www.ey.com
| REGISTERED AUDITORS’ REPORT
IntroductionWe have audited the financial statements of LS – Gestão Empresarial e 1. Imobiliária, S.A., which comprise the Balance Sheet as at 31 December 2008 (reflecting a total of 35,429,393 Euros and total equity of 2,341,517 Euros, including a net loss of 113,226 Euros) the Income Statement by Natures and By Functions and the Cash Flow Statement for the year then ended, and the related Annexes.
ResponsibilitiesThe Board of Directors is responsible for preparing the financial statements 2. giving a true and fair view of the Company’s financial position, the profits of its operations and cash flows, as well as for adopting appropriate accounting policies and criteria and keeping an appropriate internal control system.
Our responsibility is to express a professional and independent opinion based 3. on our audit to those financial statements.
ScopeWe conducted our audit in accordance with the Technical Standards and 4. Guidelines of Revision/Audit of the Portuguese Board for Registered Auditors, which require the planning and performance of the audit so as to obtain reasonable assurance that the consolidated financial statements are free from material misstatements. In order to do so, the audit included:- the examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements and the assessment of the estimates based on judgements and criteria made by the Board of Directors and used in the preparation of the financial statements;- the assessment of whether the adopted accounting policies and their disclosure are appropriate to the company’s circumstances;- examination of the applicability of the principle of continuity; and- evaluation of the overall adequacy of the presentation of information in the financial statements.
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5. The audit also included our opinion on whether the information given in the Management Report is consistent with the financial statements.
6. We believe that the audit carried out provides an acceptable basis for expressing our opinion.
Opinion7. In our opinion, the financial statements give a true and fair view, in all aspects
materially relevant, of the state of LS – Gestão Empresarial e Imobiliária, S.A. affairs as at 31 December 2008, the profits of its operations and cash flows for the financial year then ended, in accordance with the accounting principles generally accepted in Portugal.
Lisbon, 13 March 2009
Ernst & young Audit & Associados - SROC, S.A.Independet Registered Auditors Firm (No. 178)Represented by:
João Carlos Miguel Alves (Registered Auditor no. 896)
Public Company – Share Capital 1,105,000 Euros – registered on the Portuguese Board of Registered Auditors under No. 178 – Registered on CMVM (Portuguese Securities Market Commission) under No. 9011 – Tax Payer No. 505 988 283 – Registered on Lisbon Companies Registry under No. 505 988 283 – A member firm of Ernst & young Global Limited
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Solmoninhos - Consultoria, Gestão e Execução Imobiliária, Lda
A| MANAGEMENT REPORT
ACTIVITY DURING THE FINANCIAL YEAR The outskirts of metropolitan areas, namely Lisbon and Oporto, are in great demand due to the proximity of large urban centres. Real estate values are more attractive in these areas, and they offer their inhabitants a greater quality of life due to the proximity of green areas and modern thoroughfares.The Western region is clearly representative of these key points. It lies close to the large Lisbon metropolitan area and is endowed with functional infrastructures and thoroughfares which shorten the distance between new housing centres and workplaces. Some good examples are the expansion of Loures, Mafra and Torres Vedras by way of the construction of highways linking them to the centre of Lisbon in a matter of minutes. Other areas showing strong growth are Vila Franca de Xira and Alenquer, which in the past few years have registered a considerable increase in the demand for real estate. The company’s prime objective is the transformation of a group of land plots belonging to Grupo Luís Simões, through the execution and construction of Real Estate Projects. This activity, apart from contributing towards the revitalization of Solmoninhos, also brings new life to the village of Moninhos itself. Besides real estate promotion, Solmoninhos has been developing project consultancy, follow-up and execution services directly with LSG, which include the project for the new Centre for Technical Assistance (CAT) in Carregado, the expansion of the Gaia II premises and new proposals for TLS.
ECONOMIC AND FINANCIAL ANALYSISThe turbulence which has affected the real estate market throughout the year has certainly not favoured the development of the company’s activity, as evidenced by a negative Net Income of 50 thousand Euros.The company’s financial structure remains the same as it was in the preceding year, its assets having amounted to 484 thousand Euros. The levels of Financial Autonomy and Solvency registered 23% and 30% respectively, conferring a balanced structure to the company.
Solmoninhos – Consultoria, Gestão e Execução Imobiliária, LdaLegal Person no. 504 862 332 | Share Capital: 250,000.00 Euros | Registered in Loures Companies’ Registry under no. 16599 | Moninhos 2671-951 Loures, Portugal
PERSPECTIVES FOR 2009 In 2009 we intend to increase investment in two ways: through the maintenance of ongoing projects and the procurement of new tracts of land.In relation to ongoing projects, we intend to maintain a steady rhythm of work, as some projects are contingent on the approval of External Bodies, respecting the particularities of each project. This year also foresees the completion of some projects, namely the commercialization of two houses belonging to LSG, with the issue of the municipal land parcelling licence for Quinta da Peça, as well as the preparation of the infrastructures of three land plots in Moninhos.
CORPORATE BODIES
ALLOCATION OF THE PROFITSThe company Solmoninhos – Consultoria, Gestão e Execução Imobiliária, Lda. ended 2008 with net Profits to the amount of 49,867.26 Euros.In compliance with applicable legal and statutory provisions, the following application of income is proposed:
Retained Earnings -49.867,26
Moninhos, 10 February 2009
Leonel Fernando Soares Simões - Manager
Jorge Manuel Soares Simões - Manager José Luís Soares Simões - Manager
378
2005
369
2006
480
2007
484
2008
Total Assets (Thousand Euros)
Jorge Manuel Soares Simões José Luís Soares SimõesLeonel Fernando Soares Simões
ManagerManagerManager
Board of Directors:
Clara Maria Campos Monteiro RibeiroIsabel Maria Blazquez Pereira Silva
ChairmanSecretary
General meeting Committee
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B| FINANCIAL STATEMENTSBALANCE SHEET
Accounts Code 2008 2007
EEC Portuguese OAP Gross AssetsDepreciation and
AdjustmentsNet Assets Net Assets
ASSETS
D Current Assets
I Inventories:
1 36 Raw Material, Subsidiary Materials and Consumables
463.745,65 463.745,65 459.275,65
463.745,65 0,00 463.745,65 459.275,65
II Current Accounts Receivable - Short-Term:
1 211 Customers, c/a 0,00 0,00 0,00
2 252 Group Companies 1.472,81 1.472,81 18.014,54
4 24 Public Entities 3.338,62 3.338,62 2.995,17
4 262+266+267+267+221 Other Debtors 74,73
4.811,43 0,00 4.811,43 21.084,44
E Accruals and Deferrals
276 Deferred Tax Assets 14.682,69 14.682,69 0,00
14.682,69 14.682,69 0,00
Total Depreciation 0,00
Total Adjustments 0,00
Total Assets 483.239,77 0,00 483.239,77 480.360,09
Amounts in Euros
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BALANCE SHEET (Continued)
Accounts Code2008 2007
EEC Portuguese OAP
EQuITy AnD LIABILITIES
A Equity
I 51 Share Capital 250.000,00 250.000,00
Iv Reserves:
1 571 Legal Reserves 1.001,79 1.001,79
4 574 a 579 Other Reserves 4.894,26 4.894,26
V 59 Retained Earnings -94.318,30 -46.118,53
Subtotal 161.577,75 209.777,52
vI 88 net Profit for the year -49.867,26 -48.199,77
Total Equity 111.710,49 161.577,75
Liabilities
C Medium and Long Term Liabilities:
6 252 Group Companies 165.000,00 125.000,00
165.000,00 125.000,00
C Short-Term Liabilities:
2 231+12 Bank Loans 104.536,71 29.847,75
4 221 Suppliers, c/a 87.961,06 53.115,83
6 252 Group Companies 7.713,651 5.426,17
8 24 Public Entities 1.600,48 1.610,12
8 262+263+264+265 Other Creditors 99.390,00
267+268+211 201.811,90 189.389,87
D Accruals and Deferrals
273 Accrued Costs 4.717,38 4.392,47
4.717,38 4.392,47
Total Liabilities 371.989,74 318.782,34
Total Equity and Liabilities 483.239,77 480.360,09
The Certified AccountantVítor José Caetano de Sousa
The ManagementJorge Manuel Soares Simões - Manager | José Luís Soares Simões - Manager | Leonel Fernando Soares Simões - Manager
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INCOME STATEMENT BY NATURES
Valores em Euros
Accounts Code2008 2007
EEC Portuguese OAP
A LOSSES AnD COSTS
2.a) 61 Costs of Sold Goods and Consumed Materials:
Materials 24.505,63 24.505,63
2.b) 62 Supplies and External Services 20.663,70 28.946,86
3 Staff Costs
3.a) 641+642 Remunerations 26.633,82 25.182,64
3.b) Social Charges:
645/8 Other 6.977,47 33.611,29 6.119,51 31.302,15
5 63 Taxes 475,23 475,23 174,54 174,54
(A) 54.750,22 84.929,18
7 681+685+686+687+688 Interest and Other Similar Costs:
Related to Group Companies 7.713,57 5.426,17
Other 3.905,72 11.619,29 1.603,88 7.030,05
(C) 66.369,51 91.959,23
10 69 Extraordinary Losses and Costs 0,04 0,00
(E) 66.369,55 91.959,23
8+11 86 Corporate Income Tax for the Financial Year -16.155,50 -16.764,54
(G) 50.214,05 75.194,69
13 88 net Profit for the year -49.976,69 -49.867,26 -48.199,77
346,79 26.994,92
B InCOmE
1 71 Sales:
Products 26.000,00
1 72 Provision of Services 723,17 26.723,17
(B) 26.723,17
(D) 26.723,17
9 79 Extraordinary Income 346,79 271,75
(F) 346,79 26.994,92
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The company belongs to Grupo Luís Simões, being LS – Luís Simões SGPS, SA its mother company, as for the other companies in the group.
0.2. The Financial Statements were prepared according to the historical costs convention, as modified to account for the revaluation of tangible fixed assets, and based on the continuity of operations and in accordance with the core accounting principles of consistency, prudence, accruals, substance on form and materiality. Furthermore, they also respect the qualitative characteristics of relevance, reliability and comparability.
0.3. Notes which have not been mentioned either do not apply to the Company, do not apply to materially relevant accounting standards, or did not occur during the financial year to which this annex refers.
3 - ACCOUnTInG PRInCIPLES AnD VALUATIOn CRITERIA USED3.1. Inventories 3.1.1. Raw Material, Subsidiary Materials and ConsumablesThese are valued according to their price of acquisition, and the weighted average cost was used as the method for measuring output costs.
3.2. Deferred TaxesDeferred Taxes refer to the provisional differences between the amounts of assets and liabilities for the purposes of accounting reports and their respective amounts for taxation purposes.
ANNEx TO THE BALANCE SHEET AND TO THE INCOME STATEMENTFINANCIAL YEAR 2008 (Information in Euros)
0 - InTRODUCTORy nOTE0.1. Company Solmoninhos – Consultoria, Gestão e Execução Imobiliária, Lda. Head office: Moninhos – Loures, Portugal Set Up Date: 23 February 2000 Activity: Purchasing, Sale, Resale of Real Estate; Elaboration of Architectural and Engineering Studies and Projects; Technical Consultancy and Issuance of Opinions; Project, Execution and Management of Housing Estates and Real Estate Developments for Tourism, Industry and Commerce; Civil Construction and Public Works; Building, Acquisition, Administration, Management and Disposal of Housing Estates and Developments, Buildings and Housing Units; Acquisition and Disposal of shareholding units in securities and tangible and intangible investment funds. Tax Payer no.: 504 862 332
Summary:
Operating Income: (B)-(A) -54.750,22 -58.206,01
Financial Income: (D-B)-(C-A) -11.619,29 -7.030,05
Current Income: (D)-(C) -66.369,51 -65.236,06
Income Before Taxes: (F)-(E) -66.022,76 -64.964,31
net Profit for the year: (F)-(G) -49.867,26 -48.199,77
The Certified AccountantVítor José Caetano de Sousa
The ManagementJorge Manuel Soares Simões - Manager | José Luís Soares Simões - Manager | Leonel Fernando Soares Simões - Manager
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Deferred Tax Assets and Liabilities are calculated and valued, using taxation rates which are expected to be in force at the time of the reversal of the provisional differences.
Since 2007, the company has been included in the Special Taxation System for Groups of Companies (“RETGS”) led by the shareholder LS – Luís Simões, SGPS, S.A.
6 – DISCLOSURE OF THE MAIN TAx COST (INCOME) COMPONENTSThe company is subject to Corporate Income Tax (“IRC”), at the current rate of 25%, plus a municipal tax (“Derrama”) at a maximum rate of 1.5% on taxable profits, reaching an aggregated income tax of 26.5%.
Under Article 81 of the Corporate Income Tax Code (“CIRC”), the company is subject to autonomous taxation on a host of charges provided for therein.
As was referred in note 3.2, ever since the financial year of 2007 the Group companies have been included in the Special Taxation System for Groups of Companies (“RETGS”) under Article 63 et seq. of the CIRC, led by the shareholder LS – Luís Simões, SGPS, S.A., whereby individually obtained taxes are reflected in the shareholder balance included in the item “Group Companies”.
In accordance with the legislation in force, tax statements are subject to audit and correction by tax authorities for a period of four years (ten years for Social Security up to and including 2000 and five years from 2001 onwards), unless tax losses occurred or inspections, complaints or impugnments are in course; in these cases, and depending on the circumstances, these deadlines are extended or suspended.
The reconciliation between the accounting income and the taxable income, and between current tax and the income tax for the year, is as follows:
The Company has applied the provisions of Accounting Guideline no. 28, which pertains to the accounting for Deferred Taxes.
2008 2007
Current Tax
Income Before Taxes -66.022,76 -64.964,31
Permanent Differences -3,34
Taxable Income -66.026,10 -64.964,31
Tax Losses (Provisional Difference) 58.730,73 64.964,31
Tax Losses (Provisional Difference) – RETGS (Spe cial Taxation System for Groups of Companies)
7.295,37 64.964,31
0,00 0,00
Tax Rate
Corporate Income Tax 25,00% 25,00%
Municipal Tax (“Derrama”) 1,50% 1,50%
0,00 0,00
Autonomous Taxation 460,46 451,00
Current Tax (I) 460,46 451,00
Deferred Tax
Effect on the Financial Year -14.682,69
Effect on the Financial Year – RETGS (Special Taxation System for Groups of Companies)
-1.933,27 -17.215,54
Deferred Tax (II) -16.615,96 -17.215,54
Corporate Income Tax for the Financial Year (I) + (II) -16.155,50 -16.764,54
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Changes occurred during the financial year as a result of the adoption of this directive, in terms of their nature and impact, are as follows:
7 - AVERAGE nUMBER OF PERSOnS AT THE COMPAny’S SERVICEEmployees ................................................................................. 1
16 - TABLE OF GROUP COMPAnIES - ASSOCIATED COMPAnIES AnD SHAREHOLDER COMPANIESThis company’s Financial Statements are included in the Consolidated Financial Statements of the following company:
Firm: LS – Luís Simões, SGPS, S.A.Head office: Moninhos – Loures, PortugalTax Payer no.: 503 717 789
32 - GRAnTED GUARAnTEESThe company issued promissory notes to third parties as a guarantee of payment of debts, amounting to 104,536.71 Euros as at 31 December 2008.
37 - SHAREHOLDInG In THE SUBSCRIBED SHARE CAPITAL OF EACH OF THE CORPORATE BODIES HOLDING AT LEAST 20% OF THE SHARE CAPITAL
40 - DETAILED EXPLAnATIOn AnD JUSTIFICATIOn OF CHAnGES OCCURRED DURInG THE FINANCIAL YEAR IN EACH OF THE EQUITY ITEMS CONTAINED IN THE BALANCE SHEET
41 - STATEMEnT OF THE COST OF GOODS SOLD AnD MATERIAL COnSUMEDS
45 - FInAnCIAL InCOME STATEMEnT
Opening Balance
Effect on the Financial Year
Closing Balance
Deferred Tax Assets:
Tax Losses 0,00 14.682,69 14.682,69
0,00 14.682,69 14.682,69
PartnersSubscribed Shares Shareholding
%Voting
Rights %Quantity Amount
LS – Luís Simões, SGPS, S.A. 1 247.500 99 99
AccountsOpening Balance
Increase ReductionsClosing Balance
51 Share Capital 250.000,00 250.000,00
57 Reserves:
571 Legal Reserves 1.001,79 1.001,79
574 Free Reserves 4.894,26 4.894,26
59 Retained Earnings -46.118,53 -48.199,77 -94.318,30
88 Net Income -48.199,77 -49.867,26 -48.199,77 -49.867,26
Changes GoodsRaw material, Subsidiary
materials and Consumables
Opening Inventories 459.275,65
Purchases 4.470,00
Closing Inventories 463.745,65
Cost for the Year 0,00 0,00
Losses and CostsFinancial Years
2008 2007
681 Interest Paid 11.465,65 6.814,50
688 Other Financial Losses and Costs 153,64 215,55
Financial Income -11.619,29 -7.030,05
0,00 0,00
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46 - EXTRAORDInARy InCOME STATEMEnT
48 - OTHER InFORMATIOn DEEMED RELEVAnTA) Changes involving Group Companies and Associated Companies
Losses and CostsFinancial Years
2008 2007
698 Other Extraordinary Losses and Costs 0,04
Extraordinary Income 346,75 271,75
346,79 271,75
IncomeFinancial Years
2008 2007
797 Prior Years’ Adjustments 343,45 271,68
798 Other Extraordinary Income 3,34 0,07
346,79 271,75
The Certified AccountantVítor José Caetano de Sousa
The ManagementJorge Manuel Soares Simões - Manager
José Luís Soares Simões - ManagerLeonel Fernando Soares Simões - Manager
Items Amounts
Payables:
Suppliers, c/a 1.071,06
Shareholders 173.174,11
Operating Costs 10.427,88
Financial Expenditure 7.713,57
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A| MANAGEMENT REPORT
ACTIVITY DURING THE FINANCIAL YEARIn 2008, Patrimundus consolidated its major project. After completion of the construction of the new Technical Assistance Centre in Carregado, the space was rented out to other companies of the Group, who began to develop their activities there.
ECONOMIC AND FINANCIAL ANALYSISThe company Income, as was expected in the previous year, reverted its previous trend. The Operating Income amounted to 284 thousand Euros, whereas the net Income totalled 10 thousand Euros. The latter was weakened by financial charges resulting from leasing interest.
Assets amounted to 5,869 thousand Euros, a significant increase compared to last year, resulting from starting to rent the facilities. This change had a direct effect on the Financial Autonomy and Solvency Ratios of the company, both of which registered a value of 7% in 2007.
PERSPECTIVES FOR 2008During 2008, Patrimundus expects the stabilisation of its Income as a result of the revenues from the renting of its facilities to the group’s companies: Reta, Socar, Lusiseg and Transportes Luís Simões.
Patrimundus - Investimentos Imobiliários, S.A.
Patrimundus - Investimentos Imobiliários, S.A.Legal Person no. 506 861 341 | Share Capital: 510,000.00 Euros | CRC Loures | Moninhos 2671-951 Loures, Portugal
B| REPORT AND OPINION OF THE SINGLE AUDITOR AND REGISTERED AUDITORS’ REPORT
Ernst & youngAudit & Associados - SROC, S.A.
Avenida da República, 90-6°1600-206 Lisboa, Portugal
Telf: +351 217 912 000Fax: +351 217 957 586
www.ey.com
| REPORT AND OPINION OF THE SINGLE AUDITOR
Dear Shareholders,
In compliance with the legal provisions and the Company’s Articles of Association, it is incumbent on us to issue the annual report on the audit of Company Patrimundus – Investimentos Imobiliários, S.A., regarding the financial year ended on 31 December 2008, and issue an opinion on the report, accounts and the proposal for the allocation of the profits presented by the Board of Directors.
In the course of the financial year and as part of our appointed duties, we carried out, with satisfactory results and with the frequency and extent deemed most adequate, a general audit of all accounting procedures, as well as surveys of their corresponding records and other probative elements.
The Board of Directors’ report explains the orientation of the Company’s policy during the financial year, as well as the policy proposal for 2009 financial year.
The Balance Sheet, Income Statements, Cash Flow Statement and their respective Annexes, respecting all legal requirements, reflect the position of the accounting records at the end of the financial year and attest to the Company’s financial situation.The valuation criteria used for the preparation of accounts are laid down in the Annex to the Balance Sheet and to the Income Statements, and lead to a suitable
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Ernst & youngAudit & Associados - SROC, S.A.
Avenida da República, 90-6°1600-206 Lisboa, Portugal
Telf: +351 217 912 000Fax: +351 217 957 586
www.ey.com
| REGISTERED AUDITORS’ REPORT
IntroductionWe have audited the financial statements of Patrimundos – Investimentos 1. Imobiliários, S.A., which comprise the Balance Sheet as at 31 December 2008 (reflecting a total of 5,475,011 Euros and total equity of 390,426 Euros, including a net loss of 13,135 Euros) the Income Statement by Natures and By Functions and the Cash Flow Statement, for the year then ended, and the related Annexes.
ResponsibilitiesThe Board of Directors is responsible for preparing the financial statements 2. giving a true and fair view of the Company’s financial position, the profits of its operations and cash flows, as well as for adopting appropriate accounting policies and criteria and keeping an appropriate internal control system.
Our responsibility is to express a professional and independent opinion based 3. on our audit to those financial statements.
ScopeWe conducted our audit in accordance with the Technical Standards and 4. Guidelines of Revision/Audit of the Portuguese Board for Registered Auditors, which require the planning and performance of the audit so as to obtain reasonable assurance that the financial statements are free from material misstatements. In order to do so, the audit included:- the examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements and the assessment of the estimates based on judgements and criteria made by the Board of Directors and used in the preparation of the financial statements;- the assessment of whether the adopted accounting policies and their disclosure are appropriate to the company’s circumstances;- examination of the applicability of the principle of continuity; and- evaluation of the overall adequacy of the presentation of information in the financial statements.
assessment of company assetsAll regulatory formalities as well as those from the Articles of Association with regards to the accountability and auditing of the Company were complied, whereby we issue the following Opinion, which shall be presented to shareholders and published as required by law:
Opinion of the Single Auditor
Dear Shareholders,
We have audited the company Patrimundus – Investimentos Imobiliários, S.A., in accordance with article 420 of the Commercial Companies Code and the company’s Articles of Association, the results of which lead us to opine as follows:
(a) The Management Report and the Accounts for the financial year of 2008 should be approved;
(b) The Board of Directors’ proposal on the allocation of the profits of the financial year should be approved.
Lisbon, 13 March 2009
The Single Auditor
Ernst & young Audit & Associados - Sroc, S.A.Independent Registered Auditor’s Firm (No. 178)Represented by:
João Carlos Miguel Alves (Registered Auditor no. 896)
Public Company – Share Capital 1,105,000 Euros – registered on the Portuguese Board of Registered Auditors under No. 178 – Registered on CMVM (Portuguese Securities Market Commission) under No. 9011 – Tax Payer No. 505 988 283 – Registered on Lisbon Companies Registry under No. 505 988 283 – A member firm of Ernst & young Global Limited
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The audit also included our opinion on whether the information given in the 5. Management Report is consistent with the financial statements.
We believe that the audit carried out provides an acceptable basis for 6. expressing our opinion.
OpinionIn our opinion, the financial statements give a true and fair view, in all 7. aspects materially relevant, of the state of Patrimundos – Investimentos Imobiliários, S.A. affairs as at 31 December 2008, the profits of its operations and cash flows for the financial year then ended, in accordance with the accounting principles generally accepted in Portugal.
Lisbon, 13 March 2009
Ernst & young Audit & Associados - SROC, S.A.Independent Registered Auditors Firm (No. 178)Represented by:
João Carlos Miguel Alves (Registered Auditor no. 896)
Public Company – Share Capital 1,105,000 Euros – registered on the Portuguese Board of Registered Auditors under No. 178 – Registered on CMVM (Portuguese Securities Market Commission) under No. 9011 – Tax Payer No. 505 988 283 – Registered on Lisbon Companies Registry under No. 505 988 283 – A member firm of Ernst & young Global Limited
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GLOSSARy OF TERmS
“glossary
–noun, plural -ries.
1. a list of terms in a special
subject, field, or area of usage,
with accompanying definitions.
2. such a list at the back of a book,
explaining or defining difficult or
unusual words and expressions
used in the text.„
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Glossary of Terms
• BEnCHmARK – A continuous and systematic process used by companies to improve management through the conduction of surveys, comparisons and analyses of policies, products, programs and strategies provided by other companies, normally recognised as representing best practices
• ERSC – European Road Safety Charter• LOC – Logistics Operations Centre• SuSTAInABLE DEvELOPmEnT – Development which meets current needs without
putting at risk the needs of future generations. (Source: The Brundtland Report, UN World Commission on Environment and Development, 1987)
• DGERT - Directorate-General for Labour and Work Relations• EBITDA - Earnings Before Interest, Taxes, Depreciation and Amortization• PPE – Personal Protective Equipment• GREEnHOuSE GASES – gases in the atmosphere responsible for the greenhouse
effect• FOCuS GROuP – research technique that evaluates in qualitative terms the
attitude of a group of people with regard to a product, service, company or concept.
• GRI – Global Reporting Initiative• I&D – Innovation and Development• ISC – Client satisfaction survey• ISO 14001:2004 – Certification of the Environment Management System• ISO 9001:2000 – Certification of the Quality Management System• ISO 22000:2005 – Certification of the Food Safety Management System • nGOs – non-Governmental Organisations• OnRH - Human Resources national Office• POC – Portuguese Official Accounting Plan• STAKEHOLDER – Term used to represent all parties involved in the activity of
a given company and all those influenced by the company. This term is often used in a context of Social Accountability and represents all company “players” (employees, clients, suppliers, shareholders, directors), “observers” (the State, Trade Unions, institutions and the media) and civil society (associations in the region in which the company is established)
• S&ST – Occupational Health and safety
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“GRIGlobal Reporting Initiative„
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PROFILE LOCATION OR EVALUATION
1 STRATEGY AND ANALYSIS
1.1 Statement from the Board of Directors Message from the president
1.2 Description of key risks and opportunities. 02.3. Table 1
2 ORGANISATIONAL PROFILE
2.1 Name of the organisation About this report
2.2 Primary brands, products and/or services. LS Universe
2.3 Operational structure of the organisation 01.1.
2.4 Location of the organisation’s headquarters. Moninhos, P.O. Box 41, 2671-951 Loures
2.5 Number and name of countries where the organisation operates Portugal and Spain
2.6 Nature of ownership and legal form. Share capital public limited company
2.7 Markets served (including geographical breakdown, sectors covered and types of clients/beneficiaries). LS Universe
2.8 Scale of reporting organisation. 01.
2.9 Significant changes during the reporting period n.a.
2.10 Awards received in the reporting period. 08.6
3 GUIDELINES FOR THE REPORT
REPORT PROFILE
3.1 Reporting period About this report
3.2 Date of most recent report if any n.a.
3.3 Reporting cycle About this report
3.4 Contact point for questions About this report
SCOPE AND Boundary OF THE REPORT
3.5 Process for defining report content 02.5.
3.6 Boundary of the report About this report
3.7 State any specific limitations on the scope or boundary of the report. About this report
3.8Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations and other entities that can significantly affect comparability from period to period and/or organisations
About this report
3.9 Data measurement techniques and the bases of calculation, including assumptions and techniques Referred to throughout the report
3.10 Explanation of the effect of any re-statements of information provided in earlier reports n.a.
3.11 Significant changes comparison from previous reporting periods. n.a.
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SUMMARY OF GRI CONTENT
3.12 Table identifying the location of the Standard Disclosures in the report Current table
ASSURANCE
3.13 Policy and current practice with regard to seeking independent assurance for the report.In this first report no external verification was sought.
4 GOVERNANCE, ENGAGEMENTS AND INVOLVEMENT
GOVERNANCE
4.1 Governance structure of the organisation 01.2.
4.2 Indicate whether the Chair of the highest governance body is also an executive officer 01.2.
4.3For organisations that have a unitary board structure, state the number of members of the highest governance body that are independent and/or non-executive directors.
01.2.
4.4Mechanisms enabling shareholders and employees to transmit their recommendations or issue guidelines to the highest governance body.
01.2.
4.5Linkage between compensation for members of the highest governance body, senior managers and executives (including departure arrangements) and the organisation’s performance (including social and environmental performance).
0n.a.
4.6 Processes available to the highest governing body in the hierarchy, in order to avoid conflicts of interest. n.a.
4.7Process for determining the qualifications and expertise of the members of the highest governance body for guiding organisation’s strategy on economic, environmental and social topics.
n.e.
4.8Internally developed statements of mission or values codes of conduct, and principles relevant to economic, environmental and social performance and the status of their implementation.
01.
4.9Procedures of the highest governance body for overseeing the organisation’s identification and management of economic, environmental and social performance
Annual Report and AccountSusteinavility Report
4.10Processes for evaluating the highest governance body’s own performance, particularly with respect to economic, environmental and social performance
Sustainability Report
ENGAGEMENTS WITH ExTERNAL INITIATIVES
4.11 Explanation on whether the precautionary principle is broached by the company and in what way.Risk management in food safety and prevention of road safety.
4.12Externally developed economic, environmental and social charters, principles, or other initiatives to which the organisation subscribes or endorses
IRU
4.13Significant participation in associations (such as industry federations) and/or national and international defence bodies, in terms of organisation.
BCSD Portugal
STAKEHOLDERS’ ENGAGEMENT
4.14 List of stakeholder groups engaged by organisations. 02.3.
4.15 Basis for identification and selection of stakeholders. 02.3.
4.16 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group. 12.4.
4.17Key topics and concerns that have been raised through stakeholder engagement and how the organisation has responded to those key topics and concerns, including through its reporting.
12.2. and 12.3.
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ECONOMIC PERFORMANCE
EC1 Direct economic value generated and distributed E 04.2.
EC2Financial implications and other risks and opportunities for the organisation’s activities due to climatic change.
E n.a.
EC3 Fulfilment of obligations concerning the benefits plan defined by the company. E n.e.
EC4 Significant financial support received from the government. E 13.
EC5 Ratio between the lowest salary and the local minimum wage, at the most important operations units. A n.d.
EC6Policies, practices and proportion of spending on locally based suppliers at the most important operational units.
E n.d.
EC7Procedures for local hiring and the proportion of members in the top management positions occupied by individuals from the local community, at the most important operations units.
E n.e.
EC8Development and impact of investments in infrastructures and services essentially aimed at public benefit, through commercial involvement, in goods or pro bono.
E n.e.
EC9 Description and assessment of the most significant indirect economic impacts, including their extent. A n.d.
LOCATION OR EVALUATIONESSENTIAL /ACCESSORYPERFORMANCE INDICATORS
ENVIRONMENTAL PERFORMANCE
EN1 Materials used per weight or volume E n.d.
EN2 Percentage of materials used arising from recycling. E n.d.
EN3 Direct energy consumption by primary energy source ETotal diesel consumption of own fleet – 21.611.411 litres
EN4 Indirect energy consumption by primary source. E 10.2 – Chart 12
EN5 Total energy saving due to improvements in energy preservation. A 09.3
EN6Initiatives to supply products and services with low energy consumption or that use energy from renewable sources, and the reduction in energy consumption resulting from those initiatives.
A 09.3.
EN7 Initiatives to reduce indirect energy consumption and reductions achieved. A 09.3.
EN8 Total water consumption, per source. E 10.4 – Chart 14
EN9 Water resources significantly affected by water consumption. A n.a.
EN10 Percentage and total volume of recycled and reused water. A n.a.
EN11Location and area of land belonging to, leased or administered by the company, lying within or adjacent to protected areas, and areas of high biodiversity index lying outside of protected areas
E n.d.
LOCATION OR EVALUATIONESSENTIAL/ACCESSORY
PERFORMANCE INDICATORS
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EN12Description of significant impacts of activities, products and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas.
E n.d.
EN13 Protected or recovered habitats. A n.e.
EN14 Current and future strategies and programs for managing the impact on biodiversity. A n.e.
EN15Number of species on the IUCN Red List and on national conservation lists with habitats in areas affected by operations, by level of risk extension.
E n.e.
EN16 Total direct and indirect greenhouse gas emissions by weight. E 09.3. – Chart 11 / 10.2. – Chart 12
EN17 Other relevant indirect greenhouse gas emissions by weight. E n.d.
EN18 Initiatives to reduce greenhouse gas emissions, as well as the reductions obtained. A 09.3.
EN19 Emissions of ozone depleting substances by weight. E n.d.
EN20 nOx, SOx and other significant air emissions by type and weight. E n.d.
EN21 Total water discharge by quality and destination. E 8.979,6 m3
EN22 Total amount of waste, per type and method of elimination. E 10.3.1. / 10.3.2.
EN23 Total number and volume of significant spills. E n.e.
EN24Weight of transported, imported, exported or treated waste considered hazardous according to the terms of the Basel Convention – Annexes I, II, III e IV, and the percentage of waste materials transported by ship on an international level.
A n.e.
EN25Identification, size, protection status and value to biodiversity of water resources and their respective habitats which have been significantly affected by water discharges and superficial outflow.
A n.e.
EN26Initiatives to mitigate environmental impacts of products and services and extent of impact mitigation.
E 09.3.
EN27 Percentage of products sold and their packaging materials that are claimed by category. E n.d.
EN28Monetary value of significant fines and total number of non-monetary sanctions for, non-compliance with environmental laws and regulations.
E n.a.
EN29Significant environmental impact resulting from the transport of products and other goods and materials used in the company’s operations, as well as from employee transport.
A n.d.
EN30 Total cost of and investment in environmental protection, per type. A n.d.
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SOCIAL PERFORMANCE – Labour Practices and Decent Work Performance
LA1 Total workforce by employment type, employment contract and region E 06.2. – Table 6 / 06.4. – Chart 2
LA2 Total number and rate of employee turnover by age group, gender and region E 06.4.
LA3 Benefits guaranteed to full-time employees which are not offered to temporary or part-time employees. A n.e.
LA4 Percentage of employees covered by collective contract agreements. E 06.9.
LA5Minimum prior notification period concerning operations changes, including whether that procedure is specified in collective contract agreements.
E 06.9.
LA6Percentage of the total labour force represented at formal health and safety committees, which assist in following up and advising on occupational health and safety programs.
A n.e.
LA7Rates of work-related injuries, professional ailments, lost workdays, absenteeism and work-related deaths, per region.
E 07.2.1.
LA8Ongoing programs concerning education, training, advice, risk prevention and control, for the assistance of employees, their families or members of the community in relation to serious illnesses.
E 11.2.
LA9 Topics related to safety and health covered by formal agreements with trade unions A n.e.
LA10 Average hours of training per year, per employee by employee category E 06.5. – Table 8
LA11Programs for competency management and ongoing learning that support continuity of staff employability and career-end management
A n.e.
LA12 Percentage of employees receiving performance and career development assessments on a regular basis. A n.e.
LA13Composition of governance bodies and breakdown of employees per category, according to gender, age group, minority group membership and other indicators of diversity
E 06.3. and 06.4
LA14 Ratio of basic salary of men to women by employee category E 06.4.
LOCATION OR EVALUATIONESSENTIAL/ACCESSORYPERFORMANCE INDICATORS
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SOCIAL PERFORMANCE – Society
S01Nature, scope and effectiveness of any programs and practices assessing and managing the impact of operations on communities, including entering, operating and exiting.
E n.e.
S02 Percentage and total number of business units analysed for risks related to corruption E n.e.
S03 Percentage of employees trained in organisation’s anti-corruption policies and procedures E n.e.
S04 Actions taken in response to incidents of corruption E n.a.
S05 Public policy positions and participation in public policy development and lobbying E n.d.
SO6 Total value of financial and in-kind contributions to political parties, politicians or related institutions by country A n.e.
S07 Total number of legal actions due to unfair competition, antitrust and monopoly practices, and their results A n.e.
S08Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations.
E n.e.
LOCATION OR EVALUATIONESSENTIAL/ACCESSORYPERFORMANCE INDICATORS
SOCIAL PERFORMANCE – Human Rights
HR1Percentage and total number of significant investment agreements that include human rights clauses or that have undergone human rights screening
E n.e.
HR2 Percentage of significant suppliers and contractors that have undergone screening on human rights, and action taken E n.e.
HR3Total hours of training for employees on policies and procedures related to relevant human rights aspects, including the percentage of employees who received training
A n.e.
HR4 Total number of incidents of discrimination and actions taken E 06.4.
HR5Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and action taken to support these rights
E n.e.
HR6Operations identified as having significant risk for incidents of child labour, and measures taken to contribute to the elimination of child labour
E n.e.
HR7Operations identified as having of significant risk for incidents or forced or compulsory labour, and measures taken to contribute to the elimination of forced pr compulsory labour
E n.e.
HR8Percentage of safety personnel that underwent training concerning company policies or procedures related to human rights aspects
A n.e.
HR9 Total number of cases regarding the violation of indigenous people rights, and measures taken A n.a.
LOCATION OR EVALUATIONESSENTIAL/ACCESSORYPERFORMANCE INDICATORS
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note:· n.a - not applicable· n.d. - not developed· n.e. – non-existing
SOCIAL PERFORMANCE – Product Responsibility
PR1Life cycle stages in which the health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures
E 03.2.
PR2Total number of incidents of non-compliance with regulations and voluntary codes related to the impacts caused by products and services in health and safety during life cycle by type of result
A n.e.
PR3Type of product and service information required by procedures, and percentage of significant products and services categories subject to such information requirements
E n.a.
PR4Total number of incidents of non-compliance with regulations and voluntary codes related to information and the labelling of products and services by type of result
A n.e.
PR5 Practices related to client satisfaction, including results of research measuring satisfaction A 03.6.1.
PR6Programs of adherence to laws, standards and voluntary codes related to marketing communications, including advertising, promotion and sponsorship
E n.a.
PR7Total number of incidents of non-compliance with regulations and voluntary codes related to marketing communications, including advertising, promotion and sponsorship by type of result
A n.e.
PR8 Total number of confirmed complaints regarding violations of privacy and loss of client data A n.e.
PR9Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services
E n.e.
LOCATION OR EVALUATIONESSENTIAL/ACCESSORYPERFORMANCE INDICATORS©
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EngagementsPrinciples of Sustainability
Providing a service of high quality and responsibility
▪ Meeting client expectations by offering flexible and innovative solutions;▪ Guaranteeing high standards of quality for own and outsourced fleet, for internal logistics operations and for sales and technical assistance services to semi-trailers.▪ Guaranteeing high standards of product safety, including food safety, throughout LS’ involvement in the supply chain.
2009 Service Level:On time DLS: 98%, On time LSL: 96%, Global TI: 98%
Ensuring the financial strength of the Group
▪ Promoting a policy of Income retention, reinforcing equity and subsequent financial balance;▪ Adjusting the provisional structure of monetary resources foreign to the nature of financial investments;▪ Efficiently managing the client portfolio, focusing on the reduction of PMR and guaranteeing the financing of the exploration cycle.
2009 Financial autonomy – 24%;EBITDA – growth of 10% in compared to 2008.
Promotion of innovation and being at the fore-front
▪ Implementing a culture of innovation in terms of organisation, process and service, increasing efficiency and creating value for the Client and for the Group▪ Adopting the best solutions available for the performance of activities, anticipating, whenever possible, client needs and the fulfilment of regulatory requirements.
2009 Quantify Innovation Scoring indicatorInvestment rate in I&D (under the Turnover) LS ≥ 1.7%
Recruitment, Training and Retention of Employees
▪ Stimulating the recruitment and retention of the staff showing the greatest potential;▪ Assuring the continuity of the management capacity through the qualification and motivation of people;▪ Boosting professional development and personal fulfilment▪ Transmitting a vision of a company engaged with its professionals and with their development.▪ Contribute towards the creation of jobs in socially depressed areas, through the hiring of drivers.
2009 IImplement talent management in 80 High-Potential employees;Enhance the reporting of human resource management indicators, including the turn-over / rotation indicator.
Promotion of Occupational Health and Safety
▪ Improving the ergonomic conditions and the environment at the workplace.▪ Monitoring and mitigating activity-related risks; ▪ Ensuring the existence of suitable resources for the promotion of health and safety in the performance of the professional activity
2009 5% Reduction in the no. of Work-related Accidents190 hours of training on occupational safety.
Promotion of Road Safety
▪ Promoting good driving practices through the training and monitoring of performances, rewarding the best practices; ▪ Providing good job conditions for the drivers in terms of ergonomics, as well as resting conditions; ▪ Properly maintaining vehicles▪ Creating communication channels on road safety, monitoring road accidents and making engagements towards their reduction.
2009
2010
60% of drivers without accidents for which they are not accountable for during 500 days;Average age of fleet Own: 2 ½ years Outsourced: Transport 8 years, Logistics 8 yearsDevelopment of the communication channel with drivers regarding Road Safety
Energy efficiency in goods transport
▪ Promoting efficient power units, alternative fuel and inter- and co-modality solutions;▪ Optimising routes, decreasing kilometres in empty and increasing vehicle occupancy rates;▪ Investing in eco-driving training▪ Monitoring fuel consumption, greenhouse gas and particle emissions.▪ Investing in the relationship with transport and other outsourcers, supporting them with a growing adoption of sustainability criteria.
2009 Reduction of fuel consumption (own fleet) – Reduction of 0.5 lts/100 kms;Rate of increase of EURO 4 and 5 vehicles: Own fleet 6%; Reduction of kms in empty (own fleet and permanent outsourced transport fleets)(kms in empty < 8.1% of total kms);Vehicle occupancy rate (logistics): ≥ 60% (weight)Eco-driving training (h): (1000 man hours - own fleet; 600 man-hours for permanent outsourced fleets; Logistics – DLS: 800 man hours).
Improvement of the environmental performance of facilities and operations
▪ Promoting energy efficiency at warehouse, technical assistance to heavy vehicles centres, and offices level▪ Promoting the correct management and valuing of waste▪ Monitoring water consumption and promoting its recycling.
2009
2010
Decrease of Energy consumption with Good Practices (DLS – 5%)10% increase in Waste Recycling (51% to 61%)Definition of environmental requirements for suppliersMonitoring of water consumption used for truck washingImplement ISO 14001:2004 Standard
Promoting internal and external citizenship
▪ Promoting a growing approach to the community, through a strategy of patronage and support for social initiatives. ▪ Supporting institutes, organisations and projects of public interest by providing technical, human resource and financial capacities. ▪ Fomenting the citizenship of its employees by promoting their health and investing in partnerships for their benefit.
2009 Provision of transport services to the Food Bank (Banco Alimentar contra a Fome) and other social organisations; Perform 2 blood donation campaigns;Performance of 2 blood sugar screening campaigns;Performance of one campaign to break the tobacco habit;Development of partnerships with suppliers to obtain privileges for employeee.g. Health insurance for employees and their families in Spain;Encouragement of sports practice through participation in Mini Marathons, long walks, etcMaintenance of additional actions for health promotion referred to in the chapter concerning Occupational Health and Safety;Promotion of Volunteering in High Schools through actions encouraging entrepreneurship.
Promoting internal and external communication
▪ Structuring communication channels and promoting face-to-face activities for drivers and other employees▪ Promoting visits by learning institutes, families of employees and/or other stakeholders to LS facilities (sites).▪ Promoting strategic communication and operational communication web platforms with suppliers and clients▪ Communicating in a transparent way with the media and with local and national authorities
2009 New Web platform for communication with suppliers
DatasheetTitle| Luís Simões Sustainability Report 2008
Property| LS - Luís Simões, S.A.
Management| Corporate Management for Innovation
Image Coordination| LS Communication Department
Consultants| Sair da Casca - Consultoria em Desenvolvimento Sustentável
Design| Complementar Consultoria em Marketing, Lda.