ANNUAL REPORT SEPARATE ACCOUNTS 2008

Transcription

1 ANNUAL REPORT SEPARATE ACCOUNTS 2008 Sede: Estrada de Alfragide, Nº 67 Amadora 1

2 SAG GEST Soluções Automóvel Globais, SGPS,SA Listed Company Registered Share Capital: EUR 169,764,398 Taxpayer no Registered at the Amadora Registrar of Companies under no Headquarters: Estrada de Alfragide, nº Amadora Offices: Alfrapark Edifício SGC, Piso Amadora Tel: (351) Fax: (351) [email protected] Web: Sede: Estrada de Alfragide, Nº 67 Amadora 2

3 MANAGEMENT REPORT SEPARATE ACCOUNTS 2008 Sede: Estrada de Alfragide, Nº 67 Amadora 3

4 SAG GEST SOLUÇÕES AUTOMÓVEL GLOBAIS, SGPS, S.A. Listed Company REPORT OF THE BOARD OF DIRECTORS FISCAL YEAR 2008 In accordance with the applicable regulations and the Company s By-Laws, we hereby present the Management Report and the Financial Statements regarding the financial year ending on 31 December 2008 to our Shareholders. The information contained in these documents concerns SAG GEST Soluções Automóvel Global, SGPS, S.A. s individual activity as parent company of Grupo SAG. The information concerning Grupo SAG s consolidated business is presented separately. ACTIVITY REPORT In accordance with estimates which were recently published by the European Commission, by Banco de Portugal and by the Portuguese Ministry of Finance, the Portuguese GDP stagnated in 2008 and the diverging trend of this indicator vs. the European average continued for the seventh consecutive year. GDP slowdown was particularly felt in exports and investments, reflecting a sharp deterioration in the evolution of demand both in the domestic and in the foreign market. The Brazilian economy saw a 5.3% increase in GDP, an amount which was similar to that in 2007 and substantially higher than in 2006 (5.4% and 4.0%, respectively), driven mainly by increased spending and strong consumption by households in the first three quarters of the year. Brazilian GDP growth already takes into account the deceleration which hit the Brazilian economy in the final quarter of 2008, due to the effects of the international economic crisis. Business activity of the Group that SAG SGPS leads reflected the impacts of these situations, although business conducted in the automotive sector in Portugal saw a positive operational development in the various business areas, with performances above the market average. Business activities by the Group in Brazil continued with high growth rates, as had been the case in previous years. Apart from the current business operations of the Group Companies, several operations conducted in 2008 are worth highlighting: Sede: Estrada de Alfragide, Nº 67 Amadora 4

5 As concerns development of the retail network, Affiliate Soauto SGPS acquired the majority of the capital of Loures Automóveis SA, a Dealer who handles all the makes represented by SIVA (with the exception of Luxury Brands) in the Loures region, strengthening the business area expansion strategy of the automobile retain in the Greater Lisbon area. During the 2008 financial year, SAG SGPS strengthened Unidas equity with two capital increase operations conducted in April and December, in an amount equivalent to approximately EUR 34.7 million, ensuring the balance of the relevant balance sheets. In October, SAG SGPS successfully conducted the refinancing of the SAG 2004 Bond issue, which reached maturity on that date. On November 5th 2008, SAG Gest sold the total share capital of its Affiliate Brienz Mobilidade Automotiva Ltda (Brienz) to Growth Capital Invest S.A., a Grupo SGC company and therefore a Related Entity. Brienz is a company incorporated according to the Brazilian law which was bought by SAG Gest in March 2008 and which, on the date of the transaction, was not active and did not have any assets or liabilities. For this reason, the price was BRL 1,613,058.00, which corresponded to the Company s Net Equity on the date of the transaction. In accordance with para. 2 of Clause 397 of the Companies Act, the said sale transaction was submitted to the Audit Board for its opinion, which was favourable. ACTIVITY CONDUCTED BY NON-EXECUTIVE MEMBERS OF THE BOARD OF DIRECTORS Non-executive directors are advised about all relevant decisions made by the Executive Committee, and therefore permanently monitor the company s business. This knowledge, as well as their professional qualifications enable an active presence in the Board of Directors, both in the supervision of the management activity as well as in pursuing the company s interests in a cooperative manner. Therefore, they provide full support and advise the executive committee, namely as concerns strategy, target achievement and compliance of applicable regulations. They assess the company s monthly accounts and challenge the motive of any positive or negative deviations shown. They monitor and assess all matters concerning corporate governance, sustainability and internal codes of conduct, and address possible situations of conflict of interest regarding the company s relationship with its shareholders. Non-executive directors do not meet autonomously but, further to board meetings, maintain informal conversations about the business or operations of significant economic or strategic value, implicitly assessing the performance of their executive colleagues. OUTLOOK FOR 2009 During 2009, SAG GEST SGPS hopes to continue to strengthen the competitive position of its Affiliates in the areas in which they operate, based on a strategy that promotes sustained growth and with adequate profitability levels. TREASURY STOCK INFORMATION (CLAUSE 66 OF THE COMPANIES ACT) On 31 December 2007, the Company had 10,378,415 treasury stock, of which 10,373,315 held directly, and indirectly, 5,100 treasury stock held by affiliate Rolporto, all with the nominal value of EUR 1 each. The average unit acquisition price of these stocks was EUR During the financial year, SAG Gest bought 6,387,500 shares for an average unit price of EUR 2,3952. These acquisitions were made throughout the year, in the following manner: Sede: Estrada de Alfragide, Nº 67 Amadora 5

6 Quantity Average Unit Price Total Amount 1st Semester 6,387,500 2, ,299,450 2nd Semester Total for the Year 6,387,500 2, ,299,450 These acquisitions were made throughout the year, as follows: Under the contract with Banco de Investimento Global in its capacity as Liquidity Provider, 1,700,000 shares were bought for an average unit price of Eur 2,3636. Upon maturity of a swap contract established with a Financial Institution, 4,687,500 shares were bought for an average unit price of Eur On 31 December 2008, the Company owned directly 16,760,815 treasury stock, with the nominal value of EUR 1 each, and also controlled indirectly a further 5,100 shares held by affiliate Rolporto, as well as 5,100 shares held by affiliate Loures Automóveis, all with a nominal value of EUR 1 each. The portfolio of treasury stock held directly and indirectly corresponded to 9.879% of the total stock representing the Company s share capital on 31 December 2008, with an average unit price of EUR 1,9760. PROPOSAL FOR PROFIT APPROPRIATION The Net Result for FY 2008 was positive for an amount of 30,783,985, and the following distribution is hereby proposed: Legal Reserve (5%) EUR 1,539,200 Dividends EUR 3,429,241 Retained Earnings EUR 25,815,544 This result is affected by non-recurring results following the sale of part of the investments held by SAG Gest in some of its Affiliates. The consolidated Net Result of the Group totalled Eur Since the dividend payment policy that has been adopted determines the distribution of at least 50% of the Group s consolidated results, the Board of Directors considers that the above mentioned result should be used as reference. Therefore, following the decision of the Shareholders Meeting on 21 October 2008, the Company announced an interim dividend in the gross amount of 3,429,240.84, corresponding to Eur 0,0202 (two point two cents) per share, and for this reason the above proposal does not provide for any additional payment of dividends. Interim dividends were paid on 10 November 2008, and the amount corresponding to treasury stock held on that date is Eur 338,568.46, which is hereby proposed to be applied against Retained Earnings. SUBSEQUENT EVENTS As announced on 11 March 2009, Executive Director Manuel Ferro da Silva Meneses resigned from the post he had been elected to by the Shareholders Meeting held on 31 March 2006, effective 30 April Sede: Estrada de Alfragide, Nº 67 Amadora 6

7 FINAL NOTE In compliance with the legal and statutory provisions, the Board of Directors submits to the Shareholders approval the Annual Report 2008, in the firm belief that, to the best of its knowledge, information contained in the same was prepared in compliance with the applicable accounting standards and gives an accurate and adequate image of the Company s assets and liabilities, financial situation and results, and that the Management Report accurately reflects the development of business, performance and position of the Company and contains a description of the main risks and uncertainties that confront them. Alfragide, 27 March 2009 THE BOARD OF DIRECTORS João Manuel de Quevedo Pereira Coutinho Esmeralda da Silva Santos Dourado Carlos Alexandre Antão Valente Coutinho Fernando Jorge Cardoso Monteiro António Carlos Romeiras de Lemos Manuel Ferro da Silva Meneses Rui Eduardo Ferreira Rodrigues Pena José Maria Cabral Vozone Pedro Roque de Pinho de Almeida Sede: Estrada de Alfragide, Nº 67 Amadora 7

8 SHAREHOLDER POSITION SEPARATE ACCOUNTS 2008 Sede: Estrada de Alfragide, Nº 67 Amadora 8

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10 QUALIFIED OWNERSHIP POSITIONS SEPARATE ACCOUNTS 2008 Sede: Estrada de Alfragide, Nº 67 Amadora 10

11 QUALIFIED OWNERSHIP POSITIONS 31 December 2008 SGC Investimentos - SGPS, SA (*) Direct ownership 17,391,110 shares, representing 10.24% of the share capital and corresponding to 11.37% of voting rights. (*) 100% owned by SGC - SGPS, SA SGC - SGPS, SA (**) Direct ownership Indirect ownership 111,525,324 shares, representing 65.69% of the share capital and corresponding to 72.90% of voting rights. 17,391,110 shares held by SGC Investimentos SGPS, SA, representing 10.24% of share capital and corresponding to 11.37% of voting rights. (**) 100% owned by João Manuel de Quevedo Pereira Coutinho João Manuel de Quevedo Pereira Coutinho Direct ownership 3,915 shares, representing % of the share capital and corresponding to % of voting rights. Indirect ownership Global Sum 111,525,324 shares held by SGC SGPS, SA, representing 65.69% of share capital and corresponding to 72.90% of voting rights. 17,391,110 shares held by SGC Investimentos SGPS, SA, representing 10.24% of share capital and corresponding to 11.37% of voting rights. 128,920,349 shares, representing 75.94% of the share capital and corresponding to 84.26% of voting rights. Millennium bcp Gestão de Fundos de Investimento, SA Millennium Acções Portugal 2,371,391 shares, representing 1.40% of the share capital and corresponding to 1.55% of the voting rights. Millennium PPA 1,786,985 shares, representing 1.05% of the share capital and corresponding to 1.17% of the voting rights. Sede: Estrada de Alfragide, Nº 67 Amadora 11

12 Millennium Poupança PPR Millennium Investimento PPR Millennium Aforro PPR Global Sum 192,839 shares, representing 0.11% of the share capital and corresponding to 0.13% of the voting rights. 231,413 shares, representing 0.14% of the share capital and corresponding to 0.15% of the voting rights. 17,450 shares, representing 0.01% of the share capital and corresponding to 0.01% of the voting rights. 4,600,078 shares, representing 2.71% of the share and corresponding to 3.00% of the voting rights. Barclays Bank Plc Barclays Bank Plc Barclays Fundos Global Sum 4,687,500 shares, representing 2.76% of the share capital and corresponding to 3.06% of the voting rights. 454,562 shares, representing 0.27% of the share capital and corresponding to 0.30% of the voting rights. 5,142,062 shares, representing 3.03% of the share capital and corresponding to 3.36% of the voting rights. Sede: Estrada de Alfragide, Nº 67 Amadora 12

13 FINANCIAL STATEMENTS SEPARATE ACCOUNTS 2008 Sede: Estrada de Alfragide, Nº 67 Amadora 13

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18 NOTES TO THE FINANCIAL STATEMENTS SEPARATE ACCOUNTS 2008 Sede: Estrada de Alfragide, Nº 67 Amadora 18

19 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2008 INTRODUCTION The following Notes were prepared closely bearing in mind the requirements set forth in the International Financial Reporting Standards, since it is considered that the additional information provided in accordance with these terms exceeds the minimum requirements established in the local standards (Portuguese Official Chart of Accounts - POC). Therefore, and except in what concerns their numbering, the Notes to the Financial Statements comply with the criteria defined in the POC. 1. GENERAL INFORMATION REGARDING THE COMPANY S ACTIVITY Financial Statements as at 31 December 2008 were approved by the Board of Directors. The main activity of SAG GEST SGPS, SA is the management of investments in other Companies, as an indirect form of conducting economical activities. 2. SUMMARY OF MAIN ACCOUNTING POLICIES Bases for Preparation The Financial Statements of SAG SGPS, SA were prepared in accordance with accounting principles that are generally accepted in Portugal. Therefore, this report was prepared in accordance with the historical cost convention (modified by the re-evaluation of tangible assets), on the basis of the continuity of operations in accordance with the accounting principles of prudence, consistency, substance over form and materiality. All amounts shown in the Notes herein are expressed in Euros, unless stated otherwise. Changes in accounting policies The accounting policies are consistent with those applied in previous years (unless stated otherwise). Instead of adopting the minimum requirements set forth in the Portuguese accounting regulations, it was decided to implement certain adaptations, which were deemed to be necessary for a better understanding of the Company s economic and financial situation as explained herein. Investments in affiliates Investments in the share capital of Affiliated Companies, as well as securities, are recognized at cost. The corresponding dividends are only recognized when their payment has been secured. Any interest from securities is booked in the corresponding period. Sede: Estrada de Alfragide, Nº 67 Amadora 19

20 Foreign Exchange Transactions The functional currency used in the preparation of SAG SGPS SA s Financial Statements is the Euro. Transactions in foreign currencies (outside the Euro zone) are converted into Euros using the exchange rate prevailing on the date of the transaction. Foreign currency denominated accounts receivable and payable are converted into Euros using the exchange prevailing on Balance Sheet date. All exchange rate differences are recognized as income or expense during the period in which they occur. Land, Buildings and Equipment Buildings and Equipment are recognized at cost, net of the corresponding accumulated depreciation. Depreciation is calculated using the straight-line method, in compliance with the provisions of Decree no. 2/90, dated 12 January The value of fixed assets is fully depreciated during the assets useful life, and the following depreciation rates apply: % Buildings and Other Constructions 2,00 Basic Equipment 25,00 to 31,25 Office Equipment 12,50 to 25,00 Autos and Trucks 25,00 Other Tangible Assets 20,00 to 33,33 Financial costs Loans are recognized as liabilities at their nominal value, and their costs are recognized as expenses in the period to which they relate. Intangible assets Intangible assets are valued at cost. Depreciation is calculated on a straight-line basis, using depreciation rates that allow the complete depreciation of these assets during their respective useful lives. Debtors Accounts Receivable are recognized at invoice value after deducting any adjustments for bad or doubtful accounts. Adjustments for bad and doubtful accounts are recognized when there are doubts regarding the possibility to collect debt, when collection is no longer probable or on the basis of their respective ageing. Creditors Accounts Payable are booked at invoice value. Cash and cash equivalents The Cash and Cash equivalents amount shown includes money and highly liquid investments that can be quickly converted into cash with an insignificant impact to their value. Bank Debt Bank debt recognized in the Company s Balance Sheet is exclusively engaged with financial entities that conduct their operations in Portugal. Sede: Estrada de Alfragide, Nº 67 Amadora 20

21 Provisions Provisions are made when the Company has a present (legal or constructive) obligation based on past actions, when it is probable there may be a future financial payment in connection with such obligation, and the latter can be measured reliably. Income Recognition Income is recognized as such and to the extent that it is possible that the Company will obtain a future economic benefit and that the latter value can be assessed reliably. In order for income to be recognized, the following criteria also have to be fulfilled: Services Income from services is recognized during the period in which they are provided, regardless of whether or not the relevant invoice was issued. Interest Interest income is accrued so that it is recognized in the corresponding period, regardless of whether or not the corresponding support document was generated. Dividends Dividend income is recognized when the Shareholder s right to receive such dividends is established. Income tax In accordance with current legislation, tax returns can be subject to revision and correction by the tax authorities for a four-year period (five to ten years for Social Security, depending on the application of the transitional regime). Therefore, the Company s tax returns in respect of the years 2005 to 2008 could still be subject to revisions, although the Company considers that any possible corrections resulting from tax revisions to such tax returns will not have any material impact on the Financial Statements as at 31 de December de Under the terms and conditions set forth in Portuguese Accounting Standard no. 28, the Company recognizes deferred taxes as a procedure to adequately match the tax effects of its operations and to exclude distortions associated with tax criteria that affect the economic results of certain transactions. The movement recognized during the period, and the reconciliation between the Provision for Income Taxes for the period and current income tax, as well as the breakdown of deferred taxes are described in Note 5 below. Financial instruments The Company regularly uses financial instruments or derivative financial instruments in the regular course of its operations, with the single and explicit purpose of minimizing its exposure to risks related to the fluctuation of interest and exchange rates, and not for negotiation or speculation purposes. The Company s preferential coverage instrument to protect against the said interest rate fluctuation risks is interest rate swap operations. Interest payable or receivable with regard to these instruments is balanced against income or expenses until maturity of the operations. De-recognition of financial instruments occurs when the Company no longer controls the contractual rights that govern such financial instruments, which regularly occurs when they are sold or when cash-flows from said instruments are transmitted to a third party. The Company normally engages forwards or currency options to cover exchange rate fluctuations. A mark-to-market assessment is made on a monthly basis as regards these instruments. The result of this assessment is recognized in the income statement (Note 4). Sede: Estrada de Alfragide, Nº 67 Amadora 21

22 3. REPORTING BY BUSINESS SEGMENT The Company s main reporting format is the report by business segments. The identified business areas are managed separately based on the nature of the products or services provided. Each segment represents a strategic business unit that offers different products and serves various markets. The presented segment refers to legal, financial and tax consultancy services provided to the Affiliated Companies. Business segments The following chart represents the results, assets and liabilities as at 31 December 2008 and their comparison to identical information as at 31 December 2007, with regard to the several business segments in which the Company does business: Geographical Segments With the exception of the balance in the amount of 301,992 euros corresponding to Shareholders Assets involving operations in Brazil (Note 22), all services were provided within the Portuguese domestic market, and therefore information by geographic segment is not applicable. Sede: Estrada de Alfragide, Nº 67 Amadora 22

23 4. OTHER OPERATING INCOME AND EXPENSES Other Income and Expenses are detailed as follows: Financial Income and Expenses are detailed as follows: 5. INCOME TAX The main Income Tax components as at 31 December 2008 and 2007 are as follows: Sede: Estrada de Alfragide, Nº 67 Amadora 23

24 The Company is taxed according to the Special Tax Arrangements applicable to Corporate Groups. Therefore, the amount shown under Deferred Income Tax corresponds to the tax benefit resulting from the application of the above-mentioned Arrangements which will be used by the Group in the financial year. The reconciliation between statutory tax rates applied to recognized income and the actual effective tax rate (after corrections) for the periods ending 31 December 2008 and 2007 are as follows: The following entries were booked to the Deferred Tax accounts during the years 2008 and 2007: Sede: Estrada de Alfragide, Nº 67 Amadora 24

25 7. EARNINGS PER SHARE Earnings per share as at 31 December 2008 and 2007 are as follows: 8. DIVIDENDS PAID AND PROPOSED Dividends paid in respect of the years 2007 and 2006 were as follows: The proposed distribution of dividends in respect of the 2008 period is presented in the Board of Directors Management Report: - Shareholders: Sede: Estrada de Alfragide, Nº 67 Amadora 25

26 9. LAND, BUILDINGS AND EQUIPMENT Movements in the Buildings and Equipment accounts during 2008 and 2007 were as follows: Sede: Estrada de Alfragide, Nº 67 Amadora 26

27 11. INTANGIBLE ASSETS Movements in the Intangible Assets accounts in 2008 and 2007 were as follows: Sede: Estrada de Alfragide, Nº 67 Amadora 27

28 12. FINANCIAL INVESTMENTS Financial investments in 2008 and 2007 are detailed as follows: Sede: Estrada de Alfragide, Nº 67 Amadora 28

29 In 2008, changes in Financial Investments were as follows: In 2008, the result of sales was as follows: Sede: Estrada de Alfragide, Nº 67 Amadora 29

30 16. ACCOUNTS RECEIVABLE Accounts payable are broken down as follows: Terms and conditions applied to related party (intra-group) transactions are described in Note 22. Sede: Estrada de Alfragide, Nº 67 Amadora 30

31 17. CASH AND MARKETABLE SECURITIES The Cash and Marketable Securities balance shown in the Balance Sheet includes values with a maturity of three months or less. The Cash and Cash Equivalents information as shown in the Statement of Cash Flows is net of bank overdrafts. As at 31 December 2008, the Company had a total of 147,530,993 in bank facilities available to be used in the fulfilment of its operating requirements. Sede: Estrada de Alfragide, Nº 67 Amadora 31

32 18. ISSUANCE OF CAPITAL AND RESERVES Excluding the treasury stock held on 31 December 2008 (16,760,815 shares), Registered Share Capital is fully subscribed and paid up, and is represented by 169,764,398 bearer shares with a par value of 1.00, of which 111,221,824 shares are owned by the majority shareholder SGC-SGPS, SA (65.5 % of share capital), and 17,391,110 shares are owned by SGC-Investimentos, SGPS, SA (10.2% of share capital). Sede: Estrada de Alfragide, Nº 67 Amadora 32

33 Movements in Equity during 2008 were as follows: The amount shown under Other Reserves represents the difference between the acquisition value and the sales value of treasure stock. Sede: Estrada de Alfragide, Nº 67 Amadora 33

34 19. BANK DEBT Bank Debt as at 31 December 2008 and 2007 is detailed as follows: Interest rates on overdrafts are in line with standard market rates. 20. PROVISIONS FOR OTHER RISKS AND CHARGES Changes in the balance of Provisions for Other Risks were as follows: Provisions for other risks and charges refer to specific risks and are reassessed every year. Sede: Estrada de Alfragide, Nº 67 Amadora 34

35 21. CREDITORS Accounts payable are broken down as follows: Terms and conditions applied to related (intra-group) transactions are described in Note RELATED PARTY DISCLOSURES The balance and transactions with related parties, i.e. with Companies capable of controlling or significantly influencing financial and operational decisions, are as follows: Terms and conditions applicable to transactions performed with related Companies are the same as those applied to transactions with bone fide unrelated third parties, which are identical to normal market practices. Sede: Estrada de Alfragide, Nº 67 Amadora 35

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38 23. FINANCIAL INSTRUMENTS As at 31 December 2008, the following financial instruments were active: 24. COMMITMENTS AND CONTINGENCIES Guarantees On 31 December 2008 and 2007, the Company s liability for bank guarantees issued was as follows: Other Commitments Within the scope of a swap operation conducted with a Financial Institution in December 2000, which involved the sale of 4,687,500 shares from treasury stock through the stock market at a unit sales price of 2.06, SAG Gest made the commitment to, under certain circumstances, possibly repurchase such shares for the same unit price. In December 2005, the Company renegotiated the said operation and a stock re-purchase price of 1,71 was agreed. This transaction was performed in 2008 with the acquisition of 4,687,500 shares which are included in Note 18, under the terms and conditions specified in the relevant and applicable contract documents, and therefore Net Equity saw a decrease reflecting the total corresponding amount, as well as the amount of 1,625,100, which had already been paid under another operation conducted within the scope of the same operation and had been booked as Deferred Costs, together with 1,640,625 booked under Other Debtors and corresponding to the balance between the initial repurchase value and the value agreed in December Contingencies The Portuguese Tax Authorities issued additional Income Tax assessment notes to SAG Gest with regard to Income Tax owed for the years 1999 to 2004 totalling EUR 4,249, Sede: Estrada de Alfragide, Nº 67 Amadora 38

39 Tax returns concerned by these additional liquidation notes have been presented under the terms of special taxation regime for company groups. Because the Company disagrees with the basis for issuance of the said notes, it has initiated, or will initiate, within the applicable legal deadlines, legal proceedings against each one of the said notes, reason why these costs have not been reflected in the Financial Statements as at 31 December In the opinion of the Board of Directors, based on recommendations issued by well renowned independent entities, probabilities of success of the contesting processes are high. 25. SUBSEQUENT EVENTS Besides the subsequent events mentioned in this annual report, no other events have taken place after the Balance Sheet date that could have a material impact on the financial statements. Sede: Estrada de Alfragide, Nº 67 Amadora 39

40 CORPORATE GOVERNANCE REPORT SEPARATE ACCOUNTS 2008 Sede: Estrada de Alfragide, Nº 67 Amadora 40

41 CORPORATE GOVERNANCE REPORT The purpose of this report is to describe the Corporate Governance practices adopted by SAG GEST Soluções Automóvel Globais, SGPS, SA. This report has been prepared in accordance with the form appended to the Securities Commission (CMVM) Regulation no 1/2007. Also, the purpose of this report is compliance with the obligation to annually divulge in detail the corporate governance structure and practices, in accordance with clause 245-A of the Securities Code, which applies to issuers of shares listed for trading in a regulated market. CHAPTER 0. STATEMENT OF COMPLIANCE 0.1. Location where the public may find the Corporate Governance Codes to which the issuer is subject to or those by which the issuer voluntarily abides SAG GEST is an issuer of shares admitted for trade by a regulated market, namely in the official share price market of NYSE Euronext Lisbon, and the Recommendations of the Corporate Governance Code which was approved by Comissão do Mercado de Valores Mobiliários (CMVM Portuguese Securitires and Exchange Committee) in September 2007 apply. The full text of the said Code can be consulted on CMVM s website Detailed description of the recommendations contained in the CMVM Corporate Governance Code that have or have not been adopted by the Company, and 0.3. Explanation and justification of differences existing between the Company s structure or governance practices and CMVM s Recommendations. The table below identifies the Recommendations of CMVM that are part of the Corporate Governance Code, and full adoption or non adoption of the same by SAG GEST is identified on a comply or explain basis, as well as the relevant part of the report where a more detailed description regarding the adoption can be consulted. COMPLIANCE STATEMENT Recommendation I. GENERAL MEETING I.1. Board of the Shareholders Meeting: I.1.1. The Chair of the General Meeting Board shall be equipped with the necessary and adequate human resources and logistics support, taking the financial position of the company into consideration. Status on adoption of the Recommendation Remarks Adopted The Chair of the General Meeting Board is equipped with adequate human resources and logistics support as needed and also to ensure proper functioning of the meeting, namely through legal Description in the Report Sede: Estrada de Alfragide, Nº 67 Amadora 41

42 I.1.2. The remuneration of the Chair of the General Meeting Board shall be disclosed in the annual report on corporate governance. I.2. Attendance of the General Meeting I.2.1. The obligation to deposit or block shares before the General Meeting, as per the Company By-laws, shall not exceed 5 working days. I.2.2. Should the Shareholders Meeting be suspended, the company shall not demand the blocking of shares during the entire period until the meeting is resumed, and the standard notice shall apply to the first session. I.3. Voting and Exercising Voting Rights I.3.1. Companies may not impose any statutory restriction on postal voting. I.3.2. The statutory deadline for receiving early voting ballots by mail shall not exceed 3 working days. I.3.3. The company s articles of association shall provide for the one share / one vote principle. I.4. Quorum and resolutions Adopted Adopted consultancy and the investor relations office. Clause 14, para. 1 of Company By-Laws. The General Meeting comprises only the shareholders entitled to vote and holding shares or subscription certificates in lieu of the latter and who, until five business days before the Meeting, have ( ): Clause 14, para. 3 of the Company By-Laws. Deposit with a financial mediator and registering of the shares in security accounts shall be certified by a letter issued by the said entity and received at the Company at least three business days before Shareholders the meeting. Adopted In the event of suspension of the General Meeting, the same period of blocking of shares required for the first session shall apply, i.e., 5 business days. Adopted Adopted Adopted Clause 15, para. 1 of the Company By-Laws. Voting by mail is authorized. Clause 14, para. 2 of the Company By-Laws. Each share corresponds to one vote I.3. I.4. I.5. I.8. I.10. I.6. Sede: Estrada de Alfragide, Nº 67 Amadora 42

43 I.4.1 Companies shall not set a constitutive or deliberating quorum that outnumbers that which is prescribed by law. I.5. Minutes and information on resolutions passed I.5.1 The minutes of the General Meetings shall be made available to shareholders on the company s website within a 5 Not Adopted Clause 16 of the Bylaws provides for a larger quorum than provided by law. The Company considers that adoption of this recommendation would not be adjusted in view of the reduced dispersion of the Company s capital among a small number of shareholders. In fact, considering that the shareholders of reference control 75.94% of the registered share capital, it would not make sense to hold a shareholders meeting without their presence. Clause 17 further requires a deliberative quorum larger than the one provided for by law which requires the need for a quorum of two thirds corresponding to the share capital required for the approval of resolutions by the shareholders meeting on capital increases, changes to the by-laws and dissolution. Considering once again the shareholder structure of the Company and bearing in mind the matter under review which is subject to deliberation, one understands the option made by the shareholders requiring the need to obtain significant support from the shareholders in the General Meeting. Adopted Minutes of the Shareholders Meetings are made available to shareholders on the Sede: Estrada de Alfragide, Nº 67 Amadora 43 I.7.

44 day period, irrespective of the fact that such information may not be legally classified as material information. The list of attendees, agendas and resolutions passed during such meetings shall be kept on file on the company s website for a 3 year period. I.6. Measures on corporate control I.6.1 Measures adopted with the aim to prevent successful takeover bids shall respect both the company s and the shareholders interests. I.6.2 In compliance with the principle stated in above, the company s by-laws that restrict/limit the number of votes that may be held or exercised by a sole shareholder, either individually or in concert with other shareholders, shall also foresee for a resolution by the Shareholders Meeting, (5 year intervals, at least) on whether that statutory provision is to prevail without higher quorum requirements than the one legally in force and that in said resolution, all votes issued be counted, without applying said restriction. I.6.3. In cases such as change of control or changes to the composition of the Board of Directors, defensive measures should not be adopted that instigate an immediate and serious asset erosion in the company, and furthermore disturb the free transmission of shares and voluntary assessment of the performance of the Board of Directors by the shareholders. II. MANAGEMENT AND SUPERVISORY BOARDS II.1. General Points II.1.1. Structure and duties II The Board of Directors shall, in its corporate governance Adopted Not applicable Adopted Adopted company s website within 5 days. A record of meetings held is kept for at least the 3 previous years, including the agenda and background documents. No measures have been adopted to prevent successful takeover bids. I.13. Chapter II Sede: Estrada de Alfragide, Nº 67 Amadora 44

45 report, assess the governance model adopted by the Company, by identifying any constraints that are holding back performance and proposing remedial action deemed adequate to resolve said constraints II Companies shall set up internal control systems in order to efficiently detect any risk to the company s activity by protecting its assets and keeping its corporate governance transparent. II The Management and Supervisory Boards shall establish internal regulations and shall have these disclosed on its website. II.1.2 Governance incompatibility and independence II The Board of Directors shall include a number of nonexecutive members that ensure the efficient supervision, auditing and assessment of the executive members activity. II Non-executive members must include an adequate number of independent members. The size of the company and its shareholder structure must be taken into account when devising this number and may never be less than a fourth of the total number of Directors. Adopted Adopted Adopted The board of directors and the audit board both have their operational rules which are published on the company s website. The board of directors comprises several members who provide actual guidance regarding the company s management. The board of directors elected for the mandate comprises nine members and usually has ordinary meetings on a bi-monthly basis, however, it has updated information on all matters being discussed and on all decisions made by a 5 member executive committee. Not Adopted Among the four mentioned nonexecutive directors of the board, none is considered independent under the provisions of Clause 414, paragraph. 5 of the Companies Act, and therefore this recommendation is not fulfilled. The Company considers II.4. II.6. II.9. Sede: Estrada de Alfragide, Nº 67 Amadora 45

46 that the current structure of its board of directors is adequate to the current shareholder structure and that the existing corporate organization mechanisms and strict compliance of the Company s various obligations as a listed company to which it is subject fulfill the underlying objectives of this recommentation. Furthermore, the added value provided by the previous experience of all the current nonexecutive directors ensures constant monitoring and supervision of the company s business, ensuring a useful contribution to the discussion and interaction with executive directors. On the other hand, the audit board also ensures constant monitoring and the External Auditor registered at the Securities Commission conducts regular audit operations throughout the financial year, and compulsory information to the market is also made available by the Board of Directors in a timely manner, and for the above reasons implementation of a new supervisory model in the company is considered to be inadequate. II.1.3. Eligibility Criteria for Appointment II Depending on the applicable model, the Chair of the Audit Board, the Audit Committee or the Financial Matters Committee shall be Adopted The chair of the audit board is independent and is adequately capable to carry out his duties. II.13. Sede: Estrada de Alfragide, Nº 67 Amadora 46

47 independent and be adequately capable to carry out its duties. II.1.4 Policy on the Reporting of Irregularities II The company shall adopt a policy whereby irregularities occurring within the company, are reported. Such reports should contain the following information: i) the means through which such irregularities may be reported internally, including the persons that are entitled to receive the reports; ii) how the report is to be handled, including confidential treatment, should it be required by the reporter. II The general guidelines on this policy should be disclosed in the corporate governance report. II.1.5. Remuneration II The remuneration of the members of the Board of Directors shall be aligned with the interests of the company. Thus: i) The remuneration of Directors carrying out executive duties should be based on performance and a performance assessment shall be carried out periodically by the competent body or committee; ii) the level of remuneration shall be consistent with the maximization of the long Adopted Adopted With a view to adapting its corporate governance to CMVM Recommendations, the Company defined in 2006 a policy for divulging any irregular practices allegedly occurred within the Group as a means of early detection of eventual irregular practices that can contribute for the prevention of damaging and harmful situations for both the Group and its employees, as well as for the Shareholders. Within the process of implementation of the said policy of internal communication of irregularities, a request was made in May 2006 to the National Committee for Data Protection for permission to process personal data, which is still awaiting approval by the said Committee. Not Adopted Remuneration of the Board of Directors has included a variable component which is determined in line with the Group s financial performance and which translates into a sharing of the profits as approved by the Shareholders Meeting. The Company is considering the II.22. II.22. Sede: Estrada de Alfragide, Nº 67 Amadora 47

48 term performance of the company, and shall be dependent on sustainability of the levels of the adopted performance; iii) when the remuneration of non-executive members of the Board of Directors is not legally imposed, a fixed amount should be set. implementation of a system of remuneration of executive directors which includes the adoption of a variable component which considers the long term performance of the company and which is a function of the sustainability of the adopted performance variables. The Company is going to promote the creation of a specialized committee aiming to ensure a competent and independent evaluation of the performance of the executive directors and to assess its own global performance. That committee will in principle include the major shareholder and current Chairman of the Board, the Chairman of the Audit Board and a non-executive director. Remuneration of nonexecutive directors has exclusively comprised a fixed amount. II.5.2. The Remuneration Committee and the Board of Directors shall submit a statement on the remuneration policy to be presented at the Annual Shareholders General Meeting on the Management and Supervisory bodies and other directors as provided for in Article 248/3/b of the Securities Code. The shareholders shall be informed on the proposed criteria and main factors to be used in the assessment of the performance for determining the level (share bonuses; option on share acquisition, annual bonuses or other awards). Adopted In 2006, the Remuneration Committee prepared a statement regarding the board of directors remuneration policy to be applied to the mandate which was approved by the Annual General Meeting held on 26 March The Remuneration Committee also submitted to the Annual General meeting held on 31 March 2008 a statement regarding the remuneration policy for the Audit Board and the Chairman of the General I.12. Sede: Estrada de Alfragide, Nº 67 Amadora 48

49 II At least one of the Remuneration Committee s representatives shall be present at the Annual Shareholders General Meeting. II A proposal shall be submitted at the General Meeting on the approval of plans for the allotment of shares and/or options for share purchase or further yet on the variations in share prices, to members of the Management and Supervisory Boards and other Directors within the context of Article 248/3/B of the Securities Code. The proposal shall contain the regulation plan or in its absence, the plan s general conditions. The main characteristics of the retirement benefit plans for members of the Management and Supervisory Boards and other Directors within the context of Article 248/3/B of the Securities Code, shall also be approved at the General Meeting. II The remuneration of the members of the Management and Supervisory Boards shall be individually and annually disclosed and, information on fixed and variable remuneration must be detailed as well as any other remuneration received from other companies within the group of companies or companies controlled by Meeting. The Salaries Committee shall submit a statement to be presented at the Annual Shareholders General Meeting to be held on 30 April 2009 on the remuneration policy regarding the corporate bodies and other officers within the meaning of para. 3 of Clause 248 B of the Securities Code. Adopted The Remuneration Committee is duly represented at the annual general meetings through the chair of the general meeting who is also chair of the said committee. Not applicable There are no plans involving share distribution or stock options. Not Adopted The Company only has published the combined remuneration of the management board, although it has distinguished between the fixed and variable portion of the same as well as the separation between executive and non-executive directors. III.10. II.20 Sede: Estrada de Alfragide, Nº 67 Amadora 49

50 shareholders of qualifying holdings. II.2. Board of Directors II.2.1. Within the limits established by Law for each Management and Supervisory structure, and unless the company is of a reduced size, the Board of Directors shall delegate the day-to-day running and the delegated duties should be identified in the Annual Report on Corporate Governance. II.2.2. The Board of Directors shall ensure that the company acts in accordance with its goals, and should not delegate its duties, namely in what concerns: i) definition of the company s strategy and general policies; ii) definition of the corporate structure of the group; iii) decisions taken that are considered to be strategic due to the amounts, risk and particular characteristics involved. II.2.3. Should the Chair of the Board of Directors carry out executive duties, the Board of Directors shall set up efficient mechanisms for coordinating non-executive members that can ensure that these may decide upon, in an independent and Adopted Adopted The published remuneration amounts regard the combined duties performed by the members of the board, both in the Company as well as in companies of which it is a shareholder. The Company has refrained from publishing individual remunerations for each director because it is not legally obliged to do so and it considers that publishing of such data would not result in any benefit and would considerably affect the privacy of each of the directors. Not applicable This recommendation does not apply to SAG GEST because the Chairman of the Board does not have any executive functions. II.2. II.3. II.3. Sede: Estrada de Alfragide, Nº 67 Amadora 50

51 informed manner, and furthermore shall explain these mechanisms to the shareholders in the corporate governance report. II.2.4. The annual management report shall include a description of the activity carried out by the non-executive Board Members and shall mention any restraints encountered. Adopted Transcription of an excerpt of the annual management report of 2008: Non-executive directors are advised about all relevant decisions made by the executive committee, and therefore permanently monitor the company s business. This knowledge, as well as their professional qualifications enable an active presence in the Board of Directors, both in the supervision of the management activity as well as in pursuing the company s interests in a cooperative manner. Therefore, they provide full support and advise the executive committee, namely as concerns strategy, target achievement and compliance of applicable regulations. They assess the company s monthly accounts and challenge the motive of any positive or negative deviations shown. They monitor and assess all matters concerning corporate governance, sustainability and internal codes of conduct, and address possible situations of conflict of interest regarding the company s relationship with its shareholders. Non-executive directors do not meet Sede: Estrada de Alfragide, Nº 67 Amadora 51

52 II.2.5. The management body should promote the rotation of the member responsible for financial matters at least after 2 consecutive terms of office. II.3. Chief Executive Officer (CEO), Executive Committee and Executive Board of Directors II.3.1. When Directors that carry out executive duties are requested by other Board Members to supply information, the former shall do so in a timely manner and the information supplied must adequately suffice the request made. II.3.2. The Chair of the Executive Committee shall send the convening notices and minutes of the meetings to the Chair of the Board of the Directors and, when applicable, to the Chair of the Supervisory Board or the Auditing Committee. II.3.3. The Chair of the Executive Board of Directors shall send the convening notices and minutes of the meetings to the Chair of the General and Supervisory Board and to the Chair of the Financial Matters Committee. II.4. General and Supervisory Board, Financial Matters Committee, Audit Committee and Audit Board II.4.1 Besides fulfilling its supervisory duties, the General and Supervisory Board shall advise, follow-up and carry out on an on-going basis, the assessment on the management of the company by the Executive autonomously but, further to board meetings, they maintain informal conversations about the business or operations of singnificant economic or strategic value, implicitly assessing the performance of their executive colleagues. Adopted The member of the board who is responsible for the financial area is still in his first mandate. Adopted Information requested by other members of the corporate bodies from executive directors is provided in a timely and adequate manner. Adopted The Chair of the Executive Committee sends the convening notices and minutes of the meetings to the Chair of the Board of the Directors and to the Chair of the Audit Board. Not applicable This recommendation does not apply to the corporate governance model adopted by SAG GEST. Not applicable This recommendation does not apply to the corporate governance model adopted by SAG GEST. Sede: Estrada de Alfragide, Nº 67 Amadora 52

53 Board of Directors. Besides other subject matters, the General and Supervisory Board shall decide on: i) definition of the strategy and general policies of the company; ii) the corporate structure of the group; and iii) decisions taken that are considered to be strategic due to the amounts, risk and particular characteristics involved. II.4.2. The annual reports and financial information on the activity carried out by the General and Supervisory Committee, the Financial Matters Committee, the Audit Committee and the Audit Board shall be disclosed on the company s website together with the financial statements. II.4.3. The annual reports on the activity carried out by the General and Supervisory Board, the Financial Matters Committee, the Audit Committee and the Audit Board shall include a description on the supervisory activity and shall mention any restraints that they may have come up against. II.4.4. The Financial Matters Committee, the Audit Committee and the Audit Board (depending on the applicable model) shall represent the company for all purposes at the external auditor, and shall propose the supplier of the services, the relevant remuneration, ensure that adequate conditions for the supply of these services are in place within the company, and shall act as the the liaison officer between the company and the first recipient of the reports. Adopted Adopted Adopted The annual reports on the activity carried out by the Audit Board are published on the company s website together with the financial statements. The annual reports on the activity carried out by the Audit Board include a description of the supervisory activity conducted. The Audit Board shall as per Clause 25 of the Company s By-laws, propose to the Shareholders Meeting the appointment of the statutory auditor or of the auditing company / external auditor. The Audit Board shall also aprrove the relevant remuneration, make sure that conditions are ensured within the company to enable proper provision of the services and also that it is the first recipient of the relevant reports. In the fulfillment of legal requirements, the Audit Board will submit to the approval of the Shareholders Meeting to Sede: Estrada de Alfragide, Nº 67 Amadora 53

54 II.4.5. According to the applicable model, the Committees for Financial Matters, Audit Committee and the Audit Board, shall assess the external auditor on an annual basis and advise the General Meeting that he/she be discharged whenever justifiable grounds are present. II.5. Special Committees be held on 30 April 2009 a proposal for the appointment of the Audit Company which will be represented by a new responsible partner, since the previous responsible partner has already exceeded the 7 year period in the performance of those duties. Adopted The Audit Board assesses on an annual basis the external auditor whose mandate has a duration of one year and is reelectable, and it can further advise the General Meeting on the dismissal of the same whenever justifiable grounds are present. II.5.1. Unless the company is of a reduced size and depending on the adopted model, the Board of Directors and the General and Supervisory Committees, shall set up the necessary Committees in order to: i) ensure that a competent and independent assessment of the Executive Directors performance is carried out, as well as its own overall performance and further yet, the performance of all existing Committees; ii) study the adopted governance system and verify its efficiency and propose to the competent bodies, measures to be carried out with a view to its improvement. Not Adopted Although exists a committee to evaluate the corporate structure and governance, SAG GEST does not fulfill this recommendation because it does not have a specialized Committee with competence to evaluate the directors performance nor to evaluate its own or the other existing committees performance. The Company is going to promote the creation of a specialized committee aiming to ensure a competent and independent evaluation of the performance of the executive directors and to assess its own global performance. That committee will in principle include the major shareholder and Sede: Estrada de Alfragide, Nº 67 Amadora 54

55 current Chairman of the Board, the Chairman of the Audit Board and a non-executive director. II.5.2. Members of the Remuneration Committee or alike, shall be independent from the Members of the Board of Directors. Adopted The current Remuneration Committee comprises three members who are independent from the members of the Board of Directors. II.19. II.5.3. All the Committees shall draw up minutes of the meetings held. Adopted All existing committees in the Company have drawn up minutes of the meetings held. III. INFORMATION AND AUDITING III.1. General Disclosure Duties Companies shall maintain permanent contact with the market thus upholding the principle of equality for shareholders and ensure that investors are able to access information in a uniform fashion. To this end, the company shall create an Investor Assistance Unit. Adopted The Company has an Investor Relations Office that centralizes all questions asked by market agents, ensuring the divulgation of information to Shareholders and to the market in general under equal terms, and liaising with the Regulatory Authority. III.12. Therefore, all information concerning the operational and financial performance of Group companies is provided to the investor community through the Investor Relations Office. III.1.3. The following information that is made available on the company s Internet website, shall be disclosed in the English language: Adopted All the information on the Company s website is available in English. III.12. a) The company, public company status, headquarters and remaining data provided for in Article 171 of the Commercial Companies Code; b) Articles of Association Sede: Estrada de Alfragide, Nº 67 Amadora 55

56 c) Credentials of the members of the Board of Directors and the Market Liaison Officer; d) Investor Assistance Unit its functions and access tools; e) Accounts Reporting documents; f) Half-Yearly Calendar on Company Events; g) Proposals sent through for discussion and voting during the General Meeting; h) Notices convening meetings The corporate body or the committee shall at all times, assess the independency of each of its members and shall inform the shareholders, via a statement included in the corporate governance report, on its assessment both at the time of the appointment and following the loss of independency. Among the four mentioned non-executive directors of the board, none is considered independent under the provisions of Clause 414 of the Companies Act, and therefore this recommendation is not fulfilled. On the date of their appointment, each member of the above bodies issued a statement where they expressly declared, in accordance with the criteria for assessment of incompatibilities provided for in Clause 414 of the Companies Code, that they had no incompatibility for performance of their mandates, namely because they did not hold any positions in competitive companies or in any company with any relationship with SAG GEST s competitors. And all members declared, in accordance with the criteria of assessment of independence provided for in para. 5 of Clause 414 of the Companies Act, that they fully complied with the criteria of independence. At the reference date of 31 Dcember 2008, has no occurrence of any fact which has negatively altered compliance with those requirements, and for this reason it was concluded that the above have been fulfilled. To date, no communication has been received from SAG GES announcing the occurrence of any fact which could negatively affect compliance with thise requirements, and for this reason it was concluded that the above have been fulfilled. Bearing in mind the concept of independency presented by CMVM in the preamble of Regulation 1/2007 ( Reference to the independency of non-executive directors that are not directly covered by the provisions of the Companies Act, is now mentioned in articles 414/A and para. 5 of 414 of the Companies Act ), none of the non executive members of the Board of Directors of SAG GEST is considered independent. It should be noted however that confirmation of independency under the terms proposed by the said Regulation constitues a benchmark for assessment of compliance with the best practices recommended by the Corporate Governance Code and does nor represent a legal or statutory requirement for a valid appointment and performance of duties of the members of this Board. Sede: Estrada de Alfragide, Nº 67 Amadora 56

57 Chapter I. General Shareholders Meeting I.1. Identification of the members of the Board of the Shareholders Meeting The Board of the Shareholders Meeting comprises a Chairman and the Company Secretary, as established on Clause 12 of the By-Laws. The current composition of the Board of the General Meeting is the following: Chairman - Lopo Roque de Pinho Cancella de Abreu Company Secretary - Maria do Carmo Gomes Teixeira I.2. Indication of the commencement and end of the mandates of the members of the Board of the Shareholders Meeting - Chairman - Lopo Roque de Pinho Cancella de Abreu o Date of first appointment 3 November o Date term ends 31 December Company Secretary: Maria do Carmo Gomes Teixeira o Date of first appointment April o Date term ends - 31 December I.3. Remuneration of Chairman of the Board of the Shareholders Meeting The Chairman of the Shareholders Meeting receives a fixed retribution paid as an attendance ticket in the amount of Eur 1,500 for each Shareholders Meeting he chairs,,and he received Eur 3,000 in I.4. Rules applicable to the blocking of shares for participation in the Shareholders Meeting Currently, under the terms of Clause 14 of the Company By-laws, the general shareholders meeting shall be attended by Shareholders entitled to vote who, five business days before the meeting, hold Shares that are registered in securities accounts, the latter registration needing to be certified in writing by the relevant financial mediator and to be received by the Company, at the latest, three business days before the meeting. I.5. Rules applicable to the blocking of shares in the event of the suspension of the Shareholders Meeting As per the understanding of the Chairman of the Shareholders Meeting, in the event of suspension of the Shareholders Meeting, the same period of blocking of shares required for the first session shall apply, i.e., 5 business days. I.6. Number of shares that correspond to one vote According to Clause 14 of the Company s By-laws and according to Recommendation I.3.3. of the Corporate Governance Code, each share corresponds to a vote. I.7. Statutory rules on the exercise of voting rights, including constitutive or deliberating quorums or systems for equity rights Apart from the rules mentioned in points I.4., I.6. e I.8., the By-laws of SAG GEST establish specific requirements as regards constitutive / deliberative quorums for the following situations: Sede: Estrada de Alfragide, Nº 67 Amadora 57

58 Clause 16 of the By-Laws establishes a constitutive quorum which is larger than the one required by law, i.e., after the first call, the Shareholders Meeting shall only function when holders of shares representing fifty per cent of the share capital are present or represented, regardless of the matters included in the agenda. Clause 17 of the By-laws determines the need of a quorum of two thirds of the votes corresponding to the share capital for the approval of deliberations by the shareholders meeting regarding capital increases, changes in the By-laws and dissolution. I.8. Statutory rules on the exercise of voting rights via postal voting SAG GEST s By-laws provide for voting by mail. Votes sent by mail will count for the purpose of establishment of the quorum required for the shareholders meeting and will also count for the second call to the Shareholders Meeting for which they were issued, and it is the Chairman of the Shareholders Meeting s duty to check that they are authentic and in compliance under terms announced in the call to the Shareholders Meeting. It is also the Chairman of the Shareholders Meeting s duty to ensure that votes by post remain confidential until voting time. Votes by post shall be counted at the same time as votes delivered at the shareholders meeting. Votes cast by mail count as negative votes on deliberation proposals made after their date of issue. The presence of the shareholder, or of his representative at the Shareholders Meeting revokes the vote cast by mail. I.9. Availability of a model format for exercising the right to vote by mail Voting forms for exercising the vote by post can be obtained two weeks in advance by Shareholders either at the Company's registered address or downloaded from the Company s website, I.10. Requirement of a period of time to exist between the receipt of the postal ballots and the date on which the Shareholders Meeting is held Mailed votes shall be sent to the Company s registered address by registered mail to the attention of the Chairman of the Shareholders Meeting and received at least three working days before the meeting, and clearly specify the Shareholder s full identification and include the corresponding signature certified by the relevant financial mediator; the letter shall also include a document confirming the number of Shares held, as well as a closed envelope for each item on the agenda the Shareholder wants to vote on; each envelope should indicate the relevant item of the agenda. I.11. Exercise of voting rights via electronic means As per the Company s by-laws, electronic voting is not allowed. I.12. Intervention by the Shareholders Meeting on matters concerning the remuneration policy of the company and the performance assessment of the members of the management bodies Under the terms of Clause 22, para. 1 of the Company s By-laws, the Salaries Committee determines the remunerations of members of the corporate bodies. However, with a view to transparency of the procedure of determining remunerations and to comply with the Recommendations of the Securities Commission, the Salaries Committee prepared at the beginning of the mandate of the current directors a statement on the Board remuneration policy which was approved by the Annual Shareholders Meeting held on 31 March 2006, the terms of which are transcribed in full below: The remuneration policy regarding the Board of Directors of SAG is based on two different components: Sede: Estrada de Alfragide, Nº 67 Amadora 58

59 Fixed Remuneration The fixed remuneration is paid in 14 annual installments. As a guiding principle, the updating of the fixed remuneration is not subject to automatic salary indexation, but rather to a reassessment based on market conditions. Variable Remuneration Variable remuneration is paid in a single annual installment and corresponds to a share in profits that has been previously decided upon at the Shareholders Meeting. It is determined in accordance with the Group s financial performance and with an assessment of individual performance. This variable remuneration does not depend on the evolution of the Company s share price. Remuneration of Board members can be paid for by an affiliate, in which case it will be considered in determining the amount of the global individual retribution. As regards payment of social security taxes on the said remuneration, it is accepted that, at the Director s request, and provided all legal requirements are met, contributions are paid on the actual amount of the gross remuneration, therefore disregarding the maximum limit of 12 times the national minimum salary. This policy was adopted in the determination of the remuneration paid to the members of the Board of Directors in office during the 2005 financial year, and the Salaries Committee proposes that those same underlying principles be maintained during the term of the Board of Directors which will be elected for the four-year period. I.13. Defensive measures that are intended to immediately instigate asset erosion in cases such as changes in the control or to the composition of the Board of Directors No defensive measures were taken with the intention to immediately instigate a serious erosion of the Company s assets in case of changes in the control or to the composition of the board of directors. I.14. Significant agreements which the company is a party to and that come into force, are changed or end in the case of change in company control, as well as related outcomes, unless the disclosure of same, due to their nature, is highly damaging to the company, except in the case where the company is specifically obliged to disclose such information due to other legal imperatives No significant agreements exist of which the Company is a party to and that will come into force, be altered or will cease should there be changes in the control of the Company. I.15. Agreements between the company and the Board of Directors, within the meaning of para. 3 of Clause 248 B of the Securities Code, that provide for compensation if the Directors resign or are made redundant without a valid reason or if their employment ceases following a change in company control. There are no agreements between the Company and members of the board of directors or workers which provide for compensation in the case of resignation, dismissal without just cause or end of employment following a change in company control. Sede: Estrada de Alfragide, Nº 67 Amadora 59

60 Chapter II Management and Supervisory Bodies The Annual Shareholders Meeting on 30 March 2007 approved a new Corporate Governance model in line with the legal requirements resulting from the amended Companies Act, and adopted the so-called Latin model which keeps conduction of the Company with the Board of Directors and assigns the auditing of the Company s activity to an Audit Board in conjunction with a Chartered Accountant. The model of governance adopted by SAG GEST allows a separation of the powers of the various corporate bodies and allows efficient management and administration, by means of delegation by the Board of Directors of day-to-day management of the business units and corporate services to the Executive Committee. For more information on the functioning of SAG GEST in terms of corporate governance, Shareholders can obtain the By-laws and regulations on the functioning of the Board of Directors and Executive Committee and Audit Board on the Company s website, There has been a committee since 2004 the aim of which is to evaluate the corporate structure and governance the Committee for Corporate Structure and Governance Evaluation. It currently comprises 6 members CFO (Executive director responsible for the financial area), Group Controller, Internal Auditor, Investor Relation, HR Development manager and Company Secretary. The committee is responsible for ensuring that the Group complies with legal, regulatory and other regulations as regards corporate governance and monitoring of the adequacy of governance rules adopted by the Group; for monitoring the preparation of the management report and giving an opinion on chapters pertaining to corporate governance; for monitoring compliance of the code of conduct and proposing measures that it considers to be adequate to ongoing updating and renewal, and for controlling effective compliance by all Group SAG companies; for proposing to the Board of Directors initiatives and proposal that it considers adequate for the achievement of its targets. The Board of Directors considers that, taking into account the specific situation of SAG GEST, the model of governance adopted is adequate and follows principles that have been fully apprehended by its members, and it has shown to be effective in terms of creating value for the shareholders and safeguarding the interests and rights of the stakeholders. II.1. Identification and composition of the corporate bodies On 31 December 2008, the corporate bodies had the following members: Board of Directors Chairman João Manuel de Quevedo Pereira Coutinho Voting Members Esmeralda da Silva Santos Dourado Carlos Alexandre Antão Valente Coutinho Fernando Jorge Cardoso Monteiro António Carlos Romeiras de Lemos Manuel Ferro da Silva Meneses Rui Eduardo Ferreira Rodrigues Pena José Maria Cabral Vozone Pedro Roque de Pinho de Almeida Audit Board Chairman João José Martins da Fonseca George Voting Members Duarte Manuel da Palma Leal Garcia Martinho Lobo de Almeida Melo de Castro Alternate Member António Marques Sede: Estrada de Alfragide, Nº 67 Amadora 60

61 Auditors Certified Public Accountant Ernst & Young - Audit & Associados SROC (SROC nº 178) represented by João Carlos Miguel Alves (CPA no. 896). II.2. Identification and composition of other committees created with responsibilities for the management or the supervision of the company The organization model implemented at SAG GEST includes an Executive Committee in addition to the Board of Directors, with its own and distinctive responsibilities. On 31 December 2008, the Executive Committee had five members: Chairperson Esmeralda da Silva Santos Dourado Fernando Jorge Cardoso Monteiro Manuel Ferro da Silva Meneses José Maria Cabral Vozone Pedro Roque de Pinho de Almeida II.3. Organisational chart concerning the delegation of responsibilities and other duty related infor Conselho de Administração Comissão Executiva CEO Esmeralda Dourado Área Internacional Fernando Monteiro Manuel Meneses José Vozone Pedro Almeida Distribuição Automóvel Retalho Recursos Humanos Logística IT Gestão e Controlo Financeiro do Grupo Retalho Especializado Serviços Automóveis/ Fleet Management Remarketing Reciclagem / VFV Sede: Estrada de Alfragide, Nº 67 Amadora 61

62 Model of operation of the Board of Directors / Executive Committee In light of the adopted management model, the Board of Directors is focused on the definition and revision of the strategy and policy regarding management, monitoring and control of the Group s performance, ensuring that the interests of Shareholders, Clients and Employees are protected, including among others, the following tasks, (i) approval of the Group's Strategic Plan, which includes the main guidelines for the development of the business in the various areas and quantification of growth and global profitability targets by business areas, as well as the main activities to be conducted in order to achieve the said targets; (ii) approval of annual and multi-annual operation and corporate investment plans for the Company and its affiliates, as well as of the financial plan duly validated by the Executive Committee, (iii) monthly monitoring of the Group s financial performance, (iv) follow-up of ongoing projects, (v) approval of the acquisition or divestment from actual or financial non-operational assets, (vi) approval of the corporate communications plan for the group. The Board of Directors is required to have an ordinary meeting at least once every two months and whenever it must deliberate on a specific matter. The Board of Directors is kept informed and aware of all matters and decisions taken by the Executive Committee and has access to the minutes of the meetings. Conversely, the Executive Committee exists as a structure to speed up decision-making on behalf of the Board in order to optimize Group performance and to ensure day to day management of the Company, as per the Companies Act. Apart from defining the strategy for the Group and for its different business areas which are ultimately approved by the Board of Directors, the Executive Committee is responsible for institutional relations management of projects, whether these are of a structuring or a specific nature, as well as for controlling business development. The management model of the Executive Committee is essentially based on three main vectors: (i) assignment of responsibilities among its members, whether these are business areas or areas supporting the Group s business, (ii) representation by members of the Executive Committee in the various Boards of the Companies included in the various areas of business or support under their responsibility, (iii) use of the Project Management methodology according to which projects are executed by multidisciplinary teams. The Executive Committee meets on a bi-monthly basis. II.4. Description of the internal control and risk management systems within the company, namely as regards the financial information disclosure system The methodologies used to assess inherent risks to which Company activities are exposed and the organic units in charge of monitoring and controlling the same are briefly described below. Financial Risk The ALCO Committee (Assets and Liabilities Committee) is responsible for defining and controlling policies on management of financial risk factors which could affect the equity of the Company, as well as for monitoring and controlling liquidity risk, exchange risk, interest rates risk and credit risk. The management of liquidity risk involves the dynamic monitoring and measuring of that type of risk in order to ensure the fulfillment of all short and medium term financial responsibilities (cash outflows) by Grupo SAG companies towards companies doing business with them. By planning several financial operations for fund capture, together with the monitoring and control of operational activities having an impact on the various items of the Group's Balance Sheet, liquidity risk management seeks additionally to avoid unplanned seizing of funds during normal business activities, in order to avoid negative impacts on the Group's funding costs. Exchange rate risk management controls the impact that exchange rate changes can have on the Group s equity and tries to ensure accurate measurement and dynamic management of global exchange risk. Furthermore, the adopted exchange risk management policy also defines the limits of exposure to this nature of risks, as well as suitable coverage levels. Interest rate risk management aims to ensure the assessment and dynamic management of this risk by defining and establishing the limits of exposure of the Group s Balance Sheet and Income Statement to interest rate variations. The control policy that has been adopted aims to select suitable strategies for each business area in order to ensure that this risk factor does not negatively affect the relevant Sede: Estrada de Alfragide, Nº 67 Amadora 62

63 operational capacity. On the other hand, exposure to interest rate risk is further monitored through simulation of adverse scenarios having some degree of probability and which could negatively affect the Group's results. These are the main activities conducted in 2007 in the area of financial risk control in the Group: Proposal for presentation of Grupo SAG's Financial Plan for 2008 to the Board of Directors Regular meetings to monitor the Group s financial activity, including monitoring of the key financial ratios, recommendation of effective measures for Balance Sheet operational management, coordination of relations with financing entities and review of intra-group financing policy. Monthly preparation of the Group's risk control reports, namely cash-flow, exchange rate exposure and interest rate risks. In what regards credit risk management, the development of the Group's Client portfolio and each business unit's exposure are monitored on a monthly basis. The Group adopted in 2001 a Credit Risk Manual establishing policies, criteria and procedures to be adopted in the credit control area. The Credit Risk Manual is regularly updated and includes criteria to be used in determining a credit rating. The purpose of the ALCO Committee (Assets and Liabilities Committee) is to monitor and control the Group s financial risks, namely as concerns liquidity risk, exchange rate risk, interest rate risk and credit risk. Members of this Committee are those who are responsible for finance of the Group s Companies whose activity is likely to significantly influence the Group s consolidated assets and liabilities. The ALCO Committee (Assets and Liabilities Committee) is composed of eleven members, including fours executive Directors Messrs. Esmeralda Dourado, Manuel Meneses, José Maria Cabral Vozone and Pedro Almeida and two non-executive Directors, namely Carlos Coutinho and António Lemos Automobile Risk The management and control of Grupo SAG s automobile risk position, namely the definition and control the policies of vehicle assessment and determining devaluation factors and indicators is performed by the Automobile Risk Committee; its responsibilities include monitoring and control of extraordinary depreciation risk of automobile assets of the Group, which represents a very significant percentage of Grupo SAG s total assets. Management of automobile risk seeks to limit the risk of extraordinary depreciation of Grupo SAG's used car fleet through proper estimation of its market values, and also to ensure a suitable disposal and distribution policy that is compatible with the volumes transacted by establishing maximum levels of exposure by business unit, taking into account the expected profitability of those units. The main activities conducted in 2008 in this area were the following: Grupo SAG Fleet Plan Proposal for 2008 Regular meetings to monitor the portfolio of Group vehicles likely to suffer extraordinary depreciations, namely the entire vehicle portfolio established as Fixed Assets, as well as all used or semi-new car inventories. Implementation of effective vehicle portfolio re-evaluation methods, using mark-to-market methodologies involving the use of external independent sources, and recommendation on control measures to be implemented, including car purchase and sale policy. Implementation of the monitoring of the profitability of RAC vehicle repurchase operations on a multi-annual basis, and recommendation on provisioning. The Automobile Risk Committee is responsible for monitoring and controlling the risk of extraordinary depreciation of Grupo SAG s automobile assets, which represent a highly significant percentage of the Group s total assets. This Committee comprises representatives of all business units exposed to this type of risk. Sede: Estrada de Alfragide, Nº 67 Amadora 63

64 The Automobile Risk Committee currently has ten members, including three executive members of the Board of Directors, namely Fernando Monteiro, José Vozone and Pedro Almeida and a non-executive member, namely Carlos Coutinho. Operational Risk Operational risk management is based on the assignment of functional responsibilities and on the formal establishment of internal control procedures, at the level of each business area level, with relevant compliance being supervised by the Group's Internal Audit Department. Operational coordination of the Group's information systems is supported by the Technology Committee, which is based on the PMO (program management office) model and involves regular review of active projects, identification of risks and assurance of proper IT infrastructure operation. The Group has engaged insurance policies aimed at covering equity and personal risks which were considered adequate following the risk analysis performed by the Group s unit specializing in insurance brokerage in consultation with the various business units. The purpose of the Technology Committee is to define corporate governance rules regarding the Group s integrated information systems management policies, and it is responsible for the approval of the PESIG Grupo SAG s strategic information systems plan - as well as the relevant budget, and also to make recommendations regarding IT project priorities for subsequent validation by the relevant business areas. Two members of the Board of Directors Executive Committee have a permanent seat in this Committee, one of them being the global coordinator, as well as the head of the Organization, Information Technologies and Systems Directorate (DOTSI), and the Committee also includes the representatives of the development and projects area, technological infrastructure, Internet and organization of DOTSI and Unidas, and also representatives of the Group s different business areas. To make the entire decision and analysis process easier as concerns the activity of Unidas, SA (Brazil), a sub-committee has been created which is fully dedicated to this business unit. The main responsibilities of the Technological Committee include the approval of new projects and the analysis and approval of investments not included in the budget. From a corporate perspective, it is the responsibility of the Technology Committee to ensure proper development of a culture and of information systems management and control policies to streamline global practices and maximize synergies among the various information systems areas within Grupo SAG. The Technology Committee has twelve members, including two executive members of the Board of Directors, namely Manuel Meneses, José Vozone and two non-executive members Carlos Coutinho and António Lemos Furthermore, there is an Internal Audit unit, which supports the Management Board and ensures the assessment and evaluation of Group activities, as well as the suitability and effectiveness of control systems in order to protect equity and transparency of the corporate governance on behalf of investors interests. The internal audit activity is based on an annual plan, whose extent and frequency is based on the analysis of activities and business processes of the Companies, focusing primarily on areas potentially of greater risk and/or areas lacking control and organization. Furthermore, it promotes the streamlining and implementation of internal best practices. The Internal Audit unit also monitors and controls the implementation of its recommendations and approved action plans, through specific follow up audits. Functionally, the Internal Audit unit reports directly to one of the non-executive directors of the Group. As concerns disclosure of financial information, the Company pursues frequent communication with all the relevant stakeholders according to principles of accuracy, reliability and transparence. Financial information is published every quarter, and usually comprises: Non audited Financial Statements (Balance Sheets and Financial Statements, both consolidated and individual), with comments on the progress of business during the relevant period, with reference to the completed three and nine month periods, respectively, on 31 March and 30 September of each year Sede: Estrada de Alfragide, Nº 67 Amadora 64

65 Financial Statements (Balance Sheets and Financial Statements, both consolidated and individual), with a Management Report on the progress of business during the relevant period, with reference to the six and twelve month periods ended respectively on 30 June and 31 December of each year To that effect: 1. Financial information is prepared in strict compliance with the generally accepted accounting principles defined in the International Financial Reporting Standards (IAS / IFRS) 2. Prior to its disclosure, the financial information is checked for its accuracy, correction and compliance with principles indicated in 1 above, This inspection is conducted effectively by the competent supervisory bodies the Audit Board and the Auditing Company ( External Auditor). 3. The Board of Directors formally approves the information to be disclosed. 4. Public disclosure of the financial information is made in full compliance of all the applicable legal and regulatory norms, by the following order: a. CMVM s Information Disclosure System ( b. Company s corporate website ( c. IR Direct s information distribution system ( d. Media, Analysts and other corporate Business Partners e. Company s intranet II.5. Powers of the Management Body, particularly as regards resolutions on capital increases The Board of Directors has no statutory powers to deliberate on capital increases which are exclusively decided by the Shareholders Meeting. II.6. Regulations on the functioning of the corporate bodies or any internally defined rules on incompatibility and the maximum number of positions that a member is entitled to hold The Company has a Manual for the operation of the Board of Directors and of the Executive Committee, as well as a Manual for the operation of the Audit Board. These documents can be found on the Company s website: There are no limitations regarding the maximum number of accumulated posts held by Directors in management boards of other Companies. II.7. Rules applicable to the appointment and replacement of members of the Management and Supervisory Body Members of the Board of Directors can be shareholders or not, they are elected by the General Meeting for four-year terms, and they can be re-elected once or several times. One of the directors can be elected separately as per the terms of points 1 to 5 of Clause 392 of the Companies Act. In the event of an impediment or definitive absence of any of its members, the Board of Directors shall choose, within sixty days, to either call a new general meeting for the election of the missing member or to co-opt a new one. The co-opting shall be subject to confirmation in the subsequent Annual General Meeting. Members of the Audit Board are elected by the Shareholders Meeting for four year mandates,, and they can be re-elected once or several times. The shareholders meeting appoints one among the permanent members to be Chairman; should the Chairman cease his functions before completion of the mandate that was assigned to him or for which he Sede: Estrada de Alfragide, Nº 67 Amadora 65

66 was elected, the other members will choose among themselves one who will perform those duties until completion of the said period. Permanent members of the Audit Board who have a temporary impediment or whose functions have ceased shall be replaced by alternate members. Alternate members replacing permanent members whose duties have ceased shall remain in office until the first annual shareholders meeting takes place where vacant posts will be filled. When it is not possible to fill a vacancy left by a permanent member because there are no elected alternate members available, the vacant positions of permanent and alternate members shall be filled through a new election. II.8. Number of meetings held by the Management and Supervisory Body and other Committees in 2008 During 2008, the Board of Directors convened twenty times for ordinary and extraordinary meetings, and the relevant minutes have been recorded in the respective minute book. The Executive Committee of the Board of Directors met twenty two times. The Audit Board met four times in The ALCO Committer met three times in The Automobile Risk Committee met three times in The Technology Committee met three times in The Corporate Governance and Structure Assessment Committee met twice in II.9. Identification of the members of the Board of Directors and other Committees created within the company Board of Directors Chairman João Manuel de Quevedo Pereira Coutinho (non executive, non independent member) (a) Voting Members Esmeralda da Silva Santos Dourado (executive member) Carlos Alexandre Antão Valente Coutinho (non executive, non independent member) Fernando Jorge Cardoso Monteiro (executive member) António Carlos Romeiras de Lemos (non executive, non independent member) Manuel Ferro da Silva Meneses (executive member) Rui Eduardo Ferreira Rodrigues Pena (non executive, non independent member) (a) José Maria Cabral Vozone (executive member) Pedro Roque de Pinho de Almeida (executive member) (a) Do not fulfill the rules on incompatibilities as per 1. c) of clause 414º-A of the Companies Act. Executive Committee Chairman Esmeralda da Silva Santos Dourado Voting Members Fernando Jorge Cardoso Monteiro Manuel Ferro da Silva Meneses José Maria Cabral Vozone Sede: Estrada de Alfragide, Nº 67 Amadora 66

67 Pedro Roque de Pinho de Almeida II.10. Professional qualifications and other information about the members of the Board of Directors João Manuel de Quevedo Pereira Coutinho o Professional qualifications Business Organization and Management Degree o Professional activities conducted in the last 5 years Business activity and administration and management of various Companies of Grupo SGC and Grupo SAG o No. of Company Shares held 3,915 Shares (direct ownership). 128,920,349 Shares (global sum for imputation purposes as per Clause 20 of the Securities Code). ( ). o Date of first appointment 19 March o Date term ends Elected for the four-year term. Esmeralda da Silva Santos Dourado o Professional qualifications Industrial Chemistry Engineering Degree. o Professional activities conducted in the last 5 years Administration and management of various Grupo SAG companies. Member of the Portuguese Post Office (CTT Correios de Portugal) Strategic Council (since June 2003) Chairperson of Automóvel Clube de Portugal s Audit Board (April ) Member of the Audit Board, and current Chairperson of Fundação Luso-Brasileira s Audit Board (since 1999). Chairman of Fórum dos Administradores de Empresas (Forum of Company Managers) o No. of Company Shares held No Company Shares held. o Date of first appointment 15. December o Date term ends Elected for the four-year term. Carlos Alexandre Antão Valente Coutinho o Professional qualifications Economics Degree. o Professional activities conducted in the last 5 years Administration and management of various Grupo SAG Companies. Sede: Estrada de Alfragide, Nº 67 Amadora 67

68 o No. of Company Shares held 11,584 shares ( ) (11,484 shares in direct ownership and 100 shares held by spouse). o Date of first appointment 26 September o Date term ends Elected for the four-year term. Fernando Jorge Cardoso Monteiro o Professional qualifications Economics Degree. o Professional activities conducted in the last 5 years Administration and management of various Grupo SAG Companies. o No. of Company Shares held 11,658 Shares ( ). o Date of first appointment 15. December o Date term ends Elected for the four-year term. António Carlos Romeiras de Lemos o Professional qualifications Master of Arts in Economics. Master in Economics o Professional activities conducted in the last 5 years Administration and management of various Grupo SAG Companies. o No. of Company Shares held No Shares held. o Date of first appointment 29 February o Date term ends Elected for the four-year term. Manuel Ferro da Silva Meneses o Professional qualifications Economics Degree. o Professional activities conducted in the last 5 years Administration and management of various Grupo SAG Companies and Affiliates. o No. of Company Shares held 10,215 Shares ( ). Sede: Estrada de Alfragide, Nº 67 Amadora 68

69 o Date of first appointment 26 September o Date term ends Elected for the four-year term. Rui Eduardo Ferreira Rodrigues Pena o Professional qualifications Law Degree. Lawyer. o Professional activities conducted in the last 5 years Law practice. Non-executive director of various commercial and industrial Companies. Chairman of the General Shareholders Meeting of various commercial and industrial Companies. o No. of Company Shares held No shares held. o Date of first appointment 19 March o Date term ends Elected for the four-year term. José Maria Cabral Vozone o Professional qualifications Degree in Finance. o Professional activities conducted in the last 5 years Administration and management of various Grupo SAG Companies and Affiliates. o No. of Company Shares held No Shares held. o Date of first appointment 31 March o Date term ends Elected for the four-year term. Pedro Roque de Pinho de Almeida o Professional qualifications Degree in Mechanical Engineering. MBA em Marketing. o Professional activities conducted in the last 5 years Administration and management of various Grupo SAG Companies and Affiliates. o No. of Company Shares held No Shares held. Sede: Estrada de Alfragide, Nº 67 Amadora 69

70 o Date of first appointment 31 March o Date term ends Elected for the four-year term. II.11. Positions held by members of the Board of Directors in other companies Positions held by members of the Board in other Companies, including in other Group companies, are reported in Appendix I to this Report. II.12. Identification of the members of the Audit Board Chairman João José Martins da Fonseca George (a) (b) Voting Members Duarte Manuel Palma Leal Garcia (a) (b) Martinho Lobo de Almeida Melo de Castro (a) (b) (a) Fulfills the rules on incompatibilities provided for in 1 of clause 414º-A of the Companies Act, except as provided for on b) of the Companies Act. (b) Fulfills the independence criterion provided for in para. 5 of clause 414º of the Companies Act. II.13. Professional qualifications and other information about the members of the Audit Board João José Martins da Fonseca George o Professional qualifications Degree in Management o Professional activities conducted in the last 5 years Director in various companies o No. of Company Shares held No shares held. o Date of first appointment 31 March o Date term ends Elected for the four-year term. Duarte Manuel da Palma Leal Garcia o Professional qualifications Degree in Finance. o Professional activities conducted in the last 5 years Administration and management of various Companies. o No. of Company Shares held No Shares held. o Date of first appointment 31 March Sede: Estrada de Alfragide, Nº 67 Amadora 70

71 o Date term ends Elected for the four-year term. Martinho Lobo de Almeida Melo de Castro o Professional qualifications Degree in Management o Professional activities conducted in the last 5 years Administration and management of various Companies. o No. of Company Shares held No Shares held. o Date of first appointment 31 March o Date term ends Elected for the four-year term. II.14. Duties carried out by Audit Board members in other companies The functions carried out by the members of the Audit Board in other Companies are reported in Appendix II to this Report. The members of the Audit Board do not have other functions in Group companies. II.15. Not applicable due to the corporate governance model adopted by the issuer. II.16. Not applicable due to the corporate governance model adopted by the issuer. II.17. Not applicable due to the corporate governance model adopted by the issuer. II.18. Description of the remuneration policy The remuneration policies seeks to promote an alignment between the Directors interests and those of the Company, and it is mainly based on a fixed part with a variable component calculated on the results achieved and economic/financial situation of the Company. The attribution of the variable component of the remuneration to the executive members of the Board of Directors corresponds to a share in the Company s profits. Under the terms of Clause 22, para. 1 of the Company s By-laws, the Salaries Committee determines the remunerations of members of the corporate bodies. However, with a view to transparency of the procedure of determining remunerations and to comply with Recommendation 8A of the Securities Commission, the Salaries Committee prepared in 2006 a statement on Board remuneration policy which was approved by the Annual General Meeting held on 31 March 2006, the terms of which are transcribed in full below: The remuneration policy regarding the Board of Directors of SAG is based on two different components: Fixed Remuneration Sede: Estrada de Alfragide, Nº 67 Amadora 71

72 The fixed remuneration is paid in 14 annual installments. As a guiding principle, the updating of the fixed remuneration is not subject to automatic salary indexation, but rather to a reassessment based on market conditions. Variable Remuneration The variable portion of the remuneration is paid in a single annual installment and corresponds to a share in profits that has been previously decided upon at the Shareholders Meeting. It is determined in accordance with the Group s financial performance and with an assessment of individual performance. This variable remuneration does not depend on the evolution of the Company s share price. Remuneration of Board members can be paid for by an affiliate, in which case it will be considered in determining the amount of the global individual retribution. As regards payment of social security taxes on the said remuneration, it is accepted that, at the Director s request, and provided all legal requirements are met, contributions are paid on the actual amount of the gross remuneration, therefore disregarding the maximum limit of 12 times the national minimum salary. This policy was adopted in the determination of the remuneration paid to the members of the Board of Directors in office during the 2005 financial year, and the Salaries Committee proposes that those same underlying principles be maintained during the term of the Board of Directors which will be elected for the four-year period. II.19. Salaries Committee The Salaries Committee elected for the four-year period is in office. It is in charge of defining remuneration policies for the corporate bodies and comprises the following members: - Lopo Roque de Pinho Cancella de Abreu - Luís de Magalhães Reynolds de Abreu Coutinho - João Francisco de Freitas Cruz Caldeira All the members of this Committee consider themselves independent. Neither the members of this Committee, nor their spouses, relatives up to three times removed, inclusively, hold positions in the management bodies of SAG GEST or of its affiliates. II.20. Remuneration of the Board of Directors Remuneration paid to the members of the Board of Directors in 2008: Executive Directors* Non-executive Directors ** Fixed remuneration EUR 1,274,497 EUR 1,269,369 Variable remuneration*** EUR 1,731,030 - * includes remunerations of executive directors paid by SAG GEST affiliate Companies, in the amount of Eur * includes remunerations of non executive directors paid by SAG GEST affiliate Companies, in the amount of Eur *** The variable remuneration paid in 2008 was provided for in the proposal for distribution of 2007 FY profits approved by the Shareholders Meeting and took into account the Company s performance. No non-cash benefits have been distributed which could be considered as remuneration, and no indemnities have been paid to the Board of Directors. Furthermore, there are no supplementary pension schemes nor are there any early retirement schemes for members of the Board of Directors. No shares nor stock options have been distributed since there is no incentive scheme providing for the assignment of shares. Sede: Estrada de Alfragide, Nº 67 Amadora 72

73 II.21. Payment of compensation in the case of cessation of duties No payment of compensation is provided for in the case of cessation of duties in the course of the mandate that exceeds twice the amount of the monthly fixed remuneration. II.22. Irregularity Disclosure Policy Grupo SAG follows a Code of Conduct that applies to all Group affiliates and embodies the Group s ethic principles and regulates matters involving ethical duties, rules of conduct, conflicts of interest, confidentiality and incompatibilities, among others. The Code of Conduct applies to all Group Employees. The purpose of this Code is to formalize behavior patterns in line with the Group s ethic values, and to strengthen the increasing trust between Grupo SAG's Employees, Shareholders, Clients and Suppliers. The Code of Conduct is available at the corporate website In line with CMVM s Recommendations, SAG GEST defined in 2006 a policy for divulging irregular practices allegedly occurred within the Group as a means for early detection of eventual irregular practices, which will contribute to the prevention of the occurrence of damaging and harmful situations both for the Group and its Employees, as well as for the Shareholders. Under this policy, Employees are given the possibility to report any knowledge about the practice of irregularities to their direct managers or hierarchical superiors who shall have to report them at once to the supervisory body, or through a specific address for reception of reports about irregularities, in case the same are to be kept confidential, although identification of the informer is required for accountability purposes. As regards the processing of the reports about alleged irregularities, enquiries are expected to be conducted by the Committee for the Evaluation of the Corporate Structure and Governance which will give its opinion about the reported facts. The said opinion will support the decision of the Board of Directors' Executive Committee about possible action to be taken. SAG GEST s auditing body is responsible for receiving the disclosures that have been made and for monitoring the practical application of the irregularity disclosure policy, ensuring the vigilance and control function for a thorough establishment of the alleged reported irregularities. Within the process of implementation of the said policy of internal communication of irregularities, a request was made in May 2006 to the National Committee for Data Protection for permission to process personal data, which is still awaiting approval by the said Committee. Chapter III. Information III.1. Equity Structure The share capital is one hundred and sixty nine million seven hundred and sixty four thousand three hundred and ninety eight euros, it is fully paid up and divided into one hundred and sixty nine million seven hundred and sixty four thousand three hundred and ninety eight ordinary shares with a nominal value of one euro each, all listed for trading at the Eurolist by Euronext Lisbon. III.2. Qualified ownerships in the issuer's equity calculated as per article 20 of the Securities Code, on 31 December 2008 SGC Investimentos - SGPS, SA (*) Direct ownership 17,391,110 shares, representing 10.24% of the share capital and corresponding to 11.37% of voting rights. (*) 100% owned by SGC - SGPS, SA Sede: Estrada de Alfragide, Nº 67 Amadora 73

74 SGC - SGPS, SA (**) Direct ownership Indirect ownership (**) 100% owned by João Manuel de Quevedo Pereira Coutinho João Manuel de Quevedo Pereira Coutinho Direct ownership Indirect ownership Global Sum 111,525,324 shares, representing 65.69% of the share capital and corresponding to 72.90% of voting rights. 17,391,110 shares held by SGC Investimentos SGPS, SA, representing 10.24% of share capital and corresponding to 11.37% of voting rights. 3,915 shares, representing % of the share capital and corresponding to % of voting rights. 111,525,324 shares held by SGC SGPS, SA, representing 65.69% of share capital and corresponding to 72.90% of voting rights. 17,391,110 shares held by SGC Investimentos SGPS, SA, representing 10.24% of share capital and corresponding to 11.37% of voting rights. 128,920,349 shares, representing 75.94% of the share capital and corresponding to 84.26% of voting rights. Millennium bcp Gestão de Fundos de Investimento, SA Millennium Acções Portugal 2,371,391 shares, representing 1.40% of the share capital and corresponding to 1.55% of the voting rights. Millennium PPA 1,786,985 shares, representing 1.05% of the share capital and corresponding to 1.17% of the voting rights. Millennium Poupança PPR 192,839 shares, representing 0.11% of the share capital and corresponding to 0.13% of the voting rights. Millennium Investimento PPR 231,413 shares, representing 0.14% of the share capital and corresponding to 0.15% of the voting rights. Millennium Aforro PPR 17,450 shares, representing 0.01% of the share capital and corresponding to 0.01% of the voting rights. Global Sum 4,600,078 shares, representing 2.71% of the share capital and corresponding to 3.00% of the voting rights. Barclays Bank Plc Barclays Bank Plc 4,687,500 shares, representing 2.76% of the share capital and corresponding to 3.06% of the voting rights. Barclays Fundos 454,562 shares, representing 0.27% of the share capital and corresponding to 0.30% of the voting rights. Global Sum 5,142,062 shares, representing 3.36% of the share capital III.3. Shareholders holding special rights There are no shareholders with special rights. Sede: Estrada de Alfragide, Nº 67 Amadora 74

75 III.4. Restrictions to the transferability of shares There are no statutory clauses regarding restrictions to the transferability of shares, such as clauses of consent regarding the selling of shares, nor limitations to ownership of shares. III.5. Shareholders agreements The Company is not aware of any shareholders agreement. III.6. Rules applying to the amendment of the company s by-laws Deliberations involving amendments to the Company by-laws, including capital increases, require a two third majority of votes corresponding to the share capital. III.7. Mechanisms to control employee share ownership There is no system implemented for controlling employees share ownership. III.8. Description of the evolution of the issuer s share prices On the first business day of the year, SAG s share price was 2,93 and in the last business day at the Stock Exchange it was 0,95. The average daily number of shares dealt during the 2008 financial year was 103,584. SAG GEST s price saw a devaluation of approximately 67.6% during the year of 2008, thus ending the positive sequence started in 2005 (+ 74% in 2007, + 5% in 2006 and + 33% in 2005). In 2008, the SAG GEST share liquidity agreement signed with BIG Banco de Investimento Global continued. Under this agreement, 1.7 million treasury stock were purchased. With the acquisition of 60% of the share capital of Loures Automóveis, SAG now owns an additional 5,100 treasury stock which were part of the above company s balance sheet. Also in 2008, SAG repurchased 4,687,500 treasury stock under a swap agreement established with a financial institution in December ,50 3,00 2,50 2,00 Res. Anual '07 13 de Mar. Dividendo '07 31 de Mar. Res. 1ºTrim. '08 06 de Mai. Res. 1ºSem. '08 05 de Ago. Div. Intercalar '08 10 de Nov. Res. 3ºTrim. '08 26 de Nov. 1,50 1,00 0,50 0,00 Jan-08 Fev-08 Mar-08 Abr-08 Mai-08 Jun-08 Jul-08 Ago-08 Set-08 Out-08 Nov-08 Dez-08 Sede: Estrada de Alfragide, Nº 67 Amadora 75

76 III.9. Dividend distribution policy Given the nature of the Company s business and the main investment projects, the Board of Directors has proposed an expressive dividend policy, which has translated in recent years into a payout ratio that is clearly above 50% of the Group s consolidated results. In 2001, SAG GEST began an interim dividend payment policy, which was only halted exceptionally in 2003 due to the increased uncertainty regarding the evolution of the Group s activities, in a year that was marked by strong retraction in the domestic automobile sector. In 2004, SAG resumed its policy of interim dividend payment, which has been kept uninterruptedly. In terms of the future dividend distribution policy, it is our commitment to continue distributing at least 50% of the Group s consolidated results. As regards the financial year of 2008, the Board will propose a payout of 62% of the consolidated results. Therefore, and since an interim dividend has already been paid in November 2008 in the amount of 0,0202 per share, no additional dividends will be paid. Gross dividend (Euro cents per Share) * Paid in the 2 nd semester of the relevant Financial Year. ** Paid in April of the following Financial Year Interim dividend payment suspended 2008 The total amount corresponds to the Board of Directors proposal. III.10. Share distribution or stock option plans There are no plans involving share distribution or stock options for employees or members of the corporate bodies of the company or of any of its affiliates. III.11. Deals and operations between the company and the management and supervisory bodies or holders of qualified stakes or companies having a dominant or group relationship, provided that they are of economic significance for any of the parties involved In 2008, no business deals or operations were made directly between the Company and the managing or supervisory bodies. The balance and transactions with related parties, i.e. with Companies capable of controlling or significantly influencing financial and operational decisions, are as follows: Terms and conditions applicable to transactions performed with related Companies are the same as those applied to transactions with bone fide unrelated third parties, which are identical to normal market practices. Sede: Estrada de Alfragide, Nº 67 Amadora 76

77 III.12. Investor Relations Office The Company has an Investor Relations Office that is coordinated by the Investor Relations Officer and centralizes all questions asked by market agents, ensuring the divulgation of information to Shareholders and to the market in general, under equal conditions and liaising with the Regulatory Authority. Hence, all information regarding the operational and financial performance of Group companies is provided to the investor community through the Investor Relations Office. Likewise, all Company corporate communication with the media is made through the Investor Relations Office. Contacts: Telephone Fax Investor Relations Officer José Maria Cabral Vozone The Group has a corporate website - -, which provides all the published financial information to interested parties, including account reports, corporate presentations, announcements regarding privileged information and other press releases and announcements to the market, as well as calls for Shareholders Meetings and relevant documentation. The corporate website also includes a Calendar of Events (six-month basis), listing the most important events. The Company s website fulfills CMVM s recommendations as a means of divulging corporate information. III.13. Annual Remuneration paid to the Auditor The remunerations paid or to be paid to Independent Auditors, or to other individuals or companies belonging to the same network, by companies with a dominant or group relationship with the Company in 2008 was as follows (amounts in euros): Description Amount (Eur) Total % Legal Review of Accounts/Auditing Services ,3 Other services of reliability assurance ,7 Tax Consulting Services ,3 Other agreed procedures services in respect of a divestiture ,7 Total ,0 Sede: Estrada de Alfragide, Nº 67 Amadora 77

78 Ernst & Young have established an internal system to control and monitor the independence policy which complies with current independence standards used on a domestic and international level and which was implemented to identify potential threats against independence and the corresponding safeguards. This policy establishes the services that are expressly forbidden due to the risk involved in terms of auditor independence. In parallel, the personal independence of each professional is monitored through an internal process, whereby each partner, manager and employee regularly confirms his knowledge of, and compliance with the said policy. Training sessions on the said policy are conducted periodically. Monitoring of compliance with the independence policy is done through regular internal audits conducted by auditors of the auditing company who are independent from its Portuguese operation. The tax consultancy services provided to the Group by the network included the reviewing of tax returns and assistance on specific fiscal matters. As regards tax consultancy and other services, a policy has been followed which ensures total independence regarding decisions made by the Company or any of its affiliates on tax-related or other matters. Sede: Estrada de Alfragide, Nº 67 Amadora 78

79 APPENDIX I TO THE REPORT ON CORPORATE GOVERNANCE Positions held by the Members of SAG GEST Soluções Automóvel Globais, SGPS, SA s Board of Directors as at 31 December João Manuel de Quevedo Pereira Coutinho Other positions held in Grupo SAG companies o Chairman of the Board SIVA Sociedade de Importação de Veículos Automóveis, SA LGA Logística Automóvel, SA Other positions held o Chairman of the Board JPC Holdings, SGPS, SA SGC AR TELECOM, SGPS, SA SGC Comunicações, SGPS, SA SGC - SGPS, SA SGC Indústria, SGPS, SA SGC Energia - SGPS, SA SGC Investimentos Sociedade Gestora de Participações Sociais, SA Agrobari, SA Sociedade Agrícola da Brava Agricultura, Pecuária e Turismo, SA SGCSER Comércio e Serviços, SA Esmeralda da Silva Santos Dourado Other positions held in Grupo SAG companies o Chairman of the Board: AA00 Soc. de Formação Profissional e Consultoria Técnica, SA Inovision Tecnologias de Informação, SA Soauto SGPS, SA Usado OK Comércio de Automóveis, SA Castelimo Comércio de Automóveis e Serviços, SA Cercascais Oficina de Reparação e Comércio de Automóveis, SA Cervag Comércio de Automóveis, SA JM Seguro Comércio de Automóveis, SA Justocar Comércio de Viaturas, SA Rolporto Comércio e Indústria de Automóveis, SA Ecometais Sociedade de Tratamento e Reciclagem, SA Sede: Estrada de Alfragide, Nº 67 Amadora 79

80 SAG Automóveis Espanha, SL o o o Vice Chairperson: SIVA Sociedade de Importação de Veículos Automóveis, SA Member of the Board: SGC SGPS, SA LGA Logística Automóvel, SA Unidas, SA Novinela BV Manager: Globalrent Sociedade Portuguesa de Rent-a-Car, Lda. Frotarent Aluguer de Automóveis, Lda. Other positions held o Chairman of the Board: ED Brasil Empreendimentos, SA o Chairperson of the Auditing Board: Fundação Luso-Brasileira o Chairman of the Management Board: Fórum dos Administradores de Empresas (Fórum of Company Managers) Carlos Alexandre Antão Valente Coutinho Other positions held in Grupo SAG companies o Member of the Board: Inovision Tecnologias de Informação, SA SAG Serviços Assessoria Financeira e Administrativa, SA SIVA Sociedade de Importação de Veículos Automóveis, SA LGA Logística Automóvel, SA SAG Automóveis Espanha, SL Novinela BV Unidas, SA Fernando Jorge Cardoso Monteiro Other positions held in Grupo SAG companies o Chairman of the Board: Rolvia Sociedade de Automóveis, SA Loures Automóveis Comércio de Automóveis, SA o Member of the Board: Sede: Estrada de Alfragide, Nº 67 Amadora 80

81 AA00 Soc. de Formação Profissional e Consultoria Técnica, SA SAG Serviços Assessoria Financeira e Administrativa, SA SIVA Sociedade de Importação de Veículos Automóveis, SA LGA Logística Automóvel, SA Usado OK Comércio de Automóveis, SA JM Seguro Comércio de Automóveis, SA Cervag Comércio de Automóveis, SA Justocar Comércio de Viaturas, SA Soauto SGPS, SA Ecometais Sociedade de Tratamento e Reciclagem, SA SAG Automóveis Espanha, SL Novinela BV o Manager: Garagem Central de Queluz, Lda. Other position held o Member of the Board: ED Brasil Empreendimentos, SA António Carlos Romeiras de Lemos Other positions held in Grupo SAG companies o Member of the Board: SAG Automóveis Espanha, SL Novinela BV Unidas, SA o Statutory Director: Unidas Franquias do Brasil, SA Unidas Comercial de Veículos, Ltda. Unimat Comércio Distribuidora, Lda. Manuel Ferro da Silva Meneses Other positions held in Grupo SAG companies o Member of the Board: Ecometais Sociedade de Tratamento e Reciclagem, SA AA00 Soc. de Formação Profissional e Consultoria Técnica, SA Cervag Comércio de Automóveis, SA JM Seguro Comércio de Automóveis, SA Justocar Comércio de Viaturas, SA SAG Serviços Assessoria Financeira e Administrativa, SA Sede: Estrada de Alfragide, Nº 67 Amadora 81

82 Usado OK Comércio de Automóveis, SA Soauto SGPS, SA Other positions held in affiliated companies o Member of the Board: Santander Consumer Iber-Rent, SL Multirent Aluguer e Comércio de Automóveis, SA José Maria Cabral Vozone Other positions held in Grupo SAG companies o Member of the Board: SAG Serviços Assessoria Financeira e Administrativa, SA SIVA Sociedade de Importação de Veículos Automóveis, SA Usado OK Comércio de Automóveis, SA Ecometais Sociedade de Tratamento e Reciclagem, SA Cervag Comércio de Automóveis, SA JM Seguro Comércio de Automóveis, SA Justocar Comércio de Viaturas, SA Soauto SGPS, SA o Manager: Frotarent Aluguer de Automóveis, Lda. Other positions held in affiliated companies o Member of the Board: Santander Consumer Iber-Rent, SL Multirent - Aluguer e Comércio de Automóveis, SA Santander Consumer Multirent Sp. z.o.o. SAG International Finance Company Limited SAG Overseas Investment and Finance Limited Other position held o Member of the Board: ED Brasil Empreendimentos, SA Pedro Roque de Pinho de Almeida Other positions held in Grupo SAG companies o Member of the Board: Sede: Estrada de Alfragide, Nº 67 Amadora 82

83 o LGA Logística Automóvel, SA SAG Serviços Assessoria Financeira e Administrativa, SA Usado OK Comércio de Automóveis, SA Ecometais Sociedade de Tratamento e Reciclagem, SA Cervag Comércio de Automóveis, SA JM Seguro Comércio de Automóveis, SA Justocar Comércio de Viaturas, SA Soauto SGPS, SA Unidas, SA Manager: Garagem Central de Queluz, Lda. Globalrent Sociedade Portuguesa de Rent-a-Car, Lda Frotarent Aluguer de Automóveis, Lda. Other positions held in affiliated companies o Member of the Board: Santander Consumer Iber-Rent, SL Multirent Aluguer e Comércio de Automóveis, SA Santander Consumer Multirent Sp. z.o.o. SAG International Finance Company Limited o Manager: Manheim Portugal, Lda. Other position held o Member of the Board: ED Brasil Empreendimentos, SA Rui Eduardo Ferreira Rodrigues Pena Other positions held in Grupo SAG companies o Chairman of the General Shareholder Meeting: AA00 Soc. de Formação Profissional e Consultoria Técnica, SA Castelimo Comércio de Automóveis e Serviços, SA Cercascais Oficina de Reparação e Comércio de Automóveis, SA Cervag Comércio de Automóveis, SA Inovision Tecnologias de Informação, SA JM Seguro Comércio de Automóveis, SA Justocar Comércio de Viaturas, SA Sede: Estrada de Alfragide, Nº 67 Amadora 83

84 LGA Logística Automóvel, SA Rolporto Comércio e Indústria de Automóveis, SA SAG Serviços Assessoria Financeira e Administrativa, SA SIVA Sociedade de Importação de Veículos Automóveis, SA Soauto - SGPS, SA Usado OK Comércio de Automóveis, SA Ecometais Sociedade de Tratamento e Reciclagem, SA Loures Automóveis, SA Other positions held o Chairman of the General Shareholder Meeting: EDP Energias de Portugal, SA JPC Holdings SGPS, SA SGC - SGPS, SA SGC Investimentos, SGPS, SA SGC Telecom, SGPS, SA SGC Energia - SGPS, SA ENR SGPS, SA Gabarito Gestão de investimentos Imobiliários, SA SGC AR Telecom SGPS, SA AR Telecom Acessos e Redes de Telecomunicações, SA SGC Comunicações, SGPS, SA Alfraparque Sociedade Imobiliária, SA GI Gasification International, SA J.A. Santos Carvalho - Projectos e Construção, SA Sociedade Agrícola da Brava Agricultura, Pecuária e Turismo, SA SGC Imobiliária, SA SGC Indústria, SA WTS Redes e Serviços de Telecomunicações, SA Biovegetal Combustíveis Biológicos e Vegetais, SA CI&D Centro de Inovação e Desenvolvimento, SA ENRII SGPS, SA SGCSER Comércio e Serviços, SA o Member of the Board: JPC Holdings SGPS, SA SGC - SGPS, SA Ricardo Gallo Vidro de Embalagem, SA Sede: Estrada de Alfragide, Nº 67 Amadora 84

85 o Voting Member of the General and Supervisory Board: EDP Energias de Portugal, SA Sede: Estrada de Alfragide, Nº 67 Amadora 85

86 APPENDIX II TO THE REPORT ON CORPORATE GOVERNANCE Positions held by the Members of SAG GEST Soluções Automóvel Globais, SGPS, SA s Audit Board as at 31 December João José Martins da Fonseca George Other positions held Sole Director: Minitel DI Distribuição Informática, SA Managing Partner: Minitel, Lda. Netecetera, Lda. Micro Edição Sistemas de Edição Electrónica, Lda. Vida Portátil, Lda. Chairman of the General Shareholder Meeting Multiple Zones Portugal, SA Duarte Manuel da Palma Leal Garcia Other positions held Member of the Board: Aleluia Cerâmicas, SA Manager: Galepa Cerâmicas, Lda. Garlea - Sociedade Imobiliária, Lda. Martinho Lobo de Almeida Melo de Castro Other positions held Manager: Sociedade Agrícola da Herdade de Porches Director: Sociedade Agrícola de Vale do Guiso Sociedade José Lobo de Almeida Melo de Castro Herdeiros Sede: Estrada de Alfragide, Nº 67 Amadora 86

87 STATUTORY AN AUDIT REPORT OF THE INDEPENDENT AUDITORS SEPARATE ACCOUNTS 2008 Sede: Estrada de Alfragide, Nº 67 Amadora 87

88

89

90

91 REPORT AND OPINION OF THE AUDIT BOARD SEPARATE ACCOUNTS 2008 Sede: Estrada de Alfragide, Nº 67 Amadora 88

92 Report and Statement of the Audit Board on the individual accounts reports In accordance with the law, the memorandum of association and the mandate assigned to us, we present our report on the auditing activity conducted, as well as our opinion about the management report and separate financial statements presented by the Board of Directors of SAG GEST - Soluções Automóvel Globais, SGPS, SA, listed company, (the Company), a listed company, concerning the financial year ended on 31 December Report 1.1 We regularly monitored the Company s activity throughout the year to the extent that we deemed adequate. We had contacts with the Board and other responsible staff of the Company, who were always available to provide all the required explanations. 1.2 All checks that were considered due and adequate were conducted, and no situation was brought to our knowledge that could be in breach of the applicable by-laws and legal precepts. 1.3 In the course of the financial year, a favorable opinion was issued on the transaction involving the sale, by the Company, of 1,613,058 shares representing 99,99% of the share capital of Brienz Mobilidade Automotiva Ltda, a company incorporated according to the Brazilian law, to Growth Capital Invest S.A., a company incorporated according to the Luxembourg law, which is fully owned by SGC SGPS, SA, a company incorporated according to the Portuguese law, whose dominant shareholder is Dr. João Manuel de Quevedo Pereira Coutinho, Chairman of the Board of the said company and ultimate parent shareholder of a qualified stake of 75,94% of the share capital, under the terms of Clause 20 of the Securities Code. 1.4 We reviewed the Legal Certification of the Accounts and the Audit Report prepared by Ernst & Young Audit & Associados, SROC, SA, which have our approval, and we have taken note of the relevant Annual Audit Report issued by that Auditing Company about the auditing that was conducted. 1.5 The individual accounts, including the balance sheet, financial statements, the relevant Annex and other statements provide a good understanding of the Company s financial situation and results. 1.6 The adopted accounting policies and valuation criteria are adequate and comply with the accounting principles that are generally accepted and with the relevant legislation. 1.7 The Board of Directors Report gives a clear view of the orientation of the policy adopted by the Company during the financial year, as well as the outlook for the 2009 financial year. 1.8 We reviewed the rationale behind the proposal for profit appropriation presented by the Board of Directors, which we considered adequate. 2. Opinion In view of the above, and considering the information received from the Board of Directors and the conclusions contained in the Legal Certification of Accounts and Audit Report, our opinion is that the following are in a position to be approved: 2.1 The management report and individual financial statements for the financial year The proposal for profit appropriation. Sede: Estrada de Alfragide, Nº 67 Amadora 89

93 3. Statement As provided for by law, we announce that, to the best of our knowledge: (i) the information provided on the relevant management report accurately describes the development of business operations, the performance and position of the Company and contains a description of the main risks and uncertainties facing it. (ii) the infor mation provided on the individual financial statements, the legal certification of accounts and other reporting documents that are legally required were prepared in accordance with the relevant accounting standards and give an accurate and adequate image of the assets and liabilities, financial situation and earnings of the Company. Alfragide, 14 April 2009 The Audit Board João José Martins da Fonseca George (Chairman) Duarte Manuel Palma Leal Garcia (Voting Member) Martinho Lobo de Almeida Melo de Castro (Voting Member) Sede: Estrada de Alfragide, Nº 67 Amadora 90

94 CONSOLIDATED ANNUAL REPORT 2008 Sede: Estrada de Alfragide, nº Amadora 1

95 SAG GEST Soluções Automóvel Globais, SGPS,SA Listed Company Registered Share Capital: EUR 169,764,398 Taxpayer no Registered at the Amadora Registrar of Companies under no Headquarters: Estrada de Alfragide, nº Amadora Offices: Alfrapark Edifício SGC, Piso Amadora Tel: Fax: [email protected] Web: Sede: Estrada de Alfragide, nº Amadora 2

96 MANAGEMENT REPORT CONSOLIDATED ACCOUNTS 2008 Sede: Estrada de Alfragide, nº Amadora 3

97 TABLE OF CONTENTS I. MACROECONOMIC BACKGROUND A. INTERNATIONAL CONTEXT B. PORTUGUESE ECONOMY C. BRAZILIAN ECONOMY II. INDUSTRY BACKGROUND AUTOMOTIVE MARKET A. EUROPE B. PORTUGAL C. BRAZIL III. BUSINESSES REPORT A. AUTOMOTIVE DISTRIBUTION AND RETAIL 1 - Automotive Distribution - SIVA 2 Automotive Retail New Cars - SOAUTO 3 - Automotive Retail Semi-new and Used Cars Globalcar B. AUTOMOTIVE SERVICES 1 Portugal - LGA 2 Brazil - Unidas C. RECYCLING OF END OF LIFE VEHICLES - ELV 1 - Ecometais D. PARTNERSHIPS / STRATEGIC STAKES 1 Renting a.1. Portugal / Santander Consumer Multirent a.2. Spain / Santander Consumer IberRent a.3. Poland / Santander Consumer Multirent Sp. z.o.o. 2 - Remarketing a.1. Portugal / Manheim Portugal IV. BUSINESS SUPPORT ACTIVITIES A. HUMAN RESOURCES B. INFORMATION SYSTEMS C. LOGISTICS V. BUSINESS RESTRUCTURING AND INNOVATION PROCESS Sede: Estrada de Alfragide, nº Amadora 4

98 VI. ECONOMIC AND FINANCIAL ANALYSIS VII. OUTLOOK FOR 2009 A. MACROECONOMIC DEVELOPMENT PROSPECTS 1 International Background 2 Portuguese Economy 3 Brazilian Economy B. AUTOMOTIVE MARKET EVOLUTION FORECAST FOR Portugal 2 Brazil C. GROUP ACTIVITY EVOLUTION FORECAST 1 - Automotive Distribution and Retail 2 - Automotive Services i. Portugal / LGA ii. Brazil / Unidas 3 Recycling of End of Life Vehicles - ELV i. Ecometais 4 - Partnerships / Strategic Stakes i. Renting a.1. Portugal / Multirent a.2. Spain / SC Iber-Rent a.3. Poland / SC Multirent Sp. z.o.o. ii. Portugal / Manheim Portugal VIII. FINAL NOTE Sede: Estrada de Alfragide, nº Amadora 5

99 I. MACROECONOMIC BACKGROUND A. INTERNATIONAL CONTEXT The world economy is facing, since the third quarter of 2008, its worst crisis since World War II. GDP grew approximately 3.3%, showing a slowdown vs. the 5% average during the period This slowdown was sharper in the more developed economies, particularly in the United Sates of America (USA) and in the European Union (EU), with emerging countries also showing a decrease in their economic dynamics vis-à-vis the last years. Table 1. International Context Main Indicators in 2007 and (E) Euro Zone GDP 2,7 0,9 Growth of relevant external demand (in %) 5,5 2,5 Oil price (brent, USD/barrel) 72,5 96,9 USD/EUR exchange rate (annual average) 1,370 1,471 Short term interest rate (annual average, %) 1 4,3 4,6 Long term interest rate (annual average, %) 2 4,4 4,6 Sources: European Commission, 1 Euribor 3 months; 2 10 year Government bonds In 2008, the Euro zone went into technical recession for the first time. GDP grew 0.9% against 2.7% in Sede: Estrada de Alfragide, nº Amadora 6

100 B. PORTUGUESE ECONOMY The Portuguese economy went into stagnation. GDP did not grow and data shows that exports, public spending and investment were the variables which most affected its growth. Table 2. Portugal Main Indicators in 2007 and 2008 unit (E) GDP avr % 1,9 0,3 Private Consumption avr % 1,2 1,2 Public Spending avr % 0,0-0,3 Investment (GFC) avr % 2,6-0,8 Exports avr % 7,0 0,1 Imports avr % 4,1 1,0 Inflation (HICP) - average % var 2,4 2,6 Unemployment rate % act.pop. 7,8 7,7 Public Deficit % GDP -3,0-2,2 Public Debt % GDP 64,4 65,9 Source: (Min. of Finance, PEC , January 2009 update Private consumption and imports showed 1.2% and 1.0% growth in 2008, respectively. Inflation (CPI) was 2.6% in average terms in 2008 (+ 0.2 points vs 2007). The unemployment rate remained in line with 2007 figures. Public deficit in terms of % of GDP showed a 0.8 % improvement according to the European Commission, unlike public debt which saw a 1.5% increase. Sede: Estrada de Alfragide, nº Amadora 7

101 C. BRAZILIAN ECONOMY In 2008, the Brazilian economy showed 5.3% GDP growth, similar to 2007 (5.4%). The main facts which contributed to this growth was household spending and the increase in investment in the first three quarters of the year. Inflation rate (HICP) in 2008 was 5.9%, a 1.7% increase vs This increase in the inflation rate is mostly due to the increase in food prices. However, the inflation rate remained within the variation interval forecast by Brazil s Central Bank. The basic interest rate (SELIC) grew throughout 2008 from 11.25% (at the end of 2007) to 13.75% at the end of The labour market showed an increase in the number of jobs during the first three quarters in Howver, and again due to the effects of the international economic crisis, the last quarter of the year showed a drop which left the rate of employment at the same levels as in Net public debt represents approximately 38.5% of GDP, therefore continuing its downward trend. The Trade Balance showed in 2008 a surplus of US$ 24 billion, less than the US$ 40 billion achieved in Table 3. Brazil Main Indicators in 2007 and 2008 unit (E) GDP avr % 5,4 5,3 Interest Rate (SELIC) % var 11,25 13,75 Inflation (HICP) % var 4,2 5,9 Public Debt % GDP 40,0 38,5 Source: Unidas Sede: Estrada de Alfragide, nº Amadora 8

102 II. INDUSTRY BACKGROUND AUTOMOTIVE MARKET A. EUROPE In Western Europe (EU-15 + EFTA), sales of passenger vehicles (PC) fell 8.4% to 13.6 million cars, a figure which is below the 14 million mark for the first time in 10 years. This was the largest annual drop since 1993 (-16.6%). Sales of light commercial vehicles (LCV) totaled 1.8 million units, a 12.0% drop vs. figures for Chart 1 Sales Volume Passenger Vehicle Market in Western Europe (UE-15 + EFTA) (in 000s of vehicles) Light Passenger Vehicles Light Commercial Vehicles Total Light Vehicles Source: ACEA Sede: Estrada de Alfragide, nº Amadora 9

103 B. PORTUGAL Sales of light vehicles (LV) fell 0.5% with a total of 268,793 units sold, 141,737 units less ( 34,5%) than the volume achieved in 2000, the best ever result. The Portuguese market therefore continues stabilized at low levels. The Portuguese passenger car (PC) market grew 5.7% in comparison with 2007, with 213,389 units sold. The PC market had an uneven behaviour throughout the year, with a 38% increase in December worth highlighting. In spite of this increase during the year, overall sales were 88,300 units (-29.3%) less than the best year ever (1999). On the other hand, sales of LCV fell 19.0% to 55,404 units. Volumes for this market fell each month below the figures for the same months in 2007, with the exception of July when the VAT tax was reduced from 21% to 20%. The annual sales figure was the lowest since The so-called ABC market (which excludes Passenger Derivatives and Pick-ups) decreased less than the LCV market: 9.2%, to 30,766 units. Chart 2 Sales Volume Total Markets (units) Light Passenger Vehicles Light Commercial Vehicles Total Light Vehicles Source: ACAP The following were the most significant factors affecting the behaviour of the PC market in 2008: change in the rules regarding the Car Tax (ISV), with the environmental component representing 60% of the revenue, in a context of increased adoption of this component in Europe. This change created a decrease in the tax for less polluting cars and an increase for those that pollute more. Due to these changes, sales of diesel cars (Chart 3) and imported cars suffered a negative impact (Chart 4). the announcement of an increase in the Car Tax from January 1st 2009 created a phenomenon of anticipation which led people to buy their car in December. combination of the program involving the decommissioning of end of life vehicles (more than 10 years old) with promotional campaigns by different makes led to an increase in sales involving this program from 7.3% to 16.2% of the market in Sede: Estrada de Alfragide, nº Amadora 10

104 increased sales to companies, with the Operational Vehicle Rental (OVR) already accounting for more that 16% of the total market (13.7% in 2005; 7.4% in 2002). Chart 3 Diesel powered vehicles in total PC sales 27,5% 25,0% 26,5% 28,9% 28,1% 24,6% 26,0% 8,3% 12,4% 20,3% 23,6% 15,2% 17,7% 4,2% 4,5% 3,5% 3,2% 3,8% 3,3% 8,7% 19,7% 29,6% 38,2% 38,5% 40,3% 40,2% Diesel < 1,6 / LV Diesel > 1,6 / LV Source: ACAP Chart 4 Used PC Imports, ,7% 24,2% 25,0% ,1% 19,3% 20,2% 20,0% ,8% 12,6% ,3% ,8% ,0% 10,0% 5,0% ,0% ,0% ,0% LPV LPV % LV Source: ACAP In what concerns the evolution in terms of PC segments, lower segments showed an increase thus confirming a growing trend for demand for less polluting vehicles. The lower-medium (or A) segment (VW Golf) surpassed for the 4 th consecutive year the lower (or A0) segment (VW Polo). The three lower segments represent 79.5% of the market, against 75.8% in Sede: Estrada de Alfragide, nº Amadora 11

105 Chart 5 PC Segment % 1% 1% 1% 1% 2% 2% 2% 2% 3% 3% 3% 15% 15% 14% 14% 3% 2% 4% 13% 5% 2% 3% 13% 3% 2% 3% 13% 33% 34% 38% 39% 36% 37% 38% 2% 3% 4% 4% 6% 5% 7% 45% 43% 38% 35% 36% 34% 34% A0 A00 A B C+D G MPV Source: ACAP / SIVA Among LCV segments, the highest volume and the most favoured segment from a tax perspective - the Passenger Derivatives - was the most affected, and now represents 30.5% of the total market vs. 37.7% in Apart from this, only the Pick-up market saw a drop from 12.8% to 10.8% in its sales. The ABC market represented 55.6% of the LCV market (49.5% in 2007). Chart 6 LCV Segments % 10% 10% 9% 12% 13% 3% 11% 17% 16% 15% 15% 14% 16% 17% 17% 17% 17% 16% 14% 14% 16% 20% 21% 20% 23% 22% 19% 22% 34% 36% 38% 36% 37% 38% 31% Der.Pass. A - Vans <2 t B - Fg+Ch.-Cab. 2-3 t C - Fg+Ch.-Cab t Pick-ups A0 Source: ACAP / SIVA Estimates by ACAP about the total number of cars point towards a total of 4,408,000 PC and 1,200,000 LCV s on 31 December Sede: Estrada de Alfragide, nº Amadora 12

106 C. BRAZIL Sales of passenger vehicles and light commercial vehicles in the Brazilian market grew 14.1% in 2008, totaling 2.67 million units. In 2007, this volume reached 2.36 million units according to the Brazilian Car Maker Association (Anfavea) Chart 7 Sales Volume Total Domestic Sales (millions of units) Doméstic Sales ( PV & LCV) Source: ANFAVEA 2008 was the best year ever for the automotive market in Brazil s history, both in sales and in production, the latter totaling 3 million light passenger and commercial vehicles vs. the 2.8 million produced in This result was clearly helped by the ease of access to the car finance market in conditions (rates and terms) which had never been available before, and this made it possible for a significant part of the population, who previously had not had access to this type of goods, to buy their own car. Sales of flex-fuel vehicles (which make it possible to use simultaneously or alternatively gas and alcohol) were predominant in the Brazilian market and account for 87.2% of total sales in 2008, against 85.6% in the previous year. Sede: Estrada de Alfragide, nº Amadora 13

107 III. BUSINESSES REPORT A. AUTOMOTIVE DISTRIBUTION AND RETAIL 1. Automotive Distribution - SIVA In 2008, SIVA strengthened its leadership position in the light passenger vehicle market and moved up to the second position among importers in the light vehicle market. Total sales of light vehicles by SIVA totaled 32,047 units, a 5.0% increase compared to These figures correspond to a market share increase of 0.6%, from 11.3% in 2007 to 11.9% in In the PC market, Makes represented by SIVA sold 29,350, 10.5% more than in This growth meant a market share increase from 13.2% in 2007 to 13.8% in In the PC market, Volkswagen increased its share from 7.9% to 8.2%, Audi increased from 3.4% to 3.7% and Skoda increased from 1.87% to 1.90%. In the ABC market, VW commercial vehicles grew from 6.9% to 7.5%. Chart 8 SIVA Total Sales, (in units) +9,9% LPV Market: + 5,7% LCV Market: - 19,0% LV Market: - 0,5% +5,0% ,6% -31,6% -2,6% ,9% VW VP VW VCL VW "ABC" * Audi Skoda SIVA ** * Excl. Derivatives and Pickups ** Includes Luxurius Source: ACAP Volkswagen - Light Passenger Vehicles In 2008, Volkswagen rose to the 3 rd place in the ranking of sales of passenger cars, with a volume of 17,461 vehicles sold and a market share of 8.2%. In the light passenger vehicle market, Volkswagen showed the best performance in the last four years with a 10% growth vs. the previous year. This result is particularly important because it shows a positive evolution of the make in three fronts: sales volume, market share and ranking. Sede: Estrada de Alfragide, nº Amadora 14

108 Chart 9 Volkswagen Sales Light Passenger Cars (units) ,9% ,5% 8,0% 7,9% ,2% ,0% 9,0% 8,0% 7,0% 6,0% 5,0% ,0% 3,0% ,0% 1,0% ,0% Units Market Share Source: ACAP The new Volkswagen Golf, launched in mid-november, immediately conquered the leadership of the medium segment and contributed to the good performance of the Make. Also, the Passat range, with its new addition, the new Passat CC, showed positive dynamism as proved by the 3rd place in its segment, strengthening its image and conquering new clients. Having reached a mature age, the Polo continues to position itself as a reference within its segment, namely through special series offering strong value for money. Finally, the new Scirocco, produced by Autoeuropa and launched in September, affirmed itself as the best selling sports coupé in Portugal. Volkswagen - Commercial Vehicles With vehicles sold in 2008, the Volkswagen Commercial Vehicles brand excluding Passenger Derivatives, a segment which is only considered from a fiscal point of view increased its market share (ABC market) and reached an all-time high 7.5%. One of the pillars of the strengthening of the market share was the new VW Caddy Maxi. Having been introduced only at the end of the 1st quarter, it quickly became the reference within its segment. Equally important was the contribution by the VW Crafter for the total sales of the Make. Sede: Estrada de Alfragide, nº Amadora 15

109 Chart 10 Volkswagen Sales Commercial Vehicles (units) (ABC Segments) ,10% 6,30% 7,00% 7,50% 8,00% 7,00% ,20% 6,00% ,00% 4,00% 3,00% 2,00% ,00% ,00% Units Market Share Source: ACAP / SIVA 1 Excluding the Caddy Kombi, considered under PC As concerns the distribution network of this Make, important steps were taken in 2008 to improve territorial coverage with the appointment of 5 new Dealers. Audi Audi had its best year ever in Portugal in 2008, both in terms of sales volume and market share: 7,818 vehicles were sold, a 13.6% increase vs the previous year, while its market share reached 3.7%. The new Audi A4, launched in January in the break version and in May in the Avant version, quickly became absolute sales leader in the medium high segment, with 3,939 vehicles sold. The facelift to the Audi A3 in June modernized and strengthened this model s claims, and it currently leads the premium medium segment. Also the Audi Q5, launched in November, contributed to strengthen the Make s claims. Chart 11 Audi Sales (units) ,2% 3,5% 3,3% 3,4% 3,7% 6,00% 4,00% ,00% ,00% -2,00% ,00% ,00% ,00% ,00% Units Market Share Source: ACAP Sede: Estrada de Alfragide, nº Amadora 16

110 The Dealer Network continue to undergo its modernization program to be able to better respond in terms of customer service and to support new products launches. The After Sales Courtesy Car Program, which provides a vehicle at no cost for Clients whose car is in repair, was consolidated. Škoda With 4,082 units sold in 2008, the Škoda brand showed a 6.9% increase, above the market average, and achieved a 1.9% market share in the passenger car market, its best in the last 7 years. The Fabia Break a new generation launched at the beginning of 2008 whose sales grew 49% vs. its predecessor was key to the global performance of the Make. Also the Superb, the top model of the Make, which was presented to the Global Dealer Network in Lisbon and launched in the Portuguese market in the last Carter, strengthened Škoda s good performance throughout the year. Chart 12 Škoda Sales (units) ,8% 1,8% 1,9% 1,9% 2,00% ,4% ,80% 1,60% 1,40% 1,20% 1,00% 0,80% ,60% ,40% 0,20% ,00% Units Market Share Source: ACAP Luxury Makes - Bentley and Lamborghini The Luxury Makes Department, which represents the Bentley and Lamborghini makes, sold a total of 13 Bentleys. It is important to highlight the opening, in Oporto, of an area for Luxury Makes which is part of the new centre for makes represented by SIVA, and the selection and start of works in a new space which is exclusively dedicated to Lamborghini in one of Lisbon s main streets. Spares and Accessories Sales of Spares and Accessories totaled 76 million, a 3% decrease versus Sede: Estrada de Alfragide, nº Amadora 17

111 Chart 13 Sales of Parts and Accessories ,5 83,6 80,9 78,2 75, Revenue ( millions) Source: SIVA The Degree of Service (an indicator that measures the level of Spares and Accessories supplied by SIVA to its Authorized Repairshop Network) showed a very favorable evolution in the annual average, above 95%, with important effects on the level of Customer Satisfaction. During 2008, several actions were implemented that became decisive for the performance achieved, such as: facilitation of local marketing activities significant reinforcement of promotion and advertising of Accessories lines; price repositioning of the more competitive parts; launch of new products; improvements in inventory management increased number of Authorized Repair shops benefiting from same-day spare part ordering and delivery careful monitoring of procedures involving orders for broken down vehicles; training activities provided to SIVA and Authorized Repair shop employees. After Sales Service The total number of hours in the After Sales service was 1,001, in terms of hours sold in the Authorized Repair Shop Network, a reduction of 7% vs. the previous year. This is considered as a positive result given the economic environment, bearing in mind the reduction in the number of cars on the roads that are less than 8 years old. Also worth highlighting is the fact that business done under warranty, and in spite of the entrance of new models in the market, showed a 9% reduction as proof of the continued increase in product reliability. Sede: Estrada de Alfragide, nº Amadora 18

112 Clients In 2008, SIVA launched two projects in the area of Client Relationships with the aim to increase benefits provided by its distribution networks: Increased client loyalty rates for each of the makes represented by SIVA; Increased business productivity in the entire Official Dealer network, measured by sales made to potential Clients. These programs are in line with the positioning of each of these Makes represented by SIVA. The customer loyalty program called Customer Care Management (CCM) currently has approximately 18,000 Clients. In paralell, investments have been made to ensure a multi-channel approach in line with the platforms of each of the Makes and the proprietary gateway SIVAonline.pt, for both B2C and B2B. Sede: Estrada de Alfragide, nº Amadora 19

113 2. Automotive Retail New Cars - SOAUTO In 2008, SOAUTO (the Group s Retail Unit) acquired a majority stake in a Dealership in the Greater Lisbon area, Loures Automóveis, Lda. With this Dealership, the Group strengthened its position in this area and is giving continuity to its strategy in Retail. Therefore, SAG SGPS, SA s participation in automotive retail companies totaled at the end of 2008 eight dealers in areas considered of strategic importance given their market potential: Castelimo SA, VW and Audi dealer (Lisbon), under the Expocar brand (for the Audi make) and Castelimo (for the VW make); JM Seguro SA, VW and Skoda dealer in Lisbon, operating under the Carlar make in the case of Skoda; Justocar SA, VW dealer (Barreiro), operating under the Castelimo brand; Cervag SA, VW dealer in Oeiras; Rolporto SA, VW Dealer in Oporto; Cercascais, Audi dealer (Oeiras and Cascais); Rolvia SA, Audi Dealer in Oporto, operating under the Expocar brand; Loures Automóveis SA - Audi, VW and Skoda Dealer in Loures. 3,961 new vehicles and 1,452 used vehicles were sold, i.e., an increase of 8.7% and 15.6% vs. the previous year, respectively. The number of vehicles repaired in our repair shops was 68,369, generating 191,912 hours sold, a 6.9% and a 5.7% decrease compared to 2007, respectively. The ratio of hours sold per stay was lower than the one in In terms of EBITDA (excluding structural costs), the contribution per business area in 2008 was the following: Chart 14 Contribution to EBITDA per Business Area 37% 47% 16% Parts Service Vehicles Sales Source: SOAUTO Sede: Estrada de Alfragide, nº Amadora 20

114 3. Retail Semi-New and Used Cars Globalcar In 2008, the Company sold a total of 838 vehicles to End Customers. In a market that was directly affected by the economic crisis, the worst expectations were confirmed at the beginning of the year. It was necessary to quickly rethink the entire business model and strategy that had been adopted so far. It was assumed that the market would not fulfill the Group s expectations and, therefore, the expansion strategy started in 2007 was changed to one of contraction and cost optimization. Consequently, it was decided to close down 3 of the 4 existing Centres. Business at the Rio de Mouro Centre ceased on August 1 st ; in October, the Montijo was closed and a decision was made to close the Centre at Leça in January The Odivelas Centre, due both to its geographic position and to the features of the building itself, took on the responsibility of continuing the Globalcar Project, albeit operating with a totally different business model. The business changed from creation of stocks for subsequent sale to a business of intermediation, using cars available at Usado OK and SIVA. Sede: Estrada de Alfragide, nº Amadora 21

115 B. AUTOMOTIVE SERVICES 1. Portugal - LGA Preparation of new cars Preparation of cars increased 3.9% vs 2007, with a total of 31,301 cars prepared. This increase is directly linked with SIVA s business activity which contributed to the excellent results of this business unit. Furthermore, the new quality control system was implemented to improve levels of Customer satisfaction, and new procedures were also introduced in the logistics chain to reduce lead time in the preparation operation. Repairs As previously defined, LGA maintained in 2008 a policy of growth and diversification of its repair business, which was consubstantiated in Clients outside the Group. The number of jobs from external Clients grew 30% vs Chart 15 Evolution in number of jobs per source type Internal External Source: LGA However, this increase in the number of jobs was not matched by increased billings due to the fact that work done was generally of a less complex nature. This fact was compensated by a policy of reduction in administrative costs and streamlining of costs which contributed to balance results. Sede: Estrada de Alfragide, nº Amadora 22

116 2. Brazil - Unidas In 2008, Unidas showed solid growth in all its business areas: in Fleet Management and Rent-a-Car, the central pillars of the operation in Brazil, and also in the Semi-ne0077 car business, an instrumental unit within Unidas, the aim of which is to maximize the value of sales of vehicles originating in Fleet Management and Rent-a-Car. Fleet Management The Fleet Management business, which accounts for approximately 75% of Unidas' total revenue, showed a significant increase, with the fleet reaching 26,938 units at the end of the year. This amount reflects an increase of approximately 16% vs. 2007, and consolidates Unidas leadership position in Fleet Management in the Brazilian market. Chart 16 - Fleet Management - No. of Vehicles Total Fleet on 31 st December Gross Turnover Total Fleet Source: Unidas In terms of annual production, 15,701 new Renting contracts were signed, a 15% increase over the 13,617 contracts signed in Financed capital rose to R$444 million in 2008, 23% more than the R$362 million achieved in Rent-a-Car and Franchises Throughout the year, continuity was given to the plan of expansion based on Franchises, through the Turn-key model, and on a sales strategy focused on the more profitable segments (Tourism and Private Clients). It was thus possible to increase revenue per daily rental by 3%. Sede: Estrada de Alfragide, nº Amadora 23

117 Chart 17 - Rent-a-Car Net Billing and No. of Daily Rentals Gross Turnover Daily Rentals Source: Unidas In 2008, the franchise business showed a positive performance again (Chart 17). The success of the Franchise model is fundamentally due to the benefits it provides to all parties involved: reduction in the level of investment required from the Franchisee to open the Franchise, since the Franchisee receives a shop that is ready to operate and includes the cars that are needed to develop the business; faster expansion of the network due to a decrease in structural investments; greater control from the part of Unidas as regards the standards of the franchised fleet (vehicle model, age, mileage). Chart 18 Fleet Franchises No. of Daily Rentals and No. of Shops Franchised Stores Daily Rentals Source: Unidas Sede: Estrada de Alfragide, nº Amadora 24

118 Semi-New In 2008, 13,417 vehicles were sold, of which 11,083 (83%) directly to End Users and 2,334 (17%) to used car dealers. The End User channel increased its weight significantly as regards total sales, following the decision to concentrate sales points of this channel in the Greater Sao Paulo area, where it is possible to achieve higher sales margins than in other regions of the country. In the 2nd Semester of the year, performance of the semi-new and used car market saw a deterioration of the level of prices which naturally impacted, in a negative way, the results of this operation which, during the first half of the year, had contributed positively to Unidas s overall result. Realization of this fact, as well as the absence of any prospects of a reversion of this trend on a short term basis led to the creation of a provision to face potential losses in the sale of vehicles that were part of Unidas s fleet on 31 December 2008, in the amount of R$ 17.1 million (approximately 5.3 million ). Chart 19 Sales of Semi-New Cars Private Consumers Dealers Source: Unidas C. RECYCLING OF END OF LIFE VEHICLES - ELV 1. Ecometais 2008 is the first full year of Grupo SAG s experience in the industrial sector. Ecometais Sociedade de Tratamento e Reciclagem, SA has a processing scheme which involves the collection, processing, recovery and recycling of End of Life Vehicles (ELV) and ferrous and non ferrous metal scrap. Having been bought with the aim of providing the Group with capacity to process the ELV liabilities, fulfilling its responsibilities in a cycle of the vehicle s life where SAG did not have any presence yet, Ecometais proved that it had a very important role in the recycling of all types of ferrous and non ferrous metal scrap, as well as in the routing of other recyclable waste, such as batteries, plastics, catalytic converters, glass, tires. etc. Charts 20 and 21 show the industrial activity of Ecometais, distinguishing the various raw materials (processable scrap) and end products (resulting from the production process). Sede: Estrada de Alfragide, nº Amadora 25

119 Chart 20 : Types of Raw Materials entering Ecometais (2008) 8% 27% 65% Iron Scrap End Of life Vehicles Other Residue Source: Ecometais Ecometais gives a significant contribution to environmental sustainability given the fact that its output is secondary raw materials that can be used in other manufacturing processes, and sub-products also give origin to materials that can be used to replace natural raw materials. Chart 21 : Types of Finished Products from Ecometais (2008) 11% 3% 3% 83% Shredded Iron Scrap Iron 404 Other Metals Sub Produts Source: Ecometais The company s business was strongly influenced by volatility in the ferrous and non ferrous metal market. After a first semester with strong growth driven by demand, but also by interest shown by investment funds, the second semester was marked by an opposite trend, with sharper drops than the increases seen in the first half of the year. Chart 22 shows the volatility of the price of the main product sold fragmented iron. While in 2005, 2006 and 2007 the market was normalized by monthly (fortnightly at the most) price variations and changes within a relatively narrow range, in 2008 the market began to see weekly changes in prices within a range that was previously unheard of. Sede: Estrada de Alfragide, nº Amadora 26

120 Chart 22 : Comparative Analysis of the Price of Fragmented Iron in /ton w1 w5 w9 w13 w17 w21 w25 w29 w33 w37 w41 w45 w Source: Ecometais D. PARTNERSHIPS AND STRATEGIC STAKES 1. Renting a.1. Portugal - Santander Consumer Multirent In 2008, the Renting market increased its penetration rate against sales of new light vehicles, according to figures published by ALF (Portuguese Factoring and Leasing Association). Production of new Renting contracts grew 3% vs. 2007, and the fleet managed by renting companies grew 9%, totaling 125 thousand vehicles. SC Multirent strengthened its position in the Portuguese OVR market with 6,147new contracts, a 6.9% increase vs. the 5,748 signed in The amount of capital invested in new vehicles rose to over 106 million, a 1.8% increase vs. the previous year. At the base of this growth was the excellent performance of the Indirect Distribution Channel, one of the strategic focuses defined for 2008, as well as the development of Multirent s technological platform and increased penetration in Clients fleets where the Company already had a presence. The active OVR contract portfolio was 10,917 units on 31 st December 2008, a 6% increase vs. the 10,296 active contracts at the end of Sede: Estrada de Alfragide, nº Amadora 27

121 Chart 23 Multirent - Fleet Invested Capital (thousands ) Number of Contracts Source: Multirent Capturing new clients focused on the private consumer and small/medium sized company segments, where OVR penetration is smaller than in larger companies. In a context market by devaluation in the used car market, with average decreases above 15% in prices between 2007 and 2008 and with reduced liquidity, Multirent nevertheless achieved the targets it had defined for the year, both from a commercial and a financial point of view. Among the various activities that were implemented, the following are worth highlighting: Integration of in-house teams in the Accounting and Management Control, Treasury and Accounts Receivable and Payable, Credit Risk Analysis and Recovery functions; consolidation of the sale of Services not associated to Renting contracts, particularly Warranty Extensions and Maintenance Contracts; 44% increase, with 3,400 Extended Warranties and 600 Maintenance Contracts in portfolio at the end of great success in the referral of maintenance services to preferred workshops (increase from 54% to 61%) and in the focusing of purchases on preferred suppliers (over 95%). a.2. Espanha - Santander Consumer Iber-Rent Santander Consumer Iber-Rent, a company which is jointly held by SAG (40%) and Santander Consumer (60%), is active in the Renting area in Spain, apart from also conducting that business in Portugal as Multirent s sole shareholder. After a year during which Renting continued to show signs of strong vitality, in 2008 the company saw a strong retraction in its market following the significant drop in the sale of vehicles. It is worth highlighting that, in 2008, the Spanish new car market showed a decrease of approximately 28% vs 2007, with that decrease reaching nearly 50% in the last quarter of the year. Santander Consumer Iber-rent maintained the strategy it had started in 2006, i.e., to increase its sales effort in the Indirect Channel, trying to optimize synergies with Santander Consumer EFC that has established sales agreements with a vast network of Dealers, for the distribution of traditional car finance products. Since the Indirect Channel is the one that relies more on the sale of new vehicles, the Company saw a decrease in new contracts of approximately 16.8% to 8,770 units. Sede: Estrada de Alfragide, nº Amadora 28

122 In terms of financed capital, the total amount reached approximately 140 million, which reflects a 22.6% reduction vs The managed fleet totaled 16,632 units, a 3.2% decrease vs. the situation at the end of December However, and in view of the restrictions and limitations in production volume due to the drop in the market, Santander Consumer Iber-rent tried to select the more profitable operations and managed to increase the spread on new contracts by approximately 45bps vs. the situation in the previous year. a.3. Poland - Santander Consumer Multirent Sp. z.o.o. Following the team creation stage and the implementation of the computer system, SC Multirent Sp. z.o.o in Poland began its activity in the 2nd Quarter of 2008, and became an important part in the extension of the partnership between SAG and Santander Consumer for the Renting business. Having faced all the difficulties that a start-up company has to deal with, as well as the unfavorable economic situation which also affected Poland, the company closed the year with approximately 1,000 managed contracts. As is the case in Portugal and in Spain, SC Multirent Sp. z.o.o. sells its services through two distinctive distribution channels: Indirect Channel: distribution through the vast dealer network with which Santander Consumer Bank Poland has established contracts, therefore taking advantage of the commercial structure of this partner/shareholder that has a leadership position in the Polish car finance market; Direct Channel: distribution via its own sales team comprising employees who have a vast know-how about the Polish Renting market. Sede: Estrada de Alfragide, nº Amadora 29

123 2 Remarketing a.1. Portugal - Manheim Portugal At the beginning of 2007, SAG entered the car auctioning business in Portugal in partnership with Manheim, the world leading American used car remarketing services company through the creation of Manheim Portugal, a company whose capital is owned by SAG (40%) and Manheim (60%). At the same time, S.L.V. and Unileilões businesses were acquired, both of which were used car auction houses operating in the Portuguese market for some time. With these acquisitions, Manheim immediately became the second largest operator in this business sector. Throughout 2008, Manheim Portugal established itself as the leading company in the Remarketing market by introducing several innovations. Manheim Portugal focuses its services on the sale of used cars by physical and online auctioning, and on the provision of certain complementary services, such as transportation, parking and preparation of vehicles was a crucial year for the consolidation of Manheim Portugal, and several key projects were implemented to ensure a successful future: launch of new concepts on physical auctions which have had a strong impact on the Portuguese market; reorganization of the internal sales force structure; launch of the three auction floors concept with parallel operation; development of the online auctions, supported by Cyberstock, Manheim s internationally tested tool; change in the auction computer systems, benefitting from the experience of Manheim Europe. Chart 24 No. (thousands) of Used Car Sales via Auction Operators in Portugal Source: Manheim Portugal Sede: Estrada de Alfragide, nº Amadora 30

124 Chart 25 Market Share of the Main Auction Operators in Portugal 15% 7% 5% 28% 39% BCA Manheim Portugal Leilocar Leilostock Leiloatlântico Source: Manheim Portugal Sede: Estrada de Alfragide, nº Amadora 31

125 IV. BUSINESS SUPPORT ACTIVITIES A. HUMAN RESOURCES Human Resources Management policies and instruments were consolidated in Under the name Year of the Group s Values, values which were defined in 2007, several actions and activities were conducted representing each of those values, integrated in a specific program: the Values months. These actions have a transversal nature and involved all SAG companies and all of the staff. Recruitment and selection for all Group companies were centralized, with particular focus on monitoring mobility and internal recruitment. A Transversal Training Program was developed with the aim of providing the skill development and critical knowledge needs to ensure the fulfillment of responsibilities and successful business. Furthermore, the Global Performance Management System GPS was implemented with training activities and communication sessions for all the structures. Internal communication was also one of the commitments for The Group s Intranet was revamped, with contents constantly updated, and new supports were introduced to strengthen communication (billboards, posters, internal magazine). Development of the Integration and Welcome Program also made it possible for the Group to streamline and professionalise the practice of integration of new Staff. Finally, in 2008 the Human Resources Governance Model was defined with the creation and development of the Human Resources Committee. B. INFORMATION SYSTEMS Under the Strategic Plan for Group Information Systems (PESIG), the Project for integration of the financial function in one single ERP platform was continued, and it now involves 26 companies. The Internet channel continued to be developed, with initiatives involving the SIVAOnline gateway, and the first stage of implementation of the new plaform which supports activity of the automotive retail units was concluded. The CRM platform, which was implemented in SIVA during 2007, consolidated the information which will support SIVA and its Dealer network in improving the efficiency with Customer relations and service. It also supported the launch at Dealer Networks of the client loyalty building program of each of the represented makes (CCM Customer Care Management). A project for virtualization and consolidation of the server park with the aim of reducing the number of physical servers managed by teams was started, and the servers are now all in one single data centre. Also as regards the End Customer, Dealer Networks were equipped with new diagnosis and technical information features which will improve efficiency at Authorized Workshops. The IT area continued to give support to the approximately 5,000 users of the SIVA Dealer Network nationwide. Sede: Estrada de Alfragide, nº Amadora 32

126 C. LOGISTICS The efforts of the Logistics area were focused on organizational improvement, on the establishment and implementation of streamlined procedures in the various business units, as well as on the areas of car documents, nationwide distribution of cars and on building/equipment maintenance and centralized purchasing. Two areas in particular were given new procedures in 2008: a) The documentation sector, with adoption of the automobile-online system which enabled a faster access to automobile records via the Internet; b) Grupo SAG s purchasing platform enabled several financial benefits to be derived from economies of scale and synergies, as well as benefits following the implementation of electronic invoicing. V. BUSINESS RESTRUCTURING AND INNOVATION PROCESS Research, Development and Innovation Activity in the Innovation area has been guided by a policy based on the strategy defined by Grupo SAG - Mobility for the Future with Environmental Responsibility. For Innovation management, a system of Research, Development and Innovation structured by processes was developed. The mission of this system is to create a systematic and continuous model of innovation, capable of anticipating market trends, with the aim of developing new products and services resulting in new business opportunities and in the optimization of existing businesses, ensuring competitive advantages through differentiation. Because this system was certified according to the internationally acknowledged standards NP4456, NP4457 and NP4458, in October 2008 the audit which was conducted for the renewal of the certificate was carried out successfully, placing SAG as one of the pioneering companies in the maintenance of the certification of their Research, Development and Innovation system. Cooperation and involvement with Universities is an integral process of Grupo SAG s Innovation management system, thus contributing for the transformation of scientific knowledge into development and innovation. Also as part of ISCTE / Audax s program for Specialization in Entrepreneurship and Business Creation, SAG won Inovcapital s Innovation Prize for the best corporate project developed in RDI project development Following recent legal requirements in Brazil as concerns the control and tracking of vehicles, SAG identified an opportunity for the creation of a new car tracking service to be included in the fleet management services under the Unidas brand. This service allows for building upon Unidas s current assets (Customers and outsourced workshops) while offering its Customers improved management of their fleets through pro-active booking of maintenance, recommendations on the use of cars, possibility of creating a driving risk ranking, technical testing on vehicle use and simplified conflict management (for instance, traffic fines). With the introduction of this new service, Unidas will stand out among the other operators and will at the same time diversify its service portfolio. While continuing work done on a pilot project on individual urban mobility Ecocity, several awareness raising activities were conducted among interested parties, both in Portugal and abroad, and also with those who are responsible for current mobility policies, to assess potential interest in the implementation of this type of service in the cities. Ecocity is an urban mobility service with a strong environmental component. The system is based on small vehicles using alternative energies which will be available for the public to use in several points of the city under a self-service, pay-per-use and one-way-trip concept. Sede: Estrada de Alfragide, nº Amadora 33

127 The competence and the work done by SAG in recent years, combined with the need perceived by the Government for a change in the current context of urban mobility, leads us to believe that this project may well play a significant role in the near future and contribute towards the creation of sustainable mobility sustem which will provide better quality of life for citizens. VI. ECONOMIC AND FINANCIAL ANALYSIS Total Revenue and Margins Consolidated Revenue in 2008 totalled 818 milhões, 10.7% above the figure for 2007, and it already includes the total revenue for Ecometais (which, in 2007, only contributed the revenue following its acquisition in October), as well as revenue from Dealer Loures Automóveis from July 2008 onwards. Table 4. Consolidated Revenue Turnover ( 000) Var. % Sales Wholesale ,6% Retail ,3% Specialized Retail ,7% Automotive Services Portugal ,2% Automotive Services Brazil Ecometais ,0% Residual Values Unit ,2% Other Companies Intercompany Sales ,5% Total Consolidated ,9% Services Rendered Wholesale ,5% Retail ,6% Specialized Retail ,0% Automotive Services Portugal ,8% Automotive Services Brazil ,4% Ecometais ,4% Residual Values Unit ,7% Other Companies ,6% Intercompany Services Rendered ,6% Total Consolidated ,1% Total Turnover ,7% It is worth to highlight contribution by the Distribution Business and Retail Areas in Portugal, which grew 6.6% and 18.3%, respectively, and Unidas in Brazil, which saw a 39.4% increase vs. the previous year. In 2008, the effective margin corresponded to 26.1% of the Consolidated Revenue, showing an improvement vs. the previous year when this indicator was 25.4%. Sede: Estrada de Alfragide, nº Amadora 34

128 Table 5. Consolidated Income Statement Operational Costs Operational Costs totalled million in 2008, a 12.6% increase vs. the previous year. This evolution is in line with growth in business volume, particularly in Unidas, in Brazil, which is also influenced by costs regarding the business of Ecometais (which in 2007 only became part of SAG s perimeter of consolidation from October onwards), as well as by the inclusion of Loures Automóveis operational costs. Sede: Estrada de Alfragide, nº Amadora 35

129 EBITDA EBITDA totalled 77.1 million, a 16.2% increase vs. 2007, with EBITDA margin reaching 9.4% of Consolidated Revenue (9.0% in the previous year). Depreciation and Provisions Depreciation for the year ( 20.8 million) includes the amount of 5.3 million which corresponds to the provision which was created to face potential losses in the sale of vehicles that are part of Unidas s fleet, as indicated elsewhere in this Report. This provision reflects the evolution of the prices of semi-new and used cars which, particularly in the 2 nd semester of the year, showed a negative trend. Without this impact, this item showed an increase of 2.3 million (17.1% of the amount in 2007), which is the result of the increase of Unidas s fleet. The adverse effects of the evolution of the prices of used and semi-new cars, particularly during the second half of the year, also were felt in the results of sales of this type of vehicles by Unidas, and which resulted in capital losses of approximately 0.9 million ( 193,000 in 2007). Financial Income (Net Interest) Consolidated financial income in 2008 ( - 53 million) represents, on a comparative basis, i.e., excluding the capital gains achieved with the sale of the stake held in SC Interbanco in 2007, a 25.8% increase in costs vs As concerns the contribution to SAG s consolidated results, there were reductions in contributions by Affiliates in the Services area, which are consolidated through the equity method, in particular the contribution by CRE, which increased 16.3% vs. results achieved in Table 6. Consolidated Financial Income / (Expense) Variation in financial expenses involving financing operations contracted by the Group was a consequence of the increase of interest rates in international markets. This effect was particularly felt at Unidas, where financial expenses increased 37.1% vs Apart from tax levels which were significantly higher than in international markets, the increase in interest rate Sede: Estrada de Alfragide, nº Amadora 36

130 spreads in Brazil was significantly higher than in the other markets where SAG operates, and at the same time the need to resort to the financial market to keep up with the growth of Unidas s portfolio also increased. Consolidated Net Profit Consolidated Net Profit for SAG was approximately 1.1 million which, excluding the capital gains achieved with the sale of the stake held in SC Interbanco in 2007, corresponds to a reduction of approximately 6.2% vs. results in The creation of a provision for potential losses in Unidas s fleet (which had an after tax impact of approx. 3.5 million), as well as capital losses suffered in the sale of semi-new cars in Unidas in 2008 (which negatively impacted the net profit in approximately 0.6 million) contributed decisively to this reduction. Table 7. Consolidated Net Profit (Eur) Var (Eur) % Var Reported Result ( ) (97,2) Capital Gains - BSCP ( ) Result without the impact of the Sale of ( ) (85,0) BSCP Provision for losses in Unidas s Fleet (*) Capital losses (Unidas) (*) ,5 Comparable Result ( ) (30,1) (*) Net after taxes Exluding the impacts related to the sale of semi-new and used cars in Brazil and the provision for potential losses in the fleet in the portfolio, the Consolidated Net Result for 2008 shows a 30.1% ( 2.2 million) reduction vs. the comparable value achieved in 2007, which essentially reflects the resukts achieved in the Group s operations in Portugal which, overall, fulfilled expectations given the difficult environment in which the operations were conducted. Balance Sheet and Financial Structure The structure of the Consolidated Balance Sheet is affected by the above-mentioned conditions, and the level of investments made by SAG and the strong business growth of Unidas in Brazil should be highlighted. Therefore, to finance the increase in assets in Brazil, and apart from support by SAG via a new capital increase which totaled 34 million, Unidas resorted to contracting new financing in the local market, which originated an increase of approximately 53 million in financial liabilities. Still in 2008, Unidas resorted to an issue of debentures in the amount of BRL 250 million, to conform the structure of its debt to the profile of its operational fleet. Grupo SAG's net bank debt rose to 525 million, a 140 million increase vs. December 2007, whilst maintaining in essence the recommended balance for the type of assets that make up the Group s business portfolio, as shown by the Average Interest Expenses to EBITDA, which improved from 5.9 to 5.8. In October 2008, the SAG-2003 Bond Issue in the amount of 90 million reached maturity and was refinanced practically entirely in the domestic market. Consolidated Net Equity on 31 December 2008 is 60.7 million, showing a negative variation of approximately 52.1% ( 66.2 million) vs This substantial decrease is the result of the booking of the unfavourable impacts of the conversion into Euros of the Group s investment in Unidas (whose functional currency is the Brazilian Real) and which are related with the deterioration of the Brazilian Real s exchange rate vs. the Euro. This was particularly Sede: Estrada de Alfragide, nº Amadora 37

131 noted in the 4 th Quarter of In comparison with the position at the end of 2007, this situation created a decrease of 29.7 million in Consolidated Net Equity. The acquisition of treasury stock also contributed 9.0 million to the decrease in the amount of the Consolidated Net Equity, and the remaining amount of the above mentioned decrease was the result of dividend payments (approx million) in April (dividend for 2007) and in November (interim dividend in 2008 which was based on the results achieved during the first semester of the year). Financial Ratios The evolution of the major consolidated financial ratios was as follows: Table 8. Financial Ratios Profitability ratios are naturally affected by the amount of the net result, the decrease of which was the result of the above described situations, particularly those that had an unfavorable impact on the results of Unidas. As regards the debt ratios, the evolution shows a relatively more moderate trend, particularly the Interest Coverage (EBITDA / Net Interest) and financial/ebitda indicators. The following amounts were considered in the calculation of the above ratios: Table 9. Financial Ratios Components Sede: Estrada de Alfragide, nº Amadora 38

132 Shareholder Profitability and Dividends The Board of Directors will propose that there be no additional payment of dividents regarding 2008 following the payment of an interim dividend in November 2008 which corresponded to per share. Table 10. Shareholder Profitability Description of share behaviour in the stock market On the first business day of the year, SAG s share price was 2.93 and in the last business day at the Stock Exchange it was The average daily number of shares dealt during the 2008 financial year was 103,584. SAG GEST s price saw a devaluation of approximately 67.6% during the year of 2008, thus ending the positive sequence started in 2005 (+ 74% in 2007, + 5% in 2006 and + 33% in 2005). In 2008, the SAG GEST liquidity provider agreement with BIG Banco de Investimento Global continued. Under this agreement, 1.7 million treasury stock were purchased. With the acquisition of 60% of the share capital of Loures Automóveis, SAG now owns an additional 5,100 treasury stock which were part of the above company s balance sheet. Also in 2008, SAG repurchased 4,687,000 treasury stock under a swap agreement established with a financial institution in December Chart 26 SAG Share Price Evolution at the Stock Exchange 3,50 3,00 2,50 2,00 1,50 1,00 0,50 0,00 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Source: Reuters Sede: Estrada de Alfragide, nº Amadora 39

133 VII. OUTLOOK FOR 2009 A. MACROECONOMIC DEVELOPMENT PROSPECTS 1. International Background The world economy is facing a widespread crisis and, according to the most recent estimates, 2009 will be the year with less growth since World War II. Table 11. International Context Main Indicators in 2008 and forecast for (E) 2009 (P) Euro Zone GDP 0,9-1,9 Global 1 GDP 3,4 0,5 Growth of relevant external demand (in %) 2,5-2,8 Oil price (brent, USD/barrel) 96,9 51,0 USD/EUR exchange rate (annual average) 1,471 1,337 Short term interest rate (annual average, %) 2 4,6 2,2 Long term interest rate (annual average, %) 3 4,6 4,2 Sources: Forecasts for January 2009; Ministry of Finance, PEC , January 2009 update 1 International Monetary Fund 2 Euribor 3 months; 3 10 year Government bonds The short term interest rate will suffer a reduction to 2.2% following efforts by national governments to relaunch the economy. Sede: Estrada de Alfragide, nº Amadora 40

134 2. Portuguese Economy The Ministry of Finance has predicted that GDP growth in Portugal will be -0.8% in Table 12. Portugal Main Indicators in 2008 and forecast for 2009 according to the Ministry of Finance unit 2008 (E) 2009 (P) GDP avr % 0,3-0,8 Private Consumption avr % 1,2 0,4 Public Spending avr % -0,3 0,2 Investment (GFC) avr % -0,8-0,9 Exports avr % 0,1-4,4 Imports avr % 1,0-1,3 Inflation (HICP) - average % var 2,6 1,2 Unemployment rate % act.pop. 7,7 8,5 Public Deficit % GDP -2,2-3,9 Public Debt % GDP 65,9 69,7 Source: (Min. of Finance, PEC , January 2009 update According to the same forecasts, the more negative contribution will be from exports (-4.4%) and, to a lesser extent, from investment (-0.9%) due to deterioration in the evolution of demand both in the domestic and in the external marjets and to the maintenance of unfavorable conditions of financing. Inflation is expected to decrease to 1.2% as a result of the behaviour of both the energy component (decrease in oil prices) and the non-energy component (gradual deceleration in demand for goods and services). The unemployment rate is expected to rise to 8.5%. 3. Brazilian Economy The Brazilian economy is expected to show a slowdown in its growth rate. GDP growth should be around 2%, supported by private consumption and also by public spending to the detriment of a reduction in investments and in the trade balance. Inflation rate is expected to decrease to 5.5% in response to the decrease in activity and to the reduction of commodity prices, which should be higher than the devaluation of the Real. The average interest rate will show a significant reduction in 2009 to 12.0% as a result of a more flexible economic policy from the part of the Central Bank of Brazil, justified by the sharp drop in activity and the decrease in inflationary pressure. The unemployment rate is expected to remain below the two-digit level, and could decrease somewhat when the economy recovers from the 2 nd semester onwards. Sede: Estrada de Alfragide, nº Amadora 41

135 Table 13 Main Indicators in 2008 and forecast for 2009 unit 2008 (E) 2009 (P) GDP avr % 5,3 2,0 Interest Rate (SELIC) % var 13,75 12,0 Inflation (HICP) % var 5,9 5,5 Source: Unidas Among the main risks which could affect the above growth scenario, these are the most important: a retraction in business above forecasts in the event of a deepening of the international economic crisis would have a negative impact on employment and consequently on consumption; appreciation of the US Dollar vs. the Real would originate a degradation in the flow of exchange which would make it difficult for companies to get financing for their operations. Sede: Estrada de Alfragide, nº Amadora 42

136 B. AUTOMOTIVE MARKET EVOLUTION FORECAST FOR Portugal Sales of light vehicles (LV) in 2009 is expected to total 230,000 units, a decrease of more than 14% vs This reduction is the result of a 15% drop in the PC market (to 180,000 units) and a 10% decrease in the LCV market (to 50,000 units). 2 Brazil The expected slowdown in economic activity will translate into a significant reduction in the automotive market. C. GROUP ACTIVITY EVOLUTION FORECAST 2009 will be a year of great challenges for Grupo SAG. SAG will face those challenges with determination in the pursuit of the defined strategy. 1. Automotive Distribution and Retail Overall, makes represented by SIVA expect to maintain the same sales volumes, therefore succeeding in increasing their relevant market share again. New launches scheduled for 2009 will contribute decisively. Business of the Group s automotive retail companies will be in line with the business performance of SIVA brands. Table 12 shows the main product launches in 2009 Table 14 Product Launches in 2009 Model Date Volkswagem VP Golf GTI June 2009 Golf Plus March 2009 Golf Variant November 2009 Polo September 2009 Volkswagem VCL Caddy 4-Motion January 2009 Audi A4 Allroad May 2009 A5 Cabrio April 2009 A5 Sportback September 2009 Škoda Octavia February 2009 Yeti 4 th quarter 2009 Source: SIVA Sede: Estrada de Alfragide, nº Amadora 43

137 2 - Automotive Services i. Portugal / LGA Maintenance of the growth strategy in the repair business originating in Customers outside the Group. ii. Brazil / Unidas In Fleet Management (Renting), slowdown in the growth of the Brazilian economy and less credit availability for companies are expected to maintain the number of contracts at the same level as in Unidas will significantly reduce the investment in fleet, extending contracts that are near maturity with more selectivity from its Client Portfolio and repricing services in an environment of high demand and reduced supply. The Rent-a-Car business is expected to maintain the same level of activity. It is expected that the decrease in daily rentals by companies due to the slowdown in economic activity be offset by increased demand in daily rentals by privates on account of increased domestic tourism following the evolution in the exchange rate. Sede: Estrada de Alfragide, nº Amadora 44

138 3 End of Life Vehicle Recycling (ELV) i. Ecometais 2009 will be market by the global crisis environment which defined the final quarter of In this context, Ecometais s business will be marked by the following elements: the price of fragmented iron (main product of fragmentation) will undergo successive downward revisions due to the fact that its main usage is the manufacturing of steel cables, an industry that has been strongly affected by the global crisis. Prices of the remaining metals and non-ferrous alloys should see a slight recovery. These have reached historically low levels in 2008, which rendered recycling more attractive than mining, reason why prices are expected to grow. Market instability will force small and medium sized operators to look for serious and reliable partners such as Ecometais. The fragmentation residue will become profitable due to the application of new separation techniques which will enable the residue, which is currently one of the main costs of the operation, to become energy efficient. 4 Partnerships / Strategic stakes i. Renting a.1. Portugal / SC Multirent The depressed economic context that has existed in the last months and the pessimistic outlook announced by most commentators and economic agents point towards a difficult 2009 for the Renting business. The second semester of 2008 already showed strong cost cutting from the part of companies as regards their fleets, not only through a widespread demand for extension of current contracts without increased rental prices, but also by a demand for cars of lower ranges than those in the contracts nearing expiry. This is the complex environment in which SC Multirent believes it can increase its market share in On the one hand, the dimension and financial capacity of its major shareholder gives it a very significant competitive advantage over its competitors. On the other hand, the commitment which in due time was made to the sale of stand-alone services, strongly supported by the automotive network linked to Grupo SAG, is now bearing its first, very significant fruit, and this is an area which is expected to show significant growth in a.2. Spain / SC Iber-Rent In a very negative economic context, it is expected that, in 2009, Santander Consumer Iber-rent will be faced with a reduction in the production of new contracts, and it is expected to end the year with a managed fleet of approximately 15,500 vehicles, a reduction of approximately 5% vs the situation at the end of In order to make up somehow for the loss in volume, the Company will try to increase the margin of the new contracts in approximately 100bps vs. 2008, continuing its focus on distribution via the Indirect Channel (Dealer Network). Sede: Estrada de Alfragide, nº Amadora 45

139 a.3. Poland / SC Multirent Sp. z.o.o. In spite of an unfavourable economic situation which is expected to continue in 2009, SC Multirent Sp. z.o.o is expected to end the year with more than 4,000 contracts, a 300% increase vs. the final position at the end of As concerns structural costs, priorities will include optimization of synergies with Santander Consumer Bank Poland. ii. Remarketing / Manheim Portugal In 2009 a consolidation in the volumes of sales though physical auctions is expected which will enjoy greater dynamics following tax changes introduced in the automotive sector in Also, online auctions are expected to see sharp growth, and this was already felt in the second semester of These two fronts will be the bases for implementation of the growth and profitability strategy of Manheim Portugal s business. Sede: Estrada de Alfragide, nº Amadora 46

140 VIII. FINAL NOTE In compliance with the legal and statutory provisions, the Board of Directors submits to the Shareholders approval the Annual Consolidated Report 2008, in the firm belief that, to the best of its knowledge, information contained in it was prepared in compliance with the applicable accounting standards and gives an accurate and adequate image of the Company s assets and liabilities, financial situation and results of SAG Gest and of the companies included in the consolidation perimeter, and that the Management Report accurately reflects the development of business, performance and position of SAG Gest and of the companies included in the consolidation perimeter and contains a description of the main risks and uncertainties that confront them. Alfragide, 28 March 2009 THE BOARD OF DIRECTORS João Manuel de Quevedo Pereira Coutinho Esmeralda da Silva Santos Dourado Carlos Alexandre Antão Valente Coutinho Fernando Jorge Cardoso Monteiro António Carlos Romeiras de Lemos Manuel Ferro da Silva Meneses Rui Eduardo Ferreira Rodrigues Pena José Maria Cabral Vozone Pedro Roque de Pinho de Almeida Sede: Estrada de Alfragide, nº Amadora 47

141 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED ACCOUNTS 2008 Sede: Estrada de Alfragide, nº Amadora 48

142 Sede: Estrada de Alfragide, nº Amadora 49

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144 Sede: Estrada de Alfragide, nº Amadora 51

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146 NOTES TO THE FINANCIAL STATEMENTS CONSOLIDATED ACCOUNTS 2008 Sede: Estrada de Alfragide, nº Amadora 53

147 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31st DECEMBER GENERAL INFORMATION REGARDING THE GROUP S ACTIVITY The Consolidated Financial Statements of SAG Gest as at 31 December 2008 have been approved and authorized for presentation by the Board of Directors. The accounts are consolidated in Portugal. Grupo SAG, of which SAG Gest Soluções Automóvel Globais SGPS, SA (SAG GEST SGPS SA) is the parent company, comprises Companies operating in various business areas in Portugal, Spain, Brazil and Poland, namely in automobile distribution and retail trade, in Portugal, of the Volkswagen, Audi, Skoda, Bentley and Lamborghini makes, sale of used multi-brand cars, preparation of new cars and bodywork repairs, Operational Vehicle Rental medium to long term car rental products and services, maintenance contracts, rent-a-car services as well as insurance brokerage. SAG GEST SGPS SA is a holding Company with headquarters in Estrada de Alfragide, 67 Alfragide, Amadora. 2. SUMMARY OF THE MAIN ACCOUNTING POLICIES 2.1 Bases for preparation The Consolidated Financial Statements include the accounts of SAG GEST SGPS SA and its affiliates where it holds a direct and majority stake or controls management. The Financial Statements of these Companies were integrated through the integral consolidation method with the exception of Santander Consumer Iber-Rent SL, Santander Consumer Multirent, Sp.z.o.o., Autolombos, Lda., CRE SGPS e Manheim, Lda., where the equity equivalence method was used. All amounts shown in the Notes herein are expressed in euros, except where otherwise stated. 2.2 Compliance statement The Consolidated Financial Statements were prepared according to the International Financial Reporting Standards (IFRS). 2.3 Bases for Consolidation The Consolidated Financial Statements, as well as the individual Financial Statements of Companies included in the consolidation perimeter of SAG GEST SGPS SA, are reported for the period ending 31 December 2008, and were prepared using accounting policies that are consistent among them, except for Globalrent Sociedade Portuguesa de Rent-a-car, Lda. and Unidas, S.A., whose specific activities differ from the other Companies included in the consolidation, whereby vehicles used by such Companies are recognized as basic equipment. Hence, the criterion and depreciation rates used in connection with assets used by said Companies and included in the Consolidated Financial Statements, are different from the rates used in depreciating assets by the remaining Companies included in the consolidation perimeter. Such depreciation criteria are, however, applied uniformly to all Group Companies conducting similar business, as is the case of the above Companies. Inter-company balances and significant inter-company transactions (with their corresponding income and expenses) between Companies included in the consolidation perimeter were eliminated in the consolidation process. Sede: Estrada de Alfragide, nº Amadora 54

148 Differences between the book value of financial investments and the acquisition values of the Companies consolidated through the integral consolidation or equity equivalence method are recognized as follows: Where the acquisition price is higher than the acquired company s equity value, such difference is booked as goodwill; Where the acquisition price is lower than the acquired Company s equity value, such differences affect Net Income in the financial year in which the acquisition takes place. Differences determined on the date of the Group s first consolidation, regardless of whether they are positive or negative, were recognized against Consolidated Shareholders Equity. The consolidation of Companies using the integral consolidation or equity equivalence method originated the recognition of the following goodwill amounts: Goodwill liabilities, included as Intangible Assets (Note 11) arising from Companies acquired between 1999 and 2008: The Group applied IFRS 3 Business Combinations, effective as of 1 st January From that date, amortization of Goodwill generated by the acquisition of the aforementioned investments is no longer considered. The value of goodwill became subject to impairment tests on an annual basis. The amount shown in the adjusted Consolidated Balance Sheet is considered to be close to the relevant recuperable value. During the period ended in 31 December 2008, companies Lírios e Nobre, Lda., Parque das Laranjeiras, S.A., Autoimpor, S.A., Sag Dot Com SGPS, S.A. e Siva On Line, S.A were liquidated. Santander Consumer Multirent SP z.o.o. was included for the first time in the period ending 31 December 2008 in Grupo SAG's consolidation using the equity equivalence method. SAG acquired, effective July 1 st 2008, the majority (71.66%) of the share capital of Loures Automóveis, SA which, for this reason, was included for the first time using the integral consolidation method, in the Consolidated Financial Statements if the Group as at 31 December Sede: Estrada de Alfragide, nº Amadora 55

149 Goodwill assets, reflected in Net Equity, and resulting from the first consolidation performed in 1998: The amounts representing third party stakes are included in the Consolidated Financial Statement under Minority Interests. Minority interests represent the interests of unrelated third parties in affiliates Rolporto Comércio e Indústria de Automóveis, S.A., Inovision Tecnologias de Informação, S.A. and Rolvia- Sociedade de Automóveis, SA. and Loures Automóveis, S.A. 2.4 Main accounting policies Land, Buildings and Equipment Buildings and Equipment are recognized at cost or at their re-valued amounts in accordance with the terms and conditions set forth in the applicable regulations, the latest evaluation having been made in 1998 in respect of assets existing as at 31 December However, since 2001, all land belonging to the Group is re-evaluated every two years based on valuations performed by independent experts. These valuations are used as the basis for the execution of the impairment tests required by the IFRS. Sede: Estrada de Alfragide, nº Amadora 56

150 Depreciation is calculated based on cost or re-valued amounts, using the straight-line method, except in the cases mentioned below, in order to fully depreciate the assets during their estimated useful life, as follows: % Buildings and other constructions 2,00 to 16,66 Machinery and equipment 10,00 to 31,25 Autos and trucks 14,28 to 25,00 Tools 10,00 to 25,00 Office equipment 10,00 to 33,33 Other tangible assets 10,00 to 33,33 In Unidas, SA, depreciation of vehicles included as basic equipment that are assigned to the Renting business, is calculated in such a way as to reflect the estimated loss in value of the vehicle during the term of the relevant contract. At Globalrent and Unidas, SA, depreciation of vehicles included as basic equipment assigned, respectively, to Rent-a-Car and Daily operations, is booked so as to reflect the estimated loss in value of the car between its date of purchase and its expected sales date, using the straight-line method. Expenses incurred in connection with the repair and maintenance of equipment are recognized as expenses in the period in which they are incurred. Intangible Assets Intangible Assets are valued at cost. Depreciation is calculated on a straight-line basis, using depreciation rates that allow full depreciation of these assets until the end of their useful life. This account includes the differences ( goodwill ) between book value of the Companies included in the consolidation perimeter either through the integral method and the respective equity value at the date of entry in the Group. Under the terms of IFRS 1 Appendix B ( First Time Adoption of International Financial Reporting Standards ), it was decided to neither apply calculations retroactively to determine the value of goodwill in accordance with IFRS 3 ( Business Combinations ), nor the retroactive calculation of IAS 21 ( The Effects of Changes in Foreign Exchange Rates ) with regard to acquisitions made before 1 January Investments in affiliates The Group s investments in Affiliates are recognized through the equity method. Therefore, the investments are recognized at their cost of acquisition, adjusted to any subsequent changes occurred to the stake held by the Group in those Companies assets. The corresponding Goodwill is not depreciated, being subject to annual impairment tests. The results of the period reflect the ownership of the Group s share of the operating results of such Affiliate Companies. Dividends received during the year are deducted from the amount of Financial Investment. Sede: Estrada de Alfragide, nº Amadora 57

151 Financial Assets Financial assets are classified in the following manner depending on the intention of the Board of Directors at the time of their acquisition: a) Loans and receivables b) Held-to-maturity investments c) Investments measured to their fair value through results (held for trading) d) Financial assets available for sale e) Other financial assets. a) Loans and receivables These include non-derivative financial assets, with fixed or determined payments. Client and Receivable balances are booked at their nominal value, after deduction of any impairment loss, to reflect their market value. b) Held-to-maturity investments Investments held to maturity are classified as non-current investments, except if their maturity is less than 12 months from the date of the balance sheet. In this item investments with a set maturity are booked which the Group has the intention and capacity to keep until the said date. Investments held until maturity are booked at depreciated cost, deducted of eventual impairment losses. c) Investments measured to their fair value through results (held for trading) This category includes non derivative financial assets held for trading, and derivatives that do not qualify for hedge accounting purposes and are presented as current assets. A financial asset is considered to be held for trading: When it was acquired or incurred on with the main purpose of selling or repurchasing within a very short term; When it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a real recent model of profit taking on a short term basis; A derivative (except in the case of a derivative which is a designated and effective coverage instrument). Gains or losses resulting from a change in the fair value of investments measured at their fair price through the profit and loss are booked in the financial statement of the relevant period. d) Financial assets available for sale Investments available for sale are non derivative, financial assets which the Group intends to keep for an undetermined period or that are recognized as such when they are acquired, or that do not fit in any of the other categories of financial assets. They are presented as non current assets, except if there is an intention to sell them within 12 months of the balance sheet date. After the initial recognition, investments available for sale are reevaluated for their fair value, by reference to the market value on the date of the balance sheet, with no deduction of transaction costs which may occur until their sale. Investments that are not listed and whose fair value is impossible to determine are kept at cost with deduction of eventual impairment losses. Sede: Estrada de Alfragide, nº Amadora 58

152 Gains or losses resulting from a change in the fair value of the investments available for sale are booked under Equity, Reserves, until the investment is sold, received or in any way sold, or until the fair value of the investment falls below its acquisition cost and therefore corresponds to an impairment loss, on which date the accrued gain or loss is booked in the financial statement. Inventories Inventories are valued at cost or market value, whichever is lowest. Market value represents the normal sales price less sale costs. Cost is determined as follows: New cars acquisition cost plus any other additional purchase expenses; Used cars These inventories result from repurchase transactions and are valued using the cost of such repurchase transactions; Spare parts and other saleable goods Average cost of acquisition plus any other expenses incurred prior to the respective entry into stock. Income tax The Companies included in the consolidation that comply with the provisions of section 63 of the Portuguese Income Tax Code chose to apply the Portuguese special regime for taxation of groups of companies to the 2008 fiscal year. Accordingly, Portuguese Income tax is the result of the addition of all individual income taxes due by each of the Companies included in consolidation. In accordance with current legislation, tax returns can be subject to revision and correction by the tax authorities within a four-year period (five to ten years for Social Security, depending on the application of the transitional regime). Hence, the tax returns of the Companies included in the consolidation in respect of the years 2005 to 2008 may still be subject to review, although Grupo SAG considers that any possible corrections resulting from tax reviews to such tax returns will not have any material impact on the Consolidated Financial Statements as at 31 December The Group adopted the recognition of deferred taxes, in accordance with the terms and conditions set forth in IAS 12 ( Income Taxes ), as a way of suitably matching the tax effects of its operations and to exclude distortions associated with tax criteria that would affect the economic results of certain transactions. The movement recognized during the period, and the reconciliation between the Provision for Income Taxes for the period and current income tax, as well as the breakdown of deferred taxes are described in Note 5 below. Cash and cash equivalents The Cash and Banks amounts shown in the Consolidated Balance Sheet include values with a maturity of three months or less, and are net of bank overdrafts. Sede: Estrada de Alfragide, nº Amadora 59

153 Financial liabilities Financial liabilities are classified according to contract terms, regardless of their legal form, and are classified as follows: c) Financial liabilities measured to their fair value through the profit and loss b) Bank loans c) Accounts payable c) Financial liabilities measured to their fair value through the profit and loss This category includes financial liabilities for trading, and derivatives that do not qualifiy for hedge accounting purposes and are presented in this manner in their initial recognition. Gains or losses resulting from a change in the fair value of investments measured at their fair price though the profit and loss are booked in the financial statement of the relevant period. b) Bank loans Loans are recognized as liabilities at their nominal value, and the amount received is net of charges incurred with the issuing of these loans. Financial charges are calculated according with the actual interest rate and booked in the financial statement according to the principle of specification of the fiscal years. c) Accounts payable Suppliers and other creditors are initially booked at their nominal value which is understood to be their fair value, and are subsequently booked at depreciated cost, according to the effective interest rate method. Contingent assets and liabilities Contingent liabilities are not recognized in consolidated financial statements and are presented in the appendix, unless there is a remote probability of outflow of funds, in which case they are not divulged. Contingent assets are not recognized, and are only divulged when there is likelihood of a future economic benefit. Provisions Provisions are booked when the Company has an obligation (of legal or implicit nature) based on past actions, that is likely to involve a future outflow of economic resources in connection with such obligation, and that the latter can be measured reliably. Sede: Estrada de Alfragide, nº Amadora 60

154 Professional Judgments In the preparation of the consolidated financial statements in accordance with the IFRS, the Board of Directors uses estimates and assumptions that affect the application of policies and reported amounts. Estimates and opinions are consistently evaluated and are based on the experience of past events and other factors, including expectations regarding future events that are considered to be likely in view of the circumstances on which the estimates were based or the result of an acquired information or experience. The more significant accounting estimates contained in the financial statements are as follows: a) Analysis of goodwill impairment The Group tests annually whether goodwill has suffered any impairment. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. The use of this method requires the estimate of future cash flows expected to arise from the continuing operation of the cash generating unit and the choice of a suitable discount rate in these estimates. b) Valuation and useful life of intangible and tangible assets The Group has used various assumptions in the estimation of future cash flows resulting from intangible assets acquired as part of processes of acquisition of companies, which include the estimate of future revenues, discount rates and useful life of the said assets. c) Recognition of provisions and adjustments The Group is party to various legal claims for which, based on the opinion of its legal advisors, a judgment is made to determine whether a provision should be recorded for these contingencies. Adjustments for accounts receivable are computed based primarily on the aging of the receivables, the risk profile of the customers and their financial condition. Estimates related to adjustments for accounts receivables differ from business to business. e) Assessment of the market value of financial instruments The Group chooses an appropriate valuation technique for financial instruments not quoted in an active market based on its best knowledge of the market and the assets. In this process, the Group applies the valuation techniques commonly used by market practitioners and uses assumptions based on market rates. Equity instruments Equity instruments are classified according to contract terms, regardless of their legal form. Equity instruments issued by Group companies are booked for the value received, net of the costs incurred with their issuing. Income Recognition Income is recognized as such to the extent that the Company is likely to derive future economic gains and that the value of that income can be assessed reliably. In order for income to be recognized, the following criteria also have to be fulfilled: Sede: Estrada de Alfragide, nº Amadora 61

155 Sales of goods Income is recognized when the significant risks and benefits resulting from the ownership of the asset have been passed to the purchaser and the said income can be measured accurately. In the case of cars, income recognition coincides with the transfer of car ownership, which occurs, in most cases, simultaneously with the issuing of the corresponding sales invoice. In transactions where, simultaneously with the issuing of the sales invoice, the Selling Company or any other Company included in the consolidation perimeter, undertakes a repurchase commitment for the same vehicle, the principles specified in IAS 18 ( Revenue ) have been applied. Hence, neither income from revenues nor any other income or expenses relating to this kind of transaction have been recognized. Such income and expenses were recognized on a straight-line basis during the period in which these commitments are maintained, which generally corresponds to the period of time between the invoice date and the date on which the vehicle is repurchased. Services Income from services is recognized during the period in which they are actually provided, regardless of whether or not an invoice was issued. Interest Interest income is accrued so that it is recognized in the corresponding period, regardless of whether or not the corresponding support document was generated. Dividends Dividend income is recognized when the Shareholder s right to receive such dividends is established. Leasing Fixed assets acquired under financing contracts, or other contractual instruments that, in their substance, represent financial leases, are booked as financial leases, in accordance with the provisions set forth in IAS 17 ( Leases ) recognizing, on the one hand, tangible assets, deducted from the respective cumulative depreciation and, on the other, outstanding principal payments, in accordance with the applicable financial plan. Interest expenses included in contractual instalments and depreciation are recognized as expenses in the relevant period. Impairment of Assets On each reporting date, the Group evaluates any signs of impairment that may affect the value of its assets. Whenever these occur, or whenever the IFRS require the performance of impairment tests, the Group makes an estimate of the recoverable value of the asset corresponding to the highest of the corresponding fair value, after deducting eventual sales costs or the asset s usage value. In the event of an impairment situation, the value of the asset is reduced in order to reflect its recovery value. Foreign Exchange Transactions The functional currency used in the preparation of the Consolidated Financial Statements of SAG GEST SA and its subsidiaries and affiliates is the Euro, except for its affiliate Unidas, SA, Sede: Estrada de Alfragide, nº Amadora 62

156 whose functional currency is the Brazilian Real, and affiliate Santander Consumer Multirent Sp. Z.o.o., whose functional currency is the Polish zloty. The Financial Statements of Unidas, SA are translated into Euros in accordance with the following criteria: The Balance Sheet is converted to Euros using the exchange rate prevailing at year-end. The Income Statement in Euros is the result of adding all monthly Income Statements after each one of them is converted to Euros using the exchange rate prevailing at the end of each month. Transactions in foreign currencies (outside the Euro zone) are converted into Euros using the exchange rate prevailing on the date of the transaction. Foreign currency denominated accounts receivable and payable are converted into Euros using the exchange rate prevailing on the Balance Sheet date. All exchange rate differences are recognized as income or expense for the period, except for the differences determined as a result of translating the Financial Statements of Unidas, SA, which are recorded against Consolidated Shareholders Equity. Financial instruments (and derivative financial instruments) Certain Group Companies regularly use financial instruments or derivative financial instruments in the regular course of their operations, exclusively in order to minimize their exposure to risks related to the fluctuation of interest and exchange rates, and not for negotiation or speculation purposes. The most commonly used instruments for coverage of said interest rates fluctuation risks are recognized as follows: Coverage of interest rate fluctuation risks Interest rate swaps and Forward Rate Agreements The fair value of derivative financial instruments is recognized in Equity and subsequently recognized as Income for the period as the cash flows associated with these operations occur. Interest paid and/or received is recognized monthly during the term of the operation. Coverage of exchange rate fluctuation risks Exchange rate options or exchange rate forwards regarding investments in foreign Affiliates the fair value of such derivative financial instruments is recognized in the Balance Sheet as Equity, together with the adjustments resulting from the conversion into Euros of the Financial Statements of such foreign Affiliates; Exchange rate forwards to cover exchange rate fluctuation risks associated to financing in foreign currency the fair value of derivative financial instruments is recognized as Equity and subsequently recognized in the Income Statement on a monthly basis, simultaneously with the monthly recognition of exchange rate variances associated with the corresponding liabilities. These procedures were adopted by the Group in accordance with the corresponding written policy approved by the Board of Directors, which came into effect on 1 January The de-recognition of financial instruments occurs when the Group no longer controls the contractual rights that govern such financial instruments, which occurs regularly when they are sold or when cash-flows from said instruments are transmitted to a third party. Calculation of the Fair Value of financial instruments (and derivative financial instruments) The principles and procedures defined in IAS 32 ( Financial Instruments: Disclosure and Presentation ) and IAS 39 ( Financial Instruments: Recognition and Measurement ) have been fully adopted. Sede: Estrada de Alfragide, nº Amadora 63

157 2.5 New rules, changes and interpretations of existing rules Interpretation and changes to existing rules as identified below must be applied by the IASB for fiscal years starting on or after 1 January 2008: The introduction of these interpretations and the above rule change did not have any impact on the Group s Financial Statements. Sede: Estrada de Alfragide, nº Amadora 64

158 In addition, on the date of approval of these Financial Statements by the Board of Directors, the following new rules, alterations and interpretations to existing rules have been issued (in some cases, rules that have not yet been approved by the European Commission), that must be applied only to fiscal years starting on or after January 1 st 2009, have not yet been adopted by the Group: In spite of the the fact that the impact of the adoption in future fiscal years of the above mentioned rules and interpretations in the Financial Statements is not yet fully measured, it is not expected that the same will cause any materially relevant effects on Group equity and results. Sede: Estrada de Alfragide, nº Amadora 65

159 2.6. Companies included in consolidation The Subsidiaries included in the Consolidated Financial Statements as well as their main financial indicators are as follows: These Affiliates were consolidated using the integral method, with the exception of Santander Consumer Iber-Rent SL, Santander Consumer Multirent, Sp.z.o.o., Autolombos, Lda., CRE SGPS and Manheim, Lda. which were consolidated using the equity method. Santander Consumer Multirent SP z.o.o. was included for the first time in the period ending 31 December 2008 in Grupo SAG's consolidation using the equity equivalence method. SAG acquired, effective 1 July 2008, a major stake (71.66%) in the capital of Loures Automóveis, SA which, for this reason, was included for the first time using the integral consolidation method in the Group s Financial Statements as at 31 December Sede: Estrada de Alfragide, nº Amadora 66

160 3. REPORTING BY BUSINESS SEGMENT The Group s main reporting format is the report by business segments, the report by geographical area being the secondary format. The identified business areas are managed separately based on the nature of the products and services provided. Each segment represents a strategic business unit that offers different products and operates in distinct markets. The new car, used car and spare parts segment corresponds to distribution and retail sales, in Portugal, of the Volkswagen, Skoda, Audi and Bentley and Lamborghini makes, sale of multibrand used cars, as well as sale of spare parts and accessories for those brands. The car rental segment represents essentially the fleet management, Corporate Fleet, renta-car and daily services medium to long-term car rental products and services, maintenance contracts, and short-term car rental services. Other operations include namely insurance brokerage, and the preparation and repair of vehicles, as well as the recycling of end of life vehicles and scrap. Transfer prices between business segments are determined on an arm s length basis, and are equivalent to prices used in transactions performed with bona fide unrelated third parties. The Group s geographic segments are reported in accordance with the physical location of the corresponding assets and operations. Business segments The following chart represents the results, assets and liabilities as at 31 December 2008 and their comparison with identical information as at 31 December 2007, with regard to the various business segments where the Group is involved: Sede: Estrada de Alfragide, nº Amadora 67

161 Geographical Segments The following chart represents the results achieved, assets and liabilities as at 31 December 2008 and 31 December 2007, in the geographical segments: Sede: Estrada de Alfragide, nº Amadora 68

162 4. OTHER OPERATING INCOME AND EXPENSES Other income and expenses are as follows: Sede: Estrada de Alfragide, nº Amadora 69

163 5. INCOME TAX The estimate for Income Tax recorded in the Consolidated Financial Statement accrued until 31 December 2008 is as follows: The other non-deductible costs item includes differences of permant nature that occur in Brazil between the assets accounting basis and the relevant tax basis of the same assets. The benefit from the SIFIDE system of incentives translated into a deduction from corporate income in the amount of Sede: Estrada de Alfragide, nº Amadora 70

164 Deferred Tax accounts balances registered the following movements in the period ending on 31 December 2008: The total net result for the year includes adjustments which were booked directly as Consolidated Shareholders equity and which, therefore, did not affect the net profit for the year. Profit and losses from hedging operations are recognized in Equity at their value, net of taxes. Taxes resulting from these operations, totalling have been registered as Deferred Tax Assets. Sede: Estrada de Alfragide, nº Amadora 71

165 7. EARNINGS PER SHARE As at 31 December 2008, Grupo SAG had 16,771,015 treasury stocks. The nominal value of SAG stock is 1 each. Sede: Estrada de Alfragide, nº Amadora 72

166 9. LAND, BUILDINGS AND EQUIPMENT Tangible Fixed Assets are detailed as follows: Land and Buildings include 7,316,338 and 22,129,012, respectively, in respect of assets recognized under contracts involving sale and lease-back agreements. Prices of semi-new and used cars in the Brazilian market show, in particular in the 3 rd quarter of 2008, a downward trend caused by a decrease in demand which was affected by a slowdown in Brazil s economic growth, restrictions on the access to credit and changes introduced to taxes on cars in that country. These reasons, as well as the lack if prospects of a reversion of this trend on a short term basis led Unidas SA to create a provision to face potential losses in the sale of vehicles that were part of Unidas s fleet on 31 December 2008, in the amount of R$ 5,272,986 million (approximately 17,149,875 million ). In essence, this is the equivalent of an accelerated depreciation, reason why it is included in the Balance Sheet as shown above. In the Financial Statements, this amount is included under Depreciations and Provisions. The Group considers that, as at 31 December 2008, there were no impairment signs which could affect the value of its Tangible Assets. Sede: Estrada de Alfragide, nº Amadora 73

167 11. INTANGIBLE ASSETS IAS 38 ( Intangible Assets ) defines an intangible asset as a non-currency, identifiable asset without physical substance, for use in production or supply of goods or services, leasing to others, or for administrative purposes. An asset is a resource that is: controlled by the Company as a result of past events; expected to produce future economic benefits for the Company. Hence, and as an adjustment following the Group s first adoption of IFRS/IAS, SAG cancelled start-up expenses and research expenses from its Consolidated Balance Sheet as at 31 December The Group considers that, as at 31 December 2008, there are no impairment signs regarding the value of the registered goodwill. Sede: Estrada de Alfragide, nº Amadora 74

168 12. INVESTMENT IN AFFILIATES Investments in Affiliates are detailed as follows: 14. OTHER FINANCIAL ASSETS Other financial assets refer to other securities and treasury operations. 15. INVENTORIES Inventories are represented as follows: Sede: Estrada de Alfragide, nº Amadora 75

169 16. DEBTORS Accounts receivable are detailed as follows: Sede: Estrada de Alfragide, nº Amadora 76

170 The detailed accounts receivable by maturity as at 31 December 2008 are as follows: 17. CASH AND CASH EQUIVALENTS Cash and Cash Equivalents are detailed as follows: The amounts included in Cash and Cash Equivalents are determined in order to only include amounts that can be realized within no more than three months from the Balance Sheet date, and include creditor balances of bank accounts on the same date. As at 31 December 2008, Group Companies had a total of EUR in bank facilities available for use in order to fulfill operating requirements. Sede: Estrada de Alfragide, nº Amadora 77

171 18. ISSUANCE OF CAPITAL AND RESERVES As at 31 December 2008, Registered Share Capital was represented by 169,764,398 ordinary shares with a par value of 1 euro each, and was fully paid up. Treasury stock is owned by the Group s Parent Company which, as at 31 December 2008, held 16,760,815 shares, and by affiliate Rolporto S.A. and Loures Automóveis S.A, which, on the same date, held 5,100 shares each of SAG SGPS. The amount of EUR 36,058,177 recognized as Cumulative Translation Adjustments corresponds to the positive variance which occurred in 2008 in the conversion to Euros of the investment and results of the Unidas, SA subsidiary for consolidation purposes. The amount of EUR 6,421,402 in connection with hedging losses is the result of gains and losses incurred in exchange rate risk coverage derivative financial instruments in respect of the Group s investment in the same Subsidiary. The recognition at fair value, in accordance with IAS 39 ( Financial Instruments: Recognition and Measurement ), of derivative financial instruments purchased to provide coverage in respect of interest rate fluctuation risks (considered as Cash Flow Hedging Instruments) produced a decrease in Other Reserves of EUR 3,831,878. These instruments were engaged in accordance with the Exchange Rate Risk Coverage Policy approved by the Board of Directors, as specified in Note 23. Sede: Estrada de Alfragide, nº Amadora 78

172 19. BANK DEBT Bank Debt is detailed as follows: Sede: Estrada de Alfragide, nº Amadora 79

173 20. PROVISIONS FOR OTHER RISKS AND CHARGES Provisions refer to specific risks that are reassessed each year. Contingencies associated with these provisions refer mainly to operating risks related with the possibility of the Group's generating losses as a result of: court proceedings, including of tax nature; unjustified appropriation of assets; loss in the value of vehicles. Sede: Estrada de Alfragide, nº Amadora 80

174 21. CREDITORS Creditors are broken down as follows: Sede: Estrada de Alfragide, nº Amadora 81

175 22. RELATED PARTY DISCLOSURES In addition to the balances between, and the transactions performed with Companies included in Consolidation, as mentioned in Note 2 herein, which were eliminated during the preparation of the Consolidated Financial Statements, there are other balances and transactions performed with related parties, namely: Entity Nature of Transaction Amount of transactions conducted during the period SGC S.G.P.S., S.A. Interest ,27 Growth, S.A. Clients Volpe Ltda. Participações Exchange Options BRL On 31 December 2008, Unidas had established exchange options with Volpe Participações Ltda. In the total amount of BRL million. These options contracts aimed to eliminate exchange rate fluctuation risks as mentioned in Note 23. Payroll costs are detailed as follows: 23. FINANCIAL RISKS In the course of their regular activities, Grupo SAG Companies are exposed to interest and exchange rate variations that are monitored dynamically in order to guarantee the fulfilment of policies established to manage such financial risks. The ALCO ( Assets and Liabilities Committee ) is in charge of defining Grupo SAG's financial risk management policies, and it is also responsible for monitoring and assessing the implementation of recommended coverage strategies on a regular basis. In order to implement the risk coverage strategies, Derivative Financial Instruments are negotiated from time to time, if so decided by ALCO, in order to freeze interest or exchange rates or, alternatively, to limit the fluctuation range of such variables. The products that are normally used in these hedging operations are as follows: Sede: Estrada de Alfragide, nº Amadora 82

176 Interest rate fluctuation risk coverage Interest Rate Swaps (IRS) and Forward Rate Agreements (FRA); Exchange rate fluctuation risk coverage Forwards and exchange rate options. Grupo SAG suitably documents its exposure to exchange or interest rate fluctuation risks in accordance with IAS 39 ( Financial Instruments : Recognition and Measurement ). the existing relation between the hedged item and the hedging instrument. the objectives to be achieved with the coverage; the method used to assess the efficiency of the hedge; and the accounting method used. The Group currently has two types of positions that generate exposure to interest and exchange rate fluctuations risks, for which policies have been defined. 1. Investment in Foreign Currency During each reporting period, the Financial Statements of SAG do Brasil, a Brazilian Grupo SAG Company whose functional currency is the Brazilian Real, are converted using the exchange rate as at the date of the Financial Statements, in accordance with Note 2 Summary of Main Accounting Policies (Transactions in Foreign Currency). Market exchange rate fluctuations and the consequent use of different exchange rates in each reporting period generate exchange differences that are registered in Equity (Cumulative Translation Adjustments). Because there is no liquid market actively performing transactions between the Real and the Euro, SAG analyses and manages the exchange risk generated by this Investment in two different ways. SAG considers that its total foreign exchange exposure resulting from Investment in Foreign Currency comprises two different, unrelated risks: Risk of variation between the Real and US Dollar; and Risk of variation between US Dollar and Euro. Therefore, decisions regarding the coverage of both risks are independent and usually, different financial instruments are engaged to cover the risks inherent to each of these cases. The results obtained with such coverage are recognized in Equity. On the other hand, in accordance with the defined policies, the transaction costs associated to the coverage instruments may imply that, at certain times, certain exposures are not covered or are only partially covered. As at 31 December 2008, the Group did not have any active coverage operation. In 2008, coverage was only provided for the USD / EUR exposure during the first semester, originating the booking of a total result of EUR ,30. On the other hand, as a result of exchange rate variations occurred in that same period, the value of the said Group s investment showed a total exchange rate devaluation of EUR ,44 in the translation of Reals into Euros broken down as follows: 46,804, loss as a result of the devaluation of the BRL vs. the USD; 11,180, profit as a result of the valuation of the USD vs. the Euro; Sede: Estrada de Alfragide, nº Amadora 83

177 2. Variable Interest Rate Liabilities Financial instruments were engaged to cover the risk of interest rate fluctuations in connection with certain financing liabilities of Grupo SAG bearing a variable interest rate and which are not directly connected to Assets whose value is directly related to changes in interest rates. The decision to obtain this type of coverage is taken on a case-by-case basis and depends on the expected evolution of market interest rates. On 31 December 2008, certain coverage instruments were in force using Interest Rate Swaps (IRS), through which Grupo SAG aimed to cover the portion of interest whose value depends on the future value of the Euribor rate applied to the outstanding loans. These coverage instruments are considered as Cash Flow Hedges and the fair value of the corresponding derivative financial instruments affects Grupo SAG's Equity. This amount is progressively transferred to the Income Statement, as and when the corresponding interest is recognized in Financial Results. Covered operations, all of which are subject to six-monthly or monthly re-pricing, were as follows: Covered Liability Due Date Interest Rate EUR ,00 EUR ,00 EUR ,00 EUR ,00 EUR ,00 Jun-09 Euribor 6M Jun-12 Euribor 6M Ago-12 Euribor 6M Out-11 Euribor 1M Jul-10 Euribor 1M The following were the coverage financial instruments involving these liabilities which were in force during the period in review: Nominal Value of the Financial Instrument Beginning Date End Date Agreed Interest Rate Fair Value of the Financial Instrument at Value Received to the Income Statement EUR ,00 Dez-05 Jun-09 3,04% , ,78 EUR ,00 Jun-07 Jun-12 4,65% , ,33 EUR ,00 Ago-07 Ago-12 4,55% , ,33 EUR ,00 Out-08 Out-11 3,65% , ,04 EUR ,00 Out-08 Out-11 3,63% , ,33 EUR ,00 Out-08 Out-11 3,63% , ,56 To assess the effectiveness of the hedge, adequate tests were developed which made it possible to show that: On the date when the coverage instruments were established, it was expectable that there would be a coverage relationship throughout the length of the contracts; Sede: Estrada de Alfragide, nº Amadora 84

178 Since the establishment of each contract and until this reporting date, existence of an actual coverage relationship was confirmed, shown in the correlation between the fair value of the financial instruments. 3. Foreign Currency Denominated Loans As at 31 December 2008, several foreign currency denominated loans (USD and JPY) were outstanding in Unidas, in Brazil. To eliminate the risk caused by exposure to exchange rate variations involving the conversion of those operations into BRL, on the date when the loans were made, derivative financial instruments were entered into which made it possible to exchange the financial flows in foreign currency into Reals. As at 31 December 2008, Unidas s above mentioned foreign currency financing operations totaled BRL million, corresponding to the nominal value of the relevant currency coverages. Currency coverage operations as at 31 December 2008 had a market value of BRL 9.7 million. The accrued Profit of these operations in the 2008 fiscal year was BRL 13.4 million. Unidas also had currency option contracts with Financial Institutions. Active options totaled BRL million. These operations had a negative market value of BRL 60.8 million. The accrued result of the options was negative in the amount of BRL 54.6 million. Losses incurred with these contracts were offset with gains of an equal amount from symmetrical options negotiated between Unidas and Volpe Participações Ltda. Credit Risk The Group s policy as regards the establishment of thresholds on financing both nationally and internationally is done via companies specializing in credit risk coverage. A detailed analysis of the variation of annual provisions clearly shows a practically non existing Client risk. Furthermore, the Group has acces to major data bases on the market which, together with its team of technical experts, enables it to assess and clearly minimize credit risk. Liquidity Risk This risk can occur when sources of financing (cash available, cash flows generated by operations, collections following divestment, credit lines, new shareholders contributions) do not provide for existing needs to ensure fulfillment of obligations involving operational and finance activities, investments and debt repayment. The Group s main contractual obligations are related to outstanding loans (Note 19) and their respective interests. 24. COMMITMENTS AND CONTINGENCIES Guarantees As at 31 December 2008, several bank guarantees had been issued on behalf of Group Companies by banking institutions in the amount of approximately 53,930, Group Companies liability for issued bank guarantees totals 132,771, Sede: Estrada de Alfragide, nº Amadora 85

179 Contingencies Portuguese Tax Authorities issued additional Income Tax assessment notes to SAG Gest and other Companies within the consolidation perimeter, with regard to Income Tax owed for the years 1997 to 2005, totalling 6,056, The said Companies disagree with the basis for the issuance of such additional assessments and have initiated, within the applicable legal deadlines, legal proceedings in respect of each of the said assessments. Therefore these costs have not been reflected in the Consolidated Financial Statements as at 31 December In the opinion of the Board of Directors, based on recommendations issued by renowned independent entities, the probabilities of success of the contest proceedings are high. 25. SUBSEQUENT EVENTS No events have taken place after the Balance Sheet date that could have a material impact on the financial statements. Sede: Estrada de Alfragide, nº Amadora 86

180 STATUTORY AND AUDIT REPORT OF THE INDEPENDENT AUDITORS CONSOLIDATED ACCOUNTS 2008 Sede: Estrada de Alfragide, nº Amadora 87

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184 REPORT AND OPINION OF THE AUDIT BOARD CONSOLIDATED ACCOUNTS 2008 Sede: Estrada de Alfragide, nº Amadora 88

185 REPORT AND STATEMENT OF THE AUDIT BOARD CONSOLIDATED ACCOUNTS 2008 In accordance with the law, the memorandum of association and the mandate assigned to us, we present our report on the auditing activity conducted, as well as our opinion about the management report and consolidated financial statements presented by the Board of Directors of SAG GEST - Soluções Automóvel Globais, SGPS, SA, listed company, (the Company), a listed company, concerning the financial year ended on 31 December Report 1.1 We regularly monitored the Company s activity throughout the year to the extent that we deemed adequate. We had contacts with the Board and other responsible staff of the Company, who were always available to provide all the required explanations about the Company and its Affiliates. 1.2 All checks that were considered due and adequate were conducted, and no situation was brought to our knowledge that could be in breach of the applicable by-laws and legal precepts. 1.3 We reviewed the Legal Certification of the Consolidated Accounts and the Audit Report prepared by Ernst & Young Audit & Associados, SROC, SA, which have our approval, and we have taken note of the relevant Annual Audit Report issued by that Auditing Company about the auditing that was conducted. 1.4 The consolidated accounts, including the balance sheet, financial statements, the relevant Annex and other statements provide a good understanding of the financial situation and results of the group of companies. 1.5 The adopted accounting policies and valuation criteria are adequate and comply with the International Financial Reporting Standards (IFRS). 1.6 The management report is sufficiently clear about the development of the businesses and situation of the companies included in the consolidation, in each of the markets where they operate, and it provides evidence about the most significant aspects of the relevant activity and prospects as regards the evolution in the present environment. 2. Opinion In view of the above, and considering the information received from the Board of Directors and the conclusions contained in the Legal Certification of Accounts and Audit Report, our opinion is that the management report, the balance sheet and the consolidated financial statements for the 2008 financial year are in a position to be approved Sede: Estrada de Alfragide, nº Amadora 89

186 3. Statement As provided for by law, we announce that, to the best of our knowledge, the consolidated management report, the consolidated annual accounts and relevant legal certification and other reporting documents that are legally required were prepared in accordance with the relevant accounting standards and give an accurate and adequate image of the assets and liabilities, financial situation and earnings of the Company, and of the companies included in the consolidation perimeter, and that the information provided on the relevant consolidated management report accurately describes the development of business operations, the performance and position of the Company and of the companies included in the consolidation perimeter and contains a description of the main risks and uncertainties facing them. Alfragide, 14 April 2009 The Audit Board João José Martins da Fonseca George (Chairman) Duarte Manuel Palma Leal Garcia (Voting Member) Martinho Lobo de Almeida Melo de Castro (Voting Member) Sede: Estrada de Alfragide, nº Amadora 90

187 Excerpt of Minutes no General Shareholders Meeting on 30 April On the thirtieth day of April two thousand and nine, at seventeen hours and ten minutes, at the head-office located on Estrada de Alfragide, number sixty seven, Alfragide, Amadora, the Annual Shareholders Meeting was held of SAG GEST Soluções Automóvel Globais, SGPS, SA, a listed company, with a share capital of one hundred and sixty nine million seven hundred and sixty four thousand three hundred and ninety eight euros, registered at the Amadora Registrar of Companies under the single registration and tax payer number The proceedings were presided over by the Chairman of the Shareholders Meeting, Lopo Roque de Pinho Cancella de Abreu, and Maria do Carmo de Almeida Janela Gomes Teixeira as Secretary. Maria do Carmo de Almeida Janela Gomes Teixeira ( ) After the Chairman of the Shareholders Meeting submitted to discussion the first item in the agenda, the Chairperson of the Executive Committee, Esmeralda Dourado took the floor on behalf of the Board of Directors, to present a summary of the activities conducted in the previous year and commented briefly on the individual results of the 2008 financial year, to complement what was presented in the individual management report and in the corporate governance report ( ), the Chairman of the Shareholders Meeting submitted the Management Report and the Individual Accounts showing a positive result of 30,783,985 (thirty million seven hundred and eighty three thousand nine hundred and eighty five euros) to a vote, and both documents were approved unanimously Going into the second item in the agenda, the Chairman of the Shareholders Meeting gave the floor once again to Esmeralda Dourado, who commented briefly on the consolidated results of the financial year 2008, in addition to what was presented in the consolidated management report

188 Since no one else wished to take the floor, the Chairman of the Shareholders Meeting submitted the Management Report and the Consolidated Accounts showing a positive result of 1,088,973 (one million eighty eight thousand nine hundred and seventy three euros) to a vote, and both documents were approved unanimously The Chairman of the Shareholders Meeting then announced to the Shareholders that item three of the agenda concerning the Proposal on Allocation of Earnings which had been presented by the Board of Directors was going to be discussed and voted on, and proceeded to reading it in its entirety: The Net Profit achieved in the financial year two thousand and eight had a positive result of 30,783,985 (thirty million, seven hundred and eighty three thousand, nine hundred and eighty five euros), which is proposed to be distributed as follows: Legal Reserve (5% - five per cent) Eur 1,539,200 (one million five hundred and thirty nine thousand and two hundred euros); Dividends to be paid to the Shareholders Eur 3,429,241 (three million four hundred and twenty nine thousand two hundred and forty one euros); Retained Earnings Eur 25,815,544 (twenty five million eight hundred and fifteen thousand five hundred and forty four euros) This result is affected by non-recurring results following the sale of part of the investments held by SAG Gest in some of its Affiliates The Group s Consolidate Net Profit totaled Eur 1,088,973 (one million and eighty eight thousand nine hundred and seventy three euros). Since the dividend payment policy that has been adopted determines the distribution of at least 50% (fifty per cent) of the Group s consolidated results, the Board of Directors considers that the above-mentioned result should be used as reference Therefore, following the decision of the Shareholders Meeting on 21 October 2008, the Company announced an interim dividend in the gross amount of Eur 3,429, (three million four hundred and twenty nine thousand two hundred and forty euros and eighty four cents), corresponding to Eur 0,0202 (two point zero two cents) per share, and for this reason the above proposal does not provide for any additional payment of dividends

189 The interim dividends were paid on 10 November 2008, in the amount corresponding to treasury stock held on that date of Eur 338, (three hundred and thirty eight thousand five hundred and sixty eight euros and forty six cents), which is hereby proposed to be applied against Retained Earnings ( ) The proposed allocation of earnings was submitted to a vote and was approved unanimously by the Shareholders Maria do Carmo Gomes Teixeira, Company Secretary of SAG GEST Soluções Automóvel Globais, SGPS, SA, certifies, under the terms of paragraph 1f) of Article 446-B of the Company Act that the excerpt of Minutes no. 41 of the Shareholders Meeting of SAG GEST Soluções Automóvel Globais, SGPS, SA, is true, complete and up-to-date and that the remaining part of the said Minutes does not contain anything that could amplify, restrict, alter or condition the herein certified excerpt Company Secretary Maria do Carmo Gomes Teixeira