Sonae : strengthens sales and internationalization

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Maia, 5th November 2015

Growth, internationalization and financial robustness reinforced in the first nine months of 2015

SONAE STRENGTHENS SALES AND INTERNATIONALISATION

1. HIGHLIGHTS OF FIRST NINE MONTHS OF 2015:

   • Retail businesses maintain growth

   • NOS registers strong operational performance

   • Sonae Sierra capitalises on the quality of its assets

   • Turnover grows 0.8% to €3,639 M

   • Underlying EBITDA reaches €226 M and EBITDA €292 M with 8% margin

   • Direct results grow 10.4% to €102 M

   • Net income group share rises from €95 M to €142 M

   • Investment in retail businesses up 29.5% to €158 M

   • Net debt reduced by €102 M and refinancing needs assured

   • Consolidation of International activity reaching 69 countries1

   
   

   Ângelo Paupério, Co-CEO of Sonae, says, 'During the 3rd quarter, the evolution of economic activity in our principal markets was markedly different, remaining modest in Portugal, more robust in Spain and under significant pressure in Brazil.

   Within this context, our businesses also performed differently, with Sonae MC operating in an extremely aggressive competitive environment but maintaining good levels of profitability and making progress in strengthening its value proposition, aiming at further recognition concerning its price leadership, the results of which are expected to be evident in the coming quarters.In the electronics sector, the Iberian Peninsula markets performed in contrast to one another, the market contraction in Portugal was partially offset by another quarter with market share gains, while the contribution of the Spanish operation has improved significantly.In the Sports & Fashion division, which was affected during this period from the negative impact of the Spring/Summer collection, there have been positive signs in relation to the new collection indicating a promising outlook, particularly in the Spanish market.Sonae Sierra has taken important steps in relation to its capital recycling strategy and its increased investment exposure in new shopping centres. Although the company has not disclosed the positive impact of the valuation of its real estate assets in this quarter, it presents a very positive performance as a result of operational improvements.

   
   

   1

   Includes operations, services rendered to third parties, representative offices, franchising agreements and partnerships.

   
   

   
   

   Sonae is a Retail company with two major partnerships in the areas of Shopping Centres (Sonae Sierra) and Software & Information Systems Media and Telecommunications (Sonaecom).

   By the end of 2014, Sonae achieved a turnover of over 5 thousand million Euros. The company defined as its strategic objectives: the internationalisation and diversification of investment style and the leveraging and strengthening of core assets and competencies. Find out more at www.sonae.pt.

   
   

   For more information, contact: RITA BARROCAS

   External Communication / Sonae

   T. [phone] // E. [e-mail] DIOGO SIMÃO

   Director / BAN Corporate & Media Relations M. [phone] // E. [e-mail]

   
   

   In telecommunications, NOS continued its remarkable performance, which has once again exceeded the best market expectations.

   It is also worth mentioning, in the context of our active portfolio management, the completion of the sale of GeoStar and the conclusion of the 'Cartão Universo' (Universo Card) project, with a highly innovative value proposition, with the potential to increase loyalty to Sonae brands and to our partners, as well as with clear value for customers.'

   
   

2. GIVING BACK TO THE COMMUNITY

   
   

   • SOCIAL AND ENVIRONMENTAL COMMITMENT TRANSLATED INTO EQUIPA WORTEN EQUIPA AND SONAE ART

   
   

   Sonae promotes a social responsibility policy in many fields from social solidarity, health and sports, environmental awareness, to culture, education and science and innovation, looking to contribute to the economic and social development of the communities where it operates. This mission has come to life in the 7th edition of the Equipa Worten Equipa initiative that intends to contribute to increase environmental awareness. The project urges people to hand over old devices at Worten stores, in order to proceed to their proper recycling, while also playing an important social role by mitigating effective needs of many Portuguese institutions. This year, the project covers over 200 charitable institutions, donating a total of 2,345 new devices. Overall, this social and environmental responsibility project by Worten has directly supported more than 410,000 users, in an over

   €1.5 M investment in new equipment.

   
   

   Likewise, Sonae has consolidated the internationalisation of the Sonae Art brand that concentrates all social responsibility initiatives of the Sonae group related with supporting, promoting and fostering Arts and Culture, a central pillar of Sonae's corporate responsibility policies. Sonae and Worten supported, for the second consecutive year, the concert of the Orquestra Sinfónica do Porto Casa da Música in Madrid, an action that introduced Portuguese symphonic music to the Spanish audience and gave the musicians the opportunity to perform at one of the most prestigious stages of the Spanish capital.

   
   

3. OPERATIONAL AND FINANCIAL ANALYSIS

During the first nine months of the year, Sonae has reinforced its strategic pillars, exploring growth opportunities both national and internationally. Consolidated turnover reached €3,639 M, representing a 0.8% growth when compared to 9M14, benefiting from the performance of all businesses with the exception of Sonae RP, which was impacted by the recent freehold reduction.

In the food retail business, turnover stood at €2,549 M, registering a 0.5% increase when compared to 9M14. Sonae MC remains focused on rigorously expanding its store network in specific locations according to market research, especially through convenience stores. Therefore, since the end of 2014, turnover performance has benefited from the opening of 5 Continente Bom Dia and 1 Continente Modelo store. Likewise, the capital light formats have also been rapidly expanding. The number of Meu Super stores increased to 183, growing more than 6 square metres, with a 24.7% increase year-over-year. Proving their indisputable success, Meu Super stores registered a 6.1% like-for-like sales growth in comparison to 9M14.

Sonae MC has been progressively implementing a number of actions intended to further strengthen its value proposition: strong promotional initiatives, coupled with a rigorous adjustment of pricing communication in order to reinforce price perception amongst consumers, together with improvements in the own branded portfolio, perishables and services. As one of the most innovative solutions, the Continente loyalty card continues to bring real benefits to clients. Sales using the card represented more than 90% of total

sales in 9M15. Nevertheless, Sonae MC is also investing in direct discounts on top of the loyalty programme advantages. Additionally, online sales also maintained a rising trend, growing by 13% between 9M14 and 9M15.

As part of its growing and internationalisation strategy, Sonae MC signed a franchising agreement with Fathima Group, a local conglomerate that operates in multiple sectors of the United Arab Emirates, to establish Continente in the region by 2017. This agreement marks the beginning of a new growth avenue, contributing to the internationalisation of Sonae MC under a capital light model. Sonae MC has also acquired Makenotes, a Portuguese high quality and design stationery brand, thus strengthening note! and Continente stores with a new range of products.

In specialized retail, consolidated turnover reached €917 M in 9M15, increasing 0.4% when compared to the same period of 2014. The international unit increased turnover by 7.0%, driven by the positive trends of the electronics and sports divisions in Spain. During 9M15, Sonae SR continued to optimise its store network, embedded in the omnichannel strategy, therefore capitalising the complementarity between physical and online stores in order to better meet customers' needs. As a result of this strategy, which allowed to optimize commercial spaces, sales per square metre continued to increase accordingly, and there was a 58.7% increase in consolidated online sales, driven by the e-commerce platforms of all businesses.

Worten grew market share by 60 bps in Portugal and registered an 8.6% like-for-like sales growth in Spain in 3Q15, benefiting from the measures implemented over the last years. Zippy entered 4 new countries in Central America through wholesale: El Salvador, Costa Rica, Nicaragua and Guatemala, with a total of 14 stores. By establishing its own stores, franchising stores and multi brand distribution channels, Zippy's collection is currently available in 40 different countries, asserting itself as a truly international player. Sport Zone continued to expand its international presence by opening its first franchise store in France, after having already opened its first store in India earlier this year.

Regarding Sonae IM, the Investment Management unit, turnover reached €187 M, increasing 0.5% when compared to the same period of 2014. WeDo Technologies acquired 2 new telecom customers in Chile and Peru, in 3Q15, continuing to widen its worldwide customer base and generating 76.9% of its turnover abroad. S21Sec continued to progress in the cybersecurity industry and, thanks to its know-how and expertise, the company collaborated with Europol, NCA, Guardia Civil and the FBI. Saphety increased its turnover and profitability significantly, while also registering a strong commercial activity, acquiring new clients and a few relevant contracts. Bizdirect saw the number of projects delivered rise and its performance has been progressing in the European market, with international revenues representing more than 10% of its turnover. In its turn, Movvo has recently obtained the European Privacy Seal, a relevant certification granted by the European Union, which will certainly help the company increase its international penetration. In the field of partnerships, MDS turnover rose by 3% and the company consolidated its profitability, while Maxmat has seen a positive turnover trend, with a 4% like-for-like sales growth.

In shopping centres, Sonae Sierra direct results rose by 17.6% to €42 M. Tenant sales in Europe increased 1.5% to

€2,231 M, corresponding to an increase in like-for-like tenant sales of 2.6%, thus reinforcing the positive performance delivered in the first half of 2015. The global occupancy rates stood at 95.1%, which revealed a neutral evolution in comparison to 9M14. In Europe, the average occupancy rate reached 96.0%, growing 40 bps year-over- year, reflecting Sonae Sierra performance in terms of property management, as well as the improved macroeconomic conditions.