IBERIA. Thursday Sonae Sierra s 2Q13 Earnings; Reditus 2Q13 Earnings. Best & Worse Performers -1 Week (%)

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1 EQUITY RESEARCH IBERIA 2 August 2013 TOP STORIES WEEKLY António Seladas, CFA antonio.seladas@millenniumbcp.pt Jerónimo Martins - Poor Biedronka`s LfL sales numbers (+2% YoY) in 2Q13 penalized JM stock, being the big negative surprise from 2Q13 Earnings. We were expecting a 4% YoY increase while Polish Food Retail sales (disclosed on July 23rd) suggested number could be higher, which not happened. Following 2Q13 Earnings we felt comfortable with our JM`s valuation (Buy, Medium Risk; Target YE13: 16.90) in current tough environment in Poland and Portugal. Recall we estimate Biedonka`s LfL sales will reach 5% in 2013 (5.3% in 1H13) (page 12). OUT THIS WEEK Earnings Comment BES, Novabase, REN, Sonae Capital, Jerónimo Martins, Sonae Industria, Altri, Galp Energia Other Snapshots/Company Reports Sonaecom & Zon Multimedia, Retail sector Price Target / Recommendation Changes Zon Multimedia, EDP, REN, Inditex, Jerónimo Martins, Altri News Telefónica, Utilities Sector, Retail Sector, Jerónimo Martins WEEK AHEAD Thursday Sonae Sierra s 2Q13 Earnings; Reditus 2Q13 Earnings PORTFOLIOS This week, Mib Aggressive Portfolio went up 1.69%, outperforming the PSI20 by 1.42pp. Excluding Sonae Industria, all stocks contributed for this outperformance (page 16). This week, Mib Liquidity Portfolio went up 1.80%, outperforming the PSI20 by 1.53pp. Excluding Portugal Telecom, all stocks contributed for this outperformance (page 17). Stock Market Last 1W YTD 2012 Daily Vol. ( mn) 1W 1M 6M 2012 PSI 20 5, % 2.15% 2.93% PSI IBEX 35 8, % 4.98% -4.66% IBEX 35 1,911 2,413 2,472 2,578 Euro Stox x 50 2, % 6.64% 13.79% Euro Stox x 50 6,614 6,673 7,778 7,867 Forex Rates Last 1W YTD 2012 Interest Rates Last 1W Chg YE12 EUR/USD % 0.07% 1.97% Euribor 6m 0.34% 0.34% 0bp 0.32% EUR/GBP % 6.77% -2.30% 10Y Bond PT 6.55% 6.46% 9bp 7.01% EUR/BRL % 12.17% % 10Y Bond SP 4.57% 4.62% -5bp 5.26% Best & Worse Performers -1 Week (%) Best & Worse Performers - YTD (%) Sonae Capital 11.1 Impresa Altri 7.1 Mota-Engil 73.4 Av. José Malhoa, Lote Lisboa Tel / Fax: / 09 Novabase Zon Multimedia Impresa REN Zon Multimedia Sonae Capital BCP EDP Renováveis Cofina -2.4 Cimpor BPI -2.6 BES Sonae Industria -3.8 Portugal Telecom Jerónimo Martins -7.6 Cofina Page 1 of 20 All prices are those of the end of the trading session unless otherwise indicated. For important Disclosure and Disclaimer go to the second last page.

2 CHANGES EARNINGS Page 2 of 20

3 DIVIDENDS Page 3 of 20

4 FINANCIALS BES Buy High Risk (Target YE13: 1.05) 2Q13 Earnings Comment Earnings squeezed by provisions, NII better Vanda Mesquita than estimated BES disclosed its 2Q13 earnings last Friday. A conference call was last Monday. Earnings fell far short of our estimates basically due to stronger than expected provisions ( 507.2mn, almost the double of our estimates of 259.5mn) that have squeezed earnings ( mn vis-à-vis our estimates of - 26mn). This quarter cost of credit risk stood at 286bps, a figure abnormally high (average from 2008 to 2012 stood at 102 bps). However, under this bleak scenario NII was a positive surprise. Consolidated NII ( 248.5mn;-21% YoY; +12% QoQ) was supported by a higher than expected international NII (+17% than our estimates, up 26% YoY and 22% QoQ), since domestic activities came out broadly in line (+5% QoQ; -40% YoY). Consolidated NIM rose from 1.28% in 1Q13 to 1.43% in 2Q13 driven essentially by lower deposits spreads (from -2.67% in 1Q13 to -2.58% in 2Q13) and improvement of yields on the securities (& other) portfolio. In spite of this improvement, NII continues to remain under pressure as a consequence of low interest rates and increase of the non performing loans. Solvency ratios continue to stand above the minimum regulatory thresholds and LTD ratio continues its falling trend. At the CC, the bank stated that it expects a cost of credit for the full year between bps (higher than the previous guidance between bps), a figure below the cost of credit at 1H13 (216 bps), meaning that the provisioning effort will be lower in the third and in the fourth quarters. BES management clarified that the strong effort of provisioning was a consequence of an inspection done by the Bank of Portugal. This year, we assume a cost of credit of 166bps. An upward revision to BES s guidance would have a small negative impact of approximately 2 cents in our price target per share. As for the cost of credit for the coming years, we continue to assume that it will drop to 140 bps in 2014 and 97 bps in We are still comfortable with this level of provisioning. CT1 BoP (10.4%, -10bps QoQ, or 10.7% including BESA s capital increase approved at its general meeting), CT1 EBA (9.5%, -40bps QoQ) and RWA dropped by 1bn QoQ. During the CC, BES s management stated if Basel III were fully loaded, CT1 would stand at approximately 9%, above the minimum requirement of 7%. Summing up, BES posted an operating income that came out ahead of our estimates. Below the operating income line, provisions came substantially higher than our estimates. We acknowledge that we need to fine-tune our estimates for the year 2013 (this should not have a very meaningful impact in terms of price target), but we still feel comfortable with our estimates for the coming years. (For further details, please refer to our snapshot out this week) TELECOMS Telefónica Buy Medium Risk (Target YE13: Telefónica gets access to Yoigo s 4G network in exchange for wireline voice and broadband Alexandra Delgado, CFA Telefónica and Yoigo have signed a series of agreements whereby Telefónica will be able to sell 4G services over Yoigo s network and Yoigo will be able to market a converging product with its mobile services and Telefónica s wireline services (voice and broadband). Telefónica will be able to use Yoigo s 4G network (in the 1800 MHz band) to offer its Spanish clients ultra-fast mobile broadband services. Yoigo wants to cover 48% of the population with 4G by the end of this year (i.e. all cities with more than 70k inhabitants), which will make it the largest 4G network in Spain. Vodafone and Orange had already launched their 4G offers in the beginning of the summer, so Telefónica was lagging behind. We remind that Telefónica does not have spectrum in the 1800 Page 4 of 20

5 MHz band, as the main competitors do. Telefónica said in the press release it maintains its objective of building its own 4G network once the 800 MHz frequencies it won in 2011 are available. Investment in 4G will amount to 900 million. The government is looking to free up spectrum used by TV channels by January 2014, but there are concerns that this deadline may be postponed. It seems the possibility of a delay made Telefónica strike this deal. Yoigo, whose main shareholder is Telia Sonera, is the fourth mobile phone operator with a network of its own in Spain. Yoigo will be able to sell an integrated product (similar to Fusión) that includes its mobile lines and Telefónica s fixed voice and broadband services, both ADSL and fibre. The agreement that gives Yoigo access to Telefónica s 2G/3G networks in areas where the former doesn't have coverage has been extended to Telefónica and Yoigo also signed an agreement with Abertis to restructure and rationalise the mobile infrastructures of Telefónica and Yoigo. This will include Abertis acquiring at least 4,227 passive infrastructures from these operators for 385 and dismantling those that can be optimised. After this acquisition, Telefónica and Yoigo s equipment will be hosted on the same infrastructures. The agreement with Abertis should start to be implemented in the last quarter of This is a positive move for Telefónica, by allowing the operator to offer ultra-fast broadband services as its competitors, and therefore remain competitive until it builds its own 4G network. At the same time, it gets a new distribution network for its wireline services. Finally, the agreement to share passive infrastructure with Yoigo in Spain is aligned with Telefónica s strategy to pursue network sharing deals in order to achieve savings in opex & capex. We will for sure be seeing more of this in the future, and in various markets. Zon Multimedia Sonaecom Reduce Medium Risk (Target YE13: 4.30) Buy High Risk (Target YE13: 2.20) Competition watchdog adopts project decision of non-opposition to the merger Alexandra Delgado, CFA Sonaecom and Zon disclosed last Tuesday that the Competition Authority has adopted a project decision of non-opposition to the merger between Zon and Optimus. This project will now be under public consultation for 10 days and then the watchdog will issue its final decision, so presumably by mid August. This move by the Competition Authority shows it intends to approve the merger without demanding an in-depth investigation. The project implies commitments by the operators that were already made public. Commitments include the extension of the fibre network sharing agreement between Optimus and Vodafone, and the revision of the latter agreement so that the limitation of liability clause does not apply in the case of contract termination. Optimus will also have to be open to negotiate with third parties the wholesale access to its fibre network and will have to present to Vodafone a call option agreement for the purchase of Optimus fibre network. Finally, Optimus cannot charge its triple play fibre customers the payment of amounts due by virtue of loyalty clauses in the event of a request for termination of services. This is another step in the probable approval of merger in the next weeks, which is positive. The negotiated remedies are mainly directed at the fibre network Optimus shares with Vodafone (500k houses) which was already expected given the overlapping of this infrastructure with Zon s network, so no surprises on this front. (For further details, please refer to our snapshot out this week) Page 5 of 20

6 TECHNOLOGY Novabase Buy High Risk (TargetYE13: 4.20) 2Q13 Earnings Comment 0.50/ share extraordinary dividend to reduce cash pile Alexandra Delgado, CFA Novabase disclosed its 2Q13 earnings this week. Revenue was better than we expected: +4.8% in 1H13 vs. our estimate (and guidance) of 1.4% growth in the full-year. EBITDA was below our estimate but in line with guidance: in 1H Novabase delivered 52% of midpoint of EBITDA guidance (our estimate). Revenues in 2Q13 stood at 59.3mn. EBITDA was 4.1mn, meaning a 7.0% margin. Net profit reached 1.6mn in 2Q13; YoY decline is explained by lower EBITDA. Revenues in Portugal grew a surprising 6.2% YoY in 1H13, despite the very challenging environment, much better than our estimate for the full-year (-7% YoY in 2013). However, the CEO stressed that there is a lot of uncertainty on how the rest of the year will be and that he is not sure this marks a reversion in the economy. International business revenue grew 1.9% in 1H13, accounting for 32.3% of revenues in that period. The company says there are positive perspectives in the international front; it is analysing several options to open a 3rd office in Africa (after Angola and Mozambique). Net cash decreased 13 mn in 1H13 to 22mn, with WC coming back to normal levels as anticipated. Since business (and cash) has evolved as projected, the Board will propose the payment of a 0.50/ share extraordinary dividend ( 15.7mn). The announcement is not a surprise, since management had already said they would evaluate options to distribute some of the cash to shareholders. This dividend stands for 20% yield on current prices and is in line with what we had estimated. The company has called for an extraordinary shareholder meeting on September 25th to vote this proposal. All in all, 2Q13 earnings were neutral, in line with guidance for the full-year and therefore we remain comfortable with our estimates. The announced extraordinary dividend should be well received by investors. The company is distributing cash it no longer needs which also signals the evolution of the business has gone according to plan. We maintain the price target for Novabase at 4.20 (YE13), with a Buy, High Risk recommendation. (For further details, please refer to our snapshot out this week) Page 6 of 20

7 UTILITIES Utilities Sector Vanda Mesquita, Electricity consumption showed a slight recovery in Portugal in July Monthly electricity consumption (adjusted for temperature and working days) went up slightly by 0.1% YoY in Portugal in July (please see Iberian indicators table presented below). In Spain, monthly electricity consumption decreased by 3.2% YoY. All in all, it seems that electricity consumption in Portugal is on track to stabilize and in Spain seems to be deteriorating. As previously mentioned, in the case of EDP, earnings from the distribution business are not significantly affected by the drop in volumes (as the bulk of the distribution model has a fixed component) and liberalized activities in Iberia only accounted for 8.7% of 2012 EBITDA. Regarding Iberdrola, Spanish liberalized activities represented about 20% of 2012 EBITDA, therefore this decline may exert some pressure. *Light vehicle sales; **Electricity Consumption adjusted to temperature and working days (in GWh); ***Retail trade turnover index (seasonally adjusted and at constant prices). Source: ACAP, Anfac, REN, REE, INE, European Commission, DGE, DGGE, Mib REN Buy Low Risk (Target YE13: 2.45) 2Q13 Earnings Highlights Slower pace of capex, EBITDA slightly above estimated Vanda Mesquita REN disclosed its 2Q13 this week. EBITDA for 2Q13 rose by 1.3% YoY to 132.5mn. Excluding non-recurring impacts, EBITDA stood at 127.1mn (-2.8% YoY), coming out 1.7% ahead of our estimates ( 125mn). Net profit adjusted non-recurring items for 2Q13 stood at 31.1mn ( 34.9mn before the aforesaid impacts), ahead of our estimates of 27.2mn. Capex at 1H13 stood at 58.9mn, 47mn of which related to electricity and 11.9mn related to gas. This figure accounts for Page 7 of 20

8 30% of our YE13 estimate (by this time of the year, Capex at 1H12 represented 37% and at 1H11 represented 40% of the year-end figures). Net Debt at the end of the 2Q13 amounted to 2,499mn, slightly lower than YE12 figure ( 2,512mn) mainly due to lower Capex and positive tariff deviations. We estimate net debt of 2,478mn in YE13. By activity, in spite of a lower rate of return (base rate of return for electricity assets that is indexed to the 5-year CDS for Portuguese debt dropped from 9.76% in 1H12 to 8.03% in 1H13), EBITDA 2Q13 for the Electricity activities went up by 1.2% YoY to 98.2mn (9% above our estimates) on the back of a higher average RAB (+5% YoY) and also by a non-recurring item (reversion of an impairment related to interest to be received from previous tariff deviations amounting to 5.4mn). EBITDA 2Q13 for the Gas activities went down by 1.8% YoY to 38.8mn (+10% ahead of our estimates) mainly due to the negative tariff smoothing effect that has more than offset the increase in returns derived from a higher regulatory base (+1.36% YoY). Summing up, we consider that REN posted a neutral set of earnings (excluding non-recurring items EBITDA came out slightly above our estimates). This year, there is a slower pace of capex. However, bearing in mind that capex are more intensive in the second half of the year, we still believe that the company will accomplish the capex target included in our valuation ( 200mn). Following this earnings release, we feel comfortable with our estimates, keeping our neutral recommendation. (For further details, please refer to our snapshot out this week) CONGLOMERATE Sonae Capital Buy High Risk (Target YE13: 0.22) António Seladas, CFA; 2Q13 Earnings Comment Changing dynamics at Troia Resort? SC released 2Q13 figures this week. At this stage the level of information is not substantial however top line was better than our estimates, plus 31.8Mn vs. 27Mn expected, plus 9%YoY and it was mainly due to HVAC business and Others. Concerning Ebitda we were expecting 1.2Mn vs. 1Mn released so pretty much as expected, even that the break-down was different as we were assuming a better performance at the Hotels business (break even vs. minus 1.3Mn) and worst performance at the HVAC business (plus 0.2Mn vs. 0.9Mn released). The Hotels business despite some improvement is still underperforming even that it heavily rained in the 2Q13, so it could explain partially the performance. Regarding the HVAC it has been quite volatile, so it is difficult to assume a definitely improvement as the environment is still tough; Concerning the Resort business the company announced that 9 deeds were done until the end of the semester or 7 done in the 2Q13 and further 4 were already done in July, still 9 promissory purchase agreements and 5 reservation agreements were already signed, totalling 27 units vs. 13 assumed on our model for the entire year. So a strong improvement even that we were expecting a higher sales figure in the 2Q13 (unfortunately the company doesn t provide information alone regarding the apartment sales), or it could be the cheapest apartments that were sold; Regarding net debt, a main problem, it went up from 256Mn at the end of the year and 252.1Mn at the end of 1Q13 to 258.8Mn by the end of the semester, meanwhile (during the 1Q13) the company sold 6.51% of the Imosede Fund, receiving 10Mn, so basically the cash flow was negative by 12.8Mn or 10.5Mn if we would remove the capital spending, 2.3Mn; in the first half of the year. We are slightly disappointed as we were expecting an increase in net debt of 3Mn for the year; Summing up figures pretty much as expected, however HVAC business doing better and the Hotel business not so well. The positive surprise was clearly the number of deals done in the Troia Resort which could mean a change in the trend seen for the last 3 or 4 years, (we are/were just expecting this change by 2015) and the negative surprise was the behaviour of net debt. All in all and despite some adjustments would need to be done we feel comfortable with our valuation 0.22YE2013, buy recommendation high risk Page 8 of 20

9 (For further details, please refer to our snapshot out this week) RETAIL Retail Sector João Flores, July new car sales in Iberia: Strong numbers Overall, numbers are potentially positive to our retail valuations, suggesting July retail sales will show encouraging numbers. Portugal light-vehicle sales rose 17.2% in July According to ACAP (Portuguese Automobile Trade Association) light-vehicle sales rose 17.2% YoY in July ( vehicles), following a 17.6% YoY increase in June. Sales also rose 5.1% Ytd (+2.9% Ytd-June), benefiting from strong July-June sales numbers. We highlight popular brands (Toyota, Seat, Opel ) sales numbers helped strong light-vehicle sales while German premium brands keep outperforming auto market sales. According to ACAP, increasing sales to car rental companies partially explains positive numbers in July (rent-a-car business is benefiting from new dynamic in tourism sector). Spain: Strong numbers (+15% YoY) reflected end of Pive Plan 2 in late July Spanish new car sales rose 14.8% YoY in July, reflecting the end of from PIVE Plan 2 in late July (Incentive Program Efficient Vehicle which started in the second fortnight of February). Sales Ytd declined 2.1% (-4.9% Ytd June). Car sales to families strongly rose 30.4% YoY in July (+13% YoY in June), benefiting from PIVE 2 Plan. Sales rose 10.4% Ytd. Car sales to companies reduced pace of decline to 13.9% YoY (-24.4% YoY in June). Sales Page 9 of 20

10 declined -21.5% Ytd (-22.8% Ytd in June) Recall PIVE Plan 3 (Incentive Program Efficient Vehicle) started last Monday (July 29 th ). Retail Sales Jun13 - Two sides of the same coin: Portugal recovers while Spain declines Overall, numbers are potentially neutral/positive to JM and Sonae (food) while negative numbers in Spain are potentially negative to Inditex and Sonae non-food business in Spain. Jerónimo Martins (Rating: Buy; Target YE13: 16.90, Medium Risk); Sonae (Rating Buy; Target YE13: 1.00; Medium Risk); Inditex (Rating Neutral; Target YE13: ; Medium Risk). Portuguese retail sales (disclosed July 30th) reduced pace of decline in June to 2.6% YoY from - 3.6% YoY in May. On a monthly basis, sales were up 1.1% YoY (1.5% YoY in May). Food Retail sales declined 1.2% YoY in June from -2.7% YoY in May. Non-food Retail sales fell 4.2% YoY in June (-4.7% YoY in May). Recall light-vehicle sales rose 17.6% YoY in June ( vehicles), following a 5.7% YoY decline in May. Sales also rose 2.9% Ytd (-0.8% Ytd-May), benefiting from strong June sales number. Recall we estimate in 2013: JM: Estimated LfL Sales Portugal 1.0%; Estimated Total Sales Portugal +3.7% Sonae MC (Food): Estimated LfL Sales -1.3%; Estimated Total Sales -0.5% 2013 Sonae SR (Non-Food): Estimated LfL sales -4.4% 2013; Estimated Total Sales -2.7% 2013 Spanish retail sales (disclosed on July 31st) kept negative trend. Retail sales increased pace of decline in June to 7.0% (from 4.5% in May) while Non-food Retail sales fell 7.9% YoY in June (- 7.3% YoY in May). Recall Spanish new car sales slightly declined 0.7% YoY in June, reducing pace of decline. Sales Ytd declined 4.9% (-5.8% Ytd-May). Spanish domestic demand remains very weak, penalized by unemployment and austerity. According to the news, the second quarter GDP improvement from a 0.5% contraction between January to March could be short-lived because it relied mostly on seasonal gains in tourism and too many Spaniards remain out of work. Retail sales in Spain have now contracted for 36 months straight in annual terms as the nation continues to suffer from a deep recession and high unemployment. Polish retail-sales (disclosed on July 23rd) rose 1.8% YoY on an annual basis in June (above 1.1% YoY consensus), higher than the 0.5% YoY increase seen in May. On a monthly basis, retail sales Page 10 of 20

11 rose 1.5% MoM (+1.1% MoM consensus), following a 1.6% MoM increase in May. There was a 1.4% YoY increase in Food retail sales (from 4.8% YoY in May). Recall we estimate Biedronka`s LfL sales will reach 5% in Recall new car sales in Poland rose 8.4% YoY in June to registrations, following a 5.4% YoY decline in May This brings the year-to-date total to units, down 1.0% on 2013 (from - 2.8% YTD end-may). Numbers suggests Polish retail sales kept positive trend in June. We highlight Unemployment rate declined to 13.2% in June from 13.5% in May (13.2% estimated). Retail sales in Colombia (disclosed on July 19th) increased 6.5% YoY in May, following +5.9% YoY in April. (For further details, please refer to our snapshot out this week) Overall, numbers disclosed today in Portugal are potentially positive to our retail valuations Portuguese retail sales reduced pace of decline in June to 2.6% YoY from -3.6% YoY in May. On a monthly basis, sales were up 1.1% YoY (1.5% YoY in May). Food Retail sales declined 1.2% YoY in June from -2.7% YoY in May. Non-food Retail sales fell 4.2% YoY in June (-4.7% YoY in May). Recall we estimate in 2013: JM: Estimated LfL Sales Portugal 1.0%; Estimated Total Sales Portugal +3.7% Sonae MC (Food): Estimated LfL Sales -1.3%; Estimated Total Sales -0.5% 2013 Sonae SR (Non-Food): Estimated LfL sales -4.4% 2013; Estimated Total Sales -2.7% 2013 The Consumer confidence indicator increased again in July, maintaining the upward movement observed since January, after attaining the minimum of the series in December. The economic climate indicator has recovered since the beginning of the year, after registering the lowest value of the series in December. In July, all the sectorial confidence indicators increased, Manufacturing Industry, Construction and Public Works, Trade and Services. Page 11 of 20

12 Jerónimo Martins Buy Medium Risk (Target YE13: 16.90) João Flores, Good news from Poland: Polish PMI broke above 50 point in July According to the news, Polish manufacturing index PMI rose above the 50 points for the first time in 15 months, reaching 51.1 in July (from 49.3 in June) Positive data is driven by strong output and new order indices. Numbers suggests Polish economy has bottomed in 1H13, thus the big question is the pace of recovery. 2Q13 Earnings Conference Call Highlights - The trend is not your friend Jerónimo Martins (JM) published this week, its 2Q13 figures. Sales were in line while EBITDA margin and LfL sales in Poland were below estimated. A conference call was held, today at 9:00am, Lisbon and UK time. Highlights: LfL Poland 2.0%; 8.8% 1Q13 (vs estimated 4.0% 1Q13; 5% 2013). LfL Portugal 1.2%; 2.9% 1Q13 (vs estimated 1.0% 2013). Consolidated EBITDA Margin kept unchanged at 6.4% in 2Q13 8above estimated 6.6%). Strong EBITDA margin in Portugal (rose to 4.7% from 3.5% in 2Q12, vs estimated 3.8%) was offset by higher than expected start-up costs from Ara and Hebe while EBITDA margin in Biedronka kept unchanged (we estimated an increase to 6.5% from 6.4%). Outlook (slightly downwards revised Capex guidance): Double-digit sales growth with EBITDA growing in line with sales (unchanged). Expects to open 290 stores in Poland (unchanged, vs our estimates 270 net openings). Expects to open 30 to 40 stores in Colombia (unchanged, vs 35 estimated). Capex 600mn- 700mn ( mn previously vs 625mn our estimates), reflecting more rented stores. No further details from Colombia. According to JM, full year numbers will disclose more information from Colombia. It s too early to take conclusions, however Colombia is performing in line with company expectations. Overall, the big negative surprise was Biedronka`s LfL sales negative trend. We were expecting a 4% increase in 2Q13 Biedronka`s LfL sales while Polish Food Retail sales (disclosed on July 23rd) suggested number could be higher, which not happened. We highlight negative calendar impact on Biedronka LfL sales was 2.0%-2.5%, thus excluding calendar effect LfL sales reached 4.0%-4.5%. Following CC, we felt comfortable with our JM`s valuation. Recall we estimate Biedonka`s LfL sales will reach 5% in 2013 (5.3% in 1H13). The environment in Poland and Portugal keeps very Page 12 of 20

13 challenging however we felt comfortable with our estimates. (For further details, please refer to our snapshot out this week) INDUSTRIALS Sonae Industria Buy High Risk (Target YE13: 0.77) António Seladas, CFA 2Q13 Earnings Highlight Tough Environment Sonae Industria released 2Q13 figures this week. Total sales went down by 5%YoY to 324Mn and 4% below our estimates, mainly due to a lower performance in the rest of the world explained by currency weakness, ZAR and CAD (without this effect turnover would have increased by 3% on the 1H13). Concerning operating results, EBITDA, 23Mn plus 4%YoY and above our estimates of 18Mn, mainly due to a better performance in Europe (the non recurrent cash cost, 4Mn related with Solsona s closure was offset by 4Mn provision already booked in 4Q12). Depreciations were higher, 19Mn vs. 17Mn expected and financial costs are increasing 15Mn per quarter, an increase of 2MnYoY, while the average cost of debt is now 5.5% vs. 4% one year ago. Net Income was negative minus 13Mn vs. minus 12 expected; Concerning net debt as the company measures, it went down by 11Mn to 684Mn, however still higher than at the end of last year 665Mn. Capital spending has been kept at low levels, 7Mn during the 1H vs. 16Mn in the 1H12; Regarding the Outlook the company expects a relatively stable trading environment in the 2H13, which should allow them to continue to deliver a financial performance in line with the last few quarters. The two critical aspects are: reduction of fixed costs and concentration of the production in the more efficient plants. The tragic accident in Lac Mégantic at the beginning of July had a short term impact as normal production was interrupted by 5 days and will impact transportation costs in the coming months; Summing up a set of figures similar to the last few quarters, EBITDA seems to stabilize between 19Mn and 25Mn, while financial costs are roughly 15Mn per quarter, capital spending will be kept at minimum levels while efficiency gains are critical. On our assumptions we assume a margin recovery by 2015/16, however if we are wrong a rights issue is probably the best answer. (For further details, please refer to our snapshot out this week) Altri Sell High Risk (Target YE13: 1.75 António Seladas, CFA 2Q13 Earnings Highlight Strong top line Altri released the 2Q13 earnings this week. Top line 150Mn; plus 5%YoY and 6% above our estimates; Ebitda, 36Mn minus 5%YoY and 11% below our estimates, mainly explained by (1) Gross Margin 58.4% vs. 60.1% one year ago and 63.8% expected, due to upwards pressure on wood prices as in the 1Q13 (it shouldn t repeat in the 3Q13); (2) Staff Costs and External Supplies and Services behaved positively, both went down by 5.5%YoY and (3) Other Expenses and Indirect costs 7.4Mn vs. 2Mn one year ago, 2.9Mn in the 1Q13 and 1Mn expected. Concerning Other Expenses there were 2.7Mn provision related with an old litigation, so if we had removed it, Ebitda margin would have increased to 26% closer to our estimates. Below the operating line, Interest charges were 6.5Mn; better than our estimates and roughly 1.4Mn below the level recorded one year ago and lower taxes 2.5Mn (effective tax rate of 12%) vs. 4.4Mn expected, explain a net income of 16.1Mn slightly above our estimates of 15.6Mn; Concerning net debt, as the company measured, it went down by 24.3Mn in the quarter to 589.6Mn and was reduced by 30Mn vs. last year. Capital spending was 9Mn during the 1H13 Page 13 of 20

14 vs. 17Mn expected for the entire year. Regarding net debt we are expecting a reduction of 93Mn in 2013, so we are probably too optimistic; Concerning the Outlook the management s message regarding pulp prices is, probably, more positive than in the past, as they anticipate a positive trend in the second half similar to the 1Half, even that some adjustment could happen during the summer months; Summing up strong figures at top line level, but upward pressure on wood prices has impacted negatively gross margins. Apparently wood prices are finally coming down. Despite that we feel comfortable with our valuation of 1.75YE13, Reduce recommendation high risk. (For further details, please refer to our snapshot out this week) OIL & GAS Galp Energia Buy High Risk (Target YE13: 16.20) Vanda Mesquita, 2Q13 Earnings Comment Good contribution from hydrocracker Galp disclosed its 2Q13 earnings this week. Galp released a good set of earnings. Adjusted EBITDA for 2Q13 stood at 304mn (+7% YoY), coming 7% ahead of our estimates. By business, Adjusted EBITDA growth was mostly driven by a good performance from Gas & Power business (+24% YoY on the back of good trading opportunities) and from Refining & Marketing (+11% YoY mainly due to the contribution of the new hydrocracker). E&P performance (-14% YoY) was influenced by higher opex as a consequence of the maintenance activities and the start-up of the new FPSO in Lula field. Adjusted net profit for 2Q13 went down by 33% YoY to 86mn (10% below our estimates). Main deviation vis-à-vis our estimates came from higher than estimated D&A (at Exploration & Production and Refining & Marketing businesses). Net debt at 2Q13 stood at 2.1bn (we estimate 2.4bn for the end of the year) and Capex for 1H13 amounted to 474mn, accounting for 40% of our YE13 estimate. Following earnings disclose, we feel comfortable with our estimates, keeping our buy recommendation. 3Q13 working interest production is targeted to reach 27 kboepd (vis-à-vis 23.4 kboepd in 2Q13), in line with our estimates for the quarter. This expected increase QoQ is explained by the ramp up of the FPSO Cidade de Paraty and also by the resume of normal operations at FPSO Cidade Angra dos Reis. Refining margin should continue to recover benefiting from the upgrade of the hydrocracking complex (it is operating at full capacity). Marketing volumes should continue to be impacted by lower demand of oil products, although market contraction is slowing down. Natural gas volumes should continue to benefit from LNG good trading opportunities. Hydrocracker complex is running at full capacity. The company reiterated the guidance of mn additional EBITDA per year. We expect EBITDA from refining activities in 2014 (the 1st year in which the full-year impact of that conversion should be noticed) to stand 170mn higher than EBITDA in The company stated that the utilization of the refining system capacity is expected to stand at mid 80% (with the new hydrocracker operating at full capacity) vis-à-vis our expectations of an 80% capacity utilization rate over the long-run. (For further details, please refer to our snapshot out this week) Page 14 of 20

15 SECTOR PERFORMANCE PSI20 Sector Performance -1 Week (%) 0.3 PSI20 Sector Performance - YTD (%) 2.2 Oil & Gas 3.5 Industrials & Other 22.2 Electric Utilities 3.2 Electric Utilities 11.3 Industrials & Other 0.9 Oil & Gas 5.8 Financials 0.6 Retail * 3.6 Telecoms & IT 0.2 Financials -5.9 Media -2.4 Telecoms & IT -7.7 Retail * -6.2 Media * includes Jeronimo Martins and Sonae This week, the PSI20 went up 0.3%. The best performing sector was Oil & Gas, plus 3.5% and the worst was Retail, minus 6.2%. On a Ytd basis, the PSI20 went up 2.2%. The best performing sector was Industrials & Other, plus 22.2% and the worst was Media, minus 24.3%. AGGRESSIVE PORTFOLIO This week, Mib Aggressive Portfolio went up 1.69%, outperforming the PSI20 by 1.42pp. Excluding Sonae Industria, all stocks contributed for this outperformance. We highlight that the portfolio is composed by the five stocks with the highest upside potential of our coverage universe. It is equal weighted and rebalanced on a weekly basis. LIQUIDITY PORTFOLIO This week, Mib Liquidity Portfolio went up 1.80%, outperforming the PSI20 by 1.53pp. Excluding Portugal Telecom, all stocks contributed for this outperformance. We highlight that the portfolio is composed by the five stocks with the highest upside potential of our coverage universe, excluding the less liquid stocks. It is equal weighted and rebalanced on a weekly basis. Page 15 of 20

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18 2013/08/02 Latest Target Risk Trnvr ( mn) M Cap Change (%) EPS P / E EV / Sales EV / EBITDA Div Yield P/BV Upsd Rating Pr ( ) YE13 Rating 3m 6m ( mn)o Week 1M 3M 12M YTD E 2013E E 2013E E 2013E E 2013E E 2012E PSI 20 5, , Financials , BCP (1) , BES % Buy High , loss 31.9 loss % 0.0% 0.5 BPI % Buy High , loss % 0.0% 0.9 Telecoms , % 0.7% 2.1 Telefónica % Buy Medium , % 0.1% 2.3 Portugal Telecom % Buy Medium , % 8.7% 1.5 Zon Multimedia (3) % Reduce Medium , % 4.0% 4.4 Sonaecom % Buy High % 7.9% 0.5 Media loss % - - Impresa (2) loss % - - Media Capital (2) % - - Cofina (2) % - - Technology Indra % Buy High , % 3.4% 1.5 Novabase % Buy High % 4.3% 0.7 Utilities , % 3.7% 0.7 Iberdrola % Buy Low , % 7.9% 0.6 EDP % Neutral Low , % 8.1% 1.0 EDP Renováveis % Buy Low , % 1.0% 0.6 REN % Buy Low , % 8.3% 1.1 Conglomerates , Sonae % Buy Medium , % 4.8% 1.0 Semapa % Reduce High % 10.4% 0.8 Sonae Capital % Buy High loss loss loss loss % 0.0% 0.1 Retail , % 1.7% 7.8 Inditex % Neutral Medium , % 1.7% 7.8 Jerónimo Martins % Buy Medium , % 2.0% 7.6 Industrials , % - - Sonae Industria % Buy High loss loss loss loss 61.8% 0.4 Altri % Sell High % 1.3% 2.3 Portucel % Reduce Medium , % 9.4% 1.2 Cimpor (2) , % - - Construction Mota-Engil % Sell High % 6.6% 0.8 Oil & Gas Galp Energia % Buy High , % 2.0% 1.8 (1) We do not have a recommendation on BCP, as Mib is a registered trademark of BCP; (2) Not Covered; (3) Zon Multimedia figures assume merger with Optimus Page 18 of 20

19 DISCLOSURES This report has been prepared on behalf of Millennium investment banking (Mib), a registered trademark of Banco Comercial Português, S.A. (Millennium bcp). Millennium bcp is regulated by Comissão de Mercado de Valores Mobiliários. Recommendations: Buy means more than 10% absolute return; Neutral means between 0% and +10% absolute return; Reduce means between -10% and 0% absolute return; Sell means less than -10% absolute return. Unless otherwise specified, the time frame for price targets included in this report is current year-end or next year-end. Risk is defined by the analyst s view in a qualitative way (High, Medium, Low). Usually we update our models and price targets in between 3 and 9 months. Millennium bcp prohibits its analysts and members of their households to own any shares of the companies covered by them. BCP group may have business relationships with the companies mentioned in this report. Millennium bcp, expects to receive or intends to seek compensations for investment banking services from the companies mentioned in this report. The views expressed above, accurately reflect personal views of the authors. They have not and will not receive any compensation for providing a specific recommendation or view in this report. There were not any agreements between the companies covered and the analysts regarding the recommendation. Analysts are paid in part based on the profitability of BCP group, which includes investment banking revenues. BCP group has more than 2% of EDP. BCP group was chosen to evaluate EDP regarding the 8th stage of the privatization process. BCP group was chosen to evaluate REN regarding the 2nd stage of the privatization process. A member of the Executive Board of Directors of Millennium bcp is member of the General and Supervisory Board of EDP - Energias de Portugal, SA. Banco Millennium bcp Investimento, S.A. (merged into Millennium bcp) was chosen as a joint global coordinator of the Initial Public Offering of EDP Renováveis. Banco Millennium bcp Investimento, S.A. (merged into Millennium bcp) was part of the consortium, as a Co-Leader, of BES rights issue, done in April Millennium bcp was part of the consortium, as Co-Manager, of BES rights issue completed in May Millenniumbcp through its investment banking department is providing investment banking services to Tagus Holdings S.a.r.l. ( Offeror in the launch of a tender offer over Brisa - Autoestradas de Portugal, S.A. shares). Recommendations on Millennium bcp covered companies (%) Recommendation Jul-13 Jun-13 Mar-13 Dec-12 Jun-12 Dec-11 Dec-10 Dec-09 Dec-08 Dec-07 Dec-06 Dec-05 Dec-04 Buy 68% 77% 76% 77% 78% 68% 79% 63% 54% 41% 37% 30% 63% Neutral 9% 9% 10% 12% 4% 11% 7% 15% 4% 27% 11% 40% 6% Reduce 18% 14% 14% 4% 0% 0% 0% 7% 0% 0% 21% 5% 6% Sell 5% 0% 0% 4% 7% 7% 4% 4% 0% 14% 16% 5% 0% Unrated/Under Revision 0% 0% 0% 4% 11% 14% 11% 11% 42% 18% 16% 20% 25% Performance 3.0% -4.6% 3.0% 20.4% -14% -28% -10% 33% -51% 16% 30% 13% na PSI 20 5,721 5,557 5,822 5,655 4,698 5,494 7,588 8,464 6,341 13,019 11,198 8,619 7,600 DISCLAIMER This information is not an offer to sell or a solicitation to enter into any particular deal or contract. It consists of data compiled by or of opinions or estimates from Banco Comercial Português, S.A. and no representation or warranty is made as to its accuracy or completeness. This information is merely an auxiliary means of analysis to be used by its recipients, who will be solely responsible for its use, including for any losses or damages that may, directly or indirectly, derive from it. Its reproduction is not allowed without permission from the BCP group. The data herein disclosed are merely indicative and reflect the market conditions prevailing on the date they have been collected. Thus, its accuracy and timing must absolutely be confirmed before its usage. Any alteration in the market conditions shall imply the introduction of changes in this report. This information / these opinions may be altered without prior notice and may differ or be contrary to opinions expressed by other business areas of BCP group as a result of using different assumptions and criteria. The analysis contained herein is based on numerous assumptions. Different assumptions could result in materially different results. Page 19 of 20

20 OFFICE LOCATIONS Millennium investment banking Av. José Malhoa, Lote Lisboa Portugal Telephone Fax / 39 Equity Team Luis Feria - Head of Equities Equity Research António Seladas, CFA - Head (Industrials and Small Caps) Alexandra Delgado, CFA (Telecoms and IT) João Flores (Media and Retail) Vanda Mesquita (Banks, Utilities and Oil&Gas) Ramiro Loureiro (Market Analysis) Sónia Martins (Market Analysis) Sónia Primo (Publishing) Prime Brokerage Vitor Almeida Equity Sales/Trading Paulo Cruz - Head Gonçalo Lima Jorge Caldeira Nuno Sousa Paulo Santos Pedro Ferreira Cruz Pedro Gonçalves Pedro Lalanda Equity Derivatives Jorge Pina - Head Ana Lagarelhos Diogo Justino Marco Barata Maria Cardoso Baptista, CFA