INDIVIDUAL MANAGEMENT REPORT AND ACCOUNTS 1ST HALF 2005

Transcription

1 INDIVIDUAL MANAGEMENT REPORT AND ACCOUNTS 1ST HALF 2005 Semapa Sociedade de Investimento e Gestão, SGPS, SA. Av. Fontes Pereira de Melo, 14 10º Lisboa Tel. (351) Fax (351) Reg. with the Lisbon Companies Registry under no Tax No Share Cap. 118,332,445 Euros

2 Contents Page 1. Business Overview: Individual Economic and Financial Results 1 2. Operational Overview and Major Developments 2 3. Financial Financing Retirement Benefits Share Prices Dividends Net Profit for the 1st Half 4

3 S E M A P A MANAGEMENT REPORT 1ST HALF 2005 INDIVIDUAL FINANCIAL STATEMENTS 1. Business Overview: Individual Economic and Financial Results Despite the difficult economic situation at home and abroad, the Group recorded satisfactory performance in the 1st half of The individual results reported by SEMAPA for the same period in 2004 (154.7 million euros) are not entirely comparable with those for the first half of 2005 (16.9 million euros), due essentially to the fact that i) in the 1 st half of 2004 SEMAPA recorded capital gains of million euros, as a result of the disposal of financial holdings, and ii) the portfolio of holdings reflected in the results has changed, primarily because of the takeover bid for Portucel in the second half of The individual accounts presented for the 1st half of 2005 have been drawn up under the POC (Portuguese Plan of Accounts) rules, with the derogations required for the value of the Shareholders Funds reported to correspond to the value given for this item in the consolidated accounts, drawn up under the IFRS (International Financial Reporting Standards). These derogations relate to i) retrospective application of IFRS 3 to the accounting of Business Combinations, and ii) IFRS on the Fair Value of Biological Assets. The accounts also reflect the harmonization of depreciation rates for different Group companies. SEMAPA recorded Operating Income for the first half of 4.2 million euros, representing an increase of 3.5 million on the first half of 2004, explained by technical consultancy contracts entered into between SEMAPA and its subsidiaries. The company recorded negative Operating Results of 8.5 million euros, due essentially to: Recognition of liabilities for directors pensions 7.4 million euros as a result of approval of the Regulations approved by the General Meeting on 30 March 2005, and Growth in SEMAPA s workforce, with new staff recruited in the second half of 2004, to meet the demands of the company s expanded holdings. The Financial Results make a positive contribution of 25.4 million euros to Net Profits. These break down into 23.9 million euros for gains on Group and Associated companies, and 1.5 million euros for the net value of interest and similar income/costs. The company recorded positive Current Results of 16.9 million euros. 1

4 Semapa closed the first half with Net Profits of 16.9 million euros, which differ from the consolidated results 20.9 million euros because of the inclusion in Retained Earnings under IFRS of costs which were only recognized in Operational Overview and Major Developments SEMAPA In January 2005, SEMAPA, SGPS, SA notified the market of the disposal of its entire holding in ENCE Grupo Empresarial ENCE, SA, corresponding to 8.00% of the respective share capital, for a sum of approximately 46 million euros. This disposal was effected by companies controlled by SEMAPA Sociedade de Investimento e Gestão, SGPS, SA, SEINPAR INVESTMENTS BV and PORTUCEL Empresa Produtora de Pasta de Papel, SA. The Annual General Meeting of Shareholders, held on 30 March 2005, resolved to distribute a dividend of 11 cents per share and approved an amendment to the Articles of Association, permitting the company s board of directors to comprise an uneven number of members, of between 3 and 15. The meeting also approved the Directors Pension Regulations, as required by article 17 of the Articles of Association. Dividends relating to the financial year of 2004 were paid in April. Also in April, the market was notified of an alteration in the qualifying holding of the BPI Group, which now held and/or managed a 4.92% interest in SEMAPA, corresponding to 5.03% of the respective non-suspended voting rights. The market was also notified of an alteration in the qualifying holding of Companhia de Seguros Tranquilidade, SA, which now held % of the share capital of SEMAPA, corresponding to % of the respective non-suspended voting rights. With effect as of 30 June 2005, Dr. Paulo Jorge Barreto de Carvalho Ventura resigned as director of SEMAPA. The composition of SEMAPA s Audit Board was altered, with the resignation of the audit firm Belarmino Martins, Eugénio Ferreira e Associados, Sociedade de Revisores Oficiais de Contas, Lda.. In accordance with article 50 of Decree-Law 487/99, of 16 November 1999, the officers of the General Meeting appointed as the effective Official Auditor the firm PricewaterhouseCoopers & Associados Sociedade de Revisores Oficiais de Contas, Lda., registered with the Ordem dos Revisores Oficiais de Contas under no. 183, represented by Dr. Abdul Nasser Sattar, Official Auditor no. 958, or by Dr. Ana Maria Ávila de Oliveira Lopes Bertão, Official Auditor no. 902, with Dr. Jorge Manuel Santos Costa, Official Auditor no. 847, being appointed as alternate auditor. As required by the same article, these appointments will be submitted for ratification by the Company s next General Meeting. 3. Financial 3.1. Financing In keeping with the terms of issue, 20% of the nominal value (4.5 million euros) of the bonds issued in the Semapa 98 issue was repaid in March. 2

5 In June, Semapa SGPS, SA took out a medium and long term loan of 25 million euros from Caixa Galicia, and the company s subsidiaries made an early repayment, of the same amount, on the loan from the banking syndicate comprising the BES Group and CGD, contracted as partial financing for the acquisition of Portucel. At the end of June 2005, Semapa s net debt totalled 38 million euros; all bank borrowing contracted by Semapa is expressed in Euros. The economic climate in the Euro Zone remained practically unchanged throughout the 1st half of 2005, with a moderate level of economic growth, inflationary pressure under control and the ECB interest rates holding firm. Accordingly, both SEMAPA, SGPS, and its instrumental sub-holdings (Semapa Investments BV and Semapa Inversiones SL) opted to keep all their borrowing on a floating rate basis, with the consequent benefit deriving from the relatively low levels around 2% - of the Euribor index. In May, the Semapa received from Portucel (through its subsidiaries Seinpart Participações, SGPS, SA and Semapa Investments BV) dividends of 19.1 million euros, relating to profits from Retirement Benefits In order to implement the Directors Pension Regulations approved at the General Meeting of 30 March 2005 the company creates provisions for past services of 59 million euros, and approximately 7 million euros was recognized as costs of the 1 st half of Share Price Over the course of the first half of 2005, Semapa shares increased in value by a total of approximately 13.2%, and listed prices varied between a low of EUR 4.05 and a high of EUR Average daily trading during the period stood at 32,546 shares. At the market session of 15 March 2005 immediately after disclosure of the 2004 results, the share price held steady. The attribution of a dividend of EURO 0.11 per share in circulation also failed to have any relevant impact on price formation. The following graph shows the relative performance of Semapa shares: Semapa share prices vs. PSI 20 during the 1st half of

6 Semapa share prices vs. PSI 20 during the 1st half of PSI20 Semapa 90 Jan Jan Feb Fev Mar Abr Apr May Mai Jun During the first six months of 2005, the market performance of Semapa shares was fairly positive, both in absolute terms, given that listed prices rose by 13.2%, and in comparison with the Portuguese stock market, insofar as the PSI 20 index was down by 1.2% over the period Dividends On 28 April 2005, Semapa paid dividends for 2004 totalling EUR 13,016,569, corresponding to a dividend of EUR 0.11 per share in circulation. This figure was 10% up on the dividend paid in the previous year Net Profit for the period The Net Profit for the period was EUR Lisbon, 12 September 2005 THE BOARD OF DIRECTORS Pedro Mendonça de Queiroz Pereira Chairman Maria Maude Mendonça de Queiroz Pereira Lagos Director 4

7 Carlos Eduardo Coelho Alves Director José Alfredo de Almeida Honório Director Frederico José da Cunha de Mendonça e Meneses Director Gonçalo Allen Serras Pereira Director Francisco José de Melo e Castro Guedes Director Luís Manuel Pego Todo Bom Director 5

8 Disclosures required by sub-paras. b) and d) of para. 1 of article 9 of Securities Market Commission Regulations no. 04/2004 (1st Half 2005) 1. Securities issued by the company, controlled or controlling companies or other Group companies, held by company officers: José Alfredo de Almeida Honório shares in Semapa. 2. No securities issued by the company, controlled or controlling companies or Group companies were acquired, encumbered or transferred by company officers during the period. 3. Qualifying holdings calculated under the terms of Article 20 of the Securities Code: Holders No. shares % shares % of nonsuspended voting rights A - Cimianto - Gestão de Participações, S.A ,00% 0,00% Cimo - Gestão de Participações, SGPS, S.A ,33% 12,62% Longapar, SGPS, S.A ,90% 17,30% Sonaca - Sociedade Nacional de Canalizações, S.A ,06% 1,08% OEM - Organização de Empresas, SGPS, S.A ,42% 0,43% Sociedade Agrícola da Quinta da Vialonga, S.A ,54% 0,56% Sodim, SGPS, S.A ,07% 22,59% José Alfredo Almeida Honório ,02% 0,02% Total: ,34% 54,60% B - Banco BPI, S.A Banco Português de Investimento, S.A ,04% 0,04% Funds managed by BPI Pensões - Sociedade Gestora de Fundos de Pensões, S.A ,55% 3,63% Funds managed by BPI Fundos - Gestão de Fundos de Investimento Mobiliário, S.A ,19% 1,21% BPI Vida - Companhia de Seguros de Vida, S.A ,03% 0,03% Institutional clients whose portfolio is managed on a discretionary basis ,06% 0,06% Private clients whose portfolio is managed on a discretionary basis ,06% 0,06% Total: ,92% 5,03% C - Cimpor Portugal, SGPS, S.A ,02% 20,50% D - AF Investimentos - Fundos Mobiliários, S.A ,09% 2,14% 1

9 % of nonsuspended Holders % No. shares shares voting rights E - Banco Espírito Santo, S.A BES Pension Funds managed by ESAF - Espírito Santo Fundo de Pensões, S.A ,21% 4,31% Other Funds managed by ESAF - Espírito Santo Fundo de Pensões, S.A ,08% 1,11% Funds managed by ESAF - Espírito Santo Fundos de Investimento Imobiliário, S.A ,63% 0,65% Clients under the management of ESAF - Espírito Santo Gestão de Patrimónios, S.A ,00% 0,00% Total: ,93% 6,07% F - Espírito Santo International Companhia de Seguros Tranquilidade Vida, S.A ,14% 2,19% Seminv Investimentos, SGPS, S.A. holds 2,727,975 shares in Semapa, corresponding to 2.305% of the share capital, subject to the rules on own shares. 2

10 SEMAPA - SOCIEDADE DE INVESTIMENTO E GESTÃO, SGPS, S.A. BALANCE SHEET AS OF JUNE 30, 2005 AND 2004 (Amounts stated in ) Depreciation ASSETS Notes Gross and adjustments Net Net EQUITY AND LIABILITIES Notas FIXED ASSETS: EQUITY: Intangible assets: Share capital 36, 37 e Incorporation expenses Share Premium Adjustments in investments in subsidiaries and affiliated compan 40 ( ) ( ) Tangible assets: Reserves: Transport equipment (84.927) Legal reserves Administrative equipment (93.352) Other reserves Other tangible fixed assets (441) Retained earnings ( ) Tangible assets in progress Net profit for the year ( ) Total equity Investments: LIABILITIES: Investments in subsidiaries 10 e PROVISIONS: Securities and other investments Provisions for pensions Other provisions MEDIUM AND LONG TERM RECEIVABLES: Group companies MEDIUM AND LONG TERM LIABILITIES: Debenture loans CURRENT ASSETS: Bank loans Accounts receivable - Short term: Group companies SHORT TERM LIABILITIES: Accounts receivable from state entities Debenture loans Other debtors 21, 23 e ( ) Bank loans 51 e ( ) Accounts payable to suppliers Marketable securities: Accounts payable to group companies Other marketable securities (6.405) Shareholders Accounts payable to state entities Banks and cash: Other creditors Bank deposits Cash ACCRUALS AND DEFERRALS: Accrued costs ACCRUALS AND DEFERRALS: Deferred income Accrued income Deferred costs Total depreciation ( ) Total adjustments ( ) Total assets ( ) Total equity and liabilities The accompanying notes form an integral part of the balance sheet as of June 30, The Accountant The Board of Directors

11 SEMAPA - SOCIEDADE DE INVESTIMENTO E GESTÃO, SGPS, S.A. INCOME STATEMENT BY NATURE FOR THE PERIODS ENDED JUNE 30, 2005 AND 2004 (Amounts stated in ) EXPENSES Note INCOME Note External supplies and services Services rendered 44 e Payroll expenses: Supplementary income Salaries Other operating income Social charges: (B) Pensions Others Depreciation and amortisation Gains on group and affiliated companies 16 e Adjustments 21 e Gains on other companies Provisions Other interest and similar income: Income relating to group and affiliated companies 45 e Taxes Other Other operating costs (D) (A) Extraordinary income Loss on affiliated companies 16 e Depreciation and adjustments for investments 16, 21 e Others financial expenses Related to group companies 45 e Other (C) Extraordinary expenses (E) Income tax for the period 6 e (G) Net profit for the period (F) Operating results: (B) - (A) ( ) ( ) Net financial results: (D-B) - (C-A) Current results: (D) - (C) Profit before income tax: (F) - (E) Net profit for the period: (F) - (G) The accompanying notes form an integral part of the income statement by nature for the period ended June 30, The Accountant The Board of Directors 2

12 SEMAPA - SOCIEDADE DE INVESTIMENTO E GESTÃO, SGPS, S.A. CASH FLOW STATEMENT FOR THE PERIODS ENDED JUNE 30, 2005 AND 2004 (Amounts stated in ) Note OPERATING ACTIVITIES: Paid to suppliers ( ) ( ) Paid to personnel ( ) ( ) Flows from operations: ( ) ( ) (Payments)/Receipts of income tax (3.835) (16.393) Other (payments)/receipts relating to operating activities Flows before extraordinary captions ( ) ( ) Flows from operating activities (1) ( ) ( ) INVESTING ACTIVITIES: Receipts relating to: Investments Tangible fixed assets Interest and similar income Dividends Payments relating to: Investments 10 - ( ) Tangible fixed assets ( ) (1.269) ( ) ( ) Flows from investing activities (2) FINANCING ACTIVITIES: Receipts relating to: Loans obtained Loans granted Payments relating to: Loans obtained ( ) ( ) Loans granted ( ) ( ) Interest and similar expenses ( ) ( ) Dividends 40 ( ) ( ) ( ) ( ) Flows from financing activities (3) ( ) VARIATION IN CASH AND EQUIVALENTS (4) = (1) + (2) + (3) ( ) CASH AND EQUIVALENTS AT THE BEGINNING OF THE PERIOD CASH AND EQUIVALENTS AT THE END OF THE PERIOD The accompanying notes form an integral part of the cash flow statement for the period ended June 30, The Accountant The Board of Directors

13 SEMAPA SOCIEDADE DE INVESTIMENTO E GESTÃO, SGPS, S.A. NOTES TO THE BALANCE SHEET AS OF JUNE 30, 2005 AND THE INCOME STATEMENT FOR THE SIX MONTH PERIOD THEN ENDED (Translation of a report originally issued in Portuguese Note 56) (Amounts stated in ) INTRODUCTION Semapa Sociedade de Investimento e Gestão, SGPS, S.A. ("The Company") was incorporated in June 21, 1991 and its main object consists in holding positions in other companies, namely in the production of cement, cellulose pulp and paper and renewable energy, through its subsidiaries, Secil Companhia Geral de Cal e Cimento, S.A., Portucel Empresa Produtora de Pasta e Papel, S.A. and Enersis II, SGPS, S.A. the holding for the renewable energy business segment. The numbering of the notes, which follow, is as defined in the Official Chart of Accounts ( Plano Oficial de Contabilidade - POC ). The numbers not included relate to notes that are either not applicable to the Company, or their presentation is not material to the financial statements. 1. DEROGATIONS TO THE OFFICIAL CHART OF ACCOUNTS Semapa s individual financial statements were prepared in accordance with the accounting principles generally accepted in Portugal, with the following derogations: (i) accounting principle of the historical cost in growing forests, through the application of fair value method as foreseen in IAS 41, in some Group subsidiaries, with influence in Semapa s individual financial statements through the application of the equity method and (ii) additionally, some subsidiaries changed the methodology of subsequent recognition of goodwill, namely ceasing its systematic amortization and replacing it by impairment tests, in accordance with IFRS COMPARATIVE AMOUNTS The comparative analysis of the amounts presented in the balance sheet captions with the ones related to December 31, 2004, as well as the Income Statement figures with June 30, 2004, must consider the above mentioned situations the effects of which are described in the following notes. 3. BASIS OF PRESENTATION AND MAIN ACCOUNTING POLICIES The accompanying financial statements have been prepared on a going concern basis from the accounting records of the Company maintained in accordance with generally accepted accounting principles in Portugal with the exceptions referred in Note 1. These financial statements reflect only the Company s individual accounts. The Company also prepared consolidated financial statements, in accordance with IFRS, which reflect the following differences to the individual financial statements, as of June 30, However, the individual shareholder s equity, resulting from the application of the equity method to subsidiaries equals consolidated shareholders equity: Increase Total Assets, net 3,336,816,146 Total liabilities 2,813,017,220 Total income 764,038,662 Net profit for the period 4,068,416 2

14 The most relevant accounting policies used in the preparation of the financial statements are as follows: a) Tangible fixed assets Tangible fixed assets which comprises transport equipment and administrative equipment and other tangible assets, are recorded at cost and depreciated on a straight-line basis over periods from three to eight years: Useful life (years) Transport Equipment 4 Administrative Equipment 3 to 8 Other Tangible Assets 4 to 8 b) Investments Investments in group companies (and subsidiaries of group companies) and affiliated companies are recorded in accordance with the equity method. In accordance with the equity method, investments are increased or reduced annually by the amount corresponding to the Company s proportion in the net result of the subsidiaries, by corresponding entry in the income statement (Note 45). Additionally, dividends received from group companies resulting from distribution of profits or reserves are deducted from the amount of the investments in the year in which they are received. Semapa s subsidiaries started to apply in 2005, with effects at January 1, 2004, the valuation method of goodwill subsequent to initial recognition foreseen in International Financial Reporting Standards nr. 3 "Business Combinations". In accordance with this standard goodwill is not amortized and is subject to impairment tests, in an annual minimum basis. Impairment losses of goodwill can not be reversed. Additionally, some subsidiaries of Portucel subgroup changed their accounting policies on recognition of biological assets (growing forests), starting to apply the International Accounting Standard nr. 41 "Agriculture". Other financial investments, namely the ones registered under the caption securities and other investments are recorded at the lowest of the acquisition cost or the net realisable value. c) Receivables adjustments The adjustment for doubtful credits is calculated considering the collection risk expected at the end of each period. d) Accrual basis The Company records revenue and expenses on an accrual basis. Under this basis, revenue and expenses are recorded in the period at which they are generated or incurred, regardless of the time at which they are received or paid. Differences between the amounts received and paid and the corresponding revenue and expenses are recorded in accruals and deferrals captions (Note 50). e) Corporate income tax The income tax includes current and deferred tax, when applicable. Income tax is recognised in the income statement except when relating to gains and losses recorded directly in reserves, in which case the income tax is also recorded directly in reserves, namely, that relating to the impact of asset revaluations. Current income tax is determined based on the net profit, adjusted in accordance with tax legislation in force as of the balance sheet date. Deferred income tax is computed in accordance with the liability method, based on the temporary differences between recognition of assets and liabilities for accounting and for taxes 3

15 purposes. Deferred taxes are computed in accordance with the income tax rates expected to be in force when the temporary differences revert. The Company recognizes deferred tax assets when there is a reasonable expectation that future profits will be generated, against which the assets can be used. Deferred tax assets are reviewed annually and decreased whenever it becomes probable that they will not be able to be used. f) Retirement benefit complements The Company has undertake the commitment to pay to members of Board of directors a retirement benefit complement, in terms described in Note 31. The responsibilities for the payment of retirement benefits are recorded in accordance with Accounting Directive nr 19, issued by Accounting Standards Commission. g) Provisions The provisions are registered at the values effectively necessary to face estimated economic losses. h) Use of estimates The preparation of the financial statements requires that management applies its judgment in the calculation of estimates affecting revenue, expenses, assets, liabilities and disclosures on balance sheet date. These estimates are determined by judgement of the Group's management based on: i) best information and knowledge of present events, which are supplemented, in some cases, with independent opinions from third parties and ii) the specific steps which the Company considers that may undertake in the future. Nonetheless, at the closing date of operations the result may differ from the estimates included in the financial statements. 6. INCOME TAX In accordance with current legislation, tax losses are carried forward for a period of six years and may be deducted to tax profits during that period. The Company is subject to corporate income tax on an individual basis, having tax losses not used since 1999, which amount to 24,985,076. As mentioned in Note 3.e), and since the Company has been generating operating losses, there is no reasonable assurance that future tax profits will be generated so, the deferred tax asset generated by the referred tax losses has not been recorded. In accordance with current legislation, gains and losses in subsidiaries and affiliated companies resulting from application of the equity method are deducted from or added to, respectively, the profit for the year when computing taxable income. Income tax for the six month period ended June 30, 2005 amounting to 36,690 relates to current income tax - autonomous taxation. 4

16 The reconciliation of effective income tax rate is as follows: Profit before income tax 16,898, ,656,833 Nominal rate of income tax 27.50% 27.50% Estimated income tax 4,647,038 42,530,629 Permanent differences (a) (4,372,725) (42,986,739) Adjustments to taxable income 36,690 4,066 Non recoverable tax losses - 456,110 Recovered tax losses (274,313) - 36,690 4,066 Effective rate of income tax 0.22% 0.00% (a) This amount is made up essentially of: Effects arising from the application of the equity method (Note 16) (23,890,483) (29,882,306) Ajustments and taxable provisions (Notes 21 and 34) 540,664 12,704,936 Responsabilities related to pension benefits (Note 31) 7,371,352 - Non-taxable realized gains (1,000) (139,103,004) Gains for tax purposes Other 78,149 (35,039) (15,900,818) (156,315,413) Tax effect (27,5%) (4,372,725) (42,986,739) In accordance with current tax legislation, tax returns are subject to review and adjustment by the tax authorities during a period of four years and ten years for Social Security. Consequently, the Company s tax returns for the years from 2001 to 2004 are still subject to review. The Company s Management believes that any possible adjustments that may result from tax authorities reviews will not have a significant effect on the financial statements as of June 30, AVERAGE NUMBER OF EMPLOYEES The average number of employees as of June 30, 2005 and 2004 was 19 and 12 persons, respectively. 5

17 10. MOVEMENT IN FIXED ASSETS During the six month period ended June 30, 2005, the movement in intangible, tangible assets and investments, and in the related amortisation, depreciation and adjustments, was as follows: Captions Fixed Assets Opening Disposals and Closing balance Increases Decreases others balance Intangible assets: Incorporation expenses 236, (236,233) - Tangible assets: Transport Equipment 164,418 - (50,743) - 113,675 Administrative Equipment 136,063 26, ,149 Other Tangible Assets 2, ,349 Tangible assets in progress - 443, , , ,686 (50,743) - 721,773 Investments: Investments in subsidiaries (Note 16) 292,530,557 3,200,000-25,988, ,719,481 Other financial investments 1, , ,531,786 3,200,000-25,988, ,720, ,070,849 3,669,686 (50,743) 25,752, ,442,483 Captions Accumulated amortisation and depreciation Opening Disposals and Closing balance Increases Decreases others balance Intangible assets: Incorporation expenses 214, (214,664) - Tangible assets: Transport Equipment 121,939 13,731 (50,743) - 84,927 Administrative Equipment 81,971 11, ,352 Other Tangible Assets ,204 25,259 (50,743) - 178, ,868 25,259 (50,743) (214,664) 178,720 6

18 The movement in the caption Investments in subsidiaries for the six-month period ended June 30, 2005 was as follows: Subsidiaries Opening Balance 292,530,557 Results of subsidiaries and affiliated companies recorded by the equity method (Notes 6, 16 and 45): - Profits 23,890,695 - Losses (212) Dividends distributed by Seinpar, B.V. (500,000) Reimbursement of suplementary capital contributions by Seinpar Investments, BV (6,500,000) Suplementary capital contributions in Semapa Inversiones SL 3,200,000 Provision for negative shareholders equity: - Semapa Inversiones, SL (625,260) Adjustments due to cancelation of goodwill amortization in previous year in subsidiaries: - Cimentospar - Participações Sociais, SGPS, Lda 520,529 - Seinpart, SGPS, SA 1,766,026 - Seminv - Investimentos, SGPS, SA 4,278,786 Adjustments in the retained earnings of the subsidiaries: - Seinpart, SGPS, SA Seminv - Investimentos, SGPS, SA (167) - Semapa Inversiones, SL 3,644 Other changes in subgroups equities: - Enersis II - Gestão de Participações, SGPS, SA (1,455,454) - Portucel - Empresa Produtora de Pasta e Papel, SA (917,531) - Secil - Companhia Geral de Cal e Cimento, SA 5,227,117 Dividends distributed by Semapa to Seminv, SGPS, S.A. 300,077 Closing Balance 321,719, SUBSIDIARIES AND AFFILIATED COMPANIES As of June 30, 2005, investments in subsidiaries and affiliated companies were as follows: Participation June 30, 2005 Book Proportional share Head Share Net Value in net results % Subsidiaries Office Capital Equity results (Note 10) (Notes 10 and 45) Betopal, S.L. Madrid 3,005 20,525 (212) % 20,525 (212) CMP Investments B.V. (a) Amesterdam 50,000 26,126,683 2,014, % 26,126,683 2,014,820 Secil, S.A. Outão 264,600, ,754,103 43,979, % 24,812,030 2,821,499 Seinpar Investments, B.V. Amesterdam 18,000 11,545, , % 11,545, ,361 Semapa Inversiones, S.L. (c) Madrid 3,006 3,427,554 (101,139) % 3,427,554 (101,139) Semapa Investments, B.V. (b) Amesterdam 18,000 (1,514,473) (93,054) % - (93,054) Seminv, SGPS, SA Amesterdam 7,500, ,787,462 18,892, % 255,787,462 18,892, ,719,481 23,696,290 7

19 (a) CMP Investments B.V. holds 89,92% of Enersis II, SGPS, S.A. share capital, holding for the renewable energies. Therefore its results reflect group activities developed in this business segment. (b) Semapa Investments B.V. uses acquisition cost method in measuring its, direct and indirect participations in Portucel, S.A.. Therefore, its statutory financial statements reflect a positive shareholder s equity as of June 30, After consolidation adjustments, shareholder s equity becomes negative. Consequently, the related investments are registered at zero cost in the Semapa SGPS, SA balance sheet, and the negative shareholder s equity, appropriated trough equity method, are provided for in the caption Provisions for other risks and charges in liabilities, by an amount of 1,514,473 (Note 34). (c) As at December 31, 2004, and after consolidation adjustments, Semapa Inversiones, SL shareholder s equity was negative. Therefore, during the period ended June 30, 2005, Semapa SGPS, SA made supplementary capital contributions amounting to 3,200,000 to the subsidiary, and reversed the negative equity provision, appropriated by the equity method, in the caption Provisions for other risks and charges, amounting to 625,260 (Note 34). Semapa Investments, BV and Semapa Inversiones, SL indirectly control 15.3% and 14.7% of Portucel, S.A., having Semapa Investments B.V. a direct participation of 37.1% on Portucel share capital. The subsidiary Seminv, SGPS, SA holds 100% of Cimentospar, SGPS, Lda., which holds a participation of 41,06% in the share capital of Secil, SA. Therefore, Semapa controls, directly and indirectly, 46,97% of Secil, SA share capital, corresponding to 51% of the voting rights. 21. MOVEMENT IN ASSETS ADJUSTMENTS During the six-month period ended June 30, 2005, the movement in caption adjustments was as follows: Opening Closing Caption balance Increase balance Accounts receivable: Other debtors 402, , ,000 Trade securities: Other trade securities 6,405-6, , , , DOUBTFUL RECEIVABLES As of June 30, 2005, the doubtful receivables amounted to 603,000, and were recorded in the caption Other Debtors, being null the receivable balance net of adjustments (Note 21). 25. RECEIVABLE AND PAYABLE BALANCES WITH PERSONNEL As of June 30, 2005, the Company liabilities related to personnel were 114,738 (Note 49). As of December 31, 2004 the Company receivable balances from personnel amounted to 245 (Note 49). 31. FINANCIAL COMMITMENTS Retirement benefits complement 8

20 Defined benefit plan assumed by the Company The Shareholders General Meeting, held in March 30, 2005, approved the retirement directors regulation, as foreseen in the article 17º of the Company s statutes. As per the terms of the referred regulation, Semapa directors are entitled to a lifetime allowance, paid 12 times per year, from the 55 years on, if they have, generally, worked for the Company a minimum of 8 years, followed or interpolated, as directors. These rights can only be exercised when each director ceased functions. In accordance with the actuarial valuation, reported to June 30, 2005, the responsibilities for past services amount to 59,730,541, being fully provided for in liabilities caption "Provisions for pensions" (Note 34). The recognition of the cost with past services is being deferred (Note 50) based on the best estimate for the remaining period of the director functions. The past services cost recorded in the income statement under the caption "Personnel cost - Social charges - Pensions", in the six-month period ended June 30, 2005, amounts to 7,371,352. The actuarial valuation considers the following financial and the demographic assumptions: Mortality table TV 88/90 Disability Table EKV 80 Growth rate of pensions 2.25% Technical interest rate 5.32% Directors interest rate 5.32% Growth rate of salaries 3.30% Pensions reversability rate 50% Number of annual payments of Semapa complement 12 Social benefits formula Decree-Law nº 35/2002 of February GUARANTEES GRANTED During the year ended December 31, 2004, the subsidiaries Semapa Inversiones S.L. and Semapa Investments B.V. have contracted, together with Semapa next to a banking union a borrowing (June 30, 2005: outstanding balance amounts to 676,090,562), for the acquisition, through Seinpart Participações, SGPS, S.A., subsidiary jointly owned, of a 67,1% participation in the share capital of Portucel Empresa Produtora de Pasta e Papel, S.A.. Within the scope of this finance, the companies made pledges over share capital and paid-in capital direct and indirectly owned by Semapa, in the subsidiaries Semapa Inversiones, S.L., Semapa Investments, B.V., Seinpart Participações, SGPS, S.A., Portucel Empresa Produtora de Pasta e Papel, S.A., CMP Investments B.V. and Enersis, SGPS, S.A MOVEMENT IN PROVISIONS During the six-month period ended June 30, 2005, movement in provisions was as follows: Opening Closing Captions balance Increases Decreases balance Provisions for risks and costs: Pensions (Note 31) - 59,287,766-59,287,766 Appropriation of results of subsidiaries and affiliated companies by the equity method (Note 16) 3,803,582 - (2,289,109) 1,514,473 Other provisions 784, , ,733 4,587,844 59,433,237 (2,289,109) 61,731,972 As of December 31, 2004 Semapa Inversiones, S.L. shareholders equity was negative by some 625,260 (Note 16). Therefore, a provision in the same amount was registered against the caption Depreciation and provisions for investments. During the six month period ended June 30, 2005 this provision was reversed as Semapa appropriated, through the equity method, an amount of 3,427,554 from positive shareholders equity of the participated Company (Notes 10 and 16). 9

21 Additionally, shareholders equity of the subsidiary Semapa Investments B.V. was negative as of December 31, 2004 by 3,178,322. Therefore, a provision of the same amount was recorded. During the six-month period ended June 30, 2005, Semapa reduced this provision by 1,663,849, as Semapa absorbed through the equity method, the positive fluctuation of this participated Company shareholders equity in the same amount (Notes 10 and 16). 36. SHARE CAPITAL As of June 30, 2005 the Company s share capital, totally subscribed and paid in, consisted of 118,332,445 shares with the nominal value of 1 each (Note 40). 37. ENTITIES HOLDING THE SHARE CAPITAL In accordance with the most recent shareholder s meeting, held on March 30, 2005, and the qualified participations mentioned, the Company s share capital as of June 30, 2005 is owned by: Number of Name shares % Sodim, SGPS, S.A. 26,115, Cimpor Portugal, SGPS, S.A. 23,695, Longapar, SGPS, S.A. 20,000, Cimo - Gestão de Participações, SGPS, S.A. 14,592, Banco Espírito Santo, SA 7,012, Banco BPI, SA 5,817, Seminv - Investimentos, SGPS, S.A 2,727, Companhia de Seguros Tranquilidade Vida, SA 2,529, AF Investimentos - Fundo Imobiliários, S.A. 2,468, Sonaca - Sociedade Nacional de Canalizações, S.A, 1,250, Other shareholders with a participation lower than 2% 12,123, ,332, CHANGES IN SHAREHOLDER S EQUITY During the six-month period ended June 30, 2005, the movement in the equity accounts was as follows: Caption Opening Closing balance Increases Decreases Tranfers balance Share capital 118,332, ,332,445 Share Premium 3,923, ,923,459 Adjustments in investments in subsidiaries and affiliated companies (Note 10) (32,230,787) 15,613,455 (4,031,712) - (20,649,044) Reserves: Legal reserve 13,117, ,103,686 22,221,077 Other reserves 101,765, ,853, ,619,367 Retained earnings (2,557,432) - - 3,000, ,568 Net profit for the period 182,073,722 16,861,629 (22,116,569) (159,957,153) 16,861, ,424,698 32,475,084 (26,148,281) - 390,751,501 As decided by the shareholders General Meeting held on April 30, 2005, the 2004 net income was appropriated as follows: 10

22 Distribution of dividends (0.10 euros per share) 13,016,569 Legal reserve 9,103,686 Other reserves 147,853,467 Bonus to Board Members 9,100,000 Retained earnings 3,000, ,073,722 Adjustments in investments in subsidiaries and affiliated companies relates to the difference between the net book value of the financial investments in Group companies and the proportion of equity held in that companies as of the date of the first application of the equity method, as well as adjustments made after that date directly to their equity. During the six-month period ended June 30, 2005, movement in this caption was as follows: Adjustments in investments in subsidiaries and affiliated companies Opening Balance (32,230,787) Adjustments in subsidiaries and affiliates companies as a result of cancellation of goodwill's prior year amortization, in subsidiaries: - Cimentospar - Participações Sociais, SGPS, Lda 520,529 - Seinpart, SGPS, SA 1,766,026 - Semapa Investments BV 3,515,768 - Seminv - Investimentos, SGPS, SA 4,278,786 Adjustments in subsidiaries and affiliates companies as a result of movements in retained earnings of subsidiaries: - Seinpart, SGPS, SA Semapa Investments BV Seminv - Investimentos, SGPS, SA (167) - Semapa Inversiones, SL 3,645 Other changes in subgroups equities: - Enersis II - Gestão de Participações, SGPS, SA (1,455,454) - Portucel - Empresa Produtora de Pasta e Papel, SA (2,576,092) - Secil - Companhia Geral de Cal e Cimento, SA 5,227,117 Dividends distributed by Semapa to subsidiary Seminv, SGPS, SA 300,077 Closing balance (20,649,044) Legal reserve: In accordance with current legislation, the Company must transfer a minimum of 5% of its annual net profit to a legal reserve until the reserve reaches 20% of share capital. This reserve cannot be distributed to the shareholders but may be used to absorb losses after all other reserves have been used up or to increase capital. 11

23 43. STATUTORY BOARD MEMBERS REMUNERATION Remuneration attributed to statutory board members, including 2004 net income bonus distribution (Note 40) during the six-month period ended June 30, 2005 and 2004, were as follows: Board of Directors 11,248,202 3,006,060 Audit Board 2,394 1,197 11,250,596 3,007, SALES AND SERVICES RENDERED BY GEOGRAPHIC MARKET Sales and services rendered by geographic market during the six-month period ended June 30, 2005 and 2004 were as follows: Domestic Market (Note 53) 3,974, ,419 Foreign Market (Note 53) 201, ,250 4,175, , FINANCIAL RESULTS Net financial results during the six-month period ended June 30, 2005 and 2004 were made up as follows: Expenses: Interest expense with loans obtained from shareholders (Note 52) 147, ,342 Interest expense with loans obtained from group companies (Note 53) 179, ,981 Interest expense with other loans obtained 317, ,943 Losses on subsidiaries and affiliated companies (Note 16) Adjustments on investments (Notes 16 and 34) 194,193 12,152,047 Other financial expenses (Note 49) 21,260 61, ,704 13,041,513 Net financial results 25,382,384 18,335,692 26,242,088 31,377,205 Income: Interest income on loans granted to group companies (Note 53) 2,339,980 1,440,743 Other interest income ,120 Gains on subsidiaries and affiliated companies (Note 16) 23,890,695 29,883,004 Capital gains on treasury applications - 8,307 Income from other equity investments 10, ,242,088 31,377,205 The amount of 12,152,047, showed in the caption "adjustments on financial investments" in June 30, 2004, corresponds to the adjustment of the financial participations in Semapa Investments, BV and Semapa Inversiones, SL through the appropriation of the negative equity of these participated companies by the equity method. 12

24 46. EXTRAORDINARY RESULTS Extraordinary results during the six-month period ended June 30, 2005 and 2004 were made up as follows: Extraordinary expenses: Donations 5, Net extraordinary results (3,701) 139,155,566 1, ,155,716 Extraordinary income: Gains on fixed assets 1, ,120,677 Other extraordinary income ,039 1, ,155,716 As of June 30, 2004 the caption gains on fixed assets includes an amount of 139,103,004 related to the realised capital gain on the sale of % of Secil Companhia Geral de Cal e Cimento, S.A. share capital (49% of the voting rights). 48. STATE AND OTHER PUBLIC ENTITIES As of June 30, 2005 the Company was up-to-date with its payments to the State and other public entities. The balances payable to these entities as of June 30, 2005 and December 31, 2004, were made up as follows: Debtors Creditors Debtors Creditors Corporate income tax 1,182, ,523 - Personal income tax - 2,955,615-76,391 Social security - 100,735-40,804 Value added tax - 755,393-44,532 1,182,110 3,811, , ,727 As of June 30, 2005 the caption Corporate income tax was made up as follows: Corporate income tax for the period - estimation (Note 6) (36,690) Payments on account 14,305 Withholdings at source 340,965 Corporate income tax from previous year (reimbursements) 863,530 1,182,110 13

25 49. OTHER DEBTORS AND CREDITORS As of June 30, 2005 and December 31, 2004, these captions were made up as follows: Other debtors: Personnel Other debtors: Group companies (Note 53) 4,259,719 54,789 Others 970,581 4,225,873 5,230,300 4,280,907 Adjustments (note 21) (603,000) (402,000) Other creditors: 4,627,300 3,878,907 Fixed assets suppliers 171,814 - Personnel 114,738 - Consultants/professionals 53, ,253 Other creditors: Group companies (Note 53) 3,200,000-3,540, , ACCRUALS AND DEFERRALS As of June 30, 2005 and December 31, 2004, these captions were made up as follows: Deferred costs: Rentals 36,815 17,153 Insurance costs 9,544 - Unrecognised past service cost (pension benefits) 51,916,414 Expenses incurred to open credit lines 166,458 - Other deferred costs 1,127 4,587 52,130,358 21,740 Accrued costs: Other accrued interest 143, ,868 Vacation pay, vacation subsidy and other personnel costs 1,808, ,981 Accrued insurance - 14,008 Other accrued costs 52,815 40,687 2,005, ,544 14

26 51. LOANS As of June 30, 2005 and December 31, 2004, these captions were made up as follows: Medium and Short term long term Total Total Semapa/98 bond loan 5,611,476 7,856,067 13,467,543 17,956,724 Bank loans 46,146 25,000,000 25,046,146 23,002,167 5,657,622 32,856,067 38,513,689 40,958,891 On March 9, 1998 the Company issued 4,800,000 bonds with the nominal value of mesc 1 each, redeemable in ten years. During the year ended December 31, 2001, the bonds were redenominated to euros, totalling 23,942,299, corresponding to 2,394,229,906 bonds, with a nominal value of 0.01 each. After the anticipated reimbursement and the previewed settlement of 20% initial capital in the 12º and 14º coupons as of March 9, 2004 and 2005, bond loan amounts to 13,467,543 corresponding to 2,244,590,447 bonds, with a nominal value of each. The coupon interests are paid each semester and the reimbursement will occur 25% in the 16 th (09/03/2006) and 18 th (09/03/2007) and 10% in the 20 th and last coupon (09/03/2008), being impossible its anticipated reimbursement in all or part after the changes introduced to the technical note by General Assembly as of March 5, The bonds were fully subscribed for and paid upon subscription and are represented by dematerialized securities rated in Euronext Lisbon. As of June 30, 2005 the medium and long-term bond loan is redeemable as follows: 2006 (2nd semester) ,611, ,244, (1st semester) 25,000,000 32,856,067 As of June 30, 2005 and December 31, 2004, there were available bank credits granted and undrawn facilities of 12,203,854 and 2,094,591, respectively. 52. SHAREHOLDERS As of June 30, 2005 and December 31, 2004, the amount payable to shareholders related to short term loan facilities were as follows: Cimo - Gestão de Participações, SGPS, SA 4,185,050 3,888,777 Longapar, SGPS, SA 2,720,049 2,026,737 Sonaca - Sociedade Nacional de Canalizações, SA 1,034, ,944 7,939,860 6,883,458 These balances earn interest at normal market rates. 15

27 As of June 30, 2005 and December 31, 2004, transactions with shareholders, were as follows: External Financial External Financial supplies expenses supplies expenses and services (Note 45) and services (Note 45) Cimianto - Gestão de Participações, SA (SGPS) 53, ,130 - Cimo - Gestão de Participações, SGPS, SA - 78,773-76,993 Longapar, SGPS, SA - 50,312-16,468 Sonaca - Sociedade Nacional de Canalizações, SA - 18,049-24,881 53, , , , GROUP COMPANIES As of June 30, 2005, balances with Group companies were as follows: Assets Liabilities Group Group companies Other Group Other companies - medium and debtors companies creditors -short term long term (Note 49) -short term Suppliers (Note 49) Betopal, SL 10, Cimenpar Investments, BV 16, Cimentospar - Participações, SGPS, Lda ,616 9,316, CMP Investments, BV , Enersis II, SGPS, SA 203,732 18,747, Portucel - Empresa Produtora de Pasta e Papel, SA - - 3,448, Secil - Companhia Geral de Cal e Cimento, SA - - 1,032-2,071 - Seinpar Investments, BV ,532, Seinpart - Participações, SGPS, SA - 94,578, Semapa Inversiones, SL 1,709, ,200,000 Semapa Investments, BV 27,860, Seminv - Investimentos, SGPS, SA - 489, Silonor, SA , ,799, ,816,748 4,259,719 15,930,043 2,071 3,200,000 The amount of 29,799,751, to be received from Group companies refers to short-term loan facilities bearing interest quarterly at current market rates. The amount of 113,816,748 to be received from Group companies refers to medium and long-term loan facilities bearing interest quarterly at current market rates. During the six-month period ended June 30, 2005, transactions with Group companies were as follows Sales and External Financial Financial services Suppliers income losses rendered and services (Note 45) (Note 45) Betopal, SL Cimenpar Investments, BV Cimentospar - Participações, SGPS, Lda 1,076, ,213 CMP Investments, BV ,635 Enersis II, SGPS, SA ,729 Portucel - Empresa Produtora de Pasta e Papel, SA 2,898, Secil - Companhia Geral de Cal e Cimento, SA - 2,150 - Seinpar Investments, BV ,504 55,151 Seinpart - Participações, SGPS, SA - - 1,810,753 Semapa Inversiones, SL ,623 Semapa Investments, BV ,542 Seminv - Investimentos, SGPS, SA ,144 Silonor, SA 201, ,175,320 2,150 2,339, ,541 The amount of 4,175,320 in Sales and services rendered caption, refers to management services provided by the Company in financial, administrative, fiscal and IT areas, among others. 16