Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 1
2009
Report and Accounts
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A.
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 2
Table of Contents
Data on Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A.
Members of the Company’s Boards
Management Report
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A.
Balance Sheet and Income Statement
Notes to the Balance Sheet and Income Statement
Legal Certification of the Accounts
Opinion of the Single Supervisor
Banco de Portugal Pension Fund
Statement of Assets and Liabilities and Income and Expenditure Statement
Notes to the Statement of Assets and Liabilities and Income and Expenditure Statement
Certification of the Accounts
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Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 3
Data on Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A.
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. was incorporated on 3
June 1988 to manage the Banco de Portugal Pension Fund.
The Company’s share capital is 1,000,000 euros.
Shareholders:
• Banco de Portugal, with a shareholding corresponding to 98% as at 31 December
2009; and
•
Members and beneficiaries of the Banco de Portugal Pension Fund.
Its registered office and services are located at Av. da República, no. 57, 7th floor, in Lisbon.
As at 31 December 2009:
• The Company’s Net Assets stood at 2,754,386 euros;
• The Company’s Shareholders’ Equity amounted to 2,447,442 euros;
• The value of the Pension Fund closed at 1,262,326,043 euros; and
• The total liabilities of the Pension Fund amounted to 1,270,946,131 euros.
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Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 4
Members of the Company’s Boards
Shareholders’ Meeting
Chairman
Armando da Silva Couto
Secretary
Hernâni Fontoura Pires
Board of Directors
Chairman
António Manuel Martins Pereira Marta
Director
Vítor Manuel da Silva Rodrigues Pessoa
Managing Director
Helena Maria de Almeida Martins Adegas
Single Supervisor
Ernst & Young Audit & Associados – S.R.O.C., S.A.
Alternate Single Supervisor
Rui Abel Serra Martins, R.O.C.
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Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 5
Management Report
To the Shareholders
Pursuant to the law and the articles of association, the Board of Directors hereby submits the
2009 Report and Accounts and other documents concerning the 2009 financial year for your
appraisal.
1. FOREWORD
The Banco de Portugal Pension Fund – Benefício Definido (defined-benefit pension fund) was
created in 1988 and is a closed-end fund composed of an autonomous set of assets and liabilities
allocated exclusively to meeting the liabilities endorsed by Banco de Portugal in respect of
payment of retirement, disability and survivors’ benefits, as well as payment of post-retirement
charges relating to contributions to the healthcare and welfare service (SAMS). The Pension
Fund positions itself at the level of the first pillar of social protection and was closed to new
employees as a result of their integration in the general Social Security scheme pursuant to
Decree Law no. 54/2009 of 2 March.
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. is the entity responsible for
managing the Pension Fund, as well as preparing the actuarial valuations concerning calculation
of the liabilities inherent in the benefit scheme and charges financed by the Pension Fund. This
company’s share capital is 97.8% owned by Banco de Portugal and its staff is chiefly composed
of employees of Banco de Portugal under an assignment agreement.
The Pension Fund’s financial management policy is not oriented towards an isolated
maximisation of returns. Instead, its purpose is both to maximise these returns with regard to
liabilities, within a cautious attitude towards limiting market and counterparty risks affecting the
value of the assets that compose the Pension Fund’s portfolio, and to maintain appropriate
liquidity levels to address liabilities related to the payment of pensions.
The emphasis placed on “hedging” potential changes in liabilities means that their accurate
estimation is especially critical. Accordingly, particular attention is paid to the actuarial and
financial assumptions used, especially the future estimated cash flow discount method, longterm growth projections for wages and pensions and, lastly, the life expectancy prospects of the
population covered.
Management of the Banco de Portugal Pension Fund is also hindered by the significant maturity
of the population covered, from which a greater number of beneficiaries (retirees or pensioners)
than active participants results (the ratio between the former and the latter stood at 0.76 at the
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Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 6
end of 2009) and by the resulting weight of liabilities relating to pensions payable (56.9% of total
liabilities).
With regard to life expectancy, we seek to incorporate as reliable an estimate as possible in order
to avoid underevaluating the liabilities. In 2009, we continued to use the TV 88/90 mortality
table for both genders, already adopted in preceding years, whose correspondence to reality was
confirmed by an empirical study performed on the basis of the Pension Fund’s demographic
data up to 2006.
Both the Fund’s assets and liabilities for past services are valued at their fair market value,
liabilities being calculated by discounting future cash flows using market rates. This
methodology is grounded on the assumption that the present value of the Fund’s liabilities has
to represent, at each point in time, the capital that would have to be invested in low-risk assets
to meet future payments.
In 2009, nominal interest rates rose, but less than the increase observed in the forecast inflation
rate implied in long-term inflation-linked sovereign bonds in the Euro Area. Thus, a discount
rate of 5.15% and a estimated long-term inflation rate of 2.68% were found. The resulting
decrease in inflation-linked sovereign debt impacted on the evolution of the value of liabilities,
which rose to 1,270.9 million euros as at 31 December 2009 (of which 723.2 million
corresponds to liabilities for pensions payable and 547.7 million to liabilities for past services of
active employees).
Bearing in mind the investment policy in respect of assets, which largely reflects the time
structure of the liabilities, the Fund’s assets also rose, to 1,262.3 million euros at at 31 December
2009. The asset portfolio was diversified, including Euro Area sovereign bonds (79.8%), real
estate (13.6%) and shares (6.6%).
In a year of negative inflation, bank employees gained purchasing power, and the increase in
wage tables, crucial to the variation in the value of the Pension Fund’s liabilities, was greater
than the inflation rate, the latter being decisive for the return on the asset portfolio (which is, for
its most part, directly linked to inflation). In order to mitigate the impact of this increased
purchasing power, Banco de Portugal made an extraordinary contribution of 21 million euros,
which made it possible to maintain the Pension Fund’s funded ratio at levels close to 100%.
In the context of the Pension Fund’s aforementioned investment policy, traditional return and
risk measurements applied to the individual management of assets lose their significance, the
indicators aggregated from an “assets versus liabilities” (A/L) perspective being considered
more appropriate. At the end of 2009, the A/L return was nil, which means that the return on
assets (9,4%) corresponded to the variation in liabilities.
As at 31 December 2009, the overall funded ratio of the Pension Fund was 99.3%, which
ensured 100% cover for liabilities for pensions payable and 98.4% cover for liabilities for past
services of active employees.
Both the overall funded ratio and the degree of cover of liabilities for past services of active
employees are above the minimums set in Banco de Portugal Notice no. 12/2001 of 23
November, which are 97.9% and 95%, respectively.
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Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 7
Table 1: Pension Fund - Highlights
31/12/2008
31/12/2009
Active employees
1,688
1,655
Retirees
1,739
1,771
504
503
Discount rate
4.80%
5.15%
Estimated long-term inflation rate
1.76%
2.68%
TV 88/90
TV 88/90
Population Data
Pensioners
Actuarial and Financial Assumptions
Mortality table
Assets (amount and return)
M€
%
Return
M€
%
Return
Bonds
977.2
84.1%
-1%
1,007.9
79.8%
10.3%
Real estate
173.8
15%
-26.4%
171.2
13.6%
1.2%
Shares
10.3
0.9%
6.3%
83.2
6.6%
18.9%
Total
1,161.3
100%
-1.3%
1,262.3
100%
9.4%
Liabilities (million €)
1,159.6
1,270.9
(1) Funded ratio
100.1%
99.3%
(2) Mandatory minimum (Notice no. 12/2001)
94.5%
97.9%
(1/2) Cover ratio achieved
106.0%
101.5%
(3) Minimum solvency
84.7%
85.7%
118.25%
115.9%
A/L return
-0.8%
0%
A/L risk (1-month VaR, 95% confidence)
0.80%
0.91%
Coverage Ratio
(1/3) Cover ratio achieved
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2. BUSINESS PURSUED BY THE MANAGEMENT COMPANY
In 2009, the agreement creating the Banco de Portugal Pension Fund was amended with regard
to the defined-benefit pension plan, with a view to harmonising it with the legal and contractual
framework in force.
The project to implement a defined-contribution pension plan designed for employees admitted
after 22 June 2009 and which will be funded in equal parts by contributions of Banco de
Portugal and the employees was commenced.
In the field of the regulatory framework, commencement of application of Regulatory Standard
no. 8/2009-R of the Instituto de Seguros de Portugal (the Portuguese Insurance Institute) is
particularly significant. This standard regulates governance mechanisms within pension funds, in
respect of risk management and internal control systems. The project to implement this
standard takes into account the need of the Managing Company to continue to have adequate
skills to manage and control its business, notably taking into consideration the principles of
adequacy to the size, nature and complexity of the corresponding risks incurred.
Taking into account the economic and financial background, monitoring and control of risks
was heightened, in particular in respect of sovereign credit risk in the Euro Area.
The study of the Business Continuity Plan was finalised, and we commenced implementation of
some recommendations, among which the refurbishment of the Data Centre that supports the
technological environment of the Managing Company is particularly noteworthy. The purpose
of this action is to increase the systems’ safety and redundancy levels, immediately resulting in a
reduction of the risks associated with unavailability of the services.
In the context of programmes agreed between Banco de Portugal and other central banks of
Portuguese-speaking countries, the Managing Company cooperated with its peers, developing
training programmes, chiefly in the fields of accounting and actuarial calculation.
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3. MACROECONOMIC BACKGROUND AND MARKET DEVELOPMENTS
2009 was marked by worldwide recession, which affected all economies. According to
preliminary data, the gross domestic product fell in the Euro Area (-4.1%), the USA (-2.4%) and
Japan (-5%).
The recessionary environment resulted in a reduction in inflation to very low or even negative
levels. The harmonised consumer price index for the Euro Area grew only 0.3% in 2009, which is
substantially lower than the inflation (3.3%) witnessed in the preceding year. In turn, in the USA
and Japan, their corresponding consumer price indices fell (-0.4% and -1.4%, respectively).
The Portuguese economy reflected its surrounding circumstances, its gross domestic product
having fallen 2.9% in 2009, after a nil percentage change in the preceding year. Average annual
inflation was negative (-0.9%), after a positive change (2.7%) in 2008.
In this context, the central banks’ actions were guided by measures to support the financial
system and the economy. The European Central Bank gradually reduced the refinancing rate
from 2.5% to 1% between January and May and then maintained this level until the end of the
year. Some exceptional measures were also adopted, notably unlimited long-term refinancing
operations with 3-, 6- and 12-month maturities and the mortgage-backed bond purchase
programme, which resulted in a significant increase in liquidity in the Euro Area.
Table 2: Evolution of the main interest rates in the Euro Area
ECB intervention rate
Main refinancing operation rate
Money market yields
3-month
6-month
1-year
Treasury bond yields
2-year
5-year
10-year
30-year
Dec-08
Dec-09
Change (p.p.)
2.50%
1.00%
-1.50
1.74%
1.79%
1.82%
0.35%
0.45%
0.82%
-1.39
-1.34
-1.00
1.76%
2.31%
2.94%
3.53%
1.33%
2.42%
3.38%
4.10%
-0.43
+0.11
+0.44
+0.57
(*)
(**)
Source: REUTERS.
(*) Benchmark in the Euro Area: French treasury bills
(**) Benchmark in the Euro Area: German sovereign bonds
Thus, short- and medium-term sovereign debt rates continued their downward movement
initiated in 2008, having reached fairly low levels. This trend became more marked in the second
half of 2009, after the 1-year refinancing operations launched by the ECB.
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Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 10
In turn, in the longer maturities (5 to 30 years), interest rates rose, reflecting expectations of some
economic recovery and a moderate increase in the inflation rate, as well as the effect of a greater
offer of sovereign debt on the part of several States, to finance their increasing public deficits.
Chart 1: Evolution of the yield curve in the Euro Area during 2009
4.
4
Interest rate (%)
Taxa de Interest rate (%) 3.5
3
2.5
2
1.5
1
0.5
0
0
5
10
15
20
25
30
Maturity (years)
Yield Curve Dec 2009
Yield Curve Dec 2008
Inflation-linked sovereign debt behaved differently from nominal interest rates, given the
increased expectations in respect of medium- and long-term inflation, which were at a very low
level at the beginning of 2009. Thus, real interest rates for all maturities fell over the year. At the
end of 2009, 2-year real interest rates were close to 0% and 30-year real interest rates stood at
1.73% (having moved by -196 and -28 basis points, respectively).
Embedded inflation, which reflects market expectations and may be derived from the differential
between nominal and real interest rates for each maturity, rose abruptly in 2009. At year-end, it
stood at 1.7% for a 2-year time span (0.62% at the end of 2008) and 2.5% for a 30-year time span
(1.7% at the end of 2008).
In the private debt market, spreads narrowed markedly. The Itraxx Europe 5-year index, which
reflects the cost of hedging the risk of default by issuers of 5-year bonds in euros, fell from
approximately 175 basis points at the end of 2008 to some 71 basis points at the end of 2009.
On the exchange market, the euro appreciated some 2.5% against the dollar. At the end of 2009,
1 euro was worth approximately 1.43 dollars. This evolution was not linear over the year, the
exchange rate having varied between a minimum of 1.25 (in February) and a maximum of 1.51
(in November).
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Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 11
Despite the unfavourable world economic background, main stock indices appreciated
significantly, reflecting expectations of recovery in economic growth and plenty of liquidity in the
market. The European DJ Eurostoxx 50 index rose approximately 21%; the US S&P 500 gained
23.5%; the Japanese Nikkei 225 increased 19%; and the Portuguese PSI-20 index climbed 33.5%.
Oil prices also rose dramatically during the year, some 116% in dollars and 111% in euros. At the
end of 2009, a barrel of Brent was priced close to 78 dollars.
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4. PENSION PLANS
4.1. OVERVIEW
Banco de Portugal ensures, through the Pension Fund, the right to retirement, disability and
survivors’ benefits (including possible supplementary and death benefits), as well as payment of
post-retirement charges relating to contributions to the healthcare and welfare service (Serviço
de Assistência Médico-Social - SAMS).
Pensions paid by way of retirement and survivors’ benefits result from the summation of the
amounts calculated on the basis of each component of pensionable wages, in compliance with
the applicable collective employment contract and the Bank’s internal regulations.
The Pension Plan encompasses four schemes relating to base remuneration and seniority and
three schemes relating to fringe benefits. The benefit scheme was closed to new employees as a
result of their integration in the general Social Security scheme pursuant to Decree-Law no.
54/2009 of 2 March.
4.2. DEVELOPMENTS IN THE POPULATION COVERED BY THE PENSION
FUND
We would like to highlight the significant maturity of the population covered by the Banco de
Portugal Pension Fund, in which the number of beneficiaries is greater than that of its active
members. Accordingly, liabilities for pensions payable represent a significant portion of total
liabilities and strongly restrict the attitude adopted in respect of the management of the Fund’s
assets.
Table 3: Population covered by the Pension Fund
Active
Retirees
Pensioners
Total
1
31-12-2007 31-12-2008
1,689
1,688
1,728
1,739
486
504
3,903
3,931
2
Assets /Beneficiaries Ratio
1Members; 2Retirees
0.76
0.75
Change
2007/2008 31-12-2009
-1
1,655
11
1,771
18
503
3,929
28
Change
2008/2009
-33
32
-1
-2
0.73
and Pensioners
On 31 December 2009, the Pension Fund covered 1,655 members (active employees), 1,771
retirees and 503 pensioners.
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Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 13
4.3. EVOLUTION OF BENEFITS/CHARGES AND CONTRIBUTIONS
Chart 3 shows the evolution of the volume of benefits and charges paid by the Pension Fund in
the last 10 years.
In 2009, the amount of matured pensions reached 48.39 million euros, which represents an
increase of 5.06% compared to the preceding year.
Sums paid by way of redeemed capital reached 2.4 million euros in 2009, compared to 1.3
million euros in the preceding year, while sums paid by way of death benefits remained identical
to those paid in 2008 (0.3 million euros).
Charges borne by the Pension Fund in respect of contributions to SAMS concerning pensions
paid amounted to 2.9 million euros in 2009, almost the same amount as in 2008.
Contributions totalling 47 million euros were paid in 2009.
This sum includes an extraordinary contribution made by Banco de Portugal amounting to 21
million euros, with a view to mitigating the impact of the difference between the increase in
wage tables in banking (crucial to the variation in the value of the Pension Fund’s liabilities) and
the negative inflation rate observed during the year (decisive for the return on the asset
portfolio, which is, for its most part, directly linked to inflation).
Chart 3: Volume of benefits and charges borne by the Fund
(thousand euros)
60,000
50,000
40,000
30,000
20,000
10,000
0
2000
2001
Pensions
2002
2003
Redeemed capital
2004
2005
Death benefits
2006
2007
2008
2009
Contributions to SAMS
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Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 14
4.4. ACTUARIAL VALUATION
4.4.1. Actuarial and financial assumptions
The main actuarial and financial assumptions are those listed in this point.
Assumptions resulting from the Plan
Normal retirement age
Number of monthly pension instalments
Number of monthly wage instalments
65 years
14
14
Funding
Actuarial and financial assumptions
Discount rate
Growth rate - pensions
Growth rate - wages
2009/2010 growth rate – wages
Growth rate – remuneration tables
Growth rate – minimum monthly guaranteed wages
Minimum monthly guaranteed wages in the following year
Mortality table
Disability table
Turnover table
Percentage of married staff
Age difference between members and spouses
31-12-2008
4.800%
1.764%
2.764%
n.a.
1.764%
1.764%
450 €
31-12-2009
5.148%
2.684%
3.684%
1.000%
2.684%
2.684%
475 €
TV 88/90
1978 - S.O.A. Trans. Male (US)
T-1 Crocker Sarason (US)
80%
3 (male individuals being older)
These assumptions are occasionally adjusted in line with the specific characteristics of the
population groups.
The discount rate determined at the end of 2009 and used to calculate liabilities as at 31
December was 5.15%. This corresponds to the nominal interest rate of inflation-linked Euro
Area sovereign bonds taking into account the maturity structure of the Pension Fund’s liabilities.
As a result of the public debt market’s behaviour in the Euro Area in 2009, discussed in point 3,
this assumption increased by 0.35 percentage points compared to the end of the preceding year.
The inflation rate, calculated with reference to inflation-linked Euro Area treasury bonds for the
time period corresponding to the maturity of liabilities, moved in the opposite direction, rising
by 0.92 percentage points. This resulted in a reduction in the real discount rate (-0.58 points).
In 2009, we continued to use the TV 88/90 mortality table for men and women, already
adopted in preceding years, whose correspondence to reality was confirmed by an empirical
study performed on the basis of the Pension Fund’s demographic data up to 2006.
The actuarial and financial assumptions used in the Minimum Solvency scenario determined by
the Instituto de Seguros de Portugal are the following:
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Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 15
Actuarial and financial assumptions
Discount rate
Growth rate - pensions
Growth rate - wages
Minimum monthly guaranteed wages in the following year
Mortality table
Disability table
Turnover table
Percentage of married staff
Age difference between members and spouses
Minimum Solvency
31-12-2009
31-12-2008
4.500%
4.500%
2.684%
1.764%
0.000%
0.000%
475 €
450 €
TV 73/77
1978 - S.O.A. Trans. Male (US)
-/80%
3 (male individuals being older)
4.4.2. Results of the actuarial valuation
As at 31 December 2009, total liabilities for past services amounted to 1,270.9 million euros, of
which 723.2 million corresponds to liabilities for pensions payable and 547.7 million to liabilities
for past services of active employees.
Liabilities for past services (LPS)
Retirees and pensioners
Active employees
31-12-2008
31-12-2009
1,159,582,431
663,943,290
495,639,141
1,270,946,154
723,224,958
547,721,196
(euros)
In 2009, liabilities for past services increased by 111.4 million euros.
This rise corresponds to an overall annual increase of 9.6% in the amount of liabilities for past
services, as a result of the following combined effects:
a. annual expected (normal) increase of 1.68% in liabilities; and
b. unforeseen annual unquantifiable increase of 7.93% in liabilities, corresponding, in
decreasing order of relevance, to a financial departure resulting from:
− indexation of the assumptions (nominal interest rate and inflation rate) to
market rates1;
− a departure between the growth rates used to update the tables and actual
inflation;
− actuarial departures (resulting, inter alia, from the difference between the
assumed and actual movements in the population.
This effect represents 67% of the departure. Given the “asset-liability” management referred to in the
introduction, a similar change occurred in the Pension Fund’s assets, offsetting this effect.
1
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Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 16
5.
PORTFOLIO STRUCTURE AND RISK MANAGEMENT
The Pension Fund’s investment policy is defined within the applicable regulatory provisions
issued by the Instituto de Seguros de Portugal (ISP) and more restrictive internal regulations laid
down by the Managing Company itself pursuant to the risk profile approved by Banco de
Portugal.
Over 2009, the portfolio structure was continuously analysed and monitored with a view to
identifying the degree of exposure to different types of risks and their corresponding form of
mitigation, which was achieved by determining limits and resorting to hedging instruments.
5.1. Strategic benchmark for 2009
For the dual purpose of limiting the risk of a reduction in the funded ratio and maximising the
return on the portfolio, a reference, called the strategic benchmark, was selected for the Pension
Fund’s portfolio structure in 2009. Its breakdown, which is summarily presented below,
conforms to the established risk profile laid down by Banco de Portugal.
Chart 4: Strategic benchmark for 2009
[Legendagem:
Average annual breakdown
Bonds 84%
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Real estate 14%
Shares 2%
Breakdown of the bond component
Inflation-linked sovereign debt 97%
Fixed-rate sovereign debt 1%
Other 2%
Breakdown of the real estate component
Buildings 40%
Funds 60%
Geographic breakdown of the share component
USA 20%
Asia Pacific 3%
Switzerland 3%
Euro Area 70%
United Kingdom 4%
fim de legendagem]
5.2. Breakdown by asset class
The breakdown by asset class was determined with reference to the breakdown of the strategic
benchmark and some departures were assumed in order to incorporate short-term expectations
concerning market developments.
Over 2009, we had an average exposure to bonds of 83% (almost entirely sovereign debt), while
real estate and shares represented 14% and 3%, respectively.
The breakdown of the share component of the portfolio shows a predominant exposure to the
Euro Area (93%) and only a small fraction to the USA (5%).
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Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 18
Chart 5: Breakdown of the portfolio by asset class
[Legendagem:
Average annual breakdown
Bonds 83%
Real estate 14%
Shares 3%
Breakdown of the bond component
Inflation-linked sovereign debt 93%
Fixed-rate sovereign debt 3%
Other 4%
Breakdown of the real estate component
Buildings 40%
Funds 60%
Geographic breakdown of the share component
USA 5%
Euro Area 93%
United Kingdom 1%
fim de legendagem]
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Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 19
5.3. Value-at-Risk - “Assets-Liabilities”
The risk of reduction in the Pension Fund’s funded ratio is assessed and monitored by
calculating the 1-month Value-at-Risk for a confidence level of 95%.
Chart 6: 1-month Value-at-Risk - “Assets-Liabilities”
Legendagem:
1.20%
1.00%
0.80%
0.60%
0.40%
0.20%
0.00%
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
fim de legendagem]
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Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 20
This risk measurement tool corresponds to the reduction in the funded ratio in percentage
points, which has an associated estimated probability of 5% of being exceeded over a 1-month
period.
The evolution of the Value-at-Risk during 2009 reflected, on the one hand, tactical adjustments
made to the investment portfolio and, on the other, the volatility of interest rates.
5.4. Leverage-adjusted modified duration gap
The degree of sensitivity of the Pension Fund’s funded ratio to changes in real interest rates is
assessed by calculating the leverage-adjusted modified duration gap. This gap corresponds to the
difference between the duration of liabilities and the duration of the bond portfolio adjusted to
reflect the differences in size between these two aggregates.
Table 4: Leverage-adjusted modified duration gap
Average 2009 values
a)
Modified duration of liabilities for past services
14.0
b)
Modified duration of bonds
15.9
c)
Weight of bonds
83.0%
d)
Funded ratio
99.2%
Leverage-adjusted modified duration gap = b) x c) – a) / d)
-0.9
Given the high modified duration of the Pension Fund’s liabilities (14.0) and the fact that the
investment policy also includes low interest rate-sensitive assets, the average leverage-adjusted
differential registered in 2009 was achieved by holding a bond portfolio with a particularly high
modified duration (15.9).
The negative differential experienced in 2009 indicates that the value of the asset portfolio is less
sensitive to changes in interest rates than the value of liabilities. Given that real interest rates
dropped significantly in 2009, this position negatively impacted on the asset-liability return since
the increase in the value of the bond portfolio did not fully cover the increase in liabilities.
5.5. Breakdown of the bond portfolio by type of issuer
The monitoring of credit risk is ensured by restricting investments to instruments and
institutions of reputed safety and financial robustness, as well as by monitoring the ratings
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 21
assigned by international agencies, supplemented by permanent attention to available market
information.
The bond portfolio was mainly composed of inflation-linked issues, with a profile similar to the
liabilities assumed by the Pension Fund, whose value also depends on the evolution of the
aforementioned variable. In this way, we seek to mitigate the risk of reduction in the Pension
Fund’s funded ratio resulting from a possible increase in the inflation rate.
Bearing in mind that inflation-linked debt of the Euro Area with a sufficient degree of liquidity
is almost exclusively public debt, this represented virtually all the bond portfolio in 2009
(96.2%), the remainder being invested in bonds issued by supranational institutions and financial
institutions guaranteed by the Portuguese State.
In addition to this strategic motive, the instability in the credit markets felt throughout most of
the year also contributed to the concentration of the portfolio in public debt.
Table 5: Exposure of the bond portfolio by type of issuer/counterparty
Sovereign
Average 2009 values (%)
96.2%
Supranational
0.1%
Financial Inst.
3.7%
5.6. Breakdown of the bond portfolio by rating
The Pension Fund’s bond portfolio was chiefly composed of issues with a rating equal to or
higher than AA (71.0%).
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 22
Chart 7: Breakdown of the bond portfolio by rating
Average annual breakdown
5.7. Breakdown of the Pension Fund’s portfolio by region
Taken as a whole, the Pension Fund’s asset portfolio maintained a predominant exposure to the
Euro Area countries, which represented 99.6% of its total value in 2009. The low exposure to
other geographic regions (0.2% to North America and 0.2% to Europe other than the Euro
Area) materialised mostly through the share portfolio.
5.8. Exposure to exchange rate risk
The exposure to exchange risk was negligible, having represented only 0.21% of the value of the
Fund.
Table 6: Average exposure of the portfolio to exchange rate risk
Average exposure of the portfolio to
JPY
CHF
GBP
USD
0.02%
0.02%
0.03%
0.14%
exchange rate risk (%)
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 23
6.
RESULTS AND STATEMENT OF ASSETS AND LIABILITIES OF THE
PENSION FUND
Both the Pension Fund’s liabilities and the asset portfolio were influenced by the decrease in
inflation-linked sovereign debt real interest rates.
Liabilities for past services are valued at market prices taking into account interest rates and
forecast inflation. In 2009, forecast inflation embedded in Euro Area inflation-linked sovereign
debt rose markedly, more than the increase in nominal interest rates. Accordingly, real interest
rates fell.
As a result, the value of liabilities for past services (taking into account the impact of pension
payments net of received regular contributions and excluding the impact of factors exogenous to
financial management) increased by 9.4% in 2009. From a perspective of integrated
management of assets and liabilities, this change sets the reference for the rate of return on
assets.
The decrease in real interest rates also affected the return on the asset portfolio, given the
“Assets-Liabilities” emphasis of the investment policy. In fact, the goal of containing the risk of
reduction in the funded ratio was reflected in the maintenance of a strong exposure of the
portfolio to assets correlated to liabilities, in particular long-term inflation-linked Euro Area
treasury bonds. The impact of the evolution of real interest rates on the value of these assets
was crucial to the return on the bond portfolio (10.3%).
The share portfolio, which is comparatively small, benefited from the significant increase in the
share markets, achieving a return of 18.9%. In turn, the real estate portfolio reflected the
difficulties experienced in this market in 2009, achieving a return of 1.2%.
Total return on assets stood at 9.4% in 2009, which coincided with the adjusted change in
liabilities, leading to a return on “Assets-Liabilities” of 0%.
Table 7: Return on “Assets-Liabilities”
Adjusted change in liabilities
Financial management results
9.4%
Asset portfolio
Bonds
Shares
Real estate
0% Total assets
10.3%
18.9%
1.2%
9.4%
The financial management results in 2009 (return on “Assets-Liabilities”) may be attributed to
the following contributions:
• a positive contribution of 0.3 percentage points associated with the rise in shares, in a
context of recovery of market confidence;
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 24
• a negative contribution of 0.1 percentage points resulting from the decision to maintain
the sensitivity of the value of the asset portfolio to changes in interest rates lower than the
sensitivity of the value of liabilities to the same changes;
• a negative contribution of 0.2 percentage points associated with the return on real estate
investments.
Chart 9: Return on “Assets-Liabilities”
[Legendagem:
0.50%
0.30%
0.10%
-0.10%
-0.30%
-0.50%
Shares
Real estate
Bonds
Return on “Assets-Liabilities”
fim de legendagem]
At year-end, the Pension Fund’s overall funded ratio stood at 99.32%, an increase of 0.83
percentage points compared to the end of 2008.
For the purposes of the provisions of Banco de Portugal Notice no. 12/2001, as amended by
Notice no. 4/2005, the cover ratio stood at 101.4% of the required minimum.
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 25
The requirements issued by the Instituto de Seguros de Portugal were also met, the minimum
solvency coverage having reached 115.9%.
Table 8: Financial condition of the Pension Fund
Value of the Pension Fund
31-12-2008
1,161,307,496
31-12-2009
1,262,326,043
Liabilities for past services
1,159,582,431
1,270,946,154
Funded ratio
100.15%
99.32%
Minimum mandatory funded ratio (BP Notice no. 12/2001 (*))
Level of coverage achieved
94.47%
106.01%
97.90%
101.45%
Minimum Solvency funded ratio
Level of coverage achieved
84.69%
118.25%
85.69%
115.91%
(euros)
(*) As amended by BP Notice no. 4/2005
The components identified in Table 9 contributed to the reduction of 0.83 percentage points in
the funded ratio.
Table 9: Change in the Pension Fund’s funded ratio
Change in the funded ratio
Return on “Assets-Liabilities”
Review of assumptions
Factors exogenous to fin. management
Extraordinary contribution
% of the value of liabilities Million euros
-0.83%
-10.5
0.01%
0.1
0.00%
-2.49%
-31.6
1.65%
2.0
The considerable impact of factors exogenous to the financial management on funding is chiefly
due to the fact that, in a year of negative inflation, bank employees gained purchasing power. In
fact, the rate to update wages tables, crucial for the variation in the value of the liabilities of the
Pension Fund was higher than the inflation rate observed, the latter being crucial for the
profitability of the asset portfolio.
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 26
7. PROPOSAL FOR THE
MANAGEMENT COMPANY
APPROPRIATION
OF
PROFITS
OF
THE
In the 2009 financial year, Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A.
made net profits of 214,046.11 €, which we propose to appropriate as follows:
Legal reserve
Free reserves
Total
10,702.31 €
203,343.80 €
214,046.11 €
8. CLOSING REMARKS
The Board of Directors would like to conclude the 2009 Report and Accounts by thanking
Banco de Portugal for its confidence and cooperation.
A word of recognition is also due to the Instituto de Seguros de Portugal for the way it
monitored the business of Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A..
Finally, we would like to highlight the high level of professionalism and dedication of all the
staff of the Management Company.
Lisbon, 11 March 2010
The Board of Directors
António Manuel Martins Pereira Marta
Chairman
Vítor Manuel da Silva Rodrigues Pessoa
Director
Helena Maria de Almeida Martins Adegas
Managing Director
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 27
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A.
Balance Sheet and Income Statement
Notes to the Balance Sheet and the Income Statement
Legal Certification of Accounts
Opinion of the Single Supervisor
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 28
Balance sheet
Assets
2008
2009
G.A.
D.P.
N.A.
TANGIBLE FIXED ASSETS
Buildings and other erections
Basic equipment
Office equipment
Other tangible fixed assets
57,131
270,420
2,326,357
16,806
2,670,714
26,664
186,812
2,105,430
14,968
2,333,874
30,467
83,608
220,927
1,838
336,840
35,940
75,820
352,519
2,498
466,777
INTANGIBLE FIXED ASSETS
117,229
117,229
0
0
0
0
0
0
0
850
850
0
0
850
850
35,938
492
36,430
1,814,174
15,226
1,798,948
1,539,278
0
498,710
1,247
499,957
291,206
1,247
292,453
23,825
90,161
3,806
117,792
0
23,825
90,161
3,806
117,792
24,036
154,296
8,750
187,082
5,220,715
2,466,329
2,754,386
2,522,020
FIXED ASSETS IN PROGRESS
SHORT-TERM ASSETS
Debtors
State and other public entities
Other debtors
Negotiable securities
Bank deposits and cash
Bank deposits
Cash
498,710
1,247
499,957
ACCRUALS AND DEFERRALS
Accrued income
Deferred costs
Deferred tax assets
Total assets
(in euros)
G.A. = Gross Assets
G.P. = Accumulated Depreciation and Provisions
N.A. = Net Assets
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 29
Shareholders’ equity and liabilities
2009
2008
Share capital
1,000,000
1,000,000
Legal reserve
Free reserves
Profits (losses) brought forward
Net profit (loss)
Total shareholders’ equity
118,861
1,114,534
113,373
1,010,259
SHAREHOLDERS’ EQUITY
0
214,046
2,447,442
PROVISIONS FOR RISKS AND CHARGES
LIABILITIES
Creditors
Other shareholders
Other creditors
Suppliers c/a
State and other public entities
ACCRUALS AND DEFERRALS
Accrued costs
Deferred income
Total liabilities
Total shareholders’ equity and liabilities
0
109,763
2,233,396
0
70,345
0
149,947
117,779
24,876
292,603
13,468
874
14,342
0
0
97,515
67,515
165,030
52,398
850
53,249
306,945
288,624
2,754,386
2,522,020
(in euros)
The Board of Directors
António Manuel Martins Pereira Marta
Vitor Manuel da Silva Rodrigues Pessoa
Helena Maria de Almeida Martins Adegas
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 30
Income statement
Costs and losses
2009
2008
Third-party supplies and services
1,107,986
1,133,326
Staff costs
2,136,080
2,024,804
253,483
232,739
27,906
49,872
7,950
7,700
Depreciation of tangible and intangible fixed assets
Taxation
Other operating costs and losses
Provisions for risks and charges
0
(A)
Provisions for financial investments
3,533,404
44,935
3,493,376
15,226
Interest and similar costs
5,351
0
2,839
(C)
3,553,980
(E)
3,556,212
(G)
3,620,510
3,543,024
214,046
109,763
Extraordinary costs and losses
2,232
Income tax
64,298
Net profit (loss)
Total
3,834,556
3,496,215
6,112
3,502,327
40,697
3,652,787
(in euros)
SUMMARY:
Operating profit (loss): (B) - (A) =
Financial profit (loss): (D-B) - (C-A) =
Current profit (loss): (D) - (C) =
Profit (loss) before taxes: (F) - (E) =
Net profit (loss): (F) - (G) =
107,031
39,081
146,112
278,344
214,046
7,240
106,739
113,979
150,460
109,763
The Chartered Accountant
Paulo José Antunes Jorge
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 31
Income and gains
2009
Services
3,628,848
Supplementary income
11,587
(B)
Income from negotiable securities and other
financial investments
Other interest and similar income
3,640,435
39,569
20,087
2008
3,489,279
11,337
3,500,616
58,966
50,611
(D)
3,700,092
3,610,194
(F)
134,464
3,834,556
42,593
3,652,787
Total
3,834,556
Extraordinary income and gains
3,652,787
(in euros)
The Board of Directors
António Manuel Martins Pereira Marta
Vitor Manuel da Silva Rodrigues Pessoa
Helena Maria de Almeida Martins Adegas
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 32
Income statement by function of expense
2009
Sales and services
Cost of sales and services
Gross profit (loss)
Other operating income and gains
Distribution costs
2008
3,628,848
3,489,279
0
0
3,628,848
3,489,279
146,051
53,931
0
0
3,525,454
3,485,676
30,758
16,650
218,688
40,883
Net cost of funds
0
0
Gains (losses) in affiliates and associates
0
0
59,657
109,577
278,344
150,460
64,298
40,697
214,046
109,763
Operating profit (loss)
0
0
Taxation on operating profit (loss)
0
0
Overheads
Other operating costs and losses
Operating profit (loss)
Gains (losses) in other investments
Current profit (loss)
Taxation on current profit (loss)
Current profit (loss) after taxes
Net profit (loss)
214,046
109,763
(in euros)
The Chartered Accountant
Paulo José Antunes Jorge
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 33
Cash flow statement
2009
2008
OPERATING ACTIVITIES
Net profit (loss)
Adjustments
Depreciation
Provisions
Financial profit (loss)
Increase in creditors
Decrease in creditors
Increase in inventories
Decrease in inventories
Increase in debtors
Decrease in debtors
Decrease in deferred income
Increase in accrued income
Decrease in accrued income
Increase in deferred costs
Decrease in deferred costs
Increase in accrued costs
Decrease in accrued costs
Increase in deferred income
Gains in disposal of fixed assets
Losses in disposal of fixed assets
Increase in deferred tax assets
Decrease in deferred tax assets
CASH FROM OPERATING ACTIVITIES
214,046
109,763
253,483
-20,087
232,739
44,935
-50,611
-43,539
151,572
6,794
-339,302
0
211
-6,063
64,135
-10,816
-38,931
36,673
24
4,944
585,857
21
-8,747
15,386
INVESTING ACTIVITIES
Proceeds from:
Financial investments
Tangible fixed assets
Intangible fixed assets
Fixed assets in progress
Subsidies to investments
Interest and similar income
Dividends
Payments related to:
Financial investments
Tangible fixed assets
Intangible fixed assets
CASH FROM INVESTING ACTIVITIES
0
20,087
50,611
-274,896
-123,545
-712,464
-38,229
-378,353
-700,082
207,503
-684,696
292,453
499,957
977,150
292,453
FINANCING ACTIVITIES
Proceeds from:
Loans obtained
Share capital increases
Supplements and issue premiums
Subsidies and donations
Sale of shares
Coverage of losses
Payments related to:
Loans obtained
Repayment of financial lease agreements
Interest and similar costs
Dividends
Reduction in share capital and quasi-equity
Acquisition of treasury shares
CASH FROM FINANCING ACTIVITIES
CHANGE IN CASH AND CASH EQUIVALENTS
CURRENCY TRANSLATION DIFFERENCES
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS AT END OF PERIOD
(in euros)
The Chartered Accountant
Paulo José Antunes Jorge
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 34
Notes to the Balance Sheet and the Income Statement
Incorporation and business activity
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. was incorporated on 3
June 1988 through a notary deed entered on folio 74 to folio 76 of deed book no. 677 - C
of the 9th Lisbon Notary Office, and its corporate object is to administer, manage and
represent the Banco de Portugal Pension Fund.
Its incorporation was authorised by Executive Order no. 245/88 of 20 April of the Ministry
of Finance.
The notes to the financial statements follow the sequential numbering determined in the
Official Plan of Accounts (Plano Oficial de Contabilidade – POC). Any notes omitted are
either not applicable to the Company or their presentation is not relevant.
3.
VALUATION CRITERIA
The Company’s financial statements were prepared in accordance with accounting
principles generally accepted in Portugal, i.e. going concern, consistency, historical cost,
prudence, substance over form, materiality and accrual.
The valuation criteria adopted by the Company are the following:
Fixed assets
Fixed assets are valued at their acquisition cost.
Depreciation is calculated over the expected number of useful years, on a constant straightline basis. For assets acquired up to and including 1993, an annual depreciation charge is
used, while for assets acquired at a later stage, the yearly charge corresponds to the number
of months since the asset entered into service.
Depreciation rates comply with the Portuguese tax legislation. The resulting useful life
approximates the useful life of the assets.
Depreciation rates are applied as follows:
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 35
Annual percentage
Basic equipment
10%
Office and social equipment and sundry
furniture
10 to 33.33%
Other tangible fixed assets
12.50%
Marketable securities
Marketable securities are valued at their acquisition cost, which includes all acquisitionrelated costs.
Provisions were set up aimed at full coverage of the value of capital losses in the securities
portfolio and corresponding to a decline in the market value against the acquisition cost of
securities, where the former is lower.
Recognition of costs and income
Costs and income are recognised when they occur, taking into account the period to which
they refer and regardless of their actual financial settlement.
6.
DEFERRED TAXES
The tax effect of temporary differences between the accounting and tax results was
recognised in the context of Corporate Income Tax (CIT). These differences concern
provisions for depreciation of the securities portfolio.
Change in deferred tax assets
Description
Temporary differences originating deferred tax
assets
Provisions not deductible for tax purposes
Total
Sums reflected in the balance sheet (25%)
Total2009
Write-back of difference
Total2008
0
0
15,226
35,000
15,226
35,000
3,806
8,750
-4,944
(in euros)
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 36
7.
STAFF
During 2009, the average number of staff in the Company was 37.
10.
FIXED ASSETS
Movements in this heading were as follows:
Opening balance
Increases
Write-offs
Closing balance
TANGIBLE FIXED ASSETS
Gross assets
Buildings and other erections
Basic equipment
Office equipment
Other tangible fixed assets
INTANGIBLE FIXED ASSETS
57,131
0
0
57,131
242,085
28,335
0
270,420
2,231,147
95,210
0
2,326,357
16,806
0
0
16,806
117,229
0
0
117,229
FIXED ASSETS IN PROGRESS (i)
0
0
2,664,398
123,545
0
2,787,943
21,190
5,474
0
26,664
Accumulated depreciation
Buildings and other erections
Basic equipment
Office equipment
Other tangible fixed assets
Other expenses
166,265
20,547
0
186,812
1,878,628
226,803
0
2,105,431
14,307
660
0
14,967
117,229
0
0
117,229
0
2,451,103
Research and development
2,197,619
Net assets
253,484
466,779
336,840
(i) See note 14
(in euros)
14.
FIXED ASSETS IN PROGRESS
At the end of the 2009 financial year, there were no fixed assets in progress.
17.
NEGOTIABLE SECURITIES
This heading is broken down as follows:
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 37
2009
2008
FIXED-INCOME SECURITIES
Sovereign debt
1,814,174
Sundry securities
1,395,003
0
144,275
1,814,174
1,539,278
FLOATING-INCOME SECURITIES
Participation certificates
0
0
Investment funds
0
0
0
0
15,226
0
Provisions for short-term investments
Net amount
1,798,948
1,539,278
(in euros)
32.
GUARANTEES ISSUED
As at 31 December 2009, the Company had issued no guarantees.
34.
MOVEMENTS IN PROVISIONS
Movements in provisions for short-term investments were as follows:
Opening balance
Provisions for short-term investments (i)
Provisions for risks and charges (ii)
Increases
Write-backs Closing balance
0
62,443
47,217
15,226
70,345
0
70,345
0
70,345
15,226
(in euros)
(i) On the basis of the corresponding court decision, albeit not yet final, it was deemed appropriate to write
back the corresponding provision for risks and charges.
(ii) As a result of implementation of the Business Continuity Plan, several charges, attributable to both the
2008 and subsequent financial years, were found and originated an increase of 35,000 euros in provisions for
risks and charges. In 2009, this provision was written back because items in tangible fixed assets were fully
depreciated as a result of the IT projects in progress.
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 38
35.
SHARE CAPITAL
The Company’s fully subscribed and paid up share capital is 1,000,000 euros, represented by
two hundred thousand shares with a nominal value of five euros each.
37.
SHAREHOLDINGS
Banco de Portugal holds 97.77% of the share capital, corresponding to 195,544 shares.
40.
MOVEMENTS IN SHAREHOLDERS’ EQUITY
The increases that occurred in the financial year were in line with the proposal for the
appropriation of profits for 2008 submitted by the Board of Directors and approved by the
Shareholders’ Meeting.
Movements in the financial year were as follows:
Opening balance
Capital
Increases
Decreases
Closing balance
1,000,000
1,000,000
Legal reserve
113,373
5,488
0
118,861
Free reserves
1,010,259
104,275
0
1,114,534
109,763
214,046
109,763
214,046
2,233,396
323,809
109,763
Profit (loss)
2,447,442
(in euros)
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 39
45.
FINANCIAL INCOME STATEMENT
Costs and losses
2009
Interest paid
Income and gains
2008
0
77
15,226
0
Losses in disposal of shortterm investments
3,183
0
Other financial costs and
losses
2,168
2,762
39,081
106,739
59,657
109,578
Provisions for short-term
investments
Financial profit (loss)
Total
2009
2008
Interest received
39,569
58,966
Gains in disposal of shortterm investments
20,087
50,611
Total
59,657
109,578
(in euros)
46.
EXTRAORDINARY INCOME STATEMENT
Costs and losses
2009
Income and gains
2008
Losses in fixed assets
0
0
Fines and penalties
0
253
Increase in depreciation and
provisions
0
0
2,232
5,851
0
8
132,232
36,482
134,464
42,594
Corrections to preceding years
Other extraordinary costs and
losses
Extraordinary gains (losses)
Total
2009
2008
Gains in fixed assets
0
0
Benefits from contractual
penalties
0
0
Reduction in depreciation and
provisions
70,345
12
Corrections to preceding years
1,920
99
Other extraordinary income and
gains
62,200
42,482
Total
134,464
42,594
(in euros)
48.
OTHER RELEVANT INFORMATION
Bank deposits
This heading is broken down as follows:
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 40
2009
2008
Demand deposits
148,710
91,206
Term deposits
350,000
200,000
498,710
291,206
(in euros)
State and other public entities
Value Added Tax - VAT
VAT recorded in the Managing Company’s accounts relates to a self-assessment and
payment resulting from services provided by a non-resident entity.
Income tax – CIT
Income tax is calculated on the basis of the forecast value payable, at the rates prevailing
on the date of the balance sheet, and is booked under State and other public entities.
In accordance with the legislation in force, the tax authorities may review the tax returns
during a four-year period and this may lead to corrections to taxable profits and
additional assessments concerning the financial years from 2005 up to and including
2009. The Board of Directors is of the opinion that any additional assessment will not
materially impact on the financial statements.
Services provided
Services provided exclusively concern management fees, whose amount is set on an
annual basis in accordance with the management agreement entered into by and between
Banco de Portugal and the Managing Company.
Following a resolution of the Board of Directors of the Managing Company, the
management fees for 2009 were set at 3,628,848.0 euros.
Supplementary income
This income relates to revenues from a sublease agreement and reimbursement of
additional charges incurred by the Managing Company related to the secondment of an
employee of a third-party entity who is in the Company’s service.
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 41
Staff costs
This heading includes training costs directly borne by the Company and costs in respect
of its staff, notably the participants in a secondment agreement executed with Banco de
Portugal.
Accruals and deferrals
This heading includes payments made during the financial year regarding costs of the
following year, notably software licence fees.
Suspense accounts
Pursuant to no. 3.1 of Standard no. 12/95-R of 6 July of the Instituto de Seguros de
Portugal, the accounts of the Banco de Portugal Pension Fund are booked in class 0 Off-balance sheet accounts, under the following main headings:
01 - Banco de Portugal Pension Fund; and
02 - Management of the Banco de Portugal Pension Fund.
As at 31 December 2009, these accounts were balanced and amounted to 1,262,326,043
euros.
The Chartered Accountant
Paulo José Antunes Jorge
The Board of Directors
António Manuel Martins Pereira Marta
Vítor Manuel da Silva Rodrigues Pessoa
Helena Maria de Almeida Martins Adegas
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 42
Legal Certification of Accounts
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 43
Ernst & Young
Audit & Associados – SROC, S.A.
Avenida da República, 90, 6th floor
1600-206 Lisbon
ERNST & YOUNG
Portugal
Tel: +351 217 912 000
Fax: +351 217 957 586
www.ey.com
Legal Certification of Accounts
Introduction
1. We have examined the attached financial statements of Sociedade Gestora do Fundo
de Pensões do Banco de Portugal, which comprise the Balance Sheet as at 31
December
2009
(which
shows
total
assets
of
2,754,386
euros
and
total
shareholders’ equity of 2,447,442 euros, including net profits of 214,046 euros), the
Income Statements by nature and function of expense and the Cash Flow Statement
for the year ended on the aforementioned date, as well as the corresponding Notes.
Responsibility
2. The Board of Directors is responsible for preparing financial statements that give a
true and fair picture of the financial condition of the Company, the results of its
operations and cash flows, as well as for adopting appropriate accounting policies
and criteria and maintaining an appropriate internal control system.
3. We are responsible for expressing a professional and independent opinion on the
basis of our examination of the aforementioned financial statements.
______________________________________________________________________
Limited liability company * Share capital 1,105,000 euros * Registered in the Statutory Auditors’ Association under no. 178 * Registered in the CMVM under
no. 9011 * Taxpayer no. 505 988 283 * Registered in the Lisbon Commercial Registry under the same number * A member of Ernst & Young Global Limited
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 44
Scope
4. The examination we carried out was made pursuant to the Review/Audit Technical
Standards and Guidelines issued by the Statutory Auditors’ Association, which
require that the same be planned and executed with a view to obtaining a
reasonable degree of certainty that the financial statements are free of material
distortions. To this end, the aforementioned examination includes:
− verification, on a sampling basis, of documentation supporting the sums and
disclosures in the financial statements and an evaluation of the estimates, on the
basis of judgements and criteria defined by the Board of Directors, used in their
preparation;
− an assessment as to whether the accounting policies and the disclosures adopted
are appropriate, given the circumstances;
− verification that the accounts were prepared on a going-concern basis; and
− an overall assessment as to whether the presentation of the financial statements is
appropriate.
5. Our examination also included an assessment as to whether the financial information
contained in the Management Report is consistent with the financial statements.
6. We believe that the examination carried out provides an acceptable basis for
expressing our opinion.
Opinion
7. In our opinion, the aforementioned financial statements give a true and fair picture,
in all materially relevant aspects, of the financial condition of Sociedade Gestora do
Fundo de Pensões do Banco de Portugal as at 31 December 2009, the results of its
operations and cash flows for the financial year ended on the aforementioned date,
in accordance with accounting principles generally accepted in Portugal.
Lisbon, 12 March 2010
Ernst & Young Audit & Associados – SROC, S.A.
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 45
Firm of Statutory Auditors (no. 178)
Represented by:
[signature]
Ana Rosa Ribeiro Salcedas Montes Pinto (ROC no. 1230)
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 46
Opinion of the Single Supervisor
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 47
Ernst & Young
Audit & Associados – SROC, S.A.
Avenida da República, 90, 6th floor
1600-206 Lisbon
ERNST & YOUNG
Portugal
Tel: +351 217 912 000
Fax: +351 217 957 586
www.ey.com
Report and Opinion of the Single Supervisor
To the Shareholders
In compliance with the provisions of articles 420 and 421 of the Commercial Companies
Code and in the performance of our duties as Single Supervisor of Sociedade Gestora do
Fundo de Pensões do Banco de Portugal, concerning the financial year ended 31
December 2009, we have inspected the acts of the Board of Directors, evaluated the
degree of compliance with the law and the articles of association, periodically assessed
the
Company’s
accounting
books
and
records,
as
well
as
their
supporting
documentation, tested transactions and balances on a sampling basis and executed
other procedures deemed necessary given the circumstances.
We have further examined the Balance Sheet, the Income Statement by nature and
function of expense and the Cash Flow Statement and their corresponding Notes, as well
as the underlying accounting principles. The Board of Directors and the services
promptly provided us with any clarifications and information we required, and we would
like to thank them for their assistance.
On the date hereof, we have issued an unqualified Legal Certification of Accounts, which
forms an integral part of this report.
______________________________________________________________________
Limited liability company * Share capital 1,105,000 euros * Registered in the Statutory Auditors’ Association under no. 178 * Registered in the CMVM under
no. 9011 * Taxpayer no. 505 988 283 * Registered in the Lisbon Commercial Registry under the same number * A member of Ernst & Young Global Limited
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 48
In the light of what was said in the Legal Certification of Accounts, we are of the opinion
that:
a)
You should approve the 2009 Management Report and the Accounts submitted
by the Board of Directors;
b)
You should approve the proposal concerning the appropriation of profits
contained in the aforementioned Management Report.
Lisbon, 12 March 2010
The Single Supervisor
Ernst & Young Audit & Associados – SROC, S.A.
Firm of Statutory Auditors (no. 178)
Represented by:
[signature]
Ana Rosa Ribeiro Salcedas Montes Pinto (ROC no. 1230)
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 49
Banco de Portugal Pension Fund
Statement of Assets and Liabilities and Income and Expenditure Statement
Notes to the Statement of Assets and Liabilities and the Income and
Expenditure Statement
Certification of Accounts
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 50
Statement of Assets and Liabilities - FPBP
(in euros)
Investments of the Fund
Note
2009
2008
Land and buildings
4
68,674,344
70,331,254
Property under negotiation
4
0
0
Securities
5
1,157,189,763
1,076,454,523
Cash and bank deposits
6
27,239,668
8,801,374
Debtors and creditors
7
-219,264
-4,027,908
Accruals and deferrals
8
9,441,532
9,748,581
1,262,326,043
1,161,307,823
(See the attached Notes)
Income and expenditure statement - FPBP
(in euros)
Increases in the value of the Fund
Note
2009
2008
Contributions
10
47,235,452
44,000,681
Income
11
30,987,628
31,170,736
Capital gains
12
133,610,037
97,212,582
192,729
12,587
Other income
212,025,846
172,396,586
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 51
(in euros)
Note
Value of the Fund
Opening assets
2009
2008
4,987,979
4,987,979
1,156,319,844
1,178,287,100
101,018,220
-21,967,256
1,262,326,043
1,161,307,823
Profit (loss) and accumulated contributions from preceding years
Preceding years
For the year
9
(See attached Notes)
(in euros)
Decreases in the value of the Fund
Pensions payable
Note
13
Intermediation fees
Taxes
2009
2008
54,042,630
50,727,272
0
0
1,435
1,670
Capital losses
12
56,322,369
142,951,884
Other expenses
14
641,192
683,016
111,007,626
194,363,842
101,018,220
-21,967,256
Profit (loss)
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 52
Notes to the Statement of Assets and Liabilities and the Income and Expenditure
Statement
1.
CREATION AND BUSINESS
The Banco de Portugal Pension Fund (the “Pension Fund”) was created by Banco de
Portugal, in its capacity as founder associate, by public deed executed on 15 September
1988 in the Lisbon 9th Notary Office. The Managing Company executed this deed in its
capacity as managing company, a quality it acquired under its previous execution of a fund
management agreement with Banco de Portugal.
The Pension Fund is composed of autonomous assets earmarked exclusively for the
fulfilment of Banco de Portugal’s commitment to pay retirement, disability and survivors’
pensions, as well as charges for post-retirement contributions to the healthcare and
welfare service (SAMS). It is a closed-end fund, operating a defined-benefit scheme, and
plays the role of first pillar of social protection.
2.
FINANCIAL STATEMENTS SUBMITTED
The attached accounts were prepared in accordance with the accounting records of
Sociedade Gestora do Fundo de Pensões do Banco de Portugal.
These accounts summarise the Pension Fund’s transactions and net assets. They do not
take into account liabilities relating to pensions or other benefits payable in the future. The
Pension Fund’s actuarial position, including these liabilities, is shown in the actuarial
report. These financial statements should be read in conjunction with the aforementioned
report (See Note 15).
3.
ACCOUNTING PRINCIPLES
a)
General
The financial statements were prepared in accordance with accounting principles
generally accepted in Portugal and in accordance with the rules issued by the
Instituto de Seguros de Portugal (ISP).
The accounts were prepared under the historical cost convention (modified to
include the revaluation of investment in land, buildings and credit securities) and on
a going-concern basis, pursuant to the fundamental accounting principles of
consistency, prudence and accrual.
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 53
b)
Land and buildings
Land and buildings are initially recognised at their acquisition cost plus acquisition
expenses. Subsequently, this value is reassessed by independent entities, in
accordance with the provisions of Standard no. 9/2007 of 28 June of the Instituto
de Seguros de Portugal.
Unrealised capital gains and losses arising from the revaluation of real estate are
recorded in the Income and Expenditure Statement, in the financial year in which
the revaluation is made.
c)
Securities
Financial investments in the portfolio on 31 December 2009 are valued at their fair
value in accordance with Standard no. 9/2007 of 28 June of the Instituto de Seguros
de Portugal. Pursuant to this standard, an economic methodology adapted to the
type of financial asset in question is applied to securities whose listing price
significantly departs from their fair market value.
In the terms of the applicable legislation, the portfolio of listed securities with low
liquidity in regulated markets and chiefly traded over the counter is valued by using
prices made available by the main financial information agencies.
The difference between the fair value of the securities and their respective
acquisition cost is booked under capital gains and losses, as the case may be, in the
Income and Expenditure Statement. The difference between the proceeds from the
sale of securities and their book value is also booked under the same headings.
d)
Contributions
Upon actual receipt, Banco de Portugal’s contributions to the Pension Fund are
booked under contributions to the Income and Expenditure Statement (see Note
10).
e)
Income
Income from real estate rents and securities is booked in the period to which it
refers, save for dividends, which are only recognised upon actual receipt.
f)
Pensions
Pensions are paid to the beneficiaries by Banco de Portugal, which is subsequently
fully reimbursed by the Pension Fund on a monthly basis (see Note 13).
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 54
g)
Fees
Fees are booked under the corresponding heading in the Income and Expenditure
Statement in the period to which they refer, regardless of their date of payment.
Fees as yet unpaid are booked against accrued costs and prepaid fees are booked
under deferred costs (see Note 8 a)).
h)
Derivatives
Foreign exchange forward contracts executed to hedge the foreign exchange risk
associated with the securities portfolio are revalued at the foreign exchange rates
corresponding to their remaining maturity, as implied in the forward exchange rates
(average bid/ask price as at the revaluation date) released by internationally
recognised financial information systems. Any differences between the equivalent in
euros to the forward revaluation rates applied and the equivalent in euros to the
rates agreed represent revaluation income or costs, which are booked under
increases or decreases in the value of the Pension Fund, respectively, notably capital
gains and losses, against accruals and deferrals.
i)
Taxation
Pension funds are exempt from Corporate Income Tax and Property Tax, in
accordance with the Tax Benefit Act.
4.
LAND AND BUILDINGS
(in euros)
2008
2009
Date of last
valuation
Investment
value
Adjustments
Book value
Book value
Avenida da República
2008
8,055,047
10,117,593
18,172,640
18,172,640
Avenida da Liberdade
Edifício Libersil
2009
10,045,180
3,538,780
13,583,960
14,400,000
Avenida de Berna
Espaço Berna
2009
12,796,688
323,312
13,120,000
13,920,000
Edifício Y
2009
4,537,154
1,021,976
5,559,130
5,600,000
Edifício Castilho
2007
18,245,203
-6,589
18,238,614
18,238,614
53,679,272
14,995,072
68,674,344
70,331,254
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 55
The investment value includes the base price, legal charges and other expenses. The
adjustments correspond to unrealised capital losses in the 2009 financial year, to the
amount of 1,656,910 euros, and in preceding years (capital gains of 16,651,982 euros).
Valuations should be made every three years, or earlier when there are materially relevant
differences between the net book value of the building and its market value.
In 2009, the following unrealised capital gains and losses were identified:
(in euros)
Building
Unrealised gains (losses)
Avenida da Liberdade
Edifício Libersil
Avenida de Berna
Espaço Berna
-816,040
-800,000
Edifício Y
-40,870
Total
-1,656,910
5.
SECURITIES
(in euros)
2008
2009
Acquisition
cost
Adjustments
Market value
Market value
FLOATING-INCOME SECURITIES
Shares
0
0
0
168,492,582
17,305,189
185,797,771
117,667,229
920,942,125
25,717,455
946,659,580
953,503,276
Participation certificates
Units
Investment fund units
FIXED-INCOME SECURITIES - BONDS
Sovereign debt
Other supranational issuers
Other issuers
0
0
0
5,284,017
23,954,565
777,846
24,732,411
0
1,113,389,272
43,800,490
1,157,189,763
1,076,454,523
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 56
The adjustments correspond to unrealised capital gains or losses calculated as the
difference between the market value and the historical acquisition cost. In 2009, net
unrealised capital gains and losses recognised in the Income and Expenditure Statement
amounted to 43,457,888 euros (see Note 12). The remaining 342,602 euros concerns
preceding years.
6.
CASH AND BANK DEPOSITS
This heading is broken down as follows:
(in euros)
2009
Cash
Demand deposits
Term deposits
2008
719
719
1,238,950
600,655
26,000,000
8,200,000
27,239,668
8,801,374
7.
DEBTORS AND CREDITORS
This heading is broken down as follows:
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 57
(in euros)
2009
2008
CURRENT ASSETS
Brokers and financial intermediaries
Taxes (a)
Tenants
Derivatives (b)
Other
0
0
450
450
141,673
126,584
0
0
4,752
693
146,875
127,727
CURRENT LIABILITIES
Brokers and financial intermediaries
9,398
0
83,925
46,409
Creditors - buildings
146,453
148,726
Other
126,363
116,666
Taxes (a)
Derivatives (b)
Net value
(a)
0
3,843,835
366,139
4,155,635
-219,265
-4,027,908
Taxes - VAT
This heading essentially concerns the VAT paid in the renovation works of Edifício
Libersil, to be brought forward to future years.
(b)
Derivatives
The policy on the use of derivatives was based exclusively on the use of foreign
exchange forward contracts to hedge the foreign exchange risk in exchange-traded
funds denominated in four separate currencies: pound sterling, US dollar, Japanese
yen and Swiss franc. Since there were no underlying assets on 31 December 2009,
no foreign exchange forward contract position was open.
8.
ACCRUALS AND DEFERRALS
This heading is broken down as follows:
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 58
(in euros)
2009
2008
Interest receivable
From securities
From term deposits
9,441,303
9,740,865
9,800
17,095
0
0
-9,900
-9.708
329
329
9,441,532
9,748,581
Rents received
Other accruals and deferrals
Accrued costs – a)
Other
9.
VALUE OF THE FUND
Changes in the value of the Fund were as follows:
(in euros)
2008
VALUE OF THE FUND AS AT 31 DECEMBER
2009
1,161,307,823
Increases due to contributions (Note 10)
47,235,452
Decreases due to matured pensions and repayments (Note 13)
54,042,630
Financial profit (loss)
107,825,398
101,018,220
VALUE OF THE FUND AS AT 31 DECEMBER
(A)
1,262,326,043
To recall:
LIABILITIES FOR PAST SERVICES
Excess compared to liabilities
(B)
(A-B)
1,159,582,431
1,270,946,154
-8,620,111
10.
CONTRIBUTIONS
Current contributions include, in addition to the component paid by Banco de Portugal,
contributions from its staff in the conditions laid down in their corresponding pension
plans.
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 59
11.
INCOME
This heading includes the following types of income:
(in euros)
2009
Land and buildings
2008
4,362,421
4,290,596
Securities
Shares
0
Participation certificates
Real estate and securities investment funds
0
0
0
1,368,518
2,063,669
24,146,701
23,998,589
Bonds
Sovereign debt
Other public issuers
Other issuers
39,281
885,219
26,439,719
Demand deposits
Term deposits
6,830
178,658
185,488
30,987,628
231,700
98,739
26,392,697
58,645
428,798
487,444
31,170,736
12.
CAPITAL GAINS AND LOSSES
Capital gains and losses recognised in the year are broken down as follows:
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 60
(in euros)
2009
2008
UNREALISED GAINS AND LOSSES
Land and buildings
Capital gains
Capital losses
0
0
1,656,910
327,360
-1,656,910
-327,360
61,840,618
60,595,963
Securities
Capital gains
Capital losses
18,380,650
87,556,950
43,459,968
-26,960,987
Other
Capital gains
3,206
6,693
Capital losses
5,286
4,706
-2,080
1,987
REALISED CAPITAL GAINS AND LOSSES
Land and buildings
Capital gains
Capital losses
0
0
0
0
0
0
Securities
Capital gains
38,837,421
15,397,505
Capital losses
3,327,536
31,607,694
35,509,884
-16,210,188
Capital gains
32,170,530
17,644,048
Capital losses
31,809,652
20,503,933
360,878
-2,859,885
Capital gains
758,263
3,568,373
Capital losses
1,142,336
2,951,241
-384,073
617,132
Total capital gains
133,610,037
97,212,582
Total capital losses
56,322,369
142,951,884
Net value
77,287,668
-45,739,302
Derivatives
Other
13.
PENSIONS AND CAPITAL MATURED
This heading is broken down as follows:
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 61
(in euros)
2009
Pensions paid
2008
48,390,686
46,060,289
Capital matured
2,453,713
1,327,608
Pension payment charges
2,900,701
2,883,700
297,529
266,647
54,042,630
50,538,244
Repayments
0
141,280
Transfers of rights
0
47,749
54,042,630
50,727,272
Death benefits
Subtotal
Total
14.
OTHER EXPENSES
This heading is broken down as follows:
(in euros)
2009
2008
Financial - a)
266,170
123,758
Buildings - b)
338,372
491,507
Extraordinary expenses
21,167
67,750
Other expenses
15,484
0
641,192
683,016
a)
Financial expenses
This heading covers expenses borne by the Pension Fund related to the financial
asset global custody service.
b)
Expenses in buildings
This heading covers normal building management and maintenance costs.
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 62
15.
INFORMATION CONTAINED IN THE ACTUARIAL REPORT
As an integral part of its report, the Managing Company publishes the actuarial results
pertaining to the Banco de Portugal Pension Fund as at 31 December 2009.
16.
TAX LIABILITIES
Banco de Portugal assumes the tax liabilities under the agency agreement entered into with
the Managing Company on 17 October 2006. This Agreement states that Banco de
Portugal shall:
a)
b)
c)
pay retirement and survivors’ pensions to their respective beneficiaries on behalf
and on the instructions of the Managing Company;
withhold any contributions and taxes due, for subsequent delivery to the competent
authorities;
settle the sums paid and the contributions owed to the Pension Fund related to the
Bank’s employees through offset, in the terms of sub-paragraph a).
Banco de Portugal has complied and will continue to comply with the aforementioned
agreement as long as the same remains in force, and shall assume all inherent liabilities.
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 63
Certification of Accounts
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 64
ERNST & YOUNG
Ernst & Young
Audit & Associados – SROC, S.A.
Avenida da República, 90, 6th floor
1600-206 Lisbon
Portugal
Tel: +351 217 912 000
Fax: +351 217 957 586
www.ey.com
Certification of Accounts
Introduction
1. We have examined the attached financial statements of Fundo de Pensões do Banco
de Portugal (the “Fund”), which comprise the Statement of Assets and Liabilities as
at 31 December 2009 (which shows total investments of 1,262,326,043 euros and a
value of the Fund to the same amount, including net profits of 101,018,220 euros),
the Income and Expenditure Statement for the year ended on the aforementioned
date, as well as the corresponding Notes.
Responsibility
2. The Board of Directors of Sociedade Gestora do Fundo de Pensões do Banco de
Portugal is responsible for preparing financial statements that give a true and fair
picture of the assets and liabilities of the Fund and the results of its operations, as
well as for adopting appropriate accounting policies and criteria and maintaining an
appropriate internal control system.
3. We are responsible for expressing a professional and independent opinion on the
basis of our examination of the aforementioned financial statements.
______________________________________________________________________
Limited liability company * Share capital 1,105,000 euros * Registered in the Statutory Auditors’ Association under no. 178 * Registered in the CMVM under
no. 9011 * Taxpayer no. 505 988 283 * Registered in the Lisbon Commercial Registry under the same number * A member of Ernst & Young Global Limited
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 65
Scope
4. The examination we carried out was made pursuant to the Review/Audit Technical
Standards and Guidelines issued by the Statutory Auditors’ Association, which
require that the same be planned and executed with a view to obtaining a
reasonable degree of certainty that the financial statements are free of material
distortions. To this end, the aforementioned examination includes:
− verification, on a sampling basis, of documentation supporting the sums and
disclosures in the financial statements and an evaluation of the estimates, on the
basis of judgements and criteria defined by the Board of Directors of Sociedade
Gestora do Fundo de Pensões do Banco de Portugal, used in their preparation;
− an assessment as to whether the accounting policies and the disclosures adopted
are appropriate, given the circumstances;
− verification that the accounts were prepared on a going-concern basis; and
− an overall assessment as to whether the presentation of the financial statements is
appropriate.
5. Our examination also included an assessment as to whether the financial information
contained in the Management Report is consistent with the financial statements.
6. We believe that the examination carried out provides an acceptable basis for
expressing our opinion.
Opinion
7. In our opinion, the aforementioned financial statements give a true and fair picture,
in all materially relevant aspects, of the financial condition of Fundo de Pensões do
Banco de Portugal as at 31 December 2009 and the results of its operations for the
financial year ended on the aforementioned date, in accordance with accounting
principles generally accepted in Portugal and the Standards issued by the Instituto
de Seguros de Portugal for the pension fund industry.
Lisbon, 12 March 2010
Ernst & Young Audit & Associados – SROC, S.A.
Report and Accounts | 2009
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. | 66
Firm of Statutory Auditors (no. 178)
Represented by:
[signature]
Ana Rosa Ribeiro Salcedas Montes Pinto (ROC no. 1230)
Report and Accounts | 2009