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FUTEBOL CLUBE DO PORTO – FUTEBOL, SAD

Listed Company Share capital: 112.500.000 euros

Equity: 26.903.240 euros (approved in General Meeting on November 12, 2015) Head Office – Estádio do Dragão, Via FC Porto, Entrada Poente Piso 3 Registration at 1st Registration of Commercial Registry of Porto and

Legal Person n.º 504 076 574

Management Report and Consolidated Accounts 2015/2016

A. Management Report

1. Message from the Chairman 2. Governing Bodies 3. Highlights 4. Activity Evolution 5. Other Facts that Occurred During the Financial Year 6. Relevant Facts Occurred after the End of the Financial Year 7. Future perspectives 8. Information on own shares 9. Statement of the Board of Directors

B. Consolidated Financial Statements and Appendix

1. Statements of Consolidated Financial Position 2. Consolidated Statements of Results by Category 3. Consolidated Statements of Comprehensive Income and Other Results 4. Consolidated Statements of Changes in Equity Capital 5. Consolidated Statements of Cash flow 6. Notes to Consolidated Financial Statements 7. Legal Certification of Accounts and Report on the Audit of Consolidated Financial Statements 8. Report and Opinion of the Audit Committee

C. Corporate Governance Report D. Shares held by members of the Board of Directors and Audit Committee

Consolidated Accounting Report 2015/2016 ___________________________________________________________________________________________

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Futebol Clube do Porto – Futebol, SAD 2

A. Management Report

1. Message from the Chairman

The season discussed in this report did not go well. In terms of results, the football team was far

below our expectations and the intrinsic value of our players.

The consequence for that sporting failure was the change in the coaching staff of the football team,

with the signing of a new coach, Nuno Espírito Santo, a former player of the club, with a deep

knowledge of our nature and ambition.

We firmly believe that we are starting a new period of success, similar to what constantly happened

in the past.

For that, and admitting the consequences of the results of this financial year, we chose to retain the

players we deemed as important for the new season and we are sure to reap sporting and financial

profits from this strategy in the current season.

Jorge Nuno Pinto da Costa


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2. Governing Bodies

General Meeting

Chairman: José Manuel de Matos Fernandes Secretary Rui Miguel de Sousa Simões Fernandes Marrana

Board of Directors

Chairman: Jorge Nuno de Lima Pinto da Costa Directors: Adelino Sá e Melo Caldeira

Antero José Gomes da Ressurreição Diogo Henrique Fernando Manuel Santos Gomes Reinaldo da Costa Teles Pinheiro José Américo Amorim Coelho (non-executive) Rui Ferreira Vieira de Sá (non-executive)

Audit Committee

Chairman: José Paulo Sá Fernandes Nunes de Almeida Members: Jorge Luís Moreira Carvalho Guimarães

José Augusto dos Santos Saraiva Substitute Member: André Ferreira Antunes

Audit Firm

Deloitte & Associados, SROC SA, represented by António Manuel Martins Amaral

Company Secretary

Secretary: Raul Filipe Pais da Costa Figueiredo Substitute: Nuno Filipe Ferreira Barroso Chatillon

Advisory Board

Chairman: Alípio Barrosa Pereira Dias Members: Álvaro Sá Marques Rola D. António Francisco dos Santos António Manuel Gonçalves Artur Santos Silva Emídio Ferreira dos Santos Gomes Fernando Alberto Pires Póvoas Ilídio Costa Leite Pinho João Espregueira Mendes Jorge Nuno Pinto da Costa José Paulo Sá Fernandes Nunes de Almeida Joaquim Manuel Machado Faria e Almeida José Alexandre Oliveira Jorge Alberto Carvalho Martins Luis António Silva Duarte Portela Pedro Américo Violas Oliveira Sá Sebastião José Cabral Feyo de Azevedo

Remuneration Committee

Chairman: Alípio Barrosa Pereira Dias Members: Emídio Ferreira dos Santos Gomes

Joaquim Manuel Machado Faria e Almeida


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3. Highlights

• Negative Consolidated Net Result of 58,411m€, far below the achieved in the previous year,

of positive 19,352m€, especially due to the lower results from the trade of players.

• Operational Gains, excluding trade of players, are down by 17,778m€, now reaching

75,811m€, basically due to the loss in revenues from playing European competitions.

• Operational costs, excluding costs with the trade of players, increased 13%, 14,091m€, due

to the increased in costs with external supplies and services, but also from the

compensations to the coaching staff led by Julen Lopetegui and José Peseiro.

• Items related to trade of players (Amortizations and imparity losses with trades and

Gains/Costs from trade of players) had a net result of 7.102m€, representing a decrease of

44,025m€ in comparison to the previous period.

• Consolidated equity reaches 25,854m€ as of June 30, 2016, representing a decrease of

57,240m€, for the incorporation of the net result obtained in the period.

• Asset increases 15,810m€ in comparison to June 30, 2015, and is now at 375,035m€, due to

the increase of the value of the squad, which reached 90.625m€ by the end of the financial

year.

• Liabities now reach 349,181m€, representing an increase of 73,049m€ in comparison to June

30, 2015; however, the financial liability increased only 11,327m€.


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4. Activity Evolution

FC Porto – Futebol, SAD fulfils its obligations to present economic and financial information,

regarding the financial year of 2015/2016, from July 1, 2015 to June 30, 2016.

This document has been executed in compliance with the current legal framework, namely the

provisions of the Companies Code, the Securities Code and the regulations of the Portuguese

Securities Market Commission (Comissão do Mercado de Valores Mobiliários – CMVM).

As required by the regulations of the European Parliament, companies with shares traded in

regulated markets seated in the European Union must use, in their consolidated financial

statements, the international accountancy standards (IAS/IFRS) adopted by the Union for all the

financial years starting on or after the 1st of January 2005.

Regarding FC Porto – Futebol, SAD, these regulations started on the fiscal year of 2005/2006. The

accounts presented for each quarter, and this annual report, were drawn up in accordance with the

international accountancy standards.


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SUMMARY OF SPORTING ACTIVITY

Season 2015/2016 was below expectations in terms of results. The main team celebrated the New

Year in the lead of the Portuguese League, but then took a tumble down the table, ending in the

third place. The chances to win a title were completely vanished in the last official match of the

season, the final of the Portuguese Cup, with a defeat in penalties against Sporting de Braga. In the

group stage of the UEFA Champions League, the ten points earned weren’t enough to assure the

qualification to the Round of 16, something unusual in the history of the competition and a first for

the Dragons. The third place in Group G meant the qualification to the Round of 32 of Europa League,

and the draw wasn’t friendly, setting a round against Borussia Dortmund, who won in Germany (2-0)

and at Estádio do Dragão (1-0).

The season was clearly troubled, leading to a change in coach in January, with Julen Lopetegui being

replaced with José Peseiro. The start of the season had several key players leaving, and while some of

them had to leave (Casemiro and Óliver Torres returned to Real Madrid and Atlético Madrid, as their

loan ended), others (Danilo, Alex Sandro and Jackson Martínez) received offers that just couldn’t be

refused. To compensate for those departures, the board decided to sign players such as Iker Casillas,

one of the most esteemed players in the history of the sport, Maxi Pereira, Layún, Danilo, André

André, Corona, Imbula, Alberto Bueno, and Pablo Osvaldo. Most of the newcomers became an asset

to the squad, but the team was still unable to remain regular in the second half of the season.

The financial year, however, did bring good news in terms of future, as FC Porto B became the

champion of the Second League and the Under19 team won, for the second year in a row, the

national title. The achievement accomplished by the B team should be praised as the only other time

a secondary team won a championship in the history of football happened in Spain, when Real

Madrid B became the champion in 1983/84. Playing in an extremely competitive division, coach Luís

Castro was able to take advantage of the talent of young players and mainly formed at the club, who

may join the main squad in the near future. Striker André Silva is the prime example of the work

developed.


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After the end of the year under analysis, FC Porto assured the access to the group stage of the UEFA

Champions League, after eliminating Roma, a team that spent over 100 million euros to sign

important players during the summer transfer window. The 3-0 victory made it clear that the team is

determined to return to big victories in 2016/17, and, for that to happen, signed Felipe, Boly, Alex

Telles, João Teixeira, Óliver Torres, Depoitre, Diogo Jota and welcomed back Otávio and Adrián López

from their loans. On the other hand, Helton, Martins Indi, José Ángel, Aboubakar, Marega and Suk

left the team.


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ECONOMIC ACTIVITY

After a financial year that reached a positive net result of nearly twenty million euros, FC Porto –

Futebol, SAD now presents the worst net result ever, at around negative fifty eight million euros. The

accounting for this period had the influence of the strategic decision of not transferring some of the

assets of the company, with the purpose of competing at the highest level in 2016/2017. The period

under analysis does not include the access to the 2016/2017 edition of the UEFA Champions League,

which also affects the bad performance described here.

The economic and financial situation, analysed in this period, will refer to the consolidated result,

meaning, the one obtained through the individual participation of the companies of the group

included in the consolidation parameter, obtained in the transactions done between them. However,

the individual result of FC Porto – Futebol, SAD is what contributed decisively for the consolidated

result.

The year under analysis includes, for the first time, the participation of the activity of Avenida dos

Aliados – Sociedade de Comunicação, SA, and its participant, Miragem – Produção Audiovisual, SA.

On July 10, 2015, FC Porto Media acquired from Medialuso – Produções para Televisão, SA, a

participation equivalent to 99.4% of the equity of Avenida dos Aliados, who had 100% of the equity

of Miragem – Produção Audiovisual, SA, for 4.000m€. On the same day, PortoMedia alienated 17% of

the equity of Avenida dos Aliados to Mediapro Portugal, SGPS, SA, for 684m€. Through these

operations, Porto Media now holds directly 82.4% of Avenida dos Aliados and FC Porto – Futebol,

SAD now holds indirectly 81.58% of the capital of the companies Avenida dos Aliados and Miragem,

as well as control of them, which led to the inclusion of the companies in the consolidation,

integrally, on that date.

Further ahead in this report, there is a summary of the individual results of each company in the

consolidation perimeter, and for now the focus will remain in the analysis of the last two years of

consolidated results.


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As can be seen in the graphic below, in the period being analysed Futebol Clube do Porto – Futebol,

SAD achieved a negative net result of 58,411m€, contrasting with the positive 19,352m€ achieved in

the previous year.

The net result of FC Porto – Futebol, SAD, like other companies in the same field of activity, comes

from three components:

• Operational results excluding the trade of players;

• Results related to the trade of players;

• Financial and obtained from investments results (plus taxes over income)

All these components had a negative behaviour in comparison to the previous year. The first

component, operational results excluding the trade of players, is the most stable throughout the

years, as it holds the recurring gains and costs year after year, which mostly come from contracts set

on the long term. This includes the gains obtained from participating in European competitions, a

relevant and recurring item in the financial statements of the Group. The second, related to trade of

players, is the most volatile, as it reflects the decisions of the Board, each year, in reinforcing,

maintaining or release players from the squad. The differences registered here are what mainly

determines the positive/negative results of the Group. Finally, the financial results reflect the needs


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of money and access to credits of the Group. In this financial year, the results with trade of passes of

players definitely determined the end result.

Looking at the operational gains, excluding gains with trade of players, there was a decrease of

17,778m€, representing 19% in comparison to the previous year. This drop is mainly explained by the

revenues obtained from participating in European competitions.

values in thousand euros

Operational Gains, excluding the trade of passes 2015/2016 % 2014/2015 %

Merchandising 4,583 6% 3,828 4%

Tickets 6,259 8% 7,878 8%

UEFA Competitions 11,603 15% 36,170 39%

Other Sporting Revenues 1,866 2% 1,177 1%

TV rights 22,314 29% 17,251 18%

Publicity and Sponsorship 14,183 19% 13,565 14%

Corporate Hospitality 8,397 11% 8,201 9%

Other Services 5,851 8% 4,269 5%

Other Gains 756 1% 1,250 31

TOTAL 75,811 100% 93,589 100%

As can be seen in the chart above, the items that are part of the operational gains, excluding gains

with passes, had different behaviours when compared to the previous year.

Merchandising, which, starting this sporting season, is supplied by New Balance, and which

contributed to global incomes of 4,583m€, presents an increase of 20% in comparison to 2014/2015,

something noteworthy, considering the sporting results were far below what the fans expected.

Tickets revenue of the Company were penalized by the decision made between the Board of

Directors of Futebol Clube do Porto and the Board of the sporting company for football of not

transferring, starting from July 2015, 25% of the quotas paid by associates of Futebol Clube do Porto

to FC Porto – Futebol, SAD. Additionally, there was also a decrease in revenues from the trade of

tickets per match due to the fewer match for European competitions played at Estádio do Dragão.

However, the revenue from the sale of dragon seats increased in this period.


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As can be seen in the chart above, there was a decrease, in this period, in the revenue obtained by

the participation of FC Porto in European competitions of 24,566m€. despite the significant increase

in prizes paid by UEFA for the three years period of 2015/2018, and despite receiving the additional

amount paid for the previous season, worth 2,737m€, the value presented in this item had a

significant decrease due to several factors:

• Considering the accounting policy consistently used, that determines the fix award obtained

for the qualification to the UEFA Champions League is accounted in the period when the

qualification is achieved, the 8,600m€ the Company assured after qualifying to the

2014/2015 of the UEFA Champions League, following the play-offs in August 2014, were only

accounted in the first trimester of 2014/2015, whereas the 12,000m€ for qualifying to the

competition in 2015/2016 was accounted still in 2014/2015, when the qualification was

assured.

• It is not included in this analysis the prize for accessing the 2016/2017 edition of UEFA

Champions League as the team didn’t assure the direct access to the competition during the

period being analysed, and, on the other hand, because the Company changed the

accounting policy. FC Porto – Futebol, SAD, in this period, changed the accounting of the fix

prize regarding the right to participate in European competitions (in UEFA Champions League

or UEFA Europa League), which is now accounted on the period when the matches are

played, and not in the period when the right is achieved, a policy that was followed since

2014/2015. Despite the fact that the Company believes this policy is being rightfully adopted,

the decision was made to change due to the fact that CMVM understands that the

accounting policy should be the now being used. Had FC Porto – Futebol, SAD continued to

use the same accounting policy of previous years, the operational gains and the net result of

the Company, in this year, would have been 2,000m€ higher, as the prize for playing the play-

off to access the UEFA Champions League would have been accounted, as it was assured in

2015/2016.

• The performance of the team in the group stage in this sporting season didn’t allow for the

qualification to the Round of 16 in the competition, and the team was relegated to the UEFA

Europa League, which awards significantly lower prizes. FC Porto was then eliminated by


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Borussia Dortmund in the Round of 32, when they had reached the quarter finals of the UEFA

Champions League in season 2014/2015.

In Other sporting revenues, the revenues related to the Portuguese Cup are accounted, as are the

pre-season tournaments and gains coming from Dragon Force. The increase of 690m€ registered in

the period being analysed relates especially to the revenues achieved for the participation in the

Portuguese Cup, a competition that had FC Porto reaching the final, with Sporting de Braga, then

losing in penalty shootout, whereas, in season 2014/2015, the team was eliminated in the third

round. The revenues for the Dragon Force schools have also been increasing over the years,

especially after the internationalization of the concept, which has already expanded to Colombia and

Canada. There was also an increase in revenues from participating in pre-season tournaments, such

as Colonia Cup, at the start of the season.

Broadcasting/transmitting rights increased 5,063m€ in comparison to the previous period. Part of

this increase is due to guaranteed progressive revenues by the contract signed between FC Porto –

Futebol, SAD and PPTV – Publicidade de Portugal e Televisão S.A., for the television transmission

rights of matches for the national championship, when playing at home. However, there was also an

increase in revenues coming from the distribution rights of Porto Canal, exploited by PortoMedia,

part of the Group, due to guaranteed revenues in the contract signed with Altice, on December 27,

2015.

Revenues from advertising and sponsoring contracts come, mostly, from the publicity made in the

official FC Porto equipment, by its main sponsors, who, in this period, were Unicer and New Balance

(new technical sponsor), and, starting in January 2016, also MEO. These include the revenues from

the commercialization of PortoComercial, for available publicity supports and for the advertisements

appearing on Porto Canal. Despite the fact that the sponsor of MEO only started to be accounted in

January, the value obtained in this item increased, which shows the growth of the revenues achieved

with the remaining supports.

The item “Corporate Hospitality” includes the revenues related to the management and exploitation

of this item, which are revenues of the companies analysed here, exempt from the adjustments of

consolidation. This business, in short, consists on the providing of a set of products and services


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aimed at companies and include the right to use boxes and seats for companies at Estádio do Dragão,

to attend FC Porto matches. They are billed by PortoComercial and then directed to the company

EuroAntas, who then uses this income to face the debt assumed for the construction of the stadium.

In this period, the value of this item increased 196m€.

The remaining Operational gains, still not mentioned, inserted in “Other Services” and “Other Gains”

and that mainly include the operational revenues of the companies in the group, with the exception

of the gains already mentioned, increased 1,087m€, mostly due to the inclusion of the revenues

obtained by the two new societies, Avenida dos Aliados and Miragem, in the consolidation

perimeter.

As a result of the facts above, the operational gains excluding gains with the trade of players reached

78,811m€, decreasing 17,778m€ in comparison to last year, as can be seen in the chart below.

As for operational costs, still excluding costs with the trade of players, there was an increase of 13%

in comparison to 2014/2015.


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Operational Costs excluding costs with passes 2015/2016 % 2014/2015 %

CMV 3,004 2% 2,655 2%

External Supplies and Services 38,662 31% 33,237 30%

Costs with Staff 75,790 61% 69,999 63%

Amortizations excluding depreciation of passes 3,950 3% 2,775 3%

Provisions and impairment losses excluding passes 355 0% 632 1%

Other costs 2,663 2% 1,037 1%

TOTAL 124,425 100% 110,334 100%

Accompanying the increase in merchandising sales, so did the cost of goods sold, albeit to a lesser

extent, leading to improved outcome of this business.

As for external supplies and services, there was an increase of 16% split between the different types

of costs that compose it. Part of this increase comes from the increase in productions costs of Porto

Canal.

Despite the increase of 5,792m€ in costs with staff, the remuneration earned by athletes and

coaches of the sporting company remained relatively unchanged in comparison to the previous

period. The increase seen here came mostly from the payment of compensations to the coaching

teams led by Julen Lopetegui and José Peseiro, and also from the incorporation of the remunerations

earned by the staff of Avenida dos Aliados.

The increase in amortizations, excluding depreciations with passes, is caused by the fact that the

integration of EuroAntas in the group was made in October 2014, which means the depreciations of

Estádio do Dragão, held by this company, were only partially accounted for in the consolidated

accounts of the previous period. The integration of the facilities of Avenida dos Aliados and Miragem

also increased the depreciations of the period being analysed.

Provisions and impairment losses, excluding passes, reach 355m€ for the registration of new

provisions and impairment losses considered adequate.


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The “other costs”, which represent less significant costs not listed, and that represent only 2% of the

total, increased by 1,626m€ over the same period.

In summary, operating costs excluding costs with trade of players reach 124,425m€, an increase of

14,091m€, as shown in the chart below:

The net value of the sum of operating gains and costs excluding trade of player passes, reached a

negative overall value of 48,614m€, which is a worsening of 31,869m€ over the same period.


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We now focus on the second component of the net result, the item related to trade of passes, which

shows the effect of investments/disinvestments on the squad, both in terms of gains and costs with

the trade of passes, and of amortizations and impairment losses with passes of players.

Having a negative impact on the result of the Company, Amortizations and Impairment losses with

the passes of players registered a value of 31,556m€, almost similar to the registered in the previous

year. Despite the fact that Amortizations decreased in this period, the register of impairment losses

in player passes, especially with players Helton and Ghilas, respectively because of termination of

contract and for being loaned until the end of his working contract, increased the value reflected in

this item.

The Result of Trade of Passes, which includes costs and gains coming from the sale and loan of

sporting rights of players, has traditionally been a positive item in the financial demonstrations of the

group, largely contributing to the result presented.

Positively, the gains with trade of passes of players, which include definitive transfers, loans and

other revenues, such as the solidarity rights regarding players that were in the formation squads of

FC Porto, rose to 75,357m€ in the period analysed. Especially contributing to this value is the trade of


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sporting rights of player Alex Sandro to Juventus, for 26,000m€, Imbula to Stoke City, for 24,000m€,

and Maicon to São Paulo, for 12,000m€. as for the costs with the trade of passes, which include costs

associated with those transfer and loans (namely costs regarding solidarity, intermediation fees and

the cost of the value of the “pass” of the player), as well as the fee paid to the club of origin for the

temporary loan of the sporting rights to FC Porto, reach 36,699m€. thus, the result with trade of

passes was around 38,658m€, representing a decrease of 43,842m€ in comparison to 2014/2015,

which included the values for the transfer of, at the start of that season, players Eliaquim Mangala to

Manchester City, for 30,504m€, and Steven Defour to Anderlecht, for 6,000m€, and, by the end of

the season, players Danilo to Real Madrid, for 31,500m€, and Jackson Martínez to Atletico Madrid,

for 35,000m€.

It is precisely the variation of this item that justifies the worsening in operational results (results

before the costs and gains, results relative to investments and taxes over income), which reach

negative 41,512m€, far below the positive 34,381m€ registered in the previous year.

It is now added to this analysis the third component, the financial results and relating to investments,

adding to it the taxes over income for the year.


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In this period, the financial gains remained almost unchanged from the previous year. Starting from

2014/2015, with the integration of EuroAntas in the group, the financial costs regarding the fulfilling

of the project finance for the building of Estádio das Antas are described here, an agreement that has

been fully respected.

As for the results regarding investments, which include the results obtained with the investment in

economic rights of players of which the Company does not hold the sporting rights, they reached

negative 604m€, as there were no gains from the transfer of those players.

Finally, the last item composing the result of the Company, the tax over income reaches 943m€.

As an epilogue to the analysis made, the Company had a negative consolidated net result of

58,284m€, with 58,411m€ being attributable to own of equity of the main company. This result

contrasts with the positive 19,352m€ presented in 2014/2015.

Now analysing the patrimony of the Company, as of June 30, 2016, there was a decrease in equity to

25,860m€, for the incorporation of the net result shown.


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However, given the incorporation of EuroAntas in the group, whose social capital is not held by FC

Porto - Futebol, SAD in 53%, the exclusion of minority interests means that the equity attributable to

shareholders of the Parent Company is substantially lower, reaching negative 33,578m€.

With regard to the assets, which reached 375,045m€ on June 30, 2015, there is an increase in the

value of the squad, now reaching 90,625m€. There was also an increase in the balance of clients,

regarding values to be received from the trade of sporting rights of players.

As for the liabilities, which reached 349,181m€ on June 30, 2016, there was an increase of 73,049m€,

due to the increase of “other liabilities”, which reflect the advanced payment from the contract with

Altice. The financial liability of the Company increased 11,327m€ in the period being analysed.

On June 30, 2016, there were no debts due to State authorities and the situation of the Companies in

the Group regarding Social Security was up to date, within the date legally set.


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The structuration of the liability appears penalized, regarding June 30, 2015, due to the approach of

the date of reimbursement of one of the bonds, worth 20M€. Right now, the company holds two

bonds, one for 45M€, with reimbursement for May 28, 2018, and another for 20M€, with full

payment on June 6, 2017. The Board is currently analysing a financial operation to restructure this

liability, to set a significant portion of its debt on the long term.


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INDIVIDUAL PERFORMANCE OF THE COMPANIES IN THE CONSOLIDATION PERIMETER

The numbers shown so far detail the consolidated economic and financial situation of FC Porto –

Futebol, SAD, which means that the accounting of all the ten companies (eight in 2014/2015) in the

consolidation perimeter are taken into account, net of the transactions made between them.

Below is the individual performance of each of them, before the consolidation adjustments:


Companies in the group FC Porto

Futebol, SAD

Porto

Comercial

Porto

Estádio

Porto

Multimédia

Porto

Seguro

Dragon

Tour

Porto

Media

EuroAntas

Avenida

dos

Aliados

Miragem

Operational Gains excluding Trade of

Players 46,724 27,104 3,275 37 908 3.446 6,280 13,146 3,615 1

Operational Costs excluding Trade of

Players (97,490) (25,643) (3,227) (94) (591) (3,311) (6,930) (11,019) (3,957) (22)

Operational Results excluding Trade

of Players (50,765) 1,461 48 (57) 317 135 (650) 2,127 (342) (21)

Amortizations and Impairment losses

with Trades (31,556) - - - - - - - - -

(Costs)/Gains with Trades 38,658 - - - - - - - - -

Operational Results (43,664) 1,461 (48) (57) 317 135 (650) 2,127 (342) (21)

Financial Results (13,632) (401) (0) - 0 - - (866) (1) -

Results related to Investments (612) - - - - - - - (26) -

Taxes over Income (226) (335) (28) - (84) (34) (49) (134) (109) -

Net Result of the year (58,133) 725 20 (57) 234 101 (699) 1,127 (479) (21)

The table above shows that the consolidated result reached by FC Porto – Futebol, SAD was obtained

almost exclusively by the individual result of the Company, as the consolidated result is similar to the

registered by the Company in its individual account.


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5. Other Facts Occurred During the Exercise

• On October 21, 2015, Futebol Clube do Porto informed FC Porto – Futebol, SAD that, as the

single holder of preferential 7,500,000 shares without the right to vote, emitted by the Company

in October, 2014, had decided to terminate the special rights innate to said shares, and request

the Company to activate the necessary measures to convert said preferential shares without vote

into ordinary shares. Thus, in the General Meeting of November 12, FC Porto – Futebol, SAD

approved the change to articles 5 and 7 of the statutes, in order to prepare for the equity of the

Company to be represented only by ordinary shares, and to eliminate the maximum percentage

of rights to vote for each shareholder with shares without the right to vote, which no longer

applies given the change above. Thus, Futebol Clube do Porto now holds 74,59% (directly) and

75.80% (indirectly) of both the equity and the voting rights of the Company. On June 30,2016,

taking into account the shares held by Members of the Board of the main shareholder elected in

April, 2016, Futebol Clube do Porto now holds 75.72% (indirectly) of equity and voting rights of

the Company.

Thus, the reference shareholders, Olivedesportos, SGPS, S.A. and António Luís Alves Ribeiro de

Oliveira, announced to the Company that, following the approval of the suppression by the

owner of the special rights given to the 7,500,000 preferential shares without vote issued by

Futebol Clube do Porto – Futebol, SAD, and its conversion in ordinary shares, their shares,

respectively 1,502,188 and 1,651,730 shares, now represent 6.68% and 7.34% of the voting rights

and over the equity of the Company.

• Under the scope of the issuing of bonds by the Company, there was a payment of interests of the

coupons:

o n. 1 and n. 2 of the bonds “FC PORTO SAD 2015-2018”, on November 26, 2015, and May 26,

2016, respectively. The reimbursement of the operation will occur on May 28, 2018, as set by

the public offer prospectus.

o n. 3 and n. 4 of the bonds “FC PORTO SAD 2014-2017”, on December 7, 2015, and June 6,

2016, respectively. The reimbursement of the operation will occur on June 6, 2017, as set by

the public offer prospectus.


___________________________________________________________________________________________


• On December 27, 2015, FC Porto – Futebol, SAD informed the market of the contract signed with

Altice, for EUR. 457,500,000, for the rights of:

o Television Broadcast of the matches played by the Main Football Squad, at home, for

Primeira Liga, as well as the Right of Commercial Operation of Publicity Spaces at Estádio do

Dragão, for ten sporting seasons, starting on July 1, 2018;

o Broadcast of Porto Canal, for 12 and a half season, starting on January 1, 2016; and

o Status of Main Sponsor of FC Porto, with the right to place advertising on the front of the

jerseys of the Main Football Squad of FC Porto, for the period of seven and a half season,

starting on January 1, 2016.

• On January 8, 2016, the Board of Directors of FC Porto – Futebol, SAD made the decision of

replacing the coaching staff led by Julen Lopetegui, with Rui Barros assuming the interim control

of the coaching staff of the professional football team. On January 19, the Company reached an

agreement with José Vítor dos Santos Peseiro for the signing of a sporting contract, as coach og

the main football team.

• On February 19, 2016, CMVM approved the admission prospect for the negotiation in regulated

market of 7,500,000 shares issued initially as preferential without voting rights that had already

been converted into ordinary shares, which means the equity of FC Porto – Futebol, SAD is now

composed of 22,500,000 ordinary shares in negotiation in regulated market.

• On March 3, 2016, the General Meeting of FC Porto – Futebol, SAD elected the Governing Bodies

for the term 2016/19, which are already included in this report.

• On May 30, 2016, FC Porto – Futebol, SAD reached an agreement with the coach of the main

football team, José Peseiro, for the termination of his contract by the end of the sporting season.

On July 1, 2016, the Company reached an agreement with Nuno Espírito Santo for the signing of

a work contract, as coach of the main football team, for the sporting seasons 2016/2017 and

2017/2018.


___________________________________________________________________________________________


6. Relevant Facts that Occurred after the Term of the Period

• The Company, on August 25, 2016, assured the sporting rights, on a loan, of player Óliver Torres,

from Club Atlético de Madrid, until December 31, 2017, with an option to buy said rights.

• FC Porto – Futebol, SAD, on August 26, 2016, assured the sporting rights, on a loan, of player

Diogo José Teixeira da Silva (“Diogo Jota”), from Club Atlético de Madrid, until June 30, 2017,

with an option to buy said rights.

• On September 1, 2016, FC Porto – Futebol, SAD announced that Antero José Gomes da

Ressurreição Diogo Henrique had resigned from his position as Director of the Company, and

that the Board accepted the resignation.


___________________________________________________________________________________________


7. Future Perspectives

The season under analysis had both sporting and economic failure.

Thus, season 2016/2017 represents a new challenge, with the need to a deeper restructure, with

sporting and financial implications.

This season started with the arrival, as main coach, of Nuno Espírito Santo, a former player of FC

Porto, whose profile is seen as ideal to lead the main squad.

The team managed to win the play-off to qualify to the UEFA Champions League, assuring the

participation in the biggest competition in European football. By eliminating Rome, FC Porto

guaranteed the 21st participation in the group stage of the prestigious competition, remaining at the

top of the list of presences in the Champions League, along with Real Madrid and Barcelona.

Young athletes were recruited, with guaranteed value, with considerable quality and margin for

progression, and we are keeping a pleased eye on the achievements of the youth squads. FC Porto B

won the Second League and the Under19 team won, for the second year in a row, the national title in

the category. These successes and the ambition of the main coach are determinant for a sustained

and lasting evolution of the squad, so we can go far in every competition.

We have taken a step back, so that we can take two or three forward.


___________________________________________________________________________________________


8. Information on own shares

FC Porto – Futebol, SAD holds 100 own shares, consolidated, worth 499€. These shares, although a

small representation of the social capital of the company, belong to PortoSeguro, a company of the

group held at 90% by FC Porto – Futebol, SAD.

PortoSeguro has acquired 100 shares at the moment the SAD was formed, in 1997, and never

alienated or acquired any more shares. Thus, in the beginning and the end of the financial year, FC

Porto – Futebol, SAD had 100 shares, worth 500€.

9. Statement from the Board of Directors

Under the terms of paragraph c) of point 1 of article 245 of the Securities Code, the directors of FC

Porto – Futebol, SAD, in charge of the company, state that, to their knowledge, the information

presented in this report, the annual accounts and other accounting documents required by law or

legislation, even if not approved by General Meeting, has been gathered in conformity with

international financial reporting standards adopted in the European Union, giving a true and accurate

image of assets and liabilities, of the financial situation and results of the issuer and of the companies

included in the Group, and that the management report faithfully lays out the evolution in business,

performance and position of the issuer and of the companies included in the Group, and contains a

description of the main risks and uncertainties the company has to face.


___________________________________________________________________________________________


Porto, October 6, 2016

The Board of Directors,

________________________________

Jorge Nuno Lima Pinto da Costa

________________________________

Adelino Sá e Melo Caldeira

________________________________

Antero José Gomes da Ressurreição Diogo Henrique

________________________________

Fernando Manuel Santos Gomes

________________________________

Reinaldo da Costa Teles Pinheiro

________________________________

José Américo Amorim Coelho

________________________________

Rui Ferreira Vieira de Sá


___________________________________________________________________________________________


B. Consolidated Financial Statements and Appendix

1. Statements of Consolidated Financial Position

Assets Notes 30.06.2016 30.06.2015

NON-CURRENT ASSETS

Tangible Assets 7 140.503.928 139.965.096

Intangible Assets - Players' registrations 8 90.625.256 65.909.714

Other intangible asets 7 1.669.575 1.715.184

Other financial assets 9 466.443 292.167

Goodwill 6 and 10 4.469.164 3.139.715

Trade receivables 11 15.689.532 13.545.184

Other non-current assets 13 6.812.260 8.091.867

Total non-current assets 260.236.158 232.658.927

CURRENT ASSETS

Inventories 12 2.549.375 2.180.310

Trade receivables 11 86.669.884 74.757.925

Other current assets 13 12.151.763 24.571.205

Other financial assets 14 6.621.556 6.826.271

Cash and cash equivalents 14 6.816.192 18.240.722

Total current assets 114.808.770 126.576.433

TOTAL ASSETS 375.044.928 359.235.360

EQUITY AND LIABILITIES

EQUITY

Share Capital 16 112.500.000 112.500.000

Own Shares (499) (499)

Share issue premiums 259.675 259.675

Legal reserve 175.752 169.075

Other reserves 652.307 652.307

Retained earnings (88.496.054) (108.260.976)

Other changes in equity (258.840) (331.262)

Consolidated net result for the year (58.410.836) 19.351.824

Equity attributable to equity holders of the parent company (33.578.495) 24.340.144

Non-controlling interests 17 59.442.692 58.763.775

TOTAL EQUITY 25.864.197 83.103.919

LIABILITIES

NON-CURRENT LIABILITIES

Bank loans 18 34.360.593 36.288.117

Bonds 18 44.705.224 63.711.415

Derivates 33 305.775 526.226

Trade payables 20 11.213.328 5.635.495

Other non-current liabilities 21 54.060.054 15.963.736

Pension liabilities 23 324.948 335.224

Deferred tax liabilities 15 2.153.545 2.210.218

Total non current liabilities 147.123.467 124.670.431

CURRENT LIABILITIES

Bank loans 18 78.529.682 61.454.581

Bonds 18 19.653.905 -

Other creditors 19 6.841.234 11.089.200

Trade payables 20 49.368.438 46.132.804

Other current liabilities 21 47.664.005 32.784.425

Total liabilities 202.057.264 151.461.010

TOTAL LIABILITIES 349.180.731 276.131.441

TOTAL EQUITY AND LIABILITIES 375.044.928 359.235.360


___________________________________________________________________________________________


2. Consolidated Statements of Results by Category

Notes 30.06.2016 30.06.2015

Sales 24 4.583.427 3.828.129Services rendered 24 70.472.195 88.510.534Other income 755.552 1.250.341Cost of goods sold 12 (3.003.995) (2.654.892)External supplies and services 25 (38.662.122) (33.236.607)Payroll expenses 26 (75.790.467) (69.998.566)Amortisation and depreciation excluding amortisation of players' registrations 7 (3.950.246) (2.774.532)Provisions and impairment losses excluding players' registrations 22 (355.399) (632.435)Other expenses (2.663.147) (1.037.215)

Operational profit/(loss) excluding results with players' registrations (48.614.202) (16.745.243)

Amortisation and impairment losses of players' registrations 27 (31.556.150) (31.373.937)Income related with transactions of players' registrations 27 75.357.145 118.476.363Loss related with transactions of players' registrations 27 (36.699.195) (35.975.932)

7.101.800 51.126.494

Total operational profit/loss (41.512.402) 34.381.251

Financial expenses 28 (17.217.148) (17.009.385)Financial income 28 1.992.700 2.090.505Gains and losses in investments 29 (604.084) 1.096.113

Profit/Loss before income tax (57.340.934) 20.558.484

Income tax 15 (942.887) (600.791)

Consolidated profit/loss for the year (58.283.821) 19.957.693

Attributable to:Equity holders of the parent company (58.410.836) 19.351.824Non-controlling interests 17 127.015 605.869

Earning per shareBasic 31 (2,95) 1,29Diluted 31 (2,60) 0,97


___________________________________________________________________________________________


3. Consolidated Statements of Comprehensive Income

Notes 30.06.2016 30.06.2015

Net consolidated profit/ loss for the year (58.283.821) 19.957.693

Items that future will be reclassified to net incomeChanges in the fair value of cash flow hedge derivates 33 203.589 249.011Actuarial gains and losses 23 14.046 138.526

Total consolidated comprehensive income for the year (58.066.186) 20.345.230

Attributable to:Equity holders of the parent company (58.301.103) 19.739.361Non-controlling interests 17 234.917 605.869


___________________________________________________________________________________________


4. Consolidated Statements of Changes in Equity Capital

Att

rib

uta

ble

to

eq

uit

y h

old

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of

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Equ

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Bal

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259.

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169.

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652.

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(68.

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-(4

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(33.

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f 20

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(40.

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-(2

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Cap

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37.5

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(11.

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--

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7.53

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19.7

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5.86

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Bal

ance

as

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(108

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58.7

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112.

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(499

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9.67

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60.9

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(331

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24.3

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19

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(58.

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(258

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25.8

64.1

97


___________________________________________________________________________________________


5. Consolidated Statements of Cash flow

NotesOperating activitiesCash receipts from trade debtors 106.594.121 90.429.496Cash receipts from trade creditors (36.764.804) (38.604.559)Cash payments to employees (77.716.343) (73.965.833)

Other cash receipts/payments relating to operating activities 264.272 (1.411.969)Income taxes paid/received (298.552) (7.921.306) (601.276) (24.154.141)

Net cash-flow from operating activities (1) (7.921.306) (24.154.141)

Investments activitiesCash receipts arising from:Players' registrations 79.448.592 76.585.758Interests and similiar income 856 1.025.838Financial investments 14 256.539Dividends - 79.705.987 - 77.611.596

Cash payments arising from:

Financial investments 14 (1.500.000) (37.500.000)

Acquisition/Sale of players' registration (76.200.103) (45.402.780)

Other financial activities (204.515)Tangible assets (1.679.469) (79.584.087) (112.499) (83.015.279)

Net cash flow from/used in investment activities (2) 121.900 (5.403.683)

Financing activities

Cash receipts arising from:

Financial investments - 37.500.000

Loans obtained from investors (Note 19) - 5.000.000Loans obtained 79.668.338 79.668.338 77.408.767 119.908.767

Cash payments arising from:Loans obtained from investors (Note 19) (5.562.500) (3.000.000)Dividends (35.964) (25.716)Loans obtained (64.079.550) (70.733.861)Interests and similiar costs (13.650.829) (83.328.843) (13.326.972) (87.086.549)

Net cash from/used in financing activities (3) (3.660.505) 32.822.218

Cash and cash equivalents at the begining of the financial year14 18.240.722 14.965.439

Variation of consolidated perimeter 6 35.380 10.889

Net increase/decrease of cash and cash equivalents: (1)+(2)+(3) (11.459.911) 3.264.394Cash and cash equivalents at the end of the financial year 14 6.816.192 18.240.722

30.06.2016 30.06.2015


___________________________________________________________________________________________


6. Notes to Consolidated Financial Statements 1. INTRODUCTION

Futebol Clube do Porto - Futebol, S.A.D. (‘FCPorto, SAD’ or ‘the Company’), with head office at Estádio do Dragão, Via F.C. Porto, Entrada Poente, 3rd Floor, 4350-451 Porto, was incorporated on 30 July 1997, and is the parent company of a group companies as presented in Note 5 as the FCP Group (‘Group’). Its’ main activity considers the participation in professional football competitions and the sporting events promotion and organization.

These consolidated financial statements are presented in euro, rounded to units, which is the currency presented by the Company in its operations and therefore considered its functional currency.

2. SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies used in the preparation of the accompanying consolidated financial statements are as follows:

2.1 BASIS OF PRESENTATION

The accompanying consolidated financial statements have been prepared on a going concern basis from the books and accounting records of the companies included in the consolidation, adjusted in the consolidation process to reflect International Financial Reporting Standards effective for financial years beginning 1 July 2015, as adopted by the European Union. Such standards include the International Financial Reporting Standards (‘IFRS’) issued by the International Accounting Standards Board (‘IASB’), the International Accounting Standards (‘IAS’) issued by the Accounting Standards Committee (‘IASC’) and the respective interpretations – SIC and IFRIC issued by the International Financial Reporting Interpretation Committee (‘IFRIC’) and Standing Interpretation Committee (‘SIC’), that have been adopted by the European Union. These standards and interpretations are referred to hereinafter collectively as ’IAS/IFRS’. The interim financial statements were prepared, quarterly, in accordance with IAS 34 – Interim Financial Report. 1- Standards, interpretations, amendments and revisions that enter into effect in the year

The following standards, interpretations, amendments and revisions were endorsed by the European Union and have mandatory application for the first time in the financial year ended as of 30 June 2016:

Standard / Interpretation

Effective date

(annual periods

beginning on or after)

IFRIC 21 – Levies 17-jun-14 This amendment establishes the conditions

regarding the timing of recognition of a


___________________________________________________________________________________________


liability relating to payment by an entity to the State as a result of a specific event (for example, participation in a specific market), without the payment having specific goods or services received in exchange.

Amendment to IFRS 3 – Concentration of business activities (included in improvements to international financial statement standards – 2011-2013 cycle)

1-jan-15 Clarifies that IFRS 3 excludes from its scope of application the formation of a joint agreement on the financial statements of the joint agreement itself.

Amendment to IFRS 13 – Measurement at fair value (included in improvements to international financial statement standards – 2011-2013 cycle)

1-jan-15 Clarifies that the exception of the application of the standard to financial assets and liabilities with offsetting positions extends to all contracts under IAS 39, independently of their compliance with the definition of financial asset or liability of IAS 32.

Amendment to IAS 40 – Investment properties (included in improvements to international financial statement standards – 2011-2013 cycle)

1-jan-15 Clarifies that it is necessary to apply value judgement to determine if the acquisition of an investment property is the acquisition of an asset or the concentration of business activities covered by IFRS 3.

Amendment to IAS 19 – Employee benefits – Employee contribution

1-feb-15 Clarifies under which circumstances employees’ contributions to post-employment benefit plans consist of a decrease in the cost of sort term benefits.

Improvements to international financial statement standards (2010-2012 cycle)

1-feb-15 These improvements involve the clarification of some aspects relating to:

IFRS 2 – Share based payments: definition of the vesting condition; IFRS 3 – Concentration of business activities: recording of contingent payments; IFRS 8 – Operating segments: disclosures relating to the aggregation of segments and clarification of the need to reconcile total assets by segment with the amount of the assets in the financial statements; IAS 16 – Tangible fixed assets and IAS 38 – Intangible assets: need to proportionately revalue accumulated amortization in the case of the revaluation of fixed assets; and IAS 24 – Disclosure of related parties: defines that an entity that renders management services to the Company or its parent company is considered a related party; and IFRS 13 – Fair value: clarification relating to the measurement of short term receivables or payables.


___________________________________________________________________________________________


The effect in the consolidated financial statements of the Group for the year ended as of 31 June 2016, due to the adoption of the standards, interpretations, amendments and revisions mentioned above has not been significant. 2 – Standards, interpretations, amendments and revisions with mandatory application in future years The following standards, interpretations, amendments and revisions, with mandatory application in future years, were, until the approval date of the accompanying financial statements, endorsed by the European Union:

Standard

Effective date

(annual periods

beginning on or after)

Improvements to international financial statement standards (2012-2014 cycle)

1-jan-16 These improvements involve the clarification of some aspects relating to: IFRS 5 – Non-current assets held for sale and discontinued operating units: introduces guidelines on how to proceed in the case of changes as to the expected realization method (sale or distribution to the shareholders); IFRS 7 – Financial instruments: disclosures: clarifies the impact of asset monitoring contracts under the disclosures relating to continued involvement of derecognized investments, and exempts the interim financial statements from the disclosures required relating to the compensation of financial assets and liabilities; IAS 19 – Employee benefits: defines that the rate to be used to discount defined benefits must be determined by reference to high quality bonds of companies issued in the currency that the benefits will be paid; and IAS 34 – Interim financial statements: clarification on the procedures to be used when the information is available in other documents issued together with the interim financial statements.

Amendment to IFRS 11 – Joint Agreements – Recording of acquisitions of interests in joint agreements

1-jan-16 This amendment relates to the acquisition of interests in joint operations. It establishes the requirement to apply IFRS 3 when the joint operation acquired consists of a business activity in accordance with IFRS 3. When the joint operation in question does not consist of a business activity, the transaction must be recorded as the acquisition of assets. This amendment is of prospective application to new acquisitions of interests.


___________________________________________________________________________________________


Amendment to IAS 1 – Presentation of Financial Statements - “Disclosure initiative”

1-jan-16 This amendment clarifies some aspects relating to disclosure initiatives, namely: (i) the entity must not make it difficult to understand the financial statements by the aggregation of significant items with insignificant items or the aggregation of significant items of different natures; (ii) the disclosures specifically required by the IFRS need only to be provided if the information in question is significant; (iii) the lines in the financial statements specified by IAS 1 can be aggregated or segregated in accordance with what is significant in relation to the objectives of the financial statement; (iv) the part of other recognized income resulting from the application of the equity method in associates and joint agreements must be presented separately from the remaining elements of other recognized income, also segregating the items that can be reclassified to the statement of profit and loss from those that will not be reclassified; (v) the structure of the notes must be flexible, and should follow the following order:

• a declaration of compliance with the IFRS’s in the first section of the notes;

• a description of the significant accounting policies in the second section;

• supporting information for the items on the financial statements in the third section; and

other information in the fourth section. Amendment to IAS 16 – Tangible fixed assets and IAS 38 – Intangible assets – Acceptable depreciation and amortization methods

1-jan-16 This amendment establishes the presumption (that can be refuted) that income is not an appropriate basis for amortizing an intangible asset and forbids the use of income as a basis for depreciating tangible fixed assets. The presumption established for amortizing intangible assets can only be refuted when the intangible asset is expressed based on the income generated or when utilization of the financial benefits is significantly related to the income generated.

Amendment to IAS 16 – Tangible fixed assets and IAS 41 – Agriculture – Production plants

1-jan-16 This amendment excludes plants that produce fruits or other components used for harvesting and/or removal under the application of IAS 41, becoming covered by IAS 16.

Amendment to IAS 27 – Application of the equity method on separate financial statements

1-jan-16 This amendment introduces the possibility of measuring interests in subsidiaries, joint agreements and associates in separate financial statements in accordance with the equity method, in addition to the measurements methods presently existing. This change applies retrospectively.

Amendments to IFRS 10 – 1-jan-16 These amendments clarify several aspects relating


___________________________________________________________________________________________


Consolidated Financial Statements, IFRS 12 – Disclosures of interests in Other Entities and IAS 28 – Investments in Associates and Joint Ventures

to the application of the consolidation exception by investment entities.

3 – Standards, interpretations, amendments and revisions not endorsed by the European Union The following standards, interpretations, amendments and revisions with mandatory application in future years, have not yet been endorsed by the European Union at the date of approval of these financial statements: Standard

IFRS 9 - Financial Instruments (2009) and subsequent amendments

This amendment in inserted in the IAS 39 revision project and establishes the requirements for the classification and measurement of financial assets and liabilities and for the application of hedge accounting rules.

IFRS 14 – Regulatory Deferral Accounts

This standard establishes the reporting requirements, by entities who first adopt IFRS / IAS applicable to regulatory deferral accounts.

IFRS 15 – Revenue from Contracts with Costumers

This standard introduces a structure for recognizing revenue based on principles and a model to be applied to all contracts entered into with clients, replacing IAS 18 – Revenue, IAS 11 – Construction contracts; IFRIC 13 – Customer Loyalty Programmes; IFRIC 15 – Agreements for the Construction of Real Estate; IFRIC 18 – Transfer of assets from customers and SIC 31 – Revenue – Barter Transactions involving Advertising Services. This standard is of mandatory application for years beginning on or after 1 January 2018;

IFRS 16 – Leases This standard introduces the principles for the recognition and

measurement of leases, replacing IAS 17 – Leases. The standard defines a single model for recording lease contracts, which results in the recognition by the lessor of assets and liabilities for all lease contracts, except for those for periods of less than twelve months or for leases of assets of reduced value. Lessors will continue to classify leases between operating and finance leases, IFRS 16 will not produce substantial changes for such entities in relation to IAS 17.

Amendments to IFRS 10 – Consolidated Financial Statements and IAS 28 – Investments in Associates and Joint Ventures

These amendments eliminate the conflict existing between these standards, relating to the sale or the contribution of assets between the investor and the associate or between the investor and the jointly controlled entity.

Recognition of Deferred Tax Assets for Unrealised Losses (Amendments to IAS 12)

Amends IAS 12 Income Taxes to clarify the following aspects:

• Unrealised losses on debt instruments measured at fair value and measured at cost for tax purposes give rise to a deductible temporary difference regardless of whether the debt instrument's holder expects to recover the carrying amount of the debt instrument by sale or by use.


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• The carrying amount of an asset does not limit the estimation of probable future taxable profits.

• Estimates for future taxable profits exclude tax deductions resulting from the reversal of deductible temporary differences.

• An entity assesses a deferred tax asset in combination with other deferred tax assets. Where tax law restricts the utilisation of tax losses, an entity would assess a deferred tax asset in combination with other deferred tax assets of the same type.

Disclosure Initiative (Amendments to IAS 7)

Amends IAS 7 Statement of Cash Flows to clarify that entities shall provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities.

Clarifications to IFRS 15 'Revenue from Contracts with Customers'

Amends IFRS 15 Revenue from Contracts with Customers to clarify three aspects of the standard (identifying performance obligations, principal versus agent considerations, and licensing) and to provide some transition relief for modified contracts and completed contracts.

Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2)

Amends IFRS 2 Share-based Payment to clarify the standard in relation to the accounting for cash-settled share-based payment transactions that include a performance condition, the classification of share-based payment transactions with net settlement features, and the accounting for modifications of share-based payment transactions from cash-settled to equity-settled.

Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts' (Amendments to IFRS 4)

Amends IFRS 4 Insurance Contracts provide two options for entities that issue insurance contracts within the scope of IFRS 4: an option that permits entities to reclassify, from profit or loss to other comprehensive income, some of the income or expenses arising from designated financial assets; this is the so-called overlay approach; an optional temporary exemption from applying IFRS 9 for entities whose predominant activity is issuing contracts within the scope of IFRS 4; this is the so-called deferral approach. The application of both approaches is optional and an entity is permitted to stop applying them before the new insurance contracts standard is applied.

These standards have not yet been approved (“endorsed”) by the European Union and, as such, were not adopted by the Group for the year ended as of June 30 2016.

2.2 BASIS OF CONSOLIDATION

The consolidation methods adopted by the Group in the preparation of the consolidated financial statements are as follows: a) Investments in Group companies

The companies where the Group has control, i.e., where it has, cumulatively: (i) power over the investee; (ii) is exposed to, or has the right over variable results by the relationship it has with the investee; and (iii) has the capability to use its power to affect the amount of the


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results of the investee, are included in the consolidated financial statements by the full consolidation method. The equity and net result of those investments attributable to non-controlling shareholders are presented separately, under the caption “Non-controlling interests”, in the consolidated statement of financial position and in the consolidated statement of profit and loss. Companies included in the consolidated financial statements by the full consolidation method are listed in Note 5. In business combinations occurred after the date of transition to the International Financial Reporting Standards as adopted by the European Union – IFRS (1 July 2004), the assets and liabilities of each subsidiary are measured at fair value at the date of acquisition in accordance with IFRS 3 - “Business Combinations”, with this measurement able to be concluded until 12 months after acquisition date. Any excess on the cost of acquisition over the fair value of the identifiable net assets acquired (including contingent liabilities) is recognized as goodwill (Note 2.2 b)). Any excess of the fair value of the identifiable net assets and liabilities acquired over its cost is recognized as an income in the profit and loss statement of the period of acquisition, after reassessment of the estimated fair value attributed to the net assets acquired. Non-controlling interests are presented according to their share in the fair value of the acquired identifiable assets and liabilities. The results of the subsidiaries acquired or disposed during the year are included in the consolidated income statement as from the effective date of acquisition or up to the effective date of disposal, respectively. Adjustments to the financial statements of the affiliates are performed, whenever necessary, in order to adapt its accounting policies to those used by the Group. All intercompany transactions, balances and distributed dividends are eliminated during the consolidation process.

b) Goodwill

In acquisitions made after the date of transition to IFRS (1 July 2004), the difference between the acquisition cost of financial investments in Group companies (subsidiaries), added by the amount of the non-controlling interests, and the attributable amount to the fair value of the identifiable assets and liabilities of those companies, as of the acquisition date, when positive, is recorded under the caption “Goodwill” (Note 10) and, when negative, after reassessing its computation, is directly recorded in the statement of income. The Group, in a transaction basis (for each business combination), will choose to measure any non-controlling interest in the acquire either at fair value or at the proportionate share of the non-controlling interest of the acquirer’s identifiable net assets. Future contingent payments are recognized as a liability as of the date of the business combination at its fair value, with any change in the initial amount being recorded against “Goodwill”, but only during the reassessment period (12 months following the acquisition date) and if related with events prior to the acquisition date, otherwise, it will have to be recorded in the statement of profit and loss. Acquisitions or disposals of stakes in already controlled entities, as long as they do not represent a loss of control, are treated as transactions between shareholders, thus only affecting the equity caption with no impact on goodwill or net results.


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Whenever a disposal generates a loss in control, all assets and liabilities of the disposed entity will have to be disregarded and whatever interest recognized in the disposed company will have to be reassessed at fair value and the resulting gain or loss arising from the disposal recorded in the statement of profit and loss. Goodwill is not amortized, but is subject to impairment tests on an annual basis. The recoverable amounts of cash generating units are determined based on the estimation of its value of use and from its disposal at the end of its useful life. The recovery amount is estimated to individual assets or, if not possible, for the cash-generating unit to which the asset belongs. These estimations require the use of assumptions based on estimates of future circumstances, which may be different from the expected outcomes. Impairment losses identified in the period are recorded in the statement of profit and loss under the caption “Provisions and impairment losses”, and may not be reversed.

2.3 MAIN ACCOUNTING POLICIES

The main accounting policies used in the preparation of the consolidated financial statements are as follows: a) Tangible assets

Tangible assets acquired up to 1 July 2004 (transition date to IFRS) are recorded at “deemed cost”, which corresponds to the acquisition cost net of accumulated depreciation and impairment losses recorded up to that date.

Tangible assets acquired after that date are recorded at acquisition cost net of accumulated depreciation and impairment losses.

Depreciation is calculated on a straight line basis, as from the date the assets are first used, over the expected useful life for each group of assets. The expected useful life of the main groups of assets is as follows:

Buildings and other constructions - 8 to 50 years Machinery and equipment - 4 to 50 years Transport Equipment - 3 to 8 years Office equipment - 3 to 8 years Other tangible assets - 1 to 10 years

The building associated with the Dragon Stadium is being amortized over a period of 50 years. Maintenance and repair costs relating to tangible assets which do not increase their useful life nor result in significant benefits or improvements are recorded directly as expenses in the period they are incurred. Gains or losses arising on sale or disposal of tangible assets are calculated as the difference between the selling price and the carrying amount of the asset at the date of its sale/disposal; these are recorded in the income statement under either ‘Other income’ or ‘Other expenses’.


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b) Intangible assets - Players’ registrations

The caption ‘Intangible assets - Players’ registrations’ includes costs related with the acquisition of players’ registrations, including intermediation service costs, as well as signing-on fees paid directly to the players, in accordance with the Decree-Law 103/97 of 13 September. When the percentage owned of players’ registrations is less than 100% (see Note 8), it means that although the Company is entitled to full use of the player’s registration, it has entered into an associated financial interests contract with a third party, which consists of an investment partnership in the registration rights, resulting in the proportional sharing of the inherent results in future the transaction of these rights. If is estimated a loss on the recoverable amount of a player’s registration (‘impairment loss’), the corresponding impact is recognized in the income statement under the caption ‘Amortization and impairment losses of players' registrations’. The recognition and quantification of such impairment losses consider the carrying amount of players’ registrations, as of 30 June 2016, of players whose labour contracts have been terminated up to the approval date of the consolidated financial statements. Costs associated with securing the extension of a player’s labour contract are also recorded under the caption ‘Intangible assets - Players’ registrations’, being determined a new book value for the player’s registration which is amortized over the remaining revised contract term. Costs included in the caption ‘Intangible assets - Players’ registrations’ are amortized over the period covered by contracts celebrated between the players and the Company, in accordance with Decree-Law 103/97 of 13 September. “Players on loan” The acquisition costs of players’ registrations that are on temporary loan to other clubs are maintained in the caption ‘Intangible assets - Players’ registrations’ and continue to be amortized over the number of years these rights expire, according to the player’s labour contract, as it’s considered to exist a potential vaporization of the player registration while the player plays by other club under the referred loan. If a loss is estimated on the recoverable amount (‘impairment loss’) of the players’ registrations on loan up to the end of the contract period, namely when the player is borrowed in its last year of contract, the corresponding effect is recorded in the income statement under the caption ‘Amortization and impairment losses of players' registrations’.

c) Other intangible assets

Other intangible assets (non-players’ registration) are stated at acquisition cost net of depreciation and accumulated impairment losses. Intangible assets are only recognized if it is probable that future economic benefits will flow from them to the Group, if they are controlled by the Group and if their value can be reliably measured. Depreciation is charged, on a straight-line basis over the estimated useful life of the assets as from the date the assets are available for use (Note 7).


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d) Leasing and long term rental

Tangible assets acquired under finance lease contracts and the corresponding liabilities are recorded in accordance with the financial method, when complying with the requirements of IAS 17 - ‘Leases’. Accordingly, tangible assets are recorded as assets and corresponding obligations as liabilities in the statement of financial position. Both the finance charge and the depreciation expense for depreciable assets, calculated as explained in Note 2.3.a), are taken to the income statement in the period in which they are incurred. Long term rental instalments on assets acquired under this regime are recognised in full as expenses in the period to which they refer. Determination of whether contracts relate to finance leases or long term rentals is made based upon the substance rather than the form of the contracts. Operating lease instalments are recognized as expenses on a straight-line basis over the rental period.

e) Impairment of non-current assets, except for Goodwill

Assets are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Whenever the book value of an asset exceeds its recoverable amount, an impairment loss is recognised in the profit and loss statement caption ‘Provisions and impairment losses excluding players’ registrations’. The recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm’s length transaction between independent and knowledgeable parties, less costs of disposal. Value in use is the present value of estimated future cash-flow from the continued use of an asset and from its disposal at the end of its useful life. Recoverable amounts are estimated for each asset individually. Impairment losses recognised in prior years are reversed when it is concluded that the impairment losses previously recognised no longer exist or have decreased. This assessment is made whenever there is an indication that impairment losses previously recognised have been reversed. The reversal is recorded in the income statement caption ‘Other income’. However, reversal of the impairment loss is recognised only up to the amount at which the asset would have been recorded (net of depreciation) had no impairment loss been recognised for that asset in prior years.

f) Borrowing costs

Borrowing costs are recognised on an accruals basis in the income statement for the period in which they are incurred.

g) Inventories

Inventories are stated at acquisition cost or net realizable value, whichever is lower, using the average cost as costing method. Differences between cost and net realizable value, if negative, are shown as operating expenses under the caption ‘Cost of sales’.


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h) Provisions

Provisions are recognised when, and only when, the Group has a present obligation (legal or constructive) as result of a past event, it is probable that a outflow of resources will be required to settle the obligation, and a reliable estimate can be made of that obligation. Provisions are reviewed and adjusted at the end of the reporting period to reflect the best estimate as of that date.

i) Financial instruments

i) Investments

Investments are classified into the following categories: - Held to maturity - Investments measured at fair value through profit or loss - Available-for-sale

Held to maturity investments are classified as non-current assets unless they mature within 12 months of the end of the reporting period. Investments classified as held to maturity have defined maturities and the Group has the intention and ability to hold them until the maturity date. The investments measured at the fair value through profit or loss include the investments held for trading that the Group acquires with the purpose of trading in the short term. They are classified in the consolidated statement of financial position as current investments. The Company classifies as available-for-sale investments those that are neither included as investments measured at fair value through profit or loss neither as investments held to maturity. These assets are classified as non-current assets, except if the sale is expected to occur within 12 months from the date of classification. All purchases and sales of investments are recognised on the trade date, independently of the settlement date. Investments are initially measured at cost, which is the fair value of the consideration paid for them, including transaction costs. Investments that do not have a quoted price and whose fair value cannot be reliably measured are stated at cost less any impairment losses.

ii) Trade receivables and Other receivables

Non-current accounts receivables are measured at amortised cost using the effective interest method, less any impairment. Current account receivables are presented in the statement of financial position, net of any impairment losses, and are recorded at their nominal value, except when the effect of discounting is material, when they are recorded at amortised cost using the effective interest method. Financial income is calculated in accordance with the effective interest rate, except for very short term receivables when the income amounts to recognize would be immaterial. Accounts receivables are recorded as current assets, except when its maturity is greater than 12 months from the end of the reporting period, when they are classified as non-current assets. These financial assets are included in the captions presented in Note 11 and 13.


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Impairment is recognized if there is objective and measurable evidence that, as a result of one or more events that occurred, the balance will not be fully received. Therefore, each group company takes into consideration information that indicates: - Significant financial difficulty of the counterparty; - Default or delinquency in payments; - It becoming probable that the counterparty will enter bankruptcy or financial re-organization.

iii) Financial liabilities and equity instruments

Financial liabilities and equity instruments are classified and recorded based upon their contractual substance. Equity instruments are contracts that evidence a residual interest in the assets of the Group after deducting all of its liabilities, and are recorded at the proceeds received, net of direct issue costs. The preferred shares issued by the company are classified as equity instrument when redemption occurs only by company’s option and the dividends are paid by the company on a discretionary basis.

iv) Loans

Loans are recorded as liabilities at their nominal value net of transaction costs directly related to the issuance of those instruments. Financial expenses are calculated based on the effective interest rate and are recorded in the income statement on an accruals basis.

v) Trade payables and Other payables

Accounts payables are recorded at amortized cost using the effective interest rate method. Current accounts payable are stated at their nominal value, unless the effect of discounting is considered material, when they are recorded using the effective interest rate method. The financing costs are calculated according to the effective interest rate, except for amounts payable to very short-term securities which would be to recognize immaterial. Accounts payable are classified as current liabilities, except in cases where the maturity is longer than 12 months of the end of the reporting period, which are classified as non-current. These liabilities are included in the classes identified in Note 20 and 21.

vi) Discounted bills

Trade receivables represented by discounted bills that have not yet matured at the end of the reporting period remain recorded in the statement of financial position until they are collected.

vii) Cash and Cash Equivalents

‘Cash and cash equivalents’ include cash on hand, cash at banks, term deposits and other treasury applications which mature in less than three months and are subject to insignificant risk of change in value.

In the consolidated statement of cash-flows, ‘Cash and cash equivalents’ also include bank overdrafts, which are included in the statement of financial position caption ‘Bank loans’.


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viii) Other financial assets – Players economic rights

The amounts includes in the caption “Other financial assets – Players economic rights” are related to the economic rights over several players whose sporting rights were sold by FCPorto SAD, while keeping part of their economic rights. These assets are registered at cost, less possible impairment losses.

ix) Effective interest rate method

Effective interest rate method is a method of calculating the amortized cost of a financial asset or liability and of allocating interest income or expense over the relevant period. The effective interest rate method is the one used to calculate the amortization cost of a financial asset or liability and to realize the income or cost allocation up to maturity of the financial instrument. The effective interest rate is the one that, being used to discount estimated future cash flows associated to the financial instrument, allows to meet its actual value to the financial instrument value on the initial recognition date.

x) Impairment of financial instruments

Financial assets are analysed at each consolidated financial statement date to verify the existence of impairment losses indicators. The financial assets are considered in situation of impairment when there is objective evidence that, as a consequence of one or more events occurred after the assets initial recognition the estimated cash flows had been negatively affected. For the financial assets measured at amortized cost, the impairment is calculated by the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate. For investments on subsidiaries, measured at acquisition cost less impairment, the impairment analysis evolves the use of discounted cash flows models to estimate the value in use of the referred investments. Such models imply that the Company estimated the present value of future cash flows of the subsidiary company according to a discount rate in line with its associated risk. It is the Board of Directors understanding that the use of the above mentioned methodology is adequate to conclude on the eventual existence of financial investments impairment as it incorporates the best available information as at the date of the financial statements. j) Contingent assets and liabilities

Contingent assets are possible assets arising from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not within the full control of the Group. Contingent assets are not recorded in the consolidated financial statements but disclosed when future economic benefits are probable. Contingent liabilities are defined by the Group as (i) possible liabilities arising from past events, the existence of which will only be confirmed by the occurrence, or not, of one or more uncertain future events not under full control of the Group, or (ii) present obligations arising from past events, but which are not recognised because it is unlikely that there will be an outflow of financial benefits to settle the obligation or the amount of the obligation cannot be reliably measured.


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Contingent liabilities are not recorded in the consolidated financial statements. Instead they are disclosed in the notes to the financial statements, unless the probability of a cash outflow is remote, in which case, no disclosure is made. k) Income tax

The below mentioned group of companies, which is dominated by Futebol Clube do Porto – Futebol, S.A.D., has been taxed in accordance with the special regime for taxation of company groups (‘Regime Especial de Tributação de Grupo de Sociedades’ – ‘RETGS’). The companies included in the tax group, the June 30, 2016, taxed according to RETGS are as follows:

Futebol Clube do Porto – Futebol, S.A.D. PortoComercial – Sociedade de Comercialização, Licenciamento e Sponsorização, S.A. PortoEstádio, Gestão e Exploração de Equipamentos Desportivos, S.A.

PortoSeguro - Sociedade Mediadora de Seguros do Porto, Lda. Dragon Tour – Agência de Viagens, S.A.

FCP Media, S.A.

Income tax for the year is determined based on the taxable results of the companies included in the consolidation and takes into consideration deferred taxation. According to existing Portuguese legislation, company’s tax returns included in the consolidation are subject to revision and correction by the Tax Administration during a period of four years (five years for Social Security), unless there were tax losses, have been granted tax benefits, or there are ongoing inspections, complaints or disputes, these cases where, depending on the circumstances, the deadlines are elongated or suspended. Besides the referred in Note 34 relatively to inspections, complaints and ongoing impeachments, the tax situation on the years ended on 30 June 2013 and 30 June 2016 may still be subject to review and possible corrections. The Board of Directors of the Parent-Company and its subsidiaries believe that any adjustments resulting from review by the Tax Administration and the tax situation for tax-businesses, for the years in open, should not have a significant effect on the consolidated financial statements. Under Article 88 of the Tax Code the corporate income businesses of the Group, are subject to additional taxation on a separate set of charges at the rates provided for in the mentioned article. Deferred taxes are calculated using the balance sheet liability method and reflect the temporary differences between the amount of assets and liabilities for accounting purposes and the corresponding amounts for tax purposes. Deferred taxes are calculated and annually evaluated using the tax rates expected to be in force or announced at the time the temporary differences are reversed. Deferred tax assets are only recorded when there is reasonable expectation that sufficient taxable profits will arise in the future to allow such deferred tax assets to be used or when there are temporary taxable differences that compensate temporary tax deductible differences in the period they reverse. At the end of each period the Group reviews the deferred tax assets and reduces them whenever their realisation ceases to be likely. l) Revenue and Accruals

Revenue is recorded at fair value of assets received or receivable, net of discounts.


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i) Sales of goods

Revenue from the sales of goods (merchandising products) is recognised in the income statement when: (i) the significant risks and benefits of ownership of the assets have been transferred to the buyer, (ii) the Group does not retain continued management involvement of the asset sold to a degree usually associated with ownership or effective control over it, (iii) the amount of revenue can be reliably measured, (iv) it is likely that the economic benefits associated with the transaction will flow to the Group, and (v) the costs incurred or to be incurred with the transaction can be reliably measured. Sales are recognised net of taxes, discounts and other costs, including commissions, at the fair value of the amount received or receivable. ii) Sale of players’ registrations

Gains or losses on disposal of players’ registrations are recorded in the income statement under the caption ‘Income/(expenses) related with transactions of players' registrations’ and are calculated as the difference between the selling price and the carrying amount of the player’s registration at the date of the sale and any other costs related directly with the sale, including intermediation service costs and costs with liabilities relating to the ‘solidarity mechanism’ (that corresponds to a compensation at the time of the transfer of a player to another club, before the term of the respective sporting contract in is actual club, to its former clubs that the players where registered since their 12th and their 23rd birthday – this amount corresponds to 5% of the transfer value, to distribute proportionally among them, 0.25% from 12th to 15th anniversary and 0.5% from 16th to 23rd anniversary). Whenever relevant, the effect of discounting future receipts to its present value is considered in the determination of the transaction result. Gains or losses on sale of players’ registrations are recognized in the income statement when the significant risks and benefits of the player’s registration have been transferred. iii) Contracts of association of economic interests

The gains arising from the celebration of contracts of association of economic interests, which consists of an investment partnership, are recorded in the income statement or in statement of financial position (liabilities), depending if the significant benefits and risks arising from those transactions have been, or not, effectively and materially transferred, according to the contractually defined. iv) Bonuses for participation in European Competitions

Bonuses distributed from UEFA regarding the participation and performance in the matches of the European football competitions are recognised in the period when those matches take place. v) Other income

Income relating to broadcasting rights, advertising and sponsorships is recorded in the income statement in accordance with the duration period of the respective contracts. Income relating to football matches, namely ticket income and season tickets, are recognised in the period the matches take place.


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Interest and financial income are recognised on an accruals basis at the applicable effective interest rates. Other income and expenses are recorded in the period to which they relate, regardless of their date of payment or receipt. Differences between the amounts received or paid and the corresponding income and expenses are recognised in captions ‘Other non-current assets’, ‘Other current assets’, ‘Other current liabilities’ and ‘Other non-current liabilities’

m) Post-Employment benefits

The Group has committed to grant to certain employees cash benefits as pension complements for retirement, which configure a defined benefit plan. In order to estimate its liability for payment of these benefits, actuarial liabilities were calculated in accordance with the “Projected Unit Credit Method”. Actuarial gains and losses are recorded in the statement of profit and loss and other comprehensive income in the year they occur, as defined in IAS 19. Pension liabilities are recognized on the balance sheet date under the caption "Pension liabilities" and represent the present value of obligations for defined benefit plans, adjusted for actuarial gains and / or liabilities for past services not recognized.

n) Foreign currency balances and transactions

All foreign currency assets and liabilities are translated to Euro at the official year-end exchange rates. Exchange gains and losses resulting from differences between the exchange rates in force on the date of the transactions and those in force on the date of collections, payment or the end of the reporting period are recognised as gain or loss in the income statement of the period.

o) Subsequent events

Events after the end of the reporting period that provide additional information on conditions existing at the end of the reporting period (adjusting events), are reflected in the consolidated financial statements. Events after the end of the reporting period that provide information about conditions arising after the end of the reporting period (non-adjusting events), when material, are disclosed in the notes to the financial statements (Note 35).

p) Judgements and estimates

In the preparation of the accompanying consolidated financial statements judgments and estimates were made and several assumptions were used that affected the value of the assets and liabilities presented, as well as the presented amounts of revenues and expenses for the period.

Estimates used and underlying assumptions were determined based on the best information available of the ongoing events and transactions, at the approval date of these financial statements, as well as based on best knowledge of past and present events. However, not foreseeable situations may occur in subsequent periods, which were not considered in these estimates. Changes to these estimates that occur in subsequent periods will be prospectively corrected. For this reason and considering the uncertainty level incorporated, actual results of these transactions may differ of the corresponding estimates.


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The most significant accounting estimates reflected in the consolidated income statements include:

(i) Useful lives of tangible and intangible assets; (ii) Impairment analysis of Goodwill, of financial assets (namely, players’

economic rights), of the intangible assets – players’ registrations (Note 2.3.b)), and of other tangible and intangible assets;

(iii) Recognition of adjustments on assets and provisions.

q) Segment information

Every year, the Group’s most adequate applicable segments are identified considering the developed activities.

Information regarding income by business segment is included in Note 32.

3. FINANCIAL RISK MANAGEMENT

In addition to the risks inherent to the results of the sports’ activity and its’ impacts on the economic results and on the assets appreciation, the Group’s activity is also exposed to a variety of financial risks, such as market risk, credit risk and liquidity risk. These risks are the result of the uncertainty inherent to the financial markets, which is reflected in the capacity to estimate future cash-flows and returns. The Group’s risk management policy seeks to minimize any adverse effects arising from these uncertainties characteristic of financial markets.

3.1. Market risk

a) Interest rate risk The interest rate risk is primarily result of loans indexed to variable interest rates. The Group's debt is mainly indexed to variable and fixed interest rates, exposing the cost of debt to a risk of volatility. The impact of such volatility in the profits and equity of the Group is significant given the high level of indebtedness of the Group. Although the interest rate risk is significant, the Group does not, usually, use interest rate derivatives for hedging this risk. As of 30 June 2016 and 2015, the Group presents a debt of approximately 184,091 thousand Euro and 172,543 thousand Euro, respectively, divided between current and non-current loans (Notes 18 and 19) contracted with various financial institutions and other investors (“Other creditors”).

Interest rate sensitivity analysis

The sensitivity analysis presented below was computed on the basis of the Group's exposition to changes in interest rate on financial instruments with reference to the estimate of indebtedness level in the season 2015/2016. For financial instruments, the analysis was prepared on the understanding that changes in market interest rates affect interest income or expenses of financial instruments indexed to variable interest rates.

The mentioned analysis pointed out that if the Euribor had been 50 basis points higher and all other variables held constant, the financial charges for the year ended 30 June 2016 would


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increase by, approximately 277,000 Euro (234,000 Euro in the financial year ended 30 June 2015).

b) Exchange rate risk

Developing its activity, the Group carries out some transactions denominated in currencies other than Euro, namely transactions of players’ registrations. However, such transactions in foreign currency have been insignificant, being the vast majority contracted in Euro, and residually in U.S. dollars. Thus, the Group does not use derivatives for hedging, namely exchange rates forwards.

3.2. Credit risk

The Group's exposure to credit risk is mainly related with accounts receivable arising from the sale of players’ registrations and other transactions related with the Group’s activity, namely the sale of broadcasting rights, advertising and various sponsorships. The credit risk refers to the risk of the counterparty defaulting on its payment contractual obligations, resulting in a financial loss to the Group. The objective of this risk management is to ensure the effective credit collections on established deadlines without affecting the Group’s financial stability. The evaluation of this risk is made on a regular basis, and the management’s goal is (a) to evaluate the counterparty in order to assess its ability to pay the debt, (b) to monitor the evolution of the amount of trade receivables, and (c) to perform an impairment analysis of accounts receivables on a regular basis. The Group does not consider there is significant credit risk with any entity in particular, or with a group of entities with similar characteristics, to the extent that accounts receivables are spread across various customers and different geographical areas. The Group asks for credit guarantees, when the financial position of the client recommends so. For customers with higher credit risk, or when the account receivable is greater than normal, these guarantees should be bank guarantees. Impairment losses related to accounts receivables are calculated taking into consideration: (a) the client’s risk profile, (b) the term of collection of each contract, which differs in each line of business, and (c) the customer’s financial conditions. Changes in accumulated impairment losses for the years ended 30 June 2016 and 2015 are disclosed in Note 22. As of 30 June 2016 and 2015, the Group considers that there is no need to book additional impairment losses besides the amounts recorded on those dates and summary disclosed in Note 22.

3.3. Liquidity risk

Liquidity risk is defined as the risk of lack of ability to settle or accomplish its obligations on stipulated time and reasonable price. The existence of liquidity implies that management parameters are set which maximize the return and minimize the opportunity costs associated with the liquidity in a safe and efficient manner. This risk management in the Group aims to:

- Liquidity - ensure the permanent and efficient access to funds to meet correct payments to the respective due dates;

- Security - minimize the probability of default in the refund of any application of funds; and

- Financial efficiency -minimise the cost of opportunity of excessive short term liquidity.


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The Group aims to make compatible the due dates of assets and liabilities through an active management of its maturities. Normally, each contract loan is guaranteed by a receivable account balance (due to player’s registration sale, or due to receivables amounts related to European competitions bonuses and broadcasting rights); additionally, usually, the maturity dates of such loans match the due dates of the accounts receivables. The information considered in the notes to the consolidated financial statements, regarding the maturity analysis of financial liabilities includes the due amounts, not discounted, and based upon the worst case scenario, which is, the shortest period in which the liability becomes due, assuming the compliance of all requirements set contractually. Regarding the liquidity risk, as of 30 June 2016, despite the consolidated financial statements show a negative equity attributable to equity holders of the parent company of 34 million Euro and a negative working capital in approximately 87 million Euro (25 million Euro as of 30 June of 2015), it is conviction of the Board of Directors of FC Porto, SAD, supported in its annual treasury budgets, that based (i) on loans obtained, or in the process of be obtained (ii) on the renegotiation of maturities of existing loans, (iii) in the conduction of a financial operation for restructuring liabilities, in order to put a significant part of this these liabilities in the long term, as well as (iv) the predictions of the eventual cash-flows resulting from the sale of players registration sporting rights, as it has been usual in prior years, this risk is properly mitigated.

3.4. Regulatory risk - “ Financial Fair Play “

FCP, SAD is subjected to the licensing system for admission of football clubs in participating on UEFA organized competitions: "UEFA Club Licensing and Financial Fair Play Regulations". This regulation governs the rights, duties and responsibilities of all parties involved in the club licensing system for participation in the UEFA competitions and sets in particular the sport’s related to infrastructures, administrative and staff-related, legal and financial minimum criteria to be met by a sports company in order to obtain a license to participate in UEFA club competitions as part of the admission process to the competition. According to this system FCP SAD, will have to meet a set of requirements, among which the following stands out: 1. Inexistence of overdue and unpaid debts (i) with football clubs regarding the players’ registrations transfers and (ii) towards employees and/or tax authorities and social security; 2. Verification of the equilibrium ("breakeven") between the relevant revenues and relevant costs, which the acceptable accumulated deviation raises to a 5 million Euro for a monitoring period equivalent to the sum of three exercises (the three previous seasons, except the first year of application of this criteria (season 2013/2014) in which it was considered only two seasons). However, this negative deviation may be exceeded if such excesses are fully covered by equity contributions from shareholders or and / or related parties:

• Seasons of 2013/14 and 2014/15: 45 million Euro; • Seasons of 2015/16, 2016/17 and 2017/18: 30 million Euro The sanctions for non-compliance with these rules may include (i) warnings, (ii) fines, (iii) retention of premiums paid and, ultimately, (iv) the prohibition to participate in UEFA’s organized competitions. Taking into account the results obtained in the financial years 2013/14, 2014/15 and 2015/2016 presented here, the aggregate result of break even in 2013/14 to 2015/2016 monitoring period of FC Porto, SAD, is deficient and above the acceptable deviation.


___________________________________________________________________________________________


The Company's Board of Directors addressed the UEFA responsibles’ in order to explain the reasons for the recorded deficit, which included the decision of not to sell the sports rights of certain players in order to not jeopardize the sportive performance of the team. It is expectation of the FC Porto, SAD Board of Directors, similarly to investigation processes carried out in previous seasons to clubs in similar situations, that the Company must have to comply with certain obligations and implement some measures, as defined by the UEFA Club Financial Control Body, which aims to reach the break-even in future years. However, it is the conviction of the Company’s Board of Directors, taking into consideration investigation processes carried out in previous seasons to clubs in similar situations, that these measures will pass by an economic and financial re-equilibrium approach rather than a more punitive perspective, by which is expected that these measures do not have no significant impact on the sportive and economic performance of the Company.

3.5. Sportive risk

The main activity of FCP, SAD is the participation in national and international professional football competitions. Therefore, the Company depends on the existence of these sportive competitions, the maintenance of their participation’s rights, the maintenance of the premiums paid under these competitions and the sportive performance achieved by its professional football team, particularly the possibility of qualifying for the European competitions mainly the UEFA Champions League. By its turn, sports performance may be affected by the sale or purchase of players’ registrations considered essential for the sportive performance of FCP, SAD.

As predicted in the sports companies’ activity, FCP, SAD regularly sells regularly its players’ registrations. In the acquisition of each players’ registrations, there is no guarantee that the value of a potential sale corresponds to their fair value or even that there will be interested buyers in acquiring the players’ registrations of a certain player. As usual in its activity, FCP, SAD has players’ registrations that may be sold at any time, and, in case of sale of those players’ registrations, it may not be possible to find players that replace the players that were sold, providing at least the same level of performance.

Significant part of the operating income of FCP, SAD arises from the sale of football matches’ broadcasting rights of advertising contracts. These revenues are dependent on the media and sports projection of their main football team as well as the negotiating power of FCP, SAD towards the entities to which these exploitation rights are transferred of those activities. In addition, FCP, SAD is dependent on the ability of counterparties to such contracts comply with the agreed payments and, ultimately, to be possible to find other competitors in the market of those entities.

Costs related with the set of FCP, SAD football players, assume a determining weight in its operating results. The profitability and the economic and financial balance of the Company are, therefore, significantly dependent on the ability of the FCP, SAD Management to ensure a moderate increase in average costs per player and the rationalization of the number of players, specially taking into account the criteria of Financial Fair Play defined in Section 3.4.


___________________________________________________________________________________________


4. CHANGES IN ACCOUNTING POLICIES, ESTIMATES AND ERRORS

During the year ended June 30, 2016, FCP SAD changed its accounting policy regarding the revenue recognition of European competitions (UEFA Champions League or UEFA Europa League) right of participation fixed bonuses, now recognizing this bonus in the same in the period in which the matches take place, and not in the year in which that right of access is guaranteed, a policy followed until the year ended June 30, 2015 and that was changed as the Securities Market Commission (CMVM) understands that this should be the accounting policy to be followed.

If the FCP, SAD maintained the accounting policy adopted until the year ended June 30, 2015, operating income and net profit of the Company for the year ended June 30, 2016, would have increased by approximately 2,000,000 Euro, by the revenue recognition of bonuses regarding the play off access of the UEFA Champions League 2016/17 edition.

5. COMPANIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS

The companies included in the consolidation by the full consolidation method (Note 2.2.a), their head offices, the percentage of share capital held by the Group and activity as of 30 June 2016 and 2015 are as follows:


___________________________________________________________________________________________


(a) An entity that became part of the consolidation perimeter on October 22, 2014. (b) Entities that became part of the consolidation perimeter on July 10, 2015.

6. CHANGES TO THE CONSOLIDATION PERIMITER

The detail of caption Goodwill as of 30 June 2016 and 2015 is as follows:

%

participation

held

%

participation

held

30.06.2016 30.06.2015

Futebol Clube do Porto – Futebol,

S.A.D.Porto

Participation in professional footbal competitions and the

sporting events promotion and organization

Parent

company

Parent

company

PortoComercial – Sociedade de

Comercialização, Licenciamento e

Sponsorização, S.A. (“PortoComercial”)

PortoImage rights commercialization, sponsoring, merchandising and

products licensing.93.50% 93.50%

F.C.PortoMultimédia - Edições

Multimédia, S.A. (“PortoMultimédia”)Porto

Editing, production and commercialization of multimedia material

and to the Inetrnet, periodical and non-periodical publications.70% 70%

PortoEstádio – Gestão e Exploração de

Equipamentos Desportivos, S.A.

(“PortoEstádio”)

Porto Sport equipmentmanagement and exploration. 100% 100%

PortoSeguro - Sociedade Mediadora de

Seguros do Porto, Lda. (“PortoSeguro”)Porto Insurance brokerage. 90% 90%

Dragon Tour, Agência de Viagens, S.A.

(“DragonTour”)Porto

Organization and sale of travek and tour packages; ticket and

seat reservation; representation of other travel agencies and

tourism.

93.50% 93.50%

FC Porto – Media, S.A. (“FCPMedia”) Porto

Concept, design, development, production, direction, promotion,

marketing, acquisition, exploration rights, recording, distribution

and dissemination of works and audiovisual progrms,

multimedia, television, video, cinema, theme, internet, channels,

tourist events, cultural and sporting in any formats and systems;

managing, operating ad providing services in the areas of

recording, production and communication of audiovisual works,

television shows, souns, images, and any other audiovisual

media; issue periodic publicities, books and multimedia.

98.78% 98.78%

Euroantas, Promoção e Gestão de

Empreendimentos Imobiliários, S.A.

(“Euroantas”) (a)

Porto Exploration of property assets, namely "Estádio do Dragão" 47% 0%

Avenida dos Aliados, Sociedade de

Comunicação, S.A. ("Avenida dos

Aliados") (b)

Porto Exploration of the cable television channel "Porto Canal" 81.58% -

Miragem - Produção Audiovisual S.A.

("Miragem") (b)Porto

Production and execution of advertisings, news reports,

documentaries and TV programs, in video support81.58% -

Company Head Office Activity


___________________________________________________________________________________________


Note: “Porto Canal” Segment includes the Goodwilll of the subsidiaries FC Porto – Media, S.A., Avenida dos Aliados – Sociedade de Comunicações, S.A. and Miragem – Produção Audiovisual, S.A.. 2015/16 On July 10, 2015, FC Porto SAD acquired from Medialuso – Produções para Televisão, S.A. (“Medialuso”), a stake equivalent to 99.4% of the share capital of Avenida dos Aliados – Sociedade de de Comunicações, S.A., which, on its turn, held 100% of the share capital of the subsidiary Miragem – Produção Audiovisual, S.A., for 4,000,000 Euro. In the same date, FCP Media sold 17% of the share capital of Avenida dos Aliados to Mediapro Portugal, SGPS, S.A. by 684,104 Euro. In the sequence of this operation FCP Media holds 82.4% of the share capital of Avenida dos Aliados and the FCP, SAD holds indirectly 81.58% of the share capital of the companies Aliados and Miragem - Produção Audiovisual as well as the control over them; therefore these companies were included in the consolidation perimeter through the full consolidation method with reference to that date. Goodwill of Avenida dos Aliados and Miragem resulted from acquisition that was determined based on these acquired subsidiaries financial statements’ reported as of July 1, 2015. In the fair value imputation exercise of the acquired assets and liabilities, and taking into consideration the shares purchase and sale contract concluded with Medialuso, in which was foreseen, within 6 months after the contract celebration date (July, 10), the allocation of broadcasting technical equipment and means to the TV channel "Porto Canal", differences from the book value of these assets were detected, so these same equipments have been recognized in tangible fixed assets caption (Note 7) in the amount of 1,804,440 Euro, valued at market value, through an evaluation report carried out by an independent evaluator. Additionally, the Group obtained an evaluation of the Porto Canal property through an evaluation report carried out by an independent evaluator, in which the market value in which the market value was higher than the book value in the amount of 477,128 Euro. Consequently the value of goodwill initially recorded was decreased in the above described amounts. As at that date (July 10, 2015) the fair value of the assets and liabilities of those subsidiary as well as the computation of goodwill, are as follows:

30.06.2016 30.06.2015 Variation

PortoSeguro 238,045 238,045 -

Segment "Porto Canal" 4,231,119 2,901,670 1,329,449

4,469,164 3,139,715 1,329,449


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2014/15 On 22 October 2014 FC Porto SAD acquired a stake equivalent to 47% of the share capital of Euroantas to FC Porto (Club). The Board of Directors of FC Porto, SAD understood that, by acquiring this participation and by having passed to control the financial and operating policies of Euroantas, FC Porto SAD holds control over Euroantas; as so this entity became part of the consolidation perimeter as from that date. As at that date (22 October 2014) the fair value of the assets and liabilities of that subsidiary as well as the computation of goodwill, are as follows:

Assets

Segment

"Porto Canal"

Tangible Fixed Assets 499,520

Equipments transferred from Medialuso 1,804,440

Fair value adjustment regarding Porto Canal real property 477,128

Customers 1,887,305

Cash and cash equivalents 35,380

Financial investments 512,745

Deferred assets 1,671

Others account payables 304,732

Liabilities

Loans obtained (150,415)

Suppliers (3,318)

Deferred (3,313)

Others (2,005,346)

Net assets 3,360,527

Total effective percentage (ii) 81.58%

Equity value acquired 2,741,384

Non-controlling interests (v) 619,144

Equity (iii) 3,360,527

Net acquisition value 3,315,896

Value of the financial investments of "Avenida dos Aliados"

in the subsidary "Miragem" (before acquisiton transaction) 510,000

Acquisition total value (i) 3,825,896

Total Goodwill (iv)=(i)/(ii)-(iii) 1,329,449

Total non-controlling interests (vi)=(iv)*[1-(ii)]+(v) 864,081


___________________________________________________________________________________________


The Goodwill of Euroantas, arising from the acquisition, was computed based on the financial statements of the acquired subsidiary reported as of October 22, 2014. In the fair allocation exercise of the acquired assets and liabilities, differences were detected in relation to the book value, having this Goodwill been fully allocated to the value of the fixed tangible asset "Estádio do Dragão" (the main activity of this company is the exploitation of real estate assets, namely the " Estádio do Dragão ", which is the major component of its assets) in accordance with an independent evaluation. If this acquisition had been reported as of 1 July 2014, the income for the year the Group ended June 30, 2015 would increase in the amount of approximately 282,000 Euros and net income would have decreased by approximately 7,000 Euro.

7. TANGIBLE AND OTHER INTANGIBLE ASSETS

During the years ended 30 June 2016 and 2015, the movements in tangible and other intangible assets, as well as depreciation and accumulated impairment losses, were as follows:

Assets

Tangible fixed assets (Note 7) 106,779,263

Costumers 4,154,557

Cash and cash deposits 10,889

Other current assets 6,298,324

Deferred assets 3,901,535

Other accounts payable 340,232

Liabilities

Loans obtained (15,269,690)

Derivatives (786,967)

Suppliers (8,845,392)

Deferred liabilities (18,571,199)

Others (120,332)

Net assets 77,891,220 (iii)

Total effective percentage 47.00% (ii)

Equity value acquired 51,756,250 (i)

32,228,461 (iv)=(i)/(ii)-(iii)

Diference between the accounting value and tax value of the Stadium 10,727,247

Tax rate 21%

Deferred tax liabilities 2,252,722 (v)

Total Goodwill (Nota 7) 34,481,183 (vi)=(v)+(iv)

Non-controlling interests 58,363,431 (vii)=(i)/(ii)-(i)


___________________________________________________________________________________________


Land and Buildings Other Fixed

natural and other Machinery and Office tangible assets in

resources Construtions Equipment Vehicles equipment assets progress Total

Gross cost:

Opening balance (30.06.2015) 13,830,598 129,492,935 35,398,545 1,143,230 2,312,620 383,183 112,499 182,673,610

Changes in consolidation perimeter (Note 6) 39,649 569,799 971,522 - 106,365 120 - 1,687,455

Imputation of the fair value (Note 6) - 477,128 1,804,440 - - - - 2,281,568

Additions - 90,324 409,860 - 26,446 - 1,135,751 1,662,381

Regularizations - 535,000 713,250 - - - (1,248,250) -

Closing balance (30.06.2016) 13,870,247 131,165,186 39,297,617 1,143,230 2,445,431 383,303 - 188,305,014

Accumulated depreciation

and impairment losses

Opening balance (30.06.2015) - 22,753,923 16,382,470 1,083,817 2,210,983 277,321 - 42,708,514

Changes in consolidation perimeter (Note 6) - 218,407 891,986 - 77,422 120 - 1,187,935

Depreciation - 2,861,183 940,617 46,315 53,461 3,061 - 3,904,637

Closing balance (30.06.2016) - 25,833,513 18,215,073 1,130,132 2,341,866 280,502 - 47,801,086

Carrying value 13,870,247 105,331,673 21,082,544 13,098 103,565 102,801 - 140,503,928

30.06.2016

Tangible Assets

Land and Buildings Other Fixed

natural and other Machinery and Office tangible assets in

resources Construtions Equipment Vehicles equipment assets progress Total

Gross cost:

Opening balance (30.06.2014) - 1,102,098 3,445,312 1,143,230 2,292,856 256,679 - 8,240,175

Changes in consolidation perimeter (Note 6) 13,830,598 93,909,553 31,833,001 - 19,764 126,504 - 139,719,420

Imputation of the fair value (Note 6) - 34,481,183 - - - - - 34,481,183

Additions - - 120,232 - - - 112,499 232,731

Regularizations - 101 - - - - 101

Closing balance (30.06.2015) 13,830,598 129,492,935 35,398,545 1,143,230 2,312,620 383,183 112,499 182,673,610



Opening balance (30.06.2014) - 815,538 2,797,163 1,037,514 2,136,143 256,411 - 7,042,769

Changes in consolidation perimeter (Note 6) - 19,809,090 13,095,364 - 17,109 18,594 - 32,940,157

Depreciation - 2,129,295 489,943 46,303 57,731 2,316 - 2,725,588

Closing balance (30.06.2015) - 22,753,923 16,382,470 1,083,817 2,210,983 277,321 - 42,708,514

Carrying value 13,830,598 106,739,012 19,016,075 59,413 101,637 105,862 112,499 139,965,096

30.06.2015

Tangible Assets

Industrial

property Others Total

Gross cost

Opening balance (30.06.2015) 2,465,597 227,432 2,693,029

Regularizations (470,405) 107,038 (363,367)

Closing balance (30.06.2016) 1,995,192 334,470 2,329,662



Opening balance (30.06.2015) 750,545 227,300 977,845

Depreciation 21,459 24,150 45,609

Regularizations (389,097) 25,730 (363,367)

Closing balance (30.06.2016) 382,907 277,180 660,087

Carrying amount 1,612,285 57,290 1,669,575

Other intangible assest

30.06.2016


___________________________________________________________________________________________


The caption ‘Industrial property’ relates, essentially, to the right to use the FCP trademark during a period of 99 years, and is being amortised over that period.

8. INTANGIBLE ASSETS - PLAYERS’ REGISTRATIONS

During the financial years ended 30 June 2016 and 2015, the movement in ‘Players’ registrations’ as well as depreciation and accumulated impairment losses, was as follows:

Industrial

property Others Total

Gross cost

Opening balance (30.06.2014) 2,465,597 227,432 2,693,029

Closing balance (30.06.2015) 2,465,597 227,432 2,693,029



Opening balance (30.06.2014) 705,079 223,822 928,901

Depreciation 45,466 3,478 48,944

Closing balance (30.06.2015) 750,545 227,300 977,845

Carrying amount 1,715,052 132 1,715,184

Other intangible assest

30.06.2015

30.06.2016 30.06.2015

Gross Cost

Opening balance 120,209,577 117,698,516

Acquisitions 75,188,563 53,372,782

2,484,188 -

Sales (40,020,111) (46,285,529)

Transfers (Note 9) (720,350) (250,000)

Disposals (3,402,673) (4,326,192)

Closing balance 153,739,194 120,209,577



Opening balance 54,299,863 56,192,875

Depreciation (Note 27) 29,584,867 30,227,292

Impairment losses for the year (Note 27) 1,971,283 1,146,645

Sales (19,357,176) (29,955,014)

Disposals (2,238,253) (3,311,935)

Impairment losses utilization (1,146,646) -

Closing balance 63,113,938 54,299,863

Carrying amount 90,625,256 65,909,714

Players'registrations

Intangible Assets

Advances for acquisiton of players' registrations


___________________________________________________________________________________________


Acquisitions

The main acquisitions made in the year ended 30 June 2016, in amount, can be resumed as follow:

The caption “Additional expenses” refers to expenses related to the purchase of players’ registrations, namely charges for intermediation services, legal services, signing-on fees paid directly to the players, etc. It should be noted that in situations where the registration is less than 100%, although the Company is entitled to full use of the player’s registration, it has entered into an associated financial interests contract with a third party, which consists of an investment partnership in the registration rights, resulting in the proportional sharing of the inherent results in a future transaction of these rights, if it happens. The main acquisitions made in the year ended 30 June 2015, in amount, can be resumed as follow:

Player

Economic

Rights

percentage Acquisition Date Vendor

Contract

end date

Total

acquisition

cost

Imbula 100% Jul-15 Olympique de Marseille Jun-20 20,000,000

Corona 70% Aug-15 FC Twente Jun-20 10,500,000

Felipe 75% Jun-16 Corinthias Paulista Jun-21 6,000,000

Layún 100% Jun-16 Watford Jun-19 6,000,000

Marega 100% Jan-16 Maritimo da Madeira, Futebol, SAD Jun-20 3,800,000

Inácio 50% Jun-16 São Paulo Futebol Clube Jun-21 3,000,000

Danilo Pereira 80% Jul-15 Portimonense Futebol, SAD Jun-19 2,800,000

Victor Garcia 50% Aug-15 Northfields Sports, B.V. Jun-20 1,800,000

André André 100% Jul-15 Vitória Sport Clube - Futebol, SAD / Onsoccer Jun-19 1,500,000

Suk 70% Jan-16 Vitória Futebol Clube, SAD Jun-20 1,500,000

Aboubakar 10% set-15 and jan-16 FC Lorient Jun-18 1,300,000

Others 5,050,000

Additional expenses related with the acquisiton of players' registration rights 15,162,610

78,412,610

Financial discount effect (3,224,047)

Net value 75,188,563


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The charges for intermediation services related with the purchase of players’ registrations in the years ended 30 June 2016 and 2015 referred above, as well as with the negotiation and renegotiation of labour contracts with players, amounted to 13,013,878 Euro and 6,863,545 Euro, respectively. In the financial year ended 30 June 2016 these services were provided by Onsoccer International - Gestão de Carreiras Desportivas, S.A., Media Base Sports, S.L., 380 Around Marketing, S.L., Northfields Sport BV, Cantera Latina SA de CV, Tigerfish Ltd., Energy Soccer, Proeleven Gestão Desportiva, Lda, Calitecs SA, Alexander Zahavi Unipessoal, Lda., Gondry Financial Services Limited, Gopro Sport Management, S.A., Vela Management Limited, RAMP – Management Group International, Jorge António Berlanga Amaya, Team Management, Ricardo Calleri, Onsidefoot Malta Limited, C.B.Nafricatalentssport, Lda., For Gool Company Ltd., Sidius Unipessoal, Lda, D20 Sports Management Limited, Pacheco & Teixeira Lda., Buga Assesssoria em Marketing Esportivo Ltda., Bertolucci Assessoria e Propaganda Esportiva Ltda. and Normam Capuozzo Silva In the financial year ended 30 June 2015 these services were provided by Gespro Sport, SL, Bahía Atlántica S.L., Japer Sport, S.R.L., Eurogol – Consultoria e Marketing Esportivo, Ltda, Gesdek – Gestão Desportiva, Lda., RAMP – Managment Group International, A.R.B. Sport Asesores SL, Idub Servicios Desportivos, SL, Idoloasis – Soc. Unipessoal, Lda., Termford Managment Limited, SP International Management GMBH, Northfields Sports B.V, Tramontin Advogados, Foot2Foot – Gestão de Carreiras Desportivas, Lda., Prestige Sports Managment Limited, FootInvest, SA, D.L. Soccer Service SAS, JOD - Gestão de carreiras desportivas, Lda., Vela Managment Limited and Unifoot – Gestão e Eventos de carreiras de profissionais desportivos, S.A., Nescar Sports, S.L. and by the agents Maxime Nana, Luis Pompeo, Graham Heydorn and José Caldeira. The amounts of players registrations’ purchases in the years ended as of June 30, 2016 and 2015, consider the effect of discounting future payments to its present value, where applicable, in the amounts of, approximately 3,224,047 and 2,578,199 Euro, respectively. These amounts refer to the long term account payables balances related with the acquisition of the registrations of players, namely Imbula, Inácio, Corona, Marega, Felipe, Layún and Danilo Pereira (30 June

Player

Economic

Rights

percentage Acquisition Date Vendor

Contract

end date

Total

acquisition

cost

Adrian Lopez 60% Jul-14 Club Atlético de Madrid Jun-19 11,000,000

Martins Indi 100% Jul-14 Feyenoord Rotterdam N.V. Jun-18 7,700,000

Brahimi 100% Jul-14 Granada Club de Futbol Jun-19 6,500,000

Quintero 50% Dec-14 Delfino Pescara 1936 SRL Jun-17 4,500,000

Aboubakar 30% Aug-14 Football Club Lorient Jun-18 3,000,000

Marcano 100% Aug-14 Football Club Rubin Jun-18 2,650,000

Hernani 75% Feb-15 Vitória Sport Clube - Futebol, SAD Jun-19 2,900,000

Otávio 33% Aug-14 Coimbra Esporte Clube Ltda. Jun-19 2,500,000

Evandro 100% Jul-14 Estoril Praia, SAD Jun-18 2,350,000

Others 4,492,963

Additional expenses related with the acquisiton of players' registration rights 8,358,018

55,950,981

Financial discount effect (2,578,199)

Net value 53,372,782


___________________________________________________________________________________________


2016) and Adrian Lopez, Brahimi, Evandro, Martins Indi, Octávio, Hernâni, Sérgio Oliveira and Quintero (30 June 2015).

Sales Sales made during the financial year ended 30 June 2016 generated capital gains of 40,222,955 Euro (Note 27) which result mainly from: a) Sale of registration rights of the player Alex Sandro to Juventus, in the amount of 26,000,000

Euro, generating a capital gain of 21,362,880 Euro, after deducting the total amount of 4,637,120 Euro relating to: (i) effect of discounting future medium term receipts and payments to its present value arising from these transactions; (ii) responsibilities with the solidarity mechanism, (iii) amounts payable to the player as compensation and (iv) the carrying amount of the player’s registration on the date of sale;

b) Sale of registration rights of the player Imbula to Stoke City, in the amount of 24,000,000

Euro, which generated a capital gain of 3,867,345 Euro, after deducting the total amount of 3,048,638 Euros relating to (i) effect of discounting future medium term receipts and payments to its present value arising from these transactions (ii) responsibilities with the solidarity mechanism, (iii) intermediation services costs provided by the company Kick International Agency BV and (iv) the carrying amount of the player’s registration on the date of sale. The Company also retains the right to receive 15% of the gain in a future transfer of the player’s registration (net of the amounts paid by Stoke City to the Company);

c) Sale of registration rights of the player Maicon to São Paulo, in the amount of 12,000,000

Euro, which generated a capital gain of Euro 9,093,100, after deducting the total amount of 2,906,900 Euro relating to: (i) effect of discounting future medium term receipts and payments to its present value arising from these transactions; (ii) responsibilities with the solidarity mechanism; (iii) intermediation services costs provided by the company Overview of Teo Co., Ltd. and (iv) the carrying amount of the player’s registration on the date of sale.

Sales made during the financial year ended 30 June 2015 generated capital gains of 86,470,297 Euro (Note 27) which result mainly from: a) sale of the registration rights of Mangala to Manchester, by the amount of 30,503,590 Euro,

generating capital gains of 22,806,942 Euro after the deduction global values of 11,073,331 Euro relative to (i) the effect of discounting future medium term receipts and payments to its present value arising from these transactions; (ii) responsibilities with the solidarity mechanism; (iii) intermediation service costs provided by Gestifute – Gestão de carreiras de Profissionais Desportivos, S.A and (iv) amounts payable to the player as termination compensation; (v) the carrying amount of the player’s registration on the date of sale. Additionally, the buying club assumed the obligation to pay directly to Doyen the proportion that this entity held on the economic rights of the player for the liability recognized in the caption "Other creditors" on June 30, 2014, in the amount of 3,376,684 Euro, which was reversed and recognized in the computation of the capital gain;

b) Sale of registration rights of Defour to Anderlecht by the amount of 6,000,000 Euros,

generating a capital gains of 2,683,593 Euro, after deducting the total amount of 3,316,407


___________________________________________________________________________________________


Euro relating to: (i) solidarity costs, (ii) liabilities relating to the solidarity mechanism; (iii) the proportional sale value of the registration player’s owned by third parties (10%); (iv) annulment of amounts payable to the player; and (v) the carrying amount of the player’s registration on the date of sale;

c) Sale of registration rights of the player Danilo to Real Madrid by the amount of 31,500,000 Euro, generating capital gains of 23,101,403 Euro, after deducting the total amount of 8,398,597 Euros relating to: (i) the effect of discounting future medium term receipts and payments to its present value arising from these transactions; (ii) proportion of the capital gain attributable to Santos Football Club; (iii) intermediation service costs provided by Elenka B2F Sports LTDA; and (iv) the carrying amount of the player’s registration on the date of sale;

d) Sale of registration rights of the player Jackson Martinez to Atletico Madrid for the amount of 35,000,000 Euro, which generated a capital gain of 26,633,515 Euro, after deducting the total amount 8,366,485 Euro relating to: (i) the proportional sale value of the registration player’s owned by third parties (5%), (ii) the proportion of the capital gain attributable to Northfields Sports BV, (iii) compensation for the termination of the player’s sports employment contract; and (iv) the carrying amount of the player’s registration on the date of sale.

Impairment losses for the year

During the year ended June 30, 2016 impairment losses amounting 1,971,283 Euro were recorded related with the registration of the players Helton, as FCP, SAD terminated the labour contract with this player during the season 2016/17, and Ghilas, as the player’s registration was loaned during the season 2016/2017, in his last year of contract (note 2.3.b), among others.

During the year ended June 30, 2015 impairment losses amounting 1,146,645 Euro were recorded related with the registration of the players Djalma, Opare and Quinones, because FCP SAD terminated the labour contract with these players during the season 2015/16.

Player’s registration On June 30, 2016 and 2015, the aggregation of players by range of its’ registration net book value is as follows:

As of 30 June 2016 and 2015, in the carrying amount of players’ registrations are included the following players:

30.06.2016 30.06.2015

Carrying amount of players registration Number of Number of

Players Amount Players Amount

Greater than 2,000 mEuros 15 63,596,063 12 46,152,407

Between 1,000 mEuros and 2,000 mEuros 9 13,308,648 5 7,860,617

Less than 1,000 mEuros 45 13,720,545 40 11,896,690

69 90,625,256 57 65,909,714


___________________________________________________________________________________________


a) Player loaned to another club or sports entity in the season 2016/17, whose loan period is not beyond June 30,

2017;

b) Players whose percentage of economic rights evidenced is deduced, as of June 30, 2016, the share of 50%

transferred to third parties by associated financial interests contracts;

c) Player loaned to another club or sports entity in sports season 2015/16;

d) Player loaned to another club or sports entity in the season 2016/17, whose loan period is not beyond December

31, 2017;

The registrations’ percentages presented above take into consideration the sharing of economic rights made on the acquisition date of each player’s registration, or its sale at a later date, as well as the percentages assigned by FCPorto SAD to third parties related with the sharing of the amount resulting from a future sale of these rights.

In addition, commitments were established with third parties, including clubs and sports agents, in order to share the amount of future capital gains that may be obtained through FC Porto SAD players registration rights’ sale, upon verification of specific contractual conditions. As of 30 June 2016, FCP SAD kept player’s registrations that had been pledged as security for loans, as follows:

30.06.2016 30.06.2015

Players End of the Players End of the

Player registration % contract registration % contract

Corona 70% jun/20 - -

Felipe 75% jun/21 - -

Layún 100% jun/19 - -

Adrian Lopez 60% jun/19 60% jun/19

Quintero (d)

100% jun/21 100% jun/17

Marega (a)

100% jun/20 - -

Brahimi (b)

50% jun/19 50% jun/19

Martins Indi (a)

100% jun/18 100% jun/18

Herrera 80% jun/19 80% jun/17

Aboubakar (a)

40% jun/18 30% jun/18

Danilo Pereira 80% jun/19 - -

Inácio 50% jun/21 - -

Maxi Pereira 100% jun/18 - -

Hernâni (a)

85% jun/19 75% jun/19

Diego Reyes (a) 47.5% jun/18 47.5% jun/18

Otavio 32.5% jun/19 32.5% jun/19

Marcano 100% jun/18 100% jun/18

Kayembe 85% jun/19 85% jun/19

Suk (a)

70% jun/20 - -

Evandro 100% jun/18 100% jun/18

Victor Garcia (a)

60% jun/20 10% jun/16

André André 100% jun/19 - -

Gudiño 85% jun/20 85% jun/18

Alex Sandro (c) - - 100% jun/16

Bank

Amount

30.06.2016 Due date Player Registrations' End of contract

Millennium BCP 1,250,000 30/06/2017 Helton Jun17

Novo Banco 17,000,000 30/09/2016 Herrera and Brahimi Jun19


___________________________________________________________________________________________


Additionally, buy and sale option rights contracts regarding players’ economic rights were established with third parties, namely clubs and sports agents, exercisable for periods and amounts contractually established.

9. OTHER FINANCIAL ASSETS

During the financial years ended 30 June 2016 and 2015, the movements under the caption ‘Other financial assets’ as well as accumulated impairment losses, were as follows:

The detail of this caption as of 30 June 2016 and 2015 is as follows:

The caption ‘Other financial assets’, detailed above includes economic rights of several players, whose sporting rights were sold by FCPorto SAD, while keeping part of their economic rights.

30.06.2016 30.06.2015

Gross amount

Opening balance 315,426 1,923,036

Acquisitions 14,870 157

Transfers (Note 8) 720,350 250,000

Sales - (658,333)

Disposals (503,524) (1,199,434)

Closing balance 547,122 315,426

Accumulated impairment

losses

Opening balance 23,259 1,202,037

Impairment losses of the year (Note 22 and 29) 560,944 432,114

Sales - (411,458)

Disposals (503,524) (1,199,434)


Carrying amount 466,443 292,167

Other financial assets

30.06.2016 30.06.2015

Acquisition Acquisition

Description % participation cost % participation cost

Other financial assets 30,147 15,277

Other investments

Chidera Ezeh 50% 325,205 - -

Quiñones 30% 126,608 - -

Carlos Eduardo 25% - 50% 250,000

Other players 65,162 50,150

516,975 300,150

Accumulated impairment losses (Note 22) (80,679) (23,260)

466,443 292,167


___________________________________________________________________________________________


During the year ended 30 June 2016 and 2015 were estimated impairments related to these players’ economic rights that match the best Board of Directors’ estimate of the recoverable value expected from these investments. 10. GOODWILL

In the year ended June 30, 2016 and 2015, the detail of goodwill is as follows:

This balance as of June 30, 2016, refers to the Goodwill computed as follow:

(i) Porto Seguro:

In the year ended June 30, 2007, in the acquisition of 90% of the share capital of PortoSeguro, Lda., in the amount of 717,647 Euro, net of accumulated impairment losses calculated in prior years in the amount of 479,602 Euro.

(ii) Segmento “Porto Canal”:

(a) In the year ended June 30, 2014, following the capital increase in FCP Media, SA, FCP SAD holds 98.78% of its share capital, in the amount of 2,901,670 Euro. (b) In the year ended June 30, 2016, following the acquisition by FCP to Media Mediluso – Produções para Televisão, S.A., of a stake of 82.4% of Avenida dos Aliados, FCP, SAD holds indirectly 81.58% of the share capital of the companies Avenida dos Aliados and Miragem – Produção Audiovisual, in the total amount of 1,329,449 Euro. The Group carries out annual impairment tests on goodwill and whenever there are indications that it may be impaired. During the years ended 30 June 2016 and 2015, the Group has tested the goodwill impairment, haven’t estimated additional impairment losses to be recognized. For impairment assessment purposes of the subsidiaries PortoSeguro and the segment “Porto Canal”, the recoverable amount of the Cash Generating Unit was calculated based of value in use, using the discounted cash flow method, based on the business plan developed by the company’s representative and duly approved by the Group’s Board of Directors. The key assumptions used in the mentioned business plan are as follows:

Period used: 5 years cash-flow projection Growth rate (g)(1): 2.0% Discount rate (2): 8%

(1) Growth rate used to extrapolate cash flows beyond the business plan period (2) Discount rate applied to projected cash flows

30.06.2016 30.06.2015 Variation

PortoSeguro 238,045 238,045 -

Segment "Porto Canal" 4,231,119 2,901,670 1,329,449

4,469,164 3,139,715 1,329,449


___________________________________________________________________________________________


The Board of Directors, based on the discounted value of the forecasted cash flows of the Cash Generating Unit of these business segments, discounted at the rate of 8%, concluded that, as of 30 June 2016, the recoverable amounts exceed the carrying amount of their net assets, not having been established any additional need of impairment recognition. The Company performed sensitivity analyzes as follows:

- An increase of 0.5% in the assumption of the discount rate over the years of the projections would not generate additional impairment losses, on June 30, 2016;

- A decrease of 0.5% in the assumption of the perpetuity grow rate would not generate additional impairment losses, on June 30, 2016 The projected cash flows were based on the historic performance and on the expectations regarding future development of the business.

11. TRADE RECEIVABLES

Non-current assets

The detail of non-current balances of ‘Trade receivables’ as of 30 June 2016 and 2015 is as follows:

Current Assets The detail of current balances of ‘Trade receivables’ as of 30 June 2016 and 2015 is as follows:

As of 30 June 2016 and 2015 the balance of the current and non-current caption “Trade receivables - Transactions of players' registrations” includes, essentially, the following receivables:

30.06.2016 30.06.2015

Trade Receivables - Current Account

Transactions of player's Registrations 17,713,096 14,500,000

17,713,096 14,500,000

Effect of discounting trade receivables (2,023,564) (954,816)

15,689,532 13,545,184

30.06.2016 30.06.2015

Trade Receivables - Current Account

Transactions of players' registrations 50,695,129 60,563,818

Current operations 36,819,643 14,405,300

87,514,772 74,969,118

Trade Receivables - doubtfull accounts 5,482,393 5,039,019

92,997,165 80,008,137

Effect of discounting trade receivables (844,888) (211,193)

Accumulated Impairment Losses (Note 18) (5,482,393) (5,039,019)

86,669,884 74,757,925


___________________________________________________________________________________________


On June 30, 2016, the accounts receivable of the above entities resulted essentially from the sale of the economic rights of players Alex Sandro, Imbula, Danilo, Celestin Djim, Carlos Eduardo and Maicon. The balance of the caption ‘Trade receivables - Current operations’ includes balances resulting from several operations, with emphasis on the account receivables of:

(i) Futebol Clube do Porto (“Clube”) (14,828,271 Euro in 30 June 2016 and 7,412,444 Euro in 30 June 2015);

(ii) Altice Picture S.A.R.L. in the amount of 12,500,000 Euro resulting from the matches broadcasting rights contract celebrated.

The Group's exposition to credit risk is attributed to accounts receivable relating with its’ operational activity. The amounts presented on the face of the statement of financial position are net of impairment losses, which were estimated, based upon the Group’s past experience and on the assessment of the actual situation and economic environment. The Group considers that the book value of accounts receivable, net of impairment losses, reflects their fair value. As of 30 June 2016 there are no indications that the debtors of trade accounts receivable not due will not fulfil their obligations on normal conditions, thus no impairment loss was recognised. As of 30 June 2016 and 2015 the ageing of trade receivables are as follows:

Entity jun/16 jun/15

Current Non-current Current Non-current

Juventus Football Club SPA 14,462,055 7,713,096 - -

Stoke City 13,370,000 - - -

Real Madrid 12,356,500 - 9,356,500 12,000,000

Al Hilal 3,241,387 - 5,500,000 -

Doyen Sports Investments Limited 2,788,750 - 2,500,000 2,500,000

São Paulo 2,657,970 10,000,000 2,000,000 -

Portimonense Futebol SAD 615,000 - - -

Clube Atlético Paranaense 500,000 - - -

Real Sociedad de Fútbol, Sad 300,000 - - -

Manchester City 9,545 - 2,719,255 -

Atlético de Madrid - - 35,000,000 -

Fluminense FC - - 2,125,000 -

Kasimpasa - - 529,000 -

Gol Football Luxembourg - - 375,000 -

Others 393,922 - 459,063 -

50,695,129 17,713,096 60,563,817 14,500,000

Due Date

30.06.2016 Total - 90 dias 90 - 180 dias 180 - 360 dias + 360 dias

Trade Receivables - Current Account 87,514,772 69,409,250 3,761,206 5,935,601 8,408,715

Transactions of players' registrations 50,695,129 47,244,573 1,707,972 1,162,846 579,738

Current operations 36,819,643 22,164,677 2,053,234 4,772,755 7,828,977

Trade Receivables - Doubtfull Accounts 5,482,393 - - - 5,482,393

92,997,165 69,409,250 3,761,206 5,935,601 13,891,108


___________________________________________________________________________________________


As of June 30, 2016 and 2015 almost of the balance of "Trade receivables - current accounts - Transactions of players’ registrations” with seniority over 180 days refers to contractually defined amounts. There are no cases of significant settlement delays. As of June 30, 2016 and 2015 a significant portion of the balance of "Trade receivables - current accounts - Current operations" with seniority over 180 days refers to the accounts receivables from FC Porto. As of June 30, 2016 and 2015 the balance of "Doubtful Accounts receivable" includes, mainly, receivables from football clubs, such as União Desportiva de Leiria, Futebol SAD and Esporte Clube Vitória, among others. In determining the recoverability of accounts receivable the Group considers all the changes in credit quality of counterparties from the date the granting of credit by the reporting date of the consolidated financial statements. The Group has no significant concentration of credit risk, since the risk is diluted by a scattered set of customers. Management believes that credit risk does not exceed the impairment loss recorded for doubtful debts and that the maximum exposure to credit risk corresponds to the total number of costumers shown in the consolidated statement of financial position.

12. INVENTORIES

The detail of the caption ‘Inventories’ as of 30 June 2016 and 2015 is as follows:

The inventories’ caption, as of 30 June 2016 and 2015, considers the merchandise related with the exploration of the commercial areas of Futebol Clube do Porto, carried out by the subsidiary PortoComercial. The cost of sales, for the years ended 30 June 2016 and 2015 was calculated as follows:

Due date

30.06.2015 Total - 90 dias 90 - 180 dias 180 - 360 dias + 360 dias

Trade receivables - current accounts: 74,969,118 64,663,490 1,147,664 2,281,532 6,876,432

Transactions of players' registrations 60,563,818 57,809,818 60,000 2,205,000 489,000

Current operations 14,405,300 6,853,672 1,087,664 76,532 6,387,432

Trade receivables - doubtfull accounts: 5,039,019 - - - 5,039,019

80,008,137 64,663,490 1,147,664 2,281,532 11,915,451

30.06.2016 30.06.2015

Inventories 3,121,571 2,789,761

Accumulated Impairment losses in inventories (Note 22) (572,196) (609,451)

2,549,375 2,180,310


___________________________________________________________________________________________


13. OTHER CURRENT AND NON-CURRENT ASSETS Other non-current assets The detail of caption "Other non-current assets" as of 30 June 2016 and 2015 is as follows:

In 30 June 2016, the current and non-current captions “Debtors from acquisition of financial investments” concerns to the value to receive from the sale of 17% of the share capital of “Avenida dos Aliados”, by FCP Media to Mediapro Portugal, SGPS, S.A. (Note 6). During the year ended June 30, 2014 was signed between PortoComercial and the Futebol Clube do Porto a contract for the exploitation of the FCP Museum (which opening to the public occurred in October 2013). Under this contract PortoComercial acquired the right to explore the museum during a period of 8 years and paid in advance the amount of 12 million Euro relating to outstanding rents. On June 30, 2016 the caption “Other non-current assets - Museum exploitation” correspond to the rents for the year 2017/18 and following. Other current assets The detail of caption "Other current assets" as of 30 June 2016 and 2015 is as follows:

30.06.2016 30.06.2015

Opening Balance 2,789,761 1,974,275

Purchases 3,362,322 3,238,220

Regularizations (86,648) -

Closing Balance 3,121,571 2,789,761

2,943,864 2,422,734

Impairment losses in inventories (Note 22) 60,131 232,158

Cost of sales 3,003,995 2,654,892

30.06.2016 30.06.2015

Prepayment - "Museum exploitation" 6,375,000 7,875,000

Prepayment - "Centro de Treino do Olival" Rent 180,723 216,867

Debtors from acquisition of financial investments 256,537 -

6,812,260 8,091,867


___________________________________________________________________________________________


On June 30, 2016 and 2015 the amount recorded in "Other debtors" includes advances made to athletes 800,083 Euro and 1,428,279 Euro, respectively. As of June 30, 2016 and 2015 the caption "Advances for expenses relating to the next season" includes essentially deferred expenses related to scouting contracts (634,919 Euro on June 30, 2016 and 223,744 Euro on 30 June 2015), deferred costs with players’ loans and intermediation costs from technical staff hiring (249,892 Euro on June 30, 2016 and 1,277,213 Euro on June 30, 2015). 14. CASH AND CASH EQUIVALENTS The caption ‘Cash and cash equivalents’ as of 30 June 2016 and 2015 is made up as follows:

As of 30 June 2016 and 2015 the amounts recorded in the caption “Treasury applications” refer to bank deposits repayable in less than three months and bear market interest rates.

30.06.2016 30.06.2015

Other Current Assets

State and public Sector 976,216 3,744,503

Othes debtors 2,384,503 3,547,165

3,360,719 7,291,668

Accrual Income

Champions League participation bonus to be received - 12,000,000

Protocol for services rendered - FCP 750,000 1,500,000

Broadcasting Rights 2,166,667

Advertising revenue to be billed 1,656,141 -

Insurance claims 83,274 -

Bonus for FC Porto, SAD players participation in the European

Football Cup 2016 to be received 500,084-

Debtors from acquisition of financial investments 171,028 -

Other accrual income 531,980 151,885

Deferred Expenses

Advances for expenses relating to the next season 893,977 1,619,545

Prepayment - "Museum Exploitation" 1,500,000 1,500,000

Insurance 328,807 251,789

Other Deferred Expenses 209,086 256,318

8,791,044 17,279,537

12,151,763 24,571,205

30.06.2016 30.06.2015

Cash 4,633 23,727

Bank deposits repayable on demand 3,441,179 17,951,996

Treasury application 3,370,380 265,000

6,816,192 18,240,722


___________________________________________________________________________________________


Other financial assets – current In June 30, 2016 and 2015, the caption "Other financial assets" in the amount of 6,621,556 Euro and 6,826,271 Euro respectively, refers to the cash with restricted utilization allocated to reserves for debt payment (4,514,907 Euro, on 30 June 2016, and 4,529,224 Euro, on 30 June 2015) and for other operating and maintenance costs of the “Estádio do Dragão” (2,106,649 Euro, 30 June 2016, and 2,297,047 Euro on June 30, 2015), as described in Note 18 of this notes to the consolidated financial statements. Payments and receipts from financial investments On June 30, 2016, financial investments payments in the amount of 1,500,000 Euro, refer to payments made to Medialuso for the acquisition of 99.4% of the share capital of Avenida dos Aliados – Sociedade de Comunicações, S.A.(Note 6). On June 30, 2016 the financial investment receipts in the amount of 256,539 Euro, refer to receipts from Mediapro Portugal, SGPS, SA regarding the sale of 17% of the share capital of Avenida dos Aliados (Note 6).

15. TAXES The tax losses carried forward according to the income declarations presented by the companies included in the consolidation perimeter amounted to 78,732,377 Euro and mature as follows:

Current taxes Following is the reconciliation between profit before income tax and income tax for the year:

Amount Expiry Date

Generated in the year ended

30-Jun-13 1,190,982 30-Jun-18

30-Jun-14 38,434,907 30-Jun-19

30-Jun-15 56,941 30-Jun-27

30-Jun-16 39,049,547 30-Jun-28

78,732,377


___________________________________________________________________________________________


(1) In the calculation of the taxable profit, the Group chose to consider the reinvestment of capital gains on the sale of players registrations', in legal terms, which allowed to deduct 50% of tax capital gains generated in the year. (2) Municipality tax of companies taxed according to RETGS and which present taxable profit for the year. (3) Limitation on the deductibility of financing costs in accordance with Article 67 of the Corporate Income Tax – CIT (Tax Code of Legal Persons)

Under the Extraordinary Regime for the Settlement of Debts to Social Security and to Tax Authority ("RERD") granted by the Ministry of Finance to the voluntary payments made by taxpayers until December 31, 2013, regarding taxes due, the FC Porto SAD paid the amount of 4,227,685 Euro related to tax processes, using the provision recorded for this purpose in the amount of 1,514,094 Euro, recognizing the remaining difference as an expense for the year, in the amount of 2,713,591 Euro. Notwithstanding the settlement of this amount, the Company maintains the complaints and judicial claims, having the Company contingent assets related with them as detailed in Note 34.

30.06.2016 30.06.2015

Profit before income tax (57,340,934) 20,558,484

Increases:

Positive patrimonial cariation that were not reflected in the net income of the period

(art 21º)723,050

-

Non tax dedcutible provisions 2,912,859 1,756,485

Impairments losses beyond the legal limit 69,576 -

Tax capital gains 38,613,220 60,053,122

Non deductible financial costs 12,988,196 -

Benefit expenses of termination of emplyment, retirement benefits and other post-

employment benefits of long-term908,851 792,195

Aadjustments non deductible or beyond the legal limits 338,475 -

Other 1,663,121 1,166,675

Decreases:

Accounting capital gains (1) (38,731,710) (82,648,005)

Distributed dividends from subsidiaries (323,678) (231,449)

Reversal of tax deductible adjustments (111,142) (602,808)

Contributions - (64,508)

Utilization of non tax deductible provision - (355,501)

Others (203,893) (12,865)

Taxable profit (38,494,009) 411,825

Tax losses used (713,140) (903,218)

Tax base (39,207,149) (491,393)

Income tax rate 21.0% 23.0%

Municipal tax rate 1.5% 1.5%

Calculated tax 613,319 602,525

Municipality tax (2) 46,667 48,709

Autonomous taxation 705,160 714,689

Gains/Losses RETGS (365,583) (721,593)

Deferred taxes (56,673) (42,504)

Others (3) (1,035)

Income tax for the year 942,887 600,791


___________________________________________________________________________________________


Deferred taxes The changes in the caption "Deferred tax liabilities" in the year ended June 30, 2016 and 2015, can be summarized as follows:

16. CAPITAL On June 30, 2016, the share capital of FC Porto, SAD was fully subscribed and paid up and consisted of 22,500,000 nominative shares of 5 Euros each. On June 30, 2016, the following entities held share in the subscribed capital of at least 20% of the ordinary shares with voting rights: - FC Porto – 74.59% On 2 October 2014, Futebol Clube do Porto acquired 2,818,185 ordinary shares, representing 18.79% of the voting rights, from the companies Somague Imobiliária, SA and Somague. - Engenharia, SA. As a result of this transaction, to Futebol Clube do Porto has become attributable more than 50% of the voting rights in the Company at the club was forced to launch a takeover bid on the shares on offer. From the conclusion of this process Futebol Clube do Porto acquired an additional 464,746 shares, corresponding to 3.1% of the voting rights. For the year ended June 30, 2015, a capital increase of 37,500,000 Euro was accomplished, through cash contribution through private subscription by Futebol Clube do Porto (Clube), of 7,500,000 preferred shares without voting rights. In the Shareholder’s General Meeting held on November 9, 2015 it was deliberated to amend the articles of association in order to reflect in its writing the conversion of preferred shares without voting rights into common shares of the Company, with which will then form a single category, and the elimination of the maximum percentage of voting rights that can be exercised by each shareholder owner of preferred shares without voting rights, which ceases to be applied following the conversion. The individual financial statements of the Company as of June 30, 2016 present a shareholder’s equity less than half the share capital, whereby the provisions of Articles 35º and 171º of the Portuguese Companies Code ("CSC") are applicable. As mentioned in the Director’s Report, the Board of Directors of FC Porto, SAD considers that the improvement in the economic and financial results will continue in the upcoming years, and it will comply with the provisions of that article. With the goal to quickly fulfil this obligation, the Board of Directors has been analysing other solutions that allow the reinforcement of shareholders’ equity as referred in the Board of Directors’ Report.

30.06.2016 30.06.2015

Opening balance

Diference between the fair value and the tax

value of the stadium (Note 6) 2,210,218 2,252,722

Changes during th eyear

Impact on net profit (56,673) (42,504)

Closing balance 2,153,545 2,210,218


___________________________________________________________________________________________


The Board of Directors besides planning to review this matter on the Shareholders’ General Meeting held to approve the accounts for the year, it may also call upon an Extraordinary Shareholders’ General Meeting to discuss and approve the proposals that would be presented, which can include the following alternatives: • Share capital decrease to an amount not less than the Company’s shareholders’ equity; • Capital increase paid up by the shareholders; and • A combination of these two alternatives. According to Article 171º of the Portuguese Commercial Code (Código das Sociedades Comerciais), a company which shareholders’ equity is less than half of its share capital, should indicate the share capital, the amount of share capital paid and the amount of shareholders’ equity according to the last approved statement of financial position in all contracts, mail, publications, ads, websites, and in overall external activity.

17. NON-CONTROLLING INTERESTS The changes in this caption during the years ended 30 June 2016 and 2015 were as follows:

18. BANK LOANS AND BONDS The captions ‘Bank loans’ and ‘Bonds’ as of 30 June 2016 and 2015 are made up as follows:

Balance as at 1 July 2014 (179,808)

Net consolidated profit for the year attributable to non-controlling interests 605,869

Distribution of dividends (25,716)

Changes in consolidation perimeter (Note 6) 58,363,431

Other changes (1)

Balance as at 30 June 2015 58,763,775

Balance as at 1 July 2015 58,763,775

Net consolidated profit for the year attributable to non-controlling interests 234,917

Distribution of dividends (35,964)

Changes in consolidation perimeter (Note 6) 864,081

Other changes (384,117)

Balance as at 30 June 2016 59,442,692

Nature Current Non-Current Current Non-current

Bank loans 46,176,097 25,240,593 46,537,372 25,240,593

Factoring 32,353,585 9,120,000 32,453,915 9,120,000

78,529,682 34,360,593 78,991,287 34,360,593

Bonds 19,653,905 44,705,224 20,000,000 45,000,000

98,183,587 79,065,817 98,991,287 79,360,593

30.06.2016

Amortised Cost Nominal Value


___________________________________________________________________________________________


As of 30 June 2016 the repayment schedule of the nominal value of non-current loans may be summarised as follows:

The detail of loans classified as liabilities at June 30, 2016 is as follows:

Nature Current Non-Current Current Non-Current

Bank loans 34,979,147 23,879,350 35,141,831 23,879,350

Factoring 16,475,435 12,408,767 16,500,000 12,408,767

Discounte bills 10,000,000 - 10,000,000 -

61,454,581 36,288,117 61,641,831 36,288,117

Bonds - 63,711,415 - 65,000,000

61,454,581 99,999,532 61,641,831 101,288,117

30.06.2015

Amortised Cost Nominal Value

30.06.2016

2017/2018 62,866,466

2018/2019 16,494,127

79,360,593

Bank Current Non-current Total Open date Interest Rate Installments Interest Maturity Date Guarantee/Collateral

Loan issues

Bond loan 2015-2018 - 45,000,000 45,000,000 May-15 5.00% At nominal value at maturity Semi-annual May-18 -

Bond loan 2014-2017 20,000,000 - 20,000,000 Jun-14 6.75% At nominal value at maturity Semi-annual Jun-17 -

Bank loans

NOVO BANCO 3,000,000 8,000,000 11,000,000 Aug-10Euribor 12M +

spread

4 annual installments in Sep-2015 and

Sep-2016 of 3,000,000 Euro each and

in Sep-17 and Sep-18 of 4,000,000

Euro each

Annual Sep-18Revenue from the season tickets, ticket and membership

fees

NOVO BANCO 17,000,000 - 17,000,000 Oct-13Euribor 3M +

spreadAt nominal value at maturity Quarterly Sep-16 Herrera and Brahimi player's registration

Millennium BCP 412,500 - 412,500 Dec-13Euribor 6M +

spread11 quarterly installments of equal value Quarterly Dec-16 Tax credits pledge and Club's real estate assets mortgage

Millennium BCP 1,250,000 - 1,250,000 May-99Euribor 1M +

spread8 quarterly installments of equal value Monthly Jun-17 Helton player's registration

BIC 6,876,923 573,077 7,450,000 Mar-16Euribor 6M +

spreadMonthly amortisations from 01/08/2016 Monthly Jul-17

Sponsorship MEO|PT future seasons

Macquarie Bank 13,370,000 - 13,370,000 Apr-16 Fixed

3 installments of 1,910,000 € in

31/08/2016; 9,550,000 € in 15/01/2017;

1,910,000 € in 30/06/2017

Antecipated Jun-17 Amount to be received from the sale of Imbula

Montepio Geral - 10,000,000 10,000,000 Apr-16Euribor 6M +

spread

30 months, with a grace period of 26

months and amortization in the last 4

months in equal installments

Monthly Oct-18Amount to be received from the contract TV PT Altice to

future seasons

Montepio Geral 750,000 360,000 1,110,000 Feb-15Euribor 6M +

spread

1 installment of 390,000 Euros on

31.08.2016 and 2 installments of

360,000 euros on 28/02/2017 and

08/11/2017

Postecipated Aug-17 Coca-cola sponsorship contract

Banking sindicate - BPI leader

bank3,806,361 6,300,488 10,106,849 Jul-03 (*) 28 semi-annual installments Semi-annual Sep-18 (*)

Banco Popular 71,588 7,028 78,616 Jul-07EUR 6M +

spread120 monthly installments Monthly Jul-17

Blank promissory note signed by Avenida dos Aliados and

endorsed by Miragem

"Factoring"

Internationales Bankhaus

Bodensee AG12,000,000 - 12,000,000 Apr-15 Fixed

Receiving of the 3rd installment of

Danilo's sale to Real Madrid - 15-07-

2016

Antecipated Jul-16Amounts to be received from the sale of Danilo to Real

Madrid


Bodensee AG408,768 - 408,768 Jan-15 Fixed

On the dates of receipt of the New

BalanceAntecipated Nov-16 New Balance sponsorship contract


Bodensee AG1,287,477 - 1,287,477 Dec-15 Fixed At nominal value at maturity Antecipated Oct-16 Amounts to be received from UCL 15/16-Market Pool


Bodensee AG14,475,000 7,720,000 22,195,000 Sep-15 Fixed

3 installments de 7,7M € in 30/07/2016;

6,7M € in 31/12/2016; 7,7M € in

30/07/2017

Antecipated Jul-17Amounts to be received from the sale of Alex Sandro to

Juventus


Bodensee AG750,000 - 750,000 Dec-15 Fixed

Single repayment at maturity -

30/09/2016Antecipated Sep-16 Income from television broadcasts


Bodensee AG732,670 - 732,670 Dec-15 Fixed

2 equal installments in Nov-16 and Fev-

17Antecipated Feb-17 New Balance sponsorship contract

BIC 2,800,000 1,400,000 4,200,000 Apr-16Euribor 3M +

spread

3 installments of 1,4M€ in Jul-16, Jan-

17 and Jul-17Antecipated Jul-17 Unicer sponsorship contract

98,991,287 79,360,593 178,351,880

(*) Funding for the construction of "Estádio do Dragão"


___________________________________________________________________________________________


On July 8, 2003 a long-term loan agreement amounting to 40 million Euro between Euroantas, the FC Porto and five financial institutions (with the BPI bank as the leader) was signed, in order to finance the “Estádio do Dragão” construction project. The repayment of the loan is to be paid in 28 semi-annual installments, with the first one on March 31, 2005 and the last one shall become due on September 28, 2018.

The obtained financing bears market interest rates. Under Decree-Law No 284/2001, the Group benefits from an interest subsidy over the amount of 25,289,053 Euro of the total loan obtained. As of June 30, 2016 the subsidized loan tranche still owed amounts to 4,515,902 Euro (6,322,263 Euro in 30 June 2015). However, following the publication of Decree-Law No. 166/2004, of 7 July, which revoked the no. 3 of the Article 2 of Decree-Law No. 284/2001 of 26 October and, in conjunction with the approved Regulation by Ordinance No. 535/2002, of 27 May, and given the provisions of No. 5 of Article 2 of Decree No. 284/2001, Euroantas is entitled to 10 years of interest subsidy (as the term financing is higher) counted from the contract award date, so that the concession ended for the year ended June 30, 2014. Thus, the loan bears interest as follows: • Not subsidized installments: Interest rate: 4.53125% + Spread; • Subsidized installments: Interest rate: Euribor 6M + Spread (with a SWAP to fixed rate of 4.26%). Under this financing agreement, in addition to the voluntary mortgage, made payable to those financial institutions, Euroantas and FC Porto assume certain obligations, from which highlight: Euroantas (i) Prohibition of disposal or transfer of its assets (land and buildings), in the present or in the

future; (ii) Non-encumbrance or lien pledge of its assets, in the present or in the future; (iii) Failure to contract additional bank loans with other financial institutions.

FC Porto (i) Prohibition of sell or promise to sell, their Euroantas shares; (ii) Prohibition to propose or vote, any changes to Euroantas’ statutes; (iii) Prohibition to sell, or promise to sell, any shares of Futebol Clube do Porto - Futebol, SAD

without the prior agreement of the financial institutions which provided the funding.

Also as part of this financing agreement, Euroantas assumes the obligation of, in each year, fully endow a reserve fund for the corresponding debt service to one year's debt service (amount equivalent to the repayment of principal and charges with interest thereon, not considering the amount related to the aforementioned interest rate subsidies), which on June 30, 2016 amounts to approximately 4,514,907 Euro (4,529,224 Euro to June 30, 2015 (Note 14).

The average annual rate on bank loans and bonds as of 30 June 2016 is 5.45%. 19. OTHER CREDITORS

As of 30 June 2015 and 2014, the caption “Other creditors” is as follows:


___________________________________________________________________________________________


In the financial year ended 30 June 2011, the Company entered into associated financial interests contracts with third parties, in order to transfer of 25% of Walter economic rights’ by 2,125,000 Euro to Pearl Design Holding, Ltd.. Once that, according to the referred contracts, the significant risks and benefits regarding to the detention of those rights were not fully transferred, those transactions were not recorded as sales, and therefore, the part of the economic rights of that intangible assets was not derecognised. The amounts received from those entities were recorded in the caption of the statement of financial position “Other creditors”.

On July 23, 2014, the Group entered, with Doyen Sports Investments Limited, into an associated financial interests’ contracts in order to transfer part of the economic rights of the player Brahimi player in the amount of 5,000,000 Euro. This agreement foresees call options by FCP, SAD up to 55% of the economic rights until June 2017, and put options of up to 80% of the economic rights by Doyen until September 2017. Once that, according to the referred contracts, the significant risks and benefits regarding to the detention of those rights were not fully transferred, those transactions were not recorded as sales, and therefore, the part of the economic rights of that intangible assets was not derecognised. As of the year ended June 30, 2015 the Company exercised two call options corresponding to 30% of the economic rights of the player for 3.8 million Euro, having this amount been deducted from the corresponding liability.

Thus, the percentages held of the players, referred to in Note 6, take in consideration the sharing with those entities of the inherent results in future transactions of the players Walter and Brahimi.

On February 24, 2015, it was obtained a financing of 5,000,000 Euro from For Gool Co Ltd reimbursable until September 30, 2015, which was fully settled at this date. 20. TRADE PAYABLES Non-current liabilities The detail and maturity of non-current trade payables balances as of 30 June 2016 and 2015 is as follows:

Entity 30.06.2016 30.06.2015

Pearl Design 1,562,500 2,125,000

Doyen Sports Investments Ltd. 1,200,000 1,200,000

For Gool - 5,000,000

2,762,500 8,325,000

Interests 4,078,734 2,764,200

6,841,234 11,089,200

30.06.2016 > 1 YEAR > 2 YEAR > 3 YEAR > 4 YEAR > 5 YEAR

Trade Payable - Non-current

Tangible and intangible assets' suppliers

Transactions of players' registrations 12,800,000 5,000,000 1,800,000 - 6,000,000 -

Effect of discounting trade payables (1,586,672) (619,794) (223,126) - (743,752) -

11,213,328 4,380,206 1,576,874 - 5,256,248 -


___________________________________________________________________________________________


The balance of the non-current trade payable account “Suppliers – transactions of players’ registrations” as at 30 June, 2016, is due to: (i) the acquisition of economic and registration rights of Inácio in the amount of 3,000,000 Euro; (ii) Layún in the amount of 3,000,000 Euro, (iii) and Felipe in the amount of 2,000,000 Euro, among others. The balance of the non-current trade payable account “Suppliers – transactions of players’ registrations” as at 30 June, 2015, is due, essentially, to the (i) acquisition of economic and registration rights of the player Brahimi, in the amount of 5,500,000 Euro and (ii) the acquisition of sportive and economic rights of Gudiño in the amount of 500,000 Euro. Current liabilities As of 30 June 2016 and 2015, the balances of current trade payables and their exigibility may be detailed as follows:

As of 30 June 2016 and 2015 the main balances included in the captions, current and non-current, ‘Fixed assets’ suppliers – Transactions of players’ registrations’ can be detailed as follows:

30.06.2015 > 1 YEAR > 2 YEARS > 3 YEARS > 4 YEARS > 5 YEARS

Trade payables - non-current

Tangible and intangible assets' suppliers:

Transactions of players' registrations 6,000,000 6,000,000 - - - -

Effect of discounting trade payables (364,505) (364,505) - - - -

5,635,495 5,635,495 - - - -

30.06.2016 - 90 days 90 - 180 days + 180 days

Trade payables - current account 11,085,926 11,085,926 - -

Tangible and intangible assets' supliers:

Transactions of players' registration 38,743,665 29,093,665 1,000,000 8,650,000

38,743,665 29,093,665 1,000,000 8,650,000

Effect of discounting trade payables (461,153) (346,292) (11,903) (102,958)

49,368,438 39,833,299 988,097 8,547,042

Payable to

Payable to

30.06.2015 - 90 days 90 - 180 days + 180 days

Trade payables - current account 9,402,719 9,402,719 - -

Tangible and intangible assets' suppliers:

Transactions of players' registrations 36,855,915 13,528,265 3,257,500 20,070,150

36,855,915 13,528,265 3,257,500 20,070,150


46,132,804 22,884,797 3,246,379 20,001,628


___________________________________________________________________________________________


On June 30, 2016, the balances payable to the entities mentioned above have resulted mainly from the acquisition of economic rights, the proportional sale values of the registration player’s held by third parties and intermediation service costs provided in acquisition and disposals of players’ registrations regarding the athletes Imbula, Corona, Felipe, Inácio, Marega, Brahimi, Layún, among others. On June 30, 2015, the balances payable to the entities mentioned above have resulted mainly from the acquisition of economic rights, the proportional sale values of the registration player’s held by third parties and intermediation service costs provided in acquisition and disposals of players’ registrations regarding the athletes Adrian Lopez, Brahimi, Martins Indi, Celestin Djim, Kayembe, Otavio, Hernani, Quintero and Fernando, among others.

21. OTHER CURRENT AND NON-CURRENT LIABILITIES The captions ‘Other non-current liabilities’ and ‘Other current liabilities’ as of 30 June 2016 and 2015 can be detailed as follows:

Entity jun/16 jun/15

Current Non-current Current Non-current

Olympique De Marseille SASP 9,650,000 - - -

F.C.Twente 6,500,000 - - -

Sport Club Corinthians Paulista 4,000,000 2,000,000 - -

São Paulo Futebol Clube - 6,000,000 - -

Maritimo da Madeira Futebol SAD 3,925,000 - - -

Granada Club de Futbol SAD 3,332,170 - 500,000 5,500,000

Watford Association Football Club Ltd - 3,000,000 - -

Onsoccer International, S.A. 2,005,000 - 2,000,000 -

Northfields Sports B.V. 1,700,000 - - -

SASP FC Lorient Bretagne Sud 1,300,000 - - -

Portimonense Sporting Clube 2,750,000 1,800,000 - -

Gestifute, S.A. 600,150 - 600,150 -

Vitoria Sport Clube - Futebol SAD 254,592 - 2,300,000 -

Club Atlético de Madrid SAD - - 11,000,000 -

Feyenoord Rotterdam NV - - 3,720,000 -

Danubio Finanzierungsleistungen und Marketing GMBH 1,000,000 - 2,676,000 -

Coimbra Esporte Clube - - 2,500,000 -

Delfino Pescara - - 2,250,000 -

Santos FC - - 1,718,500 -

Pencilhill - - 1,618,223 -

Chivas Corazón - - 1,500,000 500,000

Universidade do Chile - - 924,667 -

Gol Football Luxembourg - - 800,000 -

Estoril - SAD - - 705,000 -

Others 1,726,753 - 2,043,376 -

38,743,665 12,800,000 36,855,915 6,000,000


___________________________________________________________________________________________


The caption ‘Other current/non-current liabilities – Cost of transactions of players' registrations, not yet due’ includes commitments assumed in players registrations transactions supported by the respective contracts and not yet invoiced as of the end of the reporting period. As of 30 June 2016, includes, namely, amounts related to:

(a) Intermediation services costs of players totalling 10,241,397 Euro relating, among others, to the players registrations sales’ of Imbula, Danilo and Maicon and to the acquisition of the players registration of Maxi Pereira, Felipe, Corona, Bueno and Quintero;

(b) Celebration and/or renewal of the labour contracts, namely signing-on fees in the amount of 1,083,188 Euro related, among others, to the players Diego Reyes, André Fernandez and Walter;

30.06.2016 30.06.2015

Other non-current liabilities

Accrued expenses

Cost of transaction of players' registration, not yet due 1,035,000 6,166,478

Indemnities 200,000 -

Deferred income

Broadcasting rights advances /antecipated invoicing 36,904,141 4,000,000

Antecipated advertising revenue - FC Porto main sponsor 9,000,000 -

Deferred sponsorship revenue - "Museu BMG" 5,259,685 5,957,167

Others 291,267 -


Creditors from acquisition of financial investments 1,500,000 -

Effect of discounting trade payables (130,039) (159,909)

54,060,054 15,963,736

Other current liabilities 30.06.2016 30.06.2015

State and public sector 4,179,332 2,638,865

Creditors from acquisition of financial investments 1,000,000 -

Others creditors 4,800,082 2,819,930

9,979,414 5,458,795

Accrued expenses

Accrued payroll 956,207 780,856

Cost of transactions of players' registration, not yet due 15,071,935 10,967,739

Competition bonuses pending processes 9,851,615 3,338,422

Indemnities 2,899,029 5,737,785

Other accrued expenses 3,487,801 3,658,014

32,266,587 24,482,816

Deferred income

Broadcasting rights advances/antecipated invoicing 2,899,704 2,000,000

Antecipated advertising revenue - FC Porto main sponsor 1,500,000 -

Deferred sponsorship revenue - "Museu BMG" 695,576 695,576

Sale of season tickets 182,688 98,688

Advance billing on advertising revenue 82,675 -

Other deferred income 267,977 645,920

5,628,620 3,440,184

Effect of discounting trade payables (210,616) (597,370)

47,664,005 32,784,425


___________________________________________________________________________________________


(c) Amounts to pay regarding the proportion sales value of the economic rights’ held by third parties, during the respective sale, in the amount of 2,960,505 Euro, relating among others, to Danilo, Walter, Carlos Eduardo and Defour;

(d) Liabilities with the solidarity mechanism in the amount of 1,312,345 Euro relating, among others, to Maicon, Alex Sandro, Imbula, Kléber, Celistin Djinn and Carlos Eduardo.

As of 30 June 2015, includes, namely, amounts related to:

(a) Intermediation services costs of players totaling 14,683,295 Euro relating, among others, the sale of Jackson Martinez and Iturbe player’s registration and the exercise price of the call options to purchase a percentage of the economic rights of Brahimi (Note 19).

(b) Celebration and/or renewal of the labour contracts, namely signing-on fees in the amount of

1,670,893 Euro related, among others, to the players Andrés Fernandez and Walter. In the classification as non-current balance, which regards the signing-on fees, were considered the agreed payment dates. The item "Other payables" as of June 30, 2016 and 2015, includes remunerations to pay to players and coaches who have terms of payment in the short term (approximately 1,844,000 Euro as of June 30, 2016 and 2,000,000 Euro as of June 30, 2015). On June 30, 2016 and 2015, the caption "Competition bonuses pending processing" includes amounts relating to matches participation premiums and amounts and bonuses attributed to certain athletes in order to guarantee the minimum annual wage contracted in their respective labour contract. The caption "Deferred Sponsorship Revenue – Museu BMG" refers to the deferral of revenue related to the agreement signed between the subsidiary PortoComercial and Banco de Minas Gerais (“BMG”) as an advance under the signature of a partnership agreement concerning advertising and support of the construction of the FC Porto Museum. This contract establishes the sponsorship and naming of the Museum in the amount of 8,000,000 Euro until 2025. As mentioned in Note 13, PortoComercial acquired, in October 2013, to Futebol Clube do Porto the right to explore the Museum, having paid in advance 12,000,000 Euro, corresponding to the rents of 8 years of the Museum exploration. The caption "Creditors for acquisition of financial investments" refers to the acquisition by FCP Media, on 10 July 2015, from Medialuso – Produções para Televisão, S.A., of stake equivalent to 99.4% of the share capital of Avenida dos Aliados – Sociedade de Comunicações, S.A., which by its turn held 100% of the share capital of the subsidiary Miragem – Produção Audiovisual, SA, for 4,000,000 Euro. On the same date, FCP Media sold 17% of the share capital of Avenida dos Aliados to Mediapro Portugal, SGPS, SA for 684,104 Euros (Note 13). On June 30, 2016 the current items and non-current "Broadcasting rights advance / anticipate invoicing" and "Anticipated advertising revenue - FC Porto main sponsor" are composed by (i) advances made by PPTV amounting to 4,000,0000 Euro (Note 30) and the advance in the global amount of 46,303,845 Euros (whose initial value amounted to 47,500,000 Euro) of the contract celebrated with Altice, by the total amount of 457,500,000 Euros, concerning the cession of:

(A) Television broadcasting rights of the home matches played by the main football team, in First League (“I Liga”) as well as the commercial exploitation of Dragao Stadium advertising places, for a period of 10 sporting seasons, starting on July 1, 2018;


___________________________________________________________________________________________


(B) “Porto Canal” television broadcasting rights for a period of 12 and a half seasons, starting 01 January 2016; and (C) Main sponsor status of FC Porto, with the right to place advertising on the front of the shirts of the main football team of FC Porto for a period of seven and a half seasons, starting 01 January 2016.

The maturity of the captions ‘Other non-current liabilities’ and ‘Other current liabilities’ as of 30 June 2016 and 2015 can be detailed as follows:

30.06.2016 > 1 YEAR > 2 YEAR > 3 YEAR > 4 YEAR > 5 YEAR


Accrued expenses

Cost of transactions of players' registrations, not yet due 1,035,000 490,000 545,000 - - -

Indemnities 200,000 200,000

Deferred income

Broadcasting rights advances /antecipated invoicing 36,904,141 2,899,704 4,649,704 4,649,704 4,649,704 20,055,325

Antecipated advertising revenue - FC Porto main sponsor 9,000,000 1,500,000 1,500,000 1,500,000 1,500,000 3,000,000

Deferred sponsorship revenue - "Museu BMG" 5,259,685 695,576 695,576 695,576 695,576 2,477,381

Others 291,267 291,267 - - - -

Other non-currents liabilities

Creditors from acquisition of financial investments 1,500,000 1,000,000 500,000 - - -

Effect of discounting trade payables (130,039) (61,564) (68,475) - - -

54,060,054 7,014,983 7,821,805 6,845,280 6,845,280 25,532,706

30.06.2016 < 90 DAYS90-180

DAYS

180-360

DAYS

Other current liabilities

State and public sector 4,179,332 4,179,332 - -

Creditors from acquisition of financial investments 1,000,000 250,000 250,000 500,000

Others creditors 4,800,082 4,800,082 - -

9,979,414 9,229,414 250,000 500,000

Accrued expenses

Accrued payroll 956,207 485,084 310,284 160,839

Cost of transactions of players' registrations, not yet due 15,071,935 12,163,185 175,000 2,733,750

Competition bonuses pending processing 9,851,615 9,851,615 - -

Indemnities 2,899,029 885,762 737,756 1,275,511

Other accrued expenses 3,487,801 3,487,801 - -

32,266,587 26,873,447 1,223,040 4,170,100

Deferred income

Broadcasting rights advances /antecipated invoicing 2,899,704 724,925 724,925 1,449,854

Antecipated advertising revenue - FC Porto main sponsor 1,500,000 375,000 375,000 750,000

Deferred sponsorship revenue - "Museu BMG" 695,576 173,894 173,894 347,788

Sale of season tickets 182,688 182,688 - -

Advance billing on advertising revenue 82,676 82,676 - -

Other deferred income 267,977 267,977 - -

5,628,621 1,807,160 1,273,819 2,547,642


47,664,005 37,740,051 2,744,414 7,179,540

30.06.2015 > 1 YEAR > 2 YEARS > 3 YEARS > 4 YEARS > 5 YEARS


Accrued expenses:

Cost of transactions of players' registrations, not yet due 6,166,478 5,746,478 420,000 - - -

Deferred income:

Broadcasting rights advances/anticipated invoicing

(Note 30)4,000,000 2,000,000 2,000,000 - - -

Deferred revenue sponsorship - BMG Museum 5,957,167 695,576 695,576 695,576 695,576 3,174,863

Effect of discounting trade payables (159,909) (149,017) (10,892) - - -

15,963,736 8,293,037 3,104,684 695,576 695,576 3,174,863


___________________________________________________________________________________________


22. PROVISIONS AND ACCUMULATED IMPAIRMENT LOSSES

The movement occurred in provisions and accumulated impairment losses in the years ended 30 June 2016 and 2015 is as follows:

Provisions During the year ended 30 June 2008 a judicial process was brought by a third party against the subsidiary PortoEstádio; in May 2009 a sentence was issued by the the Judicial Court’s (7ª Vara Cível do Tribunal Judicial do Porto) condemning PortoEstádio to pay a compensation of 404,241 Euro, plus default interests, having the Group presented an appeal against this verdict. In July 2015 the outcome of this process was known, a favourable decision for PortoEstádio by which the previously recorded provision was reversed.

30.06.2015 < 90 DAYS90-180

DAYS

180-360

DAYS

Other current liabilities

State and public sector 2,638,865 2,638,865 - -

Other creditors 8,557,715 8,557,715 - -

11,196,580 11,196,580 - -

Accrued expenses:

Accrued payroll 780,856 - 260,285 520,571

Cost of transactions of players' registrations, not yet due 10,967,739 8,857,017 1,201,611 909,111

Competition bonuses pending processing 3,338,422 3,338,422 - -

Other accrued expenses 3,658,014 3,658,014 - -

18,745,031 15,853,453 1,461,896 1,429,682

Deferred income:

Broadcasting rights advances/anticipated invoicing (Note 30) 2,000,000 500,000 500,000 1,000,000

Sale of season tickets 98,688 98,688 - -

Deferred revenue sponsorship - BMG Museum 695,576 173,894 173,894 347,788

Other deferred income 645,920 645,920 - -

3,440,184 1,418,502 673,894 1,347,788


32,784,425 28,047,634 2,112,915 2,623,876

Opening Closing

balance Changes of balance

Caption 30.06.2015 perimeter Increase Utilization Decrease 30.06.2016

Accumulated impairment loss on investments (Note 9 and 29) 23,259 - 560,944 (503,524) - 80,679

Accumulated impairment loss on account receivables (Note 11) 5,039,019 156,018 739,145 (68,043) (383,746) 5,482,393

Accumulated impairment loss on inventories (Note 12) 609,451 - 60,131 (97,386) - 572,196 -

5,671,729 156,018 1,360,220 (668,953) (383,746) 6,135,268

Opening Closing

balance Changes of balance

Caption 30.06.2014 perimeter Increase Utilization Decrease 30.06.2015

Accumulated impairment loss on investments (Note 9 and 29) 1,202,037 - 432,114 (1,610,892) - 23,259

Accumulated impairment loss on account receivables (Note 11) 4,878,255 60,963 1,429,549 (943,189) (386,559) 5,039,019

Accumulated impairment loss on inventories (Note 12) 377,293 - 232,158 - - 609,451

Provisions 410,555 - - - (410,555) -

6,868,140 60,963 2,093,821 (2,554,081) (797,114) 5,671,729


___________________________________________________________________________________________


Bank guarantees As of June 30, 2016, the Group had the following bank guarantees:

a) Porto Estádio: bank guarantee of 410,555 Euro regarding the judicial process described above, having this warranty however not been withdrew;

b) PortoComercial: bank guarantees in the amount of 143,204 Euro in favour of malls store’s leaseholders;

c) Dragon Tour: bank guarantee of 75,000 Euro in favour of IATA - International Air Transport Association.

Other responsibilities

FC Porto, SAD endorsed a guarantee towards FCP Serviços Partilhados, S.A. in the amount of 364,000 Euro, under the financial leasing of computer equipment purchased by this entity of the Futebol Clube do Porto Group.

23. PENSION LIABILITIES

The Group has committed to grant to certain employees cash contributions as retirement complement plans. These benefits are set out in the Collective Agreement between FC Porto and CESP – “Sindicato dos Trabalhadores do Comércio, Escritórios e Serviços de Portugal e Outros” (Trade Union for workers of Commerce, Offices and Services of Portugal). The most recent actuarial valuation of the plan and the present value of defined benefits obligation was made in July 15, 2016 by Mercer (Portugal) Lda.. The present value of the defined benefit obligation and the cost of the current services and past services were measured using Projected Unit Credit method.

The main assumptions followed in the actuarial valuation referred above are as follows:

Movements in the present value of the defined benefit obligation for the years ended June 30, 2016 and 2015 are described as follows:

30.06.2016 30.06.2015

Retirement normal age 66 years 66 years

Mortality table TV 88/90 TV 88/90

Disability table EVK 80 a 50% EVK 80 a 50%

Discount rate 1.50% 2.25%

Infation rate 2.00% 2.00%

Salaries increase rate 3.00% 3.00%

Pension increase rate 2.00% 2.00%

30.06.2016 30.06.2015

Opening balance 335,224 448,818

Reduction (10,892) -

Interest cost 14,662 24,932

(Gains)/actuarial losses (14,046) (138,526)



___________________________________________________________________________________________


The major risks for which the pension plan may be exposed are as follow:

• Behaviour of demographic variables; • Changes to occur in the Social Security system; • Pension indexation.

A sensitivity analysis was performed in order to measure the impact on pension liabilities caused by changes in the discount rate (increase of 75 basis points) and a negative impact of approximately 34,000 Euro was calculated. 24. SALES AND SERVICE RENDERED

Sales On June 30, 2016 and 2015 the caption "Sales" refers to sales of merchandising products of FCP by Porto Comercial. Service Rendered Services rendered for the years ended 30 June 2016 and 2015 are made up as follow:

The decrease in revenues from " European competitions participating bonus" is justified by the fact that: (i) the revenue for the UEFA Champions League 2014/15 Group’s stage, in the amount of 8,600,000 Euro has been recorded in the year ended as of June 30, 2015 and not in season 2013/2014 by the fact that the Company only won the right to participate in this stage in the season 2014/15; (ii) the revenue recognition from the access to the group’s stage of the Champions League 2015/16, recognized in the year ended June 30, 2015, in the amount of 12,000,000, revenue that was not obtained this season either because FCP, SAD have not obtained the direct access right to the Champions League 2015/16 group’s stage in the present season, either because the Company has changes the respective accounting policy (Note 4) and (iii) the main football team did not get through, in the present season, to the Round of 16 and Round of 8 of the Champions League unlike occurred in the 2014/15 season.

30.06.2016 30.06.2015

Sports Revenue

European competitions participating bonus 11,603,301 36,169,711

Ticketing income 3,399,053 4,269,628

Season tickets 2,859,517 2,690,530

Membership contributions - 918,144

Other sports revenue 1,866,279 1,176,611

19,728,150 45,224,624

Advertising 14,182,602 13,564,684

Broadcasting rights 22,314,085 17,251,214

Corporate Hospitality 8,396,500 8,200,550

Others 5,850,858 4,269,462

70,472,195 88,510,534


___________________________________________________________________________________________


The decrease in “Ticketing income” is justified by the lower number of matches played at home this season, particularly in European competitions. Since the season 2015/16 revenues from "Membership contributions" are recognized entirely by Futebol Clube do Porto (in 2014/15, FCP SAD had right to 25% of these revenues). The increase in advertising and broadcasting rights revenues is related to the celebration of new television broadcasting and advertising contracts with Altice, part of which came into force from January 1, 2016 (Note 21). Corporate Hospitality

Under the loan and cooperation agreement signed in July 2003 between PortoEstádio – Gestão e Exploração de Equipamentos Desportivos, S.A. (“PortoEstádio”), FCPorto e Futebol Clube do Porto – Futebol, S.A.D. (“FCP, SAD”), Euroantas holds the exclusive right to commercialize Boxes and Business Seats ("Lugares Euroantas"). 25. EXTERNAL SUPPLIES AND SERVICES

As of 30 June 2016 and 2015, the main balances included in this caption were as follows:

The caption ‘Specialised services’ includes several types of costs associated with the Group’s activity, namely: (i) expenses with market research services, (ii) costs with legal advisory services, (iii) costs with advisory services, namely the ones provided by FC Porto – Serviços Partilhados S.A.; (iv) production costs of contents to TV channel “Porto Canal”. The caption "Subcontracts" considers, mostly, to incurred charges related to the protocol signed between the Group and Futebol Clube do Porto, mainly consisting of the transfer of facilities and use of the training center, either to the main team or to the players training, as well as the costs of travel and accommodation (made by the football team for the games in the national championship, in Europe and in the realization of stages), incurred by the subsidiary Dragon Tour. From the 2015/16

30.06.2016 30.06.2015

Specialised Services 11,150,834 11,212,766

Subcontracts 6,233,212 5,336,446

Rentals 3,699,375 3,956,461

Image rights of athletes 3,514,972 601,126

Security 1,659,661 1,592,689

Insurance 1,266,082 1,146,193

Repair and maintenance 1,243,668 1,359,541

Organization costs 1,119,617 1,382,672

Sports Equipment 1,090,941 835,074

Advertising 1,064,030 2,168,258

Fees 940,376 736,189

Cleaning up services 611,092 544,618

Representation expenses 574,935 500,442

Fuels 558,792 212,528

Comunication 531,242 470,155

Electricity 486,584 327,418

Others costs 2,916,709 854,031

38,662,122 33,236,607


___________________________________________________________________________________________


season with integration into FCP, SAD consolidation perimeter, of the subsidiary the Avenida of Aliados, this caption also includes production costs of Porto Canal the content’s, namely advisory services and contents production, engineering technical means, among others. The caption "Image rights of athletes" refers to charges for the cession of FCP players’ of image rights that are negotiated by the subsidiary Porto Comercial. The increase in this caption is due to the increase in the number of such contracts concluded with players. On 30 June 2016 the "Image rights of athletes" costs concerned the players Brahimi, Casillas, Corona, Diego Reyes, Herrera, Layún, Imbula and Osvaldo (Herrera and Diego Reyes on 30 June 2015). The caption "Organization costs" considers various costs associated with matches’ organization. 26. PAYROLL EXPENSES The balances related to payroll expenses for the years ended 30 June 2016 and 2015 of the Company and subsidiaries are detailed as follows:

For the year ended June 30, 2016, remuneration costs with players loaned out to other clubs amounted to approximately 1,600,000 Euro (600,000 Euro on June 30 2015) and the salaries costs for players borrowed from other clubs amounted to, approximately, 1,400,000 Euro (6,100,000 Euro on 30 June 2015). On 30 June 2016 the caption "Indemnities" refers to compensation for termination of Helton’s employment contract, as well as remuneration to be paid to football coach Julen Lopetegui and respective technical team, among others. On 30 June 2016 the increase in "Technical and administrative staff" is essentially the result of the integration of Avenida dos Aliados in the FCP, SAD consolidation perimeter, from that exercise. The remuneration of the members of the Board of Directors of FC Porto, SAD and its subsidiaries for the years ended June 30, 2016 and 2015 is as follows:

The detail of the remunerations for each Board of Directors’ member and remaining governing bodies is disclosed in the Corporate Governance Report.

30.06.2016 30.06.2015

Governing bodies 1,970,681 1,827,494

Players/Coaches 54,327,109 54,120,242

Technical and administrative staff 6,449,501 4,891,902

Post-Employment Benefits 14,662 24,035

Indemnities 4,406,589 473,169

Charges on salaries 5,811,038 4,627,194

Insurance 2,171,665 2,316,993

Others costs 639,222 1,717,537

75,790,467 69,998,566

30.06.2016 30.06.2015

Fixed Remuneration 1,970,681 1,827,494

1,970,681 1,827,494


___________________________________________________________________________________________


As of 30 June 2016 and 2015, the number of people working for the Group is as follows:

27. RESULTS OF TRANSACTIONS WITH PLAYERS’ REGISTRATIONS

The results of transactions with players’ registrations in the years ended 30 June 2016 and 2015 can be detailed follows:

Impairment losses of players’ registrations rights consider the carrying amount of players’ registrations as of 30 June 2016 whose employment contracts were terminated by the Company until the approval date of these financial statements, as well as the estimated impairment loss of the players’ registrations considering the players’ sport situation as of the approval date of the financial statements. The balance of this caption as of 30 June 2016 corresponds essentially to the players Helton, Ghilas, Licá and Ricardo Nunes. On June 30, 2015 the balance of this caption corresponds mainly to the players Djalma, Opare and Quiñones On June 30, 2016, the caption "Costs relating to players on loan" refers to expenses incurred under the loan of the players Tello, Layún, Osvaldo, Gleison, Cissokho, Ismael, Reyes, Leonardo Ruiz, among others.

30.06.2016 30.06.2015

Governing bodies 8 7

Administrative staff 217 133

Technical staff 54 37

Museum 25 32

Vendors (stores) 42 43

Football players 85 77

431 329

30.06.2016 30.06.2015

Amortisation and impairment losses of players' registrations

Amortisation of players' registration rights (Note 8) (29,584,867) (30,227,292)

Impairment losses of players' registration rights (Note 8) (1,971,283) (1,146,645)

(31,556,150) (31,373,937)

Incomes related with transactions of players' registrations

Incomes relating to players's registrations sales 71,793,000 114,959,838

Incomes relating to players on loan 2,769,000 1,017,500

Others incomes relating to players 795,145 2,499,025

75,357,145 118,476,363

Costs related with transactions of players' registrations

Costs relating to players's registrations sales (31,570,045) (28,489,541)

Costs relating to players on loan (3,374,344) (3,511,210)

Others costs relating to players (1,754,806) (3,975,181)

(36,699,195) (35,975,932)

7,101,800 51,126,494

Gains/losses from sales of players' registrations 40,222,955 86,470,297


___________________________________________________________________________________________


On June 30, 2015, the caption "Costs relating to players on loan" refers to expenses incurred under the loan of the players Malthe Johansen, Roniel, Olive, Pavlovki, Tello, Casemiro, Ruiz, Campaña and Gudiño. For the year ended June 30, 2016, the caption “Other income relating to players" includes the solidarity mechanism for the transfer of player André Gomes and Otamendi. For the year ended June 30, 2015, the caption "Other income relating to players" includes the solidarity mechanism for the transfer of player James Rodriguez from AS Monaco to Real Madrid (1,069,000 Euro). The caption "Other costs relating to players" in the year ended June 30, 2016, includes the amount of, approximately, 660,000 Euros relating to the unfavourable decision to FCP, SAD of the proceedings initiated by SCP, SAD in which it reclaim for the right to receive 25% of the capital gain obtained on the sale of the player João Moutinho from FC Porto, SAD to AS Monaco. The caption "Other costs relating to players", in the year 30 June 2015, includes (i) compensation payable to the Clube Corinthians Alagoano arising from a dispute with this entity on the transfer of the player Pepe, for which the two companies reached an agreement, that foresees a payment of compensation in the amount of 1,650,000 Euro and (ii) adjustments to capital gains arising from negotiation process completed during the year ended 30 June 2015 amounting to 1,300,000 Euro. The amounts included in the captions "Gains from the sales of players’ registrations” and "Losses from the sales of players’ registrations " are presented net of the carrying amount of the players’ registrations, intermediation service costs incurred with that sales, and liabilities under the “solidarity mechanism” (if and when applicable), the discount effect of accounts receivable and payable related with those transactions and the cost of eventual compensation payments. On June 30, 2016, the caption “Gains from the sales of players’ registrations" refers essentially to the sale of players’ registration of Alex Sandro (21,362,880 Euro), Maicon (9,093,100 Euro) and Imbula (3,867,346 Euro), among others. On 30 June 2015 the caption "Gains from the sales of players’ registrations" mainly refers to sale of players’ registration rights of: Mangala (22,806,942 Euro), Danilo (23,101,403 Euro), Jackson Martinez (26,633,515 Euro) and Defour (2,683,593 Euro), among others.

28. FINANCIAL RESULTS

Financial expenses and income for the years ended 30 June 2016 and 2015 are made up as follows:

30.06.2016 30.06.2015

Financial Expenses:

Interest 12,410,407 12,844,769

Discount effect of accounts payable 2,226,226 2,239,002

Other financial expenses 2,580,515 1,925,614

17,217,148 17,009,385

Financial income

Interest 33,191 641,150

Discount effect of accounts receivable 1,959,509 1,449,355

1,992,700 2,090,505

Net financial expenses (15,224,448) (14,918,880)


___________________________________________________________________________________________


The balance of the captions ‘Discount effect of accounts receivable’ and ‘Discount effect of accounts payable’ relate to interest resulting from the temporal difference between the transaction date of sale / purchase of the registration rights of several sports players and the dates of receipt / payment contractually agreed.

In the years ended 30 June 2015 the interest income relate, mainly, to interest payable by FC Porto (CLube) in accordance with the signed debt settlement agreement and in the meanwhile settled in the year ended as of 30 June 2015.

29. INVESTMENT INCOME

The detail of caption “Gains and losses in investments” for the years ended 30 June 2016 and 2015 is as follows:

In the year ended June 30, 2015 São Paulo FC sold the sporting registration rights of the player Sousa to Fenerbahce for 8 million Euro; having FCP, SAD entitled to a value of 2,000,000 Euro, regarding 25% of the economic rights of this player, generating a capital gain of 1,528,226 Euro. 30. RELATED PARTIES Balances and transactions between the Company and its subsidiaries, which are related parties of this have been eliminated in consolidation and therefore are not releases this Note. The principal balances with other related parties, identified below, on 30 June 2016 and 2015 and the main transactions with related entities during the year ended on that date, are detailed as follows:

30.06.2016 30.06.2015

Impairment losses - players' economic rights (Note 9) (560,944) (432,113)

Capital gain/loss arising on the disposal of economic rights (Note 9) (43,140) 1,528,226

(604,084) 1,096,113

30.06.2016

Accounts Accounts Other current and non Other current and non

Balances Receivable Payable current assets current liabilities

FCP Clube 14,898,271 51,037 8,833,888 236,618

FCP Serv. Part. 1,140,605 610,382 - -

Investiantas - - 5,600 -

Fundação Porto Gaia - - 226,953 2,460

PPTV/Olived./Sport TV 3,071 - 2,166,667 4,000,000

Sportinveste 59,154 11,886 - -

16,101,101 673,305 11,233,108 4,239,078


___________________________________________________________________________________________


Futebol Clube do Porto is the main shareholder of FC Porto, SAD (Note 9), Euroantas and FC Porto Serviços Partillhados, S.A. are owned by this entity (53% and 96%, respectively). Additionally, is presented above information of Group balances and transactions with the entities Sportinveste - Multimédia, S.A. (‘Sportinveste’) and PPTV/Olivedesportos - Publicidade Televisão e Media, S.A. (‘Olivedesportos’), as the Chairman of the Board of Directors of these entities is a referral shareholder of FC Porto, SAD. As of 30 June 2016 and 2015, the transactions with the entity PPTV/Olivedesportos recorded in the caption “Sales and services rendered” are justified by the cession contract, in exclusivity, of the broadcasting rights relating to the FCP – Futebol, SAD main team games in ‘Estádio do Dragão’ for the Professional Football I League, as well as the static and virtual advertising commercial exploration relating to those games, signed between the parties. On the other hand, the balance recorded on the captions ‘Other current/non-current liabilities’ as of 30 June 2016 and 2015 corresponds, essentially, to the advance received by the Company form the entity above relating to the mentioned rights from 2016/17 season, as well as anticipated invoicing to the same entity on televising rights for the next seasons (Note 21).

Additionally, during the year ended June 30, 2016 were carried out transactions with close members of key personnel management family (directors) as definition established in IAS 24, represented by Energy Soccer, Lda. ("Energy Soccer"), company owned in 60% by Alexandre Pinto Costa, son of the president of the Board of Directors of FCP, SAD, Jorge Nuno Pinto da Costa Lima.

30.06.2015

Accounts Accounts Other current and non Other current and non

Balances Receivable Payable current assets current liabilities

FCP Clube 7,412,444 48,894 12,693,331 515,692

FCP Serv. Part. 722,411 980,986 67,261 155,183

Investiantas - - 5,600 -

Fundação Porto Gaia - - 263,098 2,460

PPTV/Olived./Sport TV - - - 6,000,000

Sportinveste 61,067 8,760 23,568 48,534

8,195,922 1,038,639 13,052,858 6,721,869

30.06.2016

Sales and Services Purchases and External Income Interest Others

Transactions rendered Supplies and Services interests expenses expenses

Futebol Clube do Porto (Nota 9) 3,721,828 5,074,147 - - 18,144

FCP Serviços Partilhados 64,323 4,961,193 - - (996)

PPTV/Olivedesportos 19,731,968 - - - -

Sportinveste 96,962 78,838 - - -

Investiantas - - - - -

Fundação Porto Gaia - 36,145 - - -

23,615,081 10,150,323 - - 17,147

30.06.2015

Sales and services Purchases and External Income Interest Other

Transactions rendered supplies and services interests expenses expenses

Futebol Clube do Porto 4,210,983 5,165,065 269,268 - 471

FCP Serviços Partilhados 108,883 5,045,019 - - (34,503)

PPTV/Olivedesportos 16,463,326 (695) - (47,396) (14,424)

Sportinveste 82,096 59,753 - - -

Investiantas - - - - -

Fundação Porto Gaia - 36,145 - - -

20,865,289 10,305,286 269,268 (47,396) (48,456)


___________________________________________________________________________________________


The transactions made with the Energy Soccer, in the years ended 30 June 2016, amounting to a total amount of 465,250 Euro, related to: • Intermediation service costs regarding the sale of registration rights of the players Ricardo Quaresma and Rolando; • Intermediation service costs regarding the acquisition of registration rights of the player Fede Varela; • Intermediation service costs regarding the renewal of the employment contract of the player Leandro Silva; and • Intermediation service costs regarding the player's employment contract signing of Rui Pires. From these transactions are pending, on 30 June 2016, a total balance of 108,300 Euro.

31. EARNINGS PER SHARE Earnings per share for the year, were calculated according to the following amounts:

32. SEGMENT INFORMATION Operationally, the Group is organised in two major segments:

Segment A: activity related to the participation in professional football competitions, and the promotion and organisation of sportive events represented by FCP SAD;

Segment B: activity relating to the sale of image rights, sponsorship, merchandising and product licensing represented by PortoComercial and Euroantas;

Segment C: activity related to the contents production and transmission of the TV channel "Porto Canal", represented by FC Porto Media, Avenida dos Aliados and Miragem.

Other services: includes the activities of the subsidiaries PortoMultimedia, PortoEstádio, PortoSeguro,and Dragon Tour.

Earnings 30.06.2016 30.06.2015

Net profit/loss considered for the computation of basic

earnings per shares (58,410,836) 19,351,824

Net profit/loss considered for computation of diluted earnings

per shares (58,410,836) 19,351,824

Number of shares

Weighted number of shres used to compute the basic

earnings per share 19,795,082 15,000,000

Effect of potential shares 2,704,918 4,972,603

Weighted number of shares used to compute the diluted

earnings per share 22,500,000 19,972,603

Basic earnings per share (2.95) 1.29

Diluted earnings per share (2.60) 0.97


___________________________________________________________________________________________


Operational income, indicating transactions with other segments and those resulting from transactions with third parties, may be presented as follows:

The amounts related to operational profit, operational cash-flow and cash-flow, by segment, are as follows:

Data on total assets and total liabilities, as well as on the investment made in the year in tangible and intangible assets, including players’ registrations, can be presented, by segment, as follows:

30.06.2016

Segm. A Segm. B Segm. C Other services Total

Operational income excluding income related with transactions of players' registrations

Resulting from operations with external clients 41,850,536 24,908,786 6,033,468 3,018,384 75,811,174

Resulting from operations with other segments 4,873,885 15,341,624 3,862,751 4,647,477 28,725,737

30.06.2015

Segm. A Segm. B Segm. C Other services Total

Operational income excluding income related with transactions of players's registrations

Resulting from operations with external clients 68,219,820 17,960,046 4,621,478 2,787,660 93,589,004

Resulting from operations with other segments 4,589,249 15,064,089 242,188 5,270,647 25,166,173

30.06.2016

Segm. A Segm. B Segm. C Other services Eliminations

and

Adjustments

Total

Operational Result (43,663,561) 3,588,495 (1,013,377) 443,492 (867,451) (41,512,402)

Amortisation and depreciation excluding amortisation of players' registrations (213,961) (2,494,918) (340,829) (33,088) (867,450) (3,950,246)

Provisions and impairments losses excluding players' registrations 203,364 (537,358) (101,348) 19,812 - (415,530)

Amortisation and impairment losses of players' registrations (31,556,150) - - - - (31,556,150)

Operational Cash-flow - EBITDA (a) (75,230,308) 556,219 (1,455,554) 430,216 (1,734,901) (77,434,328)

Gains and losses in investments (611,688) - (25,811) - 33,415 (604,084)

Financial expenses (16,229,348) (1,267,947) (1,394) (102) 281,643 (17,217,148)

Financial income 2,597,126 856 - 38 (605,320) 1,992,700

Income tax (225,879) (469,612) (158,536) (145,533) 56,673 (942,887)

Cash-flow (b) (89,700,097) (1,180,484) (1,641,294) 284,619 (1,968,491) (94,205,747)

(a) - Earnings before taxes, financial results, depreciation and amortisation, provisions and impairment losses

(b) - Profit + depreciation and amortisation, provision and impairment losses

30.06.2015


and

Adjustments

Total

Operational Result 30,213,392 3,776,902 238,053 803,492 (650,588) 34,381,251

Amortisation and depreciation excluding amortisation of players' registrations 181,773 1,879,304 28,135 34,732 650,588 2,774,532

Provisions and impairments losses excluding players' registrations 901,610 76,566 - (345,741) - 632,435

Amortisation and impairment losses of players' registrations 31,373,937 - - - - 31,373,937

Operational Cash-flow - EBITDA (a) 62,670,712 5,732,772 266,188 492,483 - 69,162,155

Gains and losses in investments 1,096,113 - - - - 1,096,113

Financial expenses (15,975,098) (1,414,034) - (848) 380,595 (17,009,385)

Financial income 2,496,510 205,982 - 57 (612,044) 2,090,505

Income tax 97,303 (423,732) (47,118) (269,748) 42,504 (600,791)

Cash-flow (b) 50,385,540 4,100,988 219,070 221,944 (188,945) 54,738,597

(a) - Earnings before taxes, financial results, depreciation and amortisation, provisions and impairment losses

(b) - Profit + depreciation and amortisation, provision and impairment losses

30.06.2016


and

Adjustments

Total

Total Assets 264,200,345 138,376,841 19,308,288 6,598,538 (53,439,084) 375,044,928

Total Liabilities 295,405,563 59,511,824 18,557,151 5,222,920 (29,516,727) 349,180,731

Investment made in the currency year (c ) 77,949,881 90,650 1,294,602 - - 79,335,133

30.06.2015


and

Adjustments

Total

Total Assets 269,782,076 136,932,732 4,090,268 6,509,401 (58,079,117) 359,235,360

Total Liabilities 242,878,838 60,112,251 3,657,285 5,072,035 (35,588,968) 276,131,441

Investment made in the currency year (c ) 53,485,281 120,232 - - - 53,605,513

(c) - Fixed tangible and intangible assets acquisition including players' registrations


___________________________________________________________________________________________


As FCP Group is currently developing its activity exclusively in the internal market, geographical segments are not reported. 33. DERIVATIVE FINANCIAL INSTRUMENTS

In order to reduce its exposure to volatility from interest rates, the Group hires interest rate “swaps”. These contracts are valued according to their fair value at the date of the financial statements and the corresponding amount recognized in "Other financial instruments - derivatives" of the assets or liabilities, as appropriate.

Derivative financial instruments recorded in the financial statements as of 30 June 2016 and 2015 correspond to an interest rate swap relating to a Group's financing loan. The Board of Directors believes that this derivative fully meets the requirements of IAS 39 - Financial Instruments: Recognition and Measurement, to be classified as a hedging instrument, so changes in their fair value are recorded directly in equity.

On June 30, 2016 and 2015, the derivative (swap) contracted by the Group had the following characteristics:

The movement occurred in the years ended as of 30 June 2016 and 2015 can be presented as follows:

34. CONTINGENT ASSETS AND LIABILITIES

Contingent Liabilities i) Pepe - Maritimo Madeira - Futebol SAD On 14 October 2010, Marítimo da Madeira – Futebol, SAD (“Marítimo”) brought a declarative action against FCPorto, SAD in the Professional Football Portuguese League claiming a rectification in the amount due regarding the sale of the Pepe’s registration to Real Madrid in the amount of, approximately, 840,000 Euro, which includes late payment interests. On 14 September, 2012, the Arbitral Comission of LPFP decided as unfounded all the claims from Marítimo, acquitting FCP, SAD. Subsequently, on 17 October, 2012, Marítimo presented appealed to decision to the plenary of LPFP.

CurrencyNational (in

currency)

National (in

Euro)Agreement date Due date

EUR 4,515,902 4,515,902 29/08/2003 28/09/2018

30.06.2016 30.06.2015

Opening balnce (526,226) -

Changes in the perimeter - (786,966)

Changes in fair value 203,589 249,011

Accrued interests 16,862 11,729

Closing balance (305,775) (526,226)


___________________________________________________________________________________________


In December 2013 the request for the annulment of the decision of the Plenary of the LPFP Arbitral Commission initiated by Maritime Football SAD within the Porto Civil Courts of Porto was denied, and from this decision has brought an appeal to the Court of Appeal of Porto, by Maritimo SAD being this process at the moment yet to be processed. The Board of Directors of the Company and its legal consultants, understands that the grounds considered by the clubs in the above processes are not correct, by which it was presented contestation, and it’s not estimated that from the outcome of these processes arise in any material impact on the consolidated financial statements. ii) João Moutinho - Sporting Was brought by Sporting Clube de Portugal, SAD, within the LPFP Arbitral Commission, a declarative judgment action concerning the definitive cession of the palyers’ registration rights relating to the athlete João Filipe Iria Santos Moutinho, contract under which it was attributed to Sporting SAD the right to receive 25% of the capital gain recorded in a future transfer of the player to a third club. On September 17, 2014 the LPFP Arbitral Commission notified FCP, SAD from the decision concerning this process in which the Company has condemned to the payment, to Sporting Clube de Portugal, SAD, of the amount of 658,047 Euro plus interest. FC PORTO, SAD appealed from the decision to the LPFP Arbitral Commission on October 6, 2014, having been notified in the year ended June 30, 2016 of the unfavourable decision in this instance. Following this decision FCP, SAD recognized the total amount of liability that was condemned (Note 27). However SCP, in its turn, appealed from this decision, arguing that the amounts that are due are higher than those to which FCP, SAD was condemned. iii) Tony Djinn Djim and Celestin Djim- Standard Liege Were brought by Standard Liege, within FIFA, two complaints against FC Porto, SAD, in which it is claimed an amount of 430,000 Euro regarding training compensation, for the hiring, by FC Porto, SAD, of the players Tony Djim and Celestin Djim. On February 18, 2016 the FIFA Dispute Resolution Center issued a favourable decision to the Company. Although, for this process, it is still possible the appeal for the Sport Arbitration Court is conviction of the Board of Directors of the Company and its legal advisors, that the reasons considered by Standard Liege are not correct, because this club has not fulfilled a requirement of the FIFA Regulations of Players Transfers Statutes and that from the eventual appeal that could take place will not result any material impact on the financial statements. iv) ERCS - Avenida dos Aliados The Regulatory Authority for Media (ERCS) established proceedings against offenses to the company Avenida dos Aliados, on the basis of paragraph d) of Article No. 1 77º of the Television Law, which predicts a punishment of 75,000 Euro to 375,000 Euro. It is conviction of the Board of Directors that, of this process will not result in liability for the Company.


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v) Iturbe - Verona The Italian club Verona complained to FIFA, the reimbursement by FCP SAD of the solidarity mechanism amounts that were claimed to him by other clubs under the temporary transfer (at first) and the permanent transfer (later) of the registration rights of the player Iturbe. However, in both cessions, the counterparties to pay to FCP, SAD were explicitly defined in the contract as being net of this mechanism, so that FCP, SAD considers that the amount is not due. FIFA Dispute Resolution Chamber ("DRC") decisions on 17 September 2015 condemned FCP, SAD to reimburse to Verona the amounts paid regarding the solidarity mechanism in the amount of 310,500 Euro and 31,824 Euro claimed by Cerro Porteno and River Plate, respectively. Following that decision, FCP SAD already appealed to the Sport Arbitration Court ("TAS"), in Switzerland, and it is understanding of the Board of Directors of the Company and its legal advisors, taking into account recent decisions taken by TAS on this matter, in which overturned several decisions of the FIFA DRC, that the reasons considered by Verona are not correct, so it does not estimates that, from the outcome of this process results any material impact on the financial statements. Other processes During the year ended 30 June 2008 a judicial process was brought by a third party against the subsidiary PortoEstádio; in May 2009 a sentence was issued by the the Judicial Court’s (7ª Vara Cível do Tribunal Judicial do Porto) condemning PortoEstádio to pay a compensation of 404,241 Euro, plus default interests, having the Group presented an appeal against this verdict. In July 2015 the outcome of this process was known, a favourable decision for PortoEstádio by which the previously recorded provision was reversed. From this process it’s only to be determined the time to legal expenses definition. Contingent Assets i) Tax litigations The Company made in previous years, payments for additional assessments of tax, recording such payments as an expense in the period in which such payments occurred. However, the Company maintains the complaints and judicial claims, calling for the return of such amounts. Thus there are the following contingent assets of tax to 30 June 2016:


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ii) Property municipality tax In a public meeting of the Municipal Council of Porto held on April 18, 2006, it was unanimously approved the proposed classification of the “Estádio do Dragão” as "property of municipal interest." In February 2008, an order by the Porto Tax Services approving the request for Property municipality tax exemption ("IMI") was issued in respect to the property, and that, according to legislation expressed in the Tax Benefits Statute will apply for the years 2006 and following. In October 2006, the Board of Directors of Euroantas addressed a request to the Minister of Finance requesting that the IMI exemption obtained would be applicable since 2004. However, in February 2008, the Group received an IMI settlement note for the years 2004 and 2005 whose total value amounted to 343,871 Euro. Despite this amount was recorded as an expense in the income statement for the year ended June 30, 2008, the Company’s Board of Directors understands that there is grounding to justify that the exemption would also apply to the years 2004 and 2005, in July 2008, the Group presented an administrative claim regarding the referred settlement; this claim was dismissed and subsequently there has been presented a judicial claim. As has not yet been any further development in this process, the Group continues to wait for a final decision.

35. SUBSEQUENT EVENTS

The following events took place after the date of the financial statements and, by its relevance, are presented as follows: i) Changes in the Board of Directors: On September 01, 2016, Mr. Antero José Gomes Resurreição Diogo Henrique presented the resignation of Director of FCP, SAD, having this resignation been accepted. ii) Players’ Loan FC Porto SAD secured the temporary registration rights of the players Oliver Torres and Diogo Jota from Club Atlético de Madrid for one season and half and one season, until December 2017 and June 2017, respectively. Both contracts contemplate definitive purchase options of the above rights.

Tax Nature

Contigent

Asset

30.06.2016

IRC 2003 Additional tax settlement 2,155,916

IVA 2003 Additional tax settlement 171,369

IRC 2005 Additional tax settlement 626,650


IRC and IVA 2008 Additional tax settlement 823,732


IRC and IRS 2010 Additional tax settlement 316,366

5,490,058


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iii) Acquisition of players’ registration rights: FCP, SAD acquired the players’ registration rights of and 100% of the economic rights of player Alex Telles from Galatasaray, Depoitre from Gent and Boly from Sporting Clube de Braga, for the total amount of 19,000,000 Euro.

36. APPROVAL OF THE FINANCIAL STATEMENTS The accompanying financial statements were approved by the Board of Directors on 6 October 2016. 37. EXPLANATION ADDED FOR TRANSLATION These consolidated financial statements are a translation of financial statements originally issued in Portuguese in accordance with International Financial Reporting Standards (IFRS/IAS) as adopted by the European Union and the format and disclosures required by those Standards, some of which may not conform to or be required by generally accepted accounting principles in other countries. In the event of discrepancies, the Portuguese language version prevails.


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7. Legal Certification of Accounts and Audit Report

Opinion

We have audited the accompanying consolidated financial statements of Futebol Clube do Porto - Futebol SAD ("Company") and its subsidiaries ("Group") which comprise the consolidated statement of financial position at June 30, 2016 (which shows total assets of 375,044,928 Euros and total equity of 25,864,197 Euros, including consolidated net profit attributable to parent company's shareholders of 58,410,836 Euros), the consolidated statement of profit and losses by nature, the consolidated statement of profit and losses and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the period then ended, and the notes to the consolidated financial statements including a summary of significant accounting policies. In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Futebol Clube do Porto - Futebol S.A.D. and its subsidiaries at June 30, 2016 and its financial performance and cash flows for the period then ended in accordance with International Financial Reporting Standards as adopted by the European Union. Basis for opinion

Our audit was conducted in accordance with International Standards on Auditing (ISA) and other standards and technical and ethical guidelines of the Portuguese Institute of Statutory Auditors (“Ordem dos Revisores Oficiais de Contas”). We are independent of the Company in accordance with the law and fulfil the other ethical requirements in accordance with the code of ethics of the Portuguese Institute of Statutory Auditors. We believe that the audit evidence we obtained is sufficient and appropriate to provide a basis for our opinion. Going concern

As mentioned in the notes to the consolidated financial statements, the Group prepares the consolidated financial statements on the going concern basis. The going concern basis implies that the Group has adequate resources to maintain the activities and that the governing body has no intention to cease activity in the short term. Based on our work, we inform that the Company’s individual financial statements on 30 June 2016 shows that all of its share capital is lost, presenting, at that date, negative equity attributable to shareholders of the Company, and, as such, the provisions of articles 35 and 171 of the Commercial Company Code (“Código das Sociedades Comerciais”) are applicable. Additionally, the individual and consolidated financial statements at that date present a situation where the current assets are clearly lower than the current liabilities. Additionally, as mentioned in Note 3.4 of the notes to the consolidated financial statements the Company has not complied with the requirements of the "break-even" as defined by the UEFA Club Licensing and Financial Fair Play Regulations. As mentioned in the consolidated Board of Directors’ Report and in Note 16 of the notes to the consolidated financial statements, the Board of Directors understands that this situation should be


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analysed and decided by the General Shareholders Meeting, in order to fulfil the requirements of the legislation referred above. The accompanying consolidated financial statements were prepared on a going concern basis, which considers the continued financial support of the financial institutions and other financing institutions, namely the renovation/reinforcement and restructuring of existing credit lines and liabilities (Notes 3.3 and 18), as well as the success of the Company’s future operations, including the positive outcome of the sale of players’ registrations, and as foreseen in its operating and cash-flow budgets, essential to the balance and fulfilment of financial commitments. Governing body’s responsabilities

The responsabilities of the governing body comprises: - the preparation of consolidated financial statements that give a true and fair view of the

financial position, financial performance and cash-flows of the Group in accordance with International Financial Reporting Standards as adopted in the European Union;

- the preparation of the consolidated Board of Director’s Report and the corporate governance report in the legal terms and regulations;

- the establishment and maintenance of an appropriate internal control system that allows the preparation of financial statements that are free from material misstatement due to fraud or error;

- the adoption of policies and accounting principles appropriate in the circumstances; - the disclosure of any significant fact that have influenced the activity, the consolidated

financial position or consolidated results of the Group; and - the assessment of the Group's ability to remain on a going concern basis, disclosing,

whenever applicable, the matters which could raise significant doubts about the going concern basis.

Auditor responsability

Our responsibility is to obtain reasonable assurance about whether the financial statements are free of material misstatement due to fraud or error, and issue a professional and independent report based on our audit that includes our opinion. Our responsibilities comprises: - verification that the financial statements of the entities included in the consolidation have

been audited and, in significant cases where they have not, verification, on a test basis, of the evidence supporting the amounts and disclosures in the financial statements and assessing the estimates based on judgments and criteria defined by the governing body, used in their preparation;

- Verification of consolidation operations and the equity method application; - the assessment of whether the adopted accounting policies are adequate and their

appropriate disclosure taking into account the circumstances; - verification of the applicability of the going concern basis; and - assessment of the adequacy of the overall presentation of the consolidated financial

statements.


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Our responsibility also includes verifying that the information contained in the consolidated Board of Director’s Report is in accordance with the consolidated financial statements and the verifications provided in paragraphs 4 and 5 of Article 451 of the Commercial Company Code. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In our opinion: (i) the consolidated Board of Directors’ Report was prepared in accordance with the laws and regulations in force and the information contained herein is consistent with the audited consolidated financial statements and has not been identified materials inaccuracies, and that (ii) the Corporate Governance Report includes the information required to the Company, as established by the Article 245º-A of the Securities Market Code. Porto, 7 October 2016

Deloitte & Associados SROC, S.A. Represented by António Manuel Martins Amaral


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8. Report and Opinion of the Audit Committee Shareholders,

In compliance with legal and statutory provisions and the mandate given to it, the Audit Committee of Futebol Clube do Porto - Futebol, SAD is to report and evaluate the management report and other provision of individual financial statements and consolidated accounts of Futebol Clube do Porto - Futebol, SAD for the year ending on June 30 2016, at the responsibility of the Board of Directors. Supervision

During the year, the Audit Committee tracked the management of the group, the evolution of its activity and its subsidiaries, and made meetings with the frequency and length considered appropriate. These meetings, considering the matters being analysed, counted on those responsible for the areas of Accounting and Taxation, Financial Planning and Control Management, Legal Department and the Board of Directors. This Committee kept close contact with the official auditor and external auditor, which kept us informed of the nature and findings of audits. In fulfilling these functions the Audit Committee received, from the Board, the various services of the group, the companies included in the group, and the auditor all information and explanations required, in particular for the proper understanding and evaluation of business development, performance and financial position and of risk management and internal control systems. The Committee also monitored the process of preparation and disclosure of financial information, as well as reviewing the provision of individual and consolidated accounts of company documents, and the official auditor received all information and explanations required. Additionally, as part of its responsibilities, the Audit Committee examined the individual and consolidated balance sheets on June 30, 2016, the individual and consolidated statements of profit and loss, cash flows and comprehensive income and changes in equity for the year than ended in that date and the accompanying notes. The annual report issued by the Board of Directors was analysed, and the legal certification of accounts and audit report on the accounts, issued by the statutory auditor, which deserve the agreement of the Audit Committee. Given the above, the Audit Committee is of the opinion that the information in the financial statements has been drafted in accordance with the accounting, legal, and statutory standards applicable and give a true and fair view of the assets and liabilities, financial position and results of Futebol Clube do Porto - Futebol, SAD and the undertakings included in the consolidation perimeter and that the management report faithfully reflects the development of business, performance and financial position of the same and the undertakings included in the consolidation perimeter and contains a description of the principal risks and uncertainties that they face. After the closure of accounts, the Audit Committee analysed the most relevant facts, duly explained in the Management Report. The Audit Committee expresses its thanks for the collaboration of the Board of Directors and services.


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Advice

As consequence of the above, the Audit Committee believes that the conditions are met for the General Assembly to approve:

a) the Management Report, the individual and consolidated balance sheets on June 30 2016, the individual and consolidated statements of results by nature, of cash flows and correspondent annexes;

b) the proposition to apply the results of individual accounts presented by the Board of

Directors. Certificate of Responsibility

The members of the Audit Committee of Futebol Clube do Porto - Futebol, SAD, in accordance with line c) of n. 1 of article 245 of the Portuguese Securities Code, declare that, to the best of their knowledge, the information specified in line a) of that article, including the documents of the individual and consolidated accounts, was prepared in accordance with the applicable accounting standards, give a true and fair view of the assets and liabilities, financial position and results of the Group and undertakings included in the consolidation perimeter, and contains a description of the principal risks and uncertainties that it faces. Porto, October 07, 2016 The Audit Committee José Paulo Sá Fernandes Nunes de Almeida


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C. Corporate Governance Report

PART I – INFORMATION ON THE SHAREHOLDER,

ORGANIZATION AND CORPORATE GOVERNANCE STRUCTURE

A. SHAREHOLDER STRUCTURE

I. Capital structure

1. Capital structure

The share capital of FC Porto - Futebol, SAD is, on June 30, 2016, of 112,500,000€ (one hundred and

twelve million five hundred thousand euros), represented by 22,500,000 (twenty two million five

hundred thousand) shares with a nominal value of 5€ (five euros) each.

On June 30, 2014, the share capital was 75,000,000. However, the General Meeting of Shareholders

on October 2 2014, approved the capital increase in the amount of 37,500,000€ through the issuing

of preferential shares without voting rights. Following this capital increase, which was fully

subscribed by Futebol Clube do Porto, the capital of the Group now amounts to a total of

112.500.00€ (one hundred and twelve million five hundred thousand euros), having not been any

changes to the social capital of FC Porto - Futebol, SAD since then.

During this year, and at the request of FC Porto as the only holder of preferential shares, the General

Meeting of November 12, 2015, FC Porto – Futebol, SAD approved the conversion of these shares

into ordinary shares, eliminating the maximum percentage of rights to vote of each shareholder.

Later, on February 19, 2016, CMVM approved the admission prospect to the negotiation in regulated

market of the 7,500,000 shares converted.

Thus, to this date, the share capital is fully subscribed and paid up and is divided into 16,782,931

shares Category A and 5,717,069 Category B (respectively 74.59% and 25.41% of the capital), and

rights to vote of the company, depending on the identity of the holder. Category A shares only

integrate this category while held by Futebol Clube do Porto, or the Management Company of


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shareholdings in which the club holds the majority of share capital, automatically converting into

Category B shares in the event of alienation to a third party in any way. For the purpose of exercising

the right to vote, each ordinary share represents one vote.

Shares in category A give the shareholder the following special rights:

• Right to veto the decisions of the general meeting intended to merge, split, transform or dissolve

the company and the change in statutes, increase or reduction of social capital and change of

headquarters (article 7, n. 2 of statutes), according to article 23, n. 3 od Decree 10/2013 of January

25.

• Right to appoint at least one of the members of the Board of Directors, which will have the right to

veto in consideration of that entity with a similar objective as n. 2 of article 7 in the Statutes (article

11, n. 3 in statutes1).

2. Restrictions regarding the transmission of shares and share holders

There are legal restrictions to the holding of shares representing the capital of FC Porto – Futebol,

SAD, due to the specific demands of the sporting activity that rule its existence. Sporting companies

are ruled by the special legal regime set in Decree 67/97, on April 3 according to the changes

introduced by Law n. 107/97, on September 16, followed by Decree n. 10/2013, on January 25.

Among those specific demands are:

• The existence of two categories for shares, with category A shares remaining subscribed and

held, at any time, by the founding club, can only be legally apprehended or encumbrance in

favour of collective people of public right;

• The special loyalty system of the Company to the founding club, which means that the club is

forced to maintain a minimum participation in the Company (not inferior to 10%); in

attributing special rights to the shares held by the founding club.

3. Own shares


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FC Porto – Futebol, SAD holds 100 own shares, consolidated, worth 499€. These shares, with a very

small representation in the social capital of the company, are held by PortoSeguro, a company in the

consolidation perimeter, held at 90% by FC Porto – Futebol, SAD.

PortoSeguro acquired 100 shares when the SAD was created, in 1997, and hasn’t alienated or

acquired any share since. Thus, FC Porto – Futebol, SAD had, both at the start and at the end of the

period under analysis, 100 own shares, worth 500€ at the time of buy.

4. Significant agreements involving the company and which start, change or cease in case the

control of the company changes following a public acquisition offer, as well as its effects

There are no significant agreements of which the company is part and that will start, change or

cease, in case the control of the Company changes following a public acquisition, or agreements

between FC Porto – Futebol, SAD and the holders of the board of directors or workers foreseeing

compensations for renounce or destitution of members of the board, nor in case of dismissal of

worker, firing without a cause or termination of work relation, following a public acquisition offer.

FC Porto – Futebol, SAD has also not adopted any measure intending to stop the success of public

offers of acquisition that disrespect the interests of the Company and the shareholders.

5. Regime controlling the renewal or revocation of defensive measures, especially those that

foresee the limitation in number of detainable votes or belonging to a single shareholder,

individually or under several shareholders

At the General Meeting of November 12, 2015, the Company changed the n. 3 of article 7 of its

statutes, eliminating the maximum percentage of rights to vote of each shareholder with preferential

shares without the right to vote, as it no longer applied following the conversion of preferential

shares without the right to vote into ordinary shares.

Thus, there are no statutory rules that foresee the existence of shares that do not offer the right to

vote or that establish that rights to vote above a certain number are not accounted, when used by

one shareholder or other shareholders related to him.


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6. Prosocial agreements known to the company and that may lead to restrictions in terms of

transmission of assets or rights to vote

The Board of Directors is unaware of any prosocial agreement as described in Art. 19 of the

Portuguese Security Code regarding the exercise of social rights, or the transmission of shares of FC

Porto – Futebol, SAD.

There is no union to vote or defence agreement against public acquisition offers (take-overs).

II. Social Participations and Obligations Detained

7. Qualified holdings

Under and for the purposes of Articles 16 and 20 of the Securities Code and Article 448 of the

Companies Code, it is reported that the Company and/or individuals with qualified social

participation exceeding 2%, 5%, 10%, 20%, a third, 50%, two thirds and 90% of the votes, and

according to reports received at the headquarters of the Company are, as of June 30, 2016, as

follows:

Futebol Clube do Porto N. of Shares % Voting rights

Directly 16,782,931 74.59%

Through Jorge Nuno de Lima Pinto da Costa 250,000 1.11%

Through Alípio Jorge Calisto Fernandes 2,175 0.01%

Through Eduardo Jorge Tentugal Valente 200 0,00%

Through António Manuel Leitão Borges 2,480 0.01%

Through Rodrigo Afonso Pinto de Magalhães Pinto Barros 200 0.00%

Total Attributable 17,037,986 75.72%


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António Luís Alves Oliveira N. of Shares % Voting rights

Directly 1,650,750 7.34%

Through Francisco António de Oliveira 980 0,00%

Total Attributable 1,651,730 7.34%

Joaquim Francisco Alves Ferreira de Oliveira N. of Shares % Voting rights

Through Olivedesportos – SGSPS, SA 1,502,188 10.01%

8. Number of shares and bounds held by members of the Board of Directors and Advisory Council,

under the terms of n. 5 of art. 447 of the Portuguese Companies Code

Under the terms of art. 447 of the Portuguese Companies Code, it should be informed that, as of

June 30, 2016, the directors of FC Porto – Futebol, SAD had the following shares:

Shares held by members of the Board of Directors Number of shares

Jorge Nuno de Lima Pinto da Costa* 250.000

Adelino Sá e Melo Caldeira* 0

Antero José Gomes da Ressurreição Diogo Henrique* 0

Fernando Manuel Santos Gomes * 0

Reinaldo da Costa Teles Pinheiro 9.850

José Américo Amorim Coelho 100

Rui Ferreira Vieira de Sá 0

* Futebol Clube do Porto, of which he is Chairman/Vice-Chairman of the Board, had 16.782.931 shares in June 30, 2016.

Shares held by members of the Advisory Council Number of shares

José Paulo Sá Fernandes Nunes de Almeida 100

Jorge Luís Moreira Carvalho Guimarães 25

José Augusto dos Santos Saraiva 0

André Ferreira Antunes 0


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As of June 30, 2016, the Statutory Auditor had no representative shares of the social capital of FC

Porto – Futebol, SAD.

9. Special powers of the Board of Directors, regarding the increase of capital

Without prejudice of the several given by Law and the Statutes of the Company, the Board of

Directors must assure the management of any social business and any operation regarding social

focus, as they are given full powers, namely to:

a) Represent the Company, at all times, propose and dispute any actions, demand and release

and make commitments in terms of decisions. For that, the board must delegate these

powers in one mandatary;

b) Create a company budget, to be approved by the General Meeting;

c) Acquire, alienate and ornate or relocate assets, including shares, quotas, bounds and right to

sign players;

d) Sign sporting contracts and sporting training contracts and proceed to dismiss them, by

mutual or unilateral agreement;

e) Acquire real-estate;

f) Decide if the Company should associate with other entities, under the terms of art. 4 of the

Statutes;

g) Decide on the emission of bounds and apply for loans in the national and/or international

financial market and accept audits from relevant entities;

h) Appoint any other individual or collective entity for social positions in other companies.

The Board of Directors does not hold powers to decide on the increase of capital. As determined in

article 7 of the Statutes of the Company, any increase to the capital requires previous analysis of the

General Meeting, as shares of Category A, held by Futebol Clube do Porto (Club), offer right to veto

of any decision of the General Meeting which aim at increasing or decreasing if social capital. Still, as

line b) of article 23, n. 2 of Decree n. 10/2013, of January 25 goes into effect, FC Porto no longer has,

by Law, the right to veto over the change in statutes of FC Porto SAD or over the increase and

decrease of social capital of that company, now being given the right to veto any chance to the

emblem or equipment of its professional football teams.


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10. Relevant commercial relations between owners of bounds and the Company

There are no significant economic businesses, for any of the parties involved, between the Company

and the member of the Board of Directors, Audit Board, owners of qualified holdings or Companies

under control of the Group, except the businesses or operations done under normal circumstances

for similar operations, part of the current activity of the Company.


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B. GOVERNING BODIES AND COMMITTEES

I. GENERAL MEETING

a) Members of the General Meeting Board

11. Identification and position of the members of the board of the general meeting and its term

In the General Meeting on March 3, 2016, it was decided to elect, for the period of 2016/2019, José

Manuel de Matos Fernandes as chairman of the General Meeting and Rui Miguel de Sousa Simões

Fernandes Marrana as secretary of the General Meeting.

b) Exercising right to vote

12. Possible restrictions in terms of right to vote

FC Porto – Futebol, SAD, before each General Meeting, and following the legal dates, discloses the

warning that a meeting will be held, including in the institutional website of the Company

(www.fcporto.pt).

According to the Statutes of the Company, all shareholders with voting right may participate in a

General Meeting, as long as the shares are under their name by zero hours (GMT) of the 5th working

day before the meeting, and if they prove their registration before the Company until the same of

that 5th day, stating their intention to be a part of the meeting in a written letter addressed to the

Chairman of the General Meeting no later than the sixth day before the General Meeting, with the

option of using electronic mail to do so. Still, the last Chairmen of the General Meeting have decided

that, considering the issues with delivery of declarations of shares, any copies received by fax or e-

mail should be accepted, as long as they follow the date disclosed in the Statutes and if the original is

received before the General Meeting.


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Shareholders that have a statute of singular person may be represented in the General Meetings

under the current Law. Collective should be represented by someone designated to do so through a

letter that must be admitted by the Chairman of the General Meeting.

The Company offers the Shareholders a representation form which can be requested at the

Company, by phone (+351 225 070 500) or e-mail ([email protected]). The documents for voluntary

representation must be handed at the social headquarters, addressed to the Chairman of the

General Meeting, at least three days before the General Meeting, and specifying the relevant

meeting, by stating the date, time and location it will be held and the Order of Work, leaving no

doubts to the Chairman about the representative, which must be identified.

The statutes of the Company, on n. 4 of art. 8, admit the issuing of preferential shares, without vote

rights, that may be redeemable, for the nominal value, added of a prize or not, if the General

Meeting decides to do so. Should this be the case, the prize for the remission must be defined. In

case the remission is not complied, the company must compensate the holder, for an amount set

during the remission. On October 31 2014, there was an increase to the issuing capital by issuing

preferential shares, without the right to vote, worth 37.500.000€, which have since been converted

in ordinary shares.

By the end of each General Meeting, the Company issues a statement, made available on their

website, as well as in the official website of CMVM, with the decisions made, the capital represented

and the results of the voting. The minutes of the meetings are sent to any shareholder that requests

them. To follow the recommendations of CMVM, the Company, as of 2009, made these minutes

available at their website, for fifteen days, as stipulated in Decree n. 49/2010.

13. Maximum percentage of vote rights that may be used by a single shareholder or by

shareholders connected through n. 1 of art. 20

Regarding the right to vote, each share means one vote, and attendance at the General Meeting is

not restricted to a minimum number of shares.


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At the General Meeting of November 12, 2015, the Company changed the n. 3 of article 7 of its

statutes, eliminating the maximum percentage of rights to vote of each shareholder with preferential

shares without the right to vote, as it no longer applied following the conversion of preferential

shares without the right to vote into ordinary shares.

Thus, there are no statutory rules that foresee the existence of shares that do not offer the right to

vote or that establish that rights to vote above a certain number are not accounted, when used by

one shareholder or other shareholders related to him.

14. Decisions that, by statutory requirement, can only be taken by a qualified majority

According to article 20 of the Statutes, the General Meeting will rule over any number of

shareholders present or represented, in both calls, without legal demands of a constitutive number

for certain acts, and, namely, the need to, in the first call, there are at least two thirds of the total

number of votes for the Meeting to approve some of the acts foreseen in art. 13, n. 2 of these

Statutes (“Any act exceeding the previsions inscribed in the budget requires authorization of the

general meeting, after a deliberation approved by simple majority, and the alienation and

transaction, of any kind, of assets pertaining to the patrimony of the Company must be approved by

two thirds of the votes issued”).

II. ADMINISTRATION AND SUPERVISION

a) Composition

15. Identification of the business model adopted

The structure of the Governing Body of the Company is based on the reinforced Latin model and is

composed of the Board of Directors, Audit Board and the Auditor, voted by the General Meeting of

Shareholders.


___________________________________________________________________________________________


16. Statutory rules on procedural requirements and applicable material to appoint and replace the

members, if applicable, of the Board of Directors

The replacement of a director will occur under the terms of the Portuguese Companies Code, as

there are no statutory rules on that matter, occurring in one of the following: if there are no

substitute directors, the Board must choose a director, which will be approved in the next General

Meeting; if a choice isn’t done in 60 days, the Audit Board will appoint a substitute director, which

must also be approved on the next General Meeting; if that doesn’t occur, the new director will be

elected on the General Meeting.

There are no statutory rules that set the selection process of the non-executive directors. The

election of the Governing Bodies, namely the Board of Directors, including all the members, is done

as one process, in a list presented by the shareholders that wish it and approved in General Meeting.

17. Composition of the Board of Directors

According to the Statutes of the Company, the Company is ran by a Board of Directors, composed of

three, five, seven or nine members, which must be professional managers, elected in General

Meeting, and appoint a chairman, if one hasn’t been set in the Meeting. The mandate of the

governing bodies lasts four years, and re-election may occur one or more times.

Currently, this body is composed of 7 members, 5 of which are executive, and all must manage the

Company.

In a Shareholder General Meeting, held on the March 3, 2016, the following elements were elected

for the term of 2016/2019 of the Board of Director, with the following positions:


___________________________________________________________________________________________


Name Date of first

election

Date of term of

mandate

Jorge Nuno de Lima Pinto da Costa (Chairman) 23-Sept-1997 31-Dec-2019

Adelino Sá e Melo Caldeira 23-Sept-1997 31-Dec-2019

Antero José Gomes da Ressurreição Diogo Henrique 3-Mar-2016 31-Dec-2019

Fernando Manuel Santos Gomes (*) 31-Mar-2014 31-Dec-2019

Reinaldo da Costa Teles Pinheiro 23-Sept-1997 31-Dec-2019

José Américo Amorim Coelho (non-executive) 3-Mar-2016 31-Dec-2019

Rui Ferreira Vieira de Sá (non-executive) 13-Feb-2012 31-Dec-2019

18. Difference between executive and non-executive members and identification of non-executive

members that may be considered independent

On June 30, 2016, the Board of Directors included two non-executive members: José Américo

Amorim Coelho and Rui Ferreira Vieira de Sá.

The members of the Board of Directors are not independent, with the exception of José Américo

Amorim Coelho and Rui Ferreira Vieira de Sá, as they are part of the Board of Directors of Futebol

Clube do Porto, which holds about 75% of the capital and of the voting rights, of Futebol Clube do

Porto - Futebol, SAD, and exercise a dominant influence over it.

The non-executive directors conducted their duties not only by participating in the meetings of the

Board of Directors, but also by accompanying and supervising the work of the executive directors, by

requesting, with coordination and efficiency, further information on matters analysed by the Board

of Directors, such as, mainly, financial, governance and regulatory aspects. It should be said there

were no restraints to the work done by the non-executive directors.

Any information requested to the other members of the Governing Bodies was given as quickly as

possible and adequately.


___________________________________________________________________________________________


19. Professional qualifications of the members of the Board of Directors

Jorge Nuno de Lima Pinto da Costa

• Education: Secondary complete

• Other positions held at FC Porto Group, referred to in point 26.


• Degree in Law by the Universidade Federal do Estado do Rio de Janeiro, in 1980

• Lawyer since 1980 until today

• Member of the Law Firm Graça Moura & Associados from 1996 to 2005

• Member of the Law Firm Gil Moreira dos Santos, Caldeira, Cernadas & Associados since 2005



• Education: Secondary complete



• Degree in Economics by the Instituto Superior de Ciências Económicas e Financeiras da Universidade Técnica de Lisboa, in 1971

• Other positions held at the Grupo FC Porto, referred to in point 26.


• Education: 1st Cycle of Basic Education



• Entrepeneur;

• Other positions referred to in point 26.


• Degree in Civil Engineering by the Faculdade de Engenharia da Universidade do Porto, em 1977

• From 1977 to 1996, Head of Services and Construction Director of Grupo Somague

• From 1996 to 2013, Member of the Board of Somague Engenharia, SA;

• From 2013 to 2016, Chairman of the Board of Somague Engenharia, SA;

• Other positions referred to in point 26.


___________________________________________________________________________________________


20. Family, professional or financial relations, usual or significant, between members of the Board

of Directors and shareholders with a qualified participation above 2% of the voting rights

There are no family, professional or business relations, usual or significant, between members of the

Board of Directors and shareholders with a qualified participation above 2% of the voting rights.

21. Organigram or functional maps regarding the distribution of competences between the several

governing bodies, committees and/or departments of the Company, including information about

delegation of competences, especially referring to the delegation of the daily management of the

Company

The Governing Bodies of FC Porto - Futebol, SAD are composed of the General Meeting, the Board of

Directors, the Audit Committee, the Statutory Auditors, the Company Secretary, the Advisory Board

and the Remuneration Committee.

FC Porto - Futebol, SAD has no executive committee, given its small dimension, and holds the

Management Board responsible for ensuring the daily management of the Company.

b) Functioning

22. Existence and location where the regulations for the functioning of the Board of Directors may

be consulted


___________________________________________________________________________________________


The Governing Bodies of FC Porto – Futebol, SAD do not have formally approved functioning

regulations. However, the members intend to set those regulations and disclose them afterwards in

the website of Futebol Clube do Porto (www.fcporto.pt).

23. Number of meetings held and attendance of each member of the Board to the meetings

In this period, the Board of Directors met 6 times, and a minute was made for each meeting. These

are available to any Governing Body who wishes to consult them. All executive members of the

Board attended all the meetings.

24. Indication of the bodies of the Company that may assess the performance of the executive

directors

Considering the model of the Governing Body implemented by FC Porto – Futebol, SAD, that

integrates a Remuneration Committee, and given the small size of the Company, it was decided that

there was no need for the creation of specialized commissions with the single purpose of evaluating

the performance of the executive directors or the activity of existing commissions.

On the other hand, FC Porto – Futebol, SAD, for its specificity as a Sporting Company, in the

performance of its activity, has a number of obligations to keep in face of sporting bodies. In order to

participate in national and European competitions, the Company has to meet a number of criteria,

especially of financial order, which, in a way, will prove the competence of the Board, as, if they are

not met, the team will be excluded from competing.

25. Pre-established criteria to evaluate the performance of the executive directors

Under the terms of their competences, the Remuneration Committee, re-elected on February 2012

for the period 2012/2015, which was still responsible for the remunerations policy for the period

2015/2016, decided to change the remuneration policy approved in General Meeting, which, despite

being analysed annually, remained the same throughout the term. Just as in the previous period,

there were no variable remunerations, considering the sporting performance of the main squad of FC

Porto.


___________________________________________________________________________________________


The proposition for the new remuneration policy of the Board of Directors and supervision of the

Company was presented and analysed by the shareholders in the General Meeting of 2014, having

been approved.

In this period, the remunerations of the members of the governing body did not depend on the

evolution of the quotas of shares or any other variable.

There was no plan to offer shares or options to acquire shares to the directors. There was also no

policy or measure set in terms of offering compensations contractually negotiated, in case of

termination of duties or early retirement, or mechanisms to limit the variable remuneration. There

was no contractual obligation regarding the compensation for dismissal without cause.

26. Availability of each member of the Board of Directors, indicating the positions held

simultaneously with other companies, in and out of the Group, and other relevant activities held

by the members of those Bodies during this period


• Chairman of the Board of FC Porto

• Chairman of the Board of InvestiAntas, SGPS, SA

• Chairman of the Board of EuroAntas, Promoção e Gestão de Empreendimentos Imobiliários, SA

• Chairman of the Board of Directors of PortoEstádio, Gestão e Exploração de Equipamentos Desportivos, SA

• Chairman of the Board of Directors of Fundação PortoGaia para o Desenvolvimento Desportivo

• Chairman of the Board of FCPortoMultimédia, Edições Multimédia, SA

• Chairman of the Board of PortoComercial, Sociedade de Comercialização, Licenciamento e Sponsorização, SA

• Chairman of the Board of FC Porto – Serviços Partilhados, SA

• Chairman of the Board of FCP Media, SA

• Chairman of the Board of Dragon Tour, Agência de Viagens, SA

• Chairman of the Board of Avenida dos Aliados, Sociedade de Comunicação, SA

• Chairman of the Board of Miragem, Produção Audiovisual, SA


• Vice-Chairman of the Board of FC Porto

• Member of the Board of Directors of Investiantas, SGPS, SA

• Member of the Board of Directors of EuroAntas, Promoção e Gestão de Empreendimentos Imobiliários, SA

• Member of the Board of Directors of PortoEstádio, Gestão e Exploração de Equipamentos Desportivos, SA

• Member of the Board of FCPortoMultimédia, Edições Multimédia, SA

• Member of the Board of PortoComercial, Sociedade de Comercialização, Licenciamento e Sponsorização, SA

• Manager of PortoSeguro – Sociedade Mediadora de Seguros do Porto, Lda.

• Member of the Board of FC Porto – Serviços Partilhados, SA


___________________________________________________________________________________________


• Member of the Board of FCP Media, SA

• Member of the Board of Dragon Tour, Agência de Viagens, SA

• Member of the Board of Avenida dos Aliados, Sociedade de Comunicação, SA

• Member of the Board of Miragem, Produção Audiovisual, SA


• Vice-Chairman of the Board FC Porto




• Member of the Board of Avenida dos Aliados – Sociedade de Comunicação, SA


• Vice-Chairman of the Board of FC Porto

• Member of the Board of EuroAntas, Promoção e Gestão de Empreendimentos Imobiliários, SA


• Member of the Board of PortoEstádio, Gestão e Exploração de Equipamentos Desportivos, SA

• Manager of PortoSeguro – Sociedade Mediadora de Seguros do Porto, Lda.

• Member of the Board of FC Porto – Serviços Partilhados, SA



• Member of the Board of Avenida dos Aliados, Sociedade de Comunicação, SA

• Member of the Board of Miragem, Produção Audiovisual, SA


• N.a.


• Chairman of the Board of Amorim Participações Mobiliárias II, S.G.P.S., S.A.

• Chairman of the Board Soamco - Investimentos Imobiliários, S.A.

• Manager of Elemento Essencial – Sociedade Agrícola Unipessoal, Lda.

• Director of Manageable Number, S.G.P.S., S.A.

• Director of Estratégia Singular, S.G.P.S., S.A.

• Manager of Tropicalocean, Lda.

• Member of the Board of Brasilimo – Investimentos Imobiliários no Brasil, S.G.P.S., S.A.

• Member of the Board of S2IS – Serviços e Investimentos imobiliários, S.G.P.S., S.A.

• Vice-Chairman of the Board of Amorim Turismo, S.G.P.S., S.A.

• Vice-Chairman of the Board of Sociedade Figueira Praia, S.A.


• N.a.


___________________________________________________________________________________________


c) Commissions in the Governing Bodies and delegated directors

27. Identification of commissions created in the Board of Directors and where can the regulations

be found

The Board of Directors believes that the only specialized commission capable of facing the needs of

the Company, considering the dimension and complexity, is the Remuneration Committee.

The Remuneration Committee of FC Porto – Futebol, SAD aims at setting the remunerations of the

members of the Governing Bodies of the Company and set the remuneration policy to be applied to

the member of the Board of FC Porto – Futebol, SAD.

The current Remuneration Committee of FC Porto – Futebol, SAD (for the period 2016-2019) is

composed of the following members:

• Alípio Dias (Chairman)

• Emídio Ferreira dos Santos Gomes

• Joaquim Manuel Machado Faria de Almeida

28. Composition, if applicable, of the executive commission and/or identification of delegate

director(s)

FC Porto – Futebol, SAD did not appoint an Executive Commission of the Board of Directors, and any

decisions regarding strategies adopted by the Board of Directors as a body will be composed of all

members, executive and non-executive, in the normal performance of their duties.

29. Competences of each commission created and summary of the activities developed when doing

those competences

The Board of Directors believes that the only specialized commission capable of facing the needs of

the Company, considering the dimension and complexity, is the Remuneration Committee.


___________________________________________________________________________________________


The Remuneration Committee is composed of members independent to the administration. To that

extent, the Remuneration Committee does not include any member of another governing body to

which it sets the respective remuneration, and the three members have no family bonds with

members of other bodies, including as their spouses, kin or straight line to the 3rd degree. The

members of the Remuneration Committee have knowledge and experience concerning remuneration

policy. During the financial year of 2015/2016 the Remuneration Committee did not find necessary to

hire additional support to their duties. After each meeting, the Remuneration Committee produces a

minute.

This committee is responsible for assessing the performance of the executive directors and

consequent remuneration, and will follow the criteria they see as fit, in compliance with the law and

the current statutory practices.

III. SUPERVISION

a) Composition

30. Identification of the supervision body on the adopted model

The structure of the Governing Body of the Company is based on the reinforced Latin model and is

composed of the Board of Directors, Audit Board and the Auditor, voted by the General Meeting of

Shareholders.

31. Composition of the Audit Committee, indicating the minimum and maximum statutory number

of members, statutory duration of terms, number of effective members, date of the first

appointment and date of term of mandate of each member.

According to the Statutes of the Company, the supervision of the Company will be made by an Audit

Committee and an Auditor. The Audit Committee is composed of three effective members and one

replacement. The mandate of the members of governing bodies lasts for four years, and the re-

election is allowed for one or more times.


___________________________________________________________________________________________


In a Shareholder General Meeting held on the March 3, 2016, the following members were elected to

be part of the Audit Committee for the period 2016/2019:

Nome Date of first election Date of term of mandate

José Paulo Sá Fernandes Nunes de Almeida 13-Nov-2008 31-Dec-2019

Jorge Luís Moreira Carvalho Guimarães 03-Mar-2016 31-Dec-2019

José Augusto dos Santos Saraiva 13-Nov-2014 31-Dec-2019

André Ferreira Antunes (Substitue) 03-Mar-2016 31-Dec-2019

32. Identification of the independent members of the Audit Committee, according to art. 414, n. 5

of the CSC

As stated by the members, the regulations for incompatibility and independence criteria foreseen in

n. 1 or article 414 A and n. 5 of article 414, respectively, both part of the Portuguese Companies

Code, apply.

33. Professional qualifications of each member of the audit Committee and other relevant

curricular elements

José Paulo Sá Fernandes Nunes de Almeida

• Degree in Economics from the Faculdade de Economia do Porto

• Business Activity: � 1982/1984 Technical Sales Department at the Banco Português do Atlântico. � 1984/2005 Director of the Company Sofite - Sociedade Industrial de Fibras Têxteis, SA. � 1984/2004 Managing Partner of the ATM - Gabinete de Gestão, Lda. � 1990/2000 Manager of the Gorem - Sociedade Técnica de Serviços, Lda. � 1991/1993 Director of Risfomento - Sociedade de Fomento Empresarial, SA. � 1994/2014 Managing Partner of TRL - Têxteis em Rede, Lda. � 1994/2011 Managing Partner of Expomoda – Têxteis e Representações, Lda. � 2002/2004 Managing Partner of Ninfamar - Indústria de Confecções, Lda. � 2010/2013 Managing Partner of Hot Pink – Comércio, Lda.

• Corporate Activity: � 1986/1996 Vice-Chairman of ANJE - Associação Nacional de Jovens Empresários. � 1991/1994 Director of APET – Associação Portuguesa dos Exportadores de Têxteis. � 1994/2003 Vice-Chairman of the General Council of the ATP – Associação Portuguesa de Têxteis e

Vestuário. � 1996/2000 Member of the Economic and Social Council. � 1996/2002 Chairman of the General Meeting of ANJE – Associação Nacional de Jovens Empresários. � 1996/2011 Vice-chairman of the Board of Sport Club do Porto.


___________________________________________________________________________________________


� 1997/2001 Director of the Associação Comercial do Porto – Câmara de Comércio e Indústria do Porto.

� 1997/2002 Member of the National Commission for Monitoring the IMIT – Iniciativa para a Modernização da Indústria Têxtil.

� 1999/2014 Member of the Executive Committee of the project Portugal Fashion. � 2001/2003 Member of the Audit Committee of MTV – Movimento do Têxtil e do Vestuário. � 2002/2006 Chairman of the General Office of the Associação Gabinete de Desporto do Porto. � 2003/2008 Chairman of the Board of ATP – Associação Têxtil e Vestuário de Portugal. � 2004/2008 Vice-Chairman of the Board of CIP – Confederação da Indústria Portuguesa. � 2004/2010 Member of the Monitoring Committee of Prime – Programa de Incentivos à

Modernização da Economia. � Since 2004 Chairman of the General Meeting of AAJUDE – Associação de Apoio à Juventude

Deficiente. � 2005/2008 Member of the General Council and the Board of Directors of AEP – Associação

Empresarial de Portugal � Since 2005 Chairman of the Audit Committee ofAssociação Fórum Manufuture Portugal � 2007/2013 Chairman of the General Council of PortoLazer – Empresa Municipal � Since 2007 Member of the Advisory Board of Fundação da Juventude. � 2007/ 2008 Vice-Chairman of the Supervisory Board of Futebol Clube do Porto � 2008/2014 Vice-Chairman of General Board and Board of Directors of AEP – Associação Empresarial

de Portugal. � 2008/2013 Chairman of the Board of EURISKO Estudos, Projectos e Consultoria, S.A. � Since 2008 Member of the Board of Associação para a Feira Internacional do Porto – Exponor � 2008/2015 Vice-Chairman of the Board of Europarque – Centro Económico e Social � Since 2008 Chairman of General Board of Exponor Brasil – Feiras e Eventos, Lda. � Since 2008 Chairman of the Board of CESAE – Centro de Serviços e Apoio às Empresas � Since 2008 Chairman of the Audit Committee of Futebol Clube do Porto, da Futebol Clube do Porto

– Futebol, SAD, da Porto Estádio – Gestão e Exploração de Equipamentos Desportivos, S.A. and Euroantas – Promoção e Gestão de Empreendimentos Imobiliários, S.A.

� Since 2009 Chairman of the Board of Directors of Fundação AEP � 2010/2015 Chairman of the Audit Committee of ATP – Associação Têxtil e Vestuário de Portugal � 2011/2013 Chairman of the Audit Committee of Futebol Clube do Porto – Basquetebol, SAD. � Since 2011 Vice-Chairman of the General Board of CIP – Confederação Empresarial de Portugal � Since 2011 Chairman of the General Meeting of AGAVI – Associação para a Promoção das

Gastronomia, Vinhos, Produtos Regionais e Biodiversidade � Since 2012 Chairman of the General Meeting of Paredes Industrial- Parques Industriais, S.A. � Chairman of the General Meeting of Tirso Parques – Parques Empresariais de Santo Tirso, S.A. � Chairman of the General Meeting of Parque-Invest – Sociedade Promotora de Parques Industriais, SA.,

among others. � Since 2013 Vice-Chairman of CCIAP – Câmara de Comércio e Indústria Árabe-Portuguesa. � Since 2014 Chairman of the General Meeting of Delegação Regional Norte da DECO � Since 2014 Chairman of the General Board and the Board of Directors of AEP – Associação

Empresarial de Portugal. � Since 2015 Chairman of the Board of Europarque – Centro Económico e Social � Other positions referred in point 36.

Jorge Luís Moreira Carvalho Guimarães

� Degree in Law by the Faculdade de Direito da Universidade de Coimbra, in 1982 � Post-graduation in European Studies, by the Centro de Estudos da Faculdade de Direito da

Universidade de Coimbra, in 1983 (attendance) � Lawyer, since 1984 � Other positions referred in point 36.


___________________________________________________________________________________________


José Augusto dos Santos Saraiva

• Degree in Economia, by the Faculdade de Economia da Universidade do Porto (1982/3)

• Degree in Finanças in the Escola Prática de Administração Militar (1983)

• Certified Accountant (Nº 25239)

• Trainer, Monitor and certified programmer (CAP EDF1202/98 DN; CCPFC/RFO-10585/00)

• HSaW Technician (Certificate n. 83/2015)

• From June 2012 to September 2015 – Member of the Board of IDARN, representing AEP,

• Since March 2012 – Member of the Board of APCER-Certificação SA, representing AEP

• From March2012 to May 2014 – Assistant of the Board of Directors of AEP,

• Since November 1995 – Admnistrative, Financial and Maintenance Coordenator CESAE,

• From October 1985 to October 1995 – Senior Official Economist and trainer / Coordenator of the IT Management Department of CESAI.

• From January 1985 to September 1985 – Senior Official Economist CICCOPN,

• From August 1983 to October 1984 – Aspiring Militiaman Official – Economist EPAM and UGF of the Região Militar Centro QG-BAS Coimbra,

• Other positions held referred to in point 36.

André Ferreira Antunes

• Degree in Law by the Faculdade de Direito da Universidade Católica Portuguesa – Centro Regional do Porto, in 1997

• MBA in Management for Degrees in Law, by the Universidade Católica Portuguesa, in 2003

• Other positions held referred to in point 36.

b) Functioning

34. Existence and location where the regulations for the functioning of the Audit Committee may

be consulted

The Governing Bodies of FC Porto – Futebol, SAD do not have formally approved functioning

regulations. However, the members intend to set those regulations and disclose them afterwards in

the website of Futebol Clube do Porto (www.fcporto.pt).

35. Number of meetings held and attendance of each member of the Audit Committee to the

meetings

In this period, the Audit Committee met 4 times, and a minute was made for each meeting. These are

available to any Governing Body who wishes to consult them. All members of the Board attended all

the meetings.


___________________________________________________________________________________________


36. Availability of each member of the Audit Committee indicating the positions held

simultaneously with other companies, in and out of the Group, and other relevant activities held

by the members of those Bodies during this period


• Chairman of the General Assembly of AAJUDE - Associação de Apoio à Juventude Deficiente

• Chairman of the Audit Committee of the Associação Fórum Manufuture Portugal

• Member of the Advisory Board of Fundação da Juventude

• Vice-Chairman of the General Council and the Board of Directors of AEP - Associação Empresarial de Portugal

• Chairman of the General Council of Fundação AEP

• Chairman of the Board of Europarque - Económico e Social

• Chairman of the General Council of Exponor Brazil - Feiras e Eventos, Lda

• Chairman of the Board of CESAE - Centro de Serviços e Apoio às Empresas

• Vice-Chairman of the General Board of CIP – Confederação Empresarial de Portugal

• Chairman of the General Meeting of AGAVI – Associação para a Promoção das Gastronomia, Vinhos, Produtos Regionais e Biodiversidade

• Chairman of the General Meeting of Paredes Industrial - Parques Industriais, SA

• Chairman of the General Meeting of Tirso Parques – Parques Empresariais de Santo Tirso, SA

• Chairman of the General Meeting of Parque-Invest – Sociedade Promotora de Parques Industriais, SA

• Chairman of the Audit Committee of Futebol Clube do Porto

• Chairman of the Audit Committee of PortoEstádio, Gestão e Exploração de Equipamentos Desportivos, SA

• Chairman of the Audit Committee of EuroAntas, Promoção e Gestão de Empreendimentos Imobiliários, SA

• Chairman of the General Meeting of Delegação Regional Norte da DECO.

• Vice-Chairman of CCIAP – Câmara de Comércio e Indústria Árabe-Portuguesa.


• Member of the Law Firm “Jorge Carvalho Guimarães, Francisco Sá Morais e Associados, RL”, since 1984

• Chairman of the General Meeting of the company “Ferfor – Empresa Industrial de Ferramentas e Forjados, SA”

• Chairman of the General Meeting of the company “Segrobe, SA”

• Director of the company “Microprocessador – Sistemas Digitais, SA”, até 2011

• Chairman of the General Meeting of the company “Microprocessador – Sistemas Digitais, SA”

• Chairman of the General Meeting of the company “STE – Sociedade de Turismo de Espinho, SA”

• Chairman of the General Meeting of the company “Gitum – Imobiliário e Serviços, SA”

• Chairman of the General Meeting of the company “Ideável – Investimentos Imobliários, SA”

• Chairman of the General Meeting of the company “Refaz – Sociedade Imobiliária, SA”

• Effective member (since 1990) of the Committee for Litigation and Jurisdiction of the Venerável Ordem Terceira de S. Francisco (Porto)

• Vice-Chairman of the Audit and Disciplinary Committee of Futebol Clube do Porto

• Chairman of the Audit Committee of “PortoComercial, Sociedade de Comercialização, Licenciamento e Sponsorização, SA”

• Chairman of the Audit Committee of “FCP Serviços Partilhados, SA”

• Chairman of the Audit Committee of “FCP Media, SA”


___________________________________________________________________________________________



• Chairman of the Audit Committee of IDARN, representing AEP,

• Chairman of the Audit Committee of ADDICT, representing AEP,

• Former Chairman of the Audit Committee of Comissão de Melhoramentos de Figueiró da Serra, IPSS,

• Member of the Audit Committee of Associação dos Parques e Exposições do Norte-EXPONOR, representing AEP,

• Member of the Audit Committee of FCP Futebol SAD

• Member of the Audit Committee of CERTIF, representing AEP,

• Member of the Audit Committee of Escola de Gestão Empresarial, representing AEP,

• Member of the Audit Committee of Fundação AEP, representing AEP,

• Member of the Audit Committee of DragonTour SA,

• Member of the Audit Committee of Futebol Clube do Porto Serviços Partilhados SA,

• Member of the Audit Committee of EuroAntas SA e Porto Estádio SA,

• Rapporteur of the Audit Committee of FC Porto,

• Trainer/Consultant/ Freelance Economist.


• Senior Associate Lawyer at Andreia Lima Carneiro & Associados, Sociedade de Advogados, R.L.

• Litigation rapporteur of the Audit and Disciplinary Committee of Futebol Clube do Porto

• Chairman of the Audit Committee of Dragon Tour – Agência de Viagens, S.A

• Member of the Audit Committee of Porto Estádio – Gestão e Exploração de Equipamentos Desportivos, SA

• Member of the Audit Committee of FC Porto Média, SA

• Chairman of the General Meeting of Artefacto – Investimentos Imobiliários, SA

c) Competences and duties

37. Description of the procedures and applicable criteria for the intervention of the supervision

body to contract the additional services of an external auditor

The Audit Committee, whenever appropriate, meets with the External Auditor not only in its own

name but also in that of the Company, pursuant to its powers. It is not under his role, however, to

propose the provider of the External Audit, given his recruitment precedes the appointment of a

separate Audit Committee of the Statutory Auditors. The external auditing services have been

analysed independently and standing by the supervisory board, issuing an annual opinion on the

activity of the Auditor during the year and making mention of any facts that could hinder the

continuity of the office for just cause. The Audit Committee is, along with the Board of Directors, the

first recipient of the reports issued by the external audit firm.


___________________________________________________________________________________________


As for other work carried out by the external auditor, different from audit, related to the validation

of financial nature so that the Group may play in competitions organized by LPFP, since the

engagement of Deloitte proved to be the most appropriate, considering the light of its solid

experience and knowledge of the operation and accounts of the Group, the Audit Committee

reviewed and approved the scope of those services and concluded that they did not affect the

independence of the external auditor.

38. Other duties of the supervision body

The Audit Committee must supervise the activity of the company, confirming the compliance of the

law and statutes. As a result, the Audit Committee shall, on an annual basis, create a report on the

activities developed, stating any incompliance verified, and issue an opinion on the documents of

accountability and on the proposed appropriation of results, presented by the Board to the General

Meeting. This report is available for consultancy on the website of the Company, and on the website

of CMVM, together with the documents of accountability.

The annual reports on the activity of the Audit Committee are disclosed on the website of the

Company, together with the documents of accountability.

It must also represent the Company, for all purposes, at its External Auditor, responsible for, among

others, propose the person responsible for these services, their remuneration, ensure there are,

within the company, proper conditions to the provision of services, as well as being the partner of

the company, as the recipient of the reports at issue, together with the Board of Directors.

IV. Statutory Auditor

39. Identification of the statutory auditor and its representative

The position of Statutory Auditor of the Company is held by the Accounting Company Deloitte &

Associados, Sociedade de Revisores Oficiais de Contas, based in Avenida Eng. Duarte Pacheco, 7

1070-100 Lisboa, registered in Ordem dos Revisores Oficiais de Contas with the number 43 and with

the CMVM under number 231, represented by António Manuel Martins Amaral (ROC n. 1130).


___________________________________________________________________________________________


40. Indication of how long the statutory auditor has been working with the company and/or group

Deloitte & Associados, SROC, S.A. has been responsible for the statutory audits of the Company and

the companies in the Group since 2004, through its representative António Manuel Martins Amaral

since 2011.

41. Description of other services carried out by the Statutory Auditor to the company

The statutory auditor is also the external auditor of the Company, as detailed below.

V. EXTERNAL AUDITOR

42. Identification of the external auditor appointed under art. 8 and the statutory auditor

representative in those duties, and number of registration in the CMVM

The external auditor of the Company, appointed under art. 8 of the CVM, is Deloitte & Associados,

SROC, S.A., registered under the number 231 in the CMVM, represented by António Manuel Martins

Amaral.

43. Indication of how long the statutory auditor has been working with the company and/or group

The statutory auditor was elected for the first time in 2004 and is now on its third mandate, through

its representative António Manuel Martins Amaral since 2011.

44. Policy and frequency of rotation of the external auditor and its representative in its duties

The company has not set a period of rotation for the external auditor. However, the accounting

company has their own internal regulations, which demand the rotation of the statutory auditor

every seven years. This method has the full support of the Board of FC Porto – Futebol, SAD and its

Audit Committee.


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However, Law 140/2015 of September 7 demands that the statutory auditor is changed, and, in the

case of FC Porto, the certified public accountant is the same as the external auditor. Thus, the

rotation of the external auditor in the Company will now comply with that Law.

45. Indication of the body responsible for the evaluation of the external auditor and frequency of

evaluation

The Audit Committee, in the function of its duties, ensures an annual evaluation of the independence

of the External Auditor. Additionally, the Audit Committee promotes, whenever possible or fitting for

the activity of the Company of the general market, an analysis on the adequacy of the External

Auditor to the exercise of its duties.

46. Identification of works, apart from audits, done by the external auditor, as well as indication of

internal procedures for the effects of approval in contracting such services and indication of reason

to the contracting

Other services done by the external auditor in 2015/2016 included those regarding the validation of

financial assumptions, so that the Company may play in the competitions organized by LPFP. Other

services are provided by different technicians involved in the audit procedure, which implies the

independence of the auditor.

The Audit Committee analysed and approved the services mentioned, concluding that they did not

question the independence of the External Auditor. On that consideration, the decision to contract

Deloitte proved to be optimal, due to their consolidated experience and knowledge in the operation

and accounting of the Company.


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47. Indication of the amount in annual remuneration paid to the auditor and to other employees

belonging to the same network and indication of the percentages belonging to each service:

By the Company* € %

Services for account audit (€) [€/%] 47,000 44%

Services for compliance assessment (€) [€/%] 10,000 9%

Services for tax consulting (€) [€/%] 8,437 8%

Other services unrelated to accounting (€) [€/%] 0%

By entities part of the group*

Services for account audit (€) [€/%] 42,000 39%

Services for compliance assessment (€) [€/%] - 0%

Services for tax consulting (€) [€/%] - 0%

Other services unrelated to accounting (€) [€/%] - 0%

TOTAL 107,437 100%


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C. INTERNAL ORGANIZATION

I. Statutes

48. Applicable regulation to the change in statutes of the Company

As line b) of article 23, n. 2 of Decree n. 10/2013, of January 25 goes into effect, FC Porto no longer

has, by Law, the right to veto over the change in statutes of FC Porto SAD, and so the regulation set

by the Portuguese Companies Code will apply on this matter.

II. Communication of irregularities

49. Means and policy to communicate irregularities occurring in the company

Although the policy statement of internal irregularities is not formally defined, considering the

proximity of the members of the Board to the activities of the Company and its employees, FC Porto -

Futebol, SAD considers that such proximity allows the communication of whichever irregularities may

appear to the Board, ensuring the implementation of procedures aimed at dealing effectively and

fairly with any irregularities detected. At the level of expertise in evaluating ethical issues and the

structure and governance of the company, these functions are performed directly by the Board,

specifically by the administrator responsible for the legal department, which maintains a constant

debate on the issue.

The staff of FC Porto – Futebol, SAD must report to the legal department, or to the director in charge,

any irregular practices detected or suspected, in order to prevent or stop irregularities that may be

cause damages to the financial health of the company or to its honour. This report must be done in

writing and describe all the existing elements and information necessary to the assessment of the

irregularity; a first approach to the report may be done directly or by phone.


___________________________________________________________________________________________


The communication of irregularities in the Company have ensured confidentiality and its sequel by

any preliminary investigation of the responsibility of those who, to this end, will be designated by the

concerning director.

III. Internal control and risk management

50. Persons, bodies or committees responsible for the internal audit and/or implementation of

internal control

The Internal Audit department is the department responsible for the internal control of the

Company.

51. Description of the hierarchical and/or functional dependence relations with other bodies or

committees of the company

Both the Internal Audit and Compliance and the Management Planning and Control depend of the

Board of Directors.

The Audit Committee has no responsibility in the creation and functioning of the internal control

systems, but takes into consideration its existence and efficacy when assessing the risks to the

company.

52. Other functional areas with competences in risk control

There is also a Management Planning and Control department with the main intent of supporting the

administration in the detection of relevant financial risks, which means analysing periodically the

information related to financial planning and control, such as the business plan, the operation

budgets and treasury and its control, management indicators, among others. These procedures are

designed to help in the quality of the information disclosed to the market.


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53. Identification and description of the main types of risk (economic, financial and legal) to which

the company is expose in its activity

The Board of Administration considers that FC Porto – Futebol, SAD is exposed to risks inherent to its

activity. Thus, the main financial risks the company believes to be subjected to are: market risk

(interest rate risk and currency risk), credit risk, liquidity risk, regulation risk (Financial Fair Play) and

sporting risk. The control mechanisms of these risks are described in the attachment regarding

financial demonstrations.

Apart from the financial risk, the activity of the company is also very reliant of the sporting

performance of the main football team. The sporting success is a key factor to obtain the traditional

revenues and to the value of its assets, as they represent invaluable gains to the company due to

transfers.

54. Description of the process of risk identification, evaluation, accompaniment, control and

management

The administration and supervising bodies of the company have been giving growing importance to

the development and improvement of the internal control and risk management systems, concerning

the operational, economic and financial aspects with a relevant impact to the activities of the group,

as recommended by national and international experts, including the CMVM.

Thus, for the financial year of 2010/2011, a department of Internal Audit has been created,

developing its activity in assessing the efficiency and efficacy of the internal control system and the

business procedures concerning the entire group, independently and systematically, in examining

and evaluating the rigour, quality and application of the operational, accounting and financial

controls, promoting an effective control at a reasonable cost and proposing measures that present

themselves as necessary to prevent possible deficiencies in the internal control system. Its function

also includes assuring the full compliance with legislation and regulations affecting the organization.

The department for Internal Audit has set an annual plan where it was determined the audits that

should be carried out in order to assess the quality of the control processes that certify the


___________________________________________________________________________________________


compliance of the objectives of the Internal Control System, namely those that certify the operation

efficiency, the reliability of the financial and operational reports and the compliance with laws and

regulations. The failures in the internal control will be reported to the upper rank and the most

severe to the Board of Directors.

55. Main elements in the internal control and risk management systems implemented in the

company regarding the process of disclosing financial information

Regarding the risk control in financial reporting process, only a very limited number of collaborators

of FC Porto - Futebol, SAD is involved in the financial reporting process.

All those involved in the financial analysis of the Company are deemed to have access to privileged

information and to be particularly aware of their obligations and the sanctions resulting from the

misuse of such information.

The system of internal control in the areas of accounting and preparation and report of financial

information is based on the following key elements:

• The use of accounting principles, detailed throughout the notes to the financial statements,

constitutes one of the bases of the control system;

• The plans, procedures and records of the Company and its subsidiaries enable reasonable

assurance that only properly authorized transactions are recorded and that these

transactions are recorded in accordance with generally accepted accounting principles;

• Financial information is analysed, in a systematic and orderly manner, by the management of

operating units, ensuring ongoing monitoring and the respective budgetary control;

• During the process of preparing and reviewing financial information, a schedule of closing

accounts is provided in advance and shared with the different areas involved, and all

documents are reviewed in depth;

• As for individual financial statements of the various companies in the group, the accounting

records and the preparation of financial statements are provided by administrative and

accounting services. The financial statements are prepared by certified accountants and

reviewed by the financial management;


___________________________________________________________________________________________


• The consolidated financial statements are prepared quarterly by the consolidation team. This

process represents an additional control element of the reliability of financial reporting,

namely ensuring the uniform application of accounting principles and procedures of cutting

operations as well as the verification of balances and transactions between companies in the

group;

• The consolidated financial statements are prepared under the supervision of the CFO. The

documents forming the annual report are sent for review and approval by the Board of

Directors. After approval, the documents are sent to the External Auditor, which emits its

Legal Certification of Accounts and the Audit Report; and

• The process of preparing the individual and consolidated financial information and the

Management Report is supervised by the Audit Committee and the Board of Directors. On a

quarterly basis, these bodies gather and analyse the individual and consolidated financial

statements of the Company.

Concerning risk factors that may materially affect the accounting and financial reporting, we

emphasize the use of accounting estimates that are based on the best information available at the

date of preparation of the financial statements as well as the knowledge and experience of past and /

or present events. We emphasize also the balances and transactions with related parties: in the

group FC Porto, balances and transactions with related parties mainly refer to current operating

activities of the companies in the group, as well as the granting and obtaining of loans bearing

interest at market rates.

The Board, in conjunction with the Audit Committee, regularly examines and supervises the

preparation and disclosure of financial information, in order to circumvent the access, improper and

untimely, of third parties, to relevant information.

IV. Investor Support

56. Service responsible for investor relations, composition, functions, information provided by

these services and elements for contact


___________________________________________________________________________________________


The representative of FC Porto - Futebol, SAD for relations with the capital market is the main

contact for all investors, institutional and private, national and international.

This representative ensures the provision of all relevant information regarding relevant events,

applicable facts and relevant facts, disclosure of quarterly results and answer to any clarification

requests by investors or the general public about financial information of a public nature. He is also

responsible for all matters pertaining to the relationship with the Committee on Securities Market, to

ensure the timely fulfilment of obligations to the supervisory authority of capital and other financial

authorities. He is also responsible for developing and maintaining the webpage for Investor Relations

in the website of the Company.

For the exercise of his duties, the address, phone and fax number and e-mail of the representative

for market relations are the following:

Address: Estádio do Dragão, Via FC Porto, Entrada Poente, piso 3,

4350-451 Porto

Phone: 22 5070500

Telefax: 22.5506931

E-Mail: [email protected]

57. Representative for market relations

The current representative of FC Porto - Futebol, SAD for market relations is Fernando Manuel

Santos Gomes, member of the Board of Directors.

58. Information on proportion and response time to information requests received during the year

or outstanding from previous years

When necessary, the representative of market relations ensures the provision of all relevant

information regarding relevant events, applicable facts and relevant facts, disclosure of quarterly

results and answer to any clarification requests by investors or the general public about financial


___________________________________________________________________________________________


information of a public nature. All information requested by investors is analysed and answered in a

maximum of five working days.

V. Website

59. Addresses(s)

FC Porto - Futebol, SAD has an internet website (www.fcporto.pt) with a wide range of information

about the Group. The aim is to provide to interested parties a general knowledge of the Group, its

business areas, information of institutional and financial nature. In the webpage dedicated to

Investor Relations, there is frequent presentation of results, documents of accountability,

information on General Meetings of shareholders, including summons and supporting

documentation, and information of institutional nature, namely the Statutes and the identification of

Governing Bodies. It is also possible to consult qualified holdings, all the privileged information and

other communications issued by the Company as well as the minutes of the General Meetings since

2009.

60. Address where information about the firm, its listed company, registered office and other

elements mentioned in Article 171 of the Companies Act can be found

http://www.fcporto.pt/pt/clube/grupo-fc-porto/Pages/futebol-clube-do-porto-futebol-sad.aspx#ancora_topo

61. Address with the statutes and regulations of the functioning of the bodies and/or commissions


62. Address with information about the identity of the corporate officers, the representative for

market relations, the Office for Support to the Investor or equivalent, respective roles structure

and means of access


http://www.fcporto.pt/pt/clube/grupo-fc-porto/Pages/contactos.aspx#ancora_topo


___________________________________________________________________________________________


63. Address with accountability documents, which must be accessible for at least five years, as well

as the biannual calendar of corporate events, at the beginning of each semester, including, among

others, general meetings, disclosure of annual, semi-annual and, if applicable, quarterly accounts

http://www.fcporto.pt/pt/clube/grupo-fc-porto/Pages/r-c-2013-2014.aspx#ancora_topo

http://www.fcporto.pt/pt/clube/grupo-fc-porto/Pages/calendario.aspx#ancora_topo

64. Address with the summon for a General Meeting and all the preparatory and subsequent

information related to it

http://www.fcporto.pt/pt/clube/grupo-fc-porto/Pages/ag-2014.aspx#ancora_topo

65. Address with the historical record of resolutions approved at general meetings of the company,

the represented share capital and the voting results, with reference to the previous 3 years

http://www.fcporto.pt/pt/clube/grupo-fc-porto/Pages/ag-2014.aspx#ancora_topo


___________________________________________________________________________________________


D. REMUNERATIONS

I. Competence for determination

66. Indication as to the competence to determine the remuneration of corporate bodies

The body responsible for conducting the performance evaluation of Executive Directors for the

purpose of remuneration is the Remuneration Committee, which follows the criteria it sees fit in

every moment, complying with legal and statutory standards.

II. Remuneration Committee

67. Composition of the Remuneration Committee, including identification of contracted individual

or collective persons to provide them support and statement on the independence of each of the

members and advisors

The current Remuneration Committee of FC Porto - Futebol, SAD (from 2016 to 2019) is composed of

the following members:

• Alípio Dias (Chairman)

• Emídio Ferreira dos Santos Gomes

• Joaquim Manuel Machado Faria de Almeida

The Remuneration Committee is composed of independent members from the Board. To this extent,

the Remuneration Committee does not include any member of another corporate body to which it

sets its remuneration, and none of the three members in office has any family relationship with other

members of these governing bodies, as their spouses or relatives in a straight line to the 3rd degree.

During the financial year of 2015/2016, the Remuneration Committee did not deem as necessary

contracting services to assist in carrying out its functions.


___________________________________________________________________________________________


68. Knowledge and experience of the members of the remuneration committee on remuneration

policy

The members of the Remuneration Committee have knowledge and experience in matters of

remuneration policy.

FC Porto - Futebol, SAD believes that the experience and professional careers of the members of the

Remuneration Committee allow them to perform their duties accurately and efficiently. Additionally,

whenever necessary, that committee will recur to specialized resources, internal or external, to

support their decisions.

III. Remuneration structure

69. Description of the remuneration policy of the management and supervisory bodies referred to

in Article 2 of Decree n. 28/2009, of June 19

As stipulated in Decree n. 28/2009, of June 19, there is an annual submission to the General

Assembly of a statement on the remuneration policy of the management and supervision bodies.

The policy on remuneration and compensation of corporate bodies of FC Porto - Futebol, SAD,

approved by the General Assembly on November 12, 2015, is as follows:

The Remuneration Committee, which is responsible for setting the remuneration policy of the Board

of Directors, submits to the General Assembly the following statement of principles:

• Members of the Board of Directors should perform their duties diligently and prudently in

the interests of the company, taking into account the interests of its shareholders,

employees and other stakeholders;

• It is the interest of the company and its shareholders to set a remuneration policy that

creates adequate conditions and procedures to allow the performance of the members of

the Board of Directors to align with the criteria previously defined;

• The performance and setting should consider, first, the level of compensation currently

practiced, and, secondly, must be conditioned by the degree of achievement of the strategic

objectives for the company.


___________________________________________________________________________________________


Taking into account the principles listed above, the Remuneration Committee proposes to the

General Meeting a remuneration model based on a fixed monthly component, which will ensure a

remuneration that rewards Executive Directors for the performance of the Company. At the

beginning of each term (every 4 years), the Compensation Committee establishes the general

parameters of remuneration of the Board of Directors, with the aim of making it more competitive in

the market and serve as a motivating element for high individual and collective performance.

The Remuneration Committee considers that the remuneration of the executive members of the

Board of Directors of the Company shall be fixed in the month of June with effect starting in July 1 to

July 30, taking into account the sporting results achieved. The remunerations of members of the

board are not dependent on the evolution of the price of the issued shares or of any other variable,

including the profits made each year.

The Remuneration Committee also intends to point out to the shareholders that there is no type of

plan of attribution of shares or acquirement of shares to the Directors. Likewise, there is no policy or

measure defined in the sense of granting compensation negotiated by contract, in the event of

termination of service or early retirement. There are also no premiums due.

Members of other corporate bodies: the General Meeting, Audit Board, Company Secretary; Advisory

Board and Remuneration Committee are not remunerated for these duties at FC Porto - Futebol,

SAD.

70. Information on how remuneration is structured so as to align the interests of members of the

board with the long-term interests of company, as well as on how it is based on performance

assessment and how it discourages taking extreme risks

The remuneration policy for executive directors intends to ensure proper and rigorous consideration

of the performance and contribution of each director to the organization's success, by aligning the

interests of executive directors with those of shareholders and the Company.


___________________________________________________________________________________________


Proposals for remuneration of executive directors are made, taking into account the functions

performed at FC Porto - Futebol, SAD and in its different subsidiaries; responsibility and added value

by individual performance; knowledge and experience gained on the job; the financial position of the

Company; the remuneration in companies of the same sector and other companies listed on NYSE

Euronext Lisbon. Regarding the latter point, the Remuneration Committee takes into account the

limits of available information, all national companies of equivalent size, namely listed on the NYSE

Euronext Lisbon, and also companies in international markets with characteristics equivalent to FC

Porto - Futebol, SAD.

The setting of remunerations also takes into account the long-term performance of the group,

compliance with the rules applicable to its business, the restraint in taking risks and market

knowledge.

71. Reference to the existence of a variable remuneration component and information about

possible impact of performance evaluation on this component

The remuneration of the members of the Board of Directors of the company has not foreseen for the

existence of variable components.

72. Deferment of payment of the variable remuneration component, specifying the period of

deferment

The remuneration of the members of the Board of Directors of the company does not foresee the

existence of variable components.

73. Criteria followed when setting the variable remuneration in shares


existence of variable components. There was no sort of plan to attribute shares or allow for the

acquisition of shares to the Directors.


___________________________________________________________________________________________


74. Criteria followed when setting the variable remuneration in options


existence of variable components. There was no sort of plan to attribute shares or allow for the

acquisition of shares to the Directors.

75. Main parameters and grounds for any system of annual bonuses and other non-cash benefits

FC Porto - Futebol, SAD does not have any system of annual bonuses or other non-cash benefits.

76. Main features of supplementary pension or early retirement plans for directors and date they

were approved in general meeting, in individual terms

The Company has not established any plans to attribute shares or allow for the acquisition of shares

or retirement benefit systems options, to members of the board of directors, and, as such, they were

never brought to the attention of the General Assembly.

IV. Disclosure of remunerations

77. Indication of the annual amount of the remuneration, in aggregate and individually, of the

members of the management bodies of the company, coming from the company, including fixed

and variable remuneration and, for the latter, mentioning the different components that led to it

The remunerations attributed to the Board of FC Porto – Futebol, SAD during this financial year

reached 1,476,667 euros and are fully paid.

The gross earnings in the year in question, by all the members of the board, relates exclusively to the

executive directors.


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Director Fix Prizes

Jorge Nuno de Lima Pinto da Costa 520,000 0

Adelino Sá e Melo Caldeira 287,000 0

Antero José Gomes da Ressurreição Diogo Henrique (*) 95,667 0

Fernando Manuel Santos Gomes 287,000 0

Reinaldo Costa Teles Pinheiro 287,000 0

José Américo Amorim Coelho 0 0

Rui Ferreira Vieira de Sá 0 0

(*) Remuneration after election as director (March 2016)

78. Amounts paid by other companies in dominion or group, or which are subject to a common

domain

The members of the Board of Directors are not remunerated by other companies in the group or by

companies controlled by shareholders with qualified holdings.

79. Remuneration paid in the form of profit sharing and/or payment of premiums and the reasons

why these bonuses or profit sharing were granted

During the exercise, no remunerations were paid by way of profit sharing or in the form of prizes.

80. Compensation paid or owed to former executive directors leaving their duties during the year

During the exercise, no amounts were paid or owed relating to compensation to directors whose

functions have ceased.

81. Indication of the annual amount of remuneration, in aggregate and individually, of members of

the supervision bodies of the company

Members of the Audit Board are not remunerated for these duties at FC Porto – Futebol, SAD.


___________________________________________________________________________________________


82. Details on the remuneration in the reference year of the chairman of the general meeting

The Chairman of the General Assembly is not paid for these duties at FC Porto – Futebol, SAD.

V. Agreements with implications on remunerations

83. Contractual limitations provided for compensation payable for unfair dismissal of directors and

its relation with the variable remuneration component

The remuneration policy maintains the principle of not contemplating compensations to directors, or

members of other governing bodies, associated with the early termination of duties or the expiry of

their terms, subject to compliance by the Company with legal provisions in force in this field.

84. Reference to the existence and description, indicating the sums involved, of agreements

between the company and members of the board of directors and managers, under the terms of

paragraph 3 of article 248-B of the Portuguese Securities Code, which provide for compensation in

case of dismissal without cause or termination of contract following a change of control of the

company

There are no agreements between the Company and members of the board of directors or other

managers of FC Porto - Futebol, SAD, within the meaning of paragraph 3 of article 248-B of the

Portuguese Securities Code, which provide for compensation in case of resignation, unfair dismissal

or termination of contract following a change of control of the Company. No agreements are

foreseen with the directors to ensure any compensation in the event of non-renewal of the mandate.

VI. Plans to attribute shares or allow for the acquisition of shares (‘stock options’)

85. Identification of the plan and its recipients


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The Company does not have in place any kind of Plans to attribute shares or allow for the acquisition

of shares to members of governing bodies or employees.

86. Characterization of the plan

The Company does not have in place any kind of Plans to attribute shares or allow for the acquisition

of shares.

87. Option rights attributable to the acquisition of shares ('stock options') to workers and

employees of the company

There are no option rights granted for the acquisition of shares to workers and employees of the

company.

88. Control mechanisms in any possible system of employee participation in capital to the extent

that the voting rights are not exercised directly by them

Not applicable as explained above.


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E. TRANSACTIONS BETWEEN RELATED PARTIES

I. Control mechanisms and procedures

89. Mechanisms implemented by the Company for purposes of monitoring of transactions with

related parties

Currently, there are no established procedures or criteria to define the relevant level of significance

in business between the Company and the holders of qualifying holdings or entities who are with

them in any relationship or group, from which the intervention is required of the supervisory board.

90. Indication of the transactions that were subject to control in the reference year

No businesses or significant transactions between the Company and members of its governing bodies

(administration and supervision), holders of qualified shareholdings or companies in a control or

dominion or group were performed, except those part of the current activity, and that were carried

out under normal market conditions for similar transactions. There were no business transactions

with members of the Audit Committee. The services rendered by the Statutory Auditors of the

various audit services were approved by the Audit Committee and are detailed in paragraph 47

above.

91. Description of the procedures and criteria for intervention by the supervision body for the

purpose of preliminary assessment of the business carried out between the company and holders

of qualifying holdings or entities that are related to them

In addition to the legal requirements applicable to the activities of the Audit Committee, there were

no additional mechanisms established by the company for the purpose of preliminary assessment of

conducting business between the Company and holders of qualifying holdings or entities that are

related to them, in accordance with Article 20 of the Securities Code.


___________________________________________________________________________________________


II. Business related elements

92. Indication of the location of accounting documents where information about the business with

related parties is made available

Information on the business with related parties, for the period of 2015/2016, can be found in Note

30 of the attachment to consolidated financial statements and Note 26 of the Attachment to the

individual accounts of the Company.


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PART II – EVALUATION OF THE CORPORATE GOVERNANCE

1. Identification of the code of corporate governance adopted

This report was prepared in accordance with CMVM Regulation n. 4/2013, of August 1 and the Code

of Corporate Governance, available at www.cmvm.pt, and to summarize the key aspects of Company

management, regarding the Board of Directors, taking into account the need for transparency on this

matter and the need for communication with investors and other stakeholders. The reporting model

adopted by the Company is stipulated by paragraph 4 of Article 1 of that Regulation and Annex I

thereto.

The report meets the standards of Article 245-A of the Portuguese Securities Code and discloses, to

the principle comply or explain, the degree of compliance with the CMVM Recommendations

included in the 2013 CMVM Code of Corporate Governance.

The duties of disclosure required by Decree 28/2009 of 19th of June, by Articles 447 and 448 of the

Commercial Companies Code and CMVM Regulation n. 5/2008, dated October 2 2008 are also met.

2. Analysis of compliance with the Code of Corporate Governance adopted

FC Porto – Futebol, SAD complies with most of the CMVM recommendations relating to Corporate

Governance as follows:

CMVM CORPORATE GOVERNANCE RECOMMENDATIONS DEGREE OF

COMPLIANCE

REPORT

I. VOTING AND CORPORATE CONTROL

I.1. Companies shall encourage shareholders to attend and vote at general

meetings and shall not set an excessively large number of shares required for the

entitlement of one vote, and implement the means necessary to exercise the right

to vote by mail and electronically.

Adopted Part I / B / I. /

b) / 12, 13

and 14

I.2. Companies shall not adopt mechanisms that hinder the passing of resolutions

by shareholders, including fixing a quorum for resolutions greater than that

provided for by law.


b) / 13 and 14


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I.3. Companies shall not establish mechanisms intended to cause mismatching

between the right to receive dividends or the subscription of new securities and the

voting right of each common share, unless duly justified in terms of long-term

interests of shareholders.


b) / 12 and 13

I.4. The company’s articles of association that provide for the restriction of the

number of votes that may be held or exercised by a sole shareholder, either

individually or in concert with other shareholders, shall also foresee for a resolution

by the General Assembly (5 year intervals), on whether that statutory provision is

to be amended or prevails – without super quorum requirements as to the one

legally in force – and that in said resolution, all votes issued be counted, without

applying said restriction.

Adopted

Part I / B / I. /

b) / 13 and 14

I.5. Measures that require payment or assumption of fees by the company in the

event of change of control or change in the composition of the Board and that

which appear likely to impair the free transfer of shares and free assessment by

shareholders of the performance of Board members, shall not be adopted.

Adopted Part I / A / I. /

2, 4, 5 and 6

II. SUPERVISION, MANAGEMENT AND OVERSIGHT

II.1. SUPERVISION AND MANAGEMENT

II.1.1. Within the limits established by law, and except for the small size of the

company, the board of directors shall delegate the daily management of the

company and said delegated powers shall be identified in the Annual Report on

Corporate Governance.

Not adopted Part II / 2 and

Part I / B / II. /

a) / 21

II.1.2. The Board of Directors shall ensure that the company acts in accordance

with its objectives and shall not delegate its responsibilities as regards the

following: i) define the strategy and general policies of the company, ii) define

business structure of the group iii) decisions considered strategic due to the

amount, risk and particular characteristics involved.

Adopted Part I / B / II. /

a) / 21

II.1.3. The General and Supervisory Board, in addition to its supervisory duties

supervision, shall take full responsibility at corporate governance level, whereby

through the statutory provision or by equivalent means, shall enshrine the

requirement for this body to decide on the strategy and major policies of the

company, the definition of the corporate structure of the group and the decisions

that shall be considered strategic due to the amount or risk involved. This body

shall also assess compliance with the strategic plan and the implementation of key

policies of the company.

Not applicable

II.1.4. Except for small-sized companies, the Board of Directors and the General

and Supervisory Board, depending on the model adopted, shall create the

necessary committees in order to:

a) Ensure a competent and independent assessment of the performance of the

executive directors and its own overall performance, as well as of other


Part I / B / II. /

c) / 29


___________________________________________________________________________________________


committees;

b) Reflect on the system structure and governance practices adopted, verify its

efficiency and propose to the competent bodies, measures to be implemented with

a view to their improvement.

II.1.5. The Board of Directors or the General and Supervisory Board, depending on

the applicable model, should set goals in terms of risk-taking and create systems for

their control to ensure that the risks effectively incurred are consistent with those

goals.


Part I / C / III.

/ 52, 54 and

55

II.1.6. The Board of Directors shall include a number of non-executive members

ensuring effective monitoring, supervision and assessment of the activity of the

remaining members of the board.

Not adopted Part I / B / II. /

a) / 18

II.1.7. Non-executive members shall include an appropriate number of independent

members, taking into account the adopted governance model, the size of the

company, its shareholder structure and the relevant free float. The independence

of the members of the General and Supervisory Board and members of the Audit

Committee shall be assessed as per the law in force. The other members of the

Board of Directors are considered independent if the member is not associated with

any specific group of interests in the company nor is under any circumstance

likely to affect an exempt analysis or decision, particularly due to:

a. Having been an employee at the company or at a company holding a controlling

or group relationship within the last three years;

b. Having, in the past three years, provided services or established commercial

relationship with the company or company with which it is in a control or group

relationship, either directly or as a partner, board member, manager or director of

a legal person;

c. Being paid by the company or by a company with which it is in a control or group

relationship besides the remuneration arising from the exercise of the functions of

a board member;

d. Living with a partner or a spouse, relative or any first degree next of kin and up

to and including the third degree of collateral affinity of board members or natural

persons that are direct and indirectly holders of qualifying holdings;

e. Being a qualifying shareholder or representative of a qualifying shareholder.


Part I / B / II. /

a) / 18

II.1.8. When board members that carry out executive duties are requested by other

board members, said shall provide the information requested, in a timely and

appropriate manner to the request.


a) / 18

II.1.9. The Chairman of the Executive Board or of the Executive Committee shall

submit, as applicable, to the Chair of the Board of Directors, the Chair of the

Supervisory Board, the Chair of the Audit Committee, the Chair of the General and

Supervisory Board and the Chairman of the Financial Matters Board, the convening


a) / 18 and

Part I / B / II. /

b) / 23


___________________________________________________________________________________________


notices and minutes of the relevant meetings.

II.1.10. If the chairman of the board of directors carries out executive duties, said

body shall appoint, from among its members, an independent member to ensure

the coordination of the work of other non-executive members and the conditions

so that said can make independent and informed decisions or to ensure the

existence of an equivalent mechanism for such coordination.


Part I / B / II. /

a) / 18

II.2. SUPERVISION

II.2.1. Depending on the applicable model, the Chair of the Supervisory Board, the

Audit Committee or the Financial Matters Committee shall be independent in

accordance with the applicable legal standard, and have the necessary skills to carry

out their relevant duties.

Adopted Part I / B / III.

/ a) / 32 and

I.A.II.8

II.2.2. The supervisory body shall be the main representative of the external auditor

and the first recipient of the relevant reports, and is responsible, inter alia, for

proposing the relevant remuneration and ensuring that the proper conditions for

the provision of services are provided within the company.

Not adopted Part I / B / III.

/ c) / 38

II.2.3. The supervisory board shall assess the external auditor on an annual basis

and propose to the competent body its dismissal or termination of the contract as

to the provision of their services when there is a valid basis for said dismissal.

Adopted Part I / B / V. /

45

II.2.4. The supervisory board shall assess the functioning of the internal control

systems and risk management and propose adjustments as may be deemed

necessary.

Not adopted Part I / B / III.

/ c) / 38

II.2.5. The Audit Committee, the General and Supervisory Board and the Supervisory

Board decide on the work plans and resources concerning the internal audit

services and services that ensure compliance with the rules applicable to the

company (compliance services), and should be recipients of reports made by these

services at least when it concerns matters related to accountability, identification or

resolution of conflicts of interest and detection of potential improprieties.

Not adopted Part I / C / III.

/ 50

II.3. REMUNERATION SETTING

II.3.1. All members of the Remuneration Committee or equivalent should be

independent from the executive board members and include at least one member

with knowledge and experience in matters of remuneration policy.

Not adopted Part I / D / II. /

67 and 68

II.3.2. Any natural or legal person that provides or has provided services in the past

three years, to any structure under the board of directors, the board of directors of

the company itself or who has a current relationship with the company or

consultant of the company, shall not be hired to assist the Remuneration

Committee in the performance of their duties. This recommendation also applies to

any natural or legal person that is related by employment contract or provision of

services with the above.

Adopted Part I / D / II. /

67

II.3.3. A statement on the remuneration policy of the management and Adopted Part I / D / III.


___________________________________________________________________________________________


supervisory bodies referred to in Article 2 of Law No. 28/2009 of 19 June, shall also

contain the following:

a) Identification and details of the criteria for determining the remuneration paid to

the members of the governing bodies ;

b) Information regarding the maximum potential, in individual terms, and the

maximum potential, in aggregate form, to be paid to members of corporate bodies,

and identify the circumstances whereby these maximum amounts may be payable;

d) Information regarding the enforceability or unenforceability of payments for the

dismissal or termination of appointment of board members.

/ 69

II.3.4. Approval of plans for the allotment of shares and/or options to acquire shares

or based on share price variation to board members shall be submitted to the

General Meeting. The proposal shall contain all the necessary information in order

to correctly assess said plan.

Not applicable Part I / D / III.

/ 73 and 74

II.3.5. Approval of any retirement benefit scheme established for members of

corporate members shall be submitted to the General Meeting. The proposal shall

contain all the necessary information in order to correctly assess said system.


/ 76

III. REMUNERATION

III.1. The remuneration of the executive members of the board shall be based on

actual performance and shall discourage taking on excessive risk-taking.

Adopted Part I / D / III.

/ 70

III.2. The remuneration of non-executive board members and the remuneration of

the members of the supervisory board shall not include any component whose

value depends on the performance of the company or of its value.


/ 69 and Part I

/ D / IV. / 78,

81 and 82

III.3. The variable component of remuneration shall be reasonable overall in

relation to the fixed component of the remuneration and maximum limits should be

set for all components.


/ 69

III.4. A significant part of the variable remuneration should be deferred for a period

not less than three years, and the right of way payment shall depend on the

continued positive performance of the company during that period.


/ 69

III.5. Members of the Board of Directors shall not enter into contracts with the

company or with third parties which intend to mitigate the risk inherent to

remuneration variability set by the company.


/ 71

III.6. Executive board members shall maintain the company's shares that were

allotted by virtue of variable remuneration schemes, up to twice the value of the

total annual remuneration, except for those that need to be sold for paying taxes

on the gains of said shares, until the end of their mandate.


/ 73 and 74

III.7. When the variable remuneration includes the allocation of options, the

beginning of the exercise period shall be deferred for a period not less than three

years.


/ 74


___________________________________________________________________________________________


III.8. When the removal of board member is not due to serious breach of their

duties nor to their unfitness for the normal exercise of their functions but is yet due

on inadequate performance, the company shall be endowed with the adequate and

necessary legal instruments so that any damages or compensation, beyond that

which is legally due, is unenforceable.


/ 69 and Part I

/ D / V. / 83

IV. AUDITING

IV.1. The external auditor shall, within the scope of its duties, verify the

implementation of remuneration policies and systems of the corporate bodies as

well as the efficiency and effectiveness of the internal control mechanisms and

report any shortcomings to the supervisory body of the company.

Adopted Part I / B / III.

/ c) / 38

IV.2. The company or any entity with which it maintains a control relationship shall

not engage the external auditor or any entity with which it finds itself in a group

relationship or that incorporates the same network, for services other than audit

services. If there are reasons for hiring such services - which must be approved by

the supervisory board and explained in its Annual Report on Corporate Governance

- said should not exceed more than 30% of the total value of services rendered to

the company.

Adopted Part I / D / IV.

/ 41 and Part I

/ D / V. / 47

IV.3. Companies shall support auditor rotation after two or three terms whether

four or three years, respectively. Its continuance beyond this period must be based

on a specific opinion of the supervisory board that explicitly considers the

conditions of auditor’s independence and the benefits and costs of its replacement.

Adopted Part I / D / V.

/ 44

V. CONFLICTS OF INTEREST AND RELATED PARTY TRANSACTIONS

V.1. The company's business with holders of qualifying holdings or entities with

which they are in any type of relationship pursuant to article 20 of the Portuguese

Securities Code, shall be conducted during normal market conditions.

Adopted Part I / E / I. /

90

V.2. The supervisory or oversight board shall establish procedures and criteria that

are required to define the relevant level of significance of business with holders of

qualifying holdings - or entities with which they are in any of the relationships

described in article 20/1 of the Portuguese Securities Code – thus significant

relevant business is dependent upon prior opinion of that body.


Part I / E / I. /

91

VI. INFORMATION

VI.1. Companies shall provide, via their websites in both the Portuguese and English

languages, access to information on their progress as regards the economic,

financial and governance state of play.

Adopted Part I / C / V. /

59 to 65

VI.2. Companies shall ensure the existence of an investor support and market

liaison office, which responds to requests from investors in a timely fashion and a

record of the submitted requests and their processing, shall be kept.

Adopted Part I / C / IV.

/ 56 to 58


___________________________________________________________________________________________


Recommendations, II.1.1., II.1.4., II.1.5., II.1.6, II.1.7., II.1.10., II.2.2., II.2.4., II.2.5., II.3.1. e V.2. are not

fully adopted by FC Porto – Futebol, SAD, as explained below.

• Recommendation II.1.1.: The directors of FC Porto – Futebol, SAD focus their activity in the

management of participations of the Group and in the definition of strategic development

lines. The decisions regarding strategic and relevant matters are adopted by the Board of

Directors as a composed college body by all members, executive and non-executive, in the

normal performance of their duties. Additionally, some of the directors of the Company are

in the Board of Directors of other operational units in the Group, which means the

recommendation is not fully followed.

• Recommendation II.1.4.: FC Porto – Futebol, SAD believes that, given its size, the only

indispensable specialized commission to the needs of the Company in the Remuneration

Committee, not presenting any committees with the specific purpose of identifying

candidates to directors and to reflect on the adopted governing system, for which the

recommendation cannot be considered adopted.

• Recommendation II.1.5.: In this report, there is a description of the most important aspects

in the risk management that were implemented in the Group. However, FC Porto – Futebol,

SAD does not have a system for internal control and risk management to include all the

components foreseen in that type of system, for which the recommendation is not fully

adopted.

• Recommendation II.1.6.: FC Porto - Futebol, SAD does not meet the II.1.6 recommendation,

which recommends that the Board of Directors includes a number of non-executive

members to ensure effective monitoring capacity, supervision and evaluation of the activities

of other members of the management body. Although the Group understands that, given its

small size and the fact that its executive members are very competent in the management of

the group, the existence of a non-executive director ensures the efficient supervision,

auditing and assessment of activities of non-executive members, it is the understanding of

CMVM that, to comply with this recommendation, at least one third of the total number of

directors shall be non-executive.


___________________________________________________________________________________________


• Recommendations II.1.7. and II.1.10.: the members of the Board of Directors are not

independent, with the exception of Rui Ferreira Vieira de Sá and José Américo Amorim

Coelhop, as all are part of the Board of Futebol Clube do Porto, holder of around 75% of the

capital and the voting rights of Futebol Clube do Porto – Futebol, SAD, having a dominant

influence over it. Rui Ferreira Vieira de Sá was in the Board of Directors of Somague

Engenharia, SA, which is owned 100% by Somague, S.G.P.S., S.A., which in turn is owned

100% by Sacyr SYV, a company that owned 18,79% of the social capital of Futebol Clube do

Porto – Futebol, SAD, until October 2014. José Américo Amorim Coelho was, until April,

2016, Vice-Chairman of the Board of Futebol Clube do Porto. Considering the company

model adopted and the composition and functioning of its governing bodies, namely the

independence of audit bodies, without any delegation of competence between that or any

other committees, the Group believes that appointing independent directors would not add

any benefits to the proper functioning of the model adopted, which has been proving to be

adequate and efficient.

• Recommendation II.2.2.: The recommendation has not been fully complied with, as the

reports issued by the external auditor have the first recipient the Supervisory Board,

together with the Board of Directors. However, FC Porto - Futebol, SAD believes that this

procedure does not affect the criterion of independence and conflict of interest, since the

external auditor's report is not influenced or changed depending on the presentation to the

Board of Directors.

• Recommendation II.2.4.: Even if the Audit Committee does not have any responsibilities in

the creation and functioning of internal control systems, it does take into consideration their

existence and efficiency when analysing the risks to the Company.

• Recommendation II.2.5.: Given that the Internal Audit and Planning and Management

Control departments depend on the Board of Directors, this recommendation is considered

not met. However, in spite of the Supervisory Board does not take responsibility in the

creation and operation of internal control systems, it takes into account their existence and

effectiveness during the examination of the risks of the group.


___________________________________________________________________________________________


• Recommendation II.3.1.: The recommendation has not been fully complied with since one of

the members of the Remuneration Committee is Vice-Chairman of Futebol Clube do Porto,

main shareholder of the Company. However, since this is a non-executive position, FC Porto -

Futebol, SAD considers that the accuracy and impartiality of this body is not questionable.

• Recommendation V.2.: Currently, there are no procedures or criteria regarding the definition

of relevant level of significance of businesses between the Company and holders of qualified

participations, or entities that are under any type of dominion or group, for which it would

be required an intervention of the audit body. However, the transactions with directors of FC

Porto – Futebol, SAD, or with companies related to the group or dominion represented by

the director, regardless of the amount, should be previously cleared by the Board of

Directors, properly accepted by the audit body, under the terms of art. 397 of the

Portuguese Companies Code.

3. Other information

Futebol Clube do Porto – Futebol, SAD believes that, despite the only partial compliance with the

recommendations of CMVM, as explained above, the degree of adoption if still wide and complete.


___________________________________________________________________________________________


D. Shares held by members of the Board of Directors and Advisory Council

Board of Directors


On June 30, 2015, had 250.000 shares. Has not acquired or alienated any share since, and, as of June

30 2016, had 250.000 shares. Futebol Clube do Porto, of which he is Chairman of the Board, had, on

June 30 2016, 16,782,931 shares.


No shares held. Futebol Clube do Porto, of which he is Vice-Chairman of the Board, held, on June 30

2016, 16,782,931 shares.



2016, 16,782,931 shares.



2016, 16,782,931 shares.


On June 30, 2015, had 9,850 shares. Has not acquired or alienated any share since, and, as of June 30

2016, had 9.850 shares. Futebol Clube do Porto, of which he is Vice-Chairman of the Board, held, on

June 30 2016, 16.782.931 shares.


On June 30, 2015, had 100 shares. Has not acquired or alienated any share since, and, as of June 30

2016, had 100 shares.


No shares held.


___________________________________________________________________________________________


Audit Committee








No shares held.


No shares held.

Statutory Auditors

Deloitte & Associados, SROC S.A. represented by António Manuel Martins Amaral

No shares held.

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