annual report 2013 - martifer · annual report 2013 page 11 main eventssubsequent events january...

ANNUAL REPORT 2013

ANNUAL REPORT 2013

ÍNDICE

MANAGEMENT REPORT 05

01 | MARTIFER GROUP 07

Message from the Board 08

Highlights 09

Key Financial Indicators 09

Main Events 11

02 | GUIDELINES 15

Activity 16

International Presence 19

History 20

Market Environment 21

03 | FINANCIAL PERFORMANCE 27

Consolidated Result Analysis 28

Revenues 29

EBITDA and Net Profit 30

Consolidated Capex 31

Consolidated Capital Structure Analysis 32

04 | ANALYSIS BY SEGMENT 35

Metallic Constructions 36

Solar 39

RE Developer 42

05 | INDIVIDUAL FINANCIAL INFORMATION 45

06 | MARTIFER SHARE PERFORMANCE 47

07 | FUTURE PROSPECTS 51

08 | MAIN RISKS 53

Financial Risks 54

Operational Risks 55

Legal Risks 57

09 | PROPOSAL OF RESULTS ALLOCATION 59

10 | OTHER INFORMATION 61

MANDATORY INFORMATION 63

ANNUAL REPORT 2013 PAGE 3

CONSOLIDATED FINANCIAL INFORMATION 67

11 | CONSOLIDATED FINANCIAL STATEMENTS 69

12 | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 75

INDIVIDUAL FINANCIAL INFORMATION 149

13 | INDIVIDUAL FINANCIAL INFORMATION 151

14 | NOTES TO INDIVIDUAL FINANCIAL STATEMENT 157

AUDIT AND FISCAL REPORTS 181

CORPORATE GOVERNANCE REPORT 191

ANNUAL REPORT 2013

MANAGEMENT REPORT

ANNUAL REPORT 2013

01 Martifer Group

ANNUAL REPORT 2013

01 | MARTIFER GROUP

MESSAGE FROM THE BOARD

Dear shareholders,

A few words about the past and the future of our Group.

2013 was a very important year for us: we conquered new markets and new clients, increasingly demanding, that make us improve

everyday. We have built more complex construction and energy infrastructures, under increasingly demanding, sometimes almost

impossible, conditions.

In solar, we have made the first PV rooftop installation in India, we have built one of UK’s largest PV clusters and also made Latin

America’s largest PV park. Globally, Martifer Solar should have installed 200 MW in 2013, which already totals around 500 MW of

PV projects delivered since 2008. This is a number that makes us quite proud and puts us in this year’s rankings, not only in Europe

(5th

), but also in the global market (16th

) in the EPC segment.

In wind energy, we successfully concluded the 26 MW wind farms for the IKEA Group and in shipbuilding, we delivered the Queen

Isabel and Amavida hotel ships to our client Douro Azul.

In our root activity, metallic construction, we continued advancing on new markets. In Brazil, after 2 years of activity, we have

concluded a few more large scale projects, such as the Arena Fonte Nova and the Arena Amazônia stadiums. We also started the

construction of other not less important projects, like Museu do Amanhã (Tomorrow’s Museum) or the Transcarioca Bridges. The

new Martifer Aluminium factory, in Jacareí is ready to produce since the end of 2013, and the company already has in backlog the

Viracopos Airport project, in Campinas, S. Paulo.

In Saudi Arabia, the projects go on at a great pace. The King Abdullah Sports City Stadium is already concluded and we were

awarded a new project: King Abdullah Petroleum Studies and Research Center. In the UK and France, we delivered Scottish Hydro

Arena, in Glasgow and Airbus, in Toulouse, respectively.

In general, the projects concluded this year have a common ground: growing engineering complexity.

Regarding the ongoing strategy plan for the Group, we should proudly highlight that the debt reduction process continues at a good

pace, despite all the adversities in the markets, having decreased 11 % - or 42 million euros - in 2013, and we are confident that we

will be able to achieve our goal: 275 million euros by the end of 2014. The metallic constructions business area’s restructuring

already shows its signs with the improvement of the operational margin, a path we want to continue following in 2014, with a more

strong capital structure, possible via a capital increase expected for 2014.

The Group consolidated its presence in its strategic markets, and continues to clearly pursue the continuous improvement of its

operational efficiency, seeking to meet our global client’s needs, taking advantage of our main strengths: flexibility, execution

capacity and the ability to adapt to any circumstances.

Step by step, the Group is more global and more competitive, which makes us sure that the MARTIFER brand continues in a

“Clear Path” for greater awareness and recognition internationally.

Dear stakeholder, we are counting on you! Together, we can make 2014 a year of successes, for a sustainable future.

.


HIGHLIGHTS

• Total Operating Revenues of 592.9 M€, increasing by 15 % YoY, reflecting the significant

improvement in volume of the core businesses areas Metallic Constructions and Solar, and

also leveraged by the sale of wind farms in the RE Developer

• Total Operating Revenues in the 4Q13 was 128.6 M€

• EBITDA of 29.3 M€ € in the end of 2013 (versus 3.9 M€ in 2012)

• EBITDA in the 4Q13 was 9.6 M€, corresponding to an EBITDA margin of 7 %

• Net consolidated Profit at the end of 2013 of -70.8 M€; Net consolidated Profit in 4Q13

was -22.0 M€

• Total Order Book of 567 M€: Metallic Construction (297 M€) and Solar (270 M€)

• Total Net Consolidated Debt of 335 M€, 42 M€ below the FY12 level, due to disinvestment

in non core activities and working capital improvements

KEY FINANCIAL INDICATORS

€M - IFRS 2013 MARG. 2012 MARG. VAR.%

Revenues 592.9 517.9 14.5%

EBITDA 29.3 4.9% 3.9 0.8% >100%

EBIT -21.3 -3.6% -15.9 -3.1% -34.2%

Financial Results -49.2 -36.3 -35.5%

Profit before tax -70.5 -52.2 -35.1%

Income tax -0.3 -2.3 88.4%

Assets for sale 0.0 0.1 n.m.

Consolidated Net Profit -70.8 -11.9% -54.4 -10.5% -30.0%

Attributable

to non-controlling interests -1.8 1.4 n.m.

to shareholders -69.0 -55.9 -23.5%

ANNUAL REPORT 2013

REVENUES – 2006-2013 (€M)

EBITDA – 2006-2013 (€M)

NET PROFIT – 2006-2013 (€M)

275

397

635 606 592

550 518

593

2006 2007 2008 2009 2010 2011 2012 2013

29

37

62 67

57

9 4

29

2006 2007 2008 2009 2010 2011 2012 2013

14 26

8

100

-52 -48 -54 -71

2006 2007 2008 2009 2010 2011 2012 2013


MAIN EVENTSSUBSEQUENT EVENTS

JANUARY 2013

Inspira Martifer Solar signs contract for first rooftop PV project in India

Inspira Martifer Solar, a subsidiary of Martifer Solar for the Indian market, has signed an EPC contract with Mapro Foods for the

construction of a 350 kW rooftop PV project in India.

Martifer Solar and the Valouro Group sign a new contract for the construction of seven

PV projects in Portugal

Martifer Solar signed a new contract with Valouro Group, for the construction of seven new PV small generation projects, with

a 1.3 MW peak power.

MARCH 2013

Martifer Solar and Montepio Crédito establish a partnership for financing small

generation projects

Martifer Solar signed a protocol with Montepio Crédito, a company of the Montepio Group, to facilitate the access to the possibility

of financing of PV small generation projects to companies in Portugal.

Martifer concludes two ships for Douro Azul

Navalria, a subsidiary of Martifer Energy Systems, concluded the construction of Queen Isabel and Amavida. The baptism of these

two hotel ships took place on March 23rd

. The two ships were built in only nine months.

APRIL 2013

Martifer concludes the Arena Fonte Nova Stadium’s structure

Martifer Construções Metálicas, a subsidiary of Martifer Metallic Constructions in Brazil, concluded, in April, the construction of the

structural steelwork for the roof of its second stadium for the 2014 World Cup.

Martifer Solar completes a solar PV cluster in the UK with a total capacity of 28.1 MWp

Martifer Solar developed a cluster of utility scale photovoltaic plants totalling 28.1 MWp in the United Kingdom. This is one of the

largest clusters of utility scale solar PV plants ever built simultaneously in the country to date.

Martifer ships the first pieces for the structural steelwork and roof of Arena Amazônia

Martifer Construções shipped the first pieces for Arena Amazônia, the third 2014 World Cup Stadium, which is expected to be

concluded in December 2013.

ANNUAL REPORT 2013

MAY 2013

Martifer Solar builds Latin America’s largest PV plant in Mexico

Martifer Solar starts building a 30 MW photovoltaic plant in Mexico, the largest to date in Latin America. The company is

responsible for the EPC (engineering, procurement and construction) services of the plant and will also provide the Operation and

Maintenance (O&M) services upon completion.

JUNE 2013

Martifer Renewables agreed to sell Rosa dos Ventos’ wind farms in Brazil

Martifer Renováveis Geração de Energia e Participações S.A., 55 % controlled by Martifer Renewables, signed a contract to sell

100 % of the company Rosa dos Ventos, which explores the wind farms (i) Canoa Quebrada and (ii) Lagoa do Mato, with a 14.7 MW

total capacity.

Martifer Renewables concludes Rymanów wind farm for the Ikea Group

Martifer Renewables and the Ikea Group have officially opened a 26 MW wind farm in Rymanów, in the Podkarpackie province,

south-east Poland.

The wind farm will avoid the emission of over 66,000 tons of CO2 which is the equivalent of the domestic power consumption of

around 30,000 households. It was developed, built and operated for the Ikea Group, and has the capacity to generate an output of

around 61 GWh/year.

The sale of the wind farm to the Ikea Group was agreed on October 2011, when it was sold three of its wind farms projects in

Poland: Leki Dukielskie (10 MW), Bukowsko (18 MW) and Rymanow (26 MW). The sale of these assets is in accordance with the

asset rotation policy implemented by the management of Martifer Renewables, the RE developer area of Martifer Group.

JULY 2013

Martifer sells a 39 % stake in Prio Energy, SGPS, SA

Martifer, SGPS, S.A. sold part of its stake in its subsidiary PRIO ENERGY, SGPS, S.A. to the company OxyCapital - Sociedade de

Capital de Risco, S.A., changing the share capital participation from 49 % to 10 %.

OCTOBER 2013

Martifer is the only company admitted in the tender for the sub-concession of the Estaleiros

de Viana do Castelo

Martifer Group, through its subsidiaries Navalria and Martifer Energy Systems, was the only company admitted in the tender for the

sub-concession of the lands and infrastructures of Viana do Castelo’s Naval Shipyard.


Martifer and Hanwha Q Cells Korea conclude PV plant of 17.8 MWp in Portugal

Martifer Solar, a subsidiary company of Martifer, SGPS, S.A., in partnership with Hanwha Q CELLS Korea, Korean leader in the

solar industry, concluded a PV plant of 17.8 MWp.

The PV cluster consists of six PV plants constructed in Loures, Montijo and Montemor-o-Novo regions. Martifer Solar will be the

operations and maintenance contractor to ensure the optimal generation levels of these six PV plants.

The “green‟ energy which will be produced by the entire cluster, is estimated to sufficiently power over 24,800 inhabitants and to

avoid the annual emission of 19,300 tons of greenhouse gases.

DECEMBER 2013

Martifer Solar reduces participation in Silverado Project

Martifer Solar, through its affiliate Martifer Silverado Fund I LCC (57.125% held by Martifer Solar Inc.), with registered offices in the

United States of America, incorporated, at the end of 2013, in partnership with Fir Tree Solar LLC, the company FTP Solar LLC. On

the incorporation of this company, Martifer Silverado Fund I LCC realized its share capital, in kind, via the delivery of projects under

development owned by it as well as some associated liabilities (net contribution of USD 22,214,400), whilst Fir Tree Solar LLC

realized its share capital in cash (contribution of USD 37,177,817). The percentages held by Martifer Silverado Fund I LLC and Fir

Tree Solar LLC in the company FTP Solar LLC were, at the end of 2013, 37.4% and 62.6%, respectively.

SUBSEQUENT EVENTS

JANUARY 2014

West Sea signs contract for the Sub-concession of Estaleiros Navais de Viana do Castelo

Following an international public tender, Martifer Energy Systems and Navalria, subsidiaries of the Martifer Group, were awarded

with the sub-concession for the private use of public domain and for the areas included in the ownership concession attributed to

the company “Estaleiros Navais de Viana do Castelo” (ENVC).

Martifer Group, via its new subsidiary West Sea, aims to develop its activity in the national and international markets and

implement, in the areas included in the ENVC sub-concession, a shipbuilding and repair project, which is expected to create 400

new work places throughout the next three years. With this sub-concession, Martifer Group increases its capacity for the

shipbuilding and repair. The contract was signed in January 2014.

Martifer Solar USA INC and Martifer Aurora LLC begin the voluntary process for Chapter 11

On 21 January 2014 the affiliates Martifer Solar USA INC and Martifer Aurora Solar LLC started voluntary restructuring processes

under Chapter 11 (US Bankruptcy Code). The affiliate companies are currently negotiating the restructuring plans, which needs to

be approved by the creditors and ratified by the Court under Chapter 11, and which will permit these to continue developing their

activities.

ANNUAL REPORT 2013

FEBRUARY 2014

Martifer Solar builds 78.4 MW portfolio in the UK for Lightsource Renewable Energy

Martifer Solar is building a 78.4 MWp portfolio of photovoltaic plants in the United Kingdom. The utility-scale combined capacity

consists of five plants, which are located in the counties of Cambridgeshire, Devon, Nottingham and Swindon.

Following the successful completion of the first round of the previously announced 50 MW in development, Martifer Solar has sold

one of these projects located at Spittleborough Farm and entered into an EPC agreement with Lightsource Renewable Energy to

construct four additional projects, which aggregate the 78.4 MWp cluster.

Martifer Renewables concludes the sale of Rosa dos Ventos

On 27 of Feburary, Martifer Renewables has conclued, through its subsidiary Martifer Ronováveis Geração de Energia e

Participações, S.A., controlled at 55%, the sale of 100% shares in the company Rosa dos ventos Geração e Comercialização de

Energia, by the $R70.3m total amount to the brazilian company CPFL. Rosa dos ventos Geração e Comercialização de Energia

SA owns the wind farm with 14.7 MW of energy cpacity. The sale agreement by both entities has been estabished in June 2013.

MARCH 2014

Martifer concludes two new ships for Douro Azul

Navalria, Martifer ‘s subsidiary, concluded, in March, the construction of the two hotel ships Viking Hemming and Viking Torgil, for

the company Douro Azul.

The ships, which will operate cruises in the Douro River, were built in one year and have a distinctive feature: a round shaped bow

that allows the creation of an exterior deck with capacity for 42 passengers.

Martifer Metallic Constructions restructures debt and is going to increase equity

Martifer Metallic Constructions completed the conversion of part of its debt from short- to medium- and long-term, and a share

capital increase of some 28 million Euros is foreseen.

02 Guidelines

ANNUAL REPORT 2013

02 | GUIDELINES

ACTIVITY

Martifer began its activity in 1990 in the steel structures sector. Since 2011, as a consequence of the strategic focus of business,

Martifer has concentrated its operations in two main areas – Metallic Construction and Solar, controlled by Martifer S.G.P.S., S.A..

The Group also has other activities and financial participations: RE Developer – Promotion and Development of wind farms

(Martifer Renewables) and a 10 % e 49 % financial participation, respectively, in Prio Energy and Nutre.

At the end of 2013, Martifer accumulated participation in more than 100 MW of projects in operation via its subsidiaries.

Approximately 64 MW had an impact in Revenues.

HOLDING

Martifer S.G.P.S., S.A. is the holding company of the Group. With the changes in the governance model implemented during 2012,

Martifer S.G.P.S., S.A. positions itself as a financial holding, establishing and defining rules and policies for the Group and

monitoring the activity of the business areas, which were given a greater degree of independence and power.

The business areas act independently, although they follow the strategic guidelines defined at the holding level, with the annual

budgets and business plans approved by Martifer’s executive board members.

At the end of the year, the Holding and support services had 55 employees.

METALLIC CONSTRUCTION

Martifer Metallic Constructions is a player with Global recognition in the sector. The company is focused in four major geographic

areas: Western Europe, Eastern Europe and Middle East, Africa and Latin America, and has industrial units that allow it, from these

areas, to build the most complex projects in such diversified places as, for example, Amazonia, in Brazil, and Jeddah, in Saudi

Arabia. Its industrial units are located in Portugal, Romania, Angola, Mozambique (in partnership) and Brazil.

The company bases its development strategy on differentiation due to engineering quality and its vocation for complex projects. The

company aims to follow a directed strategy, by partnering with companies from complementary segments, which will allow it to not only

offer more complete solutions, but also gain a greater dimension, especially in the international stage.

It provides global and innovative engineering solutions, namely in projects with a high incorporation of metallic structures made in

steel, aluminium and glass façades, equipment for oil & gas and naval industry (via its subsidiaries Navalria and West Sea).

This industrial and commercial activity is present in 16 countries. The total installed capacity is currently over 80,000 tonnes per

year and, at the end of 2013, it employed 2,663 people.


SOLAR

Martifer Solar plays a leading role in the photovoltaic industry due to its ability to adapt to a fast-moving industry and with a proven

track record underpinned by cutting-edge engineering, advanced technical qualifications and a skilled and motivated team.

The company’s main activities are project and business development, installation of EPC projects, specialized O&M services and

distribution via its subsidiary MPrime.

The company covers all market segments: ground mounted, rooftop, BIPV, small generation and off-grid solutions

Operating since 2007, it continues to expand internationally and has initiated activity in new countries. Martifer Solar is present in

more than 20 countries throughout Europe, Africa, Asia & Middle East, North America and South America. Martifer Solar has

participated in the implementation of more than 500 MW of PV energy worldwide.

The area employed 309 people at end of 2013.

RE DEVELOPER

Martifer Renewables acts as a developer of renewable energy, mainly in wind power projects. More than accumulating MWs in

operation, Martifer Renewables’ strategy is focused on the rigorous use of capital in the development and construction of pro jects.

The company currently has 64 MW of wind farms and solar plants in operation in Spain, Romania and Brazil with impact in

Revenues. In Portugal, the company has a ~50 % share in 31 MW of wind farms in operation, which contribute to the results

through the equity method. In 2011, the company’s projects in operation in Poland - Leki Dukielskie (10 MW) and Bukowsko (18

MW) – were sold, and the sale of Rymanow (26 MW under construction) was agreed. In 2012, the company completed the

construction of its wind farm in Romania (Babadag) with a total capacity of 42 MW.

Since its foundation, the company has already developed and built more than 250 MW of renewable assets in several geographies.

Following its asset rotation strategy, the company has had, in the latest sold projects, as partners, relevant companies such as

IKEA in Poland and Santander in Brazil.

This business area employed 45 people at the end of the year and is present in five countries: Portugal, Spain, Romania, Poland and

Brazil.

ANNUAL REPORT 2013

In summary, the group is organized as follows:


INTERNATIONAL PRESENCE

ANNUAL REPORT 2013

HISTORY

1990

Martifer is founded.

1998

Engil (Mota-Engil) becomes

a shareholder.

Martifer participates in several

projects for the Expo 98

(e.g.: Vasco da Gama Tower).

1999

Spain marks the beginning of

the internationalization process.

2002

Construction of stadiums

for the Euro 2004.

Second plant in Portugal

(in Benavente).

2003

Creation of Metallic

Constructions plant in Poland,

the 1st outside Portugal.

2004

Launch of activity in the

Renewable energy equipment

(wind) sector.

2005

Initiated activity in the areas

of Agriculture and Biouels

and the Development

of Wind Farms.

Acquisition of a 25.4 %

participation in REpower

Systems AG.

2006

Launch of activity in the Solar

PV sector.

Creation of the Ventinveste

Consortium, in partnership

with Galp, for the National

Wind Tender.

2007

Public Offer on Repower

Systems, together with Suzlon.

Ventiveste Consortium wins

Stage B of the National Wind

Tender (400 MW).

Initial Public Offering (IPO).

2008

Start of operation of several

industrial units: components

for wind farms, photovoltaic

modules, assembly of wind

turbines.

Acquisition of Navalria,

specialized in Naval

Construction and Repair.

2009

Creation of a Joint Venture

with Hirschfeld for the

production of wind energy

components in the USA.

Martifer Renewables exceeds

100 MW of installed capacity.

Martifer Renewables wins

217 MW in the first wind tender

in Brazil.

Sale of participation in

Repower Systems AG.

2010

Sale of 11% participation

of Prio Foods and Prio Energy,

reducing its ownership to 49 %

of its share capital.

Construction of the two largest

PV Plants in the African

Continent, in Cape Verde.

2011

Beginning of the construction

of the steel structures factory

in São Paulo, Brazil.

Martifer Solar awarded with its

first PV project in India.

Sale of Martifer’s share

in Repower Portugal.

2012

Beginning of operation

of the steel structures factory

in Brazil.

Martifer Solar expands its

activity to Ukraine, Romania,

Mexico and Brazil.

2013

Martifer Solar builds Latin

America’s largest solar park

(30 MW), in Mexico.

Martifer wins the public tender

for the sub-concession

of the lands and infrastructures

of the ENVC.

FROM 1990 TO 2004 FROM 2006 TO 2009 FROM 2010 TO 2013


MARKET ENVIRONMENT

GLOBAL ECONOMY

* At market exchange rates. Source: The Economist

Growth

The latest economic indicators released reveal a significant improvement in the

World economic growth, with European Union showing a more favourable

evolution for the GDP in the second and third quarters of the last year, after six

consecutive quarters of negative change in GDP. As well as, the confidence and

economic sentiment indicators have anticipated the gradual economic recovery

with a change in the economic cycle and increase the expectations of a steady

economic turnaround in the following quarters.

The economic growth has been underpinned by the expansionist economic

policy taken by FED, BCE and BoE in order to balance the strong budget and

fiscal restrictions that affect not only the countries required by the International

Monetary Fund, The European Union and the European Central Bank to

implement financial and economic assistance programs, but also other key

economies that presented imbalances in the public finance indicators and a

deterioration of competitiveness.

Several studies highlight that in 2014 the economic power of the Western

economies will be back on top and switch leading position with BRICs. The

Source: The Economist

ANNUAL REPORT 2013

economic recovery will be a reality and mature economies will have an important role in the world economic growth, as can be seen

in the graphic. The USA will have again a strong contribution (+2.6 % GDP).

In other words, mature markets will accelerate growth leading world economy to 3.6 % in 2014, according several organisms’

studies.

European Economy is finally in the way to the recovery. In 2013, against all the expectations and following the diminishing of risks,

the economy returned to recovery.

10 reasons to believe in it:

1. The gross domestic product of the euro area is likely to have expanded by 0.5 % in the second half of 2013.

2. Portugal came out of recession in the second quarter.

3. Spain came out of recession in the third quarter.

4. Italy stopped contracting in the fourth quarter.

5. Greece is expected to return to growth in 2014 for the first time in seven years.

6. Ireland defied most forecasts by growing 1.5 % in the third quarter alone.

7. Spain, Portugal and Greece eliminated vast current- account deficits, reducing their reliance on foreign borrowing – and not just

by slashing imports; Iberian exports in particular have surged, aided by structural reforms that have boosted competitiveness.

8. Bond Yields have fallen back to 2010 levels as foreign investors have returned to crisis-country debt markets.

9. Financial fragmentation across the euro zone has eased as borrowing costs in the periphery have finally started to come down.

10. The European Central Bank’s balance sheet, which ballooned during the crisis as funding markets closed, has shrunk as banks

have been able to repay emergency loans.


Global Indicators – (2009-2014e)

2009 2010 2011 2012 2013f 2014e

GDP, Annual var. %

USA -2.6% 3.0% 1.8% 2.8% 1.8% 2.6%

Euro Zone -4.2% 1.9% 1.5% -0.7% -0.4% 1.1%

Germany -4.7% 3.7% 3.3% 0.7% 0.5% 1.5%

Portugal -2.5% 1.9% -1.3% -3.2% -1.5% 0.8%

Inflation, Annual var. %

USA -0.4% 1.6% 3.1% 2.1% 1.5% 1.7%

Euro Zone 0.3% 1.6% 2.7% 2.5% 1.4% 1.2%

Germany 0.2% 1.2% 2.5% 2.1% 1.5% 1.6%

Portugal -1.0% 1.4% 3.6% 2.8% 0.6% 1.0%

Unemployment Rate, Annual var. %

USA 9.3% 9.6% 8.9% 8.1% 7.4% 6.8%

Euro Zone 9.5% 10.1% 10.2% 11.3% 12.1% 12.1%

Germany 7.7% 7.1% 6.1% 6.8% 6.9% 6.8%

Portugal 9.6% 10.8% 12.7% 15.7% 17.4% 17.6%

Weight of the Deficit, % GDP

USA -10.4% -9.0% -8.7% -7.0% -4.1% -3.4%

Euro Zone -6.4% -6.2% -4.1% -3.7% -2.9% -2.6%

Germany -3.1% -4.1% -0.8% 0.2% -0.2% 0.0%

Portugal -10.2% -9.9% -4.4% -6.4% -5.5% -4.0%

Price of Crude

USD per Barrel 80.0 84.0 107.4 111.1 110.8 115.0

Interest Rates, End of year (%)

Interest Rates

- Fed (Fed Funds) 0.25% 0.25% 0.25% 0.25% 0.25% 0.75%

- ECB 1.00% 1.00% 1.00% 0.75% 0.25% 0.50%

- BoE 0.50% 0.50% 0.50% 0.50% 0.50% 0.75%

Long-term Interest Rates (10 y Bonds)

USA 3.80% 3.30% 1.88% 1.76% 3.03% 3.50%

Euro Zone 3.40% 2.95% 1.83% 1.32% 1.93% 2.60%

United Kingdom 4.00% 3.40% 1.98% 1.83% 3.02% 3.50%

Exchange Rates, End of year

EUR/USD 1.43 1.33 1.30 1.32 1.38 1.35

Source: Reuters, IMF, OECD and INE (Portuguese Statistics Institute) reports

ANNUAL REPORT 2013

PULSE OF PORTUGAL

On the way to the penultimate review by ‘Troika’ creditors, and closer to the end date, Portugal’s bailout programme remains

broadly on track.

The European Commission, the IMF and the ECB, reaffirmed that the country is on the right direction and highlighted the country’s

improving short-term outlook will help to get the normal access to the financial market. As the Economic growth returned to Portugal

in the second quarter of the last year and continued through the rest of 2013, unemployment began to fall, 10 year bond yields have

fallen sharply and confidence has grown steadily.

The return to growth came after three years of recession – the worst since 1970s – as the country implemented harsh austerity and

structural reforms under the bailout.

The indicators that best demonstrates the success of the adjustment are:

The Financing needs were reduced by more than 13pp of the GDP;

Households’ saving rate has more than doubled since the bottom in 2008;

Deleveraging of corporates and the financial system, while reinforcing banks’ capital;

Export continue with strong figures

Overall, Portugal’s adjustment is really sizable compared to its Euro area peers.

Source: IGCP

The risks, according to the commission, are mainly of a legal nature, pointing to the Constitutional Court’s pending decisions on a

number of austerity measures from 2014’s budget.

Although the country’s budget goals for 2013 have been met, Portugal needs to continue those consolidations efforts in 2014, or in

other words, a rigorous implementation of the 2014 budget will be a decisive step in the transition to a post-programme

environment.


Business Environment

In what concerns business environment indicators, after this crisis, show that enterprises should be more prepared to face other

type of Risk Management with worries such as countries’ financial system and governments which the business is exposed to. Due

to globalization of markets, financial impact of economic turmoil is more than ever a dummy to be considered in the corporate

strategy. Despite all, 2014 should be more positive compared with last years. Business environment is better and will have the best

opportunities in mature markets. And once corporate and government level of investment is at the lowest level in the last years, all

indicates that as far as confidence, as expected in 2014, the potential growth in sectors such infrastructures and energy should

increase.

BUSINESS ENVIRONMENT

WORLD REAL GDP INTERNATIONAL TRADE

2010 5.1 14.0

2011 3.8 6.3

2012 3.0 2.4

2013 2.9 3.3

2014 3.6 5.2

Source: The Economist

MARKET RISKS AND VOLATILITY

Vix index closed 2013 at 13.56 points, after reaching the highest year level at 20.49 points back in june 2013, and the min. level of

11.30 in March. The index has shown a steady decrease since the economic and financial turbulent times of 2009 and 2011, when

touched the pick values of 79.13 and 42.96, respectively in September 2008 and 2011.

Source: Reuters

0

5

10

15

20

25

jan-13 fev-13 mar-13 abr-13 mai-13 jun-13 jul-13 ago-13 set-13 out-13 nov-13 dez-13

VIX INDEX

ANNUAL REPORT 2013

The risks to be considered in 2014:

a. Election in the EU

b. Bank Stress

c. Deflation in Europe

d. Unemployment and social deterioration due to austerity fatigue

e. Conflict in Ukraine

03 Financial Performance

ANNUAL REPORT 2013

03 | FINANCIAL PERFORMANCE

CONSOLIDATED RESULTS ANALYSIS

€M dec-13 dec-12 VAR.%

Revenues 592.9 517.9 14.5%

Earnings before depreciation, amortization and provisions & impairment losses (EBITDA) 29.3 3.9 >100%

EBITDA margin 4.9% 0.8% 4.2 pp

Depreciation & Amortization 17.4 17.5 -0.8%

Provisions & Impairment Losses 33.2 2.2 >100%

Operating Income (EBIT) -21.3 -15.9 -34.2%

EBIT margin -3.6% -3.1% -0.5 pp

Financial Results -49.2 -36.3 -35.5%

Profit before taxes -70.5 -52.2 -35.1%

Income tax -0.3 -2.3 88.4%

Results from assets held for sale 0.0 0.0 s.s.

Net Profit -70.8 -54.4 -30.0%

Attributable to non-controlling interests -1.8 1.4 s.s.

Attributable to shareholders -69.0 -55.9 -23.5%

per share € -0.7 -0.6

.


REVENUES

In 2013 the Total of Operating Revenues increased by 14.5 % YoY to 592.9 million euros, reflecting the significant improvement in volume of

the core business areas Solar and Metallic Constructions, leveraged by the sale of wind farms in RE Developer.

The Group accumulates, once more, successes in what concerns to its internationalization process in 2013, when compared with

2012. The contribution of Portugal for the total Revenues was only 18 %, and the remaining 82 % come from four different regions:

European Union (excluding Portugal) 33 %, Latin America 27 %, Africa and Saudi Arabia 15 % and North America 4 %.

The global exposure conquered in the last years is remarkable, the Group has now the conditions to consolidate its presence in

these markets, taking advantage of the growth forecasted in developing countries, such as Latin America and, at the same time,

collect the benefits of the exposure to mature economies, like the United Kingdom.

Metallic Construction business area reported an increase of 4.7 % YoY in Revenues to 276.1 million euros, in a year marked by

projects with greater complexity, in terms of engineering, with the strongest markets being Brazil, Saudi Arabia, Angola and France.

The Solar business ended the FY2013 with 274.7 million euros of Total Operating Revenues, increasing by 17.2 % YoY, justified by

the conclusion of projects in several geographies, highlighting the project in Mexico, currently the biggest project in Latin America,

projects in Portugal and the UK.

RE Developer had in 2013 a sharp growth in its Revenues to 44.1 million euros, due to the sale of renewable assets, mainly wind

farms, in accordance with the asset rotation strategy.

REVENUES 2013 2012

€M WEIGHT €M WEIGHT VAR.%

Martifer Consolidated 592.9 517.9 14.5%

Metallic Construction 276.1 46.6% 263.6 50.9% 4.7%

Solar 274.7 46.3% 234.4 45.3% 17.2%

RE Developer 44.1 7.4% 18.3 3.5% >100%

Others, Holding and Adjust. -2.0 -0.3% 1.6 0.3% n.m.

REVENUE BREAKDOWN - 2013 versus 2012

ANNUAL REPORT 2013

EBITDA AND NET PROFIT

Consolidated EBITDA in 2013 showed a significant improvement when compared with 2012, increasing from 3.9 million euros to

29.3 million euros, due to the EBITDA improvement in the RE Developer, with the sale of wind farms in Poland.

In Metallic Constructions, EBITDA in the end of 2013 registered -18.7 million euros, which compares with -24.6 million euros,

reflecting mostly the following effects:1) Deterioration of market conditions in Europe, with effects on the margins; 2) Remaining

effect of the exit of the Polish market; 3) Unpredicted additional costs in projects.

In Solar, the EBITDA reached 11.8 million euro, with a margin of 4.3 % vs. 6.8 %, mainly due to the negative performance in the USA,

where, in January 2014, the subsidiaries Martifer Solar USA INC and Martifer Aurora Solar LLC voluntarily started a Chapter 11 process

(US Bankrupcy Code).

EBITDA 2013 2012

€M MARG. €M MARG. VAR.%

Martifer Consolidated 29.3 4.9% 3.9 0.8% >100%

Metallic Construction -18.7 -6.8% -24.6 -9.3% 23.9%

Solar 11.8 4.3% 16.0 6.8% -26.1%

RE Developer 35.4 80.2% 9.9 53.8% >100%

Others, Holding and Adjust. 0.8 2.6 -70.8%

The Depreciation & Amortization decreased 0.8 % from 17.5 to 17.4 million euro. The Provisions & Impairment Losses registered

were of 33.2 million euros, which compares with 2.2 million euro.

The EBIT reached -21.3 million euro in 2013, compared with -16.0 million euro, refleting a 5.3 million euros decrease.

Net Financial Expenses totalled 42.9 million euros, comparable with 36.3 million euro in 2012. Net Interest Expense was 27.0

million euros in 2013, the Net Foreign Exchange reached net losses of 3.7 million euro sand the other financial costs were

18.5 million euros.

The net contribution from the subsidiaries Nutre and Prio Energy (owned at 49 % and 10 %) was -26.6 million euro and 1.6 million

euros, respectively.

The Net Profit in 2013 amounted to negative 70.8 million euros.


CONSOLIDATED CAPEX

The amount of investment in fixed assets in 2013 was 9.8 million euros, mostly applied as follows:

(1) Development of solar projects by Martifer Solar (1.9 million euros). This does not mean long term investment, as they are assets held

for sale

(2) In Metallic Construction business area, 5.5 million euro, which corresponds to maintenance capex, namely in the conclusion of

investments in Brazil, such as the new aluminium factory, and a new transportation crane in Navalria

(3) Finally, RE Developer’s investment was approximately 2.4 million euros

INVESTMENT IN FIXED ASSETS TREND (2007 – 2013) - M€

122.4

213

102.4

46.3

61.3 56.6

9.8

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ANNUAL REPORT 2013

CONSOLIDATED CAPITAL STRUCTURE ANALYSIS

FINANCIAL POSITION

€M 2013 2012 VAR. %

Fixed Assets (including Goodwill) 230.0 331.8 -30.7%

Other non current assets 164.9 187.7 -12.2%

Inventory and Receivables 322.9 383.8 -15.9%

Cash and cash equivalents 39.2 38.0 3.1%

Assets held for sale 30.8 35.1 -12.3%

Total Assets 787.8 976.4 -19.3%

Shareholders Equity 100.0 176.3 -43.3%

Non-controlling interests 39.7 51.0 -22.1%

Total Equity 139.7 227.3 -38.5%

Non-current debt and leasings 236.8 177.1 33.7%

Other non-current liabilities 37.5 38.2 -1.8%

Current debt and leasings 138.1 237.6 -41.9%

Other current liabilities 224.5 286.7 -21.7%

Liabilities related with Assets held for sale 11.2 9.5 17.6%

Total Liabilities 648.1 749.1 -13.5%

Total assets at 31st Dezember 2013, amounted to 787.8 million euro, while non-current assets reached 394.9.3 million euro

compared with 976.4 and 519.5 million euro, respectively, at the end of 2012.

Total Equity dropped 87.6 million euro to 139.7 million euro in the end of 2013. This decrease is due to the registry of losses in

2013.

However, Martifer continues to show a robust capital structure, with a financial autonomy ratio stable at 18 %.


NET DEBT

M€ Metallic

Construction Solar RE Developer Holding

Martifer Consolidated

Corporate Net Debt allocated to operating activites

108 51 13 136 308

Corporate Net Debt allocated to non-operating activities

27 27

Total Net Debt 135 51 13 136 335

FY12 Total Net Debt 120 62 40 155 377

Absolute variation (M€) +15 -11 -27 -19 -42

Note: Net Debt = Borrowings + Financial Leases (+/-) Derivatives – Cash and Cash Equivalents

The Group’s Consolidated Net Debt at 31st Dezember 2013 totalled 335 million euro, 42 million euro below the the end of 2012. This

variation is totally justified by the divestment in non core assets, according to the priorities in the ongoing strategic plan and

improvements in working capital.

The Group continues focused in its goal to continue the process of debt reduction, so it will continue to be committed to the non-core

asset sale process, especially wind farms, solar projects and residually, from the sale of real estate projects, during 2014. Meaning,

the objective continues to be achieving a debt level of 275 million euros or less by the end of 2014.

TREND OF GROUP’s CONSOLIDATED NET DEBT (08-13) - €M

NET DEBT STRUCTURE

485

444

321 330

377

335

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2008 2009 2010 2011 2012 2013

ANNUAL REPORT 2013

In end of 2013, the M/L and Short Term debt structure was 71 % and 29 % respectively. The debt structure by type of interest rate at the end of 2013 was 3% fixed and 97 % floating, in line with the 2012 level. NET DEBT STRUCTURE – FIXED VS. FLOATING M/L TERM – 2013

29%

71%

Short Term M/L Term

3%

97%

Fixed - M/L Term Floating - M/L Term

04 Analysis by Segment

ANNUAL REPORT 2013

04 | ANALYSIS BY SEGMENT

METALLIC CONSTRUCTIONS

SECTOR TRENDS

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• According to the Euroconstruct’s studies from November 2013, as can be seen in the chart below,

the European construction sector experienced severe declines within the last years as a result of

various crises, especially due to publicpublic finance tight and lack of liquidity. Production output

declined by 2.7 % in real terms in 2013 in Western Europe but the development in construction

varied significantly between the countries. The construction outlook is more favorable for the 2014-

2016 period. Construction is expected to grow moderately by 0.9% in 2014.

• But a further more dynamic performance should follow in 2015 and 16, given a stable economic

framework. All sectors – housing, non-residential construction and civil engineering are expected to

experience an expansion in volume. Necessary and often delayed infrastructure measures and

investments will counter the ongoing public consolidation pressure.

• Latin America will continue to grow and the demand for infrastructures is still growing.

• Eastern Europe, Middle East and Africa will have a strong demand, despite a strong competition.


ACTIVITY

The order book in the end of 2013 registered 297 million euros, to which are added 150 million euros in a final contractual stage. The

current list of works is mostly from 12 countries. The main projects are:

• In Brazil, the Transcarioca Bridges and Tomorrow’s Museum in Rio de Janeiro, and the airoport of Viracopos in Campinas, São Paulo

• In Saudi Arabia, the King Abdullah Financial City in Riyadh and the King Abdullah Petroleum Studies and Research Center, in Ryiadh

• In Angola, the Kilamba Building in Luanda

• In Romania, the Kaufland Valea Oltului shopping center and the Arch Bdriges “Mihai Bravu Spaiul Independentei”, in Bucarest

• In Iberia, in Portugal, we highlight the Olicargo headquarters and the Atlântico Estoril Hotel, and in Spain the Podium for the

Triana Tower in Seville

• In France the most important works are the Lyon Stadium and Iter – Building 13

• In the UK, the spotlight goes for the Birmingham New Street Atrium

ORDER BACKLOG BY COUNTRY

GEOGRAPHY VALUE (M€) %

Western Europe 111 37%

Africa 90 30%

Eastern Europe and Middle East 51 17%

Latin America 45 15%

TOTAL 297

ANNUAL REPORT 2013

RESULTS

Metallic Construction Revenues increased by 4.7 % to 276.1 million euro, despite the difficulties in the sector, mainly in Europe. The

shift in the weight in Operating Revenues, from Iberia to other countries, such as Brazil and Saudi Arabia, was the reason behind

the business turn away from the negative trend.

The internationalization effort in the last three years and the focus on countries with economic growth and infrastructure investment

plans are starting to be visible, nevertheless, still negatively impacts the current cost structure.

EBITDA in the FY13 registered -18.7 million euros, which compares with -24.6 million euros in the FY12, reflecting the following

effects:

1) Deterioration of market conditions in Europe, with effects on the margins;

2) Remaining effect of the exit of the Polish market;

3) Additional costs in projects.

The EBIT of -34.6 million euros registered in the FY13 is negatively affected by the goodwill impairment loss concerning activity in Australia

and increase in provisions for the end of activities in Poland.

Net Financial Expenses in 2013 had an increase of 5.2 % to 15.1 million euro, due to the increase in the spreads and financing

commissions applied by the banks.

Net Profit in the FY13 totalled -54.2 million euros, of which 0.2 million euros attributable to non-controlling interests in Martifer Angola.

Net Financial Debt in Metallic Constructions at 31st December 2013 reached 135 million euros. Of the total Net Debt, 27 million

euros are allocated to projects in the Retail area, not considered core business.

Total CAPEX at the FY13 reached 5.5 million euros, which correspond to maintenance investment in metallic construction, namely

investments in Brazil, the new Aluminium factory in Brazil and a new gantry crane in Navalria.

METALLIC CONSTRUCTION 2013 2012 VAR. %

€M

Revenues 276.1 263.6 4.7%

EBITDA -18.7 -24.6 23.9%

EBITDA Margin -6.8% -9.3% 2.5 pp

EBIT -34.6 -32.0 -8.0%

EBIT Margin -12.5% -12.1% -0.4 pp

Net Financial Expenses 15.1 14.4 5.2%

Income tax 4.5 -0.3 n.m.

Results from assets held for sale 0.0 0.0 n.m.

Net Profit -54.2 -46.1 -17.5%

Attributable to non-controlling interests 0.2 0.3 -35.2%

Attributable to shareholders -54.4 -46.4 -17.2%


SOLAR

SECTOR TRENDS

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• There is a renewed sense of optimism in the global PV industry at the end of 2013. Although prices

are flat and margins are only slightly positive for a few companies;

• After we expect 2013 to finish up at 35.8-40.4 GW total new build, in 2014 is expected a demand

between 41.4 and 49.9 GW, which means a volume growth between +16 % /+24 %;

• Consolidation continues, and orders keep flowing to large and medium manufacturers with perceived

higher changes of survival and better product reliability.;

• Active players with effective cost control are currently running at full capacity, and some plan

expansion in 2014;

• Actually, market is already expecting shortest offer of silicon in 2015;

• Growing markets: India, Latin America, US;

• Continuing markets: UK, France and Italy;

• Declining markets: Germany and Spain.

ANNUAL REPORT 2013

ACTIVITY

The backlog of turnkey projects (signed) is 270 million euros and are diversified throughout Europe, Asia, America and Africa.

We remind that the strategic positioning of the company is based on focusing on mature markets with a favourable regulatory

framing and emerging markets with good solar potential for the execution of on and off grid solutions. It is important to highlight,

however, that the margins in the solar segment were reduced throughout the value chain, with significant cuts in government

support and an increase in competition.

GEOGRAPHY VALUE (M€) %

Europe 109 40%

Asia 86 32%

America 57 21%

Africa 19 7%

TOTAL 270

LA

TIN

AM

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ICA

• In the Latin American Market, Brazil no longer dominates, with Chile, Mexico, and Uruguay in

particular all beeing coming on strong. And besides wind still accounts for the majority of funds

deployed, solar investment is now surging and anticipates a strong growth for the next years, as can

be seen in the graphic, in which 2014 is expected to outperform with a growth of 322 %.


RESULTS

In 2013, Total Operating Revenues increased by 17.2 % YoY, totalling 274.7 million euros, justified by the strong take-off of projects

in several geographies, highlighting the project in Mexico, currently the biggest project in Latin America, in Portugal and in the UK.

The EBITDA in Solar in the FY13 totalled 11.8 million euros, decreasing by 26.1 %, with a margin of 4.3 % vs. 6.8 % YoY, mainly

due to the negative performance in the USA, where, in January 2014, the subsidiaries Martifer Solar USA INC and Martifer Aurora

Solar LLC voluntarily started a Chapter 11 process (US Bankrupcy Code).

The subsidiaries are currently negotiating the restructuring plan, for which is expected the approval from creditors and the Court, in the

terms of Chapter 11, in order to continue the development of activities from the debtor companies. We expect that this

reorganization and restructuring process of Martifer Solar INC, with a negative impact in 2013, might lead to a turning point in 2014

and a new positive and consistent cycle from 2015.

Net Financial Expenses in 2013 increased significantly compared with 2012 from 7.4 to 14.8 million euros, in consequence of the

revision of ongoing projects, during 2013, which, for being developed for sale, were reclassified to Inventories.

Net Profit was -7.6 million euros, which negatively compares with 2012, due to the negative performance of Martifer Solar USA as

well as the recognition of client provisions.

CAPEX in the 2013 was 1.9 million euro, applied in project development.

Net Debt in the FY13 was 51.1 million euros, 10.4 million euros below 2012. This decrease was due mainly to the sale of projects in

France, Italy and Portugal and a more efficient management of working capital. The sale of Silverado projects and the transfer of

related liabilities had also a positive contribution in debt reduction, after the deconsolidation effect.

SOLAR 2013 2012 VAR. %

€M

Revenues 274.7 234.4 17.2%

EBITDA 11.8 16.0 -26.1%

EBITDA Margin 4.3% 6.8% -2.5 pp

EBIT 3.9 13.3 -70.9%

EBIT Margin 1.4% 5.7% -4.3 pp

Net Financial Expenses 14.8 7.4 >100%

Income tax -3.3 2.3 n.m.

Net Profit -7.6 3.6 n.m.

Attributable to non-controlling interests 1.6 -1.4 n.m.

Attributable to shareholders -9.2 5.0 n.m.

ANNUAL REPORT 2013

RE DEVELOPER

SECTORIAL ANALYSIS

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• In 2013, the wind energy market kept its growing trend, reaching, at the end of the year, na installed

capacity above 318 GW, representing a growth of approximately 13 % YoY and a slowdown

compared with the growth registered in 2012 (19 %);

• China, USA, Germany, Spain and India lead the sector, currently representing 73 % of the total

installed capacity worlwide;

• More dynamic markets in terms of new installations: China, UK, India, Germany, Sweden, Australia,

Denmark, Romania and Canada (according to the World Wind Energy Association);

• Brazil emerges as the biggest market in Latin America, occupying the 10th position worldwide;

• In Europe, in the last years, reversing the trend in previous years, it is expected that the level of

subsidies to the sector reached its maturity, presenting a decreasing trend for the future;

• There is currently some uncertainty in the sector, due to the announced law changes. A clarification

of these policies is expected throughout 2014;

• In the coming years, according to IEA projections, demand, investment and renewable energy

generation are expected to continue growing worldwide, mainly in India, Latin America, ASEAN and

Africa;

• Wind energy’s dependence from subsidies is gradually decreasing, with price and MWh cost getting

closer.


ACTIVITY

The company has currently 95 MW of wind and solar farms in operation, from which 64 MW with contribution to revenues, located

in Spain (7.23 MW), Romania (42 MW) and Brazil (14.7 MW). In Portugal, the company holds around 50 % in 31 MW of wind farms

in operation, which contribute to the results through equity method

In 2013, we highlight the sale of the Rymanów project in Poland, with 26 MW in operation, to the IKEA Group, and the agreement

for the sale of Rosa dos Ventos (14.7 MW), keeping its asset rotation policy.

RESULTS

RE Developer’s Total Operating Revenues increased significantly in 2013 YoY to 44.1 million euros, mainly explained by the sale of

the wind farms in Poland to IKEA.

The Total Revenues from the wind and solar farms in operation in the period, totalling 64 MW, located in Spain, Romania and

Brazil, were 17.9 million euros versus 17.1 million euros in 2012, thanks to the operation, during the entire year, of the wind farm in

Babadag, Romania (42 MW), inaugurated at the end of 2012.

EBITDA reached 35.4 million euros in 2013, showing an improvement YoY, and reflecting also a 26.6 p.p. increase in its margin,

achieved by the enhancement in the operational performance of the parks in operation in Spain and Romania, with a complete year

in operation, and consequent dilution of fixed and development costs, and also due to the sale of the Rymanów wind farm in Poland

to IKEA.

Net Profit attributable to shareholders in 2013 was positive in 9.9 million euros, compared with 0.3 million euros in 2012.

CAPEX in 2013 was 2.4 million euros, justified by project development, mainly in Poland.

Net Debt at the end of 2013 was 13 million euros, 27 million euros less than final year 2012. To the significant net financial debt

reduction in the RE Developer area has decisively contributed the sale of the Rymanów wind farm and the signature of the sale

agreement for Rosa dos Ventos, which debt was 10 million euros in December 2013, and is classified as an asset held for sale.

RE Developer 2013 2012 VAR. %

€M

Revenues 44.1 18.3 >100%

EBITDA 35.4 9.9 >100%

EBITDA Margin 80.2% 53.8% 26.4 pp

EBIT 11.1 2.0 >100%

EBIT Margin 25.1% 11.1% 14 pp

Net Financial Expenses 1.9 1.5 24.3%

Income tax -0.8 0.1 n.m.

Net Profit 9.9 0.3 >100%

Attributable to non-controlling interests 0.6 0.6 0.0%

Attributable to shareholders 9.3 -0.3 n.m.

ANNUAL REPORT 2013

05 Individual Financial Information

ANNUAL REPORT 2013

05 | INDIVIDUAL FINANCIAL INFORMATION

During 2013, the level of services that the Holding company provided to other Group companies decreased significantly due to the

fact that, part of the services that were provided by the company, have been transferred to the Business Areas following the

strategy of allocating greater autonomy to the Business Areas, with consequent greater decentralization and accountability.

The Net Profit of Martifer, SGPS, SA, the holding company of the Group, was negative amounting to 49,379,995 euro, comparing

with a negative Net Profit of 12,517,886 euro in the previous year.

The negative Net Result in 2013 is mainly due to the recognition of impairment losses in some of its subsidiaries, as a result of

operational losses which lead to deterioration in shareholders' funds.

06 Share Price Performance

ANNUAL REPORT 2013

06 | SHARE PRICE PERFORMANCE

SHARE PRICE TREND | 2013

Source: Reuters

TRADED VOLUME | 2013 –‘000 shares

Source: Reuters

The performance of the stock markets in 2013 was, in general, very positive. In Europe, gains were leaded by the DAX index (+25.5 %),

followed by IBEX (+21.4 %), CAC 40 (+18.0 %), PSI 20 (+16.3 %) and FTSE 100 (+14.4 %). As for the North American markets,

they also had a quite positive performance: +26.5 % in Dow Jones Industrial and +35.0 % in NASDAQ. Martifer’s share price ended

2013 with 29.4 % gains, above Euronext Lisbon’s main index, PSI-20, which increased by 16.3 %, compared with the end of 2012.

Martifer’s share price closed 2013 at 0.73 €/share. The maximum price achieved was 0.82 €/share and minimum 0.45 €/share.

The average volume of stocks traded during the period was 66,474 shares, which translates a significant increase when compared

with the average volume registered at the end of 2012, of 12,652 shares. The recovery of confidence from investors in the

Portuguese stock market, mainly in the second quarter of 2013, is one of the main reasons for the improvement in transaction

volumes. Martifer’s market value at 31st December 2013 was 73 million euros, meaning, 17 million euros above the value at the end

of 2012.

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j-13 f-13 m-13 a-13 m-13 j-13 j-13 a-13 s-13 o-13 n-13 d-13


PURCHASE OF OWN SHARES

In accordance with CMVM regulation 5/2008, namely article 11, numbers 1 and 2, we inform that Martifer SGPS, SA (Martifer) didn’t

purchase own shares on the Stock Exchange during 2013. Therefore, Martifer holds 2,215,910 own shares representing 2.22 % of its

share capital, the same as in 2012.

ANNUAL REPORT 2013

07 Future Prospects

ANNUAL REPORT 2013

07 | FUTURE PROSPECTS

2013 in analysis, goals partially achieved:

Debt decrease via the sale of non core assets

Growth in Revenues

Improvements in operational efficiency

At the end of 2013, the basis of the strategy remains unaltered

− The crucial point in the Group’s strategy is still the sale of non core assets and the decrease in the debt level. Meaning, the

process of sale of renewable assets is still on course, which, taking in consideration the current market conjuncture, should

extend until 2015, but with visible results in 2014.

− It is Martifer Group’s goal to obtain a debt level of 275 million euros or less until the end of 2014. Considering the current debt

level (335 million euros), it is the Group’s goal to proceed with an addicional reduction of more than 60 million euros until the

end of 2014, through the sale of non core assets, especially wind farms, solar projects and, residually, through the sale of real

estate projects.

Therefore, the Action Plan for 2014 should be based in 4 goals:

Decrease in debt through the sale of non core assets

Increase of operational efficiency

Order Book growth, leveraged by partnerships

Strenghtened capital structure

08 Main Risks

ANNUAL REPORT 2013

08 | MAIN RISKS

FINANCIAL RISKS

a) Price risk

The volatility of raw material prices constitutes a risk for the Group, both in metallic construction and solar. The changes in the price

of steel and aluminium impact the operational activity of the metallic construction and the cganges in solar panel prices can also

influence solar activity. Martifer has sought to mitigate this risk by including clauses in its contracts with customers that allow it to

pass on raw-material price fluctuations and by negotiating fixed prices for large scale projects with its suppliers.

b) Currency risk

Currency risk reflects the possibility of registering gains or losses resulting from changes in the foreign exchange rates between

different currencies. The Group’s exposure to currency risk results from the existence of foreign based subsidiaries in countries with

a currency other than the Euro, from transactions between these subsidiaries and other Group companies and from the existence of

transactions with external parties made by the operational companies in a currency other than the reporting currency of the Group.

The Group’s currency risk management policy aims to reduce the sensitivity of its results to exchange rate variations.

Subsidiaries, in their day-to-day operational activities, seek to use their local currency. Likewise, loans contracted by foreign

subsidiaries are preferably denominated in their local currency.

Certain operational activities of the Group are exposed to changes in foreign exchange rates vis-à-vis their local currency. The prices

of some raw-materials, namely steel and aluminium are generally expressed or indexed to the US Dollar which can have an impact

on the Group’s results. It is possible, to a large extent, to include these variations in the sales prices. Where this is not possible, the

Group hedges this exposure by contracting foreign exchange derivative contracts in the subsidiary exposed to the said risk. In the

last two years, the hiring of exchange derivatives increased reasonably in the Group, mainly by two reasons: 1) with the increase of

operating income in Brazil in Metallic Construction segment, and given the volatility of ‘real’ currency in recent times, and 2) also in

the case of Solar business, exchange rate protection against the U.S. dollar.

c) Interest rate risk

Interest rate risk reflects the possibility of changes in future interest charges on loans contracted due to the evolution of market

interest rate levels.

The Group relies on external financing to fund its activity and it is exposed to interest rate risk as a significant part of its borrowings

are indexed to market interest rates. At the end of 2013, the medium long term debt exposed to fixed rates was 3 % (97 % floating

rate), which compares with 17 % (fixed rate) and 83 % (floating rate) in 2012.

In the more significant long-term loans, the Group relies on fixed interest rate loans or uses interest rate derivatives to hedge

exposure to interest rate risk on the said loans. The amounts, interest due dates and repayment schedules of the loans underlying

the interest rate derivatives are identical to those of the loans they hedge, and, as such, are considered perfect hedges.

d) Liquidity risk

Liquidity risk reflects the Group’s ability to satisfy its financial responsibilities with the available financial resources.

The Group manages its liquidity risk in two main ways:


On the one hand, it seeks to ensure that its financing structure adequately reflects the nature of its obligations. Investments in fixed assets, including financial investments, are funded through long-term facilities (equity and long-term loans) whilst short-term obligations are funded through short-term loans. Long-term loans are generally contracted for periods of 5 to 7 years, generally with a grace period of the principal of 1 to 2 years.

On the other hand, subsidiaries have contracted, with financial institutions, short-term facilities for amounts that assure their liquidity. Subsidiaries also have adequate amounts of cash to cover their short-term commitments.

e) Credit risk

The worsening of the worldwide economic conditions and the escalation of the adversities facing local, national and international

economies can influence Martifer Group’s client default rate, with possible negative impacts on the Group’s results.

Aware of this reality, the Group seeks to evaluate all its clients’ credit risk in order to establish credit limits, with the ultimate purpose

of ensuring the collection of the amounts due within the periods negotiated.

With this objective in mind, the Group uses credit rating agencies, regularly analyses risk and credit control, and collects from and

manages cases in litigation, procedures which are all considered essential to manage the credit conceded and to minimize the risk

of credit default.

OPERATIONAL RISKS

a) Metallic Construction

Operational risks in the Metallic Construction area, which was also incorporated in the energy equipment area as from 2011, are

currently divided into three sources of risk – client, supplier and external risk, which, in turn, is sub-divided into specific problems.

Under client risk one can identify, for example, issues at the contractual level, such as the lack of convergence in the interpretation

and application of the contractual dispositions, the distaste or dissatisfaction with the service/product and also the risk of non-

payment of the price stipulated following the delivery of the projects.

In terms of demand volatility, it is important to note that the business area depends, in part, on the launch of public tenders for

public infrastructures (ex. bridges, airports, stations). Within the scope of public tenders, Martifer is subject to complex regulatory

demands, specific to each country, namely in matters concerning the presentation of the proposals and the preparation of complex

administrative documentation files to satisfy the project specifications defined by the contracting entity, that may represent

additional costs for the Martifer Group. It is to be highlighted that, despite the said dependence on public tenders, Martifer has been

able to win business not subject to public tender, thereby reducing its exposure to this risk.

Under supplier risk, Martifer Construções, as a specialist in engineering projects, relies very often on subcontractors, who may fail

in the execution of their work and jeopardize, through a domino-effect, the meeting of project delivery deadlines. In other words,

there is also a risk of delays in delivering the projects, with the inherent contractual penalties.

In the specific case of wind farm construction projects, this problem is mitigated by foreseeing guarantees and penalties in the

contracts, due by the suppliers of equipment or of turn-key projects, since delays in delivering the wind farms may result in less

attractive tariffs and, consequently, in lower profitability rates for the projects. On the other hand, reliance on internationally

renowned suppliers, the most important being Repower and Suzlon, reduces the dependence on suppliers and guarantees the

quality of the equipment. This form of risk management also allows for the simultaneous mitigation of the turbine performance risk,

since operation and maintenance contracts are signed with the turbine suppliers, for periods of, typically, 5 years. Finally, the risk

associated with wind turbine performance is also reduced through adequate programmed preventative maintenance.

Finally, in terms of external risks, and considering that the area of Metallic Construction is strongly correlated with economic growth

and with gross fixed capital formation, it is therefore sensitive to the current economic environment. Accordingly, the worsening of

the sovereign debt crisis in Europe also raises other problems, namely the austerity plans that imply severe transversal cuts in

public investment and the significant decrease in liquidity throughout the financial system, which often causes highly attractive

projects to be shelved due to lack of capital.

ANNUAL REPORT 2013

The manner found by the Metallic Construction area to mitigate these external risks, which are impossible to control, was to

disperse its activity throughout the various geographies, namely through the entry into markets recording higher growth rates, as is

the case of the Angolan market, or, more recently, the Brazilian market, or even countries sporadically visited such as Saudi

Arabia, which may help offset both the effects of the economic recession in Portugal as well as the economic slowdown in Europe.

b) Solar

In the turn-key park installation activity, end-client delays in obtaining the necessary licences or unanticipated delays in the delivery

of equipment may disrupt the calendars initially foreseen for the completion of the respective projects. Despite the fact that this

type of delay usually carries no contractual penalties, in some cases this situation can constitute a risk for the Group given the

planning difficulties it can present.

Additionally, the financial market crisis has been hampering the promoters’ access to funding, resulting in the postponement of

some projects. The diversification of the business throughout the value chain and the diversified client portfolio, inside and outside

the Group, in the process of being adopted should reduce the possible impact of this situation.

The solar photovoltaic modules produced by the company are traded with a 5-year warranty and a 25-year performance warranty,

as a result of which this sector is exposed to the risk of warranty claims years after the sale of the equipment. Accordingly, any

quality or performance problems that may occur can result in high costs. The performance of solar systems is also guaranteed in

respect of the modules acquired for the construction of solar parks; however, the group’s responsibility , in this case, is diminished

in that there is a right of recourse vis-à-vis the suppliers.

On the other hand, most of the equipment used in the production of solar photovoltaic modules is customized for specific raw-

materials, with a resulting dependency risk on key raw-material suppliers. The Group has sought to mitigate this risk by establishing

long-term contracts for some raw-materials, carrying out a judicious selection of suppliers and working towards garnering a

diversification of suppliers for each of the relevant raw-materials of the production process.

c) RE Developer

The productivity indices associated with the renewable energy business depends on the volume of energy produced by the wind

farms and its profitability, factors that depend on the location of the wind farms and on the seasons of the year (seasonality). Given

that the wind turbines are only driven when the wind velocity is within specific parameters, which parameters depend on the

supplier and the type of turbine, if the said velocity is not within the parameters or if it is at the lower end of the limits, the energy

production of the wind farms will suffer a reduction.

The readiness and power curve of each turbine is contractually guaranteed, with indemnities being payable by the suppliers for

situations where their readiness is not satisfied or the power curve is not attained.

This risk is also mitigated through the geographical distribution of the wind farms, allowing for the set-off of the wind velocity variations

at each farm and ensuring the relative stability of the volume of total energy produced.

LICENCING:

Wind farms and solar parks are subject to rigorous regulations in matters such as the development, construction, licensing and

operation of power plants. If the relevant authorities in the jurisdictions in which the Group operates stop or reduce their support for

the development of wind farms and solar parks, such actions may have a significant impact on the activity.


LEGAL RISKS

Martifer is subject to the national and local laws and regulations in the various geographies and markets where it operates, which

aim to assure, amongst others, worker rights, protection of the environment and spatial planning and the maintenance of an open

and competitive market. Thus, the legal and regulatory changes that affect the conditions conducive to the development of the

Groups’ activities and, consequently, prejudice or impede the attainment of the strategic objectives require the Company to adapt to

the new regulatory realities.

The management of legal risk is carried out by the legal department of the holding company and of each of the Group’s Business

Areas and is monitored within the scope of reviews performed by internal legal and fiscal service providers dedicated to the

respective activities, which operate in the dependence of the Board of Directors and management, conducting their work in

articulation with the other fiscal and financial departments, so as to assure the protection of the Company’s interests and, ultimately,

the stakeholders’, in strict compliance with their legal duties.

The members of the legal departments and internal advisory service providers referred to above have specialized formal

qualifications and undergo regular formal training and updating.

Legal and fiscal advisory services are also assured, nationally and internationally, by external professionals, selected amongst

reputable firms and in accordance with the highest standards of competence, ethics and experience.

ANNUAL REPORT 2013

09 Proposal of Results Allocation

ANNUAL REPORT 2013

09 | PROPOSAL OF RESULTS ALLOCATION

The Board recommends, to the General Shareholders’ Meeting, the allocation of the net loss, resulting from the Individual Financial

Information in the total of 49,379,995 euros, recorded in 2013, to Retained Earnings.

10 Other Information

ANNUAL REPORT 2013

10 | OTHER INFORMATION

BUSINESS DEVELOPED BY NON-EXECUTIVE MEMBERS OF THE BOARD OF

DIRECTORS

In addition to incorporating Martifer SGPS, SA’s Board of Directors, each non-executive board member integrates, at least, one of

the nominated Committees by the Board (Committee for Corporate Governance, Committee for Ethics and Conduct or Committee

for Risk), for which the rules are published in the Group’s website and which functions and activities developed throughout 2013 are

outlined in the Corporate Governance Report.

Throughout the year, the non-executive members of the Board have shared and expressed relevant opinions regarding specific

business segments, based on its performance, the risks associated and outlook, keeping regular communication with the executive

Board Members, and the Board Members and Directors of the business units.

PERMITS GIVEN TO BUSINESS TRANSACTIONS BETWEEN THE COMPANY

AND ITS BOARD MEMBERS, ACCORDING TO ARTICLE 397 OF THE

PORTUGUESE COMPANIES CODE

In 2013, the following deals or transactions were made between the company and the Board of Directors or the Supervisory Board:

Martifer Solar, through its subsidiary Martifer Solar Investment B.V. sold the totality of the capital and supplementary capital of the company LRCC LA RAD Campo Chaparro, S.A. to the company SHININGASSET SGPS, S.A.. The sale operation by the global proposed value of 2,336,520.00 euros was subject to the approval of the Company’s Supervisory Board, since the acquiring company is owned, direct or indirectly, by board members of “Martifer Solar, S.A., receiving the approval.

Martifer Gobal – SGPS, S.A., subsidiary of Martifer SGPS, constituted, in partnership with the companies I’M SGPS, S.A. and Amal – SGPS, a commercial company named Martifer Amal, S.A.m in which Martifer Global SGPS, SA, holds a 30 % share. As I’M SGPS, S.A. is owned by some of Martifer SGPS, SA’s Board Members, this operation was subject to the approval of the Company’s Supervisory Board, which approved it.

OTHER INFORMATION

Martifer SGPS, S.A. doesn’t present any debt to the State or any other public entity, including Social Security.

MANDATORY INFORMATION

ANNUAL REPORT 2013

MANDATORY INFORMATION

SHAREHOLDINGS OF THE MEMBERS OF THE MANAGEMENT AND

SUPERVISORY BODIES

In accordance with articles 447 and 448 of the Portuguese Companies Code, the securities issued by Martifer SGPA, SA and companies

dominated by it, held by members of the governing bodies in the period from 1 January 2013 through to 31 December 2013, are the

following:

HOLDER GOVERNING BODY NUMBER OF SHARES HELD ON 31/12/2013

Carlos Manuel Marques Martins Board of Directors 70,030

Jorge Alberto Marques Martins Board of Directors 230,260

I’M – SGPS, S.A. * Board of Directors 42,697,047

Arnaldo José Nunes da Costa Figueiredo Board of Directors 3,000

Luís Filipe Cardoso da Silva Board of Directors 2,000

MOTA-ENGIL, SGPS, S.A. ** Board of Directors 37,500,000

Luís Valadares Tavares Board of Directors -

Jorge Bento Ribeiro Barbosa Farinha Board of Directors -

Mário Rui Rodrigues Matias Board of Directors -

Manuel Simões de Carvalho e Silva Supervisory Board -

Carlos Alberto da Silva e Cunha Supervisory Board -

João Carlos Tavares Ferreira de Carreto Lages Supervisory Board -

Hermínio António Paulos Afonso Statutory Auditor, representing

PricewaterhouseCoopers -

José Carreto Lages Chairman of the General Meeting -

* Directors Carlos Manuel Marques Martins and Jorge Alberto Marques Martins are holders of the share capital of I’M SGPS, SA and are, respectively, its

Chairman of the Board of Directors and Director.

** Directors Arnaldo José Nunes da Costa Figueiredo and Luís Filipe Cardoso are Directors of MOTA-ENGIL, SGPS, S.A.


EVENTS DESCRIBED IN ARTICLE 447 OF THE PORTUGUESE COMPANIES

CODE

NAME OF THE MEMBER OF THE GOVERNING BODY

GOVERNING BODY SHARES HELD AT

31.12.2013



Mário Rui Rodrigues Matias Board of Directors 0

Arnaldo Nunes da Costa Figueiredo Board of Directors 3,000


Luis António de Valadares Tavares Board of Directors 0

Jorge Bento Ribeiro Barbosa Farinha Board of Directors 0

Manuel Simões de Carvalho e Silva Supervisory Board 0

Carlos Alberto da Silva e Cunha Supervisory Board 0

João Carlos Ferreira de Carreto Lages Supervisory Board 0

Juvenal Pessoa Miranda Supervisory Board 0

Directors Carlos Manuel Marques Martins and Jorge Alberto Marques Martins, respectively Chairman and Vice-Chairman of the

Board of Directors, besides the shares held as described above, are sole equal shareholders of I’M SGPS, SA, that, on 31

December 2013, held a total of 42,697,047 shares of Martifer SGPS, S.A.

Durin 2013, there were no share transactions by the members of the governing bodies.

HOLDERS OF QUALIFING SHAREHOLDINGS

According to paragraph 1b) of article 8 of CMVM regulation number 5/2008, and fulfilling article 448 of the Portuguese Companies

Code, the following is the list of qualifying shareholders, with an indication of number of shares and percentage of voting rights held,

calculated according to article 20 of the Securities Code (CMVM), as of 31 December 2013:

SHAREHOLDERS NR. OF SHARES % OF SHARE CAPITAL % OF VOTING RIGHTS 1

I’M – SGPS, SA 42,697,047 42.70% 43.66%

Carlos Manuel Marques Martins* 70,030 0.07% 0.07%

Jorge Alberto Marques Martins* 230,260 0.23% 0.24%

Total Imputable to I’M – SGPS, SA 42,997,337 43.00% 43.97%

Mota-Engil – SGPS, SA 37,500,000 37.50% 38.35%

Arnaldo José Nunes da Costa Figueiredo ** 3,000 0.00% 0.00%

Luís Filipe Cardoso da Silva ** 2,000 0.00% 0.00%

Total Imputable to Mota-Engil , SGPS, SA 37,505,000 37.51% 38.35%

1 % Voting rights = Number shares / (N.º Number shares – Own shares)

* Holder of a position in the Governing Bodies of I’M SGPS, SA

** Holder of a position in the Governing Bodies of Mota-Engil SGPS, SA

ANNUAL REPORT 2013

STATEMENT OF COMPLIANCE ACCORDING TO ARTICLE 245, NUMBER 1,

PARAGRAPH C) OF THE SECURITIES CODE (CMVM)

Dear Shareholders,

According to article 245, number 1, paragraph c) of the Securities Code (CMVM) and to the best of our knowledge:

(i) The information contained in the consolidated management report faithfully reports the evolution of trading, the performance and

the position of Martifer SGPS SA and of the companies in its consolidation perimeter and contains a description of the main risks

and uncertainties facing its business; and

(ii) The information contained in its financial statements and accompanying notes, was prepared in accordance with the applicable

accounting practices, giving a true and fair view of the assets, liabilities, financial position and financial results of Martifer SGPS SA,

and of the companies included in its consolidation perimeter.

Oliveira de Frades, 31 March 2014

The Board of Directors,

Carlos Manuel Marques Martins

(Chairman of the Board of Directors)

Jorge Alberto Marques Martins

(Vice-Chairman of the Board of Directors)

Mário Rui Rodrigues Matias

(Member of the Board of Directors)

Luís Filipe Cardoso da Silva (Member of the Board of Directors)

Arnaldo José Nunes da Costa Figueiredo (Member of the Board of Directors)

Jorge Bento Ribeiro Barbosa Farinha


Luís Valadares Tavares


CONSOLIDATED FINANCIAL INFORMATION

ANNUAL REPORT 2013

11 Consolidated Financial Statements

ANNUAL REPORT 2013

11 | CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENTS FOR THE YEARS AND QUARTERS ENDED 31 DECEMBER 2013 AND 2012

(Amounts expressed in Euro)

(Translation of consolidated financial statements originally issued in Portuguese - Note 44)

NOTES FY 2013 FY 2012 4th QUARTER

2013 (NOT AUDITED)

4th QUARTER 2012 (NOT AUDITED)

Sales and services rendered 3 and 4 517,770,071 481,391,925 101,310,812 140,858,525

Other income 5 75,152,149 36,501,071 27,327,651 16,249,796

Cost of goods sold 6 (190,323,877) (222,668,142) (29,608,197) (63,057,160)

Subcontractors 7 (142,361,309) (87,329,097) (31,237,596) (28,358,059)

External supplies and services 8 (106,788,683) (88,434,088) (22,642,641) (33,755,588)

Staff costs 9 (81,618,904) (84,803,117) (20,324,185) (21,403,239)

Other expenses 10 (42,565,298) (30,709,542) (15,200,761) (21,201,703)

29,264,149 3,949,011 9,625,083 (10,667,427)

Amortizations 3, 18 and

19 (17,367,641) (17,467,710) (4,484,864) (3,942,910)

Provisions 11 (9,963,360) 688,183 (5,772,520) 6,690,630

Impairment losses 11 (23,224,338) (2,934,218) (4,745,529) (1,783,432)

Operating income (21,291,190) (15,764,734) (5,377,830) (9,703,139)

Financial income 12 25,356,484 19,040,201 (530,094) 4,359,778

Financial expenses 12 (49,535,444) (53,488,670) (10,068,924) (15,521,634)

Gains / (losses) on associate companies and joint arrangements

13 (25,016,419) (1,811,435) (8,584,709) (683,504)

Profit before tax (70,486,569) (52,024,638) (24,561,557) (21,548,498)

Income tax 14 (264,872) (2,275,045) 2,543,520 364,862

Profit after tax (70,751,441) (54,299,683) (22,018,037) (21,183,636)

Earnings of the disposal group classified as held for sale - (112,936) - (228,713)

Attributable to:

non-controlling interests - - - -

owners of Martifer - (112,936) - (228,713)

Profit for the year (70,751,441) (54,412,619) (22,018,037) (21,412,349)

Attributable to:

non-controlling interests 29 (1,790,277) 1,440,369 (3,258,397) (936,164)

owners of Martifer (68,961,164) (55,852,988) (18,759,640) (20,476,185)

Earnings per share:

Basic 16 (0.7047) (0.5707) (0.1913) (0.2093)

from continuing operations (0.7047) (0.5696) (0.1913) (0.2070)

from disposal group classified as held for sale - (0.0012) - (0.0023)

Diluted 16 (0.7047) (0.5707) (0.1913) (0.2093)

from continuing operations (0.7047) (0.5696) (0.1913) (0.2070)

from disposal group classified as held for sale - (0.0012) - (0.0023)

The accompanying notes are part of these financial statements


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS AND

QUARTERS ENDED 31 DECEMBER 2013 AND 2012


(TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN PORTUGUESE - NOTE 44)

FY 2013 FY 2012 4th QUARTER

2013 (NOT AUDITED)

4th QUARTER 2012 (NOT AUDITED)

Profit for the year (70,751,441) (54,412,619) (22,018,037) (21,412,349)

Fair value of cash flow hedges (derivatives), net of tax 1,276,461 (672,276) 113,391 (812,863)

Exchange differences arising on (i) translating foreign operations; (ii) net investment in subsidiaries and (iii) goodwill

(3,239,581) 661,445 1,187,006 1,368,440

Income recognized directly in equity (1,963,119) (10,831) 1,300,397 555,578

Total comprehensive income for the period (72,714,560) (54,423,450) (20,717,640) (20,856,771)

Attributable to:

non-controlling interests (1,876,517) 1,382,044 (3,181,691) (1,009,618)

owners of Martifer (70,838,043) (55,805,494) (17,535,949) (19,847,152)


ANNUAL REPORT 2013

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION FOR THE YEARS ENDED 31 DECEMBER 2013 AND 2012


(Translation of consolidated financial statements originally issued in Portuguese - Note 44)

NOTES 31 DECEMBER 2013 31 DECEMBER 2012

ASSETS

Non-current assets

Goodwill 17 12,909,431 18,947,967

Intangible assets 18 7,503,472 39,441,872

Tangible assets 19 209,544,798 273,367,524

Investment property 20 16,195,865 16,206,768

Financial assets under the equity method 21 41,282,069 15,680,011

Available for sale investments 22 575,621 2,310,267

Other non-current receivables 24 92,479,001 140,174,902

Deferred tax assets 14,360,132 13,343,738

394,850,389 519,473,049

Current assets

Inventories 23 26,515,807 24,392,062

Trade receivables 24 121,615,674 150,357,128

Other receivables 24 51,455,759 62,272,521

Income tax 14 1,779,777 2,692,473

Current tax assets 25 17,396,316 18,337,239

Other current assets 26 104,115,097 125,718,650

Cash and cash equivalentes 27 38,843,709 38,024,569

Derivatives 388,468 -

Assets held for sale 28 30,812,048 35,107,509

392,922,655 456,902,151

Total assets 787,773,044 976,375,200

EQUITY

Issued capital 29 50,000,000 50,000,000

Share premium 186,500,000 186,500,000

Treasury stock (2,868,519) (2,868,519)

Reserves (64,654,736) (1,499,182)

Profit for the year (68,961,164) (55,852,988)

Equity attributable to owners of Martifer 100,015,581 176,279,311

Non-controlling interests 29 36,784,990 50,975,912

Non-controlling interests attributable to Assets held for sale 28 2,891,441 -

Total equity 139,692,012 227,255,223

LIABILITIES

Non-current liabilities

Borrowings 30 222,842,770 164,900,867

Obligation under finance leases 13,917,683 12,169,176

Other non-current liabilities 32 13,725,090 22,068,545

Provisions 33 22,326,882 12,520,693

Deferred tax liabilities 1,494,669 3,583,895

274,307,094 215,243,176

Current liabilities

Borrowings 30 133,751,722 229,030,832

Obligation under finance leases 4,357,014 8,586,378

Trade payables 32 130,031,422 165,013,219

Other payables 32 28,851,369 50,500,917

Income tax 14 3,278,785 3,623,443

Current tax liabilities 35 15,325,642 16,596,598

Other current liabilities 36 46,827,457 50,489,688

Derivatives 164,254 510,804

Liabilities related with Assets held for sale 28 11,186,273 9,524,921

373,773,938 533,876,801

Total liabilities 648,081,032 749,119,977

Total equity and liabilities 787,773,044 976,375,200


ANNUAL REPORT 2013

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED 31 DECEMBER 2013 AND 2012



ISSUED CAPITAL

SHARE PREMIUM

TREASURY STOCK

FAIR VALUE RESERVES

FOREIGN CURRENCY

TRANSLATION RESERVES

STOCK OPTIONS

RESERVES

OTHER RESERVES

NET PROFIT OF THE YEAR

EQUITY ATTRIBUTABL

E TO OWNERS OF THE PARENT

NON-CONTROLLING INTERESTS

TOTAL EQUITY

CASH FLOW HEDGE

DERIVATIVES

Balance at 1 January 2012 50,000,000 186,500,000 (2,415,629) (289,986) (19,563,611) 198,979 70,091,004 (48,587,256) 235,933,501 31,783,623 267,717,124

Appropriation of the profit of 2011 - - - - - - (48,587,256) 48,587,256 - - -

Comprehensive income for the year:

Profit for the year - - - - - - - (55,852,988) (55,852,988) 1,440,369 (54,412,619)

Exchange differences arising on (i) translating foreign operations and (ii) net investment in subsidiaries

- - - - 489,714 - - - 489,714 (624) 489,090

Exchange differences arising on goodwill - - - - 170,227 - - - 170,227 2,128 172,355

Other changes in equity of subsidiaries - - - (612,447) - - - - (612,447) (59,829) (672,276)

Total comprehensive income for the year - - - (612,447) 659,941 - - (55,852,988) (55,805,494) 1,382,044 (54,423,450)

Acquisition of treasury stock - - (452,889) - - - - - (452,889) - (452,889)

Share capital increase in subsidiaries - - - - - - - - 32,400 32,400

Other changes in equity of subsidiaries - - - - - (198,979) 1,977,136 - 1,778,158 (1,325,737) 452,420

Changes in the consolidation perimeter - - - - - - 84,746 - 84,746 119,912 204,658

Non-controlling interests transactions - - - - - (5,258,710) - (5,258,710) 18,983,670 13,724,960

Balance at 31 December 2012 50,000,000 186,500,000 (2,868,519) (902,433) (18,903,670) - 18,306,920 (55,852,988) 176,279,310 50,975,912 227,255,223

Balance at 1 January 2013 50,000,000 186,500,000 (2,868,519) (902,433) (18,903,670) - 18,306,920 (55,852,988) 176,279,310 50,975,912 227,255,223

Appropriation of the profit of 2012 - - - - - - (55,852,988) 55,852,988 - - -

Comprehensive income for the year:

Profit for the year - - - - - - - (68,961,164) (68,961,164) (1,790,277) (70,751,441)

Exchange differences arising on (i) translating foreign operations and (ii) net investment in subsidiaries

- - - - (2,373,439) - - - (2,373,439) (139,906) (2,513,345)

Exchange differences arising on goodwill - - - - (713,448) - - - (713,448) (12,788) (726,236)

Other changes in equity of subsidiaries - - - 1,210,008 - - - - 1,210,008 66,454 1,276,461

Total comprehensive income for the year - - - 1,210,008 (3,086,887) - - (68,961,164) (70,838,043) (1,876,517) (72,714,560)

Other changes in equity of subsidiaries - - - - - - (1,500,314) - (1,500,314) (293,325) (1,793,639)

Changes in the consolidation perimeter - - - - - - (1,551,175) - (1,551,175) (9,874,758) (11,425,933)

Non-controlling interests transactions - - - - - - (2,374,197) - (2,374,197) 745,119 (1,629,078)

Balance at 31 December 2013 50,000,000 186,500,000 (2,868,519) 307,575 (21,990,557) - (42,971,754) (68,961,164) 100,015,581 39,676,431 139,692,012


ANNUAL REPORT 2013

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS AND QUARTERS

ENDED 31 DECEMBER 2013 AND 2012



Notes FY 2013 FY 2012 4th QUARTER 2013

(NOT AUDITED) 4th QUARTER 2012

(NOT AUDITED)

OPERATING ACTIVITIES

Receipts from customers 678,567,568 635,572,304 181,463,224 201,127,958

Payments to suppliers (563,561,141) (524,567,053) (125,211,645) (173,219,399)

Payments to employees (81,975,358) (85,326,662) (21,884,807) (24,266,521)

Cash generated from operations 33,031,068 25,678,588 34,366,772 3,642,038

Income tax paid (3,076,835) (6,757,173) (1,817,978) (2,524,377)

Other receipts/(payments) relating to operating activities

2,489,454 1,586,788 (11,508,780) 8,849,359

Cash generated from other operating activities (587,380) (5,170,385) (13,326,759) 6,324,982

Net cash generated by operating activities (1) 32,443,688 20,508,203 21,040,013 9,967,020

INVESTING ACTIVITIES

Receipts arising from:

Financial assets 12,131,065 3,657,802 4,419,716 958,989

Tangible assets 1,313,944 10,689,442 131,284 8,420,643

Intangible assets 2,072,540 7,623,542 1,875,548 6,947,065

Investment grants 2,668,534 1,283,652 2,545,771 -

Interest and similar income 4,747,035 5,567,622 2,401,087 2,551,419

Others 1,061,983 408,500 782,132 -

23,995,100 29,230,559 12,155,537 18,878,116

Payments arising from:

Financial assets (1,622,859) (1,912,796) - (1,028,859)

Tangible assets (9,169,694) (44,330,078) (325,062) (26,301,088)

Intangible assets (562,241) (15,880,612) 1,055,288 258,191

Others (699,742) (26,555) (194,977) (21,555)

(12,054,536) (62,150,041) 535,249 (27,093,311)

Net cash generated by investing activities (2) 11,940,564 (32,919,481) 12,690,786 (8,215,195)

FINANCING ACTIVITIES


Borrowings 789,406,289 582,762,422 242,696,507 183,563,090

Grants and donations 16,043 - -

Others 1,780,646 829,718 (164,855) -

791,186,935 583,608,183 242,531,652 183,563,090


Borrowings (795,543,496) (571,480,291) (251,435,751) (166,449,704)

Leasings (2,480,857) (4,355,513) (697,919) (230,444)

Interest and similar costs (31,307,207) (26,914,646) (11,932,243) (10,554,143)

Acquisition of treasury stock - (452,889) - (1,860)

Others (4,689,231) (3,463,197) (3,044,010) (449,530)

(834,020,791) (606,666,537) (267,109,923) (177,685,682)

Net cash generated by financing activities (3) (42,833,856) (23,058,353) (24,578,271) 5,877,408

Net increase in cash and cash equivalents (4)=(1)+(2)+(3)

1,550,396 (35,469,632) 9,152,528 7,629,234

Changes in the consolidation perimeter and others (439,256) (4,313,460) 3,440,715 (10,291)

Effect of foreign exchange currencies (292,000) (78,822) 523,203 271,935

Cash and cash equivalents at the beginning of the period

27 38,024,569 77,886,483 25,727,263 30,133,691

Cash and cash equivalents at the end of the period 27 38,843,709 38,024,569 38,843,709 38,024,569


12 Notes to the Consolidated Financial Statements

ANNUAL REPORT 2013

12 | NOTES TO THE CONSOLIDATED FINANCIAL

STATEMENTS

INTRODUCTORY NOTE

Martifer SGPS, S.A., with its registered head-office at Zona Industrial, city of Oliveira de Frades – Portugal (‘Martifer SGPS’ or

‘Company’), and its group of companies (all denominated ‘Group’), have as their main activity the construction of steel

infrastructures and solar activity - which focuses on the development of photovoltaic projects, the installation of turnkey photovoltaic

parks or under EPC (Engineering, Procurement and Construction) and the development of architectural integration projects and

micro generation. They also have other activities amongst which we highlight the promotion and development of renewable energy

projects (Note 3).

Martifer SGPS was incorporated on 29 October 2004, its share capital having been realized through the delivery of shares, valued

at their market value, that the shareholders held in Martifer - Construções, S.A., a company that was incorporated in 1990 and

which, at that time, was the holding company of the current Martifer Group.

As of June 2007, after the initial public offering, the Martifer SGPS, S.A. shares have been listed on Euronext Lisbon.

At 31 December 2013, the Group developed its activity in Portugal, Spain, Poland, Slovakia, Romania, the Czech Republic, Angola,

Brazil, Greece, the United States of America, Australia, Mozambique, Ireland, Italy, Belgium, Bulgaria, The Netherlands, France,

Morocco, the United Kingdom, Canada, Austria, Mexico, Saudi Arabia, Germany, Chile, Equator, the Ukraine, Turkey, Senegal,

Singapore, India, Malta, Dubai and Japan.

All the amounts presented in these notes are expressed in Euros (rounded to the unit), unless otherwise stated.

1. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PREPARATION

These accompanying consolidated financial statements relate to the consolidated financial statements of the Martifer Group and

were prepared in accordance with the International Financial Reporting Standards (“IFRS”), as adopted by the European Union, in

force at the beginning of the economic period started on 1 January 2013. These are the International Financial Reporting

Standards, issued by the International Accounting Standards Board ("IASB"), and interpretations issued by the International

Financial Reporting Interpretations Committee ("IFRIC") or by the previous Standing Interpretations Committee ("SIC"), that have

been endorsed by European Union.

These consolidated financial statements have been prepared on a going concern basis from the books and accounting records of

the companies included in the consolidation (Note 2) and have been prepared under the historical cost convention, except for the

revaluation of certain non-current assets and certain financial instruments, which are stated at fair value.

The accounting policies and mensuration criteria adopted by the Group in the 2013 financial period are consistent with those

applied in the financial statements for the previous financial period, presented for comparative purposes, except in respect of the

standards and interpretations entering into force on or after 1 January 2013, the adoption of which has not had a significant impact

on the Group’s comprehensive income or financial position.


Adoption of new, amended or revised standards and interpretations

The following standards, interpretations, amendments and revisions endorsed by the European Union and with mandatory effects

from 1 January 2013, have been adopted for the first time in the current year:

EFFECTIVE DATE

IAS 12 – Income Taxes 01-01-13

IAS 19 – Employee Benefits 01-01-13

IFRS 1 – First-time Adoption of International Financial Reporting Standards 01-01-13

IFRS 7 – Financial Instruments: Disclosures 01-01-13

IFRS 13 – Fair Value Measurement 01-01-13

IFRS 10 – Consolidated Financial Statements 01-01-13

IFRS 11 – Joint Arrangements 01-01-13

IFRS 12 – Disclosure of Interests in Other Entities 01-01-13

Changes in IFRS 10, 11 and 12 01-01-13

IAS 27 – Consolidated and Separate Financial Statements 01-01-13

IAS 28 – Investments in Associates 01-01-13

IFRIC 20 – Stripping Costs in the Production Phase of a Surface Mine 01-01-13

The adoption of the standards, interpretations, amendments and revisions mentioned above had no significant impact on the

Group’s 2013 Consolidated Financial Statements.

New, changes or revised standards and interpretations not yet adopted

The following standards, interpretations, changes and revisions, with mandatory effects in future annual periods were, up to the

financial statements’ approval date, endorsed by European Union:

EFFECTIVE DATE

IAS 32 – Financial Instruments: Presentation 01-01-2014

IAS 36 – Impairment of Assets 01-01-2014

IAS 39 – Financial Instruments: Recognition and Measurement 01-01-2014

Changes in IFRS 10, 11 and IAS 27 01-01-2014

It is not estimated significant effects from the adoption of these standards on the Financial Statements of the Group.

New, changes or revised standards and interpretations not yet been endorsed by the European Union

As at this date, the following standards, interpretations, changes and revisions have already been issued by the IASB / IFRIC but

have not yet been endorsed by the European Union:

EFFECTIVE DATE

IFRS 9 – Financial Instruments: Recognition and Measurement To be defined


Improvement of standards 2010 – 2012 01-01-14


Change in IFRS 9 – Financial Instruments: hedge accounting To be defined

IFRIC 21 –Levies 01-01-14

It is not estimated significant effects from the adoption of these standards on the Financial Statements of the Group.

ANNUAL REPORT 2013

1 January 2004 corresponds to the first period of application, by the Group, of the IAS/IFRS, in accordance with IFRS 1 – ’First-time

adoption of the International Financial Reporting Standards‘.

The consolidated financial statements are presented in Euros since this is the main currency of the Group’s operations. The

financial statements of Group companies expressed in foreign currency were translated to Euros in accordance with the accounting

policies described in Note I xv).

In the preparation of the consolidated financial statements, in accordance with IAS/IFRS, the Group’s Board of Directors adopted

certain assumptions and estimates that can affect the assets and liabilities reported, as well as the profits and losses incurred in the

reporting periods (Note 1 xxvi)). All the Board of Directors’ estimates and assumptions were performed taking into consideration the

best knowledge available at the financial statements’ approval date, and the informations available on that date.

The accompanying consolidated financial statements were prepared for appreciation and approval by the annual Shareholder’s

General Meeting. The Board of Directors has approved them for issuance, on 31 March 2014, and believes that these will be

approved without any changes.

BASIS OF CONSOLIDATION

The Group’s consolidation methods are as follows:

a) Group companies

Investments in companies in which the Group owns, directly or indirectly, more than 50% of the voting rights at the Shareholder’s

General Meetings or is able to establish the financial and operational policies so as to benefit from their activities (definition of

control normally used by the Group), are included in the consolidated financial statements using the full consolidation method.

The equity and net profit attributable to minority shareholders are shown separately in the consolidated statement of financial

position (in the equity caption ‘non-controlling interests’) and in the consolidated income statement (included in the consolidated net

profit attributable to non-controlling interests), respectively. Companies included in the consolidated financial statements using the

full consolidation method are listed in Note 2.

In business combinations occurring after 1 January 2004, the assets and liabilities of each subsidiary (including contingent

liabilities) are measured at fair value at the date of acquisition as established in IFRS 3. Any excess of the cost of the business

combination over the Group’s interest in the fair value of the identifiable assets and liabilities acquired is recognized as Goodwill or,

when identified, added to the asset that originated such difference. Any excess of the Group’s share in the fair value of the

identifiable assets acquired over the cost of the business combination (Badwill) is recognized as income in the income statement for

the year, after reassessment of the estimated fair value. Non-controlling interests include their proportion of the fair value of net

identifiable assets, liabilities and contingent liabilities determined at the date of acquisition of the Group companies.

In business combinations occurring after 1 January 2011 (IFRS 3R), any excess of the cost of the business combination, of the fair

value of any investment held before the acquisition of control and of the value of non-controlling interests, over the fair value of

assets, liabilities and identifiable contingent liabilities is recognized as Goodwill. If the cost of the business combination, the fair

value of any investment held before the acquisition of control and the value of non-controlling interests, is lower than the fair value

of the net assets of the subsidiary acquired, the difference is recognized in the income statement for the year. Transaction costs

arising on business combinations occurring after this date are recognized as an expense when incurred.

Transactions of disposal or acquisition of shares to / from non-controlling interests do not result in the recognition of gains, losses or

Goodwill, and any difference between the value of the transaction and the carrying value of the investment traded is recognized in

equity.

The negative results generated in each period by subsidiaries with non-controlling interests are allocated, based on the percentage

held, to non-controlling interests, independently of these becoming negative.

The non-controlling interests, recognized in business combinations, are measured at their respective proportion of the fair value of

identified net assets, transaction by transaction.

The results of the Group companies acquired or disposed of during the year are included in the consolidated income statement as

from the date of their acquisition and up to the date of their disposal.


Adjustments to the financial statements of Group companies are performed, whenever necessary, in order to adapt their accounting

policies to those used by the Group. All intra-group transactions, balances and distributed dividends are eliminated in the

consolidation process. Whenever the Group has, in substance, control over other entities incorporated for a specific purpose, even

if no share capital interests are directly held in those entities, they are consolidated using the full consolidation method. At 31

December 2013, there are no entities in this situation.

b) Associate and jointly controlled companies

Investments in associate companies (companies in which the group has significant influence but does not have control over the

financial and operational decisions of those companies - mainly investments representing between 20% and 50% of the company’s

share capital) and in jointly controlled companies (companies in which the Group shares control with other partners) are included in

the accompanying consolidated financial statements in accordance with the equity method in the caption ‘Investments in associate

companies and joint arrangements’.

Under the equity method, investments are recorded at cost, adjusted by the amount corresponding to the share of changes in

equity (including net profit) of associate and jointly controlled companies and by the dividends received, net of impairment losses.

The assets and liabilities of each associate and jointly controlled company (including contingent liabilities) are identified at their fair

value at the acquisition date. Any excess of the cost of acquisition over the Group’s share of the fair value of the identifiable assets

and liabilities of the associate companies is recognized at the date of acquisition as Goodwill. This Goodwill is included in the

carrying amount of the investment in associate companies and joint arrangements and analysed annually for recoverability as part

of the financial asset. Any excess of the Group’s share of the fair value of the identifiable assets and liabilities over the cost of the

business combination (Badwill), after reassessment, is immediately recognized in the income statement.

An assessment of the investments in associate and jointly controlled companies is performed whenever there is evidence that the

asset might be impaired. Any impairment loss detected is recorded in the income statement.

When the Group’s share of losses exceeds the carrying amount of the investment, such investment is reported at nil value for as

long as the equity of the associate or jointly controlled company is negative, except when the Group has assumed commitments in

respect of said associate or jointly controlled company, in which situation a provision is recorded for those commitments.

The Group’s share of unrealized gains arising on transactions with associate and jointly controlled companies is eliminated.

Unrealized losses are eliminated, but only to the extent that there is no evidence of impairment of the assets transferred.

Investments in associate and jointly controlled companies consolidated using the equity method are listed in Note 2.

MAIN ACCOUNTING POLICIES, JUDGEMENTS AND ESTIMATES

The main accounting policies, judgements and estimates used in the preparation of the Group’s consolidated financial statemen ts

for the years presented are as follows:

i) Goodwill

The excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets, liabilities and contingent

liabilities of subsidiaries, associate companies or jointly controlled companies at the date of acquisition, is recorded in the caption

‘Goodwill’ (in the case of investments in subsidiaries) or in the caption ‘Investments in associate companies and joint arrangements’

(in the case of investments in associate companies or jointly controlled companies).

Goodwill arising on acquisitions prior to the date of transition to IFRS (1 January 2004) or Goodwill arising on the constitution of the

Group is recorded at its net carrying amount, calculated in accordance with generally accepted accounting principles in Portugal,

and is subject, as from that date, to annual impairment tests.

Goodwill is not amortized but is subject to impairment tests on an annual basis when its carrying amount is compared to its

recoverable amount. Impairment losses identified during the year are recorded in the income statement in the caption ‘Provisions

and impairment losses’. The recoverable amount is the higher between the fair value less costs to sell and the value in use. The fair

value less costs to sell is the amount that could be obtained in an arms-length transaction. The value in use is the present value of

the estimated future cash flows from the continuous use of such asset and from its sale at the end of its useful life. The recoverable

ANNUAL REPORT 2013

amount is estimated individually for each asset, or, when this is not possible, for the cash-generating unit to which the asset

belongs.

Impairment losses relating to Goodwill may not be reversed.

The excess of the acquisition cost of investments in foreign companies (subsidiary, associate and jointly controlled companies) over

the fair value of their identifiable assets and liabilities at the date of acquisition is calculated using the functional currency of each of

those companies. Translation to the Group’s currency (Euro) is made using the closing exchange rate. Exchange rate differences

arising on translation are recorded in the equity caption ’Foreign currency translation reserves’.

Any excess of the Group’s share in the fair value of identifiable assets and liabilities in subsidiary, jointly controlled and associate

companies over their acquisition cost, at the date of acquisition, is recognized as income in the income statement for the year, after

reassessment of the fair value of the identifiable assets and liabilities.

ii) Non-current assets held for sale

Non-current assets are classified as held for sale if their carrying amount is to be recovered through a sale transaction rather than

through their continued use. Nevertheless, such classification requires that the sale be highly probable and that the asset (or

disposal group) is available for immediate sale in its present condition. In addition, the Board of Directors must be committed to the

sale, which should occur in the short-term (normally, but not exclusively, within one year from the date of that classification).

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their carrying amount and their

fair value less costs to sell and are not amortised or depreciated during the period they are classified as held for sale.

iii) Intangible assets

Intangible assets acquired by the Group are stated at their acquisition cost, net of depreciation and accumulated impairment losses.

Intangible assets are only recognized if they are controlled by the Group and if their cost can be reliably measured.

Intangible assets comprise mainly software and other rights, which are depreciated on a straight-line basis over a 3-year period,

and costs incurred obtaining licences to explore wind farms, which are depreciated in line with the license period granted (currently

20 years).

Costs incurred with the licensing of wind farms are recognized as intangible assets if, and only if, all of the following requirements

have been fulfilled:

- economic feasibility studies confirm that the wind farms will generate future economic benefits;

- the Group has the technical and financial capacity to install and explore those wind farms; and

- the expenditure attributable to the wind farms during the licencing phase can be reliably measured.

Expenditure on research and installation activities related with wind farms is recognized as an expense in the year in which it is

incurred.

The remaining research expenses are recognized as costs in the year in which they are incurred.

Intangible assets acquired in a business combination are identified and recognized separately from Goodwill if their fair value can be

reliably measured. The cost of such intangible assets is the fair value at the acquisition date.

Subsequent to initial recognition, intangible assets acquired in a business combination are recorded at cost less accumulated

amortization and impairment losses, on the same basis as intangible assets acquired separately. These assets are depreciated on

a straight-line basis, usually during the period over which the economic benefits are expected to occur.

iv) Tangible assets

Tangible assets are recorded at their acquisition cost, net of depreciation and accumulated impairment losses.

Depreciation is calculated on a straight-line basis over the assets’ useful lives, land not being subject to depreciation.


Tangible assets in progress are fixed assets still under construction / development and are recorded at their acquisition cost, net of

impairment losses. Those assets are depreciated as from the moment they become available for use with the quality and technical

conditions required to operate efficiently. Depreciation is calculated on a straight-line basis, over the expected useful life for each

class of tangible assets. The useful life is estimated taking into consideration the expected use of each class of tangible assets, as

well as their natural consumption and technical obsolescence.

The depreciation rates used correspond to the following estimated useful lives:

Buildings 20 to 50 years

Equipment:

Basic equipment 3 to 7 years

Transportation equipment 4 to 5 years

Tools and dies 3 to 5 years

Office equipment 3 to 10 years

Other tangible assets:

Equipment installed in wind and solar farms 15 to 20 years

Other tangible assets 3 to 10 years

Maintenance and repair costs that neither increase the useful life, nor create significant improvements in tangible assets, are

recognized as costs in the year in which they occur.

v) Leasing

Leases are classified as (i) finance leases whenever the terms of the lease substantially transfer all the risks and rewards of

ownership to the lessee. All other leases are classified as (ii) operating leases.

A lease is classified as finance or operating depending on the substance of the transaction rather than on the form of the contract.

Fixed assets acquired under finance lease contracts and the related liabilities are recorded in accordance with the financial method.

Under this method the tangible assets, the corresponding accumulated depreciation (as defined in iii) and iv) above) and the

liabilities are recorded in accordance with the contractual financial plan. In addition, the interest included in lease payments and the

depreciation of the tangible assets are both recognized as expenses in the income statement for the year to which they relate.

Assets under long-term rental contracts are recorded in accordance with the operational lease method. In accordance with this

method, the rents paid are recognized as expenses over the rental period.

vi) Investment properties

An investment property is a property held to earn rentals and / or for capital appreciation and not for use in the course of current

operations.

Investment property is initially measured at cost, including transaction costs. Subsequent to the initial recognition, investment

property is measured at fair value, and gains or losses arising on changes in fair value are included in the income statement for the

period in which they arise.

Costs incurred with investment property (maintenance, repair, insurance and property tax), as well as the related revenue and

rental income arising are included in the income statement for the period in which they arise.

vii) Financial assets and liabilities

Financial assets and liabilities are recognized in the Group’s statement of financial position when, and only when, the Group is a

contractual party to the instrument.

a) Financial instruments:

The Group classifies financial instruments in the following categories: ‘Financial investments at fair value through profit or loss’,

‘Borrowings and receivables’, ‘Held-to-maturity investments’ and ‘Available-for-sale investments’. The classification depends on

the intention inherent to the investment’s acquisition.

ANNUAL REPORT 2013

The classification is made at the initial recognition and re-appreciated on a quarterly basis.

Financial assets at fair value through profit or loss: this category is divided into two: ‘financial assets classified as held for

trading’ and ‘financial assets designated by the Group at fair value through profit or loss’. A financial asset is classified

under this category, namely, if it is acquired for the purpose of selling it in the short-term. Derivatives are also classified

as instruments held for trading, except if designated as effective hedging instruments. Financial instruments in this

category are classified as current if they are held for trading or if it is expectable that they are going to be realized within

twelve months of the end of the reporting period;

Held-to-maturity financial assets: this category includes financial assets, non-derivative, with fixed or variable

reimbursements with a fixed maturity, and which the Board of Directors intends to hold to maturity.

Available-for-sale financial assets: these include financial assets, non-derivative, that are designated as available-for-

sale and those that are not classified as ‘borrowings and receivables’, ‘held-to-maturity investments’ or ‘financial assets

at fair value through profit or loss’. This category is classified as non-current, unless the Board of Directors intends to sell

them within 12 months from the end of the reporting period.

Held-to-maturity financial assets are classified as non-current, unless their maturity is less than a year from the end of the

reporting period. Financial assets designated by the Group at fair value through profit or loss are classified as current in the

statement of financial position.

All purchases and sales of financial instruments are recognized on the trade date, this means, on the date when the Group assumes

the risks and obligations inherent to the acquisition and disposal of the assets. These investments are initially measured at cost,

which is the fair value of the consideration paid for it, including transaction costs, with the exception of ‘Financial investments at

fair value through profit or loss’. In the latter case, the financial assets are initially recognized at their fair value and the

transactions costs are recognized in the income statement. Financial investments are derecognized when the right or obligation to

receive or pay financial flows, respectively, has expired or has been transferred, and, therefore, all the risks and benefits have

been transferred.

‘Available-for-sale financial assets’ and ‘Financial assets at fair value through profit or loss’ are subsequently measured and

recorded in the financial statements at fair value.

Gains and losses, realized or not, resulting from a change in the fair value of the ‘Financial investments at fair value through profit

or loss’ are recognized in the income statement for the year. Gains and losses resulting from a change in the fair value of

‘Available-for-sale assets’ are recognized directly in the statement of comprehensive income, under the caption ‘Fair value

reserves – Available-for-sale assets’ until the investment is sold, received or in any way alienated, at which moment the

accumulated gain or loss is recognized in the income statement.

The fair value of financial assets is based on current market prices. If the market on which the investments are traded is not active

(no quoted price exists), the Group establishes the instrument’s fair value using other valuation techniques such as recourse to

similar transactions, discounted cash flow analysis or the use of option pricing models to reflect the specific circumstances. The

fair value of listed investments is calculated using the closing price on Euronext Lisbon at the end of the reporting period.

To determine the fair value of a financial asset or liability when there is an active market, the market price is applied. This

constitutes level 1 of the hierarchy of fair value, as defined in IFRS 13 – Fair value: mensuration and disclosure.

If the market on which the investments are traded is not active, which is the case for some financial assets and liabilities, valuation

techniques generally accepted in the market, based on market assumptions, are used. This constitutes level 2 of the hierarchy of

fair value, as defined in IFRS 13.

The entity applies valuation techniques for unlisted financial instruments, such as, derivatives, financial investments at fair value

through profit or loss and available-for-sale investments. The valuation models most frequently used are discounted cash flow

analysis and option valuation models which incorporate market information such as interest rate curves.

For some complex financial instruments, complex valuation models with assumptions and information that is not directly

observable in the market, and for which an entity applies internal estimates and assumptions, are used. This constitutes level 3 of

the hierarchy of fair value, as defined in IFRS 13.

‘Borrowings and receivables’ and ‘Held-to-maturity investments’ are recorded at their amortized cost using the effective interest

rate method.

Financial assets are assessed, by the Group, for indicators of impairment at each reporting period. In the case of equity

instruments classified as available-for-sale, a significant decline or a prolonged decline in their fair value to amounts lower than

their acquisition cost, are indicators of impairment. For all other financial assets objective evidence of impairment could include:


- significant financial difficulty of the issuer or counterparty; or

- default or delinquency in interest or principal payments; or

- it becoming probable that the borrower will enter bankruptcy or financial restructuring.

For financial assets carried at amortized cost, the amount of the impairment is 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.

The carrying amount of the financial assets is reduced directly by the impairment losses for all financial assets with the exception

of trade and other receivables, for which the carrying amount is reduced through the use of an allowance account. When a trade

or other receivable is considered uncollectible, it is written-off against the allowance account. Subsequent recoveries of amounts

previously written-off are credited in the income statement for the period. Changes in the carrying amount of the allowance

account are recognized in the income statement in the caption ‘Accumulated impairment losses’.

With the exception of ‘Available-for-sale investments’, which correspond to capital instruments in another company, if, in a

subsequent period, the amount of the impairment loss decreases and the decrease can be objectively related to an event

occurring after the impairment was recognized, the previously recognized impairment loss is reversed through the income

statement.

b) Trade receivable and other receivables

Trade and other debtors balances do not bear interest and are recorded at their nominal value less any impairment losses,

recognized in the allowance account ’Accumulated impairment losses‘, in order to reflect their net realizable value.

c) Borrowings

Borrowings are recorded as liabilities at their nominal value, net of up-front fees and commissions related with the issuance of these

instruments. Financial expenses are calculated based on the effective interest rate and are recorded in the income statement on an

accruals basis.

d) Trade payables and other payables

Accounts payable that do not bear interest are recorded at their nominal value, which is substantially equivalent to their fair value.

e) Financial liabilities and equity instruments

Financial liabilities and equity instruments are classified and accounted for based on their contractual substance. The Group

classifies as equity instruments the contracts that evidence the Group’s residual interest in a group of assets after deducting all of

its liabilities. The Group classifies as financial liabilities all those that are expected to give rise to a disbursement of funds.

f) Derivatives

The Group uses derivative instruments to manage its exposure to financial risks. Derivative instruments are only used for hedge

accounting purposes, with the appropriate approval of Group’s Board of Directors, and never for speculative purposes.

The derivative instruments used by the Group, classified as cash flows hedges, are exclusively related to the hedging of interest

rates and exchange rates on loans obtained. The loan’s amount, the interest’s maturity and the loan’s reimbursement plans

inherent to the hedging instrument are in all respects similar to the established conditions for the contractual loans, configuring totally

effective correlations.

The criteria used by the Group to classify the derivative instruments as cash flow hedges are as follows:

- The hedge is expected to be highly effective in offsetting changes in the cash flows attributable to the hedged risk;

- Hedge effectiveness can be reliably measured;

- There is adequate documentation on the transaction at the inception of the hedge;

- The transaction to be hedged is highly probable.

ANNUAL REPORT 2013

Cash flow hedges are initially recorded at fair value, if any, and subsequently revaluated at their fair value. The effective portion of

the changes in the fair value of derivatives that are designated and qualify as cash flow hedges is deferred in the statement of

comprehensive income in the caption ‘Fair value reserves – Cash flow hedge derivatives’, being transferred to results in the same

periods the hedged instruments affect these. The gains or losses relating to the ineffective portion are immediately recognized in

the income statement, when determined.

Hedge accounting is discontinued when the hedging instrument expires or is sold. When a hedging instrument no longer qualifies

for hedge accounting, the accumulated gain or loss deferred in the statement of comprehensive income remains in equity and

subsequent revaluations of the derivative are recorded in the income statement.

g) Green certificates

At present there is no accounting standard or interpretation in the International Financial Reporting Standards (IFRS) that deals

specifically with the accounting for emission permits or renewable energy certificates.

Green certificates are instruments that approve the production of a certain volume of electricity from renewable energy sources.

Upon receipt of the green certificates, the company recognizes an asset under “Other short-term investments” as well as its

corresponding “Deferred income”. The deferred income is recorded in the income statement when the green certificates are sold.

Subsequent to the initial recognition, the green certificates are valued at the transaction price available at that date. At the end of

each period, the green certificates are valued using their fair value, which corresponds to their market price at that date. The

differences arising are recorded in the income statement as “Other financial income” or as “Other financial expenses”.

Green certificates are valid for a given period as from their issue date (16 months in Romania). The carrying amount of the expired

green certificates (due to lack of use within the validity period) is recorded in “Other financial expenses”.

h) Notes receivable and factoring

The Group only derecognizes a financial asset when, and only when, the contractual rights to the cash flows from the financial

asset expire; or it substantially transfers the contractual risks and rewards inherent to the possession of such financial asset to a

third party. If the Group substantially retains the risks and benefits inherent to the possession of such assets, it continues to

recognizes these in its financial statements, recording a liability in the caption ‘Borrowings’ as the monetary collateral for the assets

ceded.

Therefore, notes receivable and factored accounts receivable are recorded at each reporting period as liabilities in the statement of

the financial position, with the exception of ‘non-recourse factoring’ operations, until the underlying assets are fully collected by the

Group.

ix) Cash and cash equivalents

Cash and cash equivalents include cash on hand, cash at banks, term deposits and other treasury applications with a maturity of

less than three months, which are subject to an insignificant risk of change in value.

x) Inventories

Merchandise and raw-, subsidiary and consumable materials are stated at the lower of their average acquisition cost or net

realizable value (estimated sales price less costs to make the sale). Finished and intermediate goods are recorded at production

cost (which includes the cost of incorporated raw-materials, direct labour and overheads), which is lower than their market value.

Impairment losses are recognized in the income statement when is estimated that the inventories’ net realizable value is lower than

its carrying amount (Note 10).

xi) Accrual basis

Expenses and income are recorded in the year to which they relate, regardless of their date of payment or receipt. The captions of

’Other non-current assets’, ‘Other current assets’, ‘Other non-current liabilities’ and ‘Other current liabilities’ include expenses and

income relating to the current period, which payment and receipt will occur in future periods, as well as payments and receipts in

the current period but which relate to future periods.


xii) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue is recorded net of returns, rebates and

similar allowances.

a) Construction contracts (metallic structure constructions and the construction of turnkey wind farms and solar parks)

The Group recognizes income and costs associated with construction contracts, on an individual basis, using the stage of

completion method. Under this method, at the end of each period, income and expenses are recognized with reference to the

stage of completion of the contract activity. The stage of completion is determined based on the ratio between costs incurred to

the balance sheet date and the total estimated contract costs. The difference between income determined applying this ratio and

the total amount invoiced is recorded in ‘Other current assets’ as ‘Work in progress’ or in ‘Other current liabilities’ as ‘Advanced

invoicing’, respectively.

Revenue arising on contract variations is recorded when these are agreed with the customer, or when negotiations are at an

advanced stage and it is probable that these will be favourable to the Group, and it can be reliably measured.

To cater for the costs that will be incurred during the guarantee period, the Group recognizes a provision, created on an annual

basis, to cover for such legal obligation. This provision is estimated taking into consideration the annual production as well as the

historical costs incurred in the past with this obligation.

Claims for reimbursement of expenditure not covered in the contract price are included in the contract revenue when negotiations

with the client are at an advanced stage and it is probable that these will be favourable to the Group, and they can be reliably

measured.

When it is likely that the total estimated costs of the construction contract will exceed the revenue negotiated, the expected loss is

immediately recognized in the income statement.

b) Short-term construction contracts

In these types of contracts, the Group recognizes revenue and costs as they are billed or incurred, respectively.

c) Recognition of revenue resulting from real estate activity

Relevant costs incurred with real estate projects include the direct construction costs, the costs associated with the realization of the

projects as well as their licensing costs. Borrowing costs attributable to real estate projects are capitalized until the project is completed.

Borrowing costs are only capitalized if the project is in progress, i.e. if it is awaiting licenses from local authorities, or if it is under

construction. In all other cases, it is considered to be suspended and no capitalization of borrowing costs occurs.

Revenue on these types of operations is generated and recognized when the contractual position held by the Group is

transferred, which, generally, coincides with the signing of the transfer deed.

d) Revenue recognition related with the sale of goods (merchandise and finished products)

Revenue from the sale of goods is only recognized when all the following conditions are met:

- the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;

-the Group neither retains continuing managerial involvement to the degree usually associated with ownership nor

effective control over the goods sold;

- the amount of revenue can be reliably measured;

- it is probable that the economic benefits associated with the transaction will flow to the entity; and

- the costs incurred or to be incurred in respect of the transaction can be reliably measured.

xiii) Own worked capitalized

The internal costs (materials, staff and production costs) incurred during the production of tangible fixed assets are capitalized only

when the following requirements are fulfilled:

- the underlying assets are identifiable;

ANNUAL REPORT 2013

- there is strong probability that the assets will generate future economic benefits; and

- the production costs can be reliably measured.

xiv) Costs incurred with proposal preparation

Costs incurred with proposal preparation are recognized in the income statement as they are incurred due to the unpredictability of

their outcome.

xv) Balances and transactions in foreign currency

Individual financial statements:

All the assets and liabilities expressed in foreign currencies are translated to the functional currency, using the official exchange

rates at the reporting date. The exchange differences, favourable or unfavourable, originated by the differences between the

exchange rates at the transaction dates and those used at the collection, payment or at the reporting period, are recognized, at their

gross amounts, as profits and losses in the income statement for the period.

Consolidated financial statements:

Assets and liabilities of the Group’s foreign operations are translated to Euros using the exchange rates prevailing at the reporting

date in the preparation of the consolidated financial statements. Income and expense items, as well as cash flows, are translated at

the average exchange rates for the year. In addition, some medium-, long-term or undefined maturity loans granted to subsidiaries,

denominated in a currency other than the Euro are considered as part of the Group's net investment. Exchange differences arising,

if any, are recorded in equity and recognized in the Group’s foreign currency translation reserve. Such exchange rate differences

are recognized in the income statement in the year in which the foreign entity is disposed of.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign

entity and are therefore translated at the closing rate.

The following exchange rates have been used in the preparation of the financial statements:

1 € EQUALS: CLOSING RATE AVERAGE RATE

31 DECEMBER

2013 31 DECEMBER

2012 EVOLUTION

IN % 31 DECEMBER

2013 31 DECEMBER

2012 EVOLUTION

IN %

Australian dollar 1.542 1.271 21.3% 1.378 1.241 11.0%

Bulgarian Lev 1.956 1.956 0.0% 1.956 1.956 0.0%

Czech koruna 27.427 25.151 9.0% 25.980 25.148 3.3%

Polish zloty 4.154 4.074 2.0% 4.200 4.185 0.4%

New Romanian leu 4.471 4.445 0.6% 4.419 4.459 -0.9%

US dollar 1.379 1.319 4.5% 1.328 1.285 3.4%

South African Rand 14.566 11.173 30.4% 12.833 10.551 21.6%

Brazilian real 3.258 2.704 20.5% 2.869 2.508 14.4%

Thai Baht 45.178 40.347 12.0% 40.830 39.928 2.3%

Angolan kwanza 133.830 126.263 6.0% 127.801 122.771 4.1%

Moroccan dirham 11.237 11.130 1.0% 11.109 11.009 0.9%

Pound sterling 0.834 0.816 2.2% 0.849 0.811 4.7%

Canadian dollar 1.467 1.314 11.7% 1.368 1.284 6.6%

Mozambique metical 40.840 38.911 5.0% 39.662 36.151 9.7%

Mexican peso 17.912 17.185 4.2% 16.966 16.903 0.4%

Saudi Riyal (Saudi Arabia)/ SAR 5.167 4.950 4.4% 4.982 4.842 2.9%

Chilean Peso 722.020 632.911 14.1% 661.113 630.510 4.9%

xvi) Income tax

Income tax for the period includes the current and deferred income tax, in accordance with IAS 12. Current income tax is calculated

based on taxable profits and taking into consideration the local tax laws applicable to each Group company.

Deferred tax is recognized on timing differences arising between the carrying amounts of assets and liabilities in the financial

statements and the corresponding tax base used in the calculation of taxable profit, as well as on certain tax credits attributed to the

Group, and is accounted for using the balance sheet liability method.


Deferred tax assets and liabilities are measured and annually revalued at the tax rates expected to apply in the period in which the

liabilities are settled or the assets realized, based on tax rates (and tax laws) enacted or substantively enacted.

Deferred tax assets are generally recognized for all deductible timing differences to the extent that it is probable that taxable profits

will be available against which those deductible timing differences can be utilized. The carrying amount of deferred tax assets is

reviewed at each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be

available to allow for all or part of the asset to be recovered.

The deferred tax amount resulting from transactions or events recognized directly in equity is also registered directly in equity, not

affecting the income for the year.

xvii) Borrowing costs

Borrowing costs are recorded in the income statement on an accrual basis.

Borrowing cost related to loans obtained to finance the construction of tangible fixed assets and some inventories (real estate projects)

are capitalized, forming part of the asset’s carrying amount. The capitalization begins when the preparation of the construction activity

starts and ceases when the asset enters into use, at the end of its production or construction or when the project is suspended.

xviii) Provisions

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable

that the Group will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. These

provisions are reviewed at each reporting period and are adjusted to reflect the best estimate at the date, taking into consideration

all the risks and uncertainties inherent to such estimates. When a provision is determined using the future cash flows estimated to

settle the present obligation, its carrying amount is the present value of those cash flows.

The provisions recognized by the Group result, mainly, from:

i) Construction guarantees

The Group recognizes a provision for the costs estimated to be incurred in the future with construction guarantees provided on metallic

structures and solar parks and wind farms sold. This provision is recognized on the date of the sale or when the service is rendered,

thus affecting the profit made on same. At the end of the guarantee period (5 years on average) any remaining amount of provision

is reversed in the income statement.

ii) Onerous contracts

The Group recognizes a provision for onerous contracts when, for construction contracts in progress, it is established that the costs

to be incurred to satisfy the obligation assumed exceed the future economic benefits. This analysis is made on a contract by

contract basis, based on information provided by the project managers.

iii) Legal claims in progress

A provision for legal claims in progress is recognized when there is a reliable estimate of the costs to be incurred as a consequence

of lawsuits proposed by third parties.

iv) Financial assets accounted for under the equity method

A provision is recognized whenever an associate or jointly controlled company has a negative equity and it is considered that the

Group has assumed responsibilities over and above its share of the capital.

xix) Government grants

Grants received for staff training programmes and new hiring actions are recognized as income in the same period the relevant

expenses are incurred.

Grants received to finance tangible fixed asset investments are recorded as deferred income and are recognized as income, in the

caption ‘Other operating income’, on a straight-line basis over the expected useful lives of the underlying assets.

ANNUAL REPORT 2013

xx) Impairment of tangible and intangible assets excluding Goodwill

At each reporting period and whenever an event or change in circumstance is identified, the Group reviews the carrying amounts of

its tangible and intangible assets to determine whether there is any indication that these assets are impaired. When the asset

carrying amount is greater than its recoverable amount an impairment loss is recognized and recorded in the caption ‘Provisions

and impairment losses’. The recoverable amount is the higher of fair value less costs to sell and value in use. The fair value less

costs to sell is the amount that could be obtained in an arms-length transaction. Value in use is calculated by assessing the

estimated future cash flows generated by the asset discounted to the present value, taking into consideration its residual value.

When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of

the cash-generating unit to which the asset belongs.

The reversal of impairment losses recorded in previous years is recognized when the underlying reasons that caused that entry are

no longer applicable and, consequently, the asset is no longer impaired. The reversal of impairment losses is recognized in the

income statement as an operating result. However, the reversal of an impairment loss is performed just up to the limit of the amount

that would be recorded through the historical cost, or through the revalued amount, net of amortization and depreciation, if the

impairment loss had not been recorded in previous years.

xxi) Employee benefits

Variable remunerations

According to the statutes of some Group companies, the shareholders of those companies approved at the General Meeting or a

Remuneration Committee elected by shareholders, establish the fixed and variable remuneration to be distributed to members of

governing bodies . Bonus payments are recorded in the period to which they relate.

xxii) Statement of financial position presentation

Assets to be realized and liabilities to be settled twelve months after the reporting date are classified as non-current. Likewise, given

their nature, ‘Deferred taxes’ and ‘Provisions’ are classified as non-current in the statement of financial position.

xxiii) Contingent assets and liabilities

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.

Contingent assets are not recorded in the consolidated financial statements but are disclosed when future economic benefits are

probable.

xxiv) Consolidated cash flow statement

The consolidated cash flow statement is prepared using the direct method, according to IAS 7. The Group classifies as ‘Cash and cash

equivalents’ applications which mature in less than three months and which are subject to an insignificant risk of change in value.

The consolidated cash flow statement is classified into operating, investing and financing activities. Operating activities include cash

receipts from clients, cash payments to suppliers, cash payments to and on behalf of employees and other operating activities’

payments and receipts. Investing activities’ cash flows include, essentially, payments and receipts related with acquisitions and

sales of tangible and intangible assets and investments.

Financing activities’ cash flows include, essentially, payments and receipts of loans and borrowings, financial lease contracts and

dividend payments.

xxv) Subsequent events

Events occurring after the reporting period that provide further evidence of conditions existing at the end of the reporting period

(“adjusting events”), are recognized in the consolidated financial statements. Events occurring after the reporting period that are

indicative of conditions occurring after the end of the reporting period (“non-adjusting events”), if material, are disclosed in the notes

to the consolidated financial statements.

xxvi) Judgements and estimates


In the process of preparing the Group’s consolidated financial statements the Board of Directors used its best knowledge and

accumulated experience in past and / or current events in making certain assumptions as to future events.

The most significant accounting estimates reflected in the consolidated financial statements for the years ended on 31 December

2013 and 2012 include:

- Useful lives of the tangible assets;

- Fair value of the investment properties;

- Impairment analysis of goodwill;

- Recognition of provisions and impairment losses;

- Revenue recognition on construction contracts and guarantees;

- Recognition of deferred tax assets arising on tax losses;

- Fair value of derivatives.

The estimates used were based on the best information available during the preparation of consolidated financial statements and

on the best knowledge of past and present events. Although future events are neither controlled by the Group nor foreseeable,

some could occur and have an impact on the estimates. Changes to the estimates used by Management, that occur after the date

of these consolidated financial statements, will be recognized in net income, in accordance with IAS 8, using a prospective

methodology.

xxvii) Financial risk management

Financial markets include a high degree of uncertainty, to which the Group is exposed. This uncertainty is translated into several

risks, namely price risk, currency risk, interest rate risk, liquidity risk and credit risk.

a) Price Risk

The volatility of raw-material prices constitutes a risk for the Group, both in the Construction as well as in the Solar segments. The

changes in the price of steel and aluminium impact the operational activity of the metallic construction business area, as do the

changes in market prices for solar panel, which may also influence the solar activity. Martifer has sought to mitigate this risk by

including clauses in its contracts with customers that allow it to pass on raw-material price fluctuations and by negotiating fixed

prices for large-scale projects with its suppliers.

b) Currency Risk





The Group’s currency risk management policy aims to reduce the sensitivity of its results to exchange rate variations.

Subsidiaries seek to use their local currency in their day-to-day operational activities. Likewise, loans contracted by foreign

subsidiaries are preferably denominated in their local currency .

Certain operational activities of the Group are exposed to changes in foreign exchange rates vis-à-vis their local currency. The

prices of some raw-materials, namely steel and aluminium are generally expressed or indexed to the US Dollar, which can have an

impact on the Group’s results. It is possible, to a large extent, to include these variations in the sales prices. Where this is not

possible, the Group hedges this exposure by contracting foreign exchange derivative contracts.

In so far as the currency risk arising on the translation of Group investments in foreign subsidiaries that report in a currency other than

the Euro is concerned, the Group seeks to manage it through natural hedging, using the companies’ balance sheets, namely seeking

finance in their local currency. In parallel, the Group seeks to mitigate this impact through the diversification of the countries it is present

in.

The relevant amounts of the Group’s assets and liabilities recorded in a currency other than the Euro are as follows:

ANNUAL REPORT 2013

1 € EQUALS: ASSETS LIABILITIES

FY 2013 FY 2012 FY 2013 FY 2012

New leu (Romania) 178,617,896 181,131,249 84,573,826 101,300,595

Zloty (Poland) 60,902,163 89,036,932 80,031,053 103,006,951

US Dollar (U.S.A.) 114,478,896 116,977,033 110,218,307 113,137,401

Kwanza (Angola) 45,813,174 50,023,849 35,838,507 39,185,420

Real (Brazil) 72,434,209 74,152,244 48,267,550 48,866,717

Moroccan dirham (Morocco) 766,620 1,941,673 1,337,244 2,133,656

Australian dollar (Australia) 832,131 9,649,719 4,110,628 9,005,254

Czech koruna (Czech Republic) 364,564 415,823 239,859 315,876

Canadian dollar (Canada) 382,910 2,815,218 361,210 2,696,593

Pound sterling (United Kingdom) 46,284,346 32,232,863 40,846,792 31,236,706

Mexican Peso (Mexico) 10,509,694 455,779 14,685,844 703,785

Saudi Riyal 13,224,670 2,512,937 13,197,907 2,803,625

Hryvnia (Ukraine) 1,726,114 2,098,453 1,010,205 1,727,451

If a negative change of 1p.p. in the foreign exchange rates of the currencies identified above were to occur, the likely impact on the

Group’s financial statements may be shown as follows (amounts in Euro):

1 € EQUALS: LOCAL CURRENCY CHANGE AGAINST

EURO

FY 2013 FY 2012

IMPACT ON PROFITS

IMPACT ON

EQUITY

IMPACT ON PROFITS

IMPACT ON

EQUITY

New leu (Romania) 1% 70,936 (931,129) 16,267 (790,403)

Zloty (Poland) 1% 80,582 189,395 159,215 138,317

US Dollar (U.S.A.) 1% 87,183 (42,184) 37,324 (38,016)

Pound sterling (United Kingdom) 1% (42,039) (53,837) (4,473) (9,863)

Czech koruna (Czech Republic) 1% (680) (1,235) 820 (990)

Moroccan dirham (Morocco) 1% 3,848 5,650 (772) 1,901

Australian dollar (Australia) 1% 68,578 32,460 80,461 (6,381)

Kwanza (Angola) 1% (5,937) (98,759) (20,090) (107,311)

Real (Brazil) 1% (21,649) (239,274) (13,468) (250,352)

Canadian dollar (Canada) 1% 5,912 (215) (331) (1,174)

Mexican Peso (Mexico) 1% 40,171 41,348 1,579 2,456

Saudi Riyal (Saudi Arabia) 1% (3,178) (265) 3,465 2,878

Hryvnia (Ukraine) 1% (3,750) (7,088) (3,605) (3,673)




The Group relies on external financing to fund its activity and is exposed to interest rate risk as a significant part of its borrowings

are indexed to market interest rates.

In the more significant medium- and long-term loans, the Group relies on fixed interest rate loans or uses interest rate derivatives to

hedge exposure to interest rate risk on said loans. The amounts, interest due dates and repayment schedules of the loans

underlying the interest rate derivatives are identical to those of the loans they hedge, and, as such, configure perfect hedging

correlations.

The Group’s interest rate sensitivity analysis to changes of 1 p.p., more or less, is shown in Note 30 ‘Borrowings’.

d) Liquidity risk

Liquidity risk reflects the Group’s ability to satisfy its financial responsibilities with the available financial resources.

The Group manages its liquidity risk in two main ways:

On the one hand, it seeks to ensure that its financing structure adequately reflects the nature of its obligations.

Investments in fixed assets, including financial investments, are funded through long-term facilities (equity and long-term

loans) whilst short-term obligations are funded through short-term loans. Long-term loans are generally contracted for

periods of 5 to 7 years, generally with a grace period of the principal of 1 to 2 years.


On the other hand, subsidiaries have contracted, with financial institutions, short-term facilities for amounts that assure

their liquidity. Subsidiaries also have adequate amounts of cash to cover their short-term commitments.

The liquidity risk is analysed in Note 30 ‘Borrowings’.

e) Credit risk


economies can influence the Group’s client default rate, with possible negative impacts on the Group’s results.

Aware of this reality, the Group seeks to evaluate all its clients’ credit risk in order to establish credit limits, with the ultimate purpose

of ensuring the collection of the amounts due within the periods negotiated.

With this objective in mind, the Group uses credit rating agencies, regularly analyses risk and credit control, and collects from and

manages cases in litigation, procedures which are all considered essential to manage the credit granted and to minimize the risk of

client default.

xxviii) Capital Management

The objective of the Group, in relation to capital management, is to maintain an optimal capital structure, through a prudent use of

financial debt, seeking, in this manner, the necessary reduction of its cost.

The financial debt structure is analysed periodically, taking into consideration factors such as the borrowing costs and the

investment needs of the Group’s operational companies.

The indicator used to analyse the capital structure is the Financial Autonomy ratio. The Board has considered 20% indicative of an

optimal structure, given the characteristics of the company and the economic sector to which it belongs. The Board considers that,

depending on the objective conditions in the economic environment, in general, and in this sector, in particular, that ratio should,

under normal market conditions, ideally range between 20% - 30%. However, given the current extremely adverse economic and

sectorial environments, Management considers that, under these conditions, it is reasonable for this ratio to drop to between 15% -

20%.

Financial Autonomy evolved as follows:

FY 2013 FY 2012

Equity 139,692,012 227,255,223

Assets 787,773,044 976,375,200

Financial Autonomy 18% 23%

The decrease in this ratio is related with the decrease in Equity in 2013, in large measure due to the negative income generated by

the Group during the year.

ANNUAL REPORT 2013

2. GROUP COMPANIES INCLUDED IN THE CONSOLIDATED FINANCIAL

STATEMENTS

The Group companies included in the consolidated financial statements, their consolidation methods, registered offices and

percentage of share capital held by the Group, at 31 December 2013 and 2012, are as follows:

COMPANIES CONSOLIDATED USING THE FULL CONSOLIDATION METHOD

PERCENTAGE OF SHARE CAPITAL HELD FY 2012

COMPANY HEAD OFFICE DESIGNATION DIRECTLY INDIRECTLY COMPANY HEAD

OFFICE

Martifer SGPS, S.A. Oliveira de Frades Martifer SGPS Holding

Martifer Inovação e Gestão, S.A. Oliveira de Frades Martifer Inovação 100.00% - 100.00% 100.00%

Martifer Gestiune Si Servicii, S.R.L. Bucharest Martifer Inovação Roménia

100.00% - 100.00% 100.00%

Martifer Metallic Constructions SGPS, S.A. Oliveira de Frades Martifer Metallic Constructions

100.00% - 100.00% 100.00%

Martifer - Construções Metalomecânicas, S.A. Oliveira de Frades Martifer Construções - 100.00% 100.00% 100.00%

Martifer Mota-Engil Coffey Construction Joint Venture Limited

Dublin MMECC - 60.00% 60.00% 60.00%

Martifer – Construcciones Metálicas España, S.A. Madrid Martifer Espanha - 100.00% 100.00% 100.00%

Martifer – Construções Metálicas Angola, S.A. Luanda Martifer Angola - 78.75% 78.75% 78.75%

Martifer Construction Limited Dublin Martifer Irlanda - 100.00% 100.00% 100.00%

Martifer Polska Sp. Zo.o. Gliwice Martifer Polska - 100.00% 100.00% 100.00%

Martifer Constructions, SAS Rungis Martifer França - 100.00% 100.00% 100.00%

Martifer Constructii SRL Bucharest Martifer Constructii - 100.00% 100.00% 100.00%

Park Logistyczny Biskupice Gliwice Biskupice - 100.00% 100.00% 100.00%

Martifer Konstrukcje Sp. Z o.o. Gliwice Martifer Konstrukcje - 100.00% 100.00% 100.00%

Martifer Slovakia S.R.O. Bratislava Martifer Slovakia - 100.00% 100.00% 100.00%

Sociedade de Madeiras do Vouga, S.A. Albergaria-a-Velha Madeiras do Vouga - 100.00% 100.00% 100.00%

Martifer - Gestão de Investimentos, S.A. Oliveira de Frades MGI - 100.00% 100.00% 100.00%

Nagatel Viseu, Promoção Imobiliária, S.A. Oliveira de Frades Nagatel Viseu - 100.00% 100.00% 100.00%

Martifer Retail & Warehousing Angola, S.A. Luanda Martifer Retail Angola - 100.00% 100.00% 100.00%

Martifer - Alumínios, S.A. Oliveira de Frades Martifer Alumínios - 100.00% 100.00% 100.00%

Martifer Alumínios Angola, S.A. Luanda Martifer Alumínios Angola

- 100.00% 100.00% 100.00%

Martifer Aluminium Pty, Ltd Sidney Sassall - 100.00% 100.00% 100.00%

Martifer Aluminium Limited Dublin Martifer Aluminium Irlanda

- 100.00% 100.00% 100.00%

Martifer Aluminium UK Limited London Martifer Aluminium Reino Unido

- 100.00% 100.00% 100.00%

Martifer Aluminium SAS Rungis Martifer Aluminium França

- 100.00% 100.00% -

Martifer Alumínios Ltda São Paulo Martifer Alumínios Brasil

- 99.99% 99.99% -

Martifer UK Limited London Martifer UK - 100.00% 100.00% 100.00%

MT Construction Maroc, S.A.R.L. Tânger Martifer Marrocos - 100.00% 100.00% 100.00%

Martifer - Construções Metálicas, Ltda. Fortaleza Martifer Brasil - 99.80% 99.80% 100.00%

Saudi Martifer Constructions LLC Riyadh Martifer Arábia Saudita

- 100.00% 100.00% 100.00%

Martifer Beteiligungsverwaltungs GmbH Vienna Martifer GmbH 100.00% - 100.00% 100.00%

M City Gliwice Sp. Zo.o Gliwice M City Gliwice - 100.00% 100.00% 52.80%

Martifer Energy Systems II, SGPS, S.A. Oliveira de Frades Martifer Energy Systems II

100.00% - 100.00% 100.00%

Martifer Energia S.R.L. Bucharest Martifer Energia Roménia

- 100.00% 100.00% 100.00%

Martifer Energia LLC Kiev Martifer Energia Ucrânia

- 100.00% 100.00% 100.00%

Martifer Wind Energy Systems LLC San Angelo TX Martifer Wind USA - 100.00% 100.00% 100.00%

Martifer Energy Systems PTY Cape City Martifer Energia África do Sul

- 85.00% 85.00% 85.00%

Navalria – Docas, Construções e Reparações Navais, S.A.

Aveiro Navalria - 100.00% 100.00% 100.00%

Gebox, S.A. Ílhavo Gebox - 100.00% 100.00% 100.00%

West Sea - Estaleiros Navais, Lda. Oliveira de Frades West Sea - 100.00% 100.00% -




OFFICE

Martifer Global SGPS, S.A. Oliveira de Frades Martifer Global 100.00% - 100.00% 100.00%

Martifer Construcciones Peru, S.A. Lima Martifer Peru - 100.00% 100.00% -

Global Holding Limited Zebbug Global Holding Limited

- 100.00% 100.00% -

Global Engineering & Construction Limited Zebbug Global Engineering - 100.00% 100.00% -

Martifer Solar SGPS, S.A. Oliveira de Frades Martifer Solar SGPS 100.00% - 100.00% 100.00%

Martifer Solar, S.A. Oliveira de Frades Martifer Solar - 55.00% 55.00% 55.00%

Martifer Solar Sistemas Solares, S.A. Madrid Martifer Solar Sistemas Solares

- 55.00% 55.00% 55.00%

Solar Parks Construccion Parques Solares ETVE, S.A.

Madrid Solar Parks - 55.00% 55.00% 55.00%

Parque Solar Seseña III, S.L. Madrid Seseña III - 55.00% 55.00% 55.00%

MTS Solar Sistemas Solares, S.A. Mexico City Martifer Solar México - 54.45% 54.45% 54.45%

Martifer Solar Chile Holding, Lda Santiago do Chile Martifer Solar Chile - 55.00% 55.00% 55.00%

Martifer Solar Chile Operaciones Limitada Santiago do Chile Solar Chile Operaciones

- 55.00% 55.00% 55.00%

Martifer Solar Sistemas Solares Equador S.A. Sangolquí Martifer Solar Equador

- 54.45% 54.45% 54.45%

Martifer Solar Servicios Mexico Mexico City Martifer Solar Servicios Mexico

- 55.00% 55.00% -

Martifer Solar S.R.L. Milão Martifer Solar Itália - 55.00% 55.00% 55.00%

MTS1 S.R.L. Syracuse MTS1 - 55.00% 55.00% 55.00%


MTS3 S.R.L. Syracuse MTS3 - - - 55.00%

MTS4 S.R.L. Syracuse MTS4 - - - 55.00%

Martifer Solar RO S.R.L. Bucharest Martifer Solar Roménia

- 55.00% 55.00% 55.00%

Martifer Solar Inc. S. Francisco CA Martifer Inc. - 55.00% 55.00% 55.00%

Martifer Solar USA, Inc. Santa Monica CA AEM - 54.61% 54.61% 34.93%

Martifer Aurora Solar, LLC Santa Monica CA Solar Aurora 1) - 54.07% 54.07% 34.58%

MT Silverado Fund I LLC S. Francisco CA Silverado 1) - 31.42% 31.42% 31.42%

Martifer Solar Finance LLC S. Francisco CA Martifer Solar Finance - 55.00% 55.00% 55.00%

Martifer Solar Hellas, A.T.E. Athens PVI 1) - 39.13% 39.13% 39.13%

Martifer Solar Angola Luanda Martifer Solar Angola 1)

- 41.25% 41.25% 41.25%

Martifer Solar N.V. Deerlijk Martifer Solar Bélgica - 55.00% 55.00% 55.00%

Martifer Solar UK Limited London Martifer Solar UK - 55.00% 55.00% 55.00%

Martifer Solar S.A.S. Lyon Martifer Solar França - 55.00% 55.00% 55.00%

Martifer Solar CZ Praga Martifer Solar República Checa

- 55.00% 55.00% 55.00%

Home Energy France SAS Lyon Home Energy França - 55.00% 55.00% 55.00%

PVGlass, S.A. Oliveira de Frades PVGlass - - - 55.00%

PVGlass S.r.l Milão PVGlass Itália - 55.00% 55.00% 55.00%

MPrime Solar Solutions, S.A. Oliveira de Frades Mprime - 55.00% 55.00% 55.00%

MPrime Italia S.r.l Oliveira de Frades MPrime Itália - - - 55.00%

MPrime GMBH Munique MPrime GMBH - 55.00% 55.00% 55.00%

Sol Cativante, Lda. Sever do Vouga Sol Cativante - 55.00% 55.00% 55.00%

Sol Cativante VII, Lda. Viseu Sol Cativante VII - - - 55.00%

Martifer Solar Investments, B.V. Amsterdam Martifer Solar Holanda - 55.00% 55.00% 55.00%

Martifer Solar Canadá, Ltd. Toronto Martifer Solar Canadá - 55.00% 55.00% 55.00%


Martifer Solar SK s.r.o. Dolny Kubin Martifer Solar Eslováquia

- 55.00% 55.00% 55.00%

Ginosa Solar Farm, S.R.L. Roma Ginosa Solar Farm - 55.00% 55.00% 55.00%

Solar Spritehood S.R.L Roma Solar Spritehood - 55.00% 55.00% 55.00%

MTS7, S.R.L. Roma MTS7 - 55.00% 55.00% 55.00%

Canopy - Naos Paris Canopy Naos - 55.00% 55.00% 55.00%

Eviva Mepe Athens Eviva Grécia - - - 55.00%

MTS Trewidland Solar, Ltd London MTS Trewidland Solar - - - 55.00%

Steadfast Fairview Solar, Ltd Andover Steadfast Fairview Solar

- 55.00% 55.00% 55.00%

Steadfast Molland Solar, Ltd Andover Steadfast Molland Solar

- 55.00% 55.00% 55.00%

Steadfast Apsley Solar, Ltd Andover Steadfast Apsley Solar

- - - 55.00%

ANNUAL REPORT 2013



OFFICE

Martifer Solar UA, LLC Kyiv Martifer Solar Ucrânia - 55.00% 55.00% 55.00%

Inspira Martifer Solar Limited Mumbai Inspira Martifer Solar 1)

- 28.05% 28.05% 28.05%

Societé Developpement Local SA Dakar Martifer Solar Senegal 1)

- 28.05% 28.05% 28.05%

Martimak Solar Besiktas Martimak1) - 44.00% 44.00% 44.00%

Martiper Solar Besiktas Martiper1) - 44.00% 44.00% 44.00%

Martifer Solar Singapura PTE. LTD. Singapura Martifer Solar Singapura

- 55.00% 55.00% 55.00%

Martifer Solar Japan KK Tóquio Martifer Solar Japan - 55.00% 55.00% -

EVIVA SOLAR 1 LTD Athens Eviva Solar 1 - 54.90% 54.90% 54.90%

EVIVA SOLAR 2 LTD Athens Eviva Solar 2 - 54.90% 54.90% 54.90%

MTS Francis Court Solar Limited London MTS Francis3) - 55.00% 55.00% -

MTS Spittleborough Solar Limited London MTS Spittleborough - 55.00% 55.00% -

MTS Tonge Solar Limited London MTS Tonge - 55.00% 55.00% -

MTS Rydon Solar Limited London MTS Rydon - 55.00% 55.00% -

LRCC – La Rad Campo Charro – Energias Renováveis, Lda.

São Martinho do Porto

LRCC - - - 55.00%

Martifer Solar MZ, S.A. Maputo Martifer Solar Moçambique 1)

- 28.05% 28.05% 28.05%

Greencoverage Unipessoal, Lda. Oliveira de Frades Greencoverage - 55.00% 55.00% 55.00%

Martifer Solar, Ltda Pindamonhangaba Martifer Solar Brasil - 54.45% 54.45% 54.45%

Visiontera Unipessoal, Lda Oliveira de Frades Visiontera - 55.00% 55.00% -

Inovsun, Lda. Oliveira de Frades Inovsun - 55.00% 55.00% 55.00%

Martifer Solar Middle East Dubai Martifer Solar Middle East

- 55.00% 55.00% -

Belive in Bright Unipessoal, LDA. Oliveira de Frades Belive in Bright - 55.00% 55.00% -

Montidílico Unipessoal, LDA. Oliveira de Frades Montidílico - 55.00% 55.00% -

Martifer Renewables SGPS, S.A. Oliveira de Frades Martifer Renewables SGPS

100.00% - 100.00% 100.00%

Martifer Renewables, S.A. Oliveira de Frades Martifer Renewables SA

- 100.00% 100.00% 100.00%

Martifer Renovables ETVE, S.A.U. Madrid Martifer Renovables - 100.00% 100.00% 100.00%

Eurocab FV 1 S.L. Madrid Eurocab 1 - 100.00% 100.00% 100.00%



















Eviva Energy S.R.L. Bucharest Eviva Roménia - 100.00% 100.00% 100.00%

Eviva Nalbant S.R.O. Bucharest Eviva Nalbant - 100.00% 100.00% 99.00%

Eviva Agighiol S.R.L. Bucharest Eviva Agighiol - 99.00% 99.00% 99.00%

Eviva Casimcea S.R.O. Bucharest Eviva Casimcea - 99.00% 99.00% 99.00%

Premium Management Consulting, S.R.L. Bucharest Premium Management

- 85.00% 85.00% 85.00%

MW Topolog, S.R.L. Bucharest MW Topolog - 99.00% 99.00% 99.00%

Martifer Renewables, S.A. Gliwice Eviva Polónia - 100.00% 100.00% 100.00%

Martifer Renewables Pty, Ltd. Sidney Eviva Austrália - 100.00% 100.00% 100.00%

Eviva Beteiligungsverwaltungs GmbH Vienna Eviva GmbH - 100.00% 100.00% 100.00%

Eviva Hidro S.R.L. Bucharest Eviva Hidro 1.00% 99.00% 100.00% 100.00%




OFFICE

Martifer Deutschland GmbH Berlin Martifer Deutschland - 100.00% 100.00% 100.00%

Martifer Renewables Bippen GmbH Berlin Eviva Bippen - - - 100.00%

Wind Farm Odrzechowa Sp. Zo.o Gliwice Wind Odrzechowa - 100.00% 100.00% 100.00%

Energia Wiatrowa Sp. Zo.o Gliwice Energia Wiatrowa 3) - - - 100.00%

Eviva Gizalki Sp. Zo.o Miastko Eviva Gizalki - 100.00% 100.00% 72.00%

Wind Farm Bukowsko Sp. Zo.o Gliwice Wind Farm Bukowsko - 100.00% 100.00% 100.00%

Wind Farm Markowa Sp. Zo.o Gliwice Wind Farm Markowa - 100.00% 100.00% 100.00%

Wind Farm Lada Sp. Zo.o Gliwice Wind Farm Lada - 100.00% 100.00% 100.00%

Wind Farm Jawornik Sp. Zo.o Gliwice Wind Farm Jawornik - 100.00% 100.00% 100.00%

Wind Farm Piersno Sp. Zo.o Gliwice Wind Farm Piersno - 100.00% 100.00% 100.00%

Wind Farm Oborniki Sp. Zo.o Gliwice Wind Farm Oborniki - 100.00% 100.00% 100.00%

Martifer Renewables Brazil B.V. Amsterdam Renewables Holanda - 100.00% 100.00% 100.00%

Vesto EAD Varna Vesto - 100.00% 100.00% 100.00%

DVP1 Limited Varna DVP1 - 100.00% 100.00% 100.00%

DVP2 Limited Varna DVP2 - 100.00% 100.00% 100.00%

Martifer Renewables Investments ETVE, S.A. Madrid Eurocab 21 - 100.00% 100.00% 100.00%

Martifer Renewables Italy BV Amsterdam Renewables Italy Holanda

- 100.00% 100.00% 100.00%

Martifer Renewables Brasil Participações LTDA Fortaleza Martifer Renewables Brasil

- 100.00% 100.00% 100.00%

Martifer Renováveis - Geração de Energia e Participações S.A.

Fortaleza Ventania - 55.00% 55.00% 55.00%

Eólica Cajueiro da Praia, Ltda . Fortaleza Cajueiro - 55.00% 55.00% 55.00%

Eólica Coqueirais, Ltda. Fortaleza Cacimbas - 55.00% 55.00% 55.00%

SBER – Sociedade Brasileira de Energias Renováveis, Ltda.

Fortaleza SBER 1) - 41.25% 41.25% 41.25%

Melosa – Geração de Energia e Participações, Ltda.

Fortaleza Melosa - 55.00% 55.00% 55.00%

Eólica Paraipaba, Ltda . Fortaleza Paraipaba - 55.00% 55.00% 55.00%

Eólica Chapadão, Ltda. Fortaleza Chapadão - 55.00% 55.00% 55.00%

Rosa dos Ventos - Geração e Comercialização de Energia, S.A

Fortaleza Rosa dos Ventos2) - 55.00% 55.00% 53.63%

Eólica Macaúbas, Ltda. Fortaleza Macaúbas - 54.99% 54.99% -

Eólica Sobradinho, Ltda. Fortaleza Sobradinho - 54.99% 54.99% -

MSPAR Energia e Participações, SA Barueri MSPAR - 55.00% 55.00% -

Prio Agriculture BV Delft Prio Holanda - - - 100.00%

Porthold Project Development BV Amsterdam Porthold - - - 55.00%

Martifer Renewables O&M Sp. z o.o. Gliwice Martifer Renewables O&M

- 52.00% 52.00% -

Ventinveste Indústria SGPS, S.A. Oliveira de Frades Ventinveste Indústria 4)

- - - 46.00%

1) The consolidation of these companies using the full consolidation method is a consequence of the Group having stepped shareholdings, but exercising control at each

level.

2) This company was classified as an Assets held for sale (Note 28).

3) Its prior designation was MTS Downs Farm Solar Limited.

4) The change from full consolidation method to equity method in 2013 results of the non control of financial and operational policies of this company.

ANNUAL REPORT 2013

COMPANIES CONSOLIDATED USING THE EQUITY METHOD

The companies consolidated using the equity method; their registered offices and the percentage of share capital held by the Group

are as follows:


COMPANY HEAD OFFICE DESIGNATION DIRECTLY INDIRECTLY TOTAL TOTAL

Metallic Construction

Associate companies:

Liszki Green Park, Sp. Zo.o Gliwice Liszki Green Park - 45.00% 45.00% 45.00%

Martifer Amal, S.A. Nacala Martifer Amal - 35.00% 35.00% 35.00%

Martifer Amal, S.A. Oliveira de Frades

Martifer Amal - 30.00% 30.00% -

Joint control companies:

Promoquatro – Investimentos Imobiliários, Lda.

Oliveira de Frades

Promoquatro - 50.00% 50.00% 50.00%

M City Bialystok Sp. Zo.o Gliwice M City Bialystok - 50.00% 50.00% 50.00%

M City Radom Sp. Zo.o Gliwice M City Radom - 50.00% 50.00% 50.00%

M. City Szczecin Sp. Z o.o. Gliwice M City Szczecin - 50.00% 50.00% 50.00%

Solar


Parque Solar Seseña I, S.L. Madrid Seseña I - 20.63% 20.63% 20.63%

Canaverosa Renovables, SL Madrid Canaverosa - 26.94% 26.94% 26.94%

Empresa de Energia Renovable Maria del Sol Norte S.A.

Santiago Maria del Sol - 26.95% 26.95% 26.95%

MSN Solar Uno SpA Santiago MSN Solar Uno - 26.95% 26.95% -

MSN Solar Dos SpA Santiago MSN Solar Dos - 26.95% 26.95% -

MSN Solar Tres SpA Santiago MSN Solar Tres - 26.95% 26.95% -

MSN Solar Cuatro SpA Santiago MSN Solar Cuatro - 26.95% 26.95% -

MSN Solar Cinco SpA Santiago MSN Solar Cinco - 26.95% 26.95% -

FTP Solar LLC New York FTP Solar - 20.57% 20.57% -

MTS3 S.R.L. Syracuse MTS3 - 26.95% 26.95% -

Outros


Nutre SGPS, S.A. Oliveira de Frades

Prio SGPS 49,00% - 49.00% 49.00%

Nutre, S.A. Oliveira de Frades

Prio Foods - 49.00% 49.00% 49.00%

Nutre - Industrias Alimentares, S.A. Oliveira de Frades

Prio Alimentar - 49.00% 49.00% 49.00%

Nutre MZ. S.A. Maputo Nutre Moçambique - 49.00% 49.00% 49.00%

Nutre Farming, S.R.L. Bucharest Nutre Farming Roménia

- 49.00% 49.00% 49.00%

Prio Agromart S.R.L. Bucharest Prio Agromart - 49.00% 49.00% 49.00%

Prio Balta S.R.L. Bucharest Prio Balta - 49.00% 49.00% 49.00%

Prio Facaieni S.R.L. Bucharest Prio Facaieni - 49.00% 49.00% 49.00%

Prio Ialomita S.R.L. Bucharest Prio Ialomita - 49.00% 49.00% 49.00%

Prio Rapita S.R.L. Bucharest Prio Rapita - 49.00% 49.00% 49.00%

Nutre Farming West Part S.R.L. Bucharest Nutre West Part - 49.00% 49.00% -

Prio Terra Agricola S.R.L. Bucharest Prio Terra Agricola - 49.00% 49.00% 49.00%

Prio Turism Rural S.R.L Bucharest Prio Turism Rural - 49.00% 49.00% 49.00%

Agromec Balaciu Bucharest Agromec Balaciu - 42.60% 42.60% 42.60%

Miharox S.R.L. Bucharest Miharox - 40.47% 40.47% 40.47%

Zimbrul. S.A. Bucharest Zimbrul - 49.00% 49.00% 49.00%

Agrozootehnica. S.A. Bucharest Agrozootehnica - 48.98% 48.98% 48.98%

Prio Agrotrans S.R.L. Bucharest Prio Agrotrans - 49.00% 49.00% 49.00%

Nutre Brasil LTDA S. Luís do Maranhão

Prio Foods Brasil - 49.00% 49.00% 49.00%

Prio Extractie S.R.L. Bucharest Prio Extractie - 22.05% 22.05% 22.05%

Prio Agro Industries. Sp. Z o.o. Gliwice Prio Polónia - 49.00% 49.00% 49.00%

Prio Biocombustibil S.R.L. Bucharest Prio Biocombustibil - 22.05% 22.05% 22.05%

Prio Meat S.R.L Bucharest Prio Meat - 49.00% 49.00% 49.00%

Prio Foods – AJFS Construções, ACE Lisbon Prio Foods ACE - 24.50% 24.50% 24.50%

Nutre Farming B.V. Amsterdam Nutre Farming - 49.00% 49.00% 49.00%

Bunge Prio Cooperativa U.A. Amsterdam Bunge Prio - 22.05% 22.05% 22.05%



COMPANY HEAD OFFICE DESIGNATION DIRECTLY INDIRECTLY TOTAL TOTAL

Cooperativa

Bunge Roménia S.R.L. Buzau Bunge Roménia - 22.05% 22.05% 22.05%

Centralrest, Lda Ilhavo Centralrest 1)

- 9.80% 9.80% 9.80%

Prio Agriculture, B.V. Delft Prio Holanda - 49.00% 49.00% -

Porthold Project Development BV Amsterdam Porthold - 49.00% 49.00% -

Fertilis Agro-Indústrias, Lda Luanda Fertilis - 29.40% 29.40% -

Prio Energy SGPS. S.A. Oliveira de Frades

Prio Energy SGPS 1)

10,00% - 10.00% 49.00%

Prio Biocombustíveis. S.A. Oliveira de Frades

Prio Biocombustíveis 1)

- 10.00% 10.00% 49.00%

Prio Energy. S.A. Oliveira de Frades

Prio Energy 1)

- 10.00% 10.00% 49.00%

Mondefin Coimbra Mondefin 1)

- 10.00% 10.00% 49.00%

Prio Parque de Tanques de Aveiro, S.A. Oliveira de Frades

Prio Tanques 1)

- 10.00% 10.00% 49.00%

Prio.E-Electric, S.A. Oliveira de Frades

Prio.E-Electric 1)

- 10.00% 10.00% 49.00%

PRIO.E - Mobility Solutions, Lda _PT Oliveira de Frades

Park Charge 1)

- 10.00% 10.00% 49.00%

Prio. E – SGPS, S.A. Oliveira de Frades

Prio E SGPS 1)

- 10.00% 10.00% 49.00%

Share Motivation, Lda. Oliveira de Frades

Share Motivation 1)

- 10.00% 10.00% 49.00%

Joint control companies

Ventinveste, S.A. Lisbon Ventinveste SA 5,00% 41.00% 46.00% 46.00%

Ventinveste Eólica, SGPS, S.A. Lisbon Ventinveste Eólica - 46.00% 46.00% 46.00%

Ventinveste Indústria SGPS, S.A. Oliveira de Frades

Ventinveste Indústria 2)

- 46.00% 46.00% -

Parque Eólico de Torrinheiras, S.A. Lisbon PE Torrinheiras - 46.00% 46.00% 46.00%

Parque Eólico do Douro Sul, S.A. Lisbon PE Douro Sul - 46.00% 46.00% 46.00%

Parque Eólico do Pinhal do Oeste, S.A. Lisbon PE Pinhal do Oeste - 46.00% 46.00% 46.00%

Parque Eólico de Vale Grande. S.A. Lisbon PE Vale Grande - 46.00% 46.00% 46.00%

Parque Eólico de Vale do Chão, S.A. Lisbon PE Vale do Chão - 46.00% 46.00% 46.00%

Parque Eólico do Cabeço Norte, S.A. Lisbon PE Cabeço Norte - 46.00% 46.00% 46.00%

Parque Eólico da Serra do Oeste, S.A. Lisbon PE Serra do Oeste - 46.00% 46.00% 46.00%

Parque Eólico do Planalto, S.A. Lisbon PE Planalto - 46.00% 46.00% 46.00%

Eviva Dunowo, Sp. Z o.o. Gliwice Eviva Dunowo - 50.00% 50.00% 50.00%

SPEE 3 – Parque Eólico do Baião, S.A. Lisbon SPEE 3 - 50.00% 50.00% 50.00%

SPEE 2 – Parque Eólico de Vila Franca de Xira, S.A.

Oliveira de Frades

SPEE 2 - 50.00% 50.00% 50.00%

Macquarie Capital Wind Fund Pty Limited Sidney Macquarie - - - 50.00%

Parque Eólico da Penha da Gardunha, Lda.

Oliveira de Frades

PE Penha da Gardunha

- 50.00% 50.00% 50.00%

1) The consolidation of this company using the equity method is a consequence of the Group having joint control of its parent company, which, in turn, has joint

control of the investee.

2) The change from full consolidation method to equity method in 2013 results of the non control of financial and operational policies of this company.

During the periods ended on 31 December 2013 and 2012, the changes occurring in the consolidation perimeter were as follows:

Companies incorporated:

FY 2013 HEAD OFFICE


Subsidiary companies:

Martifer Aluminium SAS Rungis

Martifer Alumínios Ltda São Paulo

West Sea - Estaleiros Navais, Lda. Oliveira de Frades

Martifer Construcciones Peru, S.A. Lima

Global Holding Limited Zebbug

Global Engineering & Construction Limited Zebbug


Martifer Amal, S.A. (Portugal) Oliveira de Frades

ANNUAL REPORT 2013

FY 2013 HEAD OFFICE

Solar


Martifer Solar Servicios Mexico Mexico City

Martifer Solar Japan KK Tóquio

MTS Francis Court Solar Limited London

MTS Spittleborough Solar Limited London

MTS Tonge Solar Limited London

MTS Rydon Solar Limited London

Visiontera Unipessoal, Lda Oliveira de Frades

Martifer Solar Middle East Dubai

Belive in Bright Unipessoal, LDA. Oliveira de Frades

Montidílico Unipessoal, LDA. Oliveira de Frades


MSN Solar Uno SpA Santiago

MSN Solar Dos SpA Santiago

MSN Solar Tres SpA Santiago

MSN Solar Cuatro SpA Santiago

MSN Solar Cinco SpA Santiago

FTP Solar LLC New York

Renewables


Eólica Macaúbas, Ltda. Fortaleza

Eólica Sobradinho, Ltda. Fortaleza

MSPAR Energia e Participações, SA Barueri

Martifer Renewables O&M Sp. z o.o. Gliwice

Others:


Nutre Farming West Part S.R.L. Bucharest

FY 2012 HEAD OFFICE



Martifer Aluminium UK Limited London

Martifer Global SGPS, S.A. Oliveira de Frades


Martifer Amal, S.A. (Moçambique) Nacala

Solar


Martifer Solar Chile Holding, Lda Santiago do Chile

Martifer Solar Chile Operaciones Limitada Santiago do Chile

Martifer Solar Sistemas Solares Equador S.A. Sangolquí

Martifer Solar RO S.R.L. Bucharest

Martifer Solar Finance LLC S. Francisco CA

Sol Cativante VII, Lda. Viseu

MTS Trewidland Solar, Ltd London

MTS Trefinnick Solar, Ltd London

MTS Hatchlands Solar, Ltd. London

Martifer Solar UA, LLC Kyiv

Inspira Martifer Solar Limited Mumbai

Societé Developpement Local SA Dakar

Martimak Solar Besiktas

Martiper Solar Besiktas

Martifer Solar Singapura PTE. LTD. Singapura

EVIVA SOLAR 1 LTD Athens

EVIVA SOLAR 2 LTD Athens



FY 2012 HEAD OFFICE

Empresa de Energia Renovable Maria del Sol Norte S.A. Santiago

Others


Nutre Farming B.V. Amsterdam

Bunge Prio Cooperativa U.A. Amsterdam

Prio. E – SGPS, S.A. Oliveira de Frades

Companies acquired:

FY 2013

HEAD OFFICE

Others:


Fertilis Agro-Indústrias, Lda Luanda

FY 2012 HEAD OFFICE



M. City Szczecin Sp. Z o.o. Gliwice

Solar


Steadfast Fairview Solar, Ltd Andover

Steadfast Molland Solar, Ltd Andover

Steadfast Apsley Solar, Ltd Andover

LRCC – La Rad Campo Charro – Energias Renováveis, Lda. São Martinho do Porto

Greencoverage Unipessoal, Lda. Oliveira de Frades

Steadfast Rudge Solar, Ltd Andover

Steadfast Shipton Belinger Solar, Ltd Andover

Steadfast Parkhouse Solar Limited Andover

Sol Cativante III, S.A. Viseu

Martifer Solar, Ltda. Pindamonhangaba

Others:


Magnum Cap Electricial Power, Lda. Oliveira de Frades

Bunge Roménia S.R.L. Buzau

Centralrest, Lda Ílhavo

Share Motivation, Lda. Oliveira de Frades

Companies sold / liquidated:

FY 2013 HEAD OFFICE

Solar


MTS4 S.R.L. Syracuse

MPrime Italia S.r.l Oliveira de Frades

Sol Cativante VII, Lda. Viseu

Eviva Mepe Athens

MTS Trewidland Solar, Ltd London

Steadfast Apsley Solar, Ltd Andover

LRCC – La Rad Campo Charro – Energias Renováveis, Lda. São Martinho do Porto

ANNUAL REPORT 2013

FY 2013 HEAD OFFICE

Renewables


Martifer Renewables Bippen GmbH Berlin

Energia Wiatrowa Sp. Zo.o Gliwice

Others


Macquarie Capital Wind Fund Pty Limited Sidney

FY 2012 HEAD OFFICE



Parque Tecnologico do Tamega Felgueiras

Proempar, S.A. Porto


Martifer – Hirschfeld Energy Systems LLC San Angelo TX

Solar


Sol Cativante IV, S.A. Sever do Vouga

Sol Cativante II, S.A. Sever do Vouga

Sol Cativante VI, Lda. Viseu

Parque Solar Seseña II, S.L. Madrid

Parque Solar Segovia, S.L. Madrid

Parque Solar Quintanar, S.L. Madrid

MTS5 S.R.L. Syracuse

Sol Cativante III, S.A. Viseu

Sol Cativante V, S.A. Viseu

Steadfast Parkhouse Solar Limited Andover

Steadfast Shipton Belinger Solar, Ltd Andover

Steadfast Rudge Solar, Ltd Andover

MTS Trefinnick Solar, Ltd Andover

MTS Hatchlands Solar, Ltd. Andover

Renewables


Eviva Energy SGPS, S.A. Oliveira de Frades

Eurocab FV 20 S.L. Madrid

Others


Magnum Cap Electricial Power, Lda. Oliveira de Frades

Veiga & Seabra. S.A. Aguada de Baixo


Silverton Wind Farm Holding Sidney

Changes in consolidation method:

In 2013:

Prio Agriculture B.V. (Prio Holanda) – from full consolidation to equity method due to its sale by Martifer Renewables SGPS, S.A. to

Nutre SGPS, S.A.

Porthold Project Development BV (Porthold) - from full consolidation to equity method due to the sale of Prio Agriculture B.V. by

Martifer Renewables SGPS, S.A. to Nutre SGPS, S.A.

MTS 3 – decrease in the shareholding held by Martifer Solar Itália from 100% to 49%.


Ventinveste Indústria SGPS, S.A. – from full consolidation to equity method due to loss of control over same, namely for not managing

its financial and operational policies.

In 2012:

Resun Developments, S.A. – In 2011 it was consolidated using the full consolidation method. In 2012, following the sale of shares

in this company, the Groups retains a mere 10% shareholding, which is recorded at cost.

MS – Participações Societárias, S.A. (MS Brasil) – from equity to cost method, due to loss of joint control with Santander Brasil.

Eólica Embuaca, Ltda. (Embuaca) - from equity to cost method, due to loss of joint control with Santander Brasil.

Eólica Mar e Terra, Ltda (Mar e Terra) - from equity to cost method, due to loss of joint control with Santander Brasil.

Eólica Bela Vista, Ltda. (Bela Vista) - from equity to cost method, due to loss of joint control with Santander Brasil.

Eólica Icaraí, Ltda. (Icaraí) - from equity to cost method, due to loss of joint control with Santander Brasil.

Other changes in the consolidation perimeter:

In 2013:

Porthold Project Development BV (Porthold) – increase in the shareholding held by Prio Agriculture B.V from 55% to 100%.

Eviva Gizalki Sp.Zo.o (Eviva Gizalki) – increase in the shareholding held by Martifer Renewables SGPS, S.A. from 72% to 100%.

Martifer Solar USA, Inc. (AEM) – increase in the shareholding held by Martifer Solar Inc. from 63.5% to 99.293%.

Eviva Nalbant S.R.O. (Eviva Nalbant) – increase in the shareholding held by Eviva Energy S.R.L. from 99% to 100%.

Rosa dos Ventos S.A. (Rosa dos Ventos) – increase in the shareholding held by Martifer Renováveis-Geração de Energia e

Participações, S.A. from 97.5% to 100%.

Prio Energy SGPS – decrease in the shareholding held by Martifer SGPS, S.A. from 49% to 10%.

PV Glass, SA – merger by incorporation in Martifer Solar S.A.

PV Glass, Srl – change in shareholder structure as a result of the merger by incorporation of PV Glass in Martifer Solar S.A.

M City Gliwice Sp. Zo.o – increase in the shareholding held by Martifer GmbH from 52.6% to 97.8% and a further increase of 2%

through Martifer Metallic Constructions, SGPS, S.A.

In 2012:

Martifer Recycling Sp. Z.o.o. (Martifer Recycling Polónia) – merger by incorporation in Martifer Konstrukcje Sp. Z o.o. (Martifer

Konstrukcje).

Martifer - Alumínios, S.A. (Martifer Alumínios Espanha) - merger by incorporation in Martifer – Construcciones Metálicas España,

S.A. (Martifer Espanha).

Gebox, S.A (Gebox) – increase in the shareholding held by Martifer Energy Systems SGPS, S.A. from 65% to 100%.

Martifer Solar SGPS, S.A. (Martifer Solar SGPS) – decrease in the shareholding held by Martifer SGPS, S.A. from 75% to 55%.

Sol Cativante, Lda (Sol Cativante) – increase in the shareholding held by Martifer Solar, S.A. from 9.1% to 100%.

Ennebiuno S.R.L – acquisition of 100% of the shareholding by MTS4, s.r.l. and subsequent merger in this company.

Ennebidue S.R.L – acquisition of 100% of the shareholding by MTS4, s.r.l. and subsequent merger in this company.

Ennebitre S.R.L – acquisition of 100% of the shareholding by MTS4, s.r.l. and subsequent merger in this company.

Fvexcava S.R.L – acquisition of 100% of the shareholding by MTS3, s.r.l. and subsequent merger in this company.

Rosa dos Ventos S.A. (Rosa dos Ventos) – increase in the shareholding held by MS - Participações Societárias, S.A. from 95% to

97.5%.

ANNUAL REPORT 2013

3. INFORMATION BY BUSINESS SEGMENTS

The Group bases its disclosure of information on primary segments on its internal organisation for management purposes.

The Group is organised into three business areas: ‘Metallic Construction’, ‘Solar’ and ‘RE Developer’ that are coordinated and

supported by Martifer SGPS.

The Metallic Construction business area includes all the construction activities involving steel structures, aluminium façades and

glass and stainless steel solutions. It also includes the Wind Power division, components, turnkey wind farm delivery, the

Engineering division and the Naval division. In the ‘Solar’ segment the focus is on the production of PV panels, as well as on

turnkey solar park delivery, promotion, licensing, operation and maintenance of projects. The RE Developer segment includes the

promotion and development of renewable energy projects, with special emphasis on the wind sector.

The amounts presented in ‘Other’ is related to the services rendered by Martifer SGPS, S.A., Martifer Inovação e Gestão S.A.

(MIG) and Martifer Gestiune Si Servicii, S.R.L. (MIG RO).

The accounting policies used in the preparation of the information by business segment is the same as that used in the preparation

of the attached financial statements (Note 1).

At 31 December 2013 and 2012, the breakdown of sales and services rendered by primary segments is as follows:

SALES TO EXTERNAL CUSTOMERS INTERSEGMENT SALES TOTAL

FY 2013 FY 2012 FY 2013 FY 2012 FY 2013 FY 2012

Metallic Construction 253,516,407 239,167,041 61,739,088 70,578,170 315,255,495 309,745,211

Solar 245,311,739 230,285,230 62,169,737 57,189,645 307,481,476 287,474,875

RE Developer 17,870,145 27,282,900 2,058,587 9,801,680 19,928,732 37,084,580

Others 1,409,657 2,280,284 3,690,859 5,371,632 5,100,516 7,651,916

518,107,947 499,015,455 129,658,271 142,941,127 647,766,218 641,956,582

Intersegment eliminations (127,901,938) (148,350,411)

Own work capitalized (Note 5) (2,094,208) (12,214,246)

517,770,071 481,391,925

Sales and services rendered to non-group clients, by geographical segments, are as follows:

FY 2013 FY 2012

Iberian Peninsula

Metallic Construction 79,468,029 70,025,664

Solar 52,050,677 80,849,292

RE Developer 5,135,086 5,628,313

Others 1,993,876 1,938,622

European Union (other)


Solar 111,819,044 103,789,432

RE Developer 5,809,397 5,498,324

Others 235,073 341,662

Other markets


Solar 80,630,182 36,330,621

RE Developer 6,925,662 7,848,618

517,770,071 481,391,925


The sales and services rendered in the Metallic Construction segment increased by 6% to 254 million Euros in 2013, despite the

difficulties felt in the sector, primarily in Europe. The focus is being placed on other markets, namely Brazil and Saudi Arabia, to

counteract the negative trend in the Iberian Peninsula.

In the Solar segment the sales and services rendered increased 6% in 2013, when compared with 2012, totalling 245 million Euros,

justified by the project start-up in various geographies with the highlight going to the project in Mexico, currently the largest project

in Latin America, the projects in Portugal and to those in the United Kingdom.

At 31 December 2013 and 2012, the earnings before interest, taxes, amortization, provisions and impairment losses (EBITDA), the

earnings before interest and taxes (EBIT) and profit after tax, by primary segment, are as follows:

EBITDA EBIT PROFIT AFTER TAX

FY 2013 FY 2012 FY 2013 FY 2012 FY 2013 FY 2012

Metallic Construction (18,731,186) (24,559,149) (34,608,778) (31,864,231) (54,188,284) (46,115,770)

Solar 11,822,345 15,991,510 3,878,459 13,318,287 (7,626,761) 3,592,757

RE Developer 35,382,800 9,915,748 11,066,257 2,093,246 9,900,593 339,298

Others 790,190 2,600,902 (1,627,127) 687,964 (18,836,989) (12,228,904)

29,264,149 3,949,011 (21,291,189) (15,764,734) (70,751,441) (54,412,619)

In 2013, Consolidated EBITDA reflects a significant improvement when compared to 2012, increasing from 4 million Euros to 29

million Euros. This EBITDA improvement at the end of 2013 resulted fundamentally from the EBITDA contribution of RE Developer,

with the sale of wind parks.

The Metallic Construction EBITDA at the end of 2013 amounted to -19 million Euros, which compares to the -25 million Euros of the

previous year and fundamentally reflects the negative effects, resulting from the deteriorating European Market conditions and with

an impact on the margins practiced, i.e. the impact of the exit from Poland and additional unforeseeable costs in Works.

In the Solar segment, the EBITDA margin amounted to 12 million Euros, demonstrating that despite the competitive environment of

the sector, the internationalization effort and the negative performance of the activity in the United States, the segment managed to

keep its operating margins practically stable.

It should be noted that, during the period, the consolidated income statement disclosure of (i) profits / losses arising on the disposal

of subsidiaries and of (ii) foreign exchange gains and losses arising on non-financial transactions was re-analysed, with these

financial results being reclassified to operating results (Note 5).

The gains and losses in associate companies, the carrying amount of the investments in associate companies, as well as the

increases and reversals of provisions and impairment losses, by primary segment, are as follows:

LOSSES IN ASSOCIATE

COMPANIES GAINS IN ASSOCIATE COMPANIES

CARRYING AMOUNT OF THE FINANCIAL ASSETS RECORDED

UNDER EQUITY METHOD

FY 2013 FY 2012 FY 2013 FY 2012 FY 2013 FY 2012

Metallic Construction 493,734 326,320 - - 421,031 632,179

Solar - - 97,302 264,244 36,625,842 234,424

RE Developer 543 766,796 464,597 2,868,912 1,548,391 3,626,289

Others 26,648,989 5,580,080 1,564,948 1,728,605 2,686,807 11,187,119

27,143,266 6,673,196 2,126,847 4,861,761 41,282,069 15,680,011

PROVISIONS AND IMPAIRMENT LOSSES

RECORDED IN THE YEAR

REVERSALS OF PROVISIONS AND IMPAIRMENT LOSSES RECORDED IN THE YEAR

FY 2013 FY 2012 FY 2013 FY 2012

Metallic Construction 8,644,357 804,734 200,381 1,380,187

Solar 5,572,400 1,478,901 683,548 1,524,889

RE Developer 19,970,730 3,327,476 712,072 460,000

Others 596,212 - - -

34,783,699 5,611,111 1,596,001 3,365,076

ANNUAL REPORT 2013

The Group’s net assets and liabilities, by operating segments, at 31 December 2013 and 2012 are as follows:

ASSETS LIABILITIES

FY 2013 FY 2012 FY 2013 FY 2012

Metallic Construction 331,230,804 382,567,279 307,847,934 322,965,218

Solar 254,606,180 288,991,897 180,727,147 208,354,852

RE Developer 166,932,839 224,126,986 44,917,163 94,798,380

Holding and MIGs 525,799,738 550,627,281 163,855,470 168,533,767

Intra-group eliminations (490,796,517) (469,938,243) (49,266,682) (45,532,240)

787,773,044 976,375,200 648,081,032 749,119,977

The Group’s capital expenditure (acquisition of tangible and intangible assets) and depreciation / amortization, by operating

segments, up till 31 December 2013 and 2012, are as follows:

CAPITAL EXPENDITURES AMORTIZATIONS

FY 2013 FY 2012 FY 2013 FY 2012

Metallic Construction 5,446,425 10,108,845 7,433,616 7,880,536

Solar 1,959,608 31,014,462 3,055,034 2,719,212

RE Developer 2,426,902 4,524,755 5,057,885 4,955,025

Others 74,975 447,435 1,821,105 1,912,937

9,907,910 46,095,497 17,367,640 17,467,710

The amounts of assets and liabilities at 31 December 2013 include amounts relating to Assets held for sale (Note 28).

Net assets and capital expenditure, by geographical segments, are as follows:

ASSETS CAPITAL EXPENDITURES

FY 2013 FY 2012 FY 2013 FY 2012

Iberian Peninsula 327,928,884 451,186,687 2,977,310 6,653,802

European Union (other) 273,897,513 271,809,991 2,270,838 16,909,189

Other markets 185,946,647 253,378,522 4,659,762 22,532,506

787,773,044 976,375,200 9,907,910 46,095,497

4. SALES AND SERVICES RENDERED

At 31 December 2013 and 2012, the breakdown of sales and services rendered is as follows:

FY 2013 FY 2012

Revenue from the sale of merchandise 115,065,389 93,531,554

Revenue from the sale of goods 136,157,119 116,783,060

Services rendered 266,547,563 271,077,311

517,770,071 481,391,925

In 2013, sales and services rendered increased 8%, when compared with 2012, to Euro 518 million. This increase was influenced

primarily by the activity in Mexico and Saudi Arabia in the ‘Solar’ and ‘Metallic Construction’ segments, respectively.


5. OTHER INCOME

At 31 December 2013 and 2012, the breakdown of the caption ‘Other income’ is as follows:

FY 2013 FY 2012

Change in production 26,077,004 (2,222,009)

Own work capitalised 2,094,208 12,214,246

Taxes - 569,168

Reversals of impairment losses:

Trade debtors (Note 26) 2,311,237 506,343

Other impairment losses 2,577,429 1,747,691

Supplementary income 1,825,939 1,816,890

Gains in inventories 707,979 292,258

Capital Gains in non-financial assets 13,462,081 2,856,219

Operating subsidies 30,055 446,074

Investments subsidies 247,560 1,247,338

Foreign exchange gains 7,714,619 -

Other operational gains 18,104,038 17,026,854

Total 75,152,149 36,501,071

The change in Production variation reflects, primarily, the solar projects underway in the United States of America, which during

2013 were, in consequence of the revision of ongoing projects, transferred from intangible assets and tangible fixed assets to

Inventories, as these projects and licenses are being developed for sale and not for its use by Martifer. In the end of 2013 these

projects were transferred to FTP Solar LLC (Note 21).

The amount of ‘Own work capitalized’ in 2013 is essentially related to the construction of wind farms in the ‘RE Developer’ segment,

in Romania, and with the construction of a building in Brazil, in the ‘Metallic Construction’ segment.

At 31 December 2013, ‘Other income’ includes the profit arising on the formalization, in November 2013, of the disposal by Martifer

Renewables SGPS, of the Option to Buy Rights it held in respect of the shares of the company MS Participações Societárias, SA,

to Banco Santander (Brasil), SA.

In 2012, the caption ‘Other income / expenses’ includes the impact arising on the capitalization of development costs incurred with

wind farms, in the ‘RE Developer’ segment, which have subsequently been completed.

During the period, the consolidated income statement disclosure (i) of profits/losses arising on the disposal of subsidiaries and (ii) of

foreign exchange gains and losses arising on non-financial transactions was re-analysed, with the resulting reclassification of these

financial results to operating results. It was considered that the prior should include solely the financing costs of the Group or the

results attained with the management of the cash and cash equivalents and borrowings. It was considered that this change doesn’t

have significant impact in the reading of financial information, and in this way it was not reexpressed financial statements of 2012.

Hence, at 31 December 2013, Capital profits / (losses) on non-financial assets include the profit arising on the formalization, in June

2013, of the disposal by Martifer Renewables, SGPS, S.A. of the shares it held in Energia Wiatrowa, Sp. Zo.o. This disposal,

agreed to on 30 September 2011, was subject to compliance with certain terms and conditions defined in the contract, namely the

conclusion of the Rymanów project, a wind farm with 13 turbines, in the region of Podkarpackie, being developed by Wiatrowa.

ANNUAL REPORT 2013

6. COST OF GOODS SOLD AND MATERIALS CONSUMED

At 31 December 2013 and 2012, the costs of goods sold are as follows:

FY 2012 MERCHANDISE

RAW-MATERIALS, SUBSIDIARIES AND

OTHER CONSUMABLES

TOTAL

Opening balance 7,959,678 14,706,812 22,666,490

Purchases 47,746,301 166,165,124 213,911,425

Changes in the consolidation perimeter, currency exchange differences, transfers and others 1,725,604 1,747,435 3,473,039

Closing balance 6,557,447 10,825,365 17,382,812

Cost of goods sold 50,874,136 171,794,006 222,668,142

FY 2013 MERCHANDISE

RAW-MATERIALS, SUBSIDIARIES AND

OTHER CONSUMABLES

TOTAL

Opening balance 6,557,447 10,825,365 17,382,812

Purchases 66,863,137 116,248,898 183,112,035

Changes in the consolidation perimeter, currency exchange differences, transfers and others 3,258,458 3,692,289 6,950,747

Closing balance 5,663,577 11,458,141 17,121,718

Cost of goods sold 71,015,465 119,308,411 190,323,876

During 2013, this caption decreased, when compared with 2012, mainly due to the increased reliance on subcontractors (Note 7).

7. SUBCONTRACTORS

At 31 December 2013 and 2012, costs with subcontractors are as follows:

FY 2013 FY 2012

Subcontractors 142,361,309 87,329,097

142,361,309 87,329,097

The subcontracts are related with construction Works carried out, mainly in the ‘Solar’ and ‘Metallic Construction’ segments.


8. EXTERNAL SUPPLIES AND SERVICES

At 31 December 2013 and 2012, external supplies and services are as follows:

FY 2013 FY 2012

Transportation of goods 18,337,765 11,733,278

Specialized Works 36,864,446 25,450,933

Leases and rents 19,648,145 18,075,687

Service Fees 3,350,877 2,663,009

Travelling expenses 6,819,472 5,982,712

Electricity and Fuel 5,172,019 4,281,519

Insurance 4,046,825 3,770,943

Maintenance and repairs 1,793,052 2,409,785

Communications 1,712,870 1,919,575

Security 1,727,372 1,450,375

Legal and notarial fees 1,172,063 1,015,034

Commissions 833,874 1,292,691

Advertising 1,069,709 1,277,161

Cleaning, health and safety 663,118 858,190

Tools and devices 757,555 1,601,907

Other 2,819,521 4,651,288

106,788,683 88,434,088

The caption ‘Specialized works’ includes essentially costs with the development of the solar projects underway in the United States

of America (Note 5).

The increase of ‘Transportation of goods’ in 2013 is directly related with the relocation of the activity, in ‘Metallic Construction’ segment

from Iberia Peninsula to other markets, particularly Brazil and Saudi Arabia, with the consequent increase in shipping costs.

9. STAFF COSTS

At 31 December 2013 and 2012, staff costs are as follows:

FY 2013 FY 2012

Salaries 63,374,168 65,570,460

Social contributions 18,244,736 19,232,657

81,618,904 84,803,117

The social charges relate primarily to social security contributions, the food and health subsidies, insurance costs and indemnities.

AVERAGE STAFF NUMBERS

During 2013 and 2012, the Group’s average staff numbers were as follows:

FY 2013 FY 2012

Directors 31 30

Other employees 2,994 3,021

3,025 3,051

Portuguese 1,686 1,898

Portuguese in foreign countries and foreigners 1,339 1,153

3,025 3,051

ANNUAL REPORT 2013

10. OTHER EXPENSES

At 31 December 2013 and 2012, other expenses are as follows:

FY 2013 FY 2012

Taxes 6,908,755 4,637,234

Impairment losses:

Trade debtors (Note 26) 15,165,482 14,392,298

Other impairment losses 2,906,567 8,362,376

Losses in inventories 1,784,802 485,817

Losses in non-financial assets 752,205 35,862

Foreign exchange losses 9,079,877 -

Trade debtors write-off 1,305,098 253,017

Fines and penalties 554,746 447,239

Other operational losses 4,107,767 2,095,698

Total 42,565,298 30,709,542

The caption ‘Unfavourable exchange differences’ is related with the occurrence of foreign exchange variations in non-financial

transactions, primarily in the non-Euro Zone Group affiliates ( (Note 1). It is important to note the reclassification of exchange rate

differences as a consequence of the revision of the presentation of this caption in 2013 (Note 5). As referred in Note 5, it was

considered that this change doesn’t have significant impact in the reading of financial information, and in this way it was not

reexpressed financial statements of 2012.

11. PROVISIONS AND IMPAIRMENT LOSSES

The provisions and impairment losses for the periods ended on 31 December 2013 and 2012 are as follows:

FY 2013 FY 2012

Impairment losses

Goodwill (Note 17) 4,658,577 95,555

In intangible assets (Note 18) 573,641 -

In tangible assets (Note 19) 17,992,120 2,838,663

23,224,338 2,934,219

Provisions (Note 33)

Arising from the use of the equity method 683,335 716,286

Quality guarantees 148,859 13,291

Legal claims in progress 1,708,355 -

Others 7,422,811 (1,417,760)

9,963,360 (688,184)

During the period under analysis, an impairment loss was recognized for the full amount of the Goodwill in Sassall Aluminium, in

‘Metallic Construction’ segment.

The change in the caption ‘Impairment losses’ is essentially due to the recognition of impairment losses totalling 17.9 million euros,

to cover for potential losses in projects in progress in the ‘RE Developer’ segment, particularly in Spain and Romania, mainly due to

the law changes which penalized the respective tarifes.

The increase in provisions in 2013 includes, namely, a 1 million Euros provision set up in the companies Eurocab 12 through 19, in

respect of a lawsuit lodged involving the compliance with requirements for the application of the tariff regime regulating the activity


involving the production of energy under special regime. It also includes a provision for tax processes in the amount of 166

thousand Euros, in respect of prior year tax corrections, in the ‘RE Developer’ segment. Additionally, provisions for contractual

penalties were recognized in the ‘Metallic Construction’ and ‘Solar’ segments, in the amount of some 2 million Euros and 3 million

Euros, respectively. In the ‘Solar’ segment, some 3 million Euros were also provided for in respect of legal processes underway in

the United States and Italy (Note 33).

12. NET FINANCIAL RESULTS

The net financial results for the years ended on 31 December 2013 and 2012 may be analysed as follows:

FINANCIAL INCOME FY 2013 FY 2012

Loans and accounts receivable (including bank deposits)

- Interest income 4,731,953 5,449,620

Financial assets available for sale

- Dividend income - 203

- Gains on the sale of financial assets 17,411,096 1,122,338

Other financial income related to other financial assets

- Foreign exchange gains 2,129,805 11,883,862

- Other financial income 1,083,629 584,179

25,356,483 19,040,201

FINANCIAL EXPENSES FY 2013 FY 2012

Loans and accounts payable

- Interest expenses in bank loans and in finance leases 31,801,113 27,469,408

- Of which included in the acquisition cost of assets in progress (65,664) (3,059,126)

Available for sale financial assets

- Losses on the sale of financial assets 1,224,008 2,317,249

Other financial income related to other financial liabilities

- Foreign exchange losses 5,860,549 16,502,511

- Other financial expenses 10,715,438 10,258,627

49,535,444 53,488,670

The gains on the sale of financial assets include the gain arising on the disposal, in July 2013, of part of the shareholding held in

PRIO ENERGY SGPS, S.A. to the fund represented by the managing company OXY CAPITAL – SOCIEDADE DE CAPITAL DE

RISCO, S.A., bringing the Groups’ shareholding down from 49% to 10%. This operation was approved by the Portuguese Competition

Authority in September 2013.

The captions ‘Foreign exchange gains / (losses)’ are essentially related with exchange variations registered in non-Euro Zone

Group companies (Note 1).

The ‘Interest expense included in the acquisition cost of assets in progress’ in 2012 resulted from the capitalization of borrowing

costs in the construction costs of qualifying assets. Major amounts related essentially to borrowing costs capitalized in the

construction of wind farms in Romania and of solar projects in the United States of America.

The ‘other financial expenses’ relates mainly with bank commission costs.

ANNUAL REPORT 2013

13. GAINS / (LOSSES) IN ASSOCIATE COMPANIES AND JOINT

ARRANGEMENTS

At 31 December 2013 and 2012, the gains and losses in associate companies and joint-ventures are as follows:

FY 2013 FY 2012

Nutre Group (26,648,990) (5,580,080)

Prio Energy Group 1,564,948 1,728,605

SPEE 2 – Parque Eólico de Vila Franca de Xira, S.A. 294,712 622,252

SPEE 3 – Parque Eólico do Baião, S.A. 169,754 254,024

Canaverosa Renovables, SL 17,257 171,605

Promoquatro – Investimentos Imobiliários, Lda. (65,976) (25,938)

Macquarie - 1,992,636

MS Participações Societárias - (766,055)

Liskin Green Park (283,855) (263,221)

Martifer Amal (143,904) (30,720)

Parque Solar Seseña 1 80,046 92,656

M City Szczecin Sp. Zo.o - (6,441)

Other (411) (758)

(25,016,419) (1,811,435)

The financial investments are measured as to its recoverable amount whenever there are impairment indicators, being considered

for evidence whenever the Equity of subsidiaries (considering the consolidated equity whenever applicable) is lower than their

acquisition value. Based on this principle, we identified indicators of impairment in the shareholding in Nutre, SGPS, S.A. and it was

registed an impairment loss of 5.9 million euro. The methods and assumptions used in the identification, or not, of any impaiment

losses to this financial asset were as follows:

NUTRE SGPS

Equity (atributtable to the Group) (1,065,349)

Financial asset 58,909,000

Period used 5 years cash flow projection

Growth rate (g) 1 1.00%

Average growth rate of EBITDA for five years 17.00%

Discount rate 2 12.71%

1 Growth rate used to extrapolate the cash flows beyond the business plan period

2 Discount rate applied to the projected cash flows

The decrease in 1p.p. in discount rate would result in a reduction of approximately 6 million euros in impairment losses, while the

increase in 1p.p in actual rate would result in an increase in impairment loss of 5 million euros.


14. INCOME TAXES

The detail of the assets and liabilities that originate deferred taxes at 31 December 2013 and 2012 is as follows:

FY 2013 FY 2012

DEDUCTIBLE TEMPORARY DIFFERENCES BASIS DEFERRED TAX BASIS DEFERRED TAX

With impact in Net Profit

Provisions not accepted for tax purposes 11,358,995 2,941,771 3,123,486 469,610

Tax losses 33,532,693 11,204,142 40,820,172 11,393,095

Others 1,075,555 132,764 3,971,210 1,361,652

Total 45,967,243 14,278,676 47,914,867 13,224,356

With impact in Equity

Fair value of derivatives 164,254 43,527 365,173 96,771

Tax benefits - - - -

Others 241,469 37,929 143,949 22,611

Total 405,723 81,457 509,121 119,382

46,372,966 14,360,132 48,423,989 13,343,738

FY 2013 FY 2012

TAXABLE TEMPORARY DIFFERENCES BASIS DEFERRED TAX BASIS DEFERRED TAX

With impact in Net Profit

Differences between cost and fair value 1,197,918 317,448 1,197,918 317,448

Deferral of capital gains taxation 586,846 100,318 60,565 325

Accruals not accepted for tax purposes 3,108,054 423,885 8,418,509 2,501,356

Others - - 1,846,651 113,650

Total 4,892,818 841,652 11,523,643 2,932,780

With impact in Equity

Fair value on the acquisition of subsidiaries 3,260,832 619,558 3,260,832 619,558

Others 148,979 33,459 140,510 31,557

Total 3,409,812 653,018 3,401,343 651,115

8,302,629 1,494,669 14,924,986 3,583,895

Deferred tax assets and liabilities, by geographical segments, are as follows:

DEFERRED TAX ASSETS DEFERRED TAX LIABILITIES

FY 2013 FY 2012 FY 2013 FY 2012

Portugal 2,253,870 5,595,800 1,223,482 1,473,128

Spain 4,189,069 3,042,828 - -

Australia - 690,220 - 690,220

Brazil - 374,491 - -

Canada 267,760 103,910 - -

Mexico - 103,767 - -

Poland - 716,464 - 245,339

Romania 445,662 604,499 - -

Slovakia 433 42,532 - -

Italy 42,000 - 233,816 485,156

USA 7,161,338 2,069,227 37,371 690,052

14,360,132 13,343,738 1,494,669 3,583,895

ANNUAL REPORT 2013

Of the amount of deferred tax assets related with tax losses booked at 31 December 2013, totalling Euro 11,204,142, approximately 50%

were generated in the United States and have a use by time limit of 15 years. The Group recognized these values based on projections

realized for the each business activity, demonstrating that positive taxable net profits will be generated to ensure their recoverability.

According to the tax returns and tax estimates of the companies that recognize deferred tax assets in respect of tax losses carried

forward, at 31 December 2013 and 2012, using tax rates applicable at those dates, the relevant details are as follows:

31 DECEMBER 2013 31 DECEMBER 2012

TIME LIMIT BASIS DEFERRED TAX BASIS DEFERRED TAX

2013 - - 243,300 46,227

2014 395,472 104,629 6,203,456 1,573,222

2015 - - 12,731,066 3,343,541

2016 6,076,302 1,610,220 856,943 246,790

2017 2,785,385 445,662 1,204,710 317,813

2018 353,118 107,127 2,803,388 448,542

2019 - - 431,933 74,964

2020 1,452,384 435,714 - -

2021 3,373,785 849,055 - -

2022 403,657 121,096 345,890 103,767

2024 329,473 101,539 1,257,213 377,164

2025 - - 1,706,883 512,065

2026 - - 4,270,560 1,281,168

2027 6,175,168 2,470,067 6,209,986 2,399,462

2028 11,168,439 4,691,273 - -

2031 - - 346,367 103,910

2032 265,565 70,375 - -

2033 753,946 197,385 - -

33,532,693 11,204,142 38,611,695 10,828,636

Without time limit 2,089,291 564,459

33,532,693 11,204,142 40,700,987 11,393,095

At 31 December 2013, the deferred tax assets and liabilities are, respectively, Euro 14,360,132 and Euro 1,494,669 (2012: Euro

13,343,738 and Euro 3,583,895, respectively), with a positive impact on the income statement of Euro 3,339,138 (2012: positive

impact of Euro 2,728,627).

In 2013, deferred tax assets recognized on tax losses for which, based on projections made by the respective businesses, risks of

recoverability materialized, were annulled.

At 31 December 2013 and 2012, taking into consideration Portuguese tax legislation applicable to dividends, no deferred tax

liabilities were recorded for the timing differences arising on the appropriation of the results of affiliated companies, due to their

immaterial effect on the accompanying financial statements.

The reconciliation between current tax and income tax is summarized as follows:

FY 2013 FY 2012

Current tax 3,604,009 5,003,672

Deferred tax - generated by temporary differences (318,320) (141,177)

Deferred tax - reversal of temporary differences (1,100,498) 293,346

Effect of changes in the income tax rate (26,574) (41,421)

Deferred tax - tax losses recognition (1,740,295) (2,784,372)

Adjustments to the previous years - (55,004)

Other (153,450) -

Deferred tax (3,339,138) (2,728,627)

Income tax 264,872 2,275,045


At 31 December 2013 and 2012, the reconciliation between the current and effective tax rate is as follows:

FY 2013 FY 2012

Profit before tax (70,486,569) (52,024,638)

Income tax rate (nominal rate of 26.5%) (18,678,941) (13,786,529)

Non-taxable gains and losses:

Sale of financial assets (1,154,635) 265,670

Costs not accepted for tax purposes:

Depreciations on revalued fixed assets - -

Impairment losses 6,151,892 777,568

Others 1,343,271 370,263

Results of associates using equity method 6,629,351 480,031

Tax benefits 48,093 (158,449)

Not recognized deferred tax assets arising from losses of current year 5,171,510 13,014,912

Reversion of deferred tax assets in the year (1,100,498) 688,533

Different tax rates 2,156,927 452,720

Excess/ Insufficiency of income tax estimate (81,329) (84,141)

Other adjustments (220,769) 254,467

Effective income tax 264,872 2,275,045

Martifer SGPS and its companies located in Portugal are individually taxed and are subject to a tax rate of 25% in terms of

corporate income tax (‘Imposto sobre o Rendimento das Pessoas Colectivas’ or IRC), increased by a municipal surcharge that can

reach 1.5% of the taxable profit, resulting in an aggregate tax rate of 26.5%. On the portion of taxable profits between € 1,500,000

and € 7,500,000 an additional State surcharge of 3% applies. On the portion in excess of € 7,500,000 a further tax of 5% is applied.

According to article 88 of the Tax Code ‘Imposto sobre o Rendimento das Pessoas Colectivas’, Portuguese companies are also

subject to autonomous taxes on some expenses, at tax rates defined in said code.

During 2011, Martifer SGPS, SA opted for the special taxation of groups of companies’ mechanism (Regime Especial de Tributação

de Grupos de Sociedades “RETGS”), which contemplates the companies in which it holds, directly or indirectly, at least 90% of their

capital and that simultaneously meet the other conditions set by that mechanism.

The remaining affiliated companies of the Group, not contemplated by this mechanism, are taxed individually, based on their taxable profits

and the tax rates applicable.

Additionally, the net income generated by foreign subsidiaries are taxed at local tax rates, namely, those generated in Spain,

Poland, Romania, France, Italy, Belgium, the United States of America, Brazil and the United Kingdom are taxed at 30%, 19%,

16%, 33.9%, 28%, 34%, 40.5%, 34% and 26%, respectively. Due to the tax rate change in Portugal in 2014, decreed in 2013, the

deferred taxes were restated using the 23% tax rate.

Additionally, the Polish tax authorities granted Martifer Polska an income tax relief, for a period of 19 years. However, as this tax

benefit is related to future taxable income and its quantification is not possible, it has not been recorded.

Portuguese Tax Authorities can review the income tax returns of Martifer SGPS and of its Portuguese subsidiaries for a period of

four years (five years for Social Security), except when tax losses have been generated, tax benefits have been granted or when

any review, claim or impugnation is in course, under which circumstances the periods are extended or suspended. Therefore, all

annual tax returns for the year 2009 through 2012 (inclusive) are still open to such review.

As corroborated and supported by our lawyers, there are no material assets or liabilities associated with possible or probable tax

contingencies or additional assessments by the Tax Authorities that should be disclosed in the Notes to the consolidated financial

statements at 31 December 2013 and 2012.

ANNUAL REPORT 2013

At 31 December 2013 and 2012, income tax receivable and payable is as follows:

2013 2012

Income tax – Assets 1,779,777 2,692,473

Income tax – Liabilities (3,278,785) (3,623,443)

(1,499,008) (930,970)

15. DIVIDENDS

In 2013 and 2012, the Group did not distribute dividends

16. EARNINGS PER SHARE

Martifer SGPS has only issued ordinary shares and, as such, no shares have special voting or dividend rights.

Martifer has just one type of potential ordinary dilutive shares: stock options. In order to calculate diluted earnings per share it is

necessary to determine whether these stock options, irrespective of whether they are exercised or not, have a diluting effect, which

happens when the option exercise price is lower than the average market price of the shares.

Since the average market price of Martifer’ s shares, during the period between 1 January 2013 and 31 December 2013, was Euro

0.64, below that of the exercise price of the stock options (Euro 3.84), these stock options are non-diluting because, if the options

were to be exercised, the number of outstanding shares would be reduced.

Therefore, at 31 December 2013 there are no differences between the basic earnings per share and the diluted earnings per share

calculation.

The share capital of Martifer SGPS, SA is represented by 100,000,000 ordinary shares, fully paid up, representing a share capital of

Euro 50,000,000.

The weighted average number of shares outstanding is net of 2,135,634 own treasury shares acquired by Martifer SGPS between

2010 and 31 December 2013, and corresponds to 2,215,910 shares.

At 31 December 2013 and 2012, the basic and diluted earnings per share may be summarised as follows:

FY 2013 FY 2012

Profit for the year (I) (68,961,164) (55,852,988)

Weighted average number of shares outstanding (II) 97,864,366 97,864,366

Basic and diluted earnings per share (I) / (II) (0.7047) (0.5707)

from continuing operations (0.7047) (0.5696)

from Assets as held for sale - (0.0012)


17. GOODWILL

During the period ended on 31 December 2013 no companies were acquired.

The movements occurring during the years ended on 31 December 2013 and 2012 may be summarised as follows:

FY 2013 FY 2012

Gross amount

Opening balance 19,043,523 18,926,458

Acquisition of subsidiaries - 734,899

Sale of subsidiaries (749,278) -

Effect of foreign currency exchange differences (726,236) 172,355

Write-off of goodwill fully impaired - (790,190)

Closing balance 17,568,009 19,043,523

Accumulated impairment losses

Opening balance 95,555 790,190

Impairment losses recognized in the year 4,658,577 95,555

Sale of subsidiaries (95,555) -

Write-off of goodwill fully impaired - (790,190)

Closing balance 4,658,577 95,555

Carrying amount at the beginning of the period 18,947,968 18,136,269

Carrying amount at the end of the period 12,909,432 18,947,968

At 31 December 2013 and 31 December 2012, the breakdown of ‘Goodwill’ is as follow:

FY 2013 FY 2012

COST IMPAIRMENT LOSSES CARRYING AMOUNT CARRYING AMOUNT

Martifer Construções 5,448,792 - 5,448,792 5,448,792

Sassall Aluminium 4,658,577 (4,658,577) - 5,356,394

Martifer Metallic Constructions 3,898,809 - 3,898,809 3,898,809

Navalria 1,618,675 - 1,618,675 1,618,675

Martifer Solar 1,493,776 - 1,493,776 1,493,776

Martifer Solar USA 359,777 - 359,777 388,195

Martifer Solar Hellas 72,205 - 72,205 72,205

LRCC-La Rad Campo Charro - Energias Renováveis, Lda - - - 70,843

Porthold - - - 14,379

MGI 8,373 - 8,373 8,373

Martifer GmbH 6,026 - 6,026 6,026

M PRIME GMBH 3,000 - 3,000 3,000

MTS4 - - - 464,665

MTS3 - - - 103,836

Total 17,568,009 (4,658,577) 12,909,432 18,947,967

Both the fair value allocation of the assets and liabilities acquired as well as the goodwill calculation were performed using the

financial statements of the acquired companies at the date of acquisition.

The Group performs annual impairment tests on Goodwill, at the end of each year, as disclosed in the section ‘Main accounting

policies, judgements and estimates’. During the period ended on 31 December 2013, impairment losses in respect of goodwill, in an

ANNUAL REPORT 2013

amount of Euro 4,658,577, were recorded in the Metallic Construction segment. These impairment losses are recorded in the

caption ‘Impairment losses’ in the income statement.

For impairment assessment purposes, goodwill was allocated to the cash generating units that are expected to benefit from the business

combination within each operational segment. The recoverable amount for each cash generating unit was determined based on its value

in use, using the discounted cash flow method, supported by the business plans drawn up by the persons in charge of each unit and

approved by the Board of Directors of the Group, and using different discount rates according to the risks inherent to each business.

At 31 December 2013, the methods and assumptions used in the identification, or not, of any impairment losses in the more

significant amounts of goodwill recorded by each of the segments in the accompanying financial statements, with exception of

Sassall in which goodwill was eliminated by the fact that it has no use value, are as follows:

METALLIC CONSTRUCTION

MARTIFER CONSTRUÇÕES MARTIFER METALLIC

CONSTRUCTIONS NAVALRIA

Goodwill 5,448,792 3,898,809 1,618,675

Period used 5 years cash flow projection 5 years cash flow projection 5 years cash flow projection

Growth rate (g) 1 2.00% 2.00% 0.50%

Average growth rate of EBITDA for five years 23% 17% 19%

Discount rate 2 9.10% 8.80% 9.10%

1 Growth rate used to extrapolate cash flows beyond the business plan period


The Board of Directors concluded, at 31 December 2013, based on the discounted value of the provisional cash flows of the cash

generating units of this business segment, discounted at the applicable rate, that the carrying amount of the net assets, including

goodwill, did not exceed their recoverable amount.

The projected cash flows are based on the historic performance and on the expectations regarding future developments of the

business. The persons in charge of this segment believe that (in a scenario of normality) a change in the main assumptions used in

the calculation of the recoverable amount will not result in impairment losses.

SOLAR

MARTIFER SOLAR

Goodwill 1,493,776

Period used 5 years cash flow projection

Growth rate (g) 1 0.50%

Average growth rate of EBITDA for 5 years 7%

Discount rate 2 9.65%

1 Growth rate used to extrapolate cash flows beyond the business plan period


The projected cash flows are based on the historic performance and on the expectations regarding future developments of the

business. The Board of Directors concluded, based on the discounted value of the provisional cash flows of the cash generating

units of this business segment, discounted at the applicable rate, that the carrying amount of the net assets, including goodwill,

does not exceed their recoverable amount, at 31 December 2013. The persons in charge of this segment believe that (in a scenario

of normality) a change in the main assumptions used in the calculation of the recoverable amount will not result in impairment

losses.


18. INTANGIBLE ASSETS

This caption is analysed as follows:

FY 2013 FY 2012

Gross amount, reduced by impairment losses:

Software and other rights 19,447,719 26,145,255

Intangible assets in progresso 1,198,497 24,119,844

Advances for the acquisition of intangible assets - 99,623

20,646,216 50,364,722

Accumulated depreciation:

Software and other rights 13,142,744 10,922,850

13,142,744 10,922,850

Carrying amount 7,503,472 39,441,872

The gross amounts of ‘Intangible assets’, net of impairment losses, for the periods ended on 31 December 2013 and 2012, may be

analysed as follows:

FY 2012 SOFTWARE AND OTHER RIGHTS

INTANGIBLE ASSETS IN

PROGRESS

ADVANCES FOR THE ACQUISITION OF

INTANGIBLE ASSETS TOTAL

Opening balance 1 January 2012 30,057,374 17,841,232 687,015 48,585,621

Additions 3,085,585 12,795,027 - 15,880,612

Sales, disposals and write-offs (6,817,200) (232,228) (574,114) (7,623,542)

Effect of foreign currency exchange differences (22,460) (217,684) (13,278) (253,422)

Changes in the consolidation perimeter (25,726) (5,841,245) - (5,866,971)

Transfers and other movements (132,318) (225,258) - (357,576)

Closing balance 31 December 2012 26,145,255 24,119,844 99,623 50,364,722



PROGRESS



Opening balance 1 January 2013 26,145,255 24,119,844 99,623 50,364,722

Additions 266,038 296,203 - 562,241

Sales, disposals and write-offs (4,570,620) (1,872,100) - (6,442,720)

Effect of foreign currency exchange differences (466,238) (508,448) (4,313) (978,999)

Changes in the consolidation perimeter (1,940,517) (698,191) - (2,638,708)

Impairment losses (573,641) - - (573,641)

Transfers and other movements 587,442 (20,138,811) (95,310) (19,646,679)

Closing balance 31 December 2013 19,447,719 1,198,497 - 20,646,216

The sale of intangible assets during the 2013 period is mainly related with operating licences in Portugal, in the ‘Solar’ segment, in

the amount of Euro 6.4 million.

The balance of intangible assets in progress, at 31 December 2012, includes, essentially, the operating licenses in the United

States of America, in the ‘Solar’ segment, in the amount of Euro 21.8 million. In 2013, these projects were transferred to FTP Solar

LLC (Note 21).

The amounts of the accumulated depreciation of ‘Intangible assets’, for the periods ended on 31 December 2013 and 2012, may be

analysed as follows:

ANNUAL REPORT 2013



PROGRESS



Opening balance 1 January 2012 8,584,677 - - 8,584,677

Additions 2,351,982 - - 2,351,982

Effect of foreign currency exchange differences (3,623) - - (3,623)

Changes in the consolidation perimeter 2,460 - - 2,460

Transfers and other movements (12,646) - - (12,646)

Closing balance 31 December 2012 10,922,850 - - 10,922,850


INTANGIBLE ASSETS IN PROGRESS

ADVANCES FOR THE ACQUISITION OF INTANGIBLE ASSETS

TOTAL

Opening balance 1 January 2013 10,922,850 - - 10,922,850

Additions 2,293,943 - - 2,293,943

Sales, disposals and write-offs (18,462) - - (18,462)

Effect of foreign currency exchange differences (17,327) - - (17,327)

Changes in the consolidation perimeter (16,230) - - (16,230)

Transfers and other movements (22,029) - - (22,029)

Closing balance 31 December 2013 13,142,745 - - 13,142,745

Carrying Amount:

31 December 2012 15,222,405 24,119,844 99,623 39,441,872

31 December 2013 6,304,974 1,198,497 - 7,503,471

19. TANGIBLE ASSETS

This caption is analysed as follows:

FY 2013 FY 2012

Gross amount, reduced by impairment losses:

Land and buildings 102,774,904 91,325,592

Equipments 125,126,472 105,292,662

Tangible assets in progress 12,988,029 97,542,316

Other tangible assets 54,281,804 62,614,240

295,171,209 356,774,810

Accumulated depreciation:

Land and buildings 19,542,256 17,935,741

Equipments 50,836,319 52,821,114

Other tangible assets 15,247,837 12,650,431

85,626,413 83,407,286

Carrying amount 209,544,797 273,367,524


The gross amounts of land and buildings, equipment, tangible assets in progress and other fixed assets, net of impairment losses,

for the periods ended on 31 December 2013 and 2012, may be analysed as follows:

FY 2012 LAND AND

BUILDINGS EQUIPMENTS

TANGIBLE ASSETS IN

PROGRESS

OTHER TANGIBLE ASSETS

TOTAL

Opening balance 1 January 2012 96,012,887 109,258,138 91,880,914 62,919,117 360,071,056

Reclassification for Assets held for sale (7,121,495) - (15,045,951) - (22,167,446)

Additions 1,524,851 3,079,957 38,427,751 1,172,055 44,204,614

Sales, disposals and write-offs (1,631,955) (6,908,259) (2,126,522) (22,706) (10,689,442)

Effect of foreign currency exchange differences 273,887 (2,424,876) (1,765,221) (243,933) (4,160,143)

Changes in the consolidation perimeter (590,057) 1,039,688 (4,599,918) (433,002) (4,583,289)

Impairment losses - (735,600) (2,103,063) - (2,838,663)

Transfers and other movements 2,857,474 1,983,613 (7,125,673) (777,291) (3,061,877)

Closing balance 31 December 2012 91,325,592 105,292,661 97,542,317 62,614,240 356,774,810

FY 2013 LAND AND


TANGIBLE ASSETS IN

PROGRESS


TOTAL

Opening balance 1 January 2013 91,325,592 105,292,661 97,542,317 62,614,240 356,774,810

Reclassification for Assets held for sale (2,822,470) (16,217,256) (165,113) (1,901,942) (21,106,781)

Additions 407,685 1,776,531 5,874,600 1,286,853 9,345,669

Sales, disposals and write-offs (149,220) (6,137,172) (129,910) (222,810) (6,639,112)

Effect of foreign currency exchange differences (3,735,213) (4,305,947) (2,204,405) (455,067) (10,700,632)

Changes in the consolidation perimeter 8,835,062 - (6,591,847) - 2,243,215

Impairment losses - (25,000) (9,931,397) (7,493,226) (17,449,623)

Transfers and other movements 8,913,471 44,742,653 (71,406,216) 453,756 (17,296,336)

Closing balance 31 December 2013 102,774,906 125,126,470 12,988,029 54,281,804 295,171,209

Capital expenditure in 2013 relates, essentially, to the development of wind projects in Poland and Romania, by the RE Developer

segment (Euro 1.6 million), to the conclusion of the metallic construction facility in Brazil and maintenance expenditure in Metallic

Construction (Euro 5 million) and to the development of solar parks (Euro 1.9 million).

The balance in tangible assets in progress at 31 December 2012 includes projects in the United States of America, in the ‘Solar’

segment, in the amount of Euro 8.8 million. In 2013, these projects were transferred to FTP Solar LLC (Note 21).

Impairment losses were recognized during the period for some wind farms following the recent legislative changes in the sector in

Spain and in Romania, in the RE Developer segment.

The amounts of the accumulated depreciation of land and buildings, equipment, tangible assets in progress and other fixed assets,

for the periods ended on 31 December 2013 and 2012, may be analysed as follows:

FY 2012 LAND AND


TANGIBLE ASSETS IN

PROGRESS


TOTAL

Opening balance 1 January 2012 15,826,402 49,806,980 - 9,352,706 74,986,085

Additions 3,418,084 8,538,931 - 3,319,210 15,276,225

Sales, disposals and write-offs (265,096) (5,061,716) - (12,667) (5,339,479)

Effect of foreign currency exchange differences 73,534 (227,053) - (14,217) (167,736)

Changes in the consolidation perimeter 293,813 (230,207) - (594) 63,012

Transfers and other movements (1,410,996) (5,821) - 5,993 (1,410,821)

Closing balance 31 December 2012 17,935,741 52,821,114 - 12,650,431 83,407,286

ANNUAL REPORT 2013

FY 2013 LAND AND


TANGIBLE ASSETS IN

PROGRESS


TOTAL

Opening balance 1 January 2013 17,935,741 52,821,114 - 12,650,431 83,407,286

Reclassification for Assets held for sale (1,607,539) (4,692,085) - (221,041) (6,520,664)

Additions 3,462,175 8,044,628 - 3,242,666 14,749,469

Sales, disposals and write-offs (59,910) (5,374,903) - (67,528) (5,502,341)

Effect of foreign currency exchange differences (233,937) (1,345,858) - (66,980) (1,646,775)

Changes in the consolidation perimeter 14,987 (3,241) - 2,616 14,362

Transfers and other movements 30,739 1,386,663 - (292,327) 1,125,075

Closing balance 31 December 2013 19,542,256 50,836,318 - 15,247,837 85,626,412

Carrying Amount:

31 December 2012 73,389,851 52,471,547 97,542,317 49,963,809 273,367,524

31 December 2013 83,232,650 74,290,151 12,988,029 39,033,967 209,544,798

The valuation criteria and depreciation rates used for tangible fixed assets are disclosed in captions iv) and v) of the section ‘Main

accounting policies, judgements and estimates’ in Note 1 ‘Accounting Policies’.

The acquisition cost of Tangible fixed assets held by the Group, acquired under financial leases, at 31 December 2013, amounted

to Euro 32,429,364, and their carrying amount to Euro 23,632,096.

At 31 December 2013 and 2012, there were no tangible fixed assets pledged or mortgaged to financial institutions as guarantees

for loans granted, except for those acquired through financial lease contracts or through Project Finance and those mentioned in

Note 38.

During the year, the Group assessed the estimated recoverable amount of some tangible fixed assets, taking into account internal

and external factors which indicated that some assets might be recorded at a value higher than their recoverable amount.

The assessment of impairment losses in tangible and intangible fixed assets of the Group was based on the business plans of the

companies, using the assumptions described below.

SPAIN ROMANIA

Tangible fixed assets 33,818,373 54,668,949

Period 25 years 25 years

Growth rate (g) 0.43% 0.00%

Average growth rate of EBITDA for 5 years 1.87% 17.42%

Discount rate 8.65% 10.00%

In addition it was recognized impairment loss for total assets in progress Odrzechowa, Jawornik, Markowa, Brzozów, Bambiki and

Nowossielce for the total amount of 3,664,437.06 euros hold in Poland, by the risk factor of the non development in result of actual

economics environment involving these projects.

The change in law of regulation of energetic activity in Spain in not yet total approved, and in this way Martifer adjusted Business

Plans according with the actual information. At this date it is not expected significant impact in financial statements.


20. INVESTMENT PROPERTIES

The caption ‘Investment properties’ relates to the following investment properties held by the Martifer Group: Benavente Business

Centre, Warehouses in Albergaria-a-velha (Portugal), the plant in Vagos (Portugal) and the Aricesti land (Romania), all held for

rental income.

These assets are carried at their fair market value, based on independent appraisals made by specialized entities, applying the

RICS Valuation Standards (RICS Red Book). The Martifer Group performs regular revaluations of these properties, and gains and

losses arising on changes in the fair value are taken to the income statement in the period in which they arise.

At 31 December 2013 and 2012, the movements occurring in the caption ‘Investment properties’ are as follows:

FY 2013 FY 2012

Opening balance 16,206,768 17,274,846

Transfers - 3,448,525

Changes in fair value - 86,393

Effect of foreign currency exchange differences (10,903) 363,302

Reclassification to Assets held for sale (Note 28) - (4,966,297)

16,195,865 16,206,768

The transfer recorded in 2012 in ‘Investment Properties’ reflects the reclassification of the Vagos plant (Portugal) from the caption

‘Tangible fixed assets’ to this caption, in consequence of it being rented out.

The changes in fair value were recorded in the income statement, in the caption ‘Other operational income/ expenses’.

The global amount of the valuations carried out during the year and the values at which the assets are booked in the Group

financial statements, are as follows:

FAIR VALUE INDEPENDENT

APPRAISAL

Gebox 3.588.000 3.591.000

Mad. Vouga 1.415.300 1.417.000

Benavente 9.364.000 9.364.000

Aricesti 1.828.565 3.217.401

16.195.865 17.589.401

At the end of 2013, the Aricesti land, in common with other investment properties, was subjected to an independent appraisal,

realized by S.C. Dumitrascu Expertize, which attributed it a market value of Euro 3.2 million, an amount in excess of its acquisition

cost. However, given the legal proceedings in progress regarding the ownership of the land, the Group, prudently, decided to

maintain the land’s value unchanged.

Earnings obtained from investment properties in 2013 amounted to Euro 662,819 (Euro 922,578 in 2012) and are recorded in the

caption ‘Sales and Services Rendered’.

ANNUAL REPORT 2013

21. FINANCIAL ASSETS ACCOUNTED FOR USING THE EQUITY METHOD

At 31 December 2013 and 2012, financial assets accounted for using the equity method are as follows:

% SHARES

EQUITY 31-12-2013

NET INCOME 2013

FY

2013 FY

2012 FY 2013 FY 2012

Prio Energy 10.00% 49.00% 26,868,069 826,536 2,686,807 11,187,119

SPEE 3 - Parque eólico de Baião, SA 50.00% 50.00% 999,706 339,507 499,853 496,032

SPEE 2 - Parque eólico de Vila Franca de Xira, SA 50.00% 50.00% 2,096,367 589,424 1,048,183 1,082,739

FTP Solar LLC 37.40% 0.00% 27,904,281 (43,355) 36,287,978 -

Macquarie 0.00% 50.00% - - - 2,043,840

Promoquatro - Investimentos Imobiliários, Lda 50.00% 50.00% 240,519 (131,952) 120,260 186,236

Martifer Amal, S.A. (Portugal) 30.00% 0.00% 50,000 50,000 15,000 -

Martifer Amal, S.A. (Moçambique) 35.00% 35.00% 816,489 (411,155) 285,771 445,944

Canaverosa 26.94% 26.94% 278,279 35,233 136,301 119,044

Parque Sesena 1 20.63% 20.63% 524,434 213,456 196,663 115,380

Others - 5,254 3,678

41,282,070 15,680,011

At 31 December 2013 and 2012, the movements occurring in this caption are as follows:

FY 2013 FY 2012

Opening balance 15,680,011 14,867,827

Acquisitions 36,302,978 445,944

Application of the equity method 1,706,974 2,425,428

Decrease in share capital (2,043,840) -

Sales (10,208,467) (1,445,591)

Changes resulting from the loss of control in subsidiaries 4,900 (718,373)

Effect of foreign currency exchange differences (22,387) -

Other changes (138,099) 104,777

Closing balances 41,282,070 15,680,011

The amount in disposals is mainly justified by the disposal, in July 2013, of the financial investment in PRIO ENERGY SGPS, S.A.

to the fund represented by the management company OXY CAPITAL – SOCIEDADE DE CAPITAL DE RISCO, S.A. reducing the

Group’s shareholding from 49% to 10% (Note 12).

Martifer Solar, through its affiliate Martifer Silverado Fund I LCC (57.125% held by Martifer Solar Inc.), with registered offices in the

United States of America, incorporated, at the end of 2013, in partnership with Fir Tree Solar LLC, the company FTP Solar LLC. On the

incorporation of this company, Martifer Silverado Fund I LCC realized its share capital, in kind, via the delivery of projects under

development owned by it as well as some associated liabilities (net contribution of USD 22,214,400), whilst Fir Tree Solar LLC realized

its share capital in cash (contribution of USD 37,177,817). The percentages held by Martifer Silverado Fund I LLC and Fir Tree Solar

LLC in the company FTP Solar LLC were, at the end of 2013, 37.4% and 62.6%, respectively.

Since all the conditions imposed by IFRS 10 were met, the projects transferred were valued at their fair value based on valuations

carried out by Novogradac & Company LLP.


22. AVAILABLE-FOR-SALE INVESTMENTS

At 31 December 2013 and 2012, available-for-sale investments are as follows:

FY 2013 FY 2012

Non-current financial investment 338,166 1,663,963

Others 237,457 646,304

575,622 2,310,267

At 31 December 2013 and 2012, the movements occurring in the caption ‘Available-for-sale investments’ are as follows:

FY 2013 FY 2012

Opening balance 2,310,267 2,179,021

Additions 306,925 138,993

Reductions (235,268) (16,478)

Changes in fair value (1,607,994) -

Reclassification to assets held for sale (189,688) -

Changes in the consolidation perimeter (8,619) 8,731

575,622 2,310,267

At 31 December 2012, this caption includes an amount of Euro 1,607,994, relating to a savings account blocked in Rosa dos

Ventos. This savings account is included in the caption Assets held for sale, in result of the reclassification of the company in 2013.

The available-for-sale investments do not have a defined maturity.

23. INVENTORIES

At 31 December 2013 and 2012, inventories are as follows:

FY 2013 FY 2012

Raw-materials, subsidiaries and other consumables 10,584,174 10,701,150

Work in progress 3,795,980 5,299,576

Merchandise 5,663,577 6,557,447

Finished goods 6,472,076 1,833,889

26,515,807 24,392,062

ANNUAL REPORT 2013

24. OTHER FINANCIAL ASSETS

At 31 December 2013 and 2012, financial assets, other than those described in Notes 20 and 21 above, are those detailed below.

The detail of the captions ‘Trade and Other receivables’, for the periods ended on 31 December 2013 and 2012 is as follows:

NON CURRENT CURRENT

FY 2013 FY 2012 FY 2013 FY 2012

Cost:

Trade receivables:

Trade receivables 29,132,168 31,505,073 123,985,850 146,320,356

Notes receivables - - 763,697 3,930,470

Doubtful trade receivables - - 25,620,958 18,468,425

29,132,168 31,505,073 150,370,505 168,719,251

Other receivables:

Related companies 61,480,963 100,321,045 14,993,979 15,764,687

Advances to suppliers 2,718 4,847 10,199,844 11,284,325

Others 1,982,307 8,465,440 33,699,529 43,002,651

63,465,988 108,791,332 58,893,352 70,051,663

92,598,156 140,296,405 209,263,858 238,770,915

The caption of non-current ‘Trade receivables’ refers mainly to an amount receivable from an associate company, in the ‘Solar’

segment, which will be regularized as this company generates cash from the sale of energy. This receivable bears interests at

Euribor 12M + 6.75%.

At 31 December 2013 and 2012, impairment losses in accounts receivable are as follows:

NON CURRENT CURRENT

FY 2013 FY 2012 FY 2013 FY 2012

Accumulated impairment losses:

Trade receivables - - 28,754,831 18,362,123

Other receivables 119,154 121,503 7,437,595 7,779,142

119,154 121,503 36,192,426 26,141,265

Carrying amount – trade receivables 29,132,168 31,505,073 121,615,674 150,357,128

Carrying amount - other receivables 63,346,834 108,669,829 51,455,757 62,272,521

Total 92,479,002 140,174,902 173,071,432 212,629,650

The changes in accumulated impairment losses relating to accounts receivable are as follows:

TRADE RECEIVABLES OTHER RECEIVABLES

FY 2013 FY 2012 FY 2013 FY 2012

Opening balance 18,362,123 10,776,302 7,900,645 2,912,734

Additions (notes 10) 14,963,000 9,300,408 237,987 5,091,890

Reductions (note 5) 1,771,787 506,343 539,450 -

Changes of consolidation perimeter, foreign currency exchange rate difference and transfers

(2,798,505) (1,208,244) (42,433) (103,979)

Total 28,754,831 18,362,123 7,556,749 7,900,645


At 31 December 2013 and 2012, the ageing’s of accounts receivable, before accumulated impairment losses, are as follows:

FY 2012

PAST DUE

TOTAL NOT DUE UNTIL 90

DAYS 90 TO 180

DAYS 180 TO 360

DAYS MORE THAN 360 DAYS

Trade receivables 177,825,429 77,037,879 35,750,753 17,540,982 20,555,761 26,940,054

Notes receivables 3,930,470 3,261,351 34,511 18,540 616,068 -

Doubtful trade receivables 18,468,425 1,157,093 280,086 169,308 1,948,787 14,913,151

Other receivables 178,842,996 149,061,170 9,346,189 2,502,276 3,441,421 14,491,939

Total 379,067,320 230,517,493 45,411,539 20,231,106 26,562,037 56,345,144

FY 2013

PAST DUE


DAYS 90 TO 180

DAYS 180 TO 360


Trade receivables 153,118,018 74,837,527 21,401,481 9,241,465 15,725,098 31,912,448

Notes receivables 763,697 498,273 - - 246,884 18,540

Doubtful trade receivables 25,620,958 4,827,467 146,482 2,471,811 300,561 17,874,637

Other receivables 122,359,340 89,175,934 3,103,543 1,225,931 9,512,847 19,341,085

Total 301,862,013 169,339,201 24,651,506 12,939,207 25,785,390 69,146,710

The Group’s credit risk exposure is attributable, primarily, to accounts receivable from its operating activities. The amounts

presented in the statement of financial position are net of accumulated impairment losses for doubtful debts, which have been

estimated by the Group based on its experience, current conditions and the economic environment.

At 31 December 2013, the accounts receivable recorded as ‘Doubtful trade debtors’ are considered to be totally impaired.

For the remaining outstanding balances, the Group considers that there has been no deterioration of the credit capacity of the

counterparts and, therefore, that such balances are not uncollectible.

The average collection period of the Group’s accounts receivable during 2013 was 177 days, the main factor behind this being the

current economic environment. Despite this unfavourable environment, the Group is committed to the compliance with its credit risk

policy, namely in terms of client selection (in quality and amounts) as well as collection process effectiveness.

The Board of Directors believes that the amount recorded in the caption ‘Loans and accounts receivables’ is very similar to its fair

value, considering, in particular, that the accounts receivables more than 180 days overdue are not expected to generate

important losses in addition to the impairment losses recorded.

The Group does not charge any interest as long as the established collection period (on average 90 days) is being respected. After

that period, interest is invoiced if contractually agreed, and in accordance with the applicable law, depending on each situation,

which tends to occur only in extreme situations.

At 31 December 2013 and 2012 the non-current balances with related companies refer mainly to supplementary capital granted,

bearing no interest and with no reimbursement date.

At 31 December 2013 and 2012, the Group does not have any ‘held-to-maturity’ financial assets or ‘financial assets at fair value

through profit or loss’.

ANNUAL REPORT 2013

25. CURRENT TAX ASSETS

At 31 December 2013 and 2012, current tax assets are as follows:

FY 2013 FY 2012

Value added tax 13,628,629 15,379,705

Tax in other countries 1,394,267 1,464,331

Other taxes 2,373,420 1,493,203

Current tax assets 17,396,316 18,337,239

The value added tax corresponds to the amount of this tax recoverable, essentially, in respect of the acquisition of turbines, in the

RE Developer segment (2.2 million Euros) and from the development of a turnkey project in Mexico, in the Solar segment (4.7

million Euros).

26. OTHER CURRENT ASSETS

At 31 December 2013 and 2012, the breakdown of the caption ‘Other current assets’ is as follows:

FY 2013 FY 2012

Accrued income:

Construction contracts

Cost 102,714,982 123,070,681

Impairment losses (5,769,831) (5,477,871)

Carrying amount 96,945,151 117,592,810

Interest to be received 31,309 46,391

Other accrued income 4,225,822 3,427,374

101,202,282 121,066,575

Prepayments:

Insurances 732,194 1,505,437

Financial expenses 533,108 727,703

Rents 485,044 892,716

Other prepayments 797,360 905,635

2,547,706 4,031,492

Other (current) financial assets 365,109 620,583

104,115,097 125,718,650

At 31 December 2013, the caption ‘Other prepayments’ includes, essentially, the prepayments relating to specialized works, that

will be rendered/performed during 2014.

The caption ‘Other current financial assets’, at 31 December 2013, refers mainly to green certificates that the Group received for the

production of electricity in Romania that are still unsold at 31 December 2013.


At 31 December 2013 and 2012, the information regarding construction contracts in progress is as follows:

FY 2013 FY 2012

Total costs incurred with construction contracts in progress:

- Metallic Construction 721,684,287 1,008,463,521

- Solar 43,643,305 141,210,144

Costs incurred with construction contracts in progress in the year:

- Metallic Construction 273,853,603 279,603,320

- Solar 30,354,212 106,656,168

Total revenue incurred with construction contracts in progress:

- Metallic Construction 754,340,189 1,019,145,350

- Solar 51,508,209 173,648,219

Revenue incurred with construction contracts in progress in the year:


- Solar 204,360,317 135,932,471

Advanced payments received from customers of construction contracts in progress:


Retentions performed by customers in construction contracts in progress:


- Solar -

Guarantees provided to customers in relation to construction contracts in progress:


- Solar 2,043,933 23,882,955

Accrued income and accounts receivables related with construction contracts in progress:


- Solar 48,121,646 38,252,554

Total of Production not invoiced (construction contracts) 102,714,982 123,070,681

Deferred income and accounts payable related with construction contracts in progress:


- Solar 7,181,830 3,434,899

Total of Production invoiced and not yet performed (construction contracts) – Note 36 20,350,406 26,791,860

The guarantees provided to customers, in the ‘Metallic Construction’ segment, disclosed in Note 38, include both construction

contracts in progress and finished construction contracts. The average period of the guarantees is five years.

At 31 December 2013 and 2012, the Group’s main construction contracts in progress justifying the outstanding balance of the

caption ‘Production not invoiced - construction contracts’ are as follows:

ANNUAL REPORT 2013

FY 2013 FY 2012

Abbots (Martifer Solar UK) 8,861,314 -

Aura Solar I (Martifer Solar MX) 6,530,061 -

Development (Martifer Solar UK) 1,795,035 -

Halchiu (Martifer Solar IT) 2,133,397 -

KAFD Parcel 5.03 (Martifer Alumínios) 2,553,923 -

Little Morton (Martifer Solar UK) 2,567,788 -

Magurele (Martifer Solar RO) 3,264,960 -

Mingay (Martifer Solar UK) 6,849,257 -

Orissa Project (Inspira Solar IN) 1,860,494 -

Tillhouse (Martifer Solar UK) 2,354,748 -

Transcarioca (Martifer Construções BR) 1,824,769 -

Scotland's National Arena (Martifer Construções e Martifer UK) 9,099,251 11,674,677

Ponte da Ulla (Martifer Construções) 5,705,213 9,143,813

Edifício Marina Baía - Luanda (Martifer Construções) 1)

2,822,385 2,822,385

Parque Fotovoltaico APRA - 6,6 MW (Martifer Solar) - 6,681,804

Complexo desportivo Arábia Saudita (Martifer Construções) - 6,024,520

Estádio Arena Fonte Nova (Martifer Construções e Martifer Brasil) - 5,277,954

Parque Fotovoltaico Parkhouse (Martifer Solar UK) - 4,250,753

Parque Fotovoltaico Rudge (Martifer Solar UK) - 4,018,533

Cidade financeira Arábia Saudita (Martifer Alumínios e Martifer Arábia Saudita) - 3,467,117

Alstom - Mannheim 9 (Martifer Construções) - 2,997,219

Parque Fotovoltaico Trefinnick (Martifer Solar UK) - 2,820,089

Parque Fotovoltaico CBS fase 5 (AEM) - 2,493,102

Novo Hospital de Orleans ( Martifer Alumínios) - 2,325,092

Baltic Arena Gdansk (Martifer Polska) - 2,189,420

Parque Fotovoltaico Cheleiros - 2 MW (Martifer Solar) - 1,926,610

Birmingham Gateway (Martifer Aluminios UK) - 1,806,572

58,222,595 69,919,660

1) This amount is totally with impairment losses.

27. CASH AND CASH EQUIVALENTS

The ‘Cash and cash equivalents’ caption may be analysed as follows:

FY 2013 FY 2012

Cash and cash equivalents:

Bank deposits 38,781,082 37,585,387

Cash 62,627 439,182

38,843,709 38,024,569

’Cash and cash equivalents‘ includes cash on hand and in banks, maturing in no less than 3 months, which is subject to an

insignificant risk of change in value. At 31 December 2013 and 2012, no restrictions exist as to the usage of the amounts recorded

in the caption ‘Cash and cash equivalents’.


28. ASSETS HELD FOR SALE

In December 2012, following the decision taken to close the Polish facility, an active plan was put into effect to sell Martifer Polska,

Sp. Zo.o’s land and factory, integrating the ‘Metallic Construction’ segment. Additionally, negotiations are underway for the sale of

the real estate project in Szczecin (Poland), previously classified as an investment property, with its sale being highly probable. The

Group continues committed to selling these assets. Thus, they are satisfied the conditions set by IFRS 5 to the mantainance of this

asset as Asset held for sale for a period higher than 12 months.

At the end of the first half-year of 2013, Martifer Renováveis Geração de Energia e Participações S.A., 55% controlled by Martifer

Renewables SGPS, celebrated a contract to sell 100%, subject to compliance with various conditions, of the company Rosa dos

Ventos Geração e Comercialização de Energias, S.A. (Rosa dos Ventos), that operates the wind farms Canoa Quebrada and

Lagoa do Mato.

Since all the conditions set by IFRS 5 are satisfied, both the assets in Poland and the assets and liabilities of Rosa dos Ventos are

classified as “Assets held for sale” and “Liabilities associated with assets held for sale”, as appropriate.

The breakdown of the assets and the liabilities associated with the assets held for sale at 31 December 2013 and 2012 is as

follows:

31 DECEMBER

2013 31 DECEMBER

2012

Tangible Assets 22,048,574 22,167,446

Investment properties 5,002,006 4,966,297

Available for sale investments 1,357,067 -

Trade receivables 1,865,298 26,842

Other receivables 246 2,971,021

Current tax assets 3,060 1,210,275

Other current assets 135,622 212,019

Cash and cash equivalentes 400,175 3,553,609

Derivatives -

Total assets held for sale 30,812,048 35,107,509

Non-controlling interests attributable to Assets held for sale 2,891,441 -

Non-current liabilities -

Borrowings 10,889,344 1,121,477

Trade payables 2,621 4,317,301

Other payables 255,297 2,008

Current tax liabilities 29,777

Other current liabilities 9,234 3,457,187

Derivatives - 626,950

Liabilities related to Assets held for sale 11,186,273 9,524,922

Assets net of liabilities and Non-controlling interests related to Assets held for sale 16,734,334 25,582,587

29. SHARE CAPITAL, RESERVES, TREASURY SHARES AND NON-CONTROLLING

INTERESTS

Share capital and treasury shares

Martifer SGPS, SA’s share capital, fully subscribed and paid up at 31 December 2013 and 2012, amounts to Euro 50,000,000 and

is represented by 100,000,000 bearer shares with a nominal value of 50 cents each. All shares have the same rights,

corresponding to one vote per share. During 2013 and 2012, no changes occurred in the number of shares of the Group.

During 2013, Martifer SGPS, S.A. did not acquire treasury shares on the stock exchange (2012: 468,259 treasury shares were

acquired). Martifer holds 2,215,910 own treasury shares, corresponding to 2.22 % of its share capital.

At 31 December 2013, the share capital of Martifer SGPS, S.A. was held as follows: 42.70% by I’M SGPS, S.A., 37.5% by Mota-

Engil SGPS, S.A. and 2.22% are treasury shares. The remaining 17.58% represents free-float listed on Euronext Lisbon.

ANNUAL REPORT 2013

Share premium

The share premium corresponds to additional amounts obtained with the issuance of share capital increases. In accordance with

Portuguese commercial legislation, the amounts included in this caption follow the regime established for the ‘Legal reserve’, and

consequently, they are non-distributable, except in the event of the liquidation of the company. However, they may be used to

absorb losses, after all the other reserves are exhausted, or to increase share capital.

Reserves

Legal reserve

Portuguese commercial legislation requires that at least 5% of the annual net profit be appropriated to a legal reserve, until such

reserve attains at least 20% of the share capital. This reserve is non-distributable, except in the event of the liquidation of the

company. However, it may be used to absorb losses, after all the other reserves are exhausted, or to increase share capital.

This reserve is included in the caption ‘Other reserves’ and amounts to Euro 7,696,844.

Own treasury shares

Martifer holds 2,215,910 own treasury shares, corresponding to 2.22 % of its share capital. In accordance with Portuguese

legislation, it is mandatory to keep undistributable reserves in the amount of own treasury shares.

Fair value reserves – Cash flow hedge derivatives

This caption reflects the fair value changes in the cash flow hedges considered effective and can neither be distributed to

shareholders nor used to absorb losses (Note 37).

Foreign currency translation reserves

Foreign currency translation reserves reflect the foreign currency exchange differences arising on: (i) translation of foreign

operations; (ii) net investment in subsidiaries and (iii) goodwill. These reserves can neither be distributed to shareholders nor used

to absorb losses, being transferred to the income statement when the affiliates are sold or liquidated.

Stock options reserves

Stock options reserves reflect the fair value of the services rendered by some workers, reviewed, at each reporting date,

considering the number of options expected to become exercisable.

There is no stock options plan in the Group at 31 December 2013.

Other reserves

In addition to the legal reserve, this caption includes the results of prior years and an undistributable reserve in the amount of Euro

2,868,519 relating to the value of treasury shares.

In accordance with Portuguese legislation, the amount of the distributable reserves is determined taking into consideration the

individual financial statements of Martifer SGPS, S.A., which has been prepared in accordance with IFRS.

At 31 December 2013 Martifer SGPS, S.A. does not have distributable reserves.

Non-controlling interests


The movements in the non-controlling interests are as follows:

FY 2013 FY 2012

Opening balance 50,975,911 31,783,623

Net profit of the year (1,790,277) 1,440,369

Other changes in equity of subsidiaries (86,240) (1,374,499)

Increase in the share capital of subsidiaries - 32,400

Changes in the consolidation perimeter (9,874,758) 119,912

Transactions with non-controlling interests 745,119 18,983,670

Others (293,325) (9,563)

Reclassification to attributable to Assets held for sale (2,891,441) -

36,784,989 50,975,911

The main non-controlling interests may be analysed as follows:

% NON-CONTROLLING INTERESTS

FY 2013 FY 2012 FY 2013 FY 2012


Martifer Construções Angola 21.25% 21.25% 818,221 915,330

Solar

Martifer Solar 45.00% 45.00% 29,974,130 33,276,616

Martifer Solar Itália 45.00% 45.00% 3,596,695 3,471,628

Silverado Fund LLC 68.58% 68.58% 2,724,069 (28,259)

Martifer Solar UK 45.00% 45.00% 1,983,684 49,213

Martifer Solar Hellas, A.T.E. 60.87% 60.87% (559,460) (580,354)

Martifer Solar Inc. 45.00% 45.00% (2,114,444) (554,197)

Martifer Solar França 45.00% 45.00% 1,707,199 1,653,712

Martifer Solar Belgica 45.00% 45.00% 1,647,949 1,338,162

Martifer Solar Sistemas Solares 45.00% 45.00% 931,201 808,868

M Prime 45.00% 45.00% 1,519,716 626,794

Solarparks 45.00% 45.00% 189,388 75,300

Pvglass (Note 2) - 45.00% - (2,395,790)

Martifer Solar Mexico 45.55% 45.55% (1,902,566) (114,308)

AEM 45.39% 65.08% (4,995,559) (1,959,283)

Others

Ventinveste Indústria (Note 2) - 54.00% - 10,000,000

Rosa dos Ventos (Note 28) 45.00% 46.37% - 3,037,733

Martifer Renováveis – Geração de Energia e Participações 45.00% 45.00% 1,409,304 1,811,182

Others (< Euro 500,000) - (144,538) (456,435)

36,784,989 50,975,912

ANNUAL REPORT 2013

30. BORROWINGS

At 31 December 2013 and 2012, borrowings may be analysed as follows:

FY 2012 UNTIL 1 YEAR BETWEEN 1 AND

3 YEARS BETWEEN 3 AND

5 YEARS MORE THAN 5

YEARS TOTAL

Financial institutions borrowings:

Bank loans 81,687,445 70,074,451 36,686,840 19,565,015 208,013,751

Bank overdrafts 15,460,101 1,850,466 - - 17,310,567

Authorized overdrafts 67,783,191 4,533,333 1,200,000 600,000 74,116,524

Other borrowings:

Commercial paper 59,200,000 5,450,000 11,500,000 2,500,000 78,650,000

Other borrowings 4,900,095 4,575,550 3,708,697 2,656,515 15,840,857

229,030,832 86,483,800 53,095,537 25,321,530 393,931,699

FY 2013 UNTIL 1 YEAR BETWEEN 1 AND

3 YEARS BETWEEN 3

AND 5 YEARS MORE THAN 5

YEARS TOTAL


Bank loans 57,100,333 46,334,767 91,213,197 55,289,820 249,938,117

Bank overdrafts 15,808,078 - 707,711 1,808,595 18,324,384

Authorized overdrafts 42,592,133 412,160 4,395,956 10,135,017 57,535,266

Other borrowings:

Commercial paper 8,000,000 3,000,000 3,250,000 - 14,250,000

Other borrowings 10,251,178 1,712,287 1,926,745 2,656,515 16,546,725

133,751,722 51,459,214 101,493,609 69,889,947 356,594,492

At 31 December 2013, the Group’s net debt amounts to Euro 335,464,198. We call attention to the fact that the net debt calculation

includes, besides the borrowings mentioned above, ‘finance leases’, ‘derivatives’ and ‘cash and cash equivalents’

During 2013, various debt restructuring processes were finalized, permitting a significant decrease in short-term debt when

compared to 2012. This activity is expected to continue during 2014, implementing the debt restructuring strategy of the Group. Part

of the short-term financing is also expected to be repaid with the proceeds from the sale of assets, especially wind farms, solar

projects and, residually, from the sale of real-estate projects and from a equity increase in 2014 in the ‘Metallic Construction’

segment (Note 41).

The Group continues focused on reducing Net Debt; as such, it continues committed to the process of selling non-core assets,

especially wind farms, solar projects and, residually, real-estate projects, during 2014. In other words, Management continues

focused on the Group’s objective of reducing the debt level down to between 230 and 250 million Euros by the end of 2014.

Other borrowings

The amount of ‘Other borrowings’ includes approximately Euro 2.7 million in obligations under finance leases (related to the

financing of the real-estate projects recorded as ‘Work in progress’ – Note 23) which, in the event of the sale of said projects, will be

settled at that moment and not in accordance with the established reimbursement plan, which contractually occurs after 2013.

The caption ‘Other borrowings’ also includes the loans obtained from two Portuguese governmental agencies, namely Agência

Portuguesa para o Investimento (API) and Instituto de Apoio às Pequenas e Médias Empresas e ao Investimento (IAPMEI), as

support for the investment carried out by the Group, amounting Euro 5 million. These borrowings bear no interest.


At 31 December 2013 and 2012, the outstanding borrowings are denominated in the following currencies:

FY 2012 FINANCIAL

INSTITUTIONS BORROWINGS

OTHER BORROWINGS

TOTAL

Australian dolar 2,188,058 - 2,188,058

Real 20,031,407 - 20,031,407

Euro 215,022,701 94,490,855 309,513,556

Zlotis 6,596,503 - 6,596,503

New Leu 22,344,049 - 22,344,049

American dolar 33,258,127 - 33,258,127

299,440,844 94,490,855 393,931,699

FY 2013 FINANCIAL

INSTITUTIONS BORROWINGS

OTHER BORROWINGS

TOTAL

Australian dolar -

Real 8,082,814 4,297,957 12,380,771

Euro 269,919,935 26,498,768 296,418,703

Zlotis 4,270,858 - 4,270,858

Novo Leu 18,333,320 - 18,333,320

Rupia 317,835 - 317,835

American dolar 24,873,005 - 24,873,005

325,797,767 30,796,725 356,594,492

The average interest rates on bank overdrafts and borrowings are as follows:

FY 2012 AVERAGE RATES RANGE OF INTEREST

RATES (%)


Bank loans 7,17% [ 4,09% a 16,22% ]

Bank overdrafts 6,48% [ 3,38% a 10,34% ]

Authorized overdrafts 5,67% [ 2,25% a 21,00% ]

Other borrowings:

Commercial paper 2,48% [ 0,96% a 6,49% ]

Other borrowings 5,41% [ 1,20% a 7,65% ]

FY 2013 AVERAGE RATES RANGE OF INTEREST

RATES (%)


Bank loans 6,05% [ 1,22% a 12,30% ]

Bank overdrafts 6,45% [ 3,13% a 8,00% ]

Authorized overdrafts 5,82% [ 4,22% a 7,22% ]

Other borrowings:

Commercial paper 5,99% [ 5,80% a 6,34% ]

Other borrowings 2,81% [ 0,00% a 10,00% ]

ANNUAL REPORT 2013

The average interest rates on borrowings, by geography, are as follows:

COUNTRY INDEX SPREAD

Autralia - -

Belgium Euribor 1,75%

Brazil CDI [ 4,70 a 9,00 ]

Spain Euribor [ 0,45 a 6,50 ]

Italy Euribor [ 6,50 a 7,65 ]

Poland Wibor [ 2,50 a 3,50 ]

Portugal Euribor [ 2,25 a 9,50 ]

Romania Robor [ 2,00 a 4,25 ]

USA Libor [ 2,00 ]

Of all the borrowings, only about 8% of the bank loans bear a fixed interest rate or have interest rate hedging (Note 37). The fixed

interest rates are in line with market rates. The remaining bank loans bear interest rates that are indexed to the market rates for the

respective terms; it is therefore considered that the fair value of these borrowings is similar to its carrying amount.

At 31 December 2013, the main bank borrowings of the Group are as follows:

COMPANY CONTRACT CURRENCY

VALUE (EURO)

CONTRACT DATE

PERIOD GRACE

PERIOD OF CAPITAL

INSTALMENT PAYMENTS

FIRST INSTALMENT

AMOUNT

LAST INSTALMENT

AMOUNT

Martifer SGPS EUR 26,250,000 Aug-10 10 Years 1 + 2 Years Quarterly 1,640,625 831,949

Martifer Construções SA EUR 2,150,000 May-11 5 + 5 Years

4 Months + 1 Year

Monthly 32,673 375,000

Martifer Construções SA EUR 1,000,000 May-10 4 Years 1 Semestre Quarterly 71,429 71,429

Martifer Aluminios SA EUR 1,500,000 May-11 5 + 5 Years

4 Months + 1 Year

Monthly 22,795 260,000

Martifer Metallic Construction SGPS

EUR 20,000,000 Sept-10 5 Years 1 Year Quarterly 1,250,000 2,031,250

Gebox SA EUR 6,500,000 Feb-08 7 Years 2 Years Quarterly 325,000 412,698

Martifer Energy Systems SGPS EUR 5,250,000 Sept-10 5 + 5 Years

+ 1 Year Monthly 76,924 650,000

Martifer SGPS EUR 3,660,500 Oct-12 2 Years - Quarterly 498,938 547,426

Martifer SGPS EUR 15,000,000 Dec-12 5 Years 1 Year 2 Quarters 10,250,000 791,667

Martifer SGPS EUR 1,900,000 Dec-12 7 Years 2 Years Quarterly 95,000 95,000

Martifer Construções SA EUR 5,000,000 Dec-12 7 + 10 Years

2 + 2 Years Quarterly 117,188 1,250,000

Martifer Construções SA EUR 7,500,000 Mar-13 7 Years 1 Year Quarterly 256,282 376,018

Martifer Construções SA EUR 2,500,000 Mar-13 3,5 + 8 Years

1 Quarter + 2 Years

Monthly 64,103 568,236

Martifer Construções SA EUR 5,000,000 Apr-13 3 Years - 2 Quarters 774,649 894,309

Martifer Aluminios SA EUR 1,000,000 Mar-13 3,5 + 8 Years

1 Year Monthly 25,641 9,081

Martifer Construções SA EUR 5,000,000 May-13 1,2 + 10

Years 0,5 Years + 2

Years Monthly 39,063 1,250,000

Martifer SGPS EUR 5,000,000 Nov-13 7 Years 2 Years Quarterly 250,000 250,000

Martifer SGPS EUR 50,000,000 Nov-13 7 Years 2 Years Quarterly 2,500,000 2,500,000

Martifer SGPS EUR 20,000,000 Nov-13 7 Years 2 Years Quarterly 1,000,000 1,000,000

Martifer SGPS EUR 8,000,000 Nov-13 7 Years 2 Years Quarterly 400,000 400,000

Martifer - Construções Metalicas Ltda

BRL 2,762,770 May-12 3 Years 1 Year Quarterly 345,346 345,346


BRL 920,923 Nov-12 3 Years 1 Year Quarterly 102,325 102,325


BRL 3,990,668 Sept-13 5 Years 1 Year Quarterly 249,417 249,417


BRL 73,060 June-13 2 Years 1 Quarter Monthly 3,479 3,479


BRL 429,764 Aug-13 1,5 Years - Monthly 20,879 20,879


BRL 767,436 Dec-13 1,5 Years - Monthly 36,853 36,853

Martifer Renewables Investiments ETVE, S.L.

EUR 11,500,000 Dec-11 4 Years - Quarterly 718,750 722,500

Martifer Solar SA EUR 18,500,000 Oct-08 7 Years 2 Years Quarterly 792,986 792,986


At 31 December 2013, major Project Finance obtained by the Group is as follows:

COMPANY CONTRACT CURRENCY

VALUE (EURO)

CONTRACT DATE

PERIOD GRACE PERIOD

OF CAPITAL INSTALMENT

PAYMENTS

FIRST INSTALMENT

AMOUNT

LAST INSTALMENT

AMOUNT

Eviva Nalbant, srl_RO

RON 15,100,869 Apr-11 8 Years 2 Years 2 Quarterly 1,509,362 1,516,610

MTS7 EUR 2,667,000 Dec-12 18 Years - Quarterly 70,463 70,463

This amount is presented in the caption ‘Bank loans’.

At 31 December 2013, the main renewable commercial paper programmes are as follows:

COMPANY MAXIMUM AMOUNT

(EUROS) CONTRACT DATE PERIOD AMOUNT USED

Martifer SGPS, SA 9,250,000 09-09-2008 23-12-2016 9,250,000

Martifer SGPS, SA 5,000,000 15-09-2010 10-09-2015 5,000,000

The average interest rate applied to these paper programmes is 5.99%.

For some of the borrowings referred to above, and in accordance with its interest rate risk management policy, the Group

contracted several derivative instruments, which are described in Note 36, to convert the variable rates in force into fixed rates.

At 31 December 2013, the Group’s interest rate sensitivity analysis may be summarized as follows:

ESTIMATED IMPACT

2013

Change in financial results due to a 1 p.p. alteration of the interest rate applied to the entire debt 3,565,945

Fixed-rate hedging 214,297

Interest rate derivatives instruments hedging 63,439

Sensitivity of financial results due to interest rate changes 3,288,209

The interest rate risk management policy aims to reduce the Group’s exposure to variable interest rates using interest rate swaps.

During 2013, and as a consequence of the evolution of interest rates in the financial markets, this policy resulted in the loss

expressed in the table below:

COMPANY HEDGE INSTRUMENT NET INTEREST BORROWING

INTEREST GAINS/(LOSSES) FROM THE

HEDGE INSTRUMENT

MARTIFER SGPS SA Interest Rate SWAP 741,155 638,610 (102,545)

Martifer Solar SA MLP 301,514 118,196 (183,318)

Greencovarage Leasing 30,284 45,284 15,000

(270,863)

ANNUAL REPORT 2013

31. OBLIGATIONS UNDER FINANCIAL LEASES

At 31 December 2013, the major finance leases contracts are as follows:

ASSET DESCRIPTION PERIOD CONTRACT

AMOUNT PURCHASE

PERIOD

PURCHASE OPTION

AMOUNT GUARANTEES

Wind energy converters 144 months 18,205,554 End of contract 364,111 Blank promissory note

Wind energy converters 144 months 9,007,897 End of contract 180,158 Blank promissory note

Mobil metallic structure 84 months 8,850,000 End of contract 177,000 Blank promissory note

Autonomous pieces A, B, C, D, E, F, G, H, I, J, L, M e N 96 months 6,366,458 End of contract 124,911 Blank promissory note

Martifer equipments 84 months 6,000,000 End of contract 120,000 Blank promissory note

Metallic structure 72 months 5,185,415 End of contract 103,708 Blank promissory note

Various pieces of equipments 84 months 5,090,531 End of contract 101,811 Blank promissory note

Land and building Gebox - Vagos n. 104, 106, 108, 110, 112, 114, 132, 133, 134, 135, 136 e 137

182 months 3,901,356 End of contract 78,027 Promissory note guaranteed by Motofil and Martifer SGPS

Urban building 156 months 2,656,515 End of contract Blank promissory note

Various pieces of equipments (stripping camera, cutting table, Calandra) 60 months 2,192,058

End of contract 43,841

Blank promissory note

Equipment for the line of production 60 months 1,850,000 Before end of contract 37,000

Blank promissory note subscribed by PVGlass e guaranteed by Martifer SGPS

Martifer equipments 84 months 1,250,000 End of contract 22,500 Blank promissory note

Urban building 120 months 1,218,060 End of contract 3,618 Blank promissory note

Mobil metallic structure 84 months 1,190,000 End of contract 23,800 Blank promissory note

At 31 December 2013 and 2012, obligations under finance leases contracts are as follows:

MINIMUM LEASE PAYMENTS

PRESENT VALUE OF MINIMUM LEASE PAYMENTS

FY 2013 FY 2012 FY 2013 FY 2012

No later than 1 year 4,919,326 9,182,917 4,357,014 8,586,378

Later than 1 year and not later than 5 years 9,522,716 8,815,120 8,264,091 7,497,920

Later than 5 years 6,140,899 5,240,154 5,653,592 4,671,255

20,582,942 23,238,192 18,274,697 20,755,554

Future finance charges (2,308,246) (2,482,638)

Present value of minimum lease payments 18,274,696 20,755,554 18,274,697 20,755,554

Included in the financial statements as:

Current borrowings 4,357,014 8,586,378

Non-current borrowings 13,917,683 12,169,176

- - 18,274,697 20,755,554

Additionally, at 31 December 2013 and 2012, rentals associated with operational lease contracts are as follows:

FY 2013 FY 2012

No later than 1 year 1,068,325 707,099

Later than 1 year and not later than 5 years 542,087 1,088,196

Later than 5 years 27,921 30,063

1,638,333 1,825,358

At 31 December 2013 and 2012, the caption ‘External supplies and services’ includes the amounts of Euro 6,271,518 and Euro

1,749,897, respectively, relating to operational lease rentals.


32. TRADE PAYABLES AND OTHER PAYABLES

At 31 December 2013 and 2012, trade payables and other payables may be analysed as follows:

NON CURRENT CURRENT

FY 2013 FY 2012 FY 2013 FY 2012

Trade payables 11,972,874 12,239,542 130,031,422 165,013,219

Fixed assets suppliers - - 1,016,400 840,425

Related companies and other shareholders 421,870 9,046,499 3,648,374 2,378,317

Advanced payments received from customers - 387,403 16,532,026 11,316,045

Other creditors 1,330,346 395,101 7,654,569 35,966,130

Other payables 1,752,216 9,829,003 28,851,369 50,500,917

Total 13,725,090 22,068,545 158,882,791 215,514,136

The balance of non-current ‘Trade payables’ is related, primarily, with retentions on work performed by external parties, which will

be released at the end of the guarantee period. These amounts bear no interest.

At 31 December 2013 and 2012, this caption includes balances payable to suppliers resulting from the Group’s operating activities,

as well as from tangible and intangible asset acquisitions. The Board of Directors believes that the carrying amount of these

balances is very similar to their fair value and that the effect of the financial discounting of these amounts is not material.

At 31 December 2013 and 2012, the ageing of accounts payable in the captions ’Trade payables’ and ‘Other payables’ is as

follows:

FY 2012

PAST DUE


DAYS 90 TO 180

DAYS 180 TO 360


Trade payables 177,252,761 121,875,816 27,811,437 12,174,659 7,144,728 8,246,121

Other payables 60,329,920 41,639,134 3,470,044 4,232,966 6,497,684 4,490,092

Total 237,582,681 163,514,950 31,281,481 16,407,625 13,642,412 12,736,213

FY 2013

PAST DUE


DAYS 90 TO 180

DAYS 180 TO 360


Trade payables 142,004,296 72,268,176 27,331,272 11,872,408 15,953,487 14,578,953

Other payables 30,603,585 17,544,612 2,316,938 449,539 2,471,987 7,820,509

Total 172,607,881 89,812,788 29,648,210 12,321,947 18,425,474 22,399,462

The average payment period of the Group hovers around 234 days.

Accounts payable more than 180 days overdue relate to amounts payable to trade creditors with which the Group maintains regular

commercial relations.

At 31 December 2013 and 2012, the non-current balances due to associate companies and to other shareholders relate, primarily,

to loans obtained from jointly controlled entities and associate companies, which bear interest at Euribor 3M increased by a 6.75%

spread.

Besides the financial liabilities disclosed above and in Notes 30 and 31, also above, the Group does not have any other financial

liabilities.

ANNUAL REPORT 2013

33. PROVISIONS

The information relating to ‘Provisions’ at 31 December 2013 and 2012 may be detailed as follows:

FY 2013 FY 2012

Quality guarantees 3,335,399 3,176,336

Legal claims in progress 1,553,532 604,844

Provisions arising from the use of the equity method 5,450,401 4,498,385

Others 11,987,549 4,241,128

22,326,881 12,520,693

The movements occurring in the caption ‘Provisions’ during the periods ended on 31 December 2013 and 2012 are as follows:

OPENING BALANCE

ADDITIONS DEDUCTIONS APPLICATIONS CHANGE OF CONSOLIDATION

PERIMETER, EXCHANGE RATE DIFFERENCES, TRANSFERS

CLOSING BALANCE

Quality guarantees 3,176,336 800,339 (651,480) - 10,204 3,335,399

Legal claims in progress 604,844 1,893,736 (185,381) (413,312) (346,354) 1,553,533

Provisions arising from the use of the equity method

4,498,385 683,335 - - 268,681 5,450,401

Others 4,241,128 7,988,862 (556,399) (541,193) 855,151 11,987,549

12,520,693 11,366,272 (1,393,260) (954,505) 787,682 22,326,882

Quality guarantee provisions were recorded to meet potential quality problems resulting from the Group’s operating activities. On

average, quality guarantees have a 5 year limit. The provisions reflect a percentage of the construction value, which varies between

0.04% and 0.18%, depending on the business segment and company.

The amount of other provisions at 31december 2013 includes approximately 3 million euro of a provision recorded in companies

Eurocab 12 to 19 about a dispute regarding the compliance of requirements in the application of tariff regime that regulates the

activity of production of electricity, in a special regime. It includes also provisions to estimate responsabilities associated with

possible contractual obligations in operacional activities, in approximately 5 million euros.

The Group did not record provisions for the decommissioning of the wind and solar parks, since it currently has no legal or

contractual obligation to decommission these assets.

Considering the uncertainties surrounding these provisions, as well as their nature, the Group did not financially discount these

amounts.

34. CONTINGENT LIABILITIES

At 31 December 2013, the contingent liabilities are as follows:

a) On 29 October 2009, Martifer Polska, in consortium with ‘Ocekon Engineering s.r.o.’ (Slovakia), concluded with Energomontaz –

Południe S.A. an agreement for Works, which object was the manufacture, execution, delivery and installation of the steel roof on the

Baltic Arena Stadium in Gdańsk (Poland), in the amount of approximately Euro 11.3 million. On 2 September 2010, Martifer received,

from Energomontaz – Południe S.A., notice of the immediate termination of the agreement, without any prior warning. The main reason

alleged for the termination were delays in the execution, which, in Martifer’s opinion, is totally unfounded and ultimately ineffective.

Despite attempts at the amicable settlement of the matter, Martifer has been forced to lodge a motion with the Court. On 17 December

2010, Martifer lodged an official lawsuit with the Court in Katowice, against Energomontaz. The amount of the lawsuit is approximately

Euro 12.6 million, including interest, the cost of the capital involved and the damages caused to Martifer through lack of cooperation. On

18 January 2012, Energomontaz - Południe SA lodged its legal suit against Martifer, involving Euro 5.8 million. Court hearings are in

progress and the Martifer Group has recognized, in its financial statements, impairment losses relating to the account receivable,

production not invoiced and the bank guarantee executed; it therefore considers that this litigation risk is adequately covered in its

financial statements.


b) On 28 April 2011, construction contract no. 3/Z/2011 was signed between Martifer Konstrukcje and Śląskie Centrum Logistyczne. On

15 May 2012, Sląskie Centrum Logistyczne S.A. levied Martifer Konstrukcje with a penalty of 2,198,000 PLN since, in their opinion,

Martifer was behind in terms of contract execution. This penalty was treated by the client as an amount due and deducted from the

receivables balance. On 4 October 2012, Martifer Konstrukcje sp. z o.o. lodged with the Court in Gliwice an action against Śląskie

Centrum Logistyki S.A., in which Martifer claims:

The amount of 540 thousand Euros plus interest as from 2 June 2012, for the non-payment of the invoice dated 27 April 2012, based on the construction agreement;

The amount of 540 thousand Euros plus interest as from the date of the court case, as a penalty for delays in the completion of the final acceptance;

An amount of 133 thousand Euros plus interest from the date of the court case, as payment for additional work. The Court hearings commenced in January 2014.

In respect of the above mentioned amounts, Martifer Konstrukcje has only recognized in its books the receivable described in the first

point, having, nevertheless, created a 100% provision against said amount.

c) Martifer is currently involved in two arbitration proceedings. On one hand, there is a dispute between Martifer and Alstom regarding the

termination of the project in Sostanj (Slovenia). Martifer claims for compensation under the agreement, in 1.4 million Euros and Alstom

claims for damages and increased costs. In addition, Martifer claims for the reimbursement of the bank guarantees executed, in the

amount of 6.1 million Euros. On the other hand, there is a dispute between Martifer and Alstom regarding the termination of the project in

Mannheim (Germany). Martifer claims for compensation under the agreement, in 6.9 million Euros for work done and costs incurred, in

3.5 million Euros in reimbursement of the wrongfully executed bank guarantees, as well as for further amounts (financial charges for

bank guarantees and interest), still to be determined. Alstom claims for damages and increased costs. In order to safeguard the risk

involved, the Group decided, as a matter of prudence, to recognize in its financial statements an impairment loss, that it considers

adequate, in respect of the amounts under discussion, totalling some 10 million Euros.

The Group's expectation is that no losses will occur with these processes over and above the amount of impairment losses already

recognized in its financial statements.

35. CURRENT TAX LIABILITIES

At 31 December 2013 and 2012, ‘Current tax liabilities’ are as follows:

FY 2013 FY 2012

Value added tax 10,976,641 12,421,569

Social security contributions 2,289,946 1,619,163

Personnel income tax withheld 755,630 643,672

Other taxes 1,303,425 1,912,194

Current tax liabilities 15,325,642 16,596,598

ANNUAL REPORT 2013

36. OTHER CURRENT LIABILITIES

At 31 December 2013 and 2012, other current liabilities are as follows:

FY 2013 FY 2012

Accrued expenses

Holiday pay and bonuses 5,867,390 6,223,844

Interest borne but not yet overdue 3,922,237 3,622,926

Production performed by third parties not yet invoiced 4,865,198 3,613,297

Other accrued expenses 7,377,052 6,166,867

22,031,877 19,626,934

Deferred income

Production invoiced and not yet performed (related to construction contracts) 20,350,406 26,791,860

Subsidies / Government grants 1,753,735 1,502,984

Other deferred income 2,691,439 2,567,911

24,795,580 30,862,755

46,827,457 50,489,688

The ‘Other accrued expenses’, at 31 December 2013, relate to the supplies and external services rendered in 2013 not yet billed.

At 31 December 2013 and 2012, the Group’s main construction contracts in progress justifying the outstanding balance of the

caption ‘Production invoiced and not yet performed (related to construction contracts)’ are as follows:

FY 2013 FY 2012

Museu do Amanhã ( Martifer Brasil) 7,208,174

Birmingham Gateway (Martifer UK) 1,983,750

Ponte da Ulla (Martifer Espanha) 1,202,695

Hangar Airbus (Martifer França) 1,392,225

Viking Douro II (Navalria) 1,255,422

Viking Porto (Navalria) 1,255,422

PF Lisbon / Porto (Martifer Solar) 5,459,987 -

KASC (Martifer Arábia Saudita) 2,282,377 -

KASC (Martifer Construções) 875,720

Ancelle (Martifer Aluminios França) 843,441

Birmingham New Street - WP3201 (Martifer Aluminios) 800,113

Viking Torgil (Navalria) 793,588

Fábrica Martifer Amal MZ (Martifer Construções) 788,021

2062 - Edifício Kilamba (Martifer Angola) 745,595

Stade Lille - Charpente Métallique (Martifer França) 620,905

0110 - Aeroporto Namibe - EM (Martifer Angola) 568,807

Centro Polivalente Barceló - Madrid (Martifer Aluminios) 540,062

Sawmill Tier One Solar (Martifer Solar USA) 514,372 -


37. DERIVATIVES

The Group uses derivatives to manage its exposure to interest rate risk so as to reduce the Group’s exposure to variable interest

rates on its financing contracts, thereby fixing interest rates. At 31 December 2013 and 2012, the derivative contracts in place are

as follows:

31 December 2012

DERIVATIVE COMPANY COUNTERPART NOCIONAL TYPE EXPIRY DATE

FAIR VALUE

Interest Rate Swap MARTIFER, SGPS, S.A. Barclays 8,750,000 Fixed Rate 1.91% and receives Euribor 6M 22/Nov/13 (118,477)

Interest Rate Swap MARTIFER SOLAR, S.A. Santander Totta 12,025,000

Pays fixed rate of 2,24% and receives Euribor 3M 21/Oct/15 (365,173)

Exchange Rate Swap MMC, SGPS, S.A. Barclays 4,369,115 Fixed exchange rate 1.3275 USD 31/Jan/13 (27,155)

(510,804)

31 December 2013

DERIVATIVE COMPANY COUNTERPART NOCIONAL TYPE EXPIRY DATE FAIR VALUE

Non Deliverable Foreign Exchange Forward

Martifer Metallic Constructions SGPS SA

BANCO ESPIRITO SANTO SA

3,400,000 Fixed Exchange rate 3,3030. Sell BRL Buy EUR

25/Jun/14 18,483

Deliverable Foreign Exchange Forward



1,000,000 Fixed Exchange rate 1,3150. Sell USD Buy EUR

26/Mar/14 35,323



MONEX EUROPE 3,000,000 Fixed Exchange rate 3. Sell BRL Buy EUR

23/Jun/14 75,688

EUR CALL / USD PUT - Forward Sintetico

Martifer Construcoes Metalomecanicas SA


2,130,000 Fixed Exchange rate EUR Call USD Put strike 1,3380

29/Jun/14 47,512



INTL FCStone Markets, LLC


04/Apr/14 19,725


Martifer Metallic Constructions SGPS SA MONEX EUROPE


22/May/14 184,559

Interest Rate Swap Martifer Solar, S.A. MONTEPIO

901,822 Receives Euribor if higher than 1% and pays Euribor 3M ( SWAP with CAP- 15,000€)

05/Apr/19 7,178

388,468

Interest Rate Swap Martifer Solar, S.A.

SANTANDER TOTTA

5,550,000 Fixed Rate 2.24% and receives

Euribor 3M 21/Oct/15 (164,254)

(164,254)

The difference from 2012 regarding the amount recognized in Equity relates to the Wiatrowa derivative, Wiatrowa being a company

classified as an Asset held for sale.

The fair value of the above derivative contracts has been determined by the counterparties and, as these derivatives qualify as cash

flow hedges, has been recorded in the equity caption ‘Fair value reserves – Derivatives’ and in ‘Derivatives’, under Assets and

Liabilities.

The fair value valuation of the derivatives contracted by the Group (essentially interest rate swaps) was performed by the respective

financial institutions acting as counterparties. The fair value valuation model used by the counterparties is based on the discounted

cash flows method, using the swaps par rates, listed in the interbank market, and available on Reuters and/or Bloomberg terminals,

for the negotiated periods, which are used to calculate the forward interest rates and discount factors. The present value of the fixed

cash flows (fixed leg) and the present value of the variable cash flows (floating leg) are then calculated. From the addition of the two

legs results the NPV (Net Present Value or discounted value of the future cash flows or fair value of the derivatives).

ANNUAL REPORT 2013

38. COMMITMENTS

Financial Guarantees

At 31 December 2013 and 2012, the financial guarantees (bank guarantees and credit insurance) provided by the Group to third

parties, namely to customers whose civil Works are performed by Group companies may be detailed, by currency, as follows:

FY 2013 FY 2012

Euro 106,829,281 94,998,433

Zlotys 2,186,048 21,862,624

New Leu 88,200 27,675

US dollar 53,300,201 45,365,186

Australian dollar 348,352 1,459,731

Moroccan Dirham 80,027 80,798

Czech Koruna - 767,927

Mozambique Metical - 33,967

Pound Sterling 3,335,944 4,657,162

Brazilian Real 11,247,833 12,382,677

Brazilian Real 518,356 -

177,934,242 181,636,180

The breakdown, by Group company, is as follows:

FY 2013 FY 2012

Martifer Construções 39,596,777 33,659,581

Martifer Metallic Constructions SGPS 12,878,285 14,891,023

Martifer Solar Srl - 17,688,003

Martifer Solar 23,899,626 18,639,946

Navalria 709,882 1,449,256

Martifer Alumínios 8,207,459 9,589,548

Martifer Solar Sistemas Solares 3,214,891 541,692

Martifer Construcciones Metalicas Espanha 2,494,421 2,542,863

Martifer Solar NV 18,757,320 1,276,516

Martifer Polska 662,451 2,159,274

Martifer Constructii 551,671 853,788

Eviva Hidro SRL - 27,675

Eviva Nalbant SRL 27,511 -

Sassal Aluminium PTY LTD 348,352 1,459,731

Martifer Construções SK 479,546 721,772

Martifer Konstrukcje 1,117,069 1,493,030

EUROCAB FV 1 SL 29,770 29,770

EUROCAB FV 8 SL 11,227 11,227

EUROCAB FV 9 SL 11,227 11,227

EUROCAB FV 10 SL 11,227 11,227

EUROCAB FV 11 SL 11,227 11,227

EUROCAB FV 12 SL 11,227 11,227

EUROCAB FV 17 SL 11,227 11,227

EUROCAB FV 18 SL 11,227 11,227

Martifer Renewables SGPS - 17,795,778

Martifer Solar USA, INC 2,275,771 9,171,901

Martifer Silverado Fund, LLC 46,713,806 34,786,071

Martifer Construções SAS 1,059,757 297,693

Martifer Construções Lda (Brasil) 10,905,292 12,382,677

Martifer Solar Hellas - 100,000

Martifer Aluminios Lda (Brasil) 342,540 -

Martifer Construções Angola 2,936,698 -

Inspira Martifer Solar Lda 518,356 -

Martifer Energia RO SRL 128,400

177,934,242 181,636,180

1) It refers to the maximum potential amount of a surety bond whose actual responsability is lower than 7 million euros.


At 31 December 2013 and 2012, the commitments relating to import documentary credits are as follows:

FY 2013 FY 2012

Martifer Solar, S.A. 5,147,669 37,537,349

Mprime, S.A. - 1,055,819

Martifer Solar INC - 341,064

Martifer Construções, S.A. 1,931,028 -

Martifer Solar Sistemas Solares 434,469 -

7,513,166 38,934,232

Additionally, the most significant operating guarantees in force are as follows:

FY 2013 FY 2012

Martifer Solar SA 3,625,553 5,289,601

Martifer Solar Sistemas Solares 33,533,190 25,257,693

Mprime SA - 1,000,000

Martifer SGPS 88,898,000 88,898,000

126,056,743 120,445,294

The amount presented, in 2013 and 2012, includes a guarantee in favour of BP Portugal, securing the payments on the acquisition of

fuel by Prio Energy, S.A., as well as other guarantees assumed under contracts to build solar parks.

As EPC contracts entered into by Martifer Solar to build solar parks oblige it and / or associate companies to provide certain

guarantees, amongst which, as to the quality of the materials and design, the photovoltaic facilities, the performance ratios and the

power output of the installed photovoltaic modules. Martifer SGPS has agreed to endow Martifer Solar and / or its associate

companies with the necessary means to fully comply with these contractual obligations. Martifer Solar is presently considered to

have the capacity to support its own commitments, without recourse to the Holding Company.

The amount of the Martifer Solar commitments relates to guarantees provided for the development and construction of solar parks.

Pledges or Mortgages

ANNUAL REPORT 2013

At 31 December 2013, the assets pledged or mortgaged to financial institutions are as follows:

COMPANY GUARANTEE ASSET VALUE DEBT AMOUNT

Martifer Solar SA Mortgage of building and promisse pledge of equipments/ inventories

8,846,980 6,343,884

Martifer Metallic Constructions SGPS Share pledge of Martifer Aluminios SA 225,000 16,250,000

Martifer SGPS Share pledge of Martifer Solar SA 27,500,000 16,638,986

Martifer Renewables SGPS Share pledge of Martifer Renewables ETVE, S.A.U * 65,100 0

Martifer SGPS Mortgage of building in Oliveira de Frades (Components’ plant) Assets pledge Martifer Construções

8,669,300 15,231,671

Martifer Construções SA Mortgage of building Benavente 3,417,961 -

Martifer Construções SA Mortgage of industrial building (Towers’ plant) 9,517,064 5,000,000

Martifer SGPS Mortgage of industrial building (Monoblocos) Mortgage of administrative building Mortgage of industrial building (Towers’ plant)

1,442,373 1,900,000

Martifer Construções SA 5,922,166 3,233,693

Martifer Aluminios SA

3,212,899

Navalria SA 1,565,671

Martifer SGPS Share pledge of Martifer Renewables SGPS 10,000,000

9,250,000 Share pledge of Nutre SGPS 2,450,000

Martifer SGPS Mortgage of building in Oliveira de Frades Martifer Construções component

739,444 7,500,000

Martifer Construções SA Mortgage of building MT Aluminios 1,104,098 5,000,000

Martifer Construções SA

Share pledge of Martifer Renewables SGPS 25,000,000

2,955,773

Martifer Construções SA 8,627,331

Martifer Aluminios SA 305,090

Martifer Aluminios SA 956,888

Promoquatro Lda 2,000,000

Martifer Energy Systems SGPS 3,000,000

Martifer Solar SA 3,625,553

Martifer Construções Metálicas LTDA Mortgage of building in Pindamonhangaba 12,508,288 6,881,344

Martifer Construções Metálicas LTDA Security deposit Banco Safra 122,790 245,580

Martifer Construções Metálicas LTDA Security deposit Banco Safra 76,744 153,487

Martifer Construções Metálicas LTDA Security deposit Banco Itaú 92,092 343,965

Martifer Polska | Martifer Konstrucje Mortgage of building and lands 6,248,217 4,305,092

Rosa dos Ventos

Mortgage of 7 turbines and 7 steel towers 12,753,807

10,804,073 Share pledge 3,757,367

Application Liquidity Fund 1,357,067

Martifer SGPS Share pledge of Martifer Solar SA Share pledge of Martifer Renewables

65,000,000 83,000,000

Martifer Constructii SRL Mortgage of building 4,578,739 1,256,574

211,394,597 219,587,555

* The guarantee has already been cancelled, and the release of the pledge has already been requested.

Regarding fixed assets acquired, attention is drawn to the following contractual commitments:

Within the scope of the Agreement for ‘Attribution of Energy Injection Capacity to the National Electricity Grid for Electrical Energy

produced at Wind Parks’, celebrated between Ventinveste S.A. and the Portuguese Authorities (Direcção Geral de Energia e

Geologia (DGEG) on 18 September 2007, Ventinveste S.A. is obliged to contribute an amount of Euro 41,833,493 to finance

(through the Innovation Fund) research activities to be selected by the Economy and Innovation Ministry, which are to remain under

the orientation and supervision of a public entity. Of this amount, Euro 12,173,546 has already been paid (Note 17). On 21 October

2013, Ventinveste and DGEG reached an agreement as to the basic principles that will guide the revision of the existing contract,

expected to be formalized during the course of 2014.


39. SUBSIDIES AND GOVERNMENT GRANTS

At 31 December 2013, investment subsidies and government grants attributed to the Group are as follows:

INVESTMENT

AMOUNT SUBSIDIES GRANTED

DEFERRED INCOME (NOTE 36)

AMOUNT RECORDED IN INCOME STATEMENT

Buildings and other constructions 6,854,046 4,955,925 1,170,215 116,022

Basic equipment 7,832,920 2,373,768 465,538 130,551

Other Investments subsidies 150,620 142,410 117,983 986

Balance at 31 December 2013 14,837,586 7,472,103 1,753,736 247,559

At 31 December 2013, operational subsidies and government grants attributed to the Group recorded in the income statement

caption ‘Other gains and losses’ are as follows:

COMPANY DESIGNATION AMOUNT RECORDED IN INCOME

STATEMENT (NOTE 5)

Martifer Solar França Training grant 1,000

Martifer Alumínios Staff hiring grant 2,920

Navalria Requalification of equipments 23,247

Martifer Inovação e Gestão Staff hiring grant 2,888

30,055

40. RELATED PARTIES

a) Balances and transactions

Group companies have commercial relations with each other that qualify as related parties transactions. All of these transactions

are performed on an arm’s length basis.

Consequently, all these transactions are eliminated, since the consolidated financial statements disclose information regarding the

holding company and its subsidiaries as if they were a single entity.

The amounts of the balances and transactions with associate companies and joint-ventures, as well as with other shareholders and

shareholder-related companies, are as follows:

COSTS REVENUES ACCOUNTS

RECEIVABLE ACCOUNTS PAYABLE

FY 2013 FY 2012 FY 2013 FY 2012 FY 2013 FY 2012 FY 2013 FY 2012

Associate companies 520,440 306,240 9,054,711 9,084,727 77,951,489 71,709,785 2,106,000 1,504,776

Joint Ventures 11,237 316,079 1,318,881 1,445,582 33,791,721 31,896,893 1,184,598 11,179,184

Other related parties 39,151 883,783 2,633,823 916,008 4,084,915 5,934,560 12,837,186 13,317,415

570,828 1,506,102 13,007,414 11,446,317 115,828,125 109,541,238 16,127,785 26,001,374

The accounts receivable from associate companies include the supplementary capital issued to Nutre, SGPS, SA, recorded in

‘Other non-current debtors’, in the amount of Euro 58.9 million, which does not bear interest and has no defined reimbursement

period. This amount is net of Euro 39.3 million relating to the application of the Equity Method over the 2010 through 2013 periods

and impairment loss recognized (see Note 13).

Accounts receivable from Joint-Ventures relate mainly to the non-current loans granted to the companies Ventinveste, SA, M. City

Bialystok Sp.Z.o.o. and M. City Radom Sp.Z.o.o..

In addition to the balances and transactions described in the tables above and below, no other balances or transactions exist with

the Group’s related parties.

ANNUAL REPORT 2013

Accounts receivable and payable vis-à-vis related parties will be cash settled and are not covered by any guarantees. At 31

December 2013 and 2012, no impairment losses were recognized in connection with the above mentioned accounts receivable.

b) Board of Directors and key management staff remuneration

At 31 December 2013 and 2012, the Board of Directors and the key management staff remuneration amounted to Euro 2,040,204

and Euro 3,377,169, respectively.

This remuneration is determined by the Remuneration Committee, taking into consideration the individual performance and the

evolution in this type of labour market.

Remuneration assigned to the Board of Directors and to key management staff, by remuneration grade, may be summarized as follows

(amounts in Euro):

FY 2013 FY 2012

Fixed remuneration 1,900,697 3,048,198

Variable remuneration 139,507 246,593

2,040,204 3,294,791

Both the statement on the remuneration policy applicable to the management and supervisory bodies of Martifer SGPS, approved

in accordance with Law 28/2009, as well as the total amount of the remuneration attributed to the members of these bodies,

individually and in aggregate, are presented in the Corporate Governance Report.

Martifer SGPS, S.A.’s Board of Directors is constituted by:

i. Carlos Manuel Marques Martins

ii. Jorge Alberto Marques Martins

iii. Mário Rui Rodrigues Matias

iv. Arnaldo José Nunes da Costa Figueiredo

v. Luís Filipe Cardoso da Silva

vi. Luís Valadares Tavares

vii. Jorge Bento Ribeiro Barbosa Farinha

41. SUBSEQUENT EVENTS

Since the date of financial statements until the present date occurred the follow subsequent events:

Signature of the Sub-concession contract with Estaleiros Navais de Viana do Castelo

Within the scope of an international public tender, Martifer Energy Systems and Navalria, subsidiaries of the Martifer Group, were

adjudicated the Sub-concession of the Private Use of the Public Domain and of the Areas Allocated to the Dominial Concession

attributed to the Company "Estaleiros Navais de Viana do Castelo” (ENVC).

The Martifer Group, through its new subsidiary West Sea, aims to carry out its activity in the national and international markets and

to implement a naval construction and repair project, under which scope it foresees the creation of some 400 new jobs over the

next 3 years. With this sub-concession, the Group increases its naval construction and repair capacity. The signature of the contract

occurred in January 2014.

Disposal of the shareholding in Rosa dos Ventos, in Brazil

On 27 February, Martifer Renewables concluded, through its 55% controlled subsidiary Martifer Renováveis Geração de Energia e

Participações, S.A., the disposal of 100% of the shares of the company Rosa dos Ventos Geração e Comercialização de Energia,

SA, for the amount of $R70.3 million, to the Brazilian company CPFL. Rosa dos Ventos Geração e Comercialização de Energia, SA


owns a wind farm with an energy production capacity of 14.7 MW. The sale had been previously agreed to between the parties

involved, on 18 June 2013.

Debt restructuring in Metallic Construction segment

Martifer Metallic Constructions completed the conversion of part of its debt from short- to medium- and long-term, and a share

capital increase of some 28 million Euros is foreseen.

Voluntary restructuring process of Martifer Solar USA

On 21 January 2014 the affiliates Martifer Solar USA INC and Martifer Aurora Solar LLC started voluntary restructuring processes

under Chapter 11 (US Bankruptcy Code). The affiliate companies are currently negotiating the restructuring plans, which needs to

be approved by the creditors and ratified by the Court under Chapter 11, and which will permit these to continue developing their

activities.

42. CASH RECEIVABLES / CASH PAYMENTS RELATED TO FINANCIAL

ASSETS

Cash receipts and cash payments related to financial assets in 2013 and 2012, are as follows:

FY 2013 FY 2012

Cash Receivables:

Sale of Eviva Mepe 124,000 -

Sale of Prio Agriculture BV 13,780 -

Sale of Wiatrowa 7,573,569 -

Sale of LRCC 1,989,180 -

Alienação de 51% da MTS3 419,604 -

Sale of MTS4 1,960,932 -

Sale of Sol Cativante VII 50,000 -

Sale of Silverton - 1,874,086

Sale of MTESLLC - 1,705,962

Sale of Resun - 45,000

Sale of MTS5 - 32,755

12,131,065 3,657,802

Cash Payments:

Aquisition of 28% Eviva Gizalki (1,000,000) -

Aquisition of 2.5% Rosa dos Ventos (622,859) -

Acquisition of 2.5% of Rosa dos Ventos - (883,962)

Acquisition of 6.125% of Silverado - (945,966)

Acquisition of 99% of Solar Brasil - (82,868)

(1,622,859) (1,912,796)

43. APPROVAL OF THE FINANCIAL STATEMENTS

The accompanying consolidated financial statements were approved by the Board of Directors on 31 March 2014. Furthermore, the

attached financial statements for the period ended on 31 December 2013, are still subject to approval by the annual Shareholder’s

General Meeting. The Board of Directors believes that these will be approved with no significant changes.

ANNUAL REPORT 2013

44. EXPLANATION ADDED FOR THE TRANSLATION OF THE FINANCIAL

STATEMENTS

These financial statements are a translation of the consolidated financial statements originally issued in Portuguese, in accordance

with the International Financial Reporting Standards as adopted by the European Union. In the event of discrepancies, the

Portuguese version prevails.

Oliveira de Frades, 31 March 2014

The Registered Accountant The Board of Directors

__________________________________ __________________________________

Isabel Cristina Loureiro Silva Carlos Manuel Marques Martins

__________________________________


__________________________________


__________________________________

Arnaldo José Nunes da Costa Figueiredo

__________________________________

Luís Filipe Cardoso da Silva

__________________________________


__________________________________


RELATÓRIO & CONTAS INDIVIDUAIS 2011

INDIVIDUAL FINANCIAL INFORMATION

ANNUAL REPORT 2013

13 Individual Financial Statements

ANNUAL REPORT 2013

13 | INDIVIDUAL FINANCIAL STATEMENTS

INDIVIDUAL INCOME STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013 AND

2012

(TRANSLATION OF INDIVIDUAL FINANCIAL STATEMENTS ORIGINALLY ISSUED IN PORTUGUESE - NOTE 26)

NOTES FY 2013 FY 2012

Sales and services rendered 2 449,728 1,891,618

Other operational gains 35,378 178,643

Supplies and external services 3 (469,932) (308,498)

Staff costs 4 (571,139) (970,764)

Other operational losses (13,529) (80,267)

(569,494) 710,732

Depreciation 9 and 10 (19,230) (29,853)

Provisions 5 (596,212) (22,288)

Impairment losses 5 (65,786,553) (4,116,493)

Operational earnings (66,971,489) (3,457,902)

Interest and similar revenue 6 28,705,303 1,448,840

Interest and similar expenses 6 (11,237,308) (10,481,386)

Earnings before taxes (49,503,494) (12,490,448)

Corporate income tax 7 123,499 (27,438)

Net income for the period (49,379,995) (12,517,886)

Earnings per share:

Basic 8 (0.5046) (0.1279)

Diluted 8 (0.5046) (0.1279)



\INDIVIDUAL STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED

DECEMBER 31, 2013 AND 2012


FY 2013 FY 2012

Net income for the year (49,379,995) (12,517,886)

Fair value of cash flow hedges (derivatives), net of tax 100,705 (18,882)

Income recognised directly in equity 100,705 (18,882)

Total comprehensive income for the year (49,279,290) (12,536,769)


ANNUAL REPORT 2013

INDIVIDUAL STATEMENTS OF FINANCIAL POSITION AT 31 DECEMBER 2013 AND 2012


NOTES 31 DECEMBER 2013 31 DECEMBER 2012

Assets

Non-current assets

Intangible fixed assets 9 6,187 15,091

Tangible assets 10 5,577 16,355

Financial Investments 11 291,854,870 348,839,360

Group companies 12 19,824,842 24,206,816

Deferred tax assets 7 1,752,346 4,785,636

313,443,820 377,863,258

Current assets

Trade receivables 13 2,911,231 2,461,453

Advances to trade creditors - 11,974

Corporate income tax 7 - 738,605

State and other public entities 14 - 485

Group companies 12 19,319,180 13,742,925

Other accounts receivable 13 336,502 124,162

Deferred expenses 115,767 461,458

Cash and cash equivalents 15 1,539,580 448,220

24,222,260 17,989,281

Total Assets 337,666,080 395,852,539

Equity

Share capital 16 50,000,000 50,000,000

Treasury Stock 16 (2,868,519) (2,868,519)

Share premiums 16 186,500,000 186,500,000

Legal reserves 16 7,696,844 7,696,844

Other reserves 16 2,868,519 2,868,519

Retained earnings 16 (13,782,430) (1,264,544)

Other changes in equity - (100,705)

Net profit for the year (49,379,995) (12,517,886)

Total Equity 181,034,420 230,313,709

Liabilities

Non-current

Provisions 19 618,500 22,288

Borrowings 17 119,257,146 39,416,742

119,875,646 39,439,030

Current

Trade payables 18 1,028,326 726,189

Corporate income tax 7 78,351 -

State and other public entities 14 59,438 61,232

Group companies 12 8,731,502 8,314,128

Borrowings 17 25,630,759 115,226,690

Other accounts payable 18 1,227,637 1,653,083

Derivatives - 118,477

36,756,014 126,099,799

Total Liabilities 156,631,660 165,538,830

Total Equity and Liabilities 337,666,080 395,852,539


ANNUAL REPORT 2013

INDIVIDUAL STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012


SHARE CAPITAL

TREASURY STOCK

SHARE PREMIUMS

LEGAL RESERVES

OTHER RESERVES

RETAINED EARNINGS

OTHER CHANGES IN

EQUITY

NET PROFIT

FOR THE YEAR TOTAL

Balance at the beginning of 2012 50,000,000 (2,415,630) 186,500,000 7,696,844 2,614,609 20,217,077 (81,823) (21,227,710) 243,303,367

Appropriation of the profit of 2011 - - - - - (21,227,710) - 21,227,710 -

Comprehensive income for the year: - -

Profit for the year - - - - - - - (12,517,886) (12,517,886)

Fair value of cash flow hedges (derivatives) - - - - - - (18,882) - (18,882)

Fair value of available for sale financial assets - - - - - - - - -

Gains on revaluation of properties - - - - - - - - -

Total comprehensive income for the year - - - (18,882) (12,517,886) (12,536,769)

Distribution of dividends - - - - - - - - -

Acquisition of treasury stock - (452,889) - - 452,889 (452,889) - - (452,889)

Stock options - - - - - - - - -

Sales of available for sale financial assets - - - - - - - - -

Share capital increase in subsidiaries - - - - - - - - -

Other operations - - - - (198,979) 198,979 - - -

Balance at the end of 2012 50,000,000 (2,868,519) 186,500,000 7,696,844 2,868,519 (1,264,544) (100,705) (12,517,886) 230,313,709

Balance at the beginning of 2013 50,000,000 (2,868,519) 186,500,000 7,696,844 2,868,519 (1,264,544) (100,705) (12,517,886) 230,313,709

Appropriation of the profit of 2012 - - - - - (12,517,886) - 12,517,886 -

Comprehensive income for the year: - -

Profit for the year - - - - - - - (49,379,995) (49,379,995)

Fair value of cash flow hedges (derivatives) - - - - - - 100,705 - 100,705

Fair value of available for sale financial assets - - - - - - - - -

Gains on revaluation of properties - - - - - - - - -

Total comprehensive income for the year - - - 100,705 (49,379,995) (49,279,290)

Distribution of dividends - - - - - - - - -

Acquisition of treasury stock - - - - - - - - -

Stock options - - - - - - - - -

Sales of available for sale financial assets - - - - - - - - -

Share capital increase in subsidiaries - - - - - - - - -

Other operations - - - - - - - - -

Balance at the end of 2013 50,000,000 (2,868,519) 186,500,000 7,696,844 2,868,519 (13,782,430) - (49,379,995) 181,034,419


ANNUAL REPORT 2013

INDIVIDUAL CASH FLOW STATEMENTS FOR THE PERIODS ENDED DECEMBER 31, 2013

AND 2012


NOTES FY 2013 FY 2012

OPERATING ACTIVITIES:

Receipts from customers 3,041 1,606,038

Payments to suppliers (142,621) (168,883)

Payments to employees (551,601) (1,093,677)

Cash generated from operations (691,181) 343,478

Income tax paid 373,788 753,984

Other receipts/(payments) relating to operating activities (284,407) (68,743)

Cash generated from other operating activities 89,381 685,241

Net cash generated by operating activities (1) (601,800) 1,028,719

INVESTING ACTIVITIES:


Financial assets 24 92,786,985 144,895,883

Tangible assets 5,767 17,375

Interest and similar income 1,563,563 1,419,926

Dividends 6 2,942,492 -

97,298,807 146,333,184


Financial assets 24 (94,158,008) (145,319,208)

Tangible assets (2,641) (10,593)

Intangible assets (1,750) (4,600)

(94,162,399) (145,334,402)

Net cash generated by investing activities (2) 3,136,408 998,782

FINANCING ACTIVITIES:


Borrowings 491,096,608 287,585,060

491,096,608 287,585,060


Borrowings (481,315,043) (280,348,121)

Interest and similar costs (11,224,813) (9,300,736)

Acquisition of treasury stock - (452,889)

(492,539,856) (290,101,746)

Net cash generated by financing activities (3) (1,443,248) (2,516,687)

Net increase in cash and cash equivalents (4)=(1)+(2)+(3) 1,091,360 (489,185)

Effect of foreign exchange currencies - -

Cash and cash equivalents at the beginning of the year 448,220 937,405

Cash and cash equivalents at the end of the year 1,539,580 448,220


12 Notes to the Individual Financial Statements

ANNUAL REPORT 2013

14 | NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

INTRODUCTORY NOTE

Martifer SGPS, S.A. (“Company”) is a limited company, with its registered office at Zona Industrial, Apartado 17, Oliveira de Frades

- Portugal, incorporated on October 29, 2004 and having as its principal activities the management of shareholdings held and the

rendering of support services to the Group companies.

From June 2007, and following the successful an Initial Public Offer (IPO), Martifer SGPS, S.A. started trading on the Portuguese

Stock Exchange, Euronext Lisbon.

The Company is obliged, in terms of Article 4 of Regulation no. 1606/2002, of the European Parliament and Council, of July, 19, to

prepare its consolidation financial statements in conformity with the International Financial Reporting Standards as adopted by the

European Union in terms of Article 3 of the said regulation.

The company adopted for the first time, in the 2010 economic period, the International Financial Reporting Standards, as adopted

by the European Union.

All the amounts presented in these notes are expressed in Euro, unless otherwise indicated.

1. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PREPARATION

The attached financial statements relate to the individual financial statements of Martifer SGPS, SA and were prepared in accordance

with the International Financial Reporting Standards (‘IFRS’), as adopted by the European Union, which came into effect at the

beginning of the economic period started 1 January 2013. These are the International Financial Reporting Standards, issued by the

International Accounting Standards Board (‘IASB’), and interpretations issued by the International Financial Reporting Interpretations

Committee (‘IFRIC’) or by the previous Standing Interpretations Committee (‘SIC’), that have been endorsed by the European Union

The attached financial statements have been prepared on a going concern basis from the accounting records of the Company and

have been prepared under the historical cost convention, except for the revaluation of certain non-current assets and certain

financial instruments, which are stated at fair value.

In preparing the financial statements in conformity with IAS/IFRS, the Board of Directors of the Company adopted certain

assumptions and estimates that affect the assets and liabilities reported, as well as the revenue and costs incurred relating to the

periods reported upon (Note 1 xvii)). All the estimates and assumptions made by the Board of Directors in respect of events and

transactions underway were made with the best knowledge existing at the date of the approval of the financial statements.


Adoption of new, amended or revised standards and interpretations

The following standards, interpretations, amendments and revisions endorsed by the European Union and with mandatory effects

from 1 January 2013, have been adopted in the current year:

EFFECTIVE DATE

IAS 12 – Income Taxes 01-01-13



IFRS 1 – First-time Adoption of International Financial Reporting Standards 01-01-13

IFRS 7 – Financial Instruments: Disclosures 01-01-13

IFRS 13 – Fair Value Measurement 01-01-13

IFRS 10 – Consolidated Financial Statements 01-01-13

IFRS 11 – Joint Arrangements 01-01-13

IFRS 12 – Disclosure of Interests in Other Entities 01-01-13

Changes in IFRS 10, 11 and 12 01-01-13

IAS 27 – Consolidated and Separate Financial Statements 01-01-13

IAS 28 – Investments in Associates 01-01-13

IFRIC 20 – Stripping Costs in the Production Phase of a Surface Mine 01-01-13

The adoption of the standards, interpretations, amendments and revisions mentioned above had no significant impact on the 2013

Group’s consolidated financial statements.

New, amended or revised standards and interpretations not yet adopted

The following standards, interpretations, amendments and revisions, with mandatory effects in future annual periods were, up to the

financial statements approval date, endorsed by European Union:

EFFECTIVE DATE

IAS 32 – Financial Instruments: Presentation 01-01-2014

IAS 36 – Impairment of Assets 01-01-2014

IAS 39 – Financial Instruments: Recognition and Measurement 01-01-2014

Changes in IFRS 10, 11 and IAS 27 01-01-2014

At this date it is not possible to estimate the effects that the adoption of these standards could have on the financial statements of

the Group.

New, amended or revised standards and interpretations not yet been endorsed by the European Union

As at this date, the following standards, interpretations, amendments and revisions have already been issued by the IASB /IFRIC

but have not yet been endorsed by the European Union:

EFFECTIVE DATE

IFRS 9 – Financial Instruments: Recognition and Measurement To be defined




Change in IFRS 9 – Financial Instruments: hedge accounting To be defined

IFRIC 21 –Levies 01-01-14

At this date it is not possible to estimate the effects that the adoption of these standards could have on the financial statements of

the Group.

ANNUAL REPORT 2013

MAIN ACCOUNTING POLICIES, JUDGEMENTS AND ESTIMATES

The main accounting policies, judgements and estimates used in the preparation of the Group’s consolidated financial statements

for the years presented are as follows:

i) Non-current assets held for sale

Non-current assets are classified as held for sale when their value is recovered through a sales transaction as opposed to through

their continued use or when the Company loses control over a significant operational unit. However, such classification requires that

the sale transaction be highly probable, that the asset is available for immediate sale, that the Board of Directors is committed to its

sale and that it occurs in the short period (normally, but not exclusively, in the space of one year).

Non-current assets classified as held for sale are recorded at the lower of their carrying value or realisable value net of selling

expenses, and the depreciation of fixed assets affected to an operational unit held for sale is interrupted during the related period.

ii) Intangible assets

Intangible assets acquired by the Company are stated at their acquisition cost, net of accumulated depreciation and impairment

losses, and are only recognized if it is probable that future economic benefits will flow from them to the Company, their value can be

reliably measured and if they are controlled by the Company.

Intangible assets comprise mainly software and other industrial property rights, which are depreciated on a straight-line basis over a

3 year period.

iii) Tangible fixed assets

Tangible assets are recorded at their acquisition cost, net of depreciation and accumulated impairment losses.

The depreciation rates used correspond to the following estimated useful lives:

Transportation equipment 4 years

Office equipment 3 to 5 years

Maintenance and repair costs that neither increase the useful life nor create significant improvements in tangible fixed assets are

recognized as costs in the year in which they are incurred.

iv) Financial assets and liabilities

Financial assets and liabilities are recognized in the balance sheet when the Company is a contractual party to the instrument.

a) Financial instruments:

The Company classifies financial assets in the following categories: ‘Financial assets at fair value through profit or loss’,

‘Borrowings and receivables’, ‘Held-to-maturity investments’ and ‘Available-for-sale financial assets’. The classification depends on

the intention inherent to the investment’s acquisition.

The classification is made at the initial recognition date and re-appreciated on a quarterly basis.

- Financial assets at fair value through profit or loss: this category is divided into two sub-categories: ‘financial assets

classified as held for trading’ and ‘financial assets designated at fair value through profit or loss’. A financial asset is

classified under this category, namely, if it is acquired for the purpose of selling it in the short term. Derivatives are also

classified as instruments held for trading, except if designated as an effective hedging instrument. Financial instruments in

this category are classified as current if they are held for trading or if it is expected that they are going to be realized within

twelve months from the balance sheet date;

- Held-to-maturity investments: this category includes financial assets, non-derivative, with fixed or variable reimbursements

with a fixed maturity, and which the Board of Directors intends to hold to maturity


- Available-for-sale financial assets: these include financial assets, non-derivative, that are designated as available-for-sale

or those that are not and cannot be classified in the preceding categories. This category is classified as non-current, unless

the Board of Directors has the intention to sell the investment within 12 months from the balance sheet date.

Held-to-maturity investments are classified as non-current investments, unless their maturity is less than a year from the balance

sheet date. Financial assets designated by the Group at fair value through profit or loss are classified as current.

All purchases and sales of financial instruments are recognized on the trade date, irrespective of the date of the financial

settlement.

These financial assets are initially measured at cost, which is the consideration paid for them, and include transaction costs in the

case of available-for-sale investments.

After the initial recognition, financial assets valued at fair value through profit or loss and the available-for-sale investments are

re-valued at their fair values with reference to their market value at the balance sheet date (measured by their quoted price or

through an independent valuation), without regard for any transaction costs that may be incurred until their sale. Financial assets

not quoted and in respect of which it is not possible to reliably estimate their fair value, are maintained at acquisition cost less

impairment losses.

Gains and losses resulting from a change in the fair value of the ‘available–for-sale financial assets’ are recognized directly in

equity, under the caption Fair value reserves until the investment is sold, received or in any way alienated, or until the fair value of

the investment falls below the acquisition cost and this corresponds to an imparity, at which moment the accumulated gain or loss

is recognized in the income statement.

Gains and losses resulting from changes in the fair value of ‘Financial assets at fair value through profit or loss’ are recognized in

the income statement, under the caption ‘Gains/losses in financial assets’.

‘Held-to-maturity investments’ are recorded at their amortized cost using the effective interest rate method, net of capital

repayments and interest received.

Investments in subsidiaries and associated companies, as laid down by IAS 27, are valued at acquisition cost net of impairment losses.

b) Trade and other receivables

Trade and other receivable amounts have no implicit interest and are recorded at their nominal value less any impairment losses,

recognized in the allowance account ‘Accumulated Impairment losses’, in order to reflect their net realization value.

c) Borrowings

Borrowings are recorded as liabilities at the nominal value received, net of up-front fees and commissions relating to the issuance

of these instruments. Financial expenses are calculated based on the effective interest rate and are recorded in the income

statement on an accruals basis.

d) Trade and other payables

Accounts payable, which do not bear interest, are recorded at their nominal value which is substantially equivalent to their fair value.

e) Financial liabilities and equity instruments

Financial liabilities and equity instruments are classified based on their contractual substance. The Company classifies as equity

instruments those contracts that evidence a residual interest of the Group in a group of assets after deducting a group of liabilities.

f) Derivatives

The Company uses derivative instruments solely to manage its exposure to financial risks by hedging these, and not with a

trading objective. The use of derivative instruments has been approved by the Company’s Board of Directors.

The derivative instruments used by the Company, classified as cash-flows hedges, are exclusively related to the hedging of

interest rates on loans obtained. The loan amount, interest maturity and loan reimbursement plans inherent to the hedging

instrument are in all respects similar to the established conditions for the contracted loans, resulting in perfect hedges.

ANNUAL REPORT 2013

Interest rate derivatives (Cash-flow hedges) are initially recorded at cost, if any, and subsequently re-valued at their fair value.

The portion of the changes in the fair value of derivatives effectively covered are deferred in the statement of comprehensive

income in the caption ‘Fair value reserves – Derivatives’, being transferred to the income statement in the same period that the

hedge instrument affects the income statement. The gain or loss relating to the ineffective portion is recognized immediately in the

income statement, when determined.

Hedge accounting is discontinued when the hedging instrument expires or is sold. When a hedging instrument no longer

qualifies for hedge accounting the cumulative gain or loss that was deferred in the statement of comprehensive income in the

caption ‘ Fair value reserves – Derivatives’ is transferred to the income statement for the period and the subsequent revaluations

of the derivative are also recorded in the income statement.

v) Cash and cash equivalents

Cash and cash equivalents include cash on hand, cash at banks, term deposits and other treasury operations with a maturity under

three months, readily convertible to a known amount of cash, and which are subject to insignificant value changes.

vi) Revenue recognition and accrual based accounting

Revenue and expenses are recorded in the period to which they relate, regardless of their date of payment or receipt. The captions

of ‘Other accounts receivable’, ‘Deferred expenses’ and ‘Other accounts payable’ include expenses and income relating to the

current period, where payment and receipt will occur in future periods, as well as payments and receipts in the current period but

which relate to future periods.

Dividends from investments are recognized when the Company’s right to receive them has been established.

Interest revenue is accrued on a time basis, with reference to the principal outstanding and the effective interest rate applicable for

the operations.

vii) Balances and transactions expressed in foreign currency

All the assets and liabilities expressed in foreign currencies are translated to the functional currency, using the official exchange

rate at the reporting date. The exchange differences, favourable or unfavourable, originating from the differences between the

exchange rates at the transaction dates and those used at the collection, payment or at the balance sheet date, are recognized at

their gross amount as gains and losses in the income statement.

viii) Income Taxes

The Income tax charge for the period includes current and deferred tax, in accordance with IAS 12. Current tax is calculated based

on the taxable profit, in accordance with the local tax laws applicable to the location where the Company has its registered office.

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial

statements and the corresponding tax base used in the calculation of taxable profit as well as in respect of some fiscal credits

attributed to the Company, and it is accounted for using the balance sheet liability method.

Deferred tax assets and liabilities are measured at the tax rates and based on the tax legislation expected to apply in the period in

which the differences reverse, and evaluated annually using tax rates (and tax laws) that have been enacted or substantively

enacted at each balance sheet date.

Deferred tax assets are generally recognized to extent that there is a reasonable probability that taxable profits will be available

against which to offset them. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the

extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

The deferred tax amount that results from transactions or events recognized directly in equity is registered directly in equity as well,

not affecting the net income for the period.

ix) Interest charges on borrowings

Borrowing costs incurred with borrowings are recorded in the income statement on the accrual basis.

x) Provisions


Provisions are recognized when, and only when, the Group has an existing obligation (legal or constructive) as a result of a past

event, it is probable that the Group will be required to settle the obligation and a reliable estimate can be made of the amount of the

said obligation. These provisions are reviewed at each balance date and are adjusted to reflect the best estimate at that date,

taking into consideration all the risks and uncertainties inherent to such estimates. When a provision is determined using the future

cash flows estimated to settle the existing obligation, its carrying amount is the present value of those cash flows.

xi) Impairment of assets

The Company reviews the carrying amounts of its assets at each balance sheet date or whenever there is any indication (an event

or alteration of circumstances) that these assets may have suffered an impairment loss. When the asset carrying amount is greater

than its recoverable amount an impairment loss is recognized and recorded in the caption ‘Provisions and impairment losses’. The

recoverable amount is the higher of fair value less selling costs and value in use. The fair value less selling costs is the amount that

can be obtained in an arms-length transaction. Value in use is calculated by assessing the estimated future cash flows to be generated

by the asset and its residual value, all discounted to their present value. When it is not possible to estimate the recoverable amount

of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

The reversal of impairment losses recorded in previous years is recognized when the underlying reasons that caused that entry are

no longer applicable and, consequently, the asset is no longer impaired. The reversal of impairment losses is recognized in the

income statement as an operational result. However, the reversal of an impairment loss is only recognised up to the amount that

would be recorded using the historical cost, or the revalued amount, net of amortization and depreciation, if the impairment loss had

not been recorded in previous years.

xii) Employee benefits

Variable remunerations

According to the statutes of some Group companies, the shareholders of those companies approved at the General Meeting or a

Remuneration Committee elected by shareholders, establish the fixed and variable remuneration to be distributed to members of

governing bodies . Bonus payments are recorded in the period to which they relate.

xiii) Statement of financial positions presentation

Assets to be realized and liabilities to be settled twelve months after the reporting date are classified as non-currents. Likewise,

given their nature, ‘Deferred tax’ and ‘Provisions’ are classified as non-current on the statement of financial position.

xiv) Contingent assets and liabilities

Contingent liabilities are not recorded in the financial statements. Instead, they are disclosed in the notes to the financial

statements, unless the probability of a cash outflow is remote.

Contingent assets are not recorded in the financial statements but are disclosed in the notes to the financial statements when future

economic benefits are probable.

xv) Cash Flow Statement

The cash flow statement is prepared, using the direct method, in accordance with IAS 7. The Company classifies as ‘Cash and

cash equivalents’ treasury operations which mature in less than three months, readily convertible to a known amount of cash, and

which are subject to insignificant value changes.

The cash flow statement is classified by operating, investing and financing activities. Operating activities include cash receipts from

clients, cash payments to suppliers, cash payments to and on behalf of employees and other operating activities’ payments and

receipts. Investing activities’ cash flows include, essentially, payments and receipts related with the acquisitions and sales of

tangible and intangible assets.

Financing activities’ cash flows include, essentially, payments and receipts of loans and borrowings, financial lease contracts and

dividend payments.

ANNUAL REPORT 2013

xvi) Subsequent events

Events occurring after the balance sheet date that provide additional information about conditions existing at the balance sheet date

(adjusting events), are recognized in the financial statements. Events occurring after the balance sheet date that provide

information on conditions occurring after the balance sheet date (non-adjusting events), if material, are disclosed in the notes to the

financial statements.

xvii) Judgements and estimates

In preparing the financial statements the Board of Directors used its best knowledge and accumulated experience of past and

current events in making certain assumptions as to future events.

The most significant accounting estimates reflected in the financial statements for the periods ended at 31 December 2013 and

2012 include:

- Impairment analysis of financial assets;

- Recording of provisions and impairment losses;

- Fair value of financial instruments; and

- Recognition of deferred tax assets in respect of reportable tax losses.

Estimates used are based on the best information available during the preparation of the financial statements. However,

events may occur in subsequent periods that, not being foreseeable, were not considered in these estimates. Changes to the

estimates that occur after the date of these financial statements, will be recognized in net income, in accordance with IAS 8, using

the prospective methodology.

xviii) Financial risk management

Uncertainty, a characteristic of the financial markets, translates into a number of risks to which the activities of the Martifer Group

are exposed, namely price risk, currency risk, interest rate risk, liquidity risk and credit risk.

a) Currency risk

Currency risk is the possibility of registering gains or losses resulting from the changes in the foreign exchange rates between

different currencies. The Company’s exposure to currency risk results from the existence of foreign based subsidiaries in countries

with a currency other than the Euro and of transactions between these subsidiaries and other Group companies and the existence

of transactions made by companies operating in currency other than the reporting currency of the Group.

The currency risk management policy of the Company aims to reduce the sensitivity of its income statement to foreign exchange

rate variations.

b) Interest rate risk

Interest rate risk reflects the possibility of changes in future interest charges in loans borrowings obtained as a result of changes in

market interest rate levels.

The Company relies on external financing to fund its activity and it is exposed to interest rate risk as a significant part of its

borrowings are indexed to market interest rates.

In the more significant long term loans the Company relies on fixed interest rate loans or uses interest rate derivatives to hedge

exposure to interest rate risk on these loans. The amounts, interest due dates and repayment schedules of the interest rate

derivatives are identical to those of the loans they hedge and, as such, these derivatives are considered perfect hedges.

c) Liquidity risk

Liquidity risk reflects the prospect of the Company not satisfying its financial responsibilities with the available financial resources.

The Company seeks to ensure that the structure of its funding matches the nature of its obligations. Investments in fixed

assets, including financial investments, are funded by long term financing (equity and long term loans), whilst short term obligations

are funded through short term loans. Long term loans are usually arranged for periods ranging from 5 to 7 years, mostly with a

grace period in respect of the start of the principal’s repayment schedule ranging from 1 to 2 years.


d) Credit risk

The Company’s credit risk results fundamentally from its relationship with financial institutions, occurring within the scope of its

normal activity, associated with the potential default, by the financial institutions, with which it has contracted, in the regular course

of business, term deposits, current accounts and derivatives.

To mitigate this risk, the Company diversifies its counterparties, to avoid an excessive concentration of credit risk, and privileges the

contracting of less complex financial instruments in detriment of instruments which structure is not fully known.

2. SALES AND SERVICES RENDERED

Sales and services rendered for the periods ended 31 December 2013 and 2012 refer, essentially, to management fees charged to

Group companies:

FY 2013 FY 2012

Services rendered 449,728 1,891,618

449,728 1,891,618

During 2013, the level of services that the Holding company provided to other Group companies decreased significantly due to the

fact that, part of the services that were provided by the company, have been transferred to the Business Areas following the

strategy of allocating greater autonomy to the Business Areas, with consequent greater descentralization and accountability.

3. SUPPLIES AND EXTERNAL SERVICES

The breakdown of supplies and external services for the periods ended 31 December 2013 and 2012 is as follows:

FY 2013 FY 2012

Specialized services 260,611 138,308

Insurance 75,138 70,453

Fees 96,100 45,833

Travel and accommodation 15,551 22,662

Fuel 9,374 10,948

Communication 4,194 8,905

Repairs and maintenance 2,866 6,149

Stationery 2,829 2,409

Legal and notarial fees 2,054 2,316

Advertising - 332

Gifts - 91

Travelling expenses 1,153 -

Others 63 93

469,932 308,498

The caption ‘Supplies and external services’ have reduced in 2013, approximately 52%, essentially related with costs of services

from financial consulting, registed in ‘Specialized services’.

ANNUAL REPORT 2013

4. STAFF COSTS

O Staff costs for the periods ended 31 December 2013 and 2012 can be analysed as follows:

FY 2013 FY 2012

Remuneration 432,183 765,418

Social charges:

Other 138,956 205,345

571,139 970,764

At 31 December 2013 and 2012, the caption ‘Other’ includes, essentially, costs supported with social security, social responsibility

costs, training costs, medical expenses and with labour accident insurance.

The decrease in the caption ‘Staff Costs’ in 2013, has followed the reduction of ‘Sales and services rendered’, as a consequence of

the transfer of employees to the Business Areas.

During 2013 and 2012, the company’s average staff number was as follows:

FY 2013 FY 2012

Directors 2 1

Employees 8 18

10 19

5. PROVISIONS AND IMPAIRMENT LOSSES

Provisions and impairment losses for the periods ended 31 December 2013 and 2012 are as follows:

FY 2013 FY 2012

Impairment losses in financial assets (Note 11) 65,786,553 4,116,493

Provisions 596,212 22,288

66,382,765 4,138,781

At the end of 2013, impairment losses on shares, amounting to Euro 66 million, were recorded, resulting from the impairment test

performed on those assets. The increase of impairment loss in 2013 is mainly due to the deterioration of the equity of its subsidiaries,

motivated by losses in operating activities (see Note 11).

Impairment tests for various financial assets of the company have been prepared in accordance with the Discounted Cash Flow

evaluation model (DCF). The values of these evaluations are determined by past performance and the expectation of market

development, with future cash-flow projections, for a five year period, being drawn up for each of the businesses, based on

medium/long term plans approved by the Board of Directors.

These estimates were made considering a discount rate and a growth rate as mentioned on Note 11.


6. FINANCIAL RESULTS

The financial results for the periods ended 31 December 2013 and 2012 may be analysed as follows:

FY 2013 FY 2012

Interest and similar revenue

Borrowings and accounts receivable (including bank deposits)

Interest earned 1,564,779 1,448,840

Other revenue and financial gains relating to other financial assets

Dividend income 2,942,492 -

Other revenue and financial gains 24,198,032 -

Total interest and similar revenue 28,705,303 1,448,840

Interest and similar expenses

Borrowings and accounts payable

Interest charges on bank loans 9,925,626 8,154,261

Other expenses and financial losses relating to other financial liabilities

Other expenses and financial losses 1,311,682 2,327,126

Total interest and similar expenses 11,237,308 10,481,386

In period of 2013, the caption ‘Dividend income’ refers to the dividends received from the subsidiary Martifer Solar, SGPS.

The caption ‘gains on the sale of financial assets’ is mainly related with the sale of part of the participation in PRIO ENERGY,

SGPS, S.A. to a fund represented by management company OXY CAPITAL – SOCIEDADE DE CAPITAL DE RISCO, S.A.,

decreasing the Group participation from 49% to 10%. This operation was approved by the Competition Authority in September

2013.

The caption ‘Other expenses and financial losses’ results, essentially, from the fees incurred in the issuance of commercial paper.

7. INCOME TAX

The breakdown of assets giving rise to deferred taxes in the periods ended 31 December 2013 and 2012 may be analysed as

follows:

FY 2013 FY 2012

Tax losses carried forward 1,714,417 4,767,864

Fair value of derivatives 37,929 17,772

Deferred tax assets 1,752,346 4,785,636

In accordance with the tax statements presented by companies that recorded deferred tax assets arising from tax losses carried

forward, as at 31 December 2013 and 2012, and using exchange rates effective at that time, tax losses carried forward can be

summarised as follows:


TAX LOSSES

CARRIED FORWARD

DEFERRED TAX ASSET

TIME LIMIT TAX LOSSES

CARRIED FORWARD

DEFERRED TAX ASSET

TIME LIMIT

Generated in 2009 393,193 104,196 2015 393,193 104,196 2015

Generated in 2010 - - - 5,260,874 1,394,132 2014

Generated in 2011 6,076,302 1,610,221 2015 12,337,874 3,269,537 2015

ANNUAL REPORT 2013

6,469,945 1,714,417 17,991,941 4,767,864

The variation in the deferred tax assets is related with the transfer of these assets from the subsidiaries that are part of the special

taxation of groups of companies’ mechanism (“RETGS”), of which, the company is the dominant company, doesn’t originating

impact in the Income Statement

Deferred tax assets arising from tax losses carried forward registed, have in basis projections realized for the respective business

areas, which predicts positive taxable profits suporting its recuperability.

As at 31 December 2013, tax losses carried forward in the special taxation of groups of companies’ mechanism (“RETGS”),

amounting to Euro 104,441,021 (Euro 88,271,845 as at 31 December 2012), have not originated deferred tax assets amounting to

Euro 27,676,870 (Euro 23,392,039 as at 31 December 2012) for prudential reasons. Unrecognised deferred taxes on tax losses are

as follow:


TAX LOSSES

CARRIED FORWARD

TAX CREDIT TIME LIMIT TAX LOSSES

CARRIED FORWARD

TAX CREDIT TIME LIMIT

Generated in 2007 - - - 1,974,262 523,179 2013

Generated in 2008 26,734,892 7,084,746 2014 26,734,892 7,084,746 2014

Generated in 2009 6,004,990 1,591,322 2015 6,004,990 1,591,322 2015

Generated in 2010 19,475,087 5,160,898 2014 14,214,213 3,766,766 2014

Generated in 2011 19,450,588 5,154,406 2015 13,189,015 3,495,089 2015

Generated in 2012 26,154,473 6,930,935 2017 26,154,473 6,930,935 2017

Generated in 2013 6,620,991 1,754,563 2018 - - -

104,441,021 27,676,870 88,271,845 23,392,039

The reconciliation of the income tax charge for the period and the current tax charge may be analysed as follows:

FY 2013 FY 2012

Current tax 11,985 12,095

Under / (over) taxation estimates (135,484) 15,343

Deferred taxes relating to the reversal of timing differences - -

Tax charge for the period (123,499) 27,438

Effective tax rate 0.25% -0.2%

At 31 December 2013 and 2012, the reconciliation between the normal and effective rate is as follows:

FY 2013 FY 2012

Net income before taxes (49,503,494) (12,490,448)

Nominal income tax on results (nominal rate 25%) (12,375,873) (3,122,612)

Costs not deductible for tax purposes:

Permanent differences 304 -

Impairment losses 16,446,635 1,029,123

Provisions not accepted 149,053 5,572

Restituition of not deductible taxes and over taxation estimates (163,888) -

Capital gain in sale of financial assets (5,947,042) -

IRC and other taxes which directly or indirectly are applicable to taxable profits [art.º 45, n.º 1, a)] 130,017 -

Other (60,891) (18,327)

Tax benefits (8,972) -

Tax losses arising in this period in respect of which no deferred tax assets were recognised 1,830,657 2,106,243

Under / (over) taxation estimates (1) (135,484) 15,343

Autonomous taxation (2) 11,985 12,096

Municipality tax (3) - -


Effective tax charge on income (1) + (2) + (3) (123,499) 27,438

Martifer SGPS, S.A. and its subsidiaries are subject to corporate income tax (IRC) at the normal rate of 25. In addition, a municipal

surcharge, in this case of 1.5% is also applied. When the taxable profit subject to corporate income tax is between € 1,500,000 and

€ 7,500,000 there is an additional state surcharge of 3% and for the amount above of € 7,500,000 applies a taxe rate of 5%.

In terms of article 88 of the Corporate Tax Code, the company is, additionally, subject to autonomous tax over a number of

expenses, at the rates laid down in the said Code.

Since January 2011, Martifer SGPS, SA is covered by the “RETGS”, which comprises companies in which it holds, directly or

indirectly, at least 90% of its capital and meet simultaneously with the other conditions set by that mechanism. The remaining

Martifer Group companies, not covered by the special tax mechanism, are taxed individually, based on their taxable profit and at the

applicable tax rates.

In accordance with the legislation in force, tax declarations remain subject to review and adjustment by the tax authorities during a

period of four years (five years for social security), except when there are tax losses, fiscal benefits were conceded, or inspections,

claims or impugnations are underway, in which cases, depending on the circumstances, the period is extended or suspended.

Consequently, the tax declarations for the years 2009 through 2012 may be subject to review.

The Board of Directors believes that any adjustments resulting from reviews/inspections by the tax authorities will have no

significant impact on the financial statements at 31 December 2013.

At 31 December 2013 and 2012, ‘Income Tax’ are made up as follows:

FY 2013 FY 2012

Corporate income tax – Assets - 738,605

Corporate income tax – Liabilities (78,351) -

(78,351) 738,605

8. EARNINGS PER SHARE

Martifer SGPS has issued solely ordinary shares so there are no special dividends or voting rights.

Martifer has a single type of potentially dilutive ordinary share: share options. To calculate the diluted earnings per share it is

necessary to determine whether these options, regardless of whether they may or not be exercised, have a dilutive effect, which

occurs when the option exercise price is lower than the quoted share price.

Considering that Martifer’s quoted share price averaged Euro 0.64 between January 1, 2013 and December 31, 2013, which is

lower than the option exercise price (Euro 3.84), the latter can be considered non-dilutive as their exercising would result in a

reduction in the ordinary shares in circulation.

Hence, at 31 December 2013 there is no difference between the basic and diluted earnings per share calculation.

Martifer SGPS SA’s share capital is represented by 100,000,000 ordinary shares, totally subscribed and realized, representing a

share capital of Euro 50,000,000.

The weighted average number of shares in circulation is reduced in 2,135,634 shares, corresponding to own shares acquired by

Martifer SGPS during 2010 and 2013 totalling 2,215,910 shares.

At 31December 2013 and 2012, the calculation of earnings per share, basic and diluted, may be demonstrated as follows:

FY 2013 FY 2012

Net profit for the period (I) (49,379,995) (12,517,886)

Weighted average number of shares in circulation (II) 97,864,366 97,864,366

ANNUAL REPORT 2013

Earnings per share, basic and diluted (I) / (II) (0.5046) (0.1279)

9. INTANGIBLE ASSETS

Gross intangible assets for the period ended 31 December 2013 and 2012 may be analysed as follows:

SOFTWARE AND OTHER RIGHTS

OTHER INTANGIBLE

ASSETS

ADVANCES ON ACCOUNT OF INTANGIBLES

TOTAL

31 December 2012

Opening balance 1,349 35,915 - 37,264

Additions - 4,600 - 4,600

1,349 40,515 - 41,864

31 December 2013

Opening balance 1,349 40,515 - 41,864

Additions - 1,750 - 1,750

1,349 42,265 - 43,614

Accumulated amortization and impairment losses for the period ended 31 December 2013 and 2012 may be analysed as follows:

SOFTWARE AND OTHER RIGHTS

OTHER INTANGIBLE

ASSETS

ADVANCES ON ACCOUNT OF INTANGIBLES

TOTAL

31 December 2012

Opening balance 1,349 15,230 - 16,669

Additions - 10,104 - 10,104

1,349 25,424 - 26,773

31 December 2013

Opening balance 1,349 25,424 - 26,773

Additions - 10,654 - 10,654

1,349 36,078 - 37,427

Net amount:

2012 - 15,091 - 15,091

2013 - 6,187 - 6,187

10. TANGIBLE FIXED ASSETS

Gross amounts in respect of transportation and office equipment and other tangible fixed assets for the periods ended 31

December 2013 and 2012 may be analysed as follows:

TRANSPORTATION

EQUIPMENT OFFICE EQUIPMENT

OTHER TANGIBLE FIXED

ASSETS TOTAL

31 December 2012

Opening balance 91,346 31,162 - 122,508

Additions 6,920 1,792 - 8,712

Sales and write-offs (42,842) - - (42,842)

55,424 32,954 - 88,378

31 December 2013

Opening balance 55,424 32,954 - 88,378


Additions - 3,564 - 3,564


48,504 36,518 - 85,022

Accumulated depreciation and impairment losses respecting transportation and office equipment and other tangible fixed assets for

the periods ended 31 December 2013 and 2012 may be analysed as follows:

TRANSPORTATION

EQUIPMENT OFFICE

EQUIPMENT

OTHER TANGIBLE FIXED

ASSETS TOTAL

31 December 2012

Opening balance 47,859 24,242 - 72,101

Additions 15,160 4,589 - 19,749


43,191 28,831 - 72,023

31 December 2013

Opening balance 43,191 28,831 - 72,023

Additions 6,013 2,563 - 8,576


48,051 31,394 - 79,445

Net amount:

2012 12,233 4,123 - 16,355

2013 453 5,124 - 5,577

11. FINANCIAL INVESTMENTS

At 31 December 2013 and 2012, the breakdown of financial investments in subsidiaries and associated companies was as follows:

% HELD ACQUISITION

VALUE SUPPLEMENTARY

CAPITAL IMPAIRMENT LOSS TOTAL

31 December 2012

Nutre SGPS 49% - 58,909,000 - 58,909,000

Martifer Renewables, SGPS 100% 99,765,968 162,462,327 (149,507,225) 112,721,070

Eviva Hidro 1% 47 2,006,564 (2,006,611) -

Martifer Metallic Constructions, SGPS 100% 12,261,256 87,284,359 - 99,545,615

Martifer Inovação e Gestão 100% 101,291 7,776,455 (1,733,633) 6,144,113

Martifer GMBH 100% 21,800 98,291 - 120,091

Ventinveste SA 5% 2,500 - - 2,500

Martifer Energy Systems SGPS 100% 6,087,775 30,826,000 - 36,913,775

Prio Energy SGPS 49% 5,235,168 2,891,000 - 8,126,168

Martifer Gestiuni si Servicii 100% 1,265 - - 1,265

Martifer Solar SGPS 100% 26,280,763 - - 26,280,763

Martifer Global, SGPS 100% 50,000 - - 50,000

CEC 25,000 - - 25,000

149,832,833 352,253,996 (153,247,469) 348,839,360

% HELD ACQUISITION

VALUE SUPPLEMENTARY

CAPITAL IMPAIRMENT LOSS TOTAL

31 December 2013

Nutre SGPS 49% - 58,909,000 (39.309.000) 19.600.000

Martifer Renewables, SGPS 100% 99,765,968 159,462,327 (145.330.835) 113.897.460

Eviva Hidro 1% 47 2,006,564 (2,006,611) -

Martifer Metallic Constructions, SGPS 100% 12,261,256 106,280,401 (30,083,614) 88,458,043

Martifer Inovação e Gestão 100% 101,291 6,176,455 (2,148,492) 4,129,254

Martifer GMBH 100% 21,800 97,817 - 119,617

Ventinveste SA 5% 2,500 - - 2,500

Martifer Energy Systems SGPS 100% 6,087,775 32,010,327 - 38,098,102

Prio Energy SGPS 10% 534,201 586,386 - 1,120,586

Martifer Gestiuni si Servicii 100% 1,265 - - 1,265

Martifer Solar SGPS 100% 26,280,763 - - 26,280,763

ANNUAL REPORT 2013

Martifer Global, SGPS 100% 50,000 227,750 (155,470) 122,280

CEC 25,000 - - 25,000

145,131,865 365,757,027 (219.034.022) 291.854.870

The financial investements are measured as to its recoverable amount whenever there are impairment indicators, being considered

for evidence whenever the Equity of subsidiaries (considering the consolidated equity whenever applicable) is lower than their

acquisition value. Based on this principle, we identified indicators of impairment in the shareholdings in Martifer Inovação e Gestão,

S.A., Martifer Metallic Constructions, SGPS, S.A., Martifer Energy Systems, SGPS, S.A., Martifer Global, SGPS, S.A and Nutre,

SGPS, S.A..The impairment tests performed consider the following assumptions:

To Martifer Global, SGPS, S.A. and Martifer Inovação e Gestão, S.A. it was considered, as a valid indicator, the amount of

consolidated and individual Equity, respectively, and, as a consequence, impairment losses of Euro 155,470 and Euro

414,859, respectively, were recorded (Note 5)

This assumption is justified by the fact that these companies render services to the group and the amount of its assets is not

significant.

For the shareholdings of Martifer Metallic Constructions, SGPS, S.A., Martifer Energy Systems, SGPS, S.A. and Nutre, SGPS,

S.A., it was considered adequated to assess its recoverable amount based on the value in use, using a discounted cash flow

method, supported by the business plans drawn by the people in charge of each business unit and approved by the respective

Board of Directors and using different discount rates according to the risks inherent to each business.

At 31 december 2013, it was recorded impairment losses in Martifer Metallic Constructions, SGPS, S.A. and Martifer Energy

Systems, SGPS, S.A. of Euro 30,083,614 and in Nutre, SGPS, S.A. of Euro 39,309,000.

At 31 December 2013, the methods and assumptions used in the identification, or not, of any impaiment losses to these

financial assets were as follows:

MARTIFER METALLIC CONSTRUCTIONS E

MARTIFER ENERGY SYSTEMS NUTRE SGPS

Equity (atributtable to the Group) 21,502,517 (1,065,349)

Financial asset 156,639,759 58,909,000

Period used 5 years cash flow projection 5 years cash flow projection

Growth rate (g) 1 2.00% 1.00%

Average growth rate of EBITDA for five years 17.00% 17.00%

Discount rate 2 8.80% 12.71%

1 Growth rate used to extrapolate the cash flows beyond the business plan period


For Martifer Metallic Constructions and Martifer Energy Systems, the assumption of na actual rate lower in 1p.p. would result in no

booking of impairment losses. An actual rate higher in 1pp would result in an increase in impairment loss of 34 million euros.

For Nutre SGPS, the decrease in 1p.p. in discount rate would result in a reduction of approximately 6 million euros in impairment

losses, while the increase in 1p.p in actual rate would result in an increase in impairment loss of 5 million euros.

For the cases in which it was apured impairment loss, carrying amount was adjusted to the use value resulting from impairment loss

test.

For Martifer Renewables, SGPS, S.A. Group considers as a valid indicator consolidated Equity, and in this way, it was reversed

part of impairment registed in previous years, in the amount of Euro 4,176,390. This principle had in basis the fact that Martifer

Renewables, SGPS, SA has a low turnover, comparing with total assets, and considering the consolidated accounts this already

includes assets associated with wind farms, in which it was made analysis to the recuperable amounts and booked impairment

losses.


Supplementary capital doesn’t bear interests neither repayment term.

12. GROUP COMPANIES

At 31 December 2013 and 2012, shareholder loans and other financial operation balances (assets) are as follows:


NON-CURRENT CURRENT TOTAL NON-CURRENT CURRENT TOTAL

Nutre, SGPS, SA - 1,071,409 1,071,409 - 2,514 2,514

Navalria - 9,128 9,128

Prio Energy, SGPS, SA - - - - 2,250,000 2,250,000

Martifer Alumínios, S.A. - 85,880 85,880

Martifer Renewables, SGPS, SA - 178 178 - 60,890 60,890

Martifer Metallic Constructions, SGPS, SA

- 15,528,281 15,528,281 4,694,000 8,304,598 12,998,598

Martifer Inovação e Gestão, SA - 695,674 695,674 - 167,305 167,305

Martifer Energy Systems, SGPS, SA

- 74,361 74,361 1,178,460 2,804,581 3,983,041

Martifer Solar, SGPS, SA - 1,660,869 1,660,869 - 20,428 20,428

Ventinveste, SA 19,809,842 - 19,809,842 18,319,357 - 18,319,357

Martifer GMBH 15,000 1,699 16,699 15,000 640 15,640

Martifer Global, SGPS - 191,232 191,232 - 131,500 131,500

Outras - 469 469 - 469 469

19,824,842 19,319,180 39,144,022 24,206,816 13,742,925 37,949,741

In 2013, the balance of Loans granted by Martifer SGPS to Ventinveste, SA was 19.809.842 Euros. These loans were intended

largely to provide financial support to Ventinveste SA in the fulfillment of its obligations described in the contract signed with the

Direção Geral de Energia e Geologia (DGEG) on 18 of September of 2007 under the phase B of the public procedure for attribution

of energy injection capacity to the national electric grid for electric energy produced through wind parks. The schedule of the

reimbursement of this loan should be clarified in the context of ongoing negations with DGEG.

These loans bear interest at a market rate.

The liabilities presented by the company, with Group companies, at 31 December 2013 and 2012, are as follows:


Martifer Construções SA 1,657,732 4,634,051

Martifer Solar SGPS 16,042 2,947,129

Navalria - 391,397

Martifer Solar Srl - 108,131

Martifer Gestão de Investimentos 60,579 64,871

Martifer Renewables, SGPS 6,665,457 52,900

Martifer Aluminios SA - 46,451

Martifer Renewables, SA 17,743 25,330

Martifer Inovação e Gestão 70,299 23,225

Soc.Madeiras do Vouga 10,697 8,378

Martifer Metallic Constructions, SGPS 34,073 5,250

Martifer Energy Systems SGPS 195,380 4,016

Nagatel 3,500 3,000

8,731,502 8,314,128

At 31 December 2013, the amount presented in Group companies in liabilities refers mainly to liabilities that the company has with

its subsidiaries under the special taxation of groups of companies’ mechanism (“RETGS”). The main amounts relate to the transfer

of tax losses carried forward that have been recognized by the subsidiaries and that, according with the Directors’ expectation, will

be recovered within the Group.

ANNUAL REPORT 2013

13. TRADE RECEIVABLES AND OTHER ACCOUNTS RECEIVABLE

At 31 December 2013 and 2012, the trade and other accounts receivable ageing analysis are as follows:

31 DECEMBER 2012

OVERDUE

TOTAL NOT

OVERDUE LESS THAN

90 DAYS 90 TO 180

DAYS 180 TO 360

DAYS MORE THAN

360 DAYS

Clients, current accounts 2,461,453 1,073,330 403,471 46,779 157,887 779,986

Other debtors 124,162 123,978 - - - 183

2,585,615 1,197,308 403,471 46,779 157,887 780,170

31 DECEMBER 2013

OVERDUE

TOTAL NOT

OVERDUE LESS THAN

90 DAYS 90 TO 180

DAYS 180 TO 360

DAYS MORE THAN

360 DAYS

Clients, current accounts 2,911,231 1,080,446 9,773 140 531,448 1,289,424

Other debtors 336,502 830 - 282,555 - 53,117

3,247,733 1,081,275 9,773 282,695 531,448 1,342,541

The Company considers that there has been no deterioration of the credit worthiness of the counterparts (including group

companies and associates) and that the overdue amounts are not at risk of becoming unrecoverable.

14. STATE AND OTHER PUBLIC ENTITIES

At 31 December 2013 and 2012, the balances of the captions ‘Corporate income tax’ and ‘State and other public entities’ are as follows:


Assets:

Other taxes - 485

Total - 485

Liabilities:

Withholding taxes (12,368) (27,336)

Value added taxes (34,116) (27,451)

Social Security contributions (12,954) (6,445)

Total (59,438) (61,232)

15. CASH AND CASH EQUIVALENTS

The caption ‘Cash and cash equivalents’ may be analysed as follows:


Bank deposits 1,539,580 448,220

Cash and its equivalents include short term bank deposits, with maturities not exceeding 3 months, for which the risk of value

alteration is insignificant. At 31 December 2013 and 2012, there were no restrictions associated with the balances of the caption

‘Cash and cash equivalents’.


16. SHARE CAPITAL, RESERVES AND OWN SHARES

Share capital

Martifer SGPS’s share capital, fully subscribed and realized at December 31, 2013, amounted to Euro 50,000,000 and is represented

by 100,000,000 bearer shares with a par value of 50 cents each. All shares have the same rights, namely one share one vote.

During the 2013 and 2012 economic periods there were no changes in the number of shares representing the Company’s share capital.

Treasury Stock

During the 2013 economic period, Martifer SGPS didn’t acquired, through the stock exchange, own shares (in 2012 468,259 own

shares were acquired). The Group held 2,215,910 treasury shares, corresponding to 2.22% of its capital. In accordance with

Portuguese commercial legislation, company is required to keep unavailable a reserve corresponding to the own shares amount, in

which is included the caption other reserves.

At 31 December 2013, the share capital of Martifer SGPS, S.A. was held in 42.7% by I’M SGPS, S.A., 37.5% by Mota-Engil SGPS,

S.A., and 2.22% are treasury shares. The remaining 17.58% represents free-float listed in Euronext Lisbon.

Share premium

Share premiums correspond to excess amounts gained with the issue of or an increase in share capital. In accordance with

Portuguese commercial legislation, the amounts included in this caption must comply with the regime applicable to ‘legal reserves’,

that is, they are not distributable except in the event of liquidation, but they may be used to offset losses, after all the other reserves

have been used up, and/or be incorporated in share capital.

Reserves

Legal reserve

Portuguese commercial legislation establishes that at least 5% of the annual net income must be used to increase the legal reserve

until the latter represents at least 20% of the share capital. This reserve is non-distributable, except in the event of liquidation, but

may be used to offset losses, after all the other reserves have been used up, and/or be incorporated in share capital.

Other reserves

At 31 December 2013, this caption includes, a reserve, that is not available, amounting to Euro 2,868,518 (2012: Euro 2,868,518),

related to the own shares amount.

Under Portuguese legislation, the amount of reserves considered distributable is determined based on the Company’s individual financial

statements, prepared in accordance with International Financial Reporting Standards (IFRS). At 31 December 2013, Martifer SGPS, S.A.

has no distributable reserves available.

ANNUAL REPORT 2013

17. BORROWINGS

O The borrowings obtained, with reference to the periods ended 31 December 2013 and 2012, are as follows:

UP TO 1 YEAR BETWEEN 1 AND


5 YEARS OVER THAN 5

YEARS TOTAL

31 December 2012

Amounts due to financial institutions:

Bank loans 8,696,643 13,275,046 16,131,696 760,000 38,863,385

Bank overdrafts 30,049 - - - 30,049

Authorized Overdrafts 48,499,998 - - - 48,499,998

Other loans obtained:


115,226,690 16,275,046 22,381,696 760,000 154,643,432

UP TO 1 YEAR BETWEEN 1 AND


5 YEARS OVER THAN 5

YEARS TOTAL

31 December 2013

Amounts due to financial institutions:

Bank loans 2,399,088 3,900,448 67,884,098 41,222,600 115,406,234

Authorized Overdrafts 15,231,671 - - - 15,231,671

Other loans obtained:


25,630,759 6,900,448 71,134,098 41,222,600 144,887,905

The financing of the Company, including authorized overdrafts, have renewal clauses, so that it is Board of Directors’ expectation that,

similarly to what has happened in the past and based on current negotiations with creditors, a part of this funding will be renewed at the

period of its liquidation. The liquidation of the remaining funding is expected to occur with the sale of non-core assets by the subsidiaries,

which will enable them to restore loans and supplementary capital to the company, namely the sale of wind farms in Romania.

At 31 December 2013, the Company’s main renewable commercial paper programmes are as follows:

MAXIMUM CONTRACT

AMOUNT (EUROS) CONTRACT DATE CONTRACT TERM AMOUNT UTILIZED

Martifer SGPS 9,250,000 Sep-08 Dec-2016 9,250,000

Martifer SGPS 5,000,000 Sep-10 Sep-2015 5,000,000

The average interest rate on borrowings, during 2013, was 6.152% (in 2012 was 4.672%).

18. TRADE PAYABLES AND OTHER ACCOUNTS PAYABLES

The information regarding trade and other accounts payable for the periods ended December 31, 2013 and 2012 may be analysed

as follows:


Trade payables 1,028,326 726,189

Expense accruals 1,225,467 1,615,515

Other creditors 2,170 37,568

Other creditors 1,227,637 1,653,083

Total 2,255,963 2,379,272


At 31 December 2013 and 2012, this caption includes amounts due to suppliers arising from the Company’s operational activity and from

the acquisition of tangible and intangible fixed assets. The Board of Directors believes that the fair value of these balances do not differ

significantly from their carrying value and the impact of updating these amounts is not material.

At 31 December 2013 and 2012, the ageing of accounts payable in captions ’Trade payables’ and ‘Other payables’ is as follows:

FY 2012

OVERDUE

TOTAL NOT

OVERDUE LESS THAN

90 DAYS 90 TO 180

DAYS 180 TO 360

DAYS MORE THAN

360 DAYS

Trade payables 726,189 38,266 651,408 - 13,888 22,627

Other creditors 37,568 2,568 - 35,000 - -

763,757 40,834 651,408 35,000 13,888 22,627

FY 2013

OVERDUE

TOTAL NOT

OVERDUE LESS THAN

90 DAYS 90 TO 180

DAYS 180 TO 360

DAYS MORE THAN

360 DAYS

Trade payables 1,028,326 277,145 66,457 10,395 7,624 666,705

Other creditors 2,170 - - - - 2,170

1,030,496 277,145 66,457 10,395 7,624 668,875

The accounts payables due for more than 180 days refers to amounts to pay to trade creditors in which the Group mantains regular

comercial relations.

Besides the financial liabilities disclosed above and in Notes 16 and 17, the Group does not have any other financial liabilities.

19. PROVISIONS

The amount of provisions, of Euro 618,500, refers to potencial contractual obligations related with its subsidiaries.

20. COMMITMENTS

Operating Guarantees

At 3 December 2013 and 2012, the main operating guarantees issued by the Company are as follows:


Martifer SGPS 88,898,000 88,898,000

The amount indicated, in 2013 and 2012, includes a guarantee in favour of BP Portugal, to guarantee payment of fuel purchases made

by Prio Energy, S.A., (Euro 26.5 million), as well as other guarantees regarding solar park construction commitments, to ensure

payments resulting from the purchase of fuel by Prio Energy, SA. Prio took expressly and irrevocably a refund of any sums paid by

Martifer SGPS to the beneficiary bail, to ensure payments resulting from the purchase of fuel by Prio Energy, SA. Prio took

expressly and irrevocably a refund of any sums paid by Martifer SGPS to the beneficiary bail.

Given that the EPC solar park construction contracts require Martifer Solar and/or companies it has shareholdings in to guarantee,

amongst others, the quality of the materials and design, photovoltaic installations, the achievement of certain performance and

wattage ratios with the photovoltaic modules, Martifer SGPS undertook to provide Martifer Solar and/or companies it has

shareholdings in with the means necessary to guarantee full compliance with contractual obligations.

Martifer Solar is presently considered to have the capacity to support its own commitments without recourse to the Holding Company.

ANNUAL REPORT 2013

Pledges or Mortgages

At 31 December 2013 the collateral given by the Company may be summarized as follows:

COMPANY GUARANTEE ASSET VALUE DEBT

AMOUNT

Martifer, SGPS, S.A. Share pledge of Martifer Solar SA 27,500,000 16,638,986

Martifer, SGPS, S.A. Mortgage of building in Oliveira de Frades (Components’ plant) Assets pledge MT Construções

8,669,300 15,231,671

Martifer, SGPS, S.A. | Martifer Construções, S.A. | Martifer Aluminios, S.A. | Navalria, S.A. *

Mortgage of industrial building (Monoblocos) Mortgage of administrative building Mortgage of industrial building (Towers’ plant)

1,900,000 1,442,373

5,922,166

Martifer, SGPS, S.A. Share pledge of Martifer Renewables SGPS 10,000,000

9,250,000

Share pledge of Nutre SGPS 2,450,000

Martifer, SGPS, S.A. Mortgage of building in Oliveira de Frades (article P-2003) Plant OlF MTC 739,444 7,500,000

Martifer, SGPS, S.A. Pledge of 2nd level shares Martifer Solar SA Pledge of 1st level shares Martifer Renewables SGPS

65,000,000 83,000,000

121,723,283 141,532,920

‘*Besides the loan of the company, these mortgages also warrant the current account of the Martifer Construções, S.A., Martifer Alumínios, S.A and

Navalria, S.A., amounting to Euro 8 million.

21. REMUNERATION PAID TO MANAGEMENT, THE SUPERVISORY BOARD

AND THE CHARTERED ACCOUNTANT

Remuneration attributed to the key management personnel, by remuneration category, can be summarized as follows:

FY 2013 FY 2012

Fixed remuneration 122,695 458,199

Variable remuneration - -

122,695 458,199

The remuneration attributed to the Supervisory Board in 2013 amounted to Euro 14,400 (2012: Euro 14,400) and the remuneration

paid to the Chartered Accountant amounted to Euro 41,720 (2012: Euro 102,400).

The remuneration policy applicable to Martifer’ s management and supervisory bodies, approved in terms of Law 28/2009, as well

as the annual remuneration received by the members of the said bodies, in total and individually, are presented in the Corporate

Governance Report.


22. RELATED PARTIES

Beyond the balances and transactions described in the notes above, the balances or transactions performed with related parties

are as follows:

COSTS REVENUES ACCOUNTS RECEIVABLE ACCOUNTS PAYABLE

FY 2013 FY 2012 FY 2013 FY 2012 FY 2013 FY 2012 FY 2013 FY 2012

Shareholders - - - 11,334 74,579 75,071 - -

Group and associated companies

368,225 85,324 2,105,721 3,345,772 388,849,384 392,625,753 9,628,412 10,200,061

368,225 85,324 2,105,721 3,357,106 388,923,963 392,700,824 9,628,412 10,200,061

Accounts receivable include supplementary capital amounts registed in financial investments. (see Note 11).

23. CASH RECEIVABLES / CASH PAYMENTS RELATED TO FINANCIAL

ASSETS

Cash receipts and cash payments related to financial assets in 2013 and 2012 is mainly due to supplementary capital (see Note 11).

24. SUBSEQUENT EVENTS

There are no subsequent events to report.

25. APPROVAL OF THE FINANCIAL STATEMENTS

These financial statements were approved by the Board of Directors on March 31, 2014. Additionally, the attached financial

statements are pending approval at the Shareholders General Meeting. However, the Board of Directors of the Company believes

these will be approved without significant alterations.

26. EXPLANATION ADDED FOR TRANSALATION OF THE FINANCIAL

STATEMENTS

These financial statements are a translation of the individual financial statements originally issued in Portuguese in accordance with

the International Financial Reporting Standards as adopted by the European Union. In the event of discrepancies, the Portuguese

version prevails.

ANNUAL REPORT 2013

Oliveira de Frades, March 31, 2014.

The Chief Accountant The Board of Directors

__________________________________ __________________________________

Isabel Cristina Loureiro Silva Carlos Manuel Marques Martins

__________________________________


__________________________________


__________________________________


__________________________________


__________________________________


__________________________________


AUDIT AND FISCAL REPORTS

REPORT AND OPINION OF THE SUPERVISORY BOARD

On the consolidated Accounts of 2013

(TRANSLATION OF A REPORT ORIGINALLY ISSUED IN PORTUGUESE)

Dear Shareholders,

1. In accordance with the law, statutes and our mandate, we enclose our report on our

supervisory activity and our opinion on Martifer – SGPS, S.A. management report and

consolidated accounts for the year ending December 31, 2013, as well as on the proposals

presented by the Board of Directors.

2. We followed, as much as needed for such purpose, the activity of the company and of its

major subsidiaries, having received from the executive members of the Board and from

company officials all required explanations and support for the completion of our duties. We

have analysed the risk committee regulations and the general managing risk principles as well

as the work developed by the internal audit department.

3. Under paragraph 4 of article 397º of the Companies Commercial Code, we declare that were

issued for the purposes of paragraph 2 of that article, favourable opinion to the sale of LRRC

LA RAD Campo Chaparro, S.A. and to the creation of Martifer-AMAL, S.A..

4. We noted that the Turnover of the Group increased about 8%, having decreased the Total

Assets as well as the Equity and Liabilities. Gross profit has improved significantly, however,

the Net Result was very negative mainly due to the recognition of impairments and also as a

consequence of the economic crisis.

5. We accompanied the preparation of the consolidated accounts, the work of the statutory

auditor with whom we met several times and we reviewed the Legal Certification of

Consolidated Accounts, which have our agreement.

6. Within the scope of competence conferred upon us, we have found that:

a) the consolidated statements of financial position, the consolidated income statements, the

consolidated statements of comprehensive income, the consolidated cash-flow statements

and the consolidated statement of changes in shareholders’ equity and respective

accompanying notes give a true and fair view of the Company and its subsidiaries financial

position and financial results;

b) the accounting policies and valuation criteria used are in accordance with the International

Financial Reporting Standards;

c) the consolidated management report shows a clear picture of the most significant aspects

of the evolution of the businesses and the position of the Company and its subsidiaries,

describing clearly the most important activities of the Group.

7. Therefore, taking into account the information received from the Board of Directors and

from the statutory auditor and the conclusions of the Legal Certification of Consolidated

Accounts and the Auditor’s Report on Consolidated Financial Statements issued by the

external auditors, we are of the opinion that:

a) the Management Report should be approved;

b) the Consolidated Financial Statements should be approved.

Oliveira de Frades, 01 April 2014

The Supervisory Board,

_______________________________________

Manuel Simões de Carvalho e Silva Chairman of the Supervisory Board

_______________________________________

Carlos Alberto da Silva e Cunha Member of the Supervisory Board

_______________________________________

João Carlos Tavares Ferreira de Carreto Lages Member of the Supervisory Board

REPORT AND OPINION OF THE SUPERVISORY BOARD

On the individual Accounts of 2013

(TRANSLATION OF A REPORT ORIGINALLY ISSUED IN PORTUGUESE)

Dear Shareholders,

1. In accordance with the law, statutes and our mandate, we enclose our report on our

supervisory activity and our opinion on Martifer – SGPS, S.A. management report and

individual accounts for the year ending December 31, 2013, as well as on the proposals

presented by the Board of Directors.

2. We followed, as much as needed for such purpose, the activity of the company and of its

major subsidiaries, having received from the executive members of the Board and from

company officials all required explanations and support for the completion of our duties.

3. We accompanied the work of the statutory auditor, with whom we met several times, and we

reviewed the Legal Certification of Accounts, which has our agreement.

4. Within the scope of competence conferred upon us, we have found that:

a) the management report and financial statements shows a clear picture of the financial

position, financial results and cash flows of the Company;

b) the accounting policies and valuation criteria used, in accordance with the generally

accepted accounting principles in Portugal, are appropriate to understanding the net worth

of the Company at the end of the financial year and its results;

c) the proposal for the appropriation of net profit presented by the Board of Directors in its

report is adequate.

5. Therefore, taking into account the information received from the Board of Directors, from

the statutory auditor and the conclusions of the Legal Certification of Accounts, we are of the

opinion that:

a) the Management Report should be approved;

b) the Individual Financial Statements should be approved;

c) the proposal for the appropriation of net profit presented by the Board of Directors in its

report should be approved.



_______________________________________


_______________________________________


_______________________________________


STATEMENT OF COMPLIANCE

(In the terms of article 245, number 1, paragraph C of the Securities Code)

Dear Shareholders,

We hereby declare that as to the best of our knowledge:

i) the information in the individual and consolidated financial statements, as well as in the

appendices, was compiled in accordance with the applicable accounting standards, giving a true and

appropriate picture of the assets and liabilities, financial position and performance of Martifer -

SGPS, S.A. and of the companies included in the consolidation perimeter;

ii) the information contained in the Management Report truthfully represents the operational

performance and position of Martifer – SGPS, S.A. and the companies included in the consolidation

perimeter, including a description of the main risks and uncertainties faced by the company.



_______________________________________


_______________________________________


_______________________________________


PricewaterhouseCoopers & Associados - Sociedade de Revisores Oficiais de Contas, Lda.o′Porto Bessa Leite Complex, Rua António Bessa Leite, 1430 - 5º, 4150-074 Porto, Portugal

Tel +351 225 433 000 Fax +351 225 433 499, www.pwc.com/ptMatriculada na Conservatória do Registo Comercial sob o NUPC 506 628 752, Capital Social Euros 314.000

PricewaterhouseCoopers & Associados - Sociedade de Revisores Oficiais de Contas, Lda. pertence à rede de entidades

que são membros da PricewaterhouseCoopers International Limited, cada uma das quais é uma entidade legal autónoma e independente.

Sede: Palácio Sottomayor, Rua Sousa Martins, 1 - 3º, 1069 - 316 Lisboa, Portugal

Inscrita na lista das Sociedades de Revisores Oficiais de Contas sob o nº 183 e na Comissão do Mercado de Valores Mobiliários sob o nº 9077

Audit Report for Statutory and Stock Exchange Regulatory Purposes onthe Consolidated Financial Information

(Free translation from the original in Portuguese)

Introduction

1 As required by law, we present the Audit Report for Statutory and Stock Exchange RegulatoryPurposes on the financial information included in the Directors’ Report and in the attachedconsolidated financial statements of Martifer, S.G.P.S., S.A., comprising the consolidatedstatement of financial position as at December 31, 2013, (which shows total assets of Euro 787,773,044and total shareholder's equity of Euro 139,692,012, including non-controlling interests of Euro39,676,431 and a net loss of Euro 68,961,164), the consolidated statement of income by nature, theconsolidated statement of comprehensive income, the consolidated statement of changes in equity andthe consolidated statement of cash flows for the year then ended, and the corresponding notes to theaccounts.

Responsibilities

2 It is the responsibility of the Company’s Board of Directors (i) to prepare the Directors’ Reportand the consolidated financial statements which present fairly, in all material respects, the financialposition of the Company and its subsidiaries, the consolidated results and the consolidatedcomprehensive income of their operations, the changes in consolidated equity and the consolidatedcash flows; (ii) to prepare historic financial information in accordance with International FinancialReporting Standards as adopted by the European Union and which is complete, true, up-to-date, clear,objective and lawful, as required by the Portuguese Securities Market Code; (iii) to adopt appropriateaccounting policies and criteria; (iv) to maintain appropriate systems of internal control; and (v) todisclose any significant matters which have influenced the activity, financial position or results of theCompany and its subsidiaries.

3 Our responsibility is to verify the financial information included in the financial statementsreferred to above, namely as to whether it is complete, true, up-to-date, clear, objective and lawful, asrequired by the Portuguese Securities Market Code, for the purpose of issuing an independent andprofessional report based on our audit.

Scope

4 We conducted our audit in accordance with the Standards and Technical Recommendationsissued by the Institute of Statutory Auditors which require that we plan and perform the audit toobtain reasonable assurance about whether the consolidated financial statements are free frommaterial misstatement. Accordingly, our audit included: (i) verification that the Company and itssubsidiaries’ financial statements have been appropriately examined and, for the cases where such anaudit was not carried out, verification, on a sample basis, of the evidence supporting the amounts anddisclosures in the consolidated financial statements and assessing the reasonableness of the estimates,based on the judgements and criteria of the Board of Directors used in the preparation of theconsolidated financial statements; (ii) verification of the consolidation operations and the utilization of

Audit Report for Stock Exchange Regulatory Purposes Martifer S.G.P.S, S.A.

December 31, 2013 PwC 2 of 2

the equity method; (iii) assessing the appropriateness of the accounting principles used and theirdisclosure, as applicable; (iv) assessing the applicability of the going concern basis of accounting; (v)assessing the overall presentation of the consolidated financial statements; and (vi) assessing thecompleteness, truthfulness, accuracy, clarity, objectivity and lawfulness of the consolidated financialinformation.

5 Our audit also covered the verification that the information included in the Directors’ Report isconsistent with the financial statements as well as the verification set forth in paragraphs 4 and 5 ofArticle 451º of the Companies Code.

6 We believe that our audit provides a reasonable basis for our opinion.

Opinion

7 In our opinion, the consolidated financial statements referred to above, present fairly in allmaterial respects, the consolidated financial position of Martifer, S.G.P.S., S.A. as at December 31,2013, the consolidated results and the consolidated comprehensive income of its operations, thechanges in consolidated equity and the consolidated cash flows for the year then ended, in accordancewith International Financial Reporting Standards as adopted by the European Union and theinformation included is complete, true, up-to-date, clear, objective and lawful.

Report on other legal requirements

8 It is also our opinion that the information included in the Directors’ Report is consistent withthe consolidated financial statements for the year and that the Corporate Governance Report includesthe information required under Article 245º-A of the Portuguese Securities Market Code.

Emphasis

9 Without qualifying our opinion expressed in paragraph nº 7 above, we draw attention to thematter referred in the Note 41 of the Notes to the Balance sheet and Statement of income, where isreferred that the subsidiaries Solar Martifer Solar USA INC and Martifer Solar LLC began a voluntarilyprocess in the terms of Chapter 11 (US Bankrupcy Code), and is in course the approval procedures, forthe creditors and for the Court, of the viability of the companies referred above. The consolidatedfinancial statements includes an amount of 7.161 thousand euros related to Deferred Tax Assets torecover in the next years for Martifer Solar USA INC, whose recoverability is dependent of theapproval of the plan that the company will present to the Court and the creditors.

April 1, 2014

PricewaterhouseCoopers & Associados- Sociedade de Revisores Oficiais de Contas, Lda.represented by:

Hermínio António Paulos Afonso, R.O.C.

PricewaterhouseCoopers & Associados - Sociedade de Revisores Oficiais de Contas, Lda.o′Porto Bessa Leite Complex, Rua António Bessa Leite, 1430 - 5º, 4150-074 Porto, Portugal

Tel +351 225 433 000 Fax +351 225 433 499, www.pwc.com/ptMatriculada na Conservatória do Registo Comercial sob o NUPC 506 628 752, Capital Social Euros 314.000

PricewaterhouseCoopers & Associados - Sociedade de Revisores Oficiais de Contas, Lda. pertence à rede de entidades

que são membros da PricewaterhouseCoopers International Limited, cada uma das quais é uma entidade legal autónoma e independente.

Sede: Palácio Sottomayor, Rua Sousa Martins, 1 - 3º, 1069 - 316 Lisboa, Portugal

Inscrita na lista das Sociedades de Revisores Oficiais de Contas sob o nº 183 e na Comissão do Mercado de Valores Mobiliários sob o nº 9077

Audit Report for Statutory and Stock Exchange Regulatory Purposes onthe Individual Financial Information

(Free translation from the original in Portuguese)

Introduction

1 As required by law, we present the Audit Report for Stock Exchange Regulatory Purposes on thefinancial information included in the Directors’ Report and in the attached financial statements ofMartifer, S.G.P.S., S.A., comprising the statement of financial position as at December 31, 2013(which shows total assets of Euro 337,666,080 and total shareholder's equity of Euro 181,034,420,including a net loss of Euro 49,379,995), the statement of income by nature, the statement ofcomprehensive income, the statement of changes in equity and the statement of cash flows for the yearthen ended, and the corresponding notes to the accounts.

Responsibilities

2 It is the responsibility of the Company’s Board of Directors (i) to prepare the Directors’ Reportand the financial statements which present fairly, in all material respects, the financial position of theCompany, the results and the comprehensive income of its operations, the changes in equity and thecash flows; (ii) to prepare historic financial information in accordance with International FinancialReporting Standards as adopted by the European Union and which is complete, true, up-to-date, clear,objective and lawful, as required by the Portuguese Securities Market Code; (iii) to adopt appropriateaccounting policies and criteria; (iv) to maintain an appropriate system of internal control; and (v) todisclose any significant matters which have influenced the activity, financial position or results of theCompany.

3 Our responsibility is to verify the financial information included in the financial statementsreferred to above, namely as to whether it is complete, true, up-to-date, clear, objective and lawful, asrequired by the Portuguese Securities Market Code, for the purpose of issuing an independent andprofessional report based on our audit.

Scope

4 We conducted our audit in accordance with the Standards and Technical Recommendationsissued by the Institute of Statutory Auditors which require that we plan and perform the audit toobtain reasonable assurance about whether the financial statements are free from materialmisstatement. Accordingly, our audit included: (i) verification, on a sample basis, of the evidencesupporting the amounts and disclosures in the financial statements, and assessing the reasonablenessof the estimates, based on the judgements and criteria of the Board of Directors used in thepreparation of the financial statements; (ii) assessing the appropriateness of the accounting principlesused and their disclosure, as applicable; (iii) assessing the applicability of the going concern basis ofaccounting; (iv) assessing the overall presentation of the financial statements; and (v) assessing thecompleteness, truthfulness, accuracy, clarity, objectivity and lawfulness of the financial information.

Audit Report for Stock Exchange Regulatory Purposes Martifer, S.G.P.S., S.A.

December 31, 2013 PwC 2 of 2

5 Our audit also covered the verification that the information included in the Directors’ Report isconsistent with the financial statements as well as the verification set forth in paragraphs 4 and 5 ofArticle 451º of the Companies Code.

6 We believe that our audit provides a reasonable basis for our opinion.

Opinion

7 In our opinion, the financial statements referred to above, present fairly in all material respects,the financial position of Martifer, S.G.P.S., S.A as at December 31, 2013, the results and thecomprehensive income of its operations, the changes in equity and the cash flows for the year thenended, in accordance with International Financial Reporting Standards as adopted by the EuropeanUnion and the information included is complete, true, up-to-date, clear, objective and lawful.

Report on other legal requirements

8 It is also our opinion that the information included in the Directors’ Report is consistent withthe financial statements for the year and that the Corporate Governance Report includes theinformation required under Article 245º-A of the Portuguese Securities Market Code.

April 1, 2014

PricewaterhouseCoopers & Associados- Sociedade de Revisores Oficiais de Contas, Lda.represented by:

Hermínio António Paulos Afonso, R.O.C.


ÍNDICE

PART I

INFORMATION ON SHAREHOLDER STRUCTURE, ORGANISATION

AND CORPORATE GOVERNANCE 193

A. Shareholder Structure 194

B. Corporate Boards and Committees 197

C. Internal Organisation 213

D. Remuneration 225

E. Related Party Transactions 232

PARTE II

CORPORATE GOVERNANCE ASSESSMENT 235

ANNEXES 247

Annex I – Professional Qualifications 248

Annex II – Positions held and duties carried out by the members

of the Board of Directors 251

Annex III - Statement on the remuneration policy for 2013 256

[This translation into English of the Portuguese document was made only for the convenience of non-Portuguese speaking shareholders. For all intents and

purposes, the Portuguese version shall prevail.]

PART I Information on shareholder structure, organisation and corporate governance


PART I

Information on shareholder structure, organisation

and corporate governance

A. SHAREHOLDER STRUCTURE

I. CAPITAL STRUCTURE

1. Capital Structure

The share capital of Martifer SGPS, S.A., Public Company (henceforth also referred to as ‘Company’ or Martifer’), amounts to €

50,000,000.00 (fifty million Euros), is fully subscribed and paid up and is represented by 100,000,000 (one hundred million)

nominative, scriptural shares, with a par value of € 0.50 (fifty cents) each.

All the shares are ordinary, no different categories of shares existing, nor rights and duties beyond those foreseen in law or in the

Company’s Articles of Association (henceforth also ‘Articles of Association’).

All the shares issued by Martifer have been admitted to trading on the Euronext Lisbon regulated market, corresponding to ISIN

Code PTMFR0AM0003, trading under the Mnemo Code MAR.

2. Restrictions on transfer and ownership of shares

There are neither restrictions on the free transfer of the Company’s shares, nor shareholders holding special rights. Consequently,

all shares admitted to trading on the stock exchange are freely transmissible in accordance with the normal regulations applicable.

3. Own shares

During 2013, no transactions involving own shares occurred. Consequently, at 31 December 2013 the Company held, as it did in

2012, own shares totalling 2,215,910, representative of 2.22 % of its share capital. These shares correspond to 2.22% of the voting

rights of the Company.

4. Impact of changes in shareholder control over the Company on important agreements

Martifer neither celebrated nor is it part of any important agreement that comes into effect, is amended or terminates in the event of

a change in shareholder control over the Company due to a takeover bid.

Similarly, the Company has not adopted, via the approval of any statutory provisions or other measures adopted by the Company,

rules or regulations designed to prevent the success of takeover bids.

Likewise, there are no statutory provisions limiting the number of votes that can be held or exercised by a single shareholder,

individually or in conjunction with other shareholders.

5. Countermeasures in the event of changes in shareholder control

During the 2013 financial period, no countermeasures were adopted in the event of changes in shareholder control.

CORPORATE GOVERNANCE REPORT 2013 PAGE 195

6. Shareholder Agreements that the Company is Aware of

The shareholders agreement and its subsequent amendments celebrated between the two major shareholders of Martifer, namely

I’M - SGPS, S.A. (ex “MTO-SGPS, S.A.”) and Mota-Engil SGPS, SA (hereafter both referred to as “Parties”), regulate some of the

main aspects of the Company’s corporate life, namely:

- The Parties agree to exercise their voting rights at the General Meeting in a concerted manner regarding matters for which the law

requires a resolution passed by a qualified majority.

- At the request of any of the Parties, these undertake to deliberate over all changes to Martifer’s Articles of Association considered

necessary to guarantee, in the widest terms permitted by law, the proper implementation of all the provisions contained in the

Shareholder Agreement.

The Shareholder Agreement will remain in force for an indefinite period of time, but any of the intervening Parties can freely

terminate it by renouncing it with a minimum notice period of 30 days prior to the effective date of the termination.

II. SHAREHOLDINGS AND BONDS HELD

7. Qualifying Holdings

At 31 December 2013, the main shareholders holders of qualifying holdings continued to be the companies I’M SGPS, S.A. and

Mota-Engil SGPS, S.A..

The directors of Martifer, Mr Carlos Manuel Marques Martins and Mr Jorge Alberto Marques Martins, are the majority shareholders

of the company I´M SGPS, S.A., holding, respectively, shares representing 48 % and 50 % of its share capital.

Mota-Engil SGPS, S.A.’s voting rights are held, pursuant to Article 20 of the Securities Code (Código de Valores Mobiliários -

CVM), by the company Mota-Engil, SGPS, SA.

To both these shareholders combined is imputed, at 31 December 2013, 80.48% of the voting rights of the Company, under the

shareholder agreement in force at that date.

At 31 December 2013, based on the information made available to the Company, the following entities were holders of qualifying

shareholdings, calculated in accordance with no. 1 of Article 20 of the Securities Code, in the share capital of the Company:

SHAREHOLDERS NO. SHARES % OF SHARE CAPITAL % OF VOTING RIGHTS1

I’M – SGPS, SA 42,697,047 42.70% 43.66%

Carlos Manuel Marques Martins* 70,030 0.07% 0.07%

Jorge Alberto Marques Martins* 230,260 0.23% 0.24%

Total Imputable to I’M – SGPS, SA 42,997,337 43.00% 43.97%

Mota-Engil – SGPS, SA 37,500,000 37.50% 38.35%

Arnaldo José Nunes da Costa Figueiredo ** 3,000 0.00% 0.00%

Luís Filipe Cardoso da Silva ** 2,000 0.00% 0.00%

Total Imputable to Mota-Engil, SGPS, SA 37,505,000 37.51% 38.35%

1 % Voting rights = No. Shares Held / (No. Total Shares – Own Shares)

* Member of a corporate body of I’M SGPS, SA; ** Member of a corporate body of Mota-Engil SGPS, SA


8. Number of shares and bonds held by members of the management and supervisory boards (In accordance with the dispositions of no. 5 of Article 447 of the Portuguese Commercial Companies Code – “CCC”)

NAME OF THE MEMBER OF THE CORPORATE BODY

CORPORATE BODY SHARES HELD AT 31.12.2013



Mário Rui Rodrigues Matias Board of Directors 0

Arnaldo Nunes da Costa Figueiredo Board of Directors 3,000


Luis António de Valadares Tavares Board of Directors 0

Jorge Bento Ribeiro Barbosa Farinha Board of Directors 0

Manuel Simões de Carvalho e Silva Supervisory Board 0

Carlos Alberto da Silva e Cunha Supervisory Board 0

João Carlos Ferreira de Carreto Lages Supervisory Board 0

Juvenal Pessoa Miranda Supervisory Board 0

9. Special powers of the Board of Directors, namely in matters concerning resolutions

of capital increases

In accordance with the Articles of Association in force, the Board of Directors is authorised, having obtained a positive opinion from

the Supervisory Board and in compliance with the remaining provisions of the Company’s Articles of Association, to increase the company’s

share capital in cash, once or more than once, up to a maximum limit of one hundred and twenty-five million Euros. The Board of

Directors will set the terms and conditions of each capital increase, as well as the form and date/period of the subscription and realisation.

Up till the present date, no capital increase has yet occurred pursuant to these powers attributed to the Board of Directors.

10. Significant Business Relationships between the Holders of Qualifying Holdings and the

Company

At 31 December 2013, the main shareholders holders of qualifying holdings continued to be the companies I’M SGPS, S.A. and

Mota-Engil SGPS, S.A..

During the 2013 financial period, no significant business or commercial transactions occurred between the Company and the

holders of qualifying holdings in the Company.

Regarding the business or transactions between holders of qualifying holdings in the Company and other Company affiliates fall

within the normal activities of these companies and were conducted under normal market conditions.


B. CORPORATE BOARDS AND COMMITTEES

I. GENERAL MEETING

a) Composition of the Presiding Board of the General Meeting

11. Details and position of the members of the Presiding Board of the General Meeting and

respective terms of office

The Board of the Shareholders’ General Meeting comprises a chairman, a vice chairman and a secretary; the present holders of

these positions having been elected at the 11 April 2012 Shareholders’ General Meeting, for a three-year term of office, ending on

31 December 2014.

The members of the Board of the Shareholders’ General Meeting are:

CHAIRMAN José Carreto Lages

VICE CHAIRMAN Francisco Artur dos Prazeres Ferreira da Silva

SECRETARY Ana Maria Tavares Mendes

12. Restrictions on the right to vote

The Company Articles of Association do not establish any percentage or maximum limit regarding the exercising of voting rights by

any shareholder. The Company has not issued preference shares without voting rights.

The Shareholders’ General Meeting is, therefore, comprised of shareholders holding Martifer shares, each share carrying one vote.

Shareholders can participate provided they hold shares, at the least, up to five days prior to the date set for the General Meeting,

and provided these shares are registered in their name in securities’ accounts.

Up to three days prior to the date set for the General Meeting, a certificate, issued by the relevant entity, shall be presented to the

Company as proof of ownership of the shares. In the event of suspension of the General Meeting, the Company does not require

the blockage of the shares for the full suspension period; instead, compliance with the ordinary notice period for the first meeting

suffices.

Shareholders may be represented at Shareholders’ General Meetings by way of a written proxy mandate addressed to the

Chairman of the General Meeting Board. Said mandate may also be sent by electronic mail in accordance with the respective

Shareholders’ General Meeting convening notice instructions.

Shareholders may also exercise their vote by correspondence on all matters subject to approval at the General Meeting.

The proposals to be submitted for approval at the General Meeting, as well as the other information necessary for the preparation

and participation at said meetings are made available to the shareholders up to 21 days prior to date of the General Meeting, at

Martifer’s registered office and in the Company’s Website. Such documentation can be consulted in the Company’s Website at

http://www.martifer.pt/. In addition to the Company’s Website, said documentation is also made available to shareholders, for

consultation, at the company’s registered office during working hours, as well as in the CMVM’s Information Disclosure System

(www.cmvm.pt), as from the date the convening notice is issued. The Company’s Website also discloses the minutes of the

General Meetings within five days following said meetings.


Martifer has been applying and implementing measures to promote and encourage shareholder participation in general meetings:

− Postal vote;

− Availability of proxy letters and voting ballots in the Company’s Website;

− Disclosure in the Website, in Portuguese and English languages, of the general meeting convening notice, the different forms of

voting and the procedures to adopt for correspondence voting or for voting through a proxy;

− Disclosure in the Website, in Portuguese and English languages, of the preparatory documentation relating to the various points

on the Agenda;

− The creation of an internet email address, publicised in the convening notice, exclusively dedicated to the general meeting, in

order to facilitate the clarification of any doubts.

13. Details of the maximum percentage of voting rights that may be exercised by a single

shareholder or by shareholders that are in any relationship as set out in no. 1 of Article 20

There is no restriction on the number of votes that can be held or exercised by a single shareholder or group of shareholders.

14. Shareholders' resolutions that, imposed by the articles of association, may only be

taken with a qualified majority

Article 18 of the Company’s Articles of Association establishes both for a first or second call notice, the rule of a simple majority of

the votes issued to pass resolutions, unless otherwise foreseen in the CCC or in the Articles of Association.

The only exception to this rule relates to the provision in the Company’s Articles of Association that sets a qualified majority of two-

thirds of the votes counted for the passing of resolutions relating to the unfair dismissal of directors.

II. MANAGEMENT AND SUPERVISION

a) Composition

15. Details of the corporate governance model adopted

Martifer’s corporate governance structure comprises a Board of Directors, a Supervisory Board and a Statutory Auditor, all elected

at Shareholders’ General Meetings. For the term of office corresponding to the triennium 2012-2014, the Board of Directors

delegated powers governing the day-to-day affairs of the Company to three executive directors, under the terms and within the

limits defined in Point 21.1 below.

The members comprising the corporate bodies, the General Meeting Board and the Remuneration Setting Committee were elected

for a triennium (2012-2014). The Remuneration Setting Committee, elected at a Shareholders’ General Meeting, is responsible for

setting the remuneration of the members of the Company’s corporate bodies as well as for defining the general guidelines to be

observed in objectively setting the amounts.


16. Articles of association rules on the procedural and material requirements governing the

appointment and replacement of members of the Board of Directors

The members of the Board of Directors are proposed and elected every third year by the Shareholders at a Shareholders’ General

Meeting or co-opted by the Board of Directors, subject to ratification at the General Meeting, their re-election being permitted once

or more than once.

In accordance with the Articles of Association, a member of the management board may be designated by a minimum number of

Shareholders, holding at least 10% of the share capital, who voted against the proposal to elect the directors passed.

The Board of Directors designates the Chairman and Vice Chairman from amongst its members and, to the extent it considers

pertinent and appropriate, constitutes an Executive Committee or delegates powers to executive directors.

The substitution of directors is made as set forth in Article 393 of the CCC. In accordance with the Company’s Articles of Association,

for the purposes of substituting directors under no. 1 of said Article of the CCC, absence is qualified as permanent when, without

acceptable justification to the management body, a director is absent from more than five meetings, consecutive or not.

17. Composition of the Board of Directors

In accordance with the Company’s Articles of Association, Martifer’s Board of Directors is composed of 5 to 9 members, elected at

a General Meeting.

The term of office of the members nominated to the Board of Directors is 3 calendar years and there are no restrictions regarding

their re-election. The members of the Board of Directors are considered vested as soon as they are elected and remain in office

until replaced by newly elected directors.

At 31 December 2013, the Board of Directors was composed of 7 members, elected at the Company’s General Meeting for a three

calendar year term of office, ending on 31 December 2014.

At 31 December 2013, the composition of the Board of Directors for the 2012-2014 term of office was as follows:

NAME OF DIRECTOR FIRST NOMINATION END OF CURRENT TERM OF OFFICE

Carlos Manuel Marques Martins (Chairman of the BD) 2004 2014

Jorge Alberto Marques Martins (Vice Chairman) 2004 2014

Mário Rui Rodrigues Matias * 2013 2014

Arnaldo José Nunes da Costa Figueiredo 2010 2014

Luis Filipe Cardoso da Silva 2010 2014

Luis António de Castro de Valadares Tavares 2008 2014

Jorge Bento Ribeiro Barbosa Farinha 2008 2014

* Director Mário Rui Rodrigues Matias was co-opted by the Company’s Board of Directors, on 30 August 2013, following the resignation from office

of Director Mário Henriques Couto.


18. Distinction between executive and non-executive members

NAME OF DIRECTOR STATUS

(Executive / Non-executive) INDEPENDENT or NON- INDEPENDENT

Carlos Manuel Marques Martins (Chairman of the BD) Executive -

Jorge Alberto Marques Martins (Vice Chairman) Executive -

Mário Rui Rodrigues Matias Executive -

Arnaldo José Nunes da Costa Figueiredo Non-executive Non-independent

Luis Filipe Cardoso da Silva Non-executive Non-independent

Luis António de Castro de Valadares Tavares Non-executive Independent

Jorge Bento Ribeiro Barbosa Farinha Non-executive Independent

At 31 December 2013, of the 7 directors on the Board of Directors, 4 are non-executive directors, whose duties are to monitor and

appraise the management of the Company by the executive directors, 2 of these 4 non-executive directors being independent directors.

Given the Company’s size and shareholder structure, the number of independent directors is considered adequate. To verify the

independence of the members of the Board of Directors, the criteria used is that foreseen in Article 414, no. 5 of the CCC, as well

as that established in Point 18.1 of Annex 1 of the 4/2104 Regulation of the CMVM and in Recommendation II. 1.7 Code of

Corporate Governance of the CMVM (2013).

19. Professional qualifications of the members of the Board of Directors

The experience and knowledge of the members of the Board of Directors is detailed in their curricula, presented in the document

attached to this report as Annex I; these attest, in a rigorous and specific manner, their ability to carry out the duties attributed to them.

20. Customary and meaningful family, professional or business relationships of members

of the Board of Directors with shareholders that are assigned qualifying holdings

The Chairman of the Board of Directors, Carlos Manuel Marques Martins and the Vice Chairman, Jorge Alberto Marques Martins,

both hold shares and voting rights in one of the major shareholders, I’M - SGPS, S.A..

Non-executive directors Arnaldo José Nunes da Costa Figueiredo and Luis Filipe Cardoso da Silva both exercise management

functions in Mota-Engil Group companies; Mota-Engil SGPS, S.A., Martifer’s other major shareholder, being the holding company

of said Group.


21. Organisational charts or flowcharts concerning the allocation of powers between the

various corporate boards, committees and/or departments within the Company, including

information on delegating powers, particularly as regards the delegation of the Company's

daily management

21.1 ORGANISATIONAL CHARTS

21.2 POWER DELEGATION

In accordance with the Articles of Association and under Article 407, no. 3 of the CCC, daily management powers were delegated

to three executive directors, positions now held by Messrs Carlos Manuel Marques Martins, Jorge Alberto Marques Martins and

Mário Rui Rodrigues Matias. Said executive directors are responsible for the execution of the strategic decisions taken by the Board

of Directors, as well as for the daily management of the holding company, whilst company managing financial shareholdings, all

within the scope of the powers delegated to them.

The duties delegated to the executive directors include the guidance afforded to the various Business Areas’ performance, as well

as the running of the corporate services, the supervision of all the business areas, the promotion of synergies between these, the

deployment of the resources necessary, the management of human and financial resources, the definition of the strategies for

each business area and the supervision of the attainment of the objectives of each business area, establishing policies transversal

to the Company as a whole. It is also the executive directors’ duty to exercise the powers that, at any moment, have been

delegated to them by resolution of the Board of Directors, except over matters for which the delegation of powers is forbidden by

law or by the Articles of Association.

According to the Board of Directors’ resolutions dated 18 May 2012 and 30 August 2013, the following powers and respective limits

were delegated:

− Subscription, acquisition or disposal of shareholdings in any companies;

GENERAL

MEETING

Remuneration

Setting Committee

Company Secretary

Ethics and Conduct

Committee

Corporate

Governance

Committee

Risk Committee

Board of Directors STATUTORY

AUDITOR (ROC) Supervisory Board

Directors with

delegated powers

witrh


− Acquisition or disposal of real estate or other assets;

− Investment or commitment to invest, excluding those involving new business areas;

− Acquisition and disposal of own shares within the limits of the resolution of the Company’s General Meeting;

− Investment and disinvestment foreseen in the annual budgets or, if not foreseen, which amount is below five million Euros;

− Contracting of services;

− Hiring of employees, defining levels, categories, remuneration conditions and other benefits or complements;

− Exercising of disciplinary powers and applying sanctions;

− Issuance of binding instructions to wholly controlled Martifer – SGPS, S.A. group companies, as defined in the Portuguese

Commercial Companies Code;

− Participation in Joint-Ventures and in Economic Interest Groups and, additionally, celebration of consortium and associative

partnership contracts, incorporation or participation in any other forms of temporary or permanent associations of companies

and/or private or public entities, except when the said associations have as their objective projects involving turnover in excess

of one hundred million Euros;

− Appointment of representatives to the general meetings of the companies in which Martifer – SGPS, S.A., Public Company, has

shareholdings and determination of voting intentions at said meetings;

− Representation of the company in court and outside it, actively or passively, including the submission, opposition and appeal

regarding any legal or arbitration proceedings, including also the confession , withdrawal, or transactions extinguishing lawsuits

or pending issues and the acceptance of arbitration commitments; and

− Appointment of proxies to carry out specific acts or categories of acts, defining the extent of the respective mandates.

Pursuant to Article 407, no. 1 of the Portuguese Commercial Companies Code, the Board of Directors also attributed to Director

Mário Rui Rodrigues Matias the special charge of assuming responsibility for the Financial Area, as well as of Company

Representative vis-à-vis relations with the Market and with the CMVM.

Save for the matters that cannot be delegated by law pursuant to Article 407, nos. 4 and 8 of the CCC, the Board of Directors has

expressly stated that certain matters are excluded from the powers delegated to Executive Directors, namely the:

I. definition of the strategy and general policies of the Company; II. definition of Martifer Group corporate structure; and III. taking of decisions that should be considered strategic given their amounts, risk or special characteristics, the exclusion of the

latter deriving from the Board of Directors’ Regulation.

The delegation of powers will cease with the passing of a resolution by the Board of Directors or, automatically, with the end of the term of office of the Board of Directors that delegated said powers.


b) Functioning

22. Availability and place where rules on the functioning of the Board of Directors may be viewed

The Board of Directors’ Organisational and Functional Regulation is presented in Martifer’s Website at – www.martifer.pt (Tab:

Investors, Section: Corporate Governance/Articles of Association).

23. The number of meetings held and the attendance report for each member of the Board

of Directors

The Board of Directors meets regularly, once per quarter and, as defined in the Articles of Association and in the respective Regulation, whenever the Chairman or two board members call a meeting; valid resolutions being passed with the attendance or representation of a majority of its members.

Without prejudice to the above and considering the fact that the Chairman of the Board of Directors accumulates the position of Executive Director, the Board of Directors’ Regulation sets forth that the non executive directors may, even so, conduct meetings, when such meeting is called by a non-executive director on his own initiative or at the request of any two of those directors, for the purposes of exercising their powers of monitoring, supervising and appraising the activity of the members to whom the Board of Directors delegated powers.

To that end, and in order to safeguard the exercising, in an independent and informed manner, of the powers of the non-executive directors referred to in the previous paragraph, the following mechanisms and procedures were instituted by the Board of Directors and enshrined in its Regulation:

(i) obligation to deliver to the directors sans delegated powers all the information considered necessary or convenient and that is

requested by them of the Company or of any of the directors with delegated powers;

(ii) the satisfaction of the requests of directors with no delegated powers shall be made in an appropriate and timely manner;

(iii) possibility of any non-executive director requesting the calling of meetings so that non-executive directors can exercise the

powers attributed to them; and

(iv) the specialised committees with monitoring, supervisory and appraisal competencies over the activities of the directors with

delegated powers shall be presided and largely composed of directors with no delegated powers.

During the 2013 financial year, no constraints were detected regarding the management and operations of the Company; it can

therefore be considered that the mechanism that assures the coordination of the work of the non-executive directors is safeguarded.

In 2013, the Board of Directors met eight times. The minutes are written up and signed by the Directors and the Company Secretary

and recorded in the respective minute book, with copies also being sent to the Chairman of the Supervisory Board.

The attendance level of each Director at said meetings, in the conduct of his respective duties, was as follows:

NAME OF DIRECTOR ATTENDANCE

Carlos Manuel Marques Martins (Chairman of the BD) 100%

Jorge Alberto Marques Martins (Vice Chairman) 100%

Mário Rui Rodrigues Matias 100%

Arnaldo José Nunes da Costa Figueiredo 100%

Luis Filipe Cardoso da Silva * 87,5%

Luis António de Castro de Valadares Tavares * 75%

Jorge Bento Ribeiro Barbosa Farinha* 87,5%

* The director justified his absence and was represented by another director at the respective meeting, as per proxy letter issued to the effect.

http://www.martifer.pt/


24. Competent Corporate Boards undertaking the performance appraisal of executive directors

The Company’s Corporate Governance Committee is composed of non-executive members of the Company’s Board of Directors

and presided over by an independent director that meets all the independence and compatibility requirements foreseen in Point

18.1 of Annex I of the 4/2013 Regulation of the CMVM and in Recommendation II.1.7 of the CMVM (2013). This Committee has,

amongst others, the power to appraise the performance of the executive directors and the overall performance of the Board of

Directors, as well as that of the various committees in existence.

The Company’s Remuneration Committee also undertakes, within its scope of powers, the performance appraisal of the members

of the Board of Directors, endeavouring towards a convergence of the interests of the directors, the remaining corporate bodies and

the managers with the interests of the Company, promoting a long-term perspective.

25. Predefined criteria for assessing executive directors' performance

Directors’ performance is appraised based on the principles listed in the Remuneration Policy Statement. The remuneration policy

and the remuneration of the Company’s Corporate Bodies is reviewed annually and submitted for approval at the Company’s

Annual Shareholders’ General Meeting.

The remuneration policy is oriented along principles and criteria based on the duties carried out, the degree of complexity and

responsibility assumed, the alignment of the interests of the management board members with the interests of the company, the

performance appraisal, the economic situation of the company and general market conditions for equivalent situations, as better set

out in Point 70 below.

26. The availability of each member of the Board of Directors and details of the positions held

at the same time in other companies, within and outside the group, and other relevant

activities undertaken by members of this Board throughout the financial year

The indication and description of the positions held and duties carried out by the members of the Board of Directors are better

described in the document attached to the present report as Annex II.


c) Committees within the Board of Directors or Supervisory Board and Board Delegates

27. Details of the Committees created within the Board of Directors and the place where the

rules on the functioning thereof are available

With the aim of adopting the best corporate governance practices, the Board of Directors nominated 3 (three) specialised

committees to boost its operational effectiveness.

The Corporate Governance, Ethics and Conduct and the Risk Committees have their own regulations that lay down the rules relating to their composition, functioning and powers, which can be consulted in the Company’s Website at http://www.martifer.pt/ (Tab: Investors, Section: Corporate Governance/Articles of Association).

28. Details of the Board Delegates

The Board Delegates nominated by the Company’s Board of Directors are:

- Carlos Manuel Marques Martins;

- Jorge Alberto Marques Martins; and

- Mário Rui Rodrigues Matias

Director Mário Rui Rodrigues Matias was co-opted by the Company’s Board of Directors, on 30 August 2013, following the

resignation from the office of Director Mário Henriques Couto, having been attributed responsibility for the Financial Area and the

Company´s Representative for Equity Market Relations and for CMVM.

The powers delegated to the Board Delegates are set down in Point 21.2 above.

Corporate Governance

Committee

COMPANY SECRETARY

Ethics and Conduct

Committee Risk Committee

BOARD OF

DIRECTORS



29. Description of the powers of each of the committees established and a summary of

activities undertaken in exercising said powers

CORPORATE GOVERNANCE COMMITTEE

The Corporate Governance Committee shall, as per the respective Regulation, be composed of 2 to 6 members that are also

members of the Supervisory Board and/or Board of Directors, but that do not exercise executive functions. Presently, the Corporate

Governance Committee has the following composition:

PRESIDENT Mr. Jorge Bento Farinha (Independent, non-executive Director)

MEMBERS Mr. Luis Valadares Tavares (Independent, non-executive Director) Mr. Luís Cardoso da Silva (Non-Independent, non-executive Director)

The Corporate Governance Committee has the power to issue suggestions for the improvement of Martifer’s Corporate

Governance Model, with the purpose of promoting the compliance with rigorous ethical and deontological principles and the

observance of practices which assure compliance with the norms and established corporate governance best practices that sustain

a diligent, effective, balanced, ethical conduct and responsibility promoting management, from the perspective of the interests of the

shareholders and other stakeholders.

Other than the presence of its members in informal meetings and in work groups, the Corporate Governance Committee met

formally twice in 2013. This Committee records the minutes of its meetings.

The Corporate Governance Committee has its own Regulation, which lays down the rules regarding its composition, functioning

and powers, which can be consulted in the company’s Website at http://www.martifer.pt/ (Tab: Investors, Section: Corporate

Governance/Articles of Association and Regulations).

The Corporate Governance Committee has as its main responsibilities and powers to:

− evaluate and develop the corporate governance model;

− reflect on the governance system adopted and verify its effectiveness;

− advise and propose to the Company’s relevant corporate bodies the promotion of measures aimed at improving Corporate Governance;

− undertake performance appraisals of the executive directors and of the Board of Directors as a whole, as well as of the other Committees in existence.

ETHICS AND CONDUCT COMMITTEE

The Ethics and Conduct Committee is composed of three to seven members, nominated by the Board of Directors, which also

designates the President. Presently, the Ethics and Conduct Committee has the following composition:


MEMBERS Mr. Rui Correia (Human Resources Manager of the Group); Mr. José Nunes de Oliveira (Martifer’s Legal Department Manager); and Ms. Raquel Ferreira Alves (Internal Audit Department Manager)

The Ethics and Conduct Committee has its own Regulation, which lays down the rules relating to its composition, functioning and

powers regarding the elaboration, implementation, monitoring and control of ethics and conduct norms at the Martifer Group. The

Ethics and Conduct Committee Regulation can be consulted in the Company’s Website at http://www.martifer.pt/ (Tab: Investors,

Section: Corporate Governance/Articles of Association).




The Ethics and Conduct Committee is also responsible for constituting and assuring compliance with the irregularities disclosure

policy regarding irregularities occurring inside the Martifer Group, under which employees can communicate, in an adequate,

immediate and confidential (if requested) manner whilst safeguarding their professional integrity, information relating to the

denunciation of irregularities occurring within Martifer, establishing and publicizing the most adequate and effective communication

channels for this purpose.

The Ethics and Conduct Committee coordinates its activity with the company’s Supervisory Board, given the specific powers resting

with that board, namely those laid down in the CCC.

The Committee meets periodically or whenever it is called by its President, by convening notice sent by the President to its

members with a minimum notice period of seven working days, which will also indicate the respective agenda. The Ethics and

Conduct Committee writes up minutes of all its meetings.

RISK COMMITTEE

The Risk Committee is composed of three to six members that integrate the Board of Directors and/or the Supervisory Board, but

the majority of the members cannot hold executive functions. The Chairman of the Company’s Board of Directors may not form part of

the Risk Committee, but may participate in the meetings, without the right to vote. The Risk Committee has the following composition:


MEMBERS Mr Arnaldo Figueiredo (Non-independent, non-executive Director) Mr. Jorge Alberto Marques Martins (Executive Director)

The Risk Committee has its own Regulation, which lays down the rules relating to its composition, functioning and powers regarding

the preparation, implementation and monitoring of a risk management system transversal to the Martifer Group. The Risk Committee

Regulation can be consulted in the company’s Website at http://www.martifer.pt/ (Tab: Investors, Section: Corporate

Governance/Articles of Association).

The mission of the Risk Committee is to propose and monitor the implementation of the Martifer Group’s risk management policy,

which aims to establish a strategy for the prevention and management of risk transversal to the Martifer Group, so as to reduce the

exposure to risk and safeguard the Groups’ worth and the creation of value for its stakeholders.

The main responsibilities attributed to the Risk Committee are to:

− issue recommendations or opinions as to: (a) the definition of a risk policy for Martifer Group; (b) the content, format and

methodologies to consider in investment analysis reports, be they organic or of company acquisitions; and (c) the creation of

risk identification, monitoring, control and management systems of a (i) legal and contractual, (ii) financial, (iii) technical and

operational, (iv) commercial, (v) environmental, (vi) political and (vii) other nature, that the Risk Committee considers relevant;

− ensure compliance with the guiding principles of the Martifer Group Risk policy, assisting the Board of Directors with the setting

of the strategic objectives of the company in matters of risk assumption;

− prepare opinions on financing operations and investments that require the prior opinion of the Risk Committee;

− submit to the Board of Directors proposals and suggestions of methodologies to identify and cover risks that are appropriate and

that should be adopted by Martifer Group as measures aimed at improving the risk management model in place and to facilitate

the pursuit of higher corporate objectives;

− inform the Board of Directors of any situation or occurrence of which it has become aware that, in its opinion, configures non-

compliance with the Risk identification, monitoring and control rules and practices; and

− monitor and analyse the reflections and guidance produced on risk management by national and international organisms, so as

to take advantage of these to improve the Martifer Group Risk Management model.

In addition to the informal meetings and the presence of its members in work groups, the Risk Committee met formally during 2013.



III. SUPERVISION

a) Composition

30. Details of the Supervisory Board

Martifer’s supervisory model is based on a Supervisory Board and a Statutory Auditor (ROC). The functional separation between

the Supervisory Board and the Statutory Auditor basically follows a division of the functions into two: the political supervision being

exercised by the Supervisory Board, with the review and certification of the financial statements resting with the Statutory Auditor.

31. Composition of the Supervisory Board with details of the articles of association’s minimum

and maximum number of members, duration of the term of office, number of effective

members, date of first appointment and date of end of the term of office for each member

The Company’s Supervisory Board is composed of three effective members and an alternate member, elected at the 11 April 2012

General Meeting, for the triennium 2012-2014, re-electable as permitted by law.

The members of the Supervisory Board may only be elected, as a rule, at the Shareholders’ General Meeting and, in the event of a

vacancy in the Supervisory Board, such vacancy shall be filled by the alternate member. If another vacancy occurs, such vacancy

can only be filled through the election of a new member at a Shareholders’ General Meeting.

The members, Mr Manuel Simões de Carvalho e Silva (President) and Mr Carlos Alberto da Silva e Cunha (Member) were

appointed for the first mandate in 2008, ending the current and second mandate in 2014. The members, Mr João Carlos Tavares

Ferreira de Carreto Lages (Member) and Mr Juvenal Pessoa Miranda (Alternate) were appointed for the first mandate in 2012,

ending their current mandate in 2014.

32. Details of the members of the Supervisory Board

Currently, Martifer’s Supervisory Board has the following composition:

PRESIDENT Mr Manuel Simões de Carvalho e Silva

MEMBERS Mr Carlos Alberto da Silva e Cunha Mr João Carlos Tavares Ferreira de Carreto Lages

ALTERNATE Mr Juvenal Pessoa Miranda

33. Professional qualifications of each member of the Supervisory Board and other

important curricular information

The experience and knowledge of the members of the Supervisory Board are better described in their curricula presented in the

document attached to this report and attest, in a rigorous and specific manner, their ability to carry out the duties attributed to them.

The Company’s Supervisory Board is composed of independent members, who are subject to the legal and regulatory requirements

regarding incompatibility, independence, and specialisation in force, namely those foreseen in Article 414-A of the CCC, as well as

the independence criteria referred to in no. 5 of Article 414 of the CCC.


The members comprising the Supervisory Board meet the incompatibility and independence criteria identified above with, at 31

December 2013, none of the members holding Martifer shares, in compliance with Article 447 of the CCC.

b) Functioning

34. Availability and place where the rules on the functioning of the Supervisory Board may

be viewed

The Supervisory Board’s powers are described in its respective Regulation, which can be consulted in the company’s Website at

http://www.martifer.pt/ (Tab: Investors, Section: Corporate Governance/Articles of Association).

35. The number of meetings held and the attendance report for each member of the

Supervisory Board

The Supervisory Board meets, at the minimum, once a quarter, whenever its President decides or whenever any of the members

request he call a meeting. The President is responsible for calling and running the meetings. Resolutions are passed when the

majority of the members are present and by a simple majority of the votes expressed.

In 2013, the Supervisory Board met 7 times, minutes being prepared of all the meetings.

The attendance level of each Member at said meetings, in the conduct of his respective duties, was as follows:

ATTENDANCE

MR Manuel Simões de Carvalho e Silva 100%

MR Carlos Alberto da Silva e Cunha 100%

MR João Carlos Tavares Ferreira de Carreto Lages 100%

36. The availability of each member of the Supervisory Board, indicating the positions held

simultaneously in other companies, inside and outside the Group, and other relevant

activities undertaken

All the members of the Supervisory Board demonstrated throughout the 2013 financial year full availability to exercise the functions

attributed to them, having regularly attended meetings called as well as being present whenever such presence was considered convenient.

In so far as the activities of the members of the Supervisory Board are concerned, the Member, Mr Carlos Alberto da Silva e Cunha,

who is a statutory auditor, the President of the Supervisory Board, Mr Manuel Simões Carvalho e Silva, and the Member, Mr João

Carlos Tavares Ferreira de Carreto Lages, the last two holding Honours degrees in Law and practicing Law, a significant part of

which Commercial and Company Law, endow this board with important operational knowledge of the Company’s business areas.

The President is adequately supported by the remaining members of the Supervisory Board.

Within the scope of the most relevant activities of the members of the Supervisory Council we refer to the information contained in

Point 33, it being understood that the members do not exercise any other position in the Martifer Group.


c) Powers and duties

37. Description of the procedures and criteria applicable to the supervisory body for the

purposes of hiring additional services from the external auditor

The Company’s External Auditor has been the company PricewaterhouseCoopers & Associados, SROC, SA (PwC) since the 2010

financial period. The change in External Auditors followed a market consultation that year, which was the object of analysis and

assessment by the Supervisory Board.

Services falling outside the statutory and external audit scope requested by Martifer Group companies from the External Auditor

and from other entities belonging to the same network, in 2013, do not attain relevant amounts. The Supervisory Board approved

the engagement of services outside the scope of the statutory and external audit from the External Auditor, considering that these

services, in addition to not exceeding a relative weight in excess of 30% of the total services rendered to the Company, do not

impair the External Auditors’ independence.

Additionally, any new service to be rendered by PwC and its companies (national or international) to the Martifer Group is subject to

the prior approval of both the management of Martifer and the PwC Partner responsible for the PwC work at the Martifer Group,

within the scope of its quality control system.

Martifer’s Supervisory Board, within the scope of its supervisory duties vis-à-vis the company’s activity, has analytical and appraisal

responsibilities over the more significant aspects of the relationship with the External Auditor, namely in aspects relating to the

independence of its work. During 2013, the Company’s Supervisory Board appraised the activity carried out by the External

Auditor, having concluded that it was conducted in a manner consistent with applicable regulations and norms, and that it had acted

with technical rigor, transparency and elegance.

The Supervisory Board furthermore reflects, whenever necessary or adequate in function of developments at the Company or the

market configuration in general, on the adequacy of the External Auditor vis-à-vis the performance of the duties attributed to it.

38. Other duties of the supervisory body

In addition to the duties described in the previous point, the Supervisory Board has the powers set forth in law and in the Articles of

Association, amongst others, those relating to the monitoring of the Company’s operations, the compliance with the applicable

legislation, Articles of Association and regulations, as well as to issue opinions on the budget, the balance sheet, the inventories

and the annual financial statements.

Hence, in exercising its powers and carrying out its duties, the Supervisory Board proposes to the General Meeting:

− Nominates the Company’s effective and alternate Statutory Auditors;

− Monitors the Statutory Auditors’ independence, namely in respect of the rendering of additional services and the scope of these,

and in respect of the statutory audit of the Company’s financial statements;

− Examines, whenever it considers convenient and with regularity, the Company's bookkeeping;

− Monitors the Company’s activity and compliance with the applicable laws, Articles of Association and regulations;

− Represents or arranges to represent itself at the Board of Directors’ meetings whenever it considers such presence convenient;

− Requests the call of the Shareholders’ General Meeting whenever it considers such call convenient;

− Examines situations periodically presented to it by the Board of Directors during its term of office;

− Issues opinions on the budget, the balance sheet, the inventories and the annual accounts.

The Supervisory Board is also responsible for representing the Company vis-à-vis the External Auditor, and for:

− proposing the supplier of these services and the respective remuneration;


− ensuring that conditions adequate for the rendering of these services are made available at the Company;

− annually appraising the services rendered as well as for acting as the Company’s go-between, receiving, simultaneously with

the Board of Directors, the respective reports; and

− proposing the destitution of the External Auditor with just cause.

Finally, Martifer’s Supervisory Board is responsible for inspecting and assessing the effectiveness of the risk management systems

and monitoring of the activity of internal audit, including the functioning of the systems of internal control and risk management, both

the object of regular monitoring and evaluation by the Supervisory Board within the scope of its functional and legal powers, as can

be inferred from the minutes of the meetings and the annual report and opinion issued by the Supervisory Board.

IV. STATUTORY AUDITOR

39. Details of the statutory auditor and the partner that represents same

The Statutory Auditors, effective and alternate, were elected for the triennium 2012-2014 at the 10 April 2013 General Meeting,

following the resignation on 25 February 2013 of the Statutory Auditor and of the respective alternate, are:

PRESIDENT PRICEWATERHOUSECOOPERS & Associados – Sociedade de Revisores Oficiais de Contas, Lda., as statutory auditor (effective)

ALTERNATE Mr JOSÉ PEREIRA ALVES, as statutory auditor (alternate)

The Statutory Auditor can only be elected at a General Meeting. If a vacancy occurs in this body it shall be filled by the alternate

member, and, if the latter does not remain in that function, it can only be filled through the election of a new member at a

Shareholders’ General Meeting.

The Statutory Auditor may be represented by Hermínio António Paulos Afonso or by António Joaquim Brochado Correia, it being

understood that for the 2013 financial year the representative of the Statutory Auditor was Hermínio António Paulos Afonso.

40. Indication of the number of years that the statutory auditor consecutively carries out

duties at the company and/or group

As better described in the previous point, the current Statutory Auditor, PricewaterhouseCoopers & Associados, SROC, Lda, was

appointed at the General Meeting of 10 April 2013, carrying out its duties since then.

41. Description of other services that the statutory auditor provides to the company

The Statutory Auditor also provides the Company with External Audit services, as described in the follow points that.


V. EXTERNAL AUDITOR

42. Details of the external auditor appointed in accordance with Article 8 and of the partner

that represents same in carrying out these duties, and the respective registration number at

the CMVM

The Company’s External Auditor is the company PricewaterhouseCoopers & Associados, SROC, SA (PwC) registered under no.

9077 at the Comissão de Mercado de Valores Mobiliários (CMVM), pursuant to a contract initially celebrated for that financial year,

and which has been extended to the 2013 financial year.

PwC has, since 2010, been represented by Mr Herminio Paulos Afonso.

43. Indication of the number of years that the external auditor and respective partner that

represents same in carrying out these duties have consecutively carried out duties at the

company and/or group

As better described in the previous point, the External Auditor, PricewaterhouseCoopers & Associados, SROC, Lda. and the

respective statutory auditor partner representing the prior in the conduct of its duties, have exercised said duties consecutively at

the Company since 2010, ie around 4 years.

44. Rotation policy and schedule of the external auditor and the respective partner that

represents said auditor in carrying out such duties

In so far as a rotation schedule of the External Auditor is concerned, the Martifer Group has no formal policy regarding External

Auditor rotation.

The Supervisory Board carries out an annual assessment of the External Auditor’s work, ensuring compliance with those laid down

in Article 54 of Decree-law no. 487/99, of 16 November (amended by Decree-law no. 224/2008, of 20 November), relating to the

rotation of the partner responsible for the execution of the work.

Nevertheless, both the External Auditor and its partner, a Statutory Auditor representing it in the carrying out of said duties, are still

in a second term of office in the Company, and therefore complying with the rules presently in force.

45. Details of the Board responsible for assessing the external auditor and the regular

intervals when said assessment is carried out

The Supervisory Board, in the conduct of its functions, carries out an annual assessment of the External Auditor’s independence.

Additionally, the Supervisory Board, throughout each financial period and whenever necessary or adequate in function of

developments in the activity of the Company or the general market configuration, reflects on the adequacy of the External Auditor

vis-à-vis the conduct of its duties.


46. Details of services, other than auditing, carried out by the External Auditor for the

Company and/or companies in a control relationship and an indication of the internal

procedures for approving the recruitment of such services and a statement on the reasons

for said recruitment

In addition to auditing services, tax advisory services in respect of foreign companies and a due diligence in respect of an affiliate

were carried out for the Company and/or the Group’s companies.

The approval and recruitment of the services rendered by the External Auditor, other than the auditing services, was based on the

procedures described in Point 37, it being understood that said recruitment occurred due to the lack of internal resources at the

relevant company.

The Supervisory Board approved the engagement of services outside the scope of the statutory and external audit from the

External Auditor, considering that these services, in addition to not exceeding a relative weight in excess of 30% of the total

services rendered to the Company, do not impair the External Auditors’ independence.

Additionally, any new service to be rendered by PwC and its companies (national or international) to the Martifer Group is subject to

the prior approval of both the management of Martifer and the PwC Partner responsible for the PwC work at the Martifer Group,

within the scope of Martifer’ s quality control system.

47. Details of the annual remuneration paid by the Company and/or legal entities in a

control or group relationship to the auditor and other natural or legal persons pertaining to

the same network and the percentage breakdown relating to the services in question

During the 2013 financial period, the annual remuneration paid to the auditors and other private or corporate bodies belonging to

the same network, borne by the Company and / or legal entities in a control or group relationship, amounted to 444.808 thousand

Euros (including expenses and remuneration paid by foreign subsidiaries). The breakdown of that remuneration is as follows:

OTHER 2013 % 2012 % 2011 %

Statutory and external audit services 365,508 90.68% 373,226 85.10% 306,799 85.20%

Other due diligence / verification services 0 0.00% - - 6,345 1.30%

Tax advisory services 34,506 8.56% 41,899 8.80% 44,626 9.30%

Other services outside the statutory audit scope 3,074 0.76% 29,050 6.10% 19,665 4.10%

Total 403,088 100.00% 444,175 100.00% 377,435 100.00%

MT SGPS 2013 % 2012 % 2011 %

Statutory and external audit services 41,720 10.35% 32,655 100.00% 100,400 100.00%

Other due diligence / verification services 0.00% 0.00% 0.00%

Tax advisory services 0.00% 0.00% 0.00%

Other services outside the statutory audit scope 0.00% 0.00% 0.00%

Total 41,720 10.35% 32,655 100.00% 100,400 100.00%

GLOBAL TOTAL 444,808

476,830

477,835

** Including individual and consolidated accounts


C. INTERNAL ORGANISATION

I. ARTICLES OF ASSOCIATION

48. Rules governing amendment to the Articles of Association (Article 245-A/1/h))

Martifer’s Articles of Association do not contain special rules regulating amendments to the same; being, thus, applicable the rules

laid down in the CCC. Hence:

− Constitutive quorum: the provisions laid down in Article 383 of the CCC apply. At a first meeting, for a Shareholders’ General

Meeting to pass resolutions on amendments to the Company’s Articles of Association, the presence, or representation, of

shareholders holding at least one third of the company’s share capital is required;

− Deliberative quorum: the provisions laid down in Article 18 of the Articles of Association and Article 386, no. 3 of the CCC apply,

namely, corporate resolutions in a Shareholders’ General Meeting as to amendments to the Articles of Association are taken, at

a first or second meeting, by two thirds of the votes issued.

II. REPORTING OF IRREGULARITIES

49. Reporting means and policy on the reporting of irregularities in the company

The policy on the reporting of irregularities defines the Ethics and Conduct Committee as the entity responsible for the reception

and management of denunciations or reports of irregularities, without prejudice to the Supervisory Board’s own powers in this

matter.

In complement to the Supervisory Board, the Committee pursues, applies and follows up on the procedures underlying the

denunciation of internal irregularities, affording the appropriate internal treatment to the denunciations and reporting of irregularities

and ensuring the rapid resolution of the facts denounced.

In this manner, Martifer Group seeks to create conditions that allow any employee to freely report his concerns on these matters to

the Ethics and Conduct Committee and to facilitate the early detection of irregular situations that, being practiced, could damage the

Martifer Group, as well as its stakeholders.

Any notification, reporting or denunciation of irregularities occurring internally at the Martifer Group is forwarded directly in a special

mail box, which can be accessed solely by the President of the Ethics and Conduct Committee. The anonymity and confidentiality

are assured whenever so requested in the report or denunciation. This channel was considered the most appropriate and

independent means for the reception of denunciations, without prejudice to those being received through the post.

The direct reporting of irregularities to the Supervisory Board, and all those that are of the exclusive competence of the Supervisory

Board, are likewise immediately reported to that body’s President by the President of the Ethics and Conduct Committee.

During 2013, no irregularities were reported to the Martifer Group’s Ethics and Conduct Committee.

The Company’s reporting and denunciation of irregularities policy is disclosed in the Company’s Website at http://www.martifer.pt/,

as well as in the Company’s intranet site.

Martifer’s reporting of irregularities policy applies to the entire Martifer Group perimeter.



III. INTERNAL CONTROL AND RISK MANAGEMENT

50. Individuals, boards or committees responsible for the internal audit and / or

implementation of the internal control systems

Board of Directors

The risk policy is defined by the Board of Directors based on the analysis and measurement of risk, which also coordinates and

develops risk management processes so as to guarantee an integrated risk management streamlined with the strategy and

objectives of the Martifer Group.

Risk Committee

Martifer’s Risk Committee, which constitutes a Specialised Committee of the Board of Directors, has as its main attributions the

compliance with the guiding principles subjacent to Martifer Group Risk policy, aiding the Board of Directors with the setting of the

Company’s strategic objectives in matters pertaining to the assumption of risk, issuing recommendations and opinions, amongst

others, on the definition of a Risk Policy for the Martifer Group and as to the creation of risk identification, monitoring, control and

management systems of a (i) legal and contractual, (ii) financial, (iii) technical and operational, (iv) commercial, (v) environmental,

(vi) political and (vii) other nature.

The composition, functioning, attributions and powers of the Risk Committee are described in Point 29 above, and can be consulted

in the Company’s Website at http://www.martifer.pt/ (Tab: Investors, Section: Corporate Governance / Articles of Association).

Supervisory Board

The assessment of the risk management and control systems constitutes a matter which is the object of regular analysis and

discussion by Martifer’s Supervisory Board, within the scope of the framework of its legal powers.

External Audit

As part of its duties it evaluates the risks subjacent to the reliability and integrity of the accounting and financial information,

reporting on same to the Supervisory Board.

Internal Audit Department

Martifer has in its organisational structure an Internal Audit Department that carries out its activities with the purpose of assessing

the effectiveness and efficiency of the internal control system and of the business processes throughout the Martifer Group, in an

independent and systematic manner, that verifies whether the assets at Martifer Group level are duly recorded and sufficiently

protected against risks and losses, that examines and evaluates the accuracy, the quality and the application of operational,

accounting and financial controls, promoting effective control at a reasonable cost and proposing measures that reveal themselves

to be necessary to overcome potential weaknesses detected in the internal control systems.

Martifer’s internal audit department reports functionally to Mr. Jorge Bento Ribeiro Barbosa Farinha, a non-executive, independent

director sitting on the Company’s Board of Directors.

The scope of the audits to be conducted in order to assess the quality of the control processes that assure compliance with the

objectives of the Internal Control System, namely those that guarantee the efficiency of the operations, the reliability of the financial



and operational reports and the respect for the law and regulations, is defined annually. Internal control deficiencies are reported up

the hierarchy, the gravest matters being reported directly to the Board of Directors.

The activities of the Internal Audit Department, including the functioning of the internal control and risk management systems, are

regularly monitored by the Company’s Supervisory Board whilst supervisory body, within the scope of its functional powers, namely

those foreseen in paragraph i) of Article 420 of the CCC. It should be pointed out that the Company’s Supervisory Board meets

regularly, fully complying with all its duties and attributions, as can be inferred from the minutes of the meetings and from the

Supervisory Board’s annual report and opinion.

Planning and Management Control and Consolidation and Reporting Departments

Martifer also has a Planning and Management Control Department that, supported by the Company’s information systems

produces, monitors and analyses management information, raising questions at unit level.

The consolidated financial statements are prepared by Martifer’s Consolidation and Reporting Department, which guarantees

consistency in the application of the accounting policies adopted.

It should be highlighted that the risks subjacent to the reliability and integrity of the accounting and financial information are also

assessed and reported on as part of the activities of the Statutory and External Auditors.

It should also be pointed out that there is an Ethics and Conduct Code and a system for the reporting of irregularities, which fosters

Martifer Group’s control culture.

51. Details, even if through the inclusion of an organisational chart, of hierarchical and/or

functional dependency in relation to other boards or committees of the Company

Regarding hierarchical or functional dependency amongst the corporate bodies and departments responsible for the

implementation and monitoring of the internal control systems, better described in the preceding point:

− The Risk Committee is a specialised committee constituted by the Board of Directors, formed primarily by non-executive

members of the Board of Directors and/or the Supervisory Board, and is chaired by an independent director;

− The Supervisory Board is elected at the Company’s Shareholders’ General Meeting and is an independent body;

− The External Auditor, proposed by the Supervisory Board, is elected at the Company’s Shareholders’ General Meeting and the

results of its activity are assessed by the Supervisory Board;

− The Internal Audit Department reports functionally to an independent non-executive director of the Board of Directors –

Professor Jorge Bento Farinha;

− The Planning and Management Control and the Consolidation and Reporting Departments both report to the Company’s Board

of Directors.

52. Other functional areas responsible for risk control

We consider that this point is already explained in detail in the preceding point and, therefore, refer thereto for the response to this point.

53. Details and description of the major economic, financial and legal risks to which the

company is exposed in pursuing its business activity


FINANCIAL RISKS

a) Price risk

The volatility of raw-material prices constitutes a risk for the Group, both in the Construction and in the Solar Areas. The changes in the

price of steel and aluminium impact the operational activity of metallic construction, and the market evolution of solar panel prices may

also influence the solar activity. Martifer has sought to mitigate this risk, in like manner in both areas, through contracts with customers

that allow it to pass on raw-material price fluctuations and by negotiating fixed prices for large-scale projects with its suppliers.

b) Currency risk





The Group’s currency risk management policy ultimately aims to reduce the sensitivity of its results to exchange rate variations.

Subsidiaries, in their day-to-day operational activities, seek to use their local currency. Likewise, loans contracted by foreign

subsidiaries are preferably denominated in their local currency.

Certain operational activities of the Group are exposed to changes in foreign exchange rates vis-à-vis their local currency. The

prices of some raw-materials, namely steel and aluminium, are generally expressed or indexed to the US Dollar, which can have an

impact on the Group’s results. It is possible, to a large extent, to include these variations in the sales prices. The Group seeks to

hedges this exposure by contracting foreign exchange derivative contracts in the subsidiary exposed to the said risk. Over the last

two years, the contracting of derivative contracts underwent a fair increase in the Group, fundamentally for two reasons: 1) due to

the increase in operating revenue in Brazil, in the metallic construction area, and the recent the volatility of the Real, and 2) in the

case of the solar business, for currency protection in relation to the US Dollar.




The Group relies on external financing to fund its activity, being exposed to interest rate risk as a significant part of the Group’s

borrowings are indexed to market interest rates. At the end of 2013, the financing levels attained were 3% fixed rate and 97%

variable rate, which compares to the 17% and 83% at the end of 2012, respectively.

Regarding the most significant medium- and long-term loans, the Group relies on fixed interest rate loans or uses interest rate

derivatives to hedge exposure to interest rate risk on said loans. The amounts, interest due dates and repayment schedules of the

loans underlying the interest rate derivatives are identical to those of the loans they hedge, and, as such, are considered perfect

hedges.

d) Liquidity risk

Liquidity risk reflects Martifer Group’s ability to satisfy its financial responsibilities with the available financial resources. Martifer

Group manages its liquidity risk in two main ways:

− On the one hand, it seeks to ensure that the Group financing structure adequately reflects the nature of its obligations.

Investments in fixed assets, including financial investments, are funded through long-term facilities (equity and long-term loans)


whilst short-term obligations are funded through short-term loans. Long-term loans are generally contracted for periods of 5 to 7

years, generally with a grace period of the principal of 1 to 2 years.

− On the other hand, subsidiaries have contracted, with financial institutions, short-term facilities for amounts that assure their

liquidity. Subsidiaries also have adequate amounts of cash to cover their short-term commitments.

e) Credit risk


economies can influence Martifer Group’s client default rate, with negative impacts on Martifer Group’s results.

Aware of this reality, Martifer Group seeks to evaluate all its clients’ credit risk in order to establish credit limits, the ultimate purpose

of which being to ensure the collection of the amounts due within the periods negotiated.

With this objective in mind, Martifer Group uses credit rating agencies, regularly analyses risk and credit control, and collects from

and manages processes in litigation, procedures which are all considered essential to manage the credit conceded and to minimise

the risk of client default.

OPERATIONAL RISKS

a) Metallic Construction

Operational risks in the Metallic Construction area, which also incorporated the energy equipment area as from 2011, are currently

divided into three sources of risk – client, supplier and external risk, which, in turn, is sub-divided into specific problems.

Under client risk one can identify, for example, issues at the contractual level, such as the lack of convergence in the interpretation

and application of the contractual dispositions, the disfavour or dissatisfaction with the service/product as well as the risk of non-

payment of the price stipulated following delivery of the projects.

In terms of demand volatility, it is important to highlight that the business area depends, in part, on the launch of public tenders for

public infrastructures (ex. bridges, airports, stations). Under public tenders, Martifer is subject to complex regulatory demands,

specific to each country, namely in matters concerning the presentation of the proposals and the preparation of complex

administrative documentation files to satisfy the project specifications defined by the contracting entity, that may represent

additional costs for the Martifer Group. It is to be highlighted that, notwithstanding said dependency on public tenders, Martifer has

been able to win business not subject to public tender, thereby reducing its exposure to this risk.

Under supplier risk, it should be noted that Martifer Construções, whilst specialist in engineering projects, very often relies on

subcontractors, who, in turn, may fail in the execution of their contracts and jeopardise, through a domino-effect, the meeting of

project delivery deadlines. In other words, there is also a risk of delays in delivering the projects, with the inherent contractual

penalties.

In the specific case of wind farm construction projects, this problem is mitigated by contemplating guarantees and penalties in the

contracts, due by the suppliers of equipment or turnkey projects, this being so because delays in delivering the wind farms may

result in obtaining less attractive tariffs and, consequently, lower profitability rates on the projects. On the other hand, reliance on

internationally renowned suppliers, the most important being REpower and Suzlon, reduces the dependency on suppliers and

guarantees the quality of the equipment. This form of risk management also allows for the simultaneous mitigation of turbine

performance risk, since operation and maintenance contracts are signed with turbine suppliers, for periods of, typically, 5 years.

Finally, the risk associated with wind turbine performance is also reduced through adequate and programmed preventive

maintenance.

Finally, in terms of external risks, and considering that the area of Metallic Construction is strongly correlated with economic growth

and with gross fixed capital formation, it is one that is therefore sensitive to the current economic environment. Accordingly, the

worsening of the sovereign debt crisis in Europe also raises other problems, namely the austerity plans that imply severe


transversal cuts in public investment and the significant decrease in liquidity throughout the financial system, which often causes

highly attractive projects to be shelved due to lack of capital.

The manner found by the Metallic Construction area to mitigate these external risks, was to disperse its activity over different

geographies, namely through the entry into markets presenting higher growth rates in the construction sector, as is the case of the

Angolan market, the Brazilian market, or even countries sporadically visited such as Saudi Arabia, which will help offset both the

effects of the economic recession in Portugal as well as the economic slowdown in Europe.

b) Solar

In the turnkey park installation activity, end-client delays in obtaining the necessary licences or unanticipated delays in the delivery

of equipment may disrupt the calendars initially foreseen for the completion of the respective projects. Despite the fact that this

type of delay usually carries no contractual penalties, in some cases these situation can constitute a risk for the Group given the

planning difficulties they can present.

Additionally, the financial market crisis has been hampering the promoters’ access to funding, resulting in the postponement of

some projects. The diversification of the business throughout the value chain and the diversified client portfolio, inside and outside

the Group, both in the process of being adopted, should reduce the possible impact of this situation.

The solar photovoltaic modules produced by the Company are traded with 5-year warranty and 25-year performance warranty

periods, as a result of which this sector is exposed to the risk of warranty claims many years after the sale of the equipment.

Accordingly, any quality or performance problems that may occur can result in high costs. The performance of solar systems is

also guaranteed in respect of modules acquired for the construction of solar parks; however, the Group’s responsibility, in this case,

is diminished in that there is a right of recourse vis-à-vis the suppliers.

On the other hand, most of the equipment used in the production of solar photovoltaic modules is customised for specific raw-

materials, with a resulting dependency risk on key raw-material suppliers. The Group has sought to mitigate this risk by establishing

long-term contracts for some raw-materials, carrying out a judicious selection of suppliers and working towards garnering a

diversification of suppliers for each of the relevant raw-materials of the production process.

c) RE Developer

The productivity indices associated with the renewable energy business depend on the volume of energy produced by the wind

farms and its profitability, factors that depend on the location of the wind farms and on the seasons of the year (seasonality). Given

that the wind turbines are only driven when wind velocity is within specific parameters, which parameters depend on the supplier

and the type of turbine, if the said velocity is not within the parameters or if it is at the lower end of the limits, the energy production

of the wind farms will decrease.

The readiness and power curve of each turbine is contractually guaranteed, with indemnities being payable by the suppliers for

situations where its readiness is not satisfied or the power curve is not attained.

This risk is also mitigated through the geographical distribution of the wind farms, allowing for the set-off of wind velocity variations

at each farm and ensuring the relative stability of the volume of total energy produced.

Licencing Process

Wind farms and solar parks are subject to rigorous regulations in the matters of power plant development, construction, licensing

and operation. If the relevant authorities in the jurisdictions in which the Group operates stop or reduce their support for the

development of wind farms and solar parks, such actions may have a significant impact on the activity.


LEGAL RISKS

Martifer is subject to national and local laws and regulations in the various geographies and markets where it operates and that

seek to assure, amongst others, worker rights, protection of the environment and spatial planning and the maintenance of an open

and competitive market. Hence, legal and regulatory changes that affect the conditions conducive to the development of Martifer

Groups’ activities and, consequently, prejudice or impede the attainment of the strategic objectives require each company to adapt

to the new regulatory realities.

Legal risk management is carried out by the Legal Departments of the Holding Company and of each of the Group’s Business

Areas and is monitored within the scope of the internal legal and fiscal advisory services dedicated to the respective activities,

which operate in the dependency of management, developing its competencies in articulation with the other fiscal and financial

departments, so as to assure the protection of the Company’s interests and, ultimately, the stakeholders’, in strict compliance with

their legal duties.

The members of said legal departments and internal advisory services have specialised formal qualifications and undergo regular

training and updating courses.

Legal and fiscal advisory services are also assured, nationally and internationally, by external professionals, selected amongst

reputable firms and in accordance with the highest standards of competence, ethics and experience.

54. Description of the procedure for identification, assessment, monitoring, control and risk

management

RISK MANAGEMENT SYSTEMS

Risk Management is one of the components of Martifer’s culture, being present in all management processes and representing a

responsibility of all managers and employees at the various levels of organisation.

Risk policy is defined by the Board of Directors based on the analysis and measurement of risk, which also coordinates and develops risk management processes in order to guarantee an integrated risk management streamlined with the strategy and objectives of the Group.

In parallel, Martifer continues to implement internal control and risk management procedures with the objective of reinforcing the

integrated risk management, establishing a strategy for the prevention and management of risk transversal to the Group, so as to reduce

exposure to risk and safeguard the value of the Group. The procedure is characterised, summarily, by the identification of the risks in

each business area, accompanied, in parallel, by the formalisation of an assessment, management, prevention and mitigation of risk

process, to be elaborated by the Company’s Board of Directors, supported by the Risk Committee.

Risk Management comprises the processes of identifying current and potential risks, analysing their possible impact on the strategic

objectives of the organisation and estimating the probability of their occurrence, in order to determine the best way to manage exposure

to these.

All these risks are duly identified, assessed and monitored, and it is the responsibility of the different structures in the company to

manage and/or mitigate them.

Risk Management at Martifer Group starts at the operational company level, with the identification, measurement and analysis of the

different risks to which it is subject, with special emphasis on risks of an operational and market nature, seeking to estimate the

probability of the occurrence of the various factors that determine such risks and their potential impact on the business of the Company

or activity in question.


Without prejudice to the definition of the risk strategy by Martifer’s Board of Directors, the persons responsible for the operations are also

responsible for the implementation of risk control mechanisms, which are scrutinised by the competent Financial, Tax and Legal

Departments.

The identification of the risks is a responsibility transversal to the different levels of the organisation, specific templates having been created to identify and categorise the main risks in each Business Area, as well as the new risks that may arise as the respective activities develop, including:

(i) economic and business risks, (ii) financial risks, and (iii) legal risks.

The Risk Committee is also responsible for the analysis and issuance of opinions, which are submitted to the Board of Directors on,

amongst others, new Group investments above certain amounts and new geographies for Martifer Group’s activities.

The efficiency of these mechanisms is periodically assessed by the Holding Company, through the Internal Audit Department,

during the execution of the audit plan covering the financial aspects, information systems, processes and conformity with the

procedures approved. This audit plan is prepared and developed annually, based on a prior assessment of the business risks, the

mechanisms and assessments of the internal audit department being monitored and verified by the Company’s Supervisory Board

within the scope of its functional powers.

The function of Planning and Management Control also promotes and supports the integration of risk management in the

companies’ planning and management control processes.

It is an objective of the Holding Company to obtain an integrated vision of the risks the Group faces in each of its different activities

or business areas and to guarantee the consistency of the resulting risk profile with that of the Group’s global strategy and, in

particular, to determine what it considers an acceptable risk level, given the structure of its capital.

To this effect, operations with the highest relevance and impact on Martifer Group, as well as those of a more financial nature are

directly assessed and validated by the Financial, Tax and Legal Departments at the Holding Company level, in line with the policies

and risk strategies set by management.

55. Core details on the internal control and risk management systems implemented in the

company regarding the procedure for reporting financial information (Article 245-A/1/m)

Concerning the release of financial information, the Martifer Group promotes strict cooperation amongst all the bodies, departments

and remaining participants in the process, so that the financial information is prepared in accordance with the legal requirements in

force, complying with the best practices of transparency, relevance and reliability, is subject to an effective verification, whether by

internal analysis, by the supervisory bodies and the External Auditor, is approved by the responsible corporate body and its

disclosure complies with all the legal requirements and recommendations, namely those of the CMVM.

In the financial information disclosure process we highlight:

− The use of accounting policies that are explained in the Notes to the Financial Statements;

− The financial information is analysed by the persons responsible for the management of the respective business areas, seeking

to exercise permanent monitoring and the respective budgetary control;

− The accounting records and the preparation of the financial statements are prepared by the Financial, Accounting and Planning

and Management Control Departments, that guarantee the control over the recording of the transactions of the business

processes and over the balances of the asset, liability and equity accounts;

− The consolidated financial statements are prepared periodically, on a quarterly basis, by the Consolidation and Reporting

Department and validated by the Planning and Management Control Department;


− The Management Report is prepared by the competent internal departments, with the contribution and additional review of the

various business and support areas. The Statutory Auditor also reviews the content of this report (the annual and half-yearly

versions) and its conformity with the supporting financial information;

− The Group’s financial statements are prepared under the supervision of the executive directors of the Group. The documents comprising

the half-yearly and annual reports are sent for the review and approval of the Board of Directors. Subsequent to their approval, these

documents are sent to the External Auditor, who issues his legal certification of the accounts and the External Audit’s Report;

− The Statutory Auditor carries out both an annual audit and a limited review at the half-year of the individual and consolidated

accounts, carried out in accordance with the Auditing Standards in force.

IV. INVESTOR ASSISTANCE

56. Department responsible for investor assistance, composition, functions, the information

made available by said department and contact details

Martifer privileges a permanent contact with the capital market, seeking to guarantee a permanent access to information on the

Group in a continued and consistent manner, be it through the disclosure of periodic financial information or through contacts with

institutional investors, namely by participating in road-shows and conferences, or through permanent contact with financial analysts.

Shareholders and investors can generally obtain all the relevant Group information from Martifer’s Website at http://www.martifer.pt/,

in particular from the Investor Relations page, where they can find, in addition to the mandatory information of a corporate and

financial nature, information on the evolution of its quoted share price. Shareholders and Investors can also contact the Investor

Assistance Office, which assures a permanent contact with the market.

During the 2013 financial year, Martifer participated in various events amongst which roadshows, seminars, one-on-one meetings

and conferences aimed at institutional investors, with the emphasis being on London and Paris.

The Investor Relations and Communications Office seeks to assure the market, investors, analysts and journalists the disclosure of

information on the Martifer Group in a continued, opportune and balanced manner.

The main functions of the Investor Assistance Office are, amongst others:

− Assuring, vis-à-vis the authorities and the market, compliance with the legal and regulatory reporting obligations applicable to

Martifer SGPS, SA. The disclosure of information falling within the scope of “ announcement of privileged information”, the

announcement of quarterly information on the activities and results of the Group and the preparation of the annual, half-yearly

and quarterly reports and financial statements, are to be highlighted;

− Satisfy investor (institutional and private), financial analyst and other agents’ requests for information;

− Supporting and advising Martifer’s Executive Committee in aspects relating to the company’s public status, an example being

the monitoring of the evolution of Martifer’s quoted share price, in its multiple aspects, supporting the Executive Committee with

the direct contacts it regularly maintains with financial analysts and institutional investors (national and foreign), through

conferences, meetings and road-shows. At an organic level, the Investor Assistance Office reports directly to the Executive

Committee of the Board of Directors of Martifer SGPS.

− Information made available by the Investor Assistance Office:

• Investor Kit

• General Information

• Main Indicators

• Corporate Governance

• Corporate Bodies

• Articles of Association

• Ethics and Conduct

• General meetings

• Share Price Quotation

• Agenda

• Publications

• Financial Information


• Presentations • Notices

The Investor Assistance Office may be contacted at the following contacts: Sónia Baldeira

[email protected] Martifer SGPS, Apartado 17 3684-001 Oliveira de Frades Portugal Telephone: +351 232 767 702 Fax: +351 232 767 750

57. Market Liaison Officer

For purposes of the Securities Code, the Market Liaison Officer is Mr Mário Rui Matias. Mr. Mário Rui Matias

Martifer SGPS, Apartado 17 3684-001 Oliveira de Frades Portugal Telephone: +351 232 767 702 Fax: +351 232 767 750

58. Data on the extent and deadline for replying to the requests for information received

throughout the year or pending from preceding years

− Requests for information received by the Investor Assistance Office recorded a significant increase as from the second-half of

2013, which is justified by the improvement in the financial markets’ expectations regarding Portugal and company performance.

Information requests were by and large made by institutional investors, but some information requests were also placed by

small retail investors.

− The Market Liaison Office aims to minimize the response time for the requests, and when an immediate response is not

possible, it shall not exceed 24 hours, except for exceptional circumstances.

V. WEBSITE

59. Address(es)

Martifer has a Website bearing the electronic address (http://www.martifer.pt/) with a wide range of information on the Martifer Group.

60. Place where information on the firm, public company status, registered office and other

details referred to in Article 171 of the Commercial Companies Code is available

Information can be consulted at the following electronic address:

http://www.martifer.com/pt/grupo/legal-disclaimer/

http://www.martifer.com/pt/grupo/legal-disclaimer/


61. Place where the articles of association and regulations on the functioning of the boards

and / or committees are available


http://www.martifer.pt/pt/grupo/investidor/corporate-governance/estatutos/

62. Place where information is available on the names of the corporate bodies' members,

the Market Liaison Officer, the Investor Assistance Office or comparable structure,

respective functions and contact details


http://www.martifer.pt/pt/grupo/investidor/corporate-governance/orgaos-sociais/

http://www.martifer.pt/pt/grupo/investidor/informacoes-gerais/gabinete-de-apoio/

63. Place where the documents are available and relate to financial accounts reporting, which

should be accessible for at least five years and the half-yearly calendar on company events

that is published at the beginning of every six months, including, inter alia, general meetings,

disclosure of annual, half-yearly and where applicable, quarterly financial statements


http://www.martifer.pt/pt/grupo/investidor/agenda/#button_on_0

64. Place where the notice convening the general meeting and all the preparatory and

subsequent information related thereto is disclosed


http://www.martifer.pt/pt/grupo/investidor/corporate-governance/assembleias-gerais/

65. Place where the historical archive on the resolutions passed at the company's General

Meetings, share capital and voting results relating to the preceding three years are available



http://www.martifer.pt/pt/grupo/investidor/corporate-governance/estatutos/

http://www.martifer.pt/pt/grupo/investidor/corporate-governance/orgaos-sociais/

http://www.martifer.pt/pt/grupo/investidor/informacoes-gerais/gabinete-de-apoio/

http://www.martifer.pt/pt/grupo/investidor/agenda/#button_on_0




D. REMUNERATION

I. Power to establish

66. Details of the powers for establishing the remuneration of corporate boards, members

of the executive committee or chief executive and directors of the company

The remuneration policy and the remuneration of the Company’s Corporate Bodies is established by a Remuneration Setting Committee,

elected at the Shareholders’ General Meeting. This policy is reviewed annually and submitted for approval at the Company’s Annual

Shareholders’ General Meeting, where at least one representative of said Remuneration Setting Committee is present.

The Remuneration Setting Committee’s activity is dedicated to the preparation of master guidelines and the determination of the

remuneration policy of the Company’s corporate bodies, to monitoring the execution of that policy and to guaranteeing the

alignment of the actions of those bodies with the interests of the Company.

The Remuneration Setting Committee has as its main powers:

− Defining the remuneration policy of the Corporate Bodies of the Company, particularly of the executive members of the Board of

Directors, fixing the criteria to determine the variable component of the remuneration;

− Determining the various components of the fixed and variable remuneration, possible benefits and complements, as well as the

annual remuneration payable to the members of Martifer’s Corporate Bodies;

− Monitoring the performance of the executive members of the Board of Directors for the purposes of determining the variable

remuneration;

− Monitoring the performance of the non-executive members of the Board of Directors;

− Submitting, in an advisory capacity, an informative exposition on the company’s remuneration policy to the annual General

Meeting.

The Remuneration Setting Committee sporadically requests, if necessary, from Martifer’s internal departments (namely the Human

Resources Department, the Planning and Management Control Department and the Legal Department) specialised information and

data of a technical nature, amongst other, relating to the structure of the company, results of the Group and members and activities

of the corporate bodies. The information requested and received by the Committee is aimed at the compilation of a body of

information and technical data that permits the definition and implementation of the Group’s remuneration policy.

The information requested is provided free of charge, and the Committee has no need to hire persons, natural or legal, to carry out

its duties.

The External Auditor is also obliged to verify the application of the policies described and the remuneration systems of the

corporate bodies, being obliged to report any potential non-conformity detected to the Supervisory Board.

II. Remuneration Committee

67. Composition of the remuneration committee, including details of individuals or legal

persons recruited to provide services to said committee and a statement on the

independence of each member and advisor

The composition of the current Remuneration Setting Committee, elected at a Shareholders’ General Meeting for a three-year term

of office (2012-2014), is as follows:


PRESIDENT António Manuel Queirós Vasconcelos da Mota

MEMBERS Maria Manuela Queirós Vasconcelos Mota dos Santos Júlia Maria Rodrigues de Matos Nogueirinha

The members of the Remuneration Setting Committee are independent of the management body, considering the explanation

contained in the paragraph that follows.

During the 2013 corporate period, a member of the Remuneration Setting Committee – Ms. Júlia Matos – was also a member of a

corporate body of a company, which share capital is held by two executive directors of the Company, namely Messrs Carlos

Marques Martins and Jorge Marques Martins. However, the Company considers that the independence of the Remuneration

Setting Committee is safeguarded not only because of the professional training of this member in particular, but also because of the

fact that the remaining members of the Committee, which for the majority, are independent from the executive members of the

management body of the Company.

No persons were hired to integrate the Remuneration Setting Committee.

68. Knowledge and experience in remuneration policy issues by members of the

Remuneration Committee

The Company considers that all the indivuduals comprising this Remuneration Setting Committee, totally fit to carry out their duties

with excellence from a professional training perspective or based on positions previously held,.

Ms. Maria Manuela Queirós Vasconcelos Mota dos Santos is President of the Human Resources Development Commission of the

Mota-Engil Group.

The experience and knowledge of the members of the Remuneration Setting Committee are better described in their curricula

presented in the document attached to this report and attest, in a rigorous and specific manner, their ability to carry out the duties

attributed to them.

III. Remuneration structure

69. Description of the remuneration policy of the Board of Directors and Supervisory Board

as set out in Article 2 of Law No. 28/2009 of 19 June

The remuneration of the members of the Board of Directors and of the Supervisory Board of the Company is determined, in terms

of the Articles of Association, by the Remuneration Setting Committee, which submits a annual document, for appraisal at the

General Meeting, containing the general guidelines to be followed in establishing the specific amounts to attribute to the members

of the various Corporate Bodies.

At the Company’s General Meeting of 10 April 2013, the remuneration policy of the management and supervisory bodies, prepared

by the Remuneration Setting Committee, in compliance with Article 2 of Law no. 28/2009, of 19 June, and available in the

Company’s Website at http://www.martifer.pt/ (Tab: Investors, Section: Corporate Governance /General Meeting), was discussed

and submitted for approval.


In general terms, said remuneration policy of the management and supervisory bodies seeks to closely follow the CCC and the

Portuguese Securities Market Commission’s Corporate Governance Code provisions applicable, this being reflected in the

statement submitted for approval at the General Meeting referred to in the point that follows.

In defining the remuneration policy for the 2013 year, the legal provisions foreseen in (i) the CCC, namely in Article 399; (ii) Law

28/2009, of 19 June; (iii) the 2010 Corporate Governance Code issued by the CMVM; and (iv) the special regime laid down in the

Company’s Articles of Association, were considered.

70. Information on how remuneration is structured so as to enable the aligning of the interests

of the members of the Board of Directors with the Company's long-term interests and how

it is based on the performance assessment and how it discourages excessive risk taking

Martifer’s remuneration policy aims to promote the convergence of the interests of the directors, those of the other corporate bodies

and of the managers with the Company’s interests, namely those regarding the creation of value for the shareholder and real

growth for the Company, privileging a long-term perspective.

Hence, the Committee structured the components of the remuneration of the Management bodies so as to reward their

performance in achieving high and, simultaneously, sustained growth, discouraging, however, excessive risk-taking. Additional

determining factors include the company’s economic situation and general market conditions practiced for equivalent functions.

The remuneration of the executive members of the Board of Directors shall comprise a fixed and, when so deliberated by the

Remuneration Setting Committee, a variable component, with the latter variable part of the remuneration to not exceed 5% (five per

cent) of the results for the period, as laid down in law and in Article 20, no. 3 of the Articles of Association.

The informative principles observed by the Committee in establishing the remuneration are:

a) DUTIES CARRIED OUT, degree of complexity inherent to the duties, responsibilities attributed, time spent and the added

value to the Company of the work produced. Other duties carried out at group companies are also relevant, in virtue of the

increased responsibilities and of their constituting additional sources of revenue.

b) ALIGNMENT OF THE INTERESTS OF THE MEMBERS OF THE MANAGEMENT BODY WITH THOSE OF THE COMPANY,

appraisal of the performance of the members of the management body and of the creation of value for the shareholders.

c) ECONOMIC SITUATION OF THE COMPANY, present and future, privileging the interests of the Company in the long-term

term and the achievement of real growth for the Company and the creation of value for its shareholders, based on criteria

defining the economic situation of the Company, amongst others, those of a financial nature.

d) GENERAL MARKET CONDITIONS FOR EQUIVALENT SITUATIONS, considering that the remuneration shall be aligned with

market practice, permitting it to serve as a means to achieving high individual and collective performance, assuring the

interests of the member but essentially those of the Company and of the shareholders.

The general guidelines governing the remuneration policy followed by the Remuneration Setting Committee during the 2013

financial period were those contained in the Remuneration Policy Statement, which was subject to resolution at the Company’s

General Meeting of 10 April 2013, and which is attached to this report as Annex III.

71. Reference, where applicable, to there being a variable remuneration component and

information on any impact of the performance appraisal on this component

As described in more detail in the preceding point the remuneration of the executive members of the Board of Directors shall

comprise a fixed and, when attributed, a variable component.


The fixed component of the remuneration of the members of the Board of Directors with executive functions, as well as of the non-

independent, non-executive members (when attributed), shall consist of a monthly amount payable fourteen times a year, the

variable portion not being permitted to exceed five per cent of the results for the financial period, as laid down by law and in Article

20, no. 3 of the Articles of Association.

In setting all remuneration, including, namely, in distributing the total amount of the variable remuneration amongst the members of

the Board of Directors, the general principles consigned above shall be observed: duties carried out, alignment with the interests of

the Company, privileging the long-term, the situation of the Company and market criteria.

The process of attributing variable remuneration (VR) to the executive members of the Board of Directors shall follow the criteria

laid down by the Remuneration Setting Committee, namely, their position in the hierarchy, the performance appraisal carried out,

the company’s real growth, seeking in determining those criteria to strengthen the convergence of the interests of the Management

bodies with those of the Company, privileging the long-term perspective, this perspective being considered in the performance

criteria applied to Management. The following will therefore be decisive for the appraisal and mensuration of VR:

− the contribution of the executive directors to the results obtained;

− the profitability of the businesses from the shareholder perspective;

− the evolution of the share price quotation; and

− the extent to which the projects integrated and measured by the Balanced Scorecard of the Group are realised.

During the course of 2013, no contracts were celebrated, be it with the Company, or with third parties, which effects are to mitigate

the risk inherent to the variable remuneration established by the Company for the members of the management board.

72. The deferred payment of the remuneration’s variable component, specifying the

relevant deferral period

During the 2013 financial year, no variable remuneration was attributed to the directors of Martifer; consequently, the issue of

deferral of this remuneration component did not arise. On the other hand, the Remuneration Policy of the management and

supervisory bodies, drawn up by the Remuneration Setting Committee and approved at the General Meeting of 10 April 2013, does

not foresee the deferral of variable remuneration, when attributed.

73. The criteria whereon the allocation of variable remuneration on shares is based, and

also on maintaining company shares that the executive directors have had access to, on

the possible share contracts, including hedging or risk transfer contracts, the

corresponding limit and its relation to the total annual remuneration value

Martifer’s existing Remuneration Plan in Stock Options was constituted and attributed in the 2008 corporate period, foreseeing the

deferral of the exercising of the options for a period of 4 years; consequently, the exercising of the options related thereto expired

during the 2013 corporate period.

Regarding the 2008 Plan, none of the directors exercised their option rights during the respective deferral period.

During the course of the 2013 corporate year, the Company neither implemented nor attributed another stock and/or stock options

plan and, consequently, no variable remuneration was allocated on shares to the directors and no criteria were established for the

maintenance of those shares by the executive directors.


74. The criteria whereon the allocation of variable remuneration on options is based and

details of the deferral period and the exercise price

As better described in the preceding, and given that during the fiscal year 2013, the Company has not implemented, nor charge

allocation of shares and / or share purchase option plan,point the Company considers this point not applicable.

75. The key factors and grounds for any annual bonus scheme and any additional non-

financial benefits

The Company has neither implemented any annual bonus scheme nor any additional non-financial benefits.

76. Key characteristics of the supplementary pensions or early retirement schemes for

directors and date when said schemes were approved at the General Meeting, on an

individual basis

The Company does not have supplementary pensions or early retirement schemes for the members of the management and

supervisory bodies and for other managers, as defined in no. 3 of Article 248-B of the Securities Code.

77. Details on the amount relating to the annual remuneration paid as a whole and

individually to members of the Company's Board of Directors

DIRECTOR EXECUTIVE DIRECTOR

FIXED REMUNE-RATION

VARIABLE REMUNE-RATION

STOCK OPTIONS

ATTENDANCE FEES

TOTAL (€)

Carlos Manuel Marques Martins (Chairman)

Yes 0 0 0 0 0

Jorge Alberto Marques Martins (Vice Chairman)

Yes €45,724,90 0 0 0 €45,724,90

Mário Rui Rodrigues Matias Yes €46,969,69 0 0 0 €46,969,69

Arnaldo Nunes da Costa Figueiredo

No 0 0 0 0 0

Luis Filipe Cardoso da Silva No 0 0 0 0 0

Luis António de Valadares Tavares

No 0 0 0 €15,000,00 €15,000,00

Jorge Bento Barbosa Farinha No 0 0 0 €15,000,00 €15,000,00


78. Any amounts paid, for any reason whatsoever, by other companies in a control or group

relationship, or are subject to a common control

During 2013, only the following members of the Board of Directors earned a fixed remuneration from the following Company

affiliates:

DIRECTOR COMPANY FIXED REMUNERATION

Carlos Manuel Marques Martins Martifer Construções Metalomecânicas, S.A. €171,290,00

Jorge Alberto Marques Martins Martifer Construções Metálicas, Lda (Brasil) R$ 239,770,46 (i)

Jorge Alberto Marques Martins SPEE 2 - Parque Eólico de Vila Franca de Xira, S.A. €18,787,88

Jorge Alberto Marques Martins SPEE 3 - Parque Eólico de Baião S.A €18,787,88

(i) Remuneration received in local currency – Brazilian Real, which global amount corresponds to €73,603.41, at the 31/12/2013 foreign exchange rate (R$ 3.2576), i.e.

that of the last day of the financial period being reported on.

79. Remuneration paid in the form of profit sharing and/or bonus payments and the reasons

for said bonuses and/or profit sharing being awarded

During the 2013 financial period, no remuneration was paid in the form of profit sharing and/or bonus payments.

80. Compensation paid or owed to former executive directors concerning contract

termination during the financial year

During 2013, no compensation was paid, nor is it owed, to former executive directors in respect of contract termination.

81. Details of the annual remuneration paid, as a whole and individually, to the members of

the Company's Supervisory Board for the purposes of Law no. 28/2009, of 19 June

MR MANUEL SIMÕES DE CARVALHO E SILVA €4,800.00

MR CARLOS ALBERTO DA SILVA E CUNHA €4,800.00

MR JOÃO CARLOS TAVARES DE CARRETO LAGES €4,800.00

MR JUVENAL PESSOA MIRANDA € 0.00

TOTAL € 14,400.00


82. Details of the remuneration in said year of the Board of the General Meeting

JOSÉ CARRETO LAGES €1,200.00

FRANCISCO ARTUR DOS PRAZERES FERREIRA DA SILVA

€0.00

ANA MARIA TAVARES MENDES €400.00

TOTAL € 1,600.00

V. Agreements with remuneration implications

83. Envisaged contractual restraints for compensation payable for the unfair dismissal of

directors and relevance thereof to the remunerations’ variable component

The Company has neither established nor agreed to any contractual restraints for compensation payable to directors of the

Company on unfair dismissal.

Likewise, the Remuneration Policy approved at the General Meeting of 10 April 2013 does not foresee any calculation or

determination formula for the amount due to a director in these circumstances; consequently, the normal regime would apply in

such circumstances.

84. Reference to the existence and description, with details of the sums involved, of agreements

between the company and members of the Board of Directors and managers, pursuant to

Article 248-B/3 of the Securities Code that envisages compensation in the event of resignation or

unfair dismissal or termination of employment following a takeover bid (Article 245-A/1/l))

The Company is not part to any agreement with the members of the management body or other managers, as defined in no. 3 of

Article 248-B of the Securities Code, that foresees compensation in the event of resignation, unfair dismissal or employment

termination following a takeover bid.

VI. Share-Allocation and/or Stock Option Plans (“stock options”)

85. Details of the plan and the number of persons included therein

Martifer currently has no active Remuneration Plan in Stocks and Stock Options.

From 2008-2013, a Stock Options Plan (“Stock Options”) was in force at the Martifer Group, designated, in abbreviated form,

PROA.

PROA had as its main OBJECTIVES:

− Earning the loyalty of key employees in the various Group companies;

− Stimulating the creative capacity and productivity of said employees, thereby improving the Company’s results;

− Creating favourable conditions to attract and recruit managers and other employees with high strategic value;


− Aligning the interests of the employees with those of the Shareholders of Martifer and other stakeholders, rewarding their

performance in function of their creation of value for the Shareholders, reflected in the valuation of its Shares on the Stock

Exchange.

86. Characteristics of the plan (allocation conditions, non-transfer of share clauses, criteria

on share-pricing and the exercising option price, the period during which the options may

be exercised, the characteristics of the shares or options to be allocated, the existence of

incentives to purchase and/or exercise options

As better described in the preceding point, the Company has no active Stock or Stock Options Plan; consequently, the information

pertaining to this point is not applicable.

87. Stock option plans for the company employees and staff

The Company has no active Stock or Stock Options Plan; consequently, the information pertaining to this point is not applicable.

88. Control mechanisms for a possible employee-shareholder system inasmuch as the

voting rights are not directly exercised by said employees (Article 245-A/1/e))

The Company has no active Stock or Stock Options Plan; consequently, the information pertaining to this point is not applicable.

E. RELATED PARTY TRANSACTIONS

I. Control mechanisms and procedures

89. Mechanisms implemented by the Company for the purpose of controlling transactions with

related parties (For said purpose, reference is made to the concept resulting from IAS 24)

Transactions with Directors of Martifer or with entities in a group or dominant relationship in which the former are likewise also

Directors, irrespective of the amount, are subject to the prior approval of the Board of Directors with the approval of the supervisory

body, in terms of Article 397 of the CCC.

90. Details of transactions that were subject to control in the referred year

During the second-half of 2013, the following deals or transactions of economic significance took place between the Company and

members of its management and supervisory bodies:

− The affiliate Martifer Solar, S.A., through the affiliate Martifer Solar Investment B.V., disposed of the shareholding (representing

100% of the share capital) and supplementary capital it held in the company LRCC LA RAD Campo Chaparro, S.A. to the

company SHININGASSET SGPS, S.A..

The company “LRCC LA RAD Campo Chaparro, S.A.” promotes the photovoltaic projects “INOV LX 2MW” and “INOV OP


2MW”, with a 2MV / capacity, each.

This shareholding disposal transaction also included the disposal of a capital gain as well as of supplementary capital loaned to

LRCC LA RAD Campo Chaparro, S.A., and its total value amounted to EUR 2,336,520.00. As regards the development of the

photovoltaic projects, the acquiring company intends to adjudicate the rendering of EPC services to Martifer Solar, S.A. The

acquirer of that shareholding is held, directly or indirectly, by the directors of the company Martifer Solar, S.A.. Consequently,

the shareholding disposal transaction was duly subjected to the assessment and approval of the Company’s Supervisory Board.

− Martifer Global – SGPS, S.A., subsidiary of Martifer SGPS, S.A., incorporated a commercial company in association with the

companies I’M - SGPS, S.A. and AMAL – SGPS, S.A., in which it has a 30% shareholding. This new company will foster its

activity in the Latin America markets, namely Venezuela, Peru, Columbia and Ecuador, within the sphere of the metallic

construction, oil and gas, construction and shipbuilding areas. The strategic reasoning behind this new joint-venture is related to

the splitting of risk, that of investment risk as well as that related with the creation and exploitation of synergies. Since I’M

SGPS, S.A. is held by directors of Martifer SGPS, S.A., the incorporation of the company was also the object of assessment and

approval by the Supervisory Board.

91. A description of the procedures and criteria applicable to the Supervisory Body when

same provides preliminary assessment of the business deals to be carried out between the

company and the holders of qualifying holdings or entity relationships with the former, as

envisaged in Article 20 of the Securities Code

The Supervisory Board established the procedures and criteria necessary to define the relevant ‘level of significance’, of business

between the company and the holders of qualifying holdings or entities with which the former are linked in any relationship of

dominium or group, in excess of which amount the intervention of the supervisory body is required.

Hence, without prejudice to the provisions foreseen in Article 397 of the CCC, deals between, on the one hand, the Company or

Group companies and, on the other hand, holders of qualifying holdings or entities with which the former are linked in any

relationship, shall be subject to assessment and prior approval of the Supervisory Board if they meet any one of the following

criteria:

a) Are for an amount equal to or in excess of half-a-million Euros, or, when lower, when aggregated with other transactions

carried out with the same Shareholder holder of qualifying holdings, during the same financial period, result in an amount

equal to or in excess of one million Euros, except those relating to normal Company business;

b) Regardless of the amount, when they may cause a material impact on the Company’s reputation, in matters concerning the

independence in its relations with holders of qualifying holdings.

II. Data on business deals

92. Details of the place where the financial statements including information on business

dealings with related parties are available, in accordance with IAS 24, or alternatively a

copy of said data

Business dealings with related parties are described in Note 39 of the Notes to the Consolidated Financial Statements, forming part

of the 2013 Consolidated Report and Accounts, available in the Company’s Website at http://www.martifer.pt/ (Tab: Investors,

Section: Financial Information).

PART II Corporate Governance Assessment


PART II

Corporate Governance Assessment

1. 1. Details of the Corporate Governance Code implemented

Martifer, whilst issuer of shares that have been admitted to trading on an official stock exchange, is subject to the Portuguese

Securities Market Commission’s (“Comissão do Mercado de Valores Mobiliários”, henceforth also CMVM) Regulation no. 4/2013, of

18 July 2013, and abides by the recommendations contained in the 2013 Corporate Governance Code approved by the CMVM,

both documents available in the CMVM’s Website at www.cmvm.pt.

Martifer has not voluntarily adhered to any other corporate governance code.

The present report was prepared and follows, under no. 2 of Article 4 of CMVM Regulation no. 4/2013, the model appended to said

Regulation, having as its reference the 2013 CMVM Corporate Governance Code.

2. Analysis of compliance with the Corporate Governance Code implemented

In the matter of Corporate Governance and whilst Public Company, Martifer has sought to promote the implementation and adopt

the best corporate governance practices, including those contained in the new 2013 CMVM Corporate Governance Code, guiding

its policy along the highest standards of conduct, ethics and social responsibility, which are intended to be transversal to the Group.

It is an objective of the Board of Directors to implement an integrated and effective management of the Group, enabling the

Company to create value by promoting and guaranteeing the legitimate interests of its Shareholders, clients, suppliers, employees,

the capital market as well as of the community in general, permanently seeking transparency in its relations with the investors and

the market.

Martifer considers that, despite the fact that it does not comply fully with the recommendations contained in the 2013 CMVM

Corporate Governance Code, as amply described and justified in the following chapters of this report, the degree of adoption of the

recommendations is extremely wide and thorough.

3. Analysis of compliance with the Corporate Governance Code adopted

3.1 STATEMENT ON THE ACCEPTANCE OF THE CORPORATE GOVERNANCE CODE

Pursuant to and for the purposes of that laid down in paragraph o) of no. 1 of Article 245-A of the Securities Code, the recommendations

included in the CMVM’s Corporate Governance Code, with the indication of whether adopted or not, whenever applicable to Martifer’s

structure, and references to the text in the report where the form of adoption is described in greater detail, are listed below:


CMVM RECOMMENDATIONS ADOPTION REFERENCE

I. VOTING AND CORPORATE CONTROL CHAPTER, TITLE,

SECTION

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.

Partially Adopted

Part I B. I b) - 12

Part II – 3.1

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.

Partially Adopted

Part I B. I b) - 12 and 14

Part II – 3.1

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.

Adopted Part I

B. I b) 12

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

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 5

II. SUPERVISION, MANAGEMENT AND OVERSIGHT CHAPTER, TITLE,

SECTION

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.

Adopted

Part I B. II a) 21.2

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) 21.2

II.1.3. The General and Supervisory Board, in addition to its supervisory duties, 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 Part II – 3.1

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 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.

Adopted

Part I B. II c)

27 and 29

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.

Adopted Part I C. III

50 and 54



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.

Adopted Part I

B. II a) 17 and 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 a 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, 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.

Adopted 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.

Adopted Part I

B. II b) 23

II.1.9. The Chair 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 notices and minutes of the relevant meetings.

Not applicable Part II – 3.1

II.1.10. If the chair 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.

Adopted Part I

B. II b) 23

II.2. OVERSIGHT

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) 33

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.

Adopted

Part I B. III c) 38 and V 45

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. III c) 38 and 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..

Adopted

Part I B. III c) 38 and

C. III 50

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.

Adopted Part I

B. III c) 38



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.

Partially Adopted

Part I D. II

67 and

Part II – 3.1

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 its 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 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;

c) Information regarding the enforceability or unenforceability of payments for the dismissal

or termination of appointment of board members.

Partially Adopted

Part I D. III

69 and 70 and

Part II – 3.1

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

Part II – 3.1

II.3.5. Approval of any retirement benefit scheme established for members of corporate bodies shall be submitted to the General Meeting. The proposal shall contain all the necessary information in order to correctly assess said system.

Not applicable

Part I D. III 76

Part II – 3.1

III. REMUNERATION CHAPTER, TITLE,

SECTION

III.1. The remuneration of the executive members of the board shall be based on actual performance and shall discourage excessive risk-taking.

Adopted

Part I D. III

69 and 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.

Adopted Part I D. III

69, 70 and 71

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.

Partially Adopted

Part I D. III

69 and 70 and

Part II – 3.1

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.

Não Adopted

Part I D. III

72 and

Part II – 3.1

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.

Adopted Part I D. III

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.

Adopted

Part I D. III

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.

Not applicable

Part I D. III

74 and

Part II – 3.1

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.

Adopted Part I D. V

83

IV. AUDITING CHAPTER, TITLE,

SECTION

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 C. III 50 and D. I 66

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 B. V

46 and 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 B. V 44

V. CONFLICTS OF INTEREST ANS RELATED PARTY TRANSACTIONS CHAPTER, TITLE,

SECTION

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 under normal market conditions.

Adotada

Part I A. II 10 E. I

89 and 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.

Adotada Part I E. I 91

VI. INFORMAÇÃO CHAPTER, TITLE,

SECTION

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 affairs.

Adotada Part I

V. 59 and following

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.

Adotada Part I

V. 63 a 65


3.2 CLARIFICATIONS AS TO DIVERGENCES BETWEEN THE COMPANY’S GOVERNANCE PRACTICES AND THE CMVM

RECOMMENDATIONS

In this chapter, the grounds for the non-adoption or non-application of every single recommendation, which should be read together

with the table presented in the preceding chapter, are explained.

Recommendation 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.

Martifer encourages its Shareholders to participate in the General Meetings and promotes the active exercise of the right to

vote, namely:

− Disclosure in the Website, in the Portuguese and English languages, of the General Meetings’ convening notices, the

forms of exercising the vote and the procedures to adopt for correspondence or proxy voting;

− Disclosure in the Website, in the Portuguese and English languages, of the preparatory information in respect of the

various points on the Agenda;

− Access to proxy forms and voting ballots in the Website;

− The creation of an electronic mail exclusively dedicated to the General Meeting, and disclosed in the convening notice, to

facilitate the clarification of doubts;

− Statutory provision that each share is entitled to one vote.

Under Article 17 of Martifer’s Articles of Association, correspondence voting is permitted, without any restriction, in respect of all

matters subject to the appreciation of the Shareholders.

Martifer considers it has only adopted this recommendation partially due to the fact that its Articles of Association do not foresee

electronic correspondence voting. It should be noted that Martifer has adopted a flexible stance vis-à-vis the acceptance of

documentation in respect of correspondence or proxy voting sent via electronic means.

On the other hand, up till the present date, the Company has received no request or manifestation of interest from any

Shareholders or Investors as to the availability of electronic voting, as a result of which Martifer considers that the

correspondence voting system in place, as foreseen in the Articles of Association, totally safeguards all the Shareholders’

access to participation in the decisions submitted for deliberation:

Recommendation 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.

Article 18 of the Company Articles of Association establishes the rule of a simple majority of the votes to pass corporate

resolutions, except when otherwise established by the CCC or the Articles of Association.

Hence, Martifer considers it has adopted this Recommendation, except as to the provision in the Articles of Association that

requires a greater quorum than that foreseen in the CCC for resolutions on the unfair dismissal of Directors.

The reason for the inclusion in the Articles of Association of a quorum greater that that foreseen in the CCC for unfair dismissal

of directors was to protect the interest of the Company, namely to mitigate the risk of the Company being obliged to compensate

directors for unfair dismissal as laid down in no. 5 of Article 403 of the CCC. Indeed, considering the gravity and impact of an

unfair dismissal of directors, the intention was to avoid the occurrence of such a resolution passed by a simple majority of

shareholders as opposed to one based on grounds approved by a more expressive and representative majority of the

Shareholders.

Martifer considers this is the model that best defends corporate interests.


Recommendation II.1.3. . The General and Supervisory Board, in addition to its supervisory duties, 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.

Martifer considers this Recommendation as not being applicable since said Recommendation relates to a governance model not

adopted by Martifer. Under the terms and conditions foreseen in Article 278 of the Portuguese Commercial Companies Code,

the corporate governance model adopted by Martifer comprises a Board of Directors, a Supervisory Board and a Statutory

Auditor.

Recommendation II.1.9. The Chair 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 notices and minutes of the relevant

meetings.

Martifer considers this Recommendation as not being applicable since the Corporate Governance Model of the Company,

applicable during the 2013 financial year, does not foresee the existence of a chairman of an executive board or an executive

committee, but rather the delegation of powers by the Board of Directors on executive directors. Consequently, a formal

structure of executive directors subject to convening notices and meeting minutes has not been set up.

Recommendation 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.

Martifer considers this Recommendation to be partially adopted.

The Company’s Remuneration Setting Committee comprises three members, including one with knowledge and experience in

matters pertaining to Remuneration policy.

During the 2013 financial period, one of the members of the Remuneration Setting Committee - Ms Júlia Matos – was also a

member of a corporate body of a commercial company which share capital is held by two of the Company’s executive directors,

namely Messrs Carlos Marques Martins and Jorge Marques Martins. However, the Company considers that the purpose of this

Recommendation is duly safeguarded not solely because of the professional training of this member in particular, but also

because the majority of the members of the Remuneration Setting Committee are independent from the executive members of

the Company’s management body, and also because the remaining provisions of this recommendation are fully complied with.

Recommendation II.3.3. A statement on the remuneration policy of the management and 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;

c) Information regarding the enforceability or unenforceability of payments for the dismissal or termination of appointment

of board members.

Martifer considers this Recommendation to be partially adopted.


The Statement on remuneration policy containing all the information required under Article 2 of Law no. 28/2009, of 19 June, as

well as part of that required by Recommendation II.1.5.2 of the 2010 Corporate Governance Code, that is, that it be structured in

accordance with the legal dispositions and the CMVM recommendations that were in effect at the date of the General Meeting of

the Company, was proposed and approved at the Company’s General Meeting of 10 April 2013.

In so far as paragraph b) of recommendation II.3.3. is concerned, and considering that CMVM Regulation 4/2013 and the 2013

Corporate Governance Code were published and came into effect at a moment subsequent to the preparation, by the

Remuneration Setting Committee, of the Statement on the Remuneration Policy for 2013, the Company has not yet had the

opportunity to approve at a General Meeting, subsequent to that date, a Statement on the Remuneration Policy adapted to the

new requirements foreseen in Recommendation II.3.3. of CMVM’s 2013 Corporate Governance Code.

Nevertheless, the Statement on the remuneration policy to be presented at the Company’s General Meeting to occur in 2014 will

already contemplate all the dispositions foreseen in Recommendation II.3.3. of CMVM’s 2013 Corporate Governance Code and,

consequently, will result in the full adoption of said recommendation.

Recommendation 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.

Martifer’s existing Stock Options Remuneration Plan was constituted and allocated in the 2008 financial year and the exercising

of the options deriving therefrom expired during the 2013 financial period; consequently, during the course of this financial year

there was no need to assess or approve said plan at the Company’s General Meeting.

Furthermore, during the 2013 financial year, no additional stock attribution or stock options plan existed or was allocated;

consequently, there was no need to submit any proposal related to stock options’ plans for approval at the General Meeting.

Hence, Martifer considers this Recommendation not applicable.

Recommendation II.3.5. Approval of any retirement benefit scheme established for members of corporate bodies shall be

submitted to the General Meeting. The proposal shall contain all the necessary information in order to correctly assess said

system.

During the 2013 financial year, no retirement benefits scheme existed or was established in respect of the members of the

corporate bodies; consequently, there was no need to submit any proposal related to retirement benefit schemes for approval at

the General Meeting.

Hence, Martifer considers this Recommendation not applicable.

Recommendation 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.

The Company’s Remuneration Setting Committee established the exact annual amount for the fixed remuneration component

payable to the directors receiving remuneration from the Company. In parallel, the Company Articles of Association, under

Article 20, no. 3, state that the directors’ variable remuneration may not result in an allocation in excess 5% of the year’s profit,

under law. In this manner, the maximum remuneration limits for the fixed and variable remuneration components are set.

During the 2013 financial period, the Remuneration Setting Committee opted to attribute only the fixed remuneration component

to the directors and not the variable remuneration component, with the purpose of harmonizing the amount of the remuneration

received by the members of the Company’s Board of Directors in accordance with the measures implemented over the last few

periods, relating to the expense and structural cost reduction adopted transversally throughout the Martifer Group so as to

safeguard the highest number of jobs and the Company’s sustainability.


Consequently, the Company considers that it has partially adopted this Recommendation since, even though the Remuneration

Setting Committee has set the exact fixed annual remuneration amount and a statutory limit has already been set for the

variable remuneration component, during the 2013 financial period no variable remuneration was attributed to Martifer’s

directors.

Recommendation 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.

Martifer considers this recommendation to not have been adopted as the remuneration policy established by the Remuneration

Setting Committee for the management and supervisory bodies does not foresee the deferral of the variable remuneration

component, when attributed.

Notwithstanding said non-adoption of this Recommendation, the Company considers that the purpose of said recommendation

was safeguarded during the 2013 financial period in that no variable remuneration component was attributed to the directors of

Martifer during that period. The Remuneration Setting Committee is analysing the definition of criteria to fix the deferral of part of

the variable remuneration, when same is attributed.

Recommendation 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.

Martifer considers this Recommendation as not applicable as no variable remuneration was attributed to the directors of Martifer

in 2013 and therefore there was no place for its deferral.

Furthermore, during the 2008 financial period, stock options were attributed and their exercise was deferred for a period of four

years, inclusive. Up till the present date, these stock options allocated as variable remuneration have not been exercised and, in

fact, the possibility of such exercise expired at the end of the 2013 financial period.

4. Other Information

Besides the information and explanations presented in the present Report, there is no additional information of relevance that

should be presented for a proper understanding of the model and the governance practices adopted by Martifer.


Oliveira de Frades, 31st

March 2014

The Board of Directors,

__________________________________

Carlos Manuel Marques Martins

__________________________________


__________________________________


__________________________________


__________________________________


__________________________________


__________________________________


ANNEXES To the Corporate Governance Report


ANNEX I

Professional Qualifications

BOARD OF DIRECTORS

Carlos Manuel Marques Martins is the Chairman of the Management Board of Martifer (Chairman of the Board of Directors and

executive director) and one of the founding shareholders of Martifer Group in 1990, having started his professional activities in 1987

in the Company Carvalho & Nogueira, Lda, as Director of Production in the iron sector. He has a degree in Mechanical Engineering

completed at FEUP (Faculdade de Engenharia, Universidade do Porto).

Jorge Alberto Marques Martins is a Board Member of Martifer (Vice Chairman of the Board of Directors and executive director)

and one of the founding shareholders of Martifer Group in 1990, having started his professional activities in 1987 at SOCARPOR -

Sociedade de Cargas Portuárias (Douro e Leixões), Lda as Adjunct to the Financial Director. He has a degree in Economics

completed at FEP (Faculdade de Economia, Universidade do Porto) and a MBA completed at UCP (Universidade Católica

Portuguesa).

Mário Rui Rodrigues Matias is a member of the Board of Directors of Martifer (non executive and non-independent director) since

30th

August 2013. He completed a specialization course having receive a degree as Perito Contabilista no Instituto Superior de

Contabilidade e Administração de Lisboa (1973) and also attended courses of vocational training in the areas of

Accounting (POC and CNS), Taxation, Management, Human Resources and Marketing. Also held completed a

postgraduated studies at Universidade Católica in PAGECO - Forward Management Plan for Construction. Between

1973 and 1984 he worked as Administrative and Financial Officer in various organizations. From 1984 to 1990 he worked in the

following companies: Auditur – Sociedade de Revisores Oficiais de Contas, Amável Calhau, Justino Romão & José Maria Ribeiro

da Cunha, SROC e Mazars, SA. Between 1990 and 1995 he worked for Terrazul , SA , part of the Ciments Français Group , as the

Administrative and Financial Director of many of the Group companies, namely: Duartes , SA , CIB , SA , BETASA , SA ,

JODOFER , SA , BETAZUL SA and BETABEIRAS , SA . Between 1995 and 2000 he worked for Cimpor - CONCRETE, SA, which

incorporated the Terrazul Group, SA. He also worked as the Administrative and Financial Director for the Industrial Concrete Field.

In 2000 he was appointed as director of the company " OPCA - PUBLIC WORKS AND ARMED CEMENT , SA " , now renamed "

OPWAY - ENGINEERING , SA " , being a member of the Board of Directors of the holding company, as well as other Group

companies, including OPWAY , SGPS , SA , OPWAY - . ESTATE , SA , OATA , SA and SARRION , SA. Most recently he was

Chairman of the Board of Directors of the following companies: Pavicentro , SA , Pavilis , SA , Pontave , SA , Paviseu , SA ,

Pavijopace , the Pavi Brazil , Marmetal , SA , Margrimar , LDA . , Recigreen , SA , Recigroup , SGPS , RECIPNEU and Recipav

and Chairman of the Supervisory Board of Lusoscut- Auto Estradas do Grande Porto S.A., Lusoscut - Auto Estradas da Costa de

Prata S.A., Lusoscut - Auto Estradas das Beiras Litoral e Alta, S.A..

Arnaldo José Nunes da Costa Figueiredo is a member of the Board of Directors of Martifer (non executive and non independent

director) since 30th

April 2010. He has a degree in Civil Engineering at Faculdade de Engenharia da Universidade do Porto (1977).

He was Chairman of Mota-Engil, Engenharia e Construção, SA and of the Board of Directors of MEITS - Mota-Engil, imobiliária e

turismo, SA; Manager of Mota Internacional, LDA.; Chairman of Board of the Shareholders General Assembly of Maprel-Nelas,

Indústria de Pré-Fabricados em Betão, SA; Member of the Board of the Shareholders General Assembly of Paviterra, SARL;

Chairman of the Remuneration Committee (on behalf of Mota-Engil, Engenharia e Construção, SA) of Ferrovias e Construções, SA;

of Aurimove – Sociedade Imobiliária, SA; of Nortedomus – Sociedade Imobiliária, SA; and of Planinova – Sociedade Imobiliária,

SA.

Luís Filipe Cardoso da Silva is a member of the Board of Directors of Martifer - SGPS, S.A. (non executive and non independent

director) since 30th

April 2010. He has a degree in Economics at Faculdade de Economia da Universidade do Porto. He was

director of MESP, Mota-Engil Serviços Partilhados Administrativos e de Gestão SA; MESP Central Europe Sp. z.o.o.; and Mota-

Engil Brand Management B.V. He was member of the General and Supervisory Board of Vortal - Comércio Electrónico,

Consultadoria e Multimédia, SA and member of the Superior Board of Ascendi Group, SGPS, SA, as well as member of the

Supervisory Board of several companies of Ascendi Group.


Jorge Bento Ribeiro Barbosa Farinha is a Board member at Martifer SGPS, SA since 2008. In his academic work, he is a

teacher since 1987, in the category of Assistant Professor at Faculdade de Economia, Universidade do Porto from 1989 and since

1991 he occupied several positions at EGP / University of Porto Business School (EGP - UPBS). He was also a teacher at Instituto

de Estudos Superiores Empresariais (ISEE), Universidade do Porto (1999-2001), and Vice President of the Pedagogical Council at

Faculdade de Economia do Porto (FEP, 2002-2006). In his extra-academic activities, he was a Financial Analyst of Capital Markets

at Cisf- Companhia de Investimentos e Serviços Financeiros, S.A. (1987-1989), a Senior Analyst of the Mergers & Acquisitions

Department at Banco Português de Investimento, S.A. (1990-1992 ), Sub-director of the Mergers & Acquisitions Department at

Banco Português de Investimento, S.A. (1992-1993), partner of Cf&A Associados - Consultores de Gestão, Lda (1993-1994),

partner of Futop – Consultores de Gestão, S.A. ( 1994-1995) and a non-executive Board member at Enotum.com (companies

establishment helper in the area of telecommunications) (2000-2002). He has a degree in Economics (Faculdade de Economia,

Universidade do Porto), a MBA at INSEAD (Institut Européen d'Administration des Affaires, Fontainebleau, France) and a PhD in

Accounting and Finance by the University of Lancaster (Management School), UK. He is a non-executive and independent Board

member.

Luís António de Castro de Valadares Tavares is a Board member at Martifer SGPS, SA (independent non-executive director)

since 2008. Since 1980 he is Professor of Systems Management at Instituto Superior Técnico, Universidade Técnica de Lisboa,

and, from 2002, President of the Centre for Prospective - OPET. He is president of APMEP - Portuguese Association of Public

Markets and EDP´s Customer Ombudsman, an EDP independent entity. Previously, he was President of the National Institute of

Administration (2003-2007), First Coordinator of the Master Degree in Operational Research and Systems Engineering (IST),

Director of the Distance Education in Management Program (Dislogo) at UCP, Director and Founder of the Master Degree in Health

Engineering at UCP, First Coordinator of the MBA at the Inter-University Institute of Macau, General Director of the Studies and

Planning Office at the Ministry of Education (PRODEP),, Manager of the Program for the Development of Education in Portugal

(PRODEP), Director of the World Bank‟s Program for Educational System Financing, Director of the Minerva Program (Informatics

in Schools), Vice-President of the Committee for Education (OCDE), President of the Committee for Education (OCDE), President

of the Education Committee of the European Communities (first Portuguese Presidency), First President of the Portuguese

Association of Operational Research (APDIO), Vice-President of the Operational Research Societies Federation (IFORS), Visiting

Professor at the following Universities: North Carolina (Raleigh, USA), Colorado (Denver, USA) , Columbia (NY, USA), Princeton

(NY, USA), UCLA (Los Angeles, USA), Business School of the University of Newcastle (Newcastle, UK), Paris-Dauphine (Paris,

France), Mohammed (Rabat, Morocco), Middle East Technical University (Ankara, Turkey), Technical of Poznan (Poznan, Poland),

Technical of Helsinki (Helsinki, Finland); PUC (Rio de Janeiro, Brazil); Federal of Santa Catarina (Florianopolis). He has a degree in

Civil Engineering completed at IST, a Masters Degree in Operations Research completed at the University of Lancaster (UK), a

PhD degree in Science and Engineering completed at IST, and Aggregated in Operational Research at IST.

SUPERVISORY BOARD

Chairman of the Supervisory Board

Manuel Simões de Carvalho e Silva has a degree in Law, completed at Faculdade de Direito, Universidade de Coimbra. He is a

lawyer in the district of Aveiro and boundaries since October 1980 focusing on areas such as civil law, labor, commercial, corporate

and criminal law. He is the Chairman of the Supervisory Board.

Members of the Supervisory Board

Carlos Alberto da Silva e Cunha holds a Diploma in Advanced Studies (program of PhD degree on Management Sciences),

completed at Vigo University, Spain. A Master degree in Accounting and Administration completed at the University of Minho and is

Postgraduate in "The Impact of the Euro in Business" by the Institute for High Studies on Finances and Tax. He has a degree in

Auditing and the course of Specialized High Studies in Auditing at Instituto Superior de Contabilidade e Administração do Porto. He

also has a graduation completed in Accounting at Instituto Comercial do Porto. He is a registered Auditor in the official list since

March 1990. Also performs duties as Assistant Professor, teaching at Escola de Economia e Gestão, Universidade do Minho as

well at Universidade Lusíada, in Oporto. In 2008 and 2009 was invited to teach in the Post-Graduation Course "Fraud Management

" promoted by Faculdade de Economia, Universidade do Porto.


João Carlos Tavares Ferreira de Carreto Lages has a degree in Law completed at Universidade Católica Portuguesa, Centro

Regional do Porto. Since 1995 he practices Law in Oliveira de Frades District, also advocating in several causes all over the

country. He was a Member of the Management Board of APA, SA, Management of Aveiro´s Harbor, being responsible for the

following Departments: Marketing and Public Relations, Safety and Environment, Human Resources and Pilots. In July 2002 he co-

founded the Carreto Lages & Associados Law Office, located in Aveiro and Oliveira de Frades, acting as an associate Manager.

Juvenal Pessoa Miranda has a degree in Economics from Universidade de Coimbra. He is registered with the Câmara dos

Técnicos Oficias de Contas (Chamber of Registered Accountants) and carries out the activities of economist, consultant and

specialist at the Tribunal da Comarca do Baixo Vouga – Juízo do Comércio (Court of the County of Baixo Vouga – Trade Section).

STATUTORY AUDITOR

PRICEWATERHOUSECOOPERS & Associados – Sociedade de Revisores Oficiais de Contas, Lda.,., tax identification

number 506 628 752, with registered office at Palácio Sottomayor, Rua Sousa Martins, 1 – 3º, 1050-217 Lisboa, registered with the

Ordem dos Revisores oficiais de Contas under the number 183, and registered at CMVM under the number 9077.

José Pereira Alves, tax identification number 105 189 030, registered with the Ordem dos Revisores oficiais de Contas under the

number sob o nº 711. Não é detentor de acções da sociedade Martifer SGPS, S.A..

REMUNERATION COMMITTEE

António Manuel Queirós Vasconcelos da Mota has a degree in Civil Engineering (Inland Communications) completed at

Faculdade de Engenharia, Universidade do Porto. Currently performs duties as Chairman of the Board of Directors of Mota-Engil,

SGPS, SA, a position he holds since 2000. He has already served as Chairman of the Board in other companies, in particular,

Mota-Engil, Engenharia e Construção, SA (2003-2006), Mota-Engil Internacional, SA (2000-2003), Engil - Sociedade de

Construção Civil, SA (2000-2003) and Mota & Companhia, SA (1995-2003), where he also held the position of Vice-Chairman

(1987-1995). He started his professional life in 1977 as a trainee in Mota & Companhia, Lda, and between 1979 and 1981, he

worked in several departments of the same company, where he also worked as General Director of Production (1981-1987).

Maria Manuela Queirós Vasconcelos Mota dos Santos has a degree in Economics from the Faculdade de Economia,

Universidade do Porto. She has worked in several companies of Mota-Engil Group, being responsible for the Human Resources

Department. Presently she is a member of the Board of Directors at Mota-Engil, SGPS, SA.

Júlia Maria Rodrigues de Matos Nogueirinha has a degree in Law from Faculdade de Direito da Universidade de Coimbra and is

registered with the Portuguese Bar Association since 2002. She is presently a member of the Board of Directors of I’M SGPS, S.A ,

having held the post of Member of the Board of Directors in other companies of the I’M group, namely in Almina – Minas do

Alentejo, S.A.


ANNEX II

Positions Held and Activities Undertaken by the members of the Board Of Directors

CARLOS MANUEL MARQUES MARTINS

a) Positions within the Martifer Group:

CHAIRMAN OF THE BOARD OF DIRECTORS: Martifer - SGPS, S.A. Martifer Global SGPS, S.A. Martifer Metallic Constructions SGPS, S.A. Martifer Construções Metalomecânicas, S.A. Martifer – Alumínios, S.A. Martifer - Gestão de Investimentos, S.A. Sociedade de Madeiras do Vouga, S.A. Navalria- Docas,constr. e reparações navais, S.A. Gebox, S.A. Martifer Energy Systems, SGPS, S.A. Nagatel Viseu - Promoção Imobiliária, S.A. Martifer – Amal, S.A Martifer Construcciones Metálicas España, S.A. Martifer Aluminium PTY LTD (Austrália) Martifer Beteiligungsverwaltungs GmbH (Áustria) Eviva Beteiligungsverwaltungs GmbH MEMBER OF THE BOARD OF DIRECTORS: Martifer – Inovação e Gestão, S.A. Martifer Renewables SGPS, S.A. Martifer Renewables, S.A. Prio Agriculture B.V. (Holanda)

Porthold B.V. (Holanda)

Martifer Aluminium LTD (UK)

Martifer Construction UK, LTD (UK)

Martifer Aluminium LTD (Irlanda)

Martifer Construction Ltd (Irlanda)

Martifer Constructions SAS (França)

Martifer Aluminium SAS (França)

MT Constructions Maroc, SARL (Marrocos)

Martifer Construcciones PERÚ, SA

Martifer Construções Metalomecânicas, SA, Suc. Colombia

Martifer Mota Engil Coffey Joint Venture Limited

MEMBER OF THE SUPERVISORY BOARD: Martifer Renewables, SA (Polónia) MANAGER: Parque Eólico da Penha da Gardunha, Lda. Promoquatro - Investimentos Imobiliários Lda. CHAIRMAN OF THE REMUNERATION COMMITTEE: Martifer Renewables, S.A. SECRETARY: Martifer Renovables ETVE S.A.


b) Positions in companies with shareholding by Martifer Group:

CHAIRMAN OF THE BOARD OF DIRECTORS: Ventinveste Indústria SGPS, S.A.

Prio Energy, SGPS, S.A.

Prio E. SGPS, S.A.

Prio Energy, S.A.

Prio Biocombustíveis, S.A.

Mondefin Combustíveis, S.A.

Prio Parque de Tanques De Aveiro, S.A.

PRIO.E – Electric, S.A.

Nutre SGPS, S.A.

Nutre, S.A.

Nutre - Indústrias Alimentares, S.A

Nutre Farming West Part SRL

Nutre Brasil, Ldta.

Prio Agro Industries Sp. Z.o.o

Agromec Balaciu S.A.

Agrozootehnica Facaeni S.A.

Miharox S.A.

Prio Agricultura Ialomita SRL

Prio Agro Facaeni SRL

Prio Agromart SRL

Prio Balta SRL

Prio Rapita SRL

Prio Terra Agricola SRL

Prio Turism Rural SRL

Prio Agrotrans SRL

Prio Meat SRL

Zimbrul SRL

MEMBER OF THE BOARD OF DIRECTORS: Ventinveste, S.A. Bunge Prio Cooperatie U.A. Nutre Farming B.V. Nutre – MZ MANAGER: Centralrest, Lda.

a) Positions outside the Group:

CHAIRMAN OF THE BOARD OF DIRECTORS: I’M - SGPS, S.A. I´M Mining, SGPS, S.A. ESTIA – SGPS, S.A. ESTIALIVING, SGPS S.A. Tavira Gran Plaza, SA EPDM – Empresa de Perfuração e Desenvolvimento Mineiro, SA Severis, SGPS S.A. MEMBER OF THE BOARD OF DIRECTORS: ESTIALIVING, SGPS S.A. PCI - Parque de Ciência e Inovação, S.A. Estia Retail & Warehousing S.R.L. Mamaia Investments S.R.L. OFFICE BUILDING VACARESTI SRL


MANAGER: Exclusipolis, SGPS, Lda. PANNN - Consultores de Geociências, Lda.

SOLE DIRECTOR: Black and Blue Investimentos, S.A.

JORGE ALBERTO MARQUES MARTINS


CHAIRMAN OF THE BOARD OF DIRECTORS: Martifer – Inovação e Gestão, S.A.

Martifer Solar - SGPS, S.A.

Martifer Solar, S.A.

Martifer Solar Ltda.

Martifer Renewables, SGPS, S.A.

Martifer Renewables, S.A.

MPRIME – Solar Solutions, S.A.

Martifer Renovables ETVE, S.A.

Martifer Renewables Investments ETVE, S.L.

SPEE 3 - Parque Eólico do Baião, S.

VICE-CHAIRMAN OF THE BOARD OF DIRECTORS: Martifer - SGPS, S.A.

Martifer Global SGPS, S.A.

Martifer Metallic Constructions - SGPS, S.A.

MEMBER OF THE BOARD OF DIRECTORS: Martifer Energy Systems, SGPS, S.A.

SPEE 2 – Parque Eólico de Vila Franca de Xira, S.A.

Martifer Renewables Italy B.V.

Martifer Renewables Brazil B.V.

Martifer Beteiligungsverwaltungs GmbH

Eviva Beteiligungsverwaltungs GmbH

Martifer Deutschland GmbH

Martifer Renováveis Geração de Energia e Particip S.A.

Rosa dos Ventos Geração e Comerc. de Energia S.A.

Martifer – Construções Metálicas, Ltda

Martifer Wind Energy Systems LLC

Martifer Construcciones Metálicas España, S.A.

MEMBER OF THE SUPERVISORY BOARD: Martifer Renewables, SA

MANAGER: Martifer Contruções Metálicas Ltda.

Martifer – Aluminios, Ltda

Global Holding Limited

Global Engineering & Consulting Limited

SOLE DIRECTOR: Martifer Renewables Investments Etve, S.L.

CHAIRMAN OF THE REMUNERATION COMMITTEE: Martifer Alumínios, S.A.


Martifer – Construções Metalomecânicas, S.A.

MEMBER OF THE REMUNERATION COMMITTEE: Martifer Renewables, S.A.

SECRETARY: Martifer Construcciones Metálicas España

REPRESENTATIVE: EUROCAB FV 1, S.L.; EUROCAB FV 2, S.L.; EUROCAB FV 3, S.L.;

EUROCAB FV 4, S.L.; EUROCAB FV 5, S.L.; EUROCAB FV 6, S.L.;





EUROCAB 19, S.L.

b) Positions in companies with shareholding by Martifer Group:

MEMBER OF THE BOARD OF DIRECTORS Ventinveste, S.A.

c) Positions outside the Group:

MEMBER OF THE BOARD OF DIRECTORS: I´M– SGPS, S.A.

I´M Mining, SGPS, S.A.

ESTIA SGPS, S.A.

Manager: BRASEME -INVESTIMENTOS e Consultoria, Lda.

MÁRIO RUI RODRIGUES MATIAS


MEMBER OF THE BOARD OF DIRECTORS: Martifer - SGPS, S.A.

Martifer Metallic Constructions SGPS, S.A.

Does not take part on any other company inside or outside Martifer Group.

ARNALDO JOSÉ NUNES DA COSTA FIGUEIREDO

b) Positions within the Martifer Group:



c) Positions outside the Group:

CHAIRMAN OF THE MANAGEMENT BOARD: Mota-Engil, Indústria e Inovação, SA

VICE-CHAIRMAN OF THE MANAGEMENT BOARD: Mota-Engil, SGPS, SA (vice-chairman and executive director)

MEMBER OF THE GENERAL BOARD: AEM-Associação de Empresas Emitentes de Valores Cotados em

Mercado

ELO – Associação Portuguesa para o Desenvolvimento Económico e a

Cooperação

CHAIRMAN OF THE GENERAL MEETING: Mercado Urbano, S.A.

MEMBER OF DIRECTOR: Tabella Holding, B.V.

LUÍS FILIPE CARDOSO DA SILVA



b) Positions outside the Group:

MEMBER OF THE BOARD OF DIRECTORS: Mota-Engil, SGPS, SA (member and executive director)

MESP - Mota-Engil, Serviços Partilhados, Administrativos e de Gestão,

SA.

Mota-Engil Brand Management B.V.

LUIS ANTÓNIO DE CASTRO DE VALADARES TAVARES

Positions within the Martifer Group:



JORGE BENTO RIBEIRO BARBOSA FARINHA

Positions within the Martifer Group:




ANNEX III

[STATEMENT ON THE REMUNERATION POLICY OF THE MANAGEMENT AND SUPERVISORY BODIES

APPROVED OF THE GENERAL MEETING ON 10 APRIL 2013]

I - INTRODUCTION

In use of a legal right conferred by Article 399º of the Portuguese companies code (CSC), the Bylaws of Martifer SGPS, in its

article 20, delegate to a Remuneration Committee the powers to decide on the remunerations of the Management and

Supervisory Bodies of the Company.

According to the applicable provisions of the Articles of Association, the Remuneration Committee was appointed by the

Shareholders General Meeting on 11th April 2012, to exercise its duties for the three year period years 2012-2014 and currently

is formed by:

António Manuel Queirós Vasconcelos da Mota (Chairman)

Maria Manuela Queirós Vasconcelos Mota dos Santos (Member)

Júlia Maria Rodrigues de Matos Nogueirinha (Member)

In order to promote a clear and legitimate fixing of the remuneration of corporate bodies, the Remuneration Committee, in

compliance with article 2 of Law 28/2009, of 19 June, hereby submits for approval of the General Meeting of Shareholders of

Martifer SGPS, S.A. of 10 April 2013 its declaration on the policy of remunerations of the Management and Supervisory Board.

This statement seeks to follow closely the applicable provisions of the CSC and the Corporate Government Code of Comissão

Mercado dos Valores Mobiliários (“CMVM”).

It is also relevant to point out that the present statement, more than mandatory by law, intends to be an important instrument

of good Corporate Governance, aiming the proper information of the shareholders, the protection of their interests and the

transparency of Corporate Governance in matters of remuneration of Corporate Bodies.

II – REGULATORY REGIME

In the definition of the remuneration policy to be established by the Remunerations Committee, were first taken into account

the legal provisions of CSC, namely in its article 399º; the Law 28/2009, 19 June, concerning the regime of approval and

disclosure of remunerations policy of the Management and Supervisory Bodies in Listed Companies, as well the Corporate

Governance Code of CMVM.

In second place, it has also been taken into consideration, for the definition of the remuneration policy, the special regime

established in the Company’s Bylaws.


III – GENERAL PRINCIPLES

The Remunerations Committee pursues, in its remunerations policy, to promote the convergence of the interests of Directors,

other Corporate Bodies and Managers with the interests of the Company, namely shareholder value creation and real growth of

the Company, privileging here a long term perspective.

Pursuing this aspiration, and accordingly to the policy adopted in previous years, the Committee structured the integrant

components of the income of the Board of Directors in order to reward their performance, discouraging however excessive

risks-taking. This way, it is intended to promote a high-level sustained growth.

Finally, it is relevant to say that is determinant in this Committee’s mission the economic position of the Company as well the

general market practices for similar situations.

Specifying the general policy herein stated, we hereby present to the shareholders the principals informants observed by this

Committee in the definition of the remunerations:

a) Duties Performed

In the decision of the remuneration of each member of the Board of Directors, shall be taken into account, for each single

member, the complexity of his duties, the responsibilities that are, in fact, attributed to him, the time dedicated and the

added value the result of his work brings to the Company.

In that extent, one cannot fail to differentiate the remuneration between the Executive Board members and the non-

Executive Board members, as well as the remuneration amongst each of the cited group.

There are also duties performed in other controlled companies which cannot be excluded from this consideration, as this

means, on one side, there is an increase in terms of responsibility and, on the other, in terms of the collective source of

income.

b) Interests alignment between the Management and Supervisory Bodies and the Company – Performance

evaluation

In order to grant an efficient alignment of interests of the Management and Supervisory Bodies with the ones of the

Company, this Committee shall not fail to pursue a policy that rewards the Board Directors by the performance of the

Company in a long term perspective and in the creation of value for the shareholder.

c) Economic position of the Company

This criterion has to be understood and interpreted carefully. The size of the Company and the inevitable complexity of

management associated to it is clearly one of the relevant aspects to determine the economic situation of the Company and

of remuneration, understood in its broader sense. To a higher level of complexity, corresponds a higher remuneration, but it

has to be adjusted accordingly to other criteria informants of the economic situation of the Company (of financial nature,

human resources nature, etc).

d) Market Criteria

The balance between supply and demand is unavoidable when setting any remuneration and the situation regarding members

of the Corporate Bodies is no exception. Only by taking into account market practices will allow the Company to maintain

professionals guided to perform at an adequate level of complexity and responsibility, It is important that the remuneration is

aligned with market practices and that it is stimulant, allowing it to become an instrument to help achieve a single and

collective high level of performance, thus ensuring not only the individual interest, but mostly the interests of the Company

and of the shareholders.


IV – CONCRETE OPTIONS

Based on the above mentioned principles, this Committee disclosure the relevant information regarding the concrete options of

the remunerations policy, which hereby are submitted to the Company’s shareholders appreciation:

1st Remuneration of Executive members of the Board of Directors, shall be made up of a fixed and a variable part, and,

according to the law and article 20.3 of the Articles of Association, the variable part may not exceed 5% of the annual net

profit,.

2nd Remuneration for non-Executive independent members of the Board of Directors, members of the Supervisory Board and

members of the Board of the General Meeting shall only consist of a fixed part.

3rd The fixed part of the remuneration of the Executive members of the Board of Directors, as well the non-Executive Members

non independent (when applicable), shall consist in a monthly amount payable fourteen times per annum.

4th A fixed remuneration, for each participation in the meetings of the Board of Directors, shall be set for the non-Executive

and independent Board members.

5th Fixed remuneration of members of the Supervisory Board shall be set in a monthly value payable twelve times per annum.

6th In setting all remunerations, including in distributing the global amount of the variable pay of the members of the Board of

Directors, the general principles referred to above will be observed: functions carried out, alignment with the interests of

the company, privileging the long term, the company situation and market criteria.

7th Fixed remuneration of the members of the Board of the General Meeting will be a predetermined value for each meeting.

8th The process of attribution of variable remuneration to Executive members of the Board of Directors must follow the

criteria proposed by the Remunerations Committee, namely their hierarchal stand, evaluation of performance and real

growth of the Company, seeking to promote in those the convergence of the interests of the Management Body with the

Company, with emphasis on the long-term performance. Thus, will be considered decisive for the evaluation and

measurement of the VR:

The contribution of the Executive Directors for the results obtained;

The profitability of business in the perspective of the shareholder;

The evolution of the stock quotes;

The degree of achievement of the projects integrated in and measured by the Balanced Scorecard of the Company.

9th The Company’s Board of Directors submitted a proposal of Stock Options Remuneration Plan (PROA) for appreciation to

its Shareholders in the General Meeting of 28 March 2008.

The objectives of the PROA are, among others, the retention of key employees of the various companies in the Group; as

well as the members of the Board, the stimulation of the creativity and productivity of employees, thereby promoting the

results of the Company; the creation favorable conditions to attract and recruit of managers and other key employees; the

alignment of interests of the employees and members of the Board with the interests of Martifer’s shareholders and other

stakeholders, rewarding their performance through the value creation for shareholders, reflected in the evolution of the

share price of the Company on the Stock Market.

The PROA works by attributing as part of the variable remuneration (RV) of the beneficiary options to buy or subscribe to

shares of Martifer. Thus, the PROA will depend on the performance evaluation system in force in the Group. The number

of options each beneficiary receives in a given year will depend on the value of his/hers RV, which depends on his/hers

performance evaluation, hierarchical position and the value of the options. The value of the options will be calculated by

independent entities (Investment Banks).


Each option will give the beneficiary the right to acquire or subscribe one Martifer share at a future date at the exercise

price. The options may be exercised in 4 different moments, once annually. The shares to be delivered to the beneficiaries

at the moment the option is exercised will result from a capital increase. The number of shares resulting from options

attributed and not exercised, at any given time, may not exceed 2% of Martifer’s share capital. The Beneficiary may lose the

right to non exercised options in the event of leaving the Group, unless there is a mutual agreement.

10th Notwithstanding the policies above mentioned of protection of the shareholders and Company’s interests on the long

term, the Committee, in search of the best practices of Corporate Governance regarding remuneration policies of the

Corporate Bodies, is presently: (i) promoting a study and comparative analysis of remuneration policies and practices of

other groups of companies in the same sector with respect to the fixing of remuneration for future implementation and

adoption in Martifer, as well as (ii) studying the possibility of adoption of politics that, shown to be feasible and balanced to

all actors, foresee the possibility of the variable remuneration to be payable, in part or totally, only after clearance of the

fiscal accounts of all the mandate and, on the other hand, that allows a limitation to the variable remuneration in case the

results show a relevant deterioration of the company’s Performance in the last cleared fiscal year or when it is expected in

the designated year.

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