report & accounts

REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA

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Soares da CostaConstrução, SGPS, SA

REPORT & ACCOUNTS2013


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MANAGEMENT REPORT

Highlights

Introduction

1. The Soares da Costa Group

2. Corporate Social Responsibility

3. Business activity

3.1 Background

3.2 Production

3.3 Commercial Area

3.4 Human Resources

4. Financial and Economic Analysis

4.1 Individual Accounts

4.2 Consolidated Accounts

5. Risk Management

6. Outlook for 2014

7. Relevant facts occurring after the year end

8. Other legal information

9. Acknowledgements

10. Proposal for application of results

INDIVIDUAL FINANCIAL STATEMENTS

INDIVIDUAL ACCOUNTING POLICIES AND EXPLANATORY NOTES

CONSOLIDATED FINANCIAL STATEMENTS

OPINIONS AND CERTIFICATIONS

12

4

3

5

5

12

17

24

27

29

30

34

36

36

37

37

38

38

44

66

72

INDEX

A

B

C

D

E

MANAGEMENTREPORT

A

Dipanda Towers Angola


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HIGHLIGHTS

◊ Consolidated turnover of 497.2 million Euros fell by 30.2% compared to 712.5 million Euros in the prior year. There was a sharp fall in the domestic market (-58.3%) due to the conclusion of the Transmontana Motorway and also a fall in turnover in Angola (-31.6%) because of delays on significant projects;

◊ The share of international business rose to 85.4% in 2013 (75.6% in 2012);

◊ EBITDA of -13.4 million Euros (+29.0 million Euros in 2012) reflects the fall in activity and major constraints on profitability;

◊ Gains due to the restructuring of financial debt had a substantial impact on financial results, which amounted to only -1.1 million Euros, compared to -41.9 million Euros in 2012;

◊ The fall in business activity and impairment losses and provisions worsened the result before tax which totalled -61.3 million Euros (-49.8 million Euros in the prior year);

◊ Consolidated results attributable to the Group were -63.1 million Euros (-37.8 million Euros in 2012);

◊ The company’s individual results totalled -44.7 million Euros (-8.6 million Euros in 2012);

◊ Shareholder agreement leading to a transaction to increase the share capital of the company by 70 million Euros by the investor GAM Holdings, SA, successfully concluded in February 2014; as a result of this transaction, GAM Holdings became the majority shareholder in the company with 66.7% of the share capital.

Key Consolidated Indicators

(millions of Euros) 2013 2012 Change

Turnover 497.2 712.5 -30.2%

Portugal 72.4 173.6 -58.3%

External Markets 424.7 538.9 -21.2%

EBITDA -13.4 29.0 -

Operating Results (EBIT) -60.2 -8.0 -

Financial Results -1.1 -41.9 97.4%

Consolidated result attributable to the Group -63.1 -37.8 -66.9%


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INTRODUCTION

The board of directors of Soares da Costa Construção, SGPS, SA, in compliance with relevant legal and sta-tutory requirements, submits for approval at the shareholders general meeting, the management report, the financial statements and the other reporting documents for the period ending 31 December 2013.

These documents provide information concerning the business, and the performance and financial posi-tion of Soares da Costa Construção, SGPS, SA and its subsidiaries, as well as of the main risks and uncer-tainties facing them.

The accounting information presented both for the individual and consolidated financial statements should be interpreted in the light of international accounting standards (IAS/IFRS: International Finan-cial Reporting Standards), as adopted by the European Union.

Furthermore, as a company fully owned during the whole of 2013 by Grupo Soares da Costa, SGPS, SA, a publicly quoted company, Soares da Costa Construção, SGPS, SA is not legally obliged to prepare and disclose consolidated accounts, this being the responsibility of the mother company. Thus, the consoli-dated accounts presented here are optional. However, they have been prepared in accordance with the international standards mentioned above, and provide an accurate picture of the size and performance of the Soares da Costa Group’s construction business.

The financial information concerning each subsidiary referred to in this report should be understood in the context of its pertinence to an appreciation of the activity and performance of the Group and not as a substitute for the financial statements that each company prepares and discloses, in accordance with the applicable law currently in force.

Mission and Values

In its role as the coordinating entity for all of the business activity of the Soares da Costa Group directly linked to construction, Soares da Costa Construção, SGPS, SA is responsible for carrying out its mission in this business segment, one of two that are considered strategic in the Group (the other being Conces-sions/Services). The mission is to: “satisfy the demands of the market and of its customers, through a sustainable business model, and qualified and motivated resources, that generate economic, social and environmental value, in a manner that provides an attractive return for shareholders”.

This mission is pursued not by chance or at random, but by persistently following difficult, demanding but well directed paths, and reflected in the continuous practice of values, defined at a Group level, that are proudly shared across the company:

THE SOARES DA COSTA GROUP1


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◊ Constant focus on the market and customer satisfaction;

◊ Effective and efficient management;

◊ Integrity and ethical behaviour;

◊ Socially responsible conduct;

◊ Respect for the environment.

Historical Background

Soares da Costa Construção, SGPS, SA was formally founded on the 30th of December 2002, and created by the transfer of a portfolio of shareholdings in the construction business from its sole shareholder, Grupo Soares da Costa, SGPS, SA.

The origins of what is today the Soares da Costa Group goes back to 1918. From a small company with 10 workers basically executing high quality finishes, to one of the biggest Portuguese business groups ope-rating worldwide, the Company’s history is intimately tied to the Construction business.

Throughout its long existence, the Company has undergone a number of phases of growth, constantly adapting itself to changing conditions:

◊ In 1944, it became a private company with a capital of 8 million Escudos;

◊ In 1968, and with business activity across the whole of the north of Portugal, it became a limited liabi-lity company with a share capital of 9 million Escudos, still wholly owned by the founders’ heirs;

◊ In the period immediately following the 1974 Revolution, and reacting in an innovative manner to the crisis in the market, the company found the key to the continuation of its growth using a technology called the “tunnel framework”. In 1977, already with over 4,000 employees, the head office moved to a new building in the Avenida da Boavista, Porto;

◊ At the beginning of the 1980s, international expansion of the company began, with Venezuela and Guinea-Bissau chosen as the pioneering countries. The share capital was increased to 180 million Es-cudos;

◊ It was also in the 1980s, taking advantage of the expected explosive growth in infrastructure in Portu-gal as a result of joining the European Union, that the company’s business activity expanded beyond buildings to infrastructure construction;

◊ In 1988, and following an internal shareholder change, which did not result in the company losing it family character, it entered a period of greater exposure to the Financial Markets, and increased its share capital to 5,250,000 thousand Escudos;

◊ During the 1980s and 1990s, the company’s international business diversified and the level of exports increased. Its presence in markets as wide ranging as Iraq, Macau, Egypt, Guyana, Angola, Mozambi-que, Guinea-Bissau, Cape Verde and Germany are examples of its acumen in the search for business opportunities and in its ability to take advantage of them;

◊ In 1994, the company entered the American market in the USA with the incorporation of SDC Contrac-tor Inc.;

◊ In 2002, a new restructuring process led to the formal set up of the business group. Sociedade de Construções Soares da Costa, SA was converted into a management holding company, Grupo Soares da Costa, SGPS, SA, with a share capital of 160 million Euros, which, in turn, wholly owned the share capital of four other holding companies, each one holding the shareholdings of companies in their respective business segments. Soares da Costa Construção, SGPS, SA’s mission was to manage the entire construction business, and was set up with a nominal share capital of 90 million Euros;


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◊ The period from the end of 2006 to the beginning of 2007 marks another historic milestone for the company, with control over the Soares da Costa Group passing to Grupo Investifino - Investimentos e Participações SA. The family nature of the company’s management and especially its image, which had existed until then, finally disappeared, leading to a new, more professional and modern management philosophy.

The Soares da Costa Group’s history in the construction market is long and complex, but in all its phases it has always sought and been able to find the means to modernize and grow. Thus, Soares da Costa Construção SGPS, SA has the challenge of honouring this proud heritage with its business activity, seeing in its past an example to follow, but knowing always how to find, in the present, the path that leads to the growth that will ensure its future.

Hence, with the management and development of the construction business, one of the Group’s strate-gic business areas, as its responsibility, the company has grown rapidly and significantly since its formal set-up. In 2008, it acquired Contacto in Portugal and Prince in Florida in the United States, as well as Clear, which it acquired from the industrial sector in Portugal.

During 2011, the company incorporated by merger Soares da Costa Indústria, SGPS, SA. In the same year, and given the important changes in the economic environment, the lack of financing and the sharp drop in the Portuguese construction market, the management of the Soares da Costa Group decided to alter the group’s strategic plan.1 This update focuses the strategic direction on international expansion for the construction business and on the financial sustainability of all businesses.

It is also important to highlight the transaction, which took place on the 12th of February 2014 to increa-se share capital by 70 million Euros, entirely subscribed and paid up in cash by the new investor GAM Hol-dings, thus giving the latter ownership of 66.7% of the share capital of the company to which this report relates. The transaction marks a new stage in the life of the company as a result of which it is hoped that it will move forward ambitiously and with renewed vigour.

Shareholders’ Equity and Shareholders

At the beginning of the year, the share capital was 131,080,340 Euros, constituted of 26,216,068 nominal shares each with a nominal value of 5 Euros. The following changes took place during 2013:

◊ At the shareholders’ general meeting that took place on the 14th of August 2013, it was decided to reduce share capital by withdrawing shares, and alter article 4 of the company’s statutes as follows: “the share capital, wholly subscribed and paid up, is of sixty four million eighty thousand three hun-dred and forty Euros and represented by twelve million eight hundred and sixteen thousand and sixty eight shares without nominal value”. In the transaction, the value of 63,063,889.24 Euros was attribu-ted to the only shareholder and a sum of 3,936,110.76 Euros was transferred to free reserves;

◊ At the shareholders’ general meeting on the 28th of November 2013, it was decided to reduce share capital to cover cumulative losses in negative retained earnings of 4,760,512.23 Euros and the net losses totalling 38,983,932.35 Euros for the first nine months of the year 2013, reducing share capital to 20,335,895.42 Euros (twenty million three hundred and thirty five thousand eight hundred and ninety five Euros and forty two centimes), represented by twelve million eight hundred and sixteen thousand and sixty eight shares without nominal value;

During 2013, the entire share capital of the company was owned by the company Grupo Soares da Costa, SGPS, SA.

1 Please see press release on the CMVM website


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In 2014 on the 12th of February, the company decided to increase its share capital to 90,335,895.42 Euros (ninety million three hundred and thirty five thousand eight hundred and ninety five Euros and forty two centimes), through a cash inflow of 70,000,000.00 Euros (seventy million Euros), equal to the issue of 25,670,623 shares without nominal value, all of which were subscribed and paid up in cash by the new shareholder GAM Holdings, which thus became owner of 66.7% of the share capital.

Thus, under the terms of article 4 of the company’s articles of association, the share capital, entirely subscribed and paid up, is of 90,335,895.42 Euros (ninety million three hundred and thirty five thousand eight hundred and ninety five Euros and forty two centimes) and represented by 38,486,691 (thirty eight million four hundred and eight six thousand six hundred and ninety one shares) without nominal value.

The company also informs that, in compliance with the provisions of section d) of paragraph 5 of article 66 of the Commercial Companies Code, it does not own nor dealt in own shares during the year.

Statutory Bodies

The statutory bodies of Soares da Costa Construção, SGPS, SA that were decided upon at the sharehol-ders’ general meeting on the 26th of March 2013 were constituted of the following, valid for the manda-te 2013-2015:

Shareholders General Meeting Board: ◊ CHAIRMAN Jorge Manuel Oliveira Alves◊ SECRETARy Pedro Miguel Tigre Falcão Queirós

Board of Directors:◊ CHAIRMAN António Manuel Pereira Caldas de Castro Henriques◊ VICE-CHAIRMAN Jorge Domingues Grade Mendes◊ MEMBERS Pedro Gonçalo de Sotto-Mayor de Andrade Santos

Luís Miguel Andrade Mendanha Gonçalves

Daniel Hehn Pinto da Silva

Fernando Jorge Sales Nogueira

Statutory Auditor:◊ EFFECTIVE Deloitte & Associados, SROC, SA, NIPC 501776311, represented by António Manuel Martins Amaral◊ ALTERNATIVE Paulo Alexandre Rocha Silva Gaspar, ROC, NIF 200527452

Then, following the increase in share capital that took place on the 12th of February 2014 and the inhe-rent change in ownership, the composition of the Board of Directors became the following:

Board of Directors:◊ CHAIRMAN António Mosquito◊ VICE-CHAIRMAN António Sarmento Gomes Mota◊ MEMBERS António Manuel Pereira Caldas de Castro Henriques (Chairman of the Executive Committee -CEO)

Jorge Domingues Grade Mendes (Member of the Executive Committee - COO)

Miguel Nuno André Raposo Alves (Member of the Executive Committee – CFO)

Paulo Manuel da Conceição Marques

Roberto António Pereira Pisoeiro (CEO of Angolan Operations)


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Company Organisation

Soares da Costa Construção, SGPS, SA, is a holding company that carries out its business by managing shareholdings in various companies in the construction segment, executing civil construction, enginee-ring and infrastructure projects.

During 2013 all members of the Board of Directors carried out executive duties, sharing the coordination of the various shareholdings of the company.

The organisational structure in 2013 was as follows:

ANGOLA

Daniel Barreira

Jorge Rocha

António Cortes

PORTUGAL

MOZAMBIQUE

Rui Carrito

Vieira de Magalhães

BRAZIL

José Fontes

CLEAR

Paulo Leal

SOMAFEL

OTHER MARKETS

Equatorial Guinea

Costa Rica

S. Tomé & Príncipe

Emirates

Romania

Daniel Pinto da Silva Luís Mendanha Fernando Nogueira

António Castro Henriques

CEO

Gonçalo Andrade Santos

CFO

Jorge Grade Mendes

COO

AFRICA - CEO PORTUGAL - CEO BUSINESS DEVELOPMENT

Group Organisational Chart


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New shareholdings and changes to the consolidation perimeter of Soares da Costa Construção, SGPS, SA.

During 2013, the following transactions took place:

1ST QuARTER:

◊ Merger by incorporation of the company “Construções Metálicas Socometal, SA” into “Sociedade de Construções Soares da Costa, SA”;

2nD QuARTER:

◊ Disposal of the entire holding in the company governed by Angolan law, “Carta – Restauração e Canti-nas, Lda.”;

◊ Change of the corporate name of the company “Linha 3 Cezarina – Construções Ltda”, held 50% by Soares da Costa Brasil – Construções Ltda, which was renamed “Linha 3 Construções Ltda” and to in-clude in its corporate objectives the construction, management, supervision, study, project, planning, consultancy and execution of all and any relevant services to engineering works in general;

◊ Disposal of the entire shareholding of the company in MTA - Máquinas e Tractores de Angola, Lda.;

3RD QuARTER:

◊ Soares da Costa Construção SGPS, SA sold its entire shareholding in SDC América, Inc to Grupo Soares da Costa SGPS, SA;

◊ Constitution of the company “Clear Moçambique, Instalações Electromecânicas, Lda.”, a company go-verned by the law of Mozambique, owned 100% by the Group, the objective of which is to carry out bu-siness in the civil construction industry, public and private works, engineering, and electrical, electro-nic, communications, air conditioning, hydraulic, gas, mechanical and electromechanical installations;

4TH QuARTER:

◊ Acquisition of the entire shareholding in “Soares da Costa Serviços Partilhados, SA”;

◊ Winding up of the company “SDC Emirates Construction, LLC”, a company which was owned 49% by “Soares da Costa Construção, SGPS, SA”.

The structure of shareholdings held by Soares da Costa Construção, SGPS, SA, is shown below:


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Soares da Costa Construção, SGPS, SAConsolidated Accounts - 31.12.2013Perimeter and Consolidation Methods

(1) Sociedade de Construções Soares da Costa, SA holds a 4% participation in the share capital of Auto-estradas XXI, SA and Operestradas XXI, SA.(2) Sociedade de Construções Soares da Costa, SA holds a 0,004% participation in the share capital of Exproestradas XXI, SA.(3) Sociedade de Construções Soares da Costa, SA holds a 0,002% participation in the share capital of this company.(4) Sociedade de Construções Soares da Costa, SA holds a 0,5% participation in the share capital of Indáqua Matosinhos, SA.(5) Sociedade de Construções Soares da Costa, SA holds a 0,57% participation in the share capital of Indáqua Vila do Conde, SA.(6) Clear Angola, Lda holds a 2% participation in the share capital of Costa Sul, Lda. and Imosede, Lda.

Organograma do Grupo

Soares da Costa Construção, SGPS, SA


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The strategy for corporate social responsibility and the initiatives taken in this area have been imple-mented based on the guidelines set out for the Grupo Soares da Costa, SGPS, SA, the Group holding com-pany, of which the construction business area is part. The performance of the company in this area and the relevant facts pertaining to the year 2013 are described in detail in the report and accounts of Grupo Soares da Costa, SGPS, SA, in which are highlighted initiatives focused on internal social responsibility (aimed at employees of the company and their families), external social responsibility (implemented together with external entities and the surrounding communities in those areas and countries in which Soares da Costa carries out its business) and environmental responsibility.

3.1 BACKGROUND

Overall Analysis

Worldwide, the year 2013 confirmed the trend of weakening growth already evident over the prior two years with the persistence of major factors of uncertainty and highly demanding challenges in various areas and economic regions of the world. World GDP, according to projections made in October 2013 by the International Monetary Fund, grew by 2.9% (3.2% in 2012 and 3.9% in 2011).2 The emerging and developing economies continued to be the drivers of this growth with Asia as leader, while the advanced economies saw much more modest expansion (1.2%). These figures however reveal signs of a slowdown in the growth rate in China and other emerging and developing economies, which, for structural and cyclical reasons, are moving away from the maximum rates of growth achieved in more recent years. In 2014 the economic outlook is for an improvement in world economic performance (+3.6%), driven by an improved forecast in the more advanced economies (+2.0%), with an expected increase in growth in the USA and the emergence from recession of the Euro Zone. Meanwhile greater levels of growth will conti-nue in the emerging and developing economies (+5.1%) as a result of fiscal policies that are expected to continue to be neutral and benefitting from relatively low interest rates.

The United States economy experienced growth last year of 1.6% about equal to the forecast made a year previously, and 2014 may post robust growth of 2.6%. Important factors explaining this recovery are the agreement made between the main political parties about budget policy over the next two years, an improvement in private sector demand and the impact of a feel good factor from the increase in stock market values, all of which have resulted in a falling unemployment rate, which was 6.7% in December.

CORPORATE SOCIAL RESPONSIBILITY

BUSINESS ACTIVITY

2

3

2 IMF World Economic Outlook – Transitions and Tensions, outubro 2013


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The Euro Zone in 2013 continued to be affected by the legacy of the 2008 financial crisis, which led to a process of deleveraging, fragmentation of the financial markets and added uncertainty. The peripheral economies continued to follow very restrictive budgetary policies, aimed at controlling budget deficits and managing the risks still attached to sovereign debt. Thus, against a background of still high levels of unemployment, Euro Zone GDP contracted for the second year running (-0.4% in 2013). In 2014, a gradu-al recovery is expected in the Euro economic area, with GDP increasing by around 1%, an improvement which will be influenced by a halt in the fall in internal demand and by accelerating export growth.

The Portuguese Economy

The Portuguese economy continued to live under the auspices of the Financial and Economic Assistance Programme, agreed between the Portuguese government, the International Monetary Fund and the Eu-ropean Union in 2011, which has led to a highly restrictive and pro-cyclical approach to budgetary policy against a background of tight financial and monetary conditions.

In addition to budgetary policy, which has led to a fall in public investment, the process of financial de-leveraging in the private sector has led to a clear drop in investment in the Portuguese economy. Gross Fixed Capital Formation fell by -16.4%, -6.4% and -5.3%, respectively, in the first three quarters of 2013.3

The good performance of exports and deterioration in the trend of internal consumption have meant that, since the middle of the year, the Portuguese economy has shown some signs of stabilizing after ten consecutive quarters of contraction.

The Bank of Portugal in its Winter Bulletin 4 thus expects a contraction of GDP of 1.5% in 2013 but “taking into account a progressive recovery in internal demand, offset by the continuation of the process of bud-getary consolidation and deleveraging of the private sector” is forecasting growth of the Portuguese economy of 0.8% in 2014 and 1.3% in 2015. These forecasts are also based on a favourable export perfor-mance, “reflecting a trend of acceleration in external demand together with progressively smaller gains in market share during the forecast period”, modest growth in employment and an increase in the ability to finance the economy, based on the correction of external imbalances, which has been one of the most characteristic features of the process of adjustment of the Portuguese economy, together with a trend of the goods and services account balance that is expected to be in surplus during the forecast period.

Data recently released by the INE 5 (Portuguese Statistics Institute) point to a GDP change for the whole of 2013 of -1,4%, benefitting from good performance in the 4th quarter with a year on year increase of 1.6%, after a fall of 0.9% in the previous quarter.

The economic outlook for the country continues to depend on the competitiveness of and external demand for Portuguese goods and services, while the component parts of internal demand should remain weak due to the efforts made to reduce debt both in the public and private sectors.

As far as inflation is concerned, the Consumer Price Index (CPI) increased with an annual average change of 0.3% (2.8% in 2012). Excluding energy and unprocessed food products from the CPI, the average rate of change moved from 1.5% in 2012 to 0.2% in 2013. The average annual rate of change of the Harmonized Consumer Price Index (HCPI) fell to 0.4% in 2013 (2.8% in 2012), equal to a difference of -1.0 percentage points (p.p.) (0.3 p.p. in the prior year) compared to the year on year rate of change of the Euro Zone HCPI.6

3 Statistical Bulletin – February 2014, Bank of Portugal 4 Economic Bulletin – Winter 2013, Bank of Portugal, December 20135 Quarterly National Accounts – Rapid Estimate, 4th quarter 2013 and year 2013, INE, 14th of February 20146 Consumer Price Index, December 2013, INE, 13th of January 2014


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The unemployment rate continues to run at a worrying level, with the rate at 16.3% in 2013 (annual average), equal to an increase of 0.6 percentage points compared to 2012. It did benefit however from a lower rate in the 4th quarter at 15.3%, down 1.6 percentage points on the same quarter of 2012 and 0.3% percentage points lower that the estimate for the previous quarter which would appear to indicate an improving trend.7

Domestic Market: the Construction Sector

After a number of years of continuous contraction, it was not until 2013 that the Portuguese construction market showed signs of being able to emerge from the profound crisis into which it had fallen. Due to the particular characteristics of the sector that require an average delay of some 12 months in relation to invest-ment decisions, the consequences of any recovery in the country’s economy did not come about during the year just ended.

Based on data published in February 2014 by the National Statistics Institute (INE), the construction market has not managed to escape from the continuous falls that have occurred since 2008 in the Total Production Index, the trend of which is shown in the graph below for the last four years. The INE changed the basis of its analysis in October 2013 with the value of 100 corresponding to the average for 2010. It should be remem-bered however that the Production Index in January 2010 was around 75% of the average index for 2005. This means that a figure of around 60% of the average for 2010, shown on the extreme left hand side of the graph, corresponds to only 45% of the average production in 2005.

7 Employment Statistics – 4th quarter 2013 – 5th of February 20148 Production, Employment and Remuneration Indices in Construction, December 2013, INE, 11th of February 2014

So it comes as no surprise that in 2013 the production indicators for the construction sector invariably show once again deterioration in public and private demand to historically low levels. The average rate of change over the last twelve months in the construction sector production index was -16.3% (similar to that recor-ded in the previous year), the combination of a change of -16.6% in the building construction segment and -16.0% in civil engineering.8

The graph shown below records the year on year changes, where it can be seen that in the more recent perio-ds there has been a deceleration of the rate of contraction in both segments (Building Construction and Civil Engineering), which may augur better for the future. The figures show that the Building Construction seg-ment posted a year on year change in December of -14.3% (-14.6% in November) while the Civil Engineering segment posted a change of -14.5% (-15.6% in the previous month), a less sharp fall than in the immediately preceding months.

Total construction production index 2010-2013


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The recession is clearly reflected in the employment rate of the sector which showed an average change over the last twelve months of -15.8%, or in other words slightly less than the fall in production and exac-tly the same as the trend of the remuneration index (-15.8%).

The sharp fall in cement consumption in the Portuguese market, which has posted a cumulative fall of 25.2% from the beginning of the year until October is another indication of this recessionary situation.

Against this recessionary background in the sector, it is worth noting that the government has finally recognised that:

“the efforts being made in connection with the budgetary consolidation and correction of the financial imbalances of the Portuguese state in order to comply with the commitments made as part of the Memo-randum of Understanding in relation to the programme of external financing support, must be accom-panied by an appropriate, careful and consensual definition of the priorities for investment in infras-tructure which will help to strengthen the capabilities of Portuguese business and which will contribute towards the process of sustained and competitive adjustment of the economy”;

“…significant constraints still exist in relation to the capacity to transport people and goods”;

and that “over the time frame 2014-2020, the goal will be to use community funds preferentially for investment that generates value and reduces red tape in our economy and by doing so stimulates em-ployment and the competitiveness of the Portuguese economy and business community”.9 The gover-nment thus set up a work group in August 2013 with the objective of preparing recommendations con-cerning High Value Added Infrastructure investment. Of even more importance is the fact that the work group has already put its report out for public discussion with a list of thirty possible strategic projects, which sends out a good signal to the market. It is true that since it is a medium/long term plan, and over and above the normal impact of delays referred to above, the results of the implementation of this stra-tegy will only begin to be felt in terms of production as from next year. Also because of this, the indicators of confidence, most recently published by the INE (National Statistics Institute) as part of the Qualitative Attitude Survey for Construction and Public Works, which showed a trend of some recovery and less general pessimism reigning in this area, still has an overall negative tone in particular in relation to the order backlog.

9 Decree number 11215-A/2013 from the Office of the Secretary of State for Infrastructure, Transport and Communications

Construction Production Index Homologous Variation 2011-2013

Civil eng.

Buildings

Total


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External Markets

We present below a brief summary of the economic situation in the main international markets in which the company and its subsidiaries operate directly.

AnGOLAAfter the sharp fall in GDP rates of growth between 2009 and 2011 following the world financial crisis, preceding which double digit rates had been posted, the Angolan economy is gradually recovering its growth potential. The IMF is estimating real GDP growth of 5.6% for 2013 (after the 5.2% posted in 2012) and with the expectation of greater growth in 2014 (6.3%) 10, as a result of ambitious public works pro-grammes.

The process of diversifying the economy has been essential to reduce the share of the oil sector in the country’s national product, which will alleviate the impact of potential external shocks. At the same time, the coordinated execution of monetary and fiscal policies and the stability of the ex-change rate have been key factors in stabilising prices in the Angolan economy. The average inflation rate for 2013 is forecast to be around 8%, constituting a new historic low.

MOZAMBIQuEAttracting foreign investment and exploiting natural resources have been critical factors in increasing the growth potential of the Mozambique economy, which also benefits from an expansionist budgetary policy. Despite agriculture continuing to account for a high share of GDP, the discovery of large reserves of coal and gas has made possible an extraordinary development of the extractive industry, based on attracting large scale investment projects. This rate of expansion of growth of the economy is subject to debate however with significant constraints in terms of transport infrastructure.

The IMF revised economic growth upwards for the country, in contrast to growth forecasts for the majori-ty of the sub- Saharan economies, to 7.0% with a forecast of 8.5% for 2014. 11

According to the official INE (National Statistics Institute) data, real GDP growth in the first six months was 6.6%, impacted, as the country was, by heavy rain and flooding at the beginning of the year.

The average annual inflation rate measured by the consumer price index in Maputo, Beira and Nampula, the three main cities, was around 4.1% (measured in November 2013), according to information from the same entity. In general, the trend of inflation continues to be explained by the stability of the Metical on the domestic currency market and by the growth of money supply in line with the monetary program-me, against a background in which measures continue to be in force to regulate prices.

BRAZILDuring the year 2013, GDP of the Brazilian economy grew by 2.4%, with a forecast of 2.6% for next year 12, lower than the growth forecast for the Latin American and Caribbean region.

Inflation, which has been running at a high level with the latest forecasts indicating a rate of 5.8% (higher than the goal of 4.5%), has led to the country adopting a vigilant and somewhat restrictive mo-netary policy with an increase in base interest rates.

10 Regional Economic Outlook: Sub-Saharan Africa – Keeping the Pace, IMF, October 2013 11 Regional Economic Outlook: Sub-Saharan Africa – Keeping the Pace, IMF, October 201312 Preliminary Assessment of the Latin American and Caribbean Economies, CEPAL, United Nations


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SÃO TOMÉ & PRÍnCIPEIn 2013, the growth rate of São Tomé & Príncipe in 2013 is expected to show a real increase of 4.2% with a forecast for 2014 of 4.8%.

One highlight of the country’s economic performance in 2013 was the progress made to gradually sta-bilise prices. The cumulative inflation rate was 5.6% up to the end of November, a figure comparatively lower than over the last few years. Another was connected to exchange rate policy which continues to follow the goal of stabilising the Dobra in relation to the Euro, which resulted in a strengthening of the country’s currency against the dollar of 3.0% between December 2012 and November 2013.13

13 Exchange Rate and Monetary Monthly Bulletin - November 2013. Banco Central de São Tomé e Príncipe.

3.2 PRODUCTION

Portugal

After the mergers of Contacto and of Maxbela that took place in 2012 and that of Socometal at the begin-ning of 2013 – all of which were merged into Sociedade de Construções Soares da Costa, SA – the rele-vant subsidiaries that have a significant presence in the Portuguese market are:

◊ Sociedade de Construções Soares da Costa, SA and

◊ Clear – Instalações Electromecânicas, SA.

In addition, various Complementary Groups of Companies (ACEs), consolidated using the proportional method, are in operation, in which the first named of the companies above is involved. The subsidiaries in the railway and maritime construction segment, Somafel and OFM, should also be noted, again conso-lidated using the proportional method.

As was seen in the previous chapter, the construction market in Portugal is in deep recession. Public investment has fallen sharply since mid 2011 to a very small fraction of prior levels. At the same time, private investor confidence has become negative and the reigning climate of uncertainty has also led to private investment posting historically low levels.

The sharp and persistent drop in demand has had severe and negative effects on the supply side with scores of companies going out of business, due to the need for other companies on whom they depen-ded for business to downsize. This unrelenting downsizing is largely complete but there are still signs in the country of over sizing, which are visible in the cut throat competition existing for construction pro-jects out for tender and the accompanying degradation of prices.

In spite of its international vocation, Sociedade de Construções Soares da Costa, SA, either directly or through the complementary groups of companies in which it is involved, continues to do business in the domestic market and in 2013 carried out various significant construction projects. Among these, the hi-ghlight was the conclusion of the contract for construction of the Transmontana motorway.

In addition to the motorway mentioned above, constructed by the complementary group of companies CAET XXI, in which the company has a 50% shareholding, the conclusion of the following construction projects of Sociedade de Construções Soares da Costa, SA (or of ACEs in which it participated) in 2013 de-serves mention, although these are relatively small when compared to the huge scale of the motorway project:


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◊ Gas pipeline Mangualde-Celorico-Guarda for REN;

◊ Serra da Estrela Inn for ENATUR;

◊ Aljustrel building for EDIA;

◊ Pedrógão building for EDIA;

◊ Construction for the upgrade and widening of 2X3 Lanes of the subsection Maia / Santo Tirso of the motorway A3 for Brisa.

Among other construction projects running over several years, which are currently underway, worthy of note due to their size and which will end in 2014, the following can be highlighted:

◊ Moura/Safara water pipeline for Águas do Alentejo;

◊ Waste water treatment plant in Paço de Sousa for Simdouro;

◊ Hotel Sana Evolution for Aziparque;

◊ Tróia Resort for Pestana Group.

Clear is the other subsidiary of the company carrying out business in Portugal and also in Angola, here through its subsidiary Clear Angola.

In Portugal, despite facing a difficult economic situation with a scarcity of projects, Clear succeeded in maintaining a satisfactory use of installed capacity, participating in various projects of significance in Portugal, both as a partner with the group’s construction company, and also on its own, the highlights of which were:

◊ Serra da Estrela Hotel in Covilhã for Enatur, which is part of the “Pousadas de Portugal” network. In 2013, all work relating to air conditioning, electricity, hydraulics, technical management and fire pro-tection were completed.

◊ Hotel Corinthia Lisbon used the services of the company to optimise energy consumption for the building’s air conditioning. This is a flagship project for Clear because of the pioneering nature of the work done in the area of energy efficiency. The project was voted “Western Europe Region – Energy Project of the year” by the Association of Energy Engineers (AEE), aimed at exceptionally innovatory projects undertaken outside the United States.

◊ The contract for the “Hotel Sana Evolution – Lisbon” was awarded in February 2013 by Aziparque, and Clear was given responsibility for carrying out works relating to air conditioning, hydraulics, fire safety systems, technical building management and electrical installations.

◊ Groz Beckert – Construction of an Industrial Building in Valadares, Vila Nova de Gaia: execution of works began in the last quarter of 2013 for electricity, telecommunications, air conditioning, hydrau-lics and management of a new industrial building to expand the production of the factory.

◊ Organic Waste Processing Plant in Seixal: electrical and mechanical work and the installation of the main equipment were completed while control and automation systems were designed and installed. The phase of off load testing of the main electromechanical equipment was also begun, including re-lated automation and control systems.

◊ For the “Watering and Drainage Infrastructure for the Aljustrel and Pedrogão Block” for EDIA, specia-list work was completed for the expansion of the Aljustrel Watering Building and also specialist work for hydraulics, electricity and remote management of the new Pedrogão 3 Watering Building cons-truction project for water and drainage infrastructure.

Despite the shortcomings affecting the Portuguese economy because of the capacity of the railway infrastructure – the business segment of the subsidiary Somafel – the deterioration of the sector conti-nued, due to severe funding limitations on the public railway system imposed by the government.


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Thus, in the Portuguese market, Somafel’s business was confined to carrying out service work under a maintenance contract with REFER for lots 2 and 5, currently in progress, which was carried forward from the prior year, as well as other small works.

In the work group report on High Value Added Infrastructure, highlights among the priorities set out for the railways sector are the conclusion of the modernisation plan for the Northern line, the modernisa-tion of the Beira Alta line, work on the Cascais line and the new international links Sines-Caia and Aveiro--Vilar Formoso. However, any impact of these projects on the business activities of the companies in the railway sector is unlikely to be felt until after 2015.

In the port and harbour construction area, the business area of the company OFM, the contract for the “Supply and Erection of Seventeen Sea Defences at Dock 2 North” for Leixões Port was concluded, invol-ving the supply and erection of defences, including the clearing of damaged defences, as well as a con-tract (as a consortium) for the “Construction of Port Infrastructure and Improvement Works to the Mada-lena Port Shelter, Island of Pico” from the Portos dos Açores, S.A. Also concluded as part of a consortium was a contract for the “Construction of a Ramp for Roll On Roll Off Ships and Ferry, and Ancillary Works for the Port of São Roque, Pico Island” from Portos dos Açores, S.A.

In 2013, this subsidiary continued to work primarily abroad on projects in Algeria, Cape Verde, Mozambi-que, Venezuela, Brazil and Angola, a highlight being the volume of work and the importance of its contri-bution to turnover of the project at the Port of La Guaira in Venezuela, which is expected to be completed in April 2014.

Angola

The Angolan market, in which the company has been operating continuously for more than three de-cades, continues to be of fundamental and strategic importance to the development of the company’s businesses. The company has managed to consolidate its recognised prestige and reputation, namely in the building construction segment, where it has undertaken highly important and significant construc-tion projects in a range of sub-segments: residential, commercial and office buildings.

In 2013, some unexpected difficulties arose in the planning of production, because of projects which had been awarded and even contracted but which were cancelled or suspended, some of which do not have a planned start date.

In addition, and as noted in interim reports, the delays on the start up of refurbishments works on Bo-avista and Sambizanga Slopes, which began only in March, on the residential project for Angola LNG in Soyo, and the infrastructure and administrative buildings of the Fútila Industrial Complex in Cabinda, which only began at the end of 2013, had a negative impact on normal production activity, leading to dis-continuities and a slower pace of work. Steps were taken to mitigate these effects but they had nonethe-less an important effect on turnover, as will be explained in a later chapter of the report. The Angolan market, despite the above, continued to be the top market in 2013 with more than twenty active and significant projects, among which deserve special attention the following:

◊ Luanda Bay Seaside requalification for Baía de Luanda company;

◊ New headquarters building of the INE in Luanda;

◊ Restoration and construction of the Angolan Armed Forces Museum.

Among the construction works of relevance in terms of production and turnover in the year, over and above those mentioned above, were the following:

◊ Headquarters Building of BESA, 2nd phase, in Luanda;

◊ Museum of Science and Technology in Luanda for the GOE;


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◊ Luanda Towers, for the Vista Club;

◊ Upgrade of Encostas da Boavista and Sambizanga in Luanda for the Ministry of Urban Development and Construction;

◊ New office building in Luanda for the Insurance Company AAA;

◊ Muxima Plaza Buildings in Luanda for Prominvest;

◊ Dipanda Towers in Luanda for Novinvest;

◊ Lobito Building in Lobito for BESA;

◊ Provincial Headquarters of the INE in Malange, Huambo and Benguela;

◊ Various works in Luanda for SONILS;

◊ Huambo Cultural Centre for the Provincial Government.

Clear Angola has become the leading company in Angola for electrical, hydraulic, air conditioning, buil-ding management system and maintenance installations. Its technical competence, financial strength, and ability of its staff have enabled CLEAR Angola to be successfully selected for large scale construction projects or those of technical complexity.

The following is a list of the most significant projects and contracts in which Clear Angola was involved during the year 2013:

◊ “Luanda Building – Ex-IPGUL”, in which the CACL (Administrative Commission for the City of Luanda) has been installed, saw the conclusion of Clear’s work on this project for the design and execution of electrical engineering, HVAC and hydraulic installations.

◊ “BESA Building, Lobito” in the city of Lobito, for which the contract for electrical engineering and hydraulic installations was completed.

◊ ”Descontão Supermarket” in Camama, Belas, Luanda – hydraulic installations.

◊ “Baía Building” in Luanda, in which electrical engineering and hydraulic installations completed. A highlight of this project was the development and implementation of a system for measuring electri-city, water and gas consumption designed by Energy Management.

◊ “Fénix Building” in Luanda was concluded with activity in three areas: electrical engineering, HVAC and hydraulics.

◊ ”Headquarters Building of the National Press” in Luanda, a contract won in 2013 for which Clear will carry out the electrical engineering, HVAC and hydraulic installations.

In Clear Angola’s business mix, electrical work represented 60% of the output (58% last year) while air con-ditioning once again accounted for 16%. There was an increase in maintenance, which generated income of 13% (5% in 2012) with hydraulic work accounting for smaller share at 11% (21% in the previous year).

Mozambique

Mozambique is also a market where Soares da Costa has been operating for a long time and which in recent years has become increasingly important, not just because of its significant turnover and profita-bility, but also because of the relevance, quality and importance of the construction works and projects that have been carried out or are in progress.

Over and above the business carried out via Sociedade de Construções Soares da Costa, SA, more focu-sed on international projects, the business also operates through a subsidiary company incorporated under Mozambique law, Soares da Costa Moçambique, SARL, owned 80% by Soares da Costa Construção, SGPS, SA, with the remaining shares held by the Mozambique state.


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As far as the activity of Sociedade de Construções Soares da Costa SA in Mozambique is concerned, work on contracts awarded in previous years continued apace, as follows:

◊ New bridge over the River Tete: in October the concrete deck was completed, as well as work on con-crete approach viaducts. Work was also carried out, despite some limitations which were outside the control of the construction company, on access roads. It is expected that the project will be completed during 2014;

◊ Pemba airport project: this is in the final phase of completion, with the expectation that it will have entered service by the time that this report is published;

◊ Lots 2 and 3 of National Road 221: earth moving work was completed, and the laying of ground cement has almost been concluded. Work began on double surface coating. The project is expected to be completed for the 2nd quarter of 2014.

Meanwhile, the following projects were started during the year 2013:

◊ Building of thirty rail bridges in the Nacala Corridor for CDN (a subsidiary of the Brazilian Mining Com-pany, Vale); this contract was extended at the end of 2013 to cover another twelve bridges, thus cons-tituting at this point the biggest challenge that the company has in Mozambique.

◊ Building of twelve road bridges for ANE – National Roads Administration, in the provinces of Manica and Sofala. This design /build project, which was won in 2012, saw the execution of tasks related to design while the construction site was prepared; the majority of the work will be carried out in 2014.

In relation to activity of the subsidiary Soares da Costa Moçambique, SARL, there was a marked increase in turnover (+24%) and also the order backlog, all of which suggest a high level of business in the forese-eable future. The following construction projects were completed: ◊ Construction of the “Solar das Acácias” Building in Maputo; ◊ Refurbishment of the Museum of the Revolution in Maputo;◊ Construction of a number of social buildings in Caia and Chimuara;◊ Construction of a car park silo next to the Millennium Developers Building in Maputo;◊ Refurbishment of the basement and floor of the Torres Altas building in Maputo;◊ Upgrade of the “ Pombal” building for HCB - Songo, Tete;◊ Expansion of the water distribution system to the village of Bobole;◊ Construction of 15 Type 3 residences for HCB in the town of Songo, Tete;◊ Refurbishment of the ex-Salvador Caetano building in Matola;◊ Construction of a container terminal for MCT, Machava;◊ Construction of the 4th phase of the ISDB - Dom Bosco Higher Institute, Maputo.

Another significant batch of construction works were begun in the year, namely:◊ Construction of concrete foundations for high voltage power lines for Electrotec, Maputo;◊ Expansion of the study building of the “ Golo” agency in Maputo;◊ Refurbishment of the top floors and facade of the headquarters building of Petromoc, Maputo;◊ Construction of the BCI agency in Xai-Xai;◊ Refurbishment of premises of the BCI agency in Av. do Trabalho, Maputo;◊ Refurbishment of premises of the BCI agency in Alto Maé, Maputo;◊ Construction of administrative block and classrooms of ISAP in Tchumene, Maputo;◊ Restoration of “ex-Almoxarifado da Casa do Artista” in Beira;◊ Construction of a teaching complex at the UEM - Eduardo Mondlane University (URBE) – Maputo.


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The above list of projects reveals the breadth and scope of the operations carried out by the company across the country.

Taking advantage of the installed capacity in Mozambique, the company is also working on a project for the construction of 11 kilometres of roads and two bridges in Swaziland, a project won at the end of 2012. In April 2013, work began and significant work has already been completed on the road, pillars and abutments of the main bridge at Siphofaneni.

At the end of 2013, Somafel began operations in Mozambique in the railway sector, providing services to level and align track using heavy equipment for a company in the same line of business in the north of the country. A branch of Clear was also set up, which began business during the year, and now has in its order backlog a contract for the “refurbishment of the new branch office of the Bank of Mozambique in Beira”.

United States

The Group’s business in the USA continued to be carried out in 2013 by Prince Contracting, L.L.C.. Based in Tampa, Florida, the company’s business is focused on road infrastructure projects in this state, while it also takes part in some similar projects in Georgia.

It is important to note that business in the United States, under the control of Soares da Costa Construção, SGPS, SA, as owner of the share capital of SDC America Inc which in turn is the shareholder of in Prince, only continued until the end of the third quarter of 2013, since the shareholding in Soares da Costa America, Inc was transferred to Grupo Soares da Costa, SGPS, SA at the end of September of that year.

In 2013, the following projects were concluded:

◊ US27 (SR25) x SR50 – design/build project in the area of Orlando with a contract value of 21 million dollars for the upgrade of a stretch of road and related bridges;

◊ New Tampa Boulevard Bridge – bridge on the interstate road 275, in the Tampa, Florida area with a contract value of 13 million dollars;

◊ North Cattlement Road – earthworks, landscaping and road building in an area surrounding a rowing complex near Sarasota, Florida, for a contract value of 22 million Dollars;

◊ I-75 from South of Pierce Ave. to North of Arkwright Dr. – widening of a stretch of 3.65 miles of the Interstate road I-75, including the reconstruction and upgrade of 7 bridges in the county of Macon, Georgia, with a contract value of 62 million Dollars.

Work continued on a number of ongoing projects during the year, the following being the most significant:

◊ I-595 Corridor Improvement Segments A and B (Express Toll Lanes) (Florida) – located in the Fort Lau-derdale area with a value of 104 million dollars, it involves the upgrade and reconstruction of a sec-tion of the toll motorway over 4.3 miles;

◊ I-75 Tampa – motorway widening between SR56 and Fowler Road (Florida), with a value of 95 million dollars, involving the reconstruction and widening of 11 miles of the I-75 interstate motorway in the Tampa area, including the building of 19 bridges. It has a time limit for completion of 1,500 days, but it is expected that the works will be completed in around 600 days less than this limit;

◊ I-75 SWFIA Airport Access – design/build contract, with a value of 54 million Dollars, involving the design and construction of a new direct link covering 8 miles between Interstate I-75 and the Interna-tional Airport of Southwest Florida (SWFIA) in Fort Myers.


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Brazil

Operations in Brazil in 2013 were mainly carried out through Linha 3 Construções Ltda, a company owned 50/50 by Soares da Costa Brasil Construções Ltda. and Gutierrez Empreendimentos e Participa-ções Ltda. Soares da Costa Brasil Construções, Ltda is wholly owned (indirectly) by the company to which this report relates.

The company above completed the project for Line 3 of the Cezarina Cement Factory in Goiás in August 2013, a line that produces 2,000 tons per day for Cimpor Brazil, begun in April 2012, with a contract value of 57.8 million Reais. The company is also taking part in a project for the extension of the airport building at the International Airport of Viracopos in Campinas, São Paulo, for the consortium construction com-pany Viracopos (CCP), which, following the start up of work at the end of 2012, has an expected comple-tion date of March 2014. There is potential for more construction work as part of the investment plan for the Viracopos Airport concession during the year 2014.

In addition to Soares da Costa Brasil Construções Ltda, Sociedade de Construções Soares da Costa, SA has registered a branch authorised to operate in the country through Ordinance number 12 of the 14th of June 2011 from the Ministry of Development, Industry and External Trade. By continuing to make important progress in response to the demands for technical qualifications in the announcements for Brazilian public tenders by registering new certificates for construction projects with the CREA, there are reasonable grounds to hope that the company can participate in construction contracts for state and union investment programmes already announced and arising from the needs for infrastructure development in Brazil.

The construction contract for 1,890 social housing dwellings and related urban infrastructure in the State of Ceará to a contract value of 84 million Reais, awarded to the branch office and with work fore-cast to start in March 2014, is awaiting approval by the Ceará State Government.

S. Tomé and Príncipe

In 2013, activity in the country was focused on the following three projects:

◊ Expansion of the headquarters building of the Banco Internacional de São Tomé e Príncipe, consisting of the construction of a building of 4 floors at the side of the existing one. The value of the contract is around 3 million Euros, and was completed in May.

◊ Upgrade of the National Road number 1, Phase 1, Coastal Protection. The project with a contract value of 6.6 million Euros runs between points PK 16+000 and PK 27+000 on the National Road 1 which links the town of São Tomé to Neves.

◊ Construction of a headquarters building for the Banco Central de São Tomé e Príncipe: a building of 4 floors with a gross construction area of 4,245.85 m2, for which a contract for around 6.5 million Euros was signed in January 2013. However, for reasons not connected to the contractor, it was only in the last quarter of the year that work began on the foundations, which, in view of the nature of the sub soil exposed, and considering the stability of the building, meant that project had to be revised with a view to strengthening the structure. It is expected that construction will begin in earnest in 2014.

Other International Markets

The international activity of Sociedade de Construções Soares da Costa, SA was mainly focused in 2013 on the markets specifically mentioned above because of their relative importance.

Nonetheless, the search for new opportunities has led to the execution of other construction projects in non core markets. One project that deserves mention is the project for the design and construction of interchanges between Muscat International Airport and the Muscat Expressway in the Sultanate of


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Oman. Awarded in 2012, the project is fully underway through an unincorporated joint venture (consor-tium) between Sociedade de Construções Soares da Costa, SA, and Oman United Engineering Services L.L.C., with completion planned during the first half of2014.

In Romania, the contract for the construction project “Constructia Variantei de Ocolire Tecuci”, the cus-tomer being the Romanian National Roads Authority (CNADNR - Compania Nationala de Autostrazi si Drumuri National din Romania S.A.) was unilaterally cancelled in October 2013. Against this background, there is no longer any production operation underway in the country and the company’s management have decided to discontinue operations here in view of the difficult and variable conditions, which are particularly difficult to manage.

In Costa Rica, the construction business, carried out by the subsidiary Sociedade de Construciones Cen-tro-Americanas, S.A., was set up to complement the concessions business of the Soares da Costa Group. With the San José–Caldera project completed and having disposed of the shareholding in the other con-cession (San José-San Ramón), the level of business in 2013 in the country was insignificant.

In Israel, the intervention of Soares da Costa Construção also came about via collaboration with the con-cessions business of the Soares da Costa Group concerning the Tel Aviv Metro project in which Sociedade de Construções Soares da Costa, S.A., has a shareholding of 30% in the construction consortium “Israel Metro Builders” (IMB). In 2014, the outcome of the international arbitration process is awaited over the dispute between the grantor – the State of Israel – and the concessionary for the project – Metropolitan Transportation Solutions (MTS).

3.3 COMMERCIAL AREA

Enough has been said in previous sections of the report about the depressed state of the construction market in PORTuGAL. This is reflected in the general scarcity of tenders, which has led to a degrada-tion of prices and also a reduced decision rate for those tenders launched. The modest size of current demand in Portugal does not therefore provide an adequate level of business for Portuguese construc-tion companies which have focused on international markets to sustain their future.

In fact, the main feature of the market in 2013 was a huge scarcity of investment in Portugal, which has led to a headlong rush by those construction companies without any international activity to offer such low prices in their struggle for survival that they have led to severely degraded levels of profitability. This situation has been aggravated by the ineffectiveness of the construction licensing system in Portugal which does not ensure the necessary qualitative differentiation, and by a certain leniency in relation to the effective implementation of management and support systems for smaller contractors. The current licensing system allows it to be acceptable that a “small” company can work without hardly any support structure whereas it demands that each of the “big” companies performs with an efficiency that inevita-bly leads to added costs, which in the current circumstances cannot be adequately reflected in prices. In previous sections of this report when describing the current economic situation, the hope was expres-sed that the market might improve in the coming years by re-establishing a minimum level of investment appropriate to the market. But this change would only yield results if it were accompanied by comple-mentary measures: in particular the set up at last of the much talked about but never implemented Class 10 licence, establishing strict rules but also quality guarantees, consistent in particular with the execu-tion of construction works of high technical complexity.

Because of this, throughout 2013 the commercial activity of the offices in Portugal of Sociedade de Construções Soares da Costa, SA was inevitably focused on international business.

Nonetheless, as a way of ensuring the future of the company’s business in Portugal, four contracts won in the domestic market are highlighted as follows:


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◊ Expansion of the Hotel da Ribeira in Porto for the Pestana Group;◊ Lisbon “Pousada” (Inn) in the Praça do Comércio for the Pestana Group;◊ Construction of an Industrial Building for Groz Beckert;◊ Beja Effluent Treatment Plant for Águas do Alentejo.

In AnGOLA, there was a lower budget execution rate in 2013 for investment in the public sector. The pri-vate sector was also subject to significant constraints, with an important number of projects, after ten-ders being launched and bids made, later being cancelled or suspended by the entities promoting them, awaiting for better opportunities to make their investments.

In particular, a sharp fall (around 25%) was evident in the market in Luanda and in the building cons-truction segment but also an increase in competition and a consequent fall in construction prices and margins.

The most significant construction project contracts won during 2013 were as follows:

◊ BESA Headquarters Building – Phase 2 – structure and special works;◊ Rainha Guinga Office and Commercial Project for Hightown Real Estate Investments;◊ Industrial premises construction project for SONILS;◊ Foundations and structure of Building B of the LUMEJ project for Prominvest;◊ Construction of headquarters building for the Empresa Nacional de Electricidade (ENE);◊ Construction of the Frederico Welwitsch building for commerce, offices and residences in Luanda; ◊ Second Movicel Data Centre Building in Talatona;◊ Construction of the Huambo Higher Polytechnic Institute for the Universidade Lusíada.

Also worthy of note are the projects won by the subsidiary Clear Angola, which posted a significant in-crease compared to the previous year in the various works in which it specialises, among which can be highlighted:◊ IBS (Intelligent Building Systems) for the Hotel Intercontinental in Luanda;◊ Hydraulics for the “Lisampere” building in South Luanda;◊ Electrical engineering for the “Masuika Office Plaza” building in South Luanda;◊ Air conditioning and hydraulics for the “Kaluanda” building in Luanda; ◊ Hydraulics, air conditioning and electrical engineering for the “Imprensa Nacional” building in Luanda;◊ New phase of upgrade to hydraulics, air conditioning and electrical engineering for the Presidente

Hotel in Luanda;◊ Hydraulics, air conditioning and electrical engineering for the “Maianga II” building in Luanda;◊ Hydraulics, air conditioning and electrical engineering for the “SPINES” in Benguela, Malange and Huambo;◊ Electrical engineering for the Cultural Centre building in Huambo;◊ Hydraulics and upgrade of the Trópico Hotel in Luanda;◊ Hydraulics, air conditioning and electrical engineering for the “Muxima Plaza” building in Luanda.

In MOZAMBIQuE, with an economy strongly stimulated by external investments in mineral resources (coal) and natural gas, various business opportunities have arisen, concerning which Soares da Costa has given due attention and has made great efforts to penetrate these niche opportunities, investing commercially in putting forward public tender offers or competing by invitation for business, with a view to expanding activity and increasing turnover in this emerging market.

During 2013, the following important construction projects were won:


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◊ Building of thirty rail bridges in the Nacala Corridor for CDN (a subsidiary of the Companhia Mineira Brasileira, Vale). The contract, signed in April 2013, was extended to cover another twelve bridges;

◊ The Drilling Campaign Civil Works project for Anadarko in the province of Cabo Delgado; it consists of a number of rural roads and platforms for the installation of gas drilling equipment. The project permits the company to have a builders’ yard in Cabo Delgado, from which it is hoped other projects can be run;

◊ Construction / Design of a New Building for the Ministry of Justice, Maputo;

◊ Construction of 50 residential buildings for the HCB in Vila do Songo, Tete;

◊ Construction of Teaching Complex at the UEM - Universidade Eduardo Mondlane (URBE), Maputo;

◊ Upgrade of the Headquarters Building of the Board of Directors of CFM, Maputo.

Improvements in the economic situation in the unITED STATES have already had some impact on winning business contracts by Prince during 2013.

The contracts won during the year, all in Florida and for the Department of Transport (FDOT) as customer, were the following:

◊ US27 Barry Road to US192 – design-build project in the counties of Polk and Lake, to a value of 22 million USD and completion in 2015;

◊ T7311 US301 – project for roads and bridges in the county of Hillsborough (Tampa area), to a value of 21 million USD and completion in 2015;

◊ T1541 SR544 Scenic Highway – upgrade of a stretch of road in the county of Polk, to a value of 8 million USD and completion in 2014;

◊ I-75 (North of CR54) Widening E7124 – design-build project in the county of Pasco to a value of 71 million USD and completion in 2016;

◊ T5469 SR50 Dean to Avalon – upgrade of a stretch of road in the counties of Orange and Brevard to a value of 68 million USD and completion in 2016.

It is important to note however that, in view of the company’s exit from the USA in the third quarter of 2013, this market is not included in the order book of construction projects or in the comparative figures for the year 2012.

In BRAZIL, commercial activity was carried out by two departments:◊ By the branch office, in the search for partnerships in public tenders to take advantage of its technical

qualifications based on technical expertise and knowledge, registered with the CREA in Brazil, as a company able to take part in national tenders (open to authorised foreign companies in Brazil), with a number of proposals having already been made in Ceará State;

◊ By the subsidiary company Linha 3 Construções Ltda, mainly aimed at industrial projects for private customers, various proposals having been made in response to invitations, coming, in particular, from the commercial efforts of the partner Gutierrez Empreendimentos e Participações, Ltda.

During 2013, only two important additional projects were contracted, one with the construction consortium Viracopos for the building of Pier B and also the project already mentioned for the construction of 1,890 low cost subsidised residences in Ceará State, which is awaiting the issue of a service order. The objectives defi-ned in terms of the order backlog for construction projects has not been achieved, despite the large number and value of proposals put forward.

Somafel and OFM in the railway and maritime segments respectively believe that this market has high poten-tial. There has therefore been an increase in the number of commercial proposals made and some business activity has already begun, with the hope that this can be extended in the near future to large scale contracts.


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Order Book

The order book of the company at the end of 2013 totalled 646.6 million Euros, of which 89.4% relate to construction works in markets abroad, as shown in the following table:

Order Book

(millions of Euros) Dec. 2013 % Dec. 2012 % Change

Portugal 646,614 100.0% 898,651 100.0% -28.0%

Angola 68,278 10.6% 210,276 23.4% -67.5%

Mozambique 368,166 56.9% 414,962 46.2% -11.3%

Costa Rica 128,605 19.9% 119,988 13.4% 7.2%

Brazil - - 42,519 4.7% -

Romania 26,546 4.1% 6,537 0.7% 306.1%

Other markets - - 11,029 1.2% -

TOTAL 55,019 8.5% 93,340 10.4% -41.1%

For reasons already explained in this report, Costa Rica, Romania and the USA no longer contributed to the order book as at the end of the year. Also the Lisbon Oriental Hospital project, which was included in the order book in 2012, was withdrawn. Excluding the impact of these projects, the fall in the backlog of orders was lower (-14.6%).

The significant fall in the domestic market, over and above the exclusion from the order book of the above mentioned project, was basically due to the completion in 2013 of the Transmontana Motorway project, with market conditions not allowing other projects to make up the shortfall.

3.4 HUMAN RESOURCES

In the Human Resources area, of particular importance was the process of resizing organisational struc-tures mainly those existing in Portugal, a process which was begun at the end of 2011, took place largely during 2012, and was completed during the first six months of 2013.

This process was carried out in a careful and systematic manner in compliance with current law, and fully compatible with the company’s principles of social responsibility that permeate the entire organisation across all of the company’s business activities. Although affecting principally Sociedade de Construções Soares da Costa, SA, the restructuring of human resources impacted other companies although to a lesser degree.

Preference was given to transferring staff to international projects whenever possible but the end result was a very significant reduction in the number of employees.


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Personnel Recruitment and Selection

With a view to taking full advantage of existing human resources in the organisation, internal recruitment was the strategic priority to solve any human resources needs identified during the year 2013.

Internal resources were mobilised mainly for international projects. 135 staff expatriation processes were worked on.

External recruitment was therefore not materially significant. The Human Resources Department carried out four external recruitment processes (one in Sociedade de Construções Soares da Costa and three in Clear).

Performance Evaluation

The evaluation of performance is a system that is already integrated into the organisational culture of the company so that, despite the organisational changes that took place in various areas, the different phases of the evaluation process were carried out during the year.

Training

A range of training courses were given in 2013, the highlights of which were:

◊ English ◊ At the beginning of 2013, two training courses in English were given and involved sending a teacher from Portugal to Luanda. The goal was to build communication skills in the language among the two groups of students, one from Clear Angola, and the other from Soares da Costa – Angola branch;

◊ Internal Training ◊ This has been a trend in training over the last few years in the organisation, and is explained not just because of the need to manage limited financial resources but also to take ad-vantage of internal knowledge and experience, since we have staff who are technically qualified and with developed teaching skills, as well as having important knowledge of the business, which is key for tailoring the training to employee needs. In 2013, this trend continued, in particular the organisation of training courses for MS Excel and SAP;

◊ Training in new Legislation/Regulations ◊ Adapting procedures and working practices to develop-ments in legislation is a priority for the organisation. In this area in 2013, training was given concer-ning the new legal Regime for Goods in Circulation;

◊ Post Graduate course in Soldering and Welding Engineering ◊ In order to prepare Sociedade de Construções Soares da Costa for compliance with the requirements of CE Marking, an investment was made in providing specialist training for an employee in welding and soldering through attendance at a post graduate course.

Internships

Putting into practice the group’s social responsibility policy, Sociedade de Construções Soares da Costa, SA organised six academic internships during 2013. Five internships were given in the General Technical Department and one in the Production Department. Through these internships, the students were able to build their knowledge in a working environment, in a process guided and supervised by highly quali-fied members of staff.

In its turn, Clear welcomed one academic internee in the Quality, Hygiene, Safety and Environment area.


◊29

Number of Employees

In 2013, the number of staff employed by companies consolidated using the integral method was 3,651 (compared to 4,621 a year earlier). It is important to note that this trend includes the impact of changes that took place in the consolidation perimeter, in particular companies in the USA and the entry of the Shared Services company. These factors accounted for a net fall of 368 employees (-432 in the USA and +64 in Shared Services).

The individual company had nine employees (three in the previous year).

In consolidated terms, Personnel Costs amounted to 110.8 million Euros, down 16.5% on the previous year (132.7 million Euros), of which staff lay off costs were 5.2 million Euros (compared to 10.0 million Euros in 2012).

4.1 INDIVIDUAL ACCOUNTS

In terms of the portfolio of shareholdings, the most relevant transaction was the transfer in the third quarter of the year of Soares da Costa America, Inc, leaving “Soares da Costa Construção”, to be directly controlled by Grupo Soares da Costa, SGPS, SA, while Soares da Costa Serviços Partilhados (Shared Ser-vices) became wholly owned by the company.

As a holding company, the individual income statement was dominated by the financial results which to-talled -42.3 million Euros (compared to -7.9 million Euros in 2012), with the main impacts arising from:

◊ loss on the transfer of the shareholding in Soares da Costa America, Inc amounting to 35.8 million Euros;

◊ the net cost of financing was -9.3 million Euros, a higher cost than that of 2012 (-6.2 million Euros) due to the increase in debt;

◊ booking of an impairment on financial investments of 0.9 million Euros for Coordenação & Soares da Costa, SGPS, SA;

◊ recognition of investment income from shareholdings of 3.7 million Euros for dividends (19.0 million Euros in 2012) from the following companies:

(amounts in thousands of Euros)

SuBSIDIARy 2013 2012

Sociedade de Construções Soares da Costa 0 9,600

Clear 3,168 6,220

Contacto-Sociedade de Construções * - 2,950

Soares da Costa Moçambique 490 228

Vortal 36 0

TOTAL 3,694 18,998

* Was merged into Sociedade de Construções Soares da Costa SA in 2012

ECONOMIC AND FINANCIAL ANALYSIS4


◊30

Operating results deteriorated compared to the previous year (-1.4 million Euros compared to -0.4 million Euros) as a result of the increase in Personnel Costs and Third Party Supplies and Services, in this case and as explained in Note 21 in the notes to the accounts, mainly related to consultancy and specia-lised work connected with the capitalisation operation.

The loss after taxes for the year amounted to -44.7 million Euros (-8.6 million Euros in 2012).

The main variances in the individual balance sheet as at 31 December 2013 were as follows:

◊ Financial investments fell from 274.4 million Euros to 247.1 million Euros due to the decisive influen-ce of the above mentioned exit of the USA holding company Soares da Costa America, Inc. Note 6 to the accounts gives details of this movement;

◊ In terms of working capital, there was a fall in group, associate and subsidiary company receivables which fell from 34.2 million Euros to 3.6 million Euros, while in current liabilities there was an increase in the equivalent account heading “Third party debts – Group, associated and subsidiary companies”, which grew from 166.1 million Euros to 224.4 million Euros. The main entity involved in these transac-tions was the subsidiary Sociedade de Construções Soares da Costa, SA;

◊ Shareholders’ equity as at the end of 2013 fell due to the impact of the net loss for the year of -44.7 million Euros and by the attribution of 63.1 million Euros to the shareholder as part of the share capi-tal reduction transaction described on page 7 of this report.

4.2 CONSOLIDATED ACCOUNTS

Although not legally obliged to publish consolidated accounts, in view of the fact that in 2013 the com-pany was wholly owned by Grupo Soares da Costa, SGPS, SA, which is responsible for their preparation and publication, the company has nonetheless opted to prepare consolidated accounts because of the pertinent and highly relevant information that they give in order to understand the progress and perfor-mance of the financial situation of the Group, made up of the company and its subsidiaries. It is therefo-re with reference to these consolidated accounts of Sociedade de Construções Soares da Costa, SGPS, SA, prepared according to the IAS/IFRS standards adopted by the European Union that we provide the following information and analysis:

Turnover

The table below shows the breakdown of consolidated turnover by geographical area:

(thousands of Euros) 2013 % 2012 % Change

Portugal 72,429 14.6% 173,608 24.4% -58.3%

Angola 230,028 46.3% 336,507 47.2% -31.6%

United States 84,156 16.9% 125,883 17.7% -33.1%

Mozambique 76,892 15.5% 55,928 7.8% 37.5%

Brazil 10,050 2.0% 10,248 1.4% -1.9%

Other markets 23,623 4.8% 10,365 1.5% 127.9%

TOTAL 497,178 100.0% 712,539 100.0% -30.2%


◊31

Consolidated turnover for the year 2013 totalled 497.2 million Euros, a fall of 30.2% compared to the previous year. The fall was more pronounced in Portugal where turnover was below half that posted in the previous year against a background of the recessionary environment in the sector already fully des-cribed in previous chapters of this report and a situation also linked to the completion of the Transmon-tana Motorway in 2013. In effect, this project contributed some 89.1 million Euros to turnover in 2012 while the figure in 2013 was only 26.4 million Euros.

Turnover in Angola fell significantly by 31.6%, the main factors, already explained in the Production chapter, being delays occurring in the start up and/or pace of execution of a number of major projects (upgrade of the Encostas da Boavista and Sambizanga projects, the Angola LNG residential project in Soyo and infrastructure and administrative buildings at the Fútila Industrial Centre in Cabinda).

In order to correctly understand the fall in turnover in the United States, it should be remembered that the subsidiaries in this market were only consolidated into Soares da Costa Construção, SGPS, SA, for the first nine months of the year after which they were no longer included in the consolidation perimeter.In Mozambique, the consistent and progressive growth in business activity over the last few years is no-teworthy, which in 2013 even surpassed turnover in Portugal.

Brazil maintained turnover at around about 10 million Euros, at about the same level as the previous year. In other markets of the Group abroad, highlights were Oman (9.7 million Euros), São Tomé &Prín-cipe (4.0 million Euros), other African countries (3.1 million Euros) and in Venezuela in the railway and maritime sector (8.3 million Euros).

Results

For a better analysis of the results, there now follows a table of the main accounting lines, suitably aggre-gated, for the results of the accounting year 2013 with a comparison to the figures of the previous year:

(thousands of Euros) 2013 % OGI 2012 % OGI Change

Turnover 497,178 99.7% 712,539 101.4% -30.2%

Change in Stocks -5,676 -1.1% -17,928 -2.6% -68.3%

Other Operational Income* 7,414 1.5% 8,338 1.2% -11.1%

Operating Gains and Income (OGI) 498,916 100.0% 702,949 100.0% -29.0%

Cost of Goods Sold and Materials Consumed 117,485 23.5% 145,849 20.7% -19.4%

External Supplies and Services 263,746 52.9% 368,296 52.4% -28.4%

Staff Costs 110,819 22.2% 132,683 18.9% -16.5%

Other Operating Costs 20,288 4.1% 27,120 3.8% -25.2%

EBITDA -13,423 -2.7% 29,001 4.1% -

Amortisations, Provisions and Adjustments. (net of reversals)

46,817 9.4% 36,998 5.3% 26.5%

Operating Profit/ Loss (EBIT) -60,240 -12.1% -7,997 -1.1% -

Financial Charges -1,089 -0.2% -41,851 -6.0% -

Profit/ Loss before Tax -61,329 -12.3% -49,847 -7.1% -

Income Tax -1,282 -0.3% 12,812 1.8% -

Consolidated Profit/ Loss for the period -62,611 - -37,036 -5.3% -

Profit/ Loss attributable to the Group -63,056 - -37,763 -5.4% -

* No reversal of adjustments below this account heading


◊32

There were falls of 30.2% in turnover and of 29.0% in operating gains and income, while the sum of the account lines cost of goods sold and external supplies and FSE fell less sharply (-25.8%). Also staff costs, although impacted by staff lay off costs (which amounted to 5.5 million Euros in 2013, compared to 10.0 million Euros in the previous year), fell less than proportionately (-16.5%), indicating some underutilisation of this factor of production rather than its inflexibility, by increasing its weight as a percentage of operating gains from 18.9% to 22.2%.

In effect, in general terms and given the size and structure of the Group, it can be seen that the level of business activity was below the limit needed to yield adequate profitability. Together with a number of circumstances that occurred in specific countries and already mentioned above, it is also important to point out the constraints that existed financially during the year and which obviously had a negative impact on the effectiveness of operational and commercial activity.

Impairment losses, namely in relation to third party debts resulting from deteriorating credit collection conditions and an increase in litigation, as well as the set up of provisions reflecting a more conserva-tive posture, also significantly impacted financial performance by increasing Amortisations, Provisions and Adjustments (net of reversals) to an amount (46.8 million Euros), well in excess of the figure for the previous year (37.0 million Euros) and making up a greater percentage of operating gains (9.4% in 2013 compared to 5.3% % in 2012).

The operating loss was thus 60.2 million Euros (a loss of 8.0 million Euros in 2012).

It is important to point out that the performance of Sociedade de Construções Soares da Costa, SA weighs heavily on the consolidated figures. This company continues to have the most important impact on the Group and posted an operating loss of -62.5 million Euros in its individual financial statements.In turn, the consolidated financial result improved substantially from -41.8 million Euros in 2012 to -1.1 million Euros in 2013.

Specific reference should be made in this context of factors that had a decisive impact on the result for 2013 and which were of an exceptional nature. Thus, the process of restructuring the financial debt led to financial gains and income of 59.0 million Euros. In turn and in the opposite direction, the transfer of Soares da Costa America Inc resulted in capital losses, shown in the income statement in “Other financial losses”, totalling 18.7 million Euros.

Exchange rate differences had a negative impact on financial results of -2.0 million Euros (-1.4 million Euros in 2012).

The combination of these operational and financial components, together with income tax, generated a consolidated loss for the period of -62.6 million Euros, of which a loss of -63.1 million was attributable to the Group (-37.8 million Euros in 2012) and the remainder to minority interests.

Balance Sheet: Assets

Changes in the consolidation perimeter had a relevant impact on the consolidated balance sheet, the highlight being the exit of companies operating in the USA and of Carta Angola, while on the other hand Soares da Costa Serviços Partilhados (Shared Services) became part of the perimeter.

Over and above these facts, a general fall in balance sheet values occurred as a consequence of the re-duction in business activity.

The exit of companies in the USA is responsible for the movement in the balance sheet account headings goodwill and deferred tax assets. These contributed 11.7 million Euros to tangible fixed assets in 2012, which at the end of 2013 no longer existed.


◊33

In terms of current assets, there was a general fall in inventories, receivables, other current assets and also in “cash and cash equivalents”, mainly reflecting similar falls that occurred in the main subsidiary company Sociedade de Construções Soares da Costa, SA.

A special note should be made of “Other third party debts” which fell substantially from 98.1 million Euros to 19.3 million Euros, in respect of debts settled by companies of the Soares da Costa Group but outside the consolidation perimeter of Soares da Costa Construção.

Shareholders’ Equity

Shareholders’ equity as at 31 December 2013 totalled 11.4 million Euros compared to 139.7 million at the end of 2012. It was affected by the negative results for the year as well as by the operation to reduce share capital which is referred to in another section of this report (See the chapter “Share capital and Shareholders”). It is important to point out that the share capital increase through a cash injection of 70 million Euros by the new investor GAM Holdings took place in 2014 and was not yet reflected in the 2013 balance sheet.

Liabil it ies

There was also a substantial overall fall in liabilities (-117.8 million Euros), more in noncurrent liabilities (-85.1 million Euros) than in current liabilities (-32.7 million Euros).

The framework agreement to restructure bank borrowings had an important influence on the level of bank loans shown in the balance sheet.

In contrast to the general tendency for falls in the various account headings, the increase in provisions from 0.8 million Euros to 9.1 million Euros should be noted, which is the result of an increase in provi-sions made during the year to cover general operational risks (guarantees and other contractual res-ponsibilities).

Consolidated net debt at the end of 2013 amounted to 330.7 million Euros (342.2 million Euros as at 31.12.2012).

Individual Performance of Subsidiaries

In order to complement the analysis above, a summary of the key indicators for the consolidated com-panies is given below, which covers turnover, EBITDA, EBIT, financial results and net results, and breaks down the consolidated results by subsidiary.


◊34

SuBSIDIARy (Euros) Turnover EBITDA EBITFinancial

resultsnet earnings

Soc. Construções Soares da Costa, SA (a) 346.530.139 -21.502.491 -62.501.402 32.147.089 -31.890.614

Soares da Costa América, Inc. 218.445 -606.514 -606.514 -2.659.313 -1.619.906

Prince Contracting, LLC 84.155.002 1.935.564 177.540 -154.586 22.953

Soares da Costa Construction Services, LLC 0 -216.382 -216.382 -503.230 -719.613

Soares da Costa Contractor, INC 19.465 -329.739 -330.964 -6.604 -337.568

Porto Construction Group, LLC 0 -5.265 -5.265 0 -5.265

Consolidation eliminations USA -237.829 0 0 0 0

united States (b) 84.155.083 777.664 -981.585 -3.323.734 -2.659.399

CLEAR - Instalações Electromecânicas, S.A. 9.088.060 -1.279.231 -2.712.949 -46.928 -2.649.486

CLEAR ANGOLA, Lda. 35.207.418 8.720.021 7.893.542 -2.104.469 5.789.073

Consolidation eliminations Clear/Clear Angola -2.869.513 3.842 3.842 0 -335.099

Clear + Clear Angola 41.425.965 7.444.632 5.184.435 -2.151.397 2.804.488

Soares da Costa Moçambique, SARL 25.595.893 1.661.279 1.269.121 -258.320 530.848

OFM - Obras Públicas, Ferrov. e Marítimas, S.A. 9.888.821 472.472 97.535 -176.367 -113.399

Linha 3 Construções LTDA. 9.257.851 161.443 155.109 -6.498 102.444

Soares da Costa S. T. Principe Construções, Lda. 3.596.732 239.871 139.575 -129.098 10.477

SOMAFEL – Eng. e Obras Ferroviárias, S.A., SA 2.797.451 -1.041.821 -2.068.675 -150.064 -1.910.045

Carta - Restauração e Serviços, Lda. (c) 1.794.147 22.762 -83.854 -20.978 -104.831

Soares da Costa Serviços Partilhados, S.A. (d) 1.002.285 416.696 282.578 4.426 169.978

SDC Construção SGPS, SA 732.494 -1.435.496 -1.435.637 -42.280.820 -44.675.717

Soares da Costa Brasil - Construções Ltda. 594.663 -373.828 -375.424 48.635 -326.789

Somafel - Obras Ferroviárias e Marítimas Ltda. 455.523 5.257 -67.333 -50.295 -76.091

Terceira Onda Planej. e Desenvolvimento Ltda. 39.160 113.439 113.439 -37.061 59.344

Other subsidiaries 0 -384.938 -416.256 907.175 290.101

Consolidation eliminations -30.687.952 153 448.502 14.388.459 14.733.484

OvERALL TOTAL COnSTRuCTIOn 497.178.255 -13.422.906 -60.239.873 -1.088.848 -63.055,720

(a) Includes the group’s shareholding in ACEs(b) Disposed of (figures for 9 months of activity)(c) Disposed of (figures for 4 months of activity)(d) Acquired (figures for 2 months of activity)


◊35

Soares da Costa Construção, SGPS, SA, as the company responsible for the management and develop-ment of the construction business, carries out its business activity managing the shareholdings in the various companies, executing civil construction, engineering and infrastructure projects.

The companies, which make up the shareholdings of Soares da Costa Construção, SGPS, SA, as shown in the various documents of this Report and Accounts, carry out their business in various countries. In this context, the companies are obviously exposed to a range of risks.

From an organisational standpoint, a risk management and analysis department, providing skills and competence across the Group, operates as part of the Group’s corporate centre. Its goal is to ensure the efficiency and effectiveness of the Group’s operations, protect its assets, the reliability of financial in-formation and ensure compliance with standards and laws.

Risk analysis is carried out by various Group corporate departments. Work is done on the prior identification and prioritisation of risks classified as being the most critical (determined by a combination of the probability of occurrence and potential impact and shown on a risk matrix), and Risk Management strategies are defined with a view to implementing control procedures that reduce risks to an acceptable level. In this respect, the Group has implemented control activities that help mitigate the risks. The goal is to maximise the trade off between risks and business margins in order to achieve the strategic objectives of the Group in a sustained manner.

The matrix is built up from the general guidelines of the strategic plan currently in force, the goals that have been set, the kind of business activity carried out and the countries that are the preferred loca-tions for doing business under stable conditions. Then, following these overall guidelines, a number of parameters are defined that guide the strategic objectives of risk taking and determine the monitoring needed to check that the risks effectively taken conform to those objectives.

In order to appreciate and later monitor the situation through its internal organisation, the different management areas of the Group (Business Development, Financial Department, Management Control, Human Resources, Legal Services, etc.) identify and evaluate the risks that their decisions, which they take in their various specialist areas of competence and intervention, involve and suggest measures to anticipate and minimise them. Based on this analysis, and monitored critically by the central risk mana-gement department, decisions are taken concerning the business, country or project under considera-tion, namely as to whether to accept and sign a contract and the relevant contractual conditions.

The risk analysis and management system is an interactive process that covers all phases of a pro-ject from initial data and information gathering at the times of sales prospecting through to the post mortem phase, when all the responsibilities related to the project have ceased to exist. Some broader key decision making milestones are of course set, both to evaluate the potential risks and how the manner of dealing with them is compatible with the strategic profile defined, and to check if the control mechanisms and procedures are being observed and if they are satisfactory. To manage them satisfac-torily, detailed information procedures are set up with content that is appropriate for each phase, which will permit timely follow up of the various changes, and prompt action when problems arise. The entire process is open to suggestions for revision and improvement that any organisation puts forward and is subject to periodic reflection and evaluation both by support services and operational areas.

At the same time, internal audits are carried out from time to time on the main operational activities of the various companies of the Group by the Internal Audit Department, a unit that is part of the Group’s corporate centre, the goal of which is to improve the efficiency of internal controls and related business processes. Thus, the intention is to monitor risks in each of the operations, implement appropriate means to mitigate the risks detected and follow up on the manner in which they develop.

RISK MANAGEMENT 5


◊36

In view of the situation in the construction sector in Portugal, it is not expected that the still fragile signs of recovery in the economy will result in a recovery in activity levels in 2014. Indeed, with the completion in 2013 of the Transmontana motorway, it is likely that activity in Portugal will fall further in 2014.

On the other hand, a significant recovery and increase in business is expected in Angola in 2014, while in Mozambique the good market conditions of 2013 are forecast to continue.

With conditions already created at the start of 2014 to strengthen the financial capacity of the company, which are essential to resolve the major constraints on carrying out business that have weighed heavily recently on the performance of the company, the management team is convinced that a substantial and important recovery in EBITDA margin can be achieved.

On the 12nd of February 2014, a transaction took place to increase share capital via a cash injection of seventy million Euros, subscribed and fully paid up by GAM Holdings, a company incorporated in Luxem-burg and controlled by Mr António Mosquito, as a result of which it held 66.7% of the share capital of the Company with Grupo Soares da Costa, SGPS, SA owning the remaining 33.3%.

On the same date, it was decided to change the composition of the board of directors under the terms already referred to in this report.

OUTLOOK FOR 2014

RELEVANT FACTS OCCURING AFTER THE YEAR END

6

7

Debts to the State and the Social Security

As of the date of the balance sheet, the company had no debts outstanding payable to the Portuguese state either for taxes or for Social Security contributions.

Business with the company

During the year, no business dealings worthy of note between the company and its Board Directors were recorded.

OTHER LEGAL INFORMATION 8


◊37

To end this report on the business activity carried out during 2013, the board of directors takes this oppor-tunity of thanking all public and private entities, which directly and indirectly have supported and worked with the Company. It is pleasing to note, given the difficult situation, the confidence and trust that has been placed in us by customers, suppliers and other business partners, in particular financial institutions.

We also offer our thanks to members of other corporate bodies of the company, as well as the auditors, for the exemplary and rigorous manner in which they have carried out their duties.

Finally, fully worthy of recognition are the spirit of professionalism and sense of duty of our employees, upon whose efforts and dedication the company has and will continue to depend to overcome the deman-ding challenges that the Company has faced, and to follow the essential road towards creating value.

ACKNOWLEDGEMENTS9

The board of directors of Soares da Costa Construção, SGPS, SA, taking into account the attached finan-cial statements for the year ended 31 December 2013, propose to the shareholders in accordance with paragraph f) of article 66 of the Commercial Companies Code, that the residual part of the net individual loss of the company totalling 44,675,717.12 Euros for the year, amounting to 5,691,785.77 Euros (given that the amount of 38,983,932.35 Euros for the loss for the nine months to 30 September 2013 was ab-sorbed by a reduction in share capital decided upon on the 28th of November 2013), be transferred to retained earnings.

Porto, 22 April 2014

The board of directors,

António Mosquito, António Sarmento Gomes Mota, António Manuel Pereira Caldas de Castro Henriques, Jorge Domingues Grade Mendes, Miguel Nuno André Raposo Alves, Paulo Manuel da Conceição Marques, Roberto António Pereira Pisoeiro

PROPOSAL FOR APPLICATION OF RESULTS 10

INDIVIDUALFINANCIAL STATEMENTS

B

International Bank of São Tomé & Príncipe São Tomé & Príncipe


◊39

Individual Financial Position Statement in December 31, 2013 and December 31, 2012

(Euros)

ASSETS notes 31.12.2013 31.12.2012

Fixed tangible assets:

Administrative equipment 5 827 240

827 240

Financial investments:

Capital participations in subsidiaries 6,7 and 17 213,640,713 212,798,628

Loans granted to subsidiaries 6 and 17 6,346,754 34,346,697

Capital participations in associated companies 6 and 7 24,097,414 24,191,790

Loans granted to associated companies 6 29,187 29,187

Other financial investments 6 and 7 3,014,825 3,014,810

247,128,894 274,381,112

TOTAL nOn CuRREnT ASSETS 247,129,721 274,381,352

CURRENT

Accounts receivable:

Customers 8 and 9 903,303 76,760

State and other public entities 9 22 0

Group, associated and participated companies 8 and 9 3,617,197 34,233,068

Other accounts receivable 8 and 9 9,761,425 969,575

14,281,948 35,279,403

Other current assets 10 2,229 496

Cash and equivalents 11 5,886 51,496

TOTAL CuRREnT ASSETS 14,290,064 35,331,395

TOTAL ASSETS 261,419,784 309,712,747


◊40

Individual Financial Position Statement in December 31, 2013 and December 31, 2012

(Euros)

SHAREHOLDERS' EQuITy AnD LIABILITIES notes 31.12.2013 31.12.2012

Capital 12 20,335,895 131,080,340

Issue premiums 12,926,618 12,926,618

Legal reserves 2,729,271 2,729,271

Other reserves 3,936,111 -

Retained earnings - 3,840,132

Net earnings (5,691,785) (8,600,644)

TOTAL SHAREHOLDERS' EQuITy 34,236,111 141,975,718

LIABILITIES

CURRENT

Loans:

Bank loans 14 1,563 75,925

1,563 75,925

Accounts payable:

Suppliers 948,706 90,113

State and other public entities 15 115,614 30,967

Group, associated and participated companies 8 and 15 224,450,125 166,132,164

Other accounts payable 8 and 15 1,439,680 1,374,835

226,954,126 167,628,079

Other current assets 16 227,985 33,026

TOTAL CuRREnT LIABILITIES 227,183,673 167,737,030

TOTAL LIABILITIES 227,183,673 167,737,030

TOTAL SHAREHOLDERS' EQuITy AnD LIABILITIES 261,419,784 309,712,747


◊41

Separate Individual Income Statement in for the Period Ending in December 31, 2013 and December 31, 2012

(Euros)

InCOME STATEMEnT notes 2013 2012

Turnover 18 732,494 228,000

Other operational income and gains

Other operational income and gains 19 5,280 149,639

Operational income and gains 737,774 377,639

External supplies and services 21 (1,013,014) (130,462)

Staff costs 20 (1,004,638) (536,954)

Depreciation, amortisation and impairment lossses 5 (141) (80)

Other operational costs and losses:

Taxes (20,417) (14,305)

Other costs and losses 19 (135,200) (67,081)

Operational costs and losses (2,173,411) (748,882)

Operational result from the continued activities (1,435,637) (371,243)

Net financing cost:

Interest received 22 1,265,880 7,762,004

Interest paid 22 (10,533,118) (13,998,795)

(9,267,238) (6,236,790)

Other financial gains and costs:

Other financial gains 22 1,129,389 658,574

Income from capital participations 22 3,693,828 18,998,413

Other financial costs 22 (37,836,799) (21,265,021)

(33,013,582) (1,608,034)

Financial results 22 (42,280,820) (7,844,824)

Earnings before taxes (43,716,457) (8,216,068)

Income tax 23 (959,260) (384,577)

net earnings (44,675,717) (8,600,644)

Earnings per share of the continued activities: 24

Basic (1,704) (0,328)

Diluted (1,704) (0,328)

Earnings per share:

Basic - -

Diluted - -


◊42

Statement of Individual Comprehensive Income for the Period Ending in December 31, 2013and December 31, 2012

(Euros)

notes 31.12.2013 31.12.2012

Net earnings (44,675,717) (8,600,644)

Other comprehensive income

Exchange difference stemming from transposition of financial statements expressed in foreign currencies

- -

Change on fair value of derivatives - -

Change on deferred taxes of derivatives - -

Other variations - -

TOTAL COMPREHEnSIvE InCOME FOR THE PERIOD (44,675,717) (8,600,644)

Statement of Changes in Equity for the Period Ending in December 31, 2013 and December 31, 2012

(Euros)

notes Equity capitalLegal

reservesRetained earnings

Other reserves

Issue premiums

net earnings Total equity

Account balance as of 1.1.2013 12 131,080,340 2,729,271 3,840,132 - 12,926,618 (8,600,644) 141,975,718

Appropriation of net earnings - - (8,600,644) - - 8,600,644 -

Reduction of share capital (67,000,000) - - 3,936,111 - - (63,063,889)

Reduction of share capital to cover losses (43,744,445) - 4,760,512 - - 38,983,932 -

Integrated earnings - - - - - (44,675,717) (44,675,717)

ACCOunT BALAnCE AS OF 31.12.2013 20,335,895 2,729,271 - 3,936,111 12,926,618 (5,691,785) 34,236,111

Equity capitalLegal

reservesRetained earnings

Other reserves

Issue premiums

net earnings Total equity

Account balance as of 1.1.2012 131,080,340 2,522,794 3,217,065 - 12,926,618 4,129,545 153,876,362

Appropriation of net earnings - 206,477 623,067 - - (4,129,545) (3,300,000)

Integrated earnings - - - - - (8,600,644) (8,600,644)

ACCOunT BALAnCE AS OF 31.12.2013 131,080,340 2,729,271 3,840,132 - 12,926,618 (8,600,644) 141,975,718


◊43

Individual Cash Flow Statement for the Period Ending in December 31, 2013 and December 31, 2012

(Euros)

2013 2012

Operating activities:

Receipts from customers 287,090 381,280

Payments to suppliers (177,279) (106,816)

Payments to staff (552,573) (421,808)

(442,762) (147,345)

Payments/ receipts of income tax 237,782 1,814,613

Other payments/ receipts related with oper.activities (14,801,730) (5,110,470)

(14,563,948) (3,295,857)

CASH FLOW FROM InvESTMEnT ACTIvITIES (15,006,710) (3,443,201)

Investment activities:

Receipts from:

Loans granted to Group companies 194,281,942 21,043,959

Dividends 0 194,281,942 18,770,000 39,813,959

Payments related with

Loans granted to Group companies 90,108,480 127,766,978

Fixed tangible assets - -

Intangible assets 0 90,108,480 0 127,766,978

CASH FLOW FROM InvESTMEnT ACTIvITIES 104,173,462 (87,953,018)

Financing activities:

Receipts from:

Loans 390,024,635 207,760,659

Interest received 313,744 390,338,379 12,584 207,773,243

Payments related with:

Loans 477,178,141 110,917,091

Dividends 0 3,300,000

Interest paid 2,372,700 479,550,841 2,114,690 116,331,781

CASH FLOW FROM FInAnCInG ACTIvITIES (89,212,462) 91,441,462

Change in cash and cash equivalents (45,710) 45,242

Effect of foreign exchange differences 101 99

Cash and cash equivalents at the beginning of the period 51,495 6,155

Cash and cash equivalents at the end of the period 5,886 51,496

INDIVIDUAL ACCOUNTING POLICIES AND EXPLANATORY

NOTES

C

Maputo Administrative Court Mozambique


◊45

Individual Accounting Policies and Explanatory Notes as at 31 December 2013

1. InTRODuCTORy nOTE

Identification information:

◊ Company Name: Soares da Costa Construção, SGPS, SA;

◊ Registered at the Porto Conservatory Office with the tax number: 505 906 490

◊ Head Office: Rua de Santos Pousada, 220 – 4000 - 478 PORTO

◊ Corporate Object: Management of shareholdings in other companies as an indirect manner of car-rying out business activities

◊ Name of holding company: Grupo Soares da Costa, SGPS, SA.

◊ Head Office of holding company: Rua de Santos Pousada, 220 – 4000 – 478 Porto

On the 12th of February 2014, the company became owned 66.7% by GAM Holding and 33.3% by Grupo Soares da Costa, SGPS, SA, as explained in note 27.

The figures referred to in the notes are shown in Euros.

2. ACCOunTInG STAnDARDS uSED In THE PREPARATIOn OF THE FInAnCIAL STATEMEnTS

The company is part of a consolidation group whose parent company, Grupo Soares da Costa, SGPS, SA, has prepared consolidated accounts since 2004 in accordance with the International Financial Reporting Standards (IAS/IFRS) as adopted by the European Union.

Therefore, under the provisions of section 1 of article 4 of decree law 158/2009 of the 13th of July, it has opted to prepare its individual financial statements in accordance with these international standards.

3. MAIn ACCOunTInG POLICIES

The main accounting policies used in the preparation of the financial statements were as follows:

3.1 PRESEnTATIOn BASIS

The financial statements have been prepared on a going concern basis from the books of account and accounting records of the company, which are in compliance with the International Financial Reporting Standards as adopted by the European Union.

To prepare the annexed financial statements, estimates were used which affect the figures reported for assets and liabilities, as well as those for income and expenses reported during the accounting period. All estimates and assumptions made by the board of directors were based on the best information available about the ongoing events and transactions at the date the financial statements were approved.

The company’s board of directors believes that the attached financial statements and notes give a true and fair view of the financial information.

3.2 TAnGIBLE FIXED ASSETS

Tangible fixed assets have been booked at acquisition cost or at a revalued acquisition cost after deduc-tion of accumulated depreciation and impairment losses.

Depreciation is calculated using the straight line method and on a monthly basis, in accordance with the following estimated service life:


◊46

SERvICE LIFE

Buildings 8-100

Administrative equipment 4-8

Other tangible assets 3-10

Tangible fixed assets in progress at registered at acquisition or production cost, less any possible im-pairment losses.

Capital gains or losses resulting from the sale or disposal of tangible fixed assets are calculated by taking the difference between the sales price and the net accounting value at the time of the sale/dispo-sal, and are booked in the Income Statement as “other income and gains” or “other costs and losses”.

3.3 FInAnCIAL ASSETS AnD LIABILITIES

a) Financial Investments

Financial investments are recognized on the date when the risks and rewards inherent to them are substantially transferred. They are initially registered at acquisition cost, which is the fair value of the consideration paid for them, including transaction costs.

An evaluation of any investment is made when there are signs that the value of the asset might be subject to impairment losses. Any impairment losses found are registered as costs in the profit and loss statement.

Financial investments are classified as investments held until maturity and investments evaluated at fair value through results.

Following the initial booking, investments stated at fair value through results are reevaluated at their fair value, without deducting any transaction expenses that might have been incurred on the sale. Investments in equity instruments not listed in regulated financial markets, and for which fair value cannot be reliably estimated, are accounted for at acquisition cost from which are deducted possible impairment losses.

Financial investments in both group and associated companies are registered at acquisition cost less impairment losses, if applicable.

b) Accounts receivable

Accounts receivable are registered at their nominal value minus any impairment losses, recognised under “Impairment losses” in accounts receivable, so that they reflect the realisable net value.

c) Loans

Loans are registered as liabilities at their depreciated cost value (using the effective interest rate method). The costs associated with the issue of such loans are recorded as a deduction from debt and recognized over the life of the loan, in accordance with the effective interest rate method.

Financial costs of interest and similar costs (namely stamp duty), are registered in the Income State-ment in accordance with the accrual principle, with any amounts due and not paid at the date of the Balance Sheet being classified under “Other current liabilities”.

d) Accounts Payable

Accounts payable are registered at their nominal value. Usually interest is not payable on these accounts payable.


◊47

e) Cash and cash equivalents

The amounts included under “Cash and equivalents” correspond to cash, bank deposits and term depo-sits and other short term treasury applications.

3.4 FInAnCIAL CHARGES On BORROWInGS

Financial charges connected with borrowings are generally recognised as an expense in accordance with the accrual principle.

3.5 InCOME TAX

Current income tax is calculated based on taxable profits in accordance with existing taxation rules.

Deferred taxes refer to temporary differences between the values of assets and liabilities for accoun-ting reporting purposes and those for tax purposes.

Deferred tax assets and liabilities are calculated and annually assessed using the tax rates expected to be in force on the date temporary differences are reversed.

Deferred taxes assets are registered when there are reasonable prospects of sufficient taxable inco-me being available for them to be used. At the date of each balance sheet, the temporary differences underlying assets for deferred taxes are re-assessed in order to recognise assets for deferred taxes not previously registered because they failed to meet the conditions for registration and/ or to reduce their amount according to current expectations of future recovery.

Deferred taxes are registered as an expense or income of the period, except if they came from amounts registered directly in equity, in which case deferred tax is also registered under the same accounting heading.

3.6 BALAnCE SHEET PRESEnTATIOn

Assets realisable and liabilities due in over one year from the date of the balance sheet are shown res-pectively as noncurrent assets and liabilities.

3.7 RECOGnITIOn OF InCOME AnD EXPEnSES

Financial income from delayed payment by custo¬mers is accounted for when significant evidence exists that it can be collected.

Dividends are accounted for as income in the financial year that they are attributed.

The company accounts for its income and expenses on an accrual basis: income and expenses are recog-nised when generated, regardless of the time when they are received or paid. The differences between the amounts received and paid and the corresponding income and expenses generated are registered under “Other current assets” or “Other current liabilities”, depending on the nature of the difference.

3.8 BALAnCES AnD TRAnSACTIOnS In FOREIGn CuRREnCy

Foreign currency transactions (non-Euro) are regis¬tered at the exchange rates in force at the time of each transaction.

On each balance sheet date, monetary assets and liabilities expressed in foreign currency are converted to Euros using the rates in force at that time.

Exchange differences, both favourable and unfavourable, due to discrepancies between the exchange rates in force at the time of the transaction and those in force when payments were made or received, or as at the date of the balance sheet, are registered as “Other financial gains and losses” in the Income Statement for the year.

The rates used for conversion into Euros included in the Balance Sheet were as follows:


◊48

Average foreign exchange rate:

31.12.13 31.12.12

US Dollar EUR/USD 1.3791 1.3194

British Pound EUR/GBP 0.8337 0.8161

S. Tomé & Príncipe Dobra EUR/STD 24,500,00 24,500,00

Angolan Kwanza EUR/AOA 134.51 126.37

3.9 ASSET IMPAIRMEnT

An assessment of impairment is made at the date of each balance sheet, and whenever an event or chan-ge in circumstances indicates that the amount registered for the asset may not be recovered.

Whenever the asset value registered is higher than its recove¬rable value, an impairment loss is recog-nised, which is registered in the Profit and Loss Statement.

Reversal of impairment losses recognised in pre¬vious years is recorded when there are indications that the recognised impairment losses no longer exist or are smaller. The reversal of impairment losses is stated in the Profit and Loss Statement as operating income.

3.10 COnTInGEnT ASSETS AnD LIABILITIES

Contingent liabilities are not recognised in the Finan¬cial Statements, but are disclosed in the Explanatory Notes to the accounts, unless the possibility of an outflow of resources is remote.

Contingent assets are not recognised in the Financial Statements, but are disclosed in the Explanatory Notes to the accounts, when the possibility of a future economic inflow exists.

3.11 SuBSEQuEnT EvEnTS

Events occurring after the balance sheet date, which provide additional information about conditions existing at that date, are reflected in the financial statements. Events subsequent to the reporting date which provide information on conditions occur¬ring after that date, if material, are disclosed in the Financial Statements.

3.12 InFORMATIOn By SEGMEnTS

For each accounting period, the geographical areas applicable to the company are identified. Detailed information is shown in Note 18.

3.13 RISK MAnAGEMEnT

In carrying out its business, the company is exposed to a variety of risks: market risk (including exchange rate and interest rate risk as well as price risk), credit risk and liquidity risk. The global risk management program focuses on the unpredictability of the financial markets and seeks to minimize its adverse effects on the company’s financial performance.

Exposure to credit risk results from accounts receivables related to normal commercial activity, the maxi-mum exposure to credit risk being the nominal value of these receivables

4. RELATED PARTIES

The terms and conditions used for transactions between group and associated companies are substan-tially the same as those normally contracted between independent entities in comparable operations.


◊49

The balances and transactions between group and associate companies are shown in the tables below:

ACCOunT BALAnCES AS OF 31.12.2013Customers

- current account

Loans to Group and

associated companies

SuppliersOthers

debtords and creditors

Borrowings from

Group and associated companies

Special regime for corporate

taxation and dividends

receivable

CLEAR - Instalações Electromecânicas, SA - - - 2,478,443 93,048 3,168,150

CLEAR ANGOLA, SA - - - (94,556) 301,318 -

Carta, Lda - - - (810,708) - -

Grupo Soares da Costa SGPS 833,193 - 741 (222,994) - 360,518

Soares da Costa América, Inc - 77,285 - - - -

Soares da Costa Serviços Partilhados, SA - - 22,140 235,130 581,556 -

Soares da Costa Construc.Centro Americanas,SA - - - 718,461 - -

Soares da Costa Moçambique, SARL - 11,244 - 191,972 - -

Soares da Costa S. Tomé e Principe - Construções, Lda - - 31,022 - -

Soc. Construções Soares da Costa, SA - - 1,154 6,139,451 223,775,522 -

SOMAFEL - Engenharia e Obras Ferroviárias, SA, SA 70,110 - - - - -

TOTAL 903,303 88,529 24,034 8,666,220 224,751,443 3,528,668

TRAnSACTIOnS In 2013 External supplies and services

Sales and services

Other operational gains and losses

net financing cost

Other financial gains and losses

Carta - Restauração e Serviços, Lda - - - (10,107) -

CLEAR - Instalações Electromecânicas, SA - - - 147,366 -

Coordenação & Soares da Costa, SGPS Lda - - - (4,030) -

Grupo Soares da Costa SGPS 26,732 504,494 (32,641) 1,495,847 102,310

SDC América, Inc. - - - (372,307) (35,662,327)

Soares da Costa Serviços Partilhados, SA 33,024 - - 6,715 -

Soares da Costa Brasil - Construções Ltda. - - - (61,388)

Soares da Costa Construc.Centro Americanas,SA - - - 4,265 (4,798)

Soares da Costa Moçambique, SARL - - - - 18,180

Soc. Construções Soares da Costa, SA 845 - - 8,002,060 (58,046)

Somafel, SA - 228,000 - - -

TOTAL 60,601 732,494 (32,641) 9,269,808 (35,666,070)


◊50

ACCOunT BALAnCES AS OF 31.12.2012Customers

- current account

Loans to Group and

associated companies

SuppliersOthers

debtords and creditors

Borrowings from Group

and associated companies

Special regime for corporate taxation and

dividends receivable

CLEAR - Instalações Electromecânicas, SA - - - - (8,862,229) -

Construções Metálicas SOCOMETAL, SA - 18,579 - - - -

Coordenação & Soares da Costa, SGPS Lda - - - - (345,073) -

Grupo Soares da Costa SGPS 30,000 27,496,420 - (537,414) - 1,590,201

Soares da Costa América, Inc - 5,018,095 - 867,546 - -

SDC Emirates Construction, L.L.C. - - - 101,624 - -

Soares da Costa Serviços Partilhados, SA - - 24,121 (40,937) - -

Soares da Costa Brasil - Construções Ltda. - 25,000 - (57,589) - -

Soares da Costa Construc.Centro Americanas,SA - 73,021 - - - -

Soares da Costa Moçambique, SARL - 11,753 - - - -

Soc. Construções Soares da Costa, SA - - 40,394 (738,635) (156,924,861) -

SOMAFEL - Engenharia e Obras Ferroviárias, SA, SA 46,760 - - - - -

TOTAL 76,760 32,642,867 64,515 (405,405) (166,132,164) 1,590,201

TRAnSACTIOnS In 2012 External supplies and services

Sales and services

Other operational gains and losses

net financing cost

Other financial gains and losses

Carta - Restauração e Serviços, Lda - - - 9,182 -

CLEAR - Instalações Electromecânicas, SA - - - (454,495) 6,220,000

Construções Metálicas SOCOMETAL, SA - - - (202,706) -

Coordenação & Soares da Costa, SGPS Lda - - - (13,666) -

Grupo Soares da Costa SGPS - - - 1,940,386 -

HABITOP - Sociedade Imobiliária, SA 4,666 - - - -

SDC América, Inc. - - - 479,338 -

Soares da Costa Serviços Partilhados, SA 39,480 - - - -

Soares da Costa Construc.Centro Americanas,SA - - - 45,564 41

Soares da Costa Moçambique, SARL - - - - 228,413

Soc. Construções Soares da Costa, SA 1,930 - - (8,016,910) 12,550,000

Somafel, SA - 228,000 - - -

TOTAL 46,076 228,000 - (6,213,306) 18,998,453


◊51

5. TAnGIBLE ASSETS

a) Gross Assets

Movements in the gross value of tangible fixed assets during the years ended 31 December 2013 and 2012 were as follows:

Fixed tangible assets in 2013 Opening balance

Change in perimeter

Increases SalesForeign

exchange effectTranfers and

write-offsClosing

balance

Administrative equipment 641 - 727 - - - 1,368

641 - 727 - - - 1,368

Fixed tangible assets in 2012 Opening balance

Change in perimeter

Increases SalesForeign

exchange effectTranfers and

write-offsClosing

balance

Administrative equipment 641 - - - - - 641

641 - - - - - 641

b) Cumulative Depreciation

Movements in cumulative depreciation of tangible fixed assets during the years ending 31 December 2013 and 2012 were as follows:

Fixed tangible assets in 2013 Opening balance Revaluations Reinforcement Cancellation / Reversal Closing balance

Administrative equipment 401 - 141 - 542

401 - 141 - 542

Fixed tangible assets in 2012 Opening balance Reinforcement Cancellation / Reversal Closing balance

Administrative equipment 321 80 - 401

321 80 - 401

6. FInAnCIAL InvESTMEnTS

The movements that occurred in the value of financial investments during the years ending 31 December 2013 and 2012 were as follows:

FInAnCIAL InvESTMEnTS In 2013 Opening balance

value adjustments

reversals

value adjustments

increasesIncreases Sales

Tranfers and write-

offs

Closing balance

Capital participations in subsidiaries 212,798,628 430,825 (250,001) 1,450,987 (789,725) - 213,640,713

Loans granted to subsidiaries 34,346,697 19,795,175 (200,000) 5,436,771 (53,031,888) - 6,346,754

Capital participations in associated companies 24,191,790 - - - - (94,376) 24,097,414

Loans granted to associated companies 29,187 - - - - - 29,187

Other financial investments 3,014,810 - - 15 - - 3,014,825

Financial investments in progress - - - - - - -

TOTAL 274,381,112 20,226,000 (450,001) 6,887,773 (53,821,614) (94,376) 247,128,894


◊52

FInAnCIAL InvESTMEnTS In 2012 Opening balance

value adjustments

reversals

value adjustments

increasesIncreases Sales

Tranfers and write-

offs

Closing balance

Capital participations in subsidiaries 217,950,021 - (430,825) 57,589 (4,778,158) - 212,798,628

Loans granted to subsidiaries 53,359,344 - (19,795,175) 4,380,965 (3,598,437) - 34,346,697

Capital participations in associated companies 24,191,790 - - - - - 24,191,790

Loans granted to associated companies 29,187 - - - - - 29,187

Other financial investments 3,135,372 - - - - (120,562) 3,014,810

Financial investments in progress 298,665,714 - (20,226,000) 4,438,554 (8,376,595) (120,562) 274,381,112

TOTAL 298,665,714 - (20,226,000) 4,438,554 (8,376,595) (120,562) 274,381,112

During 2013, the holding in SDC América, Inc was sold to Grupo Soares da Costa, SGPS, SA for the sum of 1 Euro, in respect of the shareholding (430,824.90 Euros) and which included supplementary loan capital to-talling 53,031,888.49 Euros following an additional payment during the year 2013 of 5,436,770.85 Euros. This disposal led to the reversal of impairments set up in previous years for the entire shareholding (430,824.90 Euros) and for supplementary loans (19,795,175.10 Euros). A large part of the holding in SDC Brazil was sold for the sum of 358,900.37 Euros to Sociedade de Construções Soares da Costa, SA, reducing its shareholding from 58.88% to 1%. The company SDC Emirates ceased its business operations definitively and was legally wound up resulting in a loss of 94,375.96 Euros, equal to the shareholding of 49%. An impairment was booked for the company Coordenação & Soares da Costa, SGPS, SA, for shareholdings (250,001 Euros) and loans (200,000 Euros), on the grounds that there were no assets that make it likely that any repayment would be made in the future.

The entire share capital of SCSP- Soares da Costa Serviços Partilhados, SA was acquired from the following Group companies: Grupo Soares da Costa, SGPS, SA (1,450,406.38 Euros), Sociedade de Construções Soares da Costa, SA (145.10 Euros), Soares da Costa Concessões, SGPS, SA (145.10 Euros), Clear – Instalações Electro-mecânicas, SA (145.10 Euros) and Ciagest – Imobiliária e Gestão, SA (145.10 Euros).

Contributions to the work compensation fund that began in October for new employees totalled 15 Euros.

In addition, the detail of “Loans granted to subsidiaries” for the years ending 31 December 2013 and 2012 were as follows:

COMPAny 31.12.2013 31.12.2012

Clear - Instalações Electromecânicas, SA 6,346,754 6,346,754

Soares da Costa America, Inc. - 27,799,943

Coordenação & Soares da Costa, SGPS, SA - 200,000

TOTAL 6,346,754 34,346,697


◊53

7. InvESTMEnTS In SuBSIDIARy AnD ASSOCIATE COMPAnIES

As at 31 December 2013, the group and associate companies, in which the company directly held sha-reholdings, were as follows:

COMPAny nAME Head offices% capital

heldShareholders'

equitynet earnings

2013

Balance sheet value as of

31.12.2013

Capital participations in Group companies:

Soares da Costa Moçambique, SARL Avenida Hochimin, 1178 3º Andar

1667 - Maputo80.00% 2,353,273 530,848 868,470

SDC S. Tomé e Príncipe, Construções, Lda. Cidade de São Tomé São Tomé & Príncipe

99.00% 722,720 10,477 9,900

SDC Construcciones CentroAmericanas, SA Cantón Cero Uno (San José)

1009 - San José100.00% 3,479,504 (533,664) 853,555

Carta - Cantinas e Restauração Lda. Rua de Santos Pousada, 220

4000 - 478 - Porto100.00% 635,434 456,217 904,969

Soc. Construções Soares da Costa, SA Rua de Santos Pousada, 220

4000 - 478 - Porto100.00% 103,455,540 (13,528,634) 170,893,174

Coordenação & Soares da Costa SGPS, SA Rua Julieta Ferrão, 12 - 13º

1600-131 Lisboa100.00% (829,655) 391,752 -

Clear - Instalações Electromecânicas, SA Rua de Santos Pousada, 220

4000 - 478 - Porto100.00% 3,830,069 (2,649,486) 38,653,246

Soares da Costa Brasil - Construção, Ltda Rua Bandeira Paulista, 600 - 1º

Cidade São Paulo1.00% 315,709 (326,789) 6,413

SCSP - Soares da Costa Serviços Partilhados, SA

Rua de Santos Pousada, 220 4000 - 478 - Porto

100.00% 1,620,965 572,232 1,450,987

TOTAL 213,640,713

Capital participations in associated companies:

Grupul Portughez de Constructii, S.R.L. 010873 - Bucharest Romania 50.00% (599,201) (26,794) 500,000

GEC-Guinea Ecuatorial Construcciones,SA UrbanizacionVilla Orquidea, 4

Malabo Equatorial Guinea51.00% 15,263 - 7,775

Cerenna-Ceramica Nacional de Angola, S.A. Rua Cónego Manuel das Neves, 19

Luanda - Angola51.00% 14,749 (125) 8,253

Somafel - Engª e Obras Ferroviárias, SA Lagoas Park - Edifício 1 Piso 2

Portugal40.00% 22,369,709 (4,769,802) 23,581,386

TOTAL 24,097,414

Capital participations in other companies:

VSL - Sistemas Portugal, SA Estrada Outeiro Polima, Lote C - Piso 1

2785 - 518 - São Domingos de Rana3.97% a) a) 1,012,500

VORTAL - SGPS, SA Rua Prof. Fernando da Fonseca, 3º

Lisboa7.24% a) a) 2,002,310

TOTAL 3,014,810

a) Accounts not available on the date of preparation of financial statements

During 2013, the company SCSP – Soares da Costa Serviços Partilhados, SA was acquired. Other transac-tions were: the disposal of the entire shareholding in Soares da Costa América, Inc; disposal and reduc-tion of the shareholding in Soares da Costa Brazil to 1%; and the shareholding in SDC Emirates Construc-


◊54

tiones LLC was written off after the definitive closure of the business. Soares da Costa Construção, SGPS, SA did not participate in the increase in share capital of VSL – Sistemas Portugal, SA reducing its holding from 11.25% to 3.97%. Additional information can be found in Note 6.

As at 31 December 2012, the group and associate companies in which the company directly held sha-reholdings were as follows:

COMPAny nAME Head offices% capital

heldShareholders'

equitynet earnings

2012

Balance sheet value as of

31.12.2012

Capital participations in Group companies:

Soares da Costa América, Inc. 7270 N.W. 12 TH Street, Suite PH 3

33126 - FL Miami 100.00% 49,788,445 3,545,168 -

Soares da Costa Moçambique, SARL Avenida Hochimin, 1178 3º Andar

1667 - Maputo80.00% 2,592,151 683,962 868,470

SDC S. Tomé e Príncipe, Construções, Lda. Cidade de São Tomé São Tomé & Príncipe

99.00% 712,243 1,579 9,900

SDC Construcciones CentroAmericanas, SA Cantón Cero Uno (San José)

1009 - San José100.00% 4,174,154 114,633 853,555

Carta - Cantinas e Restauração Lda. Rua de Santos Pousada, 220

4000 - 478 - Porto100.00% 179,217 (21,273) 904,969

Soc. Construções Soares da Costa, SA Rua de Santos Pousada, 220

4000 - 478 - Porto100.00% 137,841,786 (18,193,009) 170,893,174

Coordenação & Soares da Costa SGPS, SA Rua Julieta Ferrão, 12 - 13º

1600-131 Lisboa100.00% (1,221,407) (108,526) 250,001

Clear - Instalações Electromecânicas, SA Rua de Santos Pousada, 220

4000 - 478 - Porto100.00% 9,647,405 3,960,183 38,653,246

Soares da Costa Brasil - Construção, Ltda Rua Bandeira Paulista, 600 - 1º

São Paulo58.88% 728,471 452,294 365,313

TOTAL 212,798,628

Capital participations in associated companies:

Grupul Portughez de Constructii, S.R.L. 010873 - Bucharest Romania 50.00% (576,159) (34,062) 500,000

SDC Emirates Construction,L.L.C. Abu Dhabi - UAE 49.00% a) a) 94,376

GEC-Guinea Ecuatorial Construcciones,SA UrbanizacionVilla Orquidea,4

Malabo Equatorial Guinea51.00% 15,263 - 7,775

Cerenna-Ceramica Nacional de Angola, S.A. Rua Cónego Manuel das Neves,19

Luanda - Angola51.00% 15,827 (793) 8,253

Somafel - Engª e Obras Ferroviárias, SA Lagoas Park - Edifício 1 Piso 2

Portugal40.00% 26,975,116 (4,108,154) 23,581,386

TOTAL 24,191,790

Capital participations in other companies:

VSL - Sistemas Portugal, SA Estrada Outeiro Polima, Lote C - Piso 12785 - 518 - São Domingos de Rana

11.25% a) a) 1,012,500

VORTAL - SGPS, SA Rua Prof. Fernando da Fonseca, 3º

Lisboa7.24% 29,309,043 2,684,406 2,002,310

TOTAL 3,014,810

a) Accounts not available on the date of preparation of financial statements


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8. InFORMATIOn ABOuT ASSETS unDER FInAnCIAL AnD OPERATIOnAL LEASInG COnTRACTS

Operational Leases

During 2013, 52,178.35 Euros were booked for expenses relating to operational leasing contracts.

Rentals for operational leasing contracts (fixed rents) held by the company as at 31 December 2013, mainly relating to operational leasing contracts for motor vehicles, had the following payment profile by year:

MATuRITIES Minimum operating lease payments:

2014 38,663

2015 38,663

2016 37,862

> 2016 17,974

TOTAL 133,163

9. ACCOunTS RECEIvABLE

As at 31 December 2013 and 31 December 2012, the breakdown was as follows:

CuRREnT ACCOunTS RECEIvABLES 31.12.13 31.12.12

Customers - current account 903,303 76,760

Customers 903,303 76,760

Group companies 3,682,449 32,642,867

Special regime for the taxation of groups of companies 360,518 1,590,201

Value adjustments (425,770) -

Group, associated and participated companies 3,617,197 34,233,068

Other debtors 9,761,425 969,575

Other accounts receivable 9,761,425 969,575

Following the transfer of employees from Grupo Soares da Costa, SGPS, SA to Soares da Costa Constru-ção, SGPS, SA at the beginning of the 3rd quarter of 2013, a number of costs became the responsibility of the latter company. As the invoicing of various services rendered by the Group continued to be made by Soares da Costa Construção, SGPS, SA, it was necessary to transfer these costs to the Group. This explains the increase in the accounts receivable balance.

The detail of “State and Other Public Entities” as at 31 December 2013 and 31 December 2012 was as follows:

vALuE ADDED TAX 31.12.13 31.12.12

Valued added tax 22 -

10. OTHER CuRREnT ASSETS

The detail of this account heading as at 31 December 2013 and 2012 was as follows:

OTHER CuRREnT ASSETS 31.12.13 31.12.12

Deferred costs 2,229 496


◊56

In December 2013 and 2012, this heading was broken down as follows:

DEFERRED COSTS 31.12.13 31.12.12

Insurance 2,229 496

11. CASH AnD CASH EQuIvALEnTS

As at 31 December 2013 and 31 December 2012, the detail of cash and cash equivalents was as follows:

31.12.3 31.12.12

Cash 255 314

Bank deposits immediatly available 5,631 51,182

Cash equivalents - -

CASH AnD EQuIvALEnTS 5,886 51,496

Securities - -

Cash and equivalents on balance sheet 5,886 51,496

12. SHARE CAPITAL AnD RESERvES

The share capital of the company had a nominal value of 20,335,895.42 Euros, made up of 12,816,068 ordinary shares without nominal value.

The share capital was held 100% by Grupo Soares da Costa, SGPS, SA.

On 16.8.2013, it was decided at the Shareholders’ General Meeting to reduce share capital from 131,080,340 Euros to 64,080,340.00 Euros by applying it as follows: the amount of 3,936,110.76 Euros to other reserves and 63,063,889.24 Euros were transferred to Grupo Soares da Costa, SGPS, SA as a resti-tution of share capital. It should be noted that as at 31.7.2013 Soares da Costa Construção was a creditor of Grupo Soares da Costa, SGPS, SA to the sum of 63,063,889.24 Euros.

On 28.11.2013, a decision to reduce share capital from 64,080,340.00 Euros to 20,335,895.42 Euros was taken at the Shareholders’ General Meeting to cover losses of the same amount, which were reported and certified in the balance sheet as at 30.9.2013.

Portuguese company legislation states that at least 5% of net results have to be put aside to “Legal Reserves” until the amount represents at least 20% of share capital. This reserve cannot be distributed except on the liquidation of the company but can be used to absorb losses after using up all other reser-ves, and for incorporation into capital.

The net result for the year 2012, amounting to 8,600,644 Euros, was applied in the following manner, in accordance with minute number 21 of 26.3.2013:

2012'S nET EARnInGS TRAnSFER

Retained earnings (8,600,644)

13. DIvIDEnDS

No dividends were distributed to the shareholder during the current year.


◊57

14. BAnK BORROWInGS

As at 31 December 2013 and 31 December 2012, the detail of bank borrowings was as follows:

31.12.13 31.12.12

Current liabilities

Bank loans - -

Overdrafts 1,563 75,925

TOTAL 1,563 75,925

The loans and other financial liabilities registered in the balance sheet as at 31 December 2013 had the following maturities:

MATuRITIES Loans Suppliers Other creditorsOther liabilities and financial

instrumentsTotal

2013 1,563 948,706 1,555,295 224,678,110 227,183,673

TOTAL 1,563 948,706 1,555,295 224,678,110 227,183,673

Treasury borrowings by Sociedade de Construções Soares da Costa, SA amounted to 217,804 thousand Euros. This figure is included in “Other liabilities”.

15. OTHER ACCOunTS PAyABLE

As at 31 December 2013 and 2012, “Other accounts payable” was broken down as follows:

31.12.13 31.12.12

Group companies 224,450,125 166,132,164

Group, associated and participated companies - current 224,450,125 166,132,164

Other creditors 1,439,680 1,374,835

Other accounts receivable - current 1,439,680 1,374,835

The amount for group companies relates to treasury loans and interest due and is split up by company as follows: Sociedade de Construções Soares da Costa, SA 223,775,521 Euros, Soares da Costa Serviços Partilhados 581,556 Euros and Clear Portugal 93,048 Euros.

The detail of “State and other public entities” as at 31 December 2013 and 31 December 2012 was as follows:

31.12.13 31.12.12

Valued added tax - 8,939

Contributions to the social security system 59,998 10,681

Other 55,616 11,348

TOTAL 115,614 30,967


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16. OTHER CuRREnT LIABILITIES

As at 31 December 2013 and 2012, the detail of this account heading was as follows:

OTHER CuRREnT LIABILITIES 31.12.13 31.12.12

Accrued costs 227,985 33,026

As at 31 December 2013 and 31 December 2012, this account heading was broken down as follows:

31.12.13 31.12.12

Accrued costs

Remunerations payable 226,435 33,026

Other accrued costs 1,550 -

TOTAL 227,985 33,026

The increase in remunerations payable was due to employees transferred from Grupo Soares da Costa, SGPS, SA to Soares da Costa Construção at the beginning of the 3rd quarter of 2013.

17. MOvEMEnTS In ADJuSTMEnTS AnD PROvISIOnS DuRInG THE yEAR

The movement in value adjustments in 2013 and 2012 were as follows:

vALuE ADJuSTMEnTS In 2013 Opening balance Increases Reductions Closing balance

Group companies - 425,770 - 425,770

Shareholders - 425,770 - 425,770

Capital participations in subsidiaries 430,825 5,028,159 (430,825) 5,028,159

Loans granted to subsidiaries 19,795,175 200,000 (19,795,175) 200,000

Financial investments 20,226,000 5,228,159 (20,226,000) 5,228,159

TOTAL vALuE ADJuSTMEnTS 20,226,000 5,653,929 (20,226,000) 5,653,929

The reversal of impairments was due to the sale of Soares da Costa América to Grupo Soares da Costa, SGPS, SA referred to in note 6, as well as the set up of an impairment in the company Coordenação & Soares da Costa, SGPS, SA.

vALuE ADJuSTMEnTS In 2012 Opening balance Increases Reductions Closing balance

Group companies - - - -

Shareholders - - - -

Capital participations in subsidiaries 4,778,158 430,825 (4,778,158) 430,825

Loans granted to subsidiaries 3,120,951 19,795,175 (3,120,951) 19,795,175

Financial investments 7,899,109 20,226,000 (7,899,109) 20,226,000

TOTAL vALuE ADJuSTMEnTS 7,899,109 20,226,000 (7,899,109) 20,226,000


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18. InFORMATIOn By SEGMEnT

The sales and services rendered by geographical area in 2013 and 2012 were as follows:

TuRnOvER By MARKET 31.12.13 % 31.12.12 %

Portugal 732,494 100.00% 228,000 100.00%

An explanation of the increase in turnover is given in note 9.

The breakdown of this account heading as at 31 December 2013 and 31 December 2012 was as follows:

SALES AnD TuRnOvER 31.12.13 31.12.12

Services provided 39,700 0

Supplementary income 692,794 228,000

TOTAL 732,494 228,000

The supplementary income relates mainly to the provision of labour (646 thousand Euros).

Net assets and investments in tangible assets were split by geographical market as follows:

Portugal Angola Costa Rica Mozambique Total

Net assets:

Fixed tangible assets 827 - - - 827

Financial investments 246,275,339 - 853,555 - 247,128,894

Accounts receivable 9,116,119 4,855,629 298,956 11,244 14,281,948

Cash and equivalents 5,886 - - - 5,886

Other assets 2,229 - - - 2,229

TOTAL 255,400,401 4,855,629 1,152,511 11,244 261,419,784

19. OTHER OPERATInG GAInS AnD LOSSES

Other operating gains in 2013 and 2012 were as follows:

OTHER InCOME AnD COSTS 31.12.13 31.12.12

Other operational income and costs 5,280 149,639

TOTAL 5,280 149,639

Other operating losses in 2013 and 2012 were as follows:

OTHER COSTS AnD LOSSES 31.12.13 31.12.12

Fines 806 2,107

Other operational costs and losses 134,394 64,973

TOTAL 135,200 67,081


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20. STAFF

The average number of employees working for the company during the years ending 31 December 2013 and 2012, totalling 9 and 3 respectively, was broken down as follows:

Board of directors

Senior management

Middle management

Supervisors and Heads of Department

Highly Qualified Professionals

Qualified and semi qualified professionals

non qualified professionals

Trainees

1 6 0 0 2 0 0 0

Board of directors

Senior management

Middle management

Supervisors and Heads of Department

Highly Qualified Professionals

Qualified and semi qualified professionals

non qualified professionals

Trainees

2 1 0 0 0 0 0 0

The remuneration of statutory bodies for the years ending 31 December 2013 and 2012 were as follows:

GOvERnInG BODIES 31.12.13 31.12.12

Board of directors 153,165 320,309

Statutory auditor 5,302 1,310

Staff costs for the years 2013 and 2012 were broken down as follows:

STAFF COSTS 31.12.13 31.12.12

Remunerations 765,877 444,471

Social security contributions 238,761 92,483

TOTAL 1,004,638 536,954

The increase in remuneration and charges was due to the transfer of employees from Grupo Soares da Costa, SGPS, SA that took place at the beginning of the 3rd quarter of 2013.

21. THIRD PARTy SuPPLIES AnD SERvICES

The cost of third party supplies and services for the years 2013 and 2012 can be broken down as follows:

EXTERnAL SuPPLIES AnD SERvICES 31.12.13 31.12.12

Specialized work 848,234 40,450

Travel and accommodation 5,884 24,264

Rents of buildings - 3,420

Rentals of light vehicles 46,038 51,123

Litigation and notaries 58,089 591

Other 54,769 10,614

TOTAL 1,013,014 130,462

The increase in specialist work is related to costs for lawyers and banks totalling 787 thousand Euros connected with the entry of the new shareholder which took place in February 2014. The line “litigation and notaries” includes a cost of 56 thousand Euros for legal service fees connected with the negotiation and signing of a contract for a line of credit in dollars.


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22. FInAnCIAL RESuLTS

The financial results for the years ending 31 December 2013 and 2012 can be broken down as follows:

COSTS AnD LOSSES 31.12.13 31.12.12

Interest paid 10,533,118 13,998,795

Foreign exchange losses 291,364 35,409

Impairments on financial investments 875,771 20,226,000

Capital losses on the disposal of financial investments 35,818,091 477,485

Other financial costs and losses 851,573 526,127

(1) 48,369,918 35,263,815

InCOME AnD GAInS 31.12.13 31.12.12

Interest received 1,265,880 7,762,004

Foreign exchange gains 263,719 131,101

Income from capital participations 3,693,828 18,998,413

Other financial income and gains 865,670 527,473

(2) 6,089,098 27,418,991

FInAnCIAL RESuLTS (2)-(1) (42,280,820) (7,844,824)

The impairment registered in the year of an amount of 876 thousand Euros refers to an adjustment made to the financial investment in Coordenação & Soares da Costa, SGPS, SA and is described in note 17.

Capital losses were registered on the disposals of the shareholding in Soares da Costa América, Inc to an amount of 35,662,327 Euros, in Soares da Costa Brazil to an amount of 61,388 Euros and on the write off on the shareholding in Soares da Costa Emirates of 94,376 Euros due to the definitive closure of the business (note 6).

Income from shareholdings relate to dividends from the following entities: Clear – Instalações Electro-mecânicas, SA (3,168 thousand Euros), Soares da Costa Moçambique, SARL (490 thousand Euros) and Vortal, SGPS, SA (36 thousand Euros).

23. InCOME TAX AnD DEFERRED TAXES

The company is taxed on its income under the Special Tax Regime for Corporate Groups. As a controlled company, it registers the debit/credit for its contribution to income tax in “Group, associated and subsi-diary companies”. The parent company is Grupo Soares da Costa, SGPS, SA.

In accordance with tax legislation, tax declarations are subject to review and correction by the tax au-thorities during a four year period (five years for Social Security). Hence, the company's tax declarations concerning 2009 and following years are still subject to review. The company’s board of directors believes that possible corrections, should they occur, will not have a significant impact on the financial statements.

The income tax for the years ending December 31, 2013 and 2012 can be broken down as follows:

InCOME TAX 31.12.13 31.12.12

Current tax (360,518) (1,590,201)

Deferred tax 1,319,778 1,974,777

TOTAL 959,260 384,577


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The reconciliation of the profit/loss before tax to arrive at the tax payable for the period is as follows:

Tax rate Tax Basis Tax

Rate and nominal income tax (effective in Portugal) 25.00% (43,716,457) (10,929,114)

Municipal surcharge

Autonomous taxation 63,901 16,931

Adjustments generating deferred taxes - -

Other adjustments 47,512,774 11,871,444

Tax rate and effective income tax -2.19% 959,260

“Other adjustments” can be broken down as follows:

Tax rate Tax Basis Tax

Non deductable provisions 25% 875,771 218,943

Accounting capital losses 35,662,327 8,915,582

Expenses with funding not accepted 6,266,969 1,566,742

Dividends (3,693,828) (923,457)

Deferred taxes 5,279,113 1,319,778

Other 3,122,422 773,855

TOTAL 47,512,774 11,871,444

“Deferred taxes” relates to the cancellation of IRC (Income Tax) carried forward from 2012, and is as follows:

DEFERRED TAX Opening balance Increases Reductions Closing balance

Cancelation of 2012' income tax 0 1,319,778 - 1,319,778

TOTAL 0 1,319,778 - 1,319,778

24. RESuLTS PER SHARE

As at 31 December 2013 and 2012, the basic results per share are equal to the net result divided by the number of ordinary shares of the company during the period, and were calculated as follows:

EARnInGS PER SHARE 31.12.13 31.12.12

Net earnings from continued activities (44,675,717) (8,600,644)

Net earnings (44,675,717) (8,600,644)

Total number of ordinary shares 12,816,340 26,216,068

Earnings per share of the continued activities

Basic (3,486) (0,328)

Diluted (3,486) (0,328)

Earnings per share

Basic - -

Diluted - -


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25. GuARAnTEES

The value of bank guarantees given by the company to third parties as at 31 December 2013 was as follows:

BAnK GuARAnTEES Euro uS Dollar Angolan Kwanza TOTAL

Bank guarantees - 11,964,325 - 11,964,325

The bank guarantees were given to guarantee credit lines contracted by Soares da Costa América, Inc.

Following the disposal of the shareholding in Soares da Costa América, Inc to Soares da Costa Group (note 6), the costs incurred for these guarantees will be debited to this latter company.

26. FInAnCIAL RISKS

Exchange Risk

This risk mainly arises from the company's international operations, which expose it the impact of chan-ges of different currencies against the Euro. The goal of the company’s policy for managing exchange rate risks is to minimize the sensitivity of the company’s earnings to exchange rate fluctuations. The company seeks, as far as possible, to balance assets with liabilities expressed in the same currency.

ASSETS EuR uSD AOK BRL OTHER CuRREnCIES TOTAL

Financial investments 246,180,963 853,555 - - 94,376 247,128,894

Customers 903,303 - - - - 903,303

Group companies 3,606,201 10,996 - - - 3,617,197

State and other public entities 22 - - - - 22

Others debtors 9,761,425 - - - - 9,761,425

Bank deposits 5,627 4 - - - 5,631

Cash 255 - - - - 255

Accruals and deferrals 2,229 - - - - 2,229

LIABILITIES EuR uSD AOK BRL OTHER CuRREnCIES TOTAL

Bank loans 1,563 - - - - 1,563

Group companies 224,450,125 - - - - 224,450,125

Suppliers 948,706 - - - - 948,706

State and other public entities 115,614 - - - - 115,614

Other creditors -2,654,047 2,747,470 1,111,890 234,368 - 1,439,680

Accruals and deferrals 227,985 - - - - 227,985

Credit Risk

This risk is associated with accounts receivable arising from the company’s normal business activity. The need to book impairments is determined according to the age of the debt, the customer’s risk profile, previous experience and other circumstances.

As at 31 December 2013 and 2012, the accounts receivable for which no adjustments were registered because they were considered to be recoverable were as follows:


◊64

Customers - current account Customers - other receivables 31.12.13 31.12.12

Unexpired 903,303 - 903,303 23,370

0 to 180 days - - - 53,390

TOTAL 903,303 - 903,303 76,760

As at 31 December 2013, the board of directors believes that the estimated adjustments to accounts receivable were appropriately stated in the financial statements.

Liquidity Risk

The liquidity risk management policy aims to ensure that at any given moment the profile of the maturity dates of the company’s debt matches its capacity to generate the required cash flows. The management of liquidity risk therefore includes managing imbalances between the requirements for funds (for opera-ting and financial costs, investments and debt repayment) and revenue inflows (receipts from customers, divestments, and financing commitments from financial entities). At the same time, the company’s mana-gement takes measures to prevent the occurrence of this risk through appropriate and timely cash flow management. In order to manage liquidity risk, the company maintains a balance between the term and fle-xibility of contracted debt through the use of phased financing which matches the requirement for funds. In addition, the company has hot money accounts and overdrafts which avoid (temporary) cash flow problems.

The maturity dates of financial liabilities as at 31 December 2013 were as follows:

MATuRITIES Bank loans Bonds Other loans Overdrafts Other loans (Factoring) TOTAL

2013 - - - 1,563 - 1,563

27. SuBSEQuEnT EvEnTS

On the 12th of February 2014, the share capital of the company was increased from 20,335,895.42 Euros to 90,335,895.42 Euros, via a cash injection of a sum of 70 million Euros, subscribed and fully paid up by a com-pany governed by the law of Luxemburg, GAM Holding. This company became owner of 66.7% of the share capital of Soares da Costa Construção, SGPS, SA and Grupo Soares da Costa, SGPS, SA the remaining 33.3%.

28. COMPLIAnCE WITH LEGAL PROvISIOnS

Decree Law number 318/94 article 5 section 4

During the year ended 31 December 2013, contracts for shareholders’ loans were signed with the follo-wing companies:◊ Soares da Costa America, Inc.

During the year ending 31 December 2013, contracts for financing transactions were signed with the following companies:◊ Grupo Soares da Costa, SGPS, SA;◊ Soares da Costa América, INC;◊ Sociedade de Construções Soares da Costa, SA;◊ Soares da Costa Brasil, SRL;◊ Clear – Instalações Electromecânicas, SA;◊ Clear Angola – Instalações Electromecânicas, Lda;◊ Construções Metálicas Socometal, SA;


◊65

◊ Soares da Costa Moçambique, SARL;◊ Soares da Costa Brasil, Construção, Ltda;◊ Coordenação & Soares da Costa SGPS, SA;◊ SCSP – Soares da Costa Serviços Partilhados, SA.

The respective debtor and creditor positions with these companies as at 31 December 2013 and 2102 were as follows:

COMPAny nAME 31.12.13 31.12.12

Shareholders' loans

Soares da Costa America, Inc. 0 27,799,943

Clear - Instalações Electromecânicas, Sa 6,346,754 6,346,754

Coordenação & Soares da Costa SGPS, SA 0 200,000

TOTAL 6,346,754 34,346,697

Loans granted

Soares da Costa Moçambique, SARL 11,244 11,753

Soares da Costa America, Inc. 0 5,018,095

SdC Construcciones Centro Amer 77,285 73,027

Grupo Soares da Costa, SGPS, S.A. 0 27,496,420

Soares da Costa Brasil, Construções, LTDA 0 25,000

Cerenna-Ceramica Nacional de Angola, S.A. 29,187 0

SCSP - Soares da Costa Serviços Partilhados, Lda 0 18,579

TOTAL 117,717 32,642,873

COMPAny nAME 31 dec. 13 31 dec.12

Clear Angola 301,318 0

Coordenação & Soares da Costa, SGPS, SA 0 345,073

Clear - Instalações Electromecânicas, SA 0 0

SCSP - Soares da Costa Serviços Partilhados, Lda 581,556 0

Sociedade de Construções Soares da Costa, SA 223,775,522 156,924,861

Clear - Instalações Electromecânicas, SA 93,048 8,862,229

TOTAL 224,751,443 166,132,164

29. APPROvAL FOR ISSuInG ACCOunTS

At a meeting that took place on the 22nd of April, the board of directors approved the issue of the atta-ched financial statements.

30. CHAnGES TO POLICIES, ESTIMATES AnD ERRORS

During the year 2013, there were no changes in accounting policies compared to those used in the pre-paration of financial information for the year 2012, nor were any material errors recorded in relation to previous years.

CONSOLIDATEDFINANCIAL STATEMENTS

D

Luanda Towers Angola


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Consolidated Financial Position Statement in December 31, 2013 and December 31, 2012

(Euros)

ASSETS 31.12.2013 31.12.2012

NON CURRENT

Intangible assets:

Goodwill 70,370,520 79,844,595

Intangible assets 8,472 10,543

70,378,992 79,855,138

Fixed tangible assets:

Land and buildings 72,126,116 75,257,300

Basic equipment 42,091,990 56,182,984

Other fixed tangible assets 10,050,981 12,015,468

Fixed tangible assets in progress 3,078,461 7,416,146

127,347,548 150,871,898

Investment properties 30,053 32,520

Financial investments:

Financial investments under the equity method 3,392,507 3,569,213

Loans to associated companies 5,548,937 5,548,425

Other financial investments 3,033,843 3,033,677

11,975,286 12,151,315

Deferred taxes (assets) 2,916,978 19,074,574

Accounts receivable 29,676,028 28,459,271

Other non current assets 684,000 570,000

TOTAL nOn CuRREnT ASSETS 243,008,885 291,014,716

CURRENT

Inventories 42,828,988 52,216,186

Accounts receivable:

Trade Debtors 343,762,529 392,412,415

Income tax 637,913 105,285

Other accounts receivable 19,316,149 98,136,545

363,716,591 490,654,245

Other current assets 70,214,114 99,749,433

Cash, Deposits and Securities 37,306,229 69,561,275

TOTAL CuRREnT ASSETS 514,065,922 712,181,138

TOTAL ASSETS 757,074,807 1,003,195,854

Consolidated Financial Position Statement in December 31, 2013 and December 31, 2012

(Euros)

SHAREHOLDERS' EQuITy & LIABILITIES 31.12.2013 31.12.2012

SHAREHOLDERS' EQUITy

Share capital 20,335,895 131,080,340

Reserves and retained earnings 13,143,888 44,595,056

Net income (24,071,787) (37,762,825)

EQuITy ATTRIBuTABLE TO THE GROuP 9,407,997 137,912,570

Minorities 2,000,742 1,817,057

TOTAL SHAREHOLDERS' EQuITy 11,408,738 139,729,628

LIABILITIES

NON CURRENT

Provisions 9,104,887 800,589

Loans:

Bank loans 177,790,029 259,325,525

177,790,029 259,325,525

Accounts payable 21,380,481 28,892,203

Deferred assets (liabilities) 10,419,522 14,796,427

TOTAL nOn CuRREnT LIABILITIES 218,694,919 303,814,744

CURRENT

Loans:

Bank loans 185,791,357 149,921,058

Other loans 3,411,343 891,901

189,202,699 150,812,959

Accounts payable:

Trade Creditors 147,054,891 182,332,560

Fixed assets suppliers 826,307 1,456,106

Advances on sales 64,028,041 70,407,063

Income tax 501,147 265,227

Other accounts payable 37,266,040 56,387,846

249,676,426 310,848,803

Other current liabilities 88,092,025 97,989,721

TOTAL CuRREnT LIABILITIES 526,971,150 559,651,483

TOTAL LIABILITIES 745,666,069 863,466,227

TOTAL SHAREHOLDERS' EQuITy + LIABILITIES 757,074,807 1,003,195,854


◊69

Separate Consolidated Income Statement for the Period Ending in December 31, 2013 and December 31, 2012

(Euros)

InCOME STATEMEnT 2013 2012

Turnover 497,178,255 712,538,562

Change in production (5,676,384) (17,928,006)

Other operating income 7,601,869 10,942,450

Operating income 499,103,740 705,553,006

Cost of goods sold (117,485,458) (145,849,337)

External party supplies & services (263,746,041) (368,296,046)

Staff costs (110,818,862) (132,682,643)

Depreciation and impairment losses (17,267,541) (21,282,089)

Provisions and value adjustments (29,737,342) (18,319,702)

Other operating costs (20,288,368) (27,120,118)

Operating costs (559,343,613) (713,549,935)

Operating results from continued activities (60,239,873) (7,996,929)

Interest received 64,812,210 15,031,929

Interest paid (33,700,888) (40,105,621)

net financing costs 31,111,322 (25,073,692)

Gains in associated companies 7,905 660,065

Losses in associated companies (42,755) (100,648)

Gains and losses in associated companies (34,850) 559,417

Income and capital gains in stakes held 948,650 160,031

Other financial income 17,006,419 8,820,012

Other financial costs (50,120,389) (26,316,446)

Other financial income & costs (32,165,320) (17,336,403)

Financial results (1,088,848) (41,850,678)

Earnings before taxes (61,328,722) (49,847,607)

Income tax (1,281,996) 12,811,630

net earnings: (62,610,718) (37,035,977)

Attributable to the Group (63,055,720) (37,762,825)

Minorities 445,002 726,848


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Statement of Consolidated Comprehensive Income for the Period Ending in December 31, 2013 and December 31, 2012

(Euros) 31.12.2013 31.12.2012

Consolidated net earnings for the period (62,610,718) (37,035,977)

Other comprehensive income

Exchange difference stemming from transposition of financial statements expressed in foreign currencies

(2,585,139) (2,406,334)

Change on fair value of derivatives - 1,190,357

Change on deferred taxes of derivatives - (345,204)

Adjustments in investment consolidated by equity method 4,717 (3,360)

Other variations - -

TOTAL COMPREHEnSIvE InCOME FOR THE PERIOD (65,191,140) (38,600,518)

Attributable:

to Minorities 227,812 (498,152)

to the Group (65,418,952) (38,102,366)

Statement of Changes in Equity for the Period Ending in December 31, 2013 and December 31, 2012

(Euros)

Equity capitalReserves

and retained earnings

Reserves for foreign

exchange

Reserves from coverage

derivativesOther

Equity attributable to

shareholdersMinorities Total equity

Balance as of 1.1.2013 131,080,340 9,028,402 (2,328,022) - 131,851 137,912,571 1,817,057 139,729,627

Dividends - - - - - - - -

Reduction of share capital (67,000,000) 3,936,111 - - - (63,063,889) - (63,063,889)

Reduction of share capital to cover losses

(43,744,445) 43,744,445 - - - - - -

Other - (289,575) 267,842 - - (21,734) (44,127) (65,860)

Integrated consolidated earnings

- (63,055,720) (2,367,949) - 4,717 (65,418,952) 227,812 (65,191,140)

Balance as of 31.12.2013 20,335,895 (6,636,338) (4,428,129) - 136,568 9,407,996 2,000,741 11,408,738

Balance as of 1.1.2012 131,080,340 50,103,117 (1,146,688) (845,154) 135,211 179,326,826 2,315,209 181,642,035

Dividends - (3,300,000) - - - (3,300,000) - (3,300,000)

Own shares - - - - - - - -

Other - (11,890) - - - (11,890) - (11,890)

Integrated consolidated earnings

- (37,762,825) (1,181,334) 845,154 (3,360) (38,102,365) (498,152) (38,600,517)

Balance as of 31.12.2012 131,080,340 9,028,402 (2,328,022) - 131,851 137,912,571 1,817,057 139,729,627


◊71

Consolidated Cash Flow Statement for the Period Ending in December 31, 2013 and December 31, 2012

(Euros)

2013 2012

Operating activities:

Receipts from customers 480,356,777 650,368,142

Payments to suppliers (373,557,383) (542,913,288)

Payments to staff (100,873,032) (121,534,323)

5,926,362 (14,079,470)

Payments/ receipts of income tax (597,997) (10,346,748)

Other payments/ receipts related with oper.activities (32,611,436) (12,382,472)

(33,209,433) (22,729,220)

CASH FLOW FROM InvESTMEnT ACTIvITIES (27,283,071) (36,808,690)

Investment activities:

Receipts from:

Financial investments 1,338,697 120,562

Fixed tangible assets 1,022,823 4,302,852

Interest and similar income 86,918 180,088

Dividends 0 2,448,439 66,662 4,670,165


Financial investments 264 2,631,203

Fixed tangible assets 3,225,334 4,519,832

Intangible assets - 3,225,598 - 7,151,034

CASH FLOW FROM InvESTMEnT ACTIvITIES (777,159) (2,480,870)

Financing activities:

Receipts from:

Loans 655,619,319 855,172,152

Capital increases, supplementary payments and issue premiums - 3,816

Interest received 4,880,870 660,500,189 3,256,989 858,432,957


Loans 619,522,053 767,171,205

Amortisations of financial leasing contracts 1,970,449 3,720,189

Interest paid 31,180,104 30,388,060

Dividends - 3,858,083

Acquisition of own shares - 652,672,607 - 805,137,537

CASH FLOW FROM FInAnCInG ACTIvITIES 7,827,582 53,295,419

Change in cash and cash equivalents (20,232,648) 14,005,860

Effect of foreign exchange differences (3,460,490) (1,343,489)

Effect of changes in participations (8,561,909) -

Cash and cash equivalents at the beginning of the period 69,561,275 56,898,903

Cash and cash equivalents at the end of the period 37,306,229 69,561,275

OPINIONS ANDCERTIFICATIONS

E

TTA2 Total Building Angola


◊73

Legal Certif ication of Accounts

Introduction

1. We have examined the attached financial statements of Soares da Costa Construção, SGPS, SA (Company that is part of the Soares da Costa Group, Note 2), which comprise the Consolidated Balance Sheet as at 31 December 2013, showing total assets of 261,419,784 Euros and shareholders’ equity of 34.236.111 Euros, including a net loss of 44,675,717 Euros, the Statements of Income, of Comprehensive Income, of Changes to Shareholders’ Equity and of Cash Flows for the year ending on that date and the corresponding Annexe.

Responsibilities

2. It is the responsibility of the Board of Directors to ensure that the consolidated financial statements are prepared in such a manner that they give a true and appropriate view of the financial position of the company, its results and the comprehensive income of its operations, changes to its equity and cash flo-ws as well as that proper accounting policies and criteria are used and an appropriate system of internal control is kept. Our responsibility is to express an independent and professional opinion, based on our examination of these financial statements.

Scope

3. Our examination was performed in accordance with the Technical Standards and Audit/Revision Directives issued by the Portuguese Institute of Statutory Auditors, which require that the examination be planned and performed with the objective of obtaining reasonable assurance as to whether the financial statements are free of material misstatement. Such an examination includes verifying, on a test basis, evidence supporting the amounts and disclosures in the financial statements and assessing significant estimates, based on judgments and criteria defined by the Board of Directors, used in their preparation. Such an examination also includes evaluating the adequacy of the accounting policies used and their disclosure, taking into consideration the circumstances, verifying the applicability of the going concern concept, and evaluating the adequacy in overall terms of the presentation of the financial sta-tements. Our examination also includes verifying that the financial information included in the Report of the Board of Directors is consistent with the financial statements. We believe that our examination provides a reasonable basis for expressing our opinion.

Opinion

4. In our opinion, the financial statements referred to in paragraph 1 above, present fairly and in all materially relevant respects the financial position of Soares da Costa Construção, SGPS, SA as at 31 December 2013, as well as the results and comprehensive income of its operations, changes in sharehol-ders’ equity and cash flows for the year then ended, in compliance with International Financial Reporting Standards as adopted by the European Union.


◊74

Qualifications

5. As noted in the Company’s Management Report, an agreement was reached with an investor in 2013 to carry out a capitalisation operation for the construction business of the Soares da Costa Group, led by Soares da Costa Construção, SGPS, SA, as a result of which a “Subscription Agreement” was signed dated 26 November 2013, in which the following transactions were agreed: (i) reduction of the share capital of the Company, which took place on the 31st of December 2013 (Note 12), (ii) disposal of the subsidiary So-ares da Costa América, Inc., the company heading up a number of companies carrying out business in the USA, that also took place on the 31st of December 2013 (Note 22), and (iii) a share capital increase in the amount of 70 million Euros, to be wholly paid up in cash by the investor, which gives him a holding equal to 66.7% of the share capital of the Company, a transaction that was completed on the 12th of February 2014 (Note 27).

6. The financial statements mentioned in paragraph 1 above relate to the activity of the individual Company and were prepared for approval and publication in accordance with current legislation in force. As pointed out in Note 3.2 a) of the Notes to the Accounts, financial investments in subsidiary compa-nies are shown at acquisition cost, with adjustments made to reduce the value of these investments to their net realisable value whenever this is necessary. The Company has prepared consolidated financial statements separately for later approval, presenting however shows financial information concerning subsidiary companies in Note 7.

7. The financial statements for the year ending 31 December 2012, shown for comparative purposes, were audited by another Statutory Auditor. Their Legal Certification of Accounts, dated 15 February 2013, included two qualifications.

Report on other legal requirements

8. It is also our opinion that the financial information contained in the Management Report is in agree-ment with the financial statements for the period.

Porto, 22 April 2014

Deloitte & Associados, SROC S.A.Represented by António Manuel Martins Amaral


◊75

Report and Opinion of the Statutory Auditor

To the shareholder ofSoares da Costa Construção, SGPS, SA

In compliance with current legislation and with the mandate entrusted to us, we submit, for your ap-proval, our Report and Opinion, which cover the supervisory activity carried out by us and the financial statements of Soares da Costa Construção, SGPS, SA (the “Company”) for the period ended on December 31, 2013, which are the responsibility of the Board of Directors of the company.

We monitored the activity and businesses of the Company, the accuracy of its accounting records and its compliance with legal and statutory regulations currently in force, and received from the Board of Direc-tors and from the various Company departments the information and explanations requested.

As part of our duties, we examined the Balance Sheet as at December 2013, the Income Statement by Nature, the Changes to Shareholders’ Equity and the Cash Flows for the year ending on that date and the corresponding Notes to the Accounts. In addition, we reviewed the Management Report for the year 2013 prepared by the Board of Directors of the Company and the assumptions and statements included in it. Based on the statutory audit work carried out, we issue on this date the Legal Certification of the Accounts, which includes one reservation and three qualifications.

In view of the above, we are of the opinion that, with the exception of the impact of the adjustments which may be necessary if the limitation described on paragraph 4 of the Legal Certification of Accounts were not to exist, and taking into account the points made in the paragraphs 6 and 7 of the same docu-ment, the financial statements referred to above and the Management Report as well as the assump-tions made in them, are in accordance with applicable accounting, legal and statutory regulations, on which basis they can be approved by the Shareholders’ General Meeting.

We would also like to offer our thanks to the Board of Directors and the services of the Company for their help and assistance in our work.

Porto, 15 March 2014

Deloitte & Associados, SROC S.A.Represented by António Manuel Martins Amaral

report & accounts

Documents