Grupo Soares Da Costa, Sgps, Sa 1

REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 1

2012

Grupo Soares da Costa, SGPS, SA REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 2

CONTENTS

MESSAGE from the CHAIRMAN OF THE BOARD OF DIRECTORS 4 MESSAGE from the CEO 5

01. MANAGEMENT REPORT

Highlights 7 Introduction 8 .1 Soares da Costa Group 1.1 Profile 9 1.2 Strategy 13 .2 Overview of the Activity 14 .3 Relevant Facts of the Year 18 .4 Analysis of the Activity: Consolidated Accounts 20 .5 Performance by Business Area 5.1 Construction 26 5.2 Concessions 36 5.3 Real Estate 42 5.4 Energia Própria 43 .6 Individual Accounts 44 .7 Organization 44 .8 Human Resources 45 .9 Main Risks and Uncertainties 47 .10 Soares da Costa in the Stock Exchange 49 .11 Order Book and Prospects 51 .12 Subsequent Events 54 .13 Proposal for the Appropriation of Results 54 .14 Statement on the Conformity of the Financial Information 55 .15 Final Acknowledgements 55

02. ANNEXES TO THE MANAGEMENT REPORT

.1 Participations and Transactions of the Members of Corporate Bodies 57 .2 Qualified Shareholdings 57 .3 Other Legal Information 58 .4 Corporate Governance Report 58 .5 Corporate Responsibility Report 83 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 3

CONTENTS

03. CONSOLIDATED FINANCIAL STATEMENTS 101

04. ACCOUNTING POLICIES AND EXPLAINATORY NOTES TO THE CONSOLIDATED ACCOUNTS 109

05. INDIVIDUAL FINANCIAL STATEMENTS 173

06. ACCOUNTING POLICIES AND EXPLAINATORY NOTES TO THE CONSOLIDATED ACCOUNTS 180

07. CERTIFICATIONS 209

EXPLANATION ADDED IN RESPECT OF THE TRANSLATION OF THE MANAGEMENT REPORT This management report is a translation of the original, issued in Portuguese. In the event of discrepancies, the Portuguese versions prevail. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 4

MESSAGE from the CHAIRMAN OF THE BOARD OF DIRECTORS

Almost all countries have recovered or are recuperating from the crisis that started in 2008 with the notable exception of the European countries, whose lack of cohesion contributes to withdraw forces and exhaust motivation that are essential to effectively compete in today’s global business world. The crisis of the European sovereign debts, the bank crisis, in some countries, and the crisis of the Euro itself generated a depressive environment in the “old con- tinent” – and markedly depressed in Portugal – which is very adverse to the normal business development in a sector like such as construction.

In this context Soares da Costa Group – based on its accumulated competence in more than 90 years of existence and in its experience of more than 30 years in international environments – couldn’t do nothing else than to seek viable alternatives to continuing its development in foreign markets.

Present in Angola since 1980, Soares da Costa has today in this thriving country its main market. In an environment of full economic recovery since 2011, new initiatives advance and opportunities emerge in Angola to which the Group has technical and human capacities to answer completely. The relationships that are naturally being woven with local economic interests will be decisive in Manuel Roseta Fino defining the profile of the company in the long run.

Also present in Mozambique since 1982, an operation in which the Group’s interests are associated with the Mozambican state, Soares da Costa has locally the technical capacity and the means to face, with ambition and confidence, the huge challenges and opportunities that result from the development needs of this country’s infrastructures.

Soares da Costa operates in the United States, specifically in the state of Flo- rida since 1994. Our subsidiary, which specializes in the construction of motorways, grew strongly since its acquisition in 2008 and now ranks 10th place in the ranking of the South eastern region of the United States and this country is the 3rd largest market of the Group.

The implementation of a strategic investment in Brazil is taking its first steps, since 2011, with emphasis on the contracts won to the construction of plants for the cement industry.

In this context of deepening of the internationalization process of the Group, the Portuguese market will tend to move from the 1st to the 4th or 5th position by turnover in the construction area. While the demand for investment goods is not reinstated, the parent company of the Group shall perform its decisive missions such as the control of the business and the allocation of resources to its subsidiaries abroad, but its contribution to the production and consolidated results of operations will decrease; this will not hurt the enormous relevance of the Group for the country’s economy, either through positive contributions to the balance of payments, or by contributing to the employment of qualified Portuguese workers in multiple geographies.

We believe that shareholders, aware of the significance of what we mention above and of all information reported, will interpret properly the implications of the changes in circumstances that the Group is going through and will act in support of the initiatives that are necessary to its domestic and international reaffirmation. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 5

MESSAGE from the CEO

The Executive Committee has dedicated most of its time and effort, in 2012, to the restructuring of the group, the development of its international operations and the reshaping of the debt maturities.

The organizational restructuring that took place was of utmost importance to ensure the continuity of the group’s operations, given the steep downfall of the domestic market and the impact that it had on the company and on related third parties, be it on the supply chain of services and materials or on subcontractors.

Total level of total staff reduction achieved was 36% in Portugal (19% overall), including around 800 workers. This effort, which is still on-going throughout the 1st half of 2013, will cost approximately 15 million Euros. Everything was put in place in order to protect the rights of those who have left while ensuring that those who keep on are up to the patterns of operability and quality that differentiate Soares da Costa.

International turnover increased 9% to represent 71% (as against 62% in the previous year) of consolidated turnover (which decreased 8%). This trend will continue as one can conclude from the fact that 80% of the outstanding por- António Castro Henriques tfolio comes from abroad. For this reason, the group has deployed its resources and skills in a way that substantially reinforced the capacity to intervene in each of the different geographies where it operates, mostly in the commercial and productive areas.

The search for financing to ensure the continuity of operations was a permanent concern throughout the year. As a first, but decisive, step to match the financial structure of the group with its current asset mix, a program of maturities restructuring and re-pricing of liabilities was negotiated and put in place, close to year-end, with the support of its main banks. As a complement, and in a logical and necessary continuation of this program, the group is working on recapitali- zation scenarios and asset disposals to ensure its financial sustainability.

The Group has disclosed significant losses as a result of a combination of improved operational profits and increased financial expenses and non-recurrent costs. The net operational margin improved 0.5% and stood at 7.8% of total turnover, namely as a result of decreases of expenses with personnel (-7%) and of third party supplies and services (-14%). Amongst the non-recurrent costs, the most significant amounts relate with the company’s restructuring and with balance sheet cleaning.

The construction sector will continue under severe pressure, in the short term. Some will assert that it has “benefited” from its capacity to “generate” demand from the public sector at levels above sustainability, during these last decades. However, historic profitability levels don’t confirm that such “privileges” were granted for free. The truth is that the best Portuguese construction and engineering companies developed capacities and skills that enable them to be internationally competitive. The abnormal and sudden fall of gross investment in the Portuguese economy (and not only in the public sector) and the escalating cost of funding – which combined with a significant shortage of equity – has already caused the failure of many companies. To keep on fighting for the continuity of one of the greatest, well equipped and most obviously viable companies in the construction sector is for sure an exciting and worthwhile challenge. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 6

MANAGEMENT REPORT

Tete's Bridge Mozambique complete portfolio available in: www.portfolio.soaresdacosta.pt REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 7

HIGHLIGHTS

> Consolidated turnover attain 801.8 million Euros, 8.2% below the corresponding amount of the previous year, reflecting a pronounced decline in domestic market activity (-28.1%);

> Turnover in the external market increased by 3.8% to 565.4 million Euros, currently representing a share in excess of 70%;

> Organizational and operational (reallocation and reduction of permanent employees / internal mergers) and financial (rescheduling of debt maturities) restructuring;

> Accounting of impairment losses on assets (clients and other) in the total amount of 30.5 million Euros in the 4th quarter;

> EBITDA of 71.9 million Euros (94.1 million Euros in 2011) impacted by non-recurrent costs of 30.6 million Euros;

> Recurrent EBITDA margin of 12.8% improved 1.9 percentage points over the previous year;

> Financial results attain -69.0 million Euros ( -51.8 million Euros in the previous year);

> Restructuring, tax process and credit (Portugal, Angola and the USA) and other assets (Portugal) impairment costs significantly affect the earnings before tax of -58.2 million Euros (+7.1 million Euros in 2011);

> Negative consolidated net earnings attributable to the Group of 46.9 million Euros (+2.4 million Euros in 2011);

> Individual net earnings of -11.4 million Euros (+0.9 million Euros a year before).

CONSOLIDATED FINANCIAL INDICATORS

(million Euros) 2012 2011 Variation Turnover 801.8 873.5 -8.2% Portugal 236.5 328.9 -28.1% External Market 565.4 544.7 3.8% EBITDA 71.9 94.1 -23.5% EBITDA Margin 9.0% 10.8% -1.8 p.p. Recurrent EBITDA (*) 102.5 95.4 7.5% Recurrent EBITDA Margin (*) 12.8% 10.9% +1.9 p.p. Operating Results or EBIT 10.9 58.9 -81.6% Financial Results -69.0 -51.8 33.3% Earnings before Tax -58.2 7.1 - Net earnings attributable to Group -46.9 2.4 -

(*) Recurrent EBITDA= EBITDA recalculated to exclude the impact of anomalous and/or occasional factors REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 8

INTRODUCTION

The Board of Directors of the company Grupo Soares For simplicity, this Report uses certain abbreviations da Costa, S.G.P.S., S.A., in compliance with the ap- and terms which have the following meaning: plicable legal dispositions, namely articles 65 and 66 > AP&EN: “Accounting Policies and Explanatory of the Commercial Companies Code, and the by-laws Notes” that are an integral part of the Individual presents and submits for approval at the sharehol- and/or consolidated financial statements; ders general meeting, the management report and the proposal for the appropriation of results, the > EBIT: Earnings before Interest and Tax (operating accounts for the period and the other reporting do- results); cuments for the year ended on 31 December 2012. > EBITDA: Earnings before Interest, Tax, Depreciation and Amortization = Operating Results + Amorti- It is the conviction of this board that these docu- zation for the Period + Provisions and Impairment ments fairly present the evolution of the business, Losses for the Period (net of reversals); the performance and financial position of the company Grupo Soares da Costa, S.G.P.S, S.A. and of > Recurrent EBITDA*: EBITDA recalculated to ex- the respective Group that this company leads, as clude the impact of anomalous and/or occasional factors; well as of the main risks and uncertainties facing it. > Turnover: corresponding to Sales and Services The financial statements, individual and consolida- Rendered; ted, were prepared in accordance with the Interna- tional Financial Reporting Standards (IAS/IFRS) as > Net debt: Remunerated Net-debt = Bond issues adopted by the European Union. + Bank Borrowings + Other Borrowings + Lease Financing + Discounted Bills - Cash and Cash Equi- The shareholdings in the company held by mem- valents. bers of the corporate bodies and managers, the list of shareholders with qualifying shareholdings, the annual report on the company’s governance practices and investor support (“Corporate Governan- ce”), prepared in accordance with CMVM Regulation no. 1/2010 and, also, the issue of corporate social responsibility are presented as appendices to this management report, which comprise an integral part thereof. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 9

.1 THE SOARES DA COSTA GROUP

1.1 PROFILE WHO WE ARE

The Soares da Costa Group is one of the largest eco- Contractors” ranking (based on foreign turnover), nomic groups in the construction and public works prepared by the North-American magazine Enginee- sector in Portugal. In addition to the activity carried ring News Record’s. out in the domestic market, which covers continental Portugal including the autonomous regions, Soares Grupo Soares da Costa, S.G.P.S., S.A. is the holding da Costa has a strong international component, company of the Soares da Costa economic group, with a permanent presence in Angola, Mozambique, which organizational structure, as from the end of United States and sporadically in other counties. 2002, was built on four sub-holding companies, Currently, Romania, Brazil, S. Tomé e Príncipe, Oman, each heading one of the four business areas into Costa Rica, Venezuela and the Central Maghreb which the Group’s activities were organized: cons- countries also constitute markets worked by the truction, concessions, industry and real estate. The Company’s subsidiaries, complementary group of industry business area lost its autonomy as a sepa- companies (or ACEs) and associated companies rate segment when, in 2011, it was merged into the (hereafter designated as related companies). Glo- holding company of the construction business area. bally, Soares da Costa is 105th on the ”International

HISTORICAL REFERENCES

The origins of the Group date back to 1918, to the ching into the various activity areas through four incorporation in Oporto of a small company, dedica- sub-holding companies: construction, concessions, ted to the execution of top quality finishings and to industry and real estate. painting using fine gold. The following decades saw this company’s skills expand significantly, with the The company’s shareholding structure altered as company coming to lead the sector in the northern from mid-2006, with the exit of the founding family regions of Portugal whilst expanding its activity to and the entrance of a new majority shareholder, In- the rest of the country. The 80’s were crucial to the vestifino – Investimentos e Participações, S.G.P.S., development of the Group, with the start of its in- S.A., formalized with the execution of the takeover ternationalization process: first into Venezuela and bid in January 2007. later to Egypt, Guinea-Bissau, Angola, Nigeria, Mo- zambique, Iraq, Algeria, Guiana, Cape Verde, Macau, Following the shareholder change, in its strategic Spain, Germany and the United States. At the end plan “Sustainable Ambition 2007-2012”, presented of 1986 its shares were admitted to trading on the in October 2007, the Group defined the construc- Lisbon Stock Exchange (currently Euronext Lisbon). tion and concessions/services business areas as the strategic areas for the future; with one of the six The following decade was marked by the company’s lines of development defined being the consequent growing specialization in large-scale engineering and adaptation of the business portfolio. public works and by the consolidation of a strong internationalization and diversification strategy, still The transactions conducted in 2008, namely the characteristic of the Group today. The growth in acquisition of the construction companies - Contac- activity lead to the restructuring and reorganization to (Portugal) and Prince (United States) – and the of the company in 2002, with the incorporation of a reinforcement of the shareholding in the motorway holding company, Grupo Soares da Costa, S.G.P.S., concessionaire Scutvias, fall within the scope of this S.A., with a share capital of 160 million Euros, bran- adaptation. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 10

The strategic plan “Renewed Ambitions 2014” During the second half of 2011, in light of the subs- realigned the strategic guidelines of the Group, tantial macroeconomic changes, the liquidity shor- refocusing these on the business diversification tage and the strong contraction of the domestic component, under which strategy roll-out the Group construction market, Group management adjusted acquired, at the end of 2010, a control position in the strategic plan (see 1.2. below). the share capital of Energia Própria.

CORPORATE BODIES

At the end of the period to which this report rela- Per resolution of the Board of Directors of 26 April tes the composition of the corporate bodies was as 2010, Messrs Jorge Manuel de Oliveira Alves and follows: Pedro Miguel Tigre Falcão Queirós were nominated, Company Secretary and Alternate Secretary, res- General Meeting Board: pectively. > Fernando Enes Gaião (Chairman) > João Pessoa e Costa (Secretary) The only change occurring in the composition of the corporate bodies during 2012 was the following: Board of Directors: on 30 August 2012, following the resignation, as > Manuel Roseta Fino (Chairman) member of the board of directors, of Ana Maria > António Manuel Pereira Caldas Castro Henriques Martins Caetano, who had been nominated by the (Executive member) director PARINAMA – Participações e Investimentos, > Pedro Gonçalo de Sotto-Mayor de Andrade S.G.P.S., S.A., to hold the position in her own name, Santos (Executive member) the board of directors passed a resolution confir- > Jorge Domingues Grade Mendes (Executive member) ming the nomination of António João Graça Dias > António Manuel Formigal de Arriaga (Non-execu- Martins, made by the director PARINAMA - Partici- tive, independent member) pações e Investimentos, S.G.P.S, S.A. to, in his own > António Pereira da Silva Neves (Non-executive name, hold the office of director, who, consequently, member) integrated the board of directors, with non-executi- > Carlos Moreira Garcia (Non-executive, indepen- ve functions. dent member) > José Manuel Baptista Fino (Non-executive member) Subsequently, in 2013, the substitution of directors > Martim Salema de Sande e Castro Fino (Non- following the resignation from the post of António -executive member) João Graça Dias Martins who had been nominated > PARINAMA - Participação e Investimentos, by the director PARINAMA - Participações e Inves- S.G.P.S., S.A., taxpayer no. 509 016 987, that timentos, S.G.P.S., S.A., to hold the position in his nominated António João Graça Dias Martins to own name, is to be noted; on 30 January 2013, the hold office in his own name (Non-executive board of directors passed a resolution confirming member) the nomination of Jorge Armindo de Carvalho Teixei- ra, made by said director PARINAMA - Participações Supervisory Board: e Investimentos, S.G.P.S, S.A., to, in his own name, > Júlio de Lemos de Castro Caldas (Chairman) hold the position of director, who, consequently, in- > Carlos Pedro Machado de Sousa Góis tegrated the board of directors of the company, with > Joaquim Augusto Soares da Silva non-executive functions. > Júlio de Jesus Pinto (Alternate)

Statutory Auditor: > Grant Thornton Associados, SROC, Lda., represented by Jorge Bento Martins Ledo

Remuneration Commission: > José Manuel Baptista Fino (President) > António Jorge Gonçalves Afonso > João Pessoa e Costa REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 11

SHAREHOLDERS

At 31 December 2012, the shareholders with qualified shareholdings in the company share capital were:

Manuel Fino, S.G.P.S., S.A. Number of Shares % Share Capital % Voting Rights (1)

Indirectly through Investifino S.G.P.S., Limited 113,302,682 70.814% 71.042%

Total Imputable 113,302,682 70.814% 71.042%

PARINAMA - Participações e Investimentos, Number of Shares % Share Capital % Voting Rights (1) S.G.P.S., S.A.

Directly 17,600,000 11.000% 11.035%

Total Imputable (2) 17,600,000 11.000% 11.035%

(1) Considers the effect of 5,518 preferential shares carrying no vote as well as of the existence of 507,292 own shares as 31 December 2012. (2) Imputable to Ana Maria Martins Caetano.

CORPORATE GOVERNANCE

Group Organizational Structure and Organizational Chart

CHAIRMAN

Manuel Roseta Fino

EXECUTIVE COMITTEE

António Castro Henriques (CEO), Gonçalo Andrade Santos (CFO), Jorge Grade Mendes (COO)

CORPORATE GOVERNANCE GENERAL-SECRETARY SECRETARY OF THE COMPANY

COMITTEE António Frada Jorge Alves, Pedro Queirós (substitute)

MANAGEMENT CONTROL AND STRATEGIC PLANNING Conceição Vaz Sousa

AUDITING AND RISK MANAGEMENT Sandra Paredes

REPORT AND TAX Fernando Semana

LEGAL OFFICE Jorge Alves

INVESTOR RELATIONS Rita Carles

COMMUNICATION Rita Carles REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 12

In turn, the structure of the financial shareholdings comprising the Soares da Costa Group may be represented as per the organizational chart that follows:

GRUPOGRUPOSOARESSOARES DA DA COSTA, COSTA, SGPS, SGPS, SA SA ConsolidatedConsolidated Accounts Accounts – –DecemberDecember 31, 31, 2012 2012 ConsolidateionConsolidateion Perimeter Perimeter and and Methods Methods

GrupoGrupo Soares Soares da da Costa, Costa, SGPS,SGPS, SA SA 100%100% 100%100% 100%100% SDCSDC Construção,SGPS, Construção,SGPS, SA SA SDCSDC Imobiliária, Imobiliária, SGPS, SGPS, SA SA SDCSDC Concessões, Concessões, SGPS, SGPS, SA SA 100%100% 99,96%99,96% SDCSDC América, América, INC INC 100%100% 100%100% SCSPSCSP – SDC– SDC Serviços Serviços CIAGEST,CIAGEST, SA SA SDCSDC CONCESIONESC.RICA,SA CONCESIONESC.RICA,SA 60%60% PortoPorto Construction Construction Group, Group, LLC LLC Partilhados,Partilhados, SA SA(3)(3) 80%80% 100%100% 100%100% 100%100% SDCSDC Construction Construction Services, Services, LLC LLC SoaresSoares da da MercadosMercados Novos, Novos, LDA LDA COSTAPARQUES,COSTAPARQUES, SA SA 100%100% CostaCosta CS, CS, LLC LLC 100%100% Prince,Prince, LLC LLC 100%100% SOARTA,SOARTA, SA SA CPE,CPE, SA SA 100%100% SDCSDC Contractor, Contractor, LLC LLC 100%100% HABITOP,HABITOP, SA SA 100%100% 51%51% 100%100% SDCSDC Concessions Concessions USA, USA, Inc Inc GECGEC – Guiné– Guiné Ecuatorial Ecuatorial Construcciones Construcciones NAVEGAIA,NAVEGAIA, SA SA 57,26%57,26% 80%80% 100%100% EnergiaEnergia Própria, Própria, S.A. S.A. SDCSDC Moçambique, Moçambique, SARL SARL 99%99% (2)(2) INTEVIAS,INTEVIAS, SA SA SDCSDC IMOBILIÁRIA, IMOBILIÁRIA, LDA LDA 100%100% 100%100% 75%75% SelfSelf Energy Energy Engineering Engineering SDCSDC S. S.Tomé Tomé e Príncipe,e Príncipe, Construções, Construções, Lda. Lda. 50,6%50,6% HidroequadorHidroequador S. S.Tomense Tomense & &Innovation, Innovation, S.A. S.A. HOTTIHOTTI – Angola– Angola Hóteis, Hóteis, S.A. S.A. 60%60% 100%100% 98%98% 100%100% SOCOMETAL,SOCOMETAL, SA SA (7)(7) HidroeléctricaHidroeléctrica STP, STP, Lda. Lda. COSTACOSTA SUL, SUL, LDA LDA 100%100% VentosVentos do do Horizonte, Horizonte, S.A. S.A. 100%100% 98%98% INRINR – Inv.– Inv. Nac. Nac. Rodoviários Rodoviários 78,1%78,1% SDCSDC Construcciones Construcciones Centro Centro Americanas, Americanas, SA SA (7)(7) IMOSEDE,IMOSEDE, LDA LDA 75%75% SelfSelf Energy Energy UK UK ONSOLIDATION ONSOLIDATION 100%100% SDCSDC Hidroenergia, Hidroenergia, S.A. S.A. (6) (6) C C CoordenaçãoCoordenação & &SDC SDC 100%100% 0,2%0,2% 99,8%99,8%

ULL ULL CAISCAIS da da FONTINHA, FONTINHA, SA SA

F F 100%100% 99%99% SDCSDC Hidroenergia Hidroenergia 1T, 1T, Lda Lda CARTA,CARTA, LDA LDA CartaCarta Angola, Angola, Lda. Lda. (11) (11) 51%51% IMOKANDANDU,IMOKANDANDU, LDA LDA 0,2%0,2% 99,8%99,8% 100%100% SDCSDC Hidroenergia Hidroenergia 8C, 8C, Lda Lda CLEAR,CLEAR, SA SA95%95% 99%99% CLEARCLEAR ANGOLA, ANGOLA, SA SA IMOSDCIMOSDC - Investimentos - Investimentos LDA LDA 1%1% 0,2%0,2% 99,8%99,8% 51%51% SDCSDC Hidroenergia Hidroenergia 8T, 8T, Lda Lda CERENNA,CERENNA, SA SA 0,2%0,2% 99,8%99,8% SDCSDC Hidroenergia Hidroenergia 4T, 4T, Lda Lda 100%100% SDC/Contacto,SDC/Contacto, ACE ACE 100%100% SANTOLINASANTOLINA Holding Holding B.V. B.V. 58,9%58,9% 41,1%41,1% SoaresSoares da da Costa Costa Brasil, Brasil, Ltda. Ltda. 100%100% Soc.Soc. Construções Construções Soares Soares da da Costa, Costa, SA SA

50%50% 28,57%28,57% TRANSMETRO,TRANSMETRO, ACE ACE GCVC,GCVC, ACE ACE 14,7%14,7% SCUTVIAS,SCUTVIAS, SA SA 33,33%33,33% 34,3%34,3% 40%40% 40%40% 33,33%33,33% 0,002%0,002% ASSOCASSOC-Estádio-Estádio de de EstádioEstádio d Braga,d Braga, ACE ACE TalatonaTalatona Imobiliária, Imobiliária, Lda. Lda. MRNMRN–Man.–Man. Rod.Nacionais Rod.Nacionais Braga,Braga, ACE ACE 60%60% 25%25% 33,33%33,33% EstádioEstádio Coimbra, Coimbra, ACE ACE NovaNova Estação, Estação, ACE ACE Portvias,Portvias, S.A. S.A.(9)(9) 50%50%28,57%28,57% SomagueSomague-SDC,-SDC, ACE ACE Matosinhos,Matosinhos, ACE ACE 46%46% AutoAuto-estradas-estradas XXI, XXI, S.A. S.A.(4)(4) 50%50%50%50% TeatroTeatro Circo, Circo, ACE ACE 46%46% TrêsTrês ponto ponto dois, dois, ACE ACE OperestradasOperestradas XXI, XXI, S.A. S.A.(4)(4) 50%50% 50%50% HidroAlqueva,HidroAlqueva, ACE ACE CAETCAET XXI, XXI, ACE ACE 50%50% ExproestradasExproestradas XXI, XXI, S.A. S.A.(5)(5)

ONSOLIDATION ONSOLIDATION 28,57%28,57%17,25%17,25% C C GCF,GCF, ACE ACE LGV,LGV, ACE ACE 40%40% 30%30%30%30% Oper.Oper. Estradas. Estradas. Zambeze, Zambeze, S.A. S.A. IsraelIsrael Metro Metro Builders Builders LGCLGC , ACE , ACE 40%40% 17,9%17,9%50%50% EstradasEstradas do do Zambeze, Zambeze, S.A. S.A. NORMETRO,NORMETRO, ACE ACE SdCSdC e Lena,e Lena, ACE ACE

ROPORTIONAL ROPORTIONAL 50%50%24%24% P P TerceiraTerceira Onda, Onda, Lda Lda GACEGACE–Gondomar,–Gondomar, ACE ACE 50%50% Linha3Linha3 - Cezarina,Ltda - Cezarina,Ltda 40%40% SOMAFEL,SOMAFEL, SA SA100%100% OFM,OFM, SA SA 60%60% SomafelSomafel e Ferr.,ACEe Ferr.,ACE 5%5% 95%95% Somafel,Ltda.(Brasil)Somafel,Ltda.(Brasil) 45%45% 25%25% 50%50% Alsoma,Alsoma, AEIE AEIE GAYAEXPLOR,GAYAEXPLOR, LDA LDA UteUte Efacec/Self Efacec/Self Energy Energy 50%50% 28,57%28,57% 45%45% Traversofer,Traversofer, SARL SARL SelfSelf Energy Energy Moçambique Moçambique 33%33% INDÁQUA,INDÁQUA, SA SA MTA,MTA, LDA LDA .(11) .(11) 0,5%0,5% 97,5%97,5% 49,5%49,5% 49%49%SDCSDC Emirates, Emirates, LLC LLC IndáquaIndáqua Matosinhos, Matosinhos, SA SA LarvickLarvick Espanha Espanha

ONSOLIDATION ONSOLIDATION 17%17% 98%98% 35%35% C C ConstrutoraConstrutora S. S.José José Caldera, Caldera, SA SA IndáquaIndáqua V. V. do do Conde, Conde, SA SA Sustentável,Sustentável, Desafio Desafio Lda. Lda. 50%50% 0,5%0,5% (10)(10) 93%93% 24%24%

QUITY QUITY GrupulGrupul Portughez Portughez de de Constructii Constructii IndáquaIndáqua Feira, Feira, S.A. S.A. GlobalGlobal Azoague, Azoague, S.L. S.L. E E (1)(1) 20%20% CFECFE – Indústria– Indústria de de Condutas, Condutas, S.A. S.A. MTS,MTS, LDA LDA 11,3%11,3% 10%10% VSL,VSL, SA SA RoofRoof Tops Tops of of Spain, Spain, S.A. S.A. OST OST 7,24%7,24% 17%17% C C VORTALVORTAL SGPS, SGPS, SA SA AutopistasAutopistas del del Valle Valle 17%17% ConstrutoraConstrutora - S.José - S.José-S.Ramon,-S.Ramon, SA SA 16,3%16,3% ElosElos – OM,– OM, S.A. S.A. 16,3%16,3% CQUISITION CQUISITION (8)(8) A A Elos,Elos, S.A. S.A. (1)(1) Company Company in inwhich which Clear Clear – Instalações– Instalações Electromecânicas, Electromecânicas, S.A. S.A. has has a 33.33%a 33.33% participation participation (2)(2) Additionally, Additionally, Ciagest, Ciagest, SA SA has has a 1%a 1% participation participation in inSDC SDC Imobiliária, Imobiliária, Lda. Lda. (3)(3) Additionally, Additionally, Sociedade Sociedade de de Construções Construções Soares Soares da da Costa, Costa, SA, SA, Ciagest, Ciagest, SA, SA, Clear, Clear, SA SA and and SDC SDC Concessões Concessões SGPS SGPS have, have, each, each, a 0.0a 0.01%1% participation participation in inSCSP SCSP – Soares– Soares da da Costa Costa Serviços Serviços Partilhados, Partilhados, SA. SA. (4)(4) Additionally, Additionally, Sociedade Sociedade de de Construções Construções Soares Soares da da Costa, Costa, SA SA holds holds a 4%a 4% participation participation in inAuto Auto-estradas-estradas XXI, XXI, S.A. S.A. and and Operestradas Operestradas XXI, XXI, SA. SA. (5)(5) Additionally, Additionally, Sociedade Sociedade de de Construções Construções Soares Soares da da Costa, Costa, S.A. S.A. holds holds a 0.004%a 0.004% participation participation in inExproestradas Exproestradas XXI, XXI, S.A. S.A. (6)(6) A dditionally,Additionally, SDC SDC Concessões Concessões SGPS SGPS and and Hidroequador Hidroequador Santomense Santomense hold, hold, each, each, a 0.002%a 0.002% participation participation in inSDC SDC Hidroenergia, Hidroenergia, SA. SA. (7)(7) Additionally, Additionally, Clear Clear Angola, Angola, S.A. S.A. holds holds a 2%a 2% participation participation in inCosta Costa Sul, Sul, Lda. Lda. and and in inImosede, Imosede, Lda. Lda. (8)(8) Company Company held held (16.302%) (16.302%) by by Soares Soares da da Costa Costa Concessões, Concessões, SGPS SGPS and and by by (0.002%) (0.002%) Sociedade Sociedade de de Construções Construções Soares Soares da da Costa, Costa, S.A. S.A. (9)(9) Additionally, Additionally, Intevias Intevias – Serviços– Serviços e Gestão,e Gestão, S.A. S.A. holds holds a 0.002%a 0.002% of of Portvias, Portvias, S.A. S.A. (10)(10) Additionally, Additionally, Grupo Grupo Soares Soares da da Costa, Costa, SGPS, SGPS, S.A. S.A. holds holds a 0.5%a 0.5% participation participation in inIndáqua Indáqua Feira, Feira, S.A. S.A. (11)(11) Additionally, Additionally, Sociedade Sociedade de de Construções Construções Soares Soares da da Costa, Costa, S.A. S.A. holds holds a 1%a 1% stake stake in inMTA, MTA, LDA. LDA. and and in inCarta Carta Angola, Angola, Lda. Lda. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 13

NEW SHAREHOLDINGS AND CHANGES IN THE CONSOLIDATION PERIMETER DURING THE 2012 ECONOMIC PERIOD

> Disposal of the shareholding in the company Re- > Acquisition of the remaining 40% of the shares in flexos Púrpura, Lda., a company that had been “Ventos do Horizonte, S.A.”, a company subse- 50% owned by Energia Própria, S.A.; quently wholly owned by Self Energy Engineering & Innovation, S.A.; > Disposal of the total shareholding (25% during the first quarter and 25% during the fourth quarter) > Inclusion in the consolidation perimeter of the in the company “My Watt, Lda.”, by the company company “Sustentável Desafio, Lda.”, 35% held Energia Própria, S.A.; by Energia Própria, S.A. and consolidated using the equity method; > Merger by incorporation of the company “Serviços Técnicos e de Gestão, S.A.” in “Soares da Costa - > In October 2012, disposal of the entire shareholding Concessões, S.G.P.S., S.A.”; held in the infrastructure company SDC Costa Rica, S.A., a company that had been wholly owned; and > Merger by incorporation of the company “Contacto – Sociedade de Construções, S.A.” in “Sociedade > Inclusion in the consolidation perimeter of the de Construções Soares da Costa, S.A.”; company “Global Azoague, S.L.”, a Spanish company. It had initially been 50% held by Energia > Inclusion in the consolidation perimeter of the Própria, was subsequently transferred to Ventos company Linha 3 Cezarina – Construções, Ltda., do Horizonte which, at the end of the year, dispo- a specific purpose Brazilian company, 50% held sed of 26% of the shares of that company. Hence, by the Group, consolidated using the proportional at the end of the economic period, the Group holds method, which corporate object is to promote the the remaining 24% and thus consolidates the planning, development and execution of works for company using the equity method. the implementation of the project for line 3 of the Cezarina cement factory, in the county of Cezarina, Goiás State;

1.2 STRATEGY VISION AND STRATEGIC OBJECTIVES

To be an economic Group in the construction and of value for its shareholders on par with those of the services/concessions sector with an international best global references in the sector, are the vision and projection, with levels of profitability and the creation strategic objectives of the Soares da Costa Group.

MISSION

The Group’s mission is to satisfy the demands of the > Permanent market orientation and client satisfaction; market and of its clients through a sustainable busi- > Growth sought through the efficiency and effecti- ness model, with qualified and motivated resources, veness of management; generators of economic, social and environmental value, in a manner that provides an attractive return > Corporate culture based on the principles of fair- for the shareholders. ness and impartiality; > Socially responsible conduct; People, respect for the environment and economic growth are the pillars of Soares da Costa. Acting > Creation of long-lasting relationships with part- always in an ethical, responsible and honest manner, ners, both nationally and internationally; and the Group abides by the following values: > Promotion of the respect for the environment. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 14

STRATEGIC PLAN “RENEWED AMBITION 2014” UPDATE

During the second half of 2011, Group management, tion period, an expressive reduction in net-debt, the taking into consideration the substantial macroe- following vectors were selected for action: conomic changes, the reduced financing means and > Maintenance of the growth in Africa; the strong contraction of the domestic construction market, adjusted and updated the strategic plan.1 > Development of the Brazilian market through organic growth, with the prospect of an acquisition This adjustment of the strategy, in general terms, in the medium-term; places a strong emphasis on the construction acti- > Permanence in the United States, with an empha- vity in the Group’s core geographies. The strategic sis on profitability; guidelines to be implemented are strongly focused on INTERNATIONALIZATION, on the CONSTRUCTION > Postponement of investments in new energy and BUSINESS AREA and on the FINANCIAL SUSTAINA- environmental businesses; BILITY of the activities. With a view to adjusting > Disposal of non-strategic and/or mature assets; the growth of the Group’s activities to a level com- patible with the external constraints, namely of a > Concessions: minimization of the capital’s needs; and financial nature, protecting the profitability levels > Reduction in structure costs. and permitting, at the end of the plan implementa-

.2 OVERVIEW OF THE ACTVITY

GENERAL ANALYSIS

2012, at the global level, maintained the weakened solidation and a sustainable public debt (to avoid growth trends revealed in the previous year and wi- automatic expense cuts in the short-term) strategy tnessed the permanence of the factors generators continues to be an important challenge for 2013. of great uncertainly and of demanding challenges in various areas and economic blocks around the On the positive side, the real estate correction pro- globe. Global product, per the projections made in cess is giving signs of being close to its end, with a October 2012 by the International Monetary Fund, decrease in stocks and improved price behaviour. will have expanded by 3.3%2, continuing to have as its motor the emerging markets, with Asia in the The Euro Zone, affected by the intensity of the so- lead, since the world’s advanced economies, namely vereign debt crisis and with budget deficits, espe- Europe and the United States, continue incapable cially in the southern countries, saw its economic ac- of re-establishing confidence on a solid base in the tivity much conditioned in 2012, presenting a nega- medium-term, given the scenarios of continuing tive product variation (-0.4%), the result of tenuous fiscal consolidation policies and of a financial system growth in Germany, practical stagnation in France still revealing the weaknesses that do not permit it and dips in the order of 2 to 3% in Spain, Italy and to operate efficiently. Portugal, not to mention Greece which, having been at the epicentre of the crisis (which, for it, resulted The US economy will have grown some 2.2% during in a restructuring of private debt and a second loan) 2012, with a slightly lower growth (+1.7%) expected will have presented a product dip in excess of 6%. for 2013. At the end of the electoral period, that As is to be expected, and according to projections saw the re-election of President Barack Obama, a made by the international organism previously re- tough budget policy discussion ensued, requiring ferred to, this economic framework will not undergo political consensus to avoid the so-called “fiscal any significant improvement in 2013. cliff”. The definition of a credible budgetary con-

1 See Comunicado de Informação Privilegiada de 28 de novembro de 2011 no sítio da CMVM (www.cmvm.pt) 2 IMF – World Economic Outlook, October 2012 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 15

THE PORTUGUESE ECONOMY

The implementation of measures – and their respec- at an even more negative level (-3.2%) as a result tive consequences – under the Economic and Finan- of a more pronounced decrease in the 4th quarter cial Assistance Programme negotiated between the (-3.8% versus the homologous amount of the pre- Portuguese Government, the International Monetary vious year)4. Fund and the European Union, formalized in 2011, dominated last year’s national economic panorama On the other hand, progress was noted in the “ad- and rolled-out under a strongly contracting and pro- justment process” namely in the improvement and -cyclical orientation of budgetary policy and in a con- even rebalancing of the current and capital account text of restrictive monetary and financial conditions. balances, with the growth in exports of +4.1% (even if evidencing a decreasing trend), revealing an The paralysis in public investment and the tax hike, effective market share gain and a strong decrease aimed at budgetary consolidation, are reflected in a in imports (-6.9%). At the budget deficit level, INE strong contraction of internal consumption. Addi- disclosed, within the scope of the Excessive Defi- tionally, the high levels of financial leveraging in the cits Procedure, and which is also a first estimate for business fabric collide with the financial system’s the 2012 Pubic Administration balance, that the net inability to satisfy be it investment opportunities still financing needs represent 6.4% of Gross Domestic subsisting, be it liquidity needs, either in volume or Product, an amount impacted by the non-consi- on acceptable terms (interest rates are much higher deration of the so-called extraordinary measures, than those of the European peers), in a scenario in namely the annulment of the proceeds from the which the impact of the adjustment measures im- sale of the airports’ concession to ANA – Aeroportos plemented to correct the macroeconomic imbalances de Portugal, S.A., considered in the national ac- and those of a structural character have, naturally, a counts as a financial operation5. wider timeframe. In an European context, still characterized by some Investment maintained a pronounced dipping tra- uncertainty in the EMU authorities’ response capaci- jectory, having reverted to minimum amounts last ty in dealing with the issue of sovereign debt and in recorded in 1995, in volume terms. disassociating this issue from the contagion with the banks, the external investors’ perception of the risk Save for the exporting sector, that continues to de- of the Portuguese economy revealed some signs of monstrate a, still, good dynamic, the year 2012 was improvement; these signs were reinforced in 2013 characterized by recessive reflections that were more with the results of the Portuguese State’s medium- amplified than expected, even by the international -term public debt issue, realized in January, which entities, leading to a high number of bankruptcies constituted a return to the international financial ma- and to an abrupt downsizing of the companies’ rkets ahead of the timeframe previously foreseen. structures to adjust to the substantial decrease in the domestic market demand felt both in the eco- In inflation terms, in 2012, the Consumer Price Index nomy in general and in certain particular sectors, as (CPI) recorded an average variation rate of 2.8% is the case of engineering and civil construction. (3.7% in the previous year). To this deceleration will have contributed the less expressive increase in In this context, there was a sharp decrease in do- the prices of energetic products (with the respective mestic product and a significant increase in unem- index moving from a variation rate of 12.7% in 2011 ployment. to 9.6% in 2012) and, also, the decrease of 4.1 p.p. in the average variation rate for health, that attained Hence, the Banco de Portugal (Bank of Portugal) 0.4% in 2012, motivated by the drug price revision. in its Winter Bulletin3 predicted a contraction of the The Harmonized Consumer Price Index (HCPI) also Portuguese economy of 3.0% in 2012 and of 1.9% presented a variation rate in 2012 of 2.8% (3.6% in in 2013 (severer than the drop of 1% inscribed by 2011).6 the Government in the State Budget, and which has already been successively and publically revised to Unemployment continues to show a very worriso- 2% and 2.3%) and projected a product growth in me evolution, with Portugal recording the third hi- 2014 (+1.3%) subject, however, to the confirmation ghest rate (after Spain and Greece) amongst the 27 of behavioural assumptions as to relatively favoura- countries of the European Union and maintaining a ble exogenous variables. More recent data disclosed growth trajectory during 2012. by INE place the GDP annual variation rate in 2012 4 Quarterly National Accounts – Quick Estimate 4th quarter 2012, INE, 14 February 2013 5 Excessive Deficits Procedure (1st Notification of 2013) – 28 March 2013 - INE 3 Winter Economic Bulletin 2012, Banco de Portugal, 15 January 2013 6 Consumer Price Index, December 2012, INE 11 Jan 2013 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 16

Data disclosed by INE7 place the estimated unem- points in relation to the previous year. Thus, at the ployment rate for the 4th quarter of 2012 at 16.9%, end of the year, the unemployed population totals 1.1 percentage points over that of the previous 860.1 thousand people, having increased 21.8% in quarter and 2.9 percentage points over that of the relation to the previous year (another 154.0 thou- homologous period prior to the year just ended. This sand people). The employed population recorded deterioration determines that the average annual an annual decrease of 4.2% (less 202.3 thousand unemployment rate amounts, in 2012, to 15.7%, people). which represents an increase of 2.9 percentage

INTERNAL MARKET: CONSTRUCTION SECTOR

In 2012, the indicators measuring the evolution of The real problem is aggravated when the weak GPD the construction sector reflect the degradation of growths achieved over the last decade (or even the demand, be it public or private, revealing num- the negative variations in 2003, and in more recent bers that are successively presented as historical years) are matched by a systematic decrease in the minimums. The average annual variation rate of the weight of construction (since 2002 inclusive). Production Index in construction was -17.0% (when in 2011 there had already been a 10.7% decrease), The deepening of this recessive cycle inevitably trans- the result of a variation of -18.1% in the civil engi- lates into a decrease in employment, with the average neering segment and a drop, less pronounced but variation rate of the last twelve months attaining still very significant, of -15.7% in the construction -17.1%, that is, a value practically proportional to the of buildings8. reduction in the production index (-17.0%).

This strong recession is reflected in the drop in the This recessive climate will prolong itself, if the de- consumption of cement in the national market, which crease in the value of public tenders launched and amounted to 26.9% in relation to the previous year, adjudications made (1,695.9 million Euros and recording the lowest amount ever since 1973. 1,174.4 million Euros, respectively, reflecting drops of 44.4% and 51.6%, in the first eleven months The problem with the decrease in investment is not of the year)9 is any guideline. Similarly, substantial one that surged merely in 2012. An analyses of the drops occurred in licensing for new construction reports prepared by the Bank of Portugal based on (in all types of buildings: residential and commer- data produced by the Instituto Nacional de Estatís- cial, destined for transport and communication and tica (National Statistics Institute), reveals that Gross destined for tourism) and even in rehabilitation and Fixed Capital Formation has been decreasing in a demolition licenses, proof that not even the urban sustained manner since 2002, with periodic devia- rehabilitation segment presents sufficient dynamism tions dictated by electoral logic. for this segment to constitute or act as a lenitive.

Gross Fixed Capital Formation – Annual Change Rate

15%

10%

0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 -5%

-10%

-15%

7 Employment Statistics – 4th quarter 2012 – 13 February 2013 9 Construction Environment, no. 66, January/2013, FEPICOP 8 Construction Production, Employment and Remuneration Indices, December 2012, INE, 11 February 2013 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 17

EXTERNAL MARKET

Brief references to the macroeconomic framework of the advances produced by direct foreign investment the main external markets in which the company has in the development of the mining sector (primari- a direct intervention are presented below: ly coal and gas), but a general positive evolution is also evident in the various activity sectors, with > Angola agriculture (that continues to be the main activity In May 2012, following the sixth evaluation, the sector, representing some 30% of the country’s Stand-By Programme approved in November 2009 GDP), commerce and repair, construction, transport between the Angolan Executive and the International and communication services revealing dynamism, all Monetary Fund was successfully concluded, resulting leveraged by high public and private investment. in the release of the last financing instalment. The insufficiencies of the transport sector, consti- The 31 August electoral campaign resulted in the tuting a barrier to the extractive industry’s deve- incumbent party (MPLA)’s conquest of an absolute lopment potential, emphasize the need to increase majority in Parliament, with 72% of the votes, and investment aimed at modernizing the infrastructure the renewal of the term of office of the President of in this sector. the Republic, José Eduardo dos Santos. The control over inflation attained over the last few The latest predictions formulated by the IMF10 as to months, the good performance achieved by the the behaviour of the Angolan economy point to a agricultural sector and the relative stability in the product growth in real terms of 6.8% in 2012 and a Metical exchange rate, permitted the deceleration of prediction of 5.5% for 2013, with growth rates exclu- the average annual inflation, which attained 2.6%. ding the petroleum sector achieving 6.0% and 6.8% for the same periods. The construction, energy and Despite all these positive indicators, it is important transport sectors will be the main non-petroleum GDP to highlight this country’s still very expressive de- growth motors, benefitting from the public invest- pendence on international aid and its need to conti- ment and the regularization of overdue payments. nue with the poverty reduction strategy in place. In this context, the fight against poverty and a more There remain, however, external uncertainty factors inclusive growth constitute priorities for the Mozam- – the financial crisis in Europe and the recovery of bican Government’s 2013 State Budget. growth in the United States – that strongly condition the global consumption of petroleum and, simulta- > United States neously, Angolan exports. As stated above, the economy of the United States will have expanded 2.2% during the year and the On the other hand, the coordinated execution of the projections for the expansion rate for the North- fiscal and monetary policies and the stability of the -American economy for 2013, in general, are below exchange rate constitute determinant factors for the this rate. In this context, the budgetary policies will stability of prices in the Angolan economy, with the assume great relevance, as this is an area that may inflation rate attaining in the month of August, for face automatic cuts in the federal programmes as the first time, a one digit level, and the prediction from March, namely with defence expenditure, also that it will close the year within the government ob- implying layoffs. jective of 10%. In the construction sector, the outlook for 2013 pre- > Mozambique dicted by AGC of America (The Associated General In this country, the IMF, contrary to what it has done Contractors of America) is globally positive, even if with the growth predictions for the majority of the with two different trends: a growing optimism as to advanced and emerging markets, revised the eco- the development of projects in the private sector nomic growth rate upwards both for 2012 and 2013 and a more reserved constructor outlook as to the to 7.5%11 and 8.4%, respectively (from the previous evolution of public sector demand. As to employ- 6.7% and 7.2%). ment prospects for the sector, these are improving. Notwithstanding the less optimistic climate as to This acceleration of the expansion rhythm of the the foreseeable behaviour of public sector demand, Mozambican economic growth is a consequence of a gradual increase in public private partnerships is expected, a type of contract increasingly applied in 10 Regional Economic Outlook: Sub-Saharan Africa – Maintaining Growth in an the development of infrastructures as a means to Uncertain World, IFM, Oct.12 overcome public financing constraints. 11 8.0% at the end of the 1st Half-year of 2012 according to statements made by the Governor of the Bank of Mozambique in official speech of the end of the financial year 2012 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 18

> Romania > São Tomé and Príncipe In 2012 Romania will have achieved a real GDP The evolution of the economy of São Tomé and growth in the order of 0.8%, according to Eurostat Príncipe in 2012 will have presented a real growth of predictions, with a larger product expansion being around 4%. For 2013, the latest projections point to projected for 2013 (+2.2%). a growth of 4.5%.

The construction sector presented, in 2012, a certain The macroeconomic, structural and socioeconomic dynamism revealing growths of 2.6% and 9.7% in fragility of São Tomé and Príncipe is still profound the 1st and 2nd quarters of 2012 compared with and is reflected in an economic structure heavily the homologous quarters of the previous year, but dependent on the exterior, in a chronically deficient with a somewhat erratic behaviour as can be seen in balance of payments and in a very high level of ex- the negative variation (-1.4%) observed in the 3rd ternal debt. quarter of the year. The main highlights of the 2012 economic environ- > Brazil ment are the drop in accumulated inflation, which During the year 2012 the Brazilian economy’s GDP amounted to 10.4% (11.9% in 2011). The inflation presented a somewhat disappointing growth rate. level is still high and reflects the volatility of the in- The data for the 3rd quarter of 2012 revealed a ternal prices generated by the scarcity of basic com- growth of 0.6% in comparison with that of the modities at certain times. For 2013, the Central Bank second quarter of the year, when taking the sea- expects an inflation rate below the 10% objective sonal adjustment into consideration in the series. set ever since 2011. When comparing this to like period of 2011 a GDP expansion of 0.9% becomes apparent. For the sum With an export to import rate of below 5% the of the four quarters ended at the end of the third country is extremely dependent on external aid. quarter of 2012, GDP registered a growth of 0.9% in relation to the four quarters immediately prior. In terms of the accumulated result for the year up to the end of September, GDP presented an increase of 0.7% in relation to like period of 201112.

This data caused a decrease in the growth expectations for 2013, which are now below 4%.

.3 RELEVANT FACTS OF THE YEAR

> The Court of Auditors refuses to issue the formal > Adjudication of a project in Angola: the subsidiary prior approval to the concession contract for the Po- Sociedade de Construções Soares da Costa celebra- ceirão-Caia stretch of the high speed railway (March tes a contract for the project and construction of 2012); the social facilities for the employees of Angola LNG (1st phase), in Soyo, Angola; the project will be exe- > Adjudication of the Oman Works (March 2012): cuted in consortium with MSF, with Soares da Costa the subsidiary Sociedade de Construções Soares da holding a 50% share; Costa, S.A., is adjudicated a project in the Sultanate of Oman, that includes the execution of the pro- > Disclosure of the 2011 Results: on 23 April 2012 jects and construction work on road infrastructure, the Group discloses its 2011 results; contemplating road sections, five viaducts at road junctions, and the associated road infrastructure > The company discloses the decision to provisio- networks, to be executed in an area situated betwe- nally suspend the judicial process communicated to en the Masqat International Airport and the Masqat the public on 6 December 2006. This process, on motorway. The Works will be executed through a facts invoked of a taxation nature relating to the joint venture with a local construction company; years 2001 through 2005, will, due to the responsibilities arising from the conditions accepted, have

12 Quarterly National Accounts, 3rd quarter of 2012 – Instituto Brasileiro de Geo- grafia e Estatística - IBGE REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 19

a negative impact on the results of the company of works ascends to 21.7 million Euros; some 8.7 million Euros; > In the concessions area, the related company > The related sompany Sociedade de Construções Soares da Costa Concessões, S.G.P.S., S.A. agrees Soares da Costa, S.A., is the competitor selected for to the disposal of the company “Infraestruturas SDC the adjudication, by REN – Gasodutos, S.A., of the Costa Rica, S.A.”, which had been wholly owned, and Mangualde-Celorico-Guarda gas pipeline construc- which holds a shareholding of 17% in the concessio- tion project, in Portugal. This project has an exten- naire company of the San José-Caldera motorway, sion of some 75 Km, with diameters of 700 mm and in Costa Rica. This shareholding is traded with the 300 mm and amounts to 16.8 million Euros; Spanish company, Globalvia Inversiones, S.A.U., for an amount of 9.33 million Euros, that includes sha- > The subsidiary in the United States, Prince, is reholder loans and other credits over the company announced by the Florida Department of Transpor- disposed of (October 2012); tation (FDOT), as having the most competitive proposal in a design-build project for the road accesses > The subsidiary Soares da Costa STP, Lda., in S. from the I-75 (SR 93) to the Southwest Florida Tomé and Príncipe is adjudicated Works involving International Airport, in Fort Myers, Florida. The the construction of the future headquarters of project, totalling 54.1 million Dollars (42.3 million Banco Central de S. Tomé e Príncipe (Central Bank Euros), to be executed in 795 days, comprises a of São Tomé and Principe), with 4 floors and a gross new connection between the I-75 to the Mid-Field construction area of 4.2 thousand m2, in a total Terminal of the Southwest Florida International Air- amount of 6.5 million Euros. This project together port. The project includes the construction of five with another project recently adjudicated (rehabi- viaducts/ bridges, 7 miles (approximately 11.3 Km) litation of the No. 1 National Road – phase 1 in an of access roads to the I-75 and a new access road amount of 5.3 million Euros) reinforces the long- to the terminal over the I-75; -term presence of the Group in this African market (November 2012); > The General Meeting of Shareholders is held on 24 May 2012 and, amongst other resolutions, approves > Grupo Soares da Costa, S.G.P.S., S.A., together the report and consolidated and individual accounts with a number of its related companies, celebrates for the 2011 economic period as well as the propo- a framework agreement with six banks to re-pro- sal for the appropriation of the net individual results; gramme the respective net-debts with recourse, in a total amount of some 228 million Euros. Addi- > Internal mergers: the company informs that, given tionally, a contract is celebrated with two of these the significant slowdown in the construction ac- banks for the opening of a credit line in the amount tivity in Portugal and as a measure of operational of 47 million Euros, substituting short-term debt rationalization to reinforce its position in a highly with long-term debt (November 2012); competitive and increasingly international market, it has merged the two most relevant Portuguese sub- > The consortium led by the subsidiary Sociedade sidiaries of the construction area, incorporating Con- de Construções Soares da Costa S.A., and that in- tacto – Sociedade de Construções, S.A. in Sociedade cludes Edifer Angola, S.A., is adjudicated the basic de Construções Soares da Costa, S.A. and, in the infrastructure works on the Pólo Industrial de Fútila pursuit of measures to adapt its structure, its sub- (Industral Hub of Fútila), in the Angolan Province of sidiary from the concessions area Soares da Costa Cabinda. This project of the Industrial Hub of Fútila, - Serviços Técnicos e de Gestão, S.A. in Soares da created in 1998, should occupy an area of 2,345 Costa Concessões, S.G.P.S., S.A. (June 2012); hectares and is financed by the World Bank, by the Angolan oil company Sonangol, and by the central > The subsidiary Sociedade de Construções Soares and provincial (Cabinda) governments, amongst da Costa, S.A., is adjudicated the construction of other entities. The project adjudicated to the con- the bridges over the Sangaze, Pompwe, Macuca and sortium includes the execution of the infrastructure Chidge Rivers in the Province of Sofala and the brid- of the industrial hub (roads and electrical, water ges over the Muira, Tsanzabue, and Nhagucha Rivers and sewerage grids) and 7 administrative support in the Province of Manica, in Mozambique. The pro- buildings (namely, the administrative building, the ject, adjudicated by ANE (Administração Nacional de reception, the fire department, warehousing and the Estradas, the national roads administration body), safety and health facilities). The execution period is has as its object the design-build of 9 bridges (6 12 months and the contract amounts to 68 million with reinforced concrete decks, pre-stressed and of Dollars (approximately 52 million Euros). Sociedade varying lengths), the correction of the access roads de Construções Soares da Costa has a 50% share in and other related varied work. The amount of the this consortium. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 20

.4 ANALYSIS OF THE ACTIVITY: CONSOLIDATED ACCOUNTS

CONSOLIDATED FINANCIAL INDICATORS

(million Euros) 2012 2011 Variation Turnover 801.8 873.5 -8.2% Portugal 236.5 328.9 -28.1% External Markets 565.4 544.7 3.8%

EBITDA 71.9 94.1 -23.5% EBITDA Margin 9.0% 10.8% -1.8 p.p.

Recurrent EBITDA 102.5 95.4 7.5% Recurrent EBITDA Margin 12.8% 10.9% +1.9 p.p.

EBIT (Operating Results) 10.9 58.9 -81.6%

Financial Results -69.0 -51.8 33.3%

Earnings before Tax -58.2 7.1 - Net Earnings attributable to Group -46.9 2.4 -

TURNOVER

The Group’s turnover amounted to 801.8 million relation to the previous year of the Transmontana Euros, 71.7 million Euros less in absolute terms and motorway project. 8.2% below that recorded in the previous year. This decline was determined by the accentuated decrea- The external markets on the other hand had a global se in the domestic market activity, consequence of growth of 3.8% which, associated with the decrease the adverse macroeconomic and sector framework, of 28.1% in the domestic market, accentuates the indeed already sufficiently described in a previous trend observed over the last few years in relation to chapter of this report, and is amplified in the 2011- the international dimension of the Group, with the 2012 comparative analysis by the lower amount in external turnover quota now representing 70.5%, compared with 62.4% in 2011.

TURNOVER BY GEOGRAPHICAL MARKETS

(million Euros) 2012 % 2011 % Variation Portugal 236.5 29.5% 328.9 37.6% -28.1% Angola 353.5 44.1% 325.4 37.3% 8.6%

United Satates 125.8 15.7% 114.1 13.1% 10.3%

Mozambique 64.9 8.1% 80.4 9.2% -19.2% Other countries 21.2 2.6% 24.8 2.8% -14.6%

TOTAL 801.8 100.0% 873.5 100.0% -8.2%

The external markets recorded a growth in excess torical maximum amount, and of 8.6% in Angola, of 10% in the United States (on top of the 44.8% placing this geography as the Group’s main market growth already recorded in 2011), achieving an his- of intervention. Mozambique, that doubled the 2011 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 21

turnover, despite the good level of activity in 2012, bally contributed to turnover with an amount of 21.2 did not match the extraordinary turnover level at- million Euros, representing a market share lower tained the previous year, during which the impact of than 3% but similar to that of the previous year. the Olympic village for the Pan-African games project was still felt. The remaining markets (Brazil, S. The following table presents the breakdown of con- Tomé and Príncipe, Romania, Oman and others) glo- solidated turnover by business area.

TURNOVER BY BUSINESS AREA

(million Euros) 2012 % 2011 % Variation Construction 712.5 88.9% 796.2 91.1% -10.5%

Concessions 156.8 19.6% 187.6 21.5% -16.4%

Real Estate 22.1 2.8% 7.1 0.8% 209.6%

Energy 1.6 0.2% 8.6 1.0% -81.4%

Holding and Other 11.8 1.5% 13.6 1.6% -12.8% Inter-segmental eliminations -103.0 -12.9% -139.6 -16.0% -26.2%

TOTALS 801.8 100.0% 873.5 100.0% -8.2%

In this context, there are no significant changes to increase in the Real Estate area to 2.8% of total point out in the relative weight of each business turnover, the result of the recognition of significant area; even so, reference should be made to the sales in the Talatona project, in Angola.

PROFITABILITY

For a better analysis, the main components of the for- diately preceding period are presented below, aggrega- mation of the results for the period and for the imme- ted in a convenient manner to facilitate such analysis:

(thousands of Euros) 2012 % OG 2011 % OG Variation Turnover 801,849 102.6% 873,548 98.6% -8.2%

Production Variation -30,149 -3.9% -19,097 -2.2% 57.9% Other Operating Gains without adjustment of reversals 9,958 1.3% 31,815 3.6% -68.7% Operating Gains (OG) 781,658 100.0% 886,266 100.0% -11.8% Cost of Goods Sold 146,501 18.7% 186,471 21.0% -21.4% External Supplies and Services 378,168 48.4% 437,247 49.3% -13.5% Staff Costs 145,111 18.6% 146,389 16.5% -0.9% Other Operating Costs 39,931 5.0% 22,096 2.5% 80.7%

EBITDA 71,947 9.2% 94,063 10.6% -23.5% Amortization/ Depreciation, Provisions and Adjustments (Net of 61,091 7.8% 35,176 4.0% 73.7% Reversals) EBIT (Operating Results) 10,856 1.4% 58,887 6.6% -81.6% Financial Results -69,042 -8.8% -51,800 -5.8% 33.3% Earnings before Tax -58,186 -7.4% 7,088 0.8% - Corporate Income Tax -10,675 -1.4% 4,746 0.5% -

Consolidated Earnings for the Period -47,512 - 2,342 0.3% - Result Attributable to Group -46,881 - 2,376 0.3% - REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 22

With the decrease in production variation and in Downstream from EBITDA the caption amortization/ other gains, operating gains decreased, in relation depreciation, provisions and adjustments (net of to the previous year, in a very expressive manner reversals) reveals a very significant increase in 2012 (-11.8%) more than turnover (-8.2%). in relation to the previous year, penalizing operating results in an expressive manner. Costs of Goods Sold and External Supplies and Ser- vices decreased more than proportionally (-15.9% The general adverse panorama of market demand combined) revealing, in this manner, efficiency gains associated with the severe financing limitations and or reflecting some representative change in the mix restrictions have, on the one hand, come to gene- of Works/activities justifying a different input matrix. rate difficulties, sometimes insurmountable, in the solvency of the companies and increase collections As to staff costs, despite the human resource adjust- litigation and, on the other hand, these same con- ment process deployed with a great magnitude during ditions have been decreasing the potential value of 2012, these were influenced by the value of the em- assets, in both cases requiring the recording of im- ployee contract rescission indemnities (10.8 million pairment losses. In this context, the 2012 economic Euros, versus the amount of 1.4 million Euros in period revealed itself to be a particularly difficult 2011) and thus decreased by a mere 0.9%. A recal- year for the Group. culation without this effect, considered to be non-recurrent, will lead to a substantial decrease of 7.4%, Systemizing, the consolidated income statement more in line with the real evolution of the output. presented above integrates and reflects the effects, considered non-recurrent, of the following costs: The significant increase in the caption other opera- > Restructuring costs related with employee labour ting costs reflects, in turn, the important impact in contract’s termination (transversal to the various 2012 of the costs incurred with the suspension of business areas but with a special incidence in the a tax judicial process (8.7 million Euros), for facts construction area); occurring up till 2005, as well as with the evolution of the (non) collection of credits, originating in the > Costs with the tax related judicial process refer- United States in 2007 over a third party whose in- red to in the “Relevant facts of the year” section solvency determined the respective write-off (in the (Group); amount of 11.1 million Euros). > Impairment losses with credits in the United States, Portugal and Angola (construction area); Hence, the analysis of EBITDA reveals a decrease of 94.1 million Euros down to 71.9 million Euros, redu- > Impairment losses with real estate assets (real cing the margin from 10.8% to 9.0% in relation to estate business area); turnover. > Impairment losses with parking facilities (concessions business area); and An exercise to correct the non-recurrent effects would permit concluding that recurrent EBITDA reve- > Partial write-off of goodwill arising on the acquisi- als an interesting growth from 95.4 million Euros in tion of Contacto. 2011 to 102.5 million Euros in 2012. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 23

PROFITABILITY BY BUSINESS AREA

(million Euros) 2012 % Margin 2011 % Margin Variation EBITDA 71.9 100.0% 9.0% 94.1 100.0% 10.8% -23.5%

Construction 29.0 40.3% 4.1% 47.7 50.7% 6.0% -39.2%

Concessions 46.7 64.9% 29.8% 43.3 46.0% 23.1% 7.9%

Real Estate 5.6 7.8% 25.2% 4.1 4.3% 57.0% 37.1%

Energia Própria -2.5 -3.5% - -2.1 -2.2% -23.9% -

Holding and Other -8.7 -12.1% -73.7% 0.7 0.7% 5.1% - Eliminations at Group level 1.9 2.7% -1.9% 0.4 0.4% -0.3% -

EBIT 10.9 100.0% 1.4% 58.9 100.0% 6.7% -81.6% Construction -8.0 -73.7% -1.1% 29.4 50.0% 3.7% -127.2%

Concessions 26.5 244.0% 16.9% 29.0 49.3% 15.5% -8.7%

Real Estate 2.8 26.0% 12.8% 2.5 4.2% 35.0% 13.0%

Energia Própria -2.7 -25.0% - -2.2 -3.7% -25.4% 24.4%

Holding and Other -9.7 -89.1% - -0.2 -0.4% -1.7% - Eliminations at Group level 1.9 17.8% -1.9% 0.4 0.6% -0.3% -

Note: The margin is calculated in relation to the turnover of each segment.

Excluding the non-recurrent effects identified above from the sum of the EBITDA and EBIT – in 2011 also – would result in the following recalculated indicators:

RECURRENT PROFITABILITY BY BUSINESS AREA

(million Euros) 2012 % Margin 2011 % Margin Variation EBITDA 102.5 100.0% 12.8% 95.4 100.0% 10.9% 7.5%

Construction 50.1 48.9% 7.0% 49.0 51.9% 6.2% 2.3%

Concessions 46.9 45.7% 29.9% 43.3 45.4% 23.1% 8.2%

Real Estate 5.6 5.5% 25.5% 4.1 4.3% 57.0% 38.5%

Energia Própria -2.5 -2.5% - -2.0 -2.1% -22.9% -

Holding and Other 0.5 0.5% 4.4% 0.7 0.7% 5.2% -25.5% Eliminations at Group level 1.9 1.9% -1.9% 0.4 0.4% -0.3% -

EBIT 60.8 100.0% 7.6% 62.2 100.0% 7.1% -2.2% Construction 25.2 41.4% 3.5% 32.0 51.6% 4.0% -21.4%

Concessions 32.4 53.4% 20.7% 29.3 47.1% 15.6% 10.8%

Real Estate 4.4 7.2% 19.7% 2.8 4.5% 39.2% 55.3%

Energia Própria -2.7 -4.4% - -2.1 -3.4% -24.5% 28.6%

Holding and Other -0.4 -0.7% -3.6% -0.2 -0.4% -1.7% - Eliminations at Group level 1.9 3.2% -1.9% 0.4 0.6% -0.3% - REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 24

FINANCIAL RESULTS

The financial results amounted to -69.0 million in net terms, had a negative impact in 2012 of 2.0 Euros as compared to the -51.8 million Euros in million Euros, which compares unfavourably with the 2011. The net financing cost (interest borne less positive influence of 6.4 million Euros in the pre- interest earned) increased from 41.1 million Euros to vious year. However, revenue and capital gains, due 54.7 million Euros, evidencing the general worsening to the shareholding disposed of in Costa Rica, incre- of the financing conditions, the increase in the debt ased from 1.5 million Euros in 2011 to 8.4 million as well as an agreement achieved with the Auto- Euros in 2012. nomous Region of Madeira. Exchange differences,

EARNINGS BEFORE TAXES AND NET EARNINGS

The conjugation of the operating and financial re- challenges that may present themselves, a set of sults analysed above resulted in pre-tax earnings of specific circumstances arose in 2012, already ade- -58.2 million Euros, an exceptional amount in the quately covered above, that significantly impacted history of the company, reflecting a very difficult the performance for the period. year in a very adverse economic environment. In addition to the restructuring costs inherent to the The after tax earnings attributable to the Group measures decided upon to place the Company and amounted to -46.9 million Euros, versus the positi- its main subsidiaries in a situation that enables them ve amount of 2.4 million Euros in 2011. to face and overcome, with moderate optimism, the

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At the level of the Consolidated Statement of Fi- non-current assets increasing from 937 million nancial Position, in a comparative analysis between Euros to 1,028 million Euros, whilst current assets 2012 and the previous year, two dominant and rela- decrease from 827 million Euros to 764 million ted aspects permeate this statement: Euros; > Greater weight in the structure or composition of > The increase in non-current assets is primarily the non-current captions (non-current assets and related to accounts receivable that increased by non-current liabilities) which increased against the some 100 million Euros, due fundamentally to decrease in the current captions (current assets the recognition in the Consolidated Statement of and current liabilities); and Financial Position of the financial assets of the above-mentioned concessions, that follow the fi- > A structural change that clearly reveals the growing nancial asset accounting model; and weight of the concessions business, namely as a result of the infrastructure projects under construc- > At the level of current assets the most impor- tion that have adopted the financial asset model tant changes relate to the decrease in inventories of accounting (in particular the Transmontana mo- (-38.5 million Euros) and in clients (from 440.7 torway, but also the Estradas do Zambeze, in Mo- million Euros at 31.12.2011 to 393.4 million Euros zambique), together with an improved debt structure. at 31.12.2012), partially compensated by the increase in cash and cash equivalents and in other Reference will now be made to some relevant as- current assets. pects that result from the above-mentioned comparative analysis of this financial statement, starting SHAREHOLDERS’ EQUITY suffered a severe de- with the breakdown and evolutionary analysis of the crease of 63.3 million Euros in 2012 down to 53.2 ASSETS: million Euros at the end of the period. The main changes relate to the following factors: > Total assets did not change significantly, remaining > The incorporation of the net earnings for the at around 1.8 thousand million Euros, but with period (-46.9 million Euros); REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 25

> Variation, net of deferred taxes, in the fair value Due to the greater involvement of the concessions of the derivative financial instruments (essentially business, referred to above, the value of the finan- interest rate swaps in the concessions area) of cial instruments continues to increase (with a fore- -12.4 million Euros; and seeable downturn in the trends as from the first half of 2013, at which point the notional value of the > Other variations in equity in the amount of -4.0 million Euros, which include, namely variations in foreign ex- swaps contracted will attain the maximum amount) change translation reserves and minority interests. up to an amount of 83.5 million Euros (the sum of current and non-current captions), versus the 66.4 Non-current LIABILITIES increased considerably in million Euros at the end of 2011. In so far as current terms of bank loans, with an annual variation of liabilities and working capital captions are concer- some 251 million Euros, whilst the current level of ned there is a decrease in amounts due to suppliers the same caption suffered a decrease (-35.1 million (-32.8 million Euros), but also a decrease in advan- Euros). This evolution reflects, on the one hand, the ces from clients (-10.7 million Euros). increase in the financing of concession assets and, on the other hand, the effect of the rescheduling of the debt maturities.

NET DEBT

Remunerated net debt at the end of 2012 amoun- Euros of debt without recourse, in the concessions ted to 1,024.2 million Euros (863.0 million Euros business area. in 2011) and included an amount of 460.4 million

Evolution of Net Debt

(million Euros) Dec. 2012 Dec. 2011 Variation Total Net Debt 1,024.2 863.0 +18.7%

Recourse 563.8 463.2 +21.7% Non Recourse 460.4 399.8 +15.2%

The following table shows the evolution of net-debt and of the respective multiple EBITDA, which in 2012 came in at 8.9x (versus the 8.1x a year before).

Evolution of Net Debt with Recourse and Multiple EBITDA

(million Euros) 2012 2011 2010 Net Debt with Recourse 563.8 463.2 445.5 Multiple EBITDA (Recourse net debt / Recurrent EBITDA from the activities 8.9x 8.1x 8.4x financed by recourse debt)

The increase in the debt with recourse is justified ment with six financial institutions to re-programme primarily by the equity financing of the Autoestradas the respective bank debts with recourse, in a total XXI-Subconcessionária Transmontana, S.A., by the amount of circa 228 million Euros. Additionally, a fur- charges with employee contract rescissions and by ther contract was celebrated with two of these banks other working capital needs. creating a credit line of 47 million Euros, thereby substituting short-term debt by long-term debt. Still regarding bank debt, it is important to note that, in November 2012, the company together with seve- From amongst the terms and conditions of the two ral of its subsidiaries celebrated a framework agree- contractual instruments the following is of note: REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 26

> Maturity of 9 years with a grace period for the ca- > A temporary restriction on dividend distributions; and pital of three years; and > The intention to proceed with a share capital incre- > Standardization of the spreads at a moderate rate, ase within six months, on terms yet to be defined, with the possibility of a revision at the end of the and in an amount not inferior to 25 million Euros. grace period; The executive committee has been establishing con- Within the scope of this programme the Group as- tacts and efforts that solidify expectations regarding sumed: the effective materialization of the Group capitalization operation.

.5 PERFORMANCE BY BUSINESS AREA

5.1 CONSTRUCTION

The construction business area, traditional sector The chart presented below summarizes the main of intervention, is the most important vector in the consolidated indicators of the construction busi- Soares da Costa Group, internalizing in its compe- ness area, evidences a global decrease of 10.5% in tencies all the skills, specialities and arts in the busi- turnover, result of the combination of a significant ness chain of value and in which its internationaliza- decrease in the national market activity that a slight tion assumes a preponderant role. Soares da Costa increase in the external market did not compensate, Construção, S.G.P.S., S.A. leads and concentrates a certain resilience in the margins of an operational in its sphere the related companies of this business nature, with the recurrent EBITDA increasing slightly, area. and a deterioration of the financial function.

Construction Key Performance Indicators (including intragroup operations)

(million Euros) 2012 2011 Variation Turnover 712.5 796.2 -10.5%

Portugal 173.6 264.2 -34.3% External Markets 538.9 532.0 +1.3%

EBITDA 29.0 47.7

Recurrent EBITDA 50.1 49.0 2.3%

Financial Results -41.9 -16.9 - Consolidated Net Earnings -37.8 8.1 -

TURNOVER

The construction business area turnover (inclu- decrease in relation to the previous year of 10.5%, ding intragroup operations) attained, in 2012, the explained by the pronounced decrease in the do- amount of 712.5 million Euros, which represents a mestic market (-34.3%). REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 27

Turnover of the Construction business area by Geographical Market (including intragroup operations)

(million Euros) 2012 % 2011 % Variation Portugal 173.6 24.4% 264.2 33.2% -34.3%

Angola 336.5 47.2% 327.6 41.1% 2.7%

United Satates 125.9 17.7% 114.2 14.3% 10.2%

Mozambique 55.9 7.8% 72.1 9.1% -22.4%

Brazil 10.2 1.4% 4.2 0.5% 146.3%

Romania 0.3 0.0% 6.6 0.8% -95.4% Other countries 10.1 1.4% 7.3 0.9% 38.2%

TOTAL 712.5 100.0% 796.2 100.0% -10.5%

With effect, the decrease in domestic turnover of 2011, that already represented a maximum amount, 90.6 million Euros exceeds the overall decrease revealed yet again a growth in excess of 10%, to recorded (-83.7 million Euros), with total external which contributed the fundamental intervention of turnover growing 1.3% to 538.9 million Euros (from the road infrastructure projects. 532.0 million Euros in 2011) and coming to represent over 75% of the activity. In this context, reference should also be made to Brazil, with a turnover already exceeding 10 million The level of activity in Angola, measured in terms Euros and on which the Group is banking on a gro- of turnover, exceeded 2.7% of the amount of the wing intervention; the other geographies include pri- previous year, whilst the Mozambican market, re- marily Oman, Venezuela and other African countries presenting a significant volume of activity, did not (S. Tomé and Príncipe and the Maghreb countries). match the extraordinary level attained in the previous year. Summarized below are the most relevant aspects of the development of the activity in this business area Turnover in the United States, starting from that of during 2012, in the different geographical markets:

PORTUGAL

The key companies of the construction business Merely symbolically paradigmatic of this climate is area that are consolidated using the full consolida- the suspension of the Poceirão-Caia stretch of the tion method and with a significant intervention in high speed railway project, through the withholding the country are the following: of formal prior approval by the Court of Auditors that occurred at the beginning of the year of refe- > Sociedade de Construções Soares da Costa, S.A.; rence of this report. > Clear - Instalações Electromecânicas, S.A.; > Construções Metálicas Socometal, S.A.. In parallel, private investor confidence became negative and the pervading climate of uncertainty also led Furthermore, various complementary group of com- private investment to record historically low levels. panies (or ACEs), in which, namely the first company referred above, are in operation and are consolida- Furthermore, Portugal enters this crisis following two ted using the proportional method; other compa- decades of construction market overheating, which nies were also consolidated using the proportional led to an installed productive capacity that is both method, namely those held by the rail and maritime enormous and unstable. This available productive segment: Somafel and OFM. capacity, when confronted with the investment dip and the decreased demand, necessarily leads to The construction market in Portugal is in a profound price degradation and to excessive competitiveness state of depression. Public investment was abruptly based on survival logic. reduced to an infinitesimal amount since mid-2011. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 28

Faced with this unfavourable scenario, Sociedade The geographical distribution of the operations in de Construções Soares da Costa, S.A.’s activity Portugal assumed, in 2012, a very significant amount in the domestic market, including that contributed by in the North of the country (76%), with the remaining the complementary group of companies (or ACEs) in 24% distributed ¾’s in the south of the country and which it participates, also suffered, over the last few ¼ in the Madeira archipelago. This last amount came years, a considerable drop even though still revea- from private investment; the two public works already ling market share gains. adjudicated in that region have been suspended.

In terms of construction works completed during In terms of activity segmentation, engineering and in- 2012, the following are of note: frastructure works were in a strong majority representing 87% with civil construction representing a mere 13%. > Reinforcement of the Alqueva dam power generation capacity; In particular, and within this segment, the road in- > Opening of various integrated motorway sections frastructure (roads and bridges) assume the largest on the Transmontana motorway; and share (76%); of note is the extremely small percen- > Jorjais and Tinhela road bridges. tage of works related with the environmental sector (WTPs e WWTPs), which practically had no expres- Of importance in the national market’s production sion in the activity. In this sub-segment in particular, volume, during 2012, are the following construc- there are various apparently stagnant bids due to tion works: lack of funds to invest at the State or municipal level. > Road accesses to the logistical platform of Lisboa Norte (North of Lisbon) in the sub-section Vila Franca de Xira / Nó A1 (junction) – of the Norte motorway (of the North), for Brisa; > Construction of the widening and refurbishment to 2x3 lanes of the sub-section Maia/Santo Tirso of the A3 – motorway Oporto/Valença, for Brisa; and > Pousada da Serra da Estrela (Heritage Hotel), in Activity in Portugal in 2012 – Engineering / Covilhã, a project that comprises the requalifica- Infrastructure: Breakdown by Segment tion of the old Penhas da Saúde Sanatorium into a hotel included in the “Pousadas de Portugal” programme, currently operated by Pestana Group in Infrastrutures partnership with ENATUR. 13%

The restart of the works on the Moura-Safara adductor should also be referred to, works that had been suspen- Railway ded due to difficulties that were subsequently overcome. 0,2%

Activity in Portugal in 2012 – Distribution by Bridges Geographical Area 4%

South 19% Environment 2,9%

Madeira Island 5% Dams 4,3%

North Roads/motorways 76% 75,5% REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 29

Regarding the complementary group of companies > Central de Valorização Orgânica do Seixal (Orga- (or ACEs) in which the Company participates, of note nic Waste Treatment Plant), won in 2010 by the for this document are, due to the greater relevan- hydraulic segment. The project, that comprises the ce of the activity carried out in 2012, in addition to construction of a plant to transform biodegradable CAET XXI (50%), that has as its object the design, organic material arising from the conversion of project, construction and increase in the number of urban waste into an organic compost for agricul- lanes and the rehabilitation of the various associa- tural use, as well as the production of electricity ted access groupings that integrate the Transmon- from the biogas waste represented an enticing tana sub-concession, Hidroalqueva (50%), which challenge for the Company, enabling it to acquire object is the execution of the global construction know-how and to diversify the business into an works for the reinforcement of the Capacity of the area with future growth potential. Even though the Alqueva Hydro Plant, for EDP and the two comple- rhythm of construction slowed down in 2012, it is mentary group of companies (or ACEs) (28.57%) foreseen that the plant will be fully operational in constituted to execute the construction projects for 2013 and, once again, Clear’s contribution to this the infrastructure necessary for the execution of the has been fundamental; and Indáqua Matosinhos and Indáqua Vila do Conde in- > Pousada da Serra da Estrela, in Covilhã. Clear is res- 13 vestment plans. ponsible for the execution of special installations (electrical, hydraulic and acclimatization installa- As to LGV, ACE (17.25%), constituted to execute at tions and management). This is a hotel unit with a the global price, which is fixed, not revisable and with capacity of 91 rooms, including areas for restau- a set date for delivery, the global contract covering rants, SPA and cultural activities. As with Pousada the design, project, expropriations, construction, da Cidadela de Cascais, this type of development supply and assembly of the equipment foreseen in falls within the type of projects in respect of which the construction of the railway infrastructure of the Clear has a vast experience and in which the effort Poceirão-Caia stretch of the high speed railway be- required is concentrated not only on the edifica- tween Lisbon and Madrid, as per the works contract tion, but also on the preservation of patrimony signed on 8 May 2010 with Elos – Ligações de Alta with the consequent increase in the degree of te- Velocidade, S.A., concessionaire of the said stretch, chnical difficulty in the execution of the Works. the continuity of its operations was brought into question. With effect, following almost two years With regard to Socometal, the company’s activity of developing the project, a concession contract re- in 2012 did not escape the depressive environment formulation, the participation in the elaboration of and came in below the installed production capacity. alternative proposals for the conceder, it became The most significant interventions made in the Iron known on 21 March 2012 that the Court of Auditors segment were: (i) the 6.2 A overhead passage, in had refused to issue the formal prior approval on the Vila Real, consisting in the supply, production, an- contract referred to above. With this decision LGV, ticorrosive protection and finishing, transport and ACE’s activity in 2012 was restricted to negotiating assembly of the metallic structure for an overhead the revocation of the works contract with Elos. passage over the A24 in Vila Real and a bridge over the Corgo River and access viaducts, in Vila Real, Clear is another subsidiary with a relevant activity both within the scope of CAET XXI; (ii)the supply, both in the country as well as in Angola, in this case production, machining, painting and transport of the through its subsidiary Clear Angola. In Portugal, a structures of a gantry for pier containers for the Lei- significant decrease in production occurred, the result xões Port; and (iii) the structural project, supply and of the scarcity of projects and the delay in the start- assembly of the metallic structure to provide sha- -up of some of the projects adjudicated by clients. ding (coverage) was completed for Warehouse 08 Even so, the company participated in important pro- (Gran Cruz Porto, S.A.). Even though focused on the jects amongst which the following stand out: external market, reference should be made to the > Pousada da Cidadela de Cascais (Heritage Hotel), supply and production, including machining, of con- in Cascais, with involvement in the hydraulic, me- nective parts, that comprise the metallic structure of chanical and electrical installations, inaugurated in the cover of the new Nice stadium, for the company March 2012; Fargeot Lamellé Collé, subsidiary of da Vinci, as well as to the intervention in two projects: Viaduc PK > Resort Quinta do Lord, in Caniçal, Madeira island 28+650 and Viaduc PK 36+600 of the moderniza- with the execution by Clear of the special installation of the railway line Thenia/Tizi-Ouzu, for Teixeira tions, namely mechanical and hydraulic, which Duarte, S.A.. works were completed in January 2013;

13 In parenthesis is the shareholding percentage held by the Company. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 30

In the railways sector, activity segment run by the In the area of port works, OFM’s target, of note, subsidiary Somafel, the deterioration of the sector amongst other works, is the conclusion of the reha- continued in Portugal due to the severe budgetary li- bilitation and adaption of the “Doca de Pedrouços – mitations of the railway public entities imposed by the Obras Marítimas – Volvo Ocean Race” project, aimed governmental tutelage. Indeed, the global amount of at securing the Volvo Ocean Race and guaranteeing the bid procedures for new construction works, in the its realization and the subsequent dock concession. overall national railway grid, launched by Refer during Construction work was also completed on the mari- 2012, was a mere 2.3 million Euros for the totality of time infrastructure to improve the shelter conditions the bids launched throughout the year and represent in the fishing sector in Praia, on the Graciosa Island sporadic line requalification or renovation interven- in the Azores. It is, however, in Venezuela that OFM tions. Additionally, at the end of 2012, Somafel won is carrying out the largest project ever undertaken a bid for line maintenance, launched by Refer, which by this subsidiary - “Ampliación y Modernización del will represent an annual turnover of 5 million Euros Puerto de La Guaira” -, where the project has attai- during five years. In this manner, the activity of the ned cruising speed. company in the national market was insignificant and it had to concentrate on the external market, namely The total consolidated turnover of the construction on the countries in the Maghreb region (Kingdom of business area in Portugal amounted to 173.6 million Morocco and the Popular and Democratic Republic of Euros, a drop of 34.3% versus the 264.2 million Algeria) where it has been consolidating its presence Euros of the previous year. since 2005 and 2007, respectively, and on the intense activity of a commercial nature in markets with a high potential, such as Brazil and Mozambique.

ANGOLA

The Angolan market, where Sociedade de Cons- > Museu da Ciência e da Tecnologia (Science and Te- truções Soares da Costa, S.A. has had an unin- chnology Museum) for GOE; terrupted presence of over three decades, continues > Hotel da Ilha (Island Hotel) for Forçauto; to be a primal strategic market in the development of the company’s business, that has strived to attain > Museu das Forças Armadas (Armed Forces and consolidate recognized prestige and reputation, Museum) (completed); and namely in the buildings construction segment, with > Development of “Shopping Fortaleza”. the construction of projects of great importance and significance in the various sub-segments: residen- In the Bayview - TTA2 Office Building for Total pro- tial, commercial and office blocks. ject the multidisciplinary presence of the Group is to be pointed out, since in addition to the construction The infrastructure segment is also considered an company, there were relevant participations by Clear important vector to develop in order to diversify and in the specialties of electricity, ventilation and accli- widen the business portfolio, with the company pre- matization systems, hydraulics and BMS (Building senting a significant operational importance and a Management System) as well as Socometal, which growing weight in this country. participated in the aluminium area.

Amongst the more relevant construction works in In terms of regional diversification, the project “Pri- the year’s production, in the buildings segment, are vate Residential Housing”, to be developed in Soyo, the following: in the Province of Zaire, is of note. It is a condomi- > Torre do 1º Congresso (Tower) for BESA; nium construction project built to house the tech- nicians of the natural gas facilities of Angola LNG, a > Bayview – TTA2 office building (provisionally accepted); project worth close to 220 million USD and in which > Edifício Torres Dipanda (Building); the company is in consortium with MSF. > New building of INE; Noteworthy too is the company’s expansion into > Luanda Towers Project; Huambo with two important projects for this city: the Huambo Cultural Centre and the rehabilitation of > New office building of AAA; the S. José de Cluny School building. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 31

In the infrastructure area, in addition to the rehabi- Clear Angola’s activity mix did not alter significantly, litation works on the marginal (waterfront) road (in with “electricity” representing 58% of the output the 2nd phase of execution), for Sociedade Baía de (41% a year before), “hydraulics” representing 21% Luanda, we highlight, due to its great significance (versus 27% a year before) and acclimatization and amplitude, the project “Reabilitação das En- coming in at 16%. Finally, “maintenance” generated costas de Sambizanga e Boavista” (Rehabilitation revenue representing 5%, a percentage higher than of the Slopes of Sambizanga and Boavista) in the that of last year (3%). Nevertheless, the growth of amount of circa 90 million Dollars. This project inte- the revenue in nominal terms from all the specialties grates the renovation of the urban fabric of Luanda compared to that of the previous year should be hi- and will permit, when completed, the use of a vast ghlighted. land area for the city’s expansion. Socometal has also sought to intervene more in Clear Angola after obtaining invariably pronounced this market; as subcontractor for Sociedade de growth rates of its activity in the previous years, at- Construções Soares da Costa, S.A., it intervened, as tained in 2012 a 56.5 million Euros turnover, almost stated above, in the new office building for Total, in in line with 2011’s figure, solidifying and consolida- Luanda. In the meantime, the merger of Socome- tions the level of activity reached. tal with Sociedade de Construções Soares da Costa (formalized in 2013) opens doors to a more genera- Indeed, in 2012, Clear had an active role in the ma- lized and effective internationalization in this area. jority of the residential and office block projects that were being built in Luanda. In addition to the inter- Moving outside the strict scope of production, the vention in “Total Building”, a project developed under definition and implementation of an effective rela- rigorous safety, quality and advanced technology re- tionship and cooperation framework with the enti- gulations, and that demonstrates the company’s abi- ties and local economic players, the logistical sup- lity to overcome challenges presented by great com- porting structure of the activities and finally, but no plexity, the completion of the Parking Lot building for less important, the recruitment, training, and prima- SONIP is of noted, with valences in ventilation, accli- rily retention of qualified local employee are some matization and hydraulic systems, projects followed of the fundamental vectors to be considered in the by the BMS (Business Management System) project specificities of the Angola market and that will cons- and the “Sonangol Distribuidora” building. The in- titute (and already constitute) permanent vectors tervention in the “Futungo, Cazenga and Sambizanga of study, evaluation and intervention by the related Hospitals” permitted the company to demonstrate companies of the Group in the implementation of its versatility and ability to execute works of quality the solutions considered to be most appropriate. in a demanding area such as the hospital area.

MOZAMBIQUE

Mozambique is also a market of historic permanen- During 2012, the activity carried out directly by So- ce for Soares da Costa. In addition to the activity ciedade de Construções Soares da Costa, S.A. carried out directly by the permanent establishment in Mozambique was fundamentally concentrated of Sociedade de Construções Soares da Costa, S.A., on important rehabilitation works on road N221, activity is also carried out through the Mozambican between Combomune and Chicualaquala and in the subsidiary, Soares da Costa Moçambique, SARL, construction of the bridge over the Zambeze River, in whose share capital is 80% held by the Group Tete; both works were running smoothly and at the through the company this report relates to, with programmed rhythms of execution. the remaining shareholding being held by the Mo- zambican State. In so far as the subsidiary Soares da Costa Mo- çambique, SARL is concerned, it had an intense This market has deserved an increasingly important activity in 2012 with the completion of the following reference over the last few years, not only due to the works meriting note: significance of the turnover and profitability that it has > Construction of the Administrative Court building; come to represent, but also because of the relevance, quality and importance of the works/projects that it > Construction of the new facilities of INNOQ (Insti- has developed or is in the process of developing. tuto Nacional de Normalização e Qualidade); REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 32

> Construction of gas stations for Petromoc in Songo > Construction of culverts and drains on the Combu- and in Maputo; mune –Chicualacuala road, in the Province of Gaza; > Rehabilitation of the facilities for the Mozabanco > Construction of the new Mapai Hospital in Gaza; branch, in Xai-Xai (Tete); > Construction of the new iron/chromium terminal > Rehabilitation of the facilities for the MozaBanco for MCT - Matola Cargo Terminal, in Matola; branch on Av. do Trabalho, in Maputo; > Construction and rehabilitation of the water ne- > Construction of the District Hospital of Quissico, in twork in Ribaué, Nampula; Inhambane; > Construction of the 2nd phase of ISDB - Dom > Construction of the production centre of Moçambi- Bosco, in Maputo; que Radio in Xai-Xai (Gaza); > Extension of the entrance to and rehabilitation of > Construction of the INSS (Social Security National the internal roads in the port of Maputo; Institute building, in Tete; > Construction of the Health Centre of the U.E.M. in > Demolition of the existing buildings on the Ex- the University Campus, in Maputo; -Facim properties; and > Construction of the photovoltaic panel factory, in > Construction of the parking lot for the Hotel Vip Beluluane, Maputo; Inn, in Beira. > Rehabilitation and extension of the Escola Secun- dária de Ponta Gêa (Secondary School), in Beira, and started work on the following projects : Sofala; and > Construction of 15 dwellings for HCB - Hidroeléc- > Rehabilitation of the Banco de Moçambique buil- trica de Cahora Bassa, in Songo; ding in Beira, Sofala. > Rehabilitation of the 4th loft and landscaping for HCB - Hidroeléctrica de Cahora Bassa – 2nd The subsidiary OFM, which interventions target the phase, in Songo; port and maritime works segment, started and completed in Mozambique the project “access platform > Partial rehabilitation of the ex-Salvador Caetano to the docks at the port of Pemba” consisting of the (Toyota) facilities, in Matola; construction of a platform with a length of one hun- > Construction of the Zimpeto bus station in Maputo; dred meters, planned to extend over the sea as far as is necessary to go to reach the appropriate depth > Rehabilitation and extension of the Pemba airport terminal; measurements necessary for the port operations. In Africa, in addition to works in Mozambique this com- > Gas network installation works at the Petromoc pany had interventions in other markets such as in Machava gas station; Algeria and Cape Verde, in 2012.

UNITED STATES

Prince assumes itself as a nuclear company within most noteworthy are: the scope of the construction activities of the Soares > SR408 – Widening of the Oxalis Drive to Gol- da Costa Group, in the United States. Acquired in denrod Road (Florida), a project worth 21 million 2008, this company operates in the road infrastruc- Dollars, that consists in the execution of the wi- ture segment in the States of Florida and Georgia, dening and construction of access roads, including being a player of relevance in the USA southeast the widening of four cement bridges, with a length (10th largest general contractor in turnover, accor- of 1 mile; ding to the ENR magazine ranking). > SR50 from Avalon Road to SR 429 (Florida), a The company’s activity continues centred on road design-build project, worth 18 million Dollars, that (new or refurbished) and bridge construction, for consists in the transformation of a 5 contiguous various public clients, namely the Departments of lane road into an expressway with 2x3 lanes, with Transport of Florida (FDOT) and Georgia (GDOT). a length of 3 miles; > Widening of the US27 (SR25) (Florida), a design- Amongst the projects completed during 2012 the -build project, worth 21 million Dollars, that con- REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 33

sists in the transformation of a rural road with 4 area of Fort Lauderdale, with a value of 98 million lanes into an expressway with 2x3 lanes, with a Dollars, consists in the remodelling and recons- length of 3.8 miles; truction of a tolled motorway section with 4.3 miles; > SR93 I-275 Hillsborough County North (Florida), a project worth 22 million Dollars, that consists in > I-75 Tampa – widening between the SR56 and the rehabilitation of 4 miles of motorway, inclu- Fowler Road (Florida), worth 95 million Dollars, ding 26 bridges; and consists in the reconstruction and widening of 11 miles of the I-75 interstate motorway in the > Fall Line Freeway between Augusta and Columbus Tampa area, including the construction of 19 brid- (Georgia), in the amount of 29 million Dollars, that ges. The execution period is 1,500 days, it is ne- consists in the construction of 7.5 miles of road vertheless foreseen that the execution period will with 4 lanes. be anticipated by some 600 days; and Prince had 12 works in progress during the year. The > I-75 from South of Pierce Ave. to North of Arkwri- following more important projects either commenced ght Drive (Georgia), worth 59 million Dollars, or continued in progress: consists in the widening of 3.65 miles of the I-75 in the Corridor Atlanta-Macon, including the re- > I-595 Corridor Improvement Segments A and B construction of five bridges and the rehabilitation (Express Toll Lanes) (Florida) – located in the of another two.

OTHER INTERNATIONAL MARKETS

In addition to the core markets: Portugal, Angola, > Brazil Mozambique and the United States reference is Brazil, per the Group’s strategic plan, is considered made below to the main aspects of the company’s one of the priority markets within the company’s activities during 2012, carried out in other interna- scope of international expansion. tional markets through its related companies: Ro- mania, Brazil, S. Tomé and Príncipe, the Sultanate of In 2012, through the 50% shareholding in the spe- Oman, Venezuela, Costa Rica and Israel. cific purpose company Terceira Onda Planejamento e Desenvolvimento Ltda., civil construction works were completed, in October 2012, to the total satisfac- > Romania tion of the client, on the complete unit implantation The followings works were completed in this country in Rio Branco do Sul (Paraná), a production line of during 2012: 5,000 tonnes/day for Votorantim Cimentos. > Accesses to the Casimcea wind farm, in Tulcea, for In turn, the intervention through the subsidiary the client SC CAS Regenerible (Verbund, Austria) with Soares da Costa Brasil. Ltda., in the company Linha a contract amount of approximately 6 million RON 3 Cezarina – Construções Ltda., on the project for (circa 1.38 million Euros); and Line 3 of the Cement Factory in Cezarina, Goiás, a > Accesses to the Alpha Wind wind farm, in Tulcea, production line of 2,000 tonnes/day for Cimpor Romania – Client SC Alpha Wind (Verbund, Austria), Brasil, with construction work commencing in April a project valued at approximately 3.3 million RON 2012 and the completion date foreseen for June (circa 770 thousand Euros). 2013, is of note. Towards the end of 2012, this company also commenced a project related with the Work on the project “Constructia Variantei de Ocoure extension of the Aeroporto Internacional de Viraco- Tecuci” in the amount of 49 million RON (11.1 million pos terminal, in Campinas, São Paulo, for the cons- Euros), which consignation occurred on 18 June truction consortium Viracopos (CCV). 2012, for the National Road Authority of Romania (CNADNR - Compania Nationala de Autostrazi si Drumuri National din Romania S.A.) is in progress. > S. Tomé and Príncipe The company’s subsidiary, Soares da Costa, STP Construções, Ltd, has in progress the project to extend the headquarters of the Banco Internacional de São Tomé e Príncipe, works that consist in the REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 34

construction of a building with five storeys next to > Costa Rica the present building and in which the ground floor is The construction activity in this market is carried out joined to the existing one by the bank branch that, through Sociedade de Construciones Centro-Ame- in turn, is to be extended. The remaining floors are ricanas, S.A.. With the conclusion of the San José to be used to unite the various back-office services – Caldera project (some rehabilitation and warranty of the Bank, as well as its Board of Directors and works having been carried out) and the start-up of remaining managers. The initial adjudication was the San José - San Ramón project (pending conclu- increased to include various other works, namely the sion of the negotiation details between the Govern- remodelling of the bank branch in the old building ment of Costa Rica and the concessionaire Autopis- that is to be extended into the new building and ex- tas del Valle) the activity in 2012 was inexpressive. terior improvements to the surrounding area. In September 2012, in partnership with Sociedade de Construções Soares da Costa, S.A., rehabilitation > Israel works were commenced on the project “Estrada Na- In Israel, the participation of Soares da Costa Cons- cional nº 1 – Protecção Costeira (1st National Road trução occurs through the collaboration with the – Coastal Protection)”, which will take 18 months to Group’s concessions area, within the scope of the complete. Tel Aviv Metro project. In addition to Sociedade de Construções Soares da Costa, S.A.’s branch, this In this territory note must also be made of the for- company also has a 30% shareholding in the con- malization, in March 2012, of Clear’s branch, which sortium “Israel Metro Builders” (IMB). has as its immediate objective the execution of the special installations project for Banco Internacional This project, as explained in previous management de S. Tomé, in Príncipe. reports, was interrupted by the project owner in 2010, who unilaterally terminated the concession contract; international arbitration proceedings are > Sultanate of Oman running their course and will ultimately decide this In this territory, following on the successful com- conflict. mercial incursions carried out in previous years, the Group, through the branch of Sociedade de Constru- The company shares the conviction of the conces- ções Soares da Costa, S.A., participated in a consor- sionaire entity, the direct party to the process, that tium with a local company, in the execution of a road there were no grounds for that unilateral termination infrastructure and associated infrastructure network and awaits the Arbitration Court‘s decision on this project and construction works in an area situated litigation. It is understood, however, that the reali- between the Masqat International Airport and the sation of the assets relating to this project, namely motorway of the same city. This project was adju- those that result from the proportional incorporation dicated at the beginning of 2012 and the respective of IMB in the consolidation, may be dependent on works are currently in progress. the direction this decision takes.

PROFITABILITY OF THE CONSTRUCTION BUSINESS AREA

For a better analysis we present below, aggregated in a convenient manner, the following components of the consolidated results of the Construction business area for the year and for that immediately preceding it: REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 35

(million Euros) 2012 % OR 2011 % OR Variation Turnover 712,539 101.4% 796,208 99.7% -10.5%

Production Variation -17,928 -2.6% -21,902 -2.7% -18.1%

Other Operating Gains 8,338 1.2% 24,529 3.1% -66.0%

Operating Revenue (OR) 702,949 100.0% 798,834 100.0% -12.0%

Cost of Goods Sold 145,849 20.7% 182,158 22.8% -19.9%

External Supplies and Services 368,296 52.4% 416,646 52.2% -11.6% Staff Costs 132,683 18.9% 132,768 16.6% -0.1%

Other Operating Costs 27,120 3.8% 19,541 2.5% 38.8% EBITDA 29,001 4.1% 47,722 6.0% -39.2% Depreciation, Amortisation, Provisions and Adjustments (net of 36,998 5.3% 18,291 2.3% 102.3% reversals) EBIT -7,997 -1.1% 29,431 3.7% -

Financial Results -41,851 -6.0% -16,877 -2.1% - Earnings before Tax -49,847 -7.1% 12,554 1.6% - Corporate Income Tax 12,812 1.8% -4,476 -0.6% -

Consolidated Net Earnings for the Period -37,036 - 8,078 1.0% - Results Attributable to Group -37,763 - 7,405 0.9% -

Although turnover decreased by 10.5%, the sum In function of that presented above, the operating of the captions “Cost of Goods Sold” and “External result came in at a negative 8.0 million Euros, which Supplies and Services” decreased proportionally compares unfavourably with the positive result of more (14.1%); however, this effect was neutralized 29.4 million Euros recorded in 2011. by the behaviour of Staff Costs which, affected by the compensation costs incurred with termination of Financial results also worsened significantly, penali- labour contracts by mutual agreement (an amount zed by the increase in net financing costs, reflecting that attained 10.0 million Euros in 2012, versus the the correction of the interest charged to that agreed 1.3 million Euros of the previous year), could not yet upon in the debt regularization agreement with the evidence the significant decrease expected. Madeira Autonomous Region, with the balance between the interest obtained and that borne coming EBITDA margin in relation to total operating revenue in at -25.1 million Euros in 2012, in contrast to the decreased from 6.0% to 4.1% but, reformulated, -12.5 million Euros of the previous year. The net removing the effect of the indemnities and of an ir- impact of the exchange differences was contained recoverable debt in respect of a client of an US sub- and amounts to -1.4 million Euros but, even so, dis- sidiary, that significantly increased other operating tant from the favourable amount achieved in 2011 costs, would have come in at 7.1%, higher than that of 6.4 million Euros, hence also contributing to the of 2011. worsening of the financial results. The recognition of impairment losses, namely on credits over third parties and in respect of part of The conjunction of the components previously re- Contacto’s acquisition goodwill, also significantly ferred to had as a consequence pre-tax earnings of affected the performance for the period by increa- -49.8 million Euros and, considering the tax func- sing the caption “Depreciation, Amortisation, Pro- tion, consolidated net earnings attributable to Group visions and Adjustments (net of reversals)” to an amounted to -37.8 million Euros versus the positive amount (37.0 million Euros) exceeding double the amount of 7.4 million Euros achieved in 2011. amount of the previous year (18.3 million Euros). REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 36

5.2 CONCESSIONS

From the economic context described in a previous progress and execution of projects already launched. chapter, and with a special impact on the conces- Despite this, the concessions activity in the Soares sions area, the restrictions to the financing of the da Costa Group recorded, in 2012, a positive develo- economy and the budget re-equilibrium program- pment and the Group’s main aspects of note in this me of the Portuguese State standout, significantly area are detailed below. conditioning the launch of new projects or even the

TRANSPORT CONCESSIONS

In the scope of road concessions, under develo- > Scutvias – Auto-Estradas da Beira Interior, S.A. pment and under the shared management of the Following the Portuguese State’s unilateral deci- concessions business area of the Group, there are sion to start tolling the A23 on 8 December 2011, currently 1,017 Km of roads (of which 371 Km with a decision covered by Decree-Law no. 111/2011 of a motorway profile) under construction, in operation 28 November, Scutvias’ business model suffered and under maintenance, corresponding to a global profound changes. This unilateral decision embodied investment of 1,702 million Euros. a situation that could give rise to a rebalancing request on the part of the concessionaire, fact already Of note are the Scutvias (the Beira Interior mo- communicated to the grantor. During 2013 nego- torway) operations, which have attained cruising tiations were on-going with the grantor and with speed and are achieving positive results and there- the financing banks in order to alter the concession fore permit the estimation of the cash flow genera- contract. tion from a combination of dividends and shareholder loan interest in an amount of approximately 15 The activity of the concessionaire continues to be million Euros over the next three years. regulated by a Joint Order of the Ministry of Finance and of the Ministry of the Economy and Employment Construction worked proceeded on the Transmon- dated 7 December 2011, in which the grantor conce- tana motorway, and this project is expected to ded a transitional regime for the period running from be completed and in operation during 2013. This the start of tolling through to the conclusion of the project’s accumulated investment amount already negotiations underway. ascends to 640 million Euros. Finally, and no less important, reference is made to the project Estra- Amongst other considerations are the fact that das do Zambeze, in Mozambique, which conclusion the concessionaire’s revenue, during this period, is is foreseen for 2014 but which already permits the calculated in function of the traffic foreseen in the operation and maintenance of approximately 700 concession’s base case for 2012, corrected by 50% Km of roads. of the deviation to the real traffic calculated for 2010, that is, by the difference determined betwe- We also highlight the disposal during the period of en the traffic foreseen in the base case for the year the company “Infraestruturas SDC Costa Rica, S.A.”, 2010 and real traffic recorded in that same year. a subsidiary of the Group in Costa Rica that held a Additionally, in this context, the concessionaire as- shareholding of 17% in the San José - Caldera mo- sumes no responsibility over the tolling activities or torway concessionaire company, in Costa Rica. The over the risk inherent thereto. transaction, occurring in October 2012, made with the Spanish company Globalvia Inversiones, S.A.U. Turnover amounted to approximately 134.3 million in the amount of 9.3 million Euros, including sha- Euros, representing versus 2011, an increase of 15%. reholder loans and other credits over the company services rendered in general and the revenue by sold, fell within the strategy delineated by the Group band, in particular, were influenced by the increase, of disposing of mature and/or non-core assets. contractually foreseen, of the upper limit of band 1 traffic. Revenue by band is responsible for 99.6% of The main aspects of the activity of the Group’s rela- total sales and services rendered and correspond to ted companies in this sub-segment of road conces- the monetary appreciation of road traffic considered. sions during 2012 are analysed below: REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 37

Operating costs ascended to 24.9 million Euros, an the Economy and Employment, by InIR – Instituto de amount practically identical to that recorded in 2011. Regulação de Infraestruturas Rodoviárias, I.P. and Consequently, EBITDA ascended to 109.8 million by the financing banks, under the terms of the res- Euros, which compares with the 92.4 million Euros pective financing contracts. attained in the previous year, representing a growth of some 19%. This variation is justified by the incre- The Transmontana motorway project presents two ase in the band limits previously referred to. perfectly distinct phases: > The pre-operational period – characterized by In financial terms, Scutvias presents a financial strong investment and which includes the cons- result of -39.0 million Euros in 2012, whilst in 2011 truction phase; and this indicator amounted to -41.2 million Euros. This decrease is essentially justified by the decrease in > The operational period – during which the conces- interest borne with bank financing. This caption, sionaire starts receiving income in two manners which corresponds to 41% of total costs and losses, (a fixed portion related to the use of the infras- revealed a variation of -6% versus the previous tructure and a variable portion to be determined in year, in line with the debt amortization made during function of the traffic levels). the period. Thus, in 2012, net earnings amount to circa 24.9 million Euros, which consubstantiates the The 2012 period still fell within the pre-operational turnover profitability (net income / services rende- period. However, in 2012 lots 4, 6 and 11 came into red) of 19%. operation in their entirety and lots 3 and 5 in part. During 2011 lots 2, 7, 10 and 13 had also come into The prospects show that 2013 will be characterized full operation whilst lots 5 and 12 into partial opera- by the continuation of the negotiation process with tion. Tolls continue to be collected on lot 10. the grantor in order to seek a solution, which is to be fair and sustainable for the parts, to settle the Turnover amounted to 86.3 million Euros (amounts imbalances resulting from the introduction of tolls already considered at the proportion relating to on this concession. the Group’s interests, in this case 50%) versus the amount of 125.3 million Euros of the previous year, > Autoestradas XXI, Subconcessionária Trans- a year in which the construction phase of the infras- montana, S.A. tructure had a greater volume and concentration. The year 2012 was marked by a generalized decre- In 2012 net earnings amounted to 1.0 million Euros ase in the ratings of the Portuguese and Spanish versus the amount of 0.9 million Euros a year before. banks, consequence of the so-called “sovereign debt crisis”, which implied constraints for reasons > Estradas do Zambeze, S.A. outside the control of the concessionaire in the This Mozambican company has its registered office normal course of the amortization of external debt. in Maputo and is 40% held by the Group. The concession contract signed with the Mozambican State It is to be noted that during the current year the will have the duration of 30 years and covers the shareholders handed over to the concessionaire the conception, construction, operation and maintenance outstanding amount of share capital necessary to of the project named “Nova Ponte de Tete e Estra- comply with the commitment undertaken to realize das”, with a system of real tolls together with a sub- the projects own funds (equity). sidiary mechanism that guarantees the receipts. The concession includes the new Tete bridge, with circa 2 On 8 August, Autoestradas XXI and Estradas de Por- Km, and approximately 14 Km of new 2x1 roads; the tugal, S.A. signed the following three documents: rehabilitation, financing, operation, maintenance of the national roads between Cuchamano and Zóbuè > Memorandum of Understanding for the Renego- (N7 and N8), with a stretch of approximately 260 tiation of the Contract covering the Auto-Estrada Km; the maintenance of the road between Cassaca- Transmontana Sub-concession; tiza and Tete (N9), with a length of approximately > Agreement on the Changes to the Works Pro- 268 Km; the maintenance of the road between Colo- gramme for the Auto-Estrada Transmontana Sub- mué and Mussacama (N304), with an extension of -concession; and approximately 156 Km; and the operation and maintenance of the Samora Machel Bridge in Tete. > Agreement on the Compensation to the Grantor. The concessionaire started toll collection on the All these documents come into effect after their Samora Machel Bridge on 1 August. A tender was approval by the Ministry of Finance, the Ministry of REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 38

launched for the sub-concession of the seven ser- reholding in the company (16.3%) it is not consolida- vice stations to be installed along the concessional ted and the investment realized is recorded at cost. roads, the company having already received a proposal that is currently the object of negotiation. As is public knowledge, the Court of Auditors refused to issue the formal prior approval to the concession In May, the Ministry of the Environment issue a po- contract on 21 March 2012, leading to the cancella- sitive Environmental Impact Certificate, the respecti- tion of the contract. ve license having been issued in July. As a result of this, the company started the process In terms of planning, the works progress, in general of disengaging employees, deactivating the offices terms, within the timings established, with some and revoking all contracts signed for the execution 60% of the work having already been completed of the concession contract. on the Bridge and access viaduct and 15% of the rehabilitation work on the N7 and N8 roads (at the Furthermore, as a result of this formal refusal of the end of 2012). The date foreseen for the conclusion contract the company started preparing the claim to of the work, that is, the end of September 2014, is lodge against the State relating to the costs incurred maintained. with the concession; this was lodged with the State on 30 July 2012 and amounted to 159.4 million So far as the operations and maintenance of the Euros at that date. road activity is concerned, carried out by the subsidiary Operadora das Estradas do Zambeze, S.A., on Since the State did not respond to the claim lodged 1 October 2011 operations were started in terms of ELOS started preparing the legal case for submission the assistance and vigilance activity. The operator’s to the Arbitration Court. assistance vehicles carried out, by the end of 2012, some 1,700 user assistance and roadway signalling In so far as the financing contracts are concerned, services as a result of accidents, or breakdowns, in a an agreement (Partial Assignment Agreement) was total of approximately 4,200 contacts and 970 pa- signed in June between the Company, the European trols realized over the 245,000 Km travelled. Investment Bank (EIB), and the bank syndicate comprising Caixa Geral de Depósitos, Banco Comercial The maintenance activity commenced in April 2012 Português and Banco Espirito Santo as a result of on the Tete-Cassacatiza (N9) and Mussacama- which the two credit facilities contracted with the EIB -Calomué (N304) axes with, up till the end of De- were transferred to the commercial banks, through cember, some 4,300 road anomalies having been the cession of EIB’s contractual position to the bank repaired and new vertical signalling having been syndicate. The facilities ceded were “Part A Loan” in placed on some 60 Km. the amount of 300,000,000 Euros, still unused, and the 300,000,000 Euros “Part B Loan”, with a used This company contributed (already presented at the up amount, at that date, of 90,761,574 Euros. Group’s consolidated share of the interests) with a turnover of 14.4 million Euros (11.6 million Euros in Meanwhile, in the second half of the year, the State 2011), registering an EBITDA of 266 thousand Euros expressed its intention, through the bank syndicate, and a net income of 138 thousand Euros (versus the to use the project’s financial package conditions, in- 280 thousand Euros and 204 thousand Euros, res- cluding the interest rate swap contracts, as a result pectively, in 2011). of which only the remaining contracts remained with the company, which proceeded with the formaliza- Still within the transport concessions segment, but tion of the cession of its contractual position, on 22 now focusing exclusively on the rail sub-segment, January 2013, of all the credit facilities and swap note is given of the activity carried out by: contracts, to Parpública.

> ELOS – Ligações de Alta Velocidade, S.A. Given that the Portuguese State cancelled the pro- This company was incorporated in 2010 following the ject ELOS will continue, as from 2013, to manage adjudication to the consortium co-led by Soares da the legal action, its primary asset, in the Arbitration Costa of the public private partnership contract for Court in order to recover the costs incurred during the construction, financing, maintenance and avai- the more than two years with this project. lability of the Poceirão-Caia stretch that would form part of the future high speed railway between the To close this section reference is made to the project: cities of Lisbon and Madrid. Given the Group’s sha- REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 39

> Telavive Metro - Israel the grantor as well as to comply with other condi- Regarding this project, it is important to refer to the tions. The concessionaire decided to reject both the litigation existing between the grantor (the State Grantor’s position as well as the conditions imposed of Israel) and Metropolitan Transportation Solu- (that would make the project unviable) and referred tions (MTS), a concessionaire company in which the dispute to the Arbitration Court for a decision, the Soares da Costa Group holds, through Soares undertaking all the necessary formalities. The arbi- da Costa Concessões, S.G.P.S., S.A., a shareholding tration proceedings have taken place with the nor- of 20%. During the third quarter of 2010, MTS was malcy and delay typical of these kinds of processes; confronted with the grantor’s unilateral position to since audiences are programmed for the first half of resolve the contract, for alleged non-compliance by this year it is possible that this process may still be the concessionaire, unless the latter accepted both closed during 2013. to make a number of concessions/compensations to

CAR PARK CONCESSIONS

In a context of falling internal demand, a steep drop The table that follows details the activity of CPE – in the use of private transport was recorded, causing Companhia de Parques de Estacionamento, S.A., the a significant decrease in parking receipts. main company of this segment in number of validations for short-term off-street and on-street parking:

No. validations (excl. seasonal parking) 2012 2011 2010 2009 Off-street Parking 1,057,302 1,177,232 1,314,470 1,326,574

On-street Parking 864,889 935,603 937,749 1,001,464 TOTAL 1,922,191 2,112,835 2,252,219 2,328,038 VARIATION -9% -6%

The decrease in revenue (be it in short or long-term of the Gemini underground car park and that of the parking) naturally reflects the demand decrease delimited surface car park, in Oliveira de Azeméis, which the validations and the number of retainers with a total of 1,860 parking spaces. confirm. The company presented operating revenue in the In this company it is important to note the strong amount of 275 thousand Euros, 9% below that re- impact of the adjustment made in non-current corded the previous year and an EBITDA of 46 thou- assets for impairments identified in the value of the sand Euros (60 thousand Euros in 2011). investments carried out in some car parks, to reduce these to their net realizable values and which had a Impairment losses, amounting to 525 thousand non-recurrent effect on the results of -5.3 million Euros, were also recorded on the investment made Euros. in the Gemini Car Park, in Oliveira de Azeméis, which continues to present an inexpressive turnover The car park segment, in the scope of the Soares da volume far from the initial parameters underlying the Costa Group, is complemented by Costaparques - investment undertaken. This impact was determi- Estacionamentos, S.A., which activity is limited to nant in the evolution of net earnings which totalled a the management of the Galeria Central car park, at negative 499 thousand Euros. Campo 24 de Agosto, in Oporto and to the operation REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 40

WATER AND ENERGY CONCESSIONS

> Indaqua, S.A. It was also adjudicated by the Ministry of Energy Through the Soares da Costa Concessões S.G.P.S., and Water, during 2012, the rendering of technical S.A. shareholding the Group has a shareholding of consultancy services to realize studies and projects 28.57% in the share capital of Indaqua, consolida- for the installation of water treatment plants in 25 ting it using the equity method. localities. With this new business, this subsidiary, in addition to achieving a phase of business maturity, Indaqua, S.A. is a company that results from a stra- also sees its area of intervention expanding to Mo- tegic partnership in the water sector created by some zambique. national economic groups, with competencies in different business areas, active in the environmental sector > Hidroequador Santomense – Exploração de and in the management of the water cycle, including Centrais Hidroeléctricas, Lda. the treatment, transport and distribution of water and This company has a 60% shareholding in the com- the collection and treatment of wastewater. pany Hidroeléctrica STP, Lda., in S. Tomé e Príncipe, that has as its object the conception, study, cons- It acts primarily within the scope of the municipal truction and operation of energy generating plants, concessions and public private partnerships, serving management of energy resources, electromechani- some 215,000 clients in Portugal, with 4,400 Km of cal, electrical and civil projects, with the remaining water supply and wastewater networks. 40% belonging to EMAE, the public company responsible for the distribution of electricity and water During 2012, Indaqua maintained, in Portugal, the in S. Tomé e Príncipe. management of the concessions of the counties of Fafe, Santo Tirso, Santa Maria da Feira, Matosinhos At 31 December 2012, the company had in opera- and Vila do Conde and a shareholding of 49% in the tion the Guegue hydroelectric power plant, in São company Águas de S. João that manages the water Tomé, and the Papagaio hydroelectric power plant, and wastewater public networks in the county of on the Príncipe Island. S. João da Madeira, involving a population of some 575,000 inhabitants. In consolidated terms, Inda- Work on the construction of the Central Hidroeléctrica qua presented operating revenue of 85 million Euros de Bombaim (Hydroelectric Power Plant) continues in and operating costs of 65 million Euros, generating progress, as well as the inherent financial effort, with an EBITDA of circa 20 million Euros, in Portugal. payments being made on the equipment (turbines).

In 2012 Indaqua was adjudicated the concession to The most important equipment, that has already operate and manage the public water and wastewa- been acquired, namely generators, turbines and ter networks including the collection, treatment and transformers, as well as a large part of the pipeline, rejection of the latter for Oliveira de Azeméis for a continues warehoused at the port of S. Tomé e Prín- period of 30 years, with the start-up of operations cipe, awaiting transport to the works and installation. foreseen for the 2nd half of the year of 2013, with a projected investment of circa 20 million Euros. Hidroequador Santomense and Hidroelectrica Lda. signed, at the end of 2009, a contract for the supply In Angola, Indaqua, through its related companies, of electricity generated by a set of generators instal- had in execution during 2012, the technical assistance led at the Bobo Forro II Plant, with the Government contract for the programme “Água para Todos (Water of S. Tomé e Príncipe. In compliance with that con- for All)” for the Ministry of Energy and Water, the tract, the S. Tomé e Príncipe Government proposed, contract relating to the advisory services in the crea- in June 2011, the advance acquisition of the all the tion and start-up of Águas de Saurimo e Dundo, the generators and transformers, with the corresponding contract for the training on the operation and main- negotiations taking place as from the end of Sep- tenance of the sanitation infrastructure (programme tember 2011 and also covering the substation at- sponsored by the European Union) and the contract tached to the referred equipment, which guarantees to supply and assemble the water treatment plants in the interconnection to the public grid. Negotiations the Provinces of Huíla and Namibe. Indaqua’s turno- were completed at the beginning of 2012 and the ver in Angola amounted to some 5.8 million Dollars, proposal made by this company’s shareholders has almost tripling the consolidated turnover of 2011. been accepted by the high representatives of the Government of S. Tomé e Príncipe, who undertook to define the terms that best fit the intended tran- REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 41

saction. In the meantime, the changes that occurred da Costa Concessões, S.G.P.S., S.A. and its object in the country at Government level have delayed the is the construction and operation of hydroelectric formalization and conclusion of this operation. power plants. In December 2010, it celebrated four contracts for the implementation of hydroelectric The company presented a negative operating result operations covering a period of 45 years, two on the of 487 thousand Euros, penalized by the costs with Zêzere River, one in Abrantes and another in Castro the general reposition of the consumables at the D’Aire, with an installed capacity totalling appro- Bôbo Forro Plant and with the depreciation of that ximately 28 MW, at a total investment of circa 44 equipment. The net result, in 2012, was negative in million Euros; for the implementation and operation 517 thousand Euros. of each of the projects a specific company was incorporated. > Soares da Costa Hidroenergia, S.A. and subsidiaries Soares da Costa Hidroenergia, S.A. was incorporated During 2012 the respective projects continued their in March 2010, under the majority control of Soares course.

DEVELOPMENT OF NEW CONCESSIONS BUSINESS

In this matter, reference must continue to be made period of three years and the contract concession to the new Hospital Oriental de Lisboa (previously period is expected to last for thirty years. The cur- designated “Todos-os-Santos”) project, for which rent Government defends the construction of this the consortium Salveo, led by Soares da Costa hospital, has apparently obtained the Troika’s ap- Concessões S.G.P.S., S.A., received a preliminary proval to proceed and is currently working on the adjudication. The hospital is to be located in east evaluation of the conditions for its realization. Lisbon, and will substitute five of the units presently operating in the city centre (the São José, Capuchos, Having completed a brief panorama of the general Desterro, Santa Marta and D. Estefânia Hospitals) activity of the related companies of this business serving a total of 950 thousand inhabitants. The area during 2012, we now present the general con- hospital, with 165,000 m2 will have a construction solidated indicators of this business segment:

Main Consolidated Indicators of the Concessions Business Area

(million Euros) 2012 2011 Variation Turnover 156.8 187.6 -16.4%

EBITDA 46.7 43.3 7.9%

EBIT 26.5 29.0 -8.7%

Financial Results -18.2 -27.8 34.6% Results Attributable to Group 5.6 -1.0 -

The concessions business is based, in general terms, others that have not yet achieved breakeven and on the realization of large scale investments with also others still in the implementation phases), the long-term returns and moderate risks and requires passage of time reveals itself to be a favourable a strong financial structure and a significant dimen- variable in terms of the extraction of profitability, sion. The booster characteristic of the concessions provided there are no anomalies in the regular deve- area in the construction segment is evident, and lopment of the projects. these constitute, in reality, complementary areas with important synergetic factors. Indeed, the evolution of the profitability of this segment has been consistently progressing, despite the With the Group’s concession projects portfolio and economically adverse conditions that have preven- the respective activity mix (in which coexist mature ted the implementation of new products and that investments from which profits are extracted and have placed a number of uncertainties and barriers on others that have been formalized. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 42

The 2012 period allowed it, for the first time, to It is important to highlight, in respect of the perfor- contribute positively to the consolidated results of mance achieved in 2012, two aspects with a deter- the Group (+5.6 million Euros versus a loss of 1.0 minant influence and symmetrical impacts: million Euros in 2011), with the results structure > EBIT was negatively affected in a substantial evidencing the characteristics that are specific to the manner by the recording of impairment losses on segment, that is, operating results that are signifi- assets in the car park segment (5.8 million Euros); cant revealing significant EBITDA margins without parallel in the other business areas, counterbalanced > Financial results benefitted from the disposal of by financial results (negative) also significant due to the subsidiary in Costa Rica (7.1 million Euros). the remuneration of the borrowed capital invested.

5.3 REAL ESTATE

In addition to real estate promotion, this business estate assets, from which facilities several Group area also includes the management of own real companies physically operate.

Main Consolidated Indicators of the Real Estate Business Area

(million Euros) 2012 2011 Variação Turnover 22.1 7.1 209.6%

EBITDA 5.6 4.1 37.1%

EBIT 2.8 2.5 13.0%

Financial Results -4.8 -3.4 -40.5% Results Attributable to Group -1.9 -0.5 -306.7%

Consolidated turnover for this area was 22.1 million rational performance would have been even better Euros, an amount triple that made the previous year were impairment losses in assets in some 1.5 million following significant sales in the Talatona project, in Euros not recorded. However, the more burdensome Angola. In fact, to our share (49%) in the Talatona weight of the financial results resulted in a contri- Real Estate company corresponded a turnover of bution to the consolidated results for the period of 17.1 million Euros, 4.4 million Euros being the con- -1.9 million Euros (-0.5 million Euros in 2011). tribution of Ciagest, with the contribution from the remaining companies in this business area having a Even though the real estate area is not one of the residual importance (0.6 million Euros). core areas in the Group strategy, it will nevertheless continue to remain on the lookout for business The consolidated indicators in this area reveal an opportunities, namely of disinvestment, that it may EBITDA of 5.6 million Euros and an operating result come upon in both Portugal and in the international of 2.8 million Euros (which compare with 4.1 and markets which constitute the core presence of the 2.5 million Euros in 2011, respectively);this ope- Group. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 43

5.4 SELF ENERGY

The Self Energy Group, in which the Group has a The development of photovoltaic mini-plant pro- 57.26% shareholding, operates in the area of ener- jects also suffered with the financing restrictions, getic efficiency, having incorporated the first ESCO the regulatory uncertainty and the sharp break in (Energy Services Company) company to operate in investor confidence in the economy in general. The Portugal and in the area of energy generation with company experienced growing difficulties in obtai- solar micro-generation facilities and photovoltaic ning financing for the plants in respect of which it plants. had licenses. For that reason, Energia Própria decided to sell the licenses it held and to not formalize Energia Própria’s business model mixes the medium the acquisition of others that had been attributed to and long-term business of the ESCO products with it by public tender made by the Directorate General the short-term and the cash flow generated by the for Energy and Geology - Direção Geral de Energia e sale of micro-generation solutions and other re- Geologia (DGEG), thus dispensing with the opportu- newable energy production solutions. nity to undertake the PEC (Engineering, Procurement and Construction) for these plants, such as that of The Group made important efforts in 2012 to de- Vizela or Trajouce, which reduced its revenue po- velop its internationalization through companies in tential in some 8 million Euros and affected EBITDA the United Kingdom and in Mozambique which, in unfavourably in some 400 thousand Euros. a combination of efforts with local partners, have developed the energetic efficiency business and In terms of Rooftops of Spain SL, a company 10% decentralized the production of energy, bearing in held by Energia Própria, S.A., two works were com- mind the regulations and the specific needs of each pleted that had been in progress since 2011 and the market; both businesses flourished in a sustained process to identify potential investors to sell the manner, already presenting a positive contribution plants that are already in operation to, was com- to the operating results. menced.

The business area covering the sale of micro-gene- In 2012, missions were realized and documents of ration equipment was harshly affected by the credit understanding were established aimed at entering restrictions in Portugal for both private individuals the Polish and Angolan markets. and companies as from the 2nd half of 2011, situation which prolonged itself throughout 2012, resul- Blocked by the restrictive demand and financing ting in a significant decrease in turnover and leading context, the performance in 2012 was far from the to a forced shutdown of the area in the component potential that the market segment and the skills and of rendering services to private individuals, at the know-how that the company has, justify. end of the year.

Main Consolidated Indicators of Energia Própria, S.A.

(million Euros) 2012 2011 Variation Turnover 1.6 8.6 -81.4%

EBITDA -2.6 -2.1 -23.5%

EBIT -2.7 -2.2 -24.4%

Financial Results 0 -0.7 -

Results Attributable to Group -2.8 -1.9 -50.5%

bilitation projects; on the other hand, the develop- However, the challenges and opportunities in the ment of the business in the United Kingdom and in area of intervention of the company are identified, Mozambique, the foreseen installation start-up of a as being, in Portugal, in the energetic efficacy area, project in Poland and the possible internationaliza- particularly in the public buildings and in urban reha- tion into Angola reveal more optimistic prospects for the future. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 44

.6 INDIVIDUAL ACCOUNTS

The individual accounts of Grupo Soares da Costa, > The decrease in total assets in the amount of S.G.P.S, S.A., are also prepared in accordance with 97.9 million Euros derives fundamentally from the International Financial Reporting Standards (IAS/ substantial decrease in shareholder loans made to IFRS), as adopted by the European Union. They subsidiaries that fell from 210.2 to 103.2 million reflect the realization of a turnover of 5.0 million Euros, offset by the increase in deferred tax assets Euros, lower than that recorded in the previous year (11.0 million Euros), essentially associated with (6.2 million Euros). This revenue relates essentially the company’s condition of dominant company in to the rendering of technical management services the “Special Taxation Regime for Groups”, in res- to other Group companies. pect of tax losses carried forward; > The decrease in shareholder loans referred to Operating results were negative in 9.8 million Euros above is matched by an equally expressive de- (-0.7 million Euros in 2011), strongly affected by crease (-91.4 million Euros) in current liabilities the impact, of a non-recurrent nature, of the recog- in amounts due to related companies and other nition of the assumption of the responsibility for shareholdings; the payment of an amount of 8.7 million Euros as a condition for the provisional suspension of a judicial > In terms of capital shareholdings in subsidiaries inquiry of facts of a fiscal nature that occurred in the no relevant changes occurred, other than the de- periods from 2001 through 2005. crease relating to the impairment loss referred to above; Overall financial results amounted to -3.4 million > On the liabilities side the level of bank loans made Euros (versus the positive 0.8 million Euros in directly to the company did not alter significantly, 2011), with the difference being influenced by the totalling at the end of 2012 an amount of 60.5 increase in the net cost of financing (difference be- million Euros versus the 59.9 million Euros a year tween the interest borne and the interest earned) before; that amounted to -4.1 million Euros (in comparison with -1.8 million Euros in 2011) and, also, by the > The bonds “Grupo Soares da Costa 2007/2015” recognition of impairment losses in the financial (code SCOEOE), in the amount of 20 million investment realised with the acquisition of Energia Euros and “Soares da Costa – Eur 80,000,000 – Própria, S.A. (2.2 million Euros). 2007/2017” (code SCOFOE), are, therefore, the main financial liabilities, the respective interest Dividend earnings were at a level similar to that payments on the coupons having been made on of the previous year (3.6 and 3.7 million Euros, in the respective due dates, during 2012; and 2012 and 2011, respectively). > Equity changed fundamentally due to the accommodation of the net earnings for the period (-11.4 As to the individual statement of financial position, million Euros). that facts meriting reference are the following:

.7 ORGANIZATION

An organizational structure encompasses a number The market demands and the dynamism of the glo- of means and resources through which activities are balizing society of our times require companies to carried out in a coordinated and controlled manner, adapt and to maintain a permanent and systematic acting within a determined context or environment, capacity of anticipation and response, adjusting the with the aim of attaining pre-defined objectives means (and possibly revising the objectives) to the through the efficient allocation of said resources. changes that occur but also, fundamentally, to those REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 45

foreseen and very often merely anticipated (with the into Sociedade de Construções Soares da Costa, inherent strategic evaluation risks), in the external S.A., was formalized in 2013. context or framework. This process, guaranteeing the retention of the An adequate response to these organizational needs skills, technologies and know-how that are im- calls for the existence of control and management portant to preserve within the Group, permits the tools, optimizing the systems and the supporting reduction of structure costs by avoiding overlapping technologies, which should be complemented by costs and boosts solvency and economic/financial specific and transversal training approaches vis-à- robustness, whilst simultaneously improving organi- -vis their human capital. zational flexibility. With an impact in this area, the adjustment process The year 2012, in this respect, revealed itself very which started at the end of 2011 and which is ex- demanding for the Group and for all the companies pected to be terminated during the first months of comprising it, in terms of assuring the sustainabi- 2013, relating to the re-adjustment and reallocation lity of the economic and financial conditions of the of the employees, was intense in 2012. operations, through the re-adjustment of the structures, rationalization of the costs and the impro- Internal mobility was privileged be it in functional or vement of the management tools, and, ultimately, geographical terms but, understandably, the magni- guaranteeing that the group is endowed with the tude of the needs versus, namely, the drastic decre- conditions that permit it to proceed with its mission ase in demand in the internal market, had to be ba- in an efficient and effective manner. lanced through a considerable number of contractual rescissions with employees (see Human Resources In this scope, the merger of Contacto – Sociedade below). de Construções S.A. and Sociedade de Contruções Soares da Costa, S.A., the latter being the incorpo- The year 2012 converted itself, thus, into an arduous rating company, that occurred on 28 June 2012 and job of implementing re-dimensioning, rationalizing the subsequent integration and adjustment of the and adjusting measures in the organizational struc- structures and management tools, is of special rele- tures, practically transversal to all the areas of the vance. In the concessions area, the subsidiary “Ser- Group (back-office, construction sites, production viços Técnicos e de Gestão, S.A.” was also merged means, commercial area, reinforcement of the re- by incorporation into Soares da Costa Concessões, sources allocated to the branches/ permanent esta- S.G.P.S., S.A.. On the same track, having been pre- blishments abroad with company employees with the pared at the end of 2012, the formal merger of the adequate profile, etc.), all carried out with the convic- Group’s subsidiary from the metalwork, steel and tion that the Group and its related companies will be aluminium area, Socometal, also by incorporation, better endowed to face the challenges of the future.

.8 HUMAN RESOURCES

In the sphere of human resources, of special rele- legislation in force and was imbued in social res- vance in 2012 was the roll-out of the structures’ ponsibility concerns that extend transversally to all adjustment process commenced at the end of the the company’s activities. Even though with a lower previous year. As referred to in the 2011 manage- impact, this restructuring process of the human ment report, Sociedade de Construções Soares da resources also affected the other companies, espe- Costa, S.A. was declared, by order of the Secretary cially the construction area. of State for Employment dated 7 December 2011, a company under restructuring, in the terms of and Conscious that human resources constitute one for the purposes foreseen in paragraph d) of no. 2 of the pillars of the competitiveness and develop- and no. 4 of article 10 of Decree-Law 220/2006, ment of organizations, the Group abides by a set of 3 November. This process was executed in a ca- of principles and strategic orientation guidelines in reful and progressive manner, fully respecting the the matter of the development of human resources, REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 46

having come to consolidate, progressively, a set of By Themes (hours) 2012 methodologies and good practices, promoters of the improvement of human capital. Below are presented Social Sciences 387 the most relevant aspects of the Group’s activity in Civil Construction and Civil Engineering 1,391 the matter of human resources in its various vectors: Accounting and Finance 197

Law 13 > Recruitment and Selection of Staff Set on aligning the human capital with the orga- Electricity and Energy 14 nizational development strategy, our vision of re- Engineering and Related 180 cruitment and selection was based, in 2012, on a Management 1,695 strategy of employee mobilization to other geographies in which the Group’s activity reveals a growing Computing from a User Perspective 2.126 turnover. Foreign languages and Literature 760

Marketing and Advertising 132 The expatriation of employees, together with the Group restructuring process, constitute growth and Quality, Environment and Safety 2,259 professional development opportunities for same, Health 120 associated with more attractive remuneration pa- Unspecified 75 ckages. The filling in of the needs identified, namely at the level of the Angolan branch, was satisfied TOTAL 9,349 with recourse to international mobilization of company employees, no new admission having been In implementing the Group Training Programme for made. 2012, various training sessions were realized, from amongst which we highlight: > Training > Initial Programme for Project Management: training Training hours in 2012 totalled 9,349, with total re- action that consists of 3 modules (Project Ma- gistration costs of 30,545 Euros. This volume con- nagement for Professionals – Techniques, Tools templated a total of 2,516 employees. and Methodologies, MS Project supporting works’ (project) management, and Analysis and Evalua- The analysis of the distribution of training hours tion of Investment Projects) aimed at young Group by professional category reveals that the highest employees. This course was realised mobilizing number of training hours undergone continues to be internal resources, for the conception and imple- concentrated on qualified professionals and senior mentation of two modules, and with recourse to a employees: partnership with an external training entity, to realize the module “Project Management for Profes- By Professional Category (hours) 2012 sionals – Techniques, Tools and Methodologies”. Management 12 This is an action that is include in the portfolio of the Academy of Knowledge, and may be reprodu- Senior Staff 3,888 ced in subsequent years; Mid-level Staff 914 > Financial Management for Works/Projects: training Intermediate-level Staff 550 programme conceived by Católica Porto Business Qualified Professionals 3,806 School customized to the reality of the Soares Semi-qualified Professionals 15 da Costa Group, with the collaboration of internal specialists from the financial area. This action Unqualified Professionals 143 was realized at the company headquarters for 18 Trainees/Apprentices 22 senior staff members of the Group companies TOTAL 9,349 (Soares da Costa, Clear and Socometal);

> Leadership and Leading Work Teams: with the The thematic group “Quality, Environment and objective of developing competencies in team ma- Safety” concentrated the highest number of training nagement, this action targeted the persons res- hours in 2012 – 2,259 hours, followed by the area ponsible for of the Group companies (Soares da “Computing from a User Perspective” 2,126 hours Costa, Clear and Socometal), a professional group and, in third place, the area “Management” with with a significant impact on the quality of the pro- 1,695 hours. duct and on the achievement of objectives; and REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 47

> English: in order to qualify employees for Group fessional School), and APRODAZ- Associação para a internationalization, two training actions were re- Promoção e Desenvolvimento dos Açores. alized in English tuition, aimed at different levels of knowledge. One of the actions, “English - Civil > Evaluation of Potential Engineering & Internationalization”, was the result The evaluation of potential and the management of of a partnership with Wall Street Institute, and talent has as its objectives the gathering in a syste- constitutes a programme adapted to the reality matic, judicious and reliable manner of information of the Group’s business, having as its primary ob- that permits the identification of high potential em- jective the development of English speaking com- ployees and, using that data, to manage, boost and petencies. This programme is also included in the retain, with strategic vision, the talent that is availa- portfolio of the Academy of Knowledge. ble in our human capital.

> Internships In this context, during 2012, fourteen employees Following the implementation of the Group’s cor- at the 8th functional level were identified and eva- porate social responsibility policy, both a profes- luated and the respective evaluation reports were sional internship and the hosting of various curri- issued, widening the knowledge on the competen- cular internships were developed. The professional cies, interests, and availability and career projects of internship offered by Sociedade de Construções the employees of the Soares da Costa Group. Soares da Costa, derives from the Talent Award (Prémio Talento) 2011/ 2012. During six months, > Number of Employees and Staff Costs the winner of this Award, Vanessa Fernandes Silva, The average number of employees in 2012 at the had the opportunity to develop the theme “Análise service of the Group companies consolidated using de Risco – Parametrização e Medidas Mitigadoras” the full consolidation method was 4,829 (5,549 (Risk Analysis – Parameterization and Mitigating employees the previous year). Measures) in a working environment. Consolidated Staff Costs amounted to 145.1 Sociedade de Construções Soares da Costa also million Euros (146.4 million Euros in 2011), repre- hosted 12 curricular internships during the year 2012. senting 18.8% of total operating costs (17.7% a Nine internships were hosted in the Technical De- year before). These amounts are influenced by the partment, 2 in the Technical-Commercial Department amount of 10.7 million Euros (1.4 million Euros and 1 in the Production Department. Through these in 2011) relating to indemnities paid on mutually curricular internships, the students had the possibility agreed contract rescissions with employees. of learning in a working environment and of developing knowledge with highly qualified professionals. Sociedade de Construções Soares das Costa, S.A., Amongst the entities promoting these curricular continues to be the main employer of the Group, with internships are CICCOPN, the Escola Profissional do 2,710 employees (3,249 employees a year earlier). Fundão (Professional School), the Escola Superior de Tecnologia e Gestão do Instituto Politécnico de Beja Complementing this analysis, it is to be noted that the (Higher Education School of Technology and Mana- average number of employees of the companies con- gement of the Beja Polytechnic Institute), the Insti- solidated using the proportional method was 1,013 tuto Superior de Viana do Castelo (Higher Institute), employees, in excess of the 881 employees in 2011. the Instituto Politécnico da Guarda (Polytehcnical Ins- Individually, the Company has 42 employees (40 in titute), the Escola Profissional de Sernancelhe (Pro- the previous year).

.9 MAIN RISKS AND UNCERTAINTIES

The Soares da Costa Group, as the documentation various geographical spaces. In this context, the integrating this report and accounts evidence, exer- Group is naturally exposed to various risks that may cises activity in various business segments and in be classified as: REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 48

> Business Risks: In order to be able to assess and subsequently • Operating Risks: those that can affect the effec- monitor, through their internal organization, the di- tiveness and efficiency of the operational and fferent management areas of the Group (Business services rendering processes of the Group, the Development, Finance Management, Management satisfaction of clients and the reputation of the Control, Human Resources, Legal Services, etc.) companies; identify and evaluate the risks that their decisions, taken in their respective areas of intervention and • Integrity Risks: those related with internal and competence, involve and draw up the measures that external frauds that the Group companies may may prevent or minimize them. In function of that be subject to; analysis, critically monitored by the corporate central • Management and Human Resource Risks: risks unit, decisions are taken relating to the business, related amongst others with management, lea- country or project in question, namely the decision dership, authority limits, relocation, local integra- to contract or not to contract or as to the contraction, etc.; ting conditions. • Financial Risks: namely currency risks, interest rate risks, liquidity risks and credit risks; The analysis and management system is an inte- > Data Risks: ractive process that extends through all the phases • Operating, financial and strategic evaluation data; of the project, from the original potential set-up, at a moment of pure prospecting, right through to its > Environmental Risks: • Competition; epilogue, when all the responsibilities connected to it are extinguished. Naturally, during its evolution, • Political, economic, legal and fiscal environment; some fundamental milestones requiring a wider • Regulation of and changes in the sector. scope in terms of decision making are set-up, both to evaluate if the potential risks and the manner in From an organizational perspective, it functions, which best to approach them fit the strategic profile within the scope of the corporate central unit and, defined, as well as to ensure that the control me- thus, with a transversal competency throughout the chanisms and procedures are being complied with Group, with an Analysis and Risk Management Unit and are proving to be adequate. For a thorough ma- which objectives are: assuring the efficiency and nagement, detailed information procedures are crea- effectiveness of the Group’s operations, safeguar- ted with content adequate to each phase, which will ding its assets, guaranteeing the reliability of the fi- permit the timely monitoring of the various vicissi- nancial data and compliance with the law and norms. tudes and the taking of action at the exact moment of an occurrence. The full process is open to contri- The analysis of the risk is assured by the various butions from reviews and to the improvements that corporate units of the Group. Work is carried out to any structure wishes to propose, and is the object of identify and prioritize the risks classified as more periodic reflection and evaluation involving both the critical (determined through the combination of the supporting services as well as the operational areas. probability of occurrence with the potential impact, expressed in a risk matrix) up-front and risk mana- Complementing this, the Internal Audit Unit periodi- gement strategies are defined so as to implement cally carries out internal audits of the main operatio- the control procedures that will reduce these to an nal activities of the various Group companies, with acceptable level. In this matter the Group has been a view to improving the efficiency of the internal implementing control activities that permit the mi- means of control and the respective business pro- tigation of these risks. The objective is to maximize cesses. It is intended, in this manner, to assure the the trade-off between the risks and the business monitoring of the risks of each operation, the imple- margins so as to attain, in a sustained manner, the mentation of adequate mitigating measures for the strategic objectives of the Group. This matrix derives risks detected and the monitoring of their evolution. from the general lines of the strategic plan in force, from the goals set, the type of activity carried out At the end of 2012 a project was commenced to and the countries that constitute the preferential create an internal risk management portal, not only stable places of intervention. Subsequently, and in for the use by the unit itself in recording the work strict obedience to these general lines, a set of pa- produced and in consolidating the most important rameters are defined that guide the strategic objec- risks in a combined manner, but also for the use of tives in terms of risk assumption and all the monito- the remaining business units in line with their needs. ring activities carried out to verify the conformity of The objective of this portal is the implementation of the risks effectively taken with those objectives. a systematic risk management process that permits REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 49

the management, in a corporative and integrated returns for the shareholders and benefits for the manner, of the diversity and criticality of the risks remaining stakeholders, by maintaining a solid capi- identified, the monitoring of the actions launched for tal structure that supports the development of the its mitigation, the collection and filing of information business. on each relevant risk, with qualitative evaluation and, to the extent possible, quantitative, and the elabora- The Group has reinforced its risk analysis policies in tion of a matrix defining the priorities for action. order to be better prepared to respond to the uncertainties and vicissitudes that derive from the adjust- The objective of capital risk management in the ment of its activity to the retraction in the national Soares da Costa Group is to safeguard the conti- market, and is actively searching for alternatives nuity of the operations of the Group, thus providing that boost its capacity.

.10 SOARES DA COSTA ON THE STOCK EXCHANGE

> Share Capital Representation sed 31.5 % and 55%). Thus, at 31 December 2012, Pursuant to article 4, no. 3, of the by-laws, the each share of Grupo Soares da Costa was worth company’s share capital is represented by one hun- 0.13 Euros, less 0.24 Euros than at the end of the dred and sixty million scriptural bearer shares, with a previous year, and closing at the minimum amount par value of one Euro each, divided into two catego- of the year. Market capitalization is currently 20.8 ries of shares, reciprocally convertible through a ge- million Euros, 38.4 million Euros lower than at 31 neral meeting resolution: a) one hundred and fifty- December 2011. -nine million nine hundred and ninety-four thousand four hundred and eighty-two (159,994,482) ordi- This share performance occurs in counter cycle to nary shares; b) five thousand five hundred and ei- the evolution of the market and of the comparable ghteen (5,518) preference share not carrying a vote, construction companies. The main market index but with a preferential right to a dividend and to the for Portuguese shares, PSI20, closed the year with reimbursement of the respective nominal amount in a slight gain of 3%, whilst the quoted companies the event of the liquidation of the company. from the construction sector gained, on average, 52%. The company’s negative behaviour reflects > Own Shares some specific constraints that occurred during 2012, Grupo Soares da Costa, held at 31 December 2012, namely the Court of Auditor’s refusal to issue the 507,292 own shares, corresponding to 0.317% of formal prior approval on the high speed railway its share capital, situation unchanged since 31 De- concession for the Poceirão and Caia stretch, the cember 2011. conclusion of a judicial process of a tax nature that resulted in a significant non-recurrent cost for the > Dividends Group, and the net-debt level in excess of the sector As was proposed by the board of directors at the average. shareholders general meeting held on 24 May 2012, the distribution of a gross dividend of 0.05 Euros In terms of liquidity, 2012 was also a negative year per preference share was approved. As was commu- for the Grupo Soares da Costa share. The average nicated to the market on 7 June 2012, the dividends value traded per session decreased 73% to some were placed at the shareholders’ disposal as from 10 thousand Euros per session (versus 38 thousand 22 June 2012, with the shares transacting on the Euros in 2011), reflecting, yet again, the previou- stock exchange without the right to the dividend as sly referred to share price decrease. Excluding this from 19 June 2012. share price decrease effect, and analysing merely the number of shares traded, the decrease was one > Share Price Evolution of 39% on the average number per session. In ac- Grupo Soares da Costa’s stock price evolution was cumulated terms, in 2012 some 13 million shares negative in 2012, losing circa 65% on the previous were traded, representing 8% of the total number year, and continuing the descending tendency of the of shares and 45% of the free float (in 2011 the two previous years (in which it had already decrea- number of shares traded were 21 million, correspon- REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 50

ding to 13% of the total shares and 74% of the free the average amount traded by the PSI20 companies float). This decreasing liquidity trend was also felt decreasing 27% in 2012 to 77.5 million Euros (107 by the remaining quoted companies, in general, with million Euros in the previous year).

Some Indicators of the Performance of Soares da Costa Share Price

2012 2011 2010 Share price at beginning of period (Euro) 0.37 0.54 1.19

Share price at end of period (Euro) 0.13 0.37 0.54

Maximum quotation (Euro) 0.44 0.59 1.27

Minimum quotation (Euro) 0.13 0.27 0.49

Total no. shares traded (thousand shares) 12,902 21,293 59,101

Accumulated traded amount (million Euros) 2.6 9.8 50.8

Number of shares traded per session (average; 000’ shares) 50 83 229

Traded amount per session (average; thousands of Euros) 10.3 38.1 196.9 Source: Euronext

Evolution of the Soares da Costa Share Price (Euro) and Number of Shares Traded (1000’ shares)

1.000 0,44

900 0,40 800 0,36 700 0,32 600

500 0,28

400 0,24 300 0,20 200 0,16 100

0 0,12 Jan Fev Mar Mai Jun Ago Set Out Dez

Number of Shares Traded (1000 shares)

Price (Euro)

Source: Euronext REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 51

.11 ORDER BOOK AND PROSPECTS

The panorama of a depressive construction market in The works referred to above are a clear and elucida- PORTUGAL is sufficiently portrayed in the previous tive expression of the extension of the company’s sections. This state is also apparent in the generali- territorial activity which, in turn, requires a signi- zed scarcity of tenders, which inevitably leads to the ficant concentration and cooperation of efforts, degradation of prices, as well as to the reduced rate namely organizational and logistical. of decisions taken on tenders launched. The activity of the domestic construction companies cannot, In MOZAMBIQUE, during 2012, construction works therefore, be based on domestic production over the on the bridges over the Rivers Sangaze, Pompwe, coming years, and it is on the international front that Macuca and Chidge in the Province of Sofala and on the short to medium-term future will be sustained. the bridges over the Rivers Muira, Tsanzabue and Nhagucha in the Province of Manica were adjudica- Reference is made to the following adjudications to the ted. These works, adjudicated by the Administração Soares da Costa Group occurring in 2012, in Portugal: Nacional de Estradas (Mozambican National Road > Gas pipeline Mangualde-Celorico-Guarda (REN); Administration), in the amount of 21.7 million Euros, have as their object the design-build of nine bridges > Paços de Sousa’s waste water treatment center (six with a reinforced concrete deck, pre-stressed (Simdouro); with varying lengths), the correction of access roads > EN 234 – Rehabilitation of the CRIZ (I and II) and and various other related works. the S. João das Areias bridges (Estradas de Portugal). In so far as the Group company Soares da Costa In ANGOLA we highlight, due to its relevance and Moçambique SARL is concerned, reference should be amplitude, the adjudication of the works “project made to the exceptional commercial activity in 2012 and construction of the social facilities for the em- that led to a considerable number of adjudications st ployees of Angola LNG (1 phase)”, in Soyo, a pro- and excellent prospects for 2013. ject with an execution deadline of 36 months and an adjudicated value of 252 million Dollars. The project With effect, and aiming to increase the potential uni- foresees the construction of 317 households of va- verse in which to canvass for works, the work ope- 2 rious types in a residential area of some 10,000m rations have been extended to practically the entire and of various infrastructure and support equipment country, as a result of which, at the end of the period, elements (social, environmental and leisure). our presence extended to the Provinces of Maputo, Gaza, Inhambane, Sofala, Tete and Cabo Delgado. Close to the end of the year, a consortium that includes Sociedade de Construções Soares da Costa, In addition to this, and as a general policy, a se- S.A. (and Edifer Angola, S.A.) was adjudicated the lective posturing has been maintained in the offer, work on the basic infrastructure of the Fútila Indus- opting, primarily, to bid on works for certified clients trial Hub, in the Province of Cabinda. that offer safe payment guarantees.

Of note in this market are the following adjudica- The following are the most significant adjudications tions that occurred in 2012: won in 2012: > Talatona Data Centre, for Movicel; > Rehabilitation of a building to house the new > Upgrades of Operational Bases, in Soyo, for branch in Beira, for Banco de Moçambique; Schlumberger; > Construction of 15 type 3 households in the dis- > Huambo Cultural Centre, for the Provincial Govern- trict of Songo; ment of Huambo; > Remodelling and extension of the Pemba airport > Rehabilitation and outfitting of the S. José de Cluny terminal, for Aeroportos de Moçambique, E.P.; School Complex (phase 1), for the Provincial Go- > Construction of an 8 floor building in Costa do Sol; vernment of Huambo; > Construction of rainwater drains on the Gaza road; > Construction of INE’s provincial offices in Malanje > Construction of the Hospital Distrital de Mapai and in Benguela; and (Mapai’s District Hospital) (in consortium). > Construction of the Fortaleza Shopping Centre, in Luanda. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 52

Finally, it should be referred that it has been com- South) in the amount of 30 million Dollars and that pany policy, through its performance and professio- consists in the rehabilitation of circa four miles of nalism, to cultivate customer loyalty. The continuous road and sixteen bridges. The deadline is foreseen volume of project adjudications by ANE/ Fundo de for July 2014. Estradas, Petromoc, HCB, Grupo VIP and MozaBanco, amongst others, evidence the positive end result of The pipeline of projects foreseen, namely in Florida, this market posturing. permits eyeing the future with optimism, both in terms of order book and in profitability margins. Making good use of the capacity installed in Mo- zambique, a consortium in which Sociedade de In BRAZIL, a market where the penetration of fo- Construções Soares da Costa, S.A. participates in reign companies faces significant difficulties and 50% received an intention to adjudicate on a project barriers, significant steps were taken in 2012 within in Swaziland, that consists in the construction of a the scope of installing the Group locally, namely in road, with circa 12 Km in length, including two brid- respect of obtaining the recognition of the capabili- ges, in a global amount of 17.6 million Euros. ties and the compliance with the technical-economic requirements necessary to satisfy the qualification Somafel initiated, in 2012, its commercial incursion demands imposed by the “edicts” for bids on natio- into this important emerging market. Following an nal public projects. invitation from Vale (ex Companhia do Vale do Rio Doce) the company presented proposals for the The commercial activity during the year 2012 was, complete renovation of the Nacala corridor railway, however, aimed primarily at private clients. The for- on the stretch existing in the north of the country, malization of two new works, already under execu- between the border with Malawi and the port of tion, took place. One project is for the client Cimpor Nacala on the Indian Ocean (an extension of ap- Brasil – a project for line 3 of the cement factory proximately 580 Km). This is the renovation of an in Cezarina Goiás, a line of 2,000 tonnes/ day. The existing infrastructure, with the objective of increa- other project is with the consortium constructor sing the rail transport capacity to transport the coal Viracopos (Conector, Holdroom and others) and extracted by the multinational company within the consists in a project to expand the terminal of the scope of the mining project it runs. Aeroporto Internacional de Viracopos (International Airport), in Campinas, São Paulo (SP). Both projects Still in the African market, more specifically inS. are executed by the company Linha 3 Cesarina – TOMÉ AND PRÍNCIPE, in addition to the adjudica- Construções Lda, in which Soares da Costa Brasil – tion of the rehabilitation of the no. 1 National Road, Construções Ltda., a wholly owned subsidiary of the a project already underway, reference is made to the Group, has a 50% shareholding. construction of the future headquarters of Banco Central de S. Tomé and Príncipe (S. Tomé and Principe As to the activity of Somafel, that has already ob- central bank), with a gross construction area of 4.2 tained the necessary qualifications and credentials, thousand m2, in the amount of 6.5 million Euros. in various states and in various technical skills, reference is made in this market to the start-up of in- In the UNITED STATES the most important occur- dustrial production, in the specialty of rails, with the rence in the commercial area is the adjudication to execution of rail electrical welding for SuperVia Con- Prince by the Florida Department of Transportation cessionária de Transporte Ferroviário, S.A.. The com- (FDOT) of the design-build project of the accesses pany has also been realizing an intensive commercial of the I-75 (SR93) to the Southwest Florida Inter- activity. With results in the scope of railway main- national Airport, in Fort Myers, Florida. This project, tenance, a contract for the rendering of emergency totalling 54 million Dollars, has an execution period maintenance services with heavy equipment in the up till September 2014 and consists of a new direct Belford Roxo extension, in an extension of 26 km in connection from the I-75 to the Mid Field Terminal double line, has been agreed and is in the process of said airport. The project includes the construction of formalization with SuperVia, the concessionaire of of five viaducts/bridges, approximately 8 miles of the suburban line in Rio de Janeiro. access roads to the I-75 and a new access road to the terminal under the I-75. In ROMANIA the commercial effort was directed to projects related with renewable energies (wind In addition to this project, Prince was also adjudica- farms and solar parks), for private clients, a seg- ted another project by the FDOT in the area of road ment in which the company has had some success infrastructures (I-275 Tampa, Hillsborough County over the last few years. It was, nevertheless, in the REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 53

scope of the road infrastructure segment that the and associated infrastructure networks, in an area most relevant project materialized, with the adjudi- situated between the Masqat International Airport cation by CNADNR-Compania Nationala de Autostra- and the express motorway of the same city. These zi si Drumuri National din Romania S.A. (Romanian works, in a global amount of 48 million Euros, have National Road Authority), of the project: “Construc- an execution period of 654 days and, as referred to tia Variantei de Ocolire Tecuci”, in the amount of 49 in the production chapter, are already in full swing. million RON (circa 11.1 million Euros), which consignation of the works occurred in June 2012. The The panorama presented above permits one to fo- contractual execution period for this project is 18 resee the maintenance of reasonable activity levels months, extending to the end of 2013. in the near future even though the even more abrupt decrease foreseen for the activity in the national Despite the concentration of commercial efforts on market, with the conclusion of the Transmontana the core markets of the company’s intervention, we motorway during the first part of 2013, implies the highlight, as a corollary to efforts made in previous maintenance of a concentrated, efficient and fruitful years, the adjudication to a consortium in which the commercial effort. company participates (together with a local company) of works in the SULTANATE OF OMAN, that > Order Book consist in the execution of projects and road infras- Having presented a panorama by markets and com- tructure construction works, contemplating road panies, the following table reflects the order book of sections, five overhead viaducts at road junctions the construction area and its evolution between the close of 2011 and 2012.

Order Book

(million Euros) Dec.2012 % Dec.2011 % Variation TOTAL 1,048.0 100.0% 1,404.6 100.0% -25.4%

Portugal 210.3 20.1% 482.6 34.4% -56.4%

Angola 415.0 39.6% 467.0 33.3% -11.2%

United States 149.3 14.3% 201.7 14.4% -26.0%

Mozambique 120.0 11.4% 131.6 9.4% -8.8%

Costa Rica 42.5 4.1% 43.4 3.1% -1.9%

Brazil 6.5 0.6% 5.4 0.4% 21.8%

Romania 11.0 1.1% 0.0 0.0% -

Other 93.3 8.9% 73.0 5.2% 27.9%

In the order book, reference is made to the impact particular incidence on the national market. Remo- of the withdrawal of the project to construct the ving this effect (that is, eliminating this project from TGV Poceirão-Caia stretch of the high speed railway the amount of the order book in 2011) the decrease between Lisbon and Madrid, which gave rise to a of the backlog would amount to 12.3%. significant decrease in the overall order book, with

PROSPECTS AND OBJECTIVES FOR 2013

Considering the framework of the activity, the order expectations with regard to the consolidated indica- book and the risks and uncertainties, namely those tors for 2013 are positive, although demanding. of an economic environment nature that were enu- merated throughout this management report, but During the first months of the year the human re- confident in the capacity to overcome the difficulties sources adjustment process, started at the end of and in the direction the Group has taken, the budget 2011 and profoundly developed in 2012 in the main REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 54

Portuguese related companies, is expected to be was achieved in 2012 turning the maintenance of concluded, thereby stabilizing the structure to the such levels in the future into an ambitious goal, one current and foreseeable market dimensions in the which is to be achieved simultaneously with an im- domestic market and to the technical support needs provement in profitability. of the foreign operations. As a result of this increased activity in Africa, further In terms of turnover, a new activity decrease is fore- augmented by the contribution to turnover from seen for 2013 in the national market where, given the other markets (namely Oman), an ambitious objecti- advanced state of the Transmontana motorway prove has been set for 2013 – attaining a global turno- ject, with its conclusion foreseen for the 3rd quarter of ver close to that achieved in 2012. Additionally, the 2013, the decrease is expected to be significant. increased international activity quota and the much lower weight of the non-recurrent costs expected, On the other hand, a significant increase in activi- permit the assumption of the objective to improve ty is foreseen in the Portuguese-speaking African the EBITDA margin in the construction business area nations, namely in Angola and Mozambique. In the and at the consolidated level, despite the context of United States, a maximum historical activity volume aggressive competitiveness in the markets.

.12 SUBSEQUENT EVENTS

As relevant facts occurring subsequent to the date of Soares da Costa in the Angolan market; and of reference of the accounts and as per the com- > On 1 March 2013, that the definitive registration munications of privileged information disclosed and had taken place of the merger of Construções Me- made public through the CMVM website, the com- tálicas Socometal, S.A. into Sociedade de Constru- pany informed: ções Soares da Costa, S.A., by incorporation into > On 28 February 2013, that its subsidiary Sociedade the latter. Additionally, it is hereby informed that, de Construções Soares da Costa, S.A., was adju- from an accounting standpoint, the effects of the dicated two construction projects for office and merger will be effective and backdated to 1 January commercial buildings in Luanda, including founda- 2013. Both companies, the incorporator and the tions, structure, finishings and special installations. incorporated, were wholly held, directly or indirec- The projects, with a construction area of some tly, by Grupo Soares da Costa, S.G.P.S., S.A.; thus, 26,500m2, have an execution period of 16 and 24 the operations carried out do not have any reper- months and the total amount of the adjudication cussion on the statement of financial position and is 51.5 million Dollars (39 million Euros), which reon the consolidated results. presents an increase of some 9% in the order book

.13 PROPOSAL FOR THE APPROPRIATION OF RESULTS

The Board of Directors of Grupo Soares da Costa, applicable to the distribution of corporate assets, S.G.P.S., S.A., based on the present Financial State- namely articles 32 and 33 of the said Code, that the ments, proposes to the Shareholders, in accordance individual net result of -11,407,369 Euros, made by with that laid down in paragraph f) of article 66 of the company during the period ended on 31 Decem- the Commercial Companies Code and the legislation ber 2012, be appropriated to retained earnings. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 55

.14 STATEMENT ON THE CONFORMITY OF THE FINANCIAL INFORMATION IN TERMS OF PARAGRAPH C) OF NO. 1 OF ARTICLE 245 OF THE SECURITIES CODE

The members of the Board of Directors, individually, the equity and of the consolidated and individual declare that to the best of their knowledge: results of the issuer; and > The Consolidated Financial Statements, the Indi- > The Management Report accurately discloses the vidual Financial Statements and the other docu- evolution of the business, the performance and ments comprising the accounts were prepared in the financial position both of the issuer and of the conformity with the accounting standards applica- companies included in the consolidation perimeter ble, presenting a true and fair view, in all materially and contains a description of the principal risks relevant aspects, of the assets and liabilities, of and uncertainties which they face.

.15 FINAL ACKNOWLEDGEMENTS

On concluding this report on the activity carried To the members of the other corporate bodies, as out during the 2012 economic period, the Board of well as to our external and statutory auditors, we Directors takes this opportunity to express its ap- acknowledge the manner and the rigor with which preciation to all the public and private entities that, they carried out their functions. directly or indirectly, have supported and coopera- ted with the company and with the various entities Finally, the high level of personal commitment and in the Soares da Costa universe. It is gratifying to professionalism demonstrated by the employees of highlight, in particular, the relationship of trust with the Group, without whose efforts and dedication it which clients, suppliers and other business partners, would not have been possible to create the value the namely financial institutions, have honoured us. company is responsible for, merits a special mention.

Oporto, 11 April 2013 The Board of Directors,

Manuel Roseta Fino António Manuel Formigal de Arriaga António Manuel Pereira Caldas de Castro Henriques António Pereira da Silva Neves Pedro Gonçalo de Sotto Mayor de Andrade Santos Carlos Moreira Garcia Jorge Domingues Grade Mendes José Manuel Baptista Fino Jorge Armindo de Carvalho Teixeira Martim Salema de Sande e Castro Fino REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 56

ANNEXES TO THE MANAGEMENT REPORT

Sana Luanda Royal Hotel Angola complete portfolio available in: www.portfolio.soaresdacosta.pt REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 57

.1 PARTICIPATIONS AND TRANSACTIONS OF THE MEMBERS OF CORPORATE BODIES (According to Article 9. Point a) and 14 no. 7 of Regulation 5/2008 of the CMVM)

> Manuel Roseta Fino (Chairman of the board > António Pereira da Silva Neves (Member of the of directors): Chairman of the board of directors board of directors): Held by January 1, 2012, 13,220 of Manuel Fino, SGPS, S.A. This company indirectly shares, that maintained by December 31, 2012. held, as of January 1, 2012, 113,302,682 shares that correspondent to 70.8142% of the capital, that > José Manuel Baptista Fino (Member of the bo- maintained by December 31, 2012. ard of directors): Member of the board of directors of Investifino SGPS Limited. This company held, as > António João Graça Dias Martins (Member of of January 1, 2012, 113,302,682 shares that cor- the board of directors): Member of the board of respondent to 70.8142% of the capital, that main- directors of Parinama – Participações e Investimentos, tained by December 31, 2012. S.A.. This company held, as of January 1, 2012, 17,600,00 shares that correspondent to 11.0000% of The other members of the corporate bodies did not the capital, that maintained by December 31, 2012. hold, as of December 31, 2012, shares of the company, and did not made any transactions on the company’s shares in 2012.

.2 QUALIFIED SHAREHOLDINGS

At 31 December 2012, the shareholders with qualified shareholdings in the company share capital were:

Manuel Fino, S.G.P.S., S.A. Number of Shares % Share Capital % Voting Rights (1) Indirectly through Investifino S.G.P.S., Limited 113,302,682 70.814% 71.042%

Total Imputable 113,302,682 70.814% 71.042%

PARINAMA - Participações e Number of Shares % Share Capital % Voting Rights (1) Investimentos, S.G.P.S., S.A. Directly 17,600,000 11.000% 11.035%

Total Imputable (2) 17,600,000 11.000% 11.035%

(1) Considers the effect of 5,518 preferential shares carrying no vote as well as of the existence of 507,292 own shares as 31 December 2012. (2) Imputable to Ana Maria Martins Caetano. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 58

.3 OTHER LEGAL INFORMATION

Debts to the State and Social Security the provisions of Decree-Law 492/88, of December At the balance sheet date the company has no outs- 30, authorization for payment in instalments of the tanding debts resulting from contributions to Social income tax (IRC) for the year 2011 and is awaiting Security. As disclosed in note 14 of the notes to the decision of the tax authority. individual accounts, the company requested under

.4 CORPORATE GOVERNANCE REPORT

0. STATEMENT OF COMPLIANCE

In accordance with the Portuguese Securities and Exchange Commission’s (CMVM) Code of Corporate Governance (Reg. Nr. 1/ 2010):

0.1 Legislation Soares da Costa is subject to the Code of Corporate Governance defined by CMVM, which is available in the commission website www.cmvm.pt.

0.2 Statement of Compliance of Recommendations

Recommendation Compliance Description in Report I. GENERAL SHAREHOLDERS MEETING I.1 BOARD OF THE SHAREHOLDINGS’ MEETING I.1.1 The Chairman of the Board of the General Meeting shall have the necessary human Recommendation - and logistical resources at his/her disposal, taking the company’s economic adopted situation into account. I.1.2 The remuneration of the Chairman of the Board of the General Meeting shall be Recommendation I.3 disclosed in the annual report on corporate governance. adopted I.2 PARTICIPATION IN THE GENERAL SHAREHOLDERS MEETING I.2.1 The requirement for the Board to receive statements for share deposit or blocking Recommendation I.4 for participation at the general meeting shall not exceed 5 working days. adopted I.2.2 Should the general meeting be suspended, the company shall not compel share Recommendation I.5 blocking during the interim period until the meeting is resumed and shall then adopted prepare itself in advance as required for the first session. I.3 VOTING AND VOTING EXERCISING RIGHTS I.3.1 Companies shall not impose any statutory restriction on postal voting and Recommendation I.9, I.10 and whenever adopted or admissible, on electronic voting. adopted I.12 I.3.2 The statutory deadline for receiving early voting ballots by mail may not exceed Recommendation I.11 three working days. adopted I.3.3 Companies shall ensure the level of voting rights and the shareholder’s Recommendation I.6 and I.7 participation is proportional, ideally through the statutory provision that obliges adopted the one share-one vote principal. The companies that: a) hold shares that do not confer voting right; b) establish non-casting of voting rights above a certain number, when issued solely by a shareholder or by shareholders related to former, do not comply with the proportionality principle. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 59

I.4 RESOLUTION FIXING QUORUM I.4.1 Companies shall not set a resolution-fixing quorum that outnumbers that which is Recommendation I.8 prescribed by law. adopted I.5 MINUTES AND INFORMATION ON RESOLUTIONS PASSED I.5.1 Extracts from the minutes of the general meetings or documents with correspon- Recommendation I.13 and I.14 ding content must be made available to shareholders on the company’s website adopted within a five day period after the General Meeting has been held, irrespective of the fact that such information may not be classified as material information. The information disclosed shall cover the resolutions passed, the represented capital and the voting results. Said information shall be kept on file on the company’s website for no less than a three year period. I.6 MEASURES ON CORPORATE CONTROL I.6.1 Measures aimed at preventing successful takeover bids, shall respect both the Recommendation I.19 company’s and the shareholders’ interests. The company’s articles of association adopted that by complying with said principal, provide for the restriction of the number of votes that may be held or exercised by a sole shareholder, either individually or in concert with other shareholders, shall also foresee for a resolution by the General Assembly (5 year intervals), on whether that statutory provision is to be amen- ded or prevails – without super quorum requirements as to the one legally in force – and that in said resolution, all votes issued be counted, without applying said restriction. I.6.2 In cases such as change of control or changes to the composition of the Board of Recommendation I.20 Directors, defensive measures shall not be adopted that instigate immediate and adopted serious asset erosion in the company, and further disturb the free transmission of shares and voluntary performance assessment by the shareholders of the members of the Board of Directors. II BOARD OF DIRECTORS AND SUPERVISORY BOARD II.1 GENERAL ISSUES II.1.1 STRUCTURE AND DUTIES II.1.1.1 The Board of Directors shall assess the adopted model in its Annual Report on Recommendation II.3 Corporate Governance and pin-point possible hold-ups to its functioning and adopted shall propose measures that it deems fit for surpassing such obstacles. II.1.1.2 Companies shall set up internal control and risk management systems in order Recommendation II.5, II.6 and to safeguard the company’s worth and which will identify and manage the risk. adopted II.9 Said systems shall include at least the following components: a) setting of the company’s strategic objectives as regards risk assumption; b) identifying the main risks associated to the company’s activity and any events that might generate risks; c) analyse and determine the extent of the impact and the likelihood that each of said potential risks will occur; d) risk management aimed at aligning those actual incurred risks with the company’s strategic options for risk assumption; e) control mechanisms for executing measures for adopted risk management and its effectiveness; f) adoption of internal mechanisms for information and communication on several components of the system and of risk-warning ; g) periodic assessment of the implemented system and the adoption of the amendments that are deemed necessary. II.1.1.3 The Board of Directors shall ensure the establishment and functioning of the Recommendation II.6 internal control and risk management systems. The Supervisory Board shall be adopted responsible for assessing the functioning of said systems and proposing the relevant adjustment to the company’s needs. II.1.1.4 The companies shall: a) identify the main economic, financial and legal risk that Recommendation II.9 the company is exposed to during the exercise of its activity; b) describe the adopted performance and efficiency of the risk management system, in its Annual Report on Corporate Governance. II.1.1.5 The Board of Directors and the Supervisory Board shall establish internal regula- Recommendation II.7 tions and shall have these disclosed on the company’s website. adopted II.1.2 INCOMPATIBILITY AND INDEPENDENCE II.1.2.1 The Board of Directors shall include a number of non-executive members that Recommendation II.3 and II.14 ensure the efficient supervision, auditing and assessment of the executive mem- adopted bers’ activity. II.1.2.2 Non-executive members must include an adequate number of independent mem- Recommendation II.3 and II.14 bers. The size of the company and its shareholder structure must be taken into adopted account when devising this number and may never be less than a fourth of the total number of Board Directors. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 60

II.1.2.3 The independency assessment of its non-executive members carried out by the Recommendation II.15 Board of Directors shall take into account the legal and regulatory rules in force adopted concerning the independency requirements and the incompatibility framework applicable to members of other corporate boards, which ensure orderly and sequential coherence in applying independency criteria to all the company. An independent executive member shall not be considered as such, if in another corporate board and by force of applicable rules, may not be an independent executive member. II.1.3 ELIGIBILITY AND APPOINTMENT CRITERIA II.1.3.1 Depending on the applicable model, the Chairman of the Supervisory Board Recommendation II.21, II.22 and and of the Auditing and Financial Matters Committees shall be independent and adopted II.23 adequately competent to carry out his/her duties. II.1.3.2 The selection process of candidates for non-executive members shall be conjured Recommendation II.16 so as to prevent interference by executive members. adopted II.1.4 REPORTING OF IRREGULARITIES POLICY II.1.4.1 The company shall adopt a policy whereby irregularities occurring within the Recommendation II.35 company are reported. Such reports shall contain the following information: a) adopted the means by which such irregularities may be reported internally, including the persons that are entitled to receive the reports; b) how the report is to be handled, including confidential treatment, should it be required by the reporter. II.1.4.2 The general guidelines on this policy shall be disclosed in the annual report of Recommendation II.35 Corporate Governance. adopted II.1.5 REMUNERATION II.1.5.1 The remuneration of the Members of the Board of Directors shall be structured Recommendation I.30, II.31, so that the formers’ interests are capable of being aligned with the long-term adopted on II.32 and II.33 interests of the company. Furthermore, the remuneration shall be based on i),ii),iv),vii) and performance assessment and shall discourage taking on extreme risk. Thus, viii), and not remunerations shall be structured as follows: a) The remuneration of the Board applicable on iii), of Directors carrying out executive duties shall include a variable element which is v) and vi) determined by a performance assessment carried out by the company’s competent bodies according to pre-established quantifiable criteria. Said criteria shall take into consideration the company’s real growth and the actual growth generated for the shareholders, its long-term sustainability and the risks taken on, as well as compliance with the rules applicable to the company’s activity; b) The variable component of the remuneration shall be reasonable overall as regard the fixed component of the remuneration and maximum limits shall be set for all components; c) A significant part of the variable remuneration shall be deferred for a period not less than three years and its payment shall depend of the company’s steady positive performance during said period; d) Members of the Board of Directors shall not enter into contracts with the company or third parties that will have the effect of mitigating the risk inherent in the variability of the remuneration established by the company; e) The Executive Directors shall hold, up to twice the value of the total annual remuneration, the company shares that were allotted by virtue of the variable remuneration schemes, with the exception of those shares that are required to be sold for the payment of taxes on the gains of said shares; f) When the variable remuneration includes stock options, the period for exercising same shall be deferred for a period of not less than three years; g) The appropriate legal instruments shall be established so that in the event of a Director’s dismissal without due cause, the envisaged compensation shall not be paid out if the dismissal or termination by agreement is due to the Director’s inadequate performance; h) The remuneration of Non-Executive Board Members shall not include any component the value of which is subject to the performance or the value of the company. II.1.5.2 A statement on the remuneration policy of the Board of Directors and Supervisory Recommendation II.32 e II.33 Board referred to in Article 2 of Law No. 28/2009 of 19 June, shall contain, not adopted on in addition to the content therein stated, adequate information on: a) which i) and adopted groups of companies the remuneration policy and practices of which were taken on ii) as a baseline for setting the remuneration b) the payments for the dismissal or termination by agreement of the Directors’ duties. II.1.5.3 The remuneration policy statement referred to in Article 2 of Law No. 28/2009 Recommendation - shall also include the directors’ remunerations which contain an important variable not applicable component, within the meaning of Article 248-B/3 of the Securities Code. The statement shall be detailed and the policy presented shall particularly take the long-term performance of the company, compliance with the rules applicable to its business and restraint in taking risks into account. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 61

II.1.5.4 A proposal shall be submitted at the General Meeting on the approval of plans for Recommendation - the allotment of shares and/or options for share purchase or further yet on the not applicable variations in share prices, to members of the Board of Directors and Supervisory Board and other managers within the context of Article 248/3/B of the Securities Code. The proposal shall mention all the necessary information for its correct assessment. The proposal shall contain the regulation plan or in its absence, the plan’s conditions. The main characteristics of the retirement benefit plans established for members of the Board of Directors and Supervisory Board and other managers within the context of Article 248/3/B of the Securities Code, shall also be approved at the General Meeting. II.1.5.5 At least one of the Remuneration Committee’s representatives shall be present at Recommendation II.31 the Annual General Meeting for Shareholders. adopted II.1.5.6 The amount of remuneration received, as a whole and individually, in other Recommendation II.33 companies of the group and the pension rights acquired during the financial year in adopted question shall be disclosed in the annual report on Corporate Governance. II.2 BOARD OF DIRECTORS II.2.1 Within the limits established by law for each management and supervisory Recommendation II.3 structure, and unless the company is of a reduced size, the Board of Directors shall adopted delegate the day-to-day running and the delegated duties shall be identified in the annual corporate governance report. II.2.2 The Board of Directors must ensure that the company acts in accordance with its Recommendation II.3 goals, and shall not delegate its duties, namely in what concerns: a) definition adopted of the company’s strategy and general policies; b) definition of the corporate structure of the group; c) decisions taken that are considered to be strategic due to the amounts, risk and particular characteristics involved. II.2.3 Should the Chairman of the Board of Directors carry out executive duties, the Recommendation - Board of Directors shall set up efficient mechanisms for coordinating non- not applicable executive members that can ensure that these may decide upon, in an independent and informed manner, and furthermore shall explain these mechanisms to the shareholders in the corporate governance report. II.2.4 The annual management report shall include a description of the activity carried Recommendation II.3 and II.14 out by the non-executive board members and shall mention any restraints adopted encountered. II.2.5 The company shall expound its policy of portfolio rotation on the Board of Recommendation II.11 Directors, including the person responsible for the financial portfolio, and report on adopted same in the Annual Corporate Governance Report. II.3 CHIEF EXECUTIVE OFFICER, EXECUTIVE COMMITTEE AND EXECUTIVE BOARD OF DIRECTORS II.3.1 When Managing Directors that carry out executive duties are requested by other Recommendation II.3 Board Members to supply information, the former must do so in a timely manner adopted and the information supplied must adequately suffice the request made. II.3.2 The Chairman of the Executive Committee shall send the convening notices and Recommendation II.3 and II.12 minutes of the meetings to the Chairman of the Board of the Directors and, as adopted applicable, to the Chairman of the Supervisory Board or the Auditing Committee, respectively. II.3.3 The Chairman of the Executive Board of Directors shall send the convening notices Recommendation - and minutes of the meetings to the Chairman of the General and Supervisory not applicable Board and to the Chairman of the Financial Matters Committee. II.4 GENERAL AND SUPERVISORY BOARD, FINANCIAL MATTERS COMMITTEE, AUDIT COMMITTEE AND SUPERVISORY BOARD II.4.1 Besides carrying out its supervisory duties, the General and Supervisory Board shall Recommendation - advise, follow-up and carry out an on-going assessment on the management of not applicable the company by the Executive Board of Directors. Besides other subject matters, the General and Supervisory Board shall decide on: a) the definition of the strategy and general policies of the company; b) the corporate structure of the group; and c) decisions taken that are considered to be strategic due to the amounts, risk and particular characteristics involved. II.4.2 The annual reports and financial information on the activity carried out by the Recommendation II.4 General and Supervisory Committee, the Financial Matters Committee, the Auditing adopted and Supervisory Committee must be disclosed on the company’s website. II.4.3 The annual reports on the activity carried out by the General and Supervisory Recommendation II.4 Board, the Financial Matters Committee, the Audit Committee and the Supervisory adopted Board must include a description on the supervisory activity and shall mention any restraints that they may have come up against. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 62

II.4.4 The General and Supervisory Board, the Auditing Committee and the Supervisory Recommendation II.4 Board (depending on the applicable model) shall represent the company for all adopted purposes at the external auditor, and shall propose the services supplier, the respective remuneration, ensure that adequate conditions for the supply of these services are in place within the company, as well as being the liaison officer between the company and the first recipient of the reports. II.4.5 According to the applicable model, the General and Supervisory Board, Auditing Recommendation II.4 Committee and Supervision Board shall assess the external auditor on an annual adopted basis and advise the General Meeting that he/she be discharged whenever justifiable grounds are present. II.4.6 The internal audit services and those that ensure compliance with the rules Recommendation applicable to the company (compliance services) shall functionally report to the not applicable Audit Committee, the General and Supervisory Board or in the case of companies adopting the Latin model, an independent director or Supervisory Board, regardless of the hierarchical relationship that these services have with the executive management of the company. II.5 SPECIAL COMMITTEES II.5.1 Unless the company is of a reduced size and depending on the adopted model, the Recommendation II.1, II.36 Board of Directors and the General and Supervisory Committees, shall set up the adopted necessary Committees in order to: a) ensure that a competent and independent assessment of the Executive Directors’ performance is carried out, as well as its own overall performance and further yet, the performance of all existing committees; b) study the adopted governance system and verify its efficiency and propose to the competent bodies, measures to be carried out with a view to its improvements; c) in due time identify potential candidates with the high profile required for the performance of director’s duties. II.5.2 Members of the Remuneration Committee or alike shall be independent from the Recommendation II.38 Members of the Board of Directors and include at least one member with knowledge adopted and experience in matters of remuneration policy. II.5.3 Any natural or legal person which provides or has provided, over the past three Recommendation II.39 years, services to any structure subject to the Board of Directors, to the Board adopted of Directors of the company or that has to do with the current consultant to the company shall not be recruited to assist the Remuneration Committee. This recommendation also applies to any natural or legal person who has an employment contract or provides services. II.5.4 All the Committees shall draw up minutes of the meetings held. Recommendation II.37 adopted III INFORMATION AND AUDITING III.1 GENERAL DISCLOSURE DUTIES III.1.1 Companies shall maintain permanent contact with the market thus upholding the Recommendation III.16 principle of equality for shareholders and ensure that investors are able to access adopted information in a uniform fashion. To this end, the company shall create an Investor Relations Support. III.1.2 The following information that is made available on the company’s Internet website Recommendation III.16 shall be disclosed in the English language: adopted a) The company, public company status, headquarters and remaining data provided for in Article 171 of the Commercial Companies Code; b) Articles of Association; c) Credentials of the Members of the Board of Directors and the Market Liaison Officer; d) Investor Assistance Unit – its functions and access means; e) Accounts Reporting documents; f) Half-Yearly Calendar on Company Events; g) Proposals sent through for discussion and voting during the General Meeting; h) Notices convening General Meetings. III.1.3 Companies shall advocate the rotation of auditors after two or three terms in Recommendation III.18 accordance with four or three years respectively. Their continuance beyond this adopted period must be based on a specific opinion for the Supervisory Board to formally consider the conditions of auditor independence and the benefits and costs of replacement. III.1.4 The external auditor must, within its powers, verify the implementation of Recommendation - remuneration policies and systems, the efficiency and functioning of internal control adopted mechanisms and report any shortcomings to the company’s Supervisory Board. III.1.5 The company shall not recruit the external auditor for services other than audit Recommendation III.17 services, nor any entity with which same takes part or incorporates the same adopted network. Where recruiting such services is called for, said services should not be greater than 30% of the total value of services rendered to the company. The hiring of these services must be approved by the Supervisory Board and must be expounded in the Annual Corporate Governance Report. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 63

IV CONFLICTS OF INTEREST IV.1 SHAREHOLDER RELATIONSHIP IV.1.1 Where deals are concluded between the company and shareholders with qualifying Recommendation - holdings, or entities with which same are linked in accordance with Article 20 of the adopted Securities Code, such deals shall be carried out in normal market conditions.

IV.1.2 Where deals of significant importance are undertaken with holders of qualifying Recommendation - holdings, or entities with which same are linked in accordance with Article 20 of adopted the Securities Code, such deals shall be subject to a preliminary opinion from the Supervisory Board. The procedures and criteria required defining the relevant level of significance of these deals and other conditions shall be established by the Supervisory Board.

0.3. Overall assessment of the degree of adop- The company also disagrees with the recommen- tion of recommendation groups related to each dation II.4.6, as we do not see as correct that the other by topics internal audit depends on the external audit or any In general, the company has adopted the recom- corporate bodies other than the executive commit- mendations, not existing groups of recommenda- tee: the internal and external audit functions are ditions worth mentioning in terms of adoption/ not fferent and its field of actuation should not be con- adoption. In any case, the company does not com- fused, what could be highly damaging to the success pletely agree with the independence requirements, of these missions; in fact, the internal auditing and does not consider the internal auditing and services, as well as the risk management, in a Group compliance services as supervisory services, but as with an industrial nature, represent a key tool to the fundamental support services to the executive ma- executive management, both at a central and at the nagement. Furthermore, regarding remunerations, business units levels, so, functionally, these should the company believes that to have in the remunera- depend on the executive management; this should tion committee a member related with the board of not prevent full availability to collaborate or provide directors, although with non-executive functions, is information to the non-executive members of the key to allow a more reasoned evaluation. board and to members of the supervisory board, as has always happened. 0.4. Differences between CMVM recommendations and recommendations that have not been In recommendation II.5.2, we consider that the inter- complied with or that the company considers pretation of this recommendation is that the inde- not to be applicable pendence relates to the executive committee mem- Regarding recommendation II.1.2.2, the company bers which is why we have considered this recom- believes that the number does not reflect the inter- mendation to be “adopted”, since the remuneration vention capacity of the independent members of the committee is constituted by three members, two of boards; on the contrary, the current composition of which are not related with the company’s corporate the board of directors adequately represents the di- bodies with the remaining being a non-executive fferent interests of the company’s structure. member of the board of directors. In fact, the recent legislation for this issue applicable to financial ins- In what concerns recommendation II.1.5.2, the com- titutions goes in the same direction as well as the pany does not deem appropriate to publicly refer to recommendations advocated by other entities and in other companies, although in the definition of the re- different jurisdictions. munerations are taken into consideration the system in practice in other companies, namely peers. I. GENERAL SHAREHOLDERS MEETING In what concerns recommendation II.4.4, from the current relationship between the financial committee I.1 and I.2 Identification of the members of the and the external auditor, results that the financial board of the general meeting of shareholders, committee does not have all the responsibilities beginning and expiration dates of terms of office mentioned in that recommendation, and although the The board to the general meeting of shareholders is financial committee has direct contact with the ex- constituted by the following members: ternal auditor, the company does not consider to be > Fernando Enes Gaião (chairman), term of office begin- applicable the requirement for the external auditor to ning in April 2010 and ending in 31 December 2012; be proposed by the financial committee as well as its remuneration, favouring an independent relationship > João Pessoa e Costa (secretary), term of office begin- between these two supervision structures. ning in April 2010 and ending in 31 December 2012. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 64

I.3 Indication of the remuneration of the chair- constitutive and decision-making quorums or man of the board of the general meeting of systems for equity rights shareholders The article 10-1 of the company’s bylaws establi- The remuneration attributed to the chairman of the shes that:” The general shareholders meeting is board of the general shareholders meeting in 2012 constituted and can validly deliberate in a first ses- amounted to 14.250 Euros. The remuneration attribu- sion, when the number of shareholders present or ted to the secretary of the board of the general sha- represented fulfils the legal quorum requested, and, reholders meeting in 2012 amounted to 4.275 Euros. in a second session, with any number of shareholders present or represented, regardless of the share I.4 Indication of the prior notice required for capital represented.”. the blocking of shares for participation in the General Meeting I.9 The existence of bylaws rules on the exerci- There is no blocking period. The exercise of the se of voting rights via postal voting voting rights and the shareholders representation Existing bylaw rules on the exercise of voting rights: are regulated by the company’s bylaws, in accordan- “Voting by correspondence may encompass all ce with the legal framework, as described below. matters contained in the notice. For this purpose, shareholders with voting rights who wish to exercise As set out in article 8 - 1 of the company’s bylaws: their vote via postal voting, in addition to fulfilling “In order to be entitled to vote, shareholders must all the conditions and deadlines stated above, must have evidence of registration of their shares in a address a communication to the chairman of the book-entry securities account no later than 5 busi- board of the general meeting of shareholders up ness days prior to the relevant meeting, and must to 5 p.m. on the business day immediately prior provide evidence to the company until 5 p.m. of the to the meeting, accompanied by a sealed envelope third business day prior to the general meeting of containing their clearly stated, unambiguous vote shareholders”. For the purposes of the preceding on each of the items on the agenda with a legally provision shares will be blocked from the registra- acknowledged signature. The envelopes containing tion until the general shareholders meeting is closed. the votes shall be opened at the meeting at the voting time of each item of the agenda, and shall be I.5 Indication of the rules for blocking shares in considered as votes against in the case of proposals the event of the general shareholders meeting presented after that voting was expressed.”. These being suspended rules are always part of the general shareholders In accordance with the current legal framework, meeting’s notice. there is no blocking period, shareholders only need to (re)prove their shares’ ownership. I.10 Providing a model for the right to vote by mail The documents to vote by correspondence shall I.6 Number of shares corresponding to one vote be requested to the company’s Investor Relations Each share corresponds to one vote. Office (by telephone: +351 228 342 200, or by email: [email protected]). I.7 Indication of the articles of association rules which envisage the existence of actions that I.11 A deadline requirement for the receipt of do not confer voting rights or which enable the postal ballots and the date on which the voting rights over a certain number not to be General Meeting is held counted, when issued by a single shareholder The period of time implemented for receipt of decla- or shareholders related thereto rations of vote by mail is one business day prior to The company’s share capital is represented by the date of the general meeting of shareholders. 160.000.000 nominal shares, 1 Euro each, of which 5,518 are preference shares and 159,994,482 are I.12 Exercise of voting rights by electronic means ordinary shares. In accordance with article 342-3 Currently, the possibility of voting by electronic of the Companies Code, currently, preference shares means is not available, as we believe that taking into do not carry voting rights. Soares da Costa shares consideration the shareholders that are usually pre- are listed in NYSE Euronext Lisbon. There is not any sent in the company’ general meeting, that option restriction/ limit to voting rights, when issued by a does not bring any significant advantage. Further- single shareholder or shareholders related thereto. more, we believe the physical attendance should be encouraged. In the general meeting held on May 1.8 The existence of articles of association 24, 2012, the shareholders presented represented rules on the exercise of voting rights, including 82.0855% of the company’s share capital compared to 84.57% in 2011’s general shareholders meeting. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 65

I.13 Possibility of shareholders gaining access members of the Board of Directors, Supervi- to excerpts from the Minutes of the General sory Board and other Directors Meetings in the company’s website within five The company does not have any pension benefit days after the general meeting was held systems or any early pension program to be enjoyed The minutes of the general shareholders meetings of by its directors and therefore this issue was not are available in the company’s website (www.soa- addressed at the general shareholders meeting. resdacosta.pt). In the same day of the meeting, the main deliberations are disclosed and the minutes are I.19 Existence of statutory provision that en- made available at the company’s website as soon as visages for a duty to be subject, at least every they are finished and signed. five years, to a resolution by the General Mee- ting, for the maintenance or withdrawal of the I.14 Existence of a historical record on the statutory provision providing for the limitation company’s website with the resolutions passed of the number of votes capable of being held at the company’s General Meetings, share or exercised by a single shareholder individu- capital and voting results referring to the pre- ally or together with other shareholders vious three years There is no statutory provision for the submission to The general meetings’ minutes and lists of presen- the general meeting of shareholders of a rule limiting ces remain available at the company’s website for at the votes held or exercised by a single shareholder least three years. or by a group of shareholders in a combined way.

I.15 Indication of the representative(s) from I.20 Indication of the defensive measures that the Remuneration Committee present at gene- have the effect of automatically causing a se- ral shareholders meeting rious asset erosion of company assets in case At the last general shareholders meeting held on of transfer of control or changes to the com- May 24, 2012, all members of the remuneration position of the Board of Directors committee were present. There are no agreements or measures related with the change of control of the company’s capital or I.16 Information of the intervention by the ge- with the composition of the corporate bodies and neral shareholders meeting on matters con- therefore it does not exist any limit to shares’ trans- cerning the company’s remuneration policy fer or to the shareholders’ discretion of the board of and the assessment of the performance of directors’ performance. members of the Board of Directors and other Directors I.21 Important agreements to which the com- At the last general shareholders meeting, the re- pany is a party and that come into force, are muneration committee for the company’s corporate changed or terminated in cases such as a bodies submitted a document explaining the remu- change in company control, and also related neration policy guidelines, as well as the criteria used outcome, unless the disclosure of same, due to in the fixation of the remuneration amounts attribu- its nature, is highly damaging to the company ted to corporate bodies’ members. and except when the company is specifically obliged to disclose said information by virtue I.17 Information of the intervention by the ge- of other legal requirements neral shareholders meeting on matters concer- There are no significant agreements entering into ning the proposal on the share allocation plan, force in the event of change in company control. and/or stock option plans, or based on share price fluctuations, to members of the board of I.22 Agreements between the company and the directors, supervisory board and other directors Board of Directors that provide for compensa- During the last financial year did not exist nor were tion in cases of dismissal, unfair dismissal or planned any share option plans and therefore this termination of employment following a change matter was not discussed in the company’s general in company control meeting. There are no agreements between the company and the members of the management body that pro- I.18 Information of the intervention by the ge- vide for compensation in cases of dismissal, unfair neral shareholders meeting on matters concer- dismissal or termination of employment following a ning the approval of the main features of the change in company control. retirement benefit system as enjoyed by the REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 66

II. BOARD OF DIRECTORS AND Remuneration Committee (2010-12): SUPERVISORY BOARD • José Manuel Baptista Fino (Chairman) • António Jorge Gonçalves Afonso SECTION I General Issues • João Pessoa e Costa • Company’s Secretary II.1 Identification and composition of corporate • Jorge Manuel Oliveira Alves (Secretary) boards as of December 31, 2012 • Pedro Miguel Tigre Falcão Queirós (Substitute)

General Meeting Board (2010-12): This composition reflects the only change that oc- • Fernando Enes Gaião (Chairman) curred in the board of directors’ composition during • João Pessoa e Costa (Secretary) 2012: following the resignation of Mrs Ana Maria Martins Caetano, who was appointed by the member Board of Directors (2010-12): of the board PARINAMA - Participações e Inves- • Manuel Roseta Fino (Chairman) timentos, S.G.P.S., S.A., to hold office in her own • António Manuel Pereira Caldas Castro Henriques name, the board of directors decided, at a meeting (Executive Committee, Chief Executive Officer) held on August 30, 2012, to confirm the appoint- • Pedro Gonçalo de Sotto-Mayor de Andrade ment of Mr António João Graça Dias Martins, made Santos (Executive Committee) by the member of the board PARINAMA - Parti- • Jorge Domingues Grade Mendes (Executive Com- cipações e Investimentos, S.G.P.S., S.A., to, in its mittee) own name, exercise the function of administrator, • António Manuel Formigal de Arriaga (Non-execu- therefore becoming part of the board of directors of tive, Independent) the Company, with non-executive functions. Already • António Pereira da Silva Neves (Non-executive) in 2013, by the end of January, the mentioned Mr • Carlos Moreira Garcia (Non-executive, Indepen- António João Graça Dias Martins was replaced by Mr dent) Jorge Armindo de Carvalho Teixeira, identically. • José Manuel Baptista Fino (Non-executive) • Martim Salema de Sande e Castro Fino (Non- II.2 Identification and composition of special -executive) committees established with responsibilities • PARINAMA - Participações e Investimentos, for the management or the supervision of the SGPS, S.A., corporate body number 509 016 987, company that designated António João Graça Dias Martins There are no other special committees established (Non-executive). with responsibilities in matters of corporate management or supervision besides the committees men- Supervisory Board (2010-12): tioned in II.1. • Júlio de Lemos de Castro Caldas (Chairman) • Carlos Pedro Machado de Sousa Góis II.3 Organisational structure and functional • Joaquim Augusto Soares da Silva chart relating to the division of powers among • Júlio de Jesus Pinto (Substitute) the various boards, committees and/or departments within the company, including in- Chartered Accountant (2010-12): formation on the scope of the delegation of • Grant Thornton Associados, SROC, Lda, repre- powers sented by Jorge Bento Martins Ledo The following organogram shows the company’s organisation model, identifying the heads of the di- visions: REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 67

CHAIRMAN

Manuel Roseta Fino

EXECUTIVE COMMITTEE

António Castro Henriques (CEO), Gonçalo Andrade Santos (CFO), Jorge Grade Mendes (COO)

CORPORATE GOVERNANCE GENERAL SECRETARY SECRETARY OF THE COMPANY

COMMITTEE António Frada Jorge Alves, Pedro Queirós (substitute)

MANAGEMENT CONTROL AND STRATEGIC PLANNING Conceição Vaz Sousa

AUDITING AND RISK MANAGEMENT Sandra Paredes

REPORT AND TAX Fernando Semana

LEGAL OFFICE Jorge Alves

INVESTOR RELATIONS Rita Carles

COMMUNICATION Rita Carles

The company’s operational structure is stated in the pliers, real estate business area, and all matters management report, with the Group’s subsidiaries’ related to the concessionaire Elos - Ligações de Alta being represented by its logo. Furthermore, there is Velocidade, S.A; also an operational structure before the notes to the > Pedro Gonçalo de Sotto-Mayor de Andrade consolidated financial accounts that illustrates the Santos - shared services, reporting and tax issues, subsidiaries’ structure, also indicating the group’s concessions business area, and environment & stake (%) in each company and the consolidation energy business areas; method used. > Jorge Domingues Grade Mendes - construction The company’s management is exercised by an exe- business area. cutive committee constituted by three members of the board of directors, in which the board of direc- The remaining non-executive members of the board tors has delegated all the management responsibili- of directors are informed of the decisions and issues ties, except for the responsibilities mentioned in the discussed by the executive committee, being also article 406 a) to d), f), l) and m) of the Companies reported the company’s operational performance, Code; maintained under the competence of the with the possibility of submitting to the board of di- board of directors, and therefore not being delega- rectors any matter/issue that has been discussed by ted, are also the definition of the strategy and the the executive committee. general policies of the company, as well as the decisions that, due to its dimension or risk, assume that The board of directors currently has ten members, nature and structural changes. seven of which are non-executive, including the chairman. The executive committee, although deciding in a collegial way, guided by the CEO, monitors the Regardless of the delegated responsibilities, the company’s operational activity, and preferential bu- non-executive members monitored the executive siness areas are divided among its three members: committee performance, having access to all the matters/ issues and being totally at ease to ask > António Manuel Pereira Caldas Castro Henriques for additional information on the decisions taken. institutional representation and investors relations, On the other hand, the non-executive members management control and strategic planning, human had a word on the approval of the company’s most resources, legal, corporate communication, sup- significant documents, having total access to the REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 68

information/ data they believe is important to their II.5 Description of the company’s internal con- monitoring function, accompanying and verification trol and risk management systems, particularly of the compliance with the company’s strategy set with regard to financial reporting and the func- out. There were no constraints on the performance tioning and effectiveness thereof of non-executive directors. In the dependence of the executive committee, but coordinated by the secretary-general, there are Two of the non-executive members of the board of some support and consultancy units that are trans- directors are independent, as defined by the CMVM versal to the entire Group: legal, management con- recommendations. We believe that the independen- trol and strategic planning, investor relations, report ce criteria should be based on a relative positioning and tax and communication, sustainability and orga- regarding the shareholders, and should also take nization change. into consideration the executive committee’s composition. The company’s management, of which the Besides the control and auditing services that exist executive committee is in charge – should follow the in each business area, the company has a corporate company’s superior interests, and should be run by governance committee, constituted by the secreta- professional managers, with no relation to the sha- ry-general (chairman), the legal officer, the investor reholders. relations officer, a member of the remuneration committee and an operational officer, which reflects The shareholders’ representation within the board on the company’s corporate governance policy and of directors is mainly carried out by non-executive presents proposals in these matters. members. In this context, two of the members of the executive committee do not have a relation with the On the other hand, as the company is a holding, the shareholders with qualifying positions and four of the risk committees are structured at the operational current seven non-executive members have a relation subsidiaries level, namely on those that hold the with shareholders with qualifying positions. The res- most significant activities; at the holding level, there ponsibility of monitoring the company’s management is an unit that promotes risk control strategies, defi- is handed to the non-executive members and to the nes the general policies and the responsibility terms supervisory board, constituted by independent mem- and monitors its implementation. The financial in- bers, as established in the Portuguese Law. formation is released internally to all of the officers, taking into consideration their operational area, audi- II.4 Reference to the annual reports on the ted by the external auditor, by the chartered accoun- activities undertaken by the General and Su- tant and by the supervisory board when applicable. pervisory Board, the Financial Board, the Audit Board and the Supervisory Board including the II.6 Responsibility of the Board of Directors and description of the supervisory activity and in- the Supervisory Board in establishing and ope- dicating any restraints found, and being sub- rating the company’s internal control and risk ject to disclosure on the website of the com- management systems, and also in assessing pany, together with the financial statements said system’s functioning and adaptation to The supervisory board, the chartered accountant the company’s requirements and the external auditor reports are released annu- The board of directors was responsible by the in- ally with the company’s management report and ac- ternal control and risk management system. The counts. The supervisory board report describes the supervisory board has direct access to the mana- supervision activity of the committee and eventual gement control and risks’ monitoring services, also restraints found. The supervisory board has direct having the responsibility to evaluate these systems, contact with the company’s services and with the and may propose their adjustment to the needs of external auditor and actively intervenes in contrac- the company. ting of the external auditor. Additionally, we believe that, in spite of the existence of several supervision II.7 Indication of the existence of regulations units (supervisory board, chartered accountant and on the functioning of the corporate boards or external auditor) these should be independent be- other internally defined rules on incompati- tween them. Nevertheless, the supervisory board bility and the maximum number of positions can evaluate the external auditor work, and even that a member is entitled to hold and the place purpose its dismissal. This supervision activity is ap- where said rules may be consulted proved at the general shareholders meeting. The board of directors and the supervisory board have internal operation regulations, which are available at the company’s internet site. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 69

SECTION II Board of Directors babilities of occurrence and potential impact) and are defined Risk Management strategies to implement II.8 In the event of the Board of Directors’ control procedures reduce risks to an acceptable Chairman carrying out an executive role, an level. In this sense, the Group has been implementing indication of the mechanisms coordinating the control activities that allow risks’ mitigation. The goal tasks of non-executive members in order to is to maximize the trade-off between the risks and ensure independence and notification of deci- the businesses’ margins; so that the Group’s strate- sions gic goals are achieved, in a sustainable way. The chairman of the board of directors does not perform any executive duties. This matrix is born from the strategic plan being implemented, from the targets defined, from the type II.9 Identification of the major economic, finan- of activity and from the preferred countries was a cial and legal risks to which the company is ex- stable intervention is developed. Afterwards, and posed in pursuing its business activity taking into consideration these general guidelines, a Soares da Costa Group has a diversified activity, set of parameters if defined to orient the strategic operating in several business areas and geographical goals of risk assumption and all the monitoring to markets. Therefore, the company is exposed to di- check compliance between the risks effectively in- fferent risks which can be classified as follows: curred and those goals. Business risks: In order to evaluate and monitor, through the in- > Operational risks: ternal organisation, the company’s different ma- • Risks that can affect the efficiency of the opera- nagement areas (Business Development, Finance, tional performance, the customers satisfaction and Management Control, Human Resources, Legal, the Group companies’ reputation; etc.) identify and evaluate he risks associated with • Integrity risks: risks related with internal and ex- their decisions, in their intervention and competence ternal fraud to which the Group companies’ might areas, involve and list the measures that prevent or be exposed; minimize these risks. Taking into consideration this • Human resources and management risks: risks analysis, critically monitored by the Central Unit, de- related with management, officers, authority cisions regarding the operational activity, project or limits, delocalization, and adaptation to local ma- country are taken, namely the decision to contract or rkets, etc. not, and the eventual contract conditions. • Financial risks: risks related with the foreign exchange rate variations, interest rate, liquidity risks Risk management and analysis system is an interac- and credit risks. tive process, that that runs through all phases of a > Information risks: project, since its potential launch, in pure prospec- • Operational, financial and strategic evaluation tion phase, to its epilogue, when all the responsibi- information. lities related with that project are extinct. In its evolution, some essential milestones rose in an enlarged > Context risks: decision making process, both to evaluate its the • Competition; potential risks and the way to address them fit the • Tax, legal framework, economic and political con- strategic profile defined, and to investigate whether text; the mechanisms and control procedures are being • Regulation and changes in the sector profile. observed and if they are appropriate. From an organizational point of view, in 2011 was For its adequate management, were created proce- created the Risk Analysis and Management Unit, cre- dures with detailed information, with contents ap- ated within the corporate centre context, and there- propriated to each phase, that will allow the timely fore with transversal competence to the entire Group. monitoring of the several features and acting upon The goal of this unit is to assure the efficiency and the occurrences. All the process is open to revision effectiveness of the Group’s operations, the safe- and improvement contributions, that any structure guarding of assets, the reliability of financial reporting proposes and it is object of reflection and periodic and the compliance with laws and regulations. evaluation involving either support services or operational areas. The risk analysis is assured by the Group’s several corporative units. The risks are identified and a prio- The main goal of the capital risk management in ritization is made of the risks classified as most criti- Soares da Costa Group is to safeguard the Group’s cal (determined through the combination of the pro- REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 70

operations continuity and therefore, assure sha- the minutes from the board of directors’ meetings reholders’ return and benefits for the remaining are also sent to the supervisory body chairman. stakeholders, to maintain a solid capital structure to support the business’ development. The Group has II.13 The number of meetings held by the Exe- reinforced its risk analysis policy in order to be more cutive Committee or by the Executive Board of able to answer to the uncertainties and features that Directors, as well as reference to the drawing arose from its activity’s adaption to the domestic up of the minutes of those meetings and whe- market contraction, with the consequent search for never applicable, the submission of same with alternatives that may enhance our skills. the convening notices to the Chairman of the Board of Directors, the Chairman of the Super- II.10 Powers of the Board of Directors, parti- visory Board or of the Audit Committee, the cularly with regard to resolutions concerning Chairman of the General and Supervisory Board capital increase and to the Chairman of the Financial Matters In this regard, the board of director is empowered Committee by general law. Additionally, the Group’s bylaws The executive committee convened forty times establish that the board of directors is allowed to during 2012, with a 99% attendance of its members. deliberate capital increase operations, through con- A minute of each meeting is taken, being also sent to tributions in cash from the current 160,000,000.00 the non-executive members of the board of direc- Euros up to 320,000,000.00 euros. tors, including to the chairman of the board of directors and to the chairman of the supervisory board. In II.11 The information on the rotation policy of general, no notices of meeting are issued to the exe- the Board of Directors’ functions, namely as cutive committee meetings since they are scheduled to the financial responsibility division and the in advance for the entire year, being this calendar rules applicable to the appointment and repla- released to its members and to those entities. cement of members of the board of directors and of the supervisory board II.14 Distinction between executive and non- After a transition stage, and to the 2010-12 period, -executive members and among these, diffe- the company has once again a member as the chief rentiating those members that would comply financial officer (CFO), while in the previous period, if the incompatibility rules were to be applied two members of the board shared this function, (Article 414-A/1 of the Commercial Companies one of which is now a non-executive member of the Code, except for item /b and the independency board. Therefore, the rotation of the CFO occurred criteria provided for in article 414/5, both of in the beginning of this term. There is a policy, at the Commercial Companies Code) the end of each term, to assess of convenience in Seven of the current ten members of the board of carrying the rotation of the member of the board directors have non-executive functions: Mr Manuel responsible for the financial matters. According to Roseta Fino, Mr António Manuel Formigal de Arriaga, that policy, the rotation will depend upon several Mr António Pereira da Silva Neves, Mr Carlos Morei- conditions, namely the particular characteristics of ra Garcia, Mr José Manuel Baptista Fino, Mr Martim the function such as external exposure, human and Salema de Sande e Castro Fino, and PARINAMA intellectual experience which shall not be neglected, - Participação e Investimentos, S.G.P.S., S.A. that always bearing in mind the Group’s financial perfor- designated António Dias Martins. Mr Manuel Roseta mance and all the shareholders’ interests. Fino, Mr José Manuel Baptista Fino, Mr Martim Salema de Sande e Castro Fino, PARINAMA - Participação e II.12 The number of meetings held by the board Investimentos, S.G.P.S., S.A. that designated Mr An- of directors and the supervisory board as well tónio Dias Martins, and Mr António Pereira da Silva as reference to the minutes of said meetings Neves are not considered independent members, ac- The board of director meets regularly on a quarterly cording to the article 414-5 of the Corporate Code’s basis, but extraordinary meetings can happen by definition, as they are members of the board desig- suggestion of any of its members. During 2012, the nated by shareholders with a qualified shareholding board of directors met eight times, with an avera- or because they have been elected by more than 2 ge participation above 99%. The chairman of the times. The three first members of the board mentio- supervisory board also often attends the board of ned also do not comply with the incompatibility rules directors’ meetings. In 2012, the supervisory board of article 414 -1 d) and h) of the Corporate Code. Mr met seven times with a participation of 95% of its António Manuel Formigal de Arriaga and Mr Carlos members. Minutes from both the board of directors Moreira Garcia are independent members of the and the supervisory board meetings are taken, and board of directors and comply with the incompatibility rules as defined in the above mentioned article. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 71

II.15 Description of the legal and regulatory Member of the board of directors of Banco Co- rules and other criteria that have been used as mercial Português between June 1995 and January a basis for assessing the independency of its 2008. Designated as non-executive member of members carried out by the board of directors Soares da Costa Group for the first time in April The independence evaluation was done based on the 2008, being a member of the executive committee article 414-5 of the Corporate Code. since April 26, 2010, and chairman of the executive committee since August 31, 2011. Term of office II.16 Description of the selection rules for can- expires on December 31, 2012. By December 31, didates for non-executive member positions 2012, did not hold any share of the company and the way in which executive members re- frain from interfering in the selection process > Pedro Gonçalo de Sotto-Mayor de Andrade The selection of non-executive directors is made ex- Santos Executive member of the board of directors) clusively by the shareholders without any interferen- Graduation in Management by Universidade Cató- ce of the executive directors. Given quite concentra- lica de Lisboa. Post-graduation in Real Estate by ted shareholders’ universe, in the company does not ESAI. Several functions in companies belonging to exist, and would not be adequate nor appropriate, Fino Group.. Member of the board of directors of any committee for prospecting, selection or recruit- the company since October 2006, by ratified co- ment of administrators, matter entirely reserved for -optation in May 22, 2007 and member of the shareholders, being brushed off any intervention of executive committee since January 31, 2008. Term the executive directors. of office expires on December 31, 2012. By Decem- ber 31, 2012, held indirectly through Manuel Fino, II.17 Reference to the fact that the company’s S.G.P.S., S.A. (of which is a member of the board), annual management report includes a descrip- 113,302,682 of shares of the company. tion on the activity carried out by non-executive members and possible obstacles that may > Jorge Domingues Grade Mendes (Executive be detected member of the board of directors) The management annual report, which includes this Graduation in Civil Engeneering by Instituto Superior corporate governance report, has a brief description Técnico de Lisboa. Head of Production and Techni- of the non-executive members’ activity, including cal-Commercial of ENGIL – Sociedade de Construção eventual constraints to their activity found during Civil, S.A., Member of the board of directors of A. the year. As already mentioned, there were no cons- Silva & Silva - Sociedade Gestora de Participações traints on the performance of non-executive mem- Sociais, S.A., Chief Executive Officer of da Sopol - bers. Sociedade Geral de Construções e Obras Públicas, S.A. (Group A. Silva & Silva), Member of the board II.18 Professional qualifications of the mem- of directors of Opca - Obras Públicas e Cimento bers of the board, the professional activities Armado, S.A. and Chief Executive Officer of Opway carried out by them at least in the last five Engenharia, S.A. between 2008 and 2011. Execu- years, the number of shares of the company tive member of the board since August 31, 2011. they own, date of first appointment and date Term of office expires on December 31, 2012. By of the term of office December 31, 2012, did not hold any share of the company.

> Manuel Roseta Fino (Chairman of the board of > António João Graça Dias Martins (Non-executive directors) member of the board of directors) Attendance of the Sciences College in the Universi- Graduation in Economics by Universidade Católica dade Clássica de Lisboa. Designated to the office for Portuguesa. MBA in Managemet by Universidade the first time on October 12, 2006. Term of office Nova de Lisboa. Was senior consultant on Andersen expires on December 31, 2012. By December 31, Consulting, manager at FIEP – Fundo para a Interna- 2012 held indirectly through Manuel Fino, S.G.P.S., cionalização das Empresas Portuguesas and mana- S.A. (of which is Chairman), 113,302,682 of shares ger at Banco Espírito Santo. Member of the board of of the company. directors of Caetano Coating and Parinama – Partici- pações e Investimentos, S.G.P.S., SA. By December > António Manuel Pereira Caldas Castro Henriques 31, 2012 held indirectly through Parinama – Parti- (Chief Executive Officer) cipações e Investimentos, S.G.P.S., SA. 17,600,000 Graduation in Management by IX Dauphine Paris of shares of the company. University; MBA in Universidade Nova de Lisboa. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 72

> António Manuel Formigal de Arriaga (Non-executi- Graduation in Political Science in Northeastern Uni- ve member of the board of directors) versity in Boston, US. Since April 2007. General Graduation in Economics by Universidade Católi- manager of Workcare – Medecina, Higiene e Segu- ca Portuguesa. From 1996 to October 2010 was rança no Trabalho. Designated to the office for the a member of the board of directors of Papelaria first time on Apri 26, 2010. Term of office expires in Fernandes Lojas, S.A., Fernandes Converting – December 31, 2012. By December 31, 2010, did not Transformação de Papel, S.A., Fernandes Técnica hold any shares of the company. – Desenho e Reprodução, S.A., Printima, Impressão e Tratamento de Imagens, S.A. and of Transfer – Sociedade de Transportes, S.A., offices that have II.19 Duties that the members of the board of terminated with these companies’ bankruptcy pro- directors carry out in other companies and a cess. Designated to the office for the first time on description of duties carried out in other com- April 26, 2010. Term of office expires on December panies of the same holding 31, 2012. By December 31, 2012, did not hold any Below we transcribe the information made available share of the company. by the members of the board of directors of the company as of December 31, 2012: > António Pereira da Silva Neves (Non-executive > Manuel Roseta Fino: Chairman of the board of di- member of the board of directors) rectors of Manuel Fino, S.G.P.S. S.A., sole member Graduation in Economics and Finance by Universi- of the board of director of Predifino- Sociedade dade do Porto. Designated for the first time in May Imobiliária S.A., chairman of the board of direc- 2008. Works in Soares da Costa Group since 1980 tors of Carfino S.G.P.S. S.A., sole member of the as a financial manager. Executive member of the board of director of Quinta da Ramada Imobiliário board of directors since 1998, with non-executive S.A., sole member of the board of director of Snu- function since April 26, 2010. Term of office expires cker (Portugal) Confecções S.A., sole member of on December 31, 2012. By December 31, 2012, held the board of director of Fino Participações S.G.P.S. 13,220 shares of the company. S.A., sole member of the board of director of Quinta da Ramada Sociedade Agrícola, S.A., sole member > Carlos Moreira Garcia (Non-executive member of of the board of director of Imoban- Imobiliária do the board of directors) Ancão S.A., member of the board of directors of Diplomat carrier preparation course and “Altos Es- Specialty Minerals (Portugal) Especialidades Mine- tudos” course by Instituto Rio Branco. Certified by rais S.A., and manager of GMC-Granitos e Material Georgetown University as Fellow in Foreign Service. de Construção, Lda. Diplomat since 1970. Assumed several offices in the Brazilian Foreign Relations State department, namely > António Manuel Pereira Caldas Castro Henriques: Brazilian ambassador in Madrid (Spain). Amongst Chairman of the board of directors of SCSP – Soares other functions, currently is member of the executive da Costa, Serviços Partilhados, S.A., chairman of the committee of the Euro-América Foundation, Chair- board of directors of Soares da Costa – Construção man of the corporate board of the Rio de Janeiro’s S.G.P.S. S.A., chairman of the board of directors of Iberian-American Trade Commerce. Designated to the Sociedade de Construções Soares da Costa, S.A., office for the first time on April 26, 2010. Term of chairman of the board of directors of Soares da office expires on December 31, 2012. By December Costa América, INC., chairman of the board of di- 31, 2012, did not hold any share of the company. rectors of Soares Da Costa – Imobiliária – S.G.P.S., S.A., chairman of the board of directors of Soares da > José Manuel Baptista Fino (Non-executive member Costa - Concessões, S.G.P.S., S.A., chairman of the of the board of directors) board of directors of ELOS – Ligações de Alta Velo- Attendance of Business Studies in Northeast cidade, S.A., chairman of the board of directors of London. Is boad member and occupies other func- ELOS – OM, S.A., chairman of the board of directors tion in several companies of the Fino Group. Is non- of Movex – Produção, Venda e Aluguer de Módulos -executive member of the board since April 2008. Pré-Fabricados S.A., board member of AEM - Asso- Term of office expires on December 31, 2012. Holds ciação de Empresas Emitentes de Valores Cotados indirectly through Manuel Fino, S.G.P.S., S.A. (of em Mercado, and member of the audit committee which is a member of the board), 113,302,682 of of the Federação Portuguesa de Bancos Alimentares shares of the company. contra a Fome. > Martim Salema de Sande e Castro Fino (Non-exe- > Pedro Gonçalo de Sotto-Mayor de Andrade Santos: cutive member of the board of directors) Chairman of the Board of directors of INR – Inves- REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 73

timentos Nacionais Rodoviários, SGPS, S.A., chair- Serviços, Lda., and manager of Consultigere, Lda.. man of the board of directors of Intevias – Serviços e Gestão, S.A., chairman of the board of directors of Soares da Costa Hidroenergia, S.A., chairman > António Manuel Formigal de Arriaga: Manager of of the board of directors of MRN– Manutenção de Sítio do Livro, Lda. Rodovias Nacionais, S.A., chairman of the board of directors of Scutvias– Autoestradas da Beira In- > António Pereira da Silva Neves: Not a member of terior, S.A., chairman of the board of directors of any board of directors of other companies. Portvias – Portagem de Vias, S.A., deputy chairman of the board of directors of Soares da Costa – Con- > Carlos Moreira Garcia: Member of the Board of cessões, S.G.P.S., S.A., chairmam of the board of Trustees of Fundação Luso Brasileira. directors of Soares da Costa Concessions USA, INC., member of the board of directors of SCSP– Soares > José Manuel Baptista Fino: Chairman of the board da Costa, Serviços Partilhados, S.A., member of the of directors of Ramada Holdings S.G.P.S. S.A., chair- board of directors of Energia Própria, S.A., member man of the board of directors of Ethnica S.G.P.S. of the board of directors of Self Energy Engineering S.A., chairman of the board of directors of Área In- & Innovation, S.A., member of the board of directors finitas - Design de Interiores S.A., chairman of the of Soares da Costa – Construção, S.G.P.S., S.A., board of directors of Ramada Energias Renováveis member of the board of directors of Sociedade de S.A., chairman of the board of directors of Digna- Construções Soares da Costa, S.A., member of the tis - Investimentos Imobiliários S.A., member of the board of directors of Manuel Fino, S.G.P.S., S.A., board of directors of Investifino S.G.P.S. Limited, member of the board of directors of Carfino, SGPS, member of the board of directors of Manuel Fino S.A., manager of Soares da Costa Hidroenergia 1T, S.G.P.S. S.A., deputy director of Specialty Minerals Lda., manager of Soares da Costa Hidroenergia 4T, (Portugal) Especialidades Minerais S.A., and mana- Lda., manager of Soares da Costa Hidroenergia 8T, ger of Dorfino - Imobiliário Lda. Lda., manager of Soares da Costa Hidroenergia 8C, Lda., and manager of Hidroeléctrica STP, Lda. – So- > Martim Salema de Sande e Castro Fino: Manager of ciedade Comercial de Responsabilidade, Lda.. Workcare - Medicina, Higiene e Segurança no Trabalho.

> Jorge Domingues Grade Mendes: Chairman of the board of directors of Soares da Costa Moçambique, SECTION III GENERAL AND SUPERVISORY S.A.R.L., chairman of the board of directors of Clear BOARD, FINANCIAL MATTERS COMMITTEE – Instalações Electromecânicas S.A., chairman of AND SUPERVISORY BOARD the board of directors of Construções Metálicas - Socometal S.A., chairman of the board of directors II.21 Identification of the members of the su- of Ciagest - Imobiliária e Gestão, S.A., chairman of pervisory board and statement indicating that the board of directors of Soarta - Sociedade Imo- same comply with the incompatibility rules biliária Soares da Costa S.A., chairman of the board provided for in article 414-A/1, and whether of directors of Habitop – Sociedade Imobiliária S.A., they comply with the independency criteria in chairman of the board of directors of Cais da Fon- article 414/5, both of the Commercial Compa- tinha – Investimentos Imobiliários, S.A., chairman nies Code of the board of directors of Navegaia - Instalações The Supervisory board is constituted by Júlio de Industriais, S.A., deputy chairman of the board of Lemos Castro Caldas, Carlos Pedro Machado de directors of Soares da Costa – Construção S.G.P.S. Sousa Góis and Joaquim Augusto Soares da Silva. S.A., deputy chairman of the board of directors of These members have stated that they comply with Soares da Costa América, Inc., deputy chairman of the incompatibility rules and with the independence the board of directors of Sociedade de Constru- criteria, detailed in article 414-1 and article 414-5 ções Soares da Costa, S.A., deputy chairman of the of Corporate Code, respectively. board of directors of Soares Da Costa – Imobiliária – S.G.P.S., S.A., and manager of Mercados Novos - II.22 Professional qualifications of the audit Imóveis Comerciais Lda.. committee members, indication of professional activities carried out by the same in the > António João Graça Dias Martins: Member of the last five years at least, number of shares in board of directors of Parinama – Participações e the company held by the same, date of first Investimentos, S.A., member of the board of direc- appointment and date of expiration of term of tors of Caetano Coatings, S.A., manager of Parinama office REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 74

> Júlio de Lemos de Castro Caldas (Chairman) II.23 Duties that the members of the supervi- Graduation in Law by Universidade de Lisboa. Dean sory board carry out in other companies and of the Lawyers Professional Association from 1993 describing those which are carried out in other to 1999. Chairman of the board of directors of companies of the same holding Banco Bilbao Viscaya Argentaria (Portugal), S.A. The members of the supervisory board carry out the for two mandates. Defence Minister from 1999 to following duties in other companies (none of which 2001. Chairman of the audit committee of Com- in Soares da Costa Group): panhia de Seguros Global and Global Via for three mandates. Designated to the office for the first time > Júlio de Lemos de Castro Caldas: Chairman of on April 29, 2008. Term of office expires on Decem- board of directors da SISAV – Sistema Integrado de ber 31, 2012. Tratamento e Eliminação de Resíduos, S.A., non- -executive member of the board of directors of > Carlos Pedro Machado de Sousa Góis EGEO – Tecnologia e Ambiente, S.A., non-executive Chartered Accountant number 597, partner of J. member of the board of directors of OGMA – In- Bastos, C. Sousa Góis & Associados, SROC, Lda. re- dústria Aeronáutica de Portugal, S.A., chairman of gistered in the Chartered Accountants Professional the general meeting board of ZON Multimédia SGPS, Association with the number 104. Functions in the S.A., chairman of the general meeting board of Na- company are related with the chartered accountant valrocha – Sociedade de Construções Navais, S.A., responsibilities, as defined by law, also assuming chairman of the general meeting board of Multinova the function of single auditor. In the last 5 years – União Livreira e Cultural, S.A, chairman of the ge- has been a member of the Economists Professional neral meeting board of Adega Cooperativa de Ponte Association, Accountants Professional Associa- da Barca, chairman of the general meeting board of tion, Technical Accountants Association (APOTECA), F. Albuquerque e Filhos, S.A., manager of Socieda- Tax Consultants Association, Information Systems de Agrícola de Faquelo, Lda, manager of Sociedade Audit and Control Association (ISACA). Currently Revisal, Lda., chairman of the General Council of is the chartered accountant of several companies. Supervision of Viniverde – Comércio e Produção de Since 1987 is partner of J.Bastos, C. Sousa Góis & Vinho Verde, S.A., and member of the board of di- Associados, SROC, Lda. as a chartered accountant rectors of Fundação da Casa de Mateus. (number 597). Since 1987 is judicial administrator. In 1986/1997 was a teacher of Analytic Accounting, > Carlos Pedro Machado de Sousa Góis: Single Introduction to Management, International busines- member of the audit committee, representing the ses and Financial Accounting in Universidade Nova chartered accounting company Sociedade J. Bastos, de Lisboa (Economics College). Designated to the C Sousa Góis & Associado, SROC, Lda in the following office for the first time on April 29, 2008. Term of companies: Escrita Digital. S.A., IG – Informática e office expires on December 31, 2012. Gestão, S.A., IG – Informática e Gestão, S.A., NCO S.G.P.S., S.A., Tavamar – Sociedade de Produtos > Joaquim Augusto Soares da Silva Congelados, S.A., Viveiros do Falcão, S.A., Infosis- Graduation in Accounting and Management Control. tema – Sistemas de Informáticos, S.A., Franquiger, Chairman of the general meeting of APPAC – Portu- S.A., INCG, International Network Communica- guese Association of Accounting Experts; elaboration tions Group, S.G.P.S., S.A., Nova Franquiger, S.A., and presentation of APPC’s certification application OKE – Tiner, Lda., S3 Portugal – Des. de Circuitos of several public entities; coordinator of APPC trai- Microelect. e Software, S.A., GTIE – Consultores, ning; member of the external evaluation committee S.A., Sociedade Civil Agrícola Isalema, S.A., Âmbito of the Higher Education (subcommittee B2.2 – Cor- – Sociedade Corretora de Seguros, Lda., Vans Ma- porate Management), including the analysis of the deira – Consultadoria e Projectos, S.A., Seveneves universities self-evaluations, in loco evaluations and Investimentos Imobiliários, S.A., Robles Machado, reporting. The current term of office as member of S.G.P.S., Lda., Legendra – Investimentos Imobili- the supervisory board of Grupo Soares da Costa, ários, S.A., Projecto Nata Design, S.A., Common- S.G.P.S., S.A. will cease on December 31, 2012. First ground, S.A., Tormo & Associados Portugal, S.A., appointment took place on July 4, 2006. Município de Angra do Heroísmo, Serviços Munici- palizados de Angra do Heroísmo, Redislogar (Por- None of the members of the supervisory board earn tugal) – Artigos Eléctricos, S.A., Rádio Renascença, any amount in other companies from Soares da Lda., Intervoz Publicidade, S.A., Lizmontagens, Emp. Costa Group. By 31-Dec-2011, none of the mem- Montagens Termo Industriais, S.A., DBL Aluminium bers of the supervisory board held any shares or Serviçes, S.A., COGECO – Consultadoria, Gestão e bond of the company. Contabilidade, S.A., COGECO II – Contabilidade, S.A., REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 75

CORDIS – Gestão de Imóveis e Participações Sociais, Remuneration Policy Guidance of Soares da S.A., M2SN – Soluções e Negócios, S.A., Promade Costa Group – Construções, S.A., Celso & Santos, S.A., ESLAM – 1. The remunerations of the members of the audit Estut. Lamin. Engenharia, S.A., Somercrest Industrial committee are a fixed amount, that takes into con- Holdings, S.G.P.S., S.A., Nedphyl – Com. Prod. Alim., sideration both the company track record and the Farm. e Afins, S.A., FoxTransfers – Instituição de market practise; Pagamento, Lda, Estoril-Live, S.A., Inbright, S.G.P.S. 2. The chartered accountant remuneration is defined S.A., HPLife – Empreendimentos Imobiliários, S.A., taking into consideration the legal framework; Pug World, S.A.., LDC Group, S.G.P.S., S.A., Kay Line 3. The members of the board of directors and the – Sociedade Imobiliária, S.A., Sustentatudo, S.A., remuneration committee remuneration definition Grupo Euromarketing – S.G.P.S., S.A., Geniupgrade, should take into consideration: S.G.P.S., S.A., Get – Estudos Técnicos e Constru- > The market practise, taking into consideration the ções, S.A., Culturangra, EEM, Legenda Viva, S.A., practise of other groups, the company’s dimension Centromar – Sociedade de Construções, S.A., BGB and the company’s and the Group’s complexity; – Investimentos Imobiliários, S.A., ELO12 – Inves- timentos Imobiliários, S.A., IMOCAIRES – Sociedade > The existence of non-executive/ executive direc- de Mediação Imobiliária, S.A., Percheron – Investi- tors; mentos Imobiliários, S.A., Francisco Soares da Silva, > The representativeness of the Chairman of the and LTT – Lismontagens Thermal Technologies – board of directors; S.G.P.S., S.A.. > The non-executive directors’ participation in even- > Joaquim Augusto Soares da Silva: Not a member of tual activities, committees, etc. any board of directors of other companies. > The representativeness of the Chairman of the executive committee;

II.24 Reference to the fact that the supervi- > The company’s remuneration policy track record; sory board assesses the external auditor on an > Regarding the executive directors, to have a va- annual basis and the possibility of proposing to riable component in the remuneration, based on the general meeting that the auditor be dischar- several criteria as turnover, share price/ market ged whenever justifiable grounds are present capitalisation performance, earnings, noncurrent The supervisory board annually evaluates the exter- businesses, or other, as long as variable component nal auditor, and can propose to the general meeting does not surpass 6% of the Group’s consolidated that the auditor be discharged whenever justifiable net income. grounds are present. II.31 Indication on the amount concerning the annual remuneration paid individually to SECTION IV REMUNERATION members of the board of directors and of the supervisory board of the company, including II.30 Description of the remuneration policy fixed and variable remuneration and as to the of the board of directors and the supervisory latter, mentioning the different components board that gave rise to same, the parts that has been In 2012, the remuneration committee submitted to deferred and paid the general meeting a proposal with the guidelines The directors’ remuneration is defined by the remu- to be followed by the committee, also including the neration committee, elected by the general meeting general guiding principles related with the executi- of shareholders, following the guidelines also ap- ve members of the board’ remuneration definition, proved by the general meeting. In 2012, the board namely in its variable component. Therefore, taking of directors’ remuneration breakdown was the follo- into consideration the market parameters, namely wing: the guidelines followed in companies of similar dimension and activity, it was proposed and has been determined to link the remuneration of chairman of the board of directors to the remuneration of the chairman of the executive committee. Additionally, below we reproduce the remuneration policy guidelines followed by the remuneration committee: REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 76

Variable Fixed Member of the board Subsidy Total 2012 Remuneration Remuneration Non-executive, António Formigal de Arriaga 0 0 66,500.00 66,500.00 Independent António Manuel Castro Executive, CEO 0 1,386.00 389,250.00 390,636.00 Henriques António Pereira Silva Neves Non-executive 0 0 133,000.00 133,000.00 Non-executive, Carlos Moreira Garcia 0 0 66,500.00 66,500.00 Independent Jorge Domingues Grade Mendes Executive 0 1,386.00 350,225.00 351,611.00

José Manuel Baptista Fino Non-executive 0 0 66,500.00 66,500.00

Manuel Roseta Fino Chairman 0 0 252,000.00 252,000.00

Martim de Sande e Castro Fino Non-executive 0 0 66,500.00 66,500.00

PARINAMA Non-executive 0 0 66,500.00 66,500.00 Pedro Gonçalo de Andrade Executive 0 1,386.00 375,862.50 377,248.50 Santos TOTAL 0 4,158.00 1,832,837.50 1,836,995.50

The remunerations of the members of the board of nounced to the variable remuneration, and so, the fi- directors summed, in 2012, 1,838,381.5 Euros, of gures indicated concern solely to fixed remuneration. which 1,120,881.5 Euros from the executive members and 717,500 from non-executive members. The supervisory board remuneration’s breakdown in Taking into consideration the current economic con- 2012 was as follows: text, the members of the executive committee re-

Variable Fixed Member Subsidy Total 2012 Remuneration Remuneration Member of the Carlos Pedro Sousa Gois 0 0 26,600.00 26,600.00 supervisory board Member of the Joaquim Augusto Soares Silva 0 0 16,625.00 16,625.00 supervisory board Chairman of the Júlio Lemos Castro Caldas 0 0 53,200.00 53,200.00 supervisory board TOTAL 0 0 96,425.00 96,425.00

II.32 Information on the way the remuneration II.33 As regards the remuneration of the executi- is structured so as to allow aligning the inte- ve members: rests of the members of the board of directors with the long-term interests of the company a) Reference to the fact that the executive as well as how it is based on the performance members’ remuneration includes a variable assessment and how it discourages excessive component and information on the way said risk assumption component relies of the assessment perfor- The remuneration committee established the re- mance; muneration guidelines taking into consideration The executive directors’ remuneration includes, in the company’s track record, the several members’ general and as a rule, a variable component, to be responsibilities and representation and the market attributable on a discretionary way by the remunera- practise. Concerning the executive directors, the tion committee, which is mainly based on the conso- remuneration guidelines also considers a variable lidated net income achieved in the previous year. component of an amount that the committee believes is not an incentive to an excessive risk taking; b) The corporate bodies responsible for asses- however, and as mentioned, this variable compo- sing the performance of executive members; nent was not applied in 2012’s remuneration. The corporate body responsible for assessing the performance evaluation of the executive directors REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 77

for remuneration purposes is the remuneration com- fer, the relevant limit and its relation apropos mittee, constituted by: José Manuel Baptista Fino the value of the total annual remuneration; (chairman), João Pessoa e Costa and António Jorge The distribution of shares as a variable component Gonçalves Afonso. The remuneration committee of the remuneration is not planned. currently does not integrate any executive director, nor executive directors, direct relatives up to 3rd h) Sufficient information on the criteria whe- grade, being therefore an independent committee. reon the allocation of variable remuneration on The remuneration policy proposed by the committee options is based as well as its deferral period is approved by the shareholders in general meeting, and exercising price; fitting in the functions of the external auditor the The distribution of options as a variable component verification of the implementation of the remunera- of the remuneration is not planned. tion system established. i) The main factors and reasons for any annual c) The pre-established criteria for assessing bonus scheme and any other non-financial be- the performance of executive members; nefits; The executive directors’ performance for remunera- No other type of remuneration is planned, besides tion effects is assessed freely by the remuneration the variable component committee following the criteria the committee believes is the most adequate at each moment. Only j) Remuneration paid in the form of a share in the consolidated net income criterion is pre-defined. the profits and/or the payment of bonuses and the rationale behind the act of awarding such d) The relative importance of the variable and bonuses and/or share in profits; fixed components of the members’ remune- It is not planned any remuneration paid in the form of ration, as well as the maximum limits for each a share in the profits and/or the payment of bonuses. component; In general, and as a rule, the variable component l) Compensation paid or owed to former exe- of the executive directors’ remuneration weights cutive directors in relation to early contract 20% to 35% of the total remuneration. The sum of termination; the variable components of the executive directors During the 2012’s financial year, no compensation cannot surpass 6% of the consolidated net income. was paid or became due to former executive directors related with termination of their office during e) The deferred payment of the remuneration’s the financial year. variable component and the relevant deferral period; m) Reference to the envisaged contractual As mentioned already, based on the current context, restraints for compensation owed for undue has not been assigned in the most recent years a dismissal of executive directors and its rela- variable remuneration. Therefore, this statement tion apropos the remunerations’ variable com- does not apply. ponent; No limits are contractually established for any com- f) An account of the way whereby the payment pensation to be paid upon undue dismissal of exe- of the variable remuneration is subject to the cutive directors, other than as provided for by law. company’s continual positive performance during the deferral period; n) Amounts paid on any basis by other compa- This issue is being study, however its establish- nies in a group relationship or exercising con- ment/ definition is not a critical issue as no variable trol over the company; remuneration has been attributable. In general we There were no amounts paid, for any reason what- favour a partial establishment according to a conti- soever, by other companies in control or group rela- nued performance of the attributable payment de- tionship, except for the amount paid in 2012 by the ferment, and all, with mandate rationale. majority shareholder Investifino – Investimentos e Participações, SGPS, S.A. and by Manuel Fino SGPS, g) Sufficient information on the criteria whe- SA to the executive director Pedro Gonçalo de Sotto- reon the allocation of variable remuneration -Mayor de Andrade Santos, totalling 24,050 euros on shares is based, as well as on maintaining and 9.800 Euros respectively. company shares that the executive members have had access to, on the possible share con- o) A description of the main characteristics of tracts, namely hedging contracts or risk trans- the supplementary pensions or early retire- REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 78

ment schemes set up for executive directors SECTION V SPECIALIZED COMMITTEES and whether said schemes were subject or not to the approval of the general meeting; II.36 Identification of members of those com- There is not any supplementary pension or early re- mittees that have been constituted for the tirement scheme set up for directors. purposes of individual and overall performance assessment of the executive members, con- p) An estimate of the non-financial benefits sideration on the governance system that has considered as remuneration which do not fall been adopted by the company and the identifi- under the categories listed above; cation of potential candidates with the profes- There are no significant/ relevant non pecuniary be- sional profile fitting the member position nefit deemed as remuneration. Besides de supervisory board, the directors’ performance evaluation is done by the remuneration q) Mechanisms for preventing executive direc- committee, whose composition and functions have tors from having employment contracts that already been described. The directors are chosen by question the grounds of the variable remune- the shareholders and there is not any committee in ration; charge of identifying potential member of the board The remuneration’s variable component criteria do of directors. not allow implementing contracts that put into stake its existence. By the end of August 2011, the executive committee established the management committee, having as II.34 Reference to the fact that remuneration goal to support, with an advisory nature, the exe- of non-executive members of the Board of cutive committee decisions, coordinate activities Directors is not included in the variable compo- create synergies and facilitate the information flows nent between the several business and functional areas. The non-executive directors’ remuneration does not Amongst other functions, this advisory committee have any variable component. have the following functions: assist the executive committee in the analysis of the current matters, II.35 Information on the reporting of irregu- proposing measures to its development in a correct larities adopted by the company (reporting way; analysis and discussion of the Group’s business means, persons entitled to receive said re- and monitoring of the activity development and of ports, how the reports are to be handled and the results of the several companies and business the names of the persons or bodies that have areas; discussion of commercial strategies of the access to the information and the relevant in- several business areas and of its implementation volvement in the procedure) measures; analysis of the Group’s resources to The irregularities report policy has been released implement those strategies, proposing measures to all of the group’s employees, referring to whom concerning its use and affectation; discussion of the these irregularities should be reported (executive eventual participation in large projects; discussion committee), the use given to that information (legal of the company’s financial matters and measu- services will research and analyse the reported irre- res to optimize cash flow; establish team building gularity, using other services/units if necessary, and initiatives and synergies between the several bu- will make a proposal regarding an eventual solution siness area and Group’s companies, to improve and/or penalty), the confidentiality guarantee and profitability; discussion of the internal and external annual and general statistical data on the repor- communication strategy of the Group; and, in gene- ted irregularities. This data can be consulted by the ral, to analyse any issue/ matter requested by the shareholders, by request to the Investor Relations executive committee. This management committee Office. Soares da Costa Group’s internal and exter- meets monthly, in accordance with the executive nal procedure are based on ethical standards and committee chairman notice, being held minutes of in conformity with the legal framework. We believe each meeting. In 2012, the management committee these ethical standards should be followed by all met twelve times. employees, and team/department leaders and managers should monitor this with particular attention. The corporate governance committee, whose chair- The irregularities report main goal is to timely termi- man is the secretary-general, has as main goal to nate and prevent irregularities from happening whe- monitor all the issues related with the company’s ther they are technical, economic, behaviour, legal or governance, evaluating the existing model taking any other kind. In this policy definition, the Corpora- into consideration the company’s operational con- te Ethical Code, which applies to all the employees of text and strategy, proposing changes to this model the Group, has a particularly important role. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 79

when the committee believes they are necessary. mittee, as regards the Board of Directors as This committee is composed by the following mem- well as, when applicable, to the fact that these bers: António Manuel Sousa Barbosa da Frada, Jorge persons have an existing relation with the Alves, António Jorge Gonçalves Afonso, Fernando company consultant Semana, and Rita Carles. The remuneration committee is constituted by three members. Its chairman is a non-executive director II.37 Number of meetings held by the commit- of the board and the other two members are inde- tees that have been constituted for manage- pendent, with no connection whatsoever with the ment and supervision during the period con- board of directors nor with any consultancy com- cerned, as well as reference to the minutes of pany. No consultancy/ support services were con- said meetings that have been held tracted for the remuneration committee. The board of directors met eight times in 2012, with an average attendance of 99%. The chairman of the supervisory board also attends the board of di- III. INFORMATION AND AUDITING rectors meetings. The supervisory board met seven times in 2012. The executive committee met forty III.1 The equity structure including those shares times in the same period, with an average atten- that are not admitted to trading, the different dance of 99%. From all these meetings minutes are category of shares, rights and duties of these taken. shares and the equity percentage that each category represents II.38 Reference to the fact that one member The company’s social capital is represented by of the remuneration committee has knowledge 160,000,000 shares, with a nominal value of 1 and experience in remuneration policy issues euro, of which 5,518 shares are preferential shares The members of the remuneration committee have and 159,994,482 are ordinary shares. In accordance the necessary skills and the experience in terms of with article 342-3 of the Commercial Code prefe- remuneration policy based on their technical and rential shares does not have voting rights. All shares professional qualifications and extensive curriculum are listed in Euronext Lisbon. in other companies. III.2 Qualifying holdings in the issuer’s equity II.39 Reference to the independency of natural calculated as per article 20 of the Securities or legal persons with an employment contract Code or providing services to the remuneration com- Qualifying shareholdings as of December 31, 2012:

Manuel Fino, S.G.P.S., S.A. Number of shares % Capital % Voting rights (1) Indirectly through Investifino S.G.P.S. Limited 113,302,682 70.814% 71.042%

Total 113,302,682 70.814% 71.042%

PARINAMA - Participações e Investimentos, Number of shares % Capital % Voting rights (1) S.G.P.S., S.A. Directly 17,600,000 11.000% 11.035%

Total (2) 17,600,000 11.000% 11.035%

(1) Taking into consideration 5,518 preferred nonvoting shares and 507,292 own shares, as of December 31, 2012 (2) Imputable to Mrs Ana Maria Martins Caetano

Participations held by the members of the corporate > António Pereira da Silva Neves (Non-executive bodies, as of December 31, 2012: member of the board of directors): As of January 1, > Manuel Roseta Fino (Chairman of the board of 2012 held 13,220 shares, a participation unchanged directors): Chairman of the board of directors of as of December 31, 2012. Manuel Fino, S.G.P.S., S.A. This company held indi- > António João Graça Dias Martins (Non-executive rectly, 113,302,682 shares, as of January 1, 2012, member of the board of directors): Member of the corresponding to 70.814% of the share capital, a board of directors of PARINAMA – Investimentos stake unchanged as of December 31, 2012. e Participações, S.G.P.S., S.A.. This company held REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 80

17,600,000 shares, as of January 1, 2012, corres- the voting rights. All shareholders have the same ponding to 11.000% of the share capital, a stake rights, taking into consideration the special legal fe- unchanged as of December 31, 2012. atures of the preferential shares. > José Manuel Baptista Fino (Non-executive III.5 Shareholder agreements that the com- member of the board of directors): Member of the pany may be aware of and that may restrict the board of directors of Investifino S.G.P.S. Limited. transfer of securities or voting rights This company held 113,302,682 shares, as of Janu- The company is not aware of any shareholders’ ary 1, 2012, corresponding to 70.814% of the share agreements which might lead to restrictions in the capital, a stake unchanged as of December 31, 2012. transfer of securities or voting rights. The remaining members of the corporate bodies do III.6 Rules applicable to the amendment of the not have any shares of the company as of December articles of association 31, 2012, not having performed any transactions The amendment of the company’s articles of asso- involving the company’ shares during 2012. ciation is subject to the Portuguese corporate legal framework. III.3 Identification of the shareholders that hold special rights and a description of those rights III.7 Control mechanisms for a possible em- There are no shareholders with special rights, besi- ployee-shareholder system inasmuch as the des the shareholders with preferential shares that voting rights are not directly exercised by them have the right to preferential dividends but are not There are no control mechanisms for a possible em- entitled to vote at general meetings. ployee-shareholder system as much as the voting rights are not directly exercised by them. III.4 Possible restrictions on share-transfer i.e. consent clauses for their disposal or restric- III.8 Description concerning the evolution of tions on share-ownership the issuer’s share price and taking the follo- There are no restrictions or limitations to the share wing into account: transferability or ownership. There are no limits to

Evolution of Soares da Costa’s ordinary stock price in 2012 (in Euros)

0.450.45

0.400.40

0.350.35

0.300.30

0.250.25

0.200.20

0.150.15

0.100.10 JanJan FebFeb MarMar AprApr MayMay JunJun JulJul AugAug SepSep OctOct NovNov DecDec Source: Euronext REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 81

120120

110110 PSI 20 100100 PSI20

9090

8080

7070

6060

5050

4040

3030

2020 Dec JanJan Feb Mar Apr May Jun JulJul AugAug SepSep Oct Nov Dec Source: Euronext

Soares da Costa Group stock price registered a ne- dimension to the Group, and the Group’s indebtness gative evolution in 2012, losing 65% compared with level, above its peers average. the end of the previous year and continuing the two previous years’ decreasing trend (in which losses Regarding the stock’s liquidity, 2012 was also a reached 31.5% and 55%). Therefore, as of Decem- negative year. Cumulatively were traded in 2012 ber 31, 2012, each share of the Group was worth circa 13 million shares, representing 8% of the total 0.13 Euros, less 0.24 Euros than by the end of the number of shares of the company and 45% of the previous year, closing at the year’s minimum price. company’s free float (in 2011 were traded 21 million This negative performance of the stock price reflects shares, corresponding to 13% of the total number of some specific restrictions that occurred in 2012, shares and 74% of the company’s free float) namely the Portuguese Court of Auditors refusal of the high speed railway concession between Pocei- In the following table we detail some historical data rão and Caia, the conclusion of tax nature process on the ordinary shares performance: that implied a non-recurring cost with a significant

Soares da Costa Ordinary Shares – Performance and liquidity key indicators

2012 2011 2010 2009 2008 2007 2006

EUR/ Opening price 0.37 0.55 1.18 0.65 2.08 0.69 0.35 share

EUR/ Closing price 0.13 0.37 0.54 1.20 0.63 2.09 0.69 share EUR/ Average price 0.21 0.43 0.86 1.04 1.52 1.68 0.64 share EUR/ Max. stock price 0.44 0.59 1.27 1.34 2.13 2.87 0.77 share Date 16-Jan 09-Feb 07-Jan 14-Dec 04-Jan 10-Jul 21-Aug EUR/ Min. stock price 0.13 0.27 0.49 0.50 0.58 0.69 0.33 share Date 31-Dec 10-Aug 22-Dec 19-Dec 19-Dec 02-Jan 16-Jan

Millions Shares traded 12.6 21.3 59.1 186.8 81.1 510.2 286.1 of shares

Million Turnover 2.6 9.8 50.8 195.3 123.1 857.5 183.0 Euros

Source: Euronext; Note: The quantities and prices of 2006 were adjusted taking into consideration the stock split done in August 2006, to 1.00 Euros nominal value from 5.00 Euros. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 82

III.9 Description of the dividend distribution There was not any dividend payment regarding the policy adopted by the company, including the ordinary shares, as approved in May 24, 2012’s ge- dividend value per share distributed during the neral shareholders meeting. last three years For the fourth consecutive year, the Group paid divi- Therefore, from June 22, 2012 onwards the com- dends to its shareholders owning preferred shares. pany paid the non-voting preferred shares:

2011 2010 2009 2008 Euro Gross Net Gross Net Gross Net Gross Net

Ordinary shares - - 0.0217 0.017 0.0434 0.0347 0.031 0.0248

Preferred shares 0.05 0.0375 0.05 0.0393 0.05 0.04 0.15 0.12

III.10 A description of the main characteristics ties. Before being implemented/ closed any business of the share and stock-option plans adopted or with these characteristics, the respective project is valid for the financial year in question submitted to the supervisory board who give advice, During the 2012’s financial year, the Company did particularly with regard to verification of its terms in not adopt any share and stock-option plans, nor did accordance with normal market conditions. any such plans remain in force. III.14 Description of the statistical data III.11 A description of the main data on busi- (number, average and maximum values) on the ness deals and transactions carried out be- business deals subject to preliminary opinion tween the company and between the members by the supervisory board of the Management and Supervisory Board or There were no transactions with these characte- companies in a control or group relationship, ristics. Furthermore, the supervisory board accom- provided the amount is economically signifi- panies the company activity and, furthermore, the cant for any of the parties involved, except for audit committee chairman attends the board of di- those business deals or transactions that are rectors’ meetings. cumulatively considered within the bounds of normal market conditions for similar transac- III.15 Indication of the availability on the tions and are part of the company’s current company’s website, of annual activity reports business drawn up by the general and supervisory During 2012, there were not any transactions be- board, by the financial matters committee, the tween the company and the management and su- audit committee and the supervisory board, in- pervisory bodies or qualified shareholders or com- cluding constraints that might be encountered, panies in a control or group relationship. as well as financial information documents The annual reports on the board of directors and su- III.12 Description of the vital data on business pervisory board activity are available of the company’s deals and transactions carried out in the ab- website, including eventual constraints faced. sence of normal market conditions between companies and owners of qualifying holdings III.16 Reference to an Investor Assistance Unit or entity-relationships with the former, as en- or a similar service, describing: a) The role visaged in article 20 of the Securities Code of said office; b) Type of information made Not applicable. available; c) Access means to said Office; d) The company’s website; e) The market liaison III.13 Description of the procedures and cri- officer’s credentials teria applicable to the supervisory body when The company and executive committee have adop- same provides preliminary assessment of the ted a policy regarding investors and shareholders of business deals to be carried out between the direct and permanent contact. The company has an company and the owners of qualifying holdings investor support office organised as a department, or entity-relationships with the former, as en- which assures the communication with shareholders, visaged in article 20 of the Securities Code investors, equity analysts and the market in general. The supervisory board gives its prior opinion to eventual transactions between the company and Material information release is electronically and owners of a qualified participation or related enti- directly sent to CMVM’s extranet and to Euronext REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 83

Lisbon internet site. The company fully complies available in Portuguese and English. with the legal framework regarding information release (annual report and accounts, notices, interest The contact for the media is the Communication payment press releases, etc.) and general meeting department: dcomunicaçã[email protected], tele- of shareholders’ related information. phone +351 22 834 2217.

The company’s official interne site, www.soares- III.17 Indication of the annual compensation dacosta.pt, has information specifically directed to paid to the auditor and to other individuals investors (“Investors” submenu) namely financial or groups that belong to the same network figures quarterly updated, general meetings’ notices, supported by the company and/or by any general meetings’ deliberations, information on bond group that bears with it a control or group issues, dividend and interest payments, bylaws, ma- relationship and the percentage of the total nagement reports and accounts and material infor- amount paid for the following services: a) Sta- mation releases. tutory account review services; b) Other audit reliability services; c) Tax consulting services; During 2012, the market relations representative d) Other non-statutory auditing services continued to be the Group’s secretary-general, An- The company’s external auditor is BDO & Associa- tónio Manuel Sousa Barbosa da Frada, supported by dos, SROC, number 29 in the Chartered Accoun- the investor relations office. The representative to tants Professional Association and number 1122 in the market relations contacts are: antónio.frada@ the CMVM’s auditors’ registration, represented by soaresdacosta.pt. Information requests should be Paulo Jorge de Sousa Ferreira (Chartered Accountant preferably sent to the investor relations officer: Rita number 781). In 2012, these audit services provi- Carles, [email protected], telephone + ded to the company (and other related entities, in 351 21 791 3236 or + 351 22 834 2217. The inwhich the company has a controlling participation) vestor relations office provides information on the amounted to 100,000 Euros. share price historic performance, general meetings’ attendance (direct or be representative), necessary The board of directors states that, prior to sign documents to the general meetings, dividend pay- up any service to the company’s external auditor, ments, bonds coupons and redemptions, annual re- makes sure that this will not put their independen- ports and accounts, half year and quarterly financial ce at risk (as defined in CMVM’s recommendation accounts and material information releases. Althou- number C (202) 1873 of May 16, 2004). gh all this information is available on www.soaresdacosta.pt, by request, this can also be sent by mail III.18 Reference to the external auditor’s rota- or e-mail. The investor relations office requires the tion period applicant’s identification and, eventually, the purpo- The current external auditor initiated functions in se of the information request. All the information is 2005.

.5 CORPORATE RESPONSIBILITY REPORT

5.1 INTRODUCTORY NOTE

The Soares da Costa Group’s Sustainability Report and the differing levels of maturity of the infor- consists of a set of annual information provided by mation reported, different reporting scopes were the company and all of its stakeholders, and it is an used. These are explained along with the referred attachment to the Report & Accounts 2012. indicators and, where possible, compared with the turnover of the companies and / or projects that For a better understanding of the information con- contribute to them. tained in this report, it should be interpreted in the context of the scope of the document. Given the Contact for further information: wide ranging nature of the activities of the Group [email protected] REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 84

5.2 KEY PERFORMANCE INDICATORS

In this chapter, the Soares da Costa Group presents a mental performance. In each of the following chapters, number of key indicators that are relevant to stakehol- these indicators and the actions and initiatives which ders, in relation to its economic, social and environ- give rise to them are analysed in greater detail.

Economic Indicators 1 2012 2011 Variation Turnover (million Euros) 802.0 873.5 -8.19%

EBITDA (million Euros) 72.0 94.1 -23.49%

Operating Profits (million Euros) 10.9 58.9 -81.49%

Net Earnings (million Euros) -46.9 2.4 -2,054.17% Net Financial Charges (million Euros) -69.0 -51.8 33.20% Net Debt (million Euros) 1,024.2 863.0 18.68% Social Indicators 2 2012 2011 Variation Employees (number) 4,510 5,849 -28.29%

Female Employees (percentage) 10.4 9.7 7.22% Training Hours per Employee (hours) 5.6 8.6 -34.88%

Work Accidents - Frequency Index (work accidents per million hours worked) 24.1 25.0 -3.60%

Donations and Sponsorships (thousand Euros) 186 746 -75.09% Environmental Indicators 3 2012 2011 Variation Energy Consumption (GJ/million Euros) 376.7 327.3 15.09% Water Consumption (m³/ million Euros) 281.6 360.9 -21.97%

Waste Generation (ton/ million Euros) 62.6 243.5 -74.29%

Air Emissions (tonnes CO2/million Euros) 57.2 51.1 11.94% Investment in Environmental Management (Euros/ million Euros) 3,876 2,239.1 73.09%

Notes: 1 The reporting scope of these indicators is Grupo Soares da Costa, S.G.P.S., S.A., on a consolidated basis. 2 The reporting scope on the number of employees and value of donations is Grupo Soares da Costa, S.G.P.S., S.A. on a consolidated basis. Other indicators are referred to employees with contract in Portugal, including the ones that are working in other geographies (such as expatriates). More information about the characterization of the human resources is available in the “Social Responsibility” chapter. 3 The reporting scope of these indicators is Grupo Soares da Costa, S.G.P.S., S.A., including ongoing projects, fixed units (offices, shipyards and central support unit in Madeira island), fleet and travels (air and rail) in Portugal, excluding ACE’s. It is not shown the value of energy consumption for 2010 as only from 2011 it was possible to differentiate the consumption of Soares da Costa subcontractors hired. The inclusion of this value (including subcontractors’s consumption) would lead to an incorrect evolutionary reading. More information about the environmental performance is available in the “Environmental Responsibility” chapter. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 85

5.3 2012 IN BRIEF

1st quarter > Launch of the Soares da Costa’s Prize Talent - 3rd edition > Launch of Soares da Costa’s 2012 Golf School (Porto and Lisbon) > Soares da Costa’s projects in Angola distinguished by CNBC Business Magazine > Dental screening initiative sponsored by Smile Up Clinic > Angola LNG distinguishes Soares da Costa for reaching 20 million working hours without accidents > Painting exhibition by Isabel Ribas at Soares da Costa’s Gallery entitled “Impressions - Retrospective and Future” > Prince projects featured in Gulf Coast Business Review > Partnership with CP – Comboios de Portugal, challenge for award the employees (interail, rail travel, backpacks) > Social Ecobox (Ecoponto Solidário): campaign to raise food and other goods in favor of the animals of União Zoófila de Lisboa > Celebration of World Tree Day 2012 (March 21) with an initiative in Serra da Lousã to support the sustainable development of national forest heritage 2nd quarter > Easter Camps Program for employee’s children > Social Corporate Volunteering: application of volunteers to Legião da Boa Vontade > Launch of Cais da Fontinha website (Soares da Costa real estate project) > Sponsorship and participation in two Charity Rounds, sponsored by Legião da Boa Vontade > Security Conference in Corgo’s Viaduct (Transmontana Motorway), in commemoration of the National Day of Prevention and Safety > Motivational Speech “It’s with me. I resolve it.” by Miguel Gonçalves > Solar thermal equipment offer (including the preparatory study and installation) from Self Energy to one of the houses of the SOS Villages (Aldeias SOS) of Cascais > Completion of Neighbourhood Navy School Upgrade Project, for the Angola LNG (Soyo, Angola), marked with the delivery of books to equip the library collected in a raising campaign among employees in Portugal (in 2011) > CLEAR receives “Customer Sales Volume 2011” and “Best Customer Quality VRV 2011” awards, delivered by Daikin Europe NV > Soares da Costa’s Annual Technical Conference (Jornadas Técnicas) > Society of Construction Soares da Costa and Clear - Electromechanical Facilities classified as Excellent in Sus- tainability Survey conducted by PT to its suppliers (93% and 92% respectively) > Social Ecobox (Ecoponto Solidário): campaign to raise children and youth films, donated to the Legião da Boa Vontade > Celebration of World Environment Day (June 5), with a lecture on waste minimization and homemade compost, in partnership with LIPOR > Environmental Campaign “Let’s Save" (Vamos Poupar) launched to sensitize employees to reduce energy consumption, paper and printers ink REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 86

3rd quarter

> Summer Camps Program for employee’s children > Soares da Costa joins the ECO Movement - Industry against fires (Movimento ECO) > Prince classified in 10th place in the ENR magazine top ten, in the class General Contractor Southeast U.S. > Nestlé’s new factory conclusion in Cacuaco, Luanda, built by Soares da Costa > Soares da Costa’s Staff Meeting (Angola) > Prince classified in 59th place in the ranking of the 500 largest companies in the Gulf Coast Business Review > Exhibition of paintings and drawings of Mariana de Castro at the Soares da Costa Art Gallery on the theme “the 5th element” > Social Ecobox (Ecoponto Solidário): campaign to raise paper for recycling, in favour of an organisation that combats hunger (Banco Alimentar contra a Fome)

4th quarter

> Soares da Costa’s Prize Talent – announcement of results > Soares da Costa’s Staff Meeting (Portugal) > TOTAL’s new headquarters conclusion, in Luanda, built by Soares da Costa > Self-Energy qualified by the Directorate General for Energy and Geology (DGEG) as Energy Service Company (ESCO), Level 2 > Health Day promoted at Soares da Costa, with free physical check-up in partnership with Virgin Active gym > Fire drill at Soares da Costa Headquarters > Initiative of corporate volunteer at the Centre CAIS Porto - Recover to Include > Christmas Camps Program for employee’s children > External audit that led to the certificates renewal for Quality, Environment and Health and Safety at Work of the Sociedade de Construções Soares da Costa > Corporate volunteer project “Sou Capaz”, published as a case study in the Sustainability Yearbook, promoted by BCSD Portugal > Sociedade de Construções Soares da Costa ranked 2nd largest company in the construction sector in Portugal, regarding Expresso/ D&B study > Soares da Costa distinguished by QSP - Quality, Service and Price (Marketing Consulting, Ltd.) with 1st place in the national study of spontaneous awareness - construction category - which served as the basis to guide “Brands To Score” > Scholarships attribution to Soares da Costa employee’s children > Christmas gifts attribution to Soares da Costa employee’s children up to 10 years old > Christmas baskets attribution to Soares da Costa employees > Christmas cocktails, with employees in multiple locations, offices and construction sites. > Recognition and distinction of employees who in 2012 completed 25 and 35 years of collaboration with the company > BESA - Banco Espírito Santo Angola head offices conclusion, in Luanda, built by Soares da Costa > Support of Centro CAIS Porto, with the acquisition (and distribution to employees) of 200 CAIS magazines > Competition and exhibition in the Art Gallery, with designs submitted by children of employees, alluding to the theme “Soares da Costa in the World” > Social Ecobox (Ecoponto Solidário): campaign to raise several articles (clothes, toys, etc.), to the Centro Social de Gião > Social Ecobox (Ecoponto Solidário): campaign to raise batteries, in association with the campaign of Ecopilhas, in favour of IPO (Portuguese Oncology Centre) REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 87

5.4 CORPORATE SOCIAL RESPONSIBILITY

In Corporate Social Responsibility (CSR) area, Soares and institutions which aim to support social initia- da Costa Group continues to focus on internal tives, protect the environment and/ or encourage issues, supporting its employees and families throu- economic development, whenever these are compa- gh a range of actions and establishment of part- tible with the Group’s Corporate Social Responsibility nerships with external entities. Nevertheless, at the Policy objectives and are economically viable. same time, we have continued to help organizations

5.4.1 ECONOMIC PERFORMANCE Value Generation and Distribution

Economic Value Generated and Distributed (Euros) 2012 2011 Variation

Revenues 834,029,214 887,399,068 -6% Sales and service rendered Change in stocks 801,560,930 866,985,725 -8% Own work capitalized Financial Income and expenses (except favourable exchange rate differences and 31,757,122 16,649,366 91% discounts obtained for immediate payment) Gains on fixed assets 711,162 3,763,977 -81% Operating Costs 525,442,326 625,973,076 -16% Cost of Goods Sold 146,501,299 186,470,924 -21% External Supplies and Services 378,167,507 437,246,965 -14% Losses on Fixed Assets 773,520 2,255,187 -66% Staff Costs and Benefits 145,110,723 146,388,809 -1% Payments to Capital Providers 98,909,978 78,854,073 25% Dividends distributed 275 3,750,881 -100% Interest paid, other financial costs and losses, losses on investments in affiliate companies, capital losses on disposal of investments 98,909,703 75,103,192 32%

Payments to the State 253,143 4,921,455 -95% Income taxes, fines and penalties 253,143 4,921,455 -95% Investment in the Community 185,828 745,636 -75% Annual support (in form of sponsorships and/or payment of quotas) 67,261 179,178 -62% Sponsorship of external initiatives and events 5,000 296,983 -98% Support to internal initiatives (SDC) 113,567 269,475 -58% Economic value generated 834,029,214 887,399,068 -6% Economic value distributed 769,901,998 856,883,049 -10% Economic value retained 64,127,216 30,516,019 110%

5.4.2 SOCIAL PERFORMANCE The Soares da Costa Group continues to be a relevant employer in the labour market, contributing actively to create direct and indirect employment both in Portugal and other countries in which it operates. This human capital represents the Group’s main asset for which various actions and initiatives are carried out as part of an internal program of social responsibility that seek to involve, motivate and put value on the employees of the company through sharing experiences and acquiring knowledge, continuously developing their skills and contributing towards their personal and professional career aspirations. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 88

1. HUMAN RESOURCES PROFILE

At December 31, 2012, Soares da Costa Group had Soares da Costa Group’s Employees vs. Turnover 4,510 employees, dispersed throughout the various (Turnover in million Euros) countries where the Group companies develop its activities, of which 1,660 had their contract in Por- tugal (37% of the total), even though only 1.139 (i.e. 25 %) currently develop their work in Portugal 1.139 337 565 and 521 in other geographies as expatriates. The 2012 gradual decrease in the number of employees over 3.371 the past few years (and more pronounced in the year 2012) is related with the decrease in the work 1.770 volume in the construction sector, mainly in the do- 2011 329 545 mestic market, inevitably implying an adaptation of 3.779 the operational structure, giving it greater flexibility and efficiency. 1.768 2010 380 513 Soares da Costa Group Employees (Headcount) 4.184

Employees outside Portugal

Employees in Portugal 2012 4.085 425 International Turnover

Men National Turnover 2011 5.003 546 Women Note: The reporting scope of these indicators is the Soares da Costa Group, S.G.P.S., S.A., consolidated. 2010 5.412 540

The chart above illustrates the evolution of the Note: The reporting scope of these indicators is the Soares da Costa company’s human capital due to turnover, taking Group, S.G.P.S., S.A., consolidated. into account the domestic and international market. In 2012 the domestic market accounted for 29% of turnover and 25% of the human resources of the Although in general, the percentage of women has company, while the international market accounted tended to increase over the last few years, even sli- for 71% of turnover and 75% of human resources. ghtly, the nature of the Group’s activities continue to lead to an imbalance between the number of male and female staff, with the percentage of women of total employees in the company reaching 10.4% in 2012. The majority of employees of the Soares da Costa Group are permanent members of staff (from the range of employees with contract in Portugal, only 3.92% have term contracts and 99.94% are full time employees), even though the nature of construction activities oftentimes imply the existence of a significant number of direct, fixed-term employees, due to the type, location and duration of projects. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 89

Soares da Costa Group Employees, by Age (Headcount)

18 to 29 Note: The reporting scope of 2012 67 303 497 718 75 these indicators is the Soares 30 to 39 da Costa Group, S.G.P.S., S.A., 40 to 49 consolidated, but only regar- 2011 137 409 647 987 135 ding employees with contract 50 to 59 in Portugal. 60 or more

2010 180 453 777 1.045 114

In 2012, and for the reasons explained at the be- ses specifically for the Civil Construction and Public ginning of this chapter, 667 staff – from the overall Works sector as well as for an international business employees with contract in Portugal - left the com- context is worthy of note. We also launched in 2012 pany (of which 57 were women), meaning that the the “Ms Construction Site Support Project” pro- staff turnover rate (increment of the number of outs gramme, designed and taught internally, and which against the previous year) was 180.25%, with the was run for the first time in Luanda for staff in the highest rate occurring among 50 to 59 year olds. company Clear Angola. In September and October Despite these departures, the high concentration 2012, the first “Construction Project Financial Ma- of employees of the company is in the age groups nagement Programme” was run. between 50 and 59 years old and between 40 and 49 years old, which together represented more than All these specific programs, which are part of the 73% of the total number of employees by the end permanent teaching offer of the “Knowledge Acade- of 2012 (70% in late 2011). my”, aim to build a set of skills that are considered to be critical for the jobs and careers of specific functional groups. Soares da Costa Group’s objective 2. TRAINING (of increasing international expansion through until Professional training is seen by the Soares da Costa 2014) means that it is essential to offer these trai- Group as a tool for developing human resources, the ning courses to expatriate staff. goal of which is to contribute actively towards the development of the organisation and to create value for the business. To this end, the company has car- Training hours, by training area (hours) ried out various training programmes in line with its current Strategic Plan and guided by the objectives of strengthening international expansion and con- 2012 67 303 497 centrating resources in the construction business.

At the moment, two specific programmes are being 2011 137 409 647 run in the area of “project management”, one aimed at a younger target audience (Initial Project Mana- gement Programme – IPMP) and another for more 2010 180 453 777 senior engineers (Advanced Project Management and Negotiation Programme – APMNP). The IPMP was run for the first time this year, while the APMNP Technical Areas was run for the second time between September Management and Engineering 2011 and March 2012. Human Resources

In the area of foreign languages, 2012 saw the Note: The reporting scope of these indicators is the Soares da Costa launch of the “English – oral training” programme. Group, S.G.P.S., S.A., consolidated, but only regarding employees This is an advanced course, the aims of which are with contract in Portugal. a significant improvement in English grammar and vocabulary, and an increase in fluency. The fact that the programme has been customised with exerci- REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 90

From the 9,349 total training hours given in 2012, pany exist in relation to these areas, the underlying to the employees with contract in Portugal, the big- principles are shared, involving all employees and gest training offer was in the technical areas of Qua- common procedures, with the goal of reducing the lity, Environment and Health and Safety (26%) and work accident indices each year. in themes related with engineering. The principal mission of Accident Prevention and Safety is to identify and implement measures to 3. HEALTH AND SAFETY AT WORK prevent and protect human life while carrying out Health and Safety management has been implemen- the company’s business, ensuring that safe, hygienic ted across all Soares da Costa Group companies, and healthy work conditions exist at work. In addi- and although different management systems and tion, all employees have access to the company’s thus different working policies in each group com- health services (in particular medicine at work).

Health and Safety Key Indicators 2012 2011 2010 Work Accident Frequency Index 25.62 25.02 29.02 (number of work accidents per million hours worked) Occupational Illness Frequency Index 6.60 4.17 2.69 (number of work diseases per million hours worked) Absenteeism Rate 5.11% 6.00% 4.26% (number of days lost through low and faults per million hours worked) Severity Index 2,203.87 349.18 512.03 (number of days lost due to work accidents per million hours worked)

Note: The reporting scope of these indicators is the Soares da Costa Group, S.G.P.S., S.A., consolidated, but only regarding employees in Portu- gal, Angola and Mozambique.

In 2012, 101 work accidents were recorded, a fall During 2012, as was the case in previous years, of 6.48% compared to 2011. However, due to a training in this area involved the carrying out of mortal accident on a construction site, there was onsite sessions covering issues such as alcohol and an increase in the accident severity index. This ac- psychotropic drug abuse, emergency response ca- cident occurred on the project of the Transmontana pability, individual and collective protection, dangers motorway, while a subcontractor from the project and risks arising from building activities, handling was doing some works on an overpass on EN 15 in dangerous products safely, among others. For work Sesulfe, Macedo de Cavaleiros. Excluding this fatality involving special risks, specific training sessions (equivalent automatically to 7,500 days lost), the were prepared and carried out on subjects such as severity index would have been 301.36 days lost “Working at Height”, “Confined Spaces”, “Digging per million hours worked, which would have repre- Tunnels” and “Moving Earth”. The training was given sented an improvement over the previous years, in not only to employees of the company but also to line with the trend of the last few years. the entire subcontractor chain.

4. SOCIAL INVOLVEMENT Through its Corporate Social Responsibility Policy, the ness units of the Group and the markets in which we company seeks to manage its involvement with the operate, in an up to date, rapid and clear manner for community, and is committed to develop, implement everyone. and monitor its actions at all levels of the organisation, promoting awareness among its employees, > Employee Meetings: employees meet annually customers, suppliers and Group companies about the in an initiative designed to share information across importance of corporate social responsibility. the entire company, at which members of the Board of Directors, other employees and/or guests pre- The Internal Communication in the Soares da sent high profile projects and actions in different Costa Group is an essential tool for ensuring the areas, financial results and the strategic goals for involvement, participation and motivation of all the coming year. In 2012, this event was also held in employees in actions, projects and initiatives under- Angola and was attended by a large number of local taken. We seek to acquire and share a wide range of and expatriate employees; information, taking into account the different busi- REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 91

> Technical Construction Seminars: the annual > Scholarships: The 2012/2013 Scholarship pro- technical seminars are initiatives taken to promo- gram led to the award of 72 scholarships to children te the sharing and transfer of technical knowledge of employees of Soares da Costa Group companies, and personal and professional experience of various of which 65 were awarded on the basis of social sup- employees. In 2012, we welcomed the presence of port, 5 on academic merit and 2 for special teaching. a guest speaker from the Economics Faculty of the University of Porto and representatives from PRINCE (Soares da Costa’s company in the USA), as well Scholarships Awarded 2012/2013 as various Portuguese colleagues high qualified, from different Soares da Costa Group’s compa- Higher Education nies (namely CLEAR and Sociedade de Construções Soares da Costa) who presented subjects of interest 18 related to construction techniques;

> Protocols: The Soares da Costa Group continues Special Education to establish various protocols, the goal of which is to provide special access conditions for its employe- 2 es and their families to products and services. In 2012, 9 new protocols were agreed, in the health, wellbeing/beauty, financial and hotel sectors; Primary Education > Christmas: in 2012, Christmas was celebrates 23 with a number of parties (cocktails) that took place at the builder’s yard (Rechousa Industrial Estate), the Pousada de Covilhã (Covilhã Heritage Hotel) Secundary Education construction site, the Lisbon branch office and the company’s head office, with the presence of the 29 Executive Committee. Also during the Christmas season, the Soares da Costa Group carried out ano- Note: The reporting scope of these indicators is the Soares da Costa Group, S.G.P.S., S.A ther social responsibility initiative, giving support to 272 employees by offering Christmas baskets; > 2012 Employees Honour: Soares da Costa once In keeping with a spirit of social responsibility, the again paid tribute during the year to employees who company promotes and supports several initiatives completed 25 or 35 years of service in the Group. regarding Family Support, such as holiday camps During the Christmas cocktails, 92 employees who and the offer of presents: had reached these milestones were honoured; > Holiday Camps: there are normally three holiday > SDC Gallery: the gallery which opened in De- camps each year: in the spring, the summer and at cember 2012 gives the opportunity to a number of Christmas, at which employees benefit from spe- employees and their families to exhibit their work, cial conditions through protocols established with a whether amateur or professional, in any discipline. In number of accredited institutions in this field. 2012, there were three painting exhibitions. > Christmas Presents: it has become a tradition to offer Christmas presents to children of the employe- Education continues to be one of the key areas of es of Group companies up to the age of 10 years. attention and action in the corporate social respon- This year around 400 presents were given while sibility area. The most important initiatives taken in various presents not claimed for previous years were this area were the Talent Prize and the programme donated to a charitable institution. for the award of scholarships. > Talent Prize: In yet another Soares da Costa Talent Many social responsibility initiatives have been carried Prize event, the jury decided to award the academic out in Angola and Mozambique, countries where year 2011/2012 prize to Ms Vanessa Fernandes Silva Soares da Costa has been doing business for large 30 (Integrated Masters in Civil Engineering from the En- years, seeking to act both internally and externally gineering Faculty of Porto University), who completed by supporting our employees or through involve- the Case Study “Risk Analysis – Parameterization and ment with the local community. For the year 2012, a Means to Mitigate”. The prize involved an internship of number of social responsibility initiatives can be hi- 6 months in the company, during which time the stu- ghlighted, which took the form of monetary or mate- dent had the opportunity of increasing her knowledge; rial support to carry out a range of actions, such as: REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 92

> Organization of a Children’s Party in the settlement relating to different aspects of the construction proof Tombo (around 250 children), with an offer of ject involving 337 people - Engineering Faculty of cold drinks and biscuits; the University of Porto (FEUP), NewMENSUS - FEUP, Trás-os-Montes and Alto Douro University (UTAD), > Celebrations for the 31st anniversary of the Boa- Vila Real Business Association (NERVIR), Piaget vista Fire Brigade headquarters by donating drinks; Institute of Mirandela, Felgueiras Management and Support to the 2nd solidarity game for the Friends Technology High School (ESTGF) and the Career Trai- of Sambizanga Association by donating food (rice, ning Centre for the North of Portugal Civil Construc- pasta and powdered milk); tion and Public Works Industry (CCICOPN); > Support to the 2nd Charity Gala of the Angolan Red > Technical visits to the site by various entities (96 Cross through financial aid; people – Road Network of Portugal of Vila Real and > Activities to promote health in Mozambique (carried Almada, and the Portuguese Institute of Engineers); out as part of the construction of the new bridge over > Monitoring of the internships of 4 students from Tete River): giving talks (every two months), showing the Vila Real Business Association (NERVIR); of films about various subjects such as HIV, tuber- Provision of 2 career internships (Accounting and culosis, personal hygiene, malaria, among others, to Public Administration Internship, and Safety at Work the local population which works on the construction Engineering Internship); site. These talks are given by doctors and health practitioners (via a contract with a local clinic). Also > Participation as guest speakers at the Conferen- noteworthy is the agreement of a contract with the ce - “The challenges of Geology/Geo-techniques in Tete’s area Health Department to distribute condoms the construction of the Transmontana Motorway free of charge to workers, which, together with acti- Sub-concession” during the Science and Technology vities aimed at promoting health, aim at reducing the Week- 2012 (UTAD, CAETXXI, CÊGÊ and INFRATÚNEL); incidence of sexually transmitted diseases; > Donation of 3,000 tons of milled materials from > Donation of an incinerator for hospital waste: deactivated sections of the IP4 roadway (to the given to the Health Centre of the M’Padué district Town Councils of Sabrosa, Bragança, Macedo de (where the site’s builders yard is located) and which Cavaleiros, District Councils of Amendoeira, Santa is currently used by the Builders Yard’s Medical Sta- Comba de Rossas, Sortes and Milhão); tion and by the Health Centre and which, by being > Pine trees planted on an area of waste round in Lot exchanged for the existing equipment, will increase 3 (near to Murça), at the request of the owner; levels of health and hygiene for the entire population of the district; > Awareness actions aimed at local residents concerning work carried out at night; > Material and logistic support (given by Soares da Costa Moçambique, SARL, SA) for the holding > Distribution of awareness raising brochures to resi- of social gatherings, one in Manhiça and two in dents living close to the security perimeter set up when Maputo, involving a total of around 110 young excavation work was carried out using explosives. people and lasting for three days, at which subjects such as civic, social and charitable actions by young Case Study - “Sou Capaz” people and the public in general are discussed; “Sou Capaz” (I Can) is a business voluntary work programme of the Soares da Costa Group, and > Conversion of two sea containers into libraries forms part of its Corporate Social Responsibility to be installed in the civic centres of the towns of strategy, the cornerstones of which are actions and Mapai and Chicualacuala, with help from the com- initiatives in Education, Health and Safety, and the pany in order to improve conditions of access to Environment. The mission of the project (covering reading for teaching and training purposes or as a Portugal and across all employees of the SdC Group) leisure pursuit. is to promote the social wellbeing of less privileged segments of the population. Its main objective is Regarding the construction of the Transmontana thus to provide the necessary conditions for any Motorway, between Vila Real and Quintanilha, the Group employee to be able to take part in social construction consortium CAETXXI (in which Soares solidarity actions (voluntary work) during normal da Costa has a shareholding of 50%) has been given working hours without this affecting his/her remu- special attention to relationships with various social neration or normal work: partners. Some of the most important initiatives taken during 2012 were: > CAIS Association: the partnership set up with CAIS in 2012 has resulted in three social responsibi- > Study visits to various teaching establishments lity initiatives that have been very much appreciated REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 93

by our employees: going to the Lousã hill range to support the sustai- • A two day voluntary action carried out at the CAIS nable development of forests in Portugal. A number Porto premises, where company volunteers spent of company volunteers together with a team from their time carrying out refurbishments to the buil- the “Fundação Floresta Unida” (United Forest Foun- dings (small repairs, cleaning and painting); dation) went there to control invasive plants, clear • Providing company premises to show and sell and clean up woodland, and carry out other work articles from the CAIS Recycling workshop, made that allows trees already planted to grow and de- by users of the charity during the Christmas velop for another year. In total, an area of around 3 season; hectares of forest was worked on; • Purchase (and distribution among employees) of > Social Ecobox (“Ecoponto Solidário”): as part 200 copies of the CAIS magazine over Christmas; of this project involving the donation of a range of > SOS Villages (“Aldeias SOS”): the partnership goods collected by our employees, we carried out of the Soares da Costa Group with this charity led to the following charitable actions in 2012: an important contribution coming from one of our • Collection of food and other goods for lost ani- companies – Energia Própria – which donated (and mals found and looked after by the Lisbon União was also responsible for a preparatory study and its Zoófila (abandoned dog and cat care centre); implementation) a thermal solar device to one of Al- • Collection of films for children and young people deias SOS’s houses in Cascais; (DVD, VHS), and donated to the Porto’s Legião da Boa Vontade; > Charity Rounds: working closely once again with • Collection of a range of food items and donated the Porto “Legião da Boa Vontade”, this year two to the Porto’s Legião da Boa Vontade; more Charity Rounds were carried out by volunteers • Collection of paper for recycling for the “Banco from Soares da Costa who took part in the prepara- Alimentar contra a Fome” (an association that tion and distribution of meals to homeless people in provides food to necessitated people); the region; • Collection of various items (clothes, toys, hygie- > United Forest (“Floresta Unida”): The Soares ne products) for the Gião Social Centre in Santa da Costa Group celebrated 2012 World Tree Day by Maria da Feira.

5.4.3 ENVIRONMENTAL PERFORMANCE The goal of management of environmental issues management of energy consumption explain the among companies of Soares da Costa Group is to significant fall in the energy consumption of the continually minimise the potentially negative impacts group, regardless of the energy source involved or resulting from construction activities and the day to location of consumption. day operation of buildings and other fixed premises used by the company. The management principles Total Consumption of Energy, by Source of sustainable environmental management focus (Gigajoules) on the protection and preservation of the environment, concentrating on four major areas: optimising consumption of materials, reducing consumption of 2012 15,937 31,208 2,296 energy and water, protecting surrounding biodiversi- 381 ty and minimising negative impacts involving emissions, effluents and wastes generated. Over and above compliance with existing legal and operational 2011 17,749 38,291 2,512 requirements, measures are taken to minimise the 382 environmental risks of the company’s activities with a view to optimising environmental performance. Electricity Petrol Diesel Fuel Gas and Biomass

Note: The reporting scope of these indicators is Grupo Soares da Costa, 1. ENERGY AND CLIMATE CHANGE SGPS, SA, on a consolidated basis, including all fixed units of work (offices A decrease in construction activity in Portugal; the and shipyards), projects in Portugal (excluding ACE’s) and the Group’s different types of construction projects and diffe- vehicle fleet. We do not present the energy consumption for 2010, since only from 2011 it was possible to differentiate the consumption of Soares rent phases in which they are; actions taken to raise da Costa’s subcontractors hired. The inclusion of this value (including use of awareness among staff; and effective sustainable subcontractors) would lead to an incorrect evolutionary reading. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 94

Most of the energy was consumed by the vehicle In 2012 there were a total of 7,566 tons of CO2 fleet of the company (motor vehicles and equip- emissions, a reduction of about 9% over the pre- ment), which accounted for around 45.27% of total vious year, with most of these emissions being as- consumption during the year (49,822 GJ), meaning sociated with electricity consumption and travels (by that the energy source most used was diesel fuel plane and train), which accounted for about 67% (62.64% of consumption). In 2012, the sharpest (indirect emissions). drop in energy consumption (around 20%) was in the vehicle fleet, due to a reduction in the company’s In the comparative analysis of emissions with na- fleet and also because of actions taken to increase tional turnover (excluding ACE’s), there is a slight awareness among employees of consumption of this increase in 2012, about 12%, as a result of Soares kind. da Costa’s employees mobility due to the high internationalization.

Total Consumption of Energy vs. Turnover (in million Euros) Total Air Emissions vs. Turnover (in million Euros)

2012 377 2012 57

2011 327 2011 51

Note: The reporting scope of these indicators is Grupo Soares da Cos- Note: The reporting scope of these indicators is Grupo Soares da Cos- ta, SGPS, SA, on a consolidated basis, including all fixed units of work ta, SGPS, SA, on a consolidated basis, including all fixed units of work (offices and shipyards), projects in Portugal (excluding ACE’s) and the (offices and shipyards), projects in Portugal (excluding ACE’s) and the Group’s vehicle fleet; turnover includes the activity in Portugal but exclu- Group’s vehicle fleet; turnover includes the activity in Portugal but ex- ding ACE’s. We do not present the energy consumption for 2010, since cluding ACE’s. We do not present the air emissions for 2010, since only only from 2011 it was possible to differentiate the consumption of Soa- from 2011 it was possible to differentiate the energy consumption of res da Costa’s subcontractors hired. The inclusion of this value (including Soares da Costa’s subcontractors hired. The inclusion of this value (in- use of subcontractors) would lead to an incorrect evolutionary reading. cluding use of subcontractors) would lead to an incorrect evolutionary reading.

Total Air Emissions, by type (Ton CO ) 2 In the context of environmental protection and preservation, Soares da Costa Group has developed several initiatives, in order to minimize energy 2012 2,469 2,156 2,941 consumption, material consumption, waste production and engagement with employees and surrounding communities, including: 2011 2,973 2,401 3,651 > World Environment Day: in 2012, this day was celebrated at Soares da Costa with a talk about waste generation, minimizing levels of waste and the Direct Emissions opportunities for home composting, reflecting the Indirect Emissions (sources controlled by the company) project “Terra-a-Terra” (Earth to Earth), implemented by LIPOR – Inter Municipal Waste Management Indirect Emissions (sources not controlled by the company) Service for the Porto Metropolitan Area;

Note: The “Direct Emissions” arise from energy consumption (with the > “Vamos Poupar” (Let’s Save) Campaign: this exception of electricity used in fixed units, construction sites and for the campaign was launched in 2012 by Soares da Costa, vehicle fleet); the “Indirect Emissions (sources controlled by the company)” arise from electricity consumption (in any work location) and the with the goal of raise awareness among employees “Indirect Emissions (sources not controlled by the company)” arise from for reducing paper consumption (through digitali- travels (by train and by air). The reporting scope of these indicators is Grupo Soares da Costa, S.G.P.S., S.A., on a consolidated basis, including zation and/or printing documents on both sides of all fixed units of work (offices and shipyards), projects in Portugal (ex- paper), computer consumables (black and white, cluding ACE’s) and the Group’s vehicle fleet. We do not present the air emissions for 2010, since only from 2011 it was possible to differentiate and rough draft printing) and energy (reducing the energy consumption of Soares da Costa’s subcontractors hired. The usage time for air conditioning and artificial lighting); inclusion of this value (including use of subcontractors) would lead to an incorrect evolutionary reading. > Sharepoint Knowledge Management – Cons- truction Project Document Management: This REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 95

software, implemented in 2012 by Clear – Instala- The comparative analysis of this consumption with ções Electromecânicas, SA, builds a data base linked the national turnover (excluding ACE’s) indicates a to a server in the organization, thus providing infor- decrease in 2012, of about 22% of the number of mation to all users of the network. With this tool, a cubic meters consumed per million Euros of turnover. digital data base can be developed, facilitating the circulation of information and reducing the environmental impacts of paper and ink consumption; Total Water Consumption Vs. Turnover (in million Euros) > Digital Portfolio: Following a policy already adopted for the construction area, CLEAR started promoting company construction projects and services in a socially and environmentally responsible manner, 2012 282 online, using a properly qualified and competent entity to certify the sales information to be disclosed, ensuring the use of ethical sales techniques, 2011 361 and avoiding in particular exaggerated claims concerning the services and knowledge existing in the organization. 2010 242

2. WATER RESOURCES Note: The reporting scope of these indicators is Grupo Soares da Cos- Between 2010 and 2002, an overall fall in water ta, SGPS, SA, on a consolidated basis, including all fixed units of work (offices and shipyards), projects in Portugal (excluding ACE’s); turnover consumption occurred in the Soares da Costa Group. includes the activity in Portugal but excluding ACE’s. As might be expected, most of this decrease took place on construction sites, these being the main area of consumption (70% of the water consump- As we can see by these results, Soares da Costa’s tion occurs on construction sites). The sharp drops construction companies didn’t have a significant in water consumption are mainly due to the various impact on water consumption so as to affect the actions taken to raise awareness among employees surrounding environment, either by lowering water (on site and in fixed premises), but also to reduced table levels or by altering the capacity of neighbou- construction activity in Portugal and the varying ring ecosystems to carry out their function. phases of completion of construction sites in progress during the period. This is done by the appropriate management of construction site activities through establishing In 2012, there was a consumption of 37,239 cubic criteria for minimising consumption, as specified meters of water, about 43% lower than in the pre- in the Environmental Management Systems im- vious year. plemented. At the same time, only water coming from duly licensed sources is used, ensuring proper monitoring and control. The specific nature of the Total Water Consumption, by Source (Cubic Meters) activities of Soares da Costa does not usually permit the recycling or reuse of this resource as much as we would like. However, efforts are made, whenever 2012 16,399 9,582 11,258 possible to do this, and it is estimated that in 2012 some 110 m3 of water were reused, equal to about 0.3% of total consumption. 2011 29,236 15,262 20,483

3. MATERIALS AND WASTE 2010 56,532 6,154 8,063 In managing material consumption, the company seeks to act guided by two main principles: the Water Tables sustained minimization of materials used in the execution of construction projects, and a reduction in Wells consumption of office and administrative support Public Network materials. The planning for procuring these materials is done according to two criteria, both for economic Note: The reporting scope of these indicators is Grupo Soares da Costa, SGPS, SA, on a consolidated basis, including all fixed units of work (offi- and environmental reasons: to achieve minimum ces and shipyards), projects in Portugal (excluding ACE’s). usage (and the most efficient); and to guarantee REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 96

the quality of work on the construction site. The various separation and temporary storage proce- reuse of various materials should be noted, coming dures are followed in accordance with the nature from construction site activities, and whenever this of each type, and with procedures specified in the makes sense taking into account the type of work group’s Environmental Management Systems). The involved on the site. These environmentally respon- waste is then sent to a final suitable destination sible practices mean that the consumption of virgin using third party companies, which are licensed and materials and the volume of waste sent to other lo- contracted to carry out the management of the cations can be reduced. waste, collecting, transporting and taking it to an appropriate final destination. The high production and diverse nature of the waste generated by a construction company is a common The following table shows the production of waste, feature of this sector of business activity and requi- catalogued according to the designation of the Eu- res careful management, both in order to minimise ropean Waste List (LER Code), expressed in tonnes the quantity and to properly separate it in order and between the years 2010 and 2012. The diver- to ensure an appropriate final destination, which sity of waste generated by construction activities, respects the principles of waste recovery whenever leads that only the main types of waste (most pro- possible. In order to manage the waste generated, duced) are displayed.

Main Wastes Produced (tonnes)

LER Code Designation 2012 2011 2010

15 01 06 Mixture of packaging 0,00 0,64 14,22

17 01 01 Concrete 257,86 878,27 1.631,27

17 01 07 Mixture of concrete, bricks, tiles, roof tiles and ceramic materials 445,08 3.657,26 3.720,95

17 02 03 Plastic 19,17 44,66 323,73

17 03 02 Mixture of bitumen not covered by code 17 03 01 60,50 1.314,04 440,09

17 04 05 Iron and Steel 202,39 294,06 235,13

17 04 07 Mixture of metals 5,36 19,27 65,52

17 05 04 Earth and Rock not covered by code 17 05 03 11,12 9.118,48 98,01

17 09 04 Mixture of Construction and Demolition Waste (CDWs) 183,73 314,02 688,53

20 03 01 Mixture of comparable urban waste 5,13 53,67 13,25

Other (including reused CDWs) 7.093,01 28.152,00 24.199,68

TOTAL (TONNES) 8.283,34 43.846,37 31.430,38

Note: The reporting scope of these indicators is Grupo Soares da Costa, SGPS, SA, on a consolidated basis, including all fixed units of work (offices and shipyards), projects in Portugal (excluding ACE’s). LER Code represents de designation of the European Waste List.

In 2012, the trend of falling waste generation con- Waste Production vs. Turnover (in million Euros) tinued, declining during the period by around 80% comparing to 2011. Like other environmental indicators already mentioned, these are also influenced 2012 63 by the decrease in construction activity in Portugal, by the different stages of the works in progress, by their type and by initiatives implemented to raise 2011 244 awareness and sustainable management, which does not allow a linear comparison between this evolution. 2010 107

Note: The reporting scope of these indicators is Grupo Soares da Costa, SGPS, SA, on a consolidated basis, including all fixed units of work (offices and shipyards), projects in Portugal (excluding ACE’s); turnover includes the activity in Portugal but excluding ACE’s. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 97

Almost all (around 97%) of the waste produced is 4. ENVIRONMENTAL INVESTMENT sent for recycling and recovery. There was a signi- The majority of expenditure related to the ficant increase in 2012 of recycled waste, resulting company’s environmental performance result from from destination code R4, used for metal waste. The site environmental monitoring, and implementing value of this waste, distributed among a number of measures to protect the environment using environ- different LER codes, makes up a significant part of mental management systems, the goal of which is the total of waste generation (around 55%), as a to protect and preserve the environment. According result of the sale of machines and equipment by the to the philosophy of the Soares da Costa Group, group. these costs are considered to be investments to protect the environment, rather than running costs. The amount of hazardous waste generated during the year continued to be relatively insignificant com- In 2012, we invested about 512,000 Euros in initia- pared to the total, equal to around only 1.2%. tives and equipment for environmental protection and preservation, of which about 47% were related to waste and effluents management and 44% with Waste Production, by Final Destination (%) the environmental monitoring.

0.1% The comparative analysis with the domestic turnover (excluding ACE’s) indicates an increase in environ- 2012 50.1% 47.1% 2.7% mental investment per million Euros billed.

0.4%

2011 95.6% 0.3% Environmental Investments, by Type (Euros) 3.7% 8.3% 2012 243,146 226,901 2010 80.9% 8.7% 2.1% 42,555

Recovery (R9, R13, R12) 2011 135,447 201,654 Recycling (R3, R4, R5) 66,085 Landfill (D1) 2010 463,574 346,848 Elimination (D14, D10, D15) 97,671 Note: The reporting scope of these indicators is Grupo Soares da Costa, SGPS, SA, on a consolidated basis, including all fixed units of work (offices and shipyards), projects in Portugal (excluding ACE’s). Environmental Protection Measures, Monitoring, Licences, Audits and Other Waste and Effluent Manafement In terms of effluents generated, of particular interest is the generation of industrial effluents at the Environmental Monitoring and Documentation São Félix da Marinha builders’ yard, which in 2012 produced 1,357 cubic metres. Due to the nature of Note: The reporting scope of these indicators is Grupo Soares da Costa, S.G.P.S., S.A., on a consolidated basis, including all fixed these effluents and in particular to their treatment units of work (offices and shipyards), projects in Portugal (excluding and monitoring, they are not believed to significantly ACE’s). affect any habitats or water resources and their respective biodiversity.

2009 2010 2011 2012 Effluents Produced 2.597 2.684 2.039 1.357 (ETAR flow in m3)

Note: The reporting scope of these indicators is Grupo Soares da Costa, SGPS, SA, on a consolidated basis, including all fixed units of work (offices and shipyards), projects in Portugal (excluding ACE’s). REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 98

Environmental Investments vs. Turnover (in million Euros)

2012 3,876

2011 2,239

Note: The reporting scope of these indicators is Grupo Soares da 2010 3,099 Costa, S.G.P.S., S.A., on a consolidated basis, including all fixed units of work (offices and shipyards), projects in Portugal (excluding ACE’s).

5.5 SUSTAINABLE MANAGEMENT

In business since 1918, the Soares da Costa Group is one of the biggest civil construction and public works groups in Portugal, and is steadily increasing its international business. In addition to Portugal, the company has a permanent presence in countries such as Angola, the USA and Mozambique and others, with construction being its main business but also having a varied portfolio of activities such as concessions, real estate and energy services.

5.5.1 MANAGEMENT MODEL AND IMPACTS OF ACTIVITY The management of issues relating to Corpora- Safety, Environment and Quality Department, among te Social Responsibility is the responsibility of the others. In addition to the Vision, Mission and Values Communications Department which carries out a which govern its business, the Group also has other range of activities, working closely with other func- tools to guide it towards responsible and sustaina- tional areas of the Soares da Costa Group, such as ble activity from an environmental, social and ethical the Human Resources Department or the Health, standpoint.

Código de Conduta Empresarial e Princípios de Negócio

Responsabilidade Igualdade e Diversidade Sustentabilidade Social Corporativa de Oportunidades Políticas 1 Corporativas Prevenção, Segurança, Ambiental Qualidade Higiene e Saúde

1 Within the Soares da Costa Group, there are various companies which have independent Environmental, Quality, and Accident Prevention, Safety and Hygiene Management Systems, which are certified externally. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 99

Through the Sustainability Policy of the Soares take action to improve their situation; da Costa Group, S.G.P.S., S.A., the company com- > Contributing towards the reduction of work acci- mits to promote and contribute towards sustainable dents that are a feature of its sector of activity, se- business activity, with a model that can drive im- eking to improve the safety and health conditions of provements in economic, social and environmental all of its employees, encouraging training and access performance through the pursuit of the following to information in this area and controlling all aspects guidelines: of performance and improvement through its Health > Striving to reduce the environmental impacts of its and Safety at Work System; activities, in terms of consumption of resources and > Making efforts so that its concerns and contri- the environmental discharges for which it is respon- bution towards more sustainable development are sible, with a view to continuous improvement, based taken into consideration by all those with whom on the monitoring of various key indicators which the company establishes relationships, actively en- are part of its Environmental Management System; couraging the efforts of all stakeholders to achieve > Investing in promoting employee satisfaction, these objectives; aware of the fact that human resources are its main > Encouraging research and innovation, as a means asset, supplying them with all the conditions and of contributing towards the use of new materials means at its disposal for this to happen, in the kno- and processes related to construction activities. wledge that their satisfaction will help drive the overall prosperity of the company and the sustainability The objective of this policy and the guidelines resul- of its business; ting from them is to provide food for thought about > Striving to contribute in a responsible manner to the main risks and opportunities that the business a fairer and more equitable society, seeking to act units face in the different countries in which the among the local communities among which it carries group operates. out its business, in order to find the best ways to

Main Risks Main Opportunities Proactive training / awareness raising as the best means of Health and Risks of work accidents occurring, lost working days, pre-empting risks concerning to the safety and health of Safety occupational illnesses, absenteeism employees

Continuous monitoring of energy consumption, with the Instability in the energy market and climate change goal of implementing measures to minimise energy (greenhouse gas emissions) consumption

Environ- Appropriate management of the waste products Costs arising from poor management of waste and the mental of its activities, continuously monitoring a range of costs/risks related to protecting the environment environmental factors

Appropriate follow up and control of significant Possible significant environmental impacts environmental issues

Development of projects that add value to surrounding Possible negative impacts on surrounding communities communities and contribute towards their well being

Social The company seeks to be recognised as acting in a fair Risks of losing the best talent, or of suffering low levels of manner, upholding principles of non-discrimination and productivity investing in the development and training of its employees

The company seeks to contribute towards improving the Risks of the company being associated with unacceptable Value Chain performance of the entire value chain by setting minimum management by its suppliers requirements for performance by suppliers

The Soares da Costa Group’s business activities in different countries are a positive factor contributing towards their economic, environmental and social development, both from the direct economic benefits arising from these activities and also from indirect economic benefits that they give rise to. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 100

Main Impacts Consequences/Results

Direct and indirect job crea- The main impacts arise from the payment of salaries to local employees, ensuring their personal/fami- tion ly subsistence and by promoting a better quality of life for them.

The company contributes indirectly towards the socio-economic development of the different regions Purchase of local goods and in which it operates, supporting a stable local economy by reducing costs related to the import of services materials, and from the environmental standpoint by also reducing the impacts of transporting those materials.

Besides representing a direct economic benefit to the company, construction activities also bring signi- Construction of buildings and ficant benefits to surrounding communities, providing them with better quality of life and/or access to infrastructure goods and services.

Best practices in the management of quality, the environment, health and safety, and social responsi- Adoption of best practices by bility, are in most cases assimilated and replicated among the various partners involved in our activi- business partners ties.

Economic development of The development of Soares da Costa’s activities has the effect in many countries of boosting the deve- sectors of activity other than lopment of other business sectors. construction

Transmitting know how in the A learning effect takes place in markets where the company operates and where it’s specialised know construction sector how did not previously exist in the local community.

5.5.2 COMMITMENTS WITH EXTERNAL INITIATIVES

In a relationship of commitment to sustainable de- > Chamber of Commerce and Industry Portu- velopment and to its different stakeholders, the gal Angola (CCIPA): The company “Sociedade de Soares da Costa Group frequently takes part in Construções Soares da Costa” is a member of the external initiatives related to sustainability and/or Board of the CCIPA, a private association of Portu- social responsibility. In 2012, we maintain the rela- guese and Angolan companies, set up in 1987 on tionships with the following initiatives: the initiative of a group of high profile businessmen > Business Council for Sustainable Develop- in the Portuguese and Angolan economies, with the ment (BCSD Portugal): An organisation whose goal of supporting the development of business remain mission is “to enable business leadership to be lationships between the two countries; a catalyst for change in the direction of Sustainable > iNOVA Association Gaia – Technological Incu- Development and promote ecoefficiency, innovation bation Centre of Vila Nova de Gaia: The mission and social responsibility among companies”; of iNOVA.Gaia is to manage and run the Technolo- > Platform for Sustainable Construction (cen- gical Incubation Centre iNOVA.GAIA, which supports troHabitat): The centroHabitat is a platform for research and development projects, specifically knowledge and innovation through networking by those which increase knowledge, and have merit research and development institutions, town and for the teaching of higher education, and also those city councils, and the important business community which create new technology based companies that connected with Habitat, to support a focus on Sus- encourage and propagate innovation at the heart of tainable Construction; business through the application of this advanced knowledge. The Soares da Costa Group is represen- > Reflection and Support Group to the Busi- ted in INOVA.Gaia by CLEAR – Instalações Electrome- ness Community (GRACE): GRACE is made up of a cânicas SA, a founding member of the association. number of companies, mainly multinationals, which share a common interest in increasing the role of the business sector in social development. Its mission is to Reflect on, Promote and Carry out Business Social Responsibility initiatives; REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 101

CONSOLIDATED FINANCIAL STATEMENTS

Votorantim's Cement Plant in Rio Branco do Sul Brazil complete portfolio available in: www.portfolio.soaresdacosta.pt REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 102

CONSOLIDATED FINANCIAL POSITION STATEMENT AS OF DECEMBER 31, 2012 AND 2011

(Euro) ASSETS 31.12.2012 31.12.2011 NON CURRENT Intangible assets: Goodwill 84,025,172 86,896,365

Intangible assets 241,370,799 255,443,363 325,395,972 342,339,728 Fixed tangible assets: Land and buildings 162,685,835 169,262,712

Basic equipment 57,899,231 66,447,006

Other fixed tangible assets 14,478,790 17,552,831

Fixed tangible assets in progress 14,497,193 18,459,450 249,561,048 271,721,999

Investment properties 13,350,946 9,907,556 Financial investments:

Financial investments under the equity method 11,246,193 11,607,524

Loans to associated companies 15,099,362 10,399,882

Other financial investments 6,047,352 12,876,395 32,392,908 34,883,801

Deferred taxes (assets) 63,317,422 40,941,330 Accounts receivable 337,239,015 237,395,050 Other non current assets 7,125,000 0

TOTAL NON CURRENT ASSETS 1,028,382,310 937,189,464

CURRENT Inventories 89,406,053 127,938,135 Accounts receivable:

Trade Debtors 393,377,777 440,708,549

Income tax 1,195,947 1,441,691

Other accounts receivable 49,452,085 61,307,338 444,025,810 503,457,579

Other current assets 128,747,235 109,009,408 Cash, Deposits and Securities 101,464,321 86,098,349

TOTAL CURRENT ASSETS 763,643,419 826,503,472 TOTAL ASSETS 1,792,025,729 1,763,692,936 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 103

CONSOLIDATED FINANCIAL POSITION STATEMENT AS OF DECEMBER 31, 2012 AND 2011

(Euro) Shareholders’ Equity & Liabilities 31.12.2012 31.12.2011 SHAREHOLDERS’ EQUITY Share capital 160,000,000 160,000,000 Own shares (172,526) (172,526)

Reserves and retained earnings (62,014,214) (49,820,845)

Net income (46,881,180) 2,376,012

EQUITY ATTRIBUTABLE TO THE GROUP 50,932,080 112,382,641 Minorities 2,276,539 4,139,852 TOTAL SHAREHOLDERS’ EQUITY 53,208,618 116,522,493

LIABILITIES NON CURRENT Provisions 876,854 886,200 Loans:

Bonds 97,818,453 97,604,741

Bank loans 789,797,903 538,988,548 887,616,355 636,593,289

Accounts payable 43,233,002 51,310,099 Derivatives 66,968,851 53,939,404 Deferred assets (liabilities) 25,884,029 27,884,259

TOTAL NON CURRENT LIABILITIES 1,024,579,090 770,613,251

CURRENT Loans: Bank loans 234,422,060 269,468,826

Other loans 891,901 37,850,092 235,313,961 307,318,918

Accounts payable: Trade Creditors 195,021,746 227,775,844

Fixed assets suppliers 2,698,305 3,790,535

Advances on sales 64,941,600 75,655,448

Income tax 10,251,245 8,809,377

Other accounts payable 65,814,140 56,659,835 338,727,035 372,691,039

Derivatives 16,536,361 12,504,360 Other current liabilities 123,660,663 184,042,876

TOTAL CURRENT LIABILITIES 714,238,020 876,557,193 TOTAL LIABILITIES 1,738,817,110 1,647,170,444 TOTAL SHAREHOLDERS’ EQUITY + LIABILITIES 1,792,025,729 1,763,692,936 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 104

SEPARATE CONSOLIDATED INCOME STATEMENT FOR THE PERIOD ENDED DECEMBER 31, 2012 AND 2011

(Euro) 2012 2011 Turnover 801,848,536 873,548,049 Change in production (30,149,340) (19,097,212) Other operating income 12,622,480 32,367,362 Operating income 784,321,677 886,818,200 Cost of goods sold (146,501,299) (186,470,924) Third party supplies & services (378,167,507) (437,246,965) Staff costs (145,110,723) (146,388,809) Depreciation and imparity losses (43,917,931) (33,791,882) Provisions (19,837,244) (1,936,230) Other operating costs (39,930,976) (22,096,255) Operating costs (773,465,679) (827,931,065) Operating results from continued activities 10,855,997 58,887,135 Interest paid 22,346,987 14,441,415 Interest received (77,004,244) (55,587,613) Net financing costs (54,657,258) (41,146,199) Gains in associated companies 834,259 665,568 Losses in associated companies (113,953) (500,001) Gains and losses in associated companies 720,306 165,566 Income and capital gains in stakes held 8,445,061 1,484,231 Other financial income 9,524,131 35,206,631 Other financial costs (33,074,597) (47,509,853) Other financial income & costs (15,105,405) (10,818,991) Financial results (69,042,357) (51,799,624)

Earnings before taxes (58,186,359) 7,087,511

Income tax 10,674,634 (4,746,210)

Net Earnings (47,511,726) 2,341,301 Attributable to the Group (46,881,180) 2,376,012 Minorities (630,546) (34,711)

Earnings per share of continued activities: Basic (0,294) 0,015 Diluted (0,294) 0,015

Earnings per share: Basic (0,294) 0,015 Diluted (0,294) 0,015 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 105

SEPARATE CONSOLIDATED INCOME STATEMENT FOR THE QUARTERS OCTOBER 1 TO DECEMBER 31, 2012 AND 2011

(Euro) 4th Quarter 4th Quarter 2012 2011

Turnover 182,593,390 243,766,815

Change in production (27,685,529) (21,830,458)

Other operating income 5,055,615 21,217,253 Operating income 159,963,477 243,153,611 Cost of goods sold (30,384,582) (53,303,031) Third party supplies & services (68,498,109) (119,655,875)

Staff costs (34,547,992) (38,097,556)

Depreciation and imparity losses (18,201,591) (8,732,695)

Provisions (10,625,967) (1,614,170)

Other operating costs (18,164,389) (8,005,761) Operating costs (180,422,630) (229,409,087) Operating results from continued activities (20,459,153) 13,744,524 Interest received 5,278,495 4,710,487 Interest paid (22,377,837) (15,862,261) Net financing costs (17,099,342) (11,151,774) Gains in associated companies 469,063 249,527 Losses in associated companies (84,112) (409,589) Gains and losses in associated companies 384,952 (160,063) Income and capital gains in stakes held 8,126,713 762,828 Other financial income 57,720 14,680,531

Other financial costs (9,129,798) (17,950,211) Other financial income & costs (945,366) (2,506,853) Financial results (17,659,756) (13,818,689)

Earnings before taxes (38,118,909) (74,165)

Income tax 6,652,016 (1,855,562)

Net income (31,466,893) (1,929,727) Attributable to the Group (30,907,691) (1,961,131) Minorities (559,202) 31,404

Earnings per share (0.193) (0.012) REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 106

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME FOR THE PERIOD ENDED DECEMBER 31, 2012 AND 2011

(Euro) 2012 2011 Consolidated net profit for the period (47,511,726) 2,341,301 Other comprehensive income Exchange difference stemming from transposition of financial statements expressed (1,289,123) (16,631) in foreign currencies Change on fair value of derivatives (17,061,447) (28,102,874)

Change on deferred taxes of derivatives 4,702,525 7,378,018

Adjustments in investment consolidated by equity method (1,054,361) (883,858)

Other changes 15,030 (45,884) Total comprehensive income for the period (62,199,102) (19,329,928) Attributable: to minorities (760,707) (31,061) to the Group (61,438,395) (19,298,868)

STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED DECEMBER 31, 2012 AND 2011

(Euro)

Reserves Reserves Equity Coverage Equity capital Own shares and retained for foreign Other attributable to Minorities Total equity derivatives earnings exchange shareholders

Balance as of 160.000.000 (172.526) (7.751.481) (728.190) (40.239.801) 1.274.639 112.382.640 4.139.852 116.522.492 01.01.2012

Dividends - - (276) - - - (276) - (276)

Own shares ------

Other - - (11.890) - - - (11.890) (1.102.606) (1.114.496)

Integrated - - (46.881.180) (1.158.962) (12.358.923) (1.039.331) (61.438.395) (760.707) (62.199.102) consolidated earnings

Balance as of 160.000.000 (172.526) (54.644.827) (1.887.152) (52.598.724) 235.308 50.932.079 2.276.539 53.208.618 31.12.2012

Reserves Reserves Equity Coverage Equity capital Own shares and retained for foreign Other attributable to Minorities Total equity derivatives earnings exchange shareholders

Balance as of 160.000.000 (197.780) (1.633.280) (337.995) (24.644.913) 2.204.380 135.390.411 4.170.912 139.561.324 01.01.2011

Dividends - - (3.463.847) - - - (3.463.847) - (3.463.847)

Own shares - 25.254 (93.580) - - - (68.326) - (68.326)

Other - - (4.936.786) (369.912) 5.129.968 - (176.730) - (176.730)

Integrated - - 2.376.012 (20.282) (20.724.856) (929.742) (19.298.868) (31.061) (19.329.928) consolidated earnings

Balance as of 160.000.000 (172.526) (7.751.481) (728.190) (40.239.801) 1.274.639 112.382.640 4.139.852 116.522.492 31.12.2011 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 107

CONSOLIDATED CASH FLOWS STATEMENTS FOR THE PERIOD ENDED DECEMBER 31, 2012 AND 2011

(Euro) 2012 2011 4th Quarter 2012

Operating activities:

Receipts from customers 619,127,848 729,226,037 145,016,582

Payments to suppliers (545,242,973) (626,458,193) (128,765,947)

Payments to staff (133,286,946) (132,808,555) (34,738,392)

(59,402,071) (30,040,711) (18,487,758)

Payments/ receipts of income tax (11,543,468) (4,740,400) (2,338,631)

Other payments/ receipts related with oper.activities (32,496,811) (46,802,211) (11,046,260)

(44,040,278) (51,542,610) (13,384,891)

CASH FLOW FROM INVESTMENT ACTIVITIES (103,442,349) (81,583,322) (31,872,648)

Investment activities:

Receipts from:

Financial investments 10,329,613 458,000 9,811,801

Fixed tangible assets 4,302,292 2,398,866 820,317

Interest and similar income 875,340 1,358,028 273,909

Dividends 66,600 15,573,845 198,276 4,413,171 - 10,906,027

Payments related with:

Financial investments 4,671,253 2,335,341 4,136,188

Fixed tangible assets 4,801,423 8,259,962 1,768,494

Intangible assets 137,744 9,610,419 1,996,014 12,591,317 132,736 6,037,418

CASH FLOW FROM INVESTMENT ACTIVITIES 5,963,426 (8,178,146) 4,868,610

Financing activities:

Receipts from:

Loans 1,144,858,455 473,507,895 521,550,719

Capital increases, supplementary payments and issue 3,816 - 3,816 premiums

Sale of own shares - 670,031 -

Interest received 1,166,876 1,146,029,147 288,766 474,466,692 94,736 521,649,270

Payments related with:

Loans 955,115,617 323,401,232 471,995,057

Amortisations of financial leasing contracts 4,313,878 9,692,216 743,086

Interest paid 71,742,989 55,991,809 30,495,403

Dividends 570,178 3,750,881 -

Acquisition of own shares - 1,031,742,661 810,073 393,646,211 - 503,233,547

CASH FLOW FROM FINANCING ACTIVITIES 114,286,486 80,820,481 18,415,723

Change in cash and cash equivalents 16,807,562 (8,940,987) (8,588,316)

Effect of foreign exchange differences (1,438,715) (1,486,230) (1,747,850)

Effect of changes in participations (2,876) (6,041) (2,876)

Cash and cash equivalents at the beginning of the period 86,098,349 96,531,607 111,803,363

Cash and cash equivalents at the end of the period 101,464,321 86,098,349 101,464,321 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 108

ANNEX TO THE CONSOLIDATED CASH FLOWS STATEMENT

Acquisitions, subscriptions, share capital in- 50% participation in the company “Global Azoague, creases and changes in participations S.L.” and receipt of 936 Euros from the alienation of a 26% stake of the Group’s participation in this > Receipt for cash and equivalents of 852,750 Euros company, all by cash and equivalents. concerning the alienation of the Group’s participation in the company “MY Watt, Lda.”. > Capital injection in the company “Autopistas Del Valle, S.A.” of 32,212 Euros, totally by cash and > Receipt for cash and equivalents of 69,500 Euros equivalents. concerning the alienation of the Group’s participation in the company “Reflexos Purpura, Lda.”. > Capital injection in the company “Metropolitan Transportation Solutions, Ltd.” of 4,000,000 Euros, > Receipt for cash and equivalents of 120,562 Euros totally by cash and equivalents. concerning the reduction of the share capital of the company “Vortal S.G.P.S., S.A.”. > Supplementary capital injection in the company “Elos - Ligações de Alta Velocidade, S.A.” of > Receipt for cash and equivalents of 8,786,825 445,930 Euros, totally by cash and equivalents. Euros concerning the alienation of the Group’s participation in the company “Infraestruturas SDC Costa > Payment by cash and equivalents of 1,750 Euros Rica S.A.”. referring to the Group’s participation in the capital of the company “Sustentável Desafio - Produção de > Payment of 1,800 Euros concerning the Group’s Energia, Lda.”

Cash and equivalents breakdown

31.Dec.12 31.Dec.2011

Cash 556,107 951,975

Bank deposits, immediately available 100,055,330 84,832,285

Cash equivalents 852,884 314,090

Cash and equivalents 101,464,321 86,098,349

Securities - -

Cash and equivalents on Financial Position Statement 101,464,321 86,098,349 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 109

ACCOUNTING POLICIES AND EXPLAINATORY NOTES TO THE CONSOLIDATED ACCOUNTS

I-595 Corridor Highway Improvement Project USA complete portfolio available in: www.portfolio.soaresdacosta.pt REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 110

.1 INTRODUCTORY NOTE

The company currently named GRUPO SOARES DA ment of shareholdings as an indirect way to develop COSTA, S.G.P.S., S.A. (“Company”) was incorpora- economic activities”. ted on 02 June 1944, under the name “Soares da Costa, Lda.”, a limited company that has been chan- The current share structure of the “Grupo Soares da ged into a public company by deed of 01 May 1968, Costa” is represented in the annexed diagram. also changing its denomination to “Sociedade de Construções Soares da Costa, S.A.”. The full list of the companies included in the Group’s consolidation perimeter and the consolidation me- As of December 30, 2002, after a Group re-orga- thods applied are detailed in the following notes. nisation process, the company assumed its current Figures mentioned in the Notes are in Euros, unless name and changed its mission into the “manage- otherwise indicated.

.2 MAIN ACCOUNTING POLICIES

The main accounting policies adopted in the preparation of the consolidated financial statements are as follows:

2.1 PRESENTATION BASIS

The consolidated financial statements assume the The Board of Directors believes that the attached Company’s continuity and were compiled from the consolidated financial statements and subsequent accounting records of the companies included in notes are a fair representation of the consolidated consolidation, which were kept according to the ac- financial information. counting principles accepted in Portugal, and adjusted in the consolidation process to ensure that the The following standards, amendments and interpre- consolidated financial statements comply with Inter- tations are effective for the first time with reference national Standards on Financial Reporting as adop- to January 1, 2012: ted in the European Union, in force for the financial > IFRS 7 (change) – Financial Instruments: Announ- year starting at 01 January 2005, from which date cements; the Company began applying IAS/IFRS. > IFRS 1 (change) – Adopting the IFRS for the first time. The financial statement include some figures that were estimated, affecting the amounts reported as The effect on the financial statements of Grupo assets and liabilities, as well as those reported as Soares da Costa SGPS SA for the year ended Decem- income and costs for the period reported. All esti- ber 31, 2011, arising from the standards, interpre- mates and assumptions made by the Board of Di- tations, amendments and revisions set out above, rectors were based on the best information available where applicable, was not significant. at the date the financial statements were approved. In terms of standards or interpretations issued by IASB, but not yet effective in this exercise, we emphasize the following: REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 111

Date of Application Standard / Interpretation Change (IASB) Presentation of items of other comprehensive income Amendment to IAS 1 01.07.2012

Employee benefits Amendment to IAS 19 01.01.2013

Compensation of financial assets and financial liabilities Amendment to IFRS 7 01.01.2013

Compensation of financial assets and financial liabilities Amendment to IAS 32 01.01.2014

Disclosures on the transition to IFRS 9 Amendment to IFRS 7 01.01.2015

Government Grants Amendment to IFRS 1 01.01.2013

IFRIC 20 - Removal costs during production of a surface mine New standard 01.01.2013

IFRS 9 - Financial Assets - Classification and measurement New standard 01.01.2015 (*)

IFRS 10 – Consolidated Financial Statements New standard 01.01.2014

IFRS 11 - Joint Arrangements New standard 01.01.2014

IFRS 12 - Disclosure of interests in other entities New standard 01.01.2014

IFRS 13 - Fair Value Measurement and Disclosure New standard 01.01.2013

IAS 27 - Separate Financial Statements Revision of the standard 01.01.2014

IAS 28 - Investments in associates and joint ventures Revision of the standard 01.01.2014

(*)According to the report EFRAF of March 5, 2013 - “The EU endorsement status report”, is not expectable endorsement before the effective date.

Grupo Soares da Costa has not yet completed the clearance of all impacts from the implementation of the standards mentioned above.

2.2 CONSOLIDATION PRINCIPLES

The consolidation methods applied by the Group are: counted at their fair value at acquisition. Any excess of acquisition cost over the fair value of the net a) Group companies – Full consolidation method assets and liabilities acquired is recognised as “goo- The companies in which the Group directly or indi- dwill” (Note 2.2.d)). If there is a negative difference rectly holds more than 50% of the voting rights at between acquisition cost and the fair value of net the General Shareholders’ Meeting and/or has control assets and liabilities acquired, this is recognised as over financial and operational policy (definition of income for the year. control used by the Group), were included in the consolidated financial statements by the full consolida- Minority interests include the proportion of the fair tion method. The stakes held by third parties in these value of assets and liabilities known at the acquisi- companies are presented under “minority interests”, tion date which belong to third parties. being included in the Consolidated Financial Position Statement in Shareholders’ Equity and in the Consoli- The results of subsidiaries acquired or sold during dated Income Statement in net income of the year. the year are included in the financial statements from the date of acquisition or until the date when When losses attributable to minorities are greater they are sold. than the minority interest in a subsidiary’s Sharehol- ders’ Equity, the Group absorbs this excess and any Whenever necessary, adjustments are made to the additional losses, except when the minorities have financial statements of subsidiaries to bring their an obligation and are able to cover those losses. accounting policies in line with those used by the If the subsidiary subsequently reports profits, the Group. Transactions, balances and distributed divi- Group takes those profits until the minority share of dends between Group companies are eliminated in previous losses absorbed has been recovered. the consolidation process. Capital gains resulting from the sale of stakes within Group companies are The assets and liabilities of each company are ac- also eliminated. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 112

The list of the companies consolidated by the full According to the equity method, shareholdings are consolidation method is in Note 3. registered at their acquisition cost adjusted by the Group’s share in Shareholders’ Equity variations (in- b) Jointly controlled companies – Proportional cluding net income) of the associated companies, consolidation method and also by the gains or losses of the financial year Shareholdings in jointly controlled companies were and dividends received. included in the consolidated financial statements by the proportional consolidation method, from the date If the acquisition cost surpasses the fair value of the when control began to be shared. According to this assets and liabilities of each associated company at method, assets, liabilities, income and costs from the date of the acquisition, that excess is recognised these companies were integrated in the consolidated as “goodwill” (Note 2.2.d). If there is a negative di- financial statements, item by item, in proportion to fference between acquisition cost and the fair value the amount of control attributable to the Group. of net assets and liabilities acquired, this is recognised as income for the year. If the acquisition cost surpasses the fair value of the assets and liabilities for each jointly controlled Investment in associated companies is evaluated company at the acquisition date, that excess is re- when there are signs that assets’ value may be sub- cognised as “goodwill” (Note 2.2.d). If there is a ject to impairment losses. Any impairment losses negative difference between acquisition cost and the found are registered as costs in consolidated income fair value of net assets and liabilities acquired, this is statement. recognised as income for the year. The investment in associated companies is reported Whenever necessary, adjustments are made to the as a null value when the Group corresponding per- financial statements of jointly controlled entities to centage of accumulated losses in associated com- bring their accounting policies in line with those used panies’ exceeds the investment value. by the Group. Transactions, balances and dividends distributed between Group companies are eliminated Financial investments in associated companies are in the consolidation, in proportion to the amount of detailed in Note 5. control attributable to the Group. Capital gains resulting from the sale of stakes within Group compa- d) The differences between the acquisition cost of nies are also eliminated. investments in Group companies and jointly controlled companies and the net balance between fair The classification of the financial investments in value of those companies’ assets and liabilities at jointly controlled companies is determined based the acquisition date were recorded as intangible on the Shareholders’ agreements that define the assets under “Goodwill” item. joint control, in the effective percentage of shares or voting rights held. The goodwill does not suffer any depreciation, although every year is checked for impairment losses. The financial interests held in Complementary Group Any impairment loss is immediately registered in the of Companies (ACEs), are generally consolidated in Consolidated Income Statement for the year, affec- the financial statements by the proportional conso- ting the financial statements, and is not subsequen- lidation method. tly reverted.

The list of companies consolidated by the proportio- Differences between the acquisition cost of stakes nal consolidation method is detailed in Note 4. in foreign-based Group companies, jointly controlled companies and associated companies, and the c) Associated Companies - Equity Method assets and liabilities’ fair value at the acquisition Stakes in associated companies, which are compa- date, are accounted in the reporting currency of nies in which the Group has significant influence but those companies, and converted to the reporting does not have control or joint control on the compa- currency of the Group (Euro) at the exchange rate in nies’ financial and operational decisions – in general, force at the time of the Consolidated Financial Posi- stakes representing 20% to 50% of share capital – tion Statement. Exchange differences generated in are registered by the equity method. this conversion are registered in Shareholders’ Equity under “Exchange Conversion Reserve”. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 113

e) Conversion of foreign entities’ financial sta- The goodwill and fair value adjustments resulting tements from the acquisition of foreign entities are treated Companies operating in other countries besides Por- as assets and liabilities of that entity and converted tugal, enjoying organisational, economic and finan- to Euros according to the exchange rate at the date cial autonomy are considered foreign entities. of the Consolidated Financial Position Statement.

The foreign entities’ assets and liabilities are con- Whenever a foreign entity is sold, the accumulated verted to Euros using the exchange rates at the date exchange difference is recognised in the Consolida- of the Consolidated Financial Position Statement, ted Income Statement as gain or loss resulting from and costs and income and cash flow are converted that sale. to Euros using the average exchange rate for the year. The resulting exchange difference is recorded The rates used to convert the figures of foreign in Shareholders’ Equity under “Exchange Conversion entities (Group companies, jointly controlled com- Reserve” item. panies or associated companies) to Euros were the following:

Exchange Average Exchange Average rates as of exchange rate rates as of exchange rate 31.12.2012 2012 31.12.2011 2011 US Dollar EUR/USD 1.3194 1.2932 1.2939 1.4000

Mozambican Metical EUR/MZN 39.175 36.810 34.665 40.370

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

Angolan Kuanza EUR/AOA 126.37 123.49 122.55 131.18

Romanian Leu EUR/ROL 4.4445 4.4574 4.3233 4.2399

Israelian Shekel EUR/ILS 4.9258 4.9688 4.9453 5.0105

Brazilian Real EUR/BRL 2.7036 2.5308 2.4159 2.3375

UAE Dirhams EUR/AED 4.8441 4.7521 4.7566 5.1460

British Pound EUR/GBP 0.8161 0.8119 0.8353 0.8713

Central African CFA EUR/CFA 655.17 656.06 656.14 656.14

2.3 INVESTMENT PROPERTIES

Investment properties include all the land and buil- Costs incurred related with the use of investment dings owned to obtain rents or capital appreciation, properties, namely, maintenance, repairs, insurance, or both, that are not for use in the production or and property tax (Local Property Tax), are recogni- supply of goods or services, nor for administrative sed as costs in the Consolidated Income Statement purposes nor for sale as part of the business daily for the respective financial year. Improvements ex- management. pected to generate future additional economic benefits are capitalized under “Investment properties”. Investment properties are registered at their acquisition cost. By the time financial statements were The depreciation method used for investment pro- transposed to the IAS/IFRS framework (01 January perty is straight-line depreciation method, using a 2004), materially relevant investment properties depreciation rate for a useful working life of 100 were adjusted to reflect their fair value at conver- years. sion date (“deemed-cost”). REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 114

2.4 FIXED TANGIBLE ASSETS

Tangible fixed assets acquired up to 31 December wear and tear, the likelihood of technical obsoles- 2003, the transition date to IAS/IFRS, are registered cence and the residual value attributable. The resi- at “deemed cost”, minus depreciations and impair- dual value attributable to the asset is determined on ment losses. The “deemed cost” was determined as the basis of estimated value recoverable at the end follows: of its useful life. > Land and buildings – Market value as of 31 De- The depreciation rates correspond to the following cember 2003 determined by independent assess- estimated useful life periods: ment - J. Curvelo, Lda.. > Basic equipment – Market value as of 31 Decem- ber 2003, determined by internal assessment of Useful life assets from a user perspective, audited by an exter- Buildings 8 - 100 nal assessment of an independent body – J. Curvelo, Lda.. Basic equipment 2 - 20 > Others – Acquisition cost or acquisition cost re- Other tangible assets 3 - 10 valuated in accordance with the principles generally accepted in Portugal. Fixed tangible assets in progress are registered at Assets acquired after 31 December 2003, are recor- acquisition or production cost, minus any impair- ded at acquisition cost minus accumulated deprecia- ment losses. tions and impairment losses. Gains and losses from the sale or disposal of tangible Depreciations are calculated on a straight line basis fixed assets are determined as the difference betwe- once the assets start to be used and are applied en the alienation price and the net accounting value systematically throughout the useful life of the at the time of the sale/disposal, and are registered in assets, which is determined in function of the ex- the Consolidated Income Statement as “other opera- pected use of the asset by the Group, the asset’s tional gains” or “other operational losses”

2.5 INTANGIBLE ASSETS

Intangible assets, with the exception of goodwill, Yearly depreciations for intangible assets are registe- are registered at acquisition cost, minus accumula- red in the Consolidated Income Statement under “De- ted depreciations and impairment losses. Intangible preciations and amortisation costs and impairment assets are only recognised if they are likely to pro- losses”. The depreciation method used for intangible duce future economic benefits to the Group, if they assets with a finite useful life is the straight-line de- are controlled by the Group and if their value can be preciation method. A useful life of between 3 and 5 reasonably measured. years is used for these assets, except for the charges related with concession agreements which are amortized according to the straight line basis over 12- month periods during the concession period.

2.6 FINANCIAL ASSETS AND LIABILITIES

a) Financial investments Financial investments are classified into investments Financial investments are recognized at the date the held until maturity and investments evaluated at fair risks and rewards inherent to them are transferred. value through results. They are initially registered at acquisition price, i.e. the fair value of the price paid including transaction Following the initial recognition, investments stated expenses. at fair value through results are revaluated at their fair value, without deducting any transaction costs REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 115

that may have been incurred on the sale. Invest- Financial costs associated with interests and similar ments in Equity instruments not listed in regulated costs (namely stamp duty), are registered in the financial markets, and for which fair value cannot be Consolidated Income Statement according to the reliably estimated, are accounted at acquisition cost Matching Principle, with any amounts due and not deducted from eventual impairment losses. paid at the date of the Consolidated Financial Posi- tion Statement being classified under “Other current Gains or losses arising from a change of the fair liabilities”. value of investments evaluated at fair value through results are registered in the Consolidated Income d) Accounts payable Statement for the year. Accounts payable are registered at nominal value. Usually these debts do not pay interest. b) Accounts receivable Accounts receivable are registered at their nomi- e) Discounted bills of exchange and accounts nal value minus any impairment losses, recognised receivable in “factoring” under “Impairment losses” in accounts receivable, Discounted bills of exchange and accounts receiva- so that they reflect the realisable net value. ble sold to factoring companies (with recourse) are registered in assets at their nominal value, being the c) Loans advance already registered as a liability. Loans are registered as liabilities at their nominal value. Interest charges are recognised in accordance with the Matching Accounting Principle. Any inherent costs that are paid in advance, are recognised linearly in the Consolidated Income State- f) Cash and equivalents ment for the year up to the loan maturity, classified The amounts included under “Cash and equivalents” under ”Other current assets”. correspond to cash, bank deposits and term deposits and other short term cash applications.

2.7 LEASES

Lease contracts are classified as: respective cost is registered as a liability. The depreciation of these assets, calculated as per 2.4 supra, > Financial leases if all risks and advantages inherent are registered as depreciations for the year. to ownership are substantially transferred; > Operational leases if all risks and advantages inhe- The capital repayment included in rents paid is re- rent to ownership are not substantially transferred. gistered as reductions to those responsibilities while interests included are registered as financial expen- Classification of leases as financial or operational is ses for the respective year. decided in accordance with the substance and not the form of the contract. In the case of operational leases, rents due are recognised as a cost in the Consolidated Income Sta- The values of fixed assets acquired through financial tement throughout the period of the leasing contract lease contracts are registered as assets and their under “External supplies and services”.

2.8 INVENTORIES

Inventories, raw materials and consumables are either production cost or net realizable value, whi- valued at either acquisition cost or net realizable chever is the lower. Production costs include the value, whichever is lower. In the movement of raw cost of raw material, direct labour costs and general materials and consumables, these are valued at manufacturing costs. The cost method considered is average weighted cost. the average cost.

Finished and semi-finished products, sub-products The net realizable value is the regular sale price and products and work in progress are valued at minus finishing and marketing expenses. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 116

2.9 FINANCIAL COSTS IN LOANS OBTAINED

Financial costs related to loans obtained are gene- interrupted once the asset production ends, or when rally recognised as a cost according to the Matching the project in question is suspended. Accounting Principle. In 2012, 1,247,987 Euros of financial charges were Pursuant to the terms of IAS 23, financial costs capitalised as part of the cost of tangible fixed from loans associated with the acquisition, cons- assets. truction or production of fixed assets, or associated with motorway concessions or real estate projects As of December 31, 2012, 9,094,708 Euros were classified under inventories are capitalised and com- capitalised as part of the net cost of tangible fixed prised in asset’s cost. Capitalisation of these char- assets in the consolidated financial statements of ges begins once preparation for the construction ac- the Group. tivity or development of the asset has begun, and is

2.10 PROVISIONS

Provisions are recognised when the Group has a sions are revaluated at each Consolidated Financial present obligation (legal or constructive) as a result Position Statement closing date and are adjusted to of a past event, which may result in a cash outflow reflect the best estimate at that date. for which a reliable estimate can be done. Provi-

2.11 INCOME TAX

Income tax is calculated on the basis of the taxable Deferred taxes assets are registered when there are income (which differ from accounting net income) reasonable prospects of sufficient taxable income of the companies included in consolidation, in ac- for them to be used. At the closing date of the cordance with the tax rules in force in each company Consolidated Financial Position Statement, the tem- head office location country. porary differences underlying assets for deferred taxes are re-assessed in order to recognise assets Deferred taxes refer to the temporary differences for deferred taxes not previously registered as those between the accounting and figures for tax purpo- failed to meet the conditions for registration, and/ ses in terms of assets and liabilities. or to reduce their amount according to the current expectations of future recovery. Deferred taxes assets and liabilities, are calculated and annually assessed using the tax rates expected Deferred taxes are registered as loss or income in to be in force at the reversion date of temporary di- each year, except if they arise from transactions or fferences. events registered in equity, in which case deferred tax is also registered under those same items.

2.12 CONSOLIDATED FINANCIAL POSITION STATEMENT

Realisable assets and demandable liabilities, to be due past the closing date of Consolidated Financial Position Statement, are accounted as non-current assets and liabilities, respectively. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 117

2.13 RECOGNITION OF COSTS AND INCOME a) Construction contracts b) Real estate projects For the recognition of income and expenses of Recognition of sales in real estate projects is done construction contracts, it has been adopted the when the legal transfer of the property occurs, or, percentage of completion method. According to this exceptionally, when possession or inherent risks of method, income directly related to work in progress the property are transferred to the promissory buyer is recognised in the Consolidated Income Statement and the sale is considered to be irreversible. in accordance with the percentage of completion of the work, which is determined by the ratio between c) Other activities expenses incurred at the time of the financial sta- Sales and services revenues, are generally accoun- tements and total estimated expenses for the work. ted when they occur. Financial income from delayed The differences between income accounted throu- payment by clients is accounted when there is signi- gh the application of this method and the invoices ficant evidence that they are recoverable. issued are recorded under “Other current assets” or “Other current liabilities”, according to the nature d) Costs related with bids preparation of the difference. Income and expenses related with Expenses incurred with the preparation of bids are the promotion of real-estate are deferred in the ba- recognised in the Consolidated Income Statement of lance until the respective execution has been fully or the financial year they occurred, since the outcome substantially terminated. of the bid is still unknown.

Variations in the value of works compared with the e) Matching Principle contracted price are recognised in each year’s Con- The Group companies record their income and ex- solidated Income Statement when it is highly pos- penses on an accrual basis, whereby income and ex- sible that the client will approve the amount arising penses are recognised when they are generated in- from that variation, and that this can be reliably dependently of when they are received or paid. The measured. differences between the amounts received and paid and the corresponding income and expenses gene- Claims for reimbursement of expenses not included rated are registered under “Other current assets” or in the contract price are included as revenues when “Other current liabilities”, depending on the nature negotiations are at an advanced stage and it is proof the difference. bable that the client will accept the claim, and that it is reliably measurable.

2.14 BALANCES AND TRANSACTIONS IN FOREIGN CURRENCY

Foreign currency transactions (non-Euro) are regis- Exchange differences, both favourable and unfavou- tered at the exchange rates in force at the time of rable, due to discrepancies between the exchange each transaction. rates in force at the time of the transaction and those in force when payments were made or recei- On each balance date, monetary assets and liabili- ved, or as at the date of the balance, are registered ties expressed in foreign currency are converted to as “Other financial gains and losses” in the Consoli- Euros using the rates in force at that time. dated Income Statement for the year. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 118

2.15 IMPAIRMENT OF NON-CURRENT ASSETS, EXCEPT GOODWILL

An assessment of impairment is made at the time of from the constant use of the asset and its alienation each balance, and whenever an event or change in at the end of its useful life. The recoverable amount circumstances signals that the figure registered for is estimated for each asset individually, or, if this is the asset may not be recovered. not possible, for the operational unit to which the asset belongs. Whenever the asset amount is higher than its recoverable value, it is recognised an impairment loss, A reversion of impairment losses recognised in pre- which is registered in the Consolidated Income Sta- vious years is registered when there are signs that tement. the recognised impairment losses no longer exist or have diminished. The reversion of impairment losses The recoverable amount is the highest figure be- is recognised in the Consolidated Income Statement tween the net sale price and the use value. The net as an operational income. sale price is the amount obtained from alienating the asset in a transaction accessible to the parties However, if the impairment loss was not registered involved minus the expenses directly attributable to in previous years, the reversion of impairment loss is the alienation. The value-in-use is the current value carried out up to the limit of the amount recognised of estimated future cash flows that are expected (net of amortization or depreciation).

2.16 CONTINGENT ASSETS AND LIABILITIES

Contingent liabilities are not recognised in the Con- Contingent assets are not recognised in the Consoli- solidated Financial Statements, but are disclosed in dated Financial Statements, but are disclosed in the the Notes to the accounts, unless the possibility of Notes to the accounts, when it is likely to occur a outflow is remote. future economic inflow.

2.17 SUBSEQUENT EVENTS

Events occurring after the reporting date, which pro- porting date which provide information on conditions vide additional information on the conditions exis- occurring after that date, if material, are disclosed in ting at that date, are reflected in the Consolidated the Consolidated Financial Statements. Financial Statements. Events subsequent to the re-

2.18 INFORMATION BY SEGMENTS

The business and geographical sectors applicable to the Group’s activity are determined each year. Detai- led information on this subject is included in Note 7.

2.19 SUBSIDIES

Government subsidies are recognized at fair value Operating subsidies, especially those for staff trai- provided that there is a reasonable assurance that ning, are registered in the Consolidated Income Sta- they will be paid and that the Group will meet the tement according to the expenses incurred. conditions to the granting of that subsidy. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 119

2.20 DERIVATIVES

The Group uses derivatives to cover financial risks nent, and as a financial result in their non-effective to which is exposed, namely interest rate risk. The component. Amounts recorded under “Reserves Group does not use such instruments for speculative from Hedging Operations” are transferred to finan- purposes. cial results in the period in which the covered item Derivatives are registered at fair value. The recogni- impacts results. tion method is determined by their nature and goals. Hedge accounting is discontinued when derivatives Hedge accounting reach maturity, or when the instruments are sold, The possibility of designating a derivative as a the option is exercised or when the coverage ratio hedge instrument is regulated by IAS 39, namely re- no longer meets the requirements of IAS 39. In situ- garding documentation and effectiveness. ations where the derived instrument is declassified as a hedge instrument, the fair value differences The Group uses the following criteria to classify its accumulated and deferred in Shareholders’ Equity in derivatives as cash flow hedging instruments: the item “Reserves from Hedging Operations” are transferred to the Income Statement of that year. > The hedge is expected to efficiently offset changes in cash flow attributable to the covered risk; Changes in fair value of derivatives aiming at pro- > The efficiency of the coverage can be reliably me- viding financial coverage, but that do not meet all asured; the requirements of IAS 39 (Financial Instruments: > There is adequate documentation about the tran- Recognition and Measurement), and regarding the saction to be covered at the beginning of the cove- possibility of a hedge accounting, are registered in rage; the Consolidated Income Statement in the period which they occur. > The transaction subject to the coverage is highly probable. Negotiating derivatives Changes in fair value of derivatives aiming at pro- Changes in the fair value of financial instruments viding financial coverage, in accordance with the classified as “fair value coverage” are recognized as company’s risk management policies, but which do a financial result in the period, as well as the chan- not comply with all the provisions of IAS 39 regar- ges in the fair value of the assets or liabilities sub- ding the possibility of classification as hedge ac- ject to that risk. counting, are registered in the Consolidated Income Statement in the period in which they occur. Changes in the fair value of derivatives classified as “cash flow coverage” are recognized in “Reserves During the financial year, no financial instruments from Hedging Operations” in their effective compo- were reclassified.

2.21 AGREEMENTS FOR PROVISION OF SERVICES

For service concession arrangements, IFRIC 12 de- Thus, the concessions operated by the associated termines how the service concession operators companies Auto-Estradas XXI and Estradas do Zam- should apply the rules on recognition and measu- beze are framed on the model of financial asset. rement by the private operator in the provision of The revenue and costs related to building service are infrastructure construction and operation under the treated according to IAS 11 - Construction contracts. signature of contracts concession. This interpreta- The revenue and costs relating to operation and tion was issued by the IASB in November 2008 and maintenance service are treated according to IAS 18, adopted by the European Union in March 2009, with revenue and contractual obligations to maintain or mandatory for financial years beginning on / or after restore the infrastructure at certain levels of capaci- January 1, 2010. ty for the provision of public service are recorded in accordance with IAS 37-provisions, contingent liabi- This interpretation applies to activities carried out by lities and contingent assets. associates of the Soares da Costa Group. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 120

On the other hand, the associated Scutvias, CPE and Costaparques have a record of intangible assets associated with the right to operate infrastructure in return for payments and other healthcare plan made thereunder. The intangible asset is reduced through amortization over the concession period.

2.22 OWN SHARES

Own shares are recorded at acquisition value as a sale of own shares are registered in the “Reserves deduction to equity. Gains or losses incurred on the and retained profits” account.

2.23 OWN WORK CAPITALISED

Own work capitalised essentially refers to construction > The work carried out is identifiable; and processing work carried out for own purposes. > The work will most probably generate future economic rewards and; Capitalisation of these expenses depends on the following requisites: > The development costs can be reliably measured.

2.24 MANAGEMENT OF INVESTED CAPITAL

The Group manages its capital so as to assure the The Group has two kinds of debt: recourse debt and continuity of the Group, seeking to maximise value non-recourse debt. The difference between these creation for its shareholders. The Group’s capi- two types of debt lies in the type of liability under- tal therefore consists of equity from shareholders taken. Recourse debts undertaken by any Group (consisting of share capital that has been fully company can be enforced against the Group’s sha- subscribed and realised, accrued capital reserves, reholders whereas non-recourse debt, undertaken asset revaluation reserves, foreign exchange reser- exclusively in concession business awarded in a pro- ves, consolidation differences and earnings from ject finance context, can only be enforced against previous years not distributed to the shareholders), the concessionaire, meaning only the latter’s assets debt (recourse debt and non-recourse debt) and the can be foreclosed in payment. funds held as cash and cash equivalents.

2.25 FINANCIAL RISK MANAGEMENT

Information is supplied on the Group’s financial risks management is given on chapter 9 of the 2011 Ma- nagement Report as well as in Note 30 of the Expla- natory Notes. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 121

.3 GROUP COMPANIES FULLY CONSOLIDATED

Group companies included in consolidation by the full integration method, their head offices and proportion of share capital held as of December, 31 2012:

Capital Held Company Head office Directly Indirectly Total

Grupo Soares da Costa, S.G.P.S, S.A. Rua Santos Pousada, nº 220 4000-478 Porto Holding - -

Soares da Costa Serviços Partilhados, S.A. Rua Santos Pousada, nº 220 4000-478 Porto 100.00% - 100.00%

Energia Própria

Estrada de Talaíde, lote 27, Talaíde 2785-734 S. Energia Própria, S.A. 57.26% - 57.26% Domingos de Rana Southbank Technopark, 90 London Road, London, Self Energy Uk - 78.10% 78.10% SE1 6LN Edifício Ninho de Empresas, Edifício Ninho de Ventos do Horizonte, S.A. Empresas, Avenida do Mercado Abastecedor, nº 4, - 100.00% 100.00% 5400-673 Outeiro Seco – Chaves Rua de Fundões 151 Centro Empresarial e Tecnológico Self Energy Engineering & Innovation, S.A. - 100.00% 100.00% 3700-121 São João da Madeira Construction

SDC Construção, S.G.P.S, S.A. Rua Santos Pousada, nº 220 4000-478 Porto 100.00% - 100.00%

7270 N.W. 12 TH Street, Suite PH3 - Miami - Florida Soares da Costa América, Inc. - 100.00% 100.00% - 33126 U.S.A. 7270 N.W. 12 TH Street, Suite #207 - Miami - Florida Porto Construction Group, LLC - 60.00% 60.00% - 33126 U.S.A. 751 Park of Comm. Drive, Suite #108 - Boca Raton - Soares da Costa Construction Services, LLC - 80.00% 80.00% Florida - 33487 U.S.A. 6205 Blue Lagoon Drive, Suite 310 - Miami - Florida Soares da Costa CS, LLC - 80.00% 80.00% - 33126 U.S.A. 7270 N.W. 12 TH Street, Suite PH3 - Miami - Florida Soares da Costa Contractor, LLC - 100.00% 100.00% - 33126 U.S.A.

Soares da Costa Moçambique, S.A.R.L. Av. Ho Chi Min nº 1178, Maputo Moçambique - 80.00% 80.00% Soares da Costa S. Tomé e Príncipe - S. Tomé e Príncipe - 100.00% 100.00% Construções, Lda. Soares da Costa Construcciones Centro Cantón Cero Uno - S. José Costa Rica - 100.00% 100.00% Americanas, S.A.

Carta - Cantinas e Restauração, Lda. Rua Santos Pousada, nº 220 4000-478 Porto - 100.00% 100.00%

Carta - Restauração e Serviços, Lda. Rua Cónego Manuel das Neves, 19 Luanda - Angola - 100.00% 100.00%

Soc. Construções Soares da Costa, S.A. Rua Santos Pousada, nº 220 4000-478 Porto - 100.00% 100.00%

Rua Bandeira Paulista, nº 600, 1º Andar, Conjunto 13, S o a r e s d a C o s t a B r a s i l - C o n s t r u ç õ e s , L d a . - 100.00% 100.00% CEP 04532-001, São Paulo, Brasil

S a n t o l i n a H o l d i n g B . V . De Lairessestraat 154, 1075HL Amsterdam - 100.00% 100.00%

Município da Ingombota, Bairro Ingombota, Rua C E R E N N A - C e r â m i c a N a c i o n a l d e A n g o l a , S . A . - 51.00% 51.00% Cónego Manuel Alves das Neves, Nº 19 - Luanda Soares da Costa/Contacto - Modernização de Rua Santos Pousada, nº 220 4000-478 Porto - 100.00% 100.00% Escolas, ACE Urbanización Villa Orquídea, vivenda nº 4, Carretera GEC - Guinea Ecuatorial Construcciones, S.A. del Aeropuerto, Malabo, Républica de Guinea - 51.00% 51.00% Ecuatorial REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 122

Capital Held Company Head office Directly Indirectly Total

CLEAR - Instalações Electromecânicas, S.A. Rua Santos Pousada, nº 220 4000-478 Porto - 100.00% 100.00%

CLEAR Angola, S.A. Rua Cónego Manuel das Neves, 874 Luanda - Angola - 95.00% 95.00%

Rua Julieta Ferrão, nº 12, 13º Andar, N. Senhora de Coordenação & Soares da Costa, S.G.P.S, Lda. - 100.00% 100.00% Fátima - 1000 Lisboa 10210 Highland Manor Dr - Suite 110, Tampa, Florida Prince Contracting, LLC - 100.00% 100.00% 33610 – USA

Construções Metálicas SOCOMETAL, S.A. Rua Santos Pousada, nº 220 4000-478 Porto - 100.00% 100.00%

Real Estate

Soares da Costa Imobiliária, S.G.P.S, S.A. Rua Santos Pousada, nº 220 4000-478 Porto 100.00% - 100.00%

CIAGEST - Imobiliária e Gestão, S.A. Rua Santos Pousada, nº 220 4000-478 Porto - 100.00% 100.00%

Mercados Novos - Imóveis Comerciais, Lda. Rua Santos Pousada, nº 220 4000-478 Porto - 100.00% 100.00%

SOARTA - Soc Imob. Soares da Costa, S.A. Rua Santos Pousada, nº 220 4000-478 Porto - 100.00% 100.00%

HABITOP - Sociedade Imobiliária, S.A. Rua Santos Pousada, nº 220 4000-478 Porto - 100.00% 100.00%

Estrada Farol das Lagostas Município da Sambízanga, Soares da costa Imobiliária, Lda. - 100.00% 100.00% C. do N'Golakiluange - Luanda Cais da Fontinha - Investimentos Imobiliários, Rua Santos Pousada, nº 220 4000-478 Porto - 100.00% 100.00% S.A. Estrada Farol das Lagostas, Município do IMOKANDANDU - Promoção Imobiliária, Lda. - 51.00% 51.00% Sambízanga, Comuna do N'Gola Kiluange - Angola

NAVEGAIA - Instalações Industriais, S.A. Rua Santos Pousada, nº 220 4000-478 Porto - 100.00% 100.00%

IMOSEDE, Lda. Rua Conego Manuel das Neves Casa nº 19 - Luanda - 100.00% 100.00% Costa Sul Sociedade de Promoção Imobiliária, Rua Conego Manuel das Neves Casa nº 19 - Luanda - 100.00% 100.00% Lda. Município da Ingombota, Bairro Patrice Lumumba, Hotti - Angola Hoteis, S.A. - 50.60% 50.60% Rua Cônego M. das Neves, nº 190 - Luanda

IMOSDC - Investimentos, Lda. Rua Cónego Manuel das Neves, 19 Luanda - 100.00% 100.00%

Concessions

Soares da Costa Concessões, S.G.P.S, S.A. Rua Santos Pousada, nº 220 4000-478 Porto 100.00% - 100.00%

Soares da Costa Concesiones - Costa Rica, 100 Est,200 Sul, 50 Oest - H. de La Mujer - San José - 100.00% 100.00% S.A. - Costa Rica

COSTAPARQUES - Estacionamentos, S.A. Rua Santos Pousada, nº 220 4000-478 Porto - 100.00% 100.00% C.P.E. - Companhia de Parque de Rua Julieta Ferrão, nº 12, 14º 1649 Lisboa - 100.00% 100.00% Estacionamento, S.A.

Intevias - Serviços e Gestão, S.A. Rua Santos Pousada, nº 220 4000-478 Porto - 100.00% 100.00%

Hidroequador Santomense - Exploração de Av. Repatriamento dos Poveiros, nº 67, Edifício - 75.00% 75.00% Centrais Hidroeléctricas, Lda. Cecominsa, Póvoa de Varzim

Hidroeléctrica STP, Limitada Avenida Água Grande, São Tomé - S. Tomé e Príncipe - 45.00% 45.00% INR - Investimentos Nacionais Rodoviários, Rua Julieta Ferrão, nº 12, 14º 1649-039 Lisboa - 100.00% 100.00% S.G.P.S, S.A.

Soares da Costa Hidroenergia, S.A. Rua Santos Pousada, nº 220 4000-478 Porto - 75.00% 75.00%

Soares da Costa Hidroenergia 1T, Lda. Rua Santos Pousada, nº 220 4000-478 Porto - 75.05% 75.05%

Soares da Costa Hidroenergia 4T, Lda. Rua Santos Pousada, nº 220 4000-478 Porto - 75.05% 75.05%

Soares da Costa Hidroenergia 8C, Lda. Rua Santos Pousada, nº 220 4000-478 Porto - 75.05% 75.05%

Soares da Costa Hidroenergia 8T, Lda. Rua Santos Pousada, nº 220 4000-478 Porto - 75.05% 75.05%

7270 NW 12 Street, Suite 860, Miami, Florida 33126 Soares da Costa Concessions USA, Inc. - 100.00% 100.00% EUA REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 123

During the year ended December 31, 2012 the follo- ços Técnicos e de Gestão, S.A.” by the company wing changes in the companies included in the con- “Soares da Costa Concessões, S.G.P.S., S.A.”; solidation using the full method: > Acquisition of 40% of “Ventos do Horizonte, S.A.” > Merger by absorption of the company “Contacto share capital, which is now fully owned by the – Sociedade de Construção, S.A.” by the company “Self Energy Engineering & Innovation, S.A.”; “Sociedade de Construções Soares da Costa, S.A.”; > Alienation of the full participation of the company > Merger by absorption of the company “Servi- “Infraestruturas Soares da Costa Costa Rica, S.A.”, a company that was fully owned.

.4 JOINTLY CONTROLLED COMPANIES – PROPORTION CONSOLIDATION METHOD

Jointly controlled entities consolidated by the proportional method, their head offices and the percentage of capital held on December 31, 2012, are as follows:

Capital Held Company Head office Directly Indirectly Total

Construction TRANSMETRO - Construção do Metropolitano Rua Santos Pousada, nº 220 4000-478 Porto - 50.00% 50.00% do Porto, ACE Normetro - Agrupamento do Metropolitano Rua Santos Pousada, 300 - 7º Bonfim Porto - 17.90% 17.90% do Porto, ACE

ASSOC - Soares da Costa - Construção do Av. Imaculada Conceição, 756 - Dume - 4700-034 - 40.00% 40.00% Estádio de Braga, ACE Braga

Estádio de Coimbra, SC/Abrantina, ACE Rua Santos Pousada, nº 220 4000-478 Porto - 60.00% 60.00% Casais, Eusébios, FDO, J. Gomes, Rodrigues e Névoa - Soares da Costa, Construção do Av. Imaculada Conceição, 756 - Dume - 4700-034 - 40.00% 40.00% Estádio de Braga - Acab.e Instalações/ Braga Infraest.Interiores, ACE Três ponto dois - T.G. Const. Civil - Via e Cat Avª das Forças Armadas, 125 - 2ºC - Lisboa - 50.00% 50.00% Mod. Linha do Norte, ACE Somague, Soares da Costa - Agrupamento Rua Engº Ferreira Dias, 164 4100-247 Porto - 50.00% 50.00% Construtor do Metro de Superfície, ACE Remodelação Teatro Circo - S.C., A.B.B., Rua Santos Pousada, nº 220 4000-478 Porto - 50.00% 50.00% D.S.T., ACE Rua do Rego Lameiro, nº 38, Campanhã, 4300-454 GCF - Grupo Construtor da Feira, ACE - 28.57% 28.57% Porto Rua do Rego Lameiro, nº 38, Campanhã, 4300-454 GCVC, ACE - 28.57% 28.57% Porto

Mota-Engil, Soares da Costa, MonteAdriano - Via Adelino Amaro da Costa nº 315, Lugar da Guarda - 28.57% 28.57% Matosinhos, ACE 4470-557 Moreira da Maia

HidroAlqueva, ACE Av. Frei Miguel Contreiras, nº 54 7º Andar, Lisboa - 50.00% 50.00%

Av. Frei Miguel Contreiras, nº 54 - 7º Andar, 1749- Nova Estação, ACE - 25.00% 25.00% 083 Lisboa Rua Julieta Ferrão, 12º e 13º Andar, Nossa Senhora de S o a r e s d a C o s t a e L e n a , A C E - 50.00% 50.00% Fátima, 1649-039 Lisboa

Terceira Onda Planejamento e Av. Ibirapuera, 2.332, Bloco I, 9º andar, sala 01, Ed. - 50.00% 50.00% Desenvolvimento, Ltda. Torre Ibirapuera I; Moema, S. Paulo - Brasil REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 124

Capital Held Company Head office Directly Indirectly Total

GACE - Gondomar, ACE Rua Eng. Ferreira Dias, nº 161 - Porto - 24.00% 24.00%

Rua Eng. Ferreira Dias, nº 161 Freguesia de Ramalde LGC - Linha de Gondomar, Construtores, ACE - 30.00% 30.00% - Porto

CAET XXI - Construções, ACE Rua de Santos Pousada, 220 Bonfim, Porto - 50.00% 50.00% Israel Metro Builders - a Registered 132 Derekh Menakhem begin, Tel-Aviv, Israel - 30.00% 30.00% Partnership LGV, Engenharia e Construção de Linhas de Rua Abranches Ferrão, nº 10, 9ºF, 1600-001 Lisboa - 17.25% 17.25% Alta Velocidade, ACE SOMAFEL - Engenharia e Obras Ferroviárias, Avª da República, 42 - 3º 1069-207 Lisboa - 40.00% 40.00% S.A.

OFM - Obras Públicas, Ferroviárias e Avª Columbano Bordalo Pinheiro, 93-7º - 1000 - 40.00% 40.00% Marítimas, S.A. Lisboa Avª Columbano Bordalo Pinheiro, 93-7º - 1000 Somafel e Ferrovias, ACE - 24.00% 24.00% Lisboa

Somafel - Obras Ferroviárias e Marítimas Rua Major Lopes, nº 800, sala 306, Bairro S.Pedro, - 40.00% 40.00% Ltda. Belo Horizonte-Minas Gerais Real Estate

Rua Cónego Manuel das Neves, 19 Luanda - República Talatona Imobiliária, Lda. - 49.00% 49.00% de Angola Concessions SCUTVIAS - Autoestradas da Beira Interior, Praça de Alvalade nº 6 7º Andar Lisboa - 33.33% 33.33% S.A.

OPERESTRADAS XXI, S.A. Rua Santos Pousada, nº 220 4000-478 Porto - 50.00% 50.00%

Exproestradas XXI - AE Transmontana, S.A. Rua Santos Pousada, nº 220 4000-478 Porto - 50.00% 50.00%

Auto-Estradas XXI - Subconcessionária, S.A. Rua Santos Pousada, nº 220 4000-478 Porto - 50.00% 50.00%

Distrito Urbano 1, Bairro Central, Av. Ho Chi Min nº Estradas do Zambeze, S.A. - 40.00% 40.00% 1178, 2º andar, Maputo - Moçambique Distrito Urbano 1, Bairro Central, Av. Ho Chi Min nº Operadora das Estradas do Zambeze, S.A. - 40.00% 40.00% 1178, 2º andar, Maputo - Moçambique

MRN - Manutenção de Rodovias Nacionais, Av. 12 de Novembro, nº 42, 1º Direito 6005-001 - 33.33% 33.33% S.A. Alcains - Castelo Branco Avenida 12 de Novembro, 42, 1º Dto, 6005 001 Portvias - Portagem de Vias, S.A. - 33.33% 33.33% Alcains - Castelo Branco

Changes in the companies included in the consoli- the company’s activity. Up until the date of this dation by the proportional method during the year report, the negotiation of the change of the terms ended December 31, 2012: and conditions of the sub-concession contract was > Inclusion in the consolidation perimeter of the not concluded. company “Linha 3 Cezarina – Construções, Ltda.” in which the Group has a 50% participation. In fact the Government already in 2013, constituted a commission for the renegotiation of the terms and In the concessions business area, Auto-Estradas conditions of all concessions and sub-concessions XXI – Subconcessionária Transmontana, S.A. and of the motorway sector aiming to reduce the public Scutvias – Autoestradas da Beira Interior, S.A., have sector’s net costs. These renegotiations can focus sub concession and concession contracts of the on the partnership model and on changes of re- called Transmontana and SCUT of Beira Interior mo- gulatory items that enable a reduction in operating torways, which are being renegotiated. costs.

Auto-Estradas XXI, S.A. has signed with EP – Es- The board of directors believes that from the refer- tradas de Portugal, S.A. a Memorandum of Unders- red process, taking into consideration the terms of tanding and two additional agreements in which the the u negotiation and the transaction made up until parts agreed to renegotiate the terms and condi- this date, will not emerge any changes to be intro- tions of the sub-concession Contract that governs duced to the sub-concession contract with impact REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 125

on the company’s financial statements as of De- titution of a commission to the renegotiation of the cember 31, 2012. road sector’s PPP (public to private partnerships) contracts. On the other hand, in Scutvias - Autoestradas da Beira Interior, S.A., following the unilateral deci- Meetings have been held with the said commission sion of the Portuguese Government to start the toll aiming to reduce the public sector’ net costs. These payment at A23 motorway at 8 December 2011, renegotiations can focus on the partnership model with the referred tolls being a revenue to Estradas and on regulatory changes that enable a reduction in de Portugal, S.A., a decision set by decree law 111- operating costs. 2011 of 28.11.2011, the business’ model suffered profound changes. The board of directors believes that from the referred process, taking into consideration the terms of This unilateral decision lead to a situation in which the u negotiation and the transaction made up until the concessionaire can request a re-equilibrium, a this date, will not emerge any changes to be intro- fact already communicated to the grantor. duced to the sub-concession contract with impact on the company’s financial statements as of De- In 2012 the implementation of the joint order of cember 31, 2012. the Finance Ministry and Economy and Employ- ment Ministry from December 7, 2011, continues, As of 31 December 2012 the amounts, weighted with the grantor creating a transition regime to the for the percentage of joint control, of the current period going from the start of the toll payment to assets, non-current assets, current liabilities, non- the conclusion of the negotiating process with the -current liabilities, income and expenses related with Government, resumed in late 2012, with the cons- the jointly controlled companies were as follows: REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 126

Cash flows from the activity Company Assets Liabilities Costs Income Net Earnings Operational Investment Financing

ASSOC - Soares da Costa - 294 294 267 267 - (21,935) 68 - Construção do Estádio de Braga, ACE

Auto-estradas XXI - 321,115,747 341,402,295 101,550,306 102,056,886 506,580 (91,698,792) - 91,220,983 Subconcessionária, S.A.

CAET XXI - Construções, ACE 30,177,605 28,783,207 91,713,663 84,606,086 (7,107,577) (8,772,025) 57,084 (62,002)

Casais, Eusébios, FDO, J. Gomes, Rodrigues e Névoa - Soares da Costa, 23,105 - 73 - (73) (262) - - ACE

Estádio de Coimbra, SC/Abrantina, ACE 297,690 297,690 - - - (22) - -

Estradas do Zambeze, S.A. 14,632,509 13,786,134 14,657,930 14,795,788 137,857 941,513 - (688,546)

Exproestradas XXI - AE Transmontana, 4,027,990 4,414,085 1,489,412 1,095,664 (393,749) (638,413) - 665 S.A.

GACE - Gondomar, ACE 383,424 383,424 2,426,665 2,426,665 - 9,713 - (27,677)

GCF - Grupo Construtor da Feira, ACE 293,524 293,524 119,172 119,172 - (90,057) 14,767 -

GCVC, ACE 822,047 822,047 4,302,342 4,302,342 - 24,249 6,830 -

HidroAlqueva, ACE 3,873,360 3,891,061 11,413,110 11,407,273 (5,838) 967,155 (8,041) (766,840)

Israel Metro Builders - a Registered 4,522,789 4,522,789 248,279 248,279 - (347,692) - 398,265 Partnership

LGC - Linha de Gondomar, 742,305 352,647 163,401 457,950 294,549 2,563,737 - (2,140,141) Construtores, ACE

LGV, Engenharia e Construção de 564,955 131,035 9,280,655 9,714,574 433,919 (1,031,088) 22,259 (264,847) Linhas de Alta Velocidade, ACE

Linha 3 Cezarina - Construções LTDA. 1,896,493 1,548,082 4,640,814 5,190,816 550,002 863,258 - (517,827)

Mota-Engil, Soares da Costa, 1,138,109 1,138,109 5,145,278 5,145,278 - (9,595) 9,990 - MonteAdriano - Matosinhos, ACE

MRN - Manutenção de Rodovias 6,781,057 1,907,041 4,487,108 9,341,127 4,854,018 3,444,685 (16,749) (4,387,850) Nacionais, S.A.

Normetro - Agrupamento do 3,109,480 3,109,480 21,636 21,636 - 59,247 - 10,534 Metropolitano do Porto, ACE

Nova Estação, ACE 1,220,907 1,222,074 35,938 35,938 - (18,247) 7,385 (2,674)

OFM - Obras Públicas, Ferroviárias e 7,692,712 5,981,152 8,162,517 8,157,685 (4,832) 1,531,364 (1,057,760) (625,598) Marítimas, S.A.

Operadora das Estradas do Zambeze 941,694 808,248 971,085 993,622 22,537 (717,252) - 722,182

Operestradas XXI, S.A. 5,034,252 2,002,688 2,494,514 3,405,914 911,400 426,408 (32,192) (229,990)

Portvias - Portagem de Vias, S.A. 1,069,703 912,915 2,127,634 2,264,945 137,311 66,178 (707) -

Remodelação Teatro Circo - S.C., 274,039 274,039 229,941 229,941 - (6,279) - - A.B.B., D.S.T., ACE

SCUTVIAS - Autoestradas da Beira 236,436,349 209,377,033 37,248,928 45,554,184 8,305,256 28,862,751 615,859 (26,947,578) Interior, S.A.

Soares da Costa e Lena, ACE 9,923 3,005 14,109 21,027 6,918 (28,503) - -

SOMAFEL - Engenharia e Obras 16,229,579 6,048,804 7,138,149 5,346,201 (1,791,948) (992,112) (170,879) 223,764 Ferroviárias, S.A.

Somafel - Obras Ferroviárias e 313,043 611,301 245,182 118,059 (127,123) (156,745) 234,162 (232) Marítimas Ltda.

Somague, Soares da Costa - Agrupamento Construtor do Metro de 146,189 41,508 3,266 107,947 104,681 (3,298) (249,809) - Superfície, ACE

Talatona Imobiliária, Lda. 22,983,336 25,616,808 4,074,435 3,108,400 (966,034) 1,398,783 - (1,415,943)

Terceira Onda Planejamento e 1,195,517 645,518 4,286,559 4,576,176 289,617 258,835 2,650 (323,709) Desenvolvimento, Ltda.

TRANSMETRO - Construção do 6,159,032 5,446,770 233,593 193,701 (39,891) 253,721 14,460 - Metropolitano do Porto, ACE

Três ponto dois - T.G. Const. Civil - 393,625 260,135 15,770 - (15,770) 130,210 - - Via e Cat Mod. Linha do Norte, ACE

At the reporting date there are no contingent commitments or capital commitments related with the jointly controlled companies. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 127

.5 COMPANIES INCLUDED IN CONSOLIDATION BY THE EQUITY METHOD

Companies included in consolidation by the equity method, their registered offices and the proportion of capital held as of December 31, 2012:

Capital Held Company Head office Directly Indirectly Total

Energia Própria

Avenida Kenneth Kaunda, nº 403 Maputo – Self Energy Moçambique, S.A. - 45.00% 45.00% Moçambique Av. Finestrat, S/N, Edificio La Cala, Local 10, 03509 Larvick Reliable, S.L. - 49.50% 49.50% Finestrat Avenida de la Industria 4, Edf. 1, 2-2C 28108 UTE Efacec – Self Energy, Ley 18/1982 - 50.00% 50.00% Alcobendas - Madrid

Global Azoague, S.L. Calle Alfonso XXI 24, 5º planta, 28014 Madrid - 24.00% 24.00% Sustentável Desafio - Produção de Energia Avenida do Forte, nº 8, fracção P1, Carnaxide - Oeiras - 35.00% 35.00% LDA. Construction

Grupul Portughez de Constructii S.R.L. 10873 Bucharest - Roménia - 50.00% 50.00%

CFE Indústria de Condutas, S.A. Rua Particular Joaquim Silva, 480 Sobrado - Valongo - 33.33% 33.33%

Constructora San José - Caldera, S.A. Costa Rica - 17.00% 17.00%

SDC Emirates Construction, L.L.C. Abu Dhabi - Emirados Árabes Unidos - 49.00% 49.00%

Rua Cônego Manuel das Neves, casa 19, Bairro Patrice MTA - Máquinas e Tractores de Angola, Lda. - 34.00% 34.00% Lumumba - Angola

Alsoma, AEIE 3 Av André Malrau 92300 Levallois Perret - 18.00% 18.00% Traversofer Industrie & Services Ferroviaires, 27 Chemin du Reservoir - Hydra - Alger - 20.00% 20.00% SARL Concessions

Metropolitan Transportation Solutions, Ltd. 14 Hamelecha Street, Park Afek, Rosh Haya'in Israel - 20.00% 20.00% GAYAEXPLOR - Construção e Exploração de Rua Santos Pousada, nº 220 4000-478 Porto - 25.00% 25.00% Parques de Estacionamento, Lda. Rua Antero de Quental, 221-3º Sala 303 - 4455-586 INDÁQUA - Indústria e Gestão de Águas, S.A. - 28.57% 28.57% Perafita INDÁQUA MATOSINHOS - Gestão de Águas de Rua 1º de Maio, nº 273 4451-956 Matosinhos - 28.14% 28.14% Matosinhos, S.A. Indáqua Vila do Conde - Gestão de Águas de Praça Luís de Camões, 9, 3º 1480-719 Vila do Conde - 28.00% 28.00% Vila do Conde, S.A. Indáqua Feira - Indústria de Àguas de Santa Rua Dr. Elísio de Castro, nº 37 - Santa Maria da Feira - 27.07% 27.07% Maria da Feira, S.A.

In the companies Constructora San José - Caldera, During the year ended December 31, 2012 the follo- SA and Alsoma EEIG, the Group considers to have wing changes in the companies included in the con- significant influence on these shares since they have solidation by the equity method: the power to participate in making financial and > Alienation of the total participation in the company operating policies of these companies. “Reflexos Púrpura, Lda” by the company “ Energia Própria, S.A.”; REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 128

> Alienation of the total participation (25% in the cipation in this company; as of December 31, 2011, first quarter and 25% in the fourth quarter) in the the Group held a 24% participation; company “My Watt, Lda” by the company “Energia > Inclusion in the consolidation perimeter of the Própria, S.A.”: company “Sustentável Desafio, Lda.” in which “ > Inclusion in the consolidation perimeter of the Energia Própria, S.A.” has a 35% participation. company “Global Azoague, S.L.”, a Spanish company initially acquired by “Energia Própria, S.A” in As of December 31, 2012 the total amount of assets, 50%, after transmitted to “Ventos do Horizonte” liabilities, revenue and profits of companies included in that by the end of the year, alienated its 26% parti- consolidation by the equity method were as follows:

Shareholders' Company Assets Liabilities Costs Income Net Earnings Equity

INDÁQUA - Indústria e Gestão de Águas, S.A. 65,877,616 52,761,825 13,115,791 10,681,803 11,291,513 609,710

Traversofer Industrie & Services Ferroviaires (a) 3,612 - 3,612 8,762 15,894 7,132

GAYAEXPLOR - Construção e Exploração de Parques 265,529 244,438 21,091 1,233 - (1,233) Estacionamento, Lda.

Alsoma, AEIE (b) 2,159,956 395,366 1,764,590 79,706 491,232 411,526

Grupul Portuguhez de Constructii S.R.L. 2,898,387 3,474,545 (576,159) 52,973 18,911 (34,062)

MTA - Máquinas e Tractores de Angola, Lda. (c) 2,683,946 2,173,034 510,912 2,316,504 2,567,575 251,071

Indáqua Matosinhos, S.A. 66,877,568 68,849,502 (1,971,934) 31,738,488 30,492,157 (1,246,331)

Indáqua Vila do Conde, S.A. 55,283,006 52,911,556 2,371,450 21,344,341 21,454,989 110,648

Indáqua Feira, S.A. 108,733,367 100,798,723 7,934,644 20,634,022 19,781,113 (852,909)

CFE - Indústria de Condutas, S.A. (d) 614,460 539,082 75,378 600,313 429,214 (171,099)

SDC Emirates, LLC (d) 2,062 1,239 823 67,328 242 (67,086)

Metropolitan Transportation Solutions, Ltd. (e) 47,278,382 47,221,518 56,864 - - -

Construtora - S. José Caldera, S.A. 20,486,646 3,909,807 16,576,838 2,664,920 7,589,197 4,924,277

Self Energy Moçambique S.A. 1,788,141 1,670,425 117,716 1,463,478 1,440,406 (23,072)

Larvick Reliable, R. L. 62,325 136,398 (74,073) 86,864 33,565 (53,299)

Ute Efacec/Self Energy, Ley 18/1982 42,153 574,158 (532,005) 531,079 262,928 (268,152)

Global Azoague, S.L. 4,837,959 5,042,641 (204,682) 205,483 - (205,483)

Sustentável Desafio - Produção de Energia LDA. 489,918 504,382 (14,464) 19,464 - (19,464)

(a) 31.08.2012; (b) 31.03.2012; (c) 30.09.2012; (d) 31.12.2011; (e) 30.09.2010

In 2012 was accounted a value adjustment amounting to 97,795 Euros due to an impairment loss in the Group’s participation in CFE – Indústria de Condutas, S.A.. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 129

.6 COMPANIES NOT INCLUDED IN CONSOLIDATION

Companies not included in the consolidation, as they are not material to the reported results, their registered offices and the proportion of capital held as of December 31, 2012:

Capital Held Company Head office Directly Indirectly Total Construção Estação Tratamento das Águas do Av. Fabril do Norte, 1601 - Matosinhos - 50.00% 50.00% Paiva, ACE GPCC - Grupo Português de Construção de Rua Santos Pousada, nº 220 4000-478 Porto - 25.00% 25.00% Infraestruturas de Gás Natural, ACE Quinta de Beirolas - Estaleiro Moscavide GPCIE - Grupo Português de Construção de (Parque Expo) Stª Maria dos Olivais - 2685 - 25.00% 25.00% Infrestruturas da Expo, ACE Sacavém Edifício Gil Eanes, Expo 98, lotes 1.13.03 e Grupo Construtor do Edifício Gil Eanes, ACE - 50.00% 50.00% 1.14.01 - Sta.Maria dos Olivais Molinorte Linha do Norte - Construção Civil, ACE Rua Santos Pousada, nº 220 4000-478 Porto - 23.50% 23.50%

Soares da Costa, Engil, ACE - (Hosp. de Tomar) Rua Santos Pousada, nº 220 4000-478 Porto - 50.00% 50.00%

The companies listed above are complementary and profits of these companies as of December 31, group of companies whose projects are virtually 2012 are as follows: complete. The assets, liabilities, expenses revenue

Company % Participation Assets Liabilities Costs Income

Construção Estação Tratamento das Águas do Paiva, ACE 50.00% 24,906 24,906 9,490 9,490

GPCC - Grupo Português de Construção de Infraestruturas de Gás 25.00% 318,006 318,006 133,965 133,965 Natural, ACE GPCIE - Grupo Português de Construção de Infraestruturas da Expo, ACE 25.00% 5,839 5,839 6,907 6,907

Grupo Construtor do Edifício Gil Eanes, ACE 50.00% 62,724 62,724 2,157 2,157

Molinorte Linha do Norte - Construção Civil, ACE 23.50% 170,786 170,786 - -

Soares da Costa, Engil, ACE - (Hosp. de Tomar) 50.00% 101,161 101,161 - -

.7 INFORMATION BY SEGMENT

Based on the consolidated financial information for each business area, he results and segment assets and liabilities breakdown by business area as of De- cember 31, 2012 is as follows: REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 130

Energia Holding and Intragroup Total Construction Real Estate Concessions Própria other eliminations consolidated

Turnover:

External to the Group 625,320,160 18,050,789 156,651,936 1,597,455 228,197 - 801,848,536

Intragroup transactions 87,218,402 4,084,689 138,869 - 11,606,832 (103,048,791) -

Total turnover 712,538,562 22,135,478 156,790,804 1,597,455 11,835,029 (103,048,791) 801,848,536

Operational result by segment (7,996,929) 2,824,058 26,488,828 (2,716,997) (9,672,612) 1,929,649 10,855,997

Unallocated costs - Operational results (7,996,929) 2,824,058 26,488,828 (2,716,997) (9,672,612) 1,929,649 10,855,997 (continued activity) Discontinued activity net income

Interest paid (40,105,621) (4,368,436) (39,169,094) (357,064) (16,894,204) 23,890,176 (77,004,244)

Interest received 15,031,929 112,824 18,583,004 218 12,699,127 (24,080,115) 22,346,987 Net income from associated 559,417 - 173,886 (12,997) - - 720,306 companies

Other financial costs/income (17,336,403) (506,561) 2,219,808 293,728 329,437 (105,413) (15,105,405)

Income tax 12,811,630 69,672 (2,829,994) (47,357) 1,732,040 (1,061,357) 10,674,634

Regular activity results (37,035,976) (1,868,444) 5,466,437 (2,840,469) (11,806,213) 572,939 (47,511,725)

Minorities 726,848 (15,483) (124,746) (8,848) (1,208,317) - (630,546) Net income attributable to the (37,762,825) (1,852,961) 5,591,183 (2,831,621) (10,597,895) 572,939 (46,881,179) Group Other data:

Assets by segment 993,290,175 156,040,482 719,989,930 15,338,542 446,237,508 (565,216,463) 1,765,680,174

Financial investments 9,117,638 78,984 21,532,676 1,160,932 - (5,544,675) 26,345,555

Consolidated total assets 1,792,025,729

Liabilities by segment 863,466,227 79,552,495 809,170,535 15,735,012 245,402,427 (274,509,585) 1,738,817,110

Consolidated total liabilities 1,738,817,110 Depreciation, amortisation and 21,282,089 1,386,942 20,197,561 115,206 945,163 (9,030) 43,917,931 imparity losses

Provision and value adjustments 18,319,702 1,430,739 17,811 68,992 - - 19,837,244

Reversion of adjustments (2,604,164) (59,875) - - - - (2,664,039) Intangible and tangible assets 8,594,808 78,638 5,381,361 167,604 60,679 - 14,283,089 acquisitions

Intragroup transactions are done at market values.

Earnings, assets and liabilities by business segments at 31 December 2011 were as follows: REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 131

Energia Holding and Intragroup Total Construction Real Estate Concessions Própria other eliminations consolidated

Turnover:

External to the Group 677,072,416 2,567,667 185,081,333 8,587,359 239,273 - 873,548,049

Intragroup transactions 119,135,461 4,582,060 2,522,232 - 13,334,975 (139,574,728) -

Total turnover 796,207,878 7,149,727 187,603,566 8,587,359 13,574,248 (139,574,728) 873,548,049

Operational result by segment 29,430,998 2,499,990 29,004,926 (2,183,562) (232,038) 366,820 58,887,135

Unallocated costs - Operational results 29,430,998 2,499,990 29,004,926 (2,183,562) (232,038) 366,820 58,887,135 (continued activity)

Discontinued activity net income ------

Interest paid (25,342,628) (3,977,689) (33,384,301) (161,010) (14,575,410) 21,853,425 (55,587,613)

Interest received 12,798,760 129,971 10,913,126 4,200 12,737,535 (22,142,177) 14,441,415 Net income from associated 355,017 - 201,644 (391,095) - - 165,566 companies

Other financial costs/income (4,687,770) 457,912 (5,564,502) (128,345) 2,564,222 (3,460,507) (10,818,991)

Income tax (4,475,955) 407,230 (2,021,424) 980,906 715,373 (352,340) (4,746,210)

Regular activity results 8,078,422 (482,586) (850,532) (1,878,906) 1,209,681 (3,734,779) 2,341,301

Minorities 673,706 (26,932) 119,392 - - (800,877) (34,711) Net income attributable to the 7,404,717 (455,655) (969,923) (1,878,906) 1,209,681 (2,933,903) 2,376,012 Group Other data:

1,150,832,655 161,356,679 635,654,067 22,739,334 544,645,679 1,741,685,530 Assets by segment (773,542,885)

Financial investments 6,058,517 78,984 18,214,280 621,874 - (2,966,249) 22,007,406

Consolidated total assets 1,763,692,936

976,271,839 83,700,998 716,300,302 19,484,390 332,051,742 1,647,170,444 Liabilities by segment (480,638,827)

Consolidated total liabilities 1,647,170,444 Depreciation, amortisation and 17,258,738 1,287,999 14,248,275 80,784 925,136 (9,050) 33,791,882 imparity losses

Provision and value adjustments 1,555,338 312,985 16,342 51,566 - - 1,936,230

Reversion of adjustments (523,533) (28,835) - - - - (552,368) Intangible and tangible assets 17,726,124 109,310 8,024,232 672,369 310,292 - 26,842,327 acquisitions

Sales and services breakdown by geographical market:

Turnover by geographical market 31.12.2012 % 31.12.2011 %

Portugal 236,494,091 29.49% 328,856,787 37.65%

Angola 353,491,943 44.08% 325,447,093 37.26%

U.S.A. 125,775,448 15.69% 114,071,553 13.06%

Mozambique 64,913,175 8.10% 80,378,076 9.20%

Other countries 21,173,879 2.64% 24,794,540 2.84%

TOTAL 801,848,536 100.00% 873,548,050 100.00% REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 132

Net assets and investments in tangible and intangible assets breakdown by geographical market as follows:

S.Tomé & Other Portugal Angola U.S.A. Mozambique Guinea Romania Total Príncipe countries

Net Assets

Intangible 315,857,299 - 9,474,075 - 54,187 - - 10,410 325,395,972

Fixed Tangible 122,087,732 107,273,846 11,689,930 3,172,541 3,972,632 312,726 146,361 905,281 249,561,048

Investment Properties 10,382,149 2,936,277 - 32,520 - - - - 13,350,946

Financial Investments 21,252,169 78,985 - 52,972 - - - 11,008,781 32,392,908

Inventories 50,929,219 33,287,272 - 1,013,929 509,469 - - 3,666,165 89,406,053

Accounts Receivable 420,789,966 266,324,237 18,704,162 47,515,193 1,095,404 6,994,982 3,642,831 16,198,051 781,264,825

Cash and equivalents 42,688,108 47,080,154 6,363,231 2,483,374 142,984 1,288 323,598 2,381,583 101,464,321

Deferred taxes 44,267,803 1,357,564 17,318,478 35,857 - - - 337,720 63,317,422

Other assets 74,526,105 46,288,491 5,187,555 3,059,842 497,827 1,263,236 3,020,401 2,028,778 135,872,235

TOTAL 1,102,780,550 504,626,825 68,737,431 57,366,229 6,272,503 8,572,231 7,133,191 36,536,769 1,792,025,729

Investments in 2012:

Intangible and Fixed Tangible Assets 6,731,413 4,338,866 1,548,235 1,104,601 447,683 - - 112,291 14,283,089

TOTAL 6,731,413 4,338,866 1,548,235 1,104,601 447,683 - - 112,291 14,283,089

.8 INTANGIBLE ASSETS

a) Gross assets The movements in the gross value of intangible assets were the following:

Opening Canges in Exchange Transfers and Closing Intangible assets Increases Disposals Balance Perimeter Rate Effect write off's Balance Goodwill 86,896,365 - - - 734,584 (3,605,776) 84,025,172

Other intangible assets 299,337,643 - 4,813,612 - (270) (5,814,556) 298,336,430

TOTAL 386,234,008 - 4,813,612 - 734,314 (9,420,332) 382,361,602

The effect of currency translation under “Goodwill” and the balance recorded under this heading, as of in the amount of 734,584 Euros, is related to the December 31, 2012, relates to the following acquisi- foreign exchange adjustment of goodwill of Prince tions occurred in prior years : REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 133

Goodwill 31.12.2012 31.12.2011

Energia Própria, S.A. 5,039,642 5,039,642

Sociedade de Construções Soares da Costa, S.A. (Contacto) 40,616,765 44,222,541

Scutvias – Autoestradas da Beira interior, S.A. 28,128,844 28,128,844

Hidroequador Santomense – Exploração de Centrais Hidroeléctricas, Lda. 711,659 711,659

Hidroeléctrica STP, Limitada 54,187 54,187

Prince Contracting, LLC. 9,474,075 8,739,491

TOTAL 84,025,172 86,896,365

The “Other intangible assets” balance concerns 705,686 Euros related with ongoing projects in the mainly to Public Service Concession Agreements hydroelectric concessions area. Capitalization rate (IFRIC12). correspond to specific investments in these projects, and amounts to 4.825%. As a result of an internal study that has measured the current value of future cash flows, adjustments By the end of 2012, in the Group’s consolidated were made to the value of other intangible assets financial statements were capitalised financial char- related to six parks of the associated CPE - Com- ges as part of the net costs of assests,the amount panhia de Parque de Estacionamento, S.A.,in the of 5,440,671 Euros. amount of 5.281 million Euros, and the Gemini park belonging to Costaparques - Estacionamentos, As at December 31, 2012 there are no contractual S.A., in the amount of 525,000 Euros, reinforcing commitments for the acquisition of fixed assets or the 250,000 Euros in 2011 adjustment, in order to intangible assets and were not recognized any rese- adjust the value accounting of investments in these arch and development costs in the period. car parks to its net recoverable amount. b) Accumulated depreciations During the year 2012 were capitalized financial char- Movements in accumulated depreciations of intangi- ges as part of the cost of these assets, valued at ble assets:

Opening Changes in Exchange Closing Intangible assets Increases Regularization Balance Perimeter Rate Effect Balance Other intangible assets 43,894,280 - 13,071,415 - (65) 56,965,630

TOTAL 43,894,280 - 13,071,415 - (65) 56,965,630

In late 2011, the Group, in accordance with IAS 36, mature stage of business from this year (thus esti- impairment testing the goodwill relating to acqui- mating a perpetuity according to the Gordon model). sitions of Prince, Energia Própria, Scutvias Hidroe- quador Santomense and Sociedade de Construções The operating free cash flows have been updated by Soares da Costa (Contacto) based on evaluations an annual rate of discount of 10.08% which reflects conducted internally. the weighted average cost of capital (WACC): (a) Cost of debt capital: 5.31% Prince (b) Income tax: 35% The methodology used was the discounted cash (c) Risk-free interest rate: 1.76% flow (DCF - “Discounted Cash Flows”). The refe- (d) Risk premium to the market value of 5.78% rence value was calculated assuming the continuity (e) Beta of assets of 1.17 of the company and perspetivando maintaining the (f) Leveraged Beta according to the Hamada formu- current organization. la; (g) Target capital structure target 13.23% (*) For this purpose we estimated the activity of the (*) Market ratio on the US for a set of companies from the same company until 2017 and assumed that it will enter a sector of activity REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 134

Energia Própria The assessment methodology used has been Free The methodology used was the Updated Cash Flow Cash-Flow to Equity (shareholder perspective) ac- (DCF - “Discounted Cash Flows”). The reference cording to which the company’s value is obtained value was calculated assuming the continuity of the through the update of the cash flows expected by company, the lack of synergies and future perspeti- the shareholder, i.e. dividends payment and return vando maintaining the current organization. of capital such as shareholders advances and loans as well as inherent interest. In the case at hand, the The estimates were produced assuming a nominal concessions the end of the concessions is known growth rate equivalent to inflation rate of 2%. and being those structured in a project finance regime, this has been the method usually used by The explicit projection period was ten years, ie 2013 the market. to 2022. It was considered a residual value that corresponds to the overall value that we consider the The calculation of the financial projections has been stabilization of its profitability, ie, in this case, after based on financial model and resulting financial 2022, an amount determined as the current value of statements. The free cash flows risk is evaluated a perpetual and assumed a zero growth rate long- through the usage of a discount rate used to update -term of those cash flows. those flows at the moment of the assessment. In order to obtain the discount rate, a risk-free inte- The operating free cash flows have been updated by rest rate, a market-risk premium and a country-risk an annual rate of discount of 8.86% which reflects premium have been used. In order to estimate the the weighted average cost of capital (WACC): net cash flow generated, given that the concessions’ end is pre-determined, financial projections over the (a) Cost of debt capital: 7.5% concession period have been taken into account. (b) Income tax: 26.5% (c) Risk-free interest rate: 5.3% After running impairment tests, it was concluded (d) Premium market risk value of 5.3% that there is no need to make any adjustments to (e) Beta of assets of 0.77 the value obtained. (f) Leveraged Beta according to the Hamada formula; (g) Capital structure target 55% Sociedade de Construções Soares da Costa (Contacto) Scutvias The Contact was acquired by Soares da Costa Group The DCF – Discounted Cash Flows method was used, in early 2008 to the Sonae Group, having been re- in the shareholder’s perspective (Free Cash-Flow to corded goodwill of 44,222,541 Euros. Equity). During 2012, as part of the restructuring undertaken The reference value was calculated assuming the in the construction segment of the Group, Contacto continuity of the company, the absence of future was merged by incorporation into the Sociedade de synergies and maintaining the current organisation Construções Soares da Costa, S.A.. Given that the structure. human and technical resources of the company and the corresponding associated know-how accompany Estimates were based on the financial prospects of fairly approximate the value of works to be done, the business plan which takes into account the con- we have considered turnover as a good measure ditions of the respective concession contract. to allocate goodwill by cash generating units of the company: Portugal, Angola and other geographies. The discount rate of 11.0% was used based on the following parameters: The methodology used was the Discounted Cash (a) Risk-free interest rate 5.3% Flows method (DCF). (b) Market risk premium: 5.0% (c) Levered beta equity: 1.14 The reference value was calculated assuming the continuity of the company, the absence of future synergies and maintaining the current organization. Hidroequador Santomense The explicit projection period was ten years, i.e. Also with reference to Hidroequador Santomense, 2013-2022. Was considered a residual value that by the end of 2012, an internal impairment test has corresponds to the global value is deemed to sta- been ran. bilizing its profitability, a value determined as the REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 135

present value of a perpetual income, having assumed a specific long-term to growth rate to each of the generating units company’s cash. The methods and assumptions used to assess the existence of impairments were as follows:

Assumptions Portugal Angola Other countries

Method used DCF DCF DCF

Based used Business Plan and Budget Business Plan and Budget Business Plan and Budget

Period 10 years 10 years 10 years

Cost of debt 7.5% 16.0% 16.0%

Risk free rate (*) 5.3% 5.3% 5.3%

Market premium 5.0% 7.0% 7.0%

Non leveraged Beta (**) 1.01 1.01 1.01

Target capital structure 65% 65% 65%

Cash flows growth rate on perpetuity 2.0% 3.5% 2.0%

WACC 9.6% 15.3% 15.3%

* Average yield of the Portuguese 10- year bonds up to the Portuguese Government’s financial help request ** Leveraged beta according to the Hamada formula

From this impairment test resulted in the need for an adjustment to reduce the value of goodwill in So- ciedade de Construções Soares da Costa (Contacto), in the amount of 3,605,776 Euros, referring to the cash-generating unit of Portugal.

.9 TANGIBLE FIXED ASSETS

a) Gross assets Movement in gross value of tangible fixed assets:

Opening Changes in Exchange Closing Fixed Tangible assets Increases Regularization Saldo Final Balance Perimeter Rate Effect Balance Land and buildings 216,337,731 - 279,560 (482,230) (151,322) (4,038) 215,979,701

Basic Equipment 148,058,221 - 3,040,705 (3,514,559) (466,993) (651,920) 146,465,454

Other fixed tangible assets 57,235,267 - 2,436,370 (3,136,056) (321,684) (1,273,883) 54,940,016

Ongoing fixed tangible assets 18,459,450 - 3,712,841 - (136,388) (7,538,710) 14,497,193

TOTAL 440,090,669 - 9,469,476 (7,132,845) (1,076,387) (9,468,550) 431,882,364 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 136

In the column “Increase” of “Land and buildings”, During 2012, were capitalized financial charges as “Ongoing tangible assets” and “Basic equipment” part of the cost of these assets, valued at 172,728 are accounted works to the own company in the Euros, which covers essentially the Hidroeléctrica amount of 16,241 Euros, 2,665,794 Euros e 45,293 STP,Lda project. Euros, respectively. By the end of 2012, consolidated financial state- In the column “Transfers and write-offs” of “Land and ments of the Group included capitalized costs as buildings” and “Ongoing fixed tangible assets” are part of the net cost of these assets. In the amount accounted amounts, of 333,121 Euros and 399,054 of 844,584 Euros Euros, related with the transfer of real estate assets to the item “Investment properties”. Also In this column, As of December 31, 2012 there are no materially re- in the item “Ongoing fixed tangible assets”, Portvias levant contractual commitments for the acquisition - Portagem de Vias, S.A. accounted 5,847,420 Euros, of tangible fixed assets. a figure in our percentage of participation, related with the derecognition of the System Multi Lane Free Flow b) Accumulated depreciations (MLFF), due to, under the Tripartite Agreement Invest- Movement in accumulated depreciations of tangible ment, the MLFF system have reverted to the owner- fixed assets: ship of Estradas de Portugal.

Opening Changes in Exchange Closing Fixed tangible assets Increases Regularization Balance Perimeter Rate Effect Balance Land and buildings 47,075,019 - 6,147,815 110,236 (39,203) 53,293,866

Basic equipment 81,611,215 - 10,119,521 (2,913,547) (250,966) 88,566,223

Other fixed tangible assets 39,682,436 - 4,829,129 (3,813,808) (236,531) 40,461,226

TOTAL 168,368,670 - 21,096,464 (6,617,119) (526,700) 182,321,316

During 2012, the company conducted tests for im- recorded for the tangible fixed assets in the financial pairment of the carrying value of certain of its real year ended December 31, 2012. estate properties, through assessments by independent entities. Breakdown of the net values of intangible assets and tangible fixed assets by primary reporting seg- No impairment losses (or reversal of losses) were ment as of December 31, 2012:

Energia Financial Construction Real Estate Concessions Total Própria stakes Goodwill 50,090,840 - 28,894,690 5,039,642 - 84,025,172

Other intangible assets 10,543 - 14,346,794 334,724 - 14,692,061

Services concession agreements - - 226,678,738 - 226,678,738

TOTAL INTANGIBLE ASSETS 50,101,383 - 269,920,222 5,374,366 - 325,395,972

Land and buildings 75,257,300 72,953,660 14,474,875 - - 162,685,835

Basic equipment 56,182,984 77,777 1,342,406 296,065 - 57,899,231

Other fixed tangible assets 12,015,468 453,618 568,089 7,004 1,434,611 14,478,790 Fixed tangible assets under 7,397,943 1,835,181 4,528,462 563,829 171,777 14,497,193 construction TOTAL FIXED TANGIBLE ASSETS 150,853,694 75,320,236 20,913,832 866,898 1,606,388 249,561,048 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 137

.10 FINANCIAL AND OPERATIONAL LEASING

Financial Leasing In the Consolidated Financial Position, the Group has tangible fixed assets under the financial lease. As of December 31, 2012 the book value of these assets was as follows:

Accumulated Financial Leasing Gross Assets Net Assets depreciation Lands and buildings 47,361 13,814 33,547

Basic equipment 7,285,927 3,199,571 4,086,356

Other fixed tangible assets 2,632,838 754,117 1,878,721

TOTAL 9,966,126 3,967,502 5,998,624

The Group’s responsibilities for these contracts are The financial lease agreements are subject to the as follows: market’s interest rates and determine the asset’s useful life. As of December 31, 2012 there are no contingent rents or restrictions regarding the pay- Current 1,475,411 ment of dividends (or any additional debts) associated with the financial lease agreement. Non current 1,212,027

The Group also conducted two real estate leaseback transactions whose liabilities have been registered in The total future minimum payments under the fi- the Consolidated Financial Position Statement under nancial leases at the reporting date and their pre- “Bank loans”. As of 31 December 2012 the current sent value, for each period, has been reconciled in liabilities and non-current liabilities associated with the table below: these agreements amounted to 13,264,646 Euros respectively.

31.12.2012 The real estate leaseback agreements are subject to Financial leasing minimum payments: the following underlying terms:

2013 1,632,833

2014 871,049

2015 224,139

2016 68,640

2,796,660

Present value/interests 109,222 Present value of the financial leasing 2,687,438 minimum payments Current 1,475,411

Non Current 1,212,027 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 138

Contract Real Estate financial leasing contract number 450003696

Date December 28, 2005

Lessor Banco Comercial Português, S.A.

Lessee Ciagest - Imobiliária e Gestão, S.A. Aquisition of real estate assets alienated by HABITOP - Sociedade Imobiliária S.A. e pela Goal CIAGEST - Imobiliária e Gestão S.A. Financing amount 17,352,500 Euros

Residual Value 295,050 Euros

Term November 25, 2021

Mumber ot rents 46 rents, antecipated

Frequency Semiannual

Interest rate Euribor 6 months + 3%

Contract Real Estate financial leasing contract number 450007448

Date February 29, 2008

Lessor Banco Comercial Português, S.A.

Lessee Ciagest - Imobiliária e Gestão, S.A. Fractions of the building in Rua Alvaro Pais, Rua Sousa Lopes and Rua Julieta Ferrão, in the city Goal of Lisboa Financing amount 3,000,000 Euros

Residual Value 300,000 Euros

Term November 25, 2021

Mumber ot rents 38 rents, antecipated

Frequency Semiannual

Interest rate Euribor 6 months + 3%

Operational Leasing Expenses with operating lease agreements amoun- Não existem rendas contingentes significativas, nem ting to 3,421,235 Euros were recognized in 2012. restrições impostas por estes acordos de locação, designadamente no que se refere a dividendos ou Rents on operating lease agreements (fixed rents) There are no significant contingent rents, and res- maintained by the Group as of December 31, 2012, trictions imposed by these lease arrangements, par- mainly referring to operating lease of vehicles, have ticularly in relation to dividends or additional debt. the following maturity profile: Upon expiry of the contracts, there is a call option at fair value. Maturity Operational Leasing

2013 2,143,771

2014 1,248,001

2015 629,858

2016 200,735

2017 6,284

TOTAL 4,228,648 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 139

.11 INVESTMENT PROPERTIES AND FINANCIAL INVESTMENTS

a) Gross assets Movement in the gross value of investment properties and financial investments:

Transfers Investment properties and Opening Exchange Equity Closing Increases Disposals and write Financial invstments Balance Rate Effect Method Balance off's

Investment properties 12,564,118 (7,233) 3,229,128 (196,047) - 732,176 16,322,142

Financial investments:

Equity consolidated financial 11,607,524 (56,091) 3,550 (3,420) (305,369) - 11,246,193 investments

Loans to associated 10,399,882 - 5,964,879 (1,004,564) - (260,835) 15,099,362 companies

Other financial investments 13,292,979 - 477,751 (7,715,855) - (7,522) 6,047,352

TOTAL 35,300,385 (56,091) 6,446,180 (8,723,839) (305,369) (268,357) 32,392,908

The amount recorded under “Investment Proper- The values shown in column “Disposals”, under “In- ties”, column “Increases”, mainly refers to the par- vestments in equity” and “Loans to associated com- tial allocation to this line of the project “Residences panies” are related with the sale of a 50% stake in Talatona” completed in 2012. the company Reflexos Púrpura, Lda., sale of a 50% participation and credit assignment in the company The amount recorded under “Investment Proper- My Watt, Lda. and sale of 26% stake and credit as- ties”, column “Transfers and write-offs”, is related signment in the company Global Azoague, S.L.. with the real estate assets transferred from” Land and buildings “and “Tangible fixed assets in pro- The amount accounted in “Other financial invest- gress “of the tangible fixed asset. ments”, column “Increases” concerns to loans granted in the amount of 445,930 Euros to the partici- Are recorded at zero value the investments in as- pated company Elos – Ligações de Alta Velocidade, sociated CFE - Indústria de Condutas, S.A., Grupul S.A. and to an extraordinary share capital increase Portuguhez de Constructii S.R.L., Ute Efacec/Self in the participated company Autopistas del Valle, Energy, Ley 18/1982, Larvick Reliable, R. L., Global amounting to 31,821 Euros. Azoague, S.L. and Desafio Sustentável, Lda... The amounts that exceed the value of the investment, The amount accounted in “Other financial invest- the Group’s share of accumulated losses associated ments”, column “Disposals” is related with the alie- with these, are of 19,874 Euros, 288,076 Euros, nation of “Autopistas del Sol” held by “Infraestru- 266,003 Euros, 36,666 Euros, 48,260 Euros and turas SDC Costa Rica. SA”, that was sold during the 3,313 Euros, respectively. fourth quarter of 2012.

The value recorded in column “Increases” under As at 31 December 2011 and 31 December 2010, “Loans to associated companies,” are mainly related the breakdown of the balance recorded under “Other with to loans granted to the associated companies financial investments” is as follows: Global Azoague, S.L., Indaqua, S.A. and Metropo- litan Trnasportation Soltions, Ltd., amounting to 1,564,023 Euros, 342,068 Euros and 4,000,000 Euros, respectively. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 140

Other financial investments 31.12.2012 31.12.2011

Financial assets available for sale 5,118,383 4,866,053

Financial assets fair value through gains or losses - 432,393

Loans granted and accounts receivable 928,970 7,994,533

TOTAL 6,047,352 13,292,979

Financial assets available for sale respect to holdings Loans and accounts receivable relate primarily to that do not embody significant value and are not re- contracts for supplies granted in other companies gulated market. Given the difficulty in measuring the where there is no significant influence. fair value reliably, the Group records these investments at cost. b) Accumulated depreciations Movement in accumulated depreciations of invest- Financial assets at fair value through profit or loss ment properties: refer to shares of capital in Millennium BCP, which were siold during the first half of 2012.

Opening Changes in Exchange Closing Increases Regularisations Balance Perimeter Rate Effect Balance

Investment properties 2,656,562 - 297,441 20,834 (3,641) 2,971,196

During the period ended December 31, 2012 were recognized income on investment properties amounting to 645,922 Euros.

There were no direct operating expenses during the period of investment property or contractual obligations to purchase, construct or develop investment property or for repair, maintenance or enhance- ments thereof.

According to external evaluations carried out by a specialist independent and based on generally accepted evaluation criteria for the housing market, the fair value of assets classified as investment properties amounts to approximately 15.99 million euros.

Movement in value adjustments on financial investments is detailed in note 21. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 141

.12 INVENTORIES

Inventories 31.12.2012 31.12.2011

Raw materials and consumables 16,781,336 20,211,598

Goods and work in progress 16,667,563 57,688,187

Finished and intermediate goods 45,894,444 39,677,418

Goods 16,473,236 15,362,675

Value adjustments (6,410,526) (5,001,742)

TOTAL 89,406,053 127,938,135

During the year 2012 were capitalized financial char- At the end of 2012, in the Group’s consolidated fi- ges as part of the cost of these assets, amounting nancial statements were capitalized, as part of the to 369,573 Euros, which covers the real estate pro- net cost of these assets, the amount of 2,187,519 ject developed in Angola by the associated company Euros. Talatona Imobiliária, Lda. The capitalization rate corresponds to the specific funding for this project at The item “Work in Progress” breaks down as follows the rate of 19%. to the date of December 31, 2012:

Products and work in progress 31.12.2012 31.12.2011

Work in progress 14,043,165 32,829,191

Real estate projects under construction 2,624,398 24,858,996

TOTAL 16,667,563 57,688,187

The heading “Real Estate Developments in pro- As at December 31, 2012, the value of advances gress” significantly reduced with the completion of from customers relating to real estate developments the project “Talatona Residences” (Residências de in progress and finished production amounted to Talatona) in Angola and the recognition of sales, 807,576 Euros. already made, as well as the transfer of part of the project to “Investment Properties” and “Finished Products”. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 142

.13 BREAKDOWN OF ACCOUNTS RECEIVABLE

Accounts receivable 31.12.2012 31.12.2011

Customers with retention of guarantees 27,829,308 27,104,699

Advances to suplliers 623,679 3,496,670

Other accounts receivable 308,786,028 206,793,681

Non current accounts receivable 337,239,015 237,395,050

Trade debtors: current accounts 391,570,849 437,572,441

Trade debtors: other 1,806,928 3,133,963

Trade debtors: doubful accounts 38,623,068 21,194,830

Value adjustments (38,623,068) (21,192,685)

Trade debtors 393,377,777 440,708,549

Subsidiaries 1,027,939 947,503

Advances to suppliers / fixed assets suppliers 18,599,749 16,382,411

State and other public bodies 7,803,882 11,633,457

Other accounts receivable 23,429,344 35,538,796

Value adjustments (1,408,828) (3,194,828)

Other current accounts receivable 49,452,086 61,307,338

The amount registered in the “Other accounts recei- There is no significant concentration of credit risk as vable - non-current” item refers to the compliance of 31 December 2012. with IFRIC12 (financial asset model) by the jointly controlled entities Auto-Estradas XXI - Subconces- The following table shows by consolidated company sionária, S.A. and Estradas do Zambeze, S.A.. and seniority levels of customer current account balances by the end of the fiscal year: The Group’s exposure to credit risk results from the accounts receivable related with its activity, being the maximum exposure to the credit risk the nominal value of its accounts receivable. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 143

0 to 180 181 to 360 361 to 540 541 to 720 + than 720 Company Performing Total days days days days days Soc. Construções Soares da 101,520,069 51,240,854 26,876,518 4,389,359 24,030,823 123,145,478 331,203,101 Costa, S.A.

Prince Contracting, LLC 12,848,321 2,684,350 15,532,671

CLEAR ANGOLA, S.A. 6,678,830 2,166,861 3,036,220 665,323 661,241 1,961,372 15,169,848

Talatona Imobiliária, Lda 9,783,958 9,783,958

Soares da Costa Moçambique, 378,268 4,950,435 1,242,612 674,467 180,412 288,729 7,714,923 S.A.R.L. Soares da Costa Concessões, 7,604,332 34,295 21,298 7,659,925 S.G.P.S, S.A. CLEAR - Instalações 1,050,879 133,320 92,644 784,855 12,562 1,488,600 3,562,860 Electromecânicas, S.A. SOMAFEL - Engenharia e Obras 1,388,404 636,801 1,074,409 59,805 73,729 228,502 3,461,650 Ferroviárias, S.A. Soares da Costa Construction 3,352,467 3,352,467 Services, LLC TRANSMETRO - Construção do 3,184,552 3,184,552 Metropolitano do Porto, ACE Normetro - Agrupamento do 2,694,434 2,694,434 Metropolitano do Porto, ACE Hidroequador Santomense - Exploração de Centrais 2,094,744 2,094,744 Hidroeléctricas OFM - Obras Públicas, 376,205 989,566 60,326 127,703 15,162 298,736 1,867,698 Ferroviárias e Marítimas, S.A.

Energia Própria, S.G.P.S, S.A. 209,830 1,290,245 1,500,076

HidroAlqueva, ACE 1,076,188 1,076,188

Soares da Costa Construcciones 158,595 318,170 396,589 178,124 1,051,477 Centro Americanas, S.A. Construções Metálicas 866,136 32,618 16,093 359 106,083 1,021,289 SOCOMETAL, S.A. Linha 3 Cezarina - Construções 940,331 940,331 LTDA. CIAGEST - Imobiliária e Gestão, 789,069 670 334 1,803 692 59,967 852,536 S.A. Mota-Engil, Soares da Costa, 800,632 800,632 MonteAdriano - Matosinhos, ACE Soares da Costa S. Tomé e 241,275 1,574 6,047 34,171 466,934 750,001 Principe - Construções, Lda.

Portvias - Portagem de Vias, S.A. 3,189 554,619 557,808

Carta - Restauração e Serviços, 335,905 38,682 7,028 2,101 110,646 494,361 Lda.

GCVC, ACE 483,052 483,052

Terceira Onda Planejamento e 389,992 389,992 Desenvolvimento, Ltda.

GACE - Gondomar, ACE 5,481 294,508 43,467 343,456

C.P.E. - Companhia de Parque de 75,729 82,583 19,620 45,468 901 101,269 325,569 estacionamento, S.A. Mercados Novos - Imóveis 300,527 300,527 Comerciais, Lda.

Other companies 517,591 204,411 349,618 15,903 202 142,307 1,230,030

TOTAL 140,048,269 79,197,319 32,977,485 9,785,795 25,440,778 131,950,511 419,400,157 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 144

A substantial part of the receivables with longer State and other public entities 31.12.2012 31.12.2011 maturity are from government authorities, for which there is no substantial risk of default. Information Value added tax 7,267,493 11,286,713 on credit risk is disclosed in note 30 of the present Other 536,389 346,744 document. TOTAL 7,803,882 11,633,457 As of December 31, 2012 and 2011, the account “State and other public entities” breakdown is the following:

.14 BREAKDOWN OF OTHER NON CURRENT AND CURRENT ASSETS

The value of 7,125,000 Euros under “Other non- 31.12.2012 31.12.2011 -current assets” refers to term deposits that are intended to vindicate the contribution of “Contingent Accrued Income capital”, within the “Subscription Agreement and Re- Non invoiced works done 83,395,289 60,184,838 alization of Capital of Transmontana motorway con- Compensatory processes in progress 12,611,178 16,032,980 cession” (“Acordo de Subscrição e Realização de Ca- pital da concessão da autoestrada Transmontana”). Estimated revenue by traffic range 18,740,954 13,362,330

Other accrued income 2,156,359 3,110,140

TOTAL 116,903,780 92,690,287 Other current assets 31.12.2012 31.12.2011 Deferred costs Income accruals 116,903,779 92,690,287 Construction works' set up costs 2,051,354 10,272,697 Deferred costs 11,843,456 16,319,121 Other deferred costs 9,792,101 6,046,424 TOTAL 128,747,235 109,009,408 TOTAL 11,843,455 16,319,121

As of December 31, 2012 and 2011 these items breakdown was the following: The “Estimated revenue by traffic range” account refers to traffic revenue from the motorway concession are, generated but not yet billed.

.15 BREAKDOWN OF CASH AND EQUIVALENTS

Cash and equivalents 31.12.2012 31.12.2011 The total account balance as of December 31, 2012 and December 31, 2011 of 15,719,885 Euros and Bank deposits 100,908,214 85,146,375 22,493,072 Euros respectively, and in the parti- Cash 556,107 951,975 cipation attributable to the Group, are related with non-recourse cash and cash equivalents registered TOTAL 101,464,321 86,098,349 as term deposits from the motorway concessionaire Scutvias - Autoestradas da Beira Interior, S.A.. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 145

The financing and concession agreements of the as- as of 31 December 2012 and 31 December 2011 the sociated company Scutvias – Autoestradas da Beira reserves of demand deposits or term deposits inclu- Interior, S.A. require the maintenance of deposits ded in the Consolidated Financial Position amount to equal to 5/3 of the next debt payment. Therefore, these mentioned figures.

.16 COMPOSITION OF SHARE CAPITAL AND RESERVES

Grupo Soares da Costa S.G.P.S., S.A. share capital preferential shares with no voting rights, but with amounts to 160,000,000 Euros, represented by: the right to receive a preferential dividend and preferential reimbursement of the respective nominal a) One hundred and fifty-nine million nine hundred value if the company declares bankruptcy. and ninety-four thousand four hundred and eighty- -two (159,994,482) ordinary shares; In 2012, the movements related with own shares b) Five thousand five hundred and eighteen (5,518) were as follows:

Discounts and No. of shares Nominal Value Amount premiuns

Opening balance 507,292 507,292 (334,766) 172,526

Acquisitions - - - -

Alienations - - - -

Closing Balace 507,292 507,292 (334,766) 172,526

The currency translation reserve reflects exchange Some Group companies engaged in financial hedging rate changes occurred in translating the financial instruments. The changes in the fair value of these statements of subsidiaries in currencies other than financial instruments and the related deferred taxes the Euro, and are not likely to be distributed or used are recognized directly under “Reserves and retained to absorb losses. earnings.” The change in fair value of derivative financial instruments and the respective deferred tax discriminates as follows:

Derivatives Deferred taxes Total

Grupo Soares da Costa, S.G.P.S, S.A. 63,676 (15,919) 47,757

Sociedade de Construções Soares da Costa, S.A. 1,190,357 (345,204) 845,153

Intevias – Serviços e Gestão, S.A. (1,832,689) 458,172 (1,374,517)

C.P.E. – Companhia de Parques de Estacionamento, S.A. (1,314,015) 328,504 (985,512)

Scutvias – Autoestradas da Beira Interior, S.A. 593,822 99,883 693,705

Auto-Estradas XXI - Subconcessionária, S.A. (15,762,598) 4,177,089 (11,585,510)

TOTAL (17,061,447) 4,702,525 (12,358,923) REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 146

.17 BANK LOANS

At 27 November 2012, as announced to the market, amounting to 1,471 thousand Euros, to be repaid in Grupo Soares da Costa, SGPS, S.A. jointly with seve- 12 instalments ending on November 2021; ral of its subsidiaries, has signed an agreement with six banks aiming the reprogramming of the respec- > Loan granted by Banif Banco International do tive recourse bank loans, totalling circa 228 million Funchal to Grupo Soares da Costa, S.G.P.S., S.A., Euros. Additionally, was also signed a credit facility amounting to 500 thousand Euros, to be repaid in with two of those six banks, amounting to 47 million 12 instalments ending on November 2021; Euros, to replace short term by long term debt. The operation is characterised by a 9-year maturity and > Loan granted by Banif Banco International do 3-year capital grace period, by a standardization of Funchal to Grupo Soares da Costa, S.G.P.S., S.A., spreads on a moderate level, with the possibility of amounting to 2,500 thousand Euros, to be repaid in revision after the grace period, by temporary restric- 12 instalments ending on November 2021; tions to dividend payment and by the intention to do a capital increase within six months, in terms still > Loan granted by Banco Comercial Português and to be determined, in an amount of not less than 25 Caixa Geral de Depósitos to Grupo Soares da Costa, million Euros. S.G.P.S., S.A., amounting to 1,002 thousand Euros, to be repaid in 12 instalments ending on November As of December 31, 2012, the main bank loans en- 2021; tered into by the Group are as follows: > Loan granted by Caixa Banco de Investimento to Holding Grupo Soares da Costa, S.G.P.S., S.A., amounting to > Grupo Soares da Costa, S.G.P.S., S.A. has con- 150 thousand Euros, to be repaid in January 2013; tracted with a banking syndicate the placement and underwriting of Commercial Paper issues up to a > Bond issue by Grupo Soares da Costa, S.G.P.S., limit of 32,000 thousand Euros, under a commercial S.A. amounting to 20,000 thousand Euros, to be paper programme contract in place up to 16 June repaid in November 2015; 2015. As of December 31, 2012 this programme was being completely used; > Bond issue by Grupo Soares da Costa, S.G.P.S., S.A. amounting to 80,000 thousand Euros, to be > Loan granted by Caixa Central de Crédito Agríco- repaid in December 2017; la Mútuo to Grupo Soares da Costa, S.G.P.S., S.A., amounting to 2,865 thousand Euros, to be repaid in > Loan granted by Banco Santander to Energia Pró- 12 instalments ending on November 2021; pria, S.A., amounting to 300 thousand Euros, to be repaid in quarterly instalments ending in April 2015; > Loan granted by Caixa Geral de Depósitos to Grupo Soares da Costa, S.G.P.S., S.A., amounting to 1,250 > Loan granted by Banco Santander to Energia Pró- thousand Euros, to be repaid in 12 instalments pria, S.A., amounting to 108 thousand Euros, to be ending on November 2021; repaid in quarterly instalments ending in Setember 2015; > Loan granted by Banco Popular Portugal to Grupo Soares da Costa, S.G.P.S., S.A., amounting to 5,000 > Loan granted by Banco Santander to Self Energy thousand Euros, to be repaid in 12 instalments Engineering & Innovation, S.A., amounting to 50 ending on November 2021; thousand Euros, to be repaid in quarterly instalments ending in September 2013; > Loan granted by Caixa Geral de Depósitos to Grupo Soares da Costa, S.G.P.S., S.A., amounting to Construction 14,000 thousand Euros, to be repaid in 12 instal- > Loan granted by NCG Banco, S.A. (Portuguese ments ending on November 2021; branch) as “hot money” to Sociedade de Constru- ções Soares da Costa, S.A., amounting to 1,235 > Loan granted by Banif Banco International do thousand Euros, to be repaid in January 2013; Funchal to Grupo Soares da Costa, S.G.P.S., S.A., REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 147

> Loan granted by NCG Banco, S.A. (Portuguese ting to 8,750 thousand Euros, to be repaid in 12 branch) to Sociedade de Construções Soares da instalments ending in November 2021; Costa, S.A., amounting to 1,100 thousand Euros, to be repaid in 22 instalments ending in January 2023; > Loan granted by Caixa Geral de Depósitos to Socie- dade de Construções Soares da Costa, S.A., amoun- > Loan granted by Banco BPI to Sociedade de Cons- ting to 16,000 thousand Euros, to be repaid in 12 truções Soares da Costa, S.A., amounting to 851 instalments ending in November 2021; thousand Euros, to be repaid in 3 instalments ending in September 2013; > Loan granted by Caixa Geral de Depósitos to Socie- dade de Construções Soares da Costa, S.A., amoun- > Loan granted by Banco BPI to Sociedade de Cons- ting to 1,124 thousand Euros, to be repaid in 6 ins- truções Soares da Costa, S.A., amounting to 851 talments ending in June 2013; thousand Euros, to be repaid in 3 instalments ending in September 2013; > Loan granted by Caixa Geral de Depósitos to Socie- dade de Construções Soares da Costa, S.A., amoun- > Loan granted by Banco BPI to Sociedade de Cons- ting to 16,980 thousand Euros, to be repaid in 12 truções Soares da Costa, S.A., amounting to 2,676 instalments ending in November 2021; thousand Euros, to be repaid in 8 instalments ending in August 2016; > Loan granted by Caixa Geral de Depósitos to Socie- dade de Construções Soares da Costa, S.A., amoun- > Loan granted by Banco BIC to Sociedade de Cons- ting to 10,107 thousand Euros, to be repaid in 12 truções Soares da Costa, S.A., amounting to 1,570 instalments ending in November 2021; thousand Euros, to be repaid in 37 instalments ending in June 2016; > Loan granted by Banco Bilbao Vizcaya Argentaria (Portugal) to Sociedade de Construções Soares da > Loan granted by Banco BIC to Sociedade de Cons- Costa, S.A., amounting to 6,300 thousand Euros, to truções Soares da Costa, S.A., amounting to 2,190 be repaid in 19 instalments ending in July 2014; thousand Euros, to be repaid in 38 instalments ending in June 2016; > Loan granted by Barclays Bank to Sociedade de Construções Soares da Costa, S.A., amounting to > Loan granted by Banco BIC to Sociedade de Cons- 2,040 thousand Euros, to be repaid in January 2013; truções Soares da Costa, S.A., amounting to 328 thousand Euros, to be repaid in 6 instalments ending > Loan granted by Barclays Bank to Sociedade de in June 2013; Construções Soares da Costa, S.A., amounting to 1,711 thousand Euros, to be repaid in January 2013; > Loan granted by Banif Banco Internacional do Fun- chal to Sociedade de Construções Soares da Costa, > Loan granted by Barclays Bank to Sociedade de S.A., amounting to 3,035 thousand Euros, to be Construções Soares da Costa, S.A., amounting to repaid in 12 instalments ending in November 2021; 1,200 thousand Euros, to be repaid in January 2013;

> Loan granted by Banif Banco Internacional do Fun- > Loan granted by Banco BAI Europa to Sociedade chal to Sociedade de Construções Soares da Costa, de Construções Soares da Costa, S.A., amounting to S.A., amounting to 660 thousand Euros, to be 2,245 thousand Dollars, to be repaid in February 2013; repaid in December 2015; > Loan granted by Banco BAI Europa to Sociedade > Loan granted by Banco Comercial Português to de Construções Soares da Costa, S.A., amounting to Sociedade de Construções Soares da Costa, S.A., 2,600 thousand Dollars, to be repaid in February 2013; amounting to 570 thousand Euros, to be repaid in June 2017; > Loan granted by Banco Santander Totta to Socie- dade de Construções Soares da Costa, S.A., amoun- > Loan granted by Banco Comercial Português to ting to 1,236 thousand Euros, to be repaid in 15 Sociedade de Construções Soares da Costa, S.A., instalments ending in March 2014; amounting to 14,341 thousand Euros, to be repaid in 12 instalments ending in November 2021; > Loan granted by Montepio Geral to Sociedade de Construções Soares da Costa, S.A., amounting to > Loan granted by Caixa Geral de Depósitos to Socie- 5,000 thousand Euros, to be repaid in 36 instal- dade de Construções Soares da Costa, S.A., amoun- ments ending in June 2016; REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 148

> Loan granted by Montepio Geral to Sociedade de > Loan granted by Banco de Fomento de Angola to Construções Soares da Costa, S.A., amounting to Sociedade de Construções Soares da Costa, S.A., 220 thousand Euros, to be repaid in February 2013; amounting to 742,000 thousand Kwanzas, to be repaid in June 2013; > Loan granted by Banco Espírito Santo to Sociedade de Construções Soares da Costa, S.A., amounting to > Loan granted by Banco BIC Angola to Sociedade 161 thousand Euros, to be repaid in February 2013; de Construções Soares da Costa, S.A., amounting to 743,265 thousand Kwanzas, to be repaid in April 2013; > Loan granted by Banco Espírito Santo to Sociedade de Construções Soares da Costa, S.A., amounting > Loan granted by Banco Africano de Investimentos to 3,450 thousand Euros, to be repaid in 22 instal- to Sociedade de Construções Soares da Costa, S.A., ments ending in November 2014; amounting to 1,119,189 thousand Kwanzas, to be repaid in 11 instalments ending in November 2013; > Sociedade de Construções Soares da Costa, S.A. > Loan granted by Banco Privado Atlântico to Socie- has contracted with Barclays Bank the placement dade de Construções Soares da Costa, S.A., amoun- and underwriting of Commercial Paper issues up to ting to 1,416,500 thousand Kwanzas, to be repaid in a limit of 8,250 thousand Euros, under a commercial February 2013; paper programme contract in place up to August 2013. As of December 31, 2012 this programme > Loan granted by Mizrahi Tefahot Bank, Ltd. to was being completely used; Sociedade de Construções Soares da Costa, S.A., amounting to 2,000 thousand Euros, to be repaid in > Sociedade de Construções Soares da Costa, S.A. February 2013; has contracted with Caixa Geral de Depósitos the placement and underwriting of Commercial Paper > Loan granted by Mizrahi Tefahot Bank, Ltd. to issues up to a limit of 15,000 thousand Euros, under Sociedade de Construções Soares da Costa, S.A., a commercial paper programme contract in place up amounting to 4,115 thousand Euros, to be repaid in to November 2021. As of December 31, 2012 this February 2013; programme was being completely used; > Loan granted by Montepio Geral to Clear- Instala- > Sociedade de Construções Soares da Costa, S.A. ções Electromecânicas, S.A., amounting to 88 thou- has contracted with Banco Comercial Português the sand Euros, to be repaid in 2 instalments ending in placement and underwriting of Commercial Paper March 2013; issues up to a limit of 4,500 thousand Euros, under a commercial paper programme contract in place up > Loan granted by Banco BIC Portugal to Clear- Ins- to November 2021. As of December 31, 2012 this talações Electromecânicas, S.A., amounting to 39 programme was being completely used; thousand Euros, to be repaid in 2 instalments ending in February 2013; > Sociedade de Construções Soares da Costa, S.A. has contracted with Banco Comercial Português > Loan granted by Banco Comercial Português to and Banco Popular Portugal the placement and un- Clear- Instalações Electromecânicas, S.A., amounting derwriting of Commercial Paper issues up to a limit to 770 thousand Euros, to be repaid in 12 instal- of 15,000 thousand Euros, under a commercial ments ending in November 2021; paper programme contract in place up to November 2021. As of December 31, 2012 this programme > Loan granted by Banco BIC Angola to Clear Angola- was being completely used; Instalações Electromecânicas, Lda., amounting to 1,333 thousand Euros, to be repaid in 18 instal- > Loan granted by Banco Africano de Investimentos ments ending in June 2014; to Sociedade de Construções Soares da Costa, S.A., amounting to 150 thousand Dollars, to be repaid in > Loan granted by Montepio Geral to Construções January 2013; Metálicas Socometal, S.A., amounting to 89 thousand Euros, to be repaid in 2 instalments ending in > Loan granted by Banco de Fomento de Angola to March 2013; Sociedade de Construções Soares da Costa, S.A., amounting to 235,198 thousand Kwanzas, to be > Loan granted by Banif Banco Internacional do repaid in 10 instalments ending in Setember 2013; Funchal to Construções Metálicas Socometal, S.A., amounting to 213 thousand Euros, to be repaid in 12 instalments ending November 2021; REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 149

> Loan granted by Banif Banco Internacional do Fun- > Loan granted by Caixa Banco de Investimento to chal to Soares da Costa América, Inc., amounting to Soares da Costa Hidroenergia 1T, Lda. and Soares 14,773 thousand Dollars, to be repaid in biannual da Costa Hidroenergia 4T, Lda. amounting to 5,000 instalments ending November 2021; thousand Euros, to be repaid in January 2013;

> Loan granted by Commerce Bank Finance Soares > Loan granted by a banking syndicate and Europe- da Costa América, Inc., amounting to 1,946 thou- an Investment Bank to Scutvias – Autoestradas da sand Dollars, to be repaid in December 2013; Beira Interior, S.A.. amounting to 10,346,062 (percentage of the Group) and 5,791,129 Euros, respec- > Loan granted by TerraBank Soares da Costa Améri- tively, to be repaid in biannual instalments ending in ca, Inc., amounting to 1,900 thousand Dollars, to be October 2013; repaid in April 2013; > Loan granted by BBU Bank to Soares da Costa Concessions Concessões, S.G.P.S., S.A., amounting to 2,000 > Loan granted by Banco BPI to Soares da Costa thousand Dollars, to be repaid in April 2013; Concessões, S.G.P.S., S.A., amounting to 632 thousand Euros, to be repaid in 2 instalments ending in Real Estate March 2013; > Loan granted by Banco Comercial Português to Ciagest Imobiliária e Gestão, S.A., amounting to > Loan granted by Banco Popular Portugal to Soares 2,048 thousand Euros, to be repaid in 12 instal- da Costa Concessões, S.G.P.S., S.A., amounting to ments ending in November 2021; 15,954 thousand Euros, to be repaid in 18 instalments ending in November 2024; > Loan granted by Banco Comercial Português to Ciagest Imobiliária e Gestão, S.A., amounting to > Loan granted by Banif Banco Internacional do Fun- 11,217 thousand Euros, to be repaid in 12 instal- chal to Soares da Costa Concessões, S.G.P.S., S.A., ments ending in November 2021; amounting to 2,556 thousand Euros, to be repaid in 12 instalments ending in November 2021; > Loan granted by NCG Banco, S.A. (Portugue- se branch) to Ciagest Imobiliária e Gestão, S.A., > Loan granted by Banco Comercial Português to amounting to 3,946 thousand Euros, to be repaid in Soares da Costa Concessões, S.G.P.S., S.A., amounting 100 instalments ending in June 2020; to 6,555 thousand Euros, to be repaid in June 2017; > Loan granted by NCG Banco, S.A. (Portugue- > Loan granted by Banco BPI to CPE Companhia de se branch) to Ciagest Imobiliária e Gestão, S.A., Parques de Estacionamento, S.A., amounting to amounting to 1,167 thousand Euros, to be repaid in 27,498 thousand Euros, to be repaid in 32 instal- 15 instalments ending in April 2013; ments ending in December 2028; > Loan granted by NCG Banco, S.A. (Portuguese > Loan granted by Banco BPI to CPE Companhia de branch) to Cais da Fontinha Investimentos Imobiliá- Parques de Estacionamento, S.A., amounting to ria, S.A., amounting to 3,225 thousand Euros, to be 1,100 thousand Euros, to be repaid in January 2013; repaid in March 2013;

> Loan granted by Banco BPI to CPE Companhia de > Loan granted by Banco Privado Atlântico to Cais Parques de Estacionamento, S.A., amounting to 433 da Talatona Imobiliária, Lda., amounting to 986,284 thousand Euros, to be repaid 2 instalments ending in thousand Kwanzas, to be repaid in November 2013. December 2013; As of December 31, 2012 “Bank loans” in non-cur- > Loan granted by Banco BPI to Intevias Serviços e rent liabilities included the financing loans secured Gestão, S.A., amounting to 62,258 thousand Euros, by the associated company Scutvias – Autoestradas to be repaid 14 instalments ending in July 2028; da Beira Interior, S.A. to fund the construction of the motorway, operated under a concession con- > Loan granted by Banco BPI to Intevias Serviços e tract, from Banco Europeu de Investimento and the Gestão, S.A., amounting to 3,190 thousand Euros, banking syndicate, amounting to 91,762,531 Euros to be repaid in July 2013; and 59,451,983 Euros, respectively, in the percentage attributable to the Group. The main terms of these loans are the following: REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 150

Credit facility Interest rate 1ª Amortização Amortização final

Banking syndicate Variable, indexed to 6 month 1st half of 2006 1st half of 2019

European Investment Bank Fixed rate: 6.43% 2nd half of 2007 2nd half of 2024

The jointly controlled company Auto-Estradas XXI - Subconcessionária, S.A., entered into the following financing: long term credit facility, EIB facility with commercial risk and EIB facility with guarantees, under the following terms:

EIB facility with commercial risk:

Amount: Up to 200,000,000 Euros

Total Period: Up to 27 years as of the Financial Close

Use Period: 5 years

Interest Rate: Euribor plus margin

From 2009 until the first semester of 2016: 0,90% p.a. After the first semester of 2016: 0,37% p.a. Margin: Note: an additional 0.20% margin over the EIB margins has been considered since that to the financings entered into with EIB on a variable rate, an estimated 0.31% spread over Euribor is chargeable.

Commitment Fee: 0.45% p.a. over the amount not used

Financial operations fee: 0,50% flat

Redemption: Variable and increasing with mandatory redemption amounts

Interest rates variation risk hedging through a swap contract with differentiated coverage: 100% of the capital during the availability period and for the following periods the coverage levels for the outstanding principal: Hedging: • From 2014 to 2027: 70% of the outstanding principal not taking into account the depreciations under the cash sweep system; • From 2028 to 2029: 17% and 7% of the outstanding principal not taking into account the depreciations under the cash sweep system;

EIB’s guaranteed facility loan:

Amount: Up to 89,000,000 Euros

Total Period: Up to 27 years as of the Financial Close

Use Period: 5 years

Interest Rate: Euribor plus margin

0.0% as long as bank guarantees are in force and 0.37% after the release of the bank guarantees Margin: granted by commercial banks. Note: the financial system isn’t taking into account the release of the bank guarantees

Commitment Fee: 0.20% p.a. over the amount not used

Financial operations fee: 0,20% flat

Redemption: Variable and increasing with mandatory redemption amounts

Interest rate variation risk hedging through a swap contract with differentiated coverage: 100% of the capital during the availability period and for the following periods the coverage levels for the outstanding principal: Hedging: • From 2014 to 2027: 70% of the outstanding principal not taking into account the depreciations under the cash sweep system; • From 2028 to 2029: 17% and 7% of the outstanding principal not taking into account the depreciations under the cash sweep system; REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 151

Long Term Credit Facility:

Amount: Up to 286,000,000 Euros

Amount at 31.12.2012: 226,728,944 Euros

Total Period: Up to 27 years as of the Financial Close, that is to say until 10/12/2035

Use Period: 5 years (from 2009 to 2013)

Interest Rate: Euribor plus margin

Margin: 2009 to 2011: 1,60% p.a.

2012 to 2015: 1,80% p.a.

Commitment Fee: 50% of the applicable margin over the amount not used

1,40% flat In fiscal terms, the incidence of the fee has been divided between VAT and stamp duty with Financial operations fee: the 75% and 25% respectively

Agent’s Fee: 100,000 Euros per year, adjusted with inflation

Redemption: Full cash sweep during 2014 and 2015 and the remaining bullet in 2016.

Interest rate variation risk hedging through a swap contract with differentiated coverage: 100% of the capital during the availability period and for the following periods the coverage levels for the outstanding principal: Hedging: • From 2014 to 2027: 70% of the outstanding principal not taking into account the depreciations under the cash sweep system; From 2028 to 2029: 17% and 7% of the outstanding principal not taking into account the depreciations under the cash sweep system;

The consortium bid takes into account the renegotiation of the Long Term Credit Facility in 2016 through the issuance of a debenture loan under more advantageous conditions. This refinancing operation is not deemed as the “sub-concession refinancing” provisioned in clause 90 of the sub-concession Contract because it is a part of the Consortium bid, the fulfilment risk is fully undertaken by the Consortium and is included in the Base Case. This way, it is acknowledged that, should favourable impacts result from such operation, those results shall be fully withheld by the sub-concessionary. The financial conditions of the refinancing operation are as follows:

Amount: 256,292,632.25

Total Period: Until 20 years

Use Period: A single use in 2016

Interest Rate: Euribor plus margin

Margin: 1.50%

Financial operations fee: 0.50% flat

Agent’s Fee: 100,000 Euros per year, adjusted with inflation

Redemption: 42 six-monthly instalments with variable capital as of 30 June 2016

Interest rate variation risk partial hedging through a swap contract with the following coverage levels for the outstanding principal: From 2016 to 2026: 70% of the outstanding principal; Hedging: • Year 2028: 17% of the outstanding principal; • Year 2029: 7% of the outstanding principal; • Remaining period: 0% coverage, that is to say variable capital regime.

The loans recorded in the Consolidated Financial Po- sition as of December 31, 2012 have the following maturities: REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 152

Total Other Maturity Bank loans Bonds Overdrafts Total (Factoring)

2013 224,129,286 - 10,292,774 891,901 235,313,961

2014 49,461,410 - - - 49,461,410

2015 49,403,228 19,675,035 - - 69,078,263

2016 79,958,886 - - - 79,958,886

2017 75,453,984 78,143,418 - - 153,597,402

2018 77,899,147 - - - 77,899,147

After 2018 457,621,247 - - - 457,621,247

TOTAL 1,013,927,189 97,818,453 10,292,774 891,901 1,122,930,316

The non-recourse debt as of December 31, 2012 Additionally, specific financing contract in local ma- had the following maturities: rkets of Angola, Mozambique, Israel and Oman have interest rates between 6.0% and 20.2%.

Maturity of non recourse In general, bank loans pay interest at variable rates Bank loans debt hence exposing the Group to the effect of fluctua- 2013 22,037,795 tions in market interest rates. However, to manage interest rate risk, in particular in the Concessions 2014 32,247,359 business area, the Group contracted financial instru- 2015 34,464,879 ment to cover interest rates changes, as summari- sed in the “Derivatives” note. 2016 28,671,499

2017 27,971,930 Based on the net indebtness level as of December 2018 30,849,026 31, 2012, a variation of one percentage point in the indexing interest rate would have an impact p.a. in After 2018 310,953,742 terms of financial costs of 6.5 million euros. TOTAL 487,196,229

The Group’s loans as of December 31, 2012 had the following interest rates:

Type of Credit Minimum Maximum facility Overdrafts 3.774% 7.780%

Hot Money 7.235% 7.235%

Bank loans 1.899% 8.974%

Bonds 2.854% 2.894%

Commercial paper 3.148% 6.898% REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 153

.18 DERIVATIVES

In the concessions area, the Group has the following interest rate coverage financial instruments:

Scutvias - Autoestradas da Beira Interior, S.A.

Type of financial instrument Derivative

Interest rate coverage, 100% of debt to commercial banking Description (to all term of the debt)

Banks BCP / BPI / BAYERISCHE / CGD

Currency Euro

Contract date 24/09/1999

Beginning date 01/10/1999

Maturity date 04/10/2018

Frequency Semiannual

Swap 7.14

Amount covered by 31.12.2012 218.909.501 Euros

Euribor + 1% during the construction phase; Reference Euribor + 0,9% during the operation phase

Intevias - Serviços e Gestão, S.A.

Type of financial instrument Derivative

Description Interest rate coverage

Banks BPI

Currency Euro

Contract date 04/12/2008

Beginning date 04/12/2008

Maturity date 15/07/2023

Frequency Annual

Swap 3.45

Amount covered by 31.12.2012 57.492.000 Euros, redeemable

Reference Euribor 12 months REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 154

CPE - Companhia de Parques de Estacionamento, S.A.

Type of financial instrument Derivative

Description Interest rate coverage

Banks BPI

Currency Euro

Contract date 09/06/2009

Beginning date 10/06/2009

Maturity date 10/12/2028

Frequency Semiannual

Swap 4.19

Amount covered by 31.12.2012 19.199.844 Euros, redeemable

Reference Euribor 6 months

Autoestradas XXI - Subconcessionária, S.A.

Type of financial instrument Derivative

Description Interest rate coverage

BBVA, BANESTO, BANCO POPULAR, BANKIA Banks SANTANDER TOTTA, BPI, LA CAIXA

Currency Euro

Contract date 30/01/2009

Beginning date 03/02/-2009

Maturity date 31/12/2029

Frequency Semiannual

Swap 4.22

Amount covered by 31.12.2012 533.754.326 Euros, redeemable

Reference Euribor 6 months

As of December 31, 2012, these instruments had dent and credible entities by adopting appropriate been classified as coverage instruments as they met evaluation models. These were based on the dis- the formal requisites of IAS 39 related to the docu- counted cash flow method using observable market mentation and effectiveness of the derivative cove- inputs listed in the interbank market. rage instruments. As of December 31, 2012 and 2011, the item “Deri- The fair value of these financial instruments was set vatives” has the following breakdown. by the respective counterparts which are indepen-

Derivatives 31.12.2012 31.12.2011

Grupo Soares da Costa, S.G.P.S, S.A - 63,676

Sociedade de Construções Soares da Costa, S.A. - 1,190,357

Intevias – Serviços e Gestão, S.A. 6,094,241 4,261,552

C.P.E. – Companhia de Parques de Estacionamento, S.A. 4,623,617 3,309,601

Scutvias – Autoestradas da Beira Interior, S.A. 12,901,166 13,494,989

Auto-Estradas XXI - Subconcessionária, S.A. 59,886,187 44,123,589

TOTAL 83,505,211 66,443,764 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 155

.19 BREAKDOWN OF ACCOUNTS PAYABLE

As of December 31, 2012 the item “Accounts payable” breakdown was the following:

Accounts payable 31.12.2012 31.12.2011

Fixed assets suppliers 1,212,027 2,389,730

Suppliers with retention of guarantees 15,509,345 15,144,129

Advances from customers 12,763,840 21,670,923

Other 13,747,790 12,105,318

Accounts payable - non current 43,233,002 51,310,099

Associated companies 160,724 16,867

Other shareholders 498,122 32,823

State and other public entities (excluding income tax) 9,382,280 6,611,564

Other 55,773,014 49,998,581

Accounts payable - current 65,814,140 56,659,835

“State and other public entities” (including income tax) account breakdown as of December 31, 2012 and 2011:

31.12.2012 31.12.2011

Value added tax 2,028,417 2,369,314

Social security's contributions 1,952,571 2,456,940

Other 5,401,291 1,785,309

TOTAL 9,382,280 6,611,564

.20 BREAKDOWN OF OTHER CURRENT LIABILITIES

Other current liabilities 31.12.2012 31.12.2011

Costs accruals 95,742,805 126,858,451

Deferred income 27,917,858 57,184,425

TOTAL 123,660,663 184,042,876 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 156

As of December 31, 2012 and 2011 these items breakdown was as follows:

31.12.2012 31.12.2011

Accrued costs

Invoiced to be received 69,670,285 97,894,505

Staff costs to pay 7,220,793 9,033,777

Interest to pay 5,845,123 7,943,361

Other accrued costs 13,006,604 11,986,807

TOTAL 95,742,805 126,858,451

Deferred income

Works invoiced not executed 24,656,176 47,206,189

Antecipated rents 319,854 324,107

Other deferred income 2,941,828 9,654,129

TOTAL 27,917,859 57,184,425

.21 BREAKDOWN IN ANNUAL MOVEMENT OF FAIR VALUE ADJUSTMENTS AND PROVISIONS

Movement in fair value adjustments:

Opening Closing Value adjustments Notes Increases Reversal Utilization FX Effect Balance Balance

Doubtful customers 21,192,685 18,178,009 (680,408) (1,733) (65,485) 38,623,068

Customers 13 21,192,685 18,178,009 (680,408) (1,733) (65,485) 38,623,068

Other accounts receivable 3,194,828 8,812 (1,789,962) - (4,850) 1,408,828

Other accounts receivable 13 3,194,828 8,812 (1,789,962) - (4,850) 1,408,828

Raw materials and consumables 223,733 58,875 (32,608) - (23,789) 226,211

Goods and work in progress 1,983 - (1,983) - - -

Finished and intermediate goods 4,035,566 177,131 (59,221) - - 4,153,477

Goods 740,460 1,291,235 - - (857) 2,030,838

Inventories 12 5,001,742 1,527,241 (93,811) - (24,646) 6,410,526

Other financial investments 416,584 - (416,584) - - -

Financial Investments 416,584 - (416,584) - - -

Total value adjustments 29,805,838 19,714,063 (2,980,764) (1,733) (94,982) 46,442,422 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 157

Movement in provisions was as follows:

Opening FX Effect and Closing Increases Reversal Utilization Balance Transfer. Balance

Judicial proceedings 568,724 170,263 (114,858) (1,807) (49,570) 572,753

Pensions and other staff costs 205,186 17,037 (3,703) - (6,129) 212,392

Other provisions 112,290 39,130 (84,546) (24,734) 49,570 91,708

TOTAL 886,200 226,430 (203,107) (26,540) (6,129) 876,853

Impairment losses related with accounts receivable Details on the fair value adjustments and existing are accounted based on an individual risk analysis, provisions as of December 31, 2012 by primary re- considering its nature, the payment delay and the porting segment: Group’s past experience in similar situations.

Energia Total Construction Real Estate Concessions Própria consolidated

Raw materials and consumables 226,211 - - - 226,211

Finished and intermediate goods 3,869,840 283,637 - - 4,153,477

Goods 36,770 1,967,914 - 26,154 2,030,838

Inventories 4,132,821 2,251,551 - 26,154 6,410,526

Doutful trade debtors 36,997,522 1,542,462 5,081 78,004 38,623,068

Trade debtors 36,997,522 1,542,462 5,081 78,004 38,623,068

Other debtors 1,408,828 - - - 1,408,828

Other accounts receivable 1,408,828 - - - 1,408,828

Total value adjustments 42,539,171 3,794,013 5,081 104,158 46,442,422

Lawsuits costs 532,885 - 39,868 - 572,753

Pension and other staff costs 192,397 - 19,996 - 212,392

Other provisions 75,308 - - 16,401 91,708

Provisions for risks and charges 800,589 - 59,864 16,401 876,854

.22 RELATED PARTIES

Account balances and transactions within the Group The terms and conditions used in these transactions companies in the perimeter of the consolidation are between the Group and related parties are substan- eliminated in the consolidation process, and are not tially the same normally contracted between inde- disclosed in this note. Balances and transactions pendent entities in comparable operations. between the Group and associated companies (consolidated by the equity method) are detailed in the following table. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 158

Loans to Other accounts subsidiaries Trade Other accounts Balances as of December 31, 2012 Trade debtors receivable and associated creditores payable comoamies Gayaexplor - Const.Exploração de Parques 102,674 - 27,500 - - Estacionam., Lda.

Indáqua - Indústria e Gestão de Águas, S.A. 66,143 - 9,857,795 65,680 -

Metropolitan Transportation Solutions, ltd. 7,181,319 1,500,238 4,053,054 - 864,636

Grupul Portughez de Construtii, S.R.L. 815,199 47,806 443,326 - -

CFE Indústria de Condutas, S.A. 13,168 9,388 - - 80

MTA - Máquinas e Tractores de Angola Lda. 43,605 280,902 - 80,892 -

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

Self Energy Moçambique, S.A. 194,830 - - - -

Larvick Reliable, R.L. 15,000 - 43,000 - -

Global Azoague - - 1,064,959 - -

TOTAL 8,431,939 1,939,958 15,489,634 146,572 864,716

Loans to Other accounts subsidiaries Trade Other accounts Balances as of December 31, 2011 Trade debtors receivable and associated creditores payable comoamies Gayaexplor - Const.Exploração de Parques 22,734 - 27,500 - - Estacionam., Lda

Indáqua - Indústria e Gestão de Águas, SA - 180,396 9,373,759 64,523 -

Metropolitan Transportation Solutions, ltd. 7,171,502 1,500,238 53,054 - 861,227

Grupul Portughez de Construtii, S.R.L. 1,220,804 505,521 - - -

CFE Indústria de Condutas, S.A. 12,721 - 45,000 9,163 -

MTA - Máquinas e Tractores de Angola Lda. 24,146 154,237 - 17,431 -

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

Self Energy Moçambique, S.A. 118,027 - - - -

Larvick Reliable, R.L. 15,000 - 43,000 - -

My Watt, Lda - - 505,500 - -

TOTAL 8,584,934 2,442,016 10,047,813 91,117 861,227

Operating income Operating costs and Financial income / Transactions in 2012 and gains losses costs

CFE Indústria de Condutas, S.A. - 608 -

Gayaexplor - Const.Exploração de Parques Estacionam., Lda. - 22,734 -

MTA - Máquinas e Tractores de Angola Lda. 20,541 62,734 -

Indáqua - Indústria e Gestão de Águas, S.A. 53,775 212,261 303,640

Self Energy Moçambique, S.A. 247,493 - (16)

Sustentável Desafio - Produção de Energia Lda. 366,157 - -

TOTAL 687,966 298,337 303,624 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 159

Operating income Operating costs and Financial gains and Transactions in 2011 and gains losses losses

CFE Indústria de Condutas, S.A. 15,067 54,748 -

MTA - Máquinas e Tractores de Angola Lda. 395,705 714,531 (4,243)

Indáqua - Indústria e Gestão de Águas, S.A. - 223,145 346,619

Metropolitan Transportation Solutions Ltd. - 84,752 -

Self Energy Moçambique, S.A. 329,981 - -

TOTAL 740,753 1,077,176 342,376

Remunerations for members of the board of directors, supervisory board and key management team members as of December 31, 2012 were as follows:

Fixed remuneration Variable remuneration Total

Executive members of the board of directors 1,119,496 - 1,119,496

Non executive members of the board of directors 717,500 - 717,500

Members of the supervisory board 96,425 - 96,425

Key members of the management team 3,534,211 33,540 3,567,751

The company’s external auditor is BDO & Associa- Balances as of December 31, 2012 Trade creditors dos, SROC, number 29 in the Chartered Accountants Predifino - Sociedade Imobiliária, S.A. 12,746 Professional Association and number 1,122 in the PARINAMA - Participações e Investimentos, 23,370 CMVM’s auditors’ registration, represented by Mr S.G.P.S., S.A. Paulo Jorge de Sousa Ferreira (Chartered Accountant number 781). These legal certification of accounts TOTAL 36,116 services and auditing to the company (and to other companies in which the Group has a dominant position) reached 100,000 Euros in 2012. The chartered Transactions in 2012 External supplies accountant services, Grant Thornton & Associados Predifino - Sociedade Imobiliária, S.A. 5,506 – SROC, to the company (and to other companies in PARINAMA - Participações e Investimentos, which the Group has a dominant position) totalled 76,939 S.G.P.S., S.A. 124,500 Euros in 2012 (99,500 Euros referring to the legal certification of the accounts and 25,000 TOTAL 82,444 Euros to other consulting services).

The board of directors states that, prior to sign During 2012, Investifino SGPS Limited (Investifino) up any service to the company’s external auditor, sold its qualified participation on Cimpor. makes sure that this will not put their independence at risk (as defined in CMVM’s recommendation The balances as of December 31, 2011 and transac- number C (202) 1873 of May 16, 2004). tions during 2011 were as follows:

As of December 31, 2011, the companies Manuel Fino, SGPS, S.A. and PARINAMA – Participações e In- vestimentos, SGPS, S.A. hold, respectively, 70.81% and 11.00% of the Group’s share capital. therefore, we present balances as of December 31, 2011 and the transactions occurred during the past year: REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 160

Balances as of December 31, 2011 Trade creditors Other creditors

Betão Liz, S.A. 3,566,278 -

Agrepor Agregados-Extracção de Inertes, S.A. 162,739 -

Ciarga-Argamassas Secas, S.A. 84 -

Predifino - Sociedade Imobiliária, S.A. 7,117 -

Prediana - Sociedade de Pré-Esforaçados, S.A. - 711

PARINAMA - Participações e Investimentos, S.G.P.S., S.A. 5,945 -

Ibera - Indústria de Betão, S.A. 167,621 -

TOTAL 3,909,784 711

Other Other operational External operational Transactions in 2011 Purchases income and Services income and gains gains

Betão Liz, S.A. 8,300,199 22,424 4,842 342

Agrepor Agregados-Extracção de Inertes, S.A. 834,867 465 - -

Ciarga-Argamassas Secas, S.A. 68 - - -

Predifino - Sociedade Imobiliária, S.A. - - 4,902 -

PARINAMA - Participações e Investimentos, S.G.P.S., S.A. - - 67,715 -

Ibera - Indústria de Betão, S.A. 136,274 - - -

TOTAL 9.271.408 22.889 77.459 342

We further state that the above mentioned transactions took place under market’s normal conditions.

.23 BREAKDOWN OF OTHER OPERATING INCOME AND COSTS

Other operating income was as follows:

Other operating income 31.12.2012 31.12.2011

Own works 2,727,328 12,534,888

Gains in fixed tangible assets 711,162 3,763,977

Operational subsidies 169,822 174,110

Adjustments reversion 2,664,039 552,368

Other operating income and gains 6,350,130 15,342,020

TOTAL 12,622,480 32,367,362 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 161

Other operating costs are as follows:

Other operating costs 31.12.2012 31.12.2011

Taxes 10,013,519 9,374,260

Bad debts 11,427,024 628,080

Losses in fixed tangible assets 773,520 2,255,187

Fines 253,143 175,245

Donations 19,809 42,815

Losses in inventories 364,457 156,517

Penalties in contracts 387,190 2,268,208

Other operating costs and losses 16,692,314 7,195,944

TOTAL 39,930,976 22,096,255

At 31 December 2012, the balances of the items between 2001 and 2055 and 11,107,207 Euros “Other operating costs and losses” and “Bad debts” related with the recognition of the impossibility to reflected, respectively, the amounts of 8,721,542 collect a debt from an insolvent third party in the US Euros related with costs supported with the sus- market. pension of a tax related lawsuit for facts occurred

.24 STAFF

Average number of employees working for companies included in the Group’s consolidation perimeter by full consolidation method, during the financial year ending on December 31, 2012, totalled 4,829:

Officers and Highly Semi Senior Middle Non qualified Directors heads of qualified qualified Apprentices Management Management staff services professionals professionals

34 375 297 374 2,326 671 523 229

Average number of employees working for companies included in the Group’s consolidation perimeter by the proportional method during 2012, totalled 1,013:

Officers and Highly Semi Senior Middle Non qualified Directors heads of qualified qualified Apprentices Management Management staff services professionals professionals

20 87 98 64 149 181 151 263 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 162

Officers and Highly Semi Senior Middle Non qualified Directors heads of qualified qualified Apprentices Management Management staff services professionals professionals

44 419 304 451 2,551 830 522 428

Average number of employees working for companies included in the Group’s consolidation perimeter by the proportional method during 2010, totalled 881:

Officers and Highly Semi Senior Middle Non qualified Directors heads of qualified qualified Apprentices Management Management staff services professionals professionals

32 88 82 75 192 163 236 13

.25 CONSOLIDATED FINANCIAL RESULTS

Consolidated financial results breakdown for the financial years ending on December 31, 2012 and 2011:

Costs and losses 31.12.2012 31.12.2011

Interest paid 77,004,244 55,587,613

Losses in financial investments in associated companies 113,953 500,001

Foreign exchange losses 11,280,692 28,411,897

Cash discounts granted 2,399 33,383

Financial applications adjustments - 48,996

Other financial costs and losses 21,791,506 19,015,578

Other financial losses 33,074,597 47,509,854

(1) 110,192,794 103,597,468 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 163

Income and gains 31.12.2012 31.12.2011

Interest paid 22,346,987 14,441,415

Gains in financial investments in associated companies 834,259 665,568

Income and capital gains from participations 8,445,061 1,484,231

Foreign exchange losses 9,239,324 34,784,003

Cash discounts granted 153,992 364,475

Other financial income and gains 130,815 58,154

Other financial gains 9,524,131 35,206,631

(2) 41,150,438 51,797,844

Financial results (2)-(1) (69,042,357) (51,799,624)

The item “Other financial costs and losses” mainly a capital gain obtained from the alienation of the refers to the cost of banking guarantees, arrange- Group’s participation in the company Infraestruturas ment fees and other expenses and commissions SDC Costa Rica S.A.”. charged by financial institutions. Gains and losses from associated companies for the The item “Income and capital gains from equity financial years ended December 31, 2012 and 2011: investments” for the year 2010 is influenced by

31.12.2012 31.12.2011

Losses in financial investments in associated comapnies

SDC Emirates Construction, L.L.C. - 32,872

CFE Indústria de Condutas, S.A. 97,795 37,159

Traversofer, SARL 2,853 2,395

GAYAEXPLOR - Constr.e Explor.de Parques Estacionamento, Lda. 308 484

Ute Efacec/Self Energy , Ley 18/1982 - 426,575

My Watt, Lda. - 336

Global Azoague, S.L. 864 -

Self Energy Moçambique, S.A. 10,383 -

Sustentável Desafio, Lda. 1,750 -

Reflexos Púrpura, Lda. - 180

TOTAL 113,953 500,001

Gains in financial investments in associated companies

Constructota San José - Caldera, S.A. 585,990 382,045

INDÁQUA - Indústria e Gestão de Águas, S.A. 174,194 202,128

Alsoma, AEIE 74,075 45,399

Self Energy Moçambique, S.A. - 35,997

TOTAL 834,259 665,568

Gains / (losses) in financial investments in associated companies 720,306 165,566 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 164

.26 INCOME TAX AND DEFERRED TAXES

Grupo Soares da Costa, S.G.P.S., S.A. and its do- there have been tax losses, when tax benefits have mestic affiliates held directly or indirectly by the been granted, or when inspections, complaints or Group in more than 90% are taxed for their Legal objections are in progress, in which cases, depen- Person Tax on Income under the Special Scheme for ding on the circumstances, the mentioned period Taxing of Companies Groups (RETGS). may be extended or suspended.

AS for the companies not covered by RETGS, cur- Hence, the Company’s tax declarations from 2009 rent tax is estimated based on the taxable income onwards may still be subject to review. The board under the rules and tax systems in force at each of directors considers that any amendments will not company’s country. have a significant impact on the consolidated financial statements. As of January 1, 2007, municipalities are entitled to deliberate an annual tax exemption up to 1.5% over The income tax accounted for December 31, 2012 the taxable profit subject to tax on Income, thus in- and 2011 breakdown as follows: creasing the nominal tax rate to 26.5%.

However, following the publication of Law 12 – Tax income 31.12.2012 31.12.2011 A/2010, 30 June, a state exemption has been introduced, covering all taxable persons presenting Income tax (current) (1,053,370) 10,596,163 taxable profit subject to Tax on Income higher than Deferred tax (9,621,264) (5,849,953) 2 million euros. This state exemption corresponds to TOTAL (10,674,634) 4,746,210 2.5% of the taxable profit over the mentioned limit.

According to the legislation in force in Portugal, income tax declarations are subject to review and Reconciliation of earnings before tax for the tax correction by the tax authorities for a period of four period is as follows: years (five years for social security), except when REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 165

31.12.2012 31.12.2011

Tax Rate Fiscal Basics Tax Tax Rate Fiscal Basics Tax

Tax rate and nominal income tax amount (in 26.50% (58,186,359) (15,419,385) 26.50% 7,087,512 1,878,191 Porugal)

State tax surcharge 1,003,808 1,028,019

Autonomous taxation 1,508,177 912,191

Subsidiaries with temporary tax exemption (15,055,830) (3,989,795) (11,100,502) (2,941,633)

Companies with net losses, that do not 4,442,957 1,177,384 4,161,928 1,102,911 calculate deferred taxes Reversal of deferred tax assets (extinction loss 3,265,574 865,377 5,019,260 1,330,104 carry-overs) Earnings in associated companies (equity (720,306) (190,881) (165,565) (43,875) consolidated)

Non-deductible expenses for tax purposes 9,083,110 2,407,024 2,563,355 679,289

Tax nature lawsuit and goodwill reduction 12,327,318 3,266,739 - -

Taxable dividends that do not contribute to net 8,702,917 2,306,273 12,776,797 3,385,851 income

Capital gains on the sale of financial stakes (8,445,060) (2,237,941) (1,363,268) (361,266)

Other tax benefits (65,355) (17,319) (235,283) (62,350)

Effect from diverge income tax rates (2,209,026) (1,310,022)

Other adjustments 3,226,150 854,930 (3,212,078) (851,201)

Tax rate and effective income tax amount 18.35% (10,674,634) 66.97% 4,746,210

Deferred taxes assets and liabilities accounted in Consolidated Financial Position Statement were ori- ginated by the following situations:

Deferred taxes assets 31.12.2012 31.12.2011

Losses reported 32,618,102 14,775,540

Fixed assets diverge valuation 4,754,258 5,332,692

Inventories value adjustments 1,524,153 66,250

Accounts receivables value adjustments 1,264,083 2,153,923

Financial investments diverge valuation 1,814 1,732

Financial instruments fair value 22,360,309 17,658,225

Other 794,703 952,968

TOTAL 63,317,422 40,941,330

Deferred taxes liabilities 31.12.2012 31.12.2011

Fixed assets diverge valuation 16,742,330 17,585,484

Inventories value adjustments 117,245 116,659

Non fiscal accepted's provisions 8,264,765 9,471,354

Capital gains with deferred taxes 393,709 410,751

Other 365,980 300,011

TOTAL 25,884,029 27,884,259 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 166

The reportable tax losses which caused the deferred taxation assets:

Country Year Limit for Use Fiscal losses Deferred taxes assets

Portugal 2012 2017 43,757,823

2011 2015 3,509,423

2010 2014 3,844,027

2009 2015 3,412,021

2008 2014 2,802,581

2007 2013 1,763

57,327,638 14,278,476

United States 2012 2032 19,169,262

2011 2031 10,982,932

2009 2029 2,785,473

2007 2027 3,394,638

2006 2026 890,266

2005 2025 2,521,201

2004 2024 4,071,904

43,815,677 17,318,478

Costa Rica 2012 2015 512,888

2011 2014 248,462

761,350 228,405

Angola 2012 2015 81,236

2011 2014 587,194

2010 2013 1,596,550

2,264,980 792,743

TOTAL 32,618,102

According to the applicable legislation, these losses can only be used if the respective companies generate a positive income tax result.

.27 EARNINGS PER SHARE

The company’s capital consists of 159,994,482 Holders of preferred shares without voting rights are ordinary shares and 5,518 preferred shares without entitled to a priority dividend on the terms stipula- voting rights, with a nominal value of 1 Euro each. ted in 2.7 of the respective issuance prospectus and are listed for trading, at no less than 5% of the respective par value, pursuant to article 341 (2) of the Portuguese Corporate Code. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 167

Earnings per share 31.12.2012 31.12.2011

Continued operations earnings, net of minorities (46,881,180) 2,376,012

Net income attributable to the Group (46,881,180) 2,376,012

Number of preferred shares 5,518 5,518

Number of ordinary shares 159,994,482 159,994,482

Total number of shares 507,292 507,292

Weighted average number of ordinary shares 159,492,708 159,499,423

Earnings attributable to preferred shares 276 276

Continued operations earnings per share

Basic (0.294) 0.015

Diluted (0.294) 0.015

Earnings per share

Basic (0.294) 0.015

Diluted (0.294) 0.015

The company does not have convertible debt instruments, meaning the basic result is the same as the diluted result.

.28 ASSETS HELD FOR SALE AND ACTIVITIES BEING DISCONTINUED

As of December 31, 2011 there were no assets held for sale or activities being discontinued.

.29 GUARANTEES

The detail of bank guarantees and collateral provided by the Group to third parties as of December 31, 2012 are as follows:

Mozambican Other Euros US Dollar Total Metical currencies Bank guarantee 350,451,536 40,265,692 5,311,754 4,164,979 400,193,962

Collateral 18,848,070 11,368,804 - 82 30,216,955 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 168

Bank guarantees

Guarantees in respect of construction contracts 232,082,856

Guarantees in respect of concession contracts 59,032,701

Guarantees given to financial institutions 95,512,686

Other guarantees 13,565,719

TOTAL 400,193,962

The value of guarantees given to financial institu- the Group). The banks involved in the provision of tions consist essentially to the bank guarantees such bank guarantees are coincident with the enti- from the associated company Scutvias, S.A., on ties present in the bank syndication process. behalf of the European Investment Bank in the amount of 76,943,639 Euros (part attributable to

.30 FINANCIAL RISKS

Foreign Exchange Risk minimize the sensitivity of the Group’s earnings to This risk arises mainly from the international ope- exchange rates fluctuations. The Group targets to rations of the Group. Operations by some of the balance assets and liabilities expressed in the same Group’s companies in foreign markets increase its currency. exposure to the effects of the several currencies change against the Euro. The exchange rate risk Assets and liabilities denominated in foreign cur- management policy followed by the Group aims to rency, converted into Euros as of December 31, 2012, were as follows:

Other Intragroup Total Assets EUR USD AOK MZM STD ILS BRL Total currencies eliminations consolidated

Financial 1,067,042,961 68,560,997 - - - - 611,488 - 1,136,215,447 (1,103,822,540) 32,392,908 Investments

Trade debtors 167,311,038 320,119,488 - 20,872,210 7,620 937,877 1,386,175 7,502,179 518,136,588 (96,929,503) 421,207,085

Associated 11,215,836 - - - - - 487,912 443,326 12,147,074 (11,119,135) 1,027,939 companies

Advances to 3,191,133 5,157,646 6,990,399 10,811,157 - - 96,014 1,563,193 27,809,542 (8,586,114) 19,223,428 suppliers

State and 7,643,065 31,757 83,317 384,728 3,711 1,260 428,999 422,991 8,999,829 - 8,999,829 public bodies

Other debtors 674,653,641 5,559,359 1,076,890 6,354,105 35,639 13,849 626,811 3,189,304 691,509,599 (360,703,055) 330,806,544

Securities and - 273,442 - - - - 579,442 - 852,884 - 852,884 other treasury

Bank deposits 45,752,157 29,516,872 21,438,081 1,195,340 5,517 74,796 323,558 1,749,008 100,055,330 - 100,055,330

Cash 146,549 102,872 182,594 104,307 749 - 5,333 13,703 556,107 - 556,107

Other currentand non 132,647,885 5,213,346 5,660,028 321,080 40,641 788,850 23,254 342,628 145,037,711 (9,165,477) 135,872,235 current assets

TOTAL 1,050,994,288 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 169

Other Intragroup Total Liabilities EUR USD AOK MZM STD ILS BRL Total currencies eliminations consolidated

Bank loans 782,026,173 68,778,094 140,045,767 23,244,649 - 350 - 10,124,929 1,024,219,962 - 1,024,219,962

Bonds 97,818,453 ------97,818,453 - 97,818,453

Other loans 687,472 204,429 ------891,901 - 891,901

Associated 17,895,274 - 28,544 - - - - - 17,923,818 (17,763,094) 160,724 companies

Other 1,254,794 22,162 8,297,064 - - - - - 9,574,020 (9,075,898) 498,122 shareholders

Suppliers 170,973,940 102,975,677 8,573,695 15,376,105 17,498 83,621 556,142 1,687,697 300,244,376 (89,713,285) 210,531,091

Fixed assets 3,583,412 - 272,487 - - - - 281,521 4,137,421 (227,089) 3,910,332 suppliers

Advances from 24,684,009 48,178,230 271,704 7,195,718 5,150 - 925,364 4,825,433 86,085,608 (8,380,168) 77,705,440 trade debtors

State and 18,541,910 10,120 180,744 64,071 28,571 - 563,037 245,071 19,633,525 - 19,633,525 public bodies

Other creditors 576,418,279 42,208,274 1,558,369 13,468,551 1,257 4,287,456 1,134,599 4,279,158 643,355,943 (573,835,139) 69,520,804

Derivatives 83,505,211 ------83,505,211 - 83,505,211

Other current 106,014,875 14,056,829 12,558,983 1,107,439 490 169,734 78,945 211,729 134,199,025 (10,538,361) 123,660,663 liabilities

TOTAL 1,712,056,228

Non-monetary assets and liabilities denominated in foreign currency, converted into Euros as of Decem- ber 31, 2012, were as follows:

EUR USD AOK MZM STD CRC ILS BRL Total

Assets 667,179,759 38,482,483 23,286,980 1,598,217 5,606,386 957,985 3,666,166 253,464 741,031,441

Liabilities 25,464,182 1,038,351 171,677 - 35,712 50,961 - - 26,760,882

Credit Risk This risk is associated with accounts receivable As of December 31, 2012 the board of directors inherent to the Group’s activity. Credit risks at each strongly believes that the estimated adjustments to reporting date are detected by the competent de- the accounts receivable have been adequately re- partments. The need to register an impairment loss presented in the financial statements. is determined according to the seniority of the debt, the client’s risk profile, previous experience and fur- As of December 31, 2012 to the following accounts ther circumstances. receivable amounts no adjustments have been registered as collection was considered reasonable:

Maturity Trade Debtors: current account Trade Debtors: other Total

Performing 140,048,269 1,806,928 141,855,197

0 to 180 days 79,197,319 - 79,197,319

181 to 360 days 32,977,485 - 32,977,485

361 to 540 days 9,785,795 - 9,785,795

541 to 720 days 25,440,778 - 25,440,778

more than 720 days 131,950,511 - 131,950,511

TOTAL 419,400,157 1,806,928 421,207,085 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 170

Debts outstanding for more than 360 days are ca- lated parties with which negotiations are underway tegorized by type of customer as follows: with a view to their regularization.

Amounts more than 360 days overdue 31.12.2012 Liquidity Risk The liquidity risk management policy aims to ensure Angolan public entities 64,670,782 that at any given moment the profile of the maturity Angolan private entities 28,022,102 dates of the company’s debt matches the capacity Portuguese public entities 38,087,532 to generate cash flow to meet it. The management of liquidity risk therefore includes managing im- Portuguese private entities 15,188,764 balances between the requirements for funds (for Guinea public entities 6,783,240 operating and financial costs, investments and debt Mozambican public entities 7,085,204 repayment) and the inflows (receipts from customers, disinvestments, and financing commitments Mozambican private entities 873,811 from financial entities). On the other hand, the Group US private entities 3,373,899 adopts measures to prevent this kind of risks throu- Other public entities 962,414 gh an adequate and timely cash flow management. In order to manage liquidity risk, the Group maintains Other private entities 2,129,335 a balance between the term and flexibility of con- TOTAL 167,177,084 tracted debt through the use of phased financing which reflects the requirement for funds. In addition, the Group has hot money accounts and overdrafts The above figure in category “Angolan Public En- which avoid (temporary) cash flow problems. tities” and “Angolan Private Entities” include, with reference to December 31, 2012 and 2011, circa 75 Maturity of the financial liabilities as of December million Euros on behalf of an Angolan entity and re- 31, 2012:

Advances Investment Financial Other Maturity Loans Suppliers from Other Total suppliers leasing liabilities customers

2013 235,313,961 195,021,746 1,222,894 1,475,411 64,941,600 76,065,384 140,197,024 714,238,020

2014 49,461,410 5,889,821 - 928,687 12,598,596 5,163,442 123,950 74,165,905

2015 69,078,263 3,336,950 - 216,809 165,244 826,126 116,606 73,739,998

2016 79,958,886 2,771,057 - 66,532 - 826,126 672,931 84,295,532

2017 153,597,402 3,511,518 - - - 826,126 109,262 158,044,308

2018 77,899,147 - - - - 826,126 109,262 78,834,535

After 2018 457,621,247 - - - - 5,279,844 91,720,868 554,621,959

TOTAL 1,122,930,316 210,531,091 1,222,894 2,687,438 77,705,440 89,813,175 233,049,903 1,737,940,257

.31 SUBSEQUENT EVENTS

There are no material events to report. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 171

.32 CONTINGENCIES

Dispute between Quinta da Murtosa / Socie- Consolidated assets that are exposed to this risk dade de Construções Soares da Costa / Porto amount to 17.3 million Euros, with the sums claimed Municipality under that dispute standing far beyond that figure. The disputes previously reported with Quinta da Murtosa and Porto Municipality were resolved. From MTS and its shareholders have already expressed these resolutions, the subsidiary company Socieda- the conviction that the board of directors shares, de de Construções Soares da Costa, S.A. will receive that the process is unfolding with the necessary in- from the Porto Municipality several lands to construc- dependence and respect for international canons, so tion with a with a building capacity of about 30,300 still awaiting an outcome to the process during the m2 and will pay to Quinta da Murtosa circa 500,000 year 2012. Euros. The amounts involved in these transactions do not have a relevant impact in the year’s results. Concession Contract for the High Speed Railway Stretch Poceirão-Caia from the line between Red Line of the Tel Aviv Light Rail Project, Israel Lisbon and Madrid of the participated company During the execution of the concession contract a “Elos – Ligações de Alta Velocidade, S.A.”: dispute involving the grantor (State of Israel) and Metropolitan Transportation Solutions (MTS), the The Portuguese Audit Court refused the prior appro- concessionaire company in which the Group holds a val to the concession contract on 21 March 2012, 20% stake, arose as timely disclosed to the market. leading to the cancellation of the project.

After the signature of the referred contract, which As a consequence, the company initiated negotia- took place on May 2007, and as provisioned in the tions with its employees from the termination of contract, the actions leading to the “Financial Close” their contracts, deactivating its office and revoking and the early performance of the project works star- all contracts signed for the continuation of the con- ted. Activities leading to the “Financial Close” have cession contract. been disturbed by the global financial crisis which determined the need for some amendments to the Also following the refusal of prior approval, the com- contractual provisions. Those amendments have pany started the preparation of a request for payment been exhaustively negotiated by the grantor and the of the State for the costs incurred for the grant which concessionaire along with financing entities. was sent to the State on July 30, 2012, claiming the amount of 159.4 million Euros, on that date. During the third quarter of 2010, MTS has been confronted with the decision of the grantor to termi- The Portuguese state did not answered to payment nate the contract due to alleged breach of contract, request, therefore Elos initiated the preparation of unless MTS accepted a new set of compensation for an action in the Arbitration Court. the grantor along with other conditions. Regarding the financing contracts, it was signed an The concessionaire and its shareholders have deci- agreement in June (Partial Assignment Agreement) ded to reject that position by the grantor as well as between the company, the European Investment the conditions demanded - which would render the Bank (EIB), and the banking syndicate formed by project inoperable - and submit the dispute to an Caixa Geral de Depósitos, Banco Comercial Por- Arbitration Court, implementing the required actions tuguês and Banco Espírito Santo by which were for that purpose. transferred to the commercial banks the two credit facilities contracted with the EIB, through cession of The arbitration proceedings have been occurring EIB’s contractual position to the banking syndicate. within the normal standards and with the typical The facilities were transferred to “Part A Loan” in length of such processes. The State of Israel has the amount of 300 million Euros, still not discoun- used all legal mechanisms at their disposal to delay ted, and 300 million Euros (“Part B Loan”), with a the process as possible; the judgment hearings were utilization value at the date of 90,761,574 Euros. finally scheduled to the first half of 2013. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 172

These values have no impact on the consolidated The Portuguese tax authority, following an exami- accounts of the company as the financial contribu- nation to Grupo Soares da Costa, S.G.P.S., S.A.’s action is valued at acquisition cost. counts, notified the company in 2005 for an income tax payment of 17,136,692 Euros, determined by In the second half of the year, however, was expres- the disregard as tax expenditures of a set of capital sed by the Portuguese State through the banking losses generated in that business process (given syndicate, the intention to take advantage the con- that considers as income the capital gains generated ditions of the financial package of the project, inclu- in the same process). As duly communicated to the ding interest rate swap contracts, so the remaining market (as relevant information on 10 November contracts were maintained by the company and at 2005) that company, as well as external consul- January 22, 2013 was finished the company’s con- tants and auditors who supervised and intervened in tractual position’s cession in all the credit facilities the proceedings, frontally disagree with that opinion, and swap contracts to Parpública. and the settlement was been legally contested, exception 381,752 Euros that have already been paid. Having the Portuguese State cancelled the project, Elos, from 2013 onwards, will manage the judicial 2) In July 2012, the company Grupo Soares da claim in the Arbitration Court, its main asset, in order Costa, S.G.P.S., S.A., the parent/ holding com- to be able to recover the costs incurred for more pany of the Special Taxation of Corporate Groups than two years with this project. (RETGS), was notified of the settlement of 2008’s income tax (IRC), as a result of the inspection made to the company and to some its subsidiaries. From Tax Claims: this notification results a payment of 2,164 million 1) As broadly announced, in 2002, Soares da Costa Euros under the corrections introduced by the Tax Group was submitted to a profound restructuring Authority (AT), mainly relating to the deductibility of and reorganization process that include, among financial charges and transfer pricing. The company other items, the constitution of a holding company disagrees with AT’s understanding and already has and four sub-holdings by each business area: cons- appealed against the settlement and has required, truction, real estate, concessions and industry. pursuant the terms of the Code of Tax Procedure These sub-holding were constituted with its capital and Process, the suspension of the enforcement entering in kind by the holding, with the transfer at proceedings. market values of portfolio of participations previously held in each of those segments by the holding The board of directors and the company’s lawyers company, being generated capital gains and losses believe these tax claims will be successful. with tax relevance.

.33 CHANGES IN POLICY, AND ERROR ESTIMATES

During the year 2012 there were no changes in ac- 2011, and were not recorded material errors relating counting policies, compared to those considered in to prior years. the preparation of financial information for the year

.34 ACCOUNTS RELEASE’S APPROVAL

At a meeting held on April 11, 2013, the board of directors authorised the release of these consolidated financial statements. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 173

INDIVIDUAL FINANCIAL STATEMENTS

Bridge over Tinhela's river - Transmontana Motorway Portugal complete portfolio available in: www.portfolio.soaresdacosta.pt REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 174

INDIVIDUAL FINANCIAL POSITION STATEMENT FROM DECEMBER 31, 2012 AND 2011

(Euro) ASSETS Notes 31.12.2012 31.12.2011 NON CURRENT Intangible assets: 0 0 Fixed tangible assets: Transport equipment 4 16,572 24,527

Administrative equipment 4 6,723 12,759 23,295 37,285 Financial investments: Equity participations in subsidiaries 5 258,751,074 260,951,074

Loans granted to subsidiaries 5 103,165,796 210,227,913

Other financial investments 5 211,371 227,180

Financial investments in progress 5 0 50,000 362,128,241 471,456,167 Deferred tax assets 22 15,132,634 4,120,681

TOTAL NON-CURRENT ASSETS 377,284,170 475,614,133

CURRENT Accounts receivable: Trade debtors 8 4,059,836 2,557,578

State and other public entities 8 274,441 759,930

Group, associated and participated companies 8 61,800,117 62,246,671

Other accounts receivable 8 540,813 577,531 66,675,207 66,141,710 Other current assets 9 232,375 435,594 Cash and equivalents 10 214,079 78,233

TOTAL CURRENT ASSETS 67,121,661 66,655,537 TOTAL ASSETS 444,405,831 542,269,671 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 175

INDIVIDUAL FINANCIAL POSITION STATEMENT FROM DECEMBER 31, 2012 AND 2011

(Euro) SHAREHOLDERS’ EQUITY and LIABILITIES Notes 31.12.2012 31.12.2011 SHAREHOLDERS’ EQUITY Share capital 11 160,000,000 160,000,000 Own shares (172,526) (172,526) Reserves and retained earnings: Legal reserves 7,467,782 7,423,896 Other reserves 2,549,307 2,501,550 Retained earnings 43,303,101 42,469,535 Adjustment on financial investments (660,530) (660,530) Net earnings (11,407,369) 877,728 TOTAL SHAREHOLDERS’ EQUITY 201,079,765 212,439,652

LIABILITIES NON-CURRENT Loans: Bonds 12 97,818,453 97,604,741 Bank loans 12 28,587,680 14,112,455 126,406,132 111,717,196 Accounts payable: Investment suppliers 0 9,963 0 9,963 Derivatives 13 0 31,950 TOTAL NON-CURRENT LIABILITIES 126,406,132 111,759,109

CURRENT Loans: Bank loans 12 31,941,576 45,833,053 31,941,576 45,833,053 Accounts payable: Trade creditors 1,116,449 1,425,965 Investment suppliers 16,483 11,634 State and other public entities 14 10,689,993 6,204,106 Group, associated and participated companies 14 72,306,178 163,745,638 Other accounts payable 14 25,673 84 84,154,777 171,387,427 Derivatives 13 0 31,726 Other current liabilities 15 823,580 818,703 TOTAL CURRENT LIABILITIES 116,919,934 218,070,909 TOTAL LIABILITIES 243,326,066 329,830,018 TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 444,405,831 542,269,671 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 176

SEPARATE INDIVIDUAL INCOME STATEMENT FOR THE PERIOD ENDED DECEMBER 31, 2012 AND 2011

(Euro) INCOME STATEMENT Notas 2012 2011 Turnover 16 5,002,561 6,235,258 Other operating income and gains: Other income and gains 192,945 251,739 Operating income and gains 5,195,506 6,486,997 External supplies 17 (1,470,521) (2,618,182) Staff costs 19 (4,009,465) (4,213,849) Depreciation, amortisation and impairment costs (15,562) (16,454) Other operating costs and losses 20 (9,479,192) (371,481) Operating costs and losses (14,974,740) (7,219,966) Operating results from continued activities (9,779,234) (732,969) Interest received 21 12,719,773 12,760,013 Interest paid 21 (16,792,473) (14,578,249) Net financing costs (4,072,700) (1,818,235) Income from capital participations 21 3,611,875 3,742,412 Other financial gains 21 1,313,099 604,856 Other financial costs 21 (4,281,219) (1,771,192) Other financial gains and costs 643,755 2,576,076 Financial results 21 (3,428,945) 757,841

Earnings before taxes (13,208,179) 24,872

Income tax 22 1,800,810 852,856

Net earnings (11,407,369) 877,728

Earnings per share: Basic 23 (0.071) 0.005 Diluted 23 (0.071) 0.005

STATEMENT OF INDIVIDUAL COMPREHENSIVE INCOME FOR THE PERIOD ENDED DECEMBER 31, 2012 AND 2011

(Euro) 2012 2011 Net earnings (11,407,369) 877,728

Other comprehensive income Exchange difference stemming from transposition of financial 0 0 Statements expressed in foreign currencies 63,676 (63,676) Change on fair value of derivatives (15,919) 15,919 Other variations 0 0 TOTAL COMPREHENSIVE INCOME FOR THE PERIOD (11,359,612) 829,971 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 177

STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED DECEMBER 31, 2012 AND 2011

(Euro) Reserves Total Equity Coverage Own shares and retained Other shareholders’ capital derivatives earnings equity Balance as of 01.01.2012 160,000,000 (172,526) 53,320,465 (47,757) (660,530) 212,439,652

Dividends (276) (276)

Own shares 0

Other 0 Integrated consolidated (11,407,369) 47,757 0 (11,359,612) earnings Balance as of 31.12.2012 160,000,000 (172,526) 41,912,821 0 (660,530) 201,079,765

Reserves Total Equity Coverage Own shares and retained Other shareholders’ capital derivatives earnings equity Balance as of 01.01.2011 160,000,000 (197,780) 56,000,165 0 (660,530) 215,141,855

Dividends (3,463,847) (3,463,847)

Own shares 25,254 (93,580) (68,326)

Other 0 Integrated consolidated 877,728 (47,757) 0 829,971 earnings Balance as of 31.12.2011 160,000,000 (172,526) 53,320,465 (47,757) (660,530) 212,439,652 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 178

INDIVIDUAL CASH FLOWS STATEMENTS FOR THE PERIOD ENDED DECEMBER 31, 2012 AND 2010

(Euro) Notes 2012 2011 Operating activities:

Receipts from customers 6,306,844 5,925,648

Payments to suppliers (1,443,500) (1,976,444)

Payments to staff (3,987,966) (4,128,095)

875,378 (178,891)

Payments/ receipts of income tax 1,130,453 3,102,830 Other payments/ receipts related with (2,694,029) (2,488,421) operating activities (1,563,576) 614,409

CASH FLOW FROM INVESTMENT ACTIVITIES (688,198) 435,518 Investment activities:

Receipts from:

Financial investments 8 139,550,811 218,752,353

Dividends 3,611,875 143,162,687 3,740,967 222,493,320 Payments related with:

Financial investments 8 123,543,957 306,826,045

Fixed tangible assets 792 123,544,749 320 306,826,364 CASH FLOW FROM INVESTMENT ACTIVITIES 19,617,938 (84,333,043) Financing activities:

Receipts from:

Loans 447,342,245 412,664,573

Sale of own shares 0 670,031

Interest received 3,728,883 451,071,128 12,166,120 425,500,724 Payments related with:

Loans 461,049,870 334,928,966

Amortisations of financial leasing contracts 12,187 10,872

Interest paid 279 3,461,357

Acquisition of own shares 0 810,073

Interest paid 8,802,655 469,864,990 13,599,977 352,811,245 CASH FLOW FROM FINANCING ACTIVITIES (18,793,862) 72,689,479 Change in cash and cash equivalents 135,877 (11,208,047) Effect of foreign exchange differences (31) (205,882) Cash and cash equivalents at the beginning of 78,233 11,492,163 the period Cash and cash equivalents at the end of the 214,079 78,233 period REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 179

ANNEX TO THE INDIVIDUAL CASH FLOW STATEMENTS

During the year ended December 31, 2012 the following transactions were made by cash and cash equivalents: > Dividends received by cash and cash equivalents in the amount of 3.3 million Euros paid by the company “Soares da Costa Construção, SGPS, S.A.”; > Dividends received by cash and cash equivalents in the amount of 311,875 Euros by society “Soares da Costa Serviços Partilhados, S.A.”; > Payment of preferred shares’ dividends paid to shareholders in the amount of 279 Euros, fully paid up in cash and cash equivalents.

Breakdown of cash and cash equivalents

31.12.2012 31.12.2011

Cash 1,930 638

Bank deposits, immediatly available 212,149 77,595

Cash equivalents 0 0

Cash and equivalents 214,079 78,238

Securities - 0

Cash on balance sheet 214,079 78,238

The receipts / payments on loans - financing activities - include successive settlements and new commercial paper totalling 192 million Euros. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 180

ACCOUNTING POLICIES AND EXPLAINATORY NOTES TO THE INDIVIDUAL ACCOUNTS

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.1 INTRODUCTORY NOTE

Identifying elements office, under the corporate name of “Sociedade de Construções Soares da Costa, S.A.”. This company Company name: “operated in the civil construction and public works Grupo Soares da Costa S.G.P.S., S.A. industry, in related activities and in the acquisition and disposal of real estate assets”. Registered at the Commercial Registry Office of Oporto and Tax Number: On 30 December 2002, after the transfer of its 500 265 763 direct productive activities, namely in the construc- Head Office: tion business, and by a public deed celebrated at Rua de Santos Pousada, 220 4000-478 PORTO the 4th Notary Public Office of Porto, “Sociedade Activity: de Construções Soares da Costa, S.A.” changed its Grupo Soares da Costa, S.G.P.S., S.A. is the parent company object to “Management of shareholdings Company of Soares da Costa Group. as an indirect way of carrying out economic activities” and adopted its current name “Grupo Soares The company has been incorporated on 2 June 1944 da Costa, S.G.P.S., S.A.”. as a limited business corporation named “Soares da Costa, Lda”, which later, on 01 May 1968, became Figures mentioned in Notes are presented in Euro a joint stock company by deed at a notary public units.

.2 ACCOUNTING REFERENCE BASIS USED IN THE PREPARATION OF THE FINANCIAL STATEMENTS

The company is part of the consolidation group Therefore, under the provisions of no 1 of article 4 whose parent company - Grupo Soares da Costa, of decree law 158/2009, as of 13 July, it has adop- SGPS, S.A. has been drawing up consolidated ac- ted the drawing up of the individual financial reports counts since 2004 in accordance with the Interna- in accordance with those international standards. tional Financial Reporting Standards (IAS/IFRS) as adopted in the European Union.

.3 MAIN ACCOUNTING POLICIES

The main accounting policies adopted in the preparation of the financial statements are as follows: REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 182

3.1 PRESENTATION BASIS

The financial statements assume the Company’s mates and assumptions made by the board of direc- continuity and were compiled from the accoun- tors were based on the best information available at ting records of the company, which comply with the date the financial statements were approved. the International Standards on Financial Reporting as adopted in the European Union, in force for the The company’s board of directors believes that the financial year starting on 01 January 2009, from attached financial statements and subsequent notes which date the Company began applying IAS/IFRS. are a fair representation of the financial information.

The financial statement include some figures that For the purpose of these financial statements, the were estimated, affecting the amounts reported as company has not implemented any standards or assets and liabilities, as well as those reported as interpretations that have been issued by IASB in a income and costs for the period reported. All esti- subsequent date.

3.2 FIXED TANGIBLE ASSETS

Tangible fixed assets have been recorded at acqui- Gains or losses resulting from the sale or disposal sition cost or at a reassessed acquisition cost taking of tangible fixed assets are determined through into consideration accumulated depreciations and the difference between the alienation price and the impairment losses. net accounting value at the time of the sale/disposal, and are registered in the Income Statement Depreciations are calculated according to a straight as “other income and gains” or “other costs and line method and on a monthly basis, in accordance losses”. with the following estimated useful lives:

Useful life period

Transport equipment 4

Administrative equipment 3 - 10

3.3 FINANCIAL ASSETS AND LIABILITIES

a) Financial Investments their fair value, without deducting any transaction Financial investments are recognized at the date the expenses that might have been incurred on the sale. risks and rewards inherent to them are transferred. Investments in Equity instruments not listed in re- They are initially registered at acquisition price, i.e. gulated financial markets, and for which fair value the fair value of the price paid. cannot be reliably estimated, are accounted at acquisition cost deducted from eventual impairment Investments are evaluated when there are signs that losses. assets’ value might be subject to impairment losses. Any impairment losses found are registered as costs Financial investments in both group and associated at the income statement. companies are registered at acquisition cost minus impairment losses, if applicable. Financial investments are classified into investments held until maturity and investments evaluated at fair Gains or losses arising from a change of the fair value through results. value of investments evaluated at fair value through results are registered at the Income Statement for Following the initial recognition, investments stated the financial year. at fair value through results are re-evaluated at REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 183

Company has decided, at the date of the transition zed over the life of the loan, according to the effec- to IFRS, to measure the Financial Investments at their tive interest rate method. acquisition cost, according with the Generally Accep- ted Accounting Principles previously used, using such Financial costs associated with interests and similar amount as the cost considered at that date, in accor- costs (namely stamp duty), are registered at the dance with the option provisioned in IFRS 1. Income Statement according to the Matching Princi- ple, with any amounts due and not paid at the date b) Accounts receivable of the Consolidated Financial Position Statement Accounts receivable are registered at their nomi- being classified under “Other current liabilities”. nal value minus any impairment losses, recognised under “Impairment losses” in accounts receivable, d) Accounts payable so that they reflect the realisable net value. Accounts payable are registered at their nominal value. c) Loans Loans are registered as liabilities at their amortized e) Cash and equivalents cost value (effective interest rate method). The amounts included under “Cash and equivalents” correspond to cash, bank deposits and term depo- The costs associated with the issue of such loans sits and other short term cash applications. are recorded as a deduction from debt and recogni-

3.4 LEASES

Lease contracts are classified as: assets is calculated in accordance with that described in 3.2. above, and are recorded in depreciation > Financial leases if all risks and advantages inherent for the year. to ownership are substantially transferred; > Operational leases if all risks and advantages inhe- The capital included in the rent paid is recorded as a rent to ownership are not substantially transferred. reduction of those responsibilities and interest included in those revenues are recorded as expenses in Classification of leases as financial or operational is the financial year to which they relate. decided in accordance with the substance and not the form of the contract. In the case of operational leases, rents due are recognised as a cost in the Consolidated Income Sta- The assets acquired under finance lease contracts tement throughout the period of the leasing contract are recorded at fair value in the assets and their res- under “External supplies and services”. ponsibilities in the liabilities. Depreciation of these

3.5 FINANCIAL COSTS IN LOANS OBTAINED

Financial costs related to loans obtained are gene- with real estate projects classified under inventories rally recognised as a cost according to the Matching are capitalised and comprised in asset’s cost. Capi- Accounting Principle. talisation of these charges begins once preparation for the construction activity or development of the Pursuant to the terms of IAS 23, financial costs asset has begun, and is interrupted once the asset from loans associated with the acquisition, cons- production ends, or when the project in question is truction or production of fixed assets, or associated suspended. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 184

3.6 INCOME TAX

Current income tax is calculated based on the taxable Deferred taxes assets are registered when there are profits in accordance with the existing taxation rules. reasonable prospects of sufficient taxable income for them to be used. At the closing date of the Deferred taxes refer to the temporary differences Consolidated Financial Position Statement, the tem- between the accounting and figures for tax purpo- porary differences underlying assets for deferred ses in terms of assets and liabilities. taxes are re-assessed in order to recognise assets for deferred taxes not previously registered as those Deferred taxes assets and liabilities, are calculated failed to meet the conditions for registration, and/ and annually assessed using the tax rates expected or to reduce their amount according to the current to be in force at the reversion date of temporary di- expectations of future recovery. fferences. Deferred taxes are registered as expense or income in each year, except if they came from figures registered directly in equity, in which case deferred tax is also registered under the same item.

3.7 FINANCIAL POSITION STATEMENT

Realisable assets and payable liabilities, to be due past the closing date of Consolidated Financial Posi- tion Statement, are accounted as non current assets and liabilities, respectively.

3.8 RECOGNITION OF EXPENSES AND INCOME

Services revenues, are generally accounted when The Company accounts its income and expenses on they occur. an accrual basis: income and expenses are recognised when generated, regardless of the moment Financial income from delayed payment by custo- at which they are received or paid. The differences mers is accounted when there is significant evidence between the amounts received and paid and the that they are receivable. corresponding income and expenses generated are registered under “Other current assets” or “Other Dividends are accounted as income in the financial current liabilities”, depending on the nature of the year they are attributed. difference.

3.9 BALANCES AND TRANSACTIONS IN FOREIGN CURRENCY

Foreign currency transactions (non-Euro), are regis- rable, due to discrepancies between the exchange tered at the exchange rates in force at the time of rates in force at the time of the transaction and each transaction. those in force when payments were made or received, or as at the date of the balance, are registered On each balance date, monetary assets and liabili- as “Other financial gains and losses” in the Income ties expressed in foreign currency are converted to Statement for the year. Euros using the rates in force at that time. The figures included in the Financial Position State- Exchange differences, both favourable and unfavou- ment were translated into Euros using the following: REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 185

Average foreign exchange rate (buy/ sell) 31.12.2012 31.12.2011

US Dollar EUR/USD 1.3194 1.2939

Angolan Kwanza EUR/AOA 126.37 122.55

Brazilian Real EUR/BRL 2.7036 2.4159

UK Pound EUR/GBP 0.8161 0.8353

3.10 IMPAIRMENT OF NON CURRENT ASSETS

An assessment of impairment is made at the time of A reversion of impairment losses recognised in pre- each balance, and whenever an event or change in vious years is registered when there are signs that circumstances signals that the figure registered for the recognised impairment losses no longer exist or the asset may not be recovered. have diminished. The reversion of impairment losses is recognised in the Consolidated Income Statement Whenever the asset amount is higher than its recove- as an operational income. rable value, it is recognised an impairment loss, which is registered in the Consolidated Income Statement.

3.11 CONTINGENT ASSETS AND LIABILITIES

Contingent liabilities are not recognised in the Finan- Contingent assets are not recognised in the Financial cial Statements, but are disclosed in the Explanatory Statements, but are disclosed in the Explanatory Notes to the accounts, unless the possibility of ou- Notes to the accounts, when it is likely to occur a tflow is remote. future economic inflow.

3.12 SUBSEQUENT EVENTS

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

3.13 DERIVATIVES

The company contracts derivative financial instru- The possibility of classify a derivative instrument as ments to hedge financial risks to which is exposed, a hedging instrument complies with the provisions particularly those arising from changes in interest of IAS 39, particularly regarding their documentation rate, not using derivative instruments for trading and effectiveness. purposes. The criteria used to classify derivatives as hedging Derivative financial instruments are measured at instruments of cash flows are as follows: fair value. The recognition method depends on the nature and purpose of the contract. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 186

> It is expected that the hedge is highly effective in ded under “Reserves of coverage transactions” are offsetting changes in cash flows attributable to transferred to the income statement in the period the hedged risk; when the hedged item also impacts results. > The effectiveness of the hedge can be reliably measured; Hedge or coverage accounting is discontinued when the hedging instrument reaches maturity, it is sold > Is there adequate documentation of the transaction or exercised, or when the hedging relationship to be covered at the beginning of the coverage; ceases to meet the requirements of IAS 39. In si- > The covered transaction is highly probable. tuations where the derivative no longer qualifies as a hedging instrument, the fair value differences ac- Changes in the fair value of financial instruments cumulated and deferred in equity under the caption designated as hedging of “fair value” are recognized “Reserves of coverage transactions” are transferred as financial income of the period, as well as changes to the income statement. in fair value of the asset or liability subject to that risk. The derivative instruments that are contracted with the aim of carrying out economic hedges and that Changes in the fair value of derivative instruments do not meet all the provisions of IAS 39 (Financial designated as hedging of “cash flow” are recog- Instruments: Recognition and Measurement) regar- nized in “Reserves of coverage transactions” in its ding the possibility of qualifying as hedges for ac- effective component, and in the financial results in counting, the corresponding changes in fair value are its non-effective component. The amounts recor- recognized in the income statement for the period they occur.

3.14 OWN SHARES

Own shares are recorded at acquisition value as a deduction to equity. Gains or losses incurred on the sale of own shares are registered in the “Reserves and retained profits” account.

3.15 RISK MANAGEMENT

During its activity the company is exposed to a va- Exposure to credit risk results from the accounts riety of risks: market risk (including exchange rate receivable related with usual activity, being the ma- and interest rate risk as well as price risk), credit risk ximum exposure to the credit risk the nominal value and liquidity risk. The global risk management proof the accounts receivable. gram focuses on the unpredictability of the financial markets and seeks to minimize its adverse effects There is no significant concentration of credit risk as on the company’s financial performance. of December 31, 2011.

3.16 VALUE JUDGMENTS, CRITICAL ASSUMPTIONS AND MAJOR SOURCES OF UNCERTAINTY ASSOCIATED WITH ESTIMATES

In preparing the financial statements some judg- and liabilities, as well as the income and expenses in ments and estimates were made and used and di- the period. fferent assumptions that affect the value of assets REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 187

The estimates and underlying assumptions were financial statements were not considered in these determined based on the best knowledge existing estimates. Changes to estimates that occur after the at the date of approval of the financial statements date of the financial statements will be corrected of events and transactions in progress, as well as prospectively. For this reason and given the degree on the experience of past/ current events. However, of uncertainty, the actual results of the transactions situations that may occur in subsequent periods and in question may differ from the corresponding esti- that are not foreseeable at the date of approval of mates.

.4 TANGIBLE FIXED ASSETS

a) Gross assets Movement in gross value of tangible fixed assets:

Foreign Transfer Opening Changes in Closing Fixed tangible assets Increases Disposals exchange and balance perimeter balance effect write-offs Transport equipment 32,318 0 0 0 0 0 32,318

Administrative equipment 2,370,247 0 1,698 0 0 (1,658) 2,370,287

TOTAL 2,402,565 0 1,698 0 0 (1,658) 2,402,605

b) Accumulated Depreciations Movement in accumulated depreciations of tangible fixed assets:

Foreign Opening Changes in Anulation/ Closing Fixed tangible assets Increases exchange balance perimeter reversion balance effect Transport equipment 7,792 0 7,955 0 0 15,746

Administrative equipment 2,357,488 0 7,607 (1,533) 0 2,363,563

TOTAL 2,365,280 0 15,562 (1,533) 0 2,379,309

a) Gross assets

.5 FINANCIAL INVESTMENTS

Movement in the gross value of financial investments: REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 188

Foreign Opening Changes in Transfer and Closing Financial investments exchange Increases Disposals balance perimeter write-offs balance effect Equity stakes in 277,370,120 0 0 0 0 0 277,370,120 subsidiaries Loans to subsidiaries 210,227,913 0 0 1,088,651 0 (108,150,768) 103,165,796

Other financial investments 643,764 0 0 0 (432,393) 0 211,371 Financial investments in 50,000 0 0 0 0 (50,000) 0 progress TOTAL 488,291,797 0 0 1,088,651 (432,393) (108,200,768) 380,747,287

Movement in value adjustments:

Opening Changes in Closing Value adjustments Increases Disposals balance perimeter balance Participações de capital em subsidiárias 16,419,046 0 2,200,000 0 18,619,046

Outros investimentos financeiros 416,584 0 0 (416,584) 0

Investimentos financeiros 16,835,630 0 2,200,000 (416,584) 18,619,046

The amount of 16,419.046 Euros refers to the ad- S.G.P.S., S.A. and the individual shareholders’ equity justed value of capital share in “Soares da Costa (IAS) of Soares da Costa Indústria S.G.P.S., S.A., a Imobiliária S.G.P.S., S.A.” and “Soares da Costa In- company merged with the company Soares da Costa dústria S.G.P.S., S.A.”, of 16,000,000 and 419,046 Construção, S.G.P.S., S.A.. Euros respectively, as a way to correct the differences between the accounting value and the market The 2.200.000 Euros increase is related with the value, being the reference or “proxy” the sharehol- value adjustment of the participation in the com- ders’ equity (IAS) of Soares da Costa Imobiliária pany Energia Própria, S.A..

.6 INVESTMENTS IN SUBSIDIARIES AND ASSOCIATED COMPANIES

As of December 31, 2012 the Group had direct stakes in the following companies: REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 189

Book value % capital Shareholders' Net earnings Company Head Office 31.12.2012 held capital 2012 Group companies: Rua de Santos Pousada, 220 Soares da Costa Construção, S.G.P.S., S.A. 143,808,449 100.000% 141,975,718 (8,600,644) 4000 - 478 - Porto Rua de Santos Pousada, 220 Soares da Costa Imobiliária, S.G.P.S., S.A. 83,393,057 100.000% 85,442,706 (1,248,501) 4000 - 478 - Porto Rua de Santos Pousada, 220 Soares da Costa Concessões, S.G.P.S., S.A. 25,967,527 100.000% 11,178,693 (3,536,467) 4000 - 478 - Porto SCSP-Soares da Costa Serviços Rua de Santos Pousada, 220 1,293,416 99.960% 1,048,733 (86,969) Partilhados, S.A. 4000 - 478 - Porto Estrada de Talaíde, Lote 27 Energia Própria, S.G.P.S., S.A. 4,288,625 57.260% 2,047,998 (2,594,567) 2785-734 - Talaíde

.7 FINANCIAL AND OPERATIONAL LEASING

Financial Leasing The company has fixed assets included in the balance under financial lease. As of December 31, 2012 the book value of these assets is as follows:

Accumulated Financial leasing Gross assets Net asstes depreciations Transportation equipment 32,318 15,746 16,572

TOTAL 32,318 15,746 16,572

The responsibility for these contracts is as follows: The financial leases bear interest at market rates and have periods of defined useful life. As of De- Short term 9,942 cember 31, 2012 there are no contingent rents and restrictions relating to dividends (or any additional debt) associated with the leasing contracts in force. The reconciliation between the total of future minimum payments for leases on the balance sheet date and their present value, for periods, is as follows: Operational leasing Expenses with operating lease agreements amoun- 31.12.2012 ting to 102,866 Euros were recognized in 2012.

Financial leasing minimum payments: Rents on operating lease agreements (fixed rents) 2013 10,187 maintained by the company as of December 31, Present value/ interests 246 2012, mainly referring to operating lease of vehicles, have the following maturity profile: NPV of payments 9,942

Current 9,942 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 190

Maturity

Financial leasing minimum payments:

2013 135,251

2014 79,761

2015 51,541

2016 29,340

2017 5,189

TOTAL 301,083

.8 BREAKDOWN OF ACCOUNTS RECEIVABLE

As at December 31, 2012 and December 31, 2011 breakdown was as follows:

Accounts receivable 31.12.2012 31.12.2011

Trade debtors - current account 4,059,836 2,557,578

Trade debtors 4,059,836 2,557,578

Group companies 59,005,664 50,099,584

Associated companies 85,224 80,747

Special regime for the taxation of corporate groups 2,709,228 12,066,340

Group, associated and participated companies 61,800,117 62,246,671

Other debtors 540,813 577,531

Other accounts receivable 540,813 577,531

During 2012, income resulting from financial in- 31.12.2012 31.12.2011 vestments amounted to 139,550,811 Euros, while the financial investments payments summed up to Income tax 274,441 759,930 123,543,957 Euros. TOTAL 274,441 759,930

“State and other public entities” account breakdown as of December 31, 2012 and 2011 and was as follows: REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 191

.9 BREAKDOWN OF OTHER CURRENT ASSETS

Other current assets 31.12.2012 31.12.2011

Accrued income 167,264 71,845

Deferred costs 65,111 363,749

TOTAL 232,375 435,594

On December 31, 2012and 2011 these items have the following decomposition:

31.12.2012 31.12.2011

Accrued income

Interest to receive 0 71,845

Other accrued income 167,264 0

TOTAL 167,264 71,845

Deferred costs

Costs associated with financing operations 0 304,313

Insurance 40,463 35,828

Other deferred costs 24,648 23,608

TOTAL 65,111 363,749

The setting costs with financing operations are mainly related with commercial paper issues, to be deferred by the several settlement deadlines.

.10 CASH AND CASH EQUIVALENTS

As of December 31, 2012 and 2011 cash and equivalents breakdown was as follows:

31.12.2012 31.12.2011

Cash 1,930 638

Bank deposits. immediatly available 212,149 77,595

Cash equivalents 0 0

Cash and equivalents 214,079 78,233

Securities - 0

Cash on balance sheet 214,079 78,233 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 192

.11 COMPOSITION OF SHARE CAPITAL AND RESERVES

The company’s share capital amounts to Investifino – Investimentos e Participações SGPS, 160,000,000 Euros, being represented by S.A. holds 70.8142% of the Company’s share capi- 160,000,000 shares, with a nominal value of 1.00 tal, corresponding to 113,302,682 shares granting Euro, of which 159,994,482 are ordinary shares and 71.042% of voting rights as of December 31, 2012. 5,518 are non-voting preferred shares with the right to receive a preferential dividend and preferential In 2012, the movements related with own shares reimbursement of the respective nominal value if the were as follows: company declares bankruptcy.

Own Shares No. of shares Nominal value Discounts and premiums Amount

Opening balance 507,292 507,292 (334,766) 172,526

Acquisitions 0

Alienations 0

Closing balance 507,292 507,292 (334,766) 172,526

Net income for the year 2011, amounting to Portuguese corporate legislation required that at 877,728 Euros, was applied as follows, according to least 5% of the annual net income must is alloca- minutes number 110 of 24.05.2012: ted to “Legal reserve” account, until this reserve reaches at least 20% of the share capital. This re- Legal reserve 43,886 serve cannot be distributed, except in the case of bankruptcy, but can be used to absorb losses, after Retained earnings 833,565 all other reserves have been used, and to increase Dividends 276 the share capital. TOTAL 877,728 The revaluation reserves cannot be distributed to shareholders, unless they have been fully amortised or the respective items subject to the revaluation have been sold.

.12 BANK LOANS

As of December 31, 2012 and 2011 bank loans breakdown was as follows: REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 193

Bank loans 31.12.2012 31.12.2011 > Loan contracted by Grupo Soares da Costa, Non-current liabilities S.G.P.S., S.A. from Banif – Banco Internacional do Bonds 97,818,453 97,604,741 Funchal, amounting to 500 thousand Euros, to be

Bank loans 28,587,680 14,112,455 paid in 12 instalments ending in November 2021;

TOTAL 126,406,132 111,717,196 > Loan contracted by Grupo Soares da Costa, S.G.P.S., S.A. from Banif – Banco Internacional do Current liabilities Funchal, amounting to 2,500 thousand Euros, to be Bank loans 31,941,576 45,769,651 paid in 12 instalments ending in November 2021; Overdrafts 0 63,402 > Loan contracted by Grupo Soares da Costa, TOTAL 31,941,576 45,833,053 S.G.P.S., S.A. from Banco Comercial Português and Caixa Geral de Depósitos, amounting to 1,002 thousand Euros, to be paid in 12 instalments ending in The loans are measured at amortized cost with November 2021; effective interest rates of: 0.887%, 1.212% and > Loan contracted by Grupo Soares da Costa, 0.957%. S.G.P.S., S.A. from Caixa Banco de Investimento, amounting to 150 thousand Euros, to be paid Janu- On December 31, 2012, bank loans, in the form of ary 2023; overdrafts, bear an average annual interest rate of 8.447%. > Bond issue contracted by Grupo Soares da Costa, S.G.P.S., SA, amounting to 20,000 thousand Euros, On December 31, 2012, bank loans are as follows: to be paid in November 2015; > Grupo Soares da Costa S.G.P.S., S.A. has contrac- > Bond issue contracted by Grupo Soares da Costa, ted with a syndicate the placement and underwri- S.G.P.S., SA, amounting to 80,000 thousand Euros, ting of commercial paper issues up to 32 thousand to be paid in December 2017. Euros, under a program contract valid until June 16, 2015. As of December 31, 2012 this placement was The December 31, 2012 the bank loans’ default fully in use; To guarantee this loan, the shares held amounted to 152,102 Euros. After the accounting by subsidiaries of the company were pledged; closing date was negotiated a new repayment plan to reimburse this amount. > Loan contracted by Grupo Soares da Costa, S.G.P.S., S.A. from Caixa Central de Crédito Agrícola At 27 November 2012, a group of companies of Mutuo, amounting to 2,865 thousand Euros, to be Soares da Costa Group has signed an agreement paid in 12 instalments ending in November 2021; with six banks aiming the reprogramming of the > Loan contracted by Grupo Soares da Costa, respective recourse bank loans, totalling circa 275 S.G.PS.., S.A. from Caixa Geral de Depósitos, million Euros. The operation is characterised by a amounting to 1,250 thousand Euros, to be paid in 9-year maturity and 3-year capital grace period, by 12 instalments ending in November 2021; a standardization of spreads on a moderate level, with the possibility of revision after the grace period, > Loan contracted by Grupo Soares da Costa, by temporary restrictions to dividend payment S.G.P.S., S. A. from Banco Popular Portugal, amoun- and by the intention to do a capital increase within ting to 5,000 thousand Euros, to be paid in 12 ins- six months, in terms still to be determined, in an talments ending in November 2021; amount of not less than 25 million Euros. > Loan contracted by Grupo Soares da Costa, S.G.P.S., S.A. from Caixa Geral de Depósitos, The nominal value of loans recorded in the balance amounting to 14,000 thousand Euros, to be paid in sheet date of December 31, 2012 has the following 12 instalments ending in November 2021; maturities: REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 194

Maturity Bank loans Bonds Other loans Overdrafts Other (factoring) Total

2013 32,150,000 0 0 0 0 32,150,000

2014 0 0 0 0 0 0

2015 0 20,000,000 0 0 0 20,000,000

2016 4,738,604 0 0 0 0 4,738,604

2017 4,748,788 80,000,000 0 0 0 84,748,788

> 2017 19,100,288 0 0 0 0 19,100,288

TOTAL 60,737,680 100,000,000 0 0 0 160,737,680

Loans as at December 31, 2012 had the following interest rates:

Loans Minimum Maximum

Bank loans 2.214% 7.978%

Bonds 2.854% 2.894%

Commercial paper 6.750% 6.750%

.13 DERIVATIVES

The company contracted with a financial institution, As at November 30, 2012 the company liquidated a derivative – an Interest Rate Swaps - with a cur- the said instrument. rent amount of 4,513,000 Euros, repayable, in order to partially cover the risk of interest rate on a loan On December 31, 2012 and December 31, 2011 the of 5,000,000 Euros. The financial instrument that details of derivative financial instruments was as can be summarized as follows: follows:

Type of financial instrument: Derivative 31.12.2012 31.12.2011

Description: Interest rate coverage Non current liabilities 0 31,950

Bank: BANCO POPULAR Current liabilities 0 31,726

Currency: Euro TOTAL 0 63,676 Contract date: 11/03/2011

Start date: 14/06/2011

Maturity date: 16/06/2014

Frequency: Annual

Swap: 2.64

Amount covered by 30.11.2012: 4.513.000 Euros, reedemable

Reference: 12 month-Euribor REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 195

.14 BREAKDOWN OF OTHER ACCOUNTS PAYABLE

As of December 31, 2012 and 2011 the item “Other accounts payable” breakdown was as follows:

Accounts payable 31.12.2012 31.12.2011

Group companies 62,123,941 158,265,989

Special income tax regime to group of companies 10,172,308 5,469,717

Other shareholders 9,930 9,932

Group, associated and participated companies - current 72,306,178 163,745,638

Other accounts payable 25,673 84

Other accounts payable - current 25,673 84

“State and other public entities” account breakdown as at December 31, 2012 and 2011 was as follows:

31.12.2012 31.12.2011

Value added tax 158,374 230,067

Income tax 6,622,092 5,743,767

Social security contributions 89,582 103,043

Other 3,819,945 127,229

TOTAL 10,689,993 6,204,106

The item “Income tax” includes income tax from tion for payment in instalments and is waiting for a 2011 in the amount of 4,858,109 Euros, whose de- decision from the tax administration authority. adline for voluntary payment ended on 3 September 2012. Under the provisions of Decree-Law 492/88 The item “Others” includes 3,690,000 Euros con- of 30 December, the company requested authoriza- cerning a tax nature judicial process.

.15 OTHER CURRENT LIABILITIES

Other current liabilities 31.12.2012 31.12.2011 31.12.2012 31.12.2011

Accrued costs 823,580 818,703 Accrued costs

TOTAL 823,580 818,703 Staff costs to be paid 448,668 455,479

Interest to be paid 160,626 363,224 As of December 31, 2012 and December 31, 2011 Other accrued costs 214,286 0 these items were broken down as follows: TOTAL 823,580 818,703 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 196

.16 INFORMATION BY SEGMENTS

Turnover breakdown by geographical market was as follows:

2012 % 2011 % Portugal 4,512,287 90.20% 5,684,413 91.17% Angola 44,752 0.89% 61,245 0.98% United States 386,421 7.72% 385,200 6.18% Mozambique 54,090 1.08% 83,400 1.34% S. Tomé and Príncipe 5,011 0.10% 21,000 0.34% TOTAL 5,002,561 100.00% 6,235,258 100.00%

The decomposition of this item to the date of De- cember 31, 2012 and December 31, 2011 was as follows:

Services 31.12.2012 31.12.2011 Shared services 4,999,999 6,000,000 Insurance 0 0 Other services 2,562 235,258 TOTAL 5,002,561 6,235,258

.17 EXTERNAL SUPPLIES AND SERVICES

Costs with external supplies and services in 2012 and 2011, breakdown was as follows:

External supplies 31.12.2012 31.12.2011 Specialised works/ services 373,074 1,039,868 Advertising 75,063 396,045 Fees 29,501 68,833 Travel and accommodation 260,915 301,211 Car rentals 192,866 201,287 Fuel 53,124 53,585 Communication 28,207 34,811 Insurance 67,459 66,068 Other 390,312 456,475 TOTAL 1,470,521 2,618,182 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 197

.18 RELATED PARTIES

Account balances and transactions with both group and associated companies are detailed in the following table.

The terms and conditions used in transactions between group companies and associated companies are substantially the same normally contracted between independent entities in comparable operations.

Loans to Loans from Other Trade Group and Trade Group and Accounts' balance at 31.12.2012 accounts debtors associated creditors associated receivable companies companies Soares da Costa Serviços Partilhados, S.A. 5,903 0 0 23,240 1,455,405

Costaparques, S.A. 0 49,206 0 0 0

Habitop, S.A. 0 0 0 1,286 0

Soc. Construções Soares da Costa, S.A. 879,381 0 0 5,808 30,907,306

Ciagest, S.A. 30,816 129,478 0 51,786 0

Clear, S.A. 87,862 5,757,266 0 0 0

Socometal, S.A. 11,093 0 0 0 513,203

SDC Construção, S.G.P.S., S.A. 0 0 537,414 30,000 27,496,420

SDC Imobiliária, S.G.P.S., S.A. 0 19,484,262 0 0 1,751,606

SDC Concessões, S.G.P.S., S.A. 71,698 133,718,955 0 0 0 Cais da Fontinha - Investimentos 0 317,966 0 0 0 Imobiliários, S.A. Carta, Lda. 0 589,990 0 0 0

Intevias - Serviços e Gestão, S.A. 0 39,040 0 0 0

Soarta, S.A. 0 36,464 0 0 0

Scutvias, S.A. 5,328 0 0 0 0 Indáqua Feira - Indústria de Águas de S. 0 87,157 0 0 0 Maria da Feira Carta Angola 105,991 0 0 0 0

SDC América, Inc. 2,518,204 0 0 0 0

SDC Moçambique, S.A.R.L. 137,490 0 0 0 0

SDC S. Tomé e Principe, Construções, Lda. 26,011 0 0 0 0

Soares da Costa Concessions USA, Inc. 162,322 0 0 0 0

Clear (Angola), S.A. 6 0 0 0 0

Energia Própria, S.A. 17,731 2,046,901 1,800 0 0

Estádio de Coimbra, ACE 0 0 0 5,424 0

TOTAL 4,059,836 162,256,684 539,214 117,545 62,123,941 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 198

Loans to Loans from Other Trade Group and Trade Group and Accounts' balance at 31.12.2011 accounts debtors associated creditors associated receivable companies companies Soares da Costa Serviços Partilhados, S.A. 8,655 0 0 25,815 926,582

Costaparques, S.A. 0 23,004 0 640 0

Habitop, S.A. 0 0 0 635 151,144

Soc. Construções Soares da Costa, S.A. 949,750 0 10,597 5,323 53,583,424

Contacto - Soc. Construções, S.A. 60,017 0 0 0 87,135,184

Ciagest, S.A. 43,355 1,211,682 0 44,688 0

Clear, S.A. 137,626 0 0 0 12,900,336

SDC Serviços Técnicos e de Gestão, S.A. 79,458 0 0 0 0

Socometal, S.A. 42,389 4 0 0 0

Navegaia, Instalações Industriais S.A. 0 0 0 0 336,484

SDC Construção, S.G.P.S., S.A. 79 136,166,481 537,414 0 0

SDC Imobiliária, S.G.P.S., S.A. 4 20,275,153 0 0 0

Soares da Costa Desenvolvimento, S.A. 0 0 0 0 0

SDC Concessões, S.G.P.S., S.A. 216 101,687,615 0 0 0 Cais da Fontinha - Investimentos 0 78,673 0 0 0 Imobiliários, S.A. Mercados Novos, Lda. 0 0 0 0 1,313,345

Intevias - Serviços e Gestão, S.A. 0 0 0 0 1,919,489

Scutvias, S.A. 5,328 0 0 0 0

Gaya Explor, Lda. 22,734 0 0 0 0 Indáqua Feira - Indústria de Águas de S. 0 83,085 0 0 0 Maria da Feira Carta Angola 61,239 0 0 0 0

SDC América, Inc. 925,551 0 0 0 0

SDC Moçambique, S.A.R.L. 83,400 0 0 0 0

SDC S. Tomé e Principe, Construções, Lda. 21,000 0 0 0 0

Soares da Costa Concessions USA, Inc. 62,079 0 0 0 0

CPE, S.A. 11 0 0 0 0

Clear (Angola), S.A. 6 0 0 0 0

Energia Própria, S.A. 3 882,549 85 0 0

Operestradas XXI, S.A. 36 0 0 0 0

Autoestradas XXI, S.A. 21 0 0 0 0

CAET XXI - Construções, ACE 26 0 0 0 0

Estádio de Coimbra, ACE 0 0 0 5,424 0

TOTAL 2,502,982 260,408,245 548,096 82,525 158,265,989 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 199

External Other financial Interest Interest Transactions in 2012 supplies and Turnover gains and paid received services losses Soares da Costa Serviços Partilhados, S.A. 138,661 29,078 42,880 20,645 0

Costaparques, S.A. 0 0 144 1,232 0

Habitop, S.A. 7,640 0 2,551 0 0

Soc. Construções Soares da Costa, S.A. 15,436 3,443,157 3,171,590 4,544 0

Ciagest, S.A. 286,490 150,341 593 47,436 0

Clear, S.A. 0 428,131 206,098 80,557 0

Socometal, S.A. 0 54,123 20,842 38,206 0

Navegaia, Instalações Industriais S.A. 0 0 5,479 0 0

SDC Construção, S.G.P.S., S.A. 0 0 7,219,038 5,278,652 0

SDC Imobiliária, S.G.P.S., S.A. 0 0 73,637 871,791 0

Intevias - Serviços e Gestão, S.A. 0 0 92,418 43 0

Soarta, S.A. 0 0 0 650 0

Mercados Novos, Lda. 0 0 27,841 0 0

SDC Concessões, S.G.P.S., S.A. 0 349,761 4,544 6,257,091 0

CPE, S.A. 0 35 0 0 0 Cais da Fontinha - Investimentos 0 0 0 9,273 0 Imobiliários, S.A. Carta, Lda. 0 0 0 29,573 0 Indáqua Feira - Indústria de Águas de 0 0 0 4,072 0 Santa Maria da Feira SDC Moçambique, S.A.R.L. 0 54,090 0 0 0

SDC S. Tomé e Príncipe, Construções, Lda. 0 5,011 0 0 0

Soares da Costa Concessions USA, Inc. 0 0 0 0 100,243

Energia Própria, S.A. 0 57,662 0 75,701 0

Carta Angola 0 44,752 0 0 0

SDC América, Inc. 0 386,421 0 0 1,206,233

TOTAL 448,228 5,002,561 10,867,654 12,719,467 1,306,476 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 200

External Other financial Interest Interest Transactions in 2011 supplies and Turnover gains and paid received services losses Soares da Costa Serviços Partilhados, S.A. 168,140 40,618 5,998 22,479 0

Costaparques, S.A. 2,736 5 0 1,575 0

Habitop, S.A. 7,470 0 4,237 846 0

Soc. Construções Soares da Costa, S.A. 35,878 3,784,154 2,220,004 0 0

Contacto - Soc. Construções, S.A. 0 582,887 4,791,211 0 0

Ciagest, S.A. 293,975 211,338 55 218,972 0

Clear, S.A. 0 564,688 248,044 1,646 0

SDC Serviços Técnicos e de Gestão, S.A. 0 387,648 25,228 0 0

Socometal, S.A. 0 102,225 134,941 4 0

Navegaia, Instalações Industriais S.A. 0 0 18,782 0 0

SDC Construção, S.G.P.S., S.A. 0 2,578 676,388 6,781,736 0

SDC Imobiliária, S.G.P.S., S.A. 0 3 0 890,543 0

Intevias - Serviços e Gestão, S.A. 0 0 45,281 0 0

Soarta, S.A. 0 0 31,013 0 0

Mercados Novos, Lda. 0 0 64,065 0 0

Soares da Costa Desenvolvimento, S.A. 0 0 1,358 0 0

SDC Concessões, S.G.P.S., S.A. 0 361 0 4,682,186 0 Soares da Costa - Ambiente e Energia, 0 0 2,674 0 0 S.G.P.S., S.A. CPE, S.A. 0 131 0 0 0 Cais da Fontinha - Investimentos 0 0 0 105,845 0 Imobiliários, S.A. MZI, Lda. 0 0 0 718 0

Carta, Lda. 0 0 0 7,208 0 Indáqua Feira - Indústria de Águas de 0 0 0 4,493 0 Santa Maria da Feira SDC Moçambique, S.A.R.L. 0 83,400 0 0 0

SDC S. Tomé e Principe, Construções, Lda. 0 21,000 0 0 0

Soares da Costa Concessions USA, Inc. 0 0 0 0 62,079

Energia Própria, S.A. 0 2 0 37,224 0

Operestradas XXI, S.A. 0 29 0 0 0

Autoestradas XXI, S.A. 0 76 0 0 0

CAET XXI - Construções, ACE 0 882 0 0 0

Clear (Angola), S.A. 0 6 0 0 0

Carta Angola 0 61,239 0 0 0

SDC América, Inc. 0 385,200 0 0 540,351

Mini Price Hotels (Porto), S.A. 1,925 0 0 0 0

TOTAL 510,124 6,228,470 8,269,278 12,755,474 602,430 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 201

.19 EMPLOYEES

The average number of employees during the financial years ended on December 31, 2012 was 42 persons, distributed as follows:

Qualified and semi qualified Directors Senior management Middle management professionals 9 24 1 8

The average number of employees during the financial year ended on December 31, 2011 was 40 persons, distributed as follows:

Qualified and semi qualified Directors Senior management Middle management professionals 9 22 1 8

Corporate bodies’ remunerations for the financial year ended on December 31, 2012 and 2011 were as follows:

Corporate bodies 31.12.2012 31.12.2011 Board of directors 1,770,496 1,962,465 Supervisory board 96,425 94,750 Chartered accountant 16,800 16,800

Staff costs for the financial years ending on December 31, 2012 and 2011, have the following breakdown:

Staff costs 31.12.2012 31.12.2011 Wages 3.370.987 3.548.353 Social charges 638.477 665.496 TOTAL 4.009.465 4.213.849

.20 OTHER OPERATING COSTS AND LOSSES

The other operating costs and losses for the periods ended December 31, 2012 and 2011 were as follows: REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 202

Other operating costs and losses 31.12.2012 31.12.2011 Taxes 201,653 234,215 Losses in fixed tangible assets 126 0 Fines 95,585 836 Donations 500 9,125 Fiscal related lawsuit costs (*) 8,721,542 0 Quotations 27,339 30,359 Other 432,446 96,946 TOTAL 9,479,192 371,481

(*)Following judicial inquiry related to events that occurred in the years 2001 to 2005 was granted a provisional suspension as a condition the payment of the amount in question calculated as confidential expenses (income tax).

.21 FINANCIAL RESULTS

The financial results for the periods ended December 31, 2012 and 2011 showed the following breakdown:

Financial costs and losses 31.12.2012 31.12.2011 Interest paid 16,792,473 14,578,249 Foreign exchange losses 0 206,278 Impairments on financial investments 2,200,000 48,996 Capital losses in the alienation of financial investments 0 10,222 Other financial costs and losses 2,081,219 1,505,696 TOTAL (1) 21,073,692 16,349,440

Financial income and gains 31.12.2012 31.12.2011 Interest received 12,719,773 12,760,013 Foreign exchange gains 2,149 1,030 Cash discounts obtained 57 1 Capital losses in the alienation of financial investments 4,417 0 Rendimentos de participação de capital 3,611,875 3,742,412 Other financial income and gains 1,306,476 603,825 (2) 17,644,747 17,107,281 Financial Results (1) - (2) (3,428,945) 757,841

“Other financial costs and losses” includes, essentially, costs of bank guarantees, commissions of the commercial paper issues and bond issues and expenses charged for banking services. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 203

.22 INCOME TAX AND DEFERRED TAX

The company is taxed on its income under the rities for a four year period (five years for Social Special Tax Regime for Corporate Groups. Being Security). Hence, the company’s tax declarations the parent company, the company registers in its concerning 2009 and following years are still subject relations with the State the tax charges and the to review. The company’s board of directors believes tax credit/debit for the contributions of the other that eventual corrections, should they occur, would companies in “Shareholders/ Group companies” ac- not have a significant impact on the financial state- counts. ments.

According to tax legislation, tax declarations are The income tax accounted for December 31, 2012 subject to review and correction by the tax autho- and 2011 breakdows as follow:

Income tax 31.12.2012 31.12.2011 Tax (currenta) (1,250,810) (852,856) Deferred tax (550,000) 0 TOTAL (1,800,810) (852,856)

Reconciliation of the pre-tax result for this period income tax:

Rate Taxable basis Income tax Rate and nominal income tax 25.00% (13,208,179) (3,302,045) Autonomous taxation 90,740 Non deductible costs for tax purposes 11,494,623 2,873,656 Other tax benefits (6,940) (1,735) Adjustments generating deferred taxes (2,200,000) (550,000) Other adjustments (3,645,706) (911,426) Rate and efective income tax (1,800,810)

The deferred tax assets on the balance sheet presented had the following origin:

Deferred tax assets 31.12.2012 31.12.2011 Losses reported 10,477,873 0 Diferrences in the valuation of financial investments 4,654,762 4,104,762 Derivatives' fair value 0 15,919 TOTAL 15,132,634 4,120,681

The heading “Losses reported” refers to the estimate of the incomne tax, calculated with reference to the special taxation of groups of companies, for the year 2012. The company believes that sufficient taxable profit will be available to use the value of reporting. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 204

.23 EARNINGS PER SHARES

As stated in note 11, the company’s capital consists pulated in item 2.7 of the respective issuance pros- of 159,994,482 ordinary shares and 5,518 prefe- pectus and are listed for trading, at no less than 5% rential shares without voting rights, with a par value of the respective par value, pursuant to article 341 of 1 Euro each. (2) of the Portuguese Corporate Code.

Holders of preferential shares without voting rights As of December 31, 2012 and 2011 the basic ear- are entitled to a priority dividend on the terms sti- ning per share matches the diluted earning per share, having been calculated as follows:

Earnings per share 31.12.2012 31.12.2011 Continued operations earnings, net of minorities (11,407,369) 877,728 Net earnings (11,407,369) 877,728 Number of preferred shares 5,518 5,518 Number of ordinary shares 159,994,482 159,994,482 Total number of shares 507,292 507,292 Weighted average number of ordinary shares 159,492,708 159,499,423 Net earnings attributable to preferred shares 276 276 Earnings per share Basic (0.071) 0.005 Diluted (0.071) 0.005

.24 GUARANTEES

Details on the banking guarantees and collateral provided by the company to third parties as of De- cember 31, 2012, were as follows: REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 205

Euros Bank guarantees 18,569,047 Confort Letter Opening credit external commerce operations and hot-money 1,250,000 Soc. Construções SDC, S.A. Confort Letter Opening credit to MLT financing 1,500,000 Soc. Construções SDC, S.A. Confort Letter Opening account to bank guarantees 3,250,000 Soc. Construções SDC, S.A. Confort Letter Opening credit to MLT financing 5,544,713 Ciagest, S.A. Confort Letter Opening credit to MLT financing 1,750,000 Ciagest, S.A. TOTAL 13,294,713 Soc. Construções SDC/SDC Endorsement Opening credit on current account 8,000,000 Concessões Soc. Construções SDC/SDC Endorsement Opening account to bank guarantees 8,000,000 Concessões Endorsement Opening credit on current account 5,000,000 Soc. Construções SDC, S.A. Endorsement Opening credit to MLT financing 2,247,822 Soc. Construções SDC, S.A. Endorsement Opening credit to MLT financing 16,980,227 Soc. Construções SDC, S.A. TOTAL 40,228,049

.25 FINANCIAL RISKS

Foreign Exchange Risk Credit Risk This risk results mainly from the company’s presen- This risk is associated with accounts receivable inhe- ce in foreign markets, increasing its exposure to the rent to the company’s activity. The need to register effects of the several currencies changes against an impairment loss is determined according to the the Euro. The exchange rate risk management policy seniority of the debt, the client’s risk profile, pre- followed by the company aims to minimize the sen- vious experience and further circumstances. sitivity of the company’s earnings to exchange rates fluctuations. The company seeks, as much as possi- As of December 31, 2012, the board of directors ble, to balance assets and liabilities expressed in the strongly believes that the estimated adjustments to same currency. the accounts receivable have been adequately represented in the financial statements.

As of December 31, 2012, no adjustments have been registered on accounts receivable amounts as collection was considered achievable since they include balances with Group companies.

Trade debtors - Trade debtors - Maturity 31.12.2012 31.12.2011 current account notes receivable Not due 0 0 0 721,052

0 to 180 days 0 0 0 0

181 to 360 days 0 0 0 0

361 to 540 days 0 0 0 0

541 to 720 days 0 0 0 0

more than 720 days 0 0 0 155,197

TOTAL 0 0 0 876,249 REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 206

Liquidity Risk Furthermore, the company adopts measures to The liquidity risk management policy aims to ensure prevent that kind of risks through an adequate and that at any given moment the profile of the maturity timely cash flow management. In order to manage dates of the company’s debt matches its capacity liquidity risk, the company maintains a balance be- to generate the required cash flows. The manage- tween the term and flexibility of contracted debt ment of liquidity risk therefore includes managing through the use of phased financing which reflects imbalances between the requirements for funds (for the requirement for funds. In addition, the company operating and financial costs, investments and debt has hot money accounts and overdrafts which avoid repayment) and the inflows (receipts from custo- (temporary) cash flow problems. mers, disinvestments, and financing commitments from financial entities).

.26 SUBSEQUENT EVENTS

No material events to report.

.27 COMPLIANCE WITH LEGAL FRAMEWORK

Decree law nr. 318/94, article 5, nr.4 > Costaparques - Estacionamentos, S.A. During the period ended December 31, 2012 were > Cais da Fontinha - Investimentos Imobiliários S.A. signed equity supply contracts with the following companies: > Soares da Costa Serviços Partilhados, S.A. > Energia Própria, S.G.P.S., S.A. > Intevias - Serviços e Gestão S.A. > Clear-Instalações Electromecânicas, S.A. During the period ended December 31, 2012 were signed financial operations contracts with the follo- > Socometal, S.A. wing companies: > Carta - Cantinas e Restauração, Lda. > Soares da Costa Construção, S.G.P.S., S.A. > Indáqua Feira - Indústria de Águas de Santa Maria > Soares da Costa Concessões, S.G.P.S., S.A. da Feira > Sociedade de Construções Soares da Costa, S.A. > Soarta, S.A.

> Soares da Costa Imobiliária, S.G.P.S., S.A. As of December 31, 2012 and 2011, debit and credit > Ciagest - Imobiliária e Gestão, S.A. positions, respectively, were as follows: REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 207

Loans granted 31.12.2012 31.12.2011 Equity supplies / supplementary capital Soares da Costa Construção, S.G.P.S., S.A. 0 108,150,768 Soares da Costa Concessões, S.G.P.S., S.A. 81,833,370 81,833,370 Soares da Costa Imobiliária, S.G.P.S., S.A. 19,368,450 19,368,450 Energia Própria, S.G.P.S., S.A. 1,963,976 875,325 TOTAL 103,165,796 210,227,913

Loans granted Soares da Costa Construção, S.G.P.S., S.A. 0 27,374,838 Soares da Costa Concessões, S.G.P.S., S.A. 50,830,200 19,380,260 Soares da Costa Imobiliária, S.G.P.S., S.A. 0 814,900 Cais da Fontinha - Investimentos Imobiliários, S.A. 315,117 78,300 Ciagest - Imobiliária e Gestão, S.A. 122,922 1,208,800 Costaparques - Estacionamentos, S.A. 48,854 23,000 Carta - Cantinas e Restauração, Lda. 584,157 0 Indáqua Feira - Indústria de Águas de Santa Maria da Feira 85,224 0 Intevias - Serviços e Gestão, S.A. 39,010 0 EnergiaPrópria, S.G.P.S., S.A. 0 0 Clear, S.A. 5,720,518 0 Soarta, S.A. 36,100 0 TOTAL 57,782,103 48,880,098

Loans obtained 31.12.2012 31.12.2011 Soares da Costa Construção, S.G.P.S., S.A. 26,861,048 0 Soares da Costa Imobiliária, S.G.P.S., S.A. 1,751,606 0 Sociedade de Construções Soares da Costa, S.A. 30,681,326 53,284,710 Soares da Costa Serviços Partilhados, S.A. 1,448,920 922,700 Habitop - Sociedade Imobiliária, S.A. 0 150,100 Mercados Novos-Imóveis Comerciais, Lda. 0 1,305,300 Navegaia - Instalações Industriais, S.A. 0 335,200 Construções Metálicas Socometal, S.A. 503,577 0 Intevias - Serviços e Gestão, S.A. 0 1,907,700 Contacto - Sociedade de Construções, S.A. 0 86,595,500 Clear-Instalações Electromecânicas, S.A. 0 12,819,380 TOTAL 61,246,478 157,320,590

Article 508 F of the Corporate Code The total amount charged by the external auditor and by the chartered accountant during 2012 was, respectively, 55,000 Euros and 16,800 Euros, concerning the legal certification of accounts and audit services. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 208

.28 CONTINGENCIES

As broadly announced, in 2002, Soares da Costa tants and auditors who supervised and intervened in Group was submitted to a profound restructuring the proceedings, frontally disagree with that opinion, and reorganization process that include, among and the settlement was been legally contested, ex- other items, the constitution of a holding company ception 381,752 Euros that have already been paid. and four sub-holdings by each business area: construction, real estate, concessions and industry. In July 2012, the company Grupo Soares da Costa, S.G.P.S., S.A., the parent/ holding company of These sub-holding were constituted with its capital the Special Taxation of Corporate Groups (RETGS), entering in kind by the holding, with the transfer at was notified of the settlement of 2008’s income market values of portfolio of participations previou- tax (IRC), as a result of the inspection made to the sly held in each of those segments by the holding company and to some its subsidiaries. From this company, being generated capital gains and losses notification results a payment of 2,164 million Euros with tax relevance. under the corrections introduced by the Tax Au- thority (AT), mainly relating to the deductibility of The Portuguese tax authority, following an exami- financial charges and transfer pricing. The company nation to Grupo Soares da Costa, S.G.P.S., S.A.’s ac- disagrees with AT’s understanding and already has counts, notified the company in 2005 for an income appealed against the settlement and has required, tax payment of 17,136,692 Euros, determined by pursuant the terms of the Code of Tax Procedure the disregard as tax expenditures of a set of capital and Process, the suspension of the enforcement losses generated in that business process (given proceedings. that considers as income the capital gains generated in the same process). As duly communicated to the The board of directors and the company’s lawyers market (as relevant information on 10 November believe these tax claims will be successful. 2005) that company, as well as external consul-

.29 ACCOUNTS RELEASE’S APPROVAL

At a meeting held on April 11, 2013, the Board of Directors authorised the release of these consolidated financial statements.

.30 CHANGES TO POLICIES, ESTIMATES AND ERRORS

During the year 2012, there were no changes in ac- 2011, furthermore were not recorded material errors counting policies, compared to those considered in relating to exercises above. the preparation of financial information for the year REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 209

CERTIFICATIONS

Corinthia Hotel Portugal complete portfolio available in: www.portfolio.soaresdacosta.pt REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 210

Grant Thornton & Associados – SROC, Lda. Avenida da Boavista, 1361 - 5º 4100 - 130 Porto Portugal T. +351 22 099 60 83 F. +351 22 099 76 96 www.gthornton.pt

LEGAL CERTIFICATION OF CONSOLIDATED ACCOUNTS free translation of a report originally issude in Portuguese

INTRODUCTION > Verification that the financial statements of companies included in the consolidation have been examined 1. We have examined the consolidated financial state- and for the cases where such an examination was not ments of Group Soares da Costa, S.G.P.S., S.A., which carried out, verification, on a sample basis, of the evi- comprise the Consolidated statement of financial dence supporting the ammounts and disclosures in the position as at 31 December 2012, (which shows total consolidated financial statements, and assessing the assets of 1.792.025.729 Euro and total equity of reasonabless of the estimates, based on the judgment 53.208.618 Euro, including a net loss of 46.881.180 and criteria defined by the Company´s Management Euro), the consolidated statements of comprehensive used in this preparation; and separated income, the consolidated statement of changes in equity, the Consolidated cash-flow state- > Verification of the consolidation operations; ment for the year then ended and the accounting poli- > Assessment of the appropriateness of the accounting cies and explanation notes. policies used and their disclosures, according to the circumstances; RESPONSIBILITIES > Verification of the adequacy of the overall presentation of the consolidated financial statements. 2. The Company’s Management is responsible for the preparation of consolidated financial statements which 5. Our examination also included the verification that present a true and fair view of the financial position of the financial statements. the companies included in the consolidation, the consolidated results of their operations and their conso- 6. We believe that our examination provides a reaso- lidated cash-flows as for the adoption of appropriate nable basis for expressing our opinion. accounting policies and criteria for the maintenance of adequate internal controls systems. OPINION 3. Our responsibility is to express a professional and 7. In our opinion, the consolidate financial statements independent opinion on these financial statements, referred to in paragraph 1 above present fairly, in all based on our examination. material aspects, the consolidated financial position of Grupo Soares da Costa, S.G.P.S., S.A. as at 31 Decem- SCOP ber 2012, the consolidate results of its operations and the consolidated cash flows for the year then ended, in 4. We conducted our examination in accordance with accordance with International Financial reporting stan- the auditing and technical recommendations ("Normas dards as adopted in the European Union. Técnicas" and "directrizes de Revisão/Auditoria") issued by the Portuguese Institute of The statutory Auditors ("Ordem dos Revisores Oficiais de Contas"), REPORT ON OTHER LEGAL REQUIREMENTS which required that we plan and perform our examina- 8. It is also our opinion that the financial information in order to obtain a reasonable assurance about tion contained in the consolidate management report whwther the financial statements are free of material agrees with the consolidated financial statements. misstatement. According, our examination included: REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 211

EMPHASIS OF MATTER 9.2 As referred to in note 4 of the Accounting policies and explanation notes, the contracts of Subconces- 9. Without qualifying our opinion in paragraph 7 sion and concession of "Auto Estradas XXI – Sub- above, we draw your attention to the following facts: concessionária Transmontana, S.A.", and "Scutvias 9.1 As referred to in Note 30 of the Accounting po- – Autoestradas da Beira Interior, S.A.", regarding the licies and explanation notes, Trade debtors includes denominated "Auto-Estrada Transmontana e SCUT debts in the name of an Angolan Company, and it’s da Beira Interior", respectively, are bein renegociated. related parties, for an amount of some 75.000.000 Company’s management belives that the conclusion Euro, which recovery is dependent on a negotiation of this renociation will not cause any material chan- with the Angolan Company, regarding the completion ges on the non- current consolidated assets. In the of contracts with this client. Based on his extensive case of "scutvias", the revenue of the concession for experience in this market, the Company’s Manage- the year 2012, which, in the consolidated accounts, ment assumes that these are fully recoverable, and it amounts to 44.000.000 Euro, was determined provi- is not expectable any loss on these financial assets. sionally, and is eventually subject to a further adjustment. The possible adjustment rises from the process of introducing tolls, and is under a transition regime until the conclusion of the negotiation process.

Porto, 11 April 2013

Grant Thornton & Associados – SROC, Lda. Represented by Jorge Bento Martins Ledo (ROC 591) REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 212

BDO & Associados, SROC, Lda. Rua S. João de Brito, 605 E - 3.2 4100 - 455 Porto Portugal T. +351 226 166 140 F. +351 226 166 149 www.bdo.pt

AUDITORS’ REPORT CONSOLIDATED FINANCIAL

STATEMENTS (translation of a report originally issude in Portuguese)

INTRODUCTION 3. Our responsabilitiy is to examine the financial information contained in the accounting documents 1. Pursuant to article 245 of the Securities Market referred to above, including verifying that the informa- Code “Código dos Valores Mobiliários”, we hereby tion is complet, true, timely, clear, objective and licit, as present our Auditors report of consolidated financial required by Securities Market Code, and to issue a pro- information contained in the Board of Directors Report fessional and independent report based on our work. and accompanyning consolidated financial statements of Grupo Soares da Costa, S.G.P.S., S.A. (ahead also mentioned as company), for the year ended 31 De- SCOPE cember 2012, which comprise the Consolidated Sta- tement of The Finantial Position (that reflects a total 4. Our examination was performed in accordance of 1 792 025 729 euros and shareholders equity with the Auditing Standards (“Normas Técnicas” and of 53 208 618 euros, including a consolidated net “Diretrizes de Revisão/Auditoria”, issued by the Por- loss attributable to the Company’s Equipy Holders of tuguese Institute of statutory Auditors (“Ordem dos 46881180 euros), the Separate Consolidated State- Revisores Oficiais de Contas”) witch require that exa- ment of Changes in Equity and the Consolidated State- mination is planned and performed with the objective ments of Cash Flows for the yeart then ernded and the of obtaining reasonable assurance about whether the corresponding notes. consolidated financial statements are free of material misstatements. An examination includes: (i) verifying, on a sample basics, evidence supporting the amounts RESPONSABILITIES and disclosures in the consolidated financial statement and assessing the significant estimates, based on jud- 2. The Company’s Board of Directors is responsible gements and criteria defined by the Company’s Boad for: (i) the preparation of consolidated financial state- of Directors, used in their preparation; (ii) verifying the ments that present a true and fair view of the financial consolidation procedures used, namely the application position of the companies included in the consolidation of the equity method; (iii) verifying that the financial results and comprehensive income of their operations, statements of the companies included in the consoli- the consolidated changes in equity and the consolidate dation have been appropriately examined, assessing cash flows; (ii) the preparation of historial financial the adequacy of the accounting the circunstances; (iv) information in accordance with international financial verifying the applicability of the going concern concept; reporting standards as adopted in European Union and (v) verifying the adequacy of the overall presentation that is complet, true, timely, clear, objective and licit, as of the consolidated financial statements, and;( vi) required by the securities market code; (iii) The adop- assessing if the financial information complete, true, tion of adequate accounting policies and criteria; (iv) timelym clear, objective and licit. the maintenance of appropriate systems of international control; and (v) the disclosure of any significant 5. Our examination also included verifying that the fact that has influenced the operations of companies financial information included in the consolidated included in consolidation, their financial position or re- Board Director’s report is consistent with the mentio- sults operations. ned financial statements, as well as to perform the REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 213

verifications established in nº 4 and nº 5 of the article 8.2 As mentinoned in Note 4 to the financial sta- 451º of the companies code (“Codigo das Sociedades tements, the sub concession and concession con- Comerciais”). tracts from Auto-Estradas XXI – Subconcessionária Transmontana, S.A. And “Scut da beira Interior”, 6. We believe that our examination provides a reaso- respectively, are in process of renegotiation, being nable basis for expressing our opinion. the understanding of the board of directors that as a result of its outcome no material impacts on no current assets will occur. In the case of Scutvias, the OPINION concession revenue 2012 – amounting to approximately 44 million euros from the perspective of the 7. In our opinion, the consolidated financial satements consolidated financial statements of company – was referes to above, present fairly, in all material aspects, determined on a provisional basis and possibly sub- the consolidated financial position of Grupo Soares da ject to a consequence adjustment. This adjustment Costa , S.G.P.S., S.A., as 31 of December 2012, the is related with the introduction of tolls and is under a consolidations results and comprehensive income of transitional regime until completion of the going ne- its operations, the consolidated changes in equity and gotiation process the consolidated cash flows for the year then ended, in accordance with the international Financial Reporting Standards as adopted in the European Union and the REPORT ON OTHER LEGAL REQUIREMENTS financial information contained therein is complete, true, timely, clear, objective and licit. 9. It is also our opinion that the information included in the consolidated board of Directors report is an accordance with the consolidated financial statements EMPHASIS OF MATTER of the year and that the corporate governance report includes the information required to the company, as 8. Without affecting the opinion expressed in the pre- established by article 245º a of the securities market ceding paragraph, We draw attention to the following code. matters: 8.1 As mentioned in Note 30 to the financial statements the balance of the caption clients includes overdue debts from an Angolan company and its realated parties, totalizing approximately 75 million euros, where its recovery is dependent on a process of negotiations with the management of that com- Porto, April 12, 2013 pany, concerning the execution of some construction contracts with this client. In the light of the experien- BDO & Associados, SROC, Lda. ce of the company´s Board Directors in this market, represented by Paulo Jorge de Sousa Ferreira the debts will be received and no lasses are expectable from these financial assets. REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 214

This Report is a translation of the original, issued in Portuguese. In the event of discrepancies, the Por- tuguese versions prevail.

OPINION OF THE SUPERVISORY BOARD

Under the Law (No. 1 of Article 508-D of the Cor- > Legal certification of accounts; porate Code), the supervisory board received, for > Legal certifications of consolidated accounts, examination, the consolidated accounts of Soares da Costa S.G.P.S., S.A., reported the year two thousand which, after analysis, deserved our agreement, and and twelve, who made up the following parts: therefore the supervisory board decided, unanimou- sly, to give them our approval. > Consolidated balance sheet; > Consolidated financial statements; As a result, has written this opinion and proposes > Annex to the balance sheet; that the consolidated accounts and management > Management report; report for the year two thousand and twelve are ap- > Corporate governance report. proved by the general meeting of shareholders pursuant to Article 376. of the Corporate Code. We were also submitted for consideration, the following documents, reported concerning the year 2012, prepared by the external auditor, Mr Jorge Paulo Fer- reira de Sousa, on behalf of BDO & Associados, SROC: > Audit report of individual accounts; Porto, April 23, 2013 > Audit report of the consolidated accounts, The Supervisory Board, as well as documents produced by the chartered Júlio de Lemos de Castro Caldas (Chairman) accountant (ROC), Mr Jorge Ledo Bento Martins, on Joaquim Augusto Soares da Silva behalf of Grant Thornton & Associados, SROC, Ltd.: Carlos Pedro Machado de Sousa Góis REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 215

Grant Thornton & Associados – SROC, Lda. Avenida da Boavista, 1361 - 5º 4100 - 130 Porto Portugal T. +351 22 099 60 83 F. +351 22 099 76 96 www.gthornton.pt

LEGAL CERTIFICATION OF ACCOUNTS free translation of a report originally issude in Portuguese

INTRODUCTION > Verification, on a sample basis, of evidence supporting the amounts and disclosures in the financial state- 1. We have examined the financial statements of ments, and assessing the reasonableness of the esti- Group Soares da Costa, S.G.P.S., S.A., which comprise mates, based on the judgments and criteria defined by the statement of financial position as at 31 December the Company´s Management used in this preparation; 2012, (which shows total assets of 444.405.831 Euro and total equity of 201.079.765 Euro, including > Assessment of the appropriateness of the accoun- a net loss of 11.407.369 Euro), the statements of ting policies used their disclosures, according to the comprehensive and separated income, the statement circumstances; of changes in equity, the cash-flow statement for the > Assessment of the adequacy of the overall presenta- year then ended and the accounting policies and expla- tion of the financial statements. nation notes. 5. Our examination also included the verification that the financial information included in the management RESPONSIBILITIES report agrees with the financial statements. 2. The Company’s Management is responsible for the preparation of financial statements which present a 6. We believe that our examination provides a reaso- true and fair view of the financial position of the com- nable basis for expressing our opinion. pany the results of its operations and its cash-flows as well as for the adoption of appropriate accounting policies and criteria for the maintenance of adequate OPINION internal controls systems. 7. In our opinion, the financial statements referred to in paragraph 1 above present fairly, in all material as- 3. Our responsibility is to express a professional and pects, the financial position of Grupo Soares da Costa, independent opinion on these financial statements, S.G.P.S., S.A., as at 31 December 2012, the consoli- based on our examination. date results of its operations and the cash flows for the year then ended, in accordance with International Financial reporting standards as adopted in the Euro- SCOPE pean Union. 4. We conducted our examination in accordance with the auditing standards and technical recommendations (“Normas Técnicas” and “Directrizes de Revisão/ REPORT ON OTHER LEGAL REQUIREMENTS Auditoria”) issued by the Portuguese Institute of The 8. It is also our opinion that the financial information statutory Auditors (“Ordem dos Revisores Oficiais de contained in the management report agrees with the Contas”), which required that we plan and perform our financial statements. examination in order to obtain a reasonable assurance about whether the financial statements are free of material misstatement. According, our examination included: REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 216

EMPHASIS OF MATTER 9.2 The subsidiary “Soares da costa Concessões, S.G.P.S., S.A.” holds a financial investment in “Auto- 9. Without qualifying our opinion in paragraph 7 -estadas XXI – Subconcessionária Transmontana, above, we draw your attention to the following facts: S.A.” and a indirectly investmente in “Scutvias – Au- 9.1 The subsidiary “Soares da costa Construção, toestradas da Beira Interior, S.A., which contracts of S.G.P.S., S.A.” holds a financial investment in “So- subconcession and concession of the denominated ciedade de Construções Soares da Costa, S.A.”, which “ Auto-estrada Transmontana” and “SCUT da beira financial statements includes debts in the name of Interior”, respectively , are being renegotiated. By the an Angolan Company and its related parties, for an date we issue this audit report , that negotiations are amount of some 75.000.000 Euro, which recovery is not complete. Company´s management6 believes dependent on a negotiation with Angolan Company, that the conclusion of this negotiation will not cause regarding the completion of contracts with this client. changes with impact on the financial statements of Based on his extensive experience in this market, the company. the Company’s management assumes that these amounts are fully recoverable, and it is not expectable any loss in such accounts receivable and, consequently, in the value of the investment.

Porto, 11 April 2013

Grant Thornton & Associados – SROC, Lda. Represented by Jorge Bento Martins Ledo (ROC 591) REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 217

BDO & Associados, SROC, Lda. Rua S. João de Brito, 605 E - 3.2 4100 - 455 Porto Portugal T. +351 226 166 140 F. +351 226 166 149 www.bdo.pt

AUDITORS’ REPORT translation of a report originally issude in portuguese

INTRODUCTION SCOPE 1. Pursuant to article 245 of the Securities market 4. Our examination was performed in accordance Code “Código dos valores Mobiliários”, we hereby pre- with the Auditing Standards (“Normas Técnicas” and sent our Auditors’ Report of the financial information “Diretrizes de Revisão/Auditoria”, issued by the Por- contained in the Board of Directors Report and the tuguese Institute of statutory Auditors (“Ordem dos accompanying financial statements of Grupo Soares da Revisores Oficiais de Contas”) witch require that exa- Costa, S.G.P.S., S.A. (ahead also mentioned as com- mination is planned and performed with the objective pany), for the year ended 31 December 2012, which of obtaining reasonable assurance about whether the comprise the statement of the Finantial position (that consolidated financial statements are free of material reflets a total of 444 405 831 euros and shareholders misstatements. An examination includes: (i) verifying, equity of 201 079 765 euros, including a net loss of 11 on a sample basics, evidence supporting the amounts 407 369 euros) The Separate Statement of results, the and disclosures in the consolidated financial statement Statement of comprehensive income, the Statement of and assessing the significant estimates, based on jud- Changers in Equity and the statement of cash flows for gements and criteria defined by the Company’s Boad the year then ended and the corresponding notes. of Directors, used in their preparation; (ii) assessing the adequacy of the accounting policies used and their disclosure, taking into consideration the circunstances; RESPONSIBILITIES (iii) verifying the applicability of the going concern concept; (iv) verifying the adequacy of the overall pre- 2. The Company’s Board of Directors is responsible sentation of the financial statements, and; (v) asses- for: (i) the preparation of financial statements that sing if the financial information complete, true, timely present a true and fair view of the financial position of clear, objective and licit. the company the results and comprehensive income of it’s operations, the changes in equity and the cash 5. Our examination also included verifying that the flows; (ii) the preparation of historical financial infor- financial information included in Board Director’s report mation in accordance with international financial repor- is consistent with the mentioned financial statements, ting standards as adopted in European Union and that as well as to perform the verifications established in nº is complet, true, timely, clear, objective and licit, as re- 4 and nº 5 of the article 451º of the companies code quired by the securities market code; (iii) The adoption (“Codigo das Sociedades Comerciais”). of adequate accounting policies and criteria; (iv) the maintenance of appropriate systems of international 6. We believe that our examination provides a reaso- control; and (v) the disclosure of any significant fact nable basis for expressing our opinion. that has influenced the operations their financial position or results operations. OPINION 3. Our responsabilitiy is to examine the financial information contained in the accounting documents referred 7. In our opinion, the financial satements refered to above, including verifying that the information is to above, present fairly, in all material aspects, the complet, true, timely, clear, objective and licit, as requi- consolidated financial position of Grupo Soares da red by Securities Market Code, and to issue a profes- Costa, S.G.P.S., S.A., as 31 of December 2012, the sional and independent report based on our work. consolidations results and comprehensive income of REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 218

its operations, the consolidated changes in equity and 8.2 The company indirectly holds financial inves- the consolidated cash flows for the year then ended, timents in Auto- Estradas XXI subconcessionária in accordance with the international Financial Reporting Transmontana, S.A. and Scutvias – Auto Estradas Standards as adopted in the European Union and the da Beira interior, S.A., in percentages of 50% and financial information contained therein is complete, 33,33%, whose sob concession and concession con- true, timely, clear, objective and licit. tracts for the so –called “ Auto-Estrada Transmonta- na” and “SCUT da Beira Interior”, respectively, are in process of renegotiation, being yhe undersatanding EMPHASIS OF MATTER of the board of Directors that as a result of its outcome no material impacts will occur on the individual 8. Without affecting the opinion expressed in the pre- financial statements of the company. ceding paragraph, We draw attention to the following matters: REPORT ON OTHER LEGAL REQUIREMENTS 8.1 As at December 31, 2012, Sociedade de Cons- truções Soares da Costa, S.A., owned indirectly by 9. It is also our opinion that the information included the company, integrates in its asset overdue clien- in the consolidated board of Directors Report is an tes debts from na Angolan company and its related accordance with the consolidated financial statements parties, totalizing approximately 75 million euros, of the year and that the corporate governance report wherw ist recovery is dependent on a process of includes the information required to the company, as negotiationswith the management of that company, established by article 245º A of the securities market concerning the execution of some construction con- code. tracts with this client. In the light of the experience of the company’s board of directors in this market, the debits will be received and no lasses are expectable from this financial assets, and as consequence in the corresponding final investiment. Porto, April 12, 2013

BDO & Associados, SROC, Lda. Represented by Paulo Jorge de Sousa Ferreira REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 219

This Report is a translation of the original, issued in Portuguese. In the event of discrepancies, the Por- tuguese versions prevail.

REPORT AND OPINION OF THE SUPERVISORY BOARD ON THE INDIVIDUAL ACCOUNTS AND PROPOSALS MADE BY THE BOARD OF DIRECTORS CONCERNING THE EXERCISE OF THE YEAR 2012

1. INTRODUCTION awarded or in an advance stage to the award, that were suspended. The supervisory board maintains the model followed to the presentation of its report and opinion, that it The important construction sector continues to face seems adequate to the its goal, which is its super- serious difficulties, with a large percentage of the visory action and its opinion on the report, accounts companies concentration their efforts (when possi- and proposals presented by the board of directors., ble) on the internationalisation process, to conquer according with paragraph g) of n. 1, Art. no. 420. of new markets that offset the lack of works in Portu- the Corporate Code. gal, a movement that lead to the fact that the main companies of the sector have a more important This report followed two fundamental criteria: pu- percentage of its turnover coming from the interna- blicize the work developed by the supervisory board tional markets. in 2012, performed with the intention of covering all the legal competencies; to communicate to the sha- We are therefore facing a new paradigm of business reholders the conclusions taken from that analysis in this sector, with uncertainty assuming shapes and the doubts that were transmitted to the mem- that were unimaginable until recently. bers of the board of directors. Associated to the construction market difficulties in The following points illustrate how the work developed. the country, we must sum the companies’ financial conditions, namely those resulting from the banking financing, which force the board of directors of the 2. ANALYSIS DEVELOPED BY THE companies to redoubled efforts to overcome the SUPERVISORY BOARD crisis that has plagued the country. In the previous year report was mentioned that Therefore, the supervisory board has reinforced its the panorama lived after the crisis that started in efforts in the supervision and analysis of the Group, 2007 and the consequences of the Memorandum focusing on the financial area, monitoring efforts of of Understanding signed with the “Troika” (Euro- the board of directors to surpass this. pean Commission, International Monetary Fund and European Central Bank), and namely an even more In support of its supervisory role, the supervisory pronounced fall of the investment, did not allow board held 7 formal meetings, having its members any sign of an improvement in the current recessive established several informal contacts and analysed context. 2012 was characterised by a substantial several documents and news which the board was decrease of the public and private works in the Por- aware of. tugal, still affected by relevant works, some already REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 220

In summary, the board of directors: n) Analysed the corporate governance compliance report of the stock market regulator (CMVM) to a) Continued to be present, through its chairman, 2011 and analysed the key conclusions of this eva- at meetings of the board of directors and executive luation to Soares da Costa Group. committee, in order to monitor as closer as possible the Group’s evolution, being available, when asked, The Supervisory Board received for consideration, as to provide its opinion on the issues under discussion; usual the following documents for 2012: b) Examined with due attention the documents re- > The management report; ceived, namely the minutes of the board of directors and executive committee, which were provided and, > The annual financial statements; where necessary, gave their opinion or asked for > The annual report on the inspection conducted by the clarification; company auditors and the external auditors; c) Analysed on a quarterly basis the report and ac- > The annual corporate governance report, prepared counts presented by the board of directors, given its pursuant to CMVM Regulation No. 1/2010; opinion on those; d) Discussed and analysed the quarterly and annual documents that are worth the supervisory board ap- information, individual and consolidated; proval that, because they provide a proper view of the Grupo Soares da Costa. e) Accompanied, as usual, preparations for the submission of year-end statements, including a meeting Reading these documents also highlights the une- with representatives of Grant Thornton & Associados quivocal and permanent commitment of the gover- - SROC, Ltd., Mr Jorge Bento Martins Ledo, which ning bodies to adjust to the difficult conditions that also allowed an analysis of the work done leading up our country faces, by adopting measures that in to the legal certification of accounts; each moment are vital. f) Analysed the audit reports (for the individual and consolidated accounts) prepared by the representative of the external auditor, BDO & Associados, 3. ACKNOWLEDGEMENTS SROC, Mr Jorge Paulo de Sousa Ferreira; This time is due recognition by the supervisory board g) Continued to follow closely the processes of exis- of the support received from Mr Pedro Gonçalo de ting litigation, some of them concluded in the year Sotto-Mayor Santos de Andrade, on behalf of the under analysis; Executive Committee, and Mr Fernando da Silva Semana, head of the fiscal and tax department, h) Continued to pay special attention to the collec- providing all the information and explanations that tion processes, namely the most relevant ones, and were asked. took knowledge on the measures taken to alleviate the delay in their settlement; in a particular case The members of the supervisory board would like gave some suggestion to its resolution; to thank the words addressed to them by the board i) Continued to dedicate special attention to the de- of directors that are expressed in the management velopment of risk management system and internal report. control; j) Sought to take knowledge about the tax situation, Considering that the members of the supervisory taking special care as to tax obligations compliance; board are terminating their second mandate, could not fail to notice as their work was developed in the k) Elaborated and approved the plan of activities of last six years and the satisfaction from the condi- the supervisory board for 2013; tions that were provided for that work, facilitating l) Closely monitored the development of the nego- their tasks resulting from its competencies. tiation process of the financial programme with the financial consortium, because it considers that its concretization was relevant to the Group’s opera- 4. DECLARATION tions, with an important reflect on cash flow mana- Pursuant to point c) of Article 245 of the Securities gement; Market Code, members of the Supervisory Board m) Monitored the negotiation process to the sale declare that, to their best knowledge, the informa- of mature assets, following the approved strategic tion provided in a) was prepared in accordance with plan; the applicable accounting standards, giving a true and fair view of assets and liabilities, financial posi- REPORT & ACCOUNTS 2012 | GRUPO SOARES DA COSTA, SGPS, SA 221

tion and results of Grupo Soares da Costa S.G.P.S., SA and the companies included in the consolidation, and the management report faithfully the evolution of business’ performance and the position taken by the Group and the companies included in consolidation and contains a description of principal risks and uncertainties that they face.

5. OPINION In light of the foregoing, the Supervisory Board is of the opinion that the general annual meeting of shareholders should: 1) Approve the annual report and accounts for the year 2011 that were presented by management; 2) Approve the proposed application of the results as stated in the annual report submitted by the management; 3) Carry out a general appraisal of the management and supervision of the company, taking from that appraisal the conclusions referred in art. 455. of the Corporate Code; 4) Express appreciation to the activity developed by the management.

Porto, April 13, 2013

The supervisory board, Júlio de Lemos de Castro Caldas (Chairman) Joaquim Augusto Soares da Silva Carlos Pedro Machado de Sousa Góis