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This report points out a brief description of a well-known group, whose activities are spread in 19 countries, from an internal as well as external view. Its main business areas are Engineering & Construction, Environment & Services as well as Transport Concessions. Furthermore, the market was also relevant to be analyzed to contextualize the company in its proper markets and industries with its competitors in order to find opportunities of development or divestments to be made for the improvement of the company, to create value for its shareholders, adding value for the company as a whole.

Mota-Engil Construction & Materials

Divestment Opportunity Report

mailto:[email protected]

mailto:[email protected]

Mota-Engil Divestment Opportunity Report

June 2010

Private and Confidential Mota-Engil | Table of Contents 2/51

Table of Contents

Table of Contents ........................................................................................................................... 2

Executive Summary........................................................................................................................ 3

Mota-Engil Overview ..................................................................................................................... 4

Mota-Engil Business Portfolio ..................................................................................................... 5

Contribution per Business Unit ................................................................................................... 8

Competitive Advantages in Each Business Unit ......................................................................... 11

Mota-Engil Presented Strategic Plan ........................................................................................ 12

Market Analysis – per Business Unit ............................................................................................. 14

Market Characteristics, Value and Trends ................................................................................ 15

Main Players ............................................................................................................................ 22

Success Conditions and Growth Opportunities ......................................................................... 24

Divestment Opportunity .............................................................................................................. 27

Proposed Divestment Transaction (Buyer and Seller Perspective) ............................................ 27

Target Company Overview ....................................................................................................... 30

Success Conditions of the Transaction ...................................................................................... 32

Valuation of Proposed Divestment Transaction ........................................................................ 32

Considerations on the Negotiation Process .............................................................................. 33

Appendices .................................................................................................................................. 35

Mota-Engil Valuation ............................................................................................................... 35

Mota-Engil Proforma Financials................................................................................................ 41

Martifer Valuation ................................................................................................................... 43

Disclaimer .................................................................................................................................... 51


June 2010

Private and Confidential Mota-Engil | Executive Summary 3/51

Executive Summary

On request of Mota-Engil board of directors, this paper is the result of an analysis on the viability

of a divestment in Martifer stake.

The divestment would result in the sale of 37,5% of Martifer (total stake owned by Mota-Engil),

which can be interpreted as a divestment in participations in non core activities. Mota-Engil

activities are related to Engineering and Construction, Environment and Services and Transport

Concessions, while Martifer business areas are Metallic Construction, Energy Systems, and

Electricity Generation through Renewables. Excluding Metallic Construction there is no apparent

connection in terms of synergies presented between these companies. Moreover, as business

areas are really different from the ones of Mota-Engil it is difficult to influence its long-term

strategy. That is, this is a divestment in an area in which Mota-Engil does not have a big influence

in operational terms (its expertise and know-how are just more connected with Metallic

Construction with which there are some synergies).

Consequently, there must be an industrial player in the market that gives more value and

increases its own company valuation, through synergies with this one. It can be in a position of

high understanding of Martifer businesses and it can have Human Resources, in number and

competence, which bring additional values to the recent business areas, leading them to optimal

ones. New projects require good leadership and projects coordination. Otherwise, they can

become value destructive. The buyer can also achieve a strong market share, economies of scale

and scope (operational) and strategic goals in terms of growth with this takeover.

The transaction make sense for Mota-Engil if it must be, at least, 3,13€ per share, but this value is

above actual market price. Economic agents are putting a high risk premium in the stock at the

moment. However, when during the year it achieves the previous value or a higher one the

participation can be sold, as an all, through an IPO, according to the rules of CMVM for this

transaction.

In numerical terms, this sale of Martifer stake brings € 51,83 millions as a transaction gain to

Mota-Engil valuation (with Martifer stake), which represents an additional gain of 0,25€ per share.

Moreover, leverage ratios, such as Net Debt/EBITDA suffers a bigger reduction in 2010, from the

previous expected 4,82x with Martifer to 4,31x with the divestment on it, which is a positive

improvement.


June 2010

Private and Confidential Mota-Engil | Mota-Engil Overview 4/51

59,70%

5,36%5,06%

29,88%

Capital Structure

Mota Family

Company -Owned Shares

Private Holding

Free Float

Figure 1: Mota-Engil Capital Structure

Source: Mota-Engil Report 2009

Mota-Engil Overview

Mota-Engil is a multinational, multi-services group with a proper strategy at a national and

international level, being its businesses present in nineteen countries through branches and

subsidiaries. Its main objective is to be market leader in every business area in which it acts in the

national market.

This Mota-Engil Group was founded in 2000, from the merger of Mota & Companhia, S.A. and

Engil – Sociedade de Construção Civil, S.A.. Two years later, this previous process starts having its

main effects with the growing of this Portuguese biggest construction company (the highest

business volume, approximately € 890 millions) and, onwards, its diversification strategy was

intensified, whose major emphases was on Environment and Services as well as Transport

Concessions.

The entrance in the Euronext Lisbon Index, in PSI-20, occurred in 2005 with the objective of

gaining visibility, stability and potentiality of share appreciation (not happening in 2009 having,

indeed, the worst performance in the PSI-20 Index), moreover, opening horizons for growth and

investment attraction with the access of long term capitals for a possible company

recapitalization.

Some recognition has been attested to the Group, by the market and even by some stakeholders,

through the award of a reasonable number of prizes and diverse recognitions due to the quality /

excellence of the services that Mota-Engil provide in its sectors and its contribution to the national

economy and to the projection of the image of

Portuguese companies around the world. For

example, Vasco da Gama Bridge was an

emblematic work.

There is stability in the shareholders structure. It’s a

familiar, 64-year-old-company which allows

consistency in the strategy. Moreover, Mota-

Family was presented in bringing capital to the

company in the past. In terms of private holding

part, it can be sold in a near future to Mota-

Family or attributed to other banks to sell that

part (brokerage) because that actual vehicle is

managed by Banco Privado Português, a bank in

dissolution. So it is difficult to continue sustaining it

(constituted by participations in Mota-Engil, Cimpor

and Hamburg port).

Nowadays the corporate structure of the Group has six branches, being the first three presented

below the main sectors of activity.


June 2010


Mota-Engil, SGPS, S.A.

Engineering &

Construction

Environment &

Services

Transport

Concessions

Metallic Construction

Energy Systems

Electricity Generation

(Martifer Group)

Tourism

(Amarante)

Shared Services

Figure 2: Group Structure

Mota-Engil Business Portfolio

Mota-Engil Group structure includes Engineering and Construction, Environment and Services and

Transport Concessions as the main three business areas. However, despite being different, they

are correlated among each other. There are synergies, for instance: Engineering and Construction

and Environment and Services (waste and multiservices) deals with municipal councils, as clients,

which sometimes imply cross-selling projects; in Engineering and Construction more than half of

the order backlog in Portugal and in Poland involves also Transport Concessions (greenfield

projects). With Martifer, a Mota-Engil subsidiary that operates in the industry and energy sector, it

keeps a strategic partnership. In the field of tourism, it keeps some activities in the sports and

leisure and the hotels and restaurants sectors.

Mota-Engil has its businesses internationalized, operating in the Portuguese-speaking countries of

Africa (with the biggest emphases to Angola), in Central and Eastern Europe and in some countries

of the American continent, such as Mexico, Brazil, Peru.

The following chart summarizes the fields of work in which they are engaged per business unit.

Figure 3: Chart of business areas

Engineering & Construction (E&C)

All its activities in this unit are presented not only in Portugal but also in Spain, Ireland, Central and

Eastern Europe (Poland, Romania, Hungary, Czech Republic, Slovakia), Africa (Angola, Cape Verde,

Sao Tome e Principe, Mozambique, Malawi) and America (USA, Peru, Mexico, Brazil). Its market

share as an all is between [3%, 5%], being market leaders in Portugal.

Engineering & Construction

Infrastructures

Railways

Real Estate

Specialized Sections

Environment & Services

Waste

Water

Ports & Logistics

Multi-Services

Transport Concessions

Motorways & Expressways

Railways

Bridges

Metro

Source: Mota-Engil

Source: Mota-Engil and Ascendi


June 2010


In this area the revenues and order backlog increased from 2008 to 2009. Division backlog

increased in all regions, excluding Angola, but it did not imply a decrease in its turnover. EBITDA

margin are being reduced.

Figure 4: Order Backlog and Revenues Evolution Figure 5: E&C Backlog Evolution per Geographic Area

Source: Mota-Engil Source: Mota-Engil

Figure 6: Turnover Evolution per Geographic Area Figure 7: EBITDA margin per Geographic Area


Mota-Engil Engineering and Construction expects to be leader in the national market (although it

has leadership in civil construction and public works) and an European reference, to have an

increase of its margins (EBITDA margin: 6,27% in 2007 to 10% in 2013) as well as an improvement

of the EBITDA contribution .

Environment & Services (E&S)

The group has a leading position in the privatized urban waste management market as well as in

the logistics and ports, through Suma (Mota-Engil subsidiary). They are not leaders in water

treatment. Mota-Engil Environment and Services main aim is to be leader in all the sectors in

which it works, despite being a really difficult task. This area is still in growth and there is the

possibility of much more to do before being in maturity. Essentially it can be expanded in terms of

business volume, order book, through internationalization and even in this national context.

As far as internationalization is concerned, this May was a new reaffirmation of the area through

the acquisition of 50% of the social capital of GeoVision, Soluções Ambientais e Energia of Waste

0

5

2008 2009Val

ue

(in

bill

ion

€)

Years

Order Backlog & Revenues Evolution

Order backlog Revenues

0

5

2008 2009Val

ue

(in

€b

illio

ns)

Years

Division Backlog Evolution

Portugal &Spain Central Europe

Angola Other

0

500

1000

1500

2000

2007 2008 2009

Val

ue

(in

mill

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Years

Turnover Evolution per Geographic Area

Portugal Central Europe

Angola Other

0%

50%

2007 2008 2009

%

Years

EBITDA margin per Business Area

Construction Divison PortugalCentral Europe AngolaOthers


June 2010


Figure 8: E&S Backlog Evolution (2007 excludes ports and water concessions)

Source: Mota-Engil

0

200

400

2007* 2008 2009Val

ue

(in

€m

illio

ns)

Years

Division Backlog Evolution

Treatment, mainly working in San Paulo (Brazil), by Suma. The operation involved € 21 millions, in

a company whose business volume last year was approximately € 45 millions. However, just

before this acquisition, in April there were other acquisitions: three companies in Portugal (Correia

& Correia; Transporlixos; Enviroil) and one in Poland (Ekosrodowisko). According to the President

of Suma, its expansion was crucial due to the “strangulation of private sector in the waste

management area so there was a need to grow through new acquisitions and through

international market, which represents 10% of its all actual activity”. Suma has a 50% market share

in waste unit which is difficult to expand, just if there were more municipal councils privatizing the

sector, which is being a slowly process. In Peru, the group increased order books after gaining, in

consortium, the adjudication of the Paita Port, the second more important of the country. The

modernization of the port would be via concession, and involves around 230 million dollars in 30

years. This is the major Portuguese investment in this country.

Order backlog was increasing along time.

Transport Concessions (TC)

Mota-Engil Transport Concessions

anticipates being a global operator in

this business unit. It has an aggressive

politics in finding strategic markets and

helps the strategy of growth of Ascendi.

In 2009, the group turns out to be the

major shareholder of LUSOPONTE with

38,02% of the company’s capital. This company has the concession of the two crossings over Tejo

River until March 2030. So, its Transport Concessions in Portugal under exploration are: Concessão

Norte, Costa da Prata, Beiras Litoral e Alta, Grande Porto, Grande Lisboa,LUSOPONTE and Metro

Sul do Tejo. In Mexico AE Construção Perote-Banderilla is in construction and, in Brazil, Marechal

Rondon Lest is being explored.

Moreover, European Accounting Court gave prior approval to the Douro Interior concession, a

concession that involves the conception, construction, financing, maintenance and exploration,

without toll collection, of some hauls of principal and supplementary itineraries. However, Mota-

Engil consortium reduced the value of the proposal, from € 757,33 million to € 696,57 million.

Anyway, it is in construction too.

The biggest sub-concession released by Estradas de Portugal, in terms of construction volume and

investment, Pinhal Interior, was recently attributed to a consortium with Mota-Engil in leadership.

The investment associated was approximately € 1.429 millions and will be managed by Ascendi

(Mota-Engil has 60% of Ascendi).


June 2010


Contribution per Business Unit

The final 2009 earnings evidences strong final results and with good prospects to remain growing,

influenced by the Order Book growth, by the acquisitions in the Environment and Services area

and by new developments in the Transport Concessions area. The potential of growth in this last

referred to area will come from foreign economies due to the fact that the investment in

motorways in Portugal is being revaluated.

The group expects to close 2010 with € 3 thousand millions in order books, supported by the

international activity. Last year the group net profit doubled to € 71,7 millions, where Martifer was

relevant. The operational cash-flow reduced around 2%, and this occurred because the company

was not able to replicate in the last trimester of 2009 the excellent performance of the

homogeneous period. Essentially the business (revenue) growth in 2009 was achieved due to the

growth of approximately 15% in Engineering and Construction (while its EBITDA margin fell to

7,91% and its EBITDA grew around 3% to 134 million euros) and 17% in Environment and Services

(strong improvement in the fourth quarter). Transport Concessions turnover appears to be

relatively stable. The order book reached an historic maximum of € 3.600 million at the end of

December, about € 1 million above the existing one in the previous year. The company is going to

distribute dividends related to the exercise of 2009 from April 30 onwards. The gross value of

dividends is € 0,11 per share, the same as in the previous year, which means a dividend yield of

3,27%.

Analyzing the provenience of turnover in the total one of the company from 2007 to 2009, more than 75% of it comes from Engineering and Construction, a value that is marginally growing; less than 8% and slowly reduced in Transport Concessions; and between the interval [15%; 18%] in Environment and Services. However, looking attentively to EBITDA contribution Transport Concessions area is noted in second place of importance, just after Engineering and Construction in the last two years.

Figure 9: % Turnover Contribution per business area Figure 10: % EBITDA Contribution per business area


0%

20%

40%

60%

80%

2007 2008 2009

%

Years

Percentual Turnover Contribution

E & C E & S T C

0%

10%

20%

30%

40%

50%

2007 2008 2009

%

Years

Percentual EBITDA Contribution

E & C E & S T C


June 2010


Figure 11: EBITDA Margin Evolution per Business Areas

0%

20%

40%

60%

80%

100%

2007 2008 2009

%

Years

EBITDA Margin Evolution

E & C

E & S

T C

Group

Martifer

Source: Mota-Engil and Martifer reports

In terms of Engineering and Construction,

on the one hand, and influenced by the

currency, the performance of Eastern

Europe continue to be limited. On the other

hand, there was a favorable evolution in

Angola, which registered a growth of around

40%, to € 421 millions. Peru, Mozambique

and Malawi reduced their velocity, but their

growth and margins still continued above the

area average. Indeed, there was a strong

turnover in all markets, excluding Central

Europe. But in Portugal during the last

quarter of 2009 revenues decreased while at the same time in Central Europe it occurred the

reverse, with an increase of 10%. However, this area backlog was € 3,2 billions, Portugal grew 14%

last year, Central Europe turnover got € 300 millions, having a positive EBITDA. Overall, the area

got positive, good results in an environment of problems in macro economy and in sector.

Figure 12: E&C Geographic EBITDA Contribution for the Segment Figure 13: E&S EBITDA Evolution per Segment


Looking carefully at Environment and Services area, it can be shown that the performance in all

segments was satisfactory in the last quarter of the year. EBITDA was similar to the one verified in

2008 and this area had a backlog of 363 million euros. Multi-Services set aside a strong growth,

whose EBITDA margin was 7% and logistics turnover grew 2% but at any case its EBITDA margin

went down to 16%. Water business grew up its importance through Indaqua and, to finish this

brief description of the division, in terms of waste business, its growth was positively influenced by

the first consolidation of an Angolan subsidiary (Vista Waste) and turnover grew 11% last year.

As far as Transport Concessions under exploration are concerned, the most rentable ones were

the Beira Litoral e Alta and Costa de Prata, with an EBITDA in total of 121% and 76%, respectively.

In absolute values, turnover was unchanged even with a decrease in Beiras Litoral e Alta that was

offset by other concessions performances, such as Concessão Norte that registered a magnificent

growth, for instance. Nevertheless, AADT (Annual Average Daily Traffic) still grew in all concessions

explored. Its EBITDA margin was 89,3%, which was smaller than 99,8% verified in 2008.

-50%

0%

50%

100%

2007 2008 2009

%

Years

E&C EBITDA Portion Evolution per Geographic Area

Portugal Central Europe

0%

20%

40%

60%

2007 20082009

%

Years

E&S EBITDA Portion per Segment

Waste Water Logistic Multi-Services


June 2010


Figure 14: Transport

Concessions EBITDA

portion per main

concessions under

exploration

Continuing with the previous area it requires more debt involved, so that in 2009 invested capital

in this area was € 1,362 billion, which was more than half of the global amount. Along time net

debt was growing.

Figure 15: Net Debt in value per business area Figure 16: Net Debt/EBITDA per business area


Figure 17: Invested Capital evolution per business area Figure 18: Operating Cash-Flow Evolution


The investment in capital expenditures in 2009 was € 516 millions, from which € 86 millions was spent to reinforce the participation in Lusoponte and the remaining one majorly invested in Transport Concessions.

-

2.000

4.000

2007 2008 2009Ne

t d

eb

t (i

n m

illio

n

€)

Years

Net Debt

E & C E & S T C Group

-

10,0

20,0

2007 2008 2009Ne

t d

eb

t/EB

ITD

A (

in

x)

Years

Net Debt/EBITDA


-

2.000

4.000

2008 2009

Inve

ste

d C

apit

al

(in

mill

ion

€)

Years

Invested Capital


-

200

400

2007 2008 2009

Op

era

tin

g C

F(i

n m

illio

n €

)

Years

Operating Cash-Flow


-200%

-100%

0%

100%

200%

20072008

2009

%

Years

TC EBITDA Portion per Concessions

Concessão Norte

Costa de Prata

Beiras Litoral e Alta

Grande Porto

Grande Lisboa Source: Ascendi


June 2010


Figure 19: Capex (Fixed - Maintenance, growth; Financial) Figure 20: Net income evolution per business area


To sum up this part, it is imperative to evidence net income attributable to the group, which was

€71,738 millions in 2009. There is an increase of 134,7% compared to the year 2008. Concretely, it

is vital to evidence a strong net income in Engineering and Construction and a net loss of € 7

millions in Transport Concessions. This evidences a strong evolution in an economic scenario of

crisis but still bellow the expectations of numerous analysts that have put the bar at € 80 millions

for that period.

Competitive Advantages in Each Business Unit

Mota-Engil Group has some competitive advantages in its sectors and this is why it is leader in

most of its activities. According to a SWOT (Strengths, Weaknesses, Opportunities and Threats)

analysis, some characteristics can be pointed out to the entire company as all.

Not only does the company have more than 60 years of experience but also it has a recognized

original spirit in terms of construction techniques, which makes Mota-Engil Engineering

responsible for running very important engineering projects, such as bridges/dams (Vasco da

Gama Bridge, for instance), highways/expressways, railways/ports/airports, canals/tunnels,

sundry infrastructures in the environment, health, commerce as well as industry fields. Indeed,

Mota-Engil has actually relevant strengths: versatility, quality, capacity for innovation given its

large specialized skills in all areas of Engineering, then putting it in the vanguard in Portugal and in

a good position for future positive developments as far as international growth is concerned.

Furthermore, Environment and Services in Mota-Engil, with its diversified and large number of

services, put it as a leader in Portugal in terms of privatized solid urban waste management

market (Waste and Urban Cleaning Segments) and in a foremost position in the Portuguese port

operations market (this company also provides complementary services in this area, that is, it

gives a variety of logistic integration services and it is known as the first operator to go in the

carriage of goods by the railway sector. Additionally, it has as strength the capability to bid

complex projects and to get financing for them. It can withdraw non-recourse debt, which do not

0

200

400

600

2008 2009

Cap

ex

(in

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Years

Capex

E & C E & S T C Group-50

0

50

100

150

2007 2008 2009Val

ue

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Net Income per Business Unit

E&C E&S TC Group


June 2010


create growth restrictions and have a high level of auto financing. Besides that, there are

multidisciplinarity and business quality that let them have productivity and be competitive in the

market. In a few words, the group has leadership, recognition in the market, technical capacity,

strong presence in Angola, for instance and strategy.

About weaknesses, it can mainly be pointed out its capital structure dependence. It has high

leverage ratios, shown later on. Furthermore, the company has to be careful about the evolution

of its debt.

There are also opportunities to be exploited nationally, such as the requalification of towns/cities

or the ones created by the construction or exploration of some infrastructures being publicly

launched, capitalizing the benefits to an enforcement of the international strategy and,

internationally, the big potential of transport concessions sector in Poland (as well as Central

Europe as an all), the high potential of the new markets in which it is entering through new

acquisitions and stable partnerships. In Portugal there are also some big projects in which Mota-

Engil can take part in the future, such as the New Airport in Lisbon and ANA privatization, High

Speed Railway, new road sub concessions.

Threats are obviously presented too. A change in political opinion is one that can be referred to.

Furthermore, the risk that project finance stop being sustainable in the long term, which can stop

financing public works due to market illiquidity or being no more viable to it. Another threat is the

fact that in Angola there is almost 67% of long term debt without hedging because of the

immaturity of its institutions. Moreover, there is a degree of risk to establish partnerships in other

countries with companies that are not large enough or do not have special relationships with the

State or are not included in the top ones for the achievement of the best projects, that is, the ones

that allow the highest margins. In Portugal, the political risks of the motorways of Centre and

other large infrastructures’ projects. There are always fear about materials price plus market of

construction materials, international crisis trends, the exposition of the Portuguese market of

construction and, why not, Spanish companies. The last but not the least important one can be its

businesses in some geographic areas in which they can get small/tiny margins due to lack of

knowledge. Anyway, there are some specific risks, such as: financial risk management, interest

rate risk, exchange rate risk, liquidity risk and credit risk.

Mota-Engil Presented Strategic Plan

Mota-Engil Group has some basic strategic guidelines stated in its “Ambition 2013” Strategic Plan,

comprising the period: 2009-2013. Its four main pillars are sustainable growth, diversification of its

businesses, internationalization as well as development of its human capital. The aim of all these

items is to create value for shareholders.

Concerning diversification, there is a huge will to diversify to areas of mines. The group has

experience in gold mines in Peru and uranium in Malawi, at the moment. They just do not have


June 2010


ore manipulation. They receive cash, but they want an exchange for the project equity in a near

future. There is also some interest in mini-dams, construction and mines.

Figure 21: Expected Turnover (2013) Figure 22: Expected EBITDA Margin (2013)


Internationalization is related with the presence of Mota-Engil in three geographic poles, which

are: Central Europe, Africa and America. Mota-Engil, SGPS has constituted specific structures,

choosing representatives with responsibilities over the previous defined geographic poles, creating

a connection between the different business units and the markets (potential for synergies).

Mota-Engil, through its subsidiaries, has a vast number of international acquisitions examples that

sustain this pillar.

Figure 23: Turnover by Geographic Segment in 2009 Figure 24: Expected Turnover by Geographic Segment in 2013


Then, it appears the development of its human capital, which in reality was translated in

formation schools in Angola for its employees, ME Active School, professional formation actions,

for instance.

Summarizing, the key challenges for the group are: internationalization, management capacity,

sustained development of Human Resources, growth in the markets and globalization.

59%21%

14%

6%Engineering & Construction


Transport concessions

New Businesses

24%

21%50%

5%Engineering & Construction


Transport concessions

New Businesses

55%17%

28%

54%21%

25%Iberian Peninsula

Central Europe

Africa & America


June 2010

Private and Confidential Mota-Engil | Market Analysis – per Business Unit 14/51

Market Analysis – per Business Unit

According to Dominique Strauss-Kahn, IMF Chief, in an article in Financial Times newspaper in

April 10, it comes: “The global economy now appears to be on the path of recovery. Though it

remains sluggish and uneven, and in need of continued policy support in many advanced

economies. Moreover, the costs of the crisis – low growth, high unemployment and sharply higher

public debt – will take many years to overcome.”

The first quarter of 2010 was, in global terms, positive for the main World Indexes. Although the

year began with good perspectives, they were penalized by the possibility of having Greece in

failure and the movements in China to stop the fast economic growth after having an inflation

above the expected (these facts brought uncertainty). The indexes were at maximum levels for

eighteen weeks and the economic indicators, despite not having been consistently spectaculars,

continued to encourage market participants. The companies’ results came to confirm those

improvements. At the same time, interest rates were kept at historically low levels. However, in

Portugal, Spain and Greece capital market was pressured by investors. PSI-20 lost more than 3,5%.

Indeed, in small economies (such as Portugal, Spain, and Ireland where Mota-Engil is present)

leaving recession would be a slowly phase due to strong budget and current accounts imbalances.

But in Euro Area there is another small economy (Slovakia Republic) that despite having had losses

of more than 4% last year, contradicts the previous and it is expected to grow almost the value of

the previous loss in the current year.

In terms of Mergers and Acquisitions, this first quarter was favorable. Concretely, there were more

than 2.034 international transactions and 10 hostile takeovers, which can reveal market

recuperation, from its worst period in six years. This market wins growth rhythm in the quarter.

Based on Bloomberg data, hostile takeovers grew 5%, when compared to the same period of the

previous year (to US $498,24 million); acquisitions in foreign markets more than doubled to US

$249 thousand million and announcements of hostile acquisitions grew to $17,46 thousand million

(growth of 3,07 times compared to the same last year period). This is essentially related to the

behavior of capital markets previous referred to, whose rise boosts confidence in companies’

leaders, accompanied by the improvement of credit market that makes financing business easier

than otherwise. Considering the first 5 months of the year the higher volume of M&A transactions

were in the industry of telecommunications (US $79,4 biillions), followed by Insurance. And the

main transactions were presented in North America. The main financial adviser was Goldman

Sachs that did the highest operations volume (US $189,56 billions), distributed by 95 operations,

followed by JP Morgan with US $171,94 millions distributed among 92 operations. The following

tables and figure summarizes this year M&A activity and its trend across time.


June 2010


Source: Bloomberg

Figure 25: Global Activity Trend/Evolution

-5

15

2005 2006 2007 2008 2009 2010e2011e2012e2013e2014e2015e

An

nu

al %

Ch

ange

Years

Real GDP Growth

Europe World Angola Brazil Portugal Peru

Table 1: Activity Breakdown

Activity Breakdown (Jan 1- May 31 2010) (in US$ million) Per Industry Per Region

Target Industry Volume Count Target Region Volume Count Telecommunications 79.400 261 Global 785.740 9.085 Insurance 70.120 125 North America 334.220 3.447 Oil&Gas 63.200 337 Asia Pacific 211.070 3.182

Mining 35.510 436 Europe 106.330 1.776 Electric 33.000 91 Latin America & Caribbean 93.320 345

Middle East & Africa 35.840 258

Source: Bloomberg

Table 2: M&A Top Deals (1 Jan – 31 May 2010)

Recent Top Deals (in US$ million)

Target Acquirer Annc Date

Annc Value

Premium Payment Type

AIA Group Ltd Prudential PLC 03/01/10 35.500 Cash and Stock Curso Global Telecom SAB de CV America Movil SAB de CV 01/13/10 25.740 2.68% Stock Qwest Communications International

CenturyTel Inc 04/22/10 22.160 12.49% Stock

American Life Insurance Co MetLife Inc 03/08/10 12.590 Cash and Stock Smith International Inc Schlumberger Ltd 02/21/10 12.340 42.18% Stock

Source: Bloomberg

Market Characteristics, Value and Trends

Each country, each business

area has a market with

specificities at each moment

in time and 2009 was a year

of worldwide crisis, which

now continues to have its

repercussion despite being in recuperation. Firstly, Mota-Engil is presented in

19 countries so the reality that it faces in each country is different, some opportunities of growth

in some ones, a weak period in others in a business area… Looking at real GDP, there is a sign that

economies are in recovery after the disaster of 2009 and after 2011 there is a sort of stabilization.

Figure 26: Annual Percentual Change of Real GDP Growth

Source: IMF – World Economic Outlook (April 2010)


June 2010


-5

5

15

25

An

nu

al %

Ch

ange

Years

Inflation Rate, Average Consumer Prices

Europe World Angola Brazil Portugal Peru

Source: IMF – World Economic Outlook (April 2010)

Portugal, the main country in terms of Mota-Engil results and backlog, is predicted to grow but

there are divergences in terms of the value: 0,3% for IMF, 0,7% for Portuguese Government, 0,4%

for Portuguese Central Bank. This means that, for IMF, Portugal is going to evolutes positively but

less than half of the average of the Euro Area (1%). This might imply a deep divergence of

Portugal, continuing the previous one that took almost 10 years and that was just interrupted last

year (Portugal decreased 2,7% while Monetary Union dropped 4,1%). Anyway, previsions make

the situation worse for 2011 when Portugal may increase 0,7% (even with a better performance)

while Euro Area grows 1,5%.

Globally, Europe is going to have the worst performance in terms of real GDP growth while Asia

and Pacific takes the best rate (6,8% from 2010 to 2013 and 6,9% afterwards). However, in 2009

Europe was the most hurt by the crisis, immediately followed by Western Hemisphere (-2,3%).

According to the information revealed, inflation is expected to be relatively stable in Europe in the

medium term, which is essential for the politics conduction.

Figure 27: Annual Percentage Change in Inflation Rate, Average Consumer Prices

Portugal is going to follow

the pattern of inflation rate

of Euro Area, which is

indispensable for its

permanence in the

Monetary Union. So

Portuguese purchasing

power remains stabilized

too.

Construction - Portugal

Construction was deeply affected by the recession in 2009, being the worst year for construction

market in Euroconstruct area in the last 10 years, when it fell 8,4%. For 2010, it is expected a

decline of 2,2% and it is predicted a recovery from 2012 onwards. The downturn for Euroconstruct

area GDP is approximately 4% while for construction output was even worse, dropping 8,4%, being

€ 1.365 billions then. In this area construction market accounts 11% of GDP, being in the range

[8%; 15%] of GDP each European member. Excluding Switzerland and Poland (5,3%), all remaining

members had negative growths (Spain = -21,5%; Ireland = -32,2%). Portuguese construction

output declines more than this area average. This year GDP is expected to grow more than

construction sector, the following year they must have the same level but for 2012 it is expected

that construction sector grew more than the other indicator/measure. Moreover, comparing

February 2010 with the previous month there is a reduction of 3,3% and 2,9% in construction

output in Euro Area and EU27, respectively. Picking up February 2010 and the same month in 2009


June 2010


there is a dive of 15,2% and 10,2%, respectively according to the previous order. Portugal has a

positive performance in monthly comparison (1,4%) as well as Hungary (6%) and the worst

performance was Romania.

Figure 28: Construction Output in Europe – Monthly Variation (in %)

Source: EUROSTAT – April 2010

Portugal, the internal market of Mota-Engil, is the main source of results in all its business units

(exception to Engineering and Construction where in terms of EBITDA Portugal was exceeded just

by Angola in 2009). However, it depends on public investment, having a subsector of public works.

Looking at GDP components, we assist that the positive predicted growth for the economy for this

and upcoming years comes essentially from exports, investment will grow slowly. And, indeed,

according to Stability and Growth Plan in Portugal from 2009 until 2013, it is predicted a gradual

reduction of deficit, to be below 3% in 2013 mainly due to expenditures reduction and automatic

stabilizers. So, Government is going to choose investments that affect critical factors of

competitiveness, such as human resources qualification, business competitiveness, innovation

which have high capacity of economy dynamism and with small budget effects. Then, the main

projects with high value such as the new airport, logistics and ports, among others that are in the

Government Plan until 2017 cannot be started in the short run, despite being considered with high

capability of private capitals’ mobility and revenues generating, and with small impact to the State

(financed by EU funds and private investors too).

Source: INE and Ministry of Finance and Public Administration (in Stability and Growth Plan 2010-2013)

-15

-5

5

15

Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10

% C

han

ge C

om

par

ed

wit

h

Pre

vio

us

Mo

nth

(%

)

Months

Construction Output - Monthly Variation

EA16 EU27 Portugal

-12

-22008 2009e. 2010e 2011e 2012e 2013e

Var

iati

on

rat

e (

in %

)

Years

Portuguese GDP Components

GDP Private Consuption Public ConsumptionInvestment Exports Imports

Figure 29: Portuguese GDP per

Component (in real terms)


June 2010


Source: INE, Statistics Portugal, Construction and Public Works Indexes

Source: INE, Statistics Portugal, Construction and Public Works Indexes

50

60

70

80

90

100

110

∆ P

rod

uct

ion

Vo

lum

e

Data Reference Period

Index of Production in Construction

Buildings Civil Engineering Projects Total

Table 3: Big Investments in Construction 2008-2017

Table 3: Big Investments in Construction 2008-2017

From the investments listed to be done between 2008 and2017, Mota-Engil has capability and high probability of receiving adjudication, which involves all its business areas and even indirectly through Martifer in the field of energy and renewable energy. However, the consortium “Asterion” (Mota-Engil/Brisa/Somague/BES/BCP/CGD), taking into account its lack of expertise in airport operator can put in risk its chance of gaining New Airport of Lisbon, if not includes also ANA Privatization.

At the moment there is too

much uncertainty about when

and if the major public

investments go in front. At

the same time, the production

in civil engineering plunges

14,8% at the end of first

quarter of 2010 and

construction of non

residential buildings drops

4,5% due to the association of

the reduction of Private

Investment and now onwards

the contraction of Public

Investment.

Figure 30: Index of Production in Construction - Non Adjusted (Base 2005) by Type of Project in Portugal; Monthly

To sum up, intense competition

from the main internalized

construction companies persist in

putting pressure on margins and

other features of contracts,

timetables and guarantees, for

instance. Moreover, the global

variability of economies humidify

demand in many relevant sectors

and attracting plus retaining top

performing professionals is,

without any doubt, a big

challenge for the industry.

Type of Infrastructure Announced Investment

(in €millions) New Airport of Lisbon 3.100 Airports 246 Water, Environment 5.729 Dams 1.568 Energy 1.600 Renewable Energies 7.124 Traditional Railroad 1.494 Logistics 1.875 Metro 1.366 Ports 534 Highway 7.208 TGV 7.650 Third Crossing of the Tejo River 500 Jails, Schools, Hospitals, Justice 2.905 Others (Urban Rehabilitation, Commercial Centers, Tourism) 13.425

Total 56.324

Source: FEPICOP

Source: FEPICOP


June 2010


-7

-2

3

8

13

An

nu

al %

Ch

ange

Years

Real GDP Growth

Poland Slovak Republic Hungary Romania

Source: IMF

Source: IMF

0

100

200

300

400

500

Soares da Costa Teixeira Duarte Mota Engil

Val

ue

s (i

n m

illio

n €

)

Turnover 2009

Source: Companies Reports


Construction - Central and Eastern Europe, Angola and Others (Mexico, Peru, Brazil)

In Central and Eastern Europe there are opportunities of growth, specially in Poland, because

there is a short of decent roads and in a fewer number, the housing market faces a deficit for

about 1,6 millions households and requires renovation for 30% of units. Government is going to

spend € 26 billions by 2013 in the construction of kilometers of roads, motorways and

expressways (3.700 km). This can bring more revenues for Mota-Engil, mainly in Poland (an

economy in growth).

Figure 31: Central and Eastern European Countries Real GDP Growth

In Angola, compared to its

competitors, Mota-Engil

receives the highest revenues. It

is in a good position, and has a

high backlog as it was referred

to before. Concerning GDP

growth, it is predicted a 7,1% for

2010 and a decrease in inflation

rate that continues over time,

which induces investments and

allows continuing its growth expansion verified in recent years in this economy in

development.

Figure 32: Comparison between Angolan Turnover of Mota-Engil and 2 Competitors

In other countries, such as Peru,

Mexico, Brazil, Colombia there are

opportunities related with

partnerships with municipal councils.

Moreover, real GDP growth in these

countries is above 4% until 2015e.

Brazil is also a special case with some

new investment opportunities (case

that is going to be developed

afterwards).


Logistics:

Mota-Engil Group acts in the logistics area through its subsidiary, Tertir Group that had

concessions in terms of cargo containers terminals in Santa Apolónia (Sotagus), Alcantara (Liscont),

Leixões (TCL), Setubal (Sadoport), Aveiro (Socarpor).


June 2010


Figure 33: Baltic Dry Index Evolution (in USD)

Table 4: Container Traffic Evolution

Source: Bloomberg Source: APL, APDL and APA publications

2240

2260

2280

2300

2008 2009M

illio

n €

Years

Exports to Angola

Figure 34: Exports Evolution to Angola

Source: INE Statistical Data

The container traffic of the port terminals worsens, excluding Leixões in terms of TEUs and

Setubal. The major representativeness of external trade of ports

in Lisbon were Angola (22,4% in exports side) and United

Kingdom (10,9% in imports side). The Leixões terminal

performance was positive mainly due to the exports to

Maghreb that grew 40% yoy in 2009, being almost 200

thousand tons per year, representing 10% of the overall cargo

containers. In Setubal, only exports for non European countries

have a positive annual variation (45,7%) influencing its positive

performance. Anyway, exports to Angola, the major positive

influence in all the previous terminals increased just 1,45% y.o.y,

in 2009.

The recent challenge for this sub-area (80% of market share) is the integration of the port business

with the rail freight and logistics platforms of Caia-Poceirão. Moreover, the group has plans for

exploring ports in Africa and Latin America (Paita Port was already an example of success).

Water, Waste Treatment and Multi-Services

This area depends on the commercial municipal council relationship and its will to do outsourcing

of the activities related to sewage and water treatment, waste management and multi-services.

The existing contracts are mainly of long term, and in water there are concessions. But the

process of increasing new contracts in Portugal is at a slow pace.


In Transport Concessions, through Ascendi, its network is extensive and similar to the one of Brisa,

its main competitor. It has the highest kilometers travelled.

Container Traffic by Ports (∆2009/2008)

Nr. Of Containers

TEUs

Santa Apolónia -4,8% -2,9%

Alcantara -16% -13,6%

Leixões -1% 1%

Setubal (Sesimbra also included) 23,1% 27,8%

Aveiro N.A. N.A.


June 2010


Table 6: Drivers of Traffic

Source: IMF

Table 5: Transport Market Sub-Segments in Kilometers

Player Tolled Network Shadow Toll EP Sub-concessions Total

Brisa Brisa 1.116 Baixo Tejo 68 Brisal 92 Litoral Oeste 112 Atlântico 170 Douro Litoral 129

Brisa Total 1.507 180 1.687

Ascendi AENOR 176 Costa da Prata 105 Douro Interior 245 Lusoponte 24 Beira Litoral e Altas 178 Pinhal Interior 567 Grande Lisboa

61 Grande Porto 55

Ascendi Total 261 338 812 1.411 Sacyr Túnel Marão 30 30 Soares da Costa Beira Interior 178 Transmontana 174

Interior Norte 156 S. Costa Total 334 174 508

Cintra Norte Litoral 130 Algarve 156

Cintra Total 286 286 Edifer/ACS/Dragados Baixo Alentejo 334 334

42% 23% 35% 100%

Source: Estradas de Portugal

The major risk that concessionaires may face is the road traffic, which is driven by the GDP, tariffs,

inflation, car ownership, and fuel prices. Despite the GDP decrease, the road traffic has increased

from 2008 to 2009.

Growth Rates % 2008 2009 2010E 2011E 2012E 2013E 2014E 2015E

Portuguese GDP 0% -2,70% 0,30% 0,70% 0,80% 1,30% 1,40% 1,40%

Portuguese Inflation Rate 2,7% -0,90% 0,80% 1,10% 1,40% 1,60% 1,70% 1,80%

Figure 35: Average Daily Traffic (ADT) Figure 36: Kilometers Travelled

Source: APCAP Source: APCAP

22,7722,51

22,66

20,96 21,05

20,00

20,50

21,00

21,50

22,00

22,50

23,00

2005 2006 2007 2008 2009

(in

th

ou

san

ds)

Years

Average Daily Traffic (ADT)

11,96

11,74

12,32

11,8811,95

11,4

11,6

11,8

12

12,2

12,4

2005 2006 2007 2008 2009

(in

10

⁶ K

m)

Years

Kilometres Travelled


June 2010


Unlike Brisa and others, which mainly have the concession exploration, Mota-Engil has also the

construction of concessions, granting it a more stable position, and synergies between both

activities.

From June 1 2010 there is going to be the introduction of tolls in some actual shadow tolls

network. This implies a reduction in the traffic of those roads, while increasing it in the ones

without tolls (national roads, for instance). However, this fact is not going to affect companies’

revenues predicted with those concessions. There was a renegotiation of the concessions with the

State in which a “fixed rent” is going to be paid by it to the company and the company transfers

the amount of tolls collected to the State.

Main Players

The main construction companies, at a national level, are: Mota-Engil, Brisa, Somague, Teixeira

Duarte, Soares da Costa, OPWAY, Bento Pedroso, Edifer, Monte Adriano and Construtora do

Tâmega. At an international level, it should be pointed out some companies, such as: HOCHTIEF

AG, VINCI, Skanska AB, STRABAG SE, BOUYGUES, Bechtel, Saipem, TECHNIP, Bilfinger Berger AG,

Eiffage and Bovis Lend Lease. In terms of Environment and Services, Suez and Veolia Environment

are well-known companies. For Transport Concessions, Brisa, Atlantia, Abertis have a prominent

position.

Last year revenues of some competitors in terms of Mota-Engil business areas came majorly from

Europe. Moreover, for Engineering and Construction it can be seen a different level of

internationalization within this business unit, some with more revenues coming from internal and

others from external. In Environment and Services there is also no tendency of the main revenues

provenience. However, in Transport Concessions Revenues came mainly from internal market.

0%

20%

40%

60%

80%

100%

Revenues by geographical area in 2009

Europe America Africa Asia/Middle East Oceania

Figure 17: Revenues by Geographical Area in 2009



June 2010


Figure 38: Engineering & Construction Level of Internationalization According to Revenues of 2009

0%10%20%30%40%50%60%70%80%90%

%

Companies

E & C Internationalization 2009

Internal Market

0%

20%

40%

60%

80%

100%

Strabag SE Veolia Environnement

Mota-Engil

%

Companies

E & S Internationalization 2009

Internal Market External Market

Figure 39: Environment & Services Level of Internationalization According to Revenues of 2009

Source: Companies reports Source: Companies reports

0%

20%

40%

60%

80%

100%

Concessions Vinci

Soares da Costa

Mota-Engil

%

Companies

TC Internationalization 2009

Internal Market External Market

Figure 40: Transport Concessions Level of Internationalization According to Revenues of 2009


Table 7: Competitors’ Credit Risk

Source: S&P 500

Mota-Engil does not have a credit rating given by a credit rating agency which is commonly justifiable by the argument that the company acts in a risky industry which involves high leverage ratios. However, some competitors have the ratings presented bellow.

Companies Ratings (in S&P)

Vinci S.A. BBB+

Strabag SE BBB-

Bouygues, S.A. A-

Technip BBB+

Veolia Environment BBB+

Brisa BB-

Atlantia A-


June 2010


Success Conditions and Growth Opportunities

According to Luís Filipe Pereira, President of the Executive Commission of Efacec and Best Leader

Awards 2010/Internationalization Leader, strategic leadership is essential for the development of

a company, even more if the company is in the process of internationalization that needs to

compete in foreign markets, open and usually more competitive. Some operational and tactic

mistakes can be reversed but if a company made a mistake in terms of defining how to compete,

where and the way to do it, so all organization is in risk. So in an international context, there is a

superior need to define objectives to achieve, to establish priorities, to form teams, to motivate

and remunerate human resources.

There are some main worries in CEOs’ mind when carrying on a company strategy, which makes all

sense because markets are, in part, unpredictable, not controlled by them and, when taking a

decision, the result can diverge from the expected. But in any case there are usually success

conditions.

EV1/EBITDA EV1/Revenues

Net Debt/EBITDA

Net Debt/Equity

Net Debt/Assets

ROE ROA EBITDA margin

2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009

Vinci 4,22 4,14 0,61 0,64 3,15 2,76 1,70 1,31 0,43 0,36 17,6% 15,3% 4,44% 4,22% 14,6% 15,5%

Strabag SE 3,37 3,19 0,18 0,17 2,64 2,21 0,57 0,49 0,17 0,16 5,6% 6,0% 1,70% 1,92% 5,3% 5,5%

Eiffage GB 2,55 2,50 0,24 0,24 9,45 9,88 4,47 4,81 0,46 0,50 11,1% 7,3% 1,15% 0,76% 9,4% 9,6%

Soares da Costa

N.A. N.A. N.A. N.A. 7,02 7,54 4,37 5,19 0,44 0,44 5,9% 8,8% 0,59% 0,75% 10,3% 9,6%

Teixeira Duarte

1,88 1,68 0,27 0,28 9,86 9,50 5,46 3,90 0,58 0,57 -121,8% 22,5% -12,99% 3,27% 14,5% 16,4%

Sacyr 2,17 2,93 0,25 0,23 4,48 3,78 1,03 0,58 0,10 0,08 -9,7% 17,3% -0,91% 2,49% 11,3% 7,7%

Average Construction

2,83 2,89 0,31 0,31 6,10 5,94 2,93 2,71 0,36 0,35 -15,2% 12,9% -1,00% 2,24% 10,9% 10,7%

Abertis 4,25 3,93 2,60 2,43 6,23 5,99 2,97 2,53 0,63 0,59 14,5% 12,5% 3,08% 2,93% 61,3% 61,9%

Atlantia 4,14 3,98 2,52 2,43 4,61 4,71 2,45 2,44 0,55 0,53 18,4% 16,2% 4,16% 3,50% 60,8% 61,0%

Brisa 6,65 6,13 4,31 4,36 7,61 6,94 2,69 2,33 0,66 0,63 11,2% 11,2% 2,73% 3,05% 70,4% 71,1%

Average Transport

Concessions 5,01 4,68 3,14 3,08 6,15 5,88 2,70 2,43 0,61 0,58 14,7% 13,3% 3,32% 3,16% 64,2% 64,7%

Suez Environment

3,33 3,40 0,57 0,57 2,84 3,05 1,43 1,42 0,30 0,28 12,8% 9,1% 2,70% 1,80% 17,0% 16,8%

Veolia Environment

2,57 2,67 0,30 0,31 4,03 3,82 1,73 1,49 0,34 0,30 4,2% 5,8% 0,82% 1,17% 11,5% 11,4%

Average Environment

& Services 2,95 3,04 0,43 0,44 3,43 3,44 1,58 1,46 0,32 0,29 8,5% 7,4% 1,76% 1,48% 14,2% 14,1%

Mota-Engil2 1,42 1,45 0,24 0,21 5,95 7,52 5,43 6,09 0,75 0,76 11,7% 21,3% 1,62% 2,67% 16,7% 14,3%

1EV is an approximation through market capitalization 2Includes the consolidation of Transport Concessions Source: Companies Reports

Table 8: Ratios for Companies Comparison


June 2010


0% 20% 40% 60% 80%

Lack of Stability in Capital Markets

Protracted Global Recession

Inability to Finance Growth

Exchange Rate Volatility

Over-Regulation

CEOs Main Worries about Economic and Financial Risks

Global Engineering & Construction

Source: Price Water House Coopers – 13th Annual Global CEO Survey

Figure 41: Engineering & Construction CEOs Main Worries about

Various Economic and Financial Risks

Going abroad for internationalization

assumes too many risks that can be

reduced if there is a partnership, or

any takeover, with high knowledge

of the local market, with know-how

that complements itself, with

previous good financial performance,

with good relations with the local

State, making it easier to have access

to some main value creation

projects. The value of advantages is

higher than the weaknesses.

However, these success conditions

are at some point controlled by the companies, if they have done a previous analysis of the other

(at a micro-level). At a macro-level there are economies with its GDPs, proper growths, external

factors that conditions the overall performance of companies indirectly. No economy is equal, so

some grew more at a certain length of time while in others it happens later on. So,

internationalization reduces the risk of being in an economy of small growth, of restricted market

conditioning all its results while others are in strong expansion. For instance, in the second quarter

of 2010 US GDP is expected to grow 2,3% while in the major three economies of Euro Area is

predicted just 1,9%. There are some good opportunities that can be caught in specific business

areas in different countries.

Other matter of success can be works in consortium when the possibility of gaining a project alone

seems improbable. Taking part in a consortium, as an all, the group is more valuable, capable to

take a bigger step, complementary companies’ issues in some aspects, saving development as well

as money. That is, capable to bid and win high value added projects. Just important to take into

consideration if there are different interests/objectives between the construction companies and

operators (it may have impact in the quality of civil work, for example); some duplication of

activities and resources; internal problems in communication plus assignment of responsibilities

intra-group. For example, Mota-Engil takes part in Altavia Consortium for the High Speed Train

Concession and in Asterium Consortium for New Lisbon Airport and ANA Privatization. This

increases its chance of gaining value in the projects due to the aggregation of expertise and

dimension.

Mota-Engil diversifying its markets through internationalization is reducing risks inherent to the

dependence of having just the internal one.

Mota-Engil is betting in the public sector of Peru, for construction and road rehabilitation and, this

country is considered by numerous financial analysts, one of the best markets is Latin America and

where big investments in the infrastructures recuperation are forecasted. Moreover, it is

predicted a strong economy recuperation for this year. Mota-Engil subsidiary, Translei, awards


June 2010


recent projects in an amount of € 71 millions in Peru. In the American continent, the group is also

presented in USA, Mexico and Brazil.

For instance, Brazilian construction sector can grow 7,1% or 8,8% in 2010 according to Amaryllis

Romano (Economist of Tendencies) or Getúlio Vargas Foundation, respectively. This probable

improvement is due to the mortgages expansions, investments growth and habitation deficit, not

forgetting World Cup 2014 and Olympiads 2016 that require important infrastructures

constructed. Foreign investments are going to play an important role but there are increases in

public and private investments, at the same time. Last year, from January until October,

construction sector received 5,4% of the total amount received in the country that was applied to

building construction (5,5 million houses in habitation deficit yet), infrastructures construction and

engineering and architecture. The main investors are usually US or European groups that are

seeing Brazil as a potential attraction in the sector. Camargo Corrêa Group, Mota-Engil competitor,

considered this boom prediction in construction sector and it is buying spaces for future

development of houses, mainly in the low/economic rent segments where demand is explosive.

Mota-Engil Brazil had had some experience in transport concessions (Marechal-Leste in San Paulo

State) and it reveals also some growth opportunities in ports and environment (waste, for

example) sector. In fact, Brazil shows much more opportunities because it has the second phase of

Growth Acceleration Program 2011-2014 led by its Federal Government and its value is US$220

Billion.

Table 9: Growth Acceleration Program – Phase 2 (2011-2014)

Type of Infrastructure Announced Possible Private Investment (in US$ Million)

Urban Sector Mobility (Subway, Light Rail Vehicle, Bus Rapid Transit, Bus Lane projects)

10.300

Ports (Dredge, Port Seabed) 498 Housing 40.700 Electric Power 36.200 Oil 106.700 Natural Gas 4.600 Shipbuilding Industry 20.800

Total US $219.798 Million Source: Dredging Today - Brazil

Mota-Engil Group wants to go from € 20 millions of business volume to € 120 millions in Cape

Verde in the following three years. The group is going to apply for all tenders in terms of

infrastructures and public works, letting the Cape Verdean Government know its intention. It is

going to bet in local partnerships and its areas of interest are construction of housing and roads,

expansion of ports, construction of dams, alternative energy, and solid waste treatment among

others. According to Jorge Coelho, Mota-Engil CEO, “Cape Verde became a priority for the group

because it is a stable country, with good governance and has good potential of development and

business”. This African country predicts to construct 4.000 houses until 2011, starting this year

with 1.000, according to Cape Verdean Ministry. With this construction program financed by the


June 2010

Private and Confidential Mota-Engil | Divestment Opportunity 27/51

credit line of Portugal (Habit Cape Verde and Pro-dwelling and Rehabilitate), local government will

construct 8.500 houses and recover half of the investment, and in return it will give fiscal, par

fiscal, customs incentives to construction companies and municipalities that adhere to the project.

Cape Verde is a potential market, where it is possible to develop new projects without the need of

credit resort. This is a country that awakens more interest by the Portuguese investors, according

to the President of the Business Association of the Region of Lisbon, António Ferreira de Carvalho.

Angola should grow 10% this year, with the recuperation of the petroleum resources sector and

the predicted investments in the public sector and international investors, according to the

estimates of the BES Research, which is positive due to the growing weight of Mota-Engil Angolan

works.

In Ireland Mota-Engil is growing in terms of construction. This March it was announced that its

participated, GLAN AGUA, signed 2 contracts to the construction to 20 years of 25 water

treatment stations, € 55,2 millions involved. This signature has a special meaning because it

integrates a new project’s format in design, construction and operation and they are two of the

biggest projects released in 2009 in this country (GLAN AGUA takes part of Mota-Engil

Environment and Services since 2008).

To conclude, an opportunity that the Portuguese President of Republic referred to in a speech this

April was to make a deeper link between Portugal and Czech Republic, economic cooperation, in

which Portugal can benefit from its ability in infrastructures construction, renewable energies,

telecommunications that are fulcra for Czech development and in exchange the other country

benefits from the connections of Portuguese companies with African and Latin America ones.

Mota-Engil is presented there; maybe from now onwards its business cooperation between

companies must be strong and leads to better profits and margins for both.

Divestment Opportunity

The opportunity analyzed in this chapter is a total divestment of Mota-Engil Group in Martifer,

selling its 37,50% position. The proceeds of this divestment will immediately result in debt

reduction. Thus, giving more capacity to raise medium-term debt to finance new projects [such as

the New Airport of Lisbon new, the participation in ANA, the participation in High Speed Railways

(TGV) consortium, the equity participation in new grants of highways, among others] if these

major investments will be put in place in the near future and/or awarded by this company.

Otherwise, it can be used for future acquisitions at an international level or even reinforce its

financial position in ones partially owned at the time (its core business).

Proposed Divestment Transaction (Buyer and Seller Perspective)

In the seller perspective, Mota-Engil is in a position that allowed itself to strengthen its businesses

(finding ways to optimize its business portfolio, improving cash management or release cash into

the businesses and reducing costs). Due to its strong financial position, it will need to understand


June 2010


0% 10% 20% 30% 40% 50% 60%

Looking for Cash

Dispose of Non-Performing Assets

Increase Focus on Core Business

Most Important Factor in Planning a Divestment?

Source: Ernst & Young Report: “Divesting in Turbulent Times – Achieving Value in a Buyers’ Market”, 2009

the current market conditions plus valuations and make a review about the best ways to finance

future investments.

Indeed, companies undertake divestments to guarantee their business future and as a way to fund

strategic investments (acquisitions included). So that it is in line with the Mota-Engil strategic plan

(according to the strategic puzzle aimed to promote value creation, business and geographical

diversification).

Figure 42: Inquire Results about the Most Important Factors Considered in Planning a Divestment

“Under the current economic

circumstances, and given the

company’s financial position,

paying down debt is the most

important for us when planning a

divestment”, a Media Company

responsible said. For Mota-Engil,

with this divestment, it will have

the opportunity to improve its

leverage ratios, repaying debt will

mean auto financing of new future

projects related to its core business.

The value per share of Martifer for Mota-Engil is 3,13€ while in the market it is being transacted at

1,75€.

So, as Martifer brings fewer benefits for Mota-Engil than before (just synergies in one division –

Metallic Construction), Mota-Engil should sell its participation and at the same time reducing its

net debt, improving its leverage ratios in the short-run for possible future investments in core

business. As actual market price is below the value for Mota-Engil, and expecting to have a

financial gain, it is necessary to wait until the market reaches 3,13€. Economic agents are putting a

huge risk premium in the stock, so that the cash-flows are understated, below its fair value. Then

Mota-Engil should sell the stock but just when market facilities are favourable. On the other hand,

there can exist a company in the same industry as Martifer that believes that the amount of

synergies with its own business areas is going to be so high. Moreover, it can bring Human

Resources in number and quality for Martifer that put it capable to take all new business areas

(electricity generation from renewable, for instance) to its optimal values .


June 2010


Table 10: Qualifying Holdings at December 2009

Source: Martifer

* Holder of a position in the Corporate Bodies of I‟M SGPS, SA;

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

Indeed, Mota-Engil does not influence Martifer strategy and does not manage the company from

an operational point of view. However, it has 37,5% of voting rights.

In the actual financial conditions, the Buyers are the companies with strong balance sheets. While

some companies are avoiding making investments, others consider that today’s facilities bring

exceptional opportunities for acquiring healthy business companies. However, Buyers considered

that convincing stakeholders about new transaction benefits will be a challenge, i.e, the boards,

financial people and shareholders will verify in a really detailed way the acquiring transaction, as

the statement of financial position is under pressure. The Buyers valued, in the preparation of the

divestment, the experienced management team, clear/realistic forecasts for the future company’

forecasts, a well-based description of potential future synergies, the most efficient tax structure

and the due diligence report properly set by the Seller. Martifer possible buyer can extract high

synergies, can try to reverse company’s strategy to the one in line with itself, can cut cost and

optimize the entire structure, creating more value.

In conclusion, possible buyers are characterized by stable businesses, strong balance sheets and

cash that put them in the favorable position of to re-shape their businesses through strategic

acquisitions. At the same time, sellers have to work really hard in the sense that a careful

preparation is essential and adds value to the transaction, even more in the current time when

lots of divestments are executed in record times. Buyers’ motivation is a factor of primordial

interest at this period despite challenging and successfully critical.

Shareholders Nr. of shares % of Share Capital % Voting Rights

I’M – SGPS, SA 41,590,473 41.590473% 41.590473% Carlos Manuel Marques Martins*

70,030 0.07003% 0.07003%

Jorge Alberto Marques Martins*

131,760 0.13176% 0.13176%

Total attributable to I’M – SGPS, SA

41,792,263 41.792263% 41.792263%

Mota-Engil – SGPS, SA 37,500,000 37.50% 37.50% Eduardo Jorge de Almeida Rocha **

20,000 0.02% 0.02%

Total attributable to FM – Sociedade de Controlo, SGPS, SA

37,520,000 37.520000% 37.520000%


June 2010


Martifer, SGPS, S.A.


Energy Systems | Wind

Energy Systems | Solar

Renewables Developer

Source: Martifer

46,30%

6,60%19%

28,10%

Revenues by Geographic Area

Portugal Spain

0%20%40%60%EBITDA Weight per Business Unit

46,3%

6,6%19%

28,1%

Revenues by Geographic Area

Portugal

Spain

Central Europe

Rest of the World

Target Company Overview

Martifer is a Portugal-based holding company, founded in 1990 and has initiated its activity in the

steel structures (within the metallic construction) sector. Now the company operates in 20

countries and it is engaged in the four business units presented below, that despite being

independent, complement each other in order to ensure sustained and balanced growth.

Concerning the Metallic Construction area, the company is market leader in

the Iberian Peninsula and a reference player at European level. Moreover, Martifer has recently

focused its strategy in the fast-growing countries of Central Europe and Angola. It does

construction of stadiums, bridges, buildings, airports and industrial plants. In the Energy Systems,

it constructs industrial facilities and equipment for the renewable energy sector; specifically in the

solar area it produces photovoltaic panels. In the RE Developer field, Martifer currently generates

104 megawatts of electricity with wind farms and solar parks. All the electricity generation

projects are based on renewable energy sources.

Figure 44 EBITDA Weight per Business Unit Figure 45: Revenues Weight per Geographic Area in 2009

Figure 43: Martifer Group Structure

Source: Martifer

Figure 46: Revenues Breakdown by Geographic Area

Source: Martifer


June 2010


41,79%

37,50%

20,71%

Capital Structure

I'M - SGPS, SA

Mota-Engil

Free Float

Figure 47: % of Share Capital by Shareholder Shareholder

3,50 €3,20 €

4,50 €3,90 €

3,00 €3,70 €

3,90 €3,67 €

0,00 € 1,00 € 2,00 € 3,00 € 4,00 € 5,00 €

BCP

BPI

Santander

Goldmen Sachs

Main Analysts' Target Price per Share

Source: Martifer

Figure 48: Main Analysts’ Price per Share

Source: Martifer

EV/EBITDA EV/Revenues

Net Debt/EBITDA

Net Debt/Equity

Net Debt/Assets

ROE ROA EBITDA margin

2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009

Martifer 2,84 2,62 0,28 0,29 7,87 6,65 1,45 1,14 0,36 0,31 1,59% -3,39% 0,39% -0,93% 9,72% 11,02%

Essentially, the main group’s strategy is i) internationalization of all its business units; ii) the

maintenance of its leading position within the metallic construction field in Europe; iii) to become

one of the best players in the supply of renewable energies’ equipment and systems, by improving

its technical skills; iv) to be operative, financially efficient and strong in its financial structure.

Following this strategy, recently Martifer has sold 11% of its participation in the subsidiaries Prio

and Prio Advance Fuels to Severis (€ 13,75 million involved), reducing its participation from 60% to

49% which meant a reduction in its previous strategic interest in agriculture and biofuels business

and focus on core business. There are growth opportunities in all these segments of operation

which may allow sustainable growth and value creation if the strategy is properly put in place.

The actual capital structure is as presented, noting

that Mota-Engil holds 37,5%; and the Martins’

Brothers have a participation of 50-50% in I’M.

However, it is important to note that until 2007

Martifer was jointly owned by Mota-Engil and

Martins’ Brothers. Martifer has decided to sell its

shares to institutional investors at 8€ per each, the

upper end of the price range for its IPO. Since then, Martifer is listed in Euronext Lisbon Stock

Exchange. The objective was to use its capital increase to finance the group’s expansion of its

businesses abroad. Due to this event, Mota-Engil reached a capital gain of € 67 millions, which

allowed having a net profit in 2007 that was the triple of the one obtained in the previous year

(even with a decline in the Engineering and Construction sector). The actual market price is 1,75€

which is far from its 8€, and this can be due to: the forced re composition in shareholders (free-

float); change in investors’ type (hedge funds were reduced); business model does not allow doing

project finance; regulation risk; company dependence of public subsidies which are perceived as

improbable in this period of restraint and dependence

on Iberian markets for financing.

However, for Martifer analysts its

market price is below its value and,

according to my valuation, Martifer

value per share is 3,13€, an amount

below average.

Table 11: Martifer Ratios

Source: Martifer (*Adjusted values)


June 2010


Key Factors for a Successful

Divestment

Clear Defined Strategy

Group Procedures Put

in Place

Optimization of the Blend of

Business Unit Execution with Central Control

Right People Involved

Business Value and Deal Value

Drivers UnderstandingPace and

Direction Control

Identification / Resolution of

Issues Early on

Impact of the Transaction on

the Group

Clear Communication

Good Selection of Advisors

Figure 49: Diagram about Key Factors for a Successful Divestment

Source: Price Water House Coopers Report: “The Journal – Preparing the Ground for Successful Divestment”, 2009

Success Conditions of the Transaction

The divestment of assets in the shortest length of

time, the minimization of transaction costs, the

maximization of the value of the business

unit and the avoidance of disruption to

other business activities are crucial for

the optimization of the both parties’

goals.

Then, in the execution process it can

be maximized value by, for

instance, putting the divestments

into the market at the considered

best period of time. The company should be

focused in the ongoing business

operations during all the process,

keeping in mind the company’s overall

maximization of value. The analysis in terms of valuation and financial

models must be performed in a comprehensive way and there must exist a

formal procedure for the review of what was learned. Moreover, the proper allocation of

resources to this transaction process, the control of the information flows, communication,

planning and better preparation bring value. In summary, the diagram represents the main ideas

for a successful divestment.

To sum up, the main successful condition is to find a market price, at least, equal to the value for

Mota-Engil. It is to find a shareholder that find the highest value from the company. At the

moment market price does not transpires the rela value of the compny for the industrial investor

Valuation of Proposed Divestment Transaction

The proposed divestment is to sell Martifer capital at 3,13€, an amount achieved by Martifer

valuation. This will bring a gaining in Mota-Engil shares of 0,25€ per share, resulting in a increase

from 3,57€ to 3,57€. Transacting at the actual market price does not make any sense for Mota-

Engil since that amount is not translating Martifer value, so it is going to increase during this year

and then the best opportunity for this transaction will be achieved. Stock market recuperation is

expected. The Net Debt/EBITDA is going to decrease along time, ceteris paribus.


June 2010


Table 12: Mota-Engil Divestment in Martifer

Considerations on the Negotiation Process

Considering that the transaction proposed is the sale of 37,5% by Mota-Engil, the position of

control remains in Martins’ Brothers. To keep stability and avoid possible conflicts among the main

board of power, Martins’ Brothers should agree with this transaction and believes that for any

reason the acquirer of that part of capital can bring additional value to the company because it is

going to take part in the decision making process. Maybe it is important to note some motivation

by the buyer for the expansion/development of the core activities.

The buyer knows the highest price that it can pay for this acquisition and Mota-Engil should try to

find that value, considering Martifer valuation plus the synergies that are also favorable to the

acquiring company, even not presented for this seller. All the possible risks of this divestment

should be covered to the limit that the acquirer can carry on without putting in danger its own

business.

There must be an alignment of incentives between Martifer and Mota-Engil for this transaction,

and Mota-Engil should make clear that it is not divesting in this company due to misbelieve in the

valuation and forecasts associated with its potential backlog but just a corporate level strategy to

have more funds in hand to finance its expansion, projects and diversification policy. Both

companies can continue cooperating in the areas in which they can get synergies, such as Metallic

Construction in Martifer with Engineering and Construction in Mota-Engil.

Sum of the Parts (Mota-Engil Valuation with Martifer Divestment Opportunity) (In Eur Million)

Valuation Stake

SoP (Pmarket=1,75€)

SoP 2010 (PME=3,13€)

Engineering & Construction 468,16 100% 468,16 468,16 Environment & Services 198,01 55% 108,90 108,90

Transport Concessions 279,50

279,50 279,50 Other Assets 79,00

79,00 79,00

Own Shares 23,16

23,16 23,16 Initial Debt at the Holding Level (2010) 298,70

298,70 298,70

Reduction in Debt due to Sale of Martifer participation

65,63 117,46 Total

679,33 731,17

Number of Outstanding Shares

204,63 204,63 Total per Share (€)

3,32 3,57

At Market Value

(Pmarket) At Mota-Engil Value

(PME)

Martifer price per share 1,75 € 3,13 €

Gain in the Transaction 0 51,83 €

Gain in the Transaction per share 0 0,25 €

Leverage Ratio 2008 2009 2010E 2011E 2012E 2013E

Net Debt/EBITDA – Before Martifer Divestment (x) 3,94 4,92 4,82 4,55 4,29 4,04 Net Debt/EBITDA - After Martifer Divestment (x) 3,94 4,92 4,31 3,43 3,33 3,21

Source: Research Estimates

Table 13: Gains in the Divestment

Transaction


Table 14: Net Debt/EBITDA Before and After the Divestment Transaction (Transport Concessions not consolidated for

comparison)



June 2010


To sum up, due to the amount of capital put on sale (more than one third of total share capital) it

is necessary to inform CMVM about this transaction. The price cannot be accepted if CMVM

considers that it rises anomalies to the economy, according to article187º (Obligation to launch a

takeover bid) and 188º (Counterpart) of Section II of CMVM Code.


June 2010

Private and Confidential Mota-Engil | Appendices 35/51

Appendices

Mota-Engil Valuation

Sum of the Parts (In Eur Million)

Valuation at Equity Value

Stake SoP 2010

Engineering & Construction 468,16 100% 468,16 Environment & Services 198,01 55% 108,90 Transport Concessions 279,50 279,50 Martifer1 175,00 37,50% 65,63 Other Assets 79,00 79,00 Debt at the Holding Level 298,70 298,70 Own Shares 23,16 23,16 Total 679,33

Number of Outstanding Shares 204,63 Total per Share (€) 3,32 1Valued at market price = 1,75€ x 100.000.000 shares

2Valued at market price = 2,111€ x 10.972.328 shares

In the following DCF assumptions:

LT Portuguese Inflation = 2015e =1,80% (source: IMF)

Real GDP Portugal = 2015e = 1,40% (source: IMF)

Tax Rate= 25% (IRC) + 1,5% (Derrama)

Risk-free rate = German Government Bonds 8y =4,25% (source: Bloomberg)

Beta of Mota-Engil = Company’s Beta = 1,34 (source: Reuters)


June 2010


Engineering and Construction

Main DCF Assumptions

Risk-Free Rate 4,25% Market Premium 6,00% Levered Beta 1,34 Cost of Equity 12,29%

Debt Spread 3,00% Cost of Debt 6,22% Corporate Tax Rate 26,50% After Tax Cost of Debt 4,57% Leverage 64% WACC 7,33%

Depreciation Rate 13,62%

Perpetuity Growth Rate 3,20%

Real Perpetuity Growth Rate 1,40% LT Inflation 1,80%

WACC-G 4,13%

P&L Statement (In Eur Million)

2007 2008 2009 2010E 2011E 2012E 2013E

Revenues 1.048,70 1.466,70 1.693,86 1.797,91 1.908,35 2.025,57 2.150,00 Cost of Goods Sold 956,80 1.337,00 1.559,71 1.646,97 1.738,52 1.834,49 1.935,00

EBITDA 91,90 129,70 134,15 150,94 169,83 191,09 215,00

EBITDA margin 8,76% 8,84% 7,92% 8,40% 8,90% 9,43% 10,00% Depreciation 47,50 56,10 56,53 60,37 64,49 68,88 73,57

EBIT 44,40 73,60 77,63 90,57 105,35 122,21 141,43

Financial Expenses 26,00 31,00 22,15 27,81 30,92 34,25 37,81

Equity Method 6,00 3,39 7,34 5,58 5,58 5,58 5,58 EBT 24,40 45,99 62,82 68,33 80,00 93,54 109,20 Taxes 1,00 10,00 16,29 16,29 19,07 22,30 26,03

Net Income 23,40 35,99 46,53 52,04 60,93 71,24 83,17

Financial Balance Sheet (In Eur Million)

2007 2008 2009 2010E 2011E 2012E 2013E Fixed Assets 280,00 366,00 415,00 443,26 473,45 505,69 540,13 Concessions Fixed Assets

- - - - - - -

Investments 86,00 94,00 83,00 83,42 83,83 84,25 84,67 Long-Term Receivables

30,00 34,00 63,00 63,63 64,27 64,91 65,56

Working Capital 156,00 160,00 238,00 308,04 336,15 366,85 400,14

Capital Employed 552,00 654,00 799,00 898,34 957,70 1.021,70 1.090,50

Capital 126,60 206,01 238,47 305,01 326,42 349,34 373,59

Net Income 23,40 35,99 46,53 52,04 60,93 71,24 83,17

Minority Interests - - - - - - -

Total Equity 150,00 242,00 285,00 357,05 387,35 420,58 456,76

Provisions 10,00 16,00 15,00 15,30 15,61 15,76 16,08 Long-Term Payables

116,00 131,00 143,00 145,00 147,00 149,00 151,00

Net Debt 276,00 265,00 356,00 380,99 407,74 436,37 466,67

Of which non-recourse

- - - - - - -

Liabilities 402,00 412,00 514,00 541,29 570,35 601,13 633,74

Capital Invested 552,00 654,00 799,00 898,34 957,70 1.021,70 1.090,50


June 2010


2008 2009 2010E 2011E 2012E 2013E

Net Profit 35,99 46,53 52,04 60,93 71,24 83,17 Depreciation 56,10 56,53 60,37 64,49 68,88 73,57 Cash-Flow from Operations 92,09 103,06 112,42 125,42 140,12 156,74

Capital Expenditures 142,10 105,53 88,64 94,67 101,12 108,01 Change in NWC 4,00 78,00 70,04 28,11 30,70 33,29

Change in Provisions 6,00 -1,00 0,30 0,31 0,16 0,32 Change in LT Payables 15,00 -6,00 0,96 0,95 0,94 0,93

Change in LT Receivables and Investments

12,00 18,00 1,04 1,05 1,06 1,07

Cash-Flow from Investment 137,10 190,53 157,42 121,53 130,73 140,05 Change in Equity 56,01 -3,53 20,01 -30,63 -38,01 -46,98 Change in Net Debt -11,00 91,00 24,99 26,75 28,63 30,30

Cash-Flow from Financing 45,01 87,47 45,00 -3,88 -9,39 -16,68

DCF (in mln€) 2009 2010E 2011E 2012E 2013E

Operating Income (EBIT) 77,63 90,57 105,35 122,21 141,43

(+) Non Cash Items (depreciations) 56,53 60,37 64,49 68,88 73,57 (-) Taxes 20,57 24,00 27,92 32,39 37,48 (-) Capex 105,53 88,64 94,67 101,12 108,01 (-) ∆ NWC 78,00 70,04 28,11 30,70 33,29

(+) ∆ Provisions -1,00 0,30 0,31 0,16 0,32 (+) ∆ LT Payables -6,00 0,96 0,95 0,94 0,93

(-) ∆ LT Receivables & Investments 18,00 1,04 1,05 1,06 1,07

Free Cash-Flow to Firm (FCFF) -94,94 -31,52 19,33 26,91 36,40

Discounted Factor (WACC) 1,00 0,93 0,87 0,81 Discounted Cash-Flow -31,52 18,01 23,36 29,44

PV FCFF 39,29 Terminal Value 726,45

Enterprise Value (EV) 765,74 (-) Net Debt (2010) 380,99

(+) Financial Investments (2010) 83,42

(-) Dividend Payment Equity Value 468,16


June 2010


Environment and Services


Risk-Free Rate 4,25% Market Premium 6,00% Levered Beta 1,34

Cost of Equity 12,29% Debt Spread 3,00%

Cost of Debt 5,60%

Corporate Tax Rate 26,50%

After Tax Cost of Debt 4,11% Leverage 87,05%

WACC 5,17%

Depreciation Rate 6,00%

Perpetuity Growth Rate 3,20% Real Perpetuity Growth Rate 1,40%

LT Inflation 1,80% WACC-G 1,97%


2007 2008 2009 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E

Revenues 253,00 285,70 333,48 382,17 437,96 501,91 575,19 632,70 695,97 765,57 842,13

Cost of Goods Sold

193,00 219,30 267,17 301,80 340,56 383,86 432,11 475,32 522,85 575,13 632,65

EBITDA 60,00 66,40 66,31 80,37 97,40 118,05 143,08 157,39 173,13 190,44 209,48 EBITDA margin

23,72% 23,24% 19,88% 21,03% 22,24% 23,52% 24,88% 24,88% 24,88% 24,88% 24,88%

Depreciation 18,80 19,40 29,71 32,20 35,98 40,21 44,93 50,21 56,12 62,71 70,08

EBIT 41,20 47,00 36,60 48,17 61,42 77,84 98,15 107,17 117,01 127,73 139,40

Financial Expenses

17,00 21,00 18,15 24,38 26,82 29,50 32,45 35,70 39,27 43,25 47,61

Equity Method

- 1,00 0,49 0,75 0,75 0,75 0,75 0,75 0,75 0,75 0,75

EBT 24,20 27,00 18,94 24,53 35,35 49,09 66,44 72,22 78,49 85,22 92,54

Taxes 9,00 11,00 8,51 6,50 9,37 13,01 17,61 19,14 20,80 22,58 24,52 Minority Interests

10,00 10,00 8,00 8,11 11,69 16,24 21,97 23,89 25,96 28,19 30,61

Net Income 5,20 6,00 2,43 9,92 14,29 19,84 26,86 29,19 31,73 34,45 37,41


2007 2008 2009 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E

576,52 642,07 698,49 762,85 826,59 911,90 1.006,87 1.110,71 Fixed Assets 155,40 266,00 309,00 317,09 353,14 384,17 419,57 454,62 501,55 553,78 610,89 Concessions Fixed Assets 94,10 111,00 197,00 259,43 288,93 314,32 343,28 371,96 410,36 453,09 499,82 Investments 126,00 40,00 42,00 42,84 43,70 44,57 45,46 46,37 47,30 48,24 49,21 Long-Term Receivables 12,20 13,00 4,00 4,20 4,41 4,63 4,86 5,11 5,36 5,63 5,91 Working Capital -2,60 40,00 27,00 30,94 35,46 40,64 46,57 51,23 56,35 61,98 68,18

Capital Employed 385,10 470,00 579,00 654,50 725,64 788,33 859,75 929,29 1.020,91 1.122,73 1.234,02

Capital 55,80 68,00 64,57 82,50 90,75 99,83 109,81 120,79 132,87 146,34 161,07

Net Income 5,20 6,00 2,43 9,92 14,29 19,84 26,86 29,19 31,73 34,45 37,41 Minority Interests 10,00 10,00 8,00 8,11 11,69 16,24 21,97 23,89 25,96 28,19 30,61

Equity 71,00 84,00 75,00 100,53 116,73 135,90 158,64 173,87 190,55 208,98 229,09

Provisions 10,00 14,00 15,00 16,07 17,22 18,45 19,77 21,18 22,69 24,31 26,05

Long-Term Payables 17,10 52,00 93,00 102,30 112,53 106,90 101,56 96,48 106,13 116,74 128,42 Net Debt 287,00 320,00 396,00 435,60 479,16 527,08 579,78 637,76 701,54 772,69 850,46 Of which non-recourse

29,00 81,00 89,10 98,01 107,81 118,59 130,45 143,50 158,05 173,96

Liabilities 314,10 386,00 504,00 553,97 608,91 652,43 701,11 755,42 830,36 913,75 1.004,93

Capital Invested 385,10 470,00 579,00 654,50 725,64 788,33 859,75 929,29 1.020,91 1.122,73 1.234,02


June 2010


2008 2009 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E

Net Profit 6,00 2,43 9,92 14,29 19,84 26,86 29,19 31,73 34,45 37,41 Depreciation 19,40 29,71 32,20 35,98 40,21 44,93 50,21 56,12 62,71 70,08 Cash-Flow from Operations 25,40 32,15 42,11 50,27 60,05 71,79 79,41 87,84 97,16 107,49

Capital Expenditures 146,90 158,71 102,72 101,53 96,63 109,29 113,95 141,43 157,68 173,93 Change in NWC 42,60 -13,00 3,94 4,52 5,18 5,93 4,66 5,12 5,63 6,20 Change in Provisions 4,00 1,00 1,07 1,15 1,23 1,32 1,41 1,51 1,62 1,74 Change in LT Payables 34,90 41,00 9,30 10,23 -5,63 -5,35 -5,08 9,65 10,61 11,67 Change in LT Receivables -85,20 -7,00 1,04 1,07 1,09 1,12 1,15 1,18 1,21 1,25 Cash-Flow from Investment 65,40 96,71 97,33 95,74 107,30 120,38 123,42 136,58 152,29 167,96

Change in Equity 7,00 -11,43 15,61 1,91 -0,67 -4,12 -13,96 -15,04 -16,02 -17,30 Change in Net Debt 33,00 76,00 39,60 43,56 47,92 52,71 57,98 63,78 71,15 77,77 Cash-Flow from Financing 40,00 64,57 55,21 45,47 47,25 48,59 44,01 48,73 55,13 60,47

DCF (in mln€) 2009 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E

Operating Income (EBIT) 36,60 48,17 61,42 77,84 98,15 107,17 117,01 127,73 139,40 (+) Non Cash Items (Depreciation) 29,71 32,20 35,98 40,21 44,93 50,21 56,12 62,71 70,08 (-) Taxes 8,51 6,50 9,37 13,01 17,61 19,14 20,80 22,58 24,52 (-) Capex 158,71 102,72 101,53 96,63 109,29 113,95 141,43 157,68 173,93 (-) ∆ NWC -13,00 3,94 4,52 5,18 5,93 4,66 5,12 5,63 6,20 (+) ∆ Provisions 1,00 1,07 1,15 1,23 1,32 1,41 1,51 1,62 1,74 (+) ∆ Other LT Payables 41,00 9,30 10,23 -5,63 -5,35 -5,08 9,65 10,61 11,67 (-) ∆ Other LT Reveibales and Investments -7,00 1,04 1,07 1,09 1,12 1,15 1,18 1,21 1,25

Free Cash-Flow to Firm (FCFF) -38,91 -23,46 -7,70 -2,25 5,10 14,83 15,75 15,56 17,00 Discounted Factor (WACC)

1,00 0,95 0,90 0,86 0,82 0,78 0,74 0,70

Discounted Cash-Flow

-23,46 -7,32 -2,04 4,38 12,12 12,24 11,50 11,94

PV FCFF

7,41 Terminal Value

583,35

Enterprise Value (EV) 590,77 (-) Net Debt (2010)

435,60

(+) Financial Investments (2010)

42,84

(-) Dividend Payment

Equity Value 198,01


June 2010



Eur Million Valuation Stake Mota-Engil Method

Lusoponte1

340 38,02% 129,27 Last Deal Aenor -171,99 35,11% -60,39 DCF Lusoscut Costa da Prata 176,07 36,09% 63,54 DCF Lusoscut Beira Litoral e Alta 137,39 36,09% 49,59 DCF Lusoscut Grande Porto 121,03 36,09% 43,68 DCF Grande Lisboa -18,25 36,09% -6,59 DCF Douro Litoral - 45,93% - Pinhal Interior - 42,08% - Mexico Concessions

1 80 30,00% 24,00

Brazil Concessions1

91 40,00% 36,40 Total 279,50 1Balance Sheet figures

Concessions valued according to the following assumptions:

Main DCF Assumptions - AENOR

Risk-Free Rate 4,25% Market Premium 6,00% Levered Beta 0,90 Cost of Equity 9,65% Debt Spread 2,50%

Cost of Debt 6,25% Corporate Tax Rate 26,50%

After Tax Cost of Debt 4,59%

Main DCF Assumptions - Lusoscuts

Risk-Free Rate 4,25%

Market Premium 6,00% Levered Beta 0,80



After Tax Cost of Debt 4,78% Shadow Toll

Main DCF Assumptions - Grande Lisboa

Risk-Free Rate 4,25% Market Premium 6,00% Levered Beta 1,00



After Tax Cost of Debt 4,59%


June 2010


Mota-Engil Proforma Financials (Excluding Transport Concessions Consolidation)


2007 2008 2009 2010E 2011E 2012E 2013E Revenues 1.301,70 1.752,40 2.027,34 2.180,08 2.346,31 2.527,48 2.725,19 Cost of Goods Sold 1.149,80 1.556,30 1.826,88 1.948,77 2.079,08 2.218,34 2.367,11 EBITDA 151,90 196,10 200,46 231,31 267,23 309,14 358,08 EBITDA margin 11,67% 11,19% 9,89% 10,61% 11,39% 12,23% 13,14% Depreciation 66,30 75,50 86,24 92,57 100,47 109,09 118,50 EBIT 85,60 120,60 114,22 138,74 166,77 200,05 239,58 Financial Expenses 43,00 52,00 40,30 52,20 57,74 63,75 70,27 Equity Method 6,00 4,39 7,84 6,32 6,32 6,32 6,32 EBT 48,60 72,99 81,76 92,86 115,35 142,62 175,63 Taxes 10,00 21,00 24,80 22,79 28,44 35,30 43,64 Minority Interests 10,00 45,99 54,53 60,16 72,62 87,47 105,14 Net Income 28,60 41,99 48,96 61,96 75,22 91,08 110,02


2007 2008 2009 2010E 2011E 2012E 2013E Fixed Assets 435,40 632,00 724,00 760,35 826,59 889,86 959,70 Concessions Fixed Assets 94,10 111,00 197,00 259,43 288,93 314,32 343,28 Investments 212,00 134,00 125,00 126,26 127,53 128,82 130,13

Long-Term Receivables 42,20 47,00 67,00 67,83 68,68 69,54 70,42 Working Capital 153,40 200,00 265,00 338,98 371,61 407,49 446,71 Invested Capital 937,10 1.124,00 1.378,00 1.552,85 1.683,34 1.810,04 1.950,25

Capital 182,40 274,01 303,04 387,51 417,17 449,16 483,40 Net Income 28,60 41,99 48,96 61,96 75,22 91,08 110,02

Minority Interests 10,00 10,00 8,00 8,11 11,69 16,24 21,97

Equity 221,00 326,00 360,00 457,58 504,08 556,48 615,40

Provisions 20,00 30,00 30,00 31,37 32,83 34,21 35,84

Long-Term Payables 133,10 183,00 236,00 247,30 259,53 255,90 252,56

Net Debt 563,00 585,00 752,00 816,59 886,90 963,44 1.046,45 Of which non-recourse - 29,00 81,00 89,10 98,01 107,81 118,59

Liabilities 716,10 798,00 1.018,00 1.095,26 1.179,26 1.253,56 1.334,85

Capital Employed 937,10 1.124,00 1.378,00 1.552,85 1.683,34 1.810,04 1.950,25

Cash-Flow Statement (In Eur Million)

2008 2009 2010E 2011E 2012E 2013E Net Profit 41,99 48,96 61,96 75,22 91,08 110,02 Depreciation 75,50 86,24 92,57 100,47 109,09 118,50 Cash-Flow from Operations 117,49 135,20 154,53 175,69 200,17 228,53

Capital Expenditures 289,00 264,24 191,35 196,21 197,75 217,30 Change in NWC 46,60 65,00 73,98 32,63 35,88 39,22 Change in Provisions 10,00 0,00 1,37 1,45 1,39 1,63 Change in LT Payables 49,90 35,00 10,26 11,18 -4,69 -4,42 Change in LT Receivables and Investments -73,20 11,00 2,09 2,12 2,16 2,19 Cash-Flow from Investment 202,50 305,24 255,79 218,33 239,09 261,50

Change in Equity 63,01 -14,96 35,62 -28,72 -38,68 -51,10 Change in Net Debt 22,00 167,00 64,59 70,31 76,54 83,01 Cash-Flow from Financing 85,01 152,04 100,22 41,59 37,86 31,90


June 2010


Financials 2008 2009 2010E 2011E 2012E 2013E

Turnover (Eur millions) 1.752,40 2.027,34 2.180,08 2.346,31 2.527,48 2.725,19 EBITDA (Eur millions) 196,10 200,46 231,31 267,23 309,14 358,08 Net Income (Eur millions) 41,99 48,96 61,96 75,22 91,08 110,02 EPS (Eur) 0,21 0,24 0,30 0,37 0,45 0,54 Ratios

ROIC (%) 4,61% 4,40% 4,86% 5,41% 5,99% 6,62% ROE (%) 12,88% 13,60% 13,54% 14,92% 16,37% 17,88% Net Debt/EBITDA (x) 3,94 4,92 4,82 4,55 4,29 4,04 Financials

P/E (x) 16,18 13,87 10,96 9,03 7,46 6,17 EV/Revenues (x) 0,39 0,34 0,31 0,29 0,27 0,25 EV/EBITDA (x) 3,46 3,39 2,94 2,54 2,20 1,90


June 2010


Martifer Valuation

Sum of the Parts

Eur Million Valuation Stake EV/10 Method Metallic Construction 289,47 85%1 246,05 DCF Energy Systems|Wind 67,98 100% 67,98 DCF Energy Systems|Solar 80,16 100% 80,16 DCF RE Developer (Electricity Generation) 207,90 100% 207,90 DCF Agriculture and Biofuels3 49% 61,25 Market Value

EDP stake2 43,97 Market Value Real Estate Assets 57,00 Value of the Company (EV) 764,00 (-) Consolidated Debt (2010) 451,10 Equity Value 313,22

Number of Outstanding Shares 100,00 Price per Share 3,13 € 1Martifer Aluminios is controlled by the Group in 55%

217,7 million shares x 2,484€

3 Valued at the price of the sale of 11% of Prio capital in March 25.


June 2010





Market Premium 6,00% Levered Beta 1,06%




WACC 6,85% Depreciation Rate 2,30%



P&L Statement

Eur Million 2008 2009 2010E 2011E 2012E 2013E Revenues 323,60 315,50 321,81 331,46 344,72 361,96 Cost of Goods Sold 288,90 278,40 283,97 292,87 305,35 321,80 EBITDA 34,70 37,10 37,84 38,60 39,37 40,16 EBITDA margin 10,72% 11,76% 11,76% 11,64% 11,42% 11,09%

Depreciation 9,20 10,10 11,96 12,05 12,13 12,21 EBIT 25,50 27,00 25,88 26,55 27,24 27,95

Financial Expenses 8,60 15,40 11,61 12,25 12,78 13,21 EBT 16,90 11,60 14,27 14,30 14,46 14,74 Taxes 3,60 3,50 3,78 3,79 3,83 3,91 Net Income 13,30 8,10 10,49 10,51 10,63 10,84

Eur Million 2008 2009 2010E 2011E 2012E 2013E

Net Assets 513,43 516,94 520,48 524,04 527,62 531,23 Investments

Working Capital 32,36 53,92 55,00 56,65 58,91 61,86 Capital Empoyed 545,79 570,86 575,48 580,69 586,54 593,09

Capital 78,03 87,90 99,00 104,49 109,00 112,63

Net Income 13,30 8,10 10,49 10,51 10,63 10,84 Minority Interests 2,40 2,50 3,24 3,24 3,28 3,34

Equity 93,73 98,50 112,73 118,25 122,91 126,81 Provisions 3,52 3,66 4,02 4,43 4,87 5,36

Other LT Payables 292,34 328,90 318,21 309,71 304,05 301,06 Net Debt 156,20 139,80 140,51 148,30 154,70 159,86

Liabilities 452,06 472,36 462,75 462,44 463,62 466,28 Capital Invested 545,79 570,86 575,48 580,69 586,54 593,09


June 2010


Cash-Flow Statement

Eur Million 2009 2010E 2011E 2012E 2013E Net Profit 8,10 10,49 10,51 10,63 10,84

Depreciation 10,10 11,96 12,05 12,13 12,21

Cash-Flow from Operations 18,20 22,45 22,56 22,76 23,05

Capital Expenditures (Investment) 13,61 15,50 15,61 15,71 15,82 Change in NWC 21,56 1,08 1,65 2,27 2,95

Change in Provisions 0,14 0,37 0,40 0,44 0,49 Change in Other Liabilities 36,56 -10,69 -8,50 -5,66 -2,98

Cash-Flow from Investment -1,53 26,90 25,36 23,20 21,26

Change in Equity -3,33 3,74 -4,99 -5,96 -6,94

Change in Net Debt -16,40 0,71 7,79 6,40 5,15

Cash-Flow from Financing -19,73 4,45 2,80 0,44 -1,78

DCF (in mln€) 2009 2010E 2011E 2012E 2013E

Operating Income (EBIT) 27,00 25,88 26,55 27,24 27,95

(+) Non Cash Items (depreciations) 10,10 11,96 12,05 12,13 12,21 (-) Taxes 7,16 6,86 7,04 7,22 7,41 (-) Capex 13,61 15,50 15,61 15,71 15,82

(-) ∆ NWC 21,56 1,08 1,65 2,27 2,95 (+) ∆ Provisions 0,14 0,37 0,40 0,44 0,49

(+) ∆ Other Liabilities 36,56 - 10,69 - 8,50 -5,66 -2,98 Free Cash-Flow to Firm (FCFF) 31,47 4,09 6,21 8,95 11,49 Discounted Factor (WACC) 1,00 0,94 0,88 0,82 Discounted Cash-Flow 4,09 5,81 7,84 9,42

PV FCFF 27,15 Terminal Value 262,32 Enterprise Value (EV) 289,47


June 2010


Energy Systems | Wind


Risk-Free Rate 4,25% Market Premium 6,00% Levered Beta 1,06 Cost of Equity 10,61%

Debt Spread 3% Cost of Debt 4,8% Corporate Tax Rate 26,50%

After Tax Cost of Debt 4%

Leverage 66%

WACC 5,95%

Depreciation Rate 3%


LT Inflation 1,8%

WACC-G 2,75%


2008 2009 2010E 2011E 2012E 2013E Revenues 193,50 154,50 146,78 161,18 167,63 172,66

Cost of Goods Sold 176,30 143,30 136,36 150,38 156,57 161,44 EBITDA 17,20 11,20 10,42 10,80 11,06 11,22

EBITDA margin 8,89% 7,25% 7,10% 6,70% 6,60% 6,50%

Depreciation 3,20 6,90 6,99 7,09 7,18 7,28

EBIT 14,00 4,30 3,43 3,71 3,88 3,94

Financial Expenses 5,20 3,30 3,30 3,30 3,32 3,33

EBT 8,80 1,00 0,13 0,41 0,56 0,61

Taxes 2,20 0,27 0,03 0,11 0,15 0,16 Net Income 6,60 0,74 0,10 0,30 0,42 0,45


2008 2009 2010E 2011E 2012E 2013E

Net Assets 262,70 266,29 269,94 273,63 277,37 281,16

Working Capital 46,44 44,81 42,57 46,74 48,61 50,07

Capital Empoyed 309,14 311,10 312,50 320,37 325,98 331,23

Capital 120,80 106,55 107,09 107,22 107,61 108,15 Net Income 6,60 0,74 0,10 0,30 0,42 0,45

Minority Interests 2,00 -0,20 0,03 0,09 0,13 0,14

Total Equity 129,40 107,09 107,22 107,61 108,15 108,73

Provisions 0,44 2,58 2,84 3,12 3,44 3,78

Other Liabilities 134,00 132,13 133,06 140,00 144,41 148,36 Net Debt 45,30 69,30 69,38 69,63 69,98 70,36

Liabilities 179,74 204,01 205,29 212,76 217,83 222,50

Capital Invested 309,14 311,10 312,50 320,37 325,98 331,23


June 2010



2009 2010E 2011E 2012E 2013E Net Profit 0,74 0,10 0,30 0,42 0,45 Depreciation 6,90 6,99 7,09 7,18 7,28

Cash-Flow from Operations 7,63 7,09 7,39 7,60 7,73 Capital Expenditures (Investment) 10,49 10,63 10,78 10,93 11,07 Change in NWC -1,63 -2,24 4,18 1,87 1,46

Change in Provisions 2,14 0,26 0,28 0,31 0,34 Change in Other Liabilities -1,87 0,94 6,94 4,41 3,95

Cash-Flow from Investment 8,58 7,20 7,73 8,07 8,24

Change in Equity -23,05 0,03 0,09 0,13 0,14 Change in Net Debt 24,00 0,08 0,25 0,35 0,38

Cash-Flow from Financing 0,95 0,11 0,34 0,48 0,51

DCF (in mln€) 2009 2010E 2011E 2012E 2013E

Operating Income (EBIT) 4,30 3,43 3,71 3,88 3,94 (+) Non Cash Items (Depreciations) 6,90 6,99 7,09 7,18 7,28 (-) Taxes 1,14 0,91 0,98 1,03 1,04

(-) Capex 10,49 10,63 10,78 10,93 11,07 (-) ∆ NWC -1,63 -2,24 4,18 1,87 1,46

(+) ∆ Provisions 2,14 0,26 0,28 0,31 0,34 (+) ∆ Other Liabilities -1,87 0,94 6,94 4,41 3,95

Free Cash-Flow to Firm (FCFF) 1,48 2,32 2,08 1,96 1,94

Discounted Factor (WACC) 1,00 0,94 0,89 0,84

Discounted Cash-Flow 2,32 1,97 1,75 1,63 PV FCFF 7,66

Terminal Value 60,33

Enterprise Value (EV) 67,98


June 2010


Energy systems – Solar



Market Premium 6% Levered Beta 1,06%




WACC 5,58% Depreciation Rate 3,6%

Perpetuity Growth Rate 3,20% Real Perpetuity Growth 1,40%



2008 2009 2010E 2011E 2012E 2013E 2014E 2015E 2016E

Net Assets 76,7 87,9 97,9 109,9 118,9 126,9 133,9 140,9 155,9 Investments Working Capital 12,2 35,7 39,3 43,6 47,1 53,2 58,3 65,2 73,1

Capital Employed 88,9 123,6 137,2 153,5 166,0 180,1 192,2 206,2 229,0

Capital 13,7 17,0 23,8 29,9 31,0 31,7 34,0 36,7 39,7 Net Income 2,0 4,8 5,0 5,0 5,6 6,9 7,2 7,6 8,0

Minority Interests 2,8 1,0 1,1 1,0 1,2 1,4 1,5 1,6 1,7

Total Equity 18,5 22,8 29,9 36,0 37,7 40,0 42,8 45,9 49,4

Provisions 1,3 1,3 1,3 1,3 1,3 1,3 1,3 1,3 1,3 Other Liabilities 55,2 63,1 58,3 58,9 66,8 74,9 79,8 85,7 99,6

Net Debt 13,9 36,4 47,7 57,4 60,2 63,9 68,3 73,3 78,7

Liabilities 70,4 100,8 107,3 117,6 128,3 140,1 149,4 160,2 179,6

Capital Invested 88,9 123,6 137,2 153,5 166,0 180,1 192,2 206,2 229,0


2008 2009 2010E 2011E 2012E 2013E 2014E 2015E 2016E

Revenues 122,40 130,50 143,55 159,34 172,09 194,46 212,93 238,48 267,10 Cost of Goods Sold 113,20 118,00 130,93 146,34 157,91 178,30 195,00 218,76 245,40 EBITDA 9,20 12,50 12,63 13,00 14,17 16,16 17,94 19,73 21,70 EBITDA margin 7,52% 9,58% 8,79% 8,16% 8,24% 8,31% 8,42% 8,27% 8,13%

Depreciation 1,50 3,20 3,56 4,00 4,33 4,62 4,87 5,13 5,67 EBIT 7,70 9,30 9,06 9,00 9,85 11,54 13,06 14,60 16,03 Financial Expenses 3,30 2,20 2,20 2,20 2,20 2,20 3,20 4,20 5,20 EBT 4,40 7,10 6,86 6,80 7,65 9,34 9,86 10,40 10,83 Taxes 2,40 2,30 1,82 1,80 2,03 2,47 2,61 2,76 2,87 Net Income 2,00 4,80 5,04 5,00 5,62 6,86 7,25 7,64 7,96


June 2010



2009 2010E 2011E 2012E 2013E 2014E 2015E 2016E Net Profit 4,8 5,0 5,0 5,6 6,9 7,2 7,6 8,0 Depreciation 3,2 3,6 4,0 4,3 4,6 4,9 5,1 5,7

Cash-Flow from Operations

8,0 8,6 9,0 9,9 11,5 12,1 12,8 13,6

Capital Expenditures (Investment)

14,4 13,6 16,0 13,3 12,6 11,9 12,1 20,7

Change in NWC 23,5 3,6 4,3 3,5 6,1 5,1 7,0 7,8 Change in Provisions -0,1 0,0 0,0 0,0 0,0 0,0 0,0 0,0 Change in Other Liabilities

8,0 -4,8 0,6 7,8 8,2 4,9 5,8 14,0

Cash-Flow from Investment

30,0 22,0 19,7 9,0 10,6 12,0 13,3 14,5

Change in Equity -0,5 2,1 1,0 -3,8 -4,6 -4,5 -4,5 -4,5 Change in Net Debt 22,5 11,3 9,6 2,9 3,7 4,4 5,0 5,4 Cash-Flow from Financing

22,0 13,4 10,7 -1,0 -0,9 -0,1 0,5 0,9

DCF (in mln€) 2009 2010E 2011E 2012E 2013E 2014E 2015E 2016E

Operating Income (EBIT)

9,3 9,1 9,0 9,8 11,5 13,1 14,6 16,0

(+) Non Cash Items 3,2 3,6 4,0 4,3 4,6 4,9 5,1 5,7 (-) Taxes 2,5 2,4 2,4 2,6 3,1 3,5 3,9 4,2 (-) Capex 14,4 13,6 16,0 13,3 12,6 11,9 12,1 20,7

(-) ∆ NWC 23,5 3,6 4,3 3,5 6,1 5,1 7,0 7,8 (+) ∆ Provisions -0,1 0,0 0,0 0,0 0,0 0,0 0,0 0,0 (+) ∆ Other Liabilities 8,0 -4,8 0,6 7,8 8,2 4,9 5,8 14,0

Free Cash-Flow to Firm (FCFF)

-20,0 -11,7 -9,1 2,6 2,5 2,4 2,6 2,9

Discounted Factor (WACC)

1,00 0,95 0,90 0,85 0,80 0,76 0,72

Discounted Cash-Flow

-11,7 -8,6 2,3 2,1 2,0 2,0 2,1

PV FCFF -9,8 Terminal Value 89,98


June 2010


RE Developer

1 Enterprise Value from Millennium Investment Bank, then actualized to EV/2010 at the WACC prpresented

Equity Debt

Weight 30,23% 69,77%

Cost 13,08% 1,94%

W * C 3,95% 1,35% WACC 5,31% Source: Bloomberg - 5/May/2010

Eur Million Valuation (EV/2009)

Locations:

Spain 46 Portugal 63

Poland 13 Romania -12

Slovakia - Ukraine 0

Germany 76 USA -

Brazil 12 1981


June 2010

Private and Confidential Mota-Engil | Disclaimer 51/51

Disclaimer

This report was prepared by a Masters of Finance student following the M&A – Field Lab Work

Project for exclusively academic purposes. Thus, the author is the sole responsible for the

information and estimates contained herein and for the opinions expressed which exclusively

reflect his/her own personal judgement. NOVA or its faculty accepts no responsibility whatsoever

for the content of this report nor for any consequences of its use.

The information contained herein has been compiled by students from public sources believed to

be reliable, but NOVA or the students make no representation that it is accurate or complete and

accept no liability whatsoever for any direct or indirect loss resulting from the use of this report or

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