report and consolidated accounts - … e contas...angola - n’zeto bridge ... adherence to the...

REPORT AND CONSOLIDATED ACCOUNTS

REPORT AND CONSOLIDATED ACCOUNTS2014

Corporate Information10

Conduril04

Consolidated Management Report16

Table ofContents

Legal Certification of Consolidated Accounts58

Consolidated Financial Statements and Notes24

Report and Opinion of the Statutory Audit Board54

Report and Consolidated Accounts 2014

Conduril

6

Conduril

“There are no favourable winds for those who do not know where they are going.”Séneca

Commercial Registry Office of Valongo Share capital: 10,000,000 euros Tax ID Number: 500 070 210 Building Permit No. 568

Angola - N’Zeto bridge

CONDURILReport and Consolidated

Accounts 2014

7

Conduril

Vision |

Conduril develops its activity in the field of Civil Engineering and its main objective, in both technical and economic terms, is to become one of the best Portuguese engineering companies (and to be recognised by the market as such), and, at the same time, to possess the following characteristics:

• To be a great company at a national scale, both in technical and economic terms, capable of responding to any work of civil engineering both in the domestic market and abroad.

• To be, in terms of the total number of active people, at a national level, a medium sized company, flexible and capable to respond to different market demands, with a great technical ability able to, above all else, become a solid base of support for its activities abroad.

Mission |

Our mission is to create lasting wealth for our shareholders and the sustainability of the best working conditions for our employees, as well as their satisfaction, as the first vector of our social responsibility.

Values |

We believe that we can only create value and wealth, that is, win, acting the right way. In order words: with honesty, confidence and accountability based on a culture of Integrity, which means: Honesty, Transparency, Justice and a strict adherence to the rules and regulations; these are our values.


Accounts 2014

8

Conduril

Conduril around the World

Cape Verde

Senegal

Portugal

Botswana

Spain

Angola


Accounts 2014

9

Conduril

Mozambique

MalawiZambia


Accounts 2014


Corporate Information

12

Board of the General Meeting

João Baqueiro Oliveira (President)Amadeu Augusto VinhasAntónio Emanuel Lemos Catarino

Board of Directors

António Luís Amorim Martins (Chairman)Maria Benedita Andrade de Amorim MartinsMaria Luísa Andrade Amorim Martins MendesAdemar Américo Soares PaivaÁlvaro Duarte Neves VazAntónio Baraças Andrade MiragaiaCarlos António Soares de Noronha DiasRicardo Nuno Araújo Abreu Vaz Guimarães

Executive Committee

Maria Benedita Andrade de Amorim Martins (CEO)Maria Luísa Andrade Amorim Martins Mendes (Vice--President)Ademar Américo Soares PaivaÁlvaro Duarte Neves VazAntónio Baraças Andrade MiragaiaCarlos António Soares de Noronha DiasRicardo Nuno Araújo Abreu Vaz Guimarães

Statutory Audit Board

Crisóstomo Aquino de Barros (President)Daniela Brás Vigário SilvaJosé Tiago Sapage Meireles de AmorimJosé Álvaro Fonseca Moura (Alternate)

Statutory Auditor

Horwath & Associados, SROC, Lda.Represented by Ana Raquel B. L. Esperança SismeiroSónia Bulhões Costa Matos Lourosa (Alternate)

Conduril - Engenharia, S.A. is a company limited by shares, managed by an Executive Committee elected in accordance with the law, whose management bodies present the following structure:

Angola - Paenal

Corporate InformationCONDURILReport and Consolidated

Accounts 2014

13

BOARD OF DIRECTORS (CHAIRMAN)

EXECUTIVE COMMITTEE (CEO)

Operational Control

Geographical Areas

Functional Areas

Malawi Senegal Botswana Angola Portugal Mozambique Cape Verde Spain Zambia

Specialised Committees

Finances and Treasury

Acquisition of Assets

Analysis of Contracts

Career Committee

Market and Marketing

Internal Control

Roads

Hydraulics and Environment

Civil Construction

Islands

Quality

Computing

Environment and Safety

Financial and Administrative Services

Economy OfficeInnovation

Studies Office

Park and Fixed Facilities

Metalworking and CarpentryLaboratory

Human Resources

Purchases and Treasury

Legal Office

Internal Audit Committee (Control Unit)

Remuneration Committee


OBS. |a | within the E.C. there is a substitute assigned to each element, including a vice-presidentb | several functional areas will be assigned to each one of the elements of the E.C.

NOTE | Each geographical area adopts an organisational structure with the same philosophy as the one in Portugal, but will take into account the specific local circumstances, in terms of size and specificity.

Corporate Information CONDURILReport and Consolidated

Accounts 2014

14

Zambia - Crushing plant

Corporate InformationCONDURILReport and Consolidated

Accounts 2014

15

CONDURIL - Engenharia, S.A.

Nó Carregado

Alcántara - Garrovillas

Planestrada

Marestrada

GESTÃO DE CONCESSÕES DE INFRAESTRUTURAS, S.A.

CONDURIL ENGENHARIA- AÇORES, S.A.

ANGOLA

MOZAMBIQUE

BOTSWANA

CAPE VERDE

SENEGAL

ZAMBIA

MALAWI

ACEs OtherSubsidiariesBranches

Corporate Information CONDURILReport and Consolidated

Accounts 2014


Consolidated Management Report

18

1 |

Under a continuously unfavourable national situation, the action centre of Conduril’s management focused on the consolidation of its internationalisation strategy. Aware of the risks this dynamics can imply, Conduril’s corporate governance, embodied in the Board of Directors, the Executive Committee and several Specialised Committees, ensures a policy of strict monitoring, assessment and control of these risks, whether potential or real. This aspect assumes an utmost importance in the economic environment of uncertainty that has characterised the world’s main economic blocks, with generally weak diverging dynamics and growth rates. Portugal is not an exception, being the falling trend that the construction sector has been presenting in the last five years particularly harsh for Conduril.

Conduril has consolidated its presence in the markets of Portugal, Angola, Mozambique, Botswana, Spain, Cape Verde, Senegal, Zambia and Malawi. Some macroeconomic facts related to those countries should be highlighted:

a | 2014 was marked, in Portugal, by the exit of the programme of financial assistance and by a tenuous economic recovery, due to which an inversion at the level of the internal budgetary passivity is not expected. Portugal will maintain its dependence on the developments of the Eurozone and the international price of oil;

b | In the whole of Sub-Saharan Africa, a moderate expansion was observed due to the decrease of the global demand, the low prices of raw materials, the weak foreign direct investment, the poor infrastructures, together with the Ebola epidemic and the sudden decrease of the price of oil. Especially:

• In view of the significant weight of the oil sector in the Angolan economy and the price decrease that this commodity suffered, its public finances should suffer from

delays in some of the investments planned. The measures to ensure the stability of prices and to mitigate the increase of inflation are maintained. Inflation was further pressured with the entry into force of the new 2014 common customs with consequences in the prices of imported products and locally produced products. These effects, together with the decrease of the price of oil, have been pushing the kwanza to devaluation in relation to its main currency of reference, the American dollar;

• Mozambique was the only Portuguese-speaking country that grew above the mean in this area. The year was marked by the discovery and beginning of the exploration of the large reserves of mineral coal, and it is estimated that the natural gas fields in deep sea has reserves higher than those of the largest oil producers in this area (Angola and Nigeria);

• With the motto of producing more and better, Senegal had a growth in 2014 that had not been verified for almost a decade. For that, it has been investing in policies to reduce the budget deficit, with efforts to rationalise public expenditure, working with foreign investors to increase its production;

• In turn, Zambia presents growth perspectives conditioned by the excessive government debt and the political pressure to reduce the tax burden. It is the second largest producer of copper in Africa, so it suffered a great impact with the fall of its price and, consequently, a strong depreciation of the kwacha and inflationary pressures, having even requested the help of the International Monetary Fund to try to anchor its economic stability.

The Board of Directors of Conduril - Engenharia, S.A., in compliance with the articles of association and applicable legal provisions, in particular in accordance with Articles 65 and 66 of the Portuguese Companies Act, presents and submits to the General Meeting of Shareholders, the consolidated management report, the consolidated accounts for the period and other financial statements, for the financial year ending on 31 December 2014.

Consolidated Management ReportCONDURILReport and Consolidated

Accounts 2014

19

2 |

Conduril’s globalisation has been mainly focused on other markets, namely in the African countries. Indeed, in 2014, the consolidated turnover reached 209 million euros, with 93% resulting from its international activity.

In the Angolan market, Conduril has had a constant presence for more than two decades and this is assumed as its main strategic market. With well-dimensioned and automatised local structures, the level of activity performed and the results were very satisfactory.

In Mozambique, where Conduril’s operation is solidly installed, the defined objectives were fulfilled.

In Botswana, despite the reduced weight in the global activity, Conduril stays alert to the new opportunities this market can offer. A similar dynamics is also observed in the Senegal, Zambia and Malawi markets.

In turn, in Cape Verde, the completion of the largest dam in the country should be highlighted, which is expected to revolutionise the agriculture sector in the North of the island of Santiago and, in Spain, the works for the construction of the high-speed railway line in the section Alcántara-Garrovillas present the expected evolution.

Looking to capitalise from geographical diversification, Conduril continues to search new markets and opportunities, especially in Latin America.

3 |

The strategy of modernisation and expansion of the technical means and equipment that has been performed to properly

and efficiently face the needs of the works in progress and the demands of the market, continues to materialise in expressive investment figures, which amounted to around 22 million euros in 2014. More than 90% of the investment made was directed to the external market, namely to acquire equipment for paving and earthmoving, the completion of the plant of the engineering company, Urano, Lda., and the beginning of the construction process of the central services new building in Angola. In what concerns the administrative and financial management, it was given continuity to the process of centralisation of the accounting services in Portugal and to the development of the integrated management systems transversal to all business units of the Group. This capitalisation effort is encouraged by the economic and financial soundness of Conduril and is anchored on the strategic guidance of a continuous increase in efficiency and productivity, trying to ensure its sustainability and continuity.

Spain - Madrid-Extremadura high-speed railway line

Consolidated Management Report

Portugal - EDP building


Accounts 2014

20

4 |

Conduril’s financial soundness can be demonstrated by the following consolidated indicators of the activity performance:

Turnover

Equity

EBITDA

General Liquidity

Net Income for the Period

Financial Autonomy

EBITDA / Turnover

Net Debt

M€250200150100500

M€250200150100500

M€100806040200

%

190

180

170

160

150

M€50403020100

%75604530150

%403530252015

M€231580

-8-15

2012

2012

2012

2012

2012

2012

2012

2012

2013

2013

2013

2013

2013

2013

2013

2013

2014

2014

2014

2014

2014

2014

2014

2014

external market

78%93% 93%

22%7% 7%

internal market


Accounts 2014

21

2014 maintained a turnover equivalent to that of the previous year, in which the results continue to reflect the soundness and consolidated financial equilibrium of Conduril, as well as the strategy of self-financing and the consolidation of equity set out.

This commitment of Conduril was, once again, recognised by external entities, with the attribution of some awards: 1st

Best Company in the Sector (Exame - magazine); 5th Largest Exporting Company in the Sector and 27th Largest Portuguese Exporting Company (Diário Económico - newspaper); 7th Best Company in the Sector (Expresso - newspaper).

5 |

Aligned with a global strategy of Conduril and assuming an essential role in its performance is its human capital.

With around 2500 employees throughout 2014, from which 2200 are distributed by the several units abroad, Conduril faces the current challenging economic environment with continuous investment in the development of its employees, providing them with training actions and trying to identify talents, at the same time expecting the best from each one

of them. In this sense, the vocational training continued to be a cornerstone of the management of human resources which in 2014 resulted in the participation of 1200 employees in training actions, representing a total of 23,000 hours of training.

One of the reflections of promoting the continuous learning of its employees is observed in the centre for vocational training, created 5 years ago in Angola – the Conduril Academy. Duly recognised by the local entities (INEFOP – National Institute for Employment and Vocational Training), it aims to ensure vocational training and to raise the educational levels of employees in all the provinces where Conduril operates, especially in the most remote places. Since its foundation, this academy has already issued 1211 certificates, in the scope of the process of recognition, validation and certification of professional competences, continuous training and through its programme of literacy and school acceleration, which corresponds to a total of 90,000 hours of training.

The constant concern with the satisfaction of its human capital is evident through the investment in Conduril’s Pension Fund, fully supported by the company, through which the responsibilities for the past services are completely funded, being its value, on 31 December 2014, of 8.2 million euros.

Portugal - Drainage of Pipa’s viaduct

Consolidated Management Report CONDURILReport and Consolidated

Accounts 2014

22

6 |

The rules and codes of conduct adopted and widely disseminated internally are essential to guide the company’s activity, to guarantee the satisfaction of the stakeholders involved and to preserve the entire surroundings of the areas where the company is installed.

At this level, the Integrated Management System also assumes a great relevance, evident:

• in the revalidation of the certifications of the quality management system in Portugal, in the Angola branch and in Métis, and in its extension to the Mozambique Delegation, ENOP and Urano, according to the standard NP EN ISO 9001:2008, by APCER (Portuguese Association of Certification);

• in the revalidation of the certifications in the scope of safety in Portugal, in the Angola branch and in Métis, and in its achievement in Urano, according to the standards OHSAS 18001:2007 and NP 4397:2008, by APCER;

• in the revalidation of the certification of the environmental management system in Portugal, according to the standard NP EN ISO 14001:2012, by APCER;

• in the renewal of the accreditation, by IPAC (Portuguese Institute for Accreditation), for the Portuguese Central Laboratory, according to the standard NP EN ISO/IEC 17025;

• and, in obtaining the EC Marking for the metal structures produced in our Portuguese industrial facilities, by APCER, according to the standard EN 1090-1:2009 + A1:2011.

7 |

The weakness that the global projections currently infer demonstrates that, once again, in 2015, all economic agents and especially Conduril Group, will face increased challenges in the achievement of their goals. However, the challenge for next year will necessarily pass by continuing the strategy of internationalisation of Conduril’s business, whether by the consolidation of its presence in countries where it already operates or by the potential positioning in new geographic markets, focusing its attention on the areas in which it has competitive advantages.

Despite the challenges expected, the volume of work portfolio the company has to perform - around 450 million euros, where the external input is greater than 90% - together with the continuous effort to improve the organisational efficiency and the approach to new geographical markets, now allows Conduril to face the near future comfortably.

Cape Verde - Figueira Gorda dam

Senegal - Alto Delta adductors

Mozambique - Chimunda irrigation system


Accounts 2014

23

Portugal - Roxo channel

8 |

Other information enclosed:

a | Conduril has branches in Angola, Mozambique, Botswana, Cape Verde, Senegal, Zambia, Malawi and Morocco;

b | There are no overdue debts to the State or any other public entity, including the Social Security;

c | The share capital, fully subscribed and paid-in, is composed of 2,000,000 ordinary shares with a nominal value of 5 euros each. The own shares held amounted to 200,000, were not the object of any transaction during the year. The securities issued by Conduril - Engenharia, S.A. held by members of the management bodies were maintained in relation to the last financial year;

d | Conduril is not aware of any shareholders that have sold the qualified holdings mentioned previously in other reports.

9 |

In continuation of the policy of fair return of the capital invested, the Individual Reports and Accounts present the following distribution of the net income for the period, in the amount of 29,509,114 euros:

• Dividends: 3,600,000 euros, corresponding to 2 euros per share;

• Retained Profit: 1,916,481 euros;

• Free Reserves: 23,992,633 euros.

10 |

The Board of Directors would like to thank its clients, suppliers, financial institutions and all other business partners of the company, for their constant involvement and for the confidence that, once again, they have demonstrated regarding our organisation. Similarly, it would like to thank all of its employees for the effort, commitment and dedication demonstrated throughout the year.

Ermesinde, 16 February 2015 The Board of Directors

Consolidated Management Report CONDURILReport and Consolidated

Accounts 2014


Consolidated Financial Statements and Notes

26

Consolidated balance sheetAs at 31 December 2014 and 2013

Notes 2014 2013

ASSETS

NON-CURRENT ASSET

Property, plant and equipment 3;7 55,638,755 45,737,845

Intangible assets 3;6 74,820 53,590

Permanent participations (equity method) 3;9 7,990 7,406

Permanent participations (other methods) 3;9 719,090 719,090

Shareholders - -

Other financial assets 3;9;18 13,707,510 7,674,129

Deferred tax assets 3;17 149,882 341,710

Subtotal 70,298,047 54,533,769

CURRENT ASSET

Inventories 3;10 13,765,279 12,256,907

Clients 3;18 220,441,960 213,543,861

Clients with retention payments 3;18 11,369,590 6,139,411

Contract retentions 3 3,656,696 4,775,323

State and other public bodies 20 25,591,261 23,870,348

Shareholders 1,587,001 3,227,654

Other accounts receivable 3;11 36,322,418 31,046,934

Deferrals 3;20 986,521 1,514,565

Financial assets held for trading 3;18 83,288,444 1,427

Other financial assets 3 5,000 -

Cash and bank deposits 3;4 34,818,120 36,945,742

Subtotal 431,832,289 333,322,171

Total assets 502,130,337 387,855,940

SHAREHOLDERS' FUNDS AND LIABILITIES

SHAREHOLDERS' FUNDS

Paid-in capital 10,000,000 10,000,000

Own shares 3 (950,000) (950,000)

Legal reserves 3,362,028 3,120,975

Other reserves 164,377,036 133,882,047

Retained profit 3,014,781 2,498,975

Revaluation surpluses 3,030,409 3,342,286

Other changes in equity 25,013 (1,068,134)

Subtotal 182,859,266 150,826,149

Net income for the period 29,472,732 36,459,622

Subtotal 212,331,998 187,285,771

Minority interests 156,005 125,981

Total Shareholders' Funds 3 212,488,003 187,411,751

LIABILITIES

NON-CURRENT LIABILITIES

Provisions 3;13 8,908,838 3,457,137

Financing obtained 3;8 14,518,298 14,883,260

Deferred tax liabilities 3;17 2,050,573 1,800,140

Subtotal 25,477,710 20,140,537

CURRENT LIABILITIES

Trade creditors 3 62,109,837 48,820,403

Advanced payments from clients 3 30,919,785 34,155,299

State and other public bodies 20 23,433,583 29,006,166

Shareholders 2,831,388 2,614,405

Financing obtained 3;8 114,362,542 17,251,365

Other accounts payable 3 11,082,154 13,627,286

Deferrals 3;11;20 19,425,335 34,779,633

Other financial liabilities 3;18 - 49,093

Subtotal 264,164,624 180,303,651

Total Liabilities 289,642,333 200,444,188

Total Shareholders’ Funds and Liabilities 502,130,337 387,855,940

Consolidated Financial Statements

Amounts expressed in euro


Accounts 2014

27

Consolidated profit and loss account by natureAs at 31 December 2014 and 2013

Consolidated Financial Statements

INCOME AND EXPENSES Notes 2014 2013

Sales and services provided 3;12;20 208,815,402 208,468,524

Grants received as compensation for expenses - -

Gains/losses allocated to subsidiaries, associated companies and joint ventures 3;9 - -

Variation of inventories in production 3;10 (362,907) (705,824)

Own work capitalised 3 2,781,693 2,527,167

Cost of goods sold and materials consumed 10 (50,714,596) (30,364,980)

External supplies and services (63,858,368) (61,759,019)

Personnel expenses 3;19;20 (46,664,204) (42,470,664)

Impairment of inventories (losses/reversals) 3;10 543,981 (645,346)

Impairment of doubtful debts (losses/reversals) 3;18 (1,530,815) 500,522

Provisions (increases/reductions) 3;13 (4,539,579) (1,042,870)

Impairment of non-depreciable/amortisable assets (losses/reversals) - -

Increases/reductions of fair value 3;18 49,093 102,863

Other income 14;20 37,281,658 20,506,572

Other expenses 14;20 (18,260,918) (24,249,744)

Operating income before depreciations, financing costs and taxes 63,540,440 70,867,201

Depreciation and amortisation expenses/reversals 3;6;7 (9,850,122) (6,417,161)

Impairment of depreciable/amortisable assets (losses/reversals) - -

Net operating income (before financing costs and taxes) 53,690,318 64,450,040

Interests and similar income obtained - -

Interests and similar expenses supported 3;20 (8,159,153) (5,034,000)

Income before taxation 45,531,165 59,416,039

Income taxes 3;17 (16.024.024) (22,934,316)

Net income for the period 29,507,141 36,481,723

Income of discontinued operations (net of tax) inc. in the net income for the period - -

Net income for the period attributable:

Holders of equity of the parent entity 29,472,732 36,459,622

Minority interests 34,409 22,101

Subtotal 29,507,141 36,481,723

Earnings per share (basic) 16.39 20.27



Accounts 2014

28

Consolidated cash flow statementAs at 31 December 2014 and 2013

ITEMS Notes 2014 2013

OPERATING ACTIVITIES FLOW

Cash receipts from clients 121,679,512 193,894,251

Payments to suppliers (120,983,048) (141,666,274)

Payments to employees (40,276,238) (36,170,428)

Revenues generated by operations (39,579,774) 16,057,549

Payment/receipt of income taxes (23,801,539) (19,312,753)

Other cash receipts/payments relating to operating activities (14,049,752) 8,301,371

Operating activities flow (1) (77,431,064) 5,046,166

INVESTMENT ACTIVITIES FLOW

CASH PAYMENTS ARISING FROM:

Property, plant and equipment (11,825,914) (9,761,728)

Intangible assets (27,691) (89,137)

Financial investments (6,074,597) (3,588,047)

Other assets (1,218) -

CASH RECEIPTS ARISING FROM:

Property, plant and equipment 426 -

Other assets 1,128 -

Interest and similar income 4,719,674 371,110

Dividends 56,705 68,827

Investment activities flow (2) (13,151,487) (12,998,975)

FINANCING ACTIVITIES FLOW

CASH RECEIPTS ARISING FROM:

Financing obtained 141,517,512 52,161,417

Other financing operations 272,560 4,503

CASH PAYMENTS ARISING FROM:

Financing obtained (42,908,287) (62,673,568)

Leasing financing (1,029,274) (790,958)

Interests and similar expenses (7,065,626) (3,412,146)

Dividends (5,400,000) (2,700,000)

Capital decreases and other equity instruments - 744,706

Other financing operations (20,601) (22,207)

Financing activities flow (3) 85,366,285 (16,688,254)

Net increase/decrease in cash and cash equivalents (1 + 2 + 3) (5,216,267) (24,641,062)

Effects of foreign exchange rate 3,088,645 (2,593,768)

Cash and cash equivalents at the beginning of the period 3 36,945,742 64,180,572

Cash and cash equivalents at the end of the period 4 34,818,120 36,945,742


Consolidated Financial StatementsCONDURILReport and Consolidated

Accounts 2014

29

Con

soli

dat

ed s

tate

men

t of

ch

ange

s in

equ

ity

for

th

e p

erio

d o

f 20

14

No

tes

Pa

id-i

n

cap

ita

lO

wn

sh

are

sL

ega

l re

serv

es O

ther

re

serv

esR

eta

ine

d

pro

fit

Rev

alu

atio

n

surp

luse

sO

ther

ch

an

ges

in

eq

uit

yN

et i

nco

me

for

the

per

iod

To

tal

Min

ori

ty

inte

rest

s

To

tal

sha

reh

old

ers’

fu

nd

s

Posit

ion

as a

t 01

Janu

ary

2014

10,0

00,0

00(9

50,0

00)

3,12

0,97

513

3,88

2,04

72,

498,

975

3,34

2,28

6(1

,068

,134

)36

,459

,622

187,

285,

771

125,

980

187,

411,

751

Appl

icatio

n of

the

inco

me

for t

he p

erio

d36

,459

,622

(36,

459,

622)

--

Posit

ion

as a

t 01

Janu

ary

2014

afte

r app

licat

ion

of in

com

e 10

,000

,000

(950

,000

)3,

120,

975

170,

341,

669

2,49

8,97

53,

342,

286

(1,0

68,1

34)

-18

7,28

5,77

112

5,98

018

7,41

1,75

1

CHAN

GES

IN T

HE P

ERIO

D:

Firs

t ado

ptio

n of

the

new

acc

ount

ing

fram

ewor

k-

-

Chan

ges

in a

ccou

ntin

g po

licies

--

Diffe

renc

es in

the

trans

latio

n of

fina

ncial

sta

tem

ents

1,11

0,86

31,

110,

863

2,67

41,

113,

537

Reali

sabi

lity o

f the

reva

luat

ion

surp

lus

of ta

ngib

le an

d in

tang

ible

fixed

ass

ets

--

Varia

tions

of t

he re

valu

atio

n su

rplu

ses

of ta

ngib

le an

d in

tang

ible

fixed

ass

ets

311,

877

(311

,877

)-

-

Adju

stm

ents

by

defe

rred

taxe

s-

-

Appl

icatio

n of

the

equi

ty m

etho

d-

-

Oth

er re

cogn

ised

chan

ges

in e

quity

241,

053

(564

,633

)20

3,92

9(1

7,71

6)(1

37,3

68)

(7,0

58)

(144

,426

)

--

241,

053

(564

,633

)51

5,80

6(3

11,8

77)

1,09

3,14

7-

973,

495

(4,3

84)

969,

111

NET

INCO

ME

FOR

THE

PERI

OD

29,4

72,7

3229

,472

,732

34,4

0929

,507

,141

Ove

rall r

esul

t29

.472

.732

29,4

72,7

3234

,409

29,5

07,1

41

OPE

RATI

ONS

WIT

H EQ

UITY

HO

LDER

S IN

THE

PER

IOD

Capi

tal in

crea

ses

--

Paym

ent o

f sha

re is

suan

ce p

rem

ium

s-

-

Dist

ribut

ions

(5,4

00,0

00)

(5,4

00,0

00)

(5,4

00,0

00)

Cont

ribut

ions

to c

over

loss

es-

-

Oth

er o

pera

tions

--

--

-(5

,400

,000

)-

--

-(5

,400

,000

)-

(5,4

00,0

00)

Posit

ion

at th

e en

d of

the

perio

d 20

143

10,0

00,0

00(9

50,0

00)

3,36

2,02

816

4,37

7,03

63,

014,

781

3,03

0,40

925

,013

29,4

72,7

3221

2,33

1,99

815

6,00

521

2,48

8,00

3

Amou

nts

expr

esse

d in

eur

oSh

areh

olde

rs’ F

unds

attr

ibut

ed to

hol

ders

of e

quity

of t

he p

aren

t ent

ity

Consolidated Financial Statements CONDURILReport and Consolidated

Accounts 2014

30

Notes to the consolidated financial statements as at 31 December 2014

1 | Introductory note

CONDURIL – Engenharia, S.A. (“CONDURIL” or “Company”), is a company founded in 1959 and transformed in a company limited by shares in 1976, with registered office at Av. Eng.º Duarte Pacheco, 1835 – 4445-416 Ermesinde – Valongo, Portugal, and the participated companies (“Group”), whose main activity is public construction works and all other works related to the exercise of this activity.

We believe that these consolidated financial statements are a true and proper representation of the operations of the companies belonging to the Group, as well as their financial position and performance and cash flows.

All amounts expressed in these notes are presented in euros, rounded to the nearest unit.

2 | Accounting framework

for the preparation of the

financial statements

2.1 | These financial statements have been prepared bearing in mind the continuation of the Group’s operations, from the accounting records of the Group and in accordance with the rules of the Accounting Standardisation System, governed by the following legislation:

• Decree-law no. 158/2009, of 13 July (Accounting Standardisation System);

• Decree Order no. 986/2009, of 7 September (Financial Statements Models);

• Notice no. 15652/2009, of 7 September (Framework);

• Notice no. 15655/2009, of 7 September (Accounting Standards and Financial Reporting);

• Decree Order no. 1011/2009, of 9 September (Code of Accounts).

2.2 | Indication and comment on the balance sheet and the income statement whose contents are not

comparable with those of the previous financial year:

The amounts presented for comparative purposes are comparable and are presented in accordance with the model resulting from the amendments introduced by the legislation mentioned in the previous paragraph.

3 | Significant accounting

policies

The significant accounting policies adopted in the preparation of the attached financial statements are the following:

3.1 | Measurement bases used in the preparation of the financial statements

The attached financial statements have been prepared bearing in mind the continuation of the Group’s operations, from the accounting books and records of the companies belonging to the Group, maintained in accordance with the accounting principles generally accepted in Portugal (NCRF).

a | Consolidated principles

The consolidated principles adopted by the Group in the preparation of the consolidated financial statements are the following:

I. Investments in subsidiariesInvestments in companies in which the Group owns, directly or indirectly, more than 50% of the voting rights at General Meeting of Shareholders or is able to establish financial and operational policies (definition of control used by the Group), are included in the consolidated financial statements using the integral consolidation method. Equity and net income of these companies corresponding to the shareholding of third parties in the subsidiary companies is shown separately in the consolidated balance sheet and in the consolidated profit and loss account in the item “Minority interests”.

When losses attributable to minorities are greater than the minority interest in a subsidiary’s equity, then the Group absorbs this excess and any additional losses, except when the minorities have an obligation and are able to cover said losses. If the subsidiary subsequently reports profits, then the Group appropriates all profits until the minority’s share of losses absorbed has been recovered.

Notes to the Consolidated Financial StatementsCONDURILReport and Consolidated

Accounts 2014

31

The results of subsidiaries acquired or sold during the period are included in the income statement from the effective date of acquisition or up to the effective date of sale, as appropriate.

Adjustments to the financial statements of subsidiary companies are made whenever necessary to adjust them to the accounting policies used by the Group. Transactions, balances and dividends distributed between the Group’s subsidiaries are eliminated on consolidation.

Whenever the Group has, in substance, control over other entities created for a specific purpose (“Special Purpose Entities”), even if no share capital interest is directly or indirectly held in those entities, these are consolidated by the integral consolidation method.

II. Investments in associatesInvestments in associated companies (companies where the Group exercises significant influence but does not have control or joint control through the participation in financial and operational policies - usually corresponding to holdings between 20% and 50% in a company’s share capital) are registered by the equity method.

Under the equity method, investments in associated companies are initially recorded at acquisition cost, which is adjusted proportionally to the Group’s interest in the corresponding equity of those companies, at the acquisition date or at the date of the first adoption of the equity method. Permanent participations are adjusted annually by the amount corresponding to the participation in the net profit/loss of the associated companies as opposed to gains or losses in the period. Furthermore, the dividends of these companies are registered as a decrease in investments, and the Group’s proportion in the changes occurred in the associated company’s equity are registered as a change in the Group’s equity.

The differences between the acquisition cost and fair value of the assets and liabilities attributable to the associate on acquisition date, if positive, are recognised as goodwill. If that difference is negative, after reconfirmation of the fair value attributed, it is registered as a gain for the period in the item “Other income”.

An assessment of the investments in associated companies is made whenever there are indications that the asset may be impaired, with the impairment losses that are shown to exist being registered as costs. Impairment losses recognised in previous periods that are no longer justifiable are reversed.

When the Group’s share of losses of the associated company exceeds the investment’s book value, the investment is reported at null value, except to the extent of the Group’s commitments to the associate.

The Group’s share in unrealised gains arising from transactions with associated companies is eliminated in proportion to the Group’s interest, against the investment in that associated company. Unrealised losses are eliminated, but only to the extent that there is no evidence of impairment of the asset transferred.

III. Jointly controlled entitiesThe financial interests in jointly controlled companies/entities were consolidated in the attached income statement by the proportionate consolidation method, from the date in which the control is shared. According to this method, the assets, liabilities, losses and gains of these companies have been included in the consolidated financial statements, on a line-by-line basis, in proportion to the Group’s participation in the companies.

The classification of the financial interests held in jointly controlled companies/entities is determined based on:

• shareholder agreements that regulate the joint control;

• effective percentage held;

• voting rights held.

Any change of consolidation generated by the acquisition of a jointly controlled company/entity is registered according to the accounting policies defined for subsidiaries. Transactions, balances and dividends distributed between the jointly controlled companies are eliminated in proportion to the Group’s participation.

IV. GoodwillAt the balance sheet date, an evaluation of the recoverable amount of the net value of the goodwill is made, and the respective impairment losses recognised whenever the accounting value of goodwill exceeds its recoverable amount. The goodwill value is not amortised. The gain or loss on disposal of an entity includes the accounting value of goodwill related to the entity sold, unless the business to which that goodwill is related is maintained generating benefits to the Group. Impairment losses related to goodwill cannot be reversed and are registered in the income statement for the period, in the item “Impairment of non-depreciable/amortisable investments (losses/reversals)”.

The differences between the acquisition cost of investments in subsidiaries and associates, and the fair value of the identifiable assets and liabilities (including contingent liabilities) of these companies at the date of their acquisition, if negative, are recognised as income at the date of acquisition, after reassessment of the fair value of the identifiable assets and liabilities.

The gain or loss on disposal of an entity includes the accounting value of goodwill related to the entity sold, unless the business to which that goodwill is related is maintained generating benefits to the Group.

V. Translation of financial statements of foreign subsidiariesAssets and liabilities of foreign entities financial statements included on the consolidation are translated into euros using the exchange rates at the balance sheet date and gains and losses using the average exchange rates. The amount related to the exchange rate difference is registered in the equity item “Other changes in equity”.

Notes to the Consolidated Financial Statements CONDURILReport and Consolidated

Accounts 2014

32

The goodwill value and fair value adjustments resulting from the acquisition of foreign entities are treated as assets and liabilities of that entity and converted to euros according to the exchange rate in force at the end of the period. Whenever a foreign company is sold, accumulated exchange rate differences are recognised in the income statement as a gain or loss on the disposal.

b | Intangible assets

The intangible assets, which essentially comprise computer programmes, are registered at acquisition cost, net of eventual impairment losses and accumulated depreciation. These assets are written down from the moment in which the underlying assets are completed or in use, by the straight-line method, for a period of 3 years.

The intangible assets are only recognised when it is probable that they derive future economic benefits for the Group, are controllable by the Group and that they can be measured reliably.

The development costs for which the Group demonstrates ability to complete their development and start their marketing and/or use, and for which it is probable that their created asset will generate future economic benefits, are capitalised. The development costs that do not meet these criteria are registered as expense in the period in which they are incurred.

The gains or losses arising from the sale or write-off of these assets are determined as the difference between the sale price and the accounting net value at the date of sale/write-off, and are registered by the net value in the income statement, as “Other income” or “Other expenses”.

c | Property, plant and equipment

The property, plant and equipment acquired up to 01 January 2009, are registered at their considered cost, which corresponds to the acquisition cost or the revaluated acquisition cost in accordance with the generally accepted principles in Portugal until that date, net of accumulated depreciation and impairment losses. The property, plant and equipment acquired after that date, are registered at acquisition cost, net of the corresponding depreciation and accumulated impairment losses.

Depreciations are calculated, after the beginning of use of the goods, by the straight-line method, on an annual basis, according to the following estimated useful lives:

Maintenance and repair costs, which do not increase the

useful life of these fixed assets are registered as expenses in the period in which they occur. The cost of major repairs and renovations are included in the accounting value of the asset whenever it is expected that this would involve additional future economic benefits.

Property, plant and equipment in progress represent assets still in the construction phase, and are registered at acquisition cost net of eventual impairment losses. These assets are depreciated from the moment they are in a state of use.

The gains or losses arising from the sale or write-off of these assets are determined as the difference between the sale price and the accounting net value at the date of sale/write-off, and are registered by the net value in the income statement, as “Other income” or “Other expenses”. d | Leases

Classification of leases as financial or operating is made based on the substance and not on the form of the contract. The lease agreements in which the Group acts as lessee are classified as finance leases, if the risks and rewards incident to ownership lie with the lessee, and as operating leases, if the risks and rewards incident to ownership do not lie with the lessee.

In accordance with the financial method, the cost of the asset is registered as an asset, the corresponding responsibility is registered as a liability, in the item “Financing obtained”, and the interests included in the value of rentals and the assets reintegration are registered as costs in the financial statement for the concerning period.

Operating lease instalments are recognised as expenses on a straight-line basis over the rental period.

e | Integration of branches

The accounting information of the branches where the Group develops its activity, namely Angola, Mozambique, Morocco, Botswana, Cape Verde, Senegal, Zambia and Malawi, is monthly integrated in accounting. The balances and transactions that occurred in the period between the registered office and the branches are eliminated.

When the functional currency of the branch is different from the reporting currency of the Group, the process of integration is performed through the translation of the variations of assets and liabilities, income and expenses at the exchange rate in force on the date of each monthly integration. On the reporting date, the exchange differences resulting from monetary assets and liabilities are calculated, being registered as gains or losses in the income statement. In the accounting information of the branches are mainly used accounting policies in force in Portugal. To guarantee the uniformity of the accounting policies, whenever the local legislation is different from the laws in force in Portugal, the proper adjustments are made.

Years

Buildings and other constructions 10 – 25

Machinery and other equipment 3 – 16

Transport equipment 3 – 8

Office equipment 3 – 12

Other property, plant and equipment 3 – 10


Accounts 2014

33

f | Impairment of non-current assets (except for goodwill)

Whenever an event or change in circumstances are identified that would indicate that the amount by which the asset is registered cannot be recovered, an assessment of impairment is performed with reference at the end of each period.

Whenever the amount by which the asset is registered is higher than its recoverable amount, an impairment loss is recognised, registered as an expense in the item “Impairment of depreciable assets”. The recoverable amount is the highest between the assets’ net selling price and the use value. The net selling price is the amount that would have been achieved with the disposal of the asset in a transaction between independent and knowledgeable entities, net of the costs directly attributable to the disposal. The use value is the present value of estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Recoverable amounts are estimated for individual assets or, if this is not possible, for the cash-generating unit to which the asset belongs. After the recognition of an impairment loss, the expense with the amortisation/depreciation of an asset is adjusted in future periods to allocate the asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life.

The reversal of impairment loss recognised in previous periods is registered when it is concluded that the recognised impairment losses no longer exist or have decreased. This assessment is made whenever it is believed that impairment losses previously recognised have been reversed. The reversal of impairment losses is recognised as income in the income statement. However, the reversal of the impairment loss is performed up to the limit of the amount that would be recognised (net of amortisation or depreciation), if the impairment loss had not been registered in previous periods.

g | Costs of financing obtained

Costs related to financing are recognised as an expense on an accrual basis, even in cases where these costs are directly attributable to the acquisition, construction or production of an asset whose period of time to get ready for its intended use is substantial, in which case it could be capitalised until the moment in which all the activities necessary to prepare the asset eligible for its use or sale are complete. h | Inventories

Merchandise and raw, subsidiary and consumable materials are stated at acquisition cost or at market price, whichever is lower (using the average cost as a costing method). Market price means the net realisable value or the replacement cost. Finished or semi-finished products, by-products and products and works in progress are valued at production cost (which includes the cost of raw materials, labour and manufacturing overheads) or at the market price in case this is lower. Market price means the net realisable value.

In cases where the market price is lower than the acquisition cost, impairment losses are recognised.

i | Financial instruments

I. InvestmentsThe investments on other companies are registered at the acquisition cost or, in the case of loans granted, at the nominal value. An assessment of these investments is made whenever there are indications that the asset may be impaired, with the impairment losses that are shown to exist being registered as costs. Income obtained from financial investments (dividends or profit distributed) are registered in the income statement for the period in which distribution is decided and announced.

II. DebtorsDebtors are registered at their nominal value and presented at the balance sheet net of eventual impairment losses, recognised in the item “Impairment of doubtful debts (losses/reversals)”, in order to reflect their net realisable value.

Impairment losses are registered in the sequence of events occurred, which objectively and quantifiably indicate that the total or part of the outstanding amount will not be received. For that, the Group takes into consideration market information showing that the client is insolvent along with historical data of overdue and not paid amounts.

Recognised impairment losses correspond to the difference between the carrying amount and the present value of the estimated cash flows, discounted at the original effective interest rate, which is null whenever payment is expected to occur within less than one year.

III. FinancingFinancing is registered as liabilities at their nominal value net of transaction costs directly related to the issuance of those liabilities. Financial expenses are calculated based on the effective interest rate and are registered in the income statement for the period on an accruals basis.

IV. Trade creditorsTrade creditors and other creditors are registered at their nominal value, as they do not bear interests.

V. Financial liabilities and equity instrumentsFinancial liabilities and equity instruments are classified based upon their contractual substance, regardless of the legal form they assume.

An instrument is classified as a financial liability when there is a contractual obligation for its settlement to be effected through the delivery of cash or another financial asset, regardless of its legal form. Financial liabilities are recognised initially at fair value net of transaction costs incurred, and subsequently at written off cost, using the effective interest rate method.

An instrument is classified as an equity instrument when there is no contractual obligation for its settlement to be


Accounts 2014

34

effected through the delivery of cash or another financial asset, regardless of its legal form, which evidence a residual interest in the assets of an entity after deducting all of its liabilities.

The costs directly attributable to the issuance of equity instruments are recognised in equity as a deduction to the amount issued. Amounts paid or received related to purchases or sales of equity instruments are registered in equity, net of transaction costs.

The distributions made of an equity instrument are deducted to equity as dividends, when declared.

VI. Own sharesOwn shares are accounted at the acquisition cost as an allowance to equity. Gains or losses arising from disposal of own shares are registered in the item “Other reserves”, not affecting the profit/loss of the period.

VII. Discounted bills and accounts receivable in factoringThe Group derecognises financial assets in its financial statements, only when the contractual rights to the cash flows inherent to those assets have already expired, or when the Group substantially transfers all the risks and benefits inherent to the ownership of those assets to a third entity. If the Group substantially retains the risks and benefits inherent to the ownership of those assets, it continues to recognise them in its financial statements, by registering in liabilities, in the item “Financing obtained”, the monetary consideration for the assets transferred.

Consequently, clients’ balances represented by discounted bills that have not yet reached their maturity date and accounts receivable in factoring as at the balance sheet date, with the exception of operations of “Factoring without resource”, are recognised in the financial statements, in liabilities, until they are collected.

VIII. Cash and cash equivalentsThe amounts included in the item “Cash and cash equivalents” correspond to cash flow, bank deposits, term deposits and other treasury applications, which mature in less than three months and are subject to insignificant risk of change in value.

j | Provisions, contingent liabilities and contingent assets

Provisions are recognised only when the Group has a present obligation (legal or constructive) as result of a past event, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of that obligation. Provisions are reviewed at each balance sheet date and are adjusted to reflect the best estimate at that date. Provisions for restructuring costs are recognised whenever a formal and detailed restructuring plan exists and that plan has been communicated to the parties involved.

Contingent liabilities are defined by the Group as: (i) possible obligations arising from past events and whose existence will

only be confirmed by the occurrence, or not, of one or more uncertain future events not under full control of the Group, or (ii) present obligations arising from past events, but which are not recognised because it is unlikely that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability.

Contingent assets usually arise from unplanned or other unexpected events that give rise to the possibility of an inflow of economic benefits to the Group. The Group does not recognise the contingent assets in its financial statements, but it only proceeds to its disclosure if it considers that the economic benefits, which may result from there to the Group, are likely. When the realisation of income is virtually certain, then the related asset is not a contingent asset and its recognition is appropriate.

k | Economic periods

Income and expenses are registered in the period to which they relate, regardless of the corresponding payment or receipt, on an accruals basis. Differences between the amounts received or paid and the corresponding income and expenses are registered in the items “Other accounts payable and receivable” or “Deferrals”.

l | Income taxes

The taxation registered in profit/loss include the effects of current taxes and deferred taxes. The current tax is determined in accordance with the tax rules in force of each company included on consolidation, considering the taxable profit.

Deferred taxes refer to the temporary differences between the amounts of the assets and liabilities for the purposes of accounting records and the respective amounts for the purposes of taxation, as well as those arising from the tax benefits obtained and the temporary differences between the tax and accounting results. The tax is recognised in the income statement, except when related with items, which are moved in equity, a fact that implies their recognition in equity.

Deferred tax assets and liabilities are calculated and periodically evaluated using the taxation rates, which are expected to be in force on the date of reversal of temporary differences.

Deferred taxes refer to temporary differences between the accounting values of the assets and liabilities and their tax base, using the tax rates approved or substantially approved, at the balance sheet date, in each jurisdiction and which are expected to be applied when the temporary differences are reversed.

Deferred tax liabilities are recognised for all taxable temporary differences (except for goodwill not deductible for tax purposes), differences arising on initial recognition of assets and liabilities that affect neither accounting nor taxable profit and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. Deferred taxes assets are recognised to the extent when it is probable that future taxable profits will be available


Accounts 2014

35

to absorb deductible temporary differences for tax purposes. Deferred tax assets are registered only when there are reasonable expectations of sufficient taxable profits for them to be used. Every year, a revaluation of the temporary differences underlying to the deferred tax assets is made, with the purpose of recognising or adjust them according to the present expectation of their future recovery.

m | Non-current assets held for sale

Non-current assets are classified as held for sale if the balance sheet value is realisable through a sales transaction, rather than through its continuing use. This situation is only verified when: (i) the sale is probable and the assets are available for immediate sale in the present conditions; (ii) the management is committed with a sales plan; and, (iii) the sale is expectable to occur within twelve months.

Non-current assets classified as held for sale are measured at the lower value between the carrying amount and fair value less expectable expenses with its sale.

n | Government and other public entities subsidies

Subsidies for personnel training programmes or exploration subsidies are registered in the item “Grants received as compensation for expenses” of the income statement for the period in which these programmes are carried out, independently of when they are received, unless it becomes receivable in a later period, in which it will be income for the period when it was received.

Non-reimbursable subsidies related to the assets are registered in the balance sheet as “Other changes in equity” and recognised in the income statement proportionally to the reintegrations of the subsidised assets, in each period.

o | Retirement complements

CONDURIL – Engenharia, S.A. has assumed the commitment of attributing a number of pecuniary benefits to its employees at complementary title of retirement pensions for old age or disability. To cover those responsibilities, CONDURIL – Engenharia, S. A. created a defined benefit Pension Fund in 1989, exclusive to its employees, whose annual charges, determined according to actuarial calculations, are registered in accordance with the NCRF 28 - “Employee benefits”.

The actuarial responsibilities are calculated according to the “Projected Unit Credit Method”, by using the actuarial and financial assumptions considered appropriate.

p | Revenue

The Group recognises the income of works, contract by contract, in accordance with the NCRF 19 – “Construction contracts” under the percentage of completion method, which is understood as the relation between costs incurred in each work until a certain date and the sum of those costs with the costs estimated for the work completion. The differences between the values resulting from the application

of the level of completion to the estimated income and the invoiced values are included in the items “Other accounts receivable” and “Deferrals”.

Variations in works in the amount of revenue agreed in the contract are recognised in the income for the period when it is highly possible that the client will approve the amount of revenue arising from the variation, and that this can be reliably measured.

Claims for reimbursement of costs not included in the contract price are included in contract revenue when negotiations are at an advanced stage and it is probable that the client will accept the claim, and that it will be reliably measurable.

To meet the costs incurred during the warranty period of the works, every year the Group recognises liabilities to fulfil this legal obligation, which is calculated taking into account the annual production volume and the costs incurred in the past with works in warranty period. When it is probable that total costs foreseen in the construction contract will exceed its defined income, the expected loss shall be immediately recognised in the income statement for the period.

Dividends are recognised as gains in the income statement for the period in which its attribution is decided.

q | Expenses with the preparation of proposals

The expenses made with the preparation of proposals for several tenders are recognised in the income statement for the financial year in which they are incurred.

r | Own work capitalised

Own work capitalised corresponds to construction and improvement works carried out by any company of the Group, as well as the major repairs of equipment and include expenses with materials, direct labour and general expenses. Those expenses are object of capitalisation only when the following requirements are fulfilled:

• The assets developed are identifiable;

• There is a strong probability of the assets generating future economic benefits; and

• They can be reliably measured.

s | Subsequent events

Events that occur after the balance sheet date that provide evidence or additional information on conditions existing at the balance sheet date (“adjusting events”), are reflected in the consolidated financial statements. Events after the balance sheet date that provide information on conditions arising after the balance sheet date (“non-adjusting events”), when material, are disclosed in the notes to the consolidated financial statements.


Accounts 2014

36

t | Judgements and estimates

For the preparation of the financial statements, the Board of Directors of each company included on consolidation has been based on best knowledge of past and/or present events, considering assumptions related to future events.

The most significant accounting estimates reflected in the consolidated financial statements for the periods ending on 31 December 2014 and 2013 include:

• Useful lives of tangible assets;

• Record of provisions and impairment losses;

• Recognition of revenue in works in progress;

• Recognition of the present value of responsibilities with retirement benefits; and

• Calculation of fair value of the financial instruments.

The estimates were determined based on the best information available at the preparation date of the financial statements. However, situations may occur in subsequent periods that, not being foreseeable at the date, have no impact on the estimates. Changes to the estimates that may occur after the date of the financial statements, will be corrected in the income, using a prospective method, in accordance with NCRF 4.

3.2 | Other relevant accounting policies

a | Earnings per share

Basic earnings per share are calculated by dividing the net profit attributable to the shareholders of the Company by the weighted average number of ordinary shares in circulation during the period, excluding the number of own shares held.

b | Foreign currency

All assets and liabilities expressed in foreign currency have been converted into the functional presentation currency, using the exchange rates in force at the reporting date. Exchange gains and losses resulting from differences between the exchange rates in force on the date of the transactions and those in force on the dates of collection, payments or the balance sheet date are recognised as gains or losses in the income statement for the period.

Exchange differences related to accounts receivable/payable whose maturity is not defined, are registered in the income statement for the period when those accounts receivable/payable are depreciated/disposed/liquidated. Financial statements of participated companies and branches expressed in foreign currency are translated to euros.


Accounts 2014

37

3.3 | Judgements on the application process of the accounting policies and which had greater impact in the amounts recognised in the consolidated financial statements

In preparation of the consolidated financial statements according with NCRF (equivalent to GAAP), the Board of Directors of each company included on consolidation uses estimates and assumptions that affect the application of the policies and amounts referred. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances on which the estimate was based, or as a result of new information or more experience.

3.4 | Main assumptions concerning the future

The attached consolidated financial statements have been prepared bearing in mind the continuation of the Group’s operations, from the accounting books and records of the Group, maintained in accordance with the accounting principles generally accepted in Portugal.

Events that occur after the balance sheet date that affect the value of the existing assets and liabilities at the balance sheet date are considered when preparing the financial statements for the period. Those events are disclosed in the notes to the consolidated financial statements, if material.

3.5 | Major sources of uncertainty

The present note makes reference to the major assumptions for the future adopted in the preparation of the attached financial statements, which may involve a significant risk of material adjustments to the valuation of assets and liabilities in the following financial period.

a | Impairment of assets

The determination of the impairment of assets requires an estimate of the present value of the future cash flows associated to those assets. In this calculation, the assumptions are adopted based on the historical experience of each company included on consolidation, as well as on future expectations. The Group considers that there is a controlled risk of these assumptions not taking place.

31.12.2014 31.12.2013

Currency Transaction currency 31 December Exchange rate 31 December Exchange rate

American Dollar Euro 0.8237 n/a 0.7251 0.7514

Moroccan Dirham Euro 0.0912 0.0897 0.0890 0.0896

Botswana Pulas Euro 0.0865 0.0843 0.0832 0.0890

Mozambican Metical Euro 0.0260 0.0246 0.0244 0.0251

Cape Verdean Escudo Euro 0.0091 0.0091 0.0091 0.0091

CFA Franc Euro 0.0015 0.0015 0.0015 0.0015

Zambian Kwacha Euro 0.1289 0.1223 0.1317 0.1391

Malawi Kwacha Euro 0.0017 0.0018 0.0017 0.0017

Angolan Kwanza Euro 0.0079 0.0076 0.0073 0.0077

4 | Cash flows

4.1 | Management’s comment about the amount of significant balances of cash and cash equivalents, which are not available for use

The balance amount of “Cash and cash equivalents” is fully available.

4.2 | Breakdown of the amounts registered in “Cash and bank deposits”

The cash and bank deposits balance is the following:

5 | Related parties

5.1 | Remunerations of the key management personnel

a | Total remunerations: 1,201,588 euros (2013: 1,128,867 euros).

31.12.2014 31.12.2013

Cash 74,148 52,514

Demand deposits 14,450,258 25,119,201

Term deposits 20,293,714 11,774,027

Total cash and bank deposits 34,818,120 36,945,742

Notes to the Consolidated Financial Statements

The exchange rates used to convert to euros were as follows:


Accounts 2014

38

Country Direct % Total %

BRANCHES:

Angola - - -

Mozambique - - -

Morocco - - -

Botswana - - -

Cape Verde - - -

Senegal - - -

Zambia - - -

Malawi - - -

SUBSIDIARIES:

Conduril - Gestão de Concessões de Infraestruturas, S.A. Portugal 100.00 100.00

Edirio - Construções, S.A. Portugal 100.00 100.00

Métis Engenharia, Lda. Angola 99.00 99.00

ENOP - Engenharia e Obras Públicas, Lda. Mozambique 85.47 85.47

Mabalane - Inertes, Lda. Mozambique 85.00 97.82

4M Properties, S.A. Mozambique 98.00 98.00

Urano, Lda. Angola 99.00 99.00

Conduril - Engenharia Açores, S.A. Portugal 100.00 100.00

JOINTLY CONTROLLED ENTITIES:

Edifer / RRC / Conduril, ACE Portugal 33.33 33.33

Groupement Adriano/Jaime Ribeiro/Conduril - Construção, ACE Morocco 33.33 33.33

Groupement CJA/Lote 3 - Construção, ACE Morocco 33.33 33.33

Groupement Túnel de Nador - Construção, ACE Morocco 50.00 50.00

Edifer, Dragados, Tecnovia, Conduril - Rodovias do Algarve Litoral, ACE Portugal 10.00 10.00

Edifer, Dragados, Tecnovia, Conduril - Rodovias do Baixo Alentejo, ACE Portugal 10.00 10.00

UTE Alcántara - Garrovillas Spain 15.00 15.00

OTHER PARTICIPATIONS:

Rotas do Algarve Litoral, S.A. Portugal 11.00 13.00

SPER - Sociedade Portuguesa para a Construção e Exploração Rodoviária, S.A. Portugal 11.26 11.26

Planestrada - Operação e Manutenção Rodoviária, S.A. Portugal 10.00 10.00

Marestrada - Operação e Manutenção Rodoviária, S.A. Portugal 10.00 10.00

KEY MANAGEMENT PERSONNEL:

Board of Directors:

António Luís Amorim Martins - Chairman

Maria Benedita Andrade de Amorim Martins (President of the Executive Committee) - CEO

Maria Luísa Andrade Amorim Martins Mendes (Vice-President of the Executive Committee)

Ademar Américo Soares Paiva

Álvaro Duarte Neves Vaz

António Baraças Andrade Miragaia

Carlos António Soares de Noronha Dias

Ricardo Nuno Araújo Abreu Vaz Guimarães

OTHER RELATED PARTIES:

Geonorte - Geotecnia e Fundações Especiais, Lda. Portugal - -

Sociedade Agrícola da Quinta do Javali, Lda. Portugal - -

5.2 | Transactions between related parties

a | Nature of the related party relationship:


Accounts 2014

39

b | Transactions and outstanding balances:

In the course of the present period, the Group presented the following transactions and balances in what concerns the related entities:

As at 31 December 2014:

Related partiesOutstanding balances

assetsOutstanding balances

liabilitiesProvisions

ENTITIES WITH JOINT CONTROL OR SIGNIFICANT INFLUENCE:

Groupement CJA / LOTE 3 - Construção, ACE 811,429 - -

811,429 - -


Rotas do Algarve Litoral, S.A. 7,501,936 - -

SPER - Soc. Portuguesa para a Construção e Exploração Rodoviária, S.A. 6,181,775 - -

13,683,711 - -


Geonorte - Geotecnia e Fundações Especiais, Lda. 477,385 221,892 -

477,385 221,892 -

Related partiesOutstanding balances

assetsOutstanding balances

liabilitiesProvisions

ENTITIES WITH JOINT CONTROL OR SIGNIFICANT INFLUENCE:

Groupement CJA / LOTE 3 - Construção, ACE 807,509 - -

807,509 - -


Rotas do Algarve Litoral, S.A. 2,505,989 - -

SPER - Soc. Portuguesa para a Construção e Exploração Rodoviária, S.A. 4,058,793 - -

6,564,782 - -


Geonorte - Geotecnia e Fundações Especiais, Lda. 4,977 60,063 -

4,977 60,063 -

Related parties Income Expenses


Geonorte - Geotecnia e Fundações Especiais, Lda. 475,032 1,545,014

475,032 1,545,014

Related parties Income Expenses


Geonorte - Geotecnia e Fundações Especiais, Lda. 8,852 83,701

8,852 83,701

As at 31 December 2013:


Accounts 2014

40

6 | Intangible assets

6.1 | Disclosure for each class of intangible assets, distinguishing between internally generated intangible assets and other intangible assets

a | Depreciations for the period are calculated taking into account the following average useful lives and amortisation rate:

b | Elements of intangible assets are depreciated by straight-line method, based on the amortisation rates in accordance with the Implementing Decree (Decreto Regulamentar) no. 25/2009, of 14 September.

c | The intangible assets are the following:

d | The value of amortisations related to intangible assets included in the item “Depreciation and amortisation expenses/reversals” of the income statement is the following:

e | The movements in the item “Intangible assets” during 2014 and 2013 are the following:

31.12.2014 31.12.2013

Intangible assets – Others Gross assets Amortisations and impairment losses

Gross assets Amortisations and impairment losses

Computer programmes 85,741 58,322 59,710 53,700

Industrial property 47,827 706 47,827 706

Other intangible assets 2,007 1,727 2,007 1,549

Total 135,575 60,755 109,544 55,954

2014 GoodwillDevelopment

projectsSoftware

Industrial property

Other intangible assets

TOTAL

GROSS ASSETS:

Balance as at 31.12.2013 - - 59,711 47,827 2,007 109,545

Additions - - 28,593 - - 28,593

Transfers and write-offs - - (2,562) - - (2,562)

Balance as at 31.12.2014 - - 85,742 47,827 2,007 135,576

ACCUMULATED DEPRECIATION:

Balance as at 31.12.2013 - - 53,699 706 1,550 55,955

Additions - - 6,961 - 178 7,139

Transfers and write-offs - - (2,338) - - (2,338)

Balance as at 31.12.2014 - - 58,322 706 1,728 60,756

Net value - - 27,420 47,121 279 74,820

Intangible assets – Others Useful life Amortisation rate

Computer programmes 3 33.33%

Other intangible assets 3 33.33%

Amortisations for the period - Others 31.12.2014 31.12.2013

Computer programmes 6,961 4.621

Other intangible assets 178 359

Total 7,139 4,980


Accounts 2014

41

7 | Tangible assets

7.1 | Disclosure on property, plant and equipment

a | Measurement bases:

Tangible assets are valued according to the cost model, to which an item of property, plant and equipment shall be carried at its cost less any accumulated depreciation and any accumulated impairment losses.

b | Depreciation method used:

The Group amortises its property, plant and equipment goods according to the straight-line method. In accordance to this method, depreciation is constant during the useful life of the assets if its residual value does not change.

c | Useful lives and depreciation rates used:

Depreciations for the period are calculated taking into account the following average useful lives and amortisation rate:

2013 GoodwillDevelopment

projectsSoftware

Industrial property

Other intangible assets

TOTAL

GROSS ASSETS:

Balance as at 31.12.2012 - - 58.958 47.827 2.007 108.792

Additions - - 753 - - 753

Transfers and write-offs - - - - - -

Balance as at 31.12.2013 - - 59.711 47.827 2.007 109.545


Balance as at 31.12.2012 - - 48.963 706 1.191 50.860

Additions - - 4.621 - 359 4.980

Transfers and write-offs - - 115 - - 115

Balance as at 31.12.2013 - - 53.699 706 1.550 55.955

Net value - - 6.012 47.121 457 53.590

Tangible assets Useful life Amortisation rate

Land and natural resources - -

Buildings and other constructions 10 – 25 4% – 10%

Machinery and other equipment 3 – 16 6.25% – 33.33%

Transport equipment 3 – 8 12.50% – 33.33%

Office equipment 3 – 12 8.33% – 33.33%

Other property, plant and equipment 3 – 10 10% – 33.33%

2014Land and

natural resources

Buildings and other

constructions

Machinery and other equipment

Transport equipment

Office equipment

Other property, plant and

equipment

Invests in progress

TOTAL

GROSS ASSETS:

Balance as at 31.12.2013 8,849,851 27,347,639 62,753,899 25,285,111 1,975,642 550,521 5,188,237 131,950,900

Additions 304,746 1,584,220 4,777,538 6,877,699 331,660 858,852 6,910,277 21,644,992

Disposals (306,820) - (873,171) (521,544) (1,174) (26,565) - (1,729,274)

Other variations 11,224 378,776 501,661 91,648 19,603 7,271 9,803 1,019,986

Transfers and write-offs - 514,495 7,827,175 (285,337) (109,559) (2,454) (8,705,955) (761,635)

Balance as at 31.12.2014 8,859,001 29,825,130 74,987,102 31,447,577 2,216,172 1,387,625 3,402,362 152,124,969


Balance as at 31.12.2013 - 15,611,768 52,145,453 16,737,485 1,501,583 216,765 - 86,213,054

Additions - 1,063,938 4,897,457 3,652,012 130,323 99,254 - 9,842,984

Disposals - - (599,450) (223,667) (1,174) (4,507) - (828,798)

Other variations - 170,838 486,020 88,516 15,501 6,610 - 767,485

Transfers and write-offs - (210,233) 965,412 (356,225) 8,252 84,283 - 491,490

Balance as at 31.12.2014 - 16,636,311 57,894,892 19,898,121 1,654,485 402,405 - 96,486,214

Net value 8,859,001 13,188,819 17,092,210 11,549,456 561,687 985,220 3,402,362 55,638,755

d/e | Reconciliation of the carrying amount at the beginning and end of the period


Accounts 2014

42

2013Land and

natural resources

Buildings and other

constructions

Machinery and other equipment

Transport equipment

Office equipment

Other property, plant and

equipment

Invests in progress

TOTAL

GROSS ASSETS:

Balance as at 31.12.2012 7,575,438 25,051,657 62,152,995 18,557,514 1,816,969 304,271 1,272,864 116,731,709

Additions 1,283,760 2,276,044 5,256,337 7,360,688 149,418 301,114 5,936,035 22,563,395

Disposals - - (1,745,356) (428,083) (3,881) (17,376) - (2,194,695)

Other variations (9,347) (822,030) (1,274,400) (218,421) 9,164 (34,085) (4,689) (2,353,809)

Transfers and write-offs - 841,968 (1,635,677) 13,413 3,972 (3,404) (2,015,973) (2,795,702)

Balance as at 31.12.2013 8,849,851 27,347,639 62,753,899 25,285,111 1,975,642 550,521 5,188,237 131,950,899


Balance as at 31.12.2012 - 15,015,448 52,204,369 15,646,277 1,383,723 243,201 - 84,493,018

Additions - 1,013,399 3,332,766 1,938,853 112,077 15,085 - 6,412,181

Disposals - - (1,434,690) (370,015) (7,055) (12,403) - (1,824,163)

Other variations - (432,739) (1,229,678) (213,562) 8,644 (28,115) - (1,895,450)

Transfers and write-offs - 15,659 (727,314) (264,068) 4,193 (1,003) - (972,532)

Balance as at 31.12.2013 - 15,611,768 52,145,453 16,737,485 1,501,583 216,765 - 86,213,054

Net value 8.849.851 11,735,871 10,608,445 8,547,626 474,059 333,756 5,188,237 45,737,845

7.2 | Amount of expenditures recognised in the carrying amount of fixed assets during its construction

7.3 | Depreciation recognised in the profit/loss or as part of other assets costs during the period

7.4 | Accumulated depreciation at the end of the period

7.5 | Items of fixed assets in progress

The most significant values included in the item “Investments in progress”, as at 31 December 2014 and 31 December 2013 refer to the following projects:

Tangible assetsExpenditures recognised during

construction2014

Expenditures recognised during construction

2013


Buildings and other constructions 630,117 1,055,474

Machinery and other equipment 6,280,160 4,880,561

Transport equipment - -

Other property, plant and equipment - -

Total 6,910,277 5,936,035

Tangible assetsDepreciation

recognised in profit/loss

Depreciation recognised as part of

other assets costsTOTAL

Land and natural resources - - -

Buildings and other constructions 1,063,938 - 1,063,938

Machinery and other equipment 4,897,457 - 4,897,457

Transport equipment 3,652,012 - 3,652,012

Office equipment 130,323 - 130,323

Other property, plant and equipment 99,254 - 99,254

Total 9,842,984 - 9,842,984

Accumulated depreciation 31.12.2014 31.12.2013


Buildings and other constructions 16,636,311 15,611,768


Transport equipment 19,898,121 16,737,485

Office equipment 1,654,485 1,501,583

Other property, plant and equipment 402,405 216,765

Total 96,486,214 86,213,054

31.12.2014 31.12.2013

Buildings and other constructions 1,562,568 956,187

Equipment 1,839,794 4,232,050

Total 3,402,362 5,188,237

31.12.2014 31.12.2013


Transport equipment 1,400,087 194,250

Fixed assets in progress - 1,651,217

Total 5,179,179 3,282,298

8 | Leases

8.1 | Finance leases - Lessees:

a | Net carrying amount for each asset category at 31 December 2014 and 31 December 2013:


Accounts 2014

43

b | Reconciliation between the total of the future lease minimum payments as at 31 December 2014 and 31 December 2013 and its present value:

c | Total of the future lease minimum payments at the balance sheet date and its present value:

31.12.2014 31.12.2013

Minimum payments up to 1 year 2,601,724 1,602,782

Minimum payments for more than 1 year and no more than 5 years 1,270,274 1,838,384

Minimum payments for more than 5 years - -

Total minimum payments 3,871,997 3,441,167

Future interest payments 434,545 288,952

Present value of responsibilities 3,437,452 3,152,215

Minimum payments Present value

31.12.2014 31.12.2013 31.12.2014 31.12.2013

No more than 1 year 2,601,724 1,602,782 2,235,581 1,413,184

More than 1 year and no more than 5 years 1,270,274 1,838,384 1,201,871 1,739,031

More than 5 years - - - -

Total 3,871,997 3,441,167 3,437,452 3,152,215

9 | Interests in joint ventures

and investments in

subsidiaries

Description Type of project Other participants

Edifer / RRC / Conduril, ACE Jointly controlled entity Edifer and RRC

Groupement Adriano/Jaime Ribeiro/Conduril - Construção, ACE Jointly controlled entity MonteAdriano and Jaime Ribeiro e Filhos

Groupement CJA/Lote 3 - Construção, ACE Jointly controlled entity MonteAdriano and Jaime Ribeiro e Filhos

Groupement Túnel de Nador - Construção, ACE Jointly controlled entity Jaime Ribeiro e Filhos

Rodovias do Algarve Litoral, ACE Jointly controlled entity Edifer, Dragados and Tecnovia

Rodovias do Baixo Alentejo, ACE Jointly controlled entity Edifer, Dragados and Tecnovia

9.1 | Joint ventures

a | List and description of the interests in significant joint ventures:

b | Proportion of ownership interest held and data about the entities:

At the preparation date of the financial statements, the financial statements of the group Groupement CJA/Lote 3 Construção, ACE were not available.

Company Proportion of interest held Consolidation method

Edifer / RRC / Conduril, ACE 33.33% Proportionate method

Groupement Adriano/Jaime Ribeiro/Conduril - Construção, ACE 33.33% Proportionate method

Groupement CJA/Lote 3 - Construção, ACE 33.33% Cost

Groupement Túnel de Nador - Construção, ACE 50% Proportionate method

Rodovias do Algarve Litoral, ACE 10% Proportionate method

Rodovias do Baixo Alentejo, ACE 10% Proportionate method


Accounts 2014

44

c | Method used in the recognition of interests in joint ventures:

The interests in jointly controlled companies were recognised in the consolidated financial statements by the proportionate consolidation method, from the date in which the control is shared until the date it effectively ends. According to this method, the assets, liabilities, gains and losses of these companies have been included in the consolidated financial statements, on a line-by-line basis, in proportion to the Group’s participation in the companies.

9.2 | Subsidiaries

a | List and description of the subsidiaries:

9.3 | Details of other financial investments

Related to these participations, the following loans granted are registered in the item “Other financial assets”:

10 | Inventories

10.1 | Accounting policies adopted in the measurement of inventories and cost formula used

Inventories are valued by cost or net realisable value, if this

Description Consolidation method

Conduril - Gestão de Concessões de Infraestruturas, S.A. Full consolidation

Edirio - Construções, S.A. Full consolidation

Métis Engenharia, Lda. Full consolidation

ENOP - Engenharia e Obras Públicas, Lda. Full consolidation

Mabalane - Inertes, Lda. Full consolidation

4M Properties, S.A. Full consolidation

Urano, Lda. Full consolidation

Conduril - Engenharia Açores, S.A. Full consolidation

Description 31.12.2014 31.12.2013

OTHER PARTICIPATIONS REGISTERED AT THE COST

Rotas do Algarve Litoral, S.A. 130,000 130,000

SPER, S.A. 149,500 149,500

Planestrada - Op. Manut. Rod., S.A. 5,000 5,000

Marestrada - Op.Man.Rod., S.A. 5,000 5,000

Norgarante 10,000 10,000

BAI - Banco Africano Investimento 341,375 341,375

Lusitânia Seguros 76,815 76,815

SDMH - Soc. Desenvolvimento Mini-hídricas 1,400 1,400

Others 7,990 7,406

Total 727,080 726,496

Company Loans granted 2014 Loans granted 2013

UTE Alcántara - Garrovillas - -

SPER, S.A. 6,181,775 4,688,705

Rotas do Algarve Litoral, S.A. 7,501,935 2,961,624

SDMH - Soc. Desenvolvimento Mini-hídricas 23,800 23,800

Total 13,707,510 7,674,129


Accounts 2014

45

is lower. Cost includes purchase costs, conversion expenses and other expenses incurred in bringing the inventories to their present condition. The purchase costs comprise the purchase price, import duties and other taxes, transport expenses, handling, trade discounts, rebates and other similar items. The conversion costs include expenses directly related to units of production, such as direct labour. They also include a systematic allocation of fixed and variable production overheads that are incurred in finished goods. The allocation of fixed production overheads is based on the normal capacity of the production facilities. The Group values its inventories by the weighted average cost formula, which assumes that the cost of each item is determined from the weighted average of the cost of similar items at the beginning of a period and the cost of similar items purchased or produced during the period.

10.2 | Total carrying amount of inventories and carrying amount in appropriate classifications

The carrying amount of inventories is the following:

10.3 | Amount of inventories recognised as an expense during the period

The amount of inventories recognised as an expense during the period was the following:

Inventories 31.12.2014 31.12.2013

Raw, subsidiary and consumable materials 14,258,430 12,803,852

Goods 90,806 110,507

Finished and semi-finished products 513,310 718,886

Products and work in progress 439,883 589,207

15,302,429 14,222,452

Impairment losses (1,537,150) (1,965,545)

Total 13,765,279 12,256,907

Goods Raw, subsidiary and consumable materials

31.12.2014 31.12.2013 31.12.2014 31.12.2013

Initial inventory 110,507 - 10,838,307 8,481,376

Impairment losses in stocks - - 428,395 (606,602)

Purchases - 264,671 51,520,313 33,599,376

Inventories adjustments and reclassification (19,701) (154,164) 648,861 (270,862)

Ending inventory (90,806) (110,507) (12,721,280) (10,838,307)

Expenses in the period - - 50,714,596 30,364,980

Finished and semi-finished products Products and work in progress

31.12.2014 31.12.2013 31.12.2014 31.12.2013

Initial inventory (718,886) (724,688) (589,207) (1,230,581)

Inventories adjustments and reclassification (157,331) (58,647) 149,324 -

Accumulated impairment losses - - - -

Ending inventory 513,310 718,886 439,883 589,207

Variation of inventories in production (362,907) (64,450) - (641,374)


Accounts 2014

46

10.4 | Amount of impairment losses in inventories recognised in the result of the period

The value of impairment losses recognised in the result of the period was the following:

10.5 | Movement of accumulated impairment losses in inventories

11 | Construction contracts

11.1 | Amount of contract revenue recognised as revenue in the period

The revenue of each construction contract includes the initial amount of revenue agreed, as well as variations in works, claims and incentive payments to the extent that it is probable that will result in revenue and are capable of being reliably measured. As at 31 December 2014 and 2013, the amount of revenue recognised as revenue in the period was the following:

Impairment losses in inventories 31.12.2014 31.12.2013

Goods - -

Raw, subsidiary and consumable materials (10,243) (645,346)

Finished and semi-finished products - -

Products and work in progress - -

Total (10,243) (645,346)

Reversal of impairment in inventories 31.12.2014 31.12.2013

Goods - -

Raw, subsidiary and consumable materials 554,224 -

Finished and semi-finished products - -

Products and work in progress - -

Total 554,224 -

Impact in the period 543,981 (645,346)

Raw, subsidiary and consumable materials

Accumulated impairment losses on 31.12.2013 1,965,545

Increases 10,243

Reversal (554,223)

Utilisations (309)

Exchange variations 115,894

Accumulated impairment losses on 31.12.2014 1,537,150

Work/Contract Revenue in the period 2014 Revenue in the period 2013

Construction contracts 203,656,151 193,252,626

Total 203,656,151 193,252,626


Accounts 2014

47

11.2 | Methods used to determine the contract revenue recognised in the period

The recognition of revenue in the period is made according to the percentage of completion method. Under this method, revenue is matched with the contract costs incurred when reaching the stage of completion. Contract revenue is recognised as revenue in the income statement in the accounting periods in which the work is performed. In the cases the outcome of the contracts cannot be estimated reliably, revenue shall be recognised only to the extent of contract costs incurred that it is probable will be recoverable.

11.3 | Methods used to determine the stage of completion of ongoing contracts

In order to determine the stage of completion of a contract, it is used the method that most reliably measures the work performed. Depending on the nature of the contract, the method used to determine the stage of completion can vary as follows:

• The proportion that contract costs incurred for work performed to date bear to the estimated total contract costs;

• Survey of the work performed;

• Completion of a physical proportion of the work performed.

11.4 | Information related to the ongoing construction contracts

12 | Revenue

12.1 | Accounting policies adopted for the recognition of revenue, including the methods adopted to determine the stage of completion of transactions involving the provision of services

The Group recognises revenue according to the following criteria:

a | Sales - are recognised in the income statement when the risks and benefits inherent to the ownership have been transferred to the buyer, when there is not a continued management involvement to a degree usually associated with ownership, when the amount of revenue can be reasonably measured, when it is probable that the economic benefits associated with the transaction will flow to the entity, and when the expenses incurred or to be incurred with the

2014 Expenses incurred Recognised income Advances received Retention

Ongoing contracts 462,566,446 622,496,450 22,472,890 7,257,816

Total 462,566,446 622,496,450 22,472,890 7,257,816

2013 Expenses incurred Recognised income Advances received Retention

Ongoing contracts 362,766,408 465,125,752 33,687,488 2,639,722

Total 362,766,408 465,125,752 33,687,488 2,639,722


Accounts 2014

48

transaction can be reliably measured.

b | Provision of services - are recognised in the income statement with reference to the stage of completion of the provision of services at the balance sheet date.

c | Interest - is recognised using the effective interest method.

d | Dividends - are recognised from the moment in which the shareholder’s right of receiving the payment is established.

12.2 | Amount of each significant category of revenue recognised during the period, including the revenue from:

13 | Provisions, contingent

liabilities and contingent

assets

13.1 | Provisions

The Group recognises a provision when, cumulatively, there is a present obligation as a result of a past event; it is likely that an outflow of resources embodying economic benefits will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation.

During the period ending on 31 December 2014, the movements relating to provisions occurred were the following:

31.12.2014 31.12.2013

Sales of goods 5,670,202 4,795,889

Provision of services 203,145,200 203,672,635

Interest 3,925,250 425,746

Royalties 4,372 1,668

Dividends 56,705 68,827

Total 212,801,730 208,964,764

Provisions Opening balance Increases Reclassification Exchange variation Reversal Closing balance

Guarantees to clients 1,093,835 264,465 (19,787) - (179,217) 1,159,297

Ongoing court proceedings 166,650 - - - - 166,650

Other provisions 2,196,652 6,020,095 913,958 17,952 (1,565,764) 7,582,892

Total 3,457,137 6,284,560 894,171 17,952 (1,744,981) 8,908,838


Accounts 2014

49

14 | The effects of changes in

foreign exchange rates

14.1 | Exchange differences recognised in profit/loss

14.2 | Net exchange differences classified in a separate component of equity

15 | Events after the balance

sheet date

15.1 | Disclosure updating about the conditions at the balance sheet date

Between the balance sheet date and the issuance of the consolidated financial statements, no information on the conditions that existed at the balance sheet date were received, so no adjustments in amounts recognised in the present financial statements were made.

These consolidated financial statements were approved by the Board of Directors, in the meeting of 16 February. The Board of Directors believes that these financial statements are a true and proper representation of the operations of the companies belonging to the Group, as well as their financial position and performance and cash flows.

16 | Environmental issues

16.1 | Description of the measurement bases adopted, as well as the methods used in the calculation of value adjustments

From its activity, the Group has a legal or contractual responsibility to prevent, reduce or repair environmental damage. To fulfil this obligation, the Group incurred in expenses that amounted to 52,000 euros (in 2013, they amounted to 65,000 euros) for the period ended on 31 December 2014.

To measure the environmental expenses incurred, the Group recognises the expenses effectively made in the period.

16.2 | Environmental expenses allocated to profit/loss

All environmental expenses should be considered in profit/loss if they were expenses incurred in that period, i.e., if they do not aim to prevent future damage or provide future benefits.

Therefore, environmental expenses allocated to profit/loss refer to past or present activities, or restoration of environmental conditions in the state in which they were before contamination.

17.1 | Main components of tax expense and income

Current tax and deferred tax shall be charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or a different period, directly to equity.

During the period ended on 31 December 2014 and 31 December 2013, no debits/credits were made directly to equity related to the deferred taxes.

31.12.2014 31.12.2013

EXCHANGE LOSSES

- Other expenses 11,968,879 20,492,595

11,968,879 20,492,595

EXCHANGE GAINS

- Other income 28,173,611 19,478,670

28,173,611 19,478,670

Amount allocated to profit/loss

Waste treatment 52,000

Wastewater treatment -

Total 52,000Exchange differences in

equity

Balance as at 31.12.2013 (186,208)

Reinforcements 1,000,571

Write-offs (250,776)

Balance as at 31.12.2014 563,587

31.12.2014 31.12.2013

CURRENT TAX AND ADJUSTMENTS:

Current tax for the period 15,853,512 23,169,381

15,853,512 23,169,381

DEFERRED TAXES:

Deferred taxes related to temporary differences 170,512 (235,065)

170,512 (235,065)

Income taxes expense 16,024,024 22,934,316

17 | Income taxes


Accounts 2014

50

17.2 | Relation between tax expense/income and accounting profit

The amount related to “Differentiated rates of taxation” results essentially from the fact of the Angola branch being subject to taxation at a rate of 30%.

17.3 | Deferred taxes

As at 31 December 2014, deferred tax assets and liabilities are the following:

18 | Financial instruments

18.1 | Measurement bases

It is the Group’s policy to recognise an asset, a financial liability and an equity instrument only when it becomes a part of the contractual provisions of the instrument.

The Group measures, at cost or written off cost less impairment loss, the financial instruments that have a defined maturity, which the returns have a fixed amount, with a fixed

Reconciliation of the effective tax rate 31.12.2014 31.12.2013

Income before taxation 45,531,165 59,416,039


Effective tax rate 35.19% 38.60%

Nominal tax rate (23% in 2014; 25% in 2013) 10,472,168 14,854,010

ADJUSTMENTS:

Application of the equity method - -

Differentiated rates of taxation 612,356 7,524,396

Value adjustments of non-deductible assets - (140,250)

Expenses not accepted as tax cost 102,171 104,778

Provisions not accepted as expense 1,278,834 -

Excess tax estimate - 28,648

Autonomous taxation 556,989 328,240

Tax losses for the period 123,751 287,931

Derrama (municipal tax) 2,845,796 -

Deferred taxes from previous financial years 170,512 (43,415)

Others (138,553) (10,021)

5,551,856 8,080,306

Adjustments related to taxes of previous financial years - -


Deferred tax assets Opening balance Other variations Increases Reversal Closing balance

Warranty of works 18,478 524 1,195 - 20,197

Application of percentage of completion 53,335 (424) 27,327 - 80,238

Financial instruments 12,781 (100) - (12,681) -

Tax losses 257,116 - - (207,669) 49,447

Total 341,710 - 28.522 (220,350) 149,882

Deferred tax assets Opening balance Other variations Increases Reversal Closing balance

Revaluation surpluses 1,280,257 (46,774) 52,815 - 1,286,297

Taxable income 375,084 14,876 149,092 (359,422) 179,630

Depreciation not accepted 144,800 256,872 302,972 (119,997) 584,646

Total 1,800,140 224,974 504,878 (479,419) 2,050,573


Accounts 2014

51

interest rate during the instrument’s life or of variable rate which is a typical market indexing for financing operations (for example, Euribor), or that includes a spread on that indexing, which does not contain a contractual clause that can result to its holder in a loss of nominal value and accrued interest (excluding the cases of credit risk).

The contracts to grant or take a loan in a net basis and the equity instruments that are not publicly negotiated and whose fair value cannot be obtained reliably, as well as contracts connected to those instruments that, if executed, result in the delivery of those instruments, are also measured at cost or written off cost less impairment loss.

All financial instruments, which are not measure at cost or written off cost less any impairment loss, are measured at fair value.

The Group does not include the transaction costs in the initial measurement of financial asset or liability, which is measured at the fair value as part of profit/loss.

As long as the Group holds a financial instrument, the measurement policy will not be affected.

18.2 | Financial assets and liabilities

a | Financial assets with recognition of impairment

31.12.2014 31.12.2013

Carrying amount Accumulated impairment Carrying amount Accumulated impairment

Trade accounts receivable 220,702,038 (260,078) 213,784,917 (241,056)

Clients with guarantees 11,369,590 - 6,139,411 -

Doubtful debtors 3,229,682 (3,229,682) 3,120,648 (3,120,648)

Total 235,301,310 (3,489,760) 223,044,976 (3,361,704)

b | Financial liabilities measured at fair value

The open position on 31 December 2013 corresponds to a contract of exchange rate swap, with the nominal value of 5,000,000 euros and maturity as at 5 June 2014.

c | Determination basis of fair value

For each financial asset or liability, namely, exchange rate swaps, measured at fair value, the determination basis of fair value resulted from the sum of the updated amount of future flow changes, taking into account the contracted fixed interest rate and the value expected for the indexing underlying in each of the change dates of the respective flows. As at 31 December 2014, the Group has no open positions regarding swap contracts.

The calculation of fair value of the derivatives contracted by the Group was made by the respective counterparties,

31.12.2014 31.12.2013

Carrying amount Carrying amount Variation of fair value

Exchange rate swaps - (49,093) 49,093

Total - (49,093) 49,093


Accounts 2014

52

considered as independent financial entities.

18.3 | Financial assets held for trading

This item includes the public debt securities of the Angolan State (treasury bonds), received as result of the debt settlement agreements overdue from the client - Angola’s National Roads Institute.

18.4 | Total of interest income and expense for financial assets and liabilities

To calculate the written off cost of a financial asset or financial liability and allocate the interest income or interest expense during the period, the effective interest method was used. According to this method, the total of interest income for financial assets and the total of interest expenses for financial liabilities are the following:

a | Interest income for financial assets:

b | Interest expenses for financial liabilities:

18.5 | Impairment losses in financial assets

For financial assets, which are not measured at fair value through the profit/loss and regarding which impairment is verified, the Group evaluated the respective impairment. From this evaluation, the Group was able to acquire objective evidence that the financial assets, shown in the following table, present impairment losses for the period:

18.6 | Amount of share capital

As at 31 December 2014, the Company had a share capital of 10,000,000 euros, fully subscribed and paid-in.

18.7 | Shares representing share capital

As at 31 December 2014, the share capital was composed of 2,000,000 shares, with a nominal value of 5 euros each.

19 | Employee benefits

19.1 | Post-employment benefits

As at 31 December 2014, there were 83 employees enjoying post-employment benefits regarding benefit plans defined. On 31 December 2014, the operations related to the period are the following:

The excess of responsibility covered as at 31 December 2014, in the amount of 461,680 euros, is registered in the item “Deferrals”. The amount of 534,875 euros regarding to actuarial gains in 2014 was also considered in the item “Income to be recognised”.

Assumptions used in the actuarial study:

20 | Other information

20.1 | State and other public bodies

The item “State and other public bodies” as at 31 December 2014 and 31 December 2013 is the following:

Financial assets 31.12.2014

Bank deposits 3,924,646

Others 604

Total 3,925,250

31.12.2014

Financial assets Impairment losses Reversals

Clients 1,530,815 -

Other accounts receivable - -

Other financial assets - -

Total 1,530,815 -

31.12.2013

Financial assets Impairment losses Reversals

Clients - (500,522)

Other accounts receivable - -

Other financial assets - -

Total - (500,522)

Financial liabilities 31.12.2014

Financing 5,209,267

Finance leases 560,217

Others 44,783

Total 5,814,267

Pension costs 31.12.2014 31.12.2013

Cost of current services 360,491 317,326

Interest cost 294,967 299,215

Actuarial gains and losses (245,228) (535,061)

Return on assets (330,497) (550,228)

Total 79,733 (468,748)

31.12.2014 31.12.2013

Mortality table TV 88/90 TV 88/90

Normal retirement age 66 years old 65 years old

Number of pensions in the year 13 13

Rate of return of assets 4% 4.25%

Rate of growth of wages 2% 2.25%

Discount rate 4% 4.25%


Accounts 2014

53

20.2 | Guarantees provided

As at 31 December 2014, the Group had assumed responsibilities for the guarantees provided in the amount of 99,438,407 euros (as at 31 December 2013, the amount was 101,031,362 euros).

20.3 | Turnover by activity and geographical markets

The turnover as at 31 December 2014 e 2013 is distributed as follows:

20.4 | Personnel expenses

The item “Personnel expenses” is the following, for the period ending on 31 December 2014 and 2013:

20.5 | Other income

The item “Other income” is the following, for the period ending on 31 December 2014 and 2013:

20.6 | Other expenses

The item “Other expenses” is the following, for the period ending on 31 December 2014 and 2013:

Assets 31.12.2014 31.12.2013

Personal Income Tax 4,039,895 4,301,460

Value Added Tax 10,025,375 8,621,111

Social Security Contributions - -

Other taxation 42,778 269

Business Income Tax 11,483,213 10,947,508

Total 25,591,261 23,870,348

Liabilities 31.12.2014 31.12.2013

Personal Income Tax 669,912 666,392

Value Added Tax 6,411,781 6,023,454

Social Security Contributions 516,550 423,290

Business Income Tax 15,565,160 21,748,579

Other taxation 270,180 144,451

Total 23,433,583 29,006,166

31.12.2014 31.12.2013

Internal market 14,722,457 14,456,595

External market 194,092,945 194,011,929

Total 208,815,402 208,468,524

31.12.2014 31.12.2013

Remunerations of the management bodies 1,072,975 1,130,174

Personnel remunerations 34,601,648 27,101,282

Compensations 42,522 -

Post-employment benefits (Note 19) 79,733 683,628

Social charges 2,907,659 2,838,905

Insurance schemes for accidents at work and occupational diseas 1,175,162 1,026,763

Social welfare expenses 3,402,704 2,802,340

Others 3,381,801 6,887,572

Total 46,664,204 42,470,664

Deferred costs 31.12.2014 31.12.2013

Expenses to be recognised - insurances 416,466 509,430

Expenses to be recognised - other 64,089 911,358

Pension fund - surplus (Note 19) 461,680 -

Other deferrals 44,286 93,776

Total 986,521 1,514,565

Deferred liabilities 31.12.2014 31.12.2013

Income to be recognised - NCRF 19 17,144,944 30,829,411

Income to be recognised - internal operations profit - 1,355,470

Pension fund (Note 19) 534,875 -

Billing to be recognised 1,745,516 2,594,753

Total 19,425,335 34,779,633

31.12.2014 31.12.2013

Taxes 5,244,598 2,591,252

Cash discounts given 135 145,650

Bad debts 7,706 -

Exchange losses 11,968,879 20,492,596

Losses in inventories 5,406 109,323

Expenses and losses in non-financial investments 532,495 548,751

Corrections related to previous periods 122,607 14,136

Under taxation estimate 251,441 -

Others 127,651 348,036

Total 18,260,918 24,249,744

Financing expenses and losses 31.12.2014 31.12.2013

Interest paid 5,758,936 3,096,749

Other financing expenses and losses 2,400,217 1,937,251

Total 8,159,153 5,034,000

31.12.2014 31.12.2013

Additional income 1,854,589 150,787

Cash discounts obtained 50,715 162,981

Exchange gains 28,173,611 19,478,671

Gains in inventories 31,246 25,169

Income and gains in the remaining non-financial assets 1,513,628 104,358

Corrections related to previous periods 672,401 -

Excess tax estimate 721,239 -

Interest received 3,925,250 435,011

Dividends earned 56,705 68,827

Others 282,274 80,769

Total 37,281,658 20,506,572

20.8 | Deferrals

Deferred costs and deferred liabilities are the following:

20.7 | Financial profit and loss account

The financial profit and loss are the following:


Accounts 2014


Report and Opinion of the Statutory Audit Board

56


Financial year of 2014

Consolidated accounts

Dear Shareholders:

In compliance with the legal provisions, the Statutory Audit Board submits its report and issues its opinion on the consolidated management report, consolidated balance sheet, consolidated accounts and proposal of application of net income, which were presented by the Board of Directors of CONDURIL - Engenharia, S.A., regarding the financial year ended on 31 December 2014.

Report

In the performance of its duties, the Statutory Audit Board had regular meetings accompanying the social activity and the evolution of CONDURIL - Engenharia, S.A. business, watched and ensured the fulfilment of the law and the articles of association, and it was informed of the acts carried out by the Board of Directors, which has always clarified any situation when requested. The Board carried out a careful analysis of the consolidated management report presented by the Board of Directors, the consolidated balance sheet as at 31 December 2014, consolidated profit and loss account, consolidated cash flows, changes in consolidated equity for the financial year ended in that date, and annexe with the explanatory notes, documents considered to be correct.

The Board was informed of the works developed during the year by the Audit Firm, obtained information and clarifications provided by its representative, required to the control of the official audit to the other financial statements, was informed of the conclusions and recommendations of the audit report sent to the Board of Directors, and proceeded to the analysis of the legal certification of consolidated accounts, documents that should have the agreement of the Board in what concerns their contents.

The Board, within the framework of its competence, expresses its agreement regarding the accounting policies and the valuation criteria adopted.

As a result of the above, the Board considers that the consolidated management report, consolidated balance sheet, consolidated income statement, consolidated cash flows and changes in consolidated equity allow, in the whole, for a correct understanding of the consolidated financial situation of CONDURIL - Engenharia, S.A., on 31 December 2014, and the income statement for the financial year ended

in that date, and it also considers that the legal and statutory provisions were respected.

As a conclusion, the Board also thanks, along with the Board of Directors, the Employees for their effort, commitment and dedication.

Therefore, the Statutory Audit Board issues the

Opinion

1. that the consolidated management report, consolidated balance sheet, consolidated accounts and its notes for the financial year ended on 31 December 2014 are approved;

2. that the proposal of application of net income included in the consolidated management report, in the terms presented by the Board of Directors is approved.

Ermesinde, 6 March 2015

The Statutory Audit Board

Crisóstomo Aquino de Barros, PresidentDaniela Brás Vigário SilvaJosé Tiago Sapage Meireles de Amorim

Report and Opinion of the Statutory AuditCONDURILReport and Consolidated

Accounts 2014

57

Report and Opinion of the Statutory Audit CONDURILReport and Consolidated

Accounts 2014


Legal Certification of Consolidated Accounts

60

Legal Certification of Consolidated Accounts

Introduction

1. We have examined the consolidated financial statements of Conduril - Engenharia, S.A. (“Company”), which comprise the Consolidated balance sheet on 31 December de 2014 (which reflect total assets of 502,130,337 euros and total equity of 212,488,003 euros, including a net income of 29,472,732 euros), the Consolidated profit and loss account by nature, the Consolidated statement of changes in equity and the Consolidated cash flow statement for the period ended in that date, and its Notes.

Responsibilities

2. The preparation of consolidated financial statements that present a true and proper representation of the financial position of the group of companies included on consolidation, the consolidated net income of their operations, the changes in consolidated equity and the consolidated cash flows, as well as the adoption of adequate accounting principles and the maintenance of an appropriate system of internal control is the responsibility of the Company’s Board of Directors.

3. Our responsibility is to issue a professional and independent opinion on these financial statements, based on our examination.

Scope

4. Our examination was performed in accordance with the auditing standards (“Normas Técnicas e as Directrizes de Revisão/Auditoria”) issued by the Portuguese Institute of Statutory Auditors (“Ordem dos Revisores Oficiais de Contas”), which require that the examination be planned and performed with the objective of obtaining reasonable assurance about whether the consolidated financial statements are free of material misstatement. This examination includes:

• verifying that the financial statements of the companies included on consolidation have been properly audited and, for the significant cases where they have not been, verifying, on a test basis, evidence supporting the amounts and disclosures contained therein, and assessing the significant estimates, based on assumptions and criteria defined by the Company’s Board of Directors, used in their preparation;

• verifying the consolidation practices;

• assessing the adequacy of the accounting principles used and their disclosure, taking into consideration the circumstances;

• verifying the applicability of the going concern concept; and

• the adequacy of the overall presentation of the consolidated financial statements.

5. Our examination has also verified that the financial information contained in the consolidated management report is consistent with that of the remaining documents in the consolidated financial statements.

6. We believe that our examination provides a reasonable basis for expressing our opinion.

Opinion

7. In our opinion, the consolidated financial statements referred present fairly, in all material aspects, the financial position of Conduril - Engenharia, S.A. on 31 December 2014 and the consolidated results of its operations, the changes in equity and the consolidated cash flows for the period ended in that date, in conformity with the generally accepted accounting principles in Portugal.

Report on other legal

requirements

8. We are also of the opinion that the information in the consolidated management report is consistent with the consolidated financial statements.

Oporto, 27 February 2015

HORWATH & ASSOCIADOS, SROC, LDA.Representada por Ana Raquel Borges L. Esperança Sismeiro (ROC 1126)

Legal Certification of Consolidated AccountsCONDURILReport and Consolidated

Accounts 2014

61

Legal Certification of Consolidated Accounts CONDURILReport and Consolidated

Accounts 2014

Conduril AngolaRua 2 IL (ao Largo do Ambiente)

Município de Ingombota - Luanda - AngolaT. +244 222 310 153 | F. +244 222 310 713

[email protected]

Conduril Moçambique | ENOP | Mabalane | 4MRua 1393 (Transversal da Av. José Craveirinha), n.º 120

Maputo - MoçambiqueT. +258 214 831 20 | F. +258 214 874 80

[email protected]

Conduril BotswanaTribal Lot 86 Portion 955 Isis Village

Tlokweng - Gaborone - BotswanaT. +267 319 02 53 | F. +267 393 03 25

[email protected]

Conduril Cabo VerdeAvenida da O.U.A., n.° 17, Achada Santo António

Cidade da Praia - Cabo VerdeT. +238 262 28 96 | F. +238 262 48 25

[email protected]

Conduril Sénégal186, Avenue du Prés Lamine Guèye x Rue Jacques Bugnicourt, 6ème étage

Dakar - SénégalT. +221 338 217 490 | F. +221 338 217 446

[email protected]

Conduril ZambiaPlot 3817 Martin Mwamba Road

Lusaka - ZambiaPO Box 473 P/Bag E891 Manda Hill Lusaka Zambia

Conduril MalawiPO Box 40 Liwonde Malawi

Liwonde - MalawiT. +265 994 956 884

Métis Engenharia, Lda.Parque Industrial de Viana - B.º - Capalanga

Município de Viana - Luanda - AngolaT. +244 939 212 517

[email protected]

Urano, Lda.Polo Industrial de Viana, Zona do Km 25

Município de Viana - Comuna do Zango - Luanda - AngolaT. +244 939 133 245

[email protected]

Conduril - Engenharia, S.A.Avenida Eng. Duarte Pacheco, n.º 1835 4445-416 Ermesinde - PortugalT. +351 229 773 920 | F. +351 229 748 [email protected]

report and consolidated accounts - … e contas...angola - n’zeto bridge ... adherence to the...

Documents