REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Soares da Costa
Construção, SGPS, SA
REPORT & ACCOUNTS
2013
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REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
INDEX
A
MANAGEMENT REPORT
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Highlights
4
Introduction
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1. The Soares da Costa Group
5
2. Corporate Social Responsibility
12
3. Business activity
3.1 Background
12
3.2 Production
17
3.3 Commercial Area
24
3.4 Human Resources
27
4. Financial and Economic Analysis
4.1 Individual Accounts
29
4.2 Consolidated Accounts
30
5. Risk Management
34
6. Outlook for 2014
36
7. Relevant facts occurring after the year end
36
8. Other legal information
37
9. Acknowledgements
10. Proposal for application of results
37
B
INDIVIDUAL FINANCIAL STATEMENTS
38
C
INDIVIDUAL ACCOUNTING POLICIES AND EXPLANATORY NOTES
44
D
CONSOLIDATED FINANCIAL STATEMENTS
66
E
OPINIONS AND CERTIFICATIONS
72
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MANAGEMENT
REPORT
A
Dipanda Towers Angola
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
HIGHLIGHTS
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Consolidated turnover of 497.2 million Euros fell by 30.2% compared to 712.5 million Euros in
the prior year. There was a sharp fall in the domestic market (-58.3%) due to the conclusion of
the Transmontana Motorway and also a fall in turnover in Angola (-31.6%) because of delays on
significant projects;
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The share of international business rose to 85.4% in 2013 (75.6% in 2012);
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EBITDA of -13.4 million Euros (+29.0 million Euros in 2012) reflects the fall in activity and major
constraints on profitability;
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Gains due to the restructuring of financial debt had a substantial impact on financial results,
which amounted to only -1.1 million Euros, compared to -41.9 million Euros in 2012;
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The fall in business activity and impairment losses and provisions worsened the result before
tax which totalled -61.3 million Euros (-49.8 million Euros in the prior year);
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Consolidated results attributable to the Group were -63.1 million Euros (-37.8 million Euros in 2012);
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The company’s individual results totalled -44.7 million Euros (-8.6 million Euros in 2012);
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Shareholder agreement leading to a transaction to increase the share capital of the company by
70 million Euros by the investor GAM Holdings, SA, successfully concluded in February 2014; as a
result of this transaction, GAM Holdings became the majority shareholder in the company with
66.7% of the share capital.
Key Consolidated Indicators
2013
2012
Change
497.2
712.5
-30.2%
72.4
173.6
-58.3%
424.7
538.9
-21.2%
EBITDA
-13.4
29.0
-
Operating Results (EBIT)
-60.2
-8.0
-
-1.1
-41.9
97.4%
-63.1
-37.8
-66.9%
(millions of Euros)
Turnover
Portugal
External Markets
Financial Results
Consolidated result attributable to the Group
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REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
INTRODUCTION
The board of directors of Soares da Costa Construção, SGPS, SA, in compliance with relevant legal and statutory requirements, submits for approval at the shareholders general meeting, the management report,
the financial statements and the other reporting documents for the period ending 31 December 2013.
These documents provide information concerning the business, and the performance and financial position of Soares da Costa Construção, SGPS, SA and its subsidiaries, as well as of the main risks and uncertainties facing them.
The accounting information presented both for the individual and consolidated financial statements
should be interpreted in the light of international accounting standards (IAS/IFRS: International Financial Reporting Standards), as adopted by the European Union.
Furthermore, as a company fully owned during the whole of 2013 by Grupo Soares da Costa, SGPS, SA,
a publicly quoted company, Soares da Costa Construção, SGPS, SA is not legally obliged to prepare and
disclose consolidated accounts, this being the responsibility of the mother company. Thus, the consolidated accounts presented here are optional. However, they have been prepared in accordance with the
international standards mentioned above, and provide an accurate picture of the size and performance
of the Soares da Costa Group’s construction business.
The financial information concerning each subsidiary referred to in this report should be understood in
the context of its pertinence to an appreciation of the activity and performance of the Group and not as
a substitute for the financial statements that each company prepares and discloses, in accordance with
the applicable law currently in force.
THE SOARES DA COSTA GROUP
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Mission and Values
In its role as the coordinating entity for all of the business activity of the Soares da Costa Group directly
linked to construction, Soares da Costa Construção, SGPS, SA is responsible for carrying out its mission
in this business segment, one of two that are considered strategic in the Group (the other being Concessions/Services). The mission is to: “satisfy the demands of the market and of its customers, through a
sustainable business model, and qualified and motivated resources, that generate economic, social
and environmental value, in a manner that provides an attractive return for shareholders”.
This mission is pursued not by chance or at random, but by persistently following difficult, demanding
but well directed paths, and reflected in the continuous practice of values, defined at a Group level, that
are proudly shared across the company:
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REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
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Constant focus on the market and customer satisfaction;
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Effective and efficient management;
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Integrity and ethical behaviour;
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Socially responsible conduct;
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Respect for the environment.
Historical Background
Soares da Costa Construção, SGPS, SA was formally founded on the 30th of December 2002, and created
by the transfer of a portfolio of shareholdings in the construction business from its sole shareholder,
Grupo Soares da Costa, SGPS, SA.
The origins of what is today the Soares da Costa Group goes back to 1918. From a small company with 10
workers basically executing high quality finishes, to one of the biggest Portuguese business groups operating worldwide, the Company’s history is intimately tied to the Construction business.
Throughout its long existence, the Company has undergone a number of phases of growth, constantly
adapting itself to changing conditions:
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In 1944, it became a private company with a capital of 8 million Escudos;
In 1968, and with business activity across the whole of the north of Portugal, it became a limited liability company with a share capital of 9 million Escudos, still wholly owned by the founders’ heirs;
In the period immediately following the 1974 Revolution, and reacting in an innovative manner to the
crisis in the market, the company found the key to the continuation of its growth using a technology
called the “tunnel framework”. In 1977, already with over 4,000 employees, the head office moved to a
new building in the Avenida da Boavista, Porto;
At the beginning of the 1980s, international expansion of the company began, with Venezuela and
Guinea-Bissau chosen as the pioneering countries. The share capital was increased to 180 million Escudos;
It was also in the 1980s, taking advantage of the expected explosive growth in infrastructure in Portugal as a result of joining the European Union, that the company’s business activity expanded beyond
buildings to infrastructure construction;
In 1988, and following an internal shareholder change, which did not result in the company losing it
family character, it entered a period of greater exposure to the Financial Markets, and increased its
share capital to 5,250,000 thousand Escudos;
During the 1980s and 1990s, the company’s international business diversified and the level of exports
increased. Its presence in markets as wide ranging as Iraq, Macau, Egypt, Guyana, Angola, Mozambique, Guinea-Bissau, Cape Verde and Germany are examples of its acumen in the search for business
opportunities and in its ability to take advantage of them;
In 1994, the company entered the American market in the USA with the incorporation of SDC Contractor Inc.;
In 2002, a new restructuring process led to the formal set up of the business group. Sociedade de
Construções Soares da Costa, SA was converted into a management holding company, Grupo Soares
da Costa, SGPS, SA, with a share capital of 160 million Euros, which, in turn, wholly owned the share
capital of four other holding companies, each one holding the shareholdings of companies in their
respective business segments. Soares da Costa Construção, SGPS, SA’s mission was to manage the
entire construction business, and was set up with a nominal share capital of 90 million Euros;
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
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The period from the end of 2006 to the beginning of 2007 marks another historic milestone for the
company, with control over the Soares da Costa Group passing to Grupo Investifino - Investimentos e
Participações SA. The family nature of the company’s management and especially its image, which had
existed until then, finally disappeared, leading to a new, more professional and modern management
philosophy.
The Soares da Costa Group’s history in the construction market is long and complex, but in all its phases
it has always sought and been able to find the means to modernize and grow. Thus, Soares da Costa
Construção SGPS, SA has the challenge of honouring this proud heritage with its business activity,
seeing in its past an example to follow, but knowing always how to find, in the present, the path that
leads to the growth that will ensure its future.
Hence, with the management and development of the construction business, one of the Group’s strategic business areas, as its responsibility, the company has grown rapidly and significantly since its formal
set-up. In 2008, it acquired Contacto in Portugal and Prince in Florida in the United States, as well as
Clear, which it acquired from the industrial sector in Portugal.
During 2011, the company incorporated by merger Soares da Costa Indústria, SGPS, SA. In the same year,
and given the important changes in the economic environment, the lack of financing and the sharp drop
in the Portuguese construction market, the management of the Soares da Costa Group decided to alter
the group’s strategic plan.1 This update focuses the strategic direction on international expansion for
the construction business and on the financial sustainability of all businesses.
It is also important to highlight the transaction, which took place on the 12th of February 2014 to increase share capital by 70 million Euros, entirely subscribed and paid up in cash by the new investor GAM Holdings, thus giving the latter ownership of 66.7% of the share capital of the company to which this report
relates. The transaction marks a new stage in the life of the company as a result of which it is hoped that
it will move forward ambitiously and with renewed vigour.
Shareholders’ Equity and Shareholders
At the beginning of the year, the share capital was 131,080,340 Euros, constituted of 26,216,068 nominal
shares each with a nominal value of 5 Euros. The following changes took place during 2013:
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At the shareholders’ general meeting that took place on the 14th of August 2013, it was decided to
reduce share capital by withdrawing shares, and alter article 4 of the company’s statutes as follows:
“the share capital, wholly subscribed and paid up, is of sixty four million eighty thousand three hundred and forty Euros and represented by twelve million eight hundred and sixteen thousand and sixty
eight shares without nominal value”. In the transaction, the value of 63,063,889.24 Euros was attributed to the only shareholder and a sum of 3,936,110.76 Euros was transferred to free reserves;
At the shareholders’ general meeting on the 28th of November 2013, it was decided to reduce share
capital to cover cumulative losses in negative retained earnings of 4,760,512.23 Euros and the net
losses totalling 38,983,932.35 Euros for the first nine months of the year 2013, reducing share capital
to 20,335,895.42 Euros (twenty million three hundred and thirty five thousand eight hundred and
ninety five Euros and forty two centimes), represented by twelve million eight hundred and sixteen
thousand and sixty eight shares without nominal value;
During 2013, the entire share capital of the company was owned by the company Grupo Soares da Costa,
SGPS, SA.
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Please see press release on the CMVM website
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
In 2014 on the 12th of February, the company decided to increase its share capital to 90,335,895.42
Euros (ninety million three hundred and thirty five thousand eight hundred and ninety five Euros and
forty two centimes), through a cash inflow of 70,000,000.00 Euros (seventy million Euros), equal to the
issue of 25,670,623 shares without nominal value, all of which were subscribed and paid up in cash by
the new shareholder GAM Holdings, which thus became owner of 66.7% of the share capital.
Thus, under the terms of article 4 of the company’s articles of association, the share capital, entirely
subscribed and paid up, is of 90,335,895.42 Euros (ninety million three hundred and thirty five thousand
eight hundred and ninety five Euros and forty two centimes) and represented by 38,486,691 (thirty eight
million four hundred and eight six thousand six hundred and ninety one shares) without nominal value.
The company also informs that, in compliance with the provisions of section d) of paragraph 5 of article
66 of the Commercial Companies Code, it does not own nor dealt in own shares during the year.
Statutory Bodies
The statutory bodies of Soares da Costa Construção, SGPS, SA that were decided upon at the shareholders’ general meeting on the 26th of March 2013 were constituted of the following, valid for the mandate 2013-2015:
Shareholders General Meeting Board:
◊ Chairman Jorge Manuel Oliveira Alves
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Secretary Pedro Miguel Tigre Falcão Queirós
Board of Directors:
Chairman António Manuel Pereira Caldas de Castro Henriques
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Vice-Chairman Jorge Domingues Grade Mendes
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Members Pedro Gonçalo de Sotto-Mayor de Andrade Santos
Luís Miguel Andrade Mendanha Gonçalves
Daniel Hehn Pinto da Silva
Fernando Jorge Sales Nogueira
Statutory Auditor:
Effective Deloitte & Associados, SROC, SA, NIPC 501776311, represented by António Manuel Martins Amaral
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Alternative Paulo Alexandre Rocha Silva Gaspar, ROC, NIF 200527452
Then, following the increase in share capital that took place on the 12th of February 2014 and the inherent change in ownership, the composition of the Board of Directors became the following:
Board of Directors:
Chairman António Mosquito
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Vice-Chairman António Sarmento Gomes Mota
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Members António Manuel Pereira Caldas de Castro Henriques (Chairman of the Executive Committee -CEO)
Jorge Domingues Grade Mendes (Member of the Executive Committee - COO)
Miguel Nuno André Raposo Alves (Member of the Executive Committee – CFO)
Paulo Manuel da Conceição Marques
Roberto António Pereira Pisoeiro (CEO of Angolan Operations)
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REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Company Organisation
Soares da Costa Construção, SGPS, SA, is a holding company that carries out its business by managing
shareholdings in various companies in the construction segment, executing civil construction, engineering and infrastructure projects.
During 2013 all members of the Board of Directors carried out executive duties, sharing the coordination
of the various shareholdings of the company.
The organisational structure in 2013 was as follows:
Group Organisational Chart
CEO
António Castro Henriques
CFO
COO
Gonçalo Andrade Santos
Jorge Grade Mendes
AFRICA - CEO
PORTUGAL - CEO
BUSINESS DEVELOPMENT
Daniel Pinto da Silva
Luís Mendanha
Fernando Nogueira
ANGOLA
PORTUGAL
Daniel Barreira
Jorge Rocha
António Cortes
BRAZIL
OTHER MARKETS
Equatorial Guinea
MOZAMBIQUE
S. Tomé & Príncipe
José Fontes
CLEAR
Paulo Leal
Rui Carrito
Vieira de Magalhães
Costa Rica
Emirates
Romania
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SOMAFEL
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
New shareholdings and changes to the consolidation perimeter of Soares da Costa
Construção, SGPS, SA.
During 2013, the following transactions took place:
1st Quarter:
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Merger by incorporation of the company “Construções Metálicas Socometal, SA” into “Sociedade de
Construções Soares da Costa, SA”;
2nd Quarter:
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Disposal of the entire holding in the company governed by Angolan law, “Carta – Restauração e Cantinas, Lda.”;
Change of the corporate name of the company “Linha 3 Cezarina – Construções Ltda”, held 50% by
Soares da Costa Brasil – Construções Ltda, which was renamed “Linha 3 Construções Ltda” and to include in its corporate objectives the construction, management, supervision, study, project, planning,
consultancy and execution of all and any relevant services to engineering works in general;
Disposal of the entire shareholding of the company in MTA - Máquinas e Tractores de Angola, Lda.;
3rd Quarter:
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Soares da Costa Construção SGPS, SA sold its entire shareholding in SDC América, Inc to Grupo Soares
da Costa SGPS, SA;
Constitution of the company “Clear Moçambique, Instalações Electromecânicas, Lda.”, a company governed by the law of Mozambique, owned 100% by the Group, the objective of which is to carry out business in the civil construction industry, public and private works, engineering, and electrical, electronic, communications, air conditioning, hydraulic, gas, mechanical and electromechanical installations;
4th Quarter:
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Acquisition of the entire shareholding in “Soares da Costa Serviços Partilhados, SA”;
Winding up of the company “SDC Emirates Construction, LLC”, a company which was owned 49% by
“Soares da Costa Construção, SGPS, SA”.
The structure of shareholdings held by Soares da Costa Construção, SGPS, SA, is shown below:
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REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Organograma do Grupo
Soares da Costa Construção, SGPS, SA
Consolidated Accounts - 31.12.2013
Perimeter and Consolidation Methods
Soares da Costa Construção, SGPS, SA
(1) Sociedade de Construções Soares da Costa, SA holds a 4% participation in the share capital of Auto-estradas XXI, SA and Operestradas XXI, SA.
(2) Sociedade de Construções Soares da Costa, SA holds a 0,004% participation in the share capital of Exproestradas XXI, SA.
(3) Sociedade de Construções Soares da Costa, SA holds a 0,002% participation in the share capital of this company.
(4) Sociedade de Construções Soares da Costa, SA holds a 0,5% participation in the share capital of Indáqua Matosinhos, SA.
(5) Sociedade de Construções Soares da Costa, SA holds a 0,57% participation in the share capital of Indáqua Vila do Conde, SA.
(6)
Clear Angola, Lda holds a 2% participation in the share capital of Costa Sul, Lda. and Imosede, Lda.
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REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
CORPORATE SOCIAL RESPONSIBILITY
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The strategy for corporate social responsibility and the initiatives taken in this area have been implemented based on the guidelines set out for the Grupo Soares da Costa, SGPS, SA, the Group holding company, of which the construction business area is part. The performance of the company in this area and
the relevant facts pertaining to the year 2013 are described in detail in the report and accounts of Grupo
Soares da Costa, SGPS, SA, in which are highlighted initiatives focused on internal social responsibility
(aimed at employees of the company and their families), external social responsibility (implemented
together with external entities and the surrounding communities in those areas and countries in which
Soares da Costa carries out its business) and environmental responsibility.
BUSINESS ACTIVITY
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3.1 BACKGROUND
Overall Analysis
Worldwide, the year 2013 confirmed the trend of weakening growth already evident over the prior two
years with the persistence of major factors of uncertainty and highly demanding challenges in various
areas and economic regions of the world. World GDP, according to projections made in October 2013
by the International Monetary Fund, grew by 2.9% (3.2% in 2012 and 3.9% in 2011).2 The emerging and
developing economies continued to be the drivers of this growth with Asia as leader, while the advanced
economies saw much more modest expansion (1.2%). These figures however reveal signs of a slowdown
in the growth rate in China and other emerging and developing economies, which, for structural and
cyclical reasons, are moving away from the maximum rates of growth achieved in more recent years. In
2014 the economic outlook is for an improvement in world economic performance (+3.6%), driven by an
improved forecast in the more advanced economies (+2.0%), with an expected increase in growth in the
USA and the emergence from recession of the Euro Zone. Meanwhile greater levels of growth will continue in the emerging and developing economies (+5.1%) as a result of fiscal policies that are expected to
continue to be neutral and benefitting from relatively low interest rates.
The United States economy experienced growth last year of 1.6% about equal to the forecast made a
year previously, and 2014 may post robust growth of 2.6%. Important factors explaining this recovery are
the agreement made between the main political parties about budget policy over the next two years, an
improvement in private sector demand and the impact of a feel good factor from the increase in stock
market values, all of which have resulted in a falling unemployment rate, which was 6.7% in December.
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IMF World Economic Outlook – Transitions and Tensions, outubro 2013
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
The Euro Zone in 2013 continued to be affected by the legacy of the 2008 financial crisis, which led to a
process of deleveraging, fragmentation of the financial markets and added uncertainty. The peripheral
economies continued to follow very restrictive budgetary policies, aimed at controlling budget deficits
and managing the risks still attached to sovereign debt. Thus, against a background of still high levels of
unemployment, Euro Zone GDP contracted for the second year running (-0.4% in 2013). In 2014, a gradual recovery is expected in the Euro economic area, with GDP increasing by around 1%, an improvement
which will be influenced by a halt in the fall in internal demand and by accelerating export growth.
The Portuguese Economy
The Portuguese economy continued to live under the auspices of the Financial and Economic Assistance
Programme, agreed between the Portuguese government, the International Monetary Fund and the European Union in 2011, which has led to a highly restrictive and pro-cyclical approach to budgetary policy
against a background of tight financial and monetary conditions.
In addition to budgetary policy, which has led to a fall in public investment, the process of financial deleveraging in the private sector has led to a clear drop in investment in the Portuguese economy. Gross
Fixed Capital Formation fell by -16.4%, -6.4% and -5.3%, respectively, in the first three quarters of 2013.3
The good performance of exports and deterioration in the trend of internal consumption have meant
that, since the middle of the year, the Portuguese economy has shown some signs of stabilizing after ten
consecutive quarters of contraction.
The Bank of Portugal in its Winter Bulletin 4 thus expects a contraction of GDP of 1.5% in 2013 but “taking
into account a progressive recovery in internal demand, offset by the continuation of the process of budgetary consolidation and deleveraging of the private sector” is forecasting growth of the Portuguese
economy of 0.8% in 2014 and 1.3% in 2015. These forecasts are also based on a favourable export performance, “reflecting a trend of acceleration in external demand together with progressively smaller gains
in market share during the forecast period”, modest growth in employment and an increase in the ability
to finance the economy, based on the correction of external imbalances, which has been one of the most
characteristic features of the process of adjustment of the Portuguese economy, together with a trend
of the goods and services account balance that is expected to be in surplus during the forecast period.
Data recently released by the INE 5 (Portuguese Statistics Institute) point to a GDP change for the whole
of 2013 of -1,4%, benefitting from good performance in the 4th quarter with a year on year increase of
1.6%, after a fall of 0.9% in the previous quarter.
The economic outlook for the country continues to depend on the competitiveness of and external
demand for Portuguese goods and services, while the component parts of internal demand should
remain weak due to the efforts made to reduce debt both in the public and private sectors.
As far as inflation is concerned, the Consumer Price Index (CPI) increased with an annual average change
of 0.3% (2.8% in 2012). Excluding energy and unprocessed food products from the CPI, the average rate of
change moved from 1.5% in 2012 to 0.2% in 2013. The average annual rate of change of the Harmonized
Consumer Price Index (HCPI) fell to 0.4% in 2013 (2.8% in 2012), equal to a difference of -1.0 percentage
points (p.p.) (0.3 p.p. in the prior year) compared to the year on year rate of change of the Euro Zone HCPI.6
3
Statistical Bulletin – February 2014, Bank of Portugal
Economic Bulletin – Winter 2013, Bank of Portugal, December 2013
5
Quarterly National Accounts – Rapid Estimate, 4th quarter 2013 and Year 2013, INE, 14th of February 2014
6
Consumer Price Index, December 2013, INE, 13th of January 2014
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REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
The unemployment rate continues to run at a worrying level, with the rate at 16.3% in 2013 (annual
average), equal to an increase of 0.6 percentage points compared to 2012. It did benefit however from
a lower rate in the 4th quarter at 15.3%, down 1.6 percentage points on the same quarter of 2012 and
0.3% percentage points lower that the estimate for the previous quarter which would appear to indicate
an improving trend.7
Domestic Market: the Construction Sector
After a number of years of continuous contraction, it was not until 2013 that the Portuguese construction
market showed signs of being able to emerge from the profound crisis into which it had fallen. Due to the
particular characteristics of the sector that require an average delay of some 12 months in relation to investment decisions, the consequences of any recovery in the country’s economy did not come about during the
year just ended.
Based on data published in February 2014 by the National Statistics Institute (INE), the construction market
has not managed to escape from the continuous falls that have occurred since 2008 in the Total Production
Index, the trend of which is shown in the graph below for the last four years. The INE changed the basis of its
analysis in October 2013 with the value of 100 corresponding to the average for 2010. It should be remembered however that the Production Index in January 2010 was around 75% of the average index for 2005.
This means that a figure of around 60% of the average for 2010, shown on the extreme left hand side of the
graph, corresponds to only 45% of the average production in 2005.
Total construction production index 2010-2013
So it comes as no surprise that in 2013 the production indicators for the construction sector invariably show
once again deterioration in public and private demand to historically low levels. The average rate of change
over the last twelve months in the construction sector production index was -16.3% (similar to that recorded in the previous year), the combination of a change of -16.6% in the building construction segment and
-16.0% in civil engineering.8
The graph shown below records the year on year changes, where it can be seen that in the more recent periods there has been a deceleration of the rate of contraction in both segments (Building Construction and Civil
Engineering), which may augur better for the future. The figures show that the Building Construction segment posted a year on year change in December of -14.3% (-14.6% in November) while the Civil Engineering
segment posted a change of -14.5% (-15.6% in the previous month), a less sharp fall than in the immediately
preceding months.
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Employment Statistics – 4th quarter 2013 – 5th of February 2014
Production, Employment and Remuneration Indices in Construction, December 2013, INE, 11th of February 2014
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Construction Production Index Homologous Variation 2011-2013
Civil eng.
Buildings
Total
The recession is clearly reflected in the employment rate of the sector which showed an average change
over the last twelve months of -15.8%, or in other words slightly less than the fall in production and exactly the same as the trend of the remuneration index (-15.8%).
The sharp fall in cement consumption in the Portuguese market, which has posted a cumulative fall of
25.2% from the beginning of the year until October is another indication of this recessionary situation.
Against this recessionary background in the sector, it is worth noting that the government has finally
recognised that:
“the efforts being made in connection with the budgetary consolidation and correction of the financial
imbalances of the Portuguese state in order to comply with the commitments made as part of the Memorandum of Understanding in relation to the programme of external financing support, must be accompanied by an appropriate, careful and consensual definition of the priorities for investment in infrastructure which will help to strengthen the capabilities of Portuguese business and which will contribute
towards the process of sustained and competitive adjustment of the economy”;
“…significant constraints still exist in relation to the capacity to transport people and goods”;
and that “over the time frame 2014-2020, the goal will be to use community funds preferentially for
investment that generates value and reduces red tape in our economy and by doing so stimulates employment and the competitiveness of the Portuguese economy and business community”.9 The government thus set up a work group in August 2013 with the objective of preparing recommendations concerning High Value Added Infrastructure investment. Of even more importance is the fact that the work
group has already put its report out for public discussion with a list of thirty possible strategic projects,
which sends out a good signal to the market. It is true that since it is a medium/long term plan, and over
and above the normal impact of delays referred to above, the results of the implementation of this strategy will only begin to be felt in terms of production as from next year. Also because of this, the indicators
of confidence, most recently published by the INE (National Statistics Institute) as part of the Qualitative
Attitude Survey for Construction and Public Works, which showed a trend of some recovery and less
general pessimism reigning in this area, still has an overall negative tone in particular in relation to the
order backlog.
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Decree number 11215-A/2013 from the Office of the Secretary of State for Infrastructure, Transport and Communications
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
External Markets
We present below a brief summary of the economic situation in the main international markets in which
the company and its subsidiaries operate directly.
ANGOLA
After the sharp fall in GDP rates of growth between 2009 and 2011 following the world financial crisis,
preceding which double digit rates had been posted, the Angolan economy is gradually recovering its
growth potential. The IMF is estimating real GDP growth of 5.6% for 2013 (after the 5.2% posted in 2012)
and with the expectation of greater growth in 2014 (6.3%) 10, as a result of ambitious public works programmes.
The process of diversifying the economy has been essential to reduce the share of the oil sector in the
country’s national product, which will alleviate the impact of potential external shocks.
At the same time, the coordinated execution of monetary and fiscal policies and the stability of the exchange rate have been key factors in stabilising prices in the Angolan economy. The average inflation
rate for 2013 is forecast to be around 8%, constituting a new historic low.
MOZAMBIQUE
Attracting foreign investment and exploiting natural resources have been critical factors in increasing
the growth potential of the Mozambique economy, which also benefits from an expansionist budgetary
policy. Despite agriculture continuing to account for a high share of GDP, the discovery of large reserves
of coal and gas has made possible an extraordinary development of the extractive industry, based on
attracting large scale investment projects. This rate of expansion of growth of the economy is subject to
debate however with significant constraints in terms of transport infrastructure.
The IMF revised economic growth upwards for the country, in contrast to growth forecasts for the majority of the sub- Saharan economies, to 7.0% with a forecast of 8.5% for 2014. 11
According to the official INE (National Statistics Institute) data, real GDP growth in the first six months
was 6.6%, impacted, as the country was, by heavy rain and flooding at the beginning of the year.
The average annual inflation rate measured by the consumer price index in Maputo, Beira and Nampula,
the three main cities, was around 4.1% (measured in November 2013), according to information from
the same entity. In general, the trend of inflation continues to be explained by the stability of the Metical
on the domestic currency market and by the growth of money supply in line with the monetary programme, against a background in which measures continue to be in force to regulate prices.
BRAZIL
During the year 2013, GDP of the Brazilian economy grew by 2.4%, with a forecast of 2.6% for next year 12,
lower than the growth forecast for the Latin American and Caribbean region.
Inflation, which has been running at a high level with the latest forecasts indicating a rate of 5.8%
(higher than the goal of 4.5%), has led to the country adopting a vigilant and somewhat restrictive monetary policy with an increase in base interest rates.
10
Regional Economic Outlook: Sub-Saharan Africa – Keeping the Pace, IMF, October 2013
Regional Economic Outlook: Sub-Saharan Africa – Keeping the Pace, IMF, October 2013
12
Preliminary Assessment of the Latin American and Caribbean Economies, CEPAL, United Nations
11
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REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
SÃO TOMÉ & PRÍNCIPE
In 2013, the growth rate of São Tomé & Príncipe in 2013 is expected to show a real increase of 4.2% with a
forecast for 2014 of 4.8%.
One highlight of the country’s economic performance in 2013 was the progress made to gradually stabilise prices. The cumulative inflation rate was 5.6% up to the end of November, a figure comparatively
lower than over the last few years. Another was connected to exchange rate policy which continues to
follow the goal of stabilising the Dobra in relation to the Euro, which resulted in a strengthening of the
country’s currency against the dollar of 3.0% between December 2012 and November 2013.13
3.2 PRODUCTION
Portugal
After the mergers of Contacto and of Maxbela that took place in 2012 and that of Socometal at the beginning of 2013 – all of which were merged into Sociedade de Construções Soares da Costa, SA – the relevant subsidiaries that have a significant presence in the Portuguese market are:
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Sociedade de Construções Soares da Costa, SA and
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Clear – Instalações Electromecânicas, SA.
In addition, various Complementary Groups of Companies (ACEs), consolidated using the proportional
method, are in operation, in which the first named of the companies above is involved. The subsidiaries
in the railway and maritime construction segment, Somafel and OFM, should also be noted, again consolidated using the proportional method.
As was seen in the previous chapter, the construction market in Portugal is in deep recession. Public
investment has fallen sharply since mid 2011 to a very small fraction of prior levels. At the same time,
private investor confidence has become negative and the reigning climate of uncertainty has also led to
private investment posting historically low levels.
The sharp and persistent drop in demand has had severe and negative effects on the supply side with
scores of companies going out of business, due to the need for other companies on whom they depended for business to downsize. This unrelenting downsizing is largely complete but there are still signs in
the country of over sizing, which are visible in the cut throat competition existing for construction projects out for tender and the accompanying degradation of prices.
In spite of its international vocation, Sociedade de Construções Soares da Costa, SA, either directly or
through the complementary groups of companies in which it is involved, continues to do business in the
domestic market and in 2013 carried out various significant construction projects. Among these, the highlight was the conclusion of the contract for construction of the Transmontana motorway.
In addition to the motorway mentioned above, constructed by the complementary group of companies
CAET XXI, in which the company has a 50% shareholding, the conclusion of the following construction
projects of Sociedade de Construções Soares da Costa, SA (or of ACEs in which it participated) in 2013 deserves mention, although these are relatively small when compared to the huge scale of the motorway
project:
13
17
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Exchange Rate and Monetary Monthly Bulletin - November 2013. Banco Central de São Tomé e Príncipe.
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
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Gas pipeline Mangualde-Celorico-Guarda for REN;
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Serra da Estrela Inn for ENATUR;
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Aljustrel building for EDIA;
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Pedrógão building for EDIA;
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Construction for the upgrade and widening of 2X3 Lanes of the subsection Maia / Santo Tirso of the
motorway A3 for Brisa.
Among other construction projects running over several years, which are currently underway, worthy of
note due to their size and which will end in 2014, the following can be highlighted:
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Moura/Safara water pipeline for Águas do Alentejo;
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Waste water treatment plant in Paço de Sousa for Simdouro;
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Hotel Sana Evolution for Aziparque;
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Tróia Resort for Pestana Group.
Clear is the other subsidiary of the company carrying out business in Portugal and also in Angola, here
through its subsidiary Clear Angola.
In Portugal, despite facing a difficult economic situation with a scarcity of projects, Clear succeeded in
maintaining a satisfactory use of installed capacity, participating in various projects of significance in
Portugal, both as a partner with the group’s construction company, and also on its own, the highlights of
which were:
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Serra da Estrela Hotel in Covilhã for Enatur, which is part of the “Pousadas de Portugal” network. In
2013, all work relating to air conditioning, electricity, hydraulics, technical management and fire protection were completed.
Hotel Corinthia Lisbon used the services of the company to optimise energy consumption for the
building’s air conditioning. This is a flagship project for Clear because of the pioneering nature of the
work done in the area of energy efficiency. The project was voted “Western Europe Region – Energy
Project of the Year” by the Association of Energy Engineers (AEE), aimed at exceptionally innovatory
projects undertaken outside the United States.
The contract for the “Hotel Sana Evolution – Lisbon” was awarded in February 2013 by Aziparque,
and Clear was given responsibility for carrying out works relating to air conditioning, hydraulics, fire
safety systems, technical building management and electrical installations.
Groz Beckert – Construction of an Industrial Building in Valadares, Vila Nova de Gaia: execution of
works began in the last quarter of 2013 for electricity, telecommunications, air conditioning, hydraulics and management of a new industrial building to expand the production of the factory.
Organic Waste Processing Plant in Seixal: electrical and mechanical work and the installation of the
main equipment were completed while control and automation systems were designed and installed.
The phase of off load testing of the main electromechanical equipment was also begun, including related automation and control systems.
For the “Watering and Drainage Infrastructure for the Aljustrel and Pedrogão Block” for EDIA, specialist work was completed for the expansion of the Aljustrel Watering Building and also specialist work
for hydraulics, electricity and remote management of the new Pedrogão 3 Watering Building construction project for water and drainage infrastructure.
Despite the shortcomings affecting the Portuguese economy because of the capacity of the railway
infrastructure – the business segment of the subsidiary Somafel – the deterioration of the sector continued, due to severe funding limitations on the public railway system imposed by the government.
18
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REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Thus, in the Portuguese market, Somafel’s business was confined to carrying out service work under a
maintenance contract with REFER for lots 2 and 5, currently in progress, which was carried forward from
the prior year, as well as other small works.
In the work group report on High Value Added Infrastructure, highlights among the priorities set out for
the railways sector are the conclusion of the modernisation plan for the Northern line, the modernisation of the Beira Alta line, work on the Cascais line and the new international links Sines-Caia and Aveiro-Vilar Formoso. However, any impact of these projects on the business activities of the companies in the
railway sector is unlikely to be felt until after 2015.
In the port and harbour construction area, the business area of the company OFM, the contract for the
“Supply and Erection of Seventeen Sea Defences at Dock 2 North” for Leixões Port was concluded, involving the supply and erection of defences, including the clearing of damaged defences, as well as a contract (as a consortium) for the “Construction of Port Infrastructure and Improvement Works to the Madalena Port Shelter, Island of Pico” from the Portos dos Açores, S.A. Also concluded as part of a consortium
was a contract for the “Construction of a Ramp for Roll On Roll Off Ships and Ferry, and Ancillary Works for
the Port of São Roque, Pico Island” from Portos dos Açores, S.A.
In 2013, this subsidiary continued to work primarily abroad on projects in Algeria, Cape Verde, Mozambique, Venezuela, Brazil and Angola, a highlight being the volume of work and the importance of its contribution to turnover of the project at the Port of La Guaira in Venezuela, which is expected to be completed
in April 2014.
Angola
The Angolan market, in which the company has been operating continuously for more than three decades, continues to be of fundamental and strategic importance to the development of the company’s
businesses. The company has managed to consolidate its recognised prestige and reputation, namely in
the building construction segment, where it has undertaken highly important and significant construction projects in a range of sub-segments: residential, commercial and office buildings.
In 2013, some unexpected difficulties arose in the planning of production, because of projects which had
been awarded and even contracted but which were cancelled or suspended, some of which do not have a
planned start date.
In addition, and as noted in interim reports, the delays on the start up of refurbishments works on Boavista and Sambizanga Slopes, which began only in March, on the residential project for Angola LNG in
Soyo, and the infrastructure and administrative buildings of the Fútila Industrial Complex in Cabinda,
which only began at the end of 2013, had a negative impact on normal production activity, leading to discontinuities and a slower pace of work. Steps were taken to mitigate these effects but they had nonetheless an important effect on turnover, as will be explained in a later chapter of the report.
The Angolan market, despite the above, continued to be the top market in 2013 with more than twenty
active and significant projects, among which deserve special attention the following:
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Luanda Bay Seaside requalification for Baía de Luanda company;
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New headquarters building of the INE in Luanda;
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Restoration and construction of the Angolan Armed Forces Museum.
Among the construction works of relevance in terms of production and turnover in the year, over and
above those mentioned above, were the following:
19
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Headquarters Building of BESA, 2nd phase, in Luanda;
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Museum of Science and Technology in Luanda for the GOE;
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
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Luanda Towers, for the Vista Club;
Upgrade of Encostas da Boavista and Sambizanga in Luanda for the Ministry of Urban Development
and Construction;
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New office building in Luanda for the Insurance Company AAA;
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Muxima Plaza Buildings in Luanda for Prominvest;
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Dipanda Towers in Luanda for Novinvest;
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Lobito Building in Lobito for BESA;
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Provincial Headquarters of the INE in Malange, Huambo and Benguela;
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Various works in Luanda for SONILS;
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Huambo Cultural Centre for the Provincial Government.
Clear Angola has become the leading company in Angola for electrical, hydraulic, air conditioning, building management system and maintenance installations. Its technical competence, financial strength,
and ability of its staff have enabled CLEAR Angola to be successfully selected for large scale construction
projects or those of technical complexity.
The following is a list of the most significant projects and contracts in which Clear Angola was involved
during the year 2013:
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“Luanda Building – Ex-IPGUL”, in which the CACL (Administrative Commission for the City of Luanda)
has been installed, saw the conclusion of Clear’s work on this project for the design and execution of
electrical engineering, HVAC and hydraulic installations.
“BESA Building, Lobito” in the city of Lobito, for which the contract for electrical engineering and
hydraulic installations was completed.
”Descontão Supermarket” in Camama, Belas, Luanda – hydraulic installations.
“Baía Building” in Luanda, in which electrical engineering and hydraulic installations completed. A
highlight of this project was the development and implementation of a system for measuring electricity, water and gas consumption designed by Energy Management.
“Fénix Building” in Luanda was concluded with activity in three areas: electrical engineering, HVAC and
hydraulics.
”Headquarters Building of the National Press” in Luanda, a contract won in 2013 for which Clear will
carry out the electrical engineering, HVAC and hydraulic installations.
In Clear Angola’s business mix, electrical work represented 60% of the output (58% last year) while air conditioning once again accounted for 16%. There was an increase in maintenance, which generated income of
13% (5% in 2012) with hydraulic work accounting for smaller share at 11% (21% in the previous year).
Mozambique
Mozambique is also a market where Soares da Costa has been operating for a long time and which in
recent years has become increasingly important, not just because of its significant turnover and profitability, but also because of the relevance, quality and importance of the construction works and projects
that have been carried out or are in progress.
Over and above the business carried out via Sociedade de Construções Soares da Costa, SA, more focused on international projects, the business also operates through a subsidiary company incorporated
under Mozambique law, Soares da Costa Moçambique, SARL, owned 80% by Soares da Costa Construção,
SGPS, SA, with the remaining shares held by the Mozambique state.
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REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
As far as the activity of Sociedade de Construções Soares da Costa SA in Mozambique is concerned, work
on contracts awarded in previous years continued apace, as follows:
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New bridge over the River Tete: in October the concrete deck was completed, as well as work on concrete approach viaducts. Work was also carried out, despite some limitations which were outside the
control of the construction company, on access roads. It is expected that the project will be completed
during 2014;
Pemba airport project: this is in the final phase of completion, with the expectation that it will have
entered service by the time that this report is published;
Lots 2 and 3 of National Road 221: earth moving work was completed, and the laying of ground
cement has almost been concluded. Work began on double surface coating. The project is expected to
be completed for the 2nd quarter of 2014.
Meanwhile, the following projects were started during the year 2013:
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Building of thirty rail bridges in the Nacala Corridor for CDN (a subsidiary of the Brazilian Mining Company, Vale); this contract was extended at the end of 2013 to cover another twelve bridges, thus constituting at this point the biggest challenge that the company has in Mozambique.
Building of twelve road bridges for ANE – National Roads Administration, in the provinces of Manica
and Sofala. This design /build project, which was won in 2012, saw the execution of tasks related to
design while the construction site was prepared; the majority of the work will be carried out in 2014.
In relation to activity of the subsidiary Soares da Costa Moçambique, SARL, there was a marked increase
in turnover (+24%) and also the order backlog, all of which suggest a high level of business in the foreseeable future. The following construction projects were completed:
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Construction of the “Solar das Acácias” Building in Maputo;
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Refurbishment of the Museum of the Revolution in Maputo;
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Construction of a number of social buildings in Caia and Chimuara;
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Construction of a car park silo next to the Millennium Developers Building in Maputo;
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Refurbishment of the basement and floor of the Torres Altas building in Maputo;
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Upgrade of the “ Pombal” building for HCB - Songo, Tete;
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Expansion of the water distribution system to the village of Bobole;
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Construction of 15 Type 3 residences for HCB in the town of Songo, Tete;
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Refurbishment of the ex-Salvador Caetano building in Matola;
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Construction of a container terminal for MCT, Machava;
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Construction of the 4th phase of the ISDB - Dom Bosco Higher Institute, Maputo.
Another significant batch of construction works were begun in the year, namely:
21
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Construction of concrete foundations for high voltage power lines for Electrotec, Maputo;
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Expansion of the study building of the “ Golo” agency in Maputo;
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Refurbishment of the top floors and facade of the headquarters building of Petromoc, Maputo;
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Construction of the BCI agency in Xai-Xai;
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Refurbishment of premises of the BCI agency in Av. do Trabalho, Maputo;
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Refurbishment of premises of the BCI agency in Alto Maé, Maputo;
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Construction of administrative block and classrooms of ISAP in Tchumene, Maputo;
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Restoration of “ex-Almoxarifado da Casa do Artista” in Beira;
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Construction of a teaching complex at the UEM - Eduardo Mondlane University (URBE) – Maputo.
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
The above list of projects reveals the breadth and scope of the operations carried out by the company
across the country.
Taking advantage of the installed capacity in Mozambique, the company is also working on a project for
the construction of 11 kilometres of roads and two bridges in Swaziland, a project won at the end of
2012. In April 2013, work began and significant work has already been completed on the road, pillars and
abutments of the main bridge at Siphofaneni.
At the end of 2013, Somafel began operations in Mozambique in the railway sector, providing services to
level and align track using heavy equipment for a company in the same line of business in the north of the
country. A branch of Clear was also set up, which began business during the year, and now has in its order
backlog a contract for the “refurbishment of the new branch office of the Bank of Mozambique in Beira”.
United States
The Group’s business in the USA continued to be carried out in 2013 by Prince Contracting, L.L.C.. Based
in Tampa, Florida, the company’s business is focused on road infrastructure projects in this state, while
it also takes part in some similar projects in Georgia.
It is important to note that business in the United States, under the control of Soares da Costa Construção,
SGPS, SA, as owner of the share capital of SDC America Inc which in turn is the shareholder of in Prince, only
continued until the end of the third quarter of 2013, since the shareholding in Soares da Costa America, Inc
was transferred to Grupo Soares da Costa, SGPS, SA at the end of September of that year.
In 2013, the following projects were concluded:
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US27 (SR25) x SR50 – design/build project in the area of Orlando with a contract value of 21 million
dollars for the upgrade of a stretch of road and related bridges;
New Tampa Boulevard Bridge – bridge on the interstate road 275, in the Tampa, Florida area with a
contract value of 13 million dollars;
North Cattlement Road – earthworks, landscaping and road building in an area surrounding a rowing
complex near Sarasota, Florida, for a contract value of 22 million Dollars;
I-75 from South of Pierce Ave. to North of Arkwright Dr. – widening of a stretch of 3.65 miles of the
Interstate road I-75, including the reconstruction and upgrade of 7 bridges in the county of Macon,
Georgia, with a contract value of 62 million Dollars.
Work continued on a number of ongoing projects during the year, the following being the most significant:
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22
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I-595 Corridor Improvement Segments A and B (Express Toll Lanes) (Florida) – located in the Fort Lauderdale area with a value of 104 million dollars, it involves the upgrade and reconstruction of a section of the toll motorway over 4.3 miles;
I-75 Tampa – motorway widening between SR56 and Fowler Road (Florida), with a value of 95 million
dollars, involving the reconstruction and widening of 11 miles of the I-75 interstate motorway in the
Tampa area, including the building of 19 bridges. It has a time limit for completion of 1,500 days, but it
is expected that the works will be completed in around 600 days less than this limit;
I-75 SWFIA Airport Access – design/build contract, with a value of 54 million Dollars, involving the
design and construction of a new direct link covering 8 miles between Interstate I-75 and the International Airport of Southwest Florida (SWFIA) in Fort Myers.
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Brazil
Operations in Brazil in 2013 were mainly carried out through Linha 3 Construções Ltda, a company
owned 50/50 by Soares da Costa Brasil Construções Ltda. and Gutierrez Empreendimentos e Participações Ltda. Soares da Costa Brasil Construções, Ltda is wholly owned (indirectly) by the company to which
this report relates.
The company above completed the project for Line 3 of the Cezarina Cement Factory in Goiás in August
2013, a line that produces 2,000 tons per day for Cimpor Brazil, begun in April 2012, with a contract value
of 57.8 million Reais. The company is also taking part in a project for the extension of the airport building
at the International Airport of Viracopos in Campinas, São Paulo, for the consortium construction company Viracopos (CCP), which, following the start up of work at the end of 2012, has an expected completion date of March 2014. There is potential for more construction work as part of the investment plan for
the Viracopos Airport concession during the year 2014.
In addition to Soares da Costa Brasil Construções Ltda, Sociedade de Construções Soares da Costa, SA
has registered a branch authorised to operate in the country through Ordinance number 12 of the 14th
of June 2011 from the Ministry of Development, Industry and External Trade. By continuing to make
important progress in response to the demands for technical qualifications in the announcements for
Brazilian public tenders by registering new certificates for construction projects with the CREA, there
are reasonable grounds to hope that the company can participate in construction contracts for state
and union investment programmes already announced and arising from the needs for infrastructure
development in Brazil.
The construction contract for 1,890 social housing dwellings and related urban infrastructure in the
State of Ceará to a contract value of 84 million Reais, awarded to the branch office and with work forecast to start in March 2014, is awaiting approval by the Ceará State Government.
S. Tomé and Príncipe
In 2013, activity in the country was focused on the following three projects:
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Expansion of the headquarters building of the Banco Internacional de São Tomé e Príncipe, consisting
of the construction of a building of 4 floors at the side of the existing one. The value of the contract is
around 3 million Euros, and was completed in May.
Upgrade of the National Road number 1, Phase 1, Coastal Protection. The project with a contract value
of 6.6 million Euros runs between points PK 16+000 and PK 27+000 on the National Road 1 which links
the town of São Tomé to Neves.
Construction of a headquarters building for the Banco Central de São Tomé e Príncipe: a building of 4
floors with a gross construction area of 4,245.85 m2, for which a contract for around 6.5 million Euros
was signed in January 2013. However, for reasons not connected to the contractor, it was only in the
last quarter of the year that work began on the foundations, which, in view of the nature of the sub
soil exposed, and considering the stability of the building, meant that project had to be revised with a
view to strengthening the structure. It is expected that construction will begin in earnest in 2014.
Other International Markets
The international activity of Sociedade de Construções Soares da Costa, SA was mainly focused in 2013
on the markets specifically mentioned above because of their relative importance.
Nonetheless, the search for new opportunities has led to the execution of other construction projects
in non core markets. One project that deserves mention is the project for the design and construction
of interchanges between Muscat International Airport and the Muscat Expressway in the Sultanate of
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REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Oman. Awarded in 2012, the project is fully underway through an unincorporated joint venture (consortium) between Sociedade de Construções Soares da Costa, SA, and Oman United Engineering Services
L.L.C., with completion planned during the first half of2014.
In Romania, the contract for the construction project “Constructia Variantei de Ocolire Tecuci”, the customer being the Romanian National Roads Authority (CNADNR - Compania Nationala de Autostrazi si
Drumuri National din Romania S.A.) was unilaterally cancelled in October 2013. Against this background,
there is no longer any production operation underway in the country and the company’s management
have decided to discontinue operations here in view of the difficult and variable conditions, which are
particularly difficult to manage.
In Costa Rica, the construction business, carried out by the subsidiary Sociedade de Construciones Centro-Americanas, S.A., was set up to complement the concessions business of the Soares da Costa Group.
With the San José–Caldera project completed and having disposed of the shareholding in the other concession (San José-San Ramón), the level of business in 2013 in the country was insignificant.
In Israel, the intervention of Soares da Costa Construção also came about via collaboration with the concessions business of the Soares da Costa Group concerning the Tel Aviv Metro project in which Sociedade
de Construções Soares da Costa, S.A., has a shareholding of 30% in the construction consortium “Israel
Metro Builders” (IMB). In 2014, the outcome of the international arbitration process is awaited over the
dispute between the grantor – the State of Israel – and the concessionary for the project – Metropolitan
Transportation Solutions (MTS).
3.3 COMMERCIAL AREA
Enough has been said in previous sections of the report about the depressed state of the construction
market in Portugal. This is reflected in the general scarcity of tenders, which has led to a degradation of prices and also a reduced decision rate for those tenders launched. The modest size of current
demand in Portugal does not therefore provide an adequate level of business for Portuguese construction companies which have focused on international markets to sustain their future.
In fact, the main feature of the market in 2013 was a huge scarcity of investment in Portugal, which has
led to a headlong rush by those construction companies without any international activity to offer such
low prices in their struggle for survival that they have led to severely degraded levels of profitability. This
situation has been aggravated by the ineffectiveness of the construction licensing system in Portugal
which does not ensure the necessary qualitative differentiation, and by a certain leniency in relation to
the effective implementation of management and support systems for smaller contractors. The current
licensing system allows it to be acceptable that a “small” company can work without hardly any support
structure whereas it demands that each of the “big” companies performs with an efficiency that inevitably leads to added costs, which in the current circumstances cannot be adequately reflected in prices.
In previous sections of this report when describing the current economic situation, the hope was expressed that the market might improve in the coming years by re-establishing a minimum level of investment
appropriate to the market. But this change would only yield results if it were accompanied by complementary measures: in particular the set up at last of the much talked about but never implemented Class
10 licence, establishing strict rules but also quality guarantees, consistent in particular with the execution of construction works of high technical complexity.
Because of this, throughout 2013 the commercial activity of the offices in Portugal of Sociedade de
Construções Soares da Costa, SA was inevitably focused on international business.
Nonetheless, as a way of ensuring the future of the company’s business in Portugal, four contracts won
in the domestic market are highlighted as follows:
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REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
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Expansion of the Hotel da Ribeira in Porto for the Pestana Group;
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Lisbon “Pousada” (Inn) in the Praça do Comércio for the Pestana Group;
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Construction of an Industrial Building for Groz Beckert;
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Beja Effluent Treatment Plant for Águas do Alentejo.
In Angola, there was a lower budget execution rate in 2013 for investment in the public sector. The private sector was also subject to significant constraints, with an important number of projects, after tenders being launched and bids made, later being cancelled or suspended by the entities promoting them,
awaiting for better opportunities to make their investments.
In particular, a sharp fall (around 25%) was evident in the market in Luanda and in the building construction segment but also an increase in competition and a consequent fall in construction prices and
margins.
The most significant construction project contracts won during 2013 were as follows:
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BESA Headquarters Building – Phase 2 – structure and special works;
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Rainha Guinga Office and Commercial Project for Hightown Real Estate Investments;
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Industrial premises construction project for SONILS;
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Foundations and structure of Building B of the LUMEJ project for Prominvest;
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Construction of headquarters building for the Empresa Nacional de Electricidade (ENE);
◊
Construction of the Frederico Welwitsch building for commerce, offices and residences in Luanda;
◊
Second Movicel Data Centre Building in Talatona;
◊
Construction of the Huambo Higher Polytechnic Institute for the Universidade Lusíada.
Also worthy of note are the projects won by the subsidiary Clear Angola, which posted a significant increase compared to the previous year in the various works in which it specialises, among which can be
highlighted:
◊
IBS (Intelligent Building Systems) for the Hotel Intercontinental in Luanda;
◊
Hydraulics for the “Lisampere” building in South Luanda;
◊
Electrical engineering for the “Masuika Office Plaza” building in South Luanda;
◊
Air conditioning and hydraulics for the “Kaluanda” building in Luanda;
◊
Hydraulics, air conditioning and electrical engineering for the “Imprensa Nacional” building in Luanda;
◊
New phase of upgrade to hydraulics, air conditioning and electrical engineering for the Presidente
Hotel in Luanda;
◊
Hydraulics, air conditioning and electrical engineering for the “Maianga II” building in Luanda;
◊
Hydraulics, air conditioning and electrical engineering for the “SPINES” in Benguela, Malange and Huambo;
◊
Electrical engineering for the Cultural Centre building in Huambo;
◊
Hydraulics and upgrade of the Trópico Hotel in Luanda;
◊
Hydraulics, air conditioning and electrical engineering for the “Muxima Plaza” building in Luanda.
In Mozambique, with an economy strongly stimulated by external investments in mineral resources
(coal) and natural gas, various business opportunities have arisen, concerning which Soares da Costa
has given due attention and has made great efforts to penetrate these niche opportunities, investing
commercially in putting forward public tender offers or competing by invitation for business, with a view
to expanding activity and increasing turnover in this emerging market.
During 2013, the following important construction projects were won:
25
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
◊
◊
Building of thirty rail bridges in the Nacala Corridor for CDN (a subsidiary of the Companhia Mineira
Brasileira, Vale). The contract, signed in April 2013, was extended to cover another twelve bridges;
The Drilling Campaign Civil Works project for Anadarko in the province of Cabo Delgado; it consists of a
number of rural roads and platforms for the installation of gas drilling equipment. The project permits
the company to have a builders’ yard in Cabo Delgado, from which it is hoped other projects can be run;
◊
Construction / Design of a New Building for the Ministry of Justice, Maputo;
◊
Construction of 50 residential buildings for the HCB in Vila do Songo, Tete;
◊
Construction of Teaching Complex at the UEM - Universidade Eduardo Mondlane (URBE), Maputo;
◊
Upgrade of the Headquarters Building of the Board of Directors of CFM, Maputo.
Improvements in the economic situation in the United States have already had some impact on winning
business contracts by Prince during 2013.
The contracts won during the year, all in Florida and for the Department of Transport (FDOT) as customer,
were the following:
◊
◊
◊
◊
◊
US27 Barry Road to US192 – design-build project in the counties of Polk and Lake, to a value of 22
million USD and completion in 2015;
T7311 US301 – project for roads and bridges in the county of Hillsborough (Tampa area), to a value of
21 million USD and completion in 2015;
T1541 SR544 Scenic Highway – upgrade of a stretch of road in the county of Polk, to a value of 8 million
USD and completion in 2014;
I-75 (North of CR54) Widening E7124 – design-build project in the county of Pasco to a value of 71
million USD and completion in 2016;
T5469 SR50 Dean to Avalon – upgrade of a stretch of road in the counties of Orange and Brevard to a
value of 68 million USD and completion in 2016.
It is important to note however that, in view of the company’s exit from the USA in the third quarter of
2013, this market is not included in the order book of construction projects or in the comparative figures
for the year 2012.
In Brazil, commercial activity was carried out by two departments:
◊
◊
By the branch office, in the search for partnerships in public tenders to take advantage of its technical
qualifications based on technical expertise and knowledge, registered with the CREA in Brazil, as a
company able to take part in national tenders (open to authorised foreign companies in Brazil), with a
number of proposals having already been made in Ceará State;
By the subsidiary company Linha 3 Construções Ltda, mainly aimed at industrial projects for private
customers, various proposals having been made in response to invitations, coming, in particular, from
the commercial efforts of the partner Gutierrez Empreendimentos e Participações, Ltda.
During 2013, only two important additional projects were contracted, one with the construction consortium
Viracopos for the building of Pier B and also the project already mentioned for the construction of 1,890 low
cost subsidised residences in Ceará State, which is awaiting the issue of a service order. The objectives defined in terms of the order backlog for construction projects has not been achieved, despite the large number
and value of proposals put forward.
Somafel and OFM in the railway and maritime segments respectively believe that this market has high potential. There has therefore been an increase in the number of commercial proposals made and some business
activity has already begun, with the hope that this can be extended in the near future to large scale contracts.
26
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Order Book
The order book of the company at the end of 2013 totalled 646.6 million Euros, of which 89.4% relate to
construction works in markets abroad, as shown in the following table:
Order Book
(millions of Euros)
Dec. 2013
%
Dec. 2012
%
Change
Portugal
646,614
100.0%
898,651
100.0%
-28.0%
68,278
10.6%
210,276
23.4%
-67.5%
Mozambique
368,166
56.9%
414,962
46.2%
-11.3%
Costa Rica
128,605
19.9%
119,988
13.4%
7.2%
-
-
42,519
4.7%
-
26,546
4.1%
6,537
0.7%
306.1%
-
-
11,029
1.2%
-
55,019
8.5%
93,340
10.4%
-41.1%
Angola
Brazil
Romania
Other markets
Total
For reasons already explained in this report, Costa Rica, Romania and the USA no longer contributed to
the order book as at the end of the year. Also the Lisbon Oriental Hospital project, which was included in
the order book in 2012, was withdrawn. Excluding the impact of these projects, the fall in the backlog of
orders was lower (-14.6%).
The significant fall in the domestic market, over and above the exclusion from the order book of the
above mentioned project, was basically due to the completion in 2013 of the Transmontana Motorway
project, with market conditions not allowing other projects to make up the shortfall.
3.4 HUMAN RESOURCES
In the Human Resources area, of particular importance was the process of resizing organisational structures mainly those existing in Portugal, a process which was begun at the end of 2011, took place largely
during 2012, and was completed during the first six months of 2013.
This process was carried out in a careful and systematic manner in compliance with current law, and fully
compatible with the company’s principles of social responsibility that permeate the entire organisation
across all of the company’s business activities. Although affecting principally Sociedade de Construções
Soares da Costa, SA, the restructuring of human resources impacted other companies although to a
lesser degree.
Preference was given to transferring staff to international projects whenever possible but the end
result was a very significant reduction in the number of employees.
27
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Personnel Recruitment and Selection
With a view to taking full advantage of existing human resources in the organisation, internal recruitment was
the strategic priority to solve any human resources needs identified during the year 2013.
Internal resources were mobilised mainly for international projects. 135 staff expatriation processes were
worked on.
External recruitment was therefore not materially significant. The Human Resources Department carried out
four external recruitment processes (one in Sociedade de Construções Soares da Costa and three in Clear).
Performance Evaluation
The evaluation of performance is a system that is already integrated into the organisational culture of
the company so that, despite the organisational changes that took place in various areas, the different
phases of the evaluation process were carried out during the year.
Training
A range of training courses were given in 2013, the highlights of which were:
◊
◊
◊
◊
English ◊ At the beginning of 2013, two training courses in English were given and involved sending
a teacher from Portugal to Luanda. The goal was to build communication skills in the language among
the two groups of students, one from Clear Angola, and the other from Soares da Costa – Angola
branch;
Internal Training ◊ This has been a trend in training over the last few years in the organisation, and
is explained not just because of the need to manage limited financial resources but also to take advantage of internal knowledge and experience, since we have staff who are technically qualified and
with developed teaching skills, as well as having important knowledge of the business, which is key for
tailoring the training to employee needs. In 2013, this trend continued, in particular the organisation
of training courses for MS Excel and SAP;
Training in new Legislation/Regulations ◊ Adapting procedures and working practices to developments in legislation is a priority for the organisation. In this area in 2013, training was given concerning the new legal Regime for Goods in Circulation;
Post Graduate course in Soldering and Welding Engineering ◊ In order to prepare Sociedade de
Construções Soares da Costa for compliance with the requirements of CE Marking, an investment was
made in providing specialist training for an employee in welding and soldering through attendance at
a post graduate course.
Internships
Putting into practice the group’s social responsibility policy, Sociedade de Construções Soares da Costa,
SA organised six academic internships during 2013. Five internships were given in the General Technical
Department and one in the Production Department. Through these internships, the students were able
to build their knowledge in a working environment, in a process guided and supervised by highly qualified members of staff.
In its turn, Clear welcomed one academic internee in the Quality, Hygiene, Safety and Environment area.
28
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Number of Employees
In 2013, the number of staff employed by companies consolidated using the integral method was 3,651
(compared to 4,621 a year earlier). It is important to note that this trend includes the impact of changes
that took place in the consolidation perimeter, in particular companies in the USA and the entry of the
Shared Services company. These factors accounted for a net fall of 368 employees (-432 in the USA and
+64 in Shared Services).
The individual company had nine employees (three in the previous year).
In consolidated terms, Personnel Costs amounted to 110.8 million Euros, down 16.5% on the previous
year (132.7 million Euros), of which staff lay off costs were 5.2 million Euros (compared to 10.0 million
Euros in 2012).
ECONOMIC AND FINANCIAL ANALYSIS
4
4.1 INDIVIDUAL ACCOUNTS
In terms of the portfolio of shareholdings, the most relevant transaction was the transfer in the third
quarter of the year of Soares da Costa America, Inc, leaving “Soares da Costa Construção”, to be directly
controlled by Grupo Soares da Costa, SGPS, SA, while Soares da Costa Serviços Partilhados (Shared Services) became wholly owned by the company.
As a holding company, the individual income statement was dominated by the financial results which totalled -42.3 million Euros (compared to -7.9 million Euros in 2012), with the main impacts arising from:
◊
◊
◊
◊
loss on the transfer of the shareholding in Soares da Costa America, Inc amounting to 35.8 million Euros;
the net cost of financing was -9.3 million Euros, a higher cost than that of 2012 (-6.2 million Euros) due
to the increase in debt;
booking of an impairment on financial investments of 0.9 million Euros for Coordenação & Soares da
Costa, SGPS, SA;
recognition of investment income from shareholdings of 3.7 million Euros for dividends (19.0 million
Euros in 2012) from the following companies:
(amounts in thousands of Euros)
Subsidiary
2013
2012
0
9,600
3,168
6,220
-
2,950
490
228
Vortal
36
0
Total
3,694
18,998
Sociedade de Construções Soares da Costa
Clear
Contacto-Sociedade de Construções *
Soares da Costa Moçambique
* Was merged into Sociedade de Construções Soares da Costa SA in 2012
29
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Operating results deteriorated compared to the previous year (-1.4 million Euros compared to -0.4
million Euros) as a result of the increase in Personnel Costs and Third Party Supplies and Services, in this
case and as explained in Note 21 in the notes to the accounts, mainly related to consultancy and specialised work connected with the capitalisation operation.
The loss after taxes for the year amounted to -44.7 million Euros (-8.6 million Euros in 2012).
The main variances in the individual balance sheet as at 31 December 2013 were as follows:
◊
◊
◊
Financial investments fell from 274.4 million Euros to 247.1 million Euros due to the decisive influence of the above mentioned exit of the USA holding company Soares da Costa America, Inc. Note 6 to the
accounts gives details of this movement;
In terms of working capital, there was a fall in group, associate and subsidiary company receivables
which fell from 34.2 million Euros to 3.6 million Euros, while in current liabilities there was an increase
in the equivalent account heading “Third party debts – Group, associated and subsidiary companies”,
which grew from 166.1 million Euros to 224.4 million Euros. The main entity involved in these transactions was the subsidiary Sociedade de Construções Soares da Costa, SA;
Shareholders’ equity as at the end of 2013 fell due to the impact of the net loss for the year of -44.7
million Euros and by the attribution of 63.1 million Euros to the shareholder as part of the share capital reduction transaction described on page 7 of this report.
4.2 CONSOLIDATED ACCOUNTS
Although not legally obliged to publish consolidated accounts, in view of the fact that in 2013 the company was wholly owned by Grupo Soares da Costa, SGPS, SA, which is responsible for their preparation
and publication, the company has nonetheless opted to prepare consolidated accounts because of the
pertinent and highly relevant information that they give in order to understand the progress and performance of the financial situation of the Group, made up of the company and its subsidiaries. It is therefore with reference to these consolidated accounts of Sociedade de Construções Soares da Costa, SGPS,
SA, prepared according to the IAS/IFRS standards adopted by the European Union that we provide the
following information and analysis:
Turnover
The table below shows the breakdown of consolidated turnover by geographical area:
2013
%
2012
%
Change
72,429
14.6%
173,608
24.4%
-58.3%
230,028
46.3%
336,507
47.2%
-31.6%
United States
84,156
16.9%
125,883
17.7%
-33.1%
Mozambique
76,892
15.5%
55,928
7.8%
37.5%
Brazil
10,050
2.0%
10,248
1.4%
-1.9%
Other markets
23,623
4.8%
10,365
1.5%
127.9%
497,178
100.0%
712,539
100.0%
-30.2%
(thousands of Euros)
Portugal
Angola
Total
30
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Consolidated turnover for the year 2013 totalled 497.2 million Euros, a fall of 30.2% compared to the
previous year. The fall was more pronounced in Portugal where turnover was below half that posted in
the previous year against a background of the recessionary environment in the sector already fully described in previous chapters of this report and a situation also linked to the completion of the Transmontana Motorway in 2013. In effect, this project contributed some 89.1 million Euros to turnover in 2012
while the figure in 2013 was only 26.4 million Euros.
Turnover in Angola fell significantly by 31.6%, the main factors, already explained in the Production
chapter, being delays occurring in the start up and/or pace of execution of a number of major projects
(upgrade of the Encostas da Boavista and Sambizanga projects, the Angola LNG residential project in
Soyo and infrastructure and administrative buildings at the Fútila Industrial Centre in Cabinda).
In order to correctly understand the fall in turnover in the United States, it should be remembered that
the subsidiaries in this market were only consolidated into Soares da Costa Construção, SGPS, SA, for the
first nine months of the year after which they were no longer included in the consolidation perimeter.
In Mozambique, the consistent and progressive growth in business activity over the last few years is noteworthy, which in 2013 even surpassed turnover in Portugal.
Brazil maintained turnover at around about 10 million Euros, at about the same level as the previous
year. In other markets of the Group abroad, highlights were Oman (9.7 million Euros), São Tomé &Príncipe (4.0 million Euros), other African countries (3.1 million Euros) and in Venezuela in the railway and
maritime sector (8.3 million Euros).
Results
For a better analysis of the results, there now follows a table of the main accounting lines, suitably aggregated, for the results of the accounting year 2013 with a comparison to the figures of the previous year:
2013
% OGI
2012
% OGI
Change
497,178
99.7%
712,539
101.4%
-30.2%
-5,676
-1.1%
-17,928
-2.6%
-68.3%
7,414
1.5%
8,338
1.2%
-11.1%
498,916
100.0%
702,949
100.0%
-29.0%
Cost of Goods Sold and Materials Consumed
117,485
23.5%
145,849
20.7%
-19.4%
External Supplies and Services
263,746
52.9%
368,296
52.4%
-28.4%
Staff Costs
110,819
22.2%
132,683
18.9%
-16.5%
20,288
4.1%
27,120
3.8%
-25.2%
-13,423
-2.7%
29,001
4.1%
-
46,817
9.4%
36,998
5.3%
26.5%
-60,240
-12.1%
-7,997
-1.1%
-
-1,089
-0.2%
-41,851
-6.0%
-
-61,329
-12.3%
-49,847
-7.1%
-
-1,282
-0.3%
12,812
1.8%
-
Consolidated Profit/ Loss for the period
-62,611
-
-37,036
-5.3%
-
Profit/ Loss attributable to the Group
-63,056
-
-37,763
-5.4%
-
(thousands of Euros)
Turnover
Change in Stocks
Other Operational Income*
Operating Gains and Income (OGI)
Other Operating Costs
EBITDA
Amortisations, Provisions and Adjustments.
(net of reversals)
Operating Profit/ Loss (EBIT)
Financial Charges
Profit/ Loss before Tax
Income Tax
* No reversal of adjustments below this account heading
31
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
There were falls of 30.2% in turnover and of 29.0% in operating gains and income, while the sum of the
account lines cost of goods sold and external supplies and FSE fell less sharply (-25.8%). Also staff costs,
although impacted by staff lay off costs (which amounted to 5.5 million Euros in 2013, compared to 10.0
million Euros in the previous year), fell less than proportionately (-16.5%), indicating some underutilisation
of this factor of production rather than its inflexibility, by increasing its weight as a percentage of operating
gains from 18.9% to 22.2%.
In effect, in general terms and given the size and structure of the Group, it can be seen that the level
of business activity was below the limit needed to yield adequate profitability. Together with a number
of circumstances that occurred in specific countries and already mentioned above, it is also important
to point out the constraints that existed financially during the year and which obviously had a negative
impact on the effectiveness of operational and commercial activity.
Impairment losses, namely in relation to third party debts resulting from deteriorating credit collection
conditions and an increase in litigation, as well as the set up of provisions reflecting a more conservative posture, also significantly impacted financial performance by increasing Amortisations, Provisions
and Adjustments (net of reversals) to an amount (46.8 million Euros), well in excess of the figure for the
previous year (37.0 million Euros) and making up a greater percentage of operating gains (9.4% in 2013
compared to 5.3% % in 2012).
The operating loss was thus 60.2 million Euros (a loss of 8.0 million Euros in 2012).
It is important to point out that the performance of Sociedade de Construções Soares da Costa, SA
weighs heavily on the consolidated figures. This company continues to have the most important impact
on the Group and posted an operating loss of -62.5 million Euros in its individual financial statements.
In turn, the consolidated financial result improved substantially from -41.8 million Euros in 2012 to -1.1
million Euros in 2013.
Specific reference should be made in this context of factors that had a decisive impact on the result for
2013 and which were of an exceptional nature. Thus, the process of restructuring the financial debt led
to financial gains and income of 59.0 million Euros. In turn and in the opposite direction, the transfer of
Soares da Costa America Inc resulted in capital losses, shown in the income statement in “Other financial
losses”, totalling 18.7 million Euros.
Exchange rate differences had a negative impact on financial results of -2.0 million Euros (-1.4 million
Euros in 2012).
The combination of these operational and financial components, together with income tax, generated a
consolidated loss for the period of -62.6 million Euros, of which a loss of -63.1 million was attributable to
the Group (-37.8 million Euros in 2012) and the remainder to minority interests.
Balance Sheet: Assets
Changes in the consolidation perimeter had a relevant impact on the consolidated balance sheet, the
highlight being the exit of companies operating in the USA and of Carta Angola, while on the other hand
Soares da Costa Serviços Partilhados (Shared Services) became part of the perimeter.
Over and above these facts, a general fall in balance sheet values occurred as a consequence of the reduction in business activity.
The exit of companies in the USA is responsible for the movement in the balance sheet account headings
goodwill and deferred tax assets. These contributed 11.7 million Euros to tangible fixed assets in 2012,
which at the end of 2013 no longer existed.
32
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
In terms of current assets, there was a general fall in inventories, receivables, other current assets and
also in “cash and cash equivalents”, mainly reflecting similar falls that occurred in the main subsidiary
company Sociedade de Construções Soares da Costa, SA.
A special note should be made of “Other third party debts” which fell substantially from 98.1 million
Euros to 19.3 million Euros, in respect of debts settled by companies of the Soares da Costa Group but
outside the consolidation perimeter of Soares da Costa Construção.
Shareholders’ Equity
Shareholders’ equity as at 31 December 2013 totalled 11.4 million Euros compared to 139.7 million at
the end of 2012. It was affected by the negative results for the year as well as by the operation to reduce
share capital which is referred to in another section of this report (See the chapter “Share capital and
Shareholders”). It is important to point out that the share capital increase through a cash injection of 70
million Euros by the new investor GAM Holdings took place in 2014 and was not yet reflected in the 2013
balance sheet.
Liabilities
There was also a substantial overall fall in liabilities (-117.8 million Euros), more in noncurrent liabilities
(-85.1 million Euros) than in current liabilities (-32.7 million Euros).
The framework agreement to restructure bank borrowings had an important influence on the level of
bank loans shown in the balance sheet.
In contrast to the general tendency for falls in the various account headings, the increase in provisions
from 0.8 million Euros to 9.1 million Euros should be noted, which is the result of an increase in provisions made during the year to cover general operational risks (guarantees and other contractual responsibilities).
Consolidated net debt at the end of 2013 amounted to 330.7 million Euros (342.2 million Euros as at
31.12.2012).
Individual Performance of Subsidiaries
In order to complement the analysis above, a summary of the key indicators for the consolidated companies is given below, which covers turnover, EBITDA, EBIT, financial results and net results, and breaks
down the consolidated results by subsidiary.
33
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Turnover
EBITDA
EBIT
Financial
results
Net earnings
346.530.139
-21.502.491
-62.501.402
32.147.089
-31.890.614
218.445
-606.514
-606.514
-2.659.313
-1.619.906
84.155.002
1.935.564
177.540
-154.586
22.953
0
-216.382
-216.382
-503.230
-719.613
19.465
-329.739
-330.964
-6.604
-337.568
0
-5.265
-5.265
0
-5.265
-237.829
0
0
0
0
84.155.083
777.664
-981.585
-3.323.734
-2.659.399
9.088.060
-1.279.231
-2.712.949
-46.928
-2.649.486
CLEAR ANGOLA, Lda.
35.207.418
8.720.021
7.893.542
-2.104.469
5.789.073
Consolidation eliminations Clear/Clear Angola
-2.869.513
3.842
3.842
0
-335.099
Clear + Clear Angola
41.425.965
7.444.632
5.184.435
-2.151.397
2.804.488
Soares da Costa Moçambique, SARL
25.595.893
1.661.279
1.269.121
-258.320
530.848
OFM - Obras Públicas, Ferrov. e Marítimas, S.A.
9.888.821
472.472
97.535
-176.367
-113.399
Linha 3 Construções LTDA.
9.257.851
161.443
155.109
-6.498
102.444
Soares da Costa S. T. Principe Construções, Lda.
3.596.732
239.871
139.575
-129.098
10.477
SOMAFEL – Eng. e Obras Ferroviárias, S.A., SA
2.797.451
-1.041.821
-2.068.675
-150.064
-1.910.045
Carta - Restauração e Serviços, Lda. (c)
1.794.147
22.762
-83.854
-20.978
-104.831
Soares da Costa Serviços Partilhados, S.A. (d)
1.002.285
416.696
282.578
4.426
169.978
SDC Construção SGPS, SA
732.494
-1.435.496
-1.435.637
-42.280.820
-44.675.717
Soares da Costa Brasil - Construções Ltda.
594.663
-373.828
-375.424
48.635
-326.789
Somafel - Obras Ferroviárias e Marítimas Ltda.
455.523
5.257
-67.333
-50.295
-76.091
Terceira Onda Planej. e Desenvolvimento Ltda.
39.160
113.439
113.439
-37.061
59.344
0
-384.938
-416.256
907.175
290.101
-30.687.952
153
448.502
14.388.459
14.733.484
Subsidiary
(Euros)
Soc. Construções Soares da Costa, SA (a)
Soares da Costa América, Inc.
Prince Contracting, LLC
Soares da Costa Construction Services, LLC
Soares da Costa Contractor, INC
Porto Construction Group, LLC
Consolidation eliminations USA
United States (b)
CLEAR - Instalações Electromecânicas, S.A.
Other subsidiaries
Consolidation eliminations
Overall Total Construction
(a) Includes the group’s shareholding in ACEs
(b) Disposed of (figures for 9 months of activity)
(c) Disposed of (figures for 4 months of activity)
(d) Acquired (figures for 2 months of activity)
34
◊
497.178.255 -13.422.906 -60.239.873
-1.088.848 -63.055,720
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
RISK MANAGEMENT
5
Soares da Costa Construção, SGPS, SA, as the company responsible for the management and development of the construction business, carries out its business activity managing the shareholdings in the
various companies, executing civil construction, engineering and infrastructure projects.
The companies, which make up the shareholdings of Soares da Costa Construção, SGPS, SA, as shown in
the various documents of this Report and Accounts, carry out their business in various countries. In this
context, the companies are obviously exposed to a range of risks.
From an organisational standpoint, a risk management and analysis department, providing skills and
competence across the Group, operates as part of the Group’s corporate centre. Its goal is to ensure the
efficiency and effectiveness of the Group’s operations, protect its assets, the reliability of financial information and ensure compliance with standards and laws.
Risk analysis is carried out by various Group corporate departments. Work is done on the prior identification
and prioritisation of risks classified as being the most critical (determined by a combination of the probability of
occurrence and potential impact and shown on a risk matrix), and Risk Management strategies are defined with
a view to implementing control procedures that reduce risks to an acceptable level. In this respect, the Group
has implemented control activities that help mitigate the risks. The goal is to maximise the trade off between
risks and business margins in order to achieve the strategic objectives of the Group in a sustained manner.
The matrix is built up from the general guidelines of the strategic plan currently in force, the goals that
have been set, the kind of business activity carried out and the countries that are the preferred locations for doing business under stable conditions. Then, following these overall guidelines, a number of
parameters are defined that guide the strategic objectives of risk taking and determine the monitoring
needed to check that the risks effectively taken conform to those objectives.
In order to appreciate and later monitor the situation through its internal organisation, the different
management areas of the Group (Business Development, Financial Department, Management Control,
Human Resources, Legal Services, etc.) identify and evaluate the risks that their decisions, which they
take in their various specialist areas of competence and intervention, involve and suggest measures to
anticipate and minimise them. Based on this analysis, and monitored critically by the central risk management department, decisions are taken concerning the business, country or project under consideration, namely as to whether to accept and sign a contract and the relevant contractual conditions.
The risk analysis and management system is an interactive process that covers all phases of a project from initial data and information gathering at the times of sales prospecting through to the post
mortem phase, when all the responsibilities related to the project have ceased to exist. Some broader
key decision making milestones are of course set, both to evaluate the potential risks and how the
manner of dealing with them is compatible with the strategic profile defined, and to check if the control
mechanisms and procedures are being observed and if they are satisfactory. To manage them satisfactorily, detailed information procedures are set up with content that is appropriate for each phase, which
will permit timely follow up of the various changes, and prompt action when problems arise. The entire
process is open to suggestions for revision and improvement that any organisation puts forward and is
subject to periodic reflection and evaluation both by support services and operational areas.
At the same time, internal audits are carried out from time to time on the main operational activities of
the various companies of the Group by the Internal Audit Department, a unit that is part of the Group’s
corporate centre, the goal of which is to improve the efficiency of internal controls and related business
processes. Thus, the intention is to monitor risks in each of the operations, implement appropriate
means to mitigate the risks detected and follow up on the manner in which they develop.
35
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
OUTLOOK FOR 2014
6
In view of the situation in the construction sector in Portugal, it is not expected that the still fragile signs
of recovery in the economy will result in a recovery in activity levels in 2014. Indeed, with the completion
in 2013 of the Transmontana motorway, it is likely that activity in Portugal will fall further in 2014.
On the other hand, a significant recovery and increase in business is expected in Angola in 2014, while in
Mozambique the good market conditions of 2013 are forecast to continue.
With conditions already created at the start of 2014 to strengthen the financial capacity of the company,
which are essential to resolve the major constraints on carrying out business that have weighed heavily
recently on the performance of the company, the management team is convinced that a substantial and
important recovery in EBITDA margin can be achieved.
RELEVANT FACTS OCCURING AFTER THE YEAR END
7
On the 12nd of February 2014, a transaction took place to increase share capital via a cash injection of
seventy million Euros, subscribed and fully paid up by GAM Holdings, a company incorporated in Luxemburg and controlled by Mr António Mosquito, as a result of which it held 66.7% of the share capital of the
Company with Grupo Soares da Costa, SGPS, SA owning the remaining 33.3%.
On the same date, it was decided to change the composition of the board of directors under the terms
already referred to in this report.
OTHER LEGAL INFORMATION
8
Debts to the State and the Social Security
As of the date of the balance sheet, the company had no debts outstanding payable to the Portuguese
state either for taxes or for Social Security contributions.
Business with the company
During the year, no business dealings worthy of note between the company and its Board Directors were
recorded.
36
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
ACKNOWLEDGEMENTS
9
To end this report on the business activity carried out during 2013, the board of directors takes this opportunity of thanking all public and private entities, which directly and indirectly have supported and worked
with the Company. It is pleasing to note, given the difficult situation, the confidence and trust that has
been placed in us by customers, suppliers and other business partners, in particular financial institutions.
We also offer our thanks to members of other corporate bodies of the company, as well as the auditors,
for the exemplary and rigorous manner in which they have carried out their duties.
Finally, fully worthy of recognition are the spirit of professionalism and sense of duty of our employees,
upon whose efforts and dedication the company has and will continue to depend to overcome the demanding challenges that the Company has faced, and to follow the essential road towards creating value.
PROPOSAL FOR APPLICATION OF RESULTS
10
The board of directors of Soares da Costa Construção, SGPS, SA, taking into account the attached financial statements for the year ended 31 December 2013, propose to the shareholders in accordance with
paragraph f) of article 66 of the Commercial Companies Code, that the residual part of the net individual
loss of the company totalling 44,675,717.12 Euros for the year, amounting to 5,691,785.77 Euros (given
that the amount of 38,983,932.35 Euros for the loss for the nine months to 30 September 2013 was absorbed by a reduction in share capital decided upon on the 28th of November 2013), be transferred to
retained earnings.
Porto, 22 April 2014
The board of directors,
António Mosquito, António Sarmento Gomes Mota, António Manuel Pereira Caldas de Castro Henriques,
Jorge Domingues Grade Mendes, Miguel Nuno André Raposo Alves, Paulo Manuel da Conceição Marques,
Roberto António Pereira Pisoeiro
37
◊
INDIVIDUAL
FINANCIAL STATEMENTS
B
International Bank of São Tomé & Príncipe São Tomé & Príncipe
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Individual Financial Position Statement in December 31, 2013 and December 31, 2012
(Euros)
ASSETS
Notes
31.12.2013
31.12.2012
5
827
240
827
240
6,7 and 17
213,640,713
212,798,628
6 and 17
6,346,754
34,346,697
6 and 7
24,097,414
24,191,790
6
29,187
29,187
6 and 7
3,014,825
3,014,810
247,128,894
274,381,112
247,129,721
274,381,352
8 and 9
903,303
76,760
9
22
0
Group, associated and participated companies
8 and 9
3,617,197
34,233,068
Other accounts receivable
8 and 9
9,761,425
969,575
14,281,948
35,279,403
Fixed tangible assets:
Administrative equipment
Financial investments:
Capital participations in subsidiaries
Loans granted to subsidiaries
Capital participations in associated companies
Loans granted to associated companies
Other financial investments
Total non current assets
CURRENT
Accounts receivable:
Customers
State and other public entities
Other current assets
10
2,229
496
Cash and equivalents
11
5,886
51,496
14,290,064
35,331,395
261,419,784
309,712,747
Total current assets
Total assets
39
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Individual Financial Position Statement in December 31, 2013 and December 31, 2012
(Euros)
SHAREHOLDERS' EQUITY AND LIABILITIES
Notes
31.12.2013
31.12.2012
12
20,335,895
131,080,340
Issue premiums
12,926,618
12,926,618
Legal reserves
2,729,271
2,729,271
Other reserves
3,936,111
-
-
3,840,132
Net earnings
(5,691,785)
(8,600,644)
Total shareholders' equity
34,236,111
141,975,718
1,563
75,925
1,563
75,925
948,706
90,113
15
115,614
30,967
Group, associated and participated companies
8 and 15
224,450,125
166,132,164
Other accounts payable
8 and 15
1,439,680
1,374,835
226,954,126
167,628,079
227,985
33,026
Total current liabilities
227,183,673
167,737,030
Total liabilities
227,183,673
167,737,030
Total shareholders' equity and liabilities
261,419,784
309,712,747
Capital
Retained earnings
LIABILITIES
CURRENT
Loans:
Bank loans
14
Accounts payable:
Suppliers
State and other public entities
Other current assets
40
◊
16
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Separate Individual Income Statement in for the Period Ending in December 31, 2013 and December 31, 2012
(Euros)
INCOME STATEMENT
Turnover
Notes
2013
2012
18
732,494
228,000
19
5,280
149,639
737,774
377,639
Other operational income and gains
Other operational income and gains
Operational income and gains
External supplies and services
21
(1,013,014)
(130,462)
Staff costs
20
(1,004,638)
(536,954)
5
(141)
(80)
(20,417)
(14,305)
(135,200)
(67,081)
Operational costs and losses
(2,173,411)
(748,882)
Operational result from the continued activities
(1,435,637)
(371,243)
Depreciation, amortisation and impairment lossses
Other operational costs and losses:
Taxes
Other costs and losses
19
Net financing cost:
Interest received
22
1,265,880
7,762,004
Interest paid
22
(10,533,118)
(13,998,795)
(9,267,238)
(6,236,790)
Other financial gains and costs:
Other financial gains
22
1,129,389
658,574
Income from capital participations
22
3,693,828
18,998,413
Other financial costs
22
(37,836,799)
(21,265,021)
(33,013,582)
(1,608,034)
(42,280,820)
(7,844,824)
(43,716,457)
(8,216,068)
(959,260)
(384,577)
(44,675,717)
(8,600,644)
Basic
(1,704)
(0,328)
Diluted
(1,704)
(0,328)
Basic
-
-
Diluted
-
-
Financial results
22
Earnings before taxes
Income tax
23
Net earnings
Earnings per share of the continued activities:
24
Earnings per share:
41
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Statement of Individual Comprehensive Income for the Period Ending in December 31, 2013
and December 31, 2012
(Euros)
Notes
31.12.2013
31.12.2012
(44,675,717)
(8,600,644)
Exchange difference stemming from transposition of financial statements
expressed in foreign currencies
-
-
Change on fair value of derivatives
-
-
Change on deferred taxes of derivatives
-
-
Other variations
-
-
(44,675,717)
(8,600,644)
Net earnings
Other comprehensive income
Total comprehensive income for the period
Statement of Changes in Equity for the Period Ending in December 31, 2013 and December 31, 2012
(Euros)
Notes
Equity capital
Legal
reserves
Retained
earnings
Other
reserves
12
131,080,340
2,729,271
3,840,132
-
12,926,618
(8,600,644)
141,975,718
-
-
(8,600,644)
-
-
8,600,644
-
Reduction of share capital
(67,000,000)
-
-
3,936,111
-
-
(63,063,889)
Reduction of share capital to cover losses
(43,744,445)
-
4,760,512
-
-
38,983,932
-
-
-
-
-
-
(44,675,717)
(44,675,717)
20,335,895 2,729,271
-
3,936,111
12,926,618
(5,691,785)
34,236,111
Equity capital
Legal
reserves
Retained
earnings
Other
reserves
Issue
Net earnings
premiums
Total equity
131,080,340
2,522,794
3,217,065
-
12,926,618
4,129,545
153,876,362
Appropriation of net earnings
-
206,477
623,067
-
-
(4,129,545)
(3,300,000)
Integrated earnings
-
-
-
-
-
(8,600,644)
(8,600,644)
131,080,340 2,729,271
3,840,132
-
12,926,618
(8,600,644)
141,975,718
Account balance as of 1.1.2013
Appropriation of net earnings
Integrated earnings
Account balance as of 31.12.2013
Account balance as of 1.1.2012
Account balance as of 31.12.2013
42
◊
Issue
Net earnings
premiums
Total equity
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Individual Cash Flow Statement for the Period Ending in December 31, 2013 and December 31, 2012
(Euros)
2013
2012
287,090
381,280
Payments to suppliers
(177,279)
(106,816)
Payments to staff
(552,573)
(421,808)
(442,762)
(147,345)
237,782
1,814,613
(14,801,730)
(5,110,470)
(14,563,948)
(3,295,857)
Operating activities:
Receipts from customers
Payments/ receipts of income tax
Other payments/ receipts related with oper.activities
Cash flow from investment activities
(15,006,710)
(3,443,201)
Investment activities:
Receipts from:
Loans granted to Group companies
194,281,942
21,043,959
0 194,281,942
Dividends
18,770,000
39,813,959
Payments related with
Loans granted to Group companies
90,108,480
127,766,978
Fixed tangible assets
-
-
Intangible assets
0
Cash flow from investment activities
90,108,480
0
104,173,462
127,766,978
(87,953,018)
Financing activities:
Receipts from:
Loans
390,024,635
Interest received
207,760,659
313,744 390,338,379
12,584
207,773,243
Payments related with:
Loans
Dividends
110,917,091
0
3,300,000
2,372,700 479,550,841
Interest paid
Cash flow from financing activities
Change in cash and cash equivalents
Effect of foreign exchange differences
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
43
477,178,141
◊
2,114,690
116,331,781
(89,212,462)
91,441,462
(45,710)
45,242
101
99
51,495
6,155
5,886
51,496
INDIVIDUAL ACCOUNTING
POLICIES AND EXPLANATORY
NOTES
C
Maputo Administrative Court Mozambique
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Individual Accounting Policies and Explanatory Notes as at 31 December 2013
1. INTRODUCTORY NOTE
Identification information:
◊
Company Name: Soares da Costa Construção, SGPS, SA;
◊
Registered at the Porto Conservatory Office with the tax number: 505 906 490
◊
Head Office: Rua de Santos Pousada, 220 – 4000 - 478 PORTO
◊
Corporate Object: Management of shareholdings in other companies as an indirect manner of carrying out business activities
◊
Name of holding company: Grupo Soares da Costa, SGPS, SA.
◊
Head Office of holding company: Rua de Santos Pousada, 220 – 4000 – 478 Porto
On the 12th of February 2014, the company became owned 66.7% by GAM Holding and 33.3% by Grupo
Soares da Costa, SGPS, SA, as explained in note 27.
The figures referred to in the notes are shown in Euros.
2. ACCOUNTING STANDARDS USED IN THE PREPARATION OF THE FINANCIAL STATEMENTS
The company is part of a consolidation group whose parent company, Grupo Soares da Costa, SGPS, SA,
has prepared consolidated accounts since 2004 in accordance with the International Financial Reporting
Standards (IAS/IFRS) as adopted by the European Union.
Therefore, under the provisions of section 1 of article 4 of decree law 158/2009 of the 13th of July, it has
opted to prepare its individual financial statements in accordance with these international standards.
3. MAIN ACCOUNTING POLICIES
The main accounting policies used in the preparation of the financial statements were as follows:
3.1 PRESENTATION BASIS
The financial statements have been prepared on a going concern basis from the books of account and
accounting records of the company, which are in compliance with the International Financial Reporting
Standards as adopted by the European Union.
To prepare the annexed financial statements, estimates were used which affect the figures reported for
assets and liabilities, as well as those for income and expenses reported during the accounting period. All
estimates and assumptions made by the board of directors were based on the best information available
about the ongoing events and transactions at the date the financial statements were approved.
The company’s board of directors believes that the attached financial statements and notes give a true
and fair view of the financial information.
3.2 TANGIBLE FIXED ASSETS
Tangible fixed assets have been booked at acquisition cost or at a revalued acquisition cost after deduction of accumulated depreciation and impairment losses.
Depreciation is calculated using the straight line method and on a monthly basis, in accordance with the
following estimated service life:
45
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
SERVICE LIFE
Buildings
8-100
Administrative equipment
Other tangible assets
4-8
3-10
Tangible fixed assets in progress at registered at acquisition or production cost, less any possible impairment losses.
Capital gains or losses resulting from the sale or disposal of tangible fixed assets are calculated by
taking the difference between the sales price and the net accounting value at the time of the sale/disposal, and are booked in the Income Statement as “other income and gains” or “other costs and losses”.
3.3 FINANCIAL ASSETS AND LIABILITIES
a) Financial Investments
Financial investments are recognized on the date when the risks and rewards inherent to them are
substantially transferred. They are initially registered at acquisition cost, which is the fair value of the
consideration paid for them, including transaction costs.
An evaluation of any investment is made when there are signs that the value of the asset might be
subject to impairment losses. Any impairment losses found are registered as costs in the profit and loss
statement.
Financial investments are classified as investments held until maturity and investments evaluated at
fair value through results.
Following the initial booking, investments stated at fair value through results are reevaluated at their
fair value, without deducting any transaction expenses that might have been incurred on the sale.
Investments in equity instruments not listed in regulated financial markets, and for which fair value
cannot be reliably estimated, are accounted for at acquisition cost from which are deducted possible
impairment losses.
Financial investments in both group and associated companies are registered at acquisition cost less
impairment losses, if applicable.
b) Accounts receivable
Accounts receivable are registered at their nominal value minus any impairment losses, recognised
under “Impairment losses” in accounts receivable, so that they reflect the realisable net value.
c) Loans
Loans are registered as liabilities at their depreciated cost value (using the effective interest rate
method). The costs associated with the issue of such loans are recorded as a deduction from debt and
recognized over the life of the loan, in accordance with the effective interest rate method.
Financial costs of interest and similar costs (namely stamp duty), are registered in the Income Statement in accordance with the accrual principle, with any amounts due and not paid at the date of the
Balance Sheet being classified under “Other current liabilities”.
d) Accounts Payable
Accounts payable are registered at their nominal value. Usually interest is not payable on these accounts
payable.
46
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
e) Cash and cash equivalents
The amounts included under “Cash and equivalents” correspond to cash, bank deposits and term deposits and other short term treasury applications.
3.4 FINANCIAL CHARGES ON BORROWINGS
Financial charges connected with borrowings are generally recognised as an expense in accordance with
the accrual principle.
3.5 INCOME TAX
Current income tax is calculated based on taxable profits in accordance with existing taxation rules.
Deferred taxes refer to temporary differences between the values of assets and liabilities for accounting reporting purposes and those for tax purposes.
Deferred tax assets and liabilities are calculated and annually assessed using the tax rates expected to
be in force on the date temporary differences are reversed.
Deferred taxes assets are registered when there are reasonable prospects of sufficient taxable income being available for them to be used. At the date of each balance sheet, the temporary differences
underlying assets for deferred taxes are re-assessed in order to recognise assets for deferred taxes not
previously registered because they failed to meet the conditions for registration and/ or to reduce their
amount according to current expectations of future recovery.
Deferred taxes are registered as an expense or income of the period, except if they came from amounts
registered directly in equity, in which case deferred tax is also registered under the same accounting
heading.
3.6 BALANCE SHEET PRESENTATION
Assets realisable and liabilities due in over one year from the date of the balance sheet are shown respectively as noncurrent assets and liabilities.
3.7 RECOGNITION OF INCOME AND EXPENSES
Financial income from delayed payment by custo¬mers is accounted for when significant evidence exists
that it can be collected.
Dividends are accounted for as income in the financial year that they are attributed.
The company accounts for its income and expenses on an accrual basis: income and expenses are recognised when generated, regardless of the time when they are received or paid. The differences between
the amounts received and paid and the corresponding income and expenses generated are registered
under “Other current assets” or “Other current liabilities”, depending on the nature of the difference.
3.8 BALANCES AND TRANSACTIONS IN FOREIGN CURRENCY
Foreign currency transactions (non-Euro) are regis¬tered at the exchange rates in force at the time of
each transaction.
On each balance sheet date, monetary assets and liabilities expressed in foreign currency are converted
to Euros using the rates in force at that time.
Exchange differences, both favourable and unfavourable, due to discrepancies between the exchange
rates in force at the time of the transaction and those in force when payments were made or received,
or as at the date of the balance sheet, are registered as “Other financial gains and losses” in the Income
Statement for the year.
The rates used for conversion into Euros included in the Balance Sheet were as follows:
47
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Average foreign exchange rate:
31.12.13
31.12.12
US Dollar
EUR/USD
1.3791
1.3194
British Pound
EUR/GBP
0.8337
0.8161
S. Tomé & Príncipe Dobra
EUR/STD
24,500,00
24,500,00
Angolan Kwanza
EUR/AOA
134.51
126.37
3.9 ASSET IMPAIRMENT
An assessment of impairment is made at the date of each balance sheet, and whenever an event or change in circumstances indicates that the amount registered for the asset may not be recovered.
Whenever the asset value registered is higher than its recove¬rable value, an impairment loss is recognised, which is registered in the Profit and Loss Statement.
Reversal of impairment losses recognised in pre¬vious years is recorded when there are indications that
the recognised impairment losses no longer exist or are smaller. The reversal of impairment losses is
stated in the Profit and Loss Statement as operating income.
3.10 CONTINGENT ASSETS AND LIABILITIES
Contingent liabilities are not recognised in the Finan¬cial Statements, but are disclosed in the Explanatory
Notes to the accounts, unless the possibility of an outflow of resources is remote.
Contingent assets are not recognised in the Financial Statements, but are disclosed in the Explanatory
Notes to the accounts, when the possibility of a future economic inflow exists.
3.11 SUBSEQUENT EVENTS
Events occurring after the balance sheet date, which provide additional information about conditions
existing at that date, are reflected in the financial statements. Events subsequent to the reporting date
which provide information on conditions occur¬ring after that date, if material, are disclosed in the
Financial Statements.
3.12 INFORMATION BY SEGMENTS
For each accounting period, the geographical areas applicable to the company are identified. Detailed
information is shown in Note 18.
3.13 RISK MANAGEMENT
In carrying out its business, the company is exposed to a variety of risks: market risk (including exchange
rate and interest rate risk as well as price risk), credit risk and liquidity risk. The global risk management
program focuses on the unpredictability of the financial markets and seeks to minimize its adverse
effects on the company’s financial performance.
Exposure to credit risk results from accounts receivables related to normal commercial activity, the maximum exposure to credit risk being the nominal value of these receivables
4. RELATED PARTIES
The terms and conditions used for transactions between group and associated companies are substantially the same as those normally contracted between independent entities in comparable operations.
48
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
The balances and transactions between group and associate companies are shown in the tables below:
Others
debtords and
creditors
Borrowings
from
Group and
associated
companies
Special
regime for
corporate
taxation and
dividends
receivable
-
2,478,443
93,048
3,168,150
-
-
(94,556)
301,318
-
-
-
-
(810,708)
-
-
Grupo Soares da Costa SGPS
833,193
-
741
(222,994)
-
360,518
Soares da Costa América, Inc
-
77,285
-
-
-
-
Soares da Costa Serviços Partilhados, SA
-
-
22,140
235,130
581,556
-
Soares da Costa Construc.Centro Americanas,SA
-
-
-
718,461
-
-
Soares da Costa Moçambique, SARL
-
11,244
-
191,972
-
-
Soares da Costa S. Tomé e Principe - Construções, Lda
-
-
31,022
-
-
Soc. Construções Soares da Costa, SA
-
-
1,154
6,139,451
223,775,522
-
70,110
-
-
-
-
-
903,303
88,529
24,034
8,666,220
224,751,443
3,528,668
Customers
- current
account
Loans to
Group and
associated
companies
Suppliers
CLEAR - Instalações Electromecânicas, SA
-
-
CLEAR ANGOLA, SA
-
Carta, Lda
Account balances as of 31.12.2013
SOMAFEL - Engenharia e Obras Ferroviárias, SA, SA
TOTAL
External supplies
and services
Sales and
services
Other operational
gains and losses
Net financing
cost
Other financial
gains and losses
Carta - Restauração e Serviços, Lda
-
-
-
(10,107)
-
CLEAR - Instalações Electromecânicas, SA
-
-
-
147,366
-
Coordenação & Soares da Costa, SGPS Lda
-
-
-
(4,030)
-
26,732
504,494
(32,641)
1,495,847
102,310
-
-
-
(372,307)
(35,662,327)
33,024
-
-
6,715
-
-
-
-
(61,388)
Transactions in 2013
Grupo Soares da Costa SGPS
SDC América, Inc.
Soares da Costa Serviços Partilhados, SA
Soares da Costa Brasil - Construções Ltda.
Soares da Costa Construc.Centro Americanas,SA
-
-
-
4,265
(4,798)
Soares da Costa Moçambique, SARL
-
-
-
-
18,180
845
-
-
8,002,060
(58,046)
-
228,000
-
-
-
60,601
732,494
(32,641)
9,269,808
(35,666,070)
Soc. Construções Soares da Costa, SA
Somafel, SA
TOTAL
49
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Suppliers
Others
debtords and
creditors
Borrowings
from Group
and associated
companies
Special regime
for corporate
taxation and
dividends
receivable
-
-
-
(8,862,229)
-
-
18,579
-
-
-
-
-
-
-
-
(345,073)
-
Grupo Soares da Costa SGPS
30,000
27,496,420
-
(537,414)
-
1,590,201
Soares da Costa América, Inc
-
5,018,095
-
867,546
-
-
SDC Emirates Construction, L.L.C.
-
-
-
101,624
-
-
Soares da Costa Serviços Partilhados, SA
-
-
24,121
(40,937)
-
-
Soares da Costa Brasil - Construções Ltda.
-
25,000
-
(57,589)
-
-
Soares da Costa Construc.Centro Americanas,SA
-
73,021
-
-
-
-
Soares da Costa Moçambique, SARL
-
11,753
-
-
-
-
Soc. Construções Soares da Costa, SA
-
-
40,394
(738,635) (156,924,861)
-
SOMAFEL - Engenharia e Obras Ferroviárias, SA, SA
46,760
-
-
TOTAL
76,760
32,642,867
64,515
Customers
- current
account
Loans to
Group and
associated
companies
CLEAR - Instalações Electromecânicas, SA
-
Construções Metálicas SOCOMETAL, SA
Coordenação & Soares da Costa, SGPS Lda
Account balances as of 31.12.2012
-
-
-
(405,405) (166,132,164)
1,590,201
External supplies
and services
Sales and
services
Other operational
gains and losses
Net financing
cost
Other financial
gains and losses
Carta - Restauração e Serviços, Lda
-
-
-
9,182
-
CLEAR - Instalações Electromecânicas, SA
-
-
-
(454,495)
6,220,000
Construções Metálicas SOCOMETAL, SA
-
-
-
(202,706)
-
Coordenação & Soares da Costa, SGPS Lda
-
-
-
(13,666)
-
Grupo Soares da Costa SGPS
-
-
-
1,940,386
-
4,666
-
-
-
-
-
-
-
479,338
-
39,480
-
-
-
-
Soares da Costa Construc.Centro Americanas,SA
-
-
-
45,564
41
Soares da Costa Moçambique, SARL
-
-
-
-
228,413
1,930
-
-
(8,016,910)
12,550,000
-
228,000
-
-
-
46,076
228,000
-
(6,213,306)
18,998,453
Transactions in 2012
HABITOP - Sociedade Imobiliária, SA
SDC América, Inc.
Soares da Costa Serviços Partilhados, SA
Soc. Construções Soares da Costa, SA
Somafel, SA
TOTAL
50
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
5. TANGIBLE ASSETS
a) Gross Assets
Movements in the gross value of tangible fixed assets during the years ended 31 December 2013 and
2012 were as follows:
Fixed tangible assets in 2013
Opening
balance
Change in
perimeter
Increases
Sales
Foreign
exchange effect
Tranfers and
write-offs
Closing
balance
641
-
727
-
-
-
1,368
641
-
727
-
-
-
1,368
Opening
balance
Change in
perimeter
Increases
Sales
Foreign
exchange effect
Tranfers and
write-offs
Closing
balance
641
-
-
-
-
-
641
641
-
-
-
-
-
641
Administrative equipment
Fixed tangible assets in 2012
Administrative equipment
b) Cumulative Depreciation
Movements in cumulative depreciation of tangible fixed assets during the years ending 31 December
2013 and 2012 were as follows:
Fixed tangible assets in 2013
Opening balance
Revaluations
Reinforcement
Cancellation / Reversal
Closing balance
401
-
141
-
542
401
-
141
-
542
Opening balance
Reinforcement
Cancellation / Reversal
Closing balance
321
80
-
401
321
80
-
401
Administrative equipment
Fixed tangible assets in 2012
Administrative equipment
6. FINANCIAL INVESTMENTS
The movements that occurred in the value of financial investments during the years ending 31 December
2013 and 2012 were as follows:
Opening
balance
Value
adjustments
reversals
Value
adjustments
increases
Increases
212,798,628
430,825
(250,001)
1,450,987
(789,725)
-
213,640,713
Loans granted to subsidiaries
34,346,697
19,795,175
(200,000)
5,436,771
(53,031,888)
-
6,346,754
Capital participations in associated companies
24,191,790
-
-
-
-
(94,376)
24,097,414
29,187
-
-
-
-
-
29,187
3,014,810
-
-
15
-
-
3,014,825
-
-
-
-
-
-
-
274,381,112
20,226,000
(450,001)
6,887,773
(53,821,614)
(94,376)
247,128,894
Financial investments in 2013
Capital participations in subsidiaries
Loans granted to associated companies
Other financial investments
Financial investments in progress
TOTAL
51
◊
Tranfers
Sales and writeoffs
Closing
balance
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Opening
balance
Value
adjustments
reversals
Value
adjustments
increases
Increases
217,950,021
-
(430,825)
57,589
(4,778,158)
-
212,798,628
Loans granted to subsidiaries
53,359,344
-
(19,795,175)
4,380,965
(3,598,437)
-
34,346,697
Capital participations in associated companies
24,191,790
-
-
-
-
-
24,191,790
29,187
-
-
-
-
-
29,187
3,135,372
-
-
-
- (120,562)
3,014,810
Financial investments in progress
298,665,714
-
(20,226,000)
4,438,554
(8,376,595) (120,562)
274,381,112
TOTAL
298,665,714
-
(20,226,000)
4,438,554
(8,376,595) (120,562)
274,381,112
Financial investments in 2012
Capital participations in subsidiaries
Loans granted to associated companies
Other financial investments
Tranfers
Sales and writeoffs
Closing
balance
During 2013, the holding in SDC América, Inc was sold to Grupo Soares da Costa, SGPS, SA for the sum of 1
Euro, in respect of the shareholding (430,824.90 Euros) and which included supplementary loan capital totalling 53,031,888.49 Euros following an additional payment during the year 2013 of 5,436,770.85 Euros. This
disposal led to the reversal of impairments set up in previous years for the entire shareholding (430,824.90
Euros) and for supplementary loans (19,795,175.10 Euros). A large part of the holding in SDC Brazil was sold
for the sum of 358,900.37 Euros to Sociedade de Construções Soares da Costa, SA, reducing its shareholding
from 58.88% to 1%. The company SDC Emirates ceased its business operations definitively and was legally
wound up resulting in a loss of 94,375.96 Euros, equal to the shareholding of 49%. An impairment was booked
for the company Coordenação & Soares da Costa, SGPS, SA, for shareholdings (250,001 Euros) and loans
(200,000 Euros), on the grounds that there were no assets that make it likely that any repayment would be
made in the future.
The entire share capital of SCSP- Soares da Costa Serviços Partilhados, SA was acquired from the following
Group companies: Grupo Soares da Costa, SGPS, SA (1,450,406.38 Euros), Sociedade de Construções Soares
da Costa, SA (145.10 Euros), Soares da Costa Concessões, SGPS, SA (145.10 Euros), Clear – Instalações Electromecânicas, SA (145.10 Euros) and Ciagest – Imobiliária e Gestão, SA (145.10 Euros).
Contributions to the work compensation fund that began in October for new employees totalled 15 Euros.
In addition, the detail of “Loans granted to subsidiaries” for the years ending 31 December 2013 and 2012
were as follows:
Company
31.12.2013
31.12.2012
Clear - Instalações Electromecânicas, SA
6,346,754
6,346,754
Soares da Costa America, Inc.
-
27,799,943
Coordenação & Soares da Costa, SGPS, SA
-
200,000
6,346,754
34,346,697
TOTAL
52
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
7. INVESTMENTS IN SUBSIDIARY AND ASSOCIATE COMPANIES
As at 31 December 2013, the group and associate companies, in which the company directly held shareholdings, were as follows:
Head offices
% capital
held
Shareholders'
equity
Net earnings
2013
Balance sheet
value as of
31.12.2013
Avenida Hochimin, 1178 3º Andar
1667 - Maputo
80.00%
2,353,273
530,848
868,470
Cidade de São Tomé
São Tomé & Príncipe
99.00%
722,720
10,477
9,900
Cantón Cero Uno (San José)
1009 - San José
100.00%
3,479,504
(533,664)
853,555
Carta - Cantinas e Restauração Lda.
Rua de Santos Pousada, 220
4000 - 478 - Porto
100.00%
635,434
456,217
904,969
Soc. Construções Soares da Costa, SA
Rua de Santos Pousada, 220
4000 - 478 - Porto
100.00%
103,455,540 (13,528,634)
170,893,174
Coordenação & Soares da Costa SGPS, SA
Rua Julieta Ferrão, 12 - 13º
1600-131 Lisboa
100.00%
(829,655)
391,752
-
Clear - Instalações Electromecânicas, SA
Rua de Santos Pousada, 220
4000 - 478 - Porto
100.00%
3,830,069
(2,649,486)
38,653,246
Soares da Costa Brasil - Construção, Ltda
Rua Bandeira Paulista, 600 - 1º
Cidade São Paulo
1.00%
315,709
(326,789)
6,413
Rua de Santos Pousada, 220
4000 - 478 - Porto
100.00%
1,620,965
572,232
1,450,987
Company name
Capital participations in Group companies:
Soares da Costa Moçambique, SARL
SDC S. Tomé e Príncipe, Construções, Lda.
SDC Construcciones CentroAmericanas, SA
SCSP - Soares da Costa Serviços
Partilhados, SA
TOTAL
213,640,713
Capital participations in associated companies:
Grupul Portughez de Constructii, S.R.L.
010873 - Bucharest Romania
50.00%
(599,201)
(26,794)
500,000
GEC-Guinea Ecuatorial Construcciones,SA
UrbanizacionVilla Orquidea, 4
Malabo Equatorial Guinea
51.00%
15,263
-
7,775
Rua Cónego Manuel das Neves, 19
Luanda - Angola
51.00%
14,749
(125)
8,253
Lagoas Park - Edifício 1 Piso 2
Portugal
40.00%
22,369,709
(4,769,802)
23,581,386
Cerenna-Ceramica Nacional de Angola, S.A.
Somafel - Engª e Obras Ferroviárias, SA
TOTAL
24,097,414
Capital participations in other companies:
VSL - Sistemas Portugal, SA
Estrada Outeiro Polima, Lote C - Piso 1
2785 - 518 - São Domingos de Rana
3.97%
a)
a)
1,012,500
VORTAL - SGPS, SA
Rua Prof. Fernando da Fonseca, 3º
Lisboa
7.24%
a)
a)
2,002,310
TOTAL
3,014,810
a) Accounts not available on the date of preparation of financial statements
During 2013, the company SCSP – Soares da Costa Serviços Partilhados, SA was acquired. Other transactions were: the disposal of the entire shareholding in Soares da Costa América, Inc; disposal and reduction of the shareholding in Soares da Costa Brazil to 1%; and the shareholding in SDC Emirates Construc-
53
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
tiones LLC was written off after the definitive closure of the business. Soares da Costa Construção, SGPS,
SA did not participate in the increase in share capital of VSL – Sistemas Portugal, SA reducing its holding
from 11.25% to 3.97%. Additional information can be found in Note 6.
As at 31 December 2012, the group and associate companies in which the company directly held shareholdings were as follows:
Head offices
% capital
held
Shareholders'
equity
Net earnings
2012
Balance sheet
value as of
31.12.2012
7270 N.W. 12 TH Street, Suite PH 3
33126 - FL Miami
100.00%
49,788,445
3,545,168
-
Avenida Hochimin, 1178 3º Andar
1667 - Maputo
80.00%
2,592,151
683,962
868,470
Cidade de São Tomé
São Tomé & Príncipe
99.00%
712,243
1,579
9,900
Cantón Cero Uno (San José)
1009 - San José
100.00%
4,174,154
114,633
853,555
Carta - Cantinas e Restauração Lda.
Rua de Santos Pousada, 220
4000 - 478 - Porto
100.00%
179,217
(21,273)
904,969
Soc. Construções Soares da Costa, SA
Rua de Santos Pousada, 220
4000 - 478 - Porto
100.00%
137,841,786 (18,193,009)
170,893,174
Coordenação & Soares da Costa SGPS, SA
Rua Julieta Ferrão, 12 - 13º
1600-131 Lisboa
100.00%
(1,221,407)
(108,526)
250,001
Clear - Instalações Electromecânicas, SA
Rua de Santos Pousada, 220
4000 - 478 - Porto
100.00%
9,647,405
3,960,183
38,653,246
Soares da Costa Brasil - Construção, Ltda
Rua Bandeira Paulista, 600 - 1º
São Paulo
58.88%
728,471
452,294
365,313
Company name
Capital participations in Group companies:
Soares da Costa América, Inc.
Soares da Costa Moçambique, SARL
SDC S. Tomé e Príncipe, Construções, Lda.
SDC Construcciones CentroAmericanas, SA
TOTAL
212,798,628
Capital participations in associated companies:
Grupul Portughez de Constructii, S.R.L.
SDC Emirates Construction,L.L.C.
GEC-Guinea Ecuatorial Construcciones,SA
Cerenna-Ceramica Nacional de Angola, S.A.
Somafel - Engª e Obras Ferroviárias, SA
010873 - Bucharest Romania
50.00%
(576,159)
(34,062)
500,000
Abu Dhabi - UAE
49.00%
a)
a)
94,376
UrbanizacionVilla Orquidea,4
Malabo Equatorial Guinea
51.00%
15,263
-
7,775
Rua Cónego Manuel das Neves,19
Luanda - Angola
51.00%
15,827
(793)
8,253
Lagoas Park - Edifício 1 Piso 2
Portugal
40.00%
26,975,116
(4,108,154)
23,581,386
TOTAL
24,191,790
Capital participations in other companies:
VSL - Sistemas Portugal, SA
VORTAL - SGPS, SA
Estrada Outeiro Polima, Lote C - Piso 1
2785 - 518 - São Domingos de Rana
11.25%
a)
a)
1,012,500
Rua Prof. Fernando da Fonseca, 3º
Lisboa
7.24%
29,309,043
2,684,406
2,002,310
TOTAL
3,014,810
a) Accounts not available on the date of preparation of financial statements
54
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
8. INFORMATION ABOUT ASSETS UNDER FINANCIAL AND OPERATIONAL LEASING CONTRACTS
Operational Leases
During 2013, 52,178.35 Euros were booked for expenses relating to operational leasing contracts.
Rentals for operational leasing contracts (fixed rents) held by the company as at 31 December 2013, mainly
relating to operational leasing contracts for motor vehicles, had the following payment profile by year:
Maturities
Minimum operating lease payments:
2014
38,663
2015
38,663
2016
37,862
> 2016
17,974
TOTAL
133,163
9. ACCOUNTS RECEIVABLE
As at 31 December 2013 and 31 December 2012, the breakdown was as follows:
Current accounts receivables
31.12.13
31.12.12
Customers - current account
903,303
76,760
Customers
903,303
76,760
3,682,449
32,642,867
360,518
1,590,201
Value adjustments
(425,770)
-
Group, associated and participated companies
3,617,197
34,233,068
Other debtors
9,761,425
969,575
Other accounts receivable
9,761,425
969,575
Group companies
Special regime for the taxation of groups of companies
Following the transfer of employees from Grupo Soares da Costa, SGPS, SA to Soares da Costa Construção, SGPS, SA at the beginning of the 3rd quarter of 2013, a number of costs became the responsibility
of the latter company. As the invoicing of various services rendered by the Group continued to be made
by Soares da Costa Construção, SGPS, SA, it was necessary to transfer these costs to the Group. This
explains the increase in the accounts receivable balance.
The detail of “State and Other Public Entities” as at 31 December 2013 and 31 December 2012 was as follows:
Value added tax
Valued added tax
31.12.13
31.12.12
22
-
10. OTHER CURRENT ASSETS
The detail of this account heading as at 31 December 2013 and 2012 was as follows:
Other current assets
Deferred costs
55
◊
31.12.13
31.12.12
2,229
496
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
In December 2013 and 2012, this heading was broken down as follows:
Deferred costs
31.12.13
31.12.12
2,229
496
Insurance
11. CASH AND CASH EQUIVALENTS
As at 31 December 2013 and 31 December 2012, the detail of cash and cash equivalents was as follows:
Cash
Bank deposits immediatly available
Cash equivalents
Cash and equivalents
Securities
Cash and equivalents on balance sheet
31.12.3
31.12.12
255
314
5,631
51,182
-
-
5,886
51,496
-
-
5,886
51,496
12. SHARE CAPITAL AND RESERVES
The share capital of the company had a nominal value of 20,335,895.42 Euros, made up of 12,816,068
ordinary shares without nominal value.
The share capital was held 100% by Grupo Soares da Costa, SGPS, SA.
On 16.8.2013, it was decided at the Shareholders’ General Meeting to reduce share capital from
131,080,340 Euros to 64,080,340.00 Euros by applying it as follows: the amount of 3,936,110.76 Euros to
other reserves and 63,063,889.24 Euros were transferred to Grupo Soares da Costa, SGPS, SA as a restitution of share capital. It should be noted that as at 31.7.2013 Soares da Costa Construção was a creditor
of Grupo Soares da Costa, SGPS, SA to the sum of 63,063,889.24 Euros.
On 28.11.2013, a decision to reduce share capital from 64,080,340.00 Euros to 20,335,895.42 Euros was
taken at the Shareholders’ General Meeting to cover losses of the same amount, which were reported
and certified in the balance sheet as at 30.9.2013.
Portuguese company legislation states that at least 5% of net results have to be put aside to “Legal
Reserves” until the amount represents at least 20% of share capital. This reserve cannot be distributed
except on the liquidation of the company but can be used to absorb losses after using up all other reserves, and for incorporation into capital.
The net result for the year 2012, amounting to 8,600,644 Euros, was applied in the following manner, in
accordance with minute number 21 of 26.3.2013:
2012's net earnings transfer
Retained earnings
13. DIVIDENDS
No dividends were distributed to the shareholder during the current year.
56
◊
(8,600,644)
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
14. BANK BORROWINGS
As at 31 December 2013 and 31 December 2012, the detail of bank borrowings was as follows:
31.12.13
31.12.12
Bank loans
-
-
Overdrafts
1,563
75,925
1,563
75,925
Current liabilities
TOTAL
The loans and other financial liabilities registered in the balance sheet as at 31 December 2013 had the
following maturities:
Maturities
Loans
Suppliers
Other creditors
Other liabilities and financial
instruments
Total
2013
1,563
948,706
1,555,295
224,678,110
227,183,673
TOTAL
1,563
948,706
1,555,295
224,678,110
227,183,673
Treasury borrowings by Sociedade de Construções Soares da Costa, SA amounted to 217,804 thousand
Euros. This figure is included in “Other liabilities”.
15. OTHER ACCOUNTS PAYABLE
As at 31 December 2013 and 2012, “Other accounts payable” was broken down as follows:
31.12.13
31.12.12
Group companies
224,450,125
166,132,164
Group, associated and participated companies - current
224,450,125
166,132,164
Other creditors
1,439,680
1,374,835
Other accounts receivable - current
1,439,680
1,374,835
The amount for group companies relates to treasury loans and interest due and is split up by company
as follows: Sociedade de Construções Soares da Costa, SA 223,775,521 Euros, Soares da Costa Serviços
Partilhados 581,556 Euros and Clear Portugal 93,048 Euros.
The detail of “State and other public entities” as at 31 December 2013 and 31 December 2012 was as
follows:
31.12.13
31.12.12
-
8,939
Contributions to the social security system
59,998
10,681
Other
55,616
11,348
TOTAL
115,614
30,967
Valued added tax
57
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
16. OTHER CURRENT LIABILITIES
As at 31 December 2013 and 2012, the detail of this account heading was as follows:
Other current liabilities
31.12.13
31.12.12
Accrued costs
227,985
33,026
As at 31 December 2013 and 31 December 2012, this account heading was broken down as follows:
31.12.13
31.12.12
226,435
33,026
1,550
-
227,985
33,026
Accrued costs
Remunerations payable
Other accrued costs
TOTAL
The increase in remunerations payable was due to employees transferred from Grupo Soares da Costa,
SGPS, SA to Soares da Costa Construção at the beginning of the 3rd quarter of 2013.
17. MOVEMENTS IN ADJUSTMENTS AND PROVISIONS DURING THE YEAR
The movement in value adjustments in 2013 and 2012 were as follows:
Value adjustments in 2013
Opening balance
Increases
Reductions
Closing balance
Group companies
-
425,770
-
425,770
Shareholders
-
425,770
-
425,770
430,825
5,028,159
(430,825)
5,028,159
Capital participations in subsidiaries
Loans granted to subsidiaries
19,795,175
200,000
(19,795,175)
200,000
Financial investments
20,226,000
5,228,159
(20,226,000)
5,228,159
Total value adjustments
20,226,000
5,653,929
(20,226,000)
5,653,929
The reversal of impairments was due to the sale of Soares da Costa América to Grupo Soares da Costa,
SGPS, SA referred to in note 6, as well as the set up of an impairment in the company Coordenação &
Soares da Costa, SGPS, SA.
Value adjustments in 2012
Opening balance
Increases
Reductions
Closing balance
Group companies
-
-
-
-
Shareholders
-
-
-
-
4,778,158
430,825
(4,778,158)
430,825
Capital participations in subsidiaries
Loans granted to subsidiaries
3,120,951
19,795,175
(3,120,951)
19,795,175
Financial investments
7,899,109
20,226,000
(7,899,109)
20,226,000
Total value adjustments
7,899,109
20,226,000
(7,899,109)
20,226,000
58
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
18. INFORMATION BY SEGMENT
The sales and services rendered by geographical area in 2013 and 2012 were as follows:
Turnover by market
31.12.13
%
31.12.12
%
Portugal
732,494
100.00%
228,000
100.00%
An explanation of the increase in turnover is given in note 9.
The breakdown of this account heading as at 31 December 2013 and 31 December 2012 was as follows:
Sales and TURNOVER
31.12.13
31.12.12
39,700
0
Supplementary income
692,794
228,000
Total
732,494
228,000
Services provided
The supplementary income relates mainly to the provision of labour (646 thousand Euros).
Net assets and investments in tangible assets were split by geographical market as follows:
Portugal
Angola
Costa Rica
Mozambique
Total
827
-
-
-
827
246,275,339
-
853,555
-
247,128,894
9,116,119
4,855,629
298,956
11,244
14,281,948
Cash and equivalents
5,886
-
-
-
5,886
Other assets
2,229
-
-
-
2,229
255,400,401
4,855,629
1,152,511
11,244
261,419,784
Net assets:
Fixed tangible assets
Financial investments
Accounts receivable
Total
19. OTHER OPERATING GAINS AND LOSSES
Other operating gains in 2013 and 2012 were as follows:
Other income and costs
31.12.13
31.12.12
Other operational income and costs
5,280
149,639
Total
5,280
149,639
31.12.13
31.12.12
806
2,107
Other operational costs and losses
134,394
64,973
Total
135,200
67,081
Other operating losses in 2013 and 2012 were as follows:
Other costs and losses
Fines
59
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
20. STAFF
The average number of employees working for the company during the years ending 31 December 2013
and 2012, totalling 9 and 3 respectively, was broken down as follows:
Board of
directors
Senior
management
Middle
management
Supervisors and
Heads of Department
Highly Qualified
Professionals
Qualified and semi
qualified professionals
Non qualified
professionals
Trainees
1
6
0
0
2
0
0
0
Board of
directors
Senior
management
Middle
management
Supervisors and
Heads of Department
Highly Qualified
Professionals
Qualified and semi
qualified professionals
Non qualified
professionals
Trainees
2
1
0
0
0
0
0
0
The remuneration of statutory bodies for the years ending 31 December 2013 and 2012 were as follows:
Governing bodies
31.12.13
31.12.12
Board of directors
153,165
320,309
Statutory auditor
5,302
1,310
Staff costs
31.12.13
31.12.12
Remunerations
765,877
444,471
Social security contributions
238,761
92,483
1,004,638
536,954
Staff costs for the years 2013 and 2012 were broken down as follows:
Total
The increase in remuneration and charges was due to the transfer of employees from Grupo Soares da
Costa, SGPS, SA that took place at the beginning of the 3rd quarter of 2013.
21. THIRD PARTY SUPPLIES AND SERVICES
The cost of third party supplies and services for the years 2013 and 2012 can be broken down as follows:
External supplies and services
31.12.13
31.12.12
Specialized work
848,234
40,450
5,884
24,264
-
3,420
Rentals of light vehicles
46,038
51,123
Litigation and notaries
58,089
591
Other
54,769
10,614
Total
1,013,014
130,462
Travel and accommodation
Rents of buildings
The increase in specialist work is related to costs for lawyers and banks totalling 787 thousand Euros
connected with the entry of the new shareholder which took place in February 2014. The line “litigation
and notaries” includes a cost of 56 thousand Euros for legal service fees connected with the negotiation
and signing of a contract for a line of credit in dollars.
60
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
22. FINANCIAL RESULTS
The financial results for the years ending 31 December 2013 and 2012 can be broken down as follows:
Costs and losses
31.12.13
31.12.12
10,533,118
13,998,795
Foreign exchange losses
291,364
35,409
Impairments on financial investments
875,771
20,226,000
35,818,091
477,485
851,573
526,127
48,369,918
35,263,815
31.12.13
31.12.12
1,265,880
7,762,004
263,719
131,101
3,693,828
18,998,413
865,670
527,473
6,089,098
27,418,991
(42,280,820)
(7,844,824)
Interest paid
Capital losses on the disposal of financial investments
Other financial costs and losses
(1)
Income and gains
Interest received
Foreign exchange gains
Income from capital participations
Other financial income and gains
(2)
Financial results
(2)-(1)
The impairment registered in the year of an amount of 876 thousand Euros refers to an adjustment made
to the financial investment in Coordenação & Soares da Costa, SGPS, SA and is described in note 17.
Capital losses were registered on the disposals of the shareholding in Soares da Costa América, Inc to
an amount of 35,662,327 Euros, in Soares da Costa Brazil to an amount of 61,388 Euros and on the write
off on the shareholding in Soares da Costa Emirates of 94,376 Euros due to the definitive closure of the
business (note 6).
Income from shareholdings relate to dividends from the following entities: Clear – Instalações Electromecânicas, SA (3,168 thousand Euros), Soares da Costa Moçambique, SARL (490 thousand Euros) and
Vortal, SGPS, SA (36 thousand Euros).
23. INCOME TAX AND DEFERRED TAXES
The company is taxed on its income under the Special Tax Regime for Corporate Groups. As a controlled
company, it registers the debit/credit for its contribution to income tax in “Group, associated and subsidiary companies”. The parent company is Grupo Soares da Costa, SGPS, SA.
In accordance with tax legislation, tax declarations are subject to review and correction by the tax authorities during a four year period (five years for Social Security). Hence, the company's tax declarations
concerning 2009 and following years are still subject to review. The company’s board of directors believes
that possible corrections, should they occur, will not have a significant impact on the financial statements.
The income tax for the years ending December 31, 2013 and 2012 can be broken down as follows:
Income tax
31.12.13
31.12.12
Current tax
(360,518)
(1,590,201)
Deferred tax
1,319,778
1,974,777
959,260
384,577
Total
61
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
The reconciliation of the profit/loss before tax to arrive at the tax payable for the period is as follows:
Rate and nominal income tax (effective in Portugal)
Tax rate
Tax Basis
Tax
25.00%
(43,716,457)
(10,929,114)
63,901
16,931
-
-
47,512,774
11,871,444
Municipal surcharge
Autonomous taxation
Adjustments generating deferred taxes
Other adjustments
Tax rate and effective income tax
-2.19%
959,260
“Other adjustments” can be broken down as follows:
Tax rate
Tax Basis
Tax
25%
875,771
218,943
35,662,327
8,915,582
6,266,969
1,566,742
(3,693,828)
(923,457)
Deferred taxes
5,279,113
1,319,778
Other
3,122,422
773,855
Total
47,512,774
11,871,444
Non deductable provisions
Accounting capital losses
Expenses with funding not accepted
Dividends
“Deferred taxes” relates to the cancellation of IRC (Income Tax) carried forward from 2012, and is as follows:
Deferred tax
Opening balance
Increases
Reductions
Closing balance
Cancelation of 2012' income tax
0
1,319,778
-
1,319,778
Total
0
1,319,778
-
1,319,778
24. RESULTS PER SHARE
As at 31 December 2013 and 2012, the basic results per share are equal to the net result divided by the
number of ordinary shares of the company during the period, and were calculated as follows:
Earnings per share
31.12.13
31.12.12
Net earnings from continued activities
(44,675,717)
(8,600,644)
Net earnings
(44,675,717)
(8,600,644)
12,816,340
26,216,068
Basic
(3,486)
(0,328)
Diluted
(3,486)
(0,328)
Basic
-
-
Diluted
-
-
Total number of ordinary shares
Earnings per share of the continued activities
Earnings per share
62
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
25. GUARANTEES
The value of bank guarantees given by the company to third parties as at 31 December 2013 was as follows:
BANK GUARANTEES
Euro
US Dollar
Angolan Kwanza
Total
-
11,964,325
-
11,964,325
Bank guarantees
The bank guarantees were given to guarantee credit lines contracted by Soares da Costa América, Inc.
Following the disposal of the shareholding in Soares da Costa América, Inc to Soares da Costa Group
(note 6), the costs incurred for these guarantees will be debited to this latter company.
26. FINANCIAL RISKS
Exchange Risk
This risk mainly arises from the company's international operations, which expose it the impact of changes of different currencies against the Euro. The goal of the company’s policy for managing exchange
rate risks is to minimize the sensitivity of the company’s earnings to exchange rate fluctuations. The
company seeks, as far as possible, to balance assets with liabilities expressed in the same currency.
Assets
EUR
USD
AOK
BRL
Other currencies
Total
246,180,963
853,555
-
-
94,376
247,128,894
903,303
-
-
-
-
903,303
3,606,201
10,996
-
-
-
3,617,197
22
-
-
-
-
22
9,761,425
-
-
-
-
9,761,425
5,627
4
-
-
-
5,631
255
-
-
-
-
255
2,229
-
-
-
-
2,229
EUR
USD
AOK
BRL
Other currencies
Total
1,563
-
-
-
-
1,563
224,450,125
-
-
-
-
224,450,125
Suppliers
948,706
-
-
-
-
948,706
State and other public entities
115,614
-
-
-
-
115,614
2,747,470 1,111,890
234,368
-
1,439,680
-
-
227,985
Financial investments
Customers
Group companies
State and other public entities
Others debtors
Bank deposits
Cash
Accruals and deferrals
Liabilities
Bank loans
Group companies
Other creditors
-2,654,047
Accruals and deferrals
227,985
-
-
Credit Risk
This risk is associated with accounts receivable arising from the company’s normal business activity. The
need to book impairments is determined according to the age of the debt, the customer’s risk profile,
previous experience and other circumstances.
As at 31 December 2013 and 2012, the accounts receivable for which no adjustments were registered
because they were considered to be recoverable were as follows:
63
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Customers - current account
Customers - other receivables
31.12.13
31.12.12
903,303
-
903,303
23,370
-
-
-
53,390
903,303
-
903,303
76,760
Unexpired
0 to 180 days
Total
As at 31 December 2013, the board of directors believes that the estimated adjustments to accounts
receivable were appropriately stated in the financial statements.
Liquidity Risk
The liquidity risk management policy aims to ensure that at any given moment the profile of the maturity
dates of the company’s debt matches its capacity to generate the required cash flows. The management
of liquidity risk therefore includes managing imbalances between the requirements for funds (for operating and financial costs, investments and debt repayment) and revenue inflows (receipts from customers,
divestments, and financing commitments from financial entities). At the same time, the company’s management takes measures to prevent the occurrence of this risk through appropriate and timely cash flow
management. In order to manage liquidity risk, the company maintains a balance between the term and flexibility of contracted debt through the use of phased financing which matches the requirement for funds. In
addition, the company has hot money accounts and overdrafts which avoid (temporary) cash flow problems.
The maturity dates of financial liabilities as at 31 December 2013 were as follows:
Maturities
2013
Bank loans
Bonds
Other loans
Overdrafts
Other loans (Factoring)
Total
-
-
-
1,563
-
1,563
27. SUBSEQUENT EVENTS
On the 12th of February 2014, the share capital of the company was increased from 20,335,895.42 Euros to
90,335,895.42 Euros, via a cash injection of a sum of 70 million Euros, subscribed and fully paid up by a company governed by the law of Luxemburg, GAM Holding. This company became owner of 66.7% of the share
capital of Soares da Costa Construção, SGPS, SA and Grupo Soares da Costa, SGPS, SA the remaining 33.3%.
28. COMPLIANCE WITH LEGAL PROVISIONS
Decree Law number 318/94 article 5 section 4
During the year ended 31 December 2013, contracts for shareholders’ loans were signed with the following companies:
◊
Soares da Costa America, Inc.
During the year ending 31 December 2013, contracts for financing transactions were signed with the
following companies:
64
◊
◊
Grupo Soares da Costa, SGPS, SA;
◊
Soares da Costa América, INC;
◊
Sociedade de Construções Soares da Costa, SA;
◊
Soares da Costa Brasil, SRL;
◊
Clear – Instalações Electromecânicas, SA;
◊
Clear Angola – Instalações Electromecânicas, Lda;
◊
Construções Metálicas Socometal, SA;
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
◊
Soares da Costa Moçambique, SARL;
◊
Soares da Costa Brasil, Construção, Ltda;
◊
Coordenação & Soares da Costa SGPS, SA;
◊
SCSP – Soares da Costa Serviços Partilhados, SA.
The respective debtor and creditor positions with these companies as at 31 December 2013 and 2102
were as follows:
Company name
31.12.13
31.12.12
0
27,799,943
Clear - Instalações Electromecânicas, Sa
6,346,754
6,346,754
Coordenação & Soares da Costa SGPS, SA
0
200,000
6,346,754
34,346,697
11,244
11,753
0
5,018,095
77,285
73,027
Grupo Soares da Costa, SGPS, S.A.
0
27,496,420
Soares da Costa Brasil, Construções, LTDA
0
25,000
29,187
0
0
18,579
117,717
32,642,873
31 dec. 13
31 dec.12
301,318
0
Coordenação & Soares da Costa, SGPS, SA
0
345,073
Clear - Instalações Electromecânicas, SA
0
0
581,556
0
223,775,522
156,924,861
93,048
8,862,229
224,751,443
166,132,164
Shareholders' loans
Soares da Costa America, Inc.
Total
Loans granted
Soares da Costa Moçambique, SARL
Soares da Costa America, Inc.
SdC Construcciones Centro Amer
Cerenna-Ceramica Nacional de Angola, S.A.
SCSP - Soares da Costa Serviços Partilhados, Lda
Total
Company name
Clear Angola
SCSP - Soares da Costa Serviços Partilhados, Lda
Sociedade de Construções Soares da Costa, SA
Clear - Instalações Electromecânicas, SA
Total
29. APPROVAL FOR ISSUING ACCOUNTS
At a meeting that took place on the 22nd of April, the board of directors approved the issue of the attached financial statements.
30. CHANGES TO POLICIES, ESTIMATES AND ERRORS
During the year 2013, there were no changes in accounting policies compared to those used in the preparation of financial information for the year 2012, nor were any material errors recorded in relation to
previous years.
65
◊
CONSOLIDATED
FINANCIAL STATEMENTS
D
Luanda Towers Angola
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Consolidated Financial Position Statement in December 31, 2013 and December 31, 2012
(Euros)
ASSETS
31.12.2013
31.12.2012
70,370,520
79,844,595
8,472
10,543
70,378,992
79,855,138
Land and buildings
72,126,116
75,257,300
Basic equipment
42,091,990
56,182,984
Other fixed tangible assets
10,050,981
12,015,468
3,078,461
7,416,146
127,347,548
150,871,898
30,053
32,520
Financial investments under the equity method
3,392,507
3,569,213
Loans to associated companies
5,548,937
5,548,425
Other financial investments
3,033,843
3,033,677
11,975,286
12,151,315
2,916,978
19,074,574
29,676,028
28,459,271
684,000
570,000
243,008,885
291,014,716
42,828,988
52,216,186
343,762,529
392,412,415
637,913
105,285
19,316,149
98,136,545
363,716,591
490,654,245
Other current assets
70,214,114
99,749,433
Cash, Deposits and Securities
37,306,229
69,561,275
Total current assets
514,065,922
712,181,138
TOTAL ASSETS
757,074,807
1,003,195,854
NON CURRENT
Intangible assets:
Goodwill
Intangible assets
Fixed tangible assets:
Fixed tangible assets in progress
Investment properties
Financial investments:
Deferred taxes (assets)
Accounts receivable
Other non current assets
Total non current assets
CURRENT
Inventories
Accounts receivable:
Trade Debtors
Income tax
Other accounts receivable
67
◊
Consolidated Financial Position Statement in December 31, 2013 and December 31, 2012
(Euros)
SHAREHOLDERS' EQUITY & LIABILITIES
31.12.2013
31.12.2012
Share capital
20,335,895
131,080,340
Reserves and retained earnings
13,143,888
44,595,056
(24,071,787)
(37,762,825)
Equity attributable to the Group
9,407,997
137,912,570
Minorities
2,000,742
1,817,057
11,408,738
139,729,628
9,104,887
800,589
177,790,029
259,325,525
177,790,029
259,325,525
Accounts payable
21,380,481
28,892,203
Deferred assets (liabilities)
10,419,522
14,796,427
218,694,919
303,814,744
185,791,357
149,921,058
3,411,343
891,901
189,202,699
150,812,959
147,054,891
182,332,560
826,307
1,456,106
64,028,041
70,407,063
501,147
265,227
37,266,040
56,387,846
249,676,426
310,848,803
88,092,025
97,989,721
Total current liabilities
526,971,150
559,651,483
TOTAL LIABILITIES
745,666,069
863,466,227
TOTAL SHAREHOLDERS' EQUITY + LIABILITIES
757,074,807
1,003,195,854
SHAREHOLDERS' EQUITY
Net income
TOTAL SHAREHOLDERS' EQUITY
LIABILITIES
NON CURRENT
Provisions
Loans:
Bank loans
Total non current liabilities
CURRENT
Loans:
Bank loans
Other loans
Accounts payable:
Trade Creditors
Fixed assets suppliers
Advances on sales
Income tax
Other accounts payable
Other current liabilities
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Separate Consolidated Income Statement for the Period Ending in December 31, 2013 and December 31, 2012
(Euros)
INCOME STATEMENT
2013
2012
497,178,255
712,538,562
(5,676,384)
(17,928,006)
7,601,869
10,942,450
Operating income
499,103,740
705,553,006
Cost of goods sold
(117,485,458)
(145,849,337)
External party supplies & services
(263,746,041)
(368,296,046)
Staff costs
(110,818,862)
(132,682,643)
Depreciation and impairment losses
(17,267,541)
(21,282,089)
Provisions and value adjustments
(29,737,342)
(18,319,702)
Other operating costs
(20,288,368)
(27,120,118)
(559,343,613)
(713,549,935)
(60,239,873)
(7,996,929)
64,812,210
15,031,929
(33,700,888)
(40,105,621)
31,111,322
(25,073,692)
7,905
660,065
Losses in associated companies
(42,755)
(100,648)
Gains and losses in associated companies
(34,850)
559,417
Income and capital gains in stakes held
948,650
160,031
17,006,419
8,820,012
Other financial costs
(50,120,389)
(26,316,446)
Other financial income & costs
(32,165,320)
(17,336,403)
(1,088,848)
(41,850,678)
(61,328,722)
(49,847,607)
(1,281,996)
12,811,630
(62,610,718)
(37,035,977)
(63,055,720)
(37,762,825)
445,002
726,848
Turnover
Change in production
Other operating income
Operating costs
Operating results from continued activities
Interest received
Interest paid
Net financing costs
Gains in associated companies
Other financial income
Financial results
Earnings before taxes
Income tax
Net earnings:
Attributable to the Group
Minorities
69
◊
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Statement of Consolidated Comprehensive Income for the Period Ending in December 31, 2013 and
December 31, 2012
31.12.2013
31.12.2012
(62,610,718)
(37,035,977)
(2,585,139)
(2,406,334)
Change on fair value of derivatives
-
1,190,357
Change on deferred taxes of derivatives
-
(345,204)
4,717
(3,360)
-
-
(65,191,140)
(38,600,518)
to Minorities
227,812
(498,152)
to the Group
(65,418,952)
(38,102,366)
(Euros)
Consolidated net earnings for the period
Other comprehensive income
Exchange difference stemming from transposition of financial statements expressed
in foreign currencies
Adjustments in investment consolidated by equity method
Other variations
Total comprehensive income for the period
Attributable:
Statement of Changes in Equity for the Period Ending in December 31, 2013 and December 31, 2012
(Euros)
Equity capital
Reserves
and retained
earnings
Reserves
for foreign
exchange
Reserves from
coverage
derivatives
Other
Equity
attributable to
shareholders
Minorities
Total equity
131,080,340
9,028,402
(2,328,022)
-
131,851
137,912,571
1,817,057
139,729,627
-
-
-
-
-
-
-
-
Reduction of share capital
(67,000,000)
3,936,111
-
-
-
(63,063,889)
-
(63,063,889)
Reduction of share capital to
cover losses
(43,744,445)
43,744,445
-
-
-
-
-
-
Other
-
(289,575)
267,842
-
-
(21,734)
(44,127)
(65,860)
Integrated consolidated
earnings
-
(63,055,720)
(2,367,949)
-
4,717
(65,418,952)
227,812
(65,191,140)
20,335,895
(6,636,338)
(4,428,129)
-
136,568
9,407,996
2,000,741
11,408,738
131,080,340
50,103,117
(1,146,688)
(845,154)
135,211
179,326,826
2,315,209
181,642,035
Dividends
-
(3,300,000)
-
-
-
(3,300,000)
-
(3,300,000)
Own shares
-
-
-
-
-
-
-
-
Other
-
(11,890)
-
-
-
(11,890)
-
(11,890)
Integrated consolidated
earnings
-
(37,762,825)
(1,181,334)
845,154
(3,360)
(38,102,365)
(498,152)
(38,600,517)
131,080,340
9,028,402
(2,328,022)
-
131,851
137,912,571
1,817,057
139,729,627
Balance as of 1.1.2013
Dividends
Balance as of 31.12.2013
Balance as of 1.1.2012
Balance as of 31.12.2012
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REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Consolidated Cash Flow Statement for the Period Ending in December 31, 2013 and December 31, 2012
(Euros)
2013
2012
480,356,777
650,368,142
Payments to suppliers
(373,557,383)
(542,913,288)
Payments to staff
(100,873,032)
(121,534,323)
5,926,362
(14,079,470)
(597,997)
(10,346,748)
(32,611,436)
(12,382,472)
(33,209,433)
(22,729,220)
Operating activities:
Receipts from customers
Payments/ receipts of income tax
Other payments/ receipts related with oper.activities
Cash flow from investment activities
(27,283,071)
(36,808,690)
Investment activities:
Receipts from:
Financial investments
1,338,697
120,562
Fixed tangible assets
1,022,823
4,302,852
86,918
180,088
Interest and similar income
Dividends
0
2,448,439
66,662
4,670,165
Payments related with:
Financial investments
Fixed tangible assets
Intangible assets
264
2,631,203
3,225,334
4,519,832
-
Cash flow from investment activities
3,225,598
-
(777,159)
7,151,034
(2,480,870)
Financing activities:
Receipts from:
Loans
Capital increases, supplementary payments and issue premiums
Interest received
655,619,319
855,172,152
-
3,816
4,880,870
660,500,189
3,256,989
858,432,957
Payments related with:
Loans
619,522,053
767,171,205
1,970,449
3,720,189
31,180,104
30,388,060
Dividends
-
3,858,083
Acquisition of own shares
-
Amortisations of financial leasing contracts
Interest paid
Cash flow from financing activities
652,672,607
-
805,137,537
7,827,582
53,295,419
(20,232,648)
14,005,860
Effect of foreign exchange differences
(3,460,490)
(1,343,489)
Effect of changes in participations
(8,561,909)
-
Cash and cash equivalents at the beginning of the period
69,561,275
56,898,903
Cash and cash equivalents at the end of the period
37,306,229
69,561,275
Change in cash and cash equivalents
71
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OPINIONS AND
CERTIFICATIONS
E
TTA2 Total Building Angola
REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Legal Certification of Accounts
Introduction
1. We have examined the attached financial statements of Soares da Costa Construção, SGPS, SA
(Company that is part of the Soares da Costa Group, Note 2), which comprise the Consolidated Balance
Sheet as at 31 December 2013, showing total assets of 261,419,784 Euros and shareholders’ equity of
34.236.111 Euros, including a net loss of 44,675,717 Euros, the Statements of Income, of Comprehensive
Income, of Changes to Shareholders’ Equity and of Cash Flows for the year ending on that date and the
corresponding Annexe.
Responsibilities
2. It is the responsibility of the Board of Directors to ensure that the consolidated financial statements
are prepared in such a manner that they give a true and appropriate view of the financial position of the
company, its results and the comprehensive income of its operations, changes to its equity and cash flows as well as that proper accounting policies and criteria are used and an appropriate system of internal
control is kept. Our responsibility is to express an independent and professional opinion, based on our
examination of these financial statements.
Scope
3. Our examination was performed in accordance with the Technical Standards and Audit/Revision
Directives issued by the Portuguese Institute of Statutory Auditors, which require that the examination
be planned and performed with the objective of obtaining reasonable assurance as to whether the
financial statements are free of material misstatement. Such an examination includes verifying, on a
test basis, evidence supporting the amounts and disclosures in the financial statements and assessing
significant estimates, based on judgments and criteria defined by the Board of Directors, used in their
preparation. Such an examination also includes evaluating the adequacy of the accounting policies used
and their disclosure, taking into consideration the circumstances, verifying the applicability of the going
concern concept, and evaluating the adequacy in overall terms of the presentation of the financial statements. Our examination also includes verifying that the financial information included in the Report
of the Board of Directors is consistent with the financial statements. We believe that our examination
provides a reasonable basis for expressing our opinion.
Opinion
4. In our opinion, the financial statements referred to in paragraph 1 above, present fairly and in all
materially relevant respects the financial position of Soares da Costa Construção, SGPS, SA as at 31
December 2013, as well as the results and comprehensive income of its operations, changes in shareholders’ equity and cash flows for the year then ended, in compliance with International Financial Reporting
Standards as adopted by the European Union.
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REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Qualifications
5. As noted in the Company’s Management Report, an agreement was reached with an investor in 2013
to carry out a capitalisation operation for the construction business of the Soares da Costa Group, led by
Soares da Costa Construção, SGPS, SA, as a result of which a “Subscription Agreement” was signed dated
26 November 2013, in which the following transactions were agreed: (i) reduction of the share capital of
the Company, which took place on the 31st of December 2013 (Note 12), (ii) disposal of the subsidiary Soares da Costa América, Inc., the company heading up a number of companies carrying out business in the
USA, that also took place on the 31st of December 2013 (Note 22), and (iii) a share capital increase in the
amount of 70 million Euros, to be wholly paid up in cash by the investor, which gives him a holding equal
to 66.7% of the share capital of the Company, a transaction that was completed on the 12th of February
2014 (Note 27).
6. The financial statements mentioned in paragraph 1 above relate to the activity of the individual
Company and were prepared for approval and publication in accordance with current legislation in force.
As pointed out in Note 3.2 a) of the Notes to the Accounts, financial investments in subsidiary companies are shown at acquisition cost, with adjustments made to reduce the value of these investments to
their net realisable value whenever this is necessary. The Company has prepared consolidated financial
statements separately for later approval, presenting however shows financial information concerning
subsidiary companies in Note 7.
7. The financial statements for the year ending 31 December 2012, shown for comparative purposes,
were audited by another Statutory Auditor. Their Legal Certification of Accounts, dated 15 February
2013, included two qualifications.
Report on other legal requirements
8. It is also our opinion that the financial information contained in the Management Report is in agreement with the financial statements for the period.
Porto, 22 April 2014
Deloitte & Associados, SROC S.A.
Represented by António Manuel Martins Amaral
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REPORT & ACCOUNTS 2013 ◊ SOARES DA COSTA CONSTRUÇÃO, SGPS, SA
Report and Opinion of the Statutory Auditor
To the shareholder of
Soares da Costa Construção, SGPS, SA
In compliance with current legislation and with the mandate entrusted to us, we submit, for your approval, our Report and Opinion, which cover the supervisory activity carried out by us and the financial
statements of Soares da Costa Construção, SGPS, SA (the “Company”) for the period ended on December
31, 2013, which are the responsibility of the Board of Directors of the company.
We monitored the activity and businesses of the Company, the accuracy of its accounting records and its
compliance with legal and statutory regulations currently in force, and received from the Board of Directors and from the various Company departments the information and explanations requested.
As part of our duties, we examined the Balance Sheet as at December 2013, the Income Statement by
Nature, the Changes to Shareholders’ Equity and the Cash Flows for the year ending on that date and
the corresponding Notes to the Accounts. In addition, we reviewed the Management Report for the year
2013 prepared by the Board of Directors of the Company and the assumptions and statements included
in it. Based on the statutory audit work carried out, we issue on this date the Legal Certification of the
Accounts, which includes one reservation and three qualifications.
In view of the above, we are of the opinion that, with the exception of the impact of the adjustments
which may be necessary if the limitation described on paragraph 4 of the Legal Certification of Accounts
were not to exist, and taking into account the points made in the paragraphs 6 and 7 of the same document, the financial statements referred to above and the Management Report as well as the assumptions made in them, are in accordance with applicable accounting, legal and statutory regulations, on
which basis they can be approved by the Shareholders’ General Meeting.
We would also like to offer our thanks to the Board of Directors and the services of the Company for their
help and assistance in our work.
Porto, 15 March 2014
Deloitte & Associados, SROC S.A.
Represented by António Manuel Martins Amaral
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