3. - Zagope

Report of theExecutive BoardCommercial Activity in 2010The global macroeconomic scenario in 2010was marked by the recovery initiated in thesecond semester of 2009 and by the revivalof international trade, particularly in emergingeconomies such as Brazil, India and China.Europe registered a deceleration of theeconomic growth, resulting from the debt crisisin some countries in the Euro-zone and of thestrict budget consolidation policies followed bycertain governments to face pressure from thefinancial markets.Anticipating itself to the changes in themacroeconomic scenario, Zagope identified newbusiness opportunities in international marketsand diversified its presence in Europe, Africaand the Middle East, a strategy that provedessential to the growth of the company.Thus, and despite the instability of the markets,in 2010 Zagope increased its turnover to 625 millionEuros - 82% of which were originated throughinternational construction activities - and its EBITDAto 76 million Euros.In Portugal, the budget constraint measuresadopted contributed to the deterioration of themacroeconomic indicators, with consumptionlevels showing a significant decrease. Portugalended 2010 with a 1.3% increase in its GDPand an average inflation rate of 1.4%, accordingto data from the Bank of Portugal. However, theexpected impact of the increase of VAT and othertaxes predict a significant increase in the annualvariation of the inflation rate.The construction sector in Portugal registeredanother difficult year, the 9th in a row, with adecrease of production accumulated since2002 and amounting to 36% and more than200 thousand jobs lost. The loss of dynamismin the public works sector, which resulted inthe cancellation or postponement of importantinfra-structure investments, led to a significantdecrease in the order books of the companiesthat operate in this area, and, consequently,in their financial results.218 / 19