sociedade de construções soares da costa, sa report and accounts ...

SOCIEDADE DE CONSTRUÇÕES SOARES DA COSTA, SA 

REPORT AND ACCOUNTS 2011 

This Management Report and the attached financial statements are a translation of the original, issued in Portuguese. In 

the event of discrepancies, the Portuguese versions prevail.

SOCIEDADE DE CONSTRUÇÕES SOARES DA COSTA, SA REPORT AND ACCOUNTS 2011 

INDEX 

MANAGEMENT REPORT 

Highlights 

Introduction 

1. Soares da Costa Group 

2. Activity 

2.1 Overview 

2.2 Evolution of Production 

2.3 Quality, Safety, Environment and Health 

2.4 Commercial Activity 

2.5 Human Resources 

3. Economic and Financial Analysis 

4. Prospects for 2012 

5. Principal Risks 

6. Sustainable Development 

7. Relevant Facts Occurring Subsequent to the Year-End 

8. Acknowledgments 

9. Proposal for the Appropriation of Results 

APPENDIX 

FINANCIAL STATEMENTS, ACCOUNTING POLICIES AND EXPLANATORY NOTES 

CERTIFICATIONS 

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MANAGEMENT REPORT 

HIGHLIGHTS 

� Turnover reached 605.7 million Euros, 3.3% below that of the previous year; 

� EBITDA amounted to 45.5 million Euros, growing by 14.9% and improving the margin from 6.3% to 7.5% as a 

percentage of turnover; 

� Net financial results totalled -13.3 million Euros, deteriorating by 9.7%; 

� Income before taxes increased by 36.9% to 18.5 million Euros; 

� Net income attained 12.2 million Euros, which represents an increase of 46.6% over that of the previous year. 

(Million Euros) 2011 2010 YoY 

Turnover 605.7 626.5 -3.3% 

EBITDA 45.5 39.6 14.8% 

EBITDA Margin 7.5% 6.3% +1.2p.p 

Net Financial Results -13.3 -12.1 9.7% 

Income before Taxes 18.5 13.5 36.9% 

Net Income 12.2 8.3 46.6% 

INTRODUCTION 

The Board of Directors of Sociedade de Construções Soares da Costa, S.A., in compliance with that laid down in the Corpoate 

Code and in the statutory and legal dispositions applying to public companies, submits for approval at the Shareholders General 

Meeting, the Management Report, the Financial Statements and the other reporting documents for the period ended on 31 

December 2011. 

These documents provide information regarding the evolution of the business, the performance and the financial position of the 

company, as well as of the principal risks and uncertainties it faces. 

The financial statements to which this Management Report relates were prepared in accordance with the International 

Financial Reporting Standards (IAS/IFRS) as adopted by the European Union and were subject to the statutory audit required 

by law; the relevant audit and sole supervisor reports are attached. 

1. SOARES DA COSTA GROUP 

Mission and Values 

Sociedade de Construções Soares da Costa, S.A. is the main construction company of Grupo Soares da Costa and, within its 

construction segment scope, strives to realize the Group’s mission to: «satisfy the demands of the market and of its clients, 

through a sustainable business model with qualified and motivated resources, generators of economic, social and 

environmental value, in a manner that provides an attractive return for the shareholders». 

The Company also incorporates and maintains in its attitude toward the construction market, the Group values, namely: 

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• Permanent market orientation and client satisfaction; 

• Effectiveness and efficiency of management; 

• Integrity and ethics; 

• Socially responsible conduct; and 

• Respect for the environment. 

With profitability as a permanent objective, the success of the company and of the Group it forms part of is based on 

sustainable growth, founded on a top quality human team and on the continued striving for diversification and innovation in 

all projects undertaken. 

Historical References 

The origins of Grupo Soares da Costa date back to 1918, to the incorporation in Oporto of a small company, dedicated to the 

execution of top quality finishings and to painting with fine gold. The following decades saw this company’s skills expand 

significantly, coming to lead the sector in the northern regions of Portugal whilst expanding its activity to the rest of the 

country. The 80’s are crucial to the development of the Group, with the beginning of its internationalization: first into 

Venezuela and later to Egypt, Guinea-Bissau, Angola, Nigeria, Mozambique, Iraq, Algeria, Guiana, Cape Verde, Macau, Spain, 

Germany and the United States of America. At the end of 1986 its shares were listed on the Stock Exchange. 

The following decade was marked by the company’s growing specialization in large-scale engineering and public works and by 

the consolidation of a strong internationalization and (activity) diversification strategy, still characteristic of the Group today. 

The growth in the activity lead to the restructuring and reorganization of the company in 2002, with the incorporation of a 

holding company, Grupo Soares da Costa, S.G.P.S., S.A., with a share capital of 160 million Euros, branching into the various 

activity areas through four sub-holding companies: construction, concessions, industry and real estate. 

The company’s shareholding structure altered as from mid-2006, with the exit of the founding family and the entrance of the 

majority shareholder, Investifino – Investimentos e Participações, S.G.P.S., S.A., formalized with the execution of the takeover 

bid in January 2007. 

Following the shareholder change, the Group defines in its strategic plan “Sustainable Ambition 2007-2012”, presented in 

October 2007, Construction and Concessions/Services as the strategic areas for the future, with one of the six lines of 

development being the resulting adaptation of the business portfolio. The transactions occurring in 2008, namely the 

acquisition of the construction companies - Contacto (Portugal) and Prince (United States) – and the reinforcement of the 

shareholding in the motorway concessionaire Scutvias, fall within the scope of this adaptation. 

On the other hand, the Strategic Plan “Renewable Energies”, announced in September 2010, realigned the strategic guidelines 

of the Group, refocusing on the business diversification component, under which strategy roll-out 57.26% of the share capital 

of “Energia Própria” was acquired at the end of 2010. In 2011, in light of the substantial macroeconomic changes, the liquidity 

shortage and the strong local contraction of the construction market, management adjusted the strategic plan 1 . This update 

redirected the strategic guidelines to the INTERNATIONALIZATION, the CONSTRUCTION BUSINESS AREA and the FINANCIAL 

SUSTAINABILITY of the activities. Hence, with the aim of assuring an activity growth compatible with the external constraints, 

namely those of a financial nature, protecting the profitability levels and permitting, at the end of the strategic plan 

implementation period, an expressive reduction in indebtedness, the following guidelines were selected for action: 

• Maintenance of the growth in Africa; 

• Development of the Brazilian market through organic means, with the prospects of an acquisition in the mediumterm; 

• Permanence in the United States, focusing on profitability; 

• Postponement of investments in new Energy and Environment businesses; 

• Sale of assets; 

1 Please see Soares da Costa Group’s press release on CMVM website (www.cmvm.pt) 

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• Concessions: minimization of capital needs; and 

• Reduction of the cost structure. 

Not all these guidelines are related to the company covered in this report. However, given the strategic focus on the 

construction activity and the fact that Sociedade de Construções Soares da Costa, SA is the Group’s main company in this 

sector, it will, of necessity, take on a great share of the responsibility with the implementation and roll-out of this strategy. 

2. ACTIVITY 

2.1 OVERVIEW 

General Analysis 

The year 2011, on a global scale, was characterized by weakened growth and increased uncertainly. World product expanded 

4.0% 2 , driven by the emerging markets, with Asia in the lead. The world economy is under the confluence of two adverse 

developments: the almost complete stagnation of the advanced economies and the increased uncertainty in the financial and 

fiscal planes. The fiscal consolidation underway in many of the more developed economies impacts their internal demand; on 

the other hand, the level of scepticism in the market has increased regarding many of the countries’ ability to stabilize their 

public debt, and these concerns are more widespread and less focused, as was the case previously, on the countries in the 

European periphery. 

The US economy grew some 1.7% during 2011 and a slightly higher growth (2.0%), although still below the historical average, 

is estimated for 2012. The need to accelerate the fiscal consolidation process places pressure on public spending, which will 

cease to be a growth stimulant, whilst private investment, though positive, has evolved only timidly. The draining of the real 

estate bubble is evident, with a decrease in real estate stocks and a less pronounced decrease in house prices, but it is clear 

that this sector will not be boosting economic growth anytime soon. 

The Euro Zone, affected by its concerns over public debt, saw its economic activity very much conditioned during 2011. 

Conservative budget policies, in some cases severely restrictive, the need to accelerate the financial deleveraging process 

and the increase in the price of petroleum resulted in a weak product growth with a projected stagnation for 2012, with the 

main economies, such as Germany and France, showing very limited product expansion. 

The Portuguese Economy 

The year 2011 was dominated by the Portuguese State’s request for financial assistance from the International Monetary 

Fund and the European Union, request made prior to the election that led to the substitution of the dominant political party 

in the Government. This request resulted in the formalization of an Economic and Financial Assistance Programme (EFAP), 

under which the Government of Portugal undertakes to adopt measures to correct the macroeconomic and structural 

imbalances. 

These measures, which basically been translating into in a significant reduction in public investment and a heavier tax burden, 

aimed at budgetary consolidation have resulted in an economic retraction due to the decrease in private consumption (both 

current and durable). One can also observe a contraction in the investment, with the GFCF indicator recording the lowest 

historical minimum since the beginning of the series commencing in 1995, with negative contributions from all the 

components: transportation equipment, machinery and equipment and construction, the latter recording the most significant 

contribution. 

2 International Monetary Fund projections IMF – World Economic Outlook, September 2011 

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The positive evolution recorded in international trade, with exports achieving a notable increase (+15.1 in terms of 

homologous variation in November, with imports reducing by 3.6%), is insufficient to compensate the strong reduction in 

internal demand 3 . 

Consequently, the Banco de Portugal, in its Winter Bulletin, points to a contraction of the Portuguese economy in 2011 in the 

order of -1.6% and projects a steeper drop, in the order of 3.1%, for 2012. 

In terms of inflation, the Consumer Price Index (CPI) recorded an average rate increase of 3.7% (1.4% in 2010). This change 

reflects the significant increase in energy prices and the VAT rate changes applicable as from January 2011. On the other 

hand, the average annual increase in the Harmonized Consumer Price Index (HCPI) moved from 1.4% in 2010 to 3.6% in 2011, 

attaining a differential of 0.9 p.p.(-0.2 p.p. the previous year) 4 on the Euro Zone. 

Unemployment continues to be a variable displaying a worrisome variation at the economic and social levels. Recent data 

disclosed by INE 5 places the estimated unemployment rate for the 4th quarter of 2011 at 14.0%, 1.6 percentage points over 

that of the previous quarter. The average annual unemployment rate for 2011 was 12.7%. 

Internal Market: the Construction Sector 

The indicators measuring the evolution of the construction sector reflect its progressive deterioration in 2011. Last December, 

the construction production index reflected a homologous variation of -12.7%, reflecting homologous variations of -12.2% in 

the construction of buildings and of -13.1% in the civil engineering segment. This worsening of the monthly homologous 

variations, took the average rate change of the global index over the last twelve months to -9.9%, 0.6 percentage points more 

negative than that calculated as at November, with the construction of buildings showing an average variation of -10.2% in 

November, even worse than that recorded in the civil engineering segment (-9.6%) 6 . 

Despite the habitual delay in the adjustment of the labour market, the unusually long recessionary cycle being experienced by 

the sector has inevitably resulted in lower employment, with the average variation rate over the last twelve months, 

measured in December, coming in at -10.1%. 

This recessive outlook promises to be a prolonged one, particularly in light of the number of tenders launched by the central 

administration, which contracted by 70.3% in homologous accumulated terms as at November. Overall, the drop in the 

tender launch value by November, when compared to the homologous period, amounted to 1,239 million Euros (-31.6%) 7 . 

Likewise, licensing of new houses and dwellings recorded homologous drops in December of –25.2% and -35.0% (-21.7% and 

-29.6% in the previous month), respectively 8 . 

External Market 

A brief reference follows on the macroeconomic environment of the main external markets where the company has a direct 

intervention: 

- ANGOLA 

In Angola, the IMF report dated 16 September 2011 on the Fifth Evaluation within the scope of the Stand-By Agreement, 

refers that ”the economic growth in 2010 and in the first half of 2011 was strong, although way below the levels predating the 

crisis. The main constraints were the production of petroleum below that expected and the deceleration in the credit flows and 

in the activity of the sectors affected by delays in government settlements”. Even so, the same report projected a 7.7% growth 

rate for the non-Petroleum GDP for 2011, although the overall GDP growth is estimated at 3.4%. 

3 The source used here was the “Síntese Económica de Conjuntura” – December 2011, INE (Economic Survey) 

4 Consumer Index Price, December 2011, INE 11 Jan. 2012 (CPI) 

5 Unemployment Statistics – 4th quarter 2011 - 16 Feb. 2012 

6 Production, Employment and Remuneration indices in Construction, December 2011, INE, 10 February 2012 

7 Construction Survey nº 57, December/2011, FEPICOP 

8 Economic Survey – January 2012, 17 Feb. 2012 INE 

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Consequently, the Angolan economy’s growth rate estimates continue to suggest a strong performance even thought the 

scenarios of meagre performance by the world economy and of a petroleum production decrease bring in an element of 

uncertainty that recommends prudence in projecting the economy’s expansion rate. 

The control over inflation is one of the authorities’ priorities. A decreasing trend has been achieved, with the variation rate for 

various prices over the last twelve months coming in at 11.3%, and the objective for 2012 has been set at 10%. 

- MOZAMBIQUE 

This country is considered a success story amongst the African economies and has assumed an increasingly important role in 

Southern Africa, given, namely its potential as a supplier of energy. 

Both internal entities (State Budget Amendment for 2011) and international entities project expansion rates for the 

Mozambican economy for 2011 and for subsequent years in excess of 7% 9 , higher than the growth rate recorded in 2010, 

6.8%, which, of itself, was one of the most pronounced growth rates in Sub-Saharan Africa. 

This growth rate acceleration results from the progress brought about by direct foreign investment, via megaprojects 

particularly in the mineral resource extraction sector, by the increase in public investment as well as due to the good 

performance of the agricultural sector, all factors fundamental to the progress made in attaining the overall strategic objective 

of eradicating absolute poverty in the country. 

Despite these indicators, the continued heavy dependence on international aid must be referred. 

One of the political priorities has been the war on inflation which is, however, affected by exogenous factors such as the 

increase in the price of commodities and of foodstuff at an international level. The adoption of restrictive monetary measures 

by the Banco de Moçambique (Mozambique Central Bank) and the increased stability of the local currency (Metical) have 

permitted the reduction of inflation which, even so, presents an annual average variation rate of 11.3%, measured in 

November. 

- ROMANIA 

Romania attained a GDP growth in the order of 1.5% in 2011 and forecasts point to a GDP growth rate of some 4.3% for 

2012. 

The construction sector in the country demonstrated some dynamism in 2011, supported essentially on the development 

and construction of infrastructure. 

2.2 EVOLUTION OF PRODUCTION 

Domestic Market 

In an environment so negatively inclined to investment, the domestic civil construction and public works market is suffering 

from a deep depression that has determined the need for imperious and, naturally, painful adjustments to dismantle the 

excess installed production capacity in the Country. Adding to this aspect, are the additional constraints resulting from the 

difficulty in obtaining finance with which the sector battled during 2011. 

Despite this bleak economic environment, Sociedade de Construções Soares da Costa, SA’s activity in the domestic market, 

which includes the contributions made by the joint ventures in which it participates, managed to maintain a level throughout 

2011 in line with that of the previous year, primarily due to the very relevant contribution deriving from the construction of 

the Transmontana motorway. 

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7.4% at the end of the first half of 2011, according to declarations made by the Governor of the Mozambican Central Bank in the year-end official speech 

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Given that, cumulatively, the production phase of the high velocity train line Poceirão-Caia was postponed, it can easily be 

inferred that in so far as domestic production was concerned, 2011 presented a challenge for Sociedade de Construções 

Soares da Costa, S.A. which it overcame with success. 

Amongst the works completed in Portugal during 2011, the following, given their importance, should be highlighted: 

- School Infrastructures renewal programme – Lot 2AN2); 

- ETAR do Barreiro (WWTP); 

- Barreiro-Moita drainage sub-system; 

- Capinha Irrigation Network, in Cova da Beira; 

- Cascais Citatel Heritage Hotel; 

- Amarsul – Garbage sorting station; 

- Road in Madalena do Mar, in Madeira island; 

- Organic Recovery Centre in Seixal, that entered the testing phase of the equipment and systems. 

Regarding works initiated in 2011, and despite the climate of containment installed in Portugal, the following should be 

highlighted: 

� Serra da Estrela Heritage Hotel, in Covilhã; 

� World Hotel, in Tocha brach; 

� Hotel Sana Evolution, in Lisbon; 

� EDIA - Aljustrel Block; 

� EDIA – Pedrógão 3 Block; 

� Troia housing development infrastructure 

� Substitution of the Vitória Plant Roofing, in Madeira 

Regarding the geographical distribution of Sociedade de Construções Soares da Costa’s domestic activity, a strong stagnation 

was confirmed in Madeira (1% of activity in 2011, compared to 4% in 2010 and 14% in 2009) and a strong concentration was 

evident in the North of the country. It should be pointed out that this concentration was essentially focused around the 

Transmontana motorway, which represented a huge percentage of this amount. 

Domestic Activity in 2011: Distribution by Geographical Area 

South 

31% 

Madeira 

1% 

North 

68% 

The distribution by activity segments followed the sector trend already manifested in 2010, in which a clear deceleration in 

the private activity was detected, in that there was a shift to the Engineering and Infrastructure segment that increased its 

quota from a mere 27% in 2008 to almost 54% in 2009, representing some two-thirds in 2010 and almost 90% in 2011. Once 

again, it must be stressed that this number does not reflect any public investment intention trend but rather an abrupt drop 

in private investment. 

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Domestic Activity in 2011: Distribution by Segment 

Civil 

construction 

8.8% 

Within the Civil Construction segment, almost three-quarters of the activity occurred in the Hotel sub-segment, with the 

remaining activity in 2011 split between Residential and School construction. The latter sub-segment, given its public sector 

status, highlights the undeniable stagnation of the private investment. 

Domestic Activity in 2011 – Civil Construction: Sub-segment Composition 

Office buildings 

1.8% 

Industry 

0.6% 

Schools 

11.8% 

Residential 

buildings 

12.2% 

Engineering 

and 

infrastructures 

91.2% 

Hotels 

73.6% 

Within the Engineering and Infrastructure segment, the Roads represented some two-thirds of the activity, followed by 

Infrastructure and Environment with a weight of some 10%, Dams (corresponding essentially to the reinforcement of the 

Alqueva Dam energy production capacity) with some 6% and Bridges, with 5%. 

Domestic Activity in 2011 – Engineering and Infrastructure: Sub-segment Composition 

Infraestrutures 

10.5% 

Roads 

65.2% 

Tunnels 

0.1% 

Bridges 

4.8% 

Railway 

1.7% 

Environment 

11.3% 

Dams 

6.4% 

At the joint venture level, reference should be made to the following given the importance of their volume of activity: 

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Angola 

- CAET XXI – Construções, ACE (50%): Conception, project, construction, increase in the number of roads and 

rehabilitation of the various associated road networks that integrate the Transmontana sub-concession; 

- Despite the uncertainty surrounding the project, LGV - Engenharia e Construção de Linhas de Alta Velocidade, 

ACE (17.25%), was constituted with the object of: “executing the work underlying the contract to be signed with 

ELOS – Ligações de Alta Velocidade, S.A., the company that is to celebrate the contract covering the project’s 

concession, construction, financing, maintenance and availability, throughout the entire RAVE concession 

period, of the Poceirão-Caia line as well as all the operating activities at Évora Station, including those of the 

management and sale of advertising, of the commercial areas integrated in it and of the car parks adjacent to it; 

- HidroAlqueva, ACE (50%), with the object of executing the global construction contract for the capacity increase 

of the Alqueva hydroelectric plant, for EDP; 

- Mota-Engil, Soares da Costa, MonteAdriano - Matosinhos, ACE (28.57%), for the construction of the 

infrastructure necessary for the implementation of Indáqua Matosinhos, SA’s investment plan; 

- GCVC – Grupo Construtor de Vila do Conde, ACE (28.57%), in respect of the “Conception, project and 

construction of the infrastructure necessary for the implementation of the Indáqua Vila do Conde, SA’s 

investment plan”; 

- Nova Estação, ACE (25%) – Contract for the Conception/Construction of the structural work on the extension 

between the Amadora East and the Reboleira Stations on the Blue Line of the Metropolitano de Lisboa E.P.. 

The Angolan market continues to play an important role in the company’s activity, and is a territory where the company has 

attained great notoriety, prestige and reputation in the building construction segment, with the construction of significant 

projects in the various sub-segments: residential, commercial and offices. 

However, the infrastructure segment, a strategic development vector in the diversification and enlargement of the business 

portfolio, already assumes an important operational significance in this market. 

Amongst the most relevant works included in the production for the year are the following: 

� Bayview Office Buildings; 

� Rehabilitation of the Luanda Seaside; 

� Largo do Ambiente Building (completed); 

� 1º Congresso Tower; 

� Atrium Independência Building (completed); 

� Science and Technology Museum – GOE; 

� INE – New Building; 

� Sana Luanda Royal Hotel (completed). 

Regarding this market, it is important to refer to the progressive expansion of the company’s activities beyond the Luanda 

area with the execution of works, namely in Soyo (Bechtel – LNG Project: Bairro Fina School), Benguela (BESA headquarters in 

Lobito), and Huambo (Huambo Cultural Centre), all projects that were adjudicated and started during the period. 

Mozambique 

Regarding Mozambique, another market of historic permanence for Soares da Costa, this Report covers solely the activity of 

its permanent establishment (PE). As is public knowledge, the activity of Grupo Soares da Costa in this territory extends 

beyond this PE scope, being carried out through the Mozambican subsidiary, Soares da Costa Moçambique, S.A.R.L., whose 

share capital is 80% held by Soares da Costa Construção, S.G.P.S., S.A.. 

One of the internationally most relevant public events for Mozambique in 2011 was the organization of the X African Games, 

with which the company is indubitably associated. The construction of the Olympic Village, respective infrastructure, training 

areas and the Olympic pools complex was finalized with the delivery of 848 apartments on the due date, creating the ideal 

accommodation and event conditions for the athletes present at the X Games, which took place in September 2011. The 

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professionalism and capacity of the company continue to reflect an image of credibility and trust, recognized by the market 

in general, public or private entities. 

The evolution of the rehabilitation of Estrada EN 221 (Road), namely the two lots contracted to Soares da Costa, was 

conditioned by the extreme delay in the formalization of the Portuguese Commercial Credit Facility underlying it. Despite the 

resulting constraints, the human resources necessary were not demobilized so as to guarantee a rapid start-up as soon as the 

necessary conditions were in place, which occurred on the threshold of the third-quarter of 2011. The main construction site 

already has the conditions necessary to lodge the expatriate staff, the equipment has been mobilized, and work is scheduled 

to start immediately on the earth works, despite the seasonal rains typical of this time of the year. 

With all the human and technical resources mobilized, the Ponte de Tete (Bridge) already evidences an appreciable progress, 

with the stake construction (on land and in water) pace progressively improving with the experience gained, whilst the 

abutments and piers of the super-structure are being raised. Except for the consequences of a possible overflow, above the 

norm, of the Zambezi River on the normal evolution of the works (as a result of the rain common in this season and in this 

area), all the indications are that the conditions have been garnered to guarantee regular and sustained production and 

productivity indices. This infrastructure involves both the constructing company as well as the Group concessionaire 

(integrated in the company Estradas do Zambeze), and is of particular importance to this Mozambican regional road network 

and to the connections to the Interland countries, namely Malawi, Zambia and Zimbabwe. 

Romania 

During 2011 the following works were completed in this market: 

- Pitesi water and sewerage infrastructure – carried out in consortium with MAEC (with SDC leading), with an 

executed turnover volume of 18.2 million Euros, and in respect of which the delivery was formalized on 16 

December 2011. 

- Galati water and sewerage infrastructure – carried out in consortium with MAEC (with SDC leading), with an 

executed turnover volume of 40.7 million Euros; completed in November 2011 and under guarantee until 

November 2012. 

- Accesses to the Vutcani wind farm in Vaslui, for the client Global Services Provider (EDP Renováveis – Espanha) 

with a contractual amount of 4.3 million RON (1.05 million Euros), a joint-venture project with ISIS Europa 

(50/50) and in which the latter is the consortium leader; concluded in November 2011. 

- Corugea bypass in Tulcea, for the consortium Alpha Wind/Beta Wind/Enel Green Power Romania, with a 

contracted amount of 610 thousand RON (140 thousand Euros), a project undertaken by a joint-venture of the 

company with ISIS Europa (50/50), with Soares da Costa has leading the consortium; work finalized in 

November 2011. 

Work is on-going on the access works to the Casimcea and Alpha Wind wind farms, both in Tulcea. 

Brazil 

Brazil, in line with the Group’s strategic plan, is considered one of the priority markets for the company’s activities. 2011 

formalized the start of this expansion into Brazil. To this end, the company opened up a branch in this territory in June 2011, 

which will enable it to conduct new business, directly, in the country. 

In addition to the commercial activity carried out, aimed essentially at private clients in the industrial area, it should be noted 

that through a “Sociedade de Propósito Específico” (Specific Purpose Company) named “Terceira Onda Planejamento e 

Desenvolvimento, Ltda.”, in which Sociedade de Construções Soares da Costa, SA holds 50% of the share capital (the 

remaining 50% being held by a local constructing company), the participation in two civil construction projects, integrated in 

an investment undertaken by the cement company “Votorantim” designated “3ª Onda de Investimentos da Votorantim 

Cimentos”, was already possible. 

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The first contract, for the civil construction of a cement grinding plant in S. Luís do Maranhão, in the amount of 12.7 million 

Reais and with an 8 month execution period, started in March 2011 and was finalized in November of the same year. 

The second contract, for the civil construction of a 5,000 tonne/day production line in Rio Branco do Sul, Paraná, amounts to 

36.3 million Reais and, having also started in March 2011, has its deadline set for July 2012. 

The company also has a residual shareholding in another Brazilian company, incorporated to widen the scope of the Group’s 

activities, whose share capital is held by Soares da Costa Construção, SGPS (99.9%). This company is already registered with 

CREA (Conselho Regional de Engenharia e Agronomia – Regional Engineering and Agronomy Council), which endows upon it 

the legal capacity to carry out its activities in that country. 

The approach vis-à-vis a new market always represents a challenge, be it through cultural or legal differences or due to the 

financing needs posed by the investment required. However, the presence of the company in Brazil with the ambition of 

staying on permanently, because such permanence is strategic, is also highly challenging. The first projects carried out, in 

respect of which the company relied on a local partner, permitted a drastic shortening of the, unavoidable, learning period. 

It is thus with great confidence that Sociedade de Construções Soares da Costa faces its future in that country. 

Since in 2011 the activity in the Brazilian market was not directly carried out by the company, this report does not reflect, in 

numeric terms, relevant impacts with regard to this market. 

Israel 

The activity of the company’s branch in this country, generically associated with the development of the Tel Aviv Metro 

Project, was interrupted in 2010 due to the known vicissitudes of this project, following the Project owner’s unexpected 

unilateral termination of the concession contract, which is public knowledge 10 . 

The company, although not part of the concessionaire entity, has a shareholding in the construction consortium and awaits 

the Arbitration Court‘s decision on this litigation, even though it is convinced that there were no grounds for that termination. 

2.3 QUALITY, SAFETY, ENVIRONMENT AND HEALTH 

The external audit of the quality management (NP EN ISO 9001:2008), environment management (NP EN ISO 14001:2004) 

and the management of safety and health in the workplace (NP 4397:2008 e OHSAS 18001:2007) systems was successfully 

carried out at the end of 2011. 

The APCER audit team stressed that “the Company was able to demonstrate adequate technological control over its 

productive processes and the conformity of its products, having also evidenced a good level of control over environmental 

aspects, as well as over the dangers and risks associated with its activities”. 

Despite the crisis that has affected the domestic economy, with a particular incidence on civil construction, the Company was 

able to maintain its levels of rigor and quality in implementing its Quality, Environment and Safety systems (QES). 

Given the present maturity of the systems, their continued improvement has now assumed a fundamental importance in 

their management, and for this purpose the findings and recommendations of audits, data analyses, management reviews 

and other means are relied upon on deciding corrective and even preventive actions. Improvement opportunities detected 

during internal or external audits have received special attention and have been adequately treated. 

The management structure responsible for the areas of quality, environment, safety and health has been maintained, albeit 

with minor sporadic adjustments to adapt the current economic conditions, thereby guaranteeing appropriate efficiency 

levels. 

10 http://web3.cmvm.pt/sdi2004/emitentes/docs/FR29785.pdf 

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2.4 COMMERCIAL ACTIVITY 

From the analysis of the production activity of Sociedade de Construções Soares da Costa, SA, detailed above, it can be 

inferred that 2011 was a year in which the level of the labour productivity of the company in the country, having decreased in 

terms of projects, was nevertheless expressive. However, to better understand the challenge posed by the drop in 

investment associated with the deficient financial conditions in Portugal, it is important to consider, in parallel, some of the 

facts related with the commercial activity in the country. Of these facts, the following stand out due to their significance: 

� General shortage of tenders, with the consequent degradation of prices; 

� Even more severe stagnation of tenders launched in the Madeira island; 

� Suspension of the School Premises Programme; 

� Suspension of the railway infrastructure PPPs (Public-Private Partnerships); 

� Suspension of the Lisbon and Oporto underground expansion plans; 

� Suspension of all new tenders for the High Velocity Line; 

� Suspension of the new Lisbon Airport; 

� Suspension of private projects in the Offices sub-segment; and 

� Postponement of private projects in the Hotel sub-segment. 

Adding to this, and further increasing the difficulty of the challenge, was the extremely reduced rate of decisions taken on 

the tenders launched: the Todos os Santos Hospital is currently in a dead-lock situation and various important tenders in the 

supply and waste water treatment domain are also suspended. 

The single positive note in terms of investment in Portugal was the National Dam Plan, with various tenders being launched 

by both EDP and Iberdrola. Despite these prospects, no project actually materialized in 2011 for Iberdrola, and EDP 

postponed the execution of one of the tendered dams - Alvito Dam. 

Despite this negative panorama of the construction activity in Portugal, some important bids were won amongst which: road 

in Madalena do Mar, 2nd phase in Madeira, road in Fajã da Ovelha– Ponta do Pargo, in consortium, also in Madeira, the 

infrastructure construction projects for the water, roads and drainage of the Aljustrel Block and for Block 3 at Pedrogão, 

structural interventions at the Trofa and Sortes tunnels (Refer), the Moura-Safara irrigation pipeline (AGDA), the Tocha Hotel 

for the client World Hotel and the Sana Evolution Hotel, for Aziparque. 

In terms of the international commercial activity of Sociedade de Construções Soares da Costa during 2011, the following 

occurred: 

- Start of commercial activity in the African West Coast, with the presentation of a number of proposals on bids in 

Senegal and Gambia; 

- Pre-qualification for a high velocity line between Tangier and Kenitra, in Morocco, with an effective 

participation in a number of tenders; 

- Presentation of proposals on various bids in Oman; 

- Maintenance of intense levels of commercial activity in the Portuguese-speaking African countries that the 

company is traditionally present in (Angola and Mozambique – with the spreading of activity within the 

geographic limits of these countries - and S. Tomé e Príncipe); 

- In Angola, due to its relevance, the following adjudications are worthy of note: the project Blue Plaza Building, 

which will be one of the tallest buildings in the centre of Luanda, with seventeen stories and four basements; 

the Luanda South Project, comprising two residential buildings; the “Shopping Fortaleza” Project that is to be 

developed next to the new Waterfront viaduct, and which is to face Baía de Luanda (Bay), comprising a seven 

story building for the promoter Sopros – Sociedade Angolana de Promoção de Shoppings and, due to its 

representativeness vis-à-vis the highly selective criteria imposed, Soares da Costa’s inclusion in Nestlé’s 

constructors/suppliers “universe”, with the adjudication of a project with a 9-month execution period and in an 

amount in excess of 6 million Dollars. In the Infrastructure segment, an important project was launched by the 

National Direction of the Public Infrastructures of the Urbanism and Construction Minister of the Republic of 

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Angola (covering the execution of the rainwater drainage infrastructure, the construction of road accesses, the 

installation of the electricity supply and public lighting infrastructure) integrated in the Sambizanga and 

Encostas da Boa Vista requalification project, in Luanda, partially in the ex-“Roque Santeiro” area, in the amount 

of 90 million Dollars (63 million Euros) and with an execution period of 12 months; 

- Important steps were taken to consolidate its recent presence in Brazil. 

2.5 HUMAN RESOURCES 

Staff Recruitment and Selection 

Sociedade de Construções Soares da Costa advocates a recruitment strategy that guarantees the admission of new workers 

not only with the skills required for the function but also with significant professional development potential. 

Internal recruitment was the preferred approach applied during 2011 to satisfy human resource needs, an approach which 

tends to enhance the employees’ career management, with the consequent motivational gains, as well as to reduce costs 

with external recruitment processes and with the integration of new employees. 

As a result, external recruitment processes were residual during 2011 and staff needs, namely for the Angolan Branch, were 

satisfied by resorting to the international mobilization of the company’s employees. 

Training 

The primary characterizing aspect of the investment in training in 2011 was the number of training hours, 11,978, worth 

55,985€ in enrolment fees. This volume covered 792 trainees. 

The analysis of the distribution of hours amongst the professional categories reveals that the Qualified Professionals and the 

Senior Staff used up a significant portion of the training hours. This distribution reveals lower levels of training at the Midlevel 

and Intermediate-level Staff, highlighting a clear need to act at these levels. 

“Civil Construction and Civil Engineering” was the thematic area that recorded the highest number of training hours in 2011 – 

6,274 hours, followed by “Management” with 1,865 hours and “Work Safety” with 1,675 hours. 

By Professional Category 2011 

Management 48 

Senior Staff 4,891 

Mid-level Staff 586 

Intermediate-level Staff 164 

Qualified Professionals 6,175 

Semi-qualified Professionals 17 

Unqualified Professionals 86 

Trainees and Apprentices 12 

Total 11,978 

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By Themes 2011 

Computer sciences 596 

Computing from a user perspective 36 

Social and behavioural sciences 6,274 

Civil construction and civil engineering 32 

Electricity and energy 25 

Electronics and automation 1,864 

Languages and foreign literature 620 

Marketing and advertising 6 

Accounting and management 501 

Law 235 

Unspecified 76 

Environmental protection 39 

Safety and hygiene in the workplace 1,675 

Total 11,978 

In so far as planned training is concerned, the year 2011 had as its main objective to develop in the holders of certain critical 

functions, a set of technical and behavioural skills that are considered strategic for the improvement of the Group’s human 

capital, namely: project management, languages, leadership, business innovation and technical skills in engineering and 

management. 

At the level of top management, 2011 was marked by the Top Management Encounter. This event, supported by 

organizational development consultants, brought together fifty top-level managers for two days, to work on the themes of 

leadership and business innovation; 18 of these were from Sociedade de Construções Soares da Costa. 

This Encounter was an important formative moment, with undeniable gains in terms of aligning values and attitudes applied 

in the leadership of work teams. The methodology adopted aligned the speakers’ discussions on the themes with animated 

group dynamics oriented to the sharing, cohesion and the development of work teams. 

With a great impact on the sharing and on the transfer of the knowledge existing at Sociedade de Construções Soares da 

Costa, various Engineering and Management Thematic Workshops were held. The format used in these workshops brought 

together internal speakers, experienced in a given theme, who shared their knowhow with the floor, comprised of colleagues 

with a professional interest in that theme. Given that some of the themes were of an engineering nature, the workshop 

presentations, where applicable, were complemented with study visits to construction works, where some of the technical 

aspects discussed in the workshops could be visualized in loco. 

These thematic workshops in Engineering and Management covered the following themes: Methodologies used in 

Assembling Metallic and Mixed Structures, Reinforcing the Energy Producing Capacity at the Alqueva Dam, FIDIC contracts, 

Decentralized Production of Energy and Energetic Efficiency, Public Contracts Code, Technical Conferences 2011, Project 

Sustainability Management Indicators, LEED – Evaluation of Sustainable Construction, International Procurement, Visit to the 

Corgo Viaduct Works. 

Finally, 2011 saw the creation of the Academy of Knowledge, which complies with the concept and model of a corporative 

university and has as its mission the following ambitions: 

1. Promote the sharing of experiences and transfer knowledge from the more experienced generation in the Group to 

the younger generations; 

2. Offer a set of specific formative programmes that aim to develop a series of corporative skills, transversal to the 

various functional groups; 

3. Disseminate a set of values and a behavioural pattern that permits the consolidation of the Organizational Culture 

required at the core of every company of the Group; 

14


4. Take the formative programmes of a corporative nature to the expatriate employees, namely through e-learning 

solutions. 

In the pursuit of this mission, partnerships are being sought with the best domestic business schools in terms of developing 

the formative programmes. In 2011 we formalized the first partnership between the Academy of Knowledge and Católica 

Executive Education Lisbon, which resulted in the Advanced Project Management and Negotiation Programme. 

Internship Programmes 

During 2011 Sociedade de Construções Soares da Costa took in 17 interns, with the following distribution: 3 in Civil 

Engineering under the Prémio Talento (Talent Award); 11 professional internships; and 3 curricular internships. 

Within the scope of the Prémio Talento (Talent Award) three newly qualified Civil Engineers saw their investigative work 

awarded a prize: a 6 month internship at Sociedade de Construções Soares da Costa. The interns had an opportunity to get to 

know, under the guidance of experienced coordinators, two important functional activity areas in the company: Technical 

and Technical-Commercial. 

Performance Evaluation 

The performance evaluation system in place at Grupo Soares da Costa is applied to all the employees of Sociedade de 

Construções Soares da Costa, S.A. and has as its main objectives the promotion of the professional development of the 

employees, the rewarding of excellence and the increase in the operating results of the various business areas. 

In 2011 some 564 employees of Sociedade de Construções Soares da Costa, S.A. were integrated in the performance 

evaluation process and this total includes not only the employees working in Portugal but also those working in Angola, 

Mozambique, Romania, Costa Rica and Brazil. 

Evaluation of Potential 

The Evaluation of Potential and Management of Talent process combines, in an integrated manner, the data relating to 

technical skills, operational skills of a behavioural nature, professional interest, motivational factors, career projects and 

international mobility disposition, amongst other aspects. 

These evaluation processes continued throughout 2011, with the intention of widening the knowledge available on the skills, 

interest, availability and career projects of the employees of Sociedade de Construções Soares da Costa 

Number of Employees 

At 31 December 2011, 1,634 employees worked at the Company (versus 1,872 the year before), divided as follows: 

Type of Function 2011 2010 

Directors 2 4 

Senior Management 265 290 

Mid-level Management 72 80 

Intermediate-level Management 219 239 

Highly-qualified and Qualified Professionals 938 1,114 

Semi-qualified Professionals 19 20 

Unqualified Professionals 119 131 

Trainees and Apprentices - - 

Total 1,634 1,872 

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To the table presented above must be added the staff contracted locally at the different branches and foreign delegations of 

the company, which number 1,683 at the close of the period (1,783 a year before). 

A comparative analysis shows an important decrease in the number of employees. The company’s strategy on the 

management of human resources gives preference, as stated above, to inter-sector and geographic mobility and, within the 

wider scope of the Group, inter-company mobility, as a means to mitigate the effects of the scarcity prevalent in the 

domestic construction market that has resulted in human resource redundancies in certain professional categories; the 

severity of this problem, however, has resulted in the implementation of corrective actions in the allocation of this 

important production factor, actions which the company has sought to implement in a cautious and progressive manner, 

abiding by the law in force and, even more importantly, imbued in the social responsibility concerns that are transversal to 

the conduct of all its activities. 

In this matter, Sociedade de Construções Soares da Costa was declared, by order of the Secretary of State for Employment 

dated 7 December 2011, a company under restructuring, in the terms of and for the purposes foreseen in paragraph d) of no. 

2 and no. 4 of article 10 of Decree-Law 220/2006, of 3 November. 

3. ECONOMIC AND FINANCIAL ANALYSIS 

As a complement to the various elements comprising the attached financial statements, which contain detailed information 

on the company’s accounts, we refer below to the more pertinent aspects relating to the company’s economic and financial 

situation and its performance during the period recently ended: 

Turnover 

The company’s turnover (Sales + Services Rendered) in 2011 amounted to 605.7 million Euros, an amount that represents a 

decrease of 3.3% relative to the amount attained in the previous period. The following table shows the breakdown of turnover 

by geographical market, with a comparative analysis with the previous year: 

Thousand Euros 2011 % 2010 % ∆ 2011/10 

Portugal 233,097 38.5% 229,198 36.6% 1.8% 

Angola 310,619 51.3% 347,285 55.4% -10.6% 

Mozambique 54,899 9.1% 20,945 3.3% 162.1% 

Romania 6,630 1.1% 25,876 4.1% -74.4% 

Other 432 0.1% 3,239 0.5% -87.3% 

Total 605,677 100.0% 626,544 100.0% -3.3% 

Despite the recessive climate in the domestic market, amply characterized in the previous chapter, the level of turnover in 

Portugal was maintained (and even slightly increased) as a result of the compensatory effects provided by the on-going work 

on the Transmontana motorway. In reality, if the effect of this project is removed domestic activity will have decreased 

considerably (43.7%) in relation to last year. 

In the external market the highlight goes to the extraordinary growth in Mozambique whilst Angola, which continues to be the 

company’s most representative market, with a quota in excess of half of the company’s turnover, suffered a decrease of 

10.6% which, however, must be kept in perspective given the fact that it is being compared to 2010, during which year 

historical maximums were recorded. 

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Profitability 

The main components forming the results for the period and for the previous period, are summarized below for better 

analysis: 

(Thousand Euros) 2011 % OR 2010 % OR ∆ 2011/10 

Turnover 605,677 99.5% 626,544 101.7% -3.3% 

Production Variation -19,107 -3.1% -29,914 -4.9% -36.1% 

Other Operating Gains 22,236 3.7% 19,352 3.1% 14.9% 

Operating Revenue (OR) 608,806 100.0% 615,982 100.0% -1.2% 

Cost of Goods Sold and Mat. Cons. 97,662 16.0% 103,810 16.9% -5.9% 

External Supplies and Services 369,862 60.8% 363,028 58.9% 1.9% 

Staff Costs 83,097 13.6% 95,622 15.5% -13.1% 

Other Operational Costs 12,665 2.1% 13,879 2.3% -8.8% 

EBITDA 45,520 7.5% 39,642 6.4% 14.8% 

Deprec./Amort., Provs. and Adjusts. 13,693 2.2% 13,988 2.3% -2.1% 

EBIT 31,827 5.2% 25,654 4.2% 24.1% 

Financial Results -13,291 -2.2% -12,119 -2.0% 9.7% 

Earnings before Tax 18,536 3.0% 13,536 2.2% 36.9% 

Corporate Income Tax 6,357 1.0% 5,230 0.8% 21.6% 

Net Income for the Period 12,179 2.0% 8,306 1.3% 46.6% 

Although turnover decrease by 3.3% Operating Revenue had an even lower decrease of 1.2%, given the lower production 

stock variation and the higher contribution of the other operating gains vis-à-vis the previous period. 

In terms of cost structure changes, a 13.1% drop is evident in Staff Costs which decreased 12.5 million Euros in absolute 

terms and represented 13.6% of operating revenue (compared to 15.5% a year before). This reflects the important measures 

taken to rationalize costs, which real extent is still not fully evident given the sub-utilization of human resources in certain 

professional segments at present, particularly in the domestic market where the adaptation of the structure to the 

dimension of the market requires more implementation time. 

The components “cost of goods sold and materials consumed” and “external supplies and services” had a differentiated 

variation and practically compensated each other, with a reduction in the weight of the prior and an increase in that of the 

latter, in percentage terms, which were nevertheless not very significant; this , however, does not reflect a well defined 

behaviour, given that in the previous year they had varied precisely in opposite directions, but appears, rather, to be the 

consequence of the mix and the type of projects predominating in each period. 

EBITDA presents a significant increase of 14.8%, attaining 45.5 million Euros, which has raised the profitability ratio to 7.5% 

of operating revenue, that is, an increase of 1.1% over that of the previous year. 

This margin improvement – given that the amounts of depreciation and amortization and adjustments have been fairly 

constant over the last two years – is carried forward to the operating level with EBIT rising from 25.7 to 31.8 million Euros. 

Financial results were penalized by the net increase in financing costs but the evolution in the “exchange balance” minimized 

these impacts which, even so, penalized financial results in 9.7%, topping -13.3 million Euros versus the -12.1 million Euros of 

the preceding year. 

The conjugation of the components previously referred to resulted in a pre-tax profit of 18.5 million Euros, 36.9% higher than 

the 13.5 million made in 2010. 

Considering the taxes (which revealed an effective rate of 34.3% in 2011), net income closed at 12.2 million Euros (8.3 million 

in 2010), an important level that reveals the solidity, capacity and performance of the company. 

17


A final note regarding comprehensive net income: it only differed from the net income for the period due to the recognition 

of a fair value adjustment (net of deferred taxes) in hedging instruments (+0.1 million Euros) and, consequently, totalled 12.3 

million Euros (7.8 million the year before). 

Investment 

As is known, the economic and financial framework was not propitious to the realization of significant investments. Even so, 

capex for 2011 amounted to 9.4 million Euros, an amount practically identical to that of the previous year (9.5 million), with a 

high concentration on premises and industrial buildings (Viana yard and the industrial premises of the central yard) in Angola. 

Statement of Financial Position 

At the Balance Sheet level, a substantial and desirable decrease in stocks is evident, particularly in the caption products and 

work-in-progress whilst accounts receivable show an increase of 44 million Euros, although +28.8 million Euros relate to 

group, associated and other related companies. The generalized difficulty in accessing credit and the companies’ liquidity 

problems have resulted in a significant increase in the short-term debtor balances to 397.0 million Euros, an increase of 7.2 

million Euros in relation to the previous year. 

A comparative analysis of the 2010-2011 liabilities reveals a better scheduling of the debt, with current liabilities decreasing 

by 31.7 million Euros (to which the decrease in advances from clients contributed with 28.5 million) partially compensated by 

an increase in non-current liabilities of +14.8 million. This increase in non-current liabilities relates, essentially, to bank loans 

that increased from 50.3 (at 31.12.2010) to 63.5 million Euros at the end of 2011. 

Net-debt at the end of the 2011 economic period totalled 198.0 million Euros (189.7 million Euros a year before), coming to 

represent a quite conservative ratio to EBITDA of 4.4 (4.8 in 2010). 

Equity 

During the 2011 economic period no changes occurred in the share capital and the company neither holds nor transacted 

own shares. Share capital continues, therefore, to total 50 million Euros represented by 10 million ordinary shares with a par 

value of 5 Euros each, wholly owned by Soares da Costa Construção, SGPS, SA. 

The shareholders equity at 31 December 2011 amounts to 128.2 million Euros, up from the 122.4 million Euros at the end of 

the previous year. 

The Statement of Changes in Equity highlights the following events: 

(i) The ordinary General Meeting that approved the 2010 annual accounts deliberated the distribution of a dividend in a total 

amount of 6.5 million Euros; 

(ii) During the 2011 economic period there was a change in the fair value of derivative hedging instruments of 0.1 million 

Euros; 

(iii) Recognition of the net income for the year of 12.2 million Euros. 

Ratios 

The economic and financial indicators required to be met under Ordinance no. 274/2011, of 26 September, for the annual 

revalidation of the charter foreseen in the legal regime applicable to the construction activity, approved by Decree-Law no. 

12/2004, of 9 January, had the following evolution over the last three years: 

Indicators 

2009 2010 2011 Required 

Current Ratio 120.3% 109.9% 124.0% 100.0% 

Equity to Total Assets Ratio 14.6% 15.1% 15.9% 5.0% 

18


4. PROSPECTS FOR 2012 

The current domestic economic situation in general and that of the construction sector in particular can generate no 

optimistic expectations regarding the 2012 economic period. 

Thus, decreased activity is to be expected in the domestic market, where the construction of the Transmontana motorway will 

continue to be the most important project, with a foreseeable conclusion close to the end of the year. 

The maintenance of good levels of activity in the Portuguese-speaking African countries will most probably result in an 

increase in the share of the external market to the total turnover of the company, which is globally expected to remain at the 

level obtained during the year this report refers to. 

In terms of EBITDA margin, its stabilization at the level attained in 2011 is the defined objective, although it may be pressured 

by the surge of non-recurring staff costs within the scope of the process underway to adapt the human resource capacity 

installed to the current production needs. 

5. PRINCIPAL RISKS 

In the context of their activity, organizations are exposed to diverse external and internal risks that can impact their 

performance and reputation. Risks and opportunities are a constant. The analysis, identification and mitigation of the prior 

and the ability to grasp and explore the latter is what distinguishes good from bad management. Only in this manner can the 

meeting of the objectives and improvement of the results of an organization be boosted. 

Due to the high levels of demand, both with the cost as well as with the deadline compliance levels, companies should seek 

to reduce the risks and uncertainties they are exposed to. The frequent political, economic, social, organizational and 

behavioural changes occurring in the markets where the Group carries out its activities require the definition of strategies to 

eliminate and/or anticipate the impact of these risks and uncertainties, failing which they may impact the likelihood of 

meeting the objectives and even, in the last resort, the companies’ continuity. Although decisions always involve some 

subjectivity and a certain dose of intuition, sometimes unexplainable, they cannot, in essence, be but based on rational, 

secure, known, analysed and justified parameters. Justification is, at the end of the day, a fundamental element in the 

process of analysing risk: through the discipline it represents, through the requirement of justifying the options taken, 

through the documentation of all the steps taken in the process, ultimately, because it allows for a better review at a later 

date of the good and the bad decisions. 

As the remaining chapters of this Management Report and the financial statements reveal, the activity of the company falls 

within the construction and civil engineering sector, assumes diverse dimensions and a presence in different geographical 

markets, endowing it with a truly international dimension. 

Hence, the company is exposed to various risks that can be classified into: 

• Business Process Risks: 

- Operating Risks (risks that can impact the performance of the operating and service rendering processes of the 

Group, in terms of client satisfaction and of the reputation of the company in the market); 

- Integrity Risks (those related with internal and external frauds that the group companies may be subject to); 

- Management Risks (risks related with management, leadership, authority limits, etc.); 

- Human Resource Risks (risks related with availability, qualification and local human resource policies, labour 

legislation, etc.); 

- Financial Risks (Currency risk, interest rate risk, liquidity risk, credit and treasury risk). 

• Information Risks 

- Operating, financial and strategic evaluation information. 

19


• Environmental Risks 

- Risks deriving from the competitive environment; 

- Risks related to the political, economic, legal and fiscal environment; 

- Risks arising from the regulation of and changes in the sector. 

In the economic and financial context we live in, the company recognizes the importance of having a risk management 

strategy, which is totally integrated in the global organizational strategy, and increases its resilience and gradually immunizes 

it to unforeseeable and adverse effects. 

From an organizational perspective, important steps were taken in 2011 to improve the analysis and risk management system 

of the Group which the company forms part of. Hence, at the corporate centre, and therefore with a transversal competency 

throughout the Group, an Analysis and Risk Management Unit was set up with the objective of assuring the efficiency and 

effectiveness of the Group’s operations, the safeguarding of its assets, the reliability of the financial data and the compliance 

with the law and norms. 

In the scope of analysis and risk management, work is carried out to identify and prioritize the risks classified as more critical 

(determined through the combination of the probability of occurrence with the potential impact) and risk management 

strategies are defined so as to implement the control procedures that will reduce these to an acceptable level. In this matter, 

and as was previously indicated, the company, integrated in the wider risk management strategy of the Group, has been 

implementing control activities that permit the mitigation of these risks. The objective is to maximize the trade-off between 

the risks and the business margins so as to attain, in a sustained manner, the strategic objectives. 

During the 2011 economic period focus was placed on the development of a systematized risk analysis model for 

implementation in construction projects of relevance, that will act as an aid in the management of the project, that boosts 

the probability of attaining the objectives set for said project, that follows the project from the prospecting/development 

phase through to the production/implementation phase of the business and that, simultaneously, ensures that all the 

stakeholders involved also meet their own objectives (clients, communities, public entities, suppliers, strategic partners, 

employees, shareholders or related companies). 

Through their internal organization, the different management areas of the company (Business Development, Finance 

Management, Management Control, Human Resources, Legal Services, etc.) identify and evaluate the risks that their 

decisions, taken in their respective areas of intervention and competence, involve and draw up the measures that may 

prevent or minimize them. In function of that analysis, critically monitored by the Central Unit, decisions are taken relating to 

the business, country or project in question, namely the decision to contract or not to contract or of the contracting 

conditions. 

Listed below are a few examples of the systematic approach used. Thus, in so far as market risks are concerned, the posture 

has been to strengthen the company’s internationalization and diversification dimensions. 

In respect of financial risks, a conservative and prudent attitude has been adopted, seeking to avoid over-exposure to these 

types of risks – always associated with the normal and current activity of the company and never taking speculative positions 

on financial instruments. The main political guidelines directing the Group’s actions in respect of financial risks are: 

a) In the financing of specific operations of significant value, the company always studies the possibility of using 

interest rate hedging operations (interest rate swaps), applying the following policies: 

The contracting of these instruments must always have as their objective the covering of a risk and never speculation; 

The effectiveness of the cover is dependent on making the covered loan’s interest payment dates coincide with those 

contracted in the derivative instrument and adopting the same financing index in both the loan covered and the 

derivative instrument. 

b) Currency risk is the risk that the fair value of the cash flows from financial instruments varies as a result of changes 

in foreign currency rates. The currency risk is essentially related to the company’s international presence; in so far as 

currency risk coverage is concerned hedging operations have been sporadic. However, whenever considered 

adequate, the group contracts foreign currency loans and uses currency swaps to cover the risk. 

20


c) Credit risk situations detected at the balance sheet date are identified by the competent areas and the 

accumulated impairment losses recorded are reviewed in function of the ageing of the credit, credit risk profile of the 

client, experience gathered and other circumstances applicable to the specific case. Client balances are periodically 

monitored and, when justified, sales are covered with guarantees. 

d) To manage liquidity risk the company maintains the equilibrium between the maturity and flexibility of the loans 

contracted through the use of step financing that coincides with the need for funds. Furthermore, short-term 

facilities have been contracted to cater for temporary treasury shortfalls. 

The analysis and management system is an interactive process that extends throughout all the phases of the project, from the 

original potential set-up, at a moment of pure prospecting, right through to its epilogue, when all the responsibilities 

connected to it are extinguished. Naturally, during its evolutionary road, some fundamental milestones requiring a wider 

scope in terms of decision making are set-up, both to evaluate if the potential risks and the forms in which best to approach 

them fit the strategic profile defined, as well as to ensure that the control mechanisms and procedures are being complied 

with and are proving to be adequate. The most important moments are the moment of pre-selection, the presentation of the 

proposal or other form of response, the contract formalization, the start-up, the execution phase, its conclusion and delivery 

and, when applicable, the extinction of the guarantee obligations. 

For a thorough management, detailed information procedures are created with the content adequate to each phase, which 

will permit the timely monitoring of the various vicissitudes and the taking of action at the exact moment of an occurrence. 

The full process is open to contributions from reviews and to the improvements that any structure wishes to propose, and is 

the object of periodic reflection and evaluation involving both the supporting services as well as the operational areas. 

The objective of capital risk management is to safeguard the continuity of the operations of the Group, thus providing returns 

for the shareholders and benefits for the remaining stakeholders, by maintaining a solid capital structure that supports the 

development of the business. 

The company has reinforced its risk analysis policies in order to be better prepared to respond to the uncertainties and 

vicissitudes that derive from the adaptation of its activity to the retraction in the domestic market, and is actively searching 

for alternatives that boost its capacity. 

6. SUSTAINABLE DEVELOPMENT 

Health and safety, environment and education are the three concerns of Soares da Costa Group in the matter of corporate 

social responsibility. 

The environmental, health and safety management and the support given to the various communities with which we interact 

were subject to a sustainable management throughout the year, but it was primarily in the education and training of our staff 

in the technical areas that we carried out more actions in 2011. 

Alongside the generalized increase in the technical training given to our employees, various theoretical and practical sessions 

were carried out with the objective of knowledge sharing/exchange amongst the employees. 

During its more than 90 years in activity, Soares da Costa Group has been accumulating at the employee level of the various 

companies comprising it an immense know-how and intends that these personal and professional experiences be 

transmitted to the younger generations that join the Group. 

Consequently, in 2011 and with this objective in mind, the Technical Conferences of Soares da Costa Group were repeated, 

having debuted in 2010, and were complemented with a number of sessions directed more specifically to certain employees 

of the company – the Technical Workshops – and, whenever possible, were further complemented with practical on-site 

visits. 

21


On the other hand, not only were the technical themes relating to construction covered in these initiatives but also 

discussions of a complementary nature, focusing on contract and large-scale construction project management. 

It is to be highlighted that most of the themes were presented by Soares da Costa Group employees, who shared with the 

other employees the different aspects of their experience, during each of the sessions. 

The themes presented at the II Technical Conferences on Construction were: Investigation into High Velocity, LEAN 

Construction, sustainability management of a project, automation techniques in safeguarding against fires in buildings, 

production capacity Increase at the Alqueva Dam, the bypass over the Rio Corgo (River), SDC Angola – Some Projects of 

Reference. 

The themes presented at the technical workshops – Construction and Management were: public contracts code, the bypass 

over the Rio Corgo (River), FIDIC contract model, sustainability management indicators for projects, assembly methodologies 

for metallic and mixed bridge projects, LEED system: evaluation of sustainable construction, decentralized construction and 

energetic efficiency, international procurement. 

Technical visits to the bridge over Rio Fervença (River), production capacity increase at the Alqueva Dam, bypass over the Rio 

Corgo (River). 

More information on Sustainable Development at Soares da Costa Group may be consulted in the 2011’s Sustainability 

Report, available at www.soaresdacosta.pt. 

7. RELEVANT FACTS OCCURRING SUBSEQUENT TO THE YEAR-END 

No significantly material events occurred subsequent to the period end that affects the reliability of the financial statements 

attached to this Management Report or that merit a special reference in this chapter. 

8. ACKNOWLEDGEMENTS 

On concluding this report on the activity carried out during 2011, the Board of Directors takes this opportunity to express its 

appreciation to all the public and private entities that, directly or indirectly, have supported and cooperated with the 

company. It is particularly gratifying to highlight the relationship of trust with which clients, suppliers and other business 

partners, namely financial institutions, have honoured us. 

To the members of the other corporate bodies, as well as to our auditors, we acknowledge the manner and the rigor with 

which they carried out their functions. 

Finally, the high level of professionalism and sense of duty demonstrated by the employees to the company, without whose 

efforts and dedication it would not have been possible to create the value the company is responsible for, merits a special 

mention. 

9. PROPOSAL FOR THE APPROPRIATION OF RESULTS 

The Board of Directors of Sociedade de Construções Soares da Costa, SA, based on the Financial Statements for the period 

ended on 31 December 2011, proposes in accordance with that laid down in paragraph f) of article 66 of the Commercial 

22


Companies Code, and the legislation applicable to the distribution of corporate assets, namely articles 32 and 33 of the said 

Code, that the individual net income of 12,178,856.30 Euros, earned by the company, be appropriated as follows: 

a) To Legal Reserve (5% of the net income for the period)……............ 608,942.82 Euros 

b) For Distribution as Dividends……………………………………………………….. 9,600,000.00 Euros 

d) To Reserves, the remainder ……………………:::::::::……….…………………. 1,969,913.57 Euros 

Porto, March 12, 2012 

The Board of Directors, 

António Manuel Pereira Caldas de Castro Henriques, Jorge Domingues Grade Mendes, Pedro Gonçalo de Sotto Mayor de 

Andrade Santos, Paulo Eugénio Peixoto Ferreira, Carlos Alberto Príncipe dos Santos, Roberto António Pereira Pisoeiro, Luís 

Miguel Andrade Mendanha Gonçalves, António José Cadete Paisana Ferreira 

23


APPENDIX 

GLOSSARY 

This Report includes abbreviations and financial terms that have the following meaning: 

EBIT Earnings before Interest and Tax (Operating Results) 

EBITDA Earnings before Interest, Tax, Depreciation and Amortization (Net Operating Earnings, corresponding to the 

sum of Operating Results, Amortization for the Period, Impairment Losses and Provisions for the Period (net 

of reversals) 

Turnover Turnover, corresponding to Sales and Services Rendered 

AP&EN Accounting Policies and Explanatory Notes 

Net-debt Remunerated net-debt: the balances of the liability accounts relating to remunerated financing sources, net 

of cash and cash equivalents. 

CORPORATE BODIES 

The corporate bodies of Sociedade de Construções Soares da Costa, S.A. at the beginning of the period had the following 

composition, valid for the current term of office (2010-2012): 

GENERAL MEETING BOARD 

Chairman Jorge Manuel Oliveira Alves 

Secretary Pedro Miguel Tigre Falcão Queirós 

BOARD OF DIRECTORS 

Chairman Pedro Manuel de Almeida Gonçalves 

Members Pedro Gonçalo de Sotto Mayor de Andrade Santos 

Paulo Eugénio Peixoto Ferreira 

Fernando Manuel Fernandes de Almeida 

Carlos Alberto Príncipe Santos 

Domingos Alberto Nave Serpa dos Santos 

Roberto António Pereira Pisoeiro 

SOLE SUPERVISOR 

Effective BDO & Associados, SROC, Lda., SROC no. 29, Taxpayer no. 501 340 467, represented by 

Paulo Jorge de Sousa Ferreira, Statutory Auditor (ROC) no. 781 

Substitute Nuno Miguel Loureiro Marques Vasconcelos Magina, Statutory Auditor (ROC) no. 1226 

The composition of the Board of Directors underwent a number of changes during the period, namely: following the resignation, 

by letter dated 28 July, of Mr. Pedro Manuel de Almeida Gonçalves effective from 31 August 2011, Mr. António Manuel Pereira 

Caldas de Castro Henriques was nominated Chairman of the Board of Directors per deliberation of the Shareholders General 

Meeting of 9 September 2011. It was further deliberated that Mr. Jorge Domingues Grade Mendes be nominated as Vice- 

Chairman and Mr. Luís Miguel Andrade Mendanha Gonçalves and Mr.António José Cadete Paisana Ferreira be admitted as 

members to the said Board of Directors, all of them to complete the current term of office (2010/2012). 

24


Additionally, the members of the Board of Directors, Mr Fernando Manuel Fernandes de Almeida, effective from 30 

November 2011 and Mr Domingos Alberto da Nave Serpa dos Santos, effective from 31 December 2011, submitted letters of 

resignation from their posts. 

Hence, at the date of this Report the composition of the Board of Directors is as follows: 

BOARD OF DIRECTORS 

Chairman António Manuel Pereira Caldas de Castro Henriques 

Vice-Chairman Jorge Domingues Grade Mendes 

Members Pedro Gonçalo de Sotto Mayor de Andrade Santos 

Paulo Eugénio Peixoto Ferreira 

Carlos Alberto Príncipe dos Santos 

Roberto António Pereira Pisoeiro 

Luís Miguel Andrade Mendanha Gonçalves 

António José Cadete Paisana Ferreira 

INTERNAL ORGANIZATION 

All the members of the Board of Directors have executive functions, dividing and coordinating the various business areas of 

the Company. The organizational chart of Sociedade de Construções Soares da Costa is the following: 

25


SHAREHOLDERS 

The share capital of Sociedade de Construções Soares da Costa, S.A., in the amount of 50 million Euros, is represented by 10 

million ordinary bearer shares, with a par value of 5 Euros each, wholly owned by Soares da Costa Construção, S.G.P.S., S.A., a 

shareholding management company in the business construction area of Grupo Soares da Costa. 

We hereby inform, in compliance with that laid down in paragraph d) of no. 5 of article 66 of the Corporate Code, that the 

company neither owns nor transacted any own shares during the economic period. 

OTHER LEGAL INFORMATION 

Debts to the State and to Social Security 

At the balance sheet closing date the company had no overdue debts to the State, resulting from tax assessments or from 

contributions to Social Security. 

Transactions with the company 

During the period, no transactions were conducted between the company and its directors meriting a reference in this report. 

26


FINANCIAL STATEMENTS 

INDIVIDUAL FINANCIAL POSITION STATEMENT December 31, 2010 and 2011 

A S S E T S 

NON CURRENT 

Intangible fixed assets: 6 

Notes 31/12/2011 

31/12/2010 

restated 

Other intangible fixed assets - 63 

31/12/2010 

- 63 

63 

Tangible fixed assets: 7 e 8 

Land 4,800,554 4,800,554 4,800,554 

Buildings 68,154,584 55,736,105 55,736,105 

Basic equipment 47,108,996 52,678,784 52,678,784 

Transport equipment 9,067,991 12,008,027 12,008,027 

Administrative equipment 2,275,255 2,927,967 2,927,967 

Other tangible fixed assets 36,256 153,305 153,305 

Fixed assets in progress 3,068,157 11,616,086 

139,920,82 

11,616,086 

134,511,792 

7 139,920,827 

Financial investments: 9 e 10 

Participations in subsidiaries 20,622 2,303 2,303 

Loans granted to subsidiaries 257,886 258,114 258,114 

Participations in associated companies 63,359 63,359 63,359 

Loans granted to associated companies 2,970,019 598,631 598,631 

Other financial investments 10 10 10 

3,311,896 922,417 922,417 

Deferred taxes (assets) 

Accounts receivable: 

28 1,051,219 1,328,892 1,328,892 

Retention of guarantees 31 

24,373,301 26,847,941 

169,020,14 

- 

Total non current assets 

CURRENT 

163,248,208 

0 142,172,199 

Inventories: 

Raw & subsidiary materials and 

12 e 22 

consumables 13,910,879 17,183,157 17,183,157 

Finished and intermediary products 20,778,204 20,778,204 20,778,204 

Products and work in progress 26,837,389 45,944,733 45,944,733 

61,526,471 83,906,093 83,906,093 

Accounts receivable: 13 e 22 

389,823,17 

Customers 31 397,010,299 

0 416,671,111 

Payments in advance 14,343,537 6,515,069 6,515,069 

Receivables from public entities 

Group and associated companies and 

5,804,979 3,574,668 3,574,668 

subsidiaries 54,367,942 25,572,254 25,572,254 

Other accounts receivable 9,839,559 11,702,302 

437,187,46 

11,702,302 

481,366,316 

3 464,035,404 

Other current assets 14 61,272,973 76,543,440 76,543,440 

Cash and equivalents 15 39,358,235 43,233,676 43,233,676 

(Euro) 

Total current assets 643,523,995 640,870,673 667,718,614 

Total assets 23 806,772,204 809,890,813 809,890,813 

63 

27


INDIVIDUAL FINANCIAL POSITION STATEMENT December 31, 2010 and 2011 

SHAREHOLDERS EQUITY & LIABILITIES Notes 31/12/2011 31/12/2010 

restated 

(Euro) 

31/12/2010 

SHAREHOLDERS' EQUITY 

Share capital 50,000,000 50,000,000 50,000,000 

Reserves and retained earnings: 

Issue premiuns 22,174,402 22,174,402 22,174,402 

Legal reserves 4,200,058 3,784,749 3,784,749 

Excess of revaluation 35,823,889 35,849,821 35,849,821 

Other reserves 9,335,168 7,839,469 7,839,469 

Retained earnings (5,485,637) (5,511,569) (5,511,569) 

Net income 12,178,856 8,306,186 8,306,186 

Total shareholders equity 16 128,226,736 122,443,058 122,443,058 

LIABILITIES 

NON CURRENT 

Provisions 22 15,000 15,000 15,000 

Loans: 18 

Bank loans 63,469,487 50,263,287 50,263,287 

63,469,487 50,263,287 50,263,287 

Accounts payable: 

Supplier's retention of guarantee 31 9,706,410 7,404,277 - 

Investments' suppliers 11 617,939 2,301,925 2,301,925 

Payments in advance 31 19,570,325 18,207,628 - 

29,894,674 27,913,830 2,301,925 

Deferred taxes (liabilities) 28 10,756,814 11,142,378 11,142,378 

Total non current liabilities 104,135,975 89,334,495 63,722,590 

CURRENT 

Loans: 18 

Bank loans 134,322,067 130,697,516 130,697,516 

Other loans 37,005,321 44,293,314 44,293,314 

171,327,388 174,990,830 174,990,830 

Accounts payable: 

Suppliers 31 174,542,189 184,967,229 192,371,506 

Investments' suppliers 11 2,277,351 5,662,639 5,662,639 

Payments in advance 31 72,815,925 101,278,511 119,486,139 

State and other public entities 20 2,058,065 1,285,173 1,285,173 

Group and associated companies and subsidiaries 20 8,180,059 10,894,352 10,894,352 

Other accounts payable 20 37,101,488 31,904,112 31,904,112 

296,975,077 335,992,016 361,603,921 

Derivative financial instruments 19 1,190,357 1,337,993 1,337,993 

Other current liabilities 21 104,916,669 85,792,421 85,792,421 

Total current liabilities 574,409,492 598,113,260 623,725,166 

Total liabilities 678,545,467 687,447,755 687,447,755 

Total shareholders equity & liabilities 806,772,204 809,890,813 809,890,813 

SEPARATE INDIVIDUAL INCOME STATEMENT for the period ended December 31, 2011 and 2010 

28


(Euro) 

INCOME STATEMENT Notes 2011 2010 

Turnover 23 605,677,038 626,544,465 

Change in production (19,107,345) (29,914,047) 

Other operational income: 

Work for own business 7 6,793,682 12,952,730 

Other 24 15,442,323 6,398,819 

Operational income 608,805,698 615,981,967 

Cost of goods sold (97,662,156) (103,810,331) 

Third party supplies & services 26 (369,861,690) (363,027,756) 

Staff costs 25 (83,097,026) (95,622,054) 

Depreciation, amortisation and imparity losses 6 e 7 (12,329,052) (12,858,662) 

Provisions and fair value adjustments 22 (1,363,816) (1,129,295) 

Other operational costs 

Taxes (4,847,497) (4,715,932) 

Other 24 (7,817,243) (9,163,340) 

Operating costs (576,978,481) (590,327,370) 

Operational results (continued activity) 31,827,217 25,654,598 

Net financing costs: 

Interest received 5,789,104 9,577,125 

Interest paid (14,928,587) (12,767,628) 

(9,139,483) (3,190,503) 

Other financial income/costs: 

Other financial income 29,102,223 22,091,970 

Income from equity investments 20,000 

512 

Other financial costs (33,273,687) (31,020,698) 

(4,151,465) (8,928,216) 

Financial result 27 (13,290,948) (12,118,719) 

Earnings before taxes 18,536,269 13,535,879 

Income tax 28 (6,357,413) (5,229,693) 

Net income 12,178,856 8,306,186 

Earnings per share of continued activities: 

Basic 1.218 0.831 

Diluted 1.218 0.831 

Earnings per share: 29 

Basic 1.218 0.831 

Diluted 1.218 0.831 

29


STATEMENT OF INDIVIDUAL COMPREHENSIVE INCOME for the period ended December 31, 2011 and 2010 

(Euro) 

2011 2010 

Net profit for the period 12,178,856 8,306,186 

Other comprehensive income 

Change , net of tax, of the fair value of derivatives 147,636 (974,234) 

Change of the deferred income tax of derivatives (42,814) 388,018 

Other changes - 41 

Total comprehensive income for the period 12,283,678 7,720,010 

STATEMENT OF CHANGES IN EQUITY for the period ended December 31, 2011 and 2010 

Equity capital 

Reserves and 

retained 

earnings 

Coverage 

derivatives 

Issue 

premiuns 

(Euro) 

Other Total equity 

Balance as of 

01/Jan/2011 50,000,000 51,218,591 (949,975) 22,174,402 41 122,443,058 

Dividends - (6,500,000) - - - (6,500,000) 

Own 

shares - - - - - - 

Other - - - - - - 

Integrated consolidated earnings - 12,178,856 104,822 - - 12,283,678 

Balance as of 

31/Dec/2011 50,000,000 56,897,447 (845,153) 22,174,402 41 128,226,736 

Balance as of 

01/Jan/2010 

Equity capital 

50,000,000 

Reserves and 

retained 

earnings 

52,912,405 

Coverage 

derivatives 

(363,759) 

Issue 

premiuns 

22,174,40 

2 - 

Other Total equity 

124,723,048 

Dividends 

Own 

- (10,000,000) - - - (10,000,000) 

shares - - - - - - 

Other - - - - - - 

Integrated consolidated earnings - 

Balance as of 

31/Dec/2010 

50,000,000 

8,306,186 

51,218,591 

(586,216) - 

(949,975) 

22,174,40 

2 

41 

41 

7,720,010 

122,443,058 

30


INDIVIDUAL CASH FLOWS STATEMENTS for the period ended December 31, 2011 and 2010 

Operating activities: 

Receipts from customers 575,170,641 

Payments to suppliers (440,987,139) 

Payments to staff (74,945,984) 

Notes 2011 2010 

59,237,518 

Payments/ receipts of income tax 

Other payments/ receipts related with 

(5,736,100) 

oper.activities (11,776,202) 

Cash flow from operating activities 

(17,512,302) 

41,725,216 

Investment activities: 

Receipts from: 

Financial investments 13 108,612,992 

Fixed tangible assets 264,633 

Interest and similar income 183,478 

Dividends 

Payments related with: 

15,708 109,076,811 

Financial investments 13 138,835,212 

Fixed tangible assets 1,164,005 139,999,217 

Cash flow from investment activities (30,922,406) 

Financing activities: 

Receipts from: 

Loans 196,102,903 

Interest received 

Payments related with: 

2,381,493 198,484,396 

Loans 185,635,788 

Financial leasing contracts 6,498,582 

Dividends 6,500,000 

Interest paid 12,776,231 211,410,601 

Cash flow from financing activities 

(12,926,205) 

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 

(2,123,395) 

(1,752,047) 

43,233,676 

39,358,235 

482,868,774 

(415,305,872) 

(91,984,276) 

(24,421,376) 

(6,217,401) 

(3,260,562) 

(9,477,963) 

220,289,874 

152,002 

7,582 

205,671,945 

(Euro) 

(33,899,338) 

512 220,449,970 

4,921,803 210,593,748 

263,774,665 

9,856,223 

2,098,693 265,873,359 

206,906,667 

7,891,344 

10,000,000 

11,930,072 236,728,083 

29,145,276 

5,102,160 

1,114,995 

37,016,521 

43,233,676 

31


ACCOUNTING POLICIES AND EXPLANATORY NOTES 

1. INTRODUCTORY NOTE 

Identification: 

Company name: Sociedade de Construções Soares da Costa, SA. 

Conservatória do Registo Comercial do Porto (Oporto Commercial Registry) registration and Taxpayer number: 505 924 170 

Registered Office: Rua de Santos Pousada, 220 – 4000 - 478 PORTO 

Company Object: Operations in the Civil Construction and Public Works Industry, Connected and Accessory Activities, 

Acquisition and Disposal of Real Estate 

Name of Holding Company: Soares da Costa Construção, SGPS, S.A. 

Registered Office of Holding Company: Rua de Santos Pousada, 220 – 4000 – 478 PORTO 

The Company was incorporated on 30 December 2002, by public deed celebrated at the 4th Notary in Oporto, as a result of 

the by-out of the construction activity of the company then named “Sociedade de Construções Soares da Costa, SA”, Taxpayer 

no. 500 265 763 which, on the same date, changed its name to “Grupo Soares da Costa, SGPS, SA” and its company object to 

“Management of Shareholdings”. The assets and liabilities were transferred at the carrying values in the original company, 

thereby complying with the fiscal neutrality regime foreseen in the Corporate Tax Code (IRC). 

The monetary amounts referred to in the notes are expressed in Euro units. 

2. ACCOUNTING REFERENTIAL USED IN THE PREPARATION OF THE FINANCIAL STATEMENTS 

The company integrates a group whose holding company, Grupo Soares da Costa, SGPS, SA, prepares consolidated accounts 

since 2004 in conformity with International Financial Reporting Standards (IAS/IFRS) as adopted by the European Union. 

Consequently, pursuant to that laid down in no. 1 of art. 4 of Decree-Law (DL) 158/2009, of 13 July, it has opted to present 

individual financial statements in conformity with these international standards. 

3. MAIN ACCOUNTING POLICIES 

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

3.1 Bases of presentation 

The financial statements were prepared on a going concern basis, from the books and accounting records of the company, 

which are in conformity with the International Financial Reporting Standards as adopted by the European Union. 

In preparing the attached financial statements estimates were used that affect the amounts of the assets and liabilities 

reported, as well as the amounts of revenue and costs reported for the period. All the estimates and assumptions made by 

the Board of Directors were based on the best knowledge available at the date of the approval of the financial statements of 

the events and transactions in progress. 

The Board of Directors of the Company believes that the attached financial statements and the notes that follow assure an 

adequate presentation of the financial information. 

The following standards, amendments and interpretations came into effect for the first time with reference to 1 January 

2011 but do not have a materially relevant effect on Sociedade de Construções Soares da Costa, S.A.: 

- Classification of rights issues (amendment to IAS 32); 

- Settlement of financial liabilities with capital instruments (IFRIC 19); 

- Disclosure of related parties (amendment to IAS 24); 

- Prepayment of a minimum funding requirement (amendment to IFRIC 14); 

- Improvements introduced in IFRS in May 2010. 

As to standards and interpretations endorsed by the European Commission but not yet effective during this period, of note is 

solely the amendment to IFRS 7 – Financial Instruments: Disclosure (effective as from the 2012 economic period, through 

Regulation no. 1205/2011, of 22 November), and thus no significant impacts are expected. 

In 2011 there was a change in the accounting policy relating to the distinction between current and non-current assets and 

liabilities, relating to the recording of the retentions of guarantees presented by clients, retentions of guarantees presented 

32


to suppliers and client advances, and these amounts were re-expressed in the statement of financial position at 31 December 

2010. The amounts of the retentions and advances with a maturity of over 1 year following the date of the said statement 

were estimated for this purpose. 

3.2 Intangible assets 

Intangible assets are recorded at acquisition cost, net of accumulated amortization and impairment losses. Intangible assets 

are only recognized if it is probable that they will result in future economic benefits for the company, that these benefits are 

controlled by the company and that their value can be reliably measured. 

The amortization of intangible assets for the period is recorded in the income statement in the caption “Costs with 

depreciation and amortization and impairment losses”. The depreciation method used for intangible assets with a finite life is 

the straight-line basis, and the estimated useful lives of these assets are considered to range from 3 to 5 years. 

3.3 Tangible fixed assets 

Tangible fixed assets are recorded at acquisition cost or at their revalued amount, net of accumulated depreciation and 

impairment losses. 

Depreciation is determined using the straight-line method, calculated on a monthly basis, and the following estimated useful 

lives: 

Capital work-in-progress is recorded at acquisition or production cost, net of any impairment losses. 

Capital gains or losses arising on the sale or write-off of tangible fixed assets correspond to the difference between the sales 

prices and the carrying values on the date the assets are sold/written-off, and are recorded in the income statement, in 

“other revenue and gains” or “other costs and losses”. 

3.4 Financial Assets and Liabilities 

a) Financial Investments 

Financial investments are recognized on the date the inherent risks and rewards are substantially transferred. They are 

initially recorded at their acquisition cost, which is the fair value of the price paid including transaction costs. 

An evaluation of the investment is made whenever there are indications that the asset may be impaired, and any impairment 

losses demonstrated to exist are recognized as a cost in the income statement. 

Financial investments are classified as held-to-maturity investments and investments at fair value through profit and loss. 

Subsequent to the initial recognition, investments at fair value through profit and loss are revalued at their fair value without 

deducting any transaction costs that may be incurred in selling them. Investments in capital instruments not admitted to 

trading on a regulated market and for which it is not possible to reliably estimate a fair value, are maintained at their 

acquisition cost net of any impairment losses. 

Financial investments in group and associated companies are recorded at acquisition cost, net of any impairment losses. 

Gains and losses resulting from changes in the fair value of investments held at fair value through profit and loss are 

recorded in the income statement for the period. 

b) Accounts receivable 

Useful life 

Buildings 8 - 100 

Basic equipment 2 - 20 

Other tangible assets 3 - 10 

Accounts receivable are recorded at their nominal value net of any impairment losses, recognized in the caption impairment 

losses in accounts receivable, so that they reflect their net realizable value. 

33


c) Borrowings 

Borrowings are recorded under liabilities and are valued at their amortized cost (using the effective interest rate method). 

Costs incurred with the issuance of these borrowings are recorded as a deduction to the borrowings and recognized over the 

borrowing period, in line with the effective interest rate method. 

Financial charges incurred with bank interest and similar expenses (namely Stamp Tax), are recorded in the income 

statement using the accrual basis, and amounts due but not yet settled at the balance sheet date are classified in the caption 

“Other current liabilities”. 

d) Accounts payable 

Accounts payable are recorded at their nominal value. These accounts are usually interest-free. 

e) Discounted bills and factored accounts receivable 

Discounted bills and factored accounts receivable (with recourse) are presented in assets at their nominal amounts and in 

liabilities at the amounts of the advances received. 

Interest charges are recognized on the accrual basis. 

f) Cash and cash equivalents 

The amounts included in the caption “Cash and cash equivalents” correspond to the amounts of cash, bank deposits, time 

deposits and other short-term treasury investments. 

3.5 Leases 

Leasing contracts are classified as: 

- finance leases when all the risks and rewards inherent to possession are substantially transferred; 

- operating leases when all the risks and rewards inherent to possession are not substantially transferred. 

The classification of the leases into finance or operating is based on the substance and not on the form of the underlying 

contract. 

Fixed assets acquired through finance leases are recorded, at their capital amount, in assets and the corresponding 

obligations in liabilities. The depreciation of these assets is calculated as described in 3.3 above and recognized as an 

amortization and depreciation cost for the period. 

The capital portion included in the lease payments is recorded as a reduction against the obligations and the interest element 

is recognized as a financial charge in the period to which it relates. 

In leases considered to be operational, the rentals due are recognized as a cost in the income statement during the period of 

the contract in the caption “External supplies and services”. 

3.6 Inventories 

Merchandize, raw-, subsidiary and consumable materials are recorded at the lower of acquisition cost or net realizable value. 

The costing method used in recording the movements in raw-, subsidiary and consumable materials is the weighted average 

method. 

Finished and semi-finished goods and work-in-progress are valued at the lower of production cost or net realizable value. 

Production cost includes the raw-materials incorporated, direct labour and general production costs. The costing method 

used is the average method. 

Net realizable value is the selling price net of the finishing and selling costs. 

3.7 Interest charges on borrowings 

Interest charges borne with borrowings obtained are normally recognized as a cost using the accrual basis. 

These charges are capitalized when associated with qualifying assets in accordance with IAS 23. 

34


3.8 Income tax 

Current income tax is calculated based on the taxable income determined in accordance with the tax legislation in force. 

Deferred taxes relate to the timing differences between the carrying amounts of assets and liabilities and their respective 

amounts for tax purposes. 

Deferred tax assets and liabilities are calculated and annually evaluated using the tax rates that are expected to apply when 

the timing differences reverse. 

Deferred tax assets are recorded only when there are reasonable expectations of future taxable income in amounts sufficient 

for their recovery. At each balance sheet date the timing differences underlying the deferred tax assets are re-evaluated so 

as to recognize deferred tax assets not previously recognized due to their not meeting the conditions necessary for 

recognition and/or to reduce their amount in function of the current expectations regarding their future recovery. 

Deferred taxes are recognized as costs or revenue for the period except when they result from amounts directly recognized 

in equity, in which case they are recognized in the same caption. 

3.9 Balance sheet presentation 

Assets realizable and liabilities due subsequent to the end of the year following that of the balance sheet date are presented, 

respectively, as non-current assets and liabilities. 

3.10 Recognition of costs and revenue 

Revenue arising on sales and from the rendering of services is generally recognized when realized. 

Financial revenue resulting from late payment interest earned from clients is recognized when there is significant evidence as 

to its recoverability. 

Dividends are recognized as revenue in the period in which they are attributed. 

a) Construction contracts 

The percentage of completion method was adopted to recognize revenue and costs on construction contracts. According to 

this method, revenue directly related with work-in-progress is recognized in the income statement in function of the 

percentage of completion, which is determined using the ratio between the costs incurred by the balance sheet date and the 

total estimated costs for the contracts. The differences between the revenue determined applying this method and the 

invoices issued are accounted for in the caption “Other current assets” or “Other current liabilities”, depending on the nature 

of the differences. Revenue and costs related with real estate development are deferred in the balance sheet until the 

respective execution is totally or substantially complete. 

Variations in the work carried out over the revenue amount agreed upon in the contract are recognized in the period’s 

results when it is highly probable that the client will approve the revenue resulting from the variations, and this amount can 

be reliably measured. 

Claims for the reimbursement of costs not included in the contract price are included in the contract revenue when the 

negotiations have reached an advanced stage such that it is probable that the client will accept the claim, and it can be 

reliably measured. 

b) Real estate projects 

Real estate sales are recognized on the legal transfer of the property or, exceptionally, when possession or the inherent risks 

associated with the property are transferred to the promissory buyer and the sale is considered irreversible. 

c) Costs incurred with the preparation of proposals 

Costs incurred with the preparation of proposals are recognized in the income statement for the period in which they are 

incurred, since their outcome cannot be controlled. 

d) Accrual accounting 

The company records its revenue and costs on the accrual basis, whereby revenue and costs are recognized as they are 

generated, irrespective of when they are received or paid. The differences between the amounts received and paid and the 

35


corresponding revenue and costs generated are recorded in the captions “Other current assets” or “Other current liabilities”, 

depending on the nature of the differences. 

3.11 Balances and transactions expressed in foreign currency 

Transactions in currencies other than the Euro are recorded at the rates prevailing on the date of the transaction. 

At each balance sheet date, monetary assets and liabilities expressed in foreign currencies are converted into Euros using the 

exchange rates applying on that date. 

Exchange differences, favourable and unfavourable, arising between the exchange rates applying on the date of the 

transactions and those applying on the date of collection or settlement of said transactions or on the balance sheet date, are 

recorded as “Other financial gains and losses” in the income statement for the period. 

The main exchange rates used in the captions included in the Balance Sheet were the following: 

3.12 Impairment of non-current assets 

An impairment evaluation is conducted at each balance sheet date and whenever an event or alteration in circumstances is 

identified that indicates that the amount at which the asset is recorded may not be recoverable. 

Whenever the amount at which the asset is recorded exceeds it recoverable value, an impairment loss is recognized and 

recorded in the income statement. 

The reversal of impairment losses recognized in prior years is recorded when there is evidence that the impairment losses 

recognized have ceased to exist or have been reduced. The reversal of impairment losses is recognized in the income 

statement as operating revenue. 

3.13 Contingent assets and liabilities 

Contingent liabilities are not recognized in the financial statements, but are disclosed in the notes to the financial statements 

unless the probability of a resource out-flow is remote. 

Contingent assets are not recognized in the financial statements, but are disclosed in the notes to the financial statements 

when it is probable that an economic in-flow will occur in the future. 

3.14 Subsequent events 

Events occurring after the balance sheet date that provide additional information on conditions existing at the balance sheet 

date are reflected in the financial statements. Events occurring after the balance sheet date that provide information on 

conditions arising after the balance sheet date, if material, are disclosed in the financial statements. 

3.15 Segmental information 

Average foreign exchange rate 

31/12/2011 31/12/2010 

US Dollar EUR/USD 1.2939 1.3362 

Moçambican Metical EUR/MZN 34.67 43.31 

S. Tomé and Príncipe Dibra EUR/STD 24,500.00 24,500.00 

Angolan Kwanza EUR/AOA 122.55 121.60 

Romanian Leu EUR/ROL 4.3233 4.2620 

Israelite Shekel EUR/ILS 4.9453 4.7406 

Brasilian Real EUR/BRL 2.4159 2.2177 

UAE Dirhams EUR/AED 4.7566 4.9095 

The geographical segments applicable to the company are identified for each economic period. Detailed information is 

included in Note 23. 

36


3.16 Derivative financial instruments 

The company contracts derivative financial instruments to effectively cover the financial risks to which it is exposed, 

particularly those relating to exchange rate changes; derivative instruments are not used for speculative purposes. 

Derivative financial instruments are measured at their respective fair value. The recognition method depends on the nature 

and objective of the contract. 

Hedge accounting 

The designation of a derivative financial instrument as an effective hedging instrument depends on its compliance with the 

conditions laid down in IAS 39, namely as to its documentation and effectiveness. 

The criteria used to classify a derivative financial instrument as an effective cash flow hedge are the following: 

- It is expected that the coverage is highly effective in compensating the changes in the cash flows attributable to the risk 

covered; 

- The effectiveness of the coverage can be reliably measured; 

- There is adequate documentation on the transaction being covered at the start of the coverage period; 

- The transaction underlying the coverage is highly probable. 

Changes in the fair value of derivative instruments designated as cash flow hedges are recognized in “Hedging reserves” in 

terms of its effective component and in financial results in terms of its non-effective component. The amounts recorded in 

“Hedging reserves” are transferred to financial results in the periods in which the transaction covered also has an impact on 

results. 

Hedge accounting is discontinued when a hedging instrument attains its maturity, is sold or exercised or when the scope of 

the coverage ceases to comply with the requirements of IAS 39. 

3.17 Own work for the company 

Own work carried out basically corresponds to construction and improvements made by the company for its own benefit. 

Such costs are capitalized when the following requirements are all complied with: 

- The assets developed are identifiable; 

- There is a strong probability that the assets will generate future economic benefits; and 

- The development costs can be reliably measured. 

3.18 Proportional consolidation of complementary group of companies (ACE’S) 

Complementary group of companies or ACEs were consolidated using the proportional method as referred to in Note 4. 

3.19 Risk management 

In carrying out is activity the company is exposed to a variety of risks: market risk (including currency risk, interest rate risk 

and price risk), credit risk and liquidity risk. The risk management programme focuses on the unpredictability of the financial 

markets and seeks to minimize the adverse effects deriving there from to its financial performance. 

In the scope of currency risk management, the company contracted foreign currency derivative financial instruments, 

described in the note “Derivative financial instruments”. 

The exposure to credit risk relates to accounts receivable arising from normal trade operations, and the maximum exposure 

amount at risk is the nominal amount of the accounts receivable. 

3.20 Fair Value judgments, critical assumptions and main sources of uncertainty associated with estimates 

In preparing the attached financial statements fair value judgments, estimates and various assumptions were used that affect 

the carrying amounts of the assets and liabilities, as well as the revenue and costs for the period. 

The estimates and assumptions were determined based on the best knowledge available at the date the financial statements 

were approved of the events and transactions underway, as well as on the experience gained from past and/or current 

events. However, events may occur in future years that, not being foreseeable at the date the financial statements were 

approved, were not considered in these estimates. Changes that occur in these estimates after the balance sheet date will be 

accounted for prospectively. For this reason and given the degree of uncertainty involved, the real results resulting from the 

transactions in question may differ from the corresponding estimates. 

37


4. COMPLEMENTARY GROUP OF COMPANIES 

The complementary group of companies consolidated using the proportional method, their registered offices and the 

respective shareholdings held at 31 December 2011, are as follows: 

Company Head offices Capital Held 

TRANSMETRO - Construção do Metropolitano do Porto, 

50.00% 

ACE 

Rua Santos Pousada, 220 - 4000-478 Porto 

Normetro - Agrupamento do Metropolitano do Porto, ACE Rua Santos Pousada, 300 - 7º Bonfim Porto 17.90% 

ASSOC - Soares da Costa - Construção do Estádio de Braga, 

40.00% 

ACE 

Av. Imaculada Conceição, 756 - Dume - 4700-034 Braga 

Estádio de Coimbra, SC/Abrantina, ACE Rua Santos Pousada, 220 - 4000-478 Porto 60.00% 

Casais, Eusébios, FDO, J. Gomes, Rodrigues e Névoa - 

Soares da Costa, Const.do Estádio de Braga-Acab. e 

Instal./Infraestr. Interiores, ACE 

Av. Imaculada Conceição, 756 - Dume - 4700-034 Braga 40.00% 

Soares da Costa/Contacto - Modernização Escolas, ACE. Rua Santos Pousada, 220 - 4000-478 Porto 35.00% 

Três ponto dois - T.G. Const. Civil - Via e Cat Mod. Linha do 

50.00% 

Norte, ACE 

Avª das Forças Armadas, 125 - 2ºC - Lisboa 

Somague, Soares da Costa - Agrup.Construtor do Metro de 

50.00% 

Superfície, ACE 

Rua Engº Ferreira Dias, 164 4100-247 Porto 

Remodelação Teatro Circo - S.C., A.B.B., D.S.T., ACE Rua Santos Pousada, 220 - 4000-478 Porto 50.00% 

GCF - Grupo Construtor da Feira, ACE Rua do Rego Lameiro, nº 38, Campanhã, 4300-454 Porto 28.57% 

GCVC, ACE Rua do Rêgo Lameiro, nº 38, Campanhã, 4300-454 Porto 28.57% 

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

ACE 

Moreira da Maia 

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

Nova Estação, ACE Av. Frei Miguel Contreiras, nº 54 - 7º Andar, 1749-083 Lisboa 25.00% 

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

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

CAET XXI - Construções,ACE Rua de Santos Pousada, 220 Bonfim, Porto 50.00% 

LGV, Engenharia e Construção de Linhas de Alta 

Velocidade, ACE 

Soares da Costa e Lena, ACE 

Rua Abranches Ferrão, nº 10, 9ºF, 1600-001 Lisboa 

Rua Julieta Ferrão, 12º e 13º Andar, Nossa Senhora de Fátima, 

1649-039 Lisboa 

During the period ended on 31 December 2011, the following changes occurred in complementary group of companies 

consolidated using the proportional method: 

• Inclusion of the complementary group of companies Soares da Costa e Lena, ACE., with a shareholding of 50%; 

• Termination of “Acestrada – Construção de Estradas, ACE”, a complementary group of companies terminated in the 

second quarter of 2011. 

At 31 December 2011, the amounts consolidated, weighted by the joint control percentage held, of the current assets, noncurrent 

assets, current liabilities, non-current liabilities, the revenue and the costs relating to the joint venture interests were 

as follows: 

Company 

Non 

current Current 

17.25% 

50.00% 

Non 

current Current Net 

assets assets Liabilities Liabilities Costs Income income 

ACESTRADA - Construção de Estradas, ACE - - - - - - - 

ASSOC - Soares da Costa - Construção do 

Estádio de Braga, ACE - 73,571 - 73,571 124 124 - 

CAET XXI - Construções, ACE 1,344,827 43,418,169 830,643 35,430,377 119,969,155 126,040,508 6,071,353 

Casais, Eusébios, FDO, J. Gomes, 

Rodrigues e Névoa - Soares da Costa, ACE 37 23,141 - 0 61 137 76 

Estádio de Coimbra, SC/Abrantina, ACE - 297,712 - 297,712 4,561 4,561 - 

GACE - Gondomar, ACE - 2,638,708 - 2,638,708 2,174,910 2,174,910 - 

GCF - Grupo Construtor da Feira, ACE 2,548 365,186 - 367,733 - - - 

GCVC, ACE - 953,323 - 953,323 4,100,414 4,100,414 - 

HidroAlqueva, ACE 1,676,888 2,533,593 - 4,222,344 21,145,854 21,138,639 (7,215) 

38


LGC - Linha de Gondomar, Construtores, 

ACE 7,266 4,411,030 178,311 2,644,876 1,153,625 1,157,984 4,359 

LGV, Engenharia e Construção de Linhas 

de Alta Velocidade, ACE 606 9,988,344 - 9,788,482 1,440,338 1,573,648 133,310 

Mota-Engil, Soares da Costa, 

MonteAdriano - Matosinhos, ACE 1,863 1,297,178 - 1,299,041 6,444,847 6,444,847 - 

Normetro - Agrupamento do 

Metropolitano do Porto, ACE - 3,490,375 - 3,473,944 258,135 274,566 16,431 

Nova Estação, ACE 7,302 2,348,632 - 2,357,101 5,442,990 5,442,309 (681) 

Remodelação Teatro Circo - S.C., A.B.B., 

D.S.T., ACE - 1,726,606 - 1,726,606 2,700 2,700 - 

Soares da Costa/Contacto - Modernização 

de Escolas, ACE - 37,360 - 37,360 1,464,081 1,464,081 - 

Somague, Soares da Costa - Agrupamento 

Construtor do Metro de Superfície, ACE - 311,171 107,756 203,415 8,975 8,975 - 

TRANSMETRO - Construção do 

Metropolitano do Porto, ACE - 6,502,583 - 5,750,430 690,289 712,570 22,282 

Três ponto dois - T.G. Const. Civil - Via e 

Cat Mod. Linha do Norte, ACE - 488,569 - 339,309 78,499 227,759 149,260 

Soares da Costa e Lena, ACE - 177,955 - 177,955 337,307 337,307 - 

Total 3,041,336 81,083,203 1,116,710 71,782,283 164,716,863 171,106,039 6,389,175 

5. RELATED PARTIES 

The terms and conditions practiced between group and associated companies are substantially identical to those that would 

normally be contracted between independent entities in comparable operations. 

The account balances and transactions with Group and associated companies are detailed in the following tables: 

Balance as of December 31, 2011 

Customers 

current 

account 

Loans to 

group and 

associated 

companies 

Suppliers 

Other 

debtros and 

creditors 

Loans from 


associated 

companies 

Auto-Estradas XXI - Subc.Transmontana, S.A. 15,867,362 26,895 - -533 - 

C.P.E. - Companhia de Parque de Estacion, S.A. 12,099 - - 247 - 

Carta - Cantinas e restauração, Lda - - 895 - - 

Carta - Restauração e Serviços, Lda 921,777 - 353,016 - - 

CIAGEST - Imobiliária e Gestão, S.A. 55,524 - 267,749 -4,201 - 

CLEAR - Instalações Electromecânicas, S.A. 77,655 - 4,231,176 - - 

CLEAR ANGOLA, S.A. 735,143 - 31,930,963 -6,216,232 - 

Construções Metálicas SOCOMETAL, S.A. 51,256 - 160,103 157,693 - 

CONTACTO - Soc. Construções, S.A. 935,766 - 149,630 7,112 - 

Coordenação & Soares da Costa, SGPS Lda 565,498 - - 438,837 - 

COSTAPARQUES - Estacionamentos, S.A. 863 - 1,499 - - 

Elos - Ligações de Alta Velocidade, S.A. 8,078,470 - - - - 

Energia Própria, SGPS, S.A. 132 - - - - 

Estradas do Zambeze, S.A. 2,489,226 - - -10,320,764 - 

Exproestradas XXI - AE Transmontana, S.A. 39,063 - - 1,999 - 

Grupo Soares da Costa SGPS 5,394 53,583,424 949,701 -13,539 6,488,791 

Grupul Portughez de Constructii S.R.L. 1,220,804 455,754 - 49,766 - 

HABITOP - Sociedade Imobiliária, S.A. 95 - - - - 

Hidroeléctrica STP, Limitada 250,272 - - - - 

Hotti - Angola Hoteis, S.A. 46,673 - - 10,463 - 

IMOKANDANDU - Promoção Imobiliária, Lda 32,665 - - 28,650 - 

INDÁQUA - Indústria e Gestão de Águas, S.A. - - 64,523 - - 

Indáqua Feira - Indústria de Águas de Santa Maria da 

Feira, S.A. - - 7,618 189 - 

Indáqua Matosinhos - Gestão de Águas de Matosinhos, 

SA 922,704 454 3,359 - - 

Indáqua Vila do Conde - Gestão de Águas de Vila do 

Conde, S.A. 624,380 - 100 - - 

Israel Metro Builders - a Registered Partnership 934,179 - - 231,857 - 

MTA - Máquinas e Tractores de Angola Lda.. 22,304 - 17,431 147,663 - 

39


NAVEGAIA - Instalações Industriais SA 2,190 - - -13,544 - 

OPERESTRADAS XXI S.A. 2,800 - - -2,000 - 

Prince Contracting, LLC 346 - - - - 

Santolina Holding B.V. - - - 500 - 

SDC Construções SGPS, SA 740,443 - 2,228 - - 

Soares da Costa Serviços Partilhados, S.A. 11,106 - 555,765 1,102 - 

Soares da Costa Brasil - Construções Ltda. - - - -94 - 

Soares da Costa Concessions USA, Inc. 83,275 - - - - 

Soares da Costa Concessões, SGPS, S.A. 17,138 - - 200,476 - 

Soares da Costa Construc.Centro Americanas,SA 777,729 - - - - 

Soares da Costa Contractor, INC 185,486 - 3,956 -4,746 - 

Soares da Costa Imobiliária, Lda 345,260 - - -63,990 - 

Soares da Costa Moçambique, SARL 2,424,096 - 1,355,739 190,021 - 

Soares da Costa S. Tomé e Principe - Construções, Lda 477,675 - - 94,585 - 

Soares da Costa Serv. Técnicos E de Gestão, S.A. 89,506 - - 1,578 - 

SOARTA - Soc Imob. Soares da Costa, S.A. 1,806 - - - - 

SOMAFEL - Engenharia e Obras Ferroviárias, S.A., SA - - 1,402 - - 

Talatona Imobiliária, Lda 17,153,647 - - 8,430 - 

Terceira Onda Planej. e Desenvolvimento, Ltda. - - - -220 - 

Total 56,201,805 54,066,528 40,056,851 -15,068,693 6,488,791 

Balance as of December 31, 2010 

Customers 

current 

account 

Loans to group 

and associated 

companies 

Auto-Estradas XXI-Subc.Transmontana, S.A. 32,834,356 13,642 

CPE-Comp. Parque de Estacionamento,S.A. 16,608 

Carta - Cantinas e restauração, Lda 

Carta - Restauração e Serviços, Lda 2,272,652 

CIAGEST - Imobiliária e Gestão, S.A. 80,400 

CLEAR - Instalações Electromecânicas, S.A. 12,442 

CLEAR ANGOLA, S.A. 240,879 

Construções Metálicas SOCOMETAL, S.A. 26,078 

CONTACTO - Soc. Construções, S.A. 1,006,179 

COSTAPARQUES - Estacionamentos, S.A. 986 

Elos - Ligações de Alta Velocidade, S.A. 8,939,068 

Exproestradas XXI - AE Transmontana, S.A. 

Suppliers 

895 

Other debtros 

and creditors 

247 

169,236 -4,201 

4,172,978 -138,501 

25,079,165 -2,950,402 

1,938,385 1,767,387 

1,102,799 21,918 

949 

1,999 

Loans from 


associated 

companies 

Grupo Soares da Costa SGPS 12,863 24,412,145 488,720 -6,810 5,760,109 

Grupul Portughez de Constructii S.R.L. 1,238,362 462,309 

HABITOP - Sociedade Imobiliária, S.A. 14 

Hidroeléctrica STP, Limitada 250,259 

Hotti - Angola Hoteis, S.A. 45,195 

IMOKANDANDU - Promoção Imobiliária, Lda 

INDÁQUA - Indústria e Gestão de Águas, S.A. 

Indáqua Feira-Ind.. Águas S. 

60,725 

Maria da Feira,SA 

Indáqua Matosinhos - Gestão de Águas de 

1,352 46 

Matosinhos, SA 799,582 325 538 

Indáqua Vila do Conde-Gest.Águas Vila Conde S.A. 710,841 

Israel Metro Builders - a Registered Partnership 974,517 

Mini Price Hotels (Porto), S.A. 

MTA - Máquinas e Tractores de Angola Lda.. 306,489 

NAVEGAIA - Instalações Industriais SA 4,118 

OFM - Obras Públicas, 

Ferroviárias e Marítimas, S.A. 

OPERESTRADAS XXI S.A. 1,000 

Prince Contracting, LLC 346 

SDC Construções SGPS, SA 741,119 

Soares da Costa Serviços Partilhados, S.A. 7,186 

Soares da Costa Concessões, SGPS, S.A. 92,461 

Soares da Costa Construcciones Centro Americanas, 592,982 

150 

944 

50,487 

16,200 

6,330 

224,517 

51,510 387,465 

-13,544 

-2,000 

521,741 1,102 

196,257 

40


SA 

Soares da Costa Contractor, INC 179,614 

Soares da Costa Hidroenergia, S.A. 2,244 

Soares da Costa Imobiliária, Lda 568,799 

Soares da Costa Moçambique, SARL 2,287,050 

Soares da Costa S. Tomé e Principe - Construções, Lda 1,249,862 

Soares da Costa Serviços Técnicos e de Gestão, S.A. 

Soares da Costa/Contacto - Modernização de Escolas, 

943,588 

ACE 604,431 

SOARTA - Soc Imob. Soares da Costa, S.A. 109,486 

SOMAFEL-Engenharia e Obras 

Ferroviárias, S.A., 

Talatona Imobiliária, Lda 12,997,040 

2,800 

3,830 -4,746 

297,485 21,184 

706,690 170,095 

65,009 94,585 

1,578 1,578 

32,155 7,963 

Total 70,149,096 24,888,421 34,699,634 -150,807 5,760,109 

Transactions in 2011 

External 

supplies and 

services 

Turnover 

Other 

operational 

gains and 

losses 

37 

Net financing 

costs 

Other gains 

and losses 

Auto-Estradas XXI - Subconc.Transmontana, S.A. - 122,111,485 - 155,966 - 

C.P.E. - Companhia de Parque de Estacion, S.A. - 16,324 - - - 

Carta - Restauração e Serviços, Lda 6,256,181 928,891 - - -159,211 

CIAGEST - Imobiliária e Gestão, S.A. 1,685,361 174,570 -220,503 - - 

CLEAR - Instalações Electromecânicas, S.A. 11,876,384 168,805 -1 3,263 715 

CLEAR ANGOLA, S.A. 47,108,942 1,501,623 - - -2,193,928 

Construções Metálicas SOCOMETAL, S.A. 6,184,652 94,139 - 6,007 226,298 

CONTACTO - Soc. Construções, S.A. 3,127,017 2,916,831 -15,704 3,107 14,755 

Coordenação & Soares da Costa, SGPS Lda - - - - 52,559 

COSTAPARQUES - Estacionamentos, S.A. 3,650 2,351 - - - 

Elos - Ligações de Alta Velocidade, S.A. - 1,466,267 - - - 

Energia Própria, SGPS, S.A. - 108 - - - 

Estradas do Zambeze, S.A. - 12,564,974 - - 68,157 

Exproestradas XXI - AE Transmontana, S.A. - 31,758 - - - 

Grupo Soares da Costa SGPS 3,785,436 25,537 49,219 2,220,004 - 

Grupul Portughez de Constructii S.R.L. - - - - -24,835 

HABITOP - Sociedade Imobiliária, S.A. - 545 - - - 

Hidroeléctrica STP, Limitada - 13 - - - 

Hotti - Angola Hoteis, S.A. - - - - 1,303 

IMOKANDANDU - Promoção Imobiliária, Lda - - - - 5,286 

INDÁQUA - Indústria e Gestão de Águas, S.A. 223,145 - - - - 

Indáqua Matosinhos - Gestão de Águas de Matosinhos, 

SA 7,784 3,232,947 - 129 - 

Indáqua Vila do Conde - Gestão de Águas de Vila do 

Conde, S.A. 6,978 2,158,912 - - - 

Israel Metro Builders - a Registered Partnership - - - - -32,998 

Metropolitan Transportation Solutions Ltd. 28,240 - -93 - -228 

Mini Price Hotels (Porto), S.A. 205 633 - - - 

MTA - Máquinas e Tractores de Angola Lda.. 4,788 43,377 -228 - -1,267 

NAVEGAIA - Instalações Industriais SA - 16,768 - - - 

OPERESTRADAS XXI S.A. 2,512,091 56,304 - - 20,000 

SDC Construções SGPS, SA - 4,485 - - - 

Soares da Costa Serviços Partilhados, S.A. 5,010,262 26,468 - - - 

Soares da Costa Brasil - Construções Ltda. - - - - 5 

Soares da Costa Concessions USA, Inc. - 83,275 - - - 

Soares da Costa Concessões, SGPS, S.A. - 2,846 - 281,528 - 

Soares da Costa Construc.Centro Americanas,SA - 184,746 - - - 

Soares da Costa Contractor, INC - - - - 5,575 

Soares da Costa Hidroenergia, S.A. - 638 - - - 

Soares da Costa Imobiliária, Lda 378,544 390,000 - - -4,413 

Soares da Costa Moçambique, SARL 457,060 1,410,937 -6 - -111,398 

Soares da Costa S. Tomé e Principe - Construções, Lda 41,509 309,106 -588 12,185 2,811 

41


Soares da Costa Serviços Técnicos e de Gestão, S.A. - 122,855 - - - 

SOARTA - Soc Imob. Soares da Costa, S.A. - 16,801 - 7,225 - 

Talatona Imobiliária, Lda - 3,385,373 - - 770,935 

Total 88,698,229 153,450,693 -187,904 2,689,415 -1,359,878 

Transactions in 2010 

Auto-Estradas XXI - 

Subconc.Transmontana, S.A. 37,253,957 

C.P.E. - Companhia de Parque de Estacion, S.A. 

Cais da Fontinha- 

Investimentos Imobiliários, 

S.A. 9 

External 

supplies and 

services 

Turnover 

33,173 

Carta - Restauração e Serviços, Lda 7,041,028 2,859,852 

CIAGEST - Imobiliária e Gestão, S.A. 1,648,882 179,203 

Other 

operational 

gains and 

losses 

Net financing 

costs 

212,607 

Other gains 

and losses 

42 

-34,187 

31,663 119,921 

CLEAR - Instalações Electromecânicas, S.A. 5,146,034 161,590 3 1,413 41,705 

CLEAR ANGOLA, S.A. 38,463,536 687,294 

-708,817 

Construções Metálicas SOCOMETAL, S.A. 3,255,955 106,924 1 901 -22,898 

CONTACTO - Soc. Construções, S.A. 17,240,855 3,569,013 4,945 

COSTAPARQUES - Estacionamentos, S.A. 3,372 834 

Elos - Ligações de Alta Velocidade, S.A. 

3,238,447 

Grupo Soares da Costa SGPS 2,507,629 21,114 138,700 498,896 

Grupul Portughez de Constructii S.R.L. 20,115 35,145 

HABITOP - Sociedade Imobiliária, S.A. 

Hidroeléctrica STP, Limitada 

Hotti - Angola Hoteis, S.A. 

IMOKANDANDU - Promoção Imobiliária, Lda 

INDÁQUA - Indústria e Gestão de Águas, S.A. 182,340 

Indáqua Feira - Indústria de Águas de Santa Maria da Feira, 

S.A. 27,799 

244 

5,591 

Indáqua Matosinhos - Gestão de Águas de Matosinhos, SA 

Indáqua Vila do Conde - Gestão de Águas de Vila do Conde, 

8,752 3,198,847 

S.A. 5,376 2,970,969 

Israel Metro Builders - a Registered Partnership 175,813 409,822 

Mercados Novos - Imóveis Comerciais, Lda. 

Metropolitan Transportation Solutions Ltd. 287,337 396,282 -1,503 

Mini Price Hotels (Porto), S.A. 2,658 

MTA - Máquinas e Tractores de Angola Lda.. 26,034 165,899 

NAVEGAIA - Instalações Industriais SA 

OFM - Obras Públicas, Ferroviárias e Marítimas, S.A. 150 

OPERESTRADAS XXI S.A. 

SDC Construções SGPS, SA 

9,355 

1,000 

Soares da Costa Serviços Partilhados, S.A. 4,958,790 35,433 

Soares da Costa América, Inc. 

Soares da Costa Concessões, SGPS, S.A. 

Soares da Costa 

Construc.Centro 

Americanas,SA 117,543 

Soares da Costa Contractor, INC 

Soares da Costa Hidroenergia, S.A. 

169 

83,138 

1,848 

1,855 

Soares da Costa Imobiliária, Lda 608,257 378,000 

Soares da Costa Moçambique, SARL 229,923 962,184 24,615 

Soares da Costa S. Tomé e Principe - Construções, Lda 

Soares da Costa Serv. Técnicos 

60,956 853,352 

E de Gestão, S.A. 781,184 

Soares da Costa/Contacto - Modernização de Escolas, ACE 43,822 3,397,644 

SOARTA - Soc Imob. Soares da Costa, S.A. 

158,358 

97 

27,211 

-2,540,380 

3,275 

115 

155,715 

13,570 51,395 

1,523,514 

-78,654 

-5,271 

403,603 2,638 

12,359 

27,958 

16,128 

8,899 6,455 

9,888


SOMAFEL - Engenharia e Obras Ferroviárias, S.A., SA 192,455 

Talatona Imobiliária, Lda -62,489 19,700,494 

1,506,024 54,134 

Total 82,075,379 81,775,766 166,761 4,211,075 -2,871,198 

6. BREAKDOWN OF THE MOVEMENTS IN INTANGIBLE ASSETS DURING THE PERIOD 

a) Gross Assets 

The movements occurring in the gross amount of intangible assets are as follows: 

Intangible assets 

Other intangible assets 303 - 

303 - 

b) Accumulated Amortization 

The movements occurring in the amount of accumulated amortization of intangible assets are as follows: 


7. BREAKDOWN OF THE MOVEMENTS IN TANGIBLE ASSETS FOR THE PERIOD 


Opening 

balance 

The movements occurring in the gross value of tangible fixed assets are as follows: 

The column “Disposals” of the caption “Buildings” includes a disposal of the surface rights to the Edurb-Talatona land, that 

resulted in an accounting capital gain of 2,527,349.22 €. 

The column “Additions” of the captions “Capital work-in-progress” and “Buildings” includes work for the own company of 

1,138,282 Euros and 5,655,399 Euros, respectively. 

b) Accumulated Depreciation 

Change in 

perimeter 

Opening 

balance 

Other intangible assets 240 - 

240 - 


Opening 

balance 

Change in 

perimeter 

Lnad 4,800,554 - 

Buildings 72,030,982 - 

Basic equipment 93,869,277 - 

Transport equipment 27,022,596 - 

Administrative equipment 8,465,863 - 

Other tangible assets 227,970 - 

Work in progress 11,616,086 - 

218,033,328 - 

Increases Alienations 

The movements occurring in the amount of accumulated depreciation of tangible fixed assets are as follows: 

- 

- 

- 

- 

Foreign 

exchange 

Change in 

perimeter Increase Adjustments 


- 

- 

63 (76) 

63 (76) 

Foreign 

exchange 

- 

- 

- 

5,790,764 (891,064) - 

879,875 (134,458) - 

11,662 (1,129,476) - 

182,563 (66,263) - 

2,301 (152,484) - 

2,578,455 - 

- 

9,445,620 (2,373,745) - 

Transfers and 

write-offs 

(76) 

(76) 

Foreign 

exchange 

- 

- 

Closing 

balance 


write-offs 

227 

227 

Closing 

balance 

227 

227 

Closing 

balance 

- 

4,800,554 

10,050,827 86,981,509 

(2,285,206) 92,329,488 

(2,061,926) 23,842,856 

(621,524) 7,960,639 

- 

77,787 

(11,126,385) 3,068,157 

(6,044,214) 219,060,989 

43


Fixed tangible assets 

Buildings 16,294,877 - 

Basic equipment 41,190,493 - 

Transport equipment 15,014,569 - 

Administrative equipment 5,537,896 - 

Other fixed tangible assets 74,665 - 

78,112,501 - 

8. BREAKDOWN OF THE REVALUATIONS OF TANGIBLE FIXED ASSETS 

(a) Net of depreciation 

9. BREAKDOWN OF THE MOVEMENTS IN FINANCIAL INVESTMENTS FOR THE PERIOD 


Opening 

balance 

Change in 

perimeter Increase Adjustments 

The movements occurring in the gross amount of financial investment are as follows: 

10. INVESTMENTS IN SUBSIDIARIES AND ASSOCIATED COMPANIES 

Foreign 

exchange 

3,349,529 (817,482) - 

6,006,243 (1,976,244) - 

2,179,389 (2,419,094) - 

776,062 (628,575) - 

17,765 (50,899) - 

12,328,989 (5,892,293) - 

Historical Accounting 

Costs Adjustments Values 

(a) 

Adjusted (a) 

Tangible assets: 

Lands and natural resources 2,227,883 966,100 3,193,983 

Building and other constructions 1,222,810 422,330 1,645,140 

Basic equipment 4,270 262 4,532 

3,454,962 1,388,693 4,843,655 

Financial investments 

Opening 

balance 

Change in 

perimeter 

Financial investments 

Equity participations in subsidiaries 2,303 - 

Loans to subsidaries 258,114 - 

Equity participations in associated companies 63,359 - 

Loans to associated companies 598,631 - 

Other financial investments 10 - 

922,417 - 

Foreign 

exchange 

- 

- 

- 

- 

- 

- 


18,319 - 

- 

- 

- 

- 

2,371,388 - 

- 

- 

2,389,707 - 

Closing 

balance 

18,826,925 

45,220,492 

14,774,865 

5,685,384 

41,531 

84,549,197 


write-offs 

- 

20,622 

(228) 257,886 

- 

63,359 

- 

2,970,019 

- 

10 

(228) 3,311,896 

At 31 December 2011, the group and associated companies in whom the company participated directly were as follows: 

Closing 

balance 

44


Participations in Group Companies 

11. INFORMATION ON ASSETS HELD UNDER FINANCE AND OPERATING LEASES 

Finance Leases 

The company’s balance sheet includes tangible fixed assets held under finance leases. At 31 December 2011, the carrying 

amount of these assets is as follows: 

The obligations under these contracts are as follows: 

% Shareholders Net income 

Participation equity 31.12.2011 

SCSP-Soares da Costa Serviços Partilhados, SA. 0.01% 1,447,702 328,708 

CARTA - Restauração e Serviços, Lda 1.00% 1,046,678 2,358 

Soares da Costa - S.Tomé e Príncipe, Construções, Lda 1.00% 710,664 (218,979) 

Terceira Onda 50.00% 624,203 644,713 

Santolina Holding B.V. 100.00% 18,000 - 

Soares da Costa Brasil - Construções Ltda. 0.04% 41,298 (266,120) 

Participations in Associated Companies 

Exproestradas XXI - AE Transmontana, SA. 0.004% 15,307 (45,300) 

Operestradas XXI, SA. 4.00% 4,240,329 4,143,302 

Auto-Estradas XXI - Subconcessionária Transmontana, SA. 4.00% (18,415,236) 927,993 

Financial leasing Gross 

Cumulated 

depreciation Net 

Buildings 977,904 248,880 729,023 

Basic equipment 8,672,616 1,979,288 6,693,328 

Transport equipment 212,368 84,047 128,321 

Administrative equipment 110,829 23,089 87,739 

9,973,716 2,335,305 7,638,412 

Short term 1,979,664 

Medium and long term 617,939 

The reconciliation between total minimum lease payments at the balance sheet date and their present value, by period, is as 

follows: 

31/12/2011 

Minimum payments of financial leasing: 

2012 2,043,644 

2013 538,962 

2014 93,060 

2,675,665 

Present value of minimum payments of 

financial leasing: 

Interests 78,062 

2,597,603 

Current 1,979,664 

Non current 617,939 

The finance lease contracts bear interest at market rates and have defined useful life periods. At 31 December 2011 there 

were neither contingent rentals nor restrictions with regards to dividends (or any additional debt) associated with the finance 

lease contracts in existence. 

45


Operating Leases 

During the 2011 economic period costs in the amount of 1,293,766 Euros were recognized for rentals arising on operating 

lease contracts. 

The rentals (fixed rentals) arising on operating leases held by the company at 31 December 2011, relating essentially to 

motor vehicles, have the following maturities: 

Minimum payments of operational leasing: 

2012 936,905 

2013 352,469 

2014 133,835 

2015 53,135 

Total 1,476,344 

12. BREAKDOWN OF INVENTORIES 

Inventories 31/12/2011 31/12/2010 

Raw materials 13,910,879 17,183,157 

Products and works in progress 26,837,389 45,944,733 

Intermediary and finished products 24,648,043 24,648,043 

Adjustments of value (3,869,840) (3,869,840) 

61,526,471 83,906,093 

The value of merchandize-in-transit at 31 December 2011 is 513,750 €. 

The caption “Products and work in progress” at 31 December 2011 relates, essentially, to construction work-in-progress on 

Angolan territory, which revenue amount has not yet been contractually defined. 

13. BREAKDOWN OF ACCOUNTS RECEIVABLE 

At 31 December 2011 and 31 December 2010, the detail was as follows: 

Accounts payable 31/12/2011 31/12/2010 

Customers - current account 394,058,043 384,095,322 

Customers - other 2,952,256 5,727,848 

Customers - doubtful accounts 18,602,666 17,238,850 

Adjustemnts of value (18,602,666) (17,238,850) 

Customers 397,010,299 389,823,170 

Group companies 53,586,444 24,415,035 

Participated companies 480,861 1,156,229 

Other shareholders 300,636 990 

Group, participated and associated companies 54,367,942 25,572,254 

Other debtors 11,223,681 13,086,424 

Adjustemnts of value (1,384,122) (1,384,122) 

Other accounts receivable 9,839,559 11,702,302 

The amount presented for group companies relates to short-term treasury loans made to Grupo Soares da Costa, SGPS, SA.. 

During the 2011 economic period, the amount received deriving from financial investments totalled 108,612,992 €, from 

Grupo Soares da Costa, SGPS, SA., and the amount paid relating to financial investments was 138,835,212 € (136,445,824 € 

to Grupo Soares da Costa, SGPS, SA., 2,371,368 € to Auto-Estradas XXI, SA. and 18,000 € relating to the incorporation of the 

company Santolina Holding B.V.). 

Details of the caption “State and Other Public Entities” at 31 December 2011 and 31 December 2010 were as follows: 

46


14. BREAKDOWN OF OTHER CURRENT ASSETS 

In December 2011 these captions had the following composition: 

15. CASH AND CASH EQUIVALENTS 

31/12/2011 31/12/2010 

Income tax 54,256 39,074 

Value added tax 5,724,885 3,534,629 

Other 25,838 965 

Total 5,804,979 3,574,668 

Other current assets 31/12/2011 31/12/2010 

Accrued income 49,548,146 68,125,706 

Deferred costs 11,724,827 8,417,734 

61,272,973 76,543,440 

At 31 December 2011 and 31 December 2010, the detail of cash and cash equivalents was as follows: 

16. COMPOSITION OF SHARE CAPITAL AND RESERVES 

31/12/2011 31/12/2010 

Accrued income 

Works executed not invoiced 31,089,715 43,166,981 

Compensation processes in progress 15,624,980 22,009,750 

Other accrued income 2,833,451 2,948,975 

49,548,146 68,125,706 

Deferred costs 

Initial start-up costs of works 3,904,435 1,782,257 

Other deferred costs 7,820,392 6,635,477 

11,724,827 8,417,734 

31/12/2011 31/12/2010 

Cash 465,795 528,863 

Bank deposits, immediatly available 38,892,440 42,704,813 

Cash and equivalents 39,358,235 43,233,676 

Cash and equivalents in balance sheet 39,358,235 43,233,676 

The company’s share capital has a nominal value of 50,000,000 Euros. 

The company’s capital is represented by 10,000,000 ordinary shares with a par value of 5 Euros each. 

The share capital is wholly owned by Soares da Costa Construção, SGPS, SA. 

Portuguese commercial legislation establishes that at least 5% of the annual net income is to be appropriated to increase the 

“Legal reserve” until said reserve represents at least 20% of the share capital. This reserve is non-distributable, except in the 

event of liquidation, but may be used to absorb losses, after all the other reserves are used up, and incorporated in share 

capital. 

Revaluation reserves may not be distributed to the shareholders, unless the assets underlying these are fully depreciated or 

have been sold. 

47


17. DIVIDENDS 

The dividends attributed to the shareholder with respect to the period ended on 31 December 2010, deliberated at the 17 

March 2011 General Meeting, amounted to 6,500,000.00 €. They were paid out on 07 April 2011. 

In so far as dividends relating to the period ended on 31 December 2011 are concerned, the Board of Directors proposes an 

amount of 9,600,000.00 €. These dividends are subject to the approval of the shareholder at the General Meeting, and have 

not been recorded as a liability in the attached financial statements. 

18. BORROWINGS 

At 31 December 2011 and 31 December 2010, the borrowings’ detail is as follows: 

31/12/2011 31/12/2010 

Non current liabilities 

Bank loans 63,469,487 50,263,287 

Total 63,469,487 50,263,287 

Current liabilities 

Bank loans 123,840,053 123,097,371 

Other loans 37,005,321 44,293,314 

Bank overdrafts 10,482,015 7,600,145 

Total 171,327,388 174,990,830 

At 31 December 2011, bank loans, in the form of authorized bank overdrafts bore interest at an average annual rate of 

10.601%. 

Loan, in the form of Hot Money, contracted by Sociedade de Construções Soares da Costa, S.A. with NCG Banco, SA’s 

Portuguese Branch, currently at 1,235 thousand Euros, with repayment in January, February and March 2012. 

Loan, in the form of Hot Money, contracted by Sociedade de Construções Soares da Costa, S.A. with Montepio Geral, 

currently at 3,000 thousand Euros, with repayment in January 2012. 

Loan contracted by Sociedade de Construções Soares da Costa, S.A. with Caixa Geral de Depósitos, currently at 138 thousand 

Dollars, with repayment in January 2012. 

Loan contracted by Sociedade de Construções Soares da Costa, S.A. with NCG Banco, SA’s Portuguese Branch, of 1,150 

thousand Euros, which repayment will occur with 23 half-yearly payments terminating in January 2023. 

Loan contracted by Sociedade de Construções Soares da Costa, S.A. with Banco BPI, currently at 355 thousand Euros, which 

repayment will occur in 2 quarterly payments terminating in May 2012. 

Loan contracted by Sociedade de Construções Soares da Costa, S.A. with Banco BPI, currently at 1,491 thousand Euros, which 

repayment will occur with 7 quarterly payments terminating in September 2013. 

Loan contracted by Sociedade de Construções Soares da Costa, S.A. with Banco BPI, currently at 59 thousand Euros, with 

repayment in February 2013. 

Loan contracted by Sociedade de Construções Soares da Costa, S.A. with Banco Português de Negócios, currently at 1,689 

thousand Euros, which repayment will occur with 13 quarterly payments terminating in January 2015. 

Loan contracted by Sociedade de Construções Soares da Costa, S.A. with Banco Português de Negócios, currently at 2,717 

thousand Euros, which repayment will occur with 5 quarterly payments terminating in February 2013. 

Loan contracted by Sociedade de Construções Soares da Costa, S.A. with Banco BIC, currently at 400 thousand Euros, which 

repayment will occur with 6 monthly payments terminating in June 2012. 

Loan contracted by Sociedade de Construções Soares da Costa, S.A. with BANIF Banco International do Funchal, currently at 

3,542 thousand Euros, which repayment will occur with 13 quarterly payments terminating in February 2015. 

Loan contracted by Sociedade de Construções Soares da Costa, S.A. with Caixa Geral de Depósitos, currently at 8,750 

thousand Euros, which repayment will occur with 7 quarterly payments terminating in September 2013. 

Loan contracted by Sociedade de Construções Soares da Costa, S.A. with Banco Bilbao Vizcaya Argentaria (Portugal), 

currently at 3,750 thousand Euros, which repayment will occur with 2 monthly payments terminating in February 2012. 

Loan contracted by Sociedade de Construções Soares da Costa, S.A. with Barclays Bank, currently at 3,040 thousand Euros, 

which repayment will occur with 6 monthly payments terminating in July 2012. 

Loan contracted by Sociedade de Construções Soares da Costa, S.A. with Barclays Bank, currently at 1,600 thousand Euros, 

which repayment will occur with 5 payments terminating in June 2012. 

Loan contracted by Sociedade de Construções Soares da Costa, S.A. with Banco BAI Europa, currently at 2,000 thousand 

Dollars, which repayment will occur in June 2012. 

48


Loan contracted by Sociedade de Construções Soares da Costa, S.A. with BRD Groupe Société Generale, currently at 755 

thousand Ron, which repayment will occur with 3 quarterly payments terminating in August 2012. 

Sociedade de Construções Soares da Costa, S.A. contracted with Barclays Bank the placement of Commercial Paper issuances 

up to a ceiling of 9,900 thousand Euros, under a contract programme valid through August 2013. This placement was fully 

used at 31 December 2011. 

Sociedade de Construções Soares da Costa, S. A. contracted with Caixa Central de Credito Agrícola Mutuo the placement of 

Commercial Paper issuances up to a ceiling of 5,000 thousand Euros, under a contract programme valid through January 

2014. This placement was fully used at 31 December 2011. 

Sociedade de Construções Soares da Costa, S. A. contracted with Caixa Geral de Depósitos the placement of Commercial 

Paper issuances up to a ceiling of 15,000 thousand Euros, under a contract programme valid through June 2012. This 

placement was fully used at 31 December 2011. 

Sociedade de Construções Soares da Costa, S. A. contracted with Banco Commercial Português the placement of Commercial 

Paper issuances up to a ceiling of 4,500 thousand Euros, under a contract programme valid through January 2014. This 

placement was fully used at 31 December 2011. 

Sociedade de Construções Soares da Costa, S. A. contracted with Banco Commercial Português and Banco Popular Portugal 

the placement of Commercial Paper issuances up to a ceiling of 15,000 thousand Euros, under a contract programme valid 

through January 2014. This placement was fully used at 31 December 2011. 

Loan contracted by Sociedade de Construções Soares da Costa, S.A. with Banco Africano de Investimentos, currently at 1,950 

thousand Dollars, which repayment will occur with 13 monthly payments terminating in January 2013. 

Loan contracted by Sociedade de Construções Soares da Costa, S.A. with Banco de Fomento de Angola, currently at 462,157 

thousand Kwanzas, which repayment will occur with 22 monthly payments terminating in October 2013. 

The amount of the caption “Bank loans”, following the implementation of the standards covering the valuation of bank loans 

using amortized costs - IAS 39 and IAS 32 – reflects a decrease of 82,200 Euros. 

The amount of the borrowings recorded in the balance sheet at 31 December 2011 has the following maturities: 

Maturity Bank loans Bonds Other loans 

Bank 

overdrafts 

Other loans 

(Factoring) 

Total 

2012 123,840,053 - - 10,482,015 37,005,321 171,327,388 

2013 30,518,758 - - - - 30,518,758 

2014 27,771,609 - - - - 27,771,609 

2015 3,012,216 - - - - 3,012,216 

2016 1,516,905 - - - - 1,516,905 

2017 100,000 

- - - - 100,000 

after 2017 550,000 

- - - - 550,000 

187,309,540 - 

- 10,482,015 37,005,321 234,796,876 

Borrowings at 31 December 2011 bear interest at the following rates: 

Type of loan Minimum Maximum 

Overdrafts 5.030% 9.190% 

Hot Money 7.235% 11.940% 

Bank loans 2.222% 8.670% 

Commercial paper issues 4.856% 6.604% 

19. DERIVATIVE FINANCIAL INSTRUMENTS 

To cover the currency risk associated with cash flows due from a specific project, Sociedade de Construções Soares da Costa, 

S.A. contracted with a financial institution a number of foreign exchange forwards, summarized in the table below: 

49


Type of financial instrument: Derivative 

Description: Forward 

Bank: Barclays Bank 

Currency: US Dollar 

Date of the contract: 03/07/2009 18/09/2009 

Begining date: 03/07/2009 18/09/2009 

Maturity date: 09/07/2012 09/07/2012 

Frequency: Flexible Flexible 

Swap: 1.4455 1.5100 

Covered value by 31-12-2011: 8,150,000 USD 5,000,000 USD 

Reference: EUR/USD exchange rate 

20. BREAKDOWN OF OTHER ACCOUNTS PAYABLE 

At 31 December 2011 the caption “Other accounts payable” had the following composition: 

Accounts payable 31/12/2011 31/12/2010 

Group companies 66,953 66,945 

Special regime for taxation of corporate groups 6,488,791 5,760,109 

Participated companies 1,580,283 3,857,038 

Associated companies 44,031 - 

Other shareholders - 

1,210,259 

Group companies, participated and associated companies - current 8,180,059 10,894,352 

Other creditors 37,101,488 31,904,112 

Other accounts payables - current 37,101,488 31,904,112 

The detail of the caption “State and Other Public Entities”, shown above, is as follows at 31 December 2011 and 31 December 

2010: 

Value added tax - 

Income tax 8,251 

Social security constributions 1,531,247 

Other 518,568 

Total 2,058,065 

31/12/2011 31/12/2010 

11 

12,152 

945,566 

327,444 

1,285,173 

21. BREAKDOWN OF OTHER CURRENT LIABILITIES 

Other current liabilities 31/12/2011 31/12/2010 

Accrued costs 75,739,407 62,258,681 

Deferred income 29,177,263 23,533,740 

104,916,669 85,792,421 

At 31 December 2011 and 31 December 2010 these captions had the following composition: 

50


22. BREAKDOWN OF THE MOVEMENTS IN FAIR VALUE ADJUSTMENTS AND PROVISIONS DURING THE PERIOD 

The movements in fair value adjustments are as follows: 

The movements in provisions are as follows: 

The recognition of impairment losses in accounts receivable is based on an individual risk analysis, which considers the 

nature and the delay of the receivables. 

23. INFORMATION BY SEGMENT 

31/12/2011 31/12/2010 

Accrued costs 

Invoices not yet received 66,549,522 52,349,692 

Wages to be paid 5,416,612 5,997,286 

Interest to be paid 1,322,178 591,830 

Other accrued costs 2,451,095 3,319,874 

75,739,407 62,258,681 

Deferred income 

Works invoiced not executed 28,589,418 20,203,337 

Other deferred income 587,845 3,330,403 

29,177,263 23,533,740 

Fair value adjustments 

Notes 

Customers - doubtful accounts 17,238,850 - 

Customers 13 17,238,850 - 

Other debtors 1,384,122 - 

Other accounts receivable 13 1,384,122 - 

Intermediary and finished products 3,869,840 - 

Inventories 12 3,869,840 - 

Total fair value adjustments 22,492,811 - 

Provisions 

Opening 

balance 

Opening 

balance 

Other provisions for risks and charges 15,000 - 

15,000 - 

Changes in 

perimeter Increases Reductions 

1,363,816 - 

1,363,816 - 

Sales and services rendered by geographical markets are distributed as follows: 

The breakdown of this caption at 31 December 2011 and 31 December 2010 is as follows: 

- 

- 

- 

- 

- 

- 

- 

- 

1,363,816 - 

Changes in 

perimeter Increases Reductions 

Turnover by market 2011 % 2010 % 

Portugal 233,096,859 38.49% 229,198,710 36.58% 

Angola 310,618,639 51.28% 347,285,389 55.43% 

Romania 6,629,981 1.09% 25,876,496 4.13% 

Mozambique 54,899,201 9.06% 20,944,767 3.34% 

Other countries 432,356 0.07% 3,239,103 0.52% 

Total 605,677,038 100.00% 626,544,465 100.00% 

- 

- 

- 

- 

Closing 

balance 

Closing 

balance 

18,602,666 

18,602,666 

1,384,122 

1,384,122 

3,869,840 

3,869,840 

23,856,627 

15,000 

15,000 

51


Turnover 2011 2010 

Goods 487,579 922,958 

Intermediary and finisged products 22,990 525,668 

Services rendered 591,651,888 612,466,616 

Suplementary income 13,514,581 12,629,224 

Total 605,677,038 626,544,465 

Net assets and Investments in tangible assets are distributed by geographical market as follows: 

24. OTHER OPERATING GAINS AND LOSSES 

Other operating gains are as follows: 

(*) See Note 7 

(**) Includes balance adjustments in the amount of 7.3 million Euros 

Other operating losses are as follows: 

25. EMPLOYEES 

Portugal Angola U.S. Mozambique 

S.Tomé & 

Príncipe 

Guinea Romania Other 

countries 

Net assets: 

- Fixed tangible assets 20,841,040 111,001,520 - 1,626,105 370,108 306,069 366,950 - 134,511,792 

- Financial investments 3,033,488 4,066 - 

- 256,024 - 

- 18,319 3,311,896 

- Inventories 23,846,600 37,281,313 - 

398,558 - 

- 

- 

- 61,526,471 

- Accounts receivable 185,641,544 266,426,627 - 38,218,425 805,656 6,960,858 4,442,988 3,243,519 505,739,617 

- Cash and equivalents 18,375,712 18,708,223 - 

874,143 - 13,454 1,356,834 29,869 39,358,235 

- Deferred tax assets 1,051,219 - - 

- 

- 

- 

- 

- 1,051,219 

- Other assets 37,523,830 17,983,531 - 

155,813 32,979 1,263,236 3,438,383 875,201 61,272,974 

Total 290,313,432 451,405,281 0 41,273,044 1,464,767 8,543,618 9,605,154 4,166,907 806,772,203 

Investiments in 2011: 

- Intangible and fixed tangible assets 945,282 8,192,732 - 

307,288 - 

- 

Total 945,282 8,192,732 0 307,288 0 - 

Other income and gains 2011 2010 

Gains in fixed tangible assets (*) 2,643,416 83,750 

Benefits and penalties in contracts 227,759 

507,606 

Tax refund 132,600 251,571 

Recovery of debts - 

47,001 

Other operational income and gains (**) 12,438,547 5,508,892 

Total 15,442,323 6,398,819 

Other costs and losses 2011 2010 

Bad debts 315,011 

- 

Losses in fixed tangible assets 1,672,564 858,333 

Fines 116,677 80,212 

Donations 17,726 9,338 

Losses in inventories 113,597 185,964 

Contractual penalties 771,805 1,857,257 

Other operational costs and losses 4,809,864 6,172,236 

Total 7,817,243 9,163,340 

The average number of employees in the service of the company during the period ended on 31 December 2011 and 2010, 

totalling 1,990 and 2,224, respectively, were distributed as follows: 

318 

318 

- 

Total 

9,445,620 

0 9,445,620 

52


Directors 

Senior 

management 

Middle 

management 

Officers and 

heads of 

services 

Highly 

qualified 

professionals 

The remuneration attributed to the members of the corporate bodies for the period ended on 31 December 2011 and 2010 

was as follows: 

Staff costs during the 2011 and 2010 economic periods, have the following composition: 

26. BREAKDOWN OF COSTS WITH EXTERNAL SUPPLIES AND SERVICES 

Semi 

qualified 

professionals 

Non qualified 

staff 

Apprentices 

Soc. de Construções 

4 267 74 225 956 19 121 0 

ACE's 

20 13 29 11 11 92 148 0 

Directors 

Senior 

management 

Middle 

management 

Officers and 

heads of 

services 

Highly 

qualified 

professionals 

Semi 

Non qualified 

qualified 

staff 

professionals 

Apprentices 

Soc. de Construções 

4 290 87 262 1,182 21 145 1 

ACE's 

27 42 28 39 16 42 38 0 

Corporate Bodies 2011 2010 

Board of directors 706,480 697,000 

Supervisory body 48,500 35,000 

Staff costs 2011 2010 

Wages 67,987,704 79,629,158 

Social charges 15,109,322 15,992,896 

Total 83,097,026 95,622,054 

Costs with external supplies and services during the 2011 and 2010 economic periods have the following composition: 

53


External supplies and services 2011 2010 

Subcontracts 185,441,319 178,988,321 

Consortia and complementary group of companies 17,217,734 21,729,318 

Specialised works 11,307,782 11,459,215 

Rental of equipment 4,883,780 9,456,425 

Rental of heavy vehicles 2,922,109 6,903,122 

Travel and accommodation 4,457,664 5,928,927 

Rental of buildings 4,344,130 5,864,731 

Surveillance and security 2,213,584 2,551,944 

Transports 1,707,114 2,339,085 

Fees 1,122,887 1,623,420 

Insurance 1,753,790 1,572,901 

Communication 820,856 1,315,906 

Fuel 1,417,414 1,268,398 

Rental of light vehicles 1,160,741 1,245,461 

Electricity 431,490 513,616 

Rental of lands 83,804 465,698 

Other 23,293,761 31,891,051 

Integration of complementary group of companies 105,281,730 77,910,219 

Total 369,861,690 363,027,756 

27. STATEMENT OF FINANCIAL RESULTS 

Financial results for the periods ended on 31 December 2011 and 2010 have the following composition: 

Costs and losses 2011 2010 

Interest paid 14,928,587 12,767,628 

Foreign exchange losses 24,693,093 23,627,896 

Cash discounts granted 28,721 36,363 

Other financial costs and losses 8,551,873 7,356,439 

(1) 48,202,274 43,788,325 

Income and gains 2011 2010 

Interest received 5,789,104 9,577,125 

Foreign exchange gains 28,736,391 21,783,296 

Cash discounts obtained 352,094 42,617 

Income from participations 20,000 512 

Other financial income and gains 13,738 266,057 

(2) 34,911,327 31,669,607 

Financial results (2)-(1) (13,290,948) (12,118,719) 

The caption ”Other financial losses” includes, essentially, costs incurred with bank guarantees and bank charges. 

28. INCOME AND DEFERRED TAXES 

The company is subject to Corporate Income Tax (IRC), under the Special Taxation Regime for Groups (Regime Especial de 

Tributação dos Grupos de Sociedades). The company, which is wholly owned, records in its “Group, associated and related 

companies” accounts the credit/debit relating to its tax contribution. The dominant company is “Grupo Soares da Costa, 

SGPS, SA. 

In accordance with tax legislation, the tax returns are subject to review and correction by the tax authorities for a period of 

four years (five years for social security). Consequently, the Company’s tax returns for the years 2008 et seq may still be 

subject to review. The Board of Directors of the Company believes that any corrections that may be made will not have a 

significant impact on the financial statements. 

54


Income tax recorded for the periods ended on 31 December 2011 and 2010 can be broken down as follows: 

Income tax 2011 2010 

Current tax 6,508,117 5,771,646 

Deferred tax (150,705) 

(541,953) 

6,357,413 5,229,693 

The reconciliation between the pre-tax result and the tax for the period is as follows: 

Tax and nominal income tax amount 26.50% 18,536,269 4,912,111 

State tax surcharge 1,776,124 470,673 

Autonomous taxation 1,955,893 518,312 

Adjustments that generate deferred taxes -568,696 -150,705 

Other adjustments 2,290,648 607,022 

Tax and effective income tax amount 34.30% 6,357,413 

Deferred tax assets and liabilities presented on the balance sheet have the following natures: 

29. EARNINGS PER SHARE 

Tax rate Fiscal Base Tax 

Deferred tax assets 31/12/2011 31/12/2010 

Financial instruments fair value 345,204 388,018 

Others 706,015 940,874 

1,051,219 1,328,892 

Deferred tax liabilities 31/12/2011 31/12/2010 

Diferences in the valuation of fixed assets 10,327,166 11,009,652 

Capital gains with deferred taxes 137,695 132,726 

Other 291,953 

- 

10,756,814 11,142,378 

At 31 December 2011 and 2010, basic earnings per share correspond to the net income divided by the number of ordinary 

shares of the company during the period, having been calculated as follows: 

Earnings per share Fiscal Base Tax 

Result from continued operations 12,178,856 8,306,186 

Net income 12,178,856 8,306,186 

Total number of ordinary shares 10,000,000 10,000,000 

Earnings per share of continued operations 

Basic 1.218 0.831 

Diluted 1.218 0.831 

Earnings per share 

Basic 1.218 0.831 

Diluted 1.218 0.831 

55


30. GUARANTEES ISSUED 

The value of the bank guarantees issued by the company to third parties at 31 December 2011 is as follows: 

31. FINANCIAL RISKS 

a) Currency risk 

This risk derives primarily from the company’s international presence, which exposes it to the effects of fluctuations in the 

various currencies versus the Euro. The currency risk management policy adopted by the company aims to reduce to a 

maximum the sensitivity of the results to currency fluctuations. The company seeks, to the extent possible, to balance the 

assets with liabilities in the same currency. 

b) Credit risk 

31/12/2011 

Bank guarantees 232,450,258 

Deposits 13,938,072 

Assets EUR USD AOK MZM STD CRC ILS Other Total 

Financial investments 3,309,512 2,065 - 

- 

- 

Customers 169,774,636 234,198,517 - 13,872,150 - 

Group companies 53,586,444 - 

- 

- 

- 


- 

- 

- 

Affiliated Companies and Participants 778 - 

- 

- 

- 

Other shareholders 300,636 - 

- 

- 

- 

Advances to suppliers 6,546,983 6,056,933 1,739,621 - 

- 

State and other public entity 5,804,979 - 

- 

- 

- 

Other debtors 9,527,203 - 178,079 61,812 - 

Bank deposits 21,696,335 9,332,925 7,474,449 362,544 - 

Cash 76,127 146,645 181,861 58,237 - 

Accruals and deferrals 61,272,973 - 

- 

- 

- 

This risk is associated with accounts receivable arising during the company’s normal course of business. The need to 

recognize impairment losses is determined in function of the client’s delay, risk profile, past experience and other 

circumstances. 

At 31 December 2011 accounts receivable, for which no impairment losses were considered necessary as they were all 

considered recoverable, are as follows: 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

319 3,311,896 

934,179 2,604,119 421,383,600 

- 

- 53,586,444 

- 455,754 480,084 

- 

- 

778 

- 

- 300,636 

- 

- 14,343,537 

- 

- 5,804,979 

12,447 60,019 9,839,559 

8,939 17,247 38,892,440 

2,926 - 465,795 

- 

- 61,272,973 

Liabilities EUR USD AOK MZM STD CRC ILS Other Total 

bank loans 140,292,381 29,436,263 22,909,891 41,879 - 

Other loans 37,005,321 - 

- 

- 

- 

Group companies 66,953 - 

- 

- 

- 


- 

- 

- 

Affiliated Companies and Participants 1,580,283 - 

- 

- 

- 

RETGS 6,488,791 - 

- 

- 

- 

Suppliers 117,199,436 58,085,435 2,509,251 4,054,357 - 

Suppliers of investments 297,687 - 

- 

- 

- 

Advances from customers 31,850,288 58,428,884 151,895 1,955,183 - 

Financial leasing 2,597,603 - 

- 

- 

- 

State and other public entity 2,058,065 - 

- 

- 

- 

Other creditors 34,928,534 - 451,250 1,721,704 - 

Financial derivatives 1,190,357 - 

- 

- 

- 

Accruals and deferrals 103,389,058 257,540 1,267,991 - 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 5,111,139 197,791,554 

- 

- 37,005,321 

- 

- 66,953 

- 

- 44,031 

- 

- 1,580,283 

- 

- 6,488,791 

3,518 2,396,602 184,248,599 

- 

- 297,687 

- 

- 92,386,250 

- 

- 2,597,603 

- 

- 2,058,065 

- 

- 37,101,488 

- 

- 1,190,357 

- 

2,080 104,916,669 

56


Maturity 

Amounts overdue for more than 360 days can be stratified by client type as follows: 

The amounts considered in the category “Angolan Public Entities” include, with reference both to 31 December 2011 and 31 

December 2010, 60.8 million Euros, due by an entity with which negotiations are underway for its settlement. 

It is the Board of Directors conviction that the amount of the adjustments made in accounts receivable, at 31 December 

2011, is adequate to cover the estimated impairment losses. 

c) Liquidity risk 

The liquidity risk management policy aims to assure, at any given moment, that the debt repayment profile is adequately 

matched with the company’s ability to generate the necessary cash flows. Liquidity risk management is therefore concerned 

with managing the misalignment between the need for funds (for operative and financial costs, investments and debt 

settlement) and the receipt of funds (client collections, disinvestments, financial commitments from financing entities). In 

parallel, the company adopts measures to avoid the occurrence of this risk through an adequate and timely treasury 

management. To manage liquidity risk, the company maintains a balance between the maturity and the flexibility of the 

borrowings contracted through the use of step borrowings that match the need for funds. Furthermore, the company has 

short-term treasury funding contracts that enable it to cater for any (temporary) treasury shortfalls. 

32. SUBSEQUENT EVENTS 

There are no relevant subsequent events worthy of note. 

33. CONTINGENCIES 

Customers - 

current 

account 

Customers - 

other 

2011 2010 

Performing 153,169,198 2,952,256 156,121,454 168,414,421 

0 to 180 days 59,719,539 - 59,719,539 55,200,397 




more than 720 days. 125,305,205 - 125,305,205 98,735,869 

Total 418,431,344 2,952,256 421,383,600 416,671,111 

More than 360 days 31/12/2011 31/12/2010 

Angolan public entities 66,251,920 82,679,932 

Angolan private entities 25,710,594 28,660,776 

Domestic public entities 34,388,738 26,496,806 

Domestic private entities 24,441,239 29,625,345 

Guinean public entities 2,533,240 2,533,317 

Mozambican private entities 13,940,095 - 

Other 2,852,153 - 

Total 170,117,978 169,996,175 

Dispute between Quinta da Murtosa / Sociedade de Construções Soares da Costa / CM Porto 

The company has an amount receivable from the entity “Quinta da Murtosa – Empreendimentos Imobiliários, Lda.” (QM) of 

5,985,575 Euros, included in the balance sheet in the caption “Clients – current accounts”, which is related to a promissory 

contract to sell, of land that should have been handed over to it (QM) by the Oporto Municipality under a protocol 

celebrated on 7 December 2000. The recoverability of this amount is dependent on the resolution of the legal proceedings 

between that entity and the Oporto Municipality. In parallel, the said Municipality took legal action against that company to 

judicially annul or resolve the promissory contract referred to above. 

In January 2005 the said company lodged legal proceedings against the Oporto Municipality to take possession of the land 

under dispute. Alternatively, in the event the land is not handed over, the company demands payment of an amount of 

7,182,689 Euros, plus late payment fees. This case has already been judged and the decision, favourable to the company, has 

already become final. Since the Oporto Municipality did not immediately execute that sentence, the competent executive 

action has been lodged against it and is currently in process. 

57


Since the Board of Directors believes that the resolution of this dispute will not have a relevant impact on the financial 

statements, no provision has been recorded. 

34. APPROVAL OF THE ACCOUNTS FOR ISSUE 

During the meeting of 12 March 2012 the Board of Directors approved the issue of these financial statements. 

35. CHANGES IN ACCOUNTING POLICIES, ESTIMATES AND ERRORS 

During the 2011 economic period there were no accounting policy changes from those used in the preparation of the 

financial statements for the 2010 economic period, nor were any material errors corrected in respect of prior years. 

36. KEY FINANCIAL INDICATORS 

Financial Indicators 

31/12/2011 

31/12/2010 

Restated 

31/12/2010 

Reduced liquidity 110.9% 93.8% 94.3% 

General liquidity 124.0% 110.2% 109.9% 

Solvability 118.9% 117.8% 117.8% 

Financial autonomy 15.9% 15.1% 15.1% 

Permanent self-financing capital 55.2% 57.8% 65.8% 

Degree of asset coverage 160.8% 142.4% 124.3% 

58


CERTIFICATIONS 

BDO 

Report and opinion of the sole supervisor 

(Translation from the Portuguese original) 

Dear Shareholders, 

Report 

In compliance with the mandate you entrusted to us and in the performance of our legal and statutory functions, we 

monitored during 2011, the activity of Sociedade de Construções Soares da Costa, SA, examined with regularity the books, 

accounting records and other documentation, conformed the compliance with both applicable legislation and the bylaws and 

obtained the clarifications, information and documentation requested from the Board of Directors. 

The statement of financial position, the separate income statement, the statement if comprehensive income, the statement 

of changes in equity, the statement of cash flows, the notes to the financial statements and the management report, read in 

conjunction with the Legal Certification of Accounts, permit an adequate understanding of the financial situation and of the 

results of the company and satisfy the existing legal and statutory dispositions. The valuation criteria used merit our 

proposal. 

Opinion 

Hence,, we propose, 

1. That the Management Report, the statement of financial position, the separate income statement, the statement of 

comprehensive income, the statement of changes in equity, the statement of cash flows and the notes to the financial 

statements presented by the Board of Directors for 2011, is approved. 

2. That the proposal for the appropriation of the results presented by the Board of Directors is approved. 


The Sole Supervisor, 

Paulo Jorge de Sousa Ferreira, representing BDO & Associados, SROC 

59


Legal Certification 

(Translation from the Portuguese original) 

Introduction and responsibilities 

1. We examined the financial statements of Sociedade de Construções Soares da Costa, SA (company) , which comprise the 

statement of financial as of December 31, 2011 (which shows net assets of 806,772,204 euros and net equity of 128,226,736 

euros, including a net income of 12,178,856 euros), the separate income statement, the statement of comprehensive 

income, the statement of change in equity, the statement of cash flows and the notes to the financial statements for the 

period then ended. It is the responsibility of the Board of Directors to prepare financial statement which presents a true and 

fair view of the financial position of the Company, the results of its operations and its cash flows, as well as to adopt 

adequate accounting policies and criteria and maintain an appropriate internal control system. Our responsibility is to 

express a professional and independent opinion, based on our examination of those financial statements. 

Scope 

2. Our examination was carried out in accordance with the Technical Standards and Auditing Guidelines (“Normas Técnicas e 

Directrizes de Revisão/ Auditoria”) issued by the Portuguese Institute of Chartered Accountants (“Ordem dos Revisores 

Oficiais de Contas”), which require that the examination is planned and performed with the objective of obtaining an 

acceptable degree of assurance as to whether the financial statements are free of material misstatements. To this end, the 

examination included: (i) the verification, on a sample basis, of the evidence supporting the amounts and disclosures 

contained in the financial statements as well as the evaluation of the estimates used in their preparation, based on 

judgments and criteria defined by the Board of Directors; (ii) the appraisal of the adequacy of the accounting policies 

adopted and their disclosure, considering the circumstances; (iii) the verification of the applicability of the going concern 

principle; and (iv) the appraisal of the adequacy, in overall terms, of the presentation of the financial statements. Our 

examination also included the verification of the consistency of the financial information included in the management report 

with that shown in the financial statements. We consider that our examination provides an acceptable basis for the 

expression of our opinion. 

Opinion 

3. In our opinion, the above mentioned financial statements present a true and fair view, in all material respects, of the 

financial position of Sociedade de Construções Soares da Costa, SA as of December 31, 2011, as well as the result of its 

operations and its cash flows for the period then ended, in conformity with the International Financial Reports Standards 

(IAS/ IFRS), as adopted by the European Union. 

Report and other legal requisites 

4. It is also our opinion that the information included in the management report is consistent with that shown in the financial 

statements for the period. 


Paulo Jorge de Sousa Ferreira, representing BDO & Associados, SROC 

60

sociedade de construções soares da costa, sa report and accounts ...

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