Balance sheets for the years ended at December 31st ... - Zagope

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Balance sheets for the years ended at December 31st ... - Zagope

{ verb }

1. to make solid or safe.

2. to secure.

To consolidate


Balance sheets

for the years ended at

December 31 st 2010 and 2009

ITEMS NOTES 2010 2009

ASSETS

(Amounts in thousands of euros)

Non-current assets:

Tangible fixed assets 7 100,617 78,992

Financial Investments - Equity Method 9 4,656 435

Financial Investments - Other Methods 9 600 32

Other financial assets 9 - 159

Deferred tax assets 10 69 -

Total non-current assets: 105,943 79,617

Current assets:

Inventories 11 2,260 4,466

Trade accounts receivable 12 124,793 19,305

Advances to suppliers 4,804 4,876

State and other public entities 13 4,974 6,524

Balance with group companies 6 90,551 83,736

Other accounts receivable 14 123,642 120,319

Deferrals 15 4,290 3,589

Cash and cash equivalents 4 283,438 232,539

Total current assets: 638,752 475,355

TOTAL ASSETS: 744,695 554,972

EQUITY AND LIABILITIES

Equity:

Share capital 16 50,000 50,000

Additional paid-in capital 75,928 57,549

Legal reserves 17 3,155 1,793

Retained earnings 9,836 9,913

Adjustments to financial assets 811 46

Revaluation surplus 66 66

Other variations in equity 42 42

Net result for the year 5,865 26,910

Total Equity: 145,702 146,319

Liabilities:

Non-current liabilities:

Provisions 18 6,973 6,564

Amounts owned to credit institutions 19 147,734 109,695

Deferred income tax liabilities 10 2,640 3,483

Total non-current liabilities: 157,347 119,742

Current liabilities:

Trade accounts payable 100,864 72,181

Advances from customers 115,243 33,886

State and other public entities 13 1,328 1,126

Balance with group companies 6 56,879 36,424

Amounts owned to credit institutions 19 92,476 72,127

Other accounts payable 20 30,561 39,751

Deferrals 15 44,295 33,414

Total current liabilities: 441,646 288,911

Total liabilities: 598,993 408,653

TOTAL EQUITY AND LIABILITIES: 744,695 554,972

The attached notes are an integral part of the Balance Sheet for the year ended December 31 st 2010.

The Certified Accountant:

Miguel Alexandre Martins Cardoso dos Santos Barreiros (TOC No. 45 224)

Executive Board:

Leandro de Aguiar / Arnaldo Gomes / Clovis Martines / José Francisco Cadório Ferreira Lino /

José Nicomedes Moreira / Pedro Augusto de Jesus Ricco / Remo Loschi Brunelli Filho

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Income Statements

for the years ended

at December 31 st 2010

and 2009

(Amounts in thousands of euros)

ITEMS NOTES 2010 2009

INCOMES AND EXPENSES

Sales and services rendered 22 625,235 577,653

Share of profit and loss of affiliated companies 9 (775) (1,039)

Cost of goods sold and raw materials consumed 11 (81,901) (84,811)

External supplies and services 23 (425,634) (363,176)

Wages and salaries 24 (55,270) (52,016)

Impairment of accounts receivable (losses/reversals) 12 93 11

Provisions (increases/reductions) 18 408 (3,330)

Other operating income 25 34,726 40,412

Other operating expenses 26 (20,920) (20,202)

Earnings before interests, taxes, depreciation and amortisation 75,961 93,501

Depreciation and amortisation 7 (43,491) (30,766)

Earnings before interests and taxes 32,470 62,735

Interest and similar income 27 25,690 20,153

Interest and similar expenses 27 (47,676) (45,753)

Earnings before income tax 10,484 37,135

Income tax income for the year 28 (4,619) (10,224)

NET rESULT fOr ThE YEAr 5,865 26,910

The attached notes are an integral part of the Income Statement for the year ended December 31 st 2010.

The Certified Accountant:

Miguel Alexandre Martins Cardoso dos Santos Barreiros (TOC No. 45 224)

Executive Board:

Leandro de Aguiar / Arnaldo Gomes / Clovis Martines / José Francisco Cadório Ferreira Lino /

José Nicomedes Moreira / Pedro Augusto de Jesus Ricco / Remo Loschi Brunelli Filho

ZAGOPE – Construções e Engenharia, S.A. | Annual Report 2010


Cash Flow Statements

for the years ended

at December 31 st 2010

and 2009

Clash flows from operating actitivies

(Amounts in thousands of euros)

ITEMS NOTES 2010 2009

Revenues from clients 602,038 550,905

Payments to suppliers (485,953) (425,288)

Payments to personnel (43,152) (49,619)

Cash flow generated by operations 72,933 75,999

Other operating revenues / payments 23,278 (64,005)

Cash flows from operating activities (1) 96,211 11,994

Cash flows from investing activities

Payments concerning:

Tangible fixed assets (5,567) (5,677)

Financial investments - (1,329)

Other assets (28,000) (40,000)

revenues originated from:

Tangible fixed assets 135 149

Interest and similar income 5,701 17,217

Cash flows from investing activities (2) (27,731) (29,640)

Cash flows from financing actitivies

revenues originated from:

Financings obtained 61,750 84,214

Capital increase, additional paid-in capital and share premiums 18,378 65,135

Payments concerning:

Financing obtained (31,938) (24,860)

Interests and similar expenses (12,941) (17,272)

Dividends (18,378) -

Capital reduction and additional paid-in capital - (35,918)

Other financing operations (31,966) (22,027)

Cash flows from financing activities (3) (15,095) 49,272

Changes in cash and their equivalents (1+2+3) 53,385 31,626

Effect of exchange differences (2,486) (4,367)

Cash and cash equivalents in the beginning of the period 4 232,539 205,280

Cash and cash equivalents in the end of the period 4 283,438 232,539

The attached notes are an integral part of the Cash Flow Statement for the year ended December 31 st 2010.

The Certified Accountant:

Miguel Alexandre Martins Cardoso dos Santos Barreiros (TOC No. 45 224)

Executive Board:

Leandro de Aguiar / Arnaldo Gomes / Clovis Martines / José Francisco Cadório Ferreira Lino /

José Nicomedes Moreira / Pedro Augusto de Jesus Ricco / Remo Loschi Brunelli Filho

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75


Statements

of Changes in Equity for the years ended

at December 31 st 2010 and 2009

DESCRIPTION

BALANCE AS Of JANUArY 1 ST 2009 1

ChANGES IN ThE PErIOD

ChANGES IN ThE PErIOD

NOTES

First adoption of new accounting standard (IAS)

Changes in the conversion of financial statements

Deferred taxes adjustments

Other adjustments recognised in equity 17

NET rESULT fOr ThE YEAr 3

COMPrEhENSIVE INCOME 4=2+3

TrANSACTIONS WITh ShArEhOLDErS

Additional paid-in capital

Other transactions 17

BALANCE AS Of JANUArY 1 ST 2010 6=1+2+3+5

First adoption of new accounting standard (IAS)

Changes in the conversion of financial statements

Other adjustments recognised in equity 17

NET rESULT fOr ThE YEAr 8

COMPrEhENSIVE INCOME 9=7+8

TrANSACTIONS WITh ShArEhOLDErS

Distributions

Other transactions

BALANCE AS Of DECEMBEr 31 ST 2010 11=6+7+8+10

ZAGOPE – Construções e Engenharia, S.A. | Annual Report 2010

2

5

7

10


SHARE

CAPITAL

ADDITIONAL

PAID-IN

CAPITAL

LEGAL

RESERvES

EquITY ASSIGNED TO SHAREHOLDERS OF THE PARENT COMPANY

OTHER

RESERvES

RETAINED

EARNINGS

ADJuSTMENTS

TO FINANCIAL

ASSETS

The attached notes are an integral part of the Statement for the year ended December 31 st 2010.

The Certified Accountant:

Miguel Alexandre Martins Cardoso dos Santos Barreiros (TOC No. 45 224)

Executive Board:

Leandro de Aguiar / Arnaldo Gomes / Clovis Martines / José Francisco Cadório Ferreira Lino /

José Nicomedes Moreira / Pedro Augusto de Jesus Ricco / Remo Loschi Brunelli Filho

NET RESuLT

FOR THE YEAR

OTHER

vARIATIONS

IN EquITY

NET RESuLT

FOR THE

YEAR

(Amounts in thousands of euros)

TOTAL

TOTAL EquITY

8,965 51,667 1,554 329 6,590 170 66 42 14,981 84,364 84,364

- - - - 12,786 - - - - 12,786 12,786

- - - - (635) (123) - - - (758) (758)

- - - - (3,300) - - - - (3,300) (3,300)

- - 239 - 10,743 - - - (14,981) (4,000) (4,000)

- - 239 - 19,594 (123) - - (14,981) 4,728 4,728

26,910 26,910 26,910

11,929 11,929 11,929

23,335 - - - - - - - - 23,335 23,335

17,700 5,882 - (329) (16,271) - - - - 6,982 6,982

41,035 5,882 - (329) (16,271) - - - - 30,317 30,317

50,000 57,549 1,793 - 9,913 46 66 42 26,910 146,319 146,319

- - - - 30 - - - - 30 30

- - - - (107) 765 - - - 658 658

- - 1,362 - - - - - (8,532) (7,170) (7,170)

- - 1,362 - (77) 765 - - (8,532) (6,482) (6,482)

5,865 5,865 5,865

(2,667) (2,667) (2,667)

- - - - - - - - (18,378) (18,378) (18,378)

- 18,378 - - - - - - - 18,378 18,378

- 18,378 - - - - - - (18,378) - -

50,000 75,928 3,155 - 9,836 811 66 42 5,865 145,702 145,702

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77


Notes to the

Financial Statements

at December 31 st 2010

1. Introduction

ZAGOPE – CONSTRuÇÕES E ENGENHARIA, S.A. (“Company”), with head Office in Oeiras, at Lagoas

Park, Building 6 1 st floor, was founded on January 13 th 1967, its corporate purpose being the execution, either

directly, on behalf of third parties or in partnership with third parties, of any public and private construction

work, engineering studies, as well as any industrial and commercial operations, and also the pursuit of any

other branch of trade, excepting those for which special authorization is necessary.

The company capital is held exclusively by ZAGOPE SGPS Lda., and the operations of the company

are affected by decisions taken at the Andrade Gutierrez Group, which owns the entity.

The financial statements here present have been approved by the Executive Board, which believes that the

statements truthfully and appropriately reflect the operations of ZAGOPE as well as the company’s financial

position and performance and cash flows.

2. Accounting standard of preparation

of the financial statements

2.1 BASIS Of PrEPArATION

The attached financial statements are in compliance with all the standards that integrate the Portugal

Financial Accounting Standards (Sistema de Normalização Contabilística, SNC). These included the

Conceptual Structure (notice No. 15652/2009), the Basis to the Presentation of the Financial Statements

(decree-law No. 158/2009), the Models of Financial Statements (decree order No. 986/2009), the Chart of

Accounts (decree order No. 1011/2009), the International Financial Reporting Standards (NCRF) (notice

No. 15655/2009) and the Interpretative Standards (notice No. 15653/2009).

In any occasion when the SNC does not answer to specific aspects of transactions or situations, the

application of the International Accounting Standards, adopted under EC Regulation No. 1606/2002, of July

19 th ; the IAS and the IFRS, issued by IASB, and their respective interpretations (SIC-IFRIC).

The accounting policies and measuring criteria adopted at December 31 st 2010 are comparable with the

ones used in the presentation of the financial statements at December 31 st 2009, which were reissued

according to the new accounting standard.

ZAGOPE – Construções e Engenharia, S.A. | Annual Report 2010


2.2 DErOGATION Of ThE PrOVISIONS Of SNC*

In the period to which these Financial Statements are relative, there were no exceptional cases that

directly resulted in the derogation of disposals included in the SNC*.

2.3 COMPArABILITY Of ThE fINANCIAL STATEMENTS

The elements contained in the present financial statements are, in fullness, comparable to the ones for the

previous period.

The amounts referring to the period ending December 31 st 2009, included in the present financial

statements for comparison, are presented in compliance with the model resulting from the changes

introduced by the statutes issued with the publication of the Financial Accounting Standards.

2.4 fIrST-TIME ADOPTION Of ThE IfrS

In the period of 2010 ZAGOPE adopted the accounting and financial reporting standards. The transition

date, according to the International Financial Reporting Standard, no. 3, is January 1 st 2009.

The impact over equity and net result of the company, with reference to January 1 st 2009 and

December 31 st 2009, relative to the conversion of the financial statements according to the SNC,

can be detailed by nature, as follows:

AMOuNT

Equity under POC* (01.01.2009) 109,923

Interests in joint ventures 1

Cancellation of warranty costs for works 12,785

Deferred taxes (3,300) 9,486

Equity under SNC* (01.01.2009) 119,409

Net result under POC* 27,240

Cancellation of interests in joint ventures (3,155)

Interests in joint ventures 3,156

Cancellation of warranty costs for works 2,551

Provision of warranties to clients (2,882) (330)

Net result under SNC* 26,910

EQUITY UNDEr SNC* (31.12.2009) 146,319

* POC: Portuguese Generally Accepted Accounting Principles

* SNC: Portuguese Financial Reporting Standards

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79


The adjustments in the reconciliation of the equity and of the net result are a consequence of the

different accounting policies identified between the standards POC and SNC’s, which may be

summarized as follows:

• Joint ventures are registered through the Proportional Consolidation Method “MCP”;

• Accounting adjustments relative to the construction contracts;

3. Accounting policies

The main accounting policies applied in the elaboration of the financial statements are described below.

These policies were consistently applied to all the periods present, except indication in contrary.

3.1 BASIS Of PrESENTATION

The attached financial statements were prepared in assumption of the continuity of operations, based

on the books and accounting records of the company, kept according to the NCRF in force at the date

of the elaboration of the financial statements.

3.2 CUrrENCY EXChANGE

functional and presentation currencies

The financial statements of ZAGOPE and their respective notes are presented in thousands of Euros,

unless there is explicit indication otherwise, due to this currency being principal in the operations of the

Company.

Transactions and balances

During the preparation of the financial statements, the assets and liabilities of foreign entities expressed

in foreign currency were converted to euros, at the exchange rate of December 31 st 2010 (exchange

rate at the date of the balance). The income and expenses of the period were converted to Euros at the

annual average exchange rate. The exchange differences resulting from the application of these rates

comparatively to the previous values were reflected as a separate component of the equity.

In case of liquidation or disposal of the whole or of part of the participation, the transposition differences

are integrated in the income statement.

ZAGOPE – Construções e Engenharia, S.A. | Annual Report 2010


Exchange rates

The exchange rates used for the conversion of balances expressed in foreign currencies were as

follow:

3.3 TANGIBLE fIXED ASSETS (AfT)

The tangible fixed assets are valued by the deduced cost of the depreciations accumulated and eventual

impairment losses. This cost includes the estimated cost at the date of the transition to the SNC and the

acquisition costs for assets obtained after this date.

The acquisition cost includes the purchase cost of the asset, the expenses directly imputable to its acquisition

and the charges incurred with the preparation of the asset so it would be in operation conditions. The costs

incurred with financial loans obtained for the construction of tangible assets are recognised as part of the cost

of construction of the asset.

The subsequent costs incurred with renovations and heavy-duty repairs that increase the useful life

or productive capacity of the assets are recognised in the cost of the asset; or as a separate asset, as

appropriate, only when it is probable that the future economic benefits associated flow to the entity and when

the cost can be reliably measured; the registered cost of the replaced part is not recognised in the Balance.

The expenses with maintenance, inspection and repairs of current nature, that do not increase the useful life of

the assets or result in significant improvements in the elements of the tangible fixed assets, are recognised as

expenses of the period in which they incurred.

ExCHANGE RATES FOR FOREIGN CuRRENCIES

COUNTrY CUrrENCY 2010 2009

Angola AOA 122.355 126.382

Algeria DZD 102.8565 106.6680

Brazil BRL 2.2177 2.5113

Economic Community of Central African States * xAF 655.957 655.957

Republic of Guinea GNF 8,230.03 7,209.60

Libya LYD 1.6749 1.76618

Mauritania MRO 369.42 373.57

Mozambique MZM 43.59 -

united Arab Emirates AED 4.4822 5.2632

united States of America uSD 1.3362 1.4406

* Includes Cameroon, Republic of the Congo, Equatorial Guinea and Mali

The costs to support with the dis-assembly, dismantling or removal of assets, when translated into significant

amounts, will be considered as part of the initial cost of the respective assets.

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81


Depreciations are calculated, after the date when the assets are available for use, by the straight line

method, in compliance with the useful life estimated for each group of assets. Land is not depreciated.

The depreciation rates used in the remainder of the assets correspond to the following estimated useful life

periods (in years):

The useful life of assets is reviewed in each financial report date so that the depreciations practiced are in

compliance with the consumption patterns of the assets. Once there is a sign of a significant alteration of

the useful life or of the residual value of an asset, its depreciation is reviewed in a prospective form in order

to reflect the new expectations.

Whenever there are signs of loss of value of the tangible fixed assets, impairment tests are performed

so as to estimate the recoverable value of the asset and, when necessary, register an impairment loss.

The recoverable value is determined as the highest between the net retail price and the use value of the

asset, with the latest being calculated based on the current value of estimated future cash flows due to the

continuous use and the disposal of the asset at the end of its useful life.

The capital gains and losses resulting from the disposal or write-off of the tangible fixed asset are

determined as the difference between the retail price and the net book value at the date of the disposal or

write off, and are recognised at the financial statements under the items Other Operating Income or Other

Operating Expenses.

3.4 IMPAIrMENT Of ASSETS

At the date of each report, and every time an event or alteration in the circumstances indicates the amount

under which the asset is registered may not be recoverable, an impairment evaluation of tangible and

intangible fixed assets is performed.

The assets with finite useful life are tested for impairment whenever an event or alteration in surrounding

conditions indicates that the value under which they are registered is not recoverable.

Whenever the recoverable value determined is inferior to the book value of the assets, the Company

evaluates if the loss situation is permanent and definitive and, if such is the case, registers the respective

impairment loss. In the cases when the loss is not considered to be permanent and definitive, the reasons

that explain this conclusion are published. The impairment losses are registered in the financial statement in

the item Impairment of Depreciable/Amortisable Investments (losses/reversals), or in the item Impairment of

Accounts Receivables (losses/reversals), when referring to non-depreciable assets.

YEARS

Buildings and other constructions 10 to 50

Plant and Machinery 2 to 15

Transport Equipment 2 to 10

Administrative Equipment 2 to 10

Other tangible fixed assets (according to estimated useful life)

ZAGOPE – Construções e Engenharia, S.A. | Annual Report 2010


The recoverable value is the highest between the fair value of the asset, deduced from the sales costs, and

its use value. The net sales price is the amount that would be obtained with the disposal of the asset, in a

transaction between independent and knowledgeable entities, deduced from the costs directly allocated

to the disposal. The use value is the current value of the estimated future cash flows that are expected to

arise from the continuous use of the asset and from its disposal at the end of its useful life. The recoverable

amount is estimated for each asset individually or, that being impossible, for the cash flow generating unit to

which the asset belongs. For the determination of the existence of impairment, the assets are allocated at

the lowest level for which there are identifiable separate cash flows (cash generating units).

When the registration or reversal of impairment takes place, the amortisation and depreciation of the assets

are prospectively recalculated according to the recoverable value. The reversal of impairment losses

recognised in previous periods is registered when the impairment losses previously recognised are found

to have decreased or not exist any more. The reversal of impairment losses is recognised in the financial

statement, in the above mentioned item. The reversal of the impairment loss is made until the limit of the

(net amortisation or depreciation) amount that would have been recognised in case the impairment loss had

not been registered in previous periods.

3.5 fINANCIAL INVESTMENTS

The financial investements in jointly controlled companies, particularly joint-ventures (known as ACE’s in

Portuguese), were integrated in the financial statements through the proportional consolidation method,

starting from the date when the control is first shared.

According to NCRF13 and NCRF15, and following the consolidation proceedings, the identical items of

assets, liabilities, income and expenses are added, item by item to the invididual financial statements, in the

proportion of the control portion assigned to the Company.

The transactions, balances and dividends among companies are completely eliminated in the consolidation

process.

Adjustments are made whenever necessary to the financial statements of the entities jointly controlled in

order to adapt their accounting policies to the ones used in the Company.

The classification of financial investments in joint ventures is determined according to contractual

agreements that regulate the joint control, in the effective percentage and/or voting rights held.

The Financial Investments – other methods item includes the investments in affiliates in which the company

holds no control (which would be the case if the company controlled, directly or indirectly, more than 50% of

the voting rights in a plenary meeting, or held the power of controlling financial and operational policies) or

significant influence (which would be the case if the company took part in financial and operational decisions

of the company, something that normally happens in investments that represent between 20% and 50% of

the capital of the company).

The financial statements are calculated upon the cost subtracted from any impairment loss accumulated.

The dividends are recognised when the company’s right to receipt is established, and are explained in

Interests and similar income.

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3.6 ACCOUNTS rECEIVABLE

The items under Trade accounts receivable are receiving rights for the rendering of services or other

debts pertaining to the regular course of business of ZAGOPE. These rights are initially recognised at fair

value and subsequently measured at the amortised cost, deduced from impairment adjustments (when

applicable). Whenever there is a formal agreement for the deferral of the receivable amounts, the fair

value of retribution is determined according to the effective interest rate method, which corresponds to the

rate that discounts exactly the future cash receivables estimated by the estimated repayment term.

The impairment losses of clients and receivables are registered whenever there is objective evidence that

they are not recoverable according to the initial terms of the transaction. The impairment losses identified

are registered in the financial statements under Impairment of Accounts Receivable, and are subsequently

reverted by results in case the impairment signs are no longer present. For this case, the Company

considers market information that shows the client to be in default of his responsibilities as well as their

history of unpaid balances

3.7 CASh AND CASh EQUIVALENTS

Cash and cash equivalent includes cash, bank deposits and bank overdrafts. Bank overdrafts appear in

the Balance among current liabilities, in the item Amounts owned to Credit Institutions.

3.8 ShArE CAPITAL

The share capital, in the amount of 50.000 thousands of euros, is held in its entirely by ZAGOPE SGPS,

Lda.,

3.9 INVENTOrIES

Goods and raw, subsidiary and consumption materials are at the acquisition cost, deduced from the value

of quantity discounts given by suppliers, which is lower than the respective market value. The acquisition

cost includes expenses incurred until storage, using the average cost as a costing method, in a permanent

inventory system.

3.10 CONSTrUCTION CONTrACTS

The entity adopts the NCRF 19 – Construction Contracts to the accounting of contracts celebrated with

its clients. Thus, whenever the end result of a contract can be determined with some reliability, the entity

adopts the finishing percentage method to recognise the revenue associated to the contract. In order

to determine the percentage of finishing, the entity uses the measurement records and the degree of

incorporation of materials in the work to evaluate its execution level. This method consists in recognising

revenue in the same proportion as the execution level of the project.

When the end result of a contract cannot be reliably determined, the zero profit method - which is

fundamentally the recognisance of revenue until the limit of value of the expenses incurred – is adopted.

ZAGOPE – Construções e Engenharia, S.A. | Annual Report 2010


3.11 fINANCIAL LIABILITIES

ZAGOPE classifies and measures by cost or amortised cost the financial liabilities i) which must be

paid on sight or have a defined maturity; ii) which repayment is of fixed amount, fixed interest rate or

variable rate correspondent to a market index; and iii) which do not include any contractual clause

that may result on a change of the responsibility for the repayment of the nominal value and of the

payable interest, as is the case of financing obtained, payables (suppliers and other creditors) and

equity instruments.

The interest expenses to recognise in each period are determined according to the effective interest

rate method, which corresponds to the tax rate that discounts exactly the payments of estimated

future cash flows during the expected life of the financial instrument.

The financial liabilities (or parts of a financial liability) are unrecognised when extinguished, that is,

when the obligation established in the contract is liquidated, cancelled or expires.

3.12 AMOUNTS OWNED TO CrEDIT INSTITUTIONS

The financings obtained are initially recognised at fair value, with transaction and assembly costs

not included. Financings are subsequently presented to amortised cost, with the difference between

nominal value and the initial fair value recognised in the financial statements along the period of the

loan by use of the effective interest rate method.

The financings obtained are classified among current liabilities, unless ZAGOPE has an unconditional

right to defer payment of the liability for at least 12 months after the date of the balance, in which case

the liability will be classified under non-current liability.

The costs with loans obtained are generally recognised as expenses in the financial statement of the

period according to the accrual method.

3.13 LEASING

The classification of financial or operational leases is done according to the contents of the

contracts and not to their forms. Thus, tangible fixed asset leases, in which ZAGOPE holds all

the risks and benefits inherent to the property of the asset, are classified as financial leases.

Agreements in which the analysis of one or more particular situations point to this situation are also

classified as financial leases. All other leases are classified as operational leases.

Financial leases are capitalised in the beginning of the lease by the lowest between the fair value

of the leased asset and the present value of the minimum payments of the lease, both values being

determined at the beginning of the contract. The debt resulting from a financial lease contract is

registered, without including financial charges, under the item Amounts owned to Credit Institutions.

The financial charges included in the rent and the depreciation of the leased assets are recognised

in the Financial Statement, in the period to which they relate.

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The tangible fixed assets acquired through financial leases are depreciated by the lowest between the

useful life period and the lease period, when ZAGOPE does not have the option of acquisition at the end of

the lease; or by the estimated useful life period, when the Company has the intention of acquiring the asset

at the end of the contract.

In the leases classified as operational, the rent payments are recognised as expenses in the financial

statements, in a linear basis, throughout the period of the lease.

3.14 rEVENUE

The revenue corresponds to the fair value of the amount received or receivable relative to services

rendered throughout the normal activities of the Company. The revenue of the rendering of services is

recognised in the financial statements with reference to the end stage of the services rendered, at the date

of the balance.

The revenue is presented without the inclusion of any real, estimated (or both) amounts relative to

commercial discounts, quantity discounts or pre-payment discounts. These amounts are estimated

based on historic information, specific contractual terms or future expectations related to the evolution

of the revenue; and are deduced when the revenue is recognised, by the accounting of liabilities and/or

appropriate provisions. Whenever there is a formal agreement for the deferral of the receivable amounts,

the fair value of retribution is determined according to the effective interest rate method, which corresponds

to the rate that discounts exactly future cash receipts estimated by the estimated repayment term.

The revenue generated by the sale of assets is only recognised when:

i. the significant risks and benefits of the property of the assets are transferred to the buyer;

ii. there is no continued management involvement generally associated with owning or effectively

controlling the assets sold;

iii. the amount of revenue can be reliably measured;

iv. it is probable that the economic benefits associated to the transactions flow to the company; and

v. the costs incurred or to be incurred related to the transaction can be reliably measured.

Sales are recognised with the exclusion of taxes, discounts and other costs inherent to their concretization,

by the fair value of the amount received or receivable.

The remaining revenues and expenses are registered according to the accrual method, and thus

recognised as they are generated, independently of the moment when they are received or paid.

The differences between the amounts received and paid and the corresponding revenues and expenses

generated are registered in the item “Deferrals” or “Other accounts payable” or “Other accounts

receivable”.

In relation to the recognisance of revenue in the rendering of services, ZAGOPE only recognises the

revenue when the services are completed.

ZAGOPE – Construções e Engenharia, S.A. | Annual Report 2010


When the degree of finishing/execution/production is higher than the turnover percentage issued, ZAGOPE

recognises the difference in a debtors by accrual method. In the opposite situation, that is, when the

turnover is higher than the degree of finishing, the entity recognises the difference in a Deferrals account.

3.15 PrOVISIONS

The provisions are recognised when the company has: i) a present, legal or constructive obligation resulting

from previous events; ii) for the payment of which an expense of internal resources will probably not be

necessary; and iii) the amount can be reasonably measured. Whenever one of these criteria is not fulfilled

or the existence of the obligation is conditioned to the occurrence (or non-occurrence) of a specific future

event, ZAGOPE will publicise this fact as a contingent liability, except if the evaluation of the demandability

of the exit of resources for the payment of this liability is considered remote.

Provisions are measured at the current value of the expenses estimated to liquidate the obligation, using a

pre-tax rate that reflects the market evaluation for the period of the discount and for the risk in question.

The provisions are reviewed at the date of each financial statement and adjusted so as to reflect the best

estimate at this date.

3.16 INCOME TAX AND DEfErrED TAX

The income tax for the period includes current and deferred taxes. Income taxes are registered in the

financial statements, except when they are related to items that are recognised directly in the equity. The

amount of current tax to pay is determined based on the earnings before tax, adjusted according to the tax

rules in force.

Deferred taxes are recognised based on the balance responsibility, considering the temporary differences

resulting from the tax basis of assets and liabilities and their value in the financial statements.

Deferred taxes are calculated based on the tax rate in force or officially communicated at the date of the

balance and estimated to be applicable at the time of the realisation of the deferred tax assets or at the date

of the payment of the deferred tax liabilities.

Deferred tax assets are recognised as long as it is probably that there will be future taxable profits for the

use of the temporary difference. The deferred tax liabilities are recognised under all the taxable temporary

differences, except the ones related to: i) the initial recognisance of goodwill; or ii) the initial recognisance of

assets and liabilities that don’t result of a concentration of activities and that, at the time of the transaction,

do not affect the accounting or tax results.

At the end of each period a review of these deferred taxes is performed, seeing them reduced every time

their future use becomes improbable.

86 /

87


3.17 COMPENSATION Of BALANCES AND TrANSACTIONS

The assets, liabilities, income and expenses are not compensated unless demanded or allowed by the

NCRF.

3.18 JUDGEMENTS AND ESTIMATES

The judgements and estimates with influence over ZAGOPE’s financial statements are constantly

evaluated, presenting at the date of each report the best appraisal from the Executive Board, considering

historic performance, experience accumulated and expectations for future events that, in the current

circumstances, are considered reasonable.

The inherent nature of the estimates may lead to the real reflex of the situations to be different from the

amounts estimated for financial report purposes.

The most significant accounting estimates reflected in the financial statements include:

• useful life of tangible and intangible fixed assets;

• Impairment analysis, namely of receivables;

• Provisions.

The estimates were determined based on the best information available at the time of preparation of the

financial statements, and based on the best knowledge and experience of past and/or current events.

However, there may be situations in subsequent periods that, not being predictable at the time, have not

been considered in the estimates. The changes to these estimates that occur later than the date of the

financial statements will be corrected in a prospective manner in the income statement.

3.19 SUBSEQUENT EVENTS

The events that occur after the date of the balance sheet and provide additional information about

conditions that exist at the date of the balance sheet are reflected in the financial statements. The events

that occur after the date of the balance sheet and provide information about conditions after the date of

the balance sheet are publicised in the financial statements if considered to be concrete.

3.20 ACCrUALS

The expenses and income are registered in the period to which they refer, independently from their

payment or receipt, according to the accruals method. The differences between the amounts received and

paid and the corresponding income and expenses are recognised as assets or liabilities if qualified as

such.

ZAGOPE – Construções e Engenharia, S.A. | Annual Report 2010


4. Cash flows

4.1 BrEAkDOWN Of ThE VALUES WrITTEN UNDEr ThE ITEM

“CASh AND CASh EQUIVALENTS”

Cash and its equivalents includes currency, immediately mobilisable, bank deposits and cash investments

in the money market, net bank overdrafts and other equivalent net short term loans; and presents the

following values:

The details of the amount considered as closing balance in the Cash and cash equivalent item,

for the elaboration of the cash flows statement for the period ending December 31 st 2010, are as

follows:

2010 2009

Cash 3,578 2,219

Bank deposits 279,859 230,320

CASh AND CASh EQUIVALENTS 283,438 232,539

Cash

2010 2009

Cash 3,578 2,219

Bank deposits

Demand deposits 56,618 39,792

Time deposits 223,242 190,529

279,859 230,320

CASh AND CASh EQUIVALENTS 283,438 232,539

5. Accounting policies, changes in the

accounting estimates and errors

During the period ending December 31 st 2010 there has been no changes to accounting policies, due to

the changes considered in the preparation of the financial information relative to the period of 2009.

6. Related parties

On December 31 st 2010, ZAGOPE, SGPS Lda (entity based in Portugal) held 100% of the share capital of

the Company.

88 /

89


ELATED PArTIES

6.1 TrANSACTIONS AND BALANCES WITh rELATED PArTIES

On December 31 st 2010 and 2009 the Company presented the following balances and transactions with

related parties:

SHAREHOLDERS

SuPPLIES AND OTHER OTHER

ExTERNAL FIxED OPERATING SALES AND OPERATING

RECEIvABLES PAYABLES SERvICES ASSETS ExPENSES SERvICES INCOME

Construtora Andrade Gutierrez (CONSAG) - 38,243 55,942 - - - 80

CONSAG - Branches - 12,042 57,406 - 10,445 122,964 277

AGZG Camarões - 1,262 2,359 - - - -

Groupments 17,395 - - - - - -

Agcomex - 5,333 2,792 9,532 - - -

Zagope Angola, S.A. 10,846 - - - - 6,983 35,995

Zagope Algérie, S.A.R.L. 445 - - - - - 1

Zagope Gulf Contracting, LLC 1,565 - - - - - -

Novazagope Investimentos, S.A. 672 - - - - - 98

Zagope, SGPS, Lda. 58,810 - - - - - 2,613

Acrossgiga, Lda 81 - 258 - - 108 88

INZAG, S.A.R.L. 736 - - - - - 60

90,551 56,879 118,757

31-12-2009

9,532 10,445 130,055 39,212

rELATED PArTIES

SHAREHOLDERS

2010

2009

SuPPLIES AND OTHER OTHER

ExTERNAL FIxED OPERATING SALES AND OPERATING

RECEIvABLES PAYABLES SERvICES ASSETS ExPENSES SERvICES INCOME

Construtora Andrade Gutierrez (CONSAG) 4,901 21,206 54,053 515 - - 680

CONSAG - Branches 28,656 13,587 33,214 - 35,768 169,923 222

Agcomex - 1,111 9,014 2,303 - - -

Zagope Angola, S.A. 4,641 - 40,005 - - - -

Zagope - Sucursal Moçambique 3 - - - - - -

Zagope Gulf Contracting, LLC 1,511 - - - - - -

Novazagope Investimentos, S.A. - - - - - - 553

Zagope, SGPS, Lda. 43,504 427 - - - - 2,424

Acrossgiga, Lda 144 94 258 - - 135 58

INZAG, S.A.R.L. 376 - - - - - 8

83,736 36,424 136,544 2,818 35,768 170,058 3,945

ZAGOPE – Construções e Engenharia, S.A. | Annual Report 2010


6.2 rEMUNErATION Of BOArD MEMBErS

The remunerations to the board members of the Company in the periods ended December 31 st 2010

and 2009 were:

7. Tangible Fixed Assets

During the period ended December 31 st 2010 and 2009, the changes that occurred in the carrying

amount of the tangible fixed assets, as well as in the respective accumulated depreciation and

impairment losses, were the following:

2010 2009

Executive Board 628 467

Statutory Auditor 27 24

Assets

2010

BuILDINGS PLANT

AND OTHER AND TRANSPORT ADMINISTRATIvE OTHER AFT IN

CONSTRuCTIONS MACHINERY EquIPMENT EquIPMENT AFT PROGRESS TOTAL

Opening balance 504 5,497 147,259 11,873 2,456 1,410 1,189 170,187

Increases - 3,062 60,170 2,525 107 781 - 66,645

Disposals - (26) (472) (372) (283) (3) - (1,156)

Transfers and Write-offs - - (363) (258) - - (1,229) (1,850)

Closing balance 504 8,532 206,593 13,769 2,280 2,188 (40) 233,826

Accumulated amortisations and impairment losses

Opening balance - 2,017 77,690 9,009 1,764 716 - 91,195

Depreciations for the period - 937 39,289 2,485 188 592 - 43,491

Depreciations - Disposals - (26) (472) (372) (282) (3) - (1,155)

Depreciations - Transfers and Write-offs - - (80) (242) - - - (322)

Closing balance - 2,927 116,427 10,880 1,670 1,304 - 133,209

NET ASSETS 504 5,605 90,166 2,889 610 883 (40) 100,617

90 /

91


Assets

BuILDINGS PLANT

AND OTHER AND TRANSPORT ADMINISTRATIvE OTHER AFT IN

CONSTRuCTIONS MACHINERY EquIPMENT EquIPMENT AFT PROGRESS TOTAL

Balance in January 1 st 2009 (POC*) 391 3,759 124,768 12,042 1,967 669 - 143,596

Balance in January 1 st 2009 (adjusted) 391 3,759 124,768 12,042 1,967 669 - 143,596

Increases 113 1,738 23,182 355 550 743 1,189 27,869

Disposals - - (515) (233) (61) (2) - (811)

Transfers and Write-offs - - (176) (291) - - - (466)

Closing balance 504 5,497 147,259 11,873 2,456 1,410 1,189 170,187

Accumulated amortisations and impairment losses

Balance in January 1 st 2009 (POC* ) - 1,454 51,057 7,375 1,595 332 - 61,813

Balance in January 1 st 2009 (adjusted) - 1,454 51,057 7,375 1,595 332 - 61,813

Depreciations for the period - 562 27,303 1,988 230 389 - 30,472

Depreciations - Disposals - - (515) (515) (61) (2) - (1,093)

Depreciations - Transfers and Write-offs - - (154) 161 - (3) - 3

Closing balance - 2,017 77,690 9,009 1,764 716 - 91,195

NET ASSETS 504 3,480 69,569 2,864 692 694 1,189 78,992

* POC: Portuguese Generally Accepted Accounting Principles

8. Leasing

8.1 fINANCIAL LEASING

In December 31 st 2010 and 2009 the company holds the following assets in financial leasing:

2009

2010

2009

DEPRECIATION /

ACCuMuLATED

IMPAIRMENT CARRYING CARRYING

COSTS LOSSES AMOuNT AMOuNT

Buildings and other constructions 2,302 719 1,583 1,173

Plant and Machinery 156,081 81,972 74,110 54,674

Transport Equipment 2,896 2,134 762 701

Administrative Equipment 453 113 340 -

Other tangible fixed assets 366 250 116 233

162,099 85,189 76,910 56,781

ZAGOPE – Construções e Engenharia, S.A. | Annual Report 2010


The payments of the financial leasing in December 31 st 2010 are detailed as follows:

AvERAGE OuTSTANDING 2014 AND

FINANCIAL INSTITuTIONS RATE AMOuNT 2011 2012 2013 FOLLOWING

Barclays Bank 3.75% 17,622 4,867 4,973 4,531 3,251

BBvA Finanziamento 2.50% 123 123 - - -

Millennium BCP 4.38% 4,138 2,218 1,852 68 -

BES Leasing e Factoring 2.25% 5,048 3,426 1,384 238 -

BPI 3.65% 616 177 183 189 67

CAT Financial 4.00% 22,103 6,731 6,683 5,215 3,474

Caixa Leasing e Factoring 6.00% 49,280 12,958 13,452 11,599 11,270

Santander Totta 3.01% 7,863 2,367 2,129 1,683 1,684

Bansalease 3.25% 366 96 101 107 62

8.2 OPErATIONAL LEASING

The contracts for operational leasing are mainly the renting contracts of light vehicles with Millenium BCP

and LeasePlan, and IT equipment with BBvA.

The rents of operational leasing reaching maturity are as follows:

MATuRITY OF OPERATING LEASING 2010

up to 1 Year 606

Between 1 and 5 years 884

TOTAL 1,490

9. Investments in Subsidiaries, Associates

and Joint Ventures

9.1 INVESTMENTS

On December 31 st 2010 and 2009 the company held investments in the following entities:

107,160 32,963 30,757 23,632 19,808

HEAD NET CARRYING PROPORTION ACquISITION ADJuSTMENTS

2010 OFFICE % HELD EquITY RESuLT AMOuNT IN THE RESuLT AMOuNT (EquITY METHOD)

Zed, Lda (a) e (c) Funchal 25% - - - - 1 -

Portec Baumterchman, Gmbh (a) e (c) Berlim 50% - - - - 26 -

Zagope Gulf Emirados 49% 2,163 (783) 4,575 (783) 265 (33)

Contracting, Llc (b) Árabes unidos

Zagope Algerie, Sarl (b) Argélia 50% 86 59 43 29 53 (361)

Zagope Angola, SA (c) Angola 0.005% 14,664 14,591 1 - 1 -

viamadeira, SA ( b) Funchal 16% 230 (133) 37 (21) 80 (1)

AEDL - Auto Estradas Douro Litoral, SA (c) Aveiro 9% (93,630) (3) 600 - 6 -

(76,487) 13,730 5,256 (775) 432 (395)

92 /

93


HEAD NET CARRYING PROPORTION ACquISITION ADJuSTMENTS

2009 OFFICE % HELD EquITY RESuLT AMOuNT IN THE RESuLT AMOuNT (EquITY METHOD)

Zed, Lda (a) e (c) Funchal 25% - - - - 1 -

Portec Baumterchman, Gmbh (a) e (c) Berlim 50% - - - - 26 -

Zagope Gulf Emirados 49% (1,596) (1,347) - (1,347) 265 (117)

Contracting, Llc (b) Árabes unidos

Zagope Algerie, Sarl (b) Argélia 50% 751 656 375 328 53 (6)

Zagope Angola, SA (c) Angola 0.005% 26,348 26,647 1 - 1 -

viamadeira, SA (b) Funchal 16% 364 (131) 59 (21) 80 -

AEDL - Auto Estradas Douro Litoral, SA (c) Aveiro 9% (54,166) (2) 190 - 5 -

(a) Companies with no business;

(b) Investments valued by the equity method;

(c) Investments valued by the historic cost method.

9.2 JOINT VENTUrES (ACE’S)

On December 31 st 2010 and 2009, the company held the following interests in jointly controlled entities,

integrated through the proportional consolidation method:

JOINT vENTuRES (ACE’S) HEAD OFFICE 2010 2009

Zagope - Tecnovia, ACE Porto Salvo 50% 50%

Mota Engil, Zagope, urbaser, ACE Linda-a-velha 31.50% 31.50%

Douro Litoral, ACE Porto Salvo 20% 20%

DLOEACE - Douro Litoral Obras Especiais, ACE Porto Salvo 20% 20%

Hidroalqueva, ACE Porto Salvo 50% 50%

Novaestação, ACE Porto Salvo 25% 25%

CONBATE - Construções Baixo Tejo, ACE Porto Salvo 17.50% 17.50%

LGv, ACE Lisboa 15.50% -

The financial statements in December 31 st 2010 and 2009 integrate the assets, liabilities, income

and expenses from the ACE’s (joint ventures), in the proportion of the percentage of investment that

the company holds in these entities, and after the removal of balances and transactions,

as follows:

(28,299) 25,824 626 (1,039) 431 (123)

ITEM 2010 2009

Current assets 49,276 29,993

Non-current assets 2,266 2,494

Current liabilities 27,511 24,301

Non-current liabilities - 1,047

Sales and services rendered 111,735 48,729

Cost of goods sold and raw materials consumed (6,512) (2,031)

External supplies and services (99,719) (42,701)

Wages and salaries (1,687) (654)

Other income and expenses 448 (145)

CONSOLIDATED rESULT 4,263 3,198

ZAGOPE – Construções e Engenharia, S.A. | Annual Report 2010


10. Assets and Liabilities by Deferred Taxes

In December 31 st 2010 and 2009, the balances relative to deferred taxes recognised are presented in the

balance by their gross value:

11. Inventories

In December 31 st 2010 and 2009 the inventories had the following composition:

The amount of inventories recognised as expenses during the periods ended December 31 st 2010

and 2009 are detailed as follows:

DEFERRED DEFERRED DEFERRED DEFERRED

TAx TAx TAx TAx

ASSETS LIABILITIES ASSETS LIABILITIES

Opening balance in January 1 st 2009 (POC*) - - - 183

Conversion adjustments - - - 3,300

Opening balance in January 1 st 2009 (adjusted) - 3,483 - 3,483

Changes in the period

Provisions - (843) - -

Others 69 - - -

CLOSING BALANCE 69 2,640 - 3,483

* POC: Portuguese Generally Accepted Accounting Principles

2010

RAW, SuBSIDIARY RAW, SuBSIDIARY

& CONSuMPTION MATERIAL & CONSuMPTION MATERIAL

Opening Inventories 4,466 364

Purchases 79,696 88,913

Adjustments - -

Closing Inventories 2,260 4,466

COST Of GOODS SOLD AND rAW MATErIALS CONSUMED 81,901 84,811

2009

GROSS IMPAIRMENT NET GROSS IMPAIRMENT NET

AMOuNT LOSSES AMOuNT AMOuNT LOSSES AMOuNT

Raw, subsidiary and consumption materials 2,260 - 2,260 4,466 - 4,466

2010

2,260 - 2,260 4,466 - 4,466

2010

94 /

95

2009

2009


12. Trade accounts Receivable

Clients

On December 31 st 2010 and 2009, the breakdown of the Clients’ item is as follows:

The credits given through factoring without claims transactions and outstanding at December 31 st 2010 and

2009, and deduced from the balance of clients’ current accounts, amount to:

Clients’ adjustments

During the period ended December 31 st 2010 and 2009, the following changes occurred in the item

Impairment losses of clients’ debts:

2010

2009

CuRRENT NON-CuRRENT TOTAL CuRRENT NON-CuRRENT TOTAL

Clients’ others 126,093 - 126,093 20,698 - 20,698

Clients’ impairment losses (1,299) - (1,299) (1,392) - (1,392)

CLIENTS’ TOTAL 124,794 - 124,794 19,305 - 19,305

2010 2009

BES Leasing e Factoring 156,264 167,693

BCP Factoring/ASSICOM 14,187 14,688

BNP Factor 1,118 7,628

Caixa Leasing e Factoring 14,249 7,268

Santander-Totta Crédito especializado 71,735 43,283

Caixa Económica Montepio Geral 9,773 -

267,326 240,560

2010 2009

Opening Balance 1,392 1,403

Increases - -

Adjustments - -

Decreases (93) (11)

CLOSING BALANCE 1,299 1,392

ZAGOPE – Construções e Engenharia, S.A. | Annual Report 2010


13. State and other public entities

In the period ended December 31 st 2010 and 2009 the item State and other public entities presented the

following structure:

14. Other accounts receivable

On December 31 st of 2010 and 2009 the balances of the item Other receivable were as follows:

The item Debtors by accruals is detailed as follows:

ASSET LIABILITY ASSET LIABILITY

Corporate Income tax (IRC) - 152 - 143

Singular Income Tax (IRS) - 425 - 188

value added Tax (vAT) 3,858 - 5,412 96

Social Security - 514 - 409

Other Taxes - 238 - -

Joint ventures 1,117 - 1,112 -

Branches and permanent establishments - - - 291

2010

2009

4,974 1,328 6,524 1,126

2010

2009

CuRRENT NON-CuRRENT TOTAL CuRRENT NON-CuRRENT TOTAL

Cash advances for fixed asset supplies 440 - 440 347 - 347

Debtors by accruals 111,788 - 111,788 98,954 - 98,954

Other debtors 11,046 - 11,046 20,978 - 20,978

Personnel 368 - 368 40 - 40

2010 2009

Interest receivable 401 991

values to invoice by application of NCRF 19 1,353 5,653

Branches/Permanent establishment 106,276 79,593

Other values to invoice 3,758 12,717

* NCRF 19- Portuguese Accounting Standards - Construction Contracts

123,642 - 123,642 120,319 - 120,319

111,788 98,954

96 /

97


15. Deferrals

On December 31 st 2010 and 2009 the balances of the item Deferrals of the assets and the liabilities

are as follows:

EXPENSES TO rECOGNISE:

Current

16. Share capital

On December 31 st 2010 and 2009 the ZAGOPE share capital, entirely in arrear and paid-in, amounted

to 50 000 thousands of euros and was represented by 10 000 000 shares with nominal value

of 5 euros each.

On December 31 st 2010 and 2009 ZAGOPE, SGPS, Lda. (entity based in Portugal) helds 100% of the

share capital of the company.

2010 2009

Rent paid 64 46

Insurance charges 39 46

Advertising 39 45

Branches/Permanent establishments 3,637 2,863

Joint ventures 511 588

4,290 3,589

INCOME TO rECOGNISE:

Current

Compensatory interest 631 403

Revenues anticipated by application of NCRF 19 * 1,785 769

Warranty costs for works - 6,214

Branches/Permanent establishments 23,970 22,035

Joint ventures 17,909 3,993

44,295 33,414

ZAGOPE – Construções e Engenharia, S.A. | Annual Report 2010


17. Reserves and result per share

These items register the following movements during the period ended December 31 st 2010

and 2009:

LEGAL OTHER

RESERvE RESERvES

Opening balance as of January 1 st 2009 1,554 329

Application of the result for the period 239 -

Decreases - (329)

December 31 st 2009 1,793 -

Application of the result for the period 1,362 -

CLOSING BALANCE AS Of DECEMBEr 31 ST 2010 3,155 -

According to commercial law, at least 5% of the annual net result, if positive, must be destined

to the reinforcement of legal reserves until it represents 20% of the capital.

The result per share of the period is of €0.59 and corresponds to the quotient between the net result

for the year and the number of shares issued.

18. Provisions, contingent liabilities

and contingent assets

In the periods ended December 31 st 2010 and 2009 the following movements were registered

in the Provisions item:

The increase registered includes 816 thousands of euros referring to the participation in the losses

(negative equity) of Zagope Gulf Contracting.

OPENING CLOSING

BALANCE INCREASES (uSES) (REvERSALS) OTHERS BALANCE

Guarantees to Clients 2,882 - - - - 2,882

Ongoing law suits 2,087 39 - (447) - 1,679

Other provisions 1,596 817 - - - 2,412

6,564 856 - (447) - 6,973

98 /

99


19. Amounts owned to Credit Institutions

On December 31 st 2010 and 2009 the financings are detailed as follows:

The non-current loans presented the following estimated repayment plan on 31 st December 2010:

The average tax rates of the bank loans supported by the company in the periods 2010 and 2009 were

of 3.79% and 4.22% respectively.

2010

Details of the financing in 31.12.2010, as presented in the tables above:

2009

CuRRENT NON-CuRRENT CuRRENT NON-CuRRENT

Bank Loans 59,448 73,537 48,335 54,466

Bank Overdrafts 65 - - -

Financial Leases 32,963 74,197 23,792 55,228

92,476 147,734 72,127 109,694

2012 41,704

2013 28,833

2014 3,000

73,537

STARTING OuTSTANDING

FINANCIAL INSTITuTIONS DATE CuRRENCY AMOuNT

Banco Espírito Santo 06/06/29 EuR 44,954

Santander Totta 06/11/29 uSD 5,133

BNP Paribas 08/05/29 EuR 2,987

BBvA 08/08/25 EuR 3,000

Millennium BCP 09/12/20 EuR 20,000

Montepio Geral 10/12/14 EuR 6,750

Deutsche Bank 10/12/23 EuR 13,500

Caixa Geral de Depósitos 10/12/27 EuR 34,000

130,324

ZAGOPE – Construções e Engenharia, S.A. | Annual Report 2010


20. Other accounts payable

On December 31 st 2010 and 2009, the details of the Other accounts payable item are as follows:

CuRRENT NON-CuRRENT TOTAL CuRRENT NON-CuRRENT TOTAL

Creditors for accrued expenses 20,950 - 20,950 31,876 - 31,876

Other creditors 8,666 - 8,666 7,384 - 7,384

Personnel 944 - 944 491 - 491

The details of Creditors for accrued expenses are presented below:

21. Construction Contracts

2010

2009

30,561 - 30,561 39,751 - 39,751

The amount of revenue from contracts recognised in 2010 and 2009 were of 620 607 thousands of Euros

and 565 062 thousands of euros respectively.

In the periods ended 31 st of December of 2010 and 2009, the information relative to construction contracts

in progress can be analysed as follows:

2010 2009

Interest payable 1,855 767

Remmunerations payable 8,762 1,945

Branches/Permanent establishments 5,185 23,765

Services rendered not yet invoiced 5,148 5,400

20,950 31,876

2010 2009

Costs incurred 1,103,585 709,782

Profits/Losses recognised 1,250,272 1,049,608

Cash advances received 115,243 33,886

Garantees given to clients 385,297 330,398

100 /

101


22. Income

Amount of income in each significant category recognised during the periods of 2010 and 2009,

including:

The revenue value is composed mostly of the income recognised through the finishing degree of the work

in progress.

The sales and services rendered by geographic areas can be analysed as follows:

23. External Supplies and Services

The item External Supplies and Services is detailed as follows:

2010 2009

Sales of goods 620,607 565,062

Rendering of services 4,628 12,591

Interests 5,626 2,893

630,861 580,545

2010 2009

European Market 227,177 133,157

African Market 398,058 444,496

625,235 577,653

2010 2009

Subcontracts 261,606 230,256

Specialised works 68,072 49,632

Conservation and repairs 17,153 16,773

Materials 8,877 5,393

Deslocations, lodgings and transport 21,996 19,359

Rents 19,231 18,192

Energy and fluids 4,183 5,583

Communication 1,790 1,714

Insurance 1,996 1,691

Rendering of other external services 20,729 14,582

425,634 363,176

ZAGOPE – Construções e Engenharia, S.A. | Annual Report 2010


24. Employees benefits

On December 31 st 2010 and 2009 the item Employees benefits was composed as follows:

The average number of employees throughout the year of 2010 was 6 112, compared to only

5 045 employees in the previous year.

25. Other operating income

2010 2009

Remmuneration of board members 628 467

Remmuneration of personnel 42,284 47,586

Compensation 668 -

Charges over remmuneration 3,170 2,806

Work accident and occupational disease insurance 1,089 562

Social work expenses 348 342

Other expenses with personnel 583 253

Balance bonuses 6,500 -

55,270 52,016

The breakdown of the item Other operating income on December 31 st 2010 and 2009 is as follows:

2010 2009

Supplemmentary income 9,731 6,417

Cash payment discounts 46 102

Currency exchange differences 13,771 23,368

Income and gains in non-financial investments 136 327

Others income and gains 1,778 304

Joint ventures 556 160

Branches/Permanent establishments 8,707 9,734

34,726 40,412

102 /

103


26. Other operating expenses

The breakdown of the item Other operating expenses on December 31 st 2010 and 2009 is as follows:

27. Interests and other similar income

and expenses

The interests and other similar income obtained in the course of the periods of 2010 and 2009 are detailed

as follows:

2010 2009

Taxes 5,516 10,361

Inventory losses - 1

Expenses and losses in non-financial investments 71 169

Corrections related to previous years 16 58

Donations 101 370

Levies 83 68

Insufficiency of the taxes estimate 30 76

Administrative and non-administrative fines and contractual penalties 11 1,308

Compensation 31 7

Other operating expenses and losses 1,257 2,099

Joint ventures 99 204

Branches/Permanent establishments 13,704 5,480

20,920 20,202

2010 2009

Interest from deposits in credit institutions 5,626 2,893

Interest from sales and services rendered 6,069 14,658

Exchange gains 12,878 -

Other financial income 1,117 2,602

25,690 20,153

ZAGOPE – Construções e Engenharia, S.A. | Annual Report 2010


The interests and other similar expenses supported in the course of the periods of 2010 and 2009

are detailed as follows:

2010 2009

Interest paid 13,235 10,554

Exchange losses 28,124 27,358

Other financing expenses 6,318 7,841

28. Corporate Income Tax

47,676 45,753

The company is subject to Corporate Income Tax (IRC), currently at a rate of 25% with the addition of

the derrama (local tax proportionally divided among taxpayers), with a maximum rate of 1.5%, adding

to a combined maximum rate of 26.5%. The entity is also subject to another derrama, a state tax

applicable over taxable amount that surpasses 2 000 thousands of euros.

In the terms of article 88º of the “Código do Imposto sobre o Rendimento das Pessoas Colectivas”

the Company is subject to autonomous taxation over a number of charges at the rates established in

the above mentioned article.

According to the laws in force, tax statements are subject to revision and corrections by tax

authorities during a period of four years (five years for Social Security), except when there have been

tax losses, tax benefits conceded, or ongoing inspections, complaints or disputes; in which cases,

depending on the circumstances, the periods are extended or suspended.

Thus, the tax declarations of the Company for the years of 2007 to 2010 may still be subject to

revision.

It must also be mentioned that the Company is included in a Special Regime of Taxation for Holdings

(RETGS), according to which the dominant company (ZAGOPE SGPS) is responsible for the delivery

to the state of the taxes collected by the Group, including the Company.

The Executive Board understands that any eventual corrections caused by revisions/inspections from

the tax authorities to the tax declarations will not have a significant effect on the financial statements

as of December 31 st 2010.

104 /

105


As established in the Accounting Standards and IFRS 25, the Company accounts the deferred

taxes resulting from the temporary differences between the accounting and the tax results.

During the periods of 2010 and 2009, the Company updated the values relative to deferred taxes,

as follows:

RECONCILIATION OF TAx 2010 2009

Earnings before income tax 10,601 37,465

Nominal tax rate 29.00% 26.50%

Tax expected 3,074 9,928

Permanent differences (i) 1,088 (645)

Adjustments to the collection (ii) 1,300 1,228

Tax over income for the period 5,462 10,512

Effective tax rate 51.53% 28.06%

Current tax 5,462 10,512

Deferred tax generated in the year (843) (288)

4,619 10,224

2010 2009

(I) ThE BrEAkDOWN Of ThE AMOUNT WAS AS fOLLOWS:

Changes to the construction contract recognition method 2,491 -

Balance bonuses - (7,500)

Taxable profit allocated by transparent companies 500 371

Depreciation and amortisation not accepted 80 100

Net effect of capital gains and losses (36) 376

Application of the equity method 795 1,347

Corrections related to previous years 16 58

Confidential expenses 1,257 2,092

Tax benefits (110) (180)

Corrections by application of Artº 19 vs DC3 690 1,087

Other net situations 560 (185)

3,752 (2,434)

Nominal tax rate 29.00% 26.50%

1,088 (645)

ZAGOPE – Construções e Engenharia, S.A. | Annual Report 2010


(II) ThE BrEAkDOWN Of ThE AMOUNT WAS AS fOLLOWS:

2010 2009

Expenses related to passenger vehicles 1,309 1,507

Representation expenses 370 128

1,679 1,635

Nominal tax rate 10.00% 10.00%

Expenses with km in own vehicles 147 128

Living allowance 300 250

447 378

Nominal tax rate 5.00% 5.00%

variable remmunerations payable to administrators 1,375 -

1,375 -

Nominal tax rate 35.00%

Confidential expenses 1,257 2,092

Nominal tax rate 50.00% 50.00%

Taxation based on expenses 1,300 1,228

29. Contingencies

Guarantees

On December 31st 2010 and 2009, the guarantees given to third parties relative to bank guarantees and

fidelity insurance given to projects’ owners are as follow:

OBJECT 2010 2009

Construction contracts 385,297 330,398

Other guarantees 144,553 110,192

529,850 440,590

106 /

107


30. Events after the date of the balance

until the date of the conclusion of this report there had been events related to the political convulsion

in Libya, country in which we have a significant backlog and operations that are reflected upon our

financial statements.

The Executive Board performed an analysis of the relevant risks, based on the information available,

and concluded that, in the worst case scenario, there will be no negative loss of resources relevant to

the financial position of the Company.

The construction equipment in the country has been grouped and stored in a location unaffected by

the protests, in the city of Tripoli.

The financial assets are deposited in a bank account with a state bank.

All the expatriate staff has been evacuated and will be reallocated to other operations of the

company.

A team of Libyan employees remain in control of administrative activities and maintenance of the

assets of the Company.

The contracts are still in force, with the construction activities in the urban zone of Tripoli temporarily

suspended.

The Certified Accountant:

Miguel Alexandre Martins Cardoso dos Santos Barreiros

(TOC No. 45 224)

Executive Board:

Leandro de Aguiar

Arnaldo Gomes

Clovis Martines

José Francisco Cadório Ferreira Lino

José Nicomedes Moreira

Pedro Augusto de Jesus Ricco

Remo Loschi Brunelli Filho

ZAGOPE – Construções e Engenharia, S.A. | Annual Report 2010


Statutory Auditor’s

Report

ZAGOPE – Construções e Engenharia, S.A. | Annual Report 2010


Shaholders,

1. In order to perform our duties, as established by article 420 of the Commercial Companies Code,

we are required to issue a report and express our opinion on the financial statements prepared

by Zagope – Construções e Engenharia, for the financial year ended December 31 st 2010.

2. We accompanied developments in the management of the Company throughout the year

of 2010, having received from the Executive Board all information and explanations necessary

to the performance of our duties.

3. We personally analysed the accounts in our capacity as Statutory Auditors, issuing an Auditor’s

Report and Opinion and the Annual Supervision Report, documents whose contents shall be

regarded as reproduced in full in this report..

4. OPINION :

All aspects duly considered, we are of the opinion that the General Meeting should proceed as follows:

a) Approve the management report and the annual accounts for 2010, as presented by the Executive

Board;

b) Approve the proposal for appropriation of profits contained in the management report presented

by the Executive Boards;

c) Make a general assessment of the management and supervision of the Company and reach

the conclusions referred in Article 455 of the Commercial Companies Code;

d) Distinguish the Executive Board for their work and accomplishments.

Lisbon, March 14 th 2011.

The Statutory Auditor

Amália Baleiro & Manuel Fonseca

Statutory Audit Company

Represented by: Maria Amália Baleiro

110 /

111


Auditor’s Report

and Opinion

ZAGOPE – Construções e Engenharia, S.A. | Annual Report 2010


Introduction

1. We have examined the financial statements of Zagope - Construções e Engenharia, S.A., comprising

the Balance Sheet as of December 31 st 2010 (showing a total of 744.695 thousands of Euros and a

total equity of 145.702 thousands of Euros, including a net result for the year of 27.740 thousand of

Euros); the Income Statements, the Statement of Changes in Equity; the Statements Cash Flows for

the year ending on that date and the corresponding Notes.

Responsibilities

2. It is the Executive Board’s responsibility to prepare financial statements that present accurately and

appropriately the financial position of the company and the result of its operations and cash flows, as

well as the adoption of appropriate policies and methods and the maintenance of an appropriate system

of internal control.

3. It is our responsibility to express a professional and independent opinion on these financial statements,

based on our examination.

Scope

4. Our examination was performed in compliance with the Technical Standards and Guidelines of the

Portuguese Institute of Statutory Auditors (“Ordem dos Revisores Oficiais de Contas”), which require

the analysis to be planned and performed with the objective of obtaining reasonable assurance as to

whether the financial statements are free of material misstatement. Therefore, this examination included

the following:

- the random verification of evidence supporting the amounts and disclosures in the financial statements

and an assessment of the estimates, based on judgments and criteria defined by the Executive Board

and used in the preparation of the financial statements;

- assessment of the adequacy of the accounting policies used and their disclosure, taking into

consideration the circumstances;

- assessment of the applicability of the going-concern concept;

- assessment of the adequacy of the overall presentation of the financial statements.

5. Our examination also included verification of the consistency of the management report with the other

accounting documents;

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

Opinion

7. In our opinion, the aforementioned financial statements give a true and fair, in all material aspects, the

financial position of Zagope – Construções e Engenharia, S.A. as of December 31 st 2010, the results

of its operations and its cash flows for the year then ended, in conformity with accounting principles

generally accepted in Portugal.

Report over other Legal Obligations

8. It is also our opinion that the information presented in the management report appears in accordance

with the financial statements for the period.

Lisbon, March 14 th 2011

Amália Baleiro & Manuel Fonseca

Statutory Audit Company

Represented by: Maria Amália Baleiro

112 /

113


Contacts

Zagope Around the World

ANGOLA

Bairro do Benfica – Sector Talatona

Zona Residencial 6B, via AL4A, n.º ZR6B

Samba – Luanda, Angola

Phone: +244 222 405 394

ALGErIA

13 Rue les Palmiers,Jardin des Pins,

El Biar - 16.406 Alger, Algérie

Phone: +213 21 915 256

Fax: +213 21 915 641

CAMErOON

Immeuble Credit Foncier du Cameroun 3 ème Etage

– Porte 321

B.P. 7422 Yaoundé, Cameroun

Phone: +237 223 08 86

UNITED ArAB EMIrATES

Abu Dhabi

Defense Road – African & Eastern Show Room

Asma majid AlFuttaim Bldg. 2 nd Floor – Office 204

united Arab Emirates

Phone: +971 26 431 996

Dubai

P.O. BOx 63890

Al Maqtoum Road - Dubai

united Arab Emirates

SPAIN

Plaza de Angel Carbajo n.º 6

Entreplanta Derecha

28020 Madrid, España

Phone: +34 915 715 045

GrEECE

314-316, Sigrou Avenue

17673, Kallithea – Athens, Greece

Phone: +30 210 956 5534

EQUATOrIAL GUINEA

Calle udubuandjolo (Bisa) S/N

Al lado de Iglesia de Salesianos

Batta Litoral, Guinea Ecuatorial

Phone: +240 534 849

LIBYA

Alseyaheya - As Fhan Road A73

Tripoli, Libya

Phone: +218 917 877 306

MALI

Immeuble du Patronat – CNPM

2 ème étage de l’aile sud Hamdallaye ACI 2000

Bamako, Mali

MAUrITANIA

Rue 42-066 llot 19, Salle 105

B.P. 5627 Nouakchott, Mauritanie

Phone: +222 524 46 30

MOZAMBIQUE

Av. do Zimbabwe, 560

Maputo, Moçambique

Phone: +258 21 492 754/5

rEPUBLIC Of GUINEA

Immeuble Résidence Jeannine

Rue D.I. 017 Camayenne

B.P. 1419 Conakry, République de Guinée

rEPUBLIC Of ThE CONGO

129, Rue de Reims - Centre

B.P. 943 République du Congo

Phone: +242 622 16 06

ZAGOPE – Construções e Engenharia, S.A. | Annual Report 2010


Zagope in Portugal

hEADQUArTErS

Lagoas Park Edifício 6, Piso 1

2740-244 Lisboa, Portugal

Phone: +351 218 432 500

Fax: +351 218 432 550

PALMELA YArD

Estrada velha da Moita, Km 1

Lugar dos Poços

2651-901 Palmela

Phone: +351 212 336 010

Fax: +351 212 330 528

MADEIrA OffICE

Rua do Ribeirinho de Baixo n.º 8A

2º E, D e H

9050-447 Funchal

Phone: +351 291 200 950

Fax: +351 291 230 348

Portugal

Mauritania

Spain

republic of guinea

Mali

Algeria

Cameroon

Libya

Equatorial Guinea

Angola

Greece

republic of the Congo

Mozambique

United Arab Emirates

114 /

115


CERTIFICATES:

2001/CEP. 1569; 2008/AMB.0359 e 2008/SST.0166

“ZAGOPE: BUILDING WITh QUALITY, SAfETY,

AND rESPECT fOr ThE ENVIrONMENT”

Building Permit No. 92

www.zagope.pt

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