Annual Report 2010 - AdP

Chairman’s Message
As forecast in the 2009 Management Report and Accounts,
2010 did prove a difficult year for the Portuguese economy and
society and also a demanding year for companies, which were
forced to make efforts to contain costs and improve efficiency.
Such efforts, alongside opportunities which emerged in the
meanwhile and which we were able to exploit, explain the
exceptionally positive results attained by the AdP Group in the
financial year which has just ended: a consolidated result of €
79.5 million after tax. This result includes the impact of around
€ 28 million stemming from non-operating results, in particular,
the sale of the stake held in Águas de Moçambique, fixed assets
and the respective working life changes at EPAL, in turn deriving
from the application of a new accountancy standards framework
and the resolution of litigation over the sub-soil utilisation charge
in the municipality of Lisbon.
This result is due to the efforts of everybody involved,
managers, directors and group members of staff as well as the
experience of good cooperation with the regulatory authorities
and our partners, especially municipalities.
This year, for the first time, the group fully adopted across all its
companies the new international financial reporting standards,
in accordance with the opportunity provided under Decree
Law no. 158/2009, of 13 July, which approved the Accountancy
Standardisation System (SNC), coming into effect as of 1
January 2010. The AdP SGPS results, ascertained in accordance
with these standards, were € 27.3 million, a sum that we also
consider to be very positive.
These positive results demonstrate the good performance of
the AdP Group but do not represent the extent of the
successes notched up in the year covered by this report.
In 2010, the two public-public partnership management
companies for water and sanitation fully embarked on their
activities following the signing of contracts in 2009 for AdRA -
Águas da Região de Aveiro and AgdA - Águas Públicas do
Alentejo. Since this was a new model for water and sanitation
service management and a new business model for the AdP
Group, providing scope for the integration of municipal assets
and members of staff into the new companies, there was a great
deal of expectation as to what might happen. At this moment,
we may state that these operations have all been successful,
courtesy not only of the effort put in by the management and
all members of staff but also the good understanding existing
with the local governments at the heart of the partnerships and
the prevailing good spirit of cooperation.
In 2010, the process of merging the multi-municipal systems of
Minho e Lima, Cávado and Ave was completed with the
subsequent creation of Águas do Noroeste and the signing of
the respective concession contract. The merger of Resioeste
and Valorsul, EGF group companies, was also finished with the
signing of a new concession contract, in addition to the founding
of Simdouro, concessionaire for the Grande Porto multimunicipal
sanitation system, with its concession contract signed
last November. Although they were undertaken prior to the
public release of Government guidelines within the framework
of the Stability and Growth Plan, these projects, which seek to
implement the strategic guidelines already approved by the
government, adopt the measures recommended in the Plan as
regards the simplification of state-owned companies.
Right at the end of the year, we sold off the stake held by the
group in the equity capital of the company Águas de
Moçambique, concession holder of the drinking water supply
for the cities of Maputo and Matola, at the request of the
Government of Mozambique. This company, with its contract
due to expire at the end of 2014, turned in a positive operating
result for the very first time and its sale enabled a meaningful
financial return, resulting from the sale itself, the reversion of the
provisions established, and also the lapsing of bank guarantees.
Of further relevance in the international market was the success
of the technical assistance proposals presented in partnership
with other national companies, especially in Angola.
Throughout 2010, progress was also made on other projects
announced in our 2009 message: the merger of Águas do
Mondego and Simlis, the partnership with the municipalities of
that region and the partnership with the Noroeste
municipalities. The difficult circumstances in 2010 did not allow
for their conclusion, which depends additionally on the
necessary conditions for their financing being met.
The Board of Directors that I presid over ended its mandate
on the 31 December and hence a brief overview of this period
is required, taking into consideration the guidelines provided by
the Secretary of State for the Treasury and Finance, on behalf
of the Minister, and the Minister of the Environment, Territorial
Planning and Regional Development in their Recommendations
annexed to Order no. 6008/2009, of 23 January.
Therefore, it should be highlighted that the AdP Group
advanced with its investments in multi-municipal systems and
now also in State-Local Government partnerships in line with
the conclusions and orientations set by PEAASAR II and PERSU
II, despite the different financial market conditions and the delays
in the approval of applications under the POVT. Also in
alignment with these strategic plans and regulatory
recommendations, various operations were undertaken in
order to expand existing multi-municipal systems as well as the
recommended mergers. Major progress was also recorded in