r&c dst sa 2016 en

Annual Report domingos da silva teixeira, s.a.

December 31, 2016

Index

A) 1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

MANAGEMENT REPORT TO THE BOARD OF DIRECTORS MACROECONOMICS FRAMEWORK BUSINESS ACTIVITY MATERIAL EVENTS OCCURRING AFTER THE END OF THE PERIOD FUTURE PERSPECTIVES OWN SHARES AUTHORIZATION FOR TRANSACTIONS BETWEEN THE ENTITY AND ITS DIRECTORS BRANCHES OF THE ENTITY PROPOSED RESULTS APPLICATION FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES INFORMATION REQUIRED BY LEGISLATION AUTHORIZED DISCLOSURE DATE FOR ISSUE THE FINANCIAL STATEMENTS FINAL NOTE

3 3 13 19 19 20 20 20 21 21 21 22 22

B)

ANNEX TO THE BOARD OF DIRECTORS REPORT

23

C)

CORPORATE BODIES

24

D)

INDIVIDUAL FINANCIAL INFORMATION

25

INDIVIDUAL BALANCE SHEET INDIVIDUAL INCOME STATEMENT INDIVIDUAL STATEMENT OF EQUITY CHANGES IN 2016 INDIVIDUAL STATEMENT OF EQUITY CHANGES IN 2015 INDIVIDUAL CASH FLOWS STATEMENT ANNEX AT DECEMBER 31, 2016

25 26 27 28 29 30

E)

LEGAL CERTIFICATION OF ACCOUNTS

71

F)

REPORT AND OPINION OF THE SOLE FISCAL AUDITOR

73

Annual Report 2016

A)

Management Report to the Board of Directors

Dear Shareholders,

In compliance with the legal and statutory regulations, the Board of Directors presents the management report for 2016 fiscal year.

As the environment where we operate is directly related to the positive evolution or downturn of the global economy, before presenting the entity’s financial information and its business centers we will do a slight approach to the most important national and international macroeconomic data.

1.

Macroeconomics framework

1.1

International macroeconomic framework

With regard to the international framework, the current outlook points to a gradual pick-up in activity and world trade.

Despite this positive development in 2016, in the coming years world economic growth is expected to remain below the levels seen, on average, in the period prior to the financial crisis. In the fourth quarter of 2016, the world economy was more buoyant, boosted by advanced economies, accompanied by an improvement in industrial production in both Japan and the European Union. Among the advanced economies, the Gross Domestic Product (GDP) of the United States of America (USA) accelerated to 1.9% year on year (1.7% in the 3rd quarter), coupled with robust private consumption and recovery of private investment; while that of the United Kingdom remained at 2.2%. For emerging countries, China’s GDP slowed down to 6.7% (the lowest in the last 25 years) and both exports and imports of goods fell to -7.2% and -5.3%, respectively (-2.9% and -14.3% in 2015).

In 2016, world trade in goods also accelerated as a result of more dynamic world exports, since world imports decelerated.

The strengthening of trade was mainly observed in emerging and developing countries (especially in Asia).

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Annual Report 2016

In the fourth quarter of 2016, the economic sentiment indicator showed a significant recovery for both the European Union (EU) and the euro area (EA), as a result of improved confidence indicators. According to the European Commission’s (EC) preliminary estimate, the GDP of the European Union and the euro area increased to 1.9% and 1.8% year on year in real terms. The quantitative indicators for the euro area for the whole of 2016 indicate a strengthening of economic activity (industrial production, retail sales and exports of goods in nominal terms).

Macroeconomic Indicators

2014

2015

2016(e)

2,4 1,6 1,2 0,3

2,6 2,2 2,0 1,2

1,6 1,9 1,8 1,0

GDP: USA EUROPEAN UNION EUROZONE JAPÃN

Source: GPEARI Finanças Reading: Percentage variationl (e) - estimated

The EU labour market saw a gradual improvement throughout 2016, with a drop in the unemployment rate for both the EU and the EA, standing at 8.2% and 9.6%, respectively, in, December 2016 (9.0% and 10.5% in December 2015). In December 2016, the expectations of euro area entrepreneurs in relation to job creation worsened for the manufacturing, service and retail sectors, but improved for the construction industry. In the US, the unemployment rate dropped to 4.9% (5.3% in 2015), strengthening the trend of the gradual pick-up in employment observed in recent years.

In December 2016, the annual rate of inflation of the euro area rose to 1.1%, mainly due to the recovery of energy prices and the acceleration of unprocessed food prices. However, for 2016 as a whole, the annual average inflation rate only increased to 0.2% (0.0% in 2015), reflecting a less marked fall in energy prices, to -5.0%, on average (-6.9% in 2015). The annual rate of inflation of advanced economies and China accelerated at the end of 2016, rising to 1.3% in the US (0.1% in 2015).

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Annual Report 2016

2014

2015

2016(e)

USA EUROPEAN UNION

1,6 0,5

0,1 0,0

1,3 0,3

EUROZONE

0,4

0,0

0,2

JAPÃN

2,8

0,8

-0,1

USA EUROPEAN UNION

6,2 10,3

5,3 9,4

4,9 8,2

EUROZONE

11,6

10,9

9,6

JAPÃM

3,6

3,4

3,1

USA

2,9

0,3

-1,0

EUROPEAN UNION EUROZONE

1,2 0,9

2,2 2,0

1,9 1,7

JAPÃN

2,1

-1,2

-0,9

Macroeconomic Indicators Inflation:

Unemployment rate::

Industrial Production Index:

Source: IMFI/ European Commission/ Eurostat/ GPEARI Finance Reading: Percentage variation (e) - estimated

In average annual terms, the price of oil fell again in 2016 compared to the previous year, prolonging the trend observed since 2013. This downward trend is expected to be halted in 2017, with a projected average oil increase of approximately 15%. In the years ensuing, the growth rate should slow down. At the end of 2016, the spot price of Brent crude oil averaged USD 45/bbl (EUR 42/bbl). However, in the last months of the year, oil prices rose significantly to an average of USD 55/bbl (EUR 52/bbl) in December 2016, reflecting the agreement reached between member and non-member countries of OPEC (in November 2016) to reduce production by 1.2 million barrels per day from January 2017. In the fourth quarter of 2016, the price of non-energy raw materials accelerated 9.8% year-on-year (1.3% in the third quarter), a trend that extended to all products, with emphasis on metals and industrial inputs.

The reduction of the price of oil in an oil-importing economy, such as the Portuguese economy, has a positive impact on GDP growth by reducing production and transport costs and their transmission to consumer prices. The impact on consumer prices reflects both the direct effect of the reduction in the price of oil products and the indirect effect of reducing the cost of producing other goods. In addition, by reducing the price of oil the reduction of inflation has a positive effect on the real disposable income of households and, consequently, on private consumption.

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Despite the direct effect of the oil price reduction described above, there are no negligible effects in this regard, in particular the effect of the fall in the price of this raw material in oil-exporting economies, by significantly reducing revenues associated with the exploitation of this raw material, as is the case of Angola. With oil production as the main source of export and tax revenues, Angola is suffering the impact of the steep decline in this raw material since mid-2014.

In this context, and due to the strong link between the Portuguese and Angolan market, the sharp contraction in external demand from Angola, which has had a significant impact on Portuguese exports, cannot go unnoticed.

Raw materials

Brent oil USD/Barrel (1) Agricultural goods (2) Metal (2)

2014

2015

2016(e)

99,5 1,9 -10,3

53,6 -13,5 -23,1

45,1 -6,9 -5,4

Source: Ministry of Finance / Bank of Portugal Reading: (1) Barrel average price/USD / (2) Percentage variation (e) - estimated

In December 2016, the euro exchange rate depreciated significantly against the dollar, with the euro standing at USD 1,054 at the end of the year, corresponding to a depreciation of 3.2% in comparison to the end of 2015 (USD 1,089).

Throughout 2016, the euro-dollar followed a markedly downward trend, in the context of diverging monetary policies between the two sides of the Atlantic.

Foreign currencies

2014

2015

2016

EUR/USD EUR/JPY EUR/GBP

1,214 145,23 0,779

1,089 131,07 0,734

1,054 123,00 0,856

EUR/CHF

1,202

1,084

1,074

Source: Ministry of Finance / Bank of Portugal Reading: Foreign currencies parity at the end of the period

The Council of the European Central Bank (ECB) maintained a set of unconventional monetary policy measures during 2016, with the rate of the main refinancing operations declining to 0,00%. In December 2016, short-term interest rates on the euro money market continued their downward trend, renewing historically low levels, to -0.26% on average for the year 2016. In the US, 3-month interest rates accentuated the upward movement since the beginning of the year, with a yearly average of 0.74%. Thus, at the end of December 2016, 3-, 6- and 12-month Euribor interest rates stood at -0.32%, -0.22% and -0.08%, respectively. In the US, short-term interest rates rose to close to 1.00% at the end of 2016.

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Reference interest rates

Eurozone USA Japan

2014

2015

2016

0,05 0,25 0,10 0,50

0,05 0,50 0,10 0,50

0,00 0,75 -0,10 0,25

2014

2015

2016

0,14 0,02 0,08 0,17 0,33

-0,13 -0,21 -0,13 -0,04 0,06

-0,33 -0,37 -0,32 -0,22 -0,08

0,26

0,61

1,00

0,11

0,08

-0,05

Source: Ministry of Finance / Bank of Portugal Reading: Percentage at the end of the period

Monetary Market interest rates

Eurozone Eonia Euribor 1 month Euribor 3 months Euribor 6 months Euribor 12 months USA Libor 3 months Japan Libor 3 months Source: Ministry of Finance / Bank of Portugal Reading: Percentage, annual average

In December 2016, long-term interest rates rose for both the US and the euro area, albeit more sharply for the former.

Investors also penalised some bond markets (Portugal and Italy), resulting in a spread versus Germany, partly due to the fragility of the banking sector of both countries. Concerns about the political situation in Europe led to the widening of intraeuro spreads, particularly in Portugal, Italy and Spain.

At the end of 2016, international stock indices took a downturn. The drop in stock prices was influenced by the negative performance of the Chinese stock exchange, the significant decline in the price of oil and some instability in the financial sector.

Stock markets

Dow Jones EURO STOXX Nikkei 225 Standard & Poors 500

2014

2015

2016

13,1 14,2 17,5

11,8 23,9 6,8

-9,7 -11,7 1,5

Source: European Central Bank

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Annual Report 2016

Despite the emergence of new positive factors in 2016, namely low energy prices, the uncertainty associated with the global economic outlook remains high and the intensification of downside risks are related to geopolitical tensions, the reappearance of volatility in financial and foreign exchange markets in the context of diverging monetary policies among major economies and the incomplete implementation of structural reforms. Moreover, a prolonged period of very low inflation, or even deflation, will be equally detrimental both to the prospects of world growth, and in particular to European growth, and to the persistence of excessive public and private indebtedness.

In this context, the uncertainty surrounding economic policy guidelines in the United States, as well as the development of the UK's relations with the European Union and a possible weaker recovery of emerging market economies generate risks of possibly less buoyant developments in economic activity and trade flows on a global level.

In terms of financial markets, the possibility of renewed tensions cannot be excluded and there is some uncertainty about the configuration of the ECB’s non-conventional monetary policy. In addition, the vulnerable situation of the banking system or the fiscal position in some euro area countries may lead to an increase in sovereign debt interest rates. These factors could lead to an increase in the financing costs of the European economy, with an impact on private consumption and investment.

1.2

National macroeconomic framework

In 2016, the Portuguese economy maintained the path of moderate recovery that has characterised the past few years.

This moderate growth translates into an average annual GDP growth rate of 1.2% in 2016, with GDP expected to accelerate to 1.4% in 2017 and stabilise its growth rate by 1.5% in the two years ensuing. In the coming years, GDP growth should be close to that projected by the ECB for the euro area, but it will not be able to reverse the negative spread accumulated between 2010 and 2013. This lack of real convergence vis-Ă -vis the euro area reflects the persistence of structural constraints to the growth of the Portuguese economy, with emphasis on the high levels of indebtedness of the public and private sectors, unfavourable demographic trends and the persistence of inefficiency in the labour and product markets, which require the continuation of the process of structural reforms.

After a very dynamic growth of exports of goods and services in 2015 (6.1%), in 2016 the growth rate decelerated to 3.7%.

This slowdown, which should not prevent a new gain in market shares, reflects both the deceleration of external demand and some temporary factors, such as the reduction in production in industrial units in the automotive and energy sectors.

In addition, in 2016 exports continued to reflect unfavourable sales behaviour for some non-EU markets, most notably Angola. Current projections point to a dissipation of these factors in 2017 and an acceleration of external demand, contributing to the return of more dynamic growth of exports.

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Annual Report 2016

Portuguese economic recovery in 2016 thus continued to be sustained by the buoyancy of exports of goods and services, accompanied by a slightly higher growth in domestic demand and a positive evolution of Gross Fixed Capital Formation (GFCF). The external environment of the Portuguese economy should remain favourable, albeit with a downward revision of global trade flows relative to previous periods. In addition, monetary and financial conditions should remain globally accommodative, and the Portuguese economy should maintain the financing capacity vis-Ă -vis the exterior. In turn, the price of energy and non-energy raw materials should reverse the downward trend of recent years. In this globally favourable environment, exports of goods and services should be more dynamic than external demand and will continue to be the component of global demand with the greatest contribution to the growth of activity. The greater buoyancy of the Portuguese economy in the coming years will also be sustained by an acceleration of the GFCF, based on a recovery of business investment.

In sectoral terms, at the end of 2016, there was a lower rate of change in the Gross Value Added (GVA) of the main activity sectors compared to 2015, especially in construction and industry. Activity in the services sector, which accounts for 74% of GVA, after a slight deceleration in 2016, should show a moderate acceleration profile in 2017. This sector will continue to benefit from the momentum of exports, in particular tourism, but also of services associated with the export of goods, in line with a greater allocation of productive resources to the sectors most exposed to international competition.

Indicadores MacroeconĂłmicos Expenditure and GDP - Private Consumption - Public Consumption - GFCF - Exports - Imports - GDP at market prices Inflation Industrial Production Index Industrial Turnover Index PSI 20 Index Unemployment rate

2014

2,2 -0,5 2,8 3,9 7,2 0,9 -0,2 1,8 -1,2 -26,8 13,9

2015

2,6 0,8 4,6 6,1 8,2 1,6 0,5 1,2 0,2 10,7 12,4

2016(e)

2,1 1,0 -1,7 3,7 3,5 1,2 0,8 -1,2 6,1 -11,9 11,0

Source: Ministry of Finance / Bank of Portugal Reading: Percentage variation, excepting unemployment rate (e)- Estimatied

Against a background of rising real disposable income, declining unemployment, and with consumer confidence remaining at particularly high levels, in the last quarter of 2016 private consumption was more dynamic and higher than GDP growth in the third quarter. The acceleration of this aggregate in year-on-year terms will have essentially reflected the acceleration of the consumption of non-durable goods. On the other hand, there was a slowdown in the consumption of durable goods for the second consecutive quarter, explained by the deceleration in the purchase of passenger cars.

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On the other hand, the GFCF once again recorded a year-on-year decrease in the last quarter of 2016, down -1.7% compared to a growth of 4.6% in 2015. The evolution of the GFCF throughout the year reflected the decline of the construction component, in line with the evolution of cement sales, conditioned by the sharp drop in public investment.

Public investment dropped sharply in 2016, but this component is particularly uncertain given the late entry into force of the budget for this year and taking into account the expenditure profile associated with investment projects co-financed by Community funds.

Inflation, as measured by the Harmonized Index of Consumer Prices (HICP), is expected to increase to 0.8% in 2016, compared to 0.5% in 2015. Compared with projections for the euro area, inflation is expected to remain 0.6 pp above the euro area average in 2016. The price increase in 2016 reflects a slight acceleration in service prices and a lower drop in the prices of energy and non-energy industrial goods. The upward trend in inflation is driven by an increase in internal and external inflationary pressures, motivated by the context of growth of the national and global economy, by the positive impact of the monetary policy measures adopted by the ECB, as well as by the incorporation of the technical hypotheses of price increases of raw materials in euro.

In addition, there was an improvement in consumer quality indicators. On the other hand, the qualitative indicators of business opinion showed a mixed evolution, with domestic demand for consumer goods improving while the volume of retail sales deteriorated. With regard to the conditions on the labour market, there is also evidence of a favourable trend in employment. Employment growth will occur in the private sector, as public employment is expected to remain relatively stable. These developments in employment, along with the hypothesis of stabilisation of the active population, imply maintaining a downward trend in the unemployment rate, 11.0% at the end of 2016, versus 12.4% in 2015. However, the growth in activity has translated into rather sluggish labour productivity in the recent recovery period. After a slight drop in 2016, annual labour productivity growth is projected to be around 0.5% in the coming years.

Despite the moderate recovery of the Portuguese economy since 2013, several structural constraints to economic growth persist, including the high level of indebtedness of the various sectors of the economy – households, non-financial corporations and the public sector – unfavourable demographic trends, a high level of long-term unemployment and a pace of recovery of investment short of that observed in previous recoveries. In this context, it is important to continue to deepen the process of structural reforms by increasing incentives for innovation, factor mobility and investment in physical and human capital, thereby creating conditions for a sustained increase in productivity and growth potential of the economy . In addition, in a context of relatively high levels of uncertainty, maintaining a predictable institutional and fiscal framework will contribute to preserving investor confidence and ensuring a favourable investment climate. Finally, pursuing an additional fiscal consolidation effort is crucial if the downward trend of the level of public indebtedness is to be sustained and to remain robust to adverse shocks.

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1.2.1

The construction sector

In a moderate economic recovery, the performance of the construction sector is once again negative. In fact, investment in construction and Gross Value Added (GVA) recorded significant decreases throughout 2016, with a 3.1% fall in the sector’s GVA and a 3.6% drop in Gross Fixed Capital Formation (GFCF) in construction, contrasting with the positive GDP growth of 1.1% in the same period.

With the confirmation of this new fall in production in 2016, this will be the 9th consecutive year in which the construction sector did not grow at all. It is estimated that the volume of production in 2016 is less than 45% of production in 2001, when construction peaked.

Even so, not all indicators behaved negatively in 2016 when compared to the previous year. With regard to employment, the number of construction workers grew 3.7% year on year, representing an increase of 10 thousand workers on average throughout 2016.

On the other hand, the data on transactions involving dwellings confirm the strong momentum that has been characterising the real-estate market, where the number of sales of housing units grew 20% year on year. Estimates point to a total of more than 128 thousand dwellings sold during 2016. Production indicators were very positive, with a 36% increase in the number of new licensed dwellings, +29% in the value of public works promoted and +19% in public works contracts. These increases anticipate a pick-up in the sector in the short term.

In turn, the amount of new loans granted for the acquisition of housing amounted to EUR 3.2 billion, a growth of 54% in comparison to the same period of 2015. There were also positive developments in the licensing of new non-residential buildings, with a licensed area of more than 1.6 million m2 during the first eight months of 2016, which translates into a year-on-year increase of 27.5%.

The public works market began to show signs of recovery in the last months of 2016, reversing the downward trend witnessed over a long period. The amount of public works contracts put out to tender amounted to EUR 1,756 million, 42% higher than in 2015. This is the best record since 2011 in terms of promotion of public works. In turn, the total volume of contracts awarded and reported in the public works observatory, resulting from public tenders, stood at EUR 718 million in 2016. Despite a 14% growth over the previous year, hiring remains at historically low levels. Contracts entered into as a result of direct awards amounted to EUR 544 million in 2016, 20% higher than in 2015. On the whole, contracts concluded and reported in 2016, which include public tenders, direct awards and other modalities, such as competitions limited by prior qualification, amounted to EUR 1,355 million, 12% more than in 2015.

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These are the first signs of a potential recovery of the construction activity that the 2017 State budget should help to consolidate due to its direct effects on employment and economic growth.

Consumption of cement in the national territory followed the downward trend in the sector, with a negative change of 4.4% in 2016, conditioned by the sharp drop in public investment in the construction sector. In the State budget for 2017, growth in public investment is once again not foreseen. In a crisis context, this variable is crucial to boost private investment and construction and to kick start the Portuguese economy.

Sector Indicators Concrete sales Building licenses Construction – Works completed: - Buildings - Total - Buildings - Family Housing - Dwellings - Family Housing GFCF (Construction)

2014

2015

2016(e)

-9,5 -5,2

6,9 -3,3

-4,4 2,0

-12,0 -21,2 -24,4 -3,2

-19,2 -21,5 -25,4 4,1

-8,3 -2,8 -2,3 -3,6

Source: Ministry of Finance Percentage variation (e) - estimated

The economic situation in Angola remains unfavourable for the construction sector. Insufficient demand, lack of materials and difficulties in obtaining bank loans were the main constraints. Likewise, the deterioration of sales perspectives, excessive bureaucracy and state regulations have conditioned the activity of Portuguese companies in Angola. The drop in crude oil prices in the period under review has reduced Angolan tax revenues from oil exports, leading the Government to cut public spending, including contracts to the State, thus affecting Portuguese companies oriented towards the Angolan market.

Furthermore, construction companies continue to experience delays in payments, a recurrent situation in Angola. The conversion of kwanzas revenues to dollars and their expatriation to Portugal will be a growing problem due to the lack of foreign exchange in the market. Consequently, the Angolan crisis will have a negative impact on the margin of Portuguese companies, as Angola continues to be the largest market for Portuguese construction companies.

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Annual Report 2016

2.

Business activity

Dst develops its activity in the construction and infrastructure areas, being supported by complementary production centers for construction, such as the application and production of bituminous mixtures department and logistics and maintenance departments (which is responsible for the management, conservation and maintenance of entity’s equipments).

During the 2016 period the entity consolidated its turnover above â‚Ź 115.6M, maintaining the focus of its activity in works arising from formalized contracts in previous years and in the startup of emblematic works in the area of infrastructure and construction of non-residential buildings, from north to south of the country.

In a context of moderate growth of the Portuguese economy, conditioned by the persistence of a several structural constraints to economic growth, which requires the continuation of the structural reforms process to correct accumulated macroeconomic imbalances, the entity maintained extremely positive economic and financial results.

The period of 2016 was also marked by the execution of very significant amount of contracts, whose proceeds will be reflected in the 2017 period.

Turnover

Sales Services rendered TOTAL

2014 2.449 139.192 141.641

2015 2.484 117.711 120.195

2016 3.145 112.503 115.647

VAR. 26,61% -4,42% -3,78%

Unit: Thousand Euros

Note that the reduction of 3.78% in the entity's turnover in the period under review does not demonstrate a priori a major impact, and it is reasonable to consider that, once again, the entity maintained the sustained growth trend of its operational activity. The turnover permanence above â‚Ź 115M since several years is especially notable in the extent that it corresponds to a countercyclical against the activity sector that it fits, which returned to record significant production losses in 2016.

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In the year under review, the construction buildings component assumes preponderance over the infrastructure works. At the end of 2016 the weight of the construction works in total services amounted to 79%, while the relevance of the infrastructure works stood at 21%.

Services rendered

Infrastructure Buildings TOTAL

2014 85.078 54.115 139.192

% 61% 39%

2015

%

57.263 60.448 117.711

2016

49% 51%

23.312 89.191 112.503

% 21% 79%

Unit: Thousand Euros

Well, dst has a large ensemble cast of strong technical skills in engineering and construction, which allows a market recognition as a landmark of rigor and quality in the services provided. As such, in 2016 it took out various works of recognized impact and technical complexity.

As an example, in the table below are identified some of these major contracts: Main works

Localization

Hotel EXE Cascais 4*

Cascais

IKEA Allotment

LoulĂŠ/Faro

Continente Alto do Lumiar

Lisbon

IKEA Braga

Braga

RENOVA - Paper factory expansion

Torres Novas

Northern Line Railroad - Alfarelos

Soure

Graciosa Energy System

Santa Cruz da Graciosa

Body- Ed. 2B - Construction of the new Logistics Building

Palmela

Hydraulic Circuit - Machados

Beja

IKEA Matosinhos

Matosinhos

PSA Pler in Sines - Expansion of the NW sector

Sines

Howa Tramico

Viana do Castelo

Hidroelectric Use of RuivĂŁes

Vieira do Minho

Continente Bom Dia Parede II

Cascais

Continente Bom Dia Faro - Montenegro

Faro

Continente Bom Dia Seia

Seia

Bricodepot Sintra

Sintra

Reconstruction of the BRG108 Building - Bosch

Braga

Water conduit - Damaia

Amadora

Continente Bom Dia Albergaria-A-Velha

Albergaria-A-Velha

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Annual Report 2016

2.1. Investment 

Financial participations

In 2016, the entity recorded a decreased of € 927k in its line of financial participations, essentially by the disposal of Steelgreen S.A. society.



Tangible fixed assets

The equity structure of dst continues to show an incremental strengthening of productive net assets.

Thus, the investment in 2016 stood at € 904k, contemplating an increase in the purchase of transport equipment and basic equipment for the development of its operational activity.

Description Basi c equipment Transport equipment Administrative equipment Others TFA TFA under construction TOTAL

2014 2015 588.387,23 1.099.857,52 499.125,28 280.402,02 66.220,55 38.963,14 61.089,55 8.958,79 95.055,28 1.105,00 1.309.877,89 1.429.286,47

2016 96.479,49 782.788,04 23.603,98 1.226,31 904.097,82

2.2. Human resources In 2016, the average number of people to the entity's service was 419 employees, a decrease of 11.6% over the same period of the previous year.

However, dst maintained a personal and professional development policy for its employees, with the strategic objective of strengthening its senior and middle technicians.

In this regard, during the period under review, the entity has implemented various training programs, including a high number of employees of the different departments.

Description Board Members Employees TOTAL

domingos da silva teixeira, s.a.

2014

2015 6 523 529

2016 5 469 474

5 414 419

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Annual Report 2016

2.3. Economic and financial analysis In line with the sustained trend of previous periods, the dst’s performance in 2016 remained extremely positive, solidifying its position in the market in which it operates. Thus, the entity continues to invest in its sustained and multifaceted growth.

Regarding the dst’s financial situation in the end of 2016, immediately highlights the huge liquidity and solidity that it presents, as it has a financial autonomy ratio of 34.06% and its net assets stood at € 126.3M at the end of the period.

During the period under review, the entity distributed dividends in the amount of € 34M, which explains part of the variation observed in its equity, € -25M compared to the same period.

The decrease in the entity’s net assets is mainly due to the reduction in the amount of other receivables (€ -29.7M compared to 2015). In parallel, the entity adopted in the period under review, very strict policies of prospective analysis of credit risk, with direct positive impacts on the above mentioned financial liquidity.

Despite the increase in the entity's net financial debt to the current € 13.1M (€ 5.9M more than in the previous period), it should be noted a slight reduction in the entity's liabilities in 2016 to € 83.3M (compared to € 86.4M at the end of 2015).

The increase in Loans was offset by the reduction in Trade creditors.

thousand euro

Balance sheet 180.000 160.000 140.000 120.000 100.000 80.000 60.000 40.000 20.000 0 2015 Assets

domingos da silva teixeira, s.a.

2016 Liabilities

Equity

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Annual Report 2016

Under the economic activity of the entity in the 2016 period, there are two analysis vectors of particular relevance: (i) the turnover achieved in the period and (ii) the respective Net Income.

The dst’s turnover in 2016 exceeded € 115.6M, reflecting the sustained continuation of the works started in previous years and the raising of new contracts with an amounting very significant during 2016. Despite a slight reduction in the turnover compared to the previous period, the entity had very positive net profitability levels.

However, the strengthening of the entity's operating activities in 2016 was reflected positively in terms of dst’s net profitability in the period, and its positive net income was consolidated at € 8.9M, corresponding to a net margin of 7.7% (8.1% in 2015).

In order to make possible the increase of their profitability levels and safeguarding the quality of its services, dst conducted a profound exercise of optimizing their operating activity, that is highlights the 19.4% decrease in the cost of sales and 47.5% in other operating charges, and spending on supplies and services maintained the values of the previous period.

It added other positive operational effects at this level, as was the case of reduction the net amount of provisions for other risks and charges in order of € 792.5k.

On the other hand, due to the gradual and continuing reduction of its debt levels in the period under review, the entity reduced by 23.6% its funding costs. There was also a reduction in interest and similar income obtained, thus contributing to a net decrease in entity’s financial results € 628.3k (-23.2% compared to 2015).

Income Statment 12.000

thousand euros

10.000 8.000 6.000 4.000 2.000 0 EBITDA

domingos da silva teixeira, s.a.

2015 Operating results

2016 Financial results Net Profit / Loss

Page 17 of 73

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Thus, in the overall economic assessment of 2016, despite the tax burden for the period amount to € 1.9M, dst was marked by excellence and responsiveness to the instability and uncertainty context that the construction sector remains, reaching at the end of economic period under review a positive result of € 8.9M which allows for continuous reinforcement and return on equity, in pursuit of an ambitious and sustained growth strategy.

The excellent entity's operating performance has resulted in a positive EBITDA of € 10.6M and a creation of gross value added above € 21M. The positive evolution of the entity's activity in the last years is reflected in the values highlighted by some economic indicators, financial and profitability, including:

Description Economic indicators Gross Added Valued* EBITDA* EBITDA % Net Debt/EBITDA Cash-Flow* Rotation of Fixed Assets Rotation of Working Capital Rotation of Stocks Financial Indicators Financial autonomy General liquidity General solvency Profitability Indicators Gross margin of sales Return on sales Return on total assets Return on equity

2014

2015

2016

24.986.567 13.131.368 9,27% 0,86 11.846.862 480,56% 94,24% 1233,48%

21.069.374 10.104.599 8,41% 0,71 9.453.314 384,67% 80,34% 1218,07%

21.033.811 10.562.504 9,13% 1,24 10.719.703 363,15% 94,48% 1055,61%

37,21% 162,43% 59,26%

44,09% 187,01% 78,87%

34,06% 168,07% 51,66%

74,02% 7,56% 6,81% 18,31%

79,21% 8,06% 6,27% 14,22%

82,59% 7,70% 7,05% 20,69%

*Amounts in euros

The Net Debt / EBITDA ratio of the entity has a value of 1.24 at the end of 2016, which, despite the increase compared to previous periods, continues to show a remarkable progress of the entity in relation to the sector in which it operates, enhancing its strong autonomy from the bank credit.

However, the entity's ability to generate cash flows was also very positive, with the net cash exceeded € 10.7M in 2016, which highlights its management capacity to cope with the difficulties experienced in the sector.

domingos da silva teixeira, s.a.

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The dst’s good performance is confirmed also by the effectiveness demonstrated in rotation ratios of the fixed and current assets, with values above 300% and 90% respectively, reflecting the strong investment in productive capacity that the entity has been making in recent years. Its operating efficiency is also proved by the value observed in the rotation ratio of stocks, which is directly related to the reduction of inventories.

The entity’s financial strength remains unshakable, with a financial autonomy ratio above 34%. which sets an extremely favorable evolution compared to previous periods. The general liquidity indicator also shows very positive values, 168.1% in 2016, which shows that the entity is fully equipped with the financial means to meet its short-term liabilities.

In turn, the general solvency indicator, which measures the entity's ability to, with their own means, pay off creditors, stood at 51.7% in 2016, which reflects a low dependency on its creditors.

As show in the table above in respect of profitability indicators, deserves featured the dst’s capacity in 2016, increasing the gross margin sales up 82.6% and get a return on total assets of 7.1%.

The entity's distinct economic and financial performance also reflected an improvement in the return on equity (an increase of 6.5 pp compared to 2015), which stood at 20.7% at the end of the period, reflecting a strong dynamic period of the entity, with a significant investment and bets in new business and development opportunities.

3.

Material events occurring after the end of the period

After the period end, and to date, there were no events that may have a significant impact on the financial statements at December 31, 2016

4.

Future perspectives

In economic terms, the dst’s strategy remains focused on consolidating its turnover and in maintaining its market share in the country, seeking to increase the satisfaction and loyalty of its customers through marketed products, services and confidence relationships developed.

At the same time is also entity’s purpose the continuous improve of its profitability, with very restricted and conscious control of their debt levels, which will always keep low compared to the sector’s average and its main competitors, in order to be able a business flexibility and investment flexibility higher than other players.

domingos da silva teixeira, s.a.

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In terms of human resources, the dst’s purpose is to strengthen the skills of its human capital, while remaining committed to a delineated and comprehensive training plan for employees of the different departments. dst also continue to focus on strong investment policy in raising awareness and control of safety and environment in all workplaces, both in terms of works contracts sector, both in terms of production centers.

The entity's objectives, in terms of quality, pass through the continuation of the process for certification of the research, development and innovation management system (RDI), according to the standard NP 4457: 2007 – ID Management, IDI Requirements Management System; as well as the continuity and maintaining their certifications in the area of quality, environment and safety.

5.

Own shares

During the year 2016, the entity did not acquire or sell its own shares. On December 31, 2016, the entity did not held treasury shares.

6.

Authorization for transactions between the entity and its directors

During the year 2016 the entity did not grant loans or credits to directors, did not make payments on their behalf, did not provide guarantees for liabilities incurred by them, nor any advances have been provided to them, nor entered into any contracts with them, directly or intermediary.

7.

Branches of the entity

On December 31, 2016 the entity had the following branches: 

“Domingos da Silva Teixeira, S.A. Sucursal en España” - Pontevedra, Espanha:



“Domingos da Silva Teixeira, S.A. Sucursal em França ” – Trappes, França



“Domingos da Silva Teixeira, S.A. Palmeira Sucursala Bucuresti” - Roménia, Bucareste

domingos da silva teixeira, s.a.

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8.

Proposed results application

The Board of Directors proposes to the Shareholders that the net positive result from the year 2016 of 8,900,565.11 Euros (eight million and nine-hundred thousand and five-hundred and sixty five euros and eleven cents) to be applied under the item of Retained Earnings.

9.

Financial risk management objectives and policies

Within the economic and financial context in which the entity operates is essential to have a risk management strategy fully integrated into the overall strategy of the organization that increase its degree of resilience and gradually become immune to unforeseen and adverse effects. Therefore, risk analysis is ensured by the group’s different business units in which the entity operates. A prior identification study of the risks classified as the most critical is being developed, and risk management strategies are defined for control procedures implementation that reduce them to an acceptable level.

Through the control procedures implementation the entity seeks to ensure the efficiency and effectiveness of its operations, as well as assets safeguarding, financial reporting reliability and compliance with laws and regulations. The ultimate goal will be the trade-off maximization between risks and business margins, in order to achieve, in a sustained way, the group’s strategic objectives in which it operates.

10. Information required by legislation The Board of Directors advises that the entity does not have debts in arrears to the State, in compliance with the terms of Law-decree number 534/80 of November 7.

In compliance with the provisions of the Article 210th of the Contributory Code, published by the Law number 110/2016 of September 16, the Board advises that the situation of the entity before the Social Security is regularized within the legally stipulated deadlines.

Pursuant to the requirements of the Article 66º of the Code of Commercial Companies, the entity informs that the Statutory Auditor’s charged fees (Chartered Accountant) amounted to 18,450.00 Euros (VAT included), which solely cover the statutory audit services.

domingos da silva teixeira, s.a.

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11. Authorized disclosure date for issue the financial statements The financial statements for the period ended December 31, 2016 were approved by the Management Board for issue on March 31, 2017.

12. Final note The Management Board expresses a word of recognition to all employees and of gratitude to everyone who in one way or another cooperated with the entity. Special gratitude is hereby expressed to the Sole Fiscal Auditor, trade creditors and banking entities that very much honor us with valuable relationship.

Braga, March 31, 2017

The Board of Directors,

José Gonçalves Teixeira; Executive Chairman

Joaquim Gonçalves Teixeira; Executive Vice-Chairman

Avelino Gonçalves Teixeira; Non-Executive Vice-Chairman

João Martins Negrais de Matos; Executive Member of the Board of Directors

Eurico António Lopes Soares; Non-Executive Member of the Board of Directors

domingos da silva teixeira, s.a.

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B)

Annex to the Board of Directors Report

In compliance with the terms and for the effects of the number 5 of article 447th and number 4 of article 448th of the Trading Companies Code (“CSC – Código das Sociedades Comerciais”), approved by Law-decree number 262/86 of September 2, hereby is presented the list of shares regulated by such diplomas:

1. In light of the number 5 of the Article 447th of the Trading Companies Code, as of December 31, 2016 the members of the Board of Directors did not own entity’s shares.

2. The following shareholders, to whom the number 4 of the Article 448th of the Trading Companies Code is applicable, held as of December 31, 2016 at least one tenth of the entity’s share capital: i. dst engenharia & construção, sgps, s.a., with 100% of the entity’s share capital.

Braga, March 31, 2017 The Board of Directors,

José Gonçalves Teixeira; Executive Chairman

Joaquim Gonçalves Teixeira; Executive Vice-Chairman

Avelino Gonçalves Teixeira; Non-Executive Vice-Chairman

João Martins Negrais de Matos; Executive Member of the Board of Directors

Eurico António Lopes Soares; Non-Executive Member of the Board of Directors

domingos da silva teixeira, s.a.

Page 23 of 73

Annual Report 2016

C)

Corporate Bodies

BOARD OF DIRECTORS Executive Chairman: José Gonçalves Teixeira Executive Vice-Chairman: Joaquim Gonçalves Teixeira Non-Executive Vice-Chairman: Avelino Gonçalves Teixeira Executive Member of the Board of Directors: João Martins Negrais de Matos Non-Executive Member of the Board of Directors: Eurico António Lopes Soares

GENERAL SHAREHOLDERS’ ASSEMBLY President: Susana Daniela Simões da Silva Braga Secretary: Catarina Mendes Amaro

SUPERVISORY BOARD (SOLE FISCAL AUDITOR) Efective: Joaquim Guimarães, Manuela Malheiro e Mário Guimarães, SROC, represented by Dr. Mário da Cunha Guimarães (ROC n.º 1159).

Surrogate: Dr.ª Maria Manuela Alves Malheiro (ROC n.º 916).

domingos da silva teixeira, s.a.

Page 24 of 73

Annual Report 2016

D)

Individual Financial Information

Individual Balance sheet For the year ended December 31, 2016 Translation of financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails.

Amounts expressed in euros NOTES

DATES 31/12/2016

31/12/2015

ASSETS Non-current assets Tangible fixed assets Investment properties Intangible fixed assets Financial investments - equity method valuation Other financial investments Deferred tax assets

3.091.805,59 100.000,00 138.877,74 53.523,41 75.398,77 543.124,18 4.002.729,69

3.183.468,53 100.000,00 199.698,29 980.206,43 120.542,89 481.740,19 5.065.656,33

12 13 15 14 16 4

1.907.359,68 27.101.810,38 1.991.872,96 85.744.222,78 132.960,70 5.430.287,94 122.308.514,44 126.311.244,13

2.051.271,72 26.219.569,13 1.723.143,75 115.442.665,54 143.745,64 3.925.341,00 149.505.736,78 154.571.393,11

17 18

12.500.000,00 1.010.000,00 2.500.000,00 8.122.976,43 9.944.861,75 49.460,30 8.900.565,11 43.027.863,59

12.500.000,00 1.010.000,00 2.393.108,32 8.122.976,43 34.360.240,72 78.459,13 9.691.391,11 68.156.175,71

Liabilities Non-current liabilities Provisions Loans

19 7 and 20

2.490.782,90 8.020.016,64 10.510.799,54

2.282.695,65 4.185.641,25 6.468.336,90

Current liabilities Trade creditors Prepayments Taxation payable Loans due within 1 year Other payables Deferrals

21 13 15 7 and 20 22 16

27.108.707,20 133.570,47 404.534,72 10.475.627,98 26.200.122,40 8.450.018,23 72.772.581,00 83.283.380,54 126.311.244,13

35.671.969,40 245.549,08 383.218,90 6.920.849,76 23.894.372,19 12.830.921,17 79.946.880,50 86.415.217,40 154.571.393,11

Current assets Stocks Trade debtors Taxation receivable Other receivables Deferrals Cash in hand, at bank and bank term deposits

6 and 7 8 9 10 11 23

Total assets EQUITY AND LIABILITIES Equity Ordinary share capital Other equity instruments Legal Reserve Other reserves Retained profit Adjustments / other changes in equity Net profit/(loss) for the period Total equity

Total liabilities Total equity and liabilities

Braga, March 31, 2017 the Board of Directors,

domingos da silva teixeira, s.a.

the Certified Accountant number 55854,

Page 25 of 73

Annual Report 2016

Individual Income Statement For the years ended December 31, 2016 Translation of financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails.

Amounts expressed in euros PERIODS NOTES

Turnover Gains/(losses) on subsidiary, associates companies and joint ventures Cost of sales Other external charges Staff costs Trade debtors impairment (losses/written off) Provisions (incresase/decrease) Increase/decrease in fair value Other operating income Other operating charges Net operating profit/(loss) before depreciation and amortization, interests and taxes Depreciation, amortization and other amounts written off tangible and intangible fixed assets Net operating profit/(loss) before interets and taxes Income from interests Interest payable and similar charges Net Profit/(loss) before taxes Corporation tax Net Profit/(loss) for the period

Earnings per share

2016

2015

24

115.647.235,99

120.194.787,40

10 12 25 26 13 19 11 27 28

72.816,98 (20.134.311,83) (77.996.604,93) (9.959.343,40) (1.196.874,04) 449.560,52 (2.512,15) 4.175.659,84 (1.240.436,81) 9.815.190,17 (1.071.824,73) 8.743.365,44 2.800.738,39 (715.014,25) 10.829.089,58 (1.928.524,47) 8.900.565,11

133.578,74 (24.985.979,63) (77.703.812,06) (10.071.180,92) 1.768.679,79 (342.930,90) 4.898.993,13 (2.361.787,39) 11.530.348,16 (1.187.671,49) 10.342.676,67 3.649.785,44 (935.734,03) 13.056.728,08 (3.365.336,97) 9.691.391,11

0,71

0,78

6 29 30

Braga, March 31, 2017 the Board of Directors,

domingos da silva teixeira, s.a.

the Certified Accountant number 55854,

Page 26 of 73

Annual Report 2016

Individual Statement of Equity Changes in 2016 Translation of financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails.

Amounts expressed in euros Notes

On January 1, 2016 Changes during the year Application of 2015 result Changes in other Equity variations: Equity method

Other equity instruments

Share capital

Legal Reserve Other Reserves

Retained Earnings

Adjustments / other changes in equity

Net Profit / Loss of the period

12.500.000,00

1.010.000,00

2.393.108,32

8.122.976,43

34.360.240,72

78.459,13

9.691.391,11

68.156.175,71

-

-

106.891,68

-

9.584.499,43

-

(9.691.391,11)

-

-

-

106.891,68

-

121,60 9.584.621,03

(28.998,83) (28.998,83)

(9.691.391,11) 8.900.565,11 8.900.565,11

(28.877,23) (28.877,23) 8.900.565,11 8.900.565,11

12.500.000,00

1.010.000,00

2.500.000,00

8.122.976,43

(34.000.000,00) (34.000.000,00) 9.944.861,75

49.460,30

8.900.565,11

(34.000.000,00) (34.000.000,00) 43.027.863,59

Net Profit / Loss for the period Comprehensive income for the year Operations with Shareholders Distributions On December 31, 2016

Total

Braga, March 31, 2017 the Board of Directors,

domingos da silva teixeira, s.a.

the Certified Accountant number 55854,

Page 27 of 73

Annual Report 2016

Individual Statement of Equity Changes in 2015 Translation of financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails.

Amounts expressed in euros Notes

On January 1, 2015 Changes during the year Application of 2014 result Changes in other Equity variations: Equity method Other variations recognized in equity

Other equity instruments

Share capital

Legal Reserve Other Reserves

Retained Earnings

Adjustments / other changes in equity

Net Profit / Loss of the period

Total

12.500.000,00

1.010.000,00

1.857.936,86

8.122.976,43

24.985.826,30

(714.217,30)

10.703.429,21

58.465.951,50

-

-

535.171,46

-

10.168.257,75

-

(10.703.429,21)

-

-

-

535.171,46

-

(784.607,22) (9.236,11) 9.374.414,42

778.991,81 13.684,62 792.676,43

(10.703.429,21) 9.691.391,11 9.691.391,11

(5.615,41) 4.448,51 (1.166,90) 9.691.391,11 9.691.391,11

12.500.000,00

1.010.000,00

2.393.108,32

8.122.976,43

34.360.240,72

78.459,13

9.691.391,11

68.156.175,71

Net Profit / Loss for the period Comprehensive income for the year Operations with Shareholders On December 31, 2015

Braga, March 31, 2017 the Board of Directors,

domingos da silva teixeira, s.a.

the Certified Accountant number 55854,

Page 28 of 73

Annual Report 2016

Individual Cash Flows Statement For the years ended December 31, 2016 Translation of financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails.

Description

Notes

Amounts expressed i n euros PERIODS 2016

2015

Operating activities Received from trade debtors

121.879.117,31

129.271.797,04

Payments to trade creditors

(107.054.592,39)

(104.728.424,67)

(9.856.356,09)

(10.291.644,87)

4.968.168,83

14.251.727,50

(2.852.913,30)

(4.202.088,94)

Payments to and on behalf of employees Cash fl ow from operations Corporate Tax payments/receivables Outros recebimentos/pagamentos Operati ng cash flow (1)

-

-

2.115.255,53

10.049.638,56

(916.719,61)

(786.282,21)

(16.348,42)

(83.219,45)

Investment activities Payments for: Tangible fi xed assets Intangible assets Financial investments

-

(52.042,41)

(933.068,03)

(921.544,07)

Revenues from: Tangible fi xed assets Financial investments Loans Investment cash flow (2)

-

-

1.015.766,89

119.159,25

26.746.287,87

-

27.762.054,76

119.159,25

26.828.986,73

(802.384,82)

7.212.369,61

-

7.212.369,61

-

-

(7.091.123,30)

(651.664,93)

(732.040,26)

Financing activities Revenues from: Loans obtained

Payments for: Loans granted Interests Dividends

Fi nanci ng cash flow (3)

(Decrease)/ Increase in cash in the year (1) + (2) + (3)

(34.000.000,00)

-

(34.651.664,93)

(7.823.163,56)

(27.439.295,32)

(7.823.163,56)

1.504.946,94

1.424.090,18

cash and cash equivalents at the begining of the period

4

3.925.341,00

2.501.250,82

cash and cash equivalents at the end of the period

4

5.430.287,94

3.925.341,00

Braga, March 31, 2017 the Board of Directors,

domingos da silva teixeira, s.a.

the Certified Accountant number 55854,

Page 29 of 73

Annual Report 2016

Annex at December 31, 2016 Translation of financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails.

1.

Entity Identification

Company designation: domingos da silva teixeira, s.a.

Headquarters: Rua de Pitancinhos – Palmeira - Braga Incorporation date: February 13, 1984 Tax identification number: 501 489 126 C.A.E.: 42990 - Construction of civil engineering works Activity: Construction and Engineering Ultimate parent company: dst-sgps, s.a.

Ultimate parent company headquarters: Rua de Pitancinhos – Palmeira - Braga

These financial statements are the entity's individual financial statements.

All the amounts presented in these notes are expressed in Euros, unless otherwise stated.

2.

Accounting referential for the financial statements preparation

2.1.

Accounting Normalization System (“SNC – Sistema de Normalização Contabilística”)

The financial statements herewith were prepared according with all standards of SNC, approved by the law-decree nº158/2009, of 13th July, republished by the law-decree nº 98/2015, of 2nd of June which includes the Accounting and Financial Reporting Standards (NCRF) adapted by the Accounting Normalization Committee (CNC) based on the International Financial Reporting Standards (IFRS) settled by the Accounting Standards Board (IASB) and adopted by the European Union (EU).

According to n.2 of the article 9 of the law-decree 158/20019, edited by the law-decre nº 98/2015 of 2nd of July which widen the concept of entities and for the effect of the application of SNC the entity is considered a medium size company and is still applies the NCRF.

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In order to ensure the proper and true expression of the financial position and the entity’s performance, were used the standards that integrate the SNC, referred to above, in all aspects pertaining to the recognition, measurement and disclosure.

However where the SNC do not respond to particular aspects of transactions or situations are complementarily applied in the following order, the International Accounting Standards, as adopted pursuant to Regulation (EC) number 1606/2002 of the European Parliament and Council of July 19, the International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as issued by the IASB, and respective SIC-IFRIC interpretations.

Complying with the regulation that become effective on the 1st o January of 2016, we inform that there was not any adjustment to the financial statements.

3.

Main accounting policies

The main accounting policies used for the preparation of the financial statements are stated below.

3.1. Presentation basis In preparing the financial statements taken as based on the following assumption:

3.1.1. Continuity assumption Under the continuity assumption, the entity has evaluated the information available and its future expectations, taking into account the entity's ability to continue with your business. Of the evaluation resulted that the business is able to proceed assuming its continuity.

3.1.2. Accruals assumption (or economic periodization) The entity records its income and expenses in accordance with the rules of the increase, by which income and expenses are recognized as they are generated, regardless of when they are received or paid.

The differences between the amounts received and paid and the corresponding income and expenses are recognized under "Deferrals" or "Other payables or other receivables."

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3.1.3. Consistency of presentation The items presentation and classification in the financial statements are consistent from one period to another.

3.1.4. Materiality and aggregation The materiality depends on the size and nature of the error or omission, sober in the circumstances that surround it. It is considered that the omissions or incorrect statements are materially relevant items if they can, individually or collectively, influence the economic decisions taken by users of financial statements. An item that is not materially relevant to justify its separate presentation on the face of the financial statements can however be relevant material to be presented separately in the notes to this annex.

3.1.5. Compensation The assets and liabilities, income and costs are reported separately in the respective items of the balance sheet and the income statement, so that no assets were compensated for any liability or any expense for any income, both vice-versa.

Gains and losses arising from a group of similar transactions are reported on a net basis, ie, gains and losses from exchange rate differences and gains or losses arising on financial instruments held for trading. These gains and losses are reported separately if they are materially relevant

3.1.6. Comparative Information The accounting policies and measurement bases adopted at December 31, 2016 are comparable with those used in preparing the financial statements for December 31, 2015. (rever texto: nĂŁo sĂŁo comparĂĄveis se ocorrerem ajustamentos do novo snc) The comparability of the information between periods is continuously improvement object in order to be increasingly an instrument of help to users allowing them to take economic decisions and assessing the trends in financial information for forecasting purposes.

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3.2. Recognition and measurement policies used in the preparation of financial statements

3.2.1.

Transactions in foreign currency

The entity’s financial statements are presented in euros; the euro is the functional and presentation currency.

The transactions in foreign currency (currency other than the functional currency of the entity) are recognized at exchange rates of the dates of the transactions. At each reporting date, the carrying amounts of monetary items denominated in foreign currency are updated at the exchange rates that date. The carrying amounts of non-monetary items are recognized at fair value denominated in a foreign currency are updated to the exchange rates of the dates on which the respective fair values were determined. The carrying amounts of non-monetary items are recognized at historical cost, denominated in a foreign currency are not upgraded.

Positive or negative exchange differences driven out from differences between the exchange rates in force at the transaction dates and at the dates of collection, payment or of balance sheet are recognized as income and/or expenses in the period’s income statement as foreign exchange gains and/or losses.

3.2.2.

Tangible fixed assets

Tangible fixed assets are recognized at acquisition cost, net of related depreciation and any impairment losses. The acquisition cost includes all expenditure directly attributable to the acquisition of such assets and to their availability in local and operational conditions required.

Subsequent charges are included in the acquisition cost of the asset or recognized as separate assets, as appropriate, when it is probable that future economic benefits will flow to the entity through its use and its cost can be reliably measured.

Tangible assets in progress, fixed assets still under construction or completion, are accounted for at acquisition cost deducted of eventual impairment losses. The depreciation of these assets starts at the moment that they are available for use.

Depreciation are calculated from the straight-line method, applied annually under duodecimal attribution since the date the assets are ready for use and in the required conditions in terms of quality and technical, to operate according to intended by the entity, considering the most appropriate economic rates to allow the full reintegration of the assets during their estimated useful lives. The estimated useful lives is determined taking into account the expected use of the asset by the entity, the natural wear expected, the subjection to technical obsolescence and salvage value attributable.

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Provided that the entity does not have a reliable estimate of the residual value of its assets it was considered null value for depreciation of tangible fixed assets purposes. Whenever there is evidence that a significant change occurred in the useful life or in the residual amount of an asset, its depreciation is reviewed on a prospective basis in order to reflect such new expectations.

The average annual depreciation rates and the useful lives were considered as follows: Useful live

Annual Rate (%)

10 to 50

2 to 10

2 to 20

5 a 50

3 to 7

14.29 to 33.33

Office equipment

3 to 10

10 to 33.33

Artistic patrimony

8

12.5

4 to 10

10 to 25

Buildings and other structures Basic equipment Transport equipment

Other tangible fixed assets

The depreciation method and useful lives of the various assets are reviewed annually. The effect of any changes to these estimates will be recognized prospectively in the income statement.

Repairs and maintenance expenses that do not increase the useful life of the assets and do not results in significant improvements in the elements of tangible fixed assets are recognized as an expense in the period in which they are incurred.

The major repairs relating to the replacement of equipment are recorded in tangible fixed assets and depreciated at rates corresponding to the residual life of the respective assets.

The gains or losses resulting from the write-off or sale of tangible fixed assets are determined by the difference between the amount received from the sale and the assets' carrying amount and are recognized in the income statement as "Other operating income" or "Other operating charges", respectively.

3.2.3.

Intangible assets

Intangible assets are accounted for at acquisition cost deducted from amortizations and any accumulated impairment losses. Intangible assets only are recognized if it is probable that they will produce future economic benefits to the entity and if they are controllable and can be reliably measured. domingos da silva teixeira, s.a.

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Most intangible assets consist of software and are amortized in accordance with the straight-line method with duodecimal attribution since the date the assets are ready for use, considering the most appropriate economic rates to allow the full reintegration of the assets during their estimated useful lives. No residual value is considered.

The average annual depreciation rates and the useful lives were considered as follows:

Software Industrial property

Useful live

Annual Rate (%)

3

33.33

10

10

The gains or losses resulting from the write-off or sale of intangible fixed assets are determined by the difference between the sale price and the assets' carrying amount and are recognized in the income statement as "Other revenues and income" or "Other losses and expenses", respectively.

3.2.4.

Investment properties

Investment properties consist of land whose purposes are to obtain rents and equity valorization and not for administrative purposes nor for sale in the course of the entity’s current activity.

Investment properties are measured at cost less any accumulated impairment losses.

The costs incurred with investment properties in use, such as maintenance, repairs, insurance and property taxes are recognized in the income statement of the period to which they relate. The improvements in respect of which it is estimated that generate future additional economic benefits are capitalized under investment properties.

The investment properties in progress, still under construction or conclusion stage, are recognized at the acquisition cost less any impairment losses. The depreciation of this assets will begin as soon as they are available to be used.

3.2.5.

Financial investments

a)

Financial investments - equity method and Goodwill

Investments in subsidiaries and associates are valued according to the equity method, defining themselves as such entities over which the Group exercises control or significant influence, generally investments representing more than 20% of the capital of a company, and they are not Joint Ventures. domingos da silva teixeira, s.a.

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For the determination of control or significant influence are taken into consideration the interests existing at the present date in accordance with potential voting rights.

According to the equity method, the financial investments are recognized at their acquisition cost, adjusted by the amount corresponding to the company participation in the net results of associates and subsidiaries, against profit or loss for the period, and by the dividends received, net of accumulated impairment losses.

Any excess of the acquisition cost over the value of the equity percentage held is considered "Goodwill", being added to the value of the financial asset and its recovery analyzed annually as part of the investment, and if the difference is negative ("Badwill"), after reassessment of the valuation process and if it remains in the income statement.

Is performed an assessment of investments in subsidiaries and associated companies or other when there are indications that the asset may be impaired, and recognized a loss in the income statement whenever it is confirmed.

When the proportion of the entity in accumulated losses of associated company or subsidiary exceeds the value of the investment is recognized, the investment is reported at nil value while the equity of the associated company is not positive, except when the entity has made commitments to the associated our subsidiary company, registering such cases a provision under the liability item 'Provisions' to meet these obligations.

The unrealized gains on transactions with associated companies are eliminated in proportion to the interest of the company in the associated company against the investment in these companies. The unrealized losses are similarly disposed, but only to the extent that the loss does not evidence that the asset transferred is in impaired.

b)

Other financial investments

The entity uses the cost model in relation to investments in other entities in which the equity or proportional consolidation methods are not mandatory and in which it is unable to reliably determine their fair value, namely investments in companies with securities out of a regulated market.

According to the cost model investments are initially recognized at acquisition cost, which includes transaction costs, and subsequently its value is decreased by eventual impairment losses.

The entity uses the fair value model in financial investments in companies listed on a regulated market, whose fair value can be obtained and reliably determined.

domingos da silva teixeira, s.a.

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Annual Report 2016

3.2.6. Inventories Goods, raw materials, subsidiary and consumable materials are valued at the lower of their average acquisition cost and net realizable value (estimated sales price net of costs to be incurred for their disposal), using the FIFO as cost formula.

The finished and semi-finished products, by-products and products and work in progress are valued at production cost or net realizable value (if this is lower). The production costs include the cost of raw materials, direct labor and manufacturing overheads.

If the net realizable value is lower, in particular due to the decrease in the market price, deterioration or obsolescence, rising of finishing or necessary costs to perform the sale, or of the recoverable value by using the conversion into finished products whose market price has been reduced, it is justified the recognition of impairments in the periods that the adjustment needs are found, using replacement cost as a reference.

The reversal of impairment losses recognized in prior periods is recorded when there is evidence that impairment losses are no longer justified or decreased, being expressed in the income statement as "Impairment of inventory net of reversals".

However, the reversal is only done up to the amount of the accumulated impairment losses.

The expenses related to inventory sold are recorded in the same reporting period in which revenue is recognized.

3.2.7.

Leases

The classification as operating or financial leases depends on the respective contract’s substance and not on its form.

Lease contracts are classified as finance leases, if through tem are substantially transferred all the risks and rewards of ownership of the asset leased or otherwise as operating leases.

Financial leases Tangible fixed assets acquired through financial lease contracts and their correspondent liabilities are recognized in accordance with the provisions of NCRF 9 - Leases. According to this method the cost of the asset is recorded as tangible fixed asset, the correspondent responsibility is accounted for as a liability and the financial charges included in the rent and the depreciations of the leased assets are recognized as expenses in the income statement in the period to which they relate.

Operating leases In leases considered operational, the rents payable are recognized as expense in the income statement over the period of the lease and in accordance with the obligations inherent to these. domingos da silva teixeira, s.a.

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Annual Report 2016

3.2.8.

Contingent assets and liabilities

Contingent assets are possible assets arising from past events and whose existence will only be confirmed if occurs, or not, one or more uncertain future events not wholly within the entity’s control. If it is probable the existence of future economic benefits, the entity does not recognize this contingent asset in its financial statements but promotes its disclosure.

Contingent liabilities are defined as: (i) possible obligations arising from past events and whose existence will only be confirmed if occurs, or not, one or more uncertain future events not wholly within the entity’s control; or (ii) current obligations arising from past events that are not recognized because it is unlikely that resources flows affecting economic benefits are required to offset the obligation or because the amount of the obligation cannot be measured with enough reliability.

Contingent liabilities are not recognized in the entity's financial statements but are disclosed unless the possibility of a funds outflow affecting future economic benefits is remote, in which case they are not even disclosed.

3.2.9.

Provisions

Provisions are recognized in accordance with the effectively required amounts to cover estimated losses, are revised at each balance sheet date and are adjusted to reflect the best estimate at that date.

Provisions are recognized if and only if the entity has a present liability (legal or constructive) resulting from a past event and if it is probable that for the resolution of such obligation a resources outflow occurs and that the amount of the obligation can be reasonably estimated.

Provisions for future operating losses are not recognized.

3.2.10.

Employee benefits

Short-term benefits The employees’ short-term benefits include wages, salaries, Social Security contributions, food allowances, holidays and Christmas subsidies and any other retribution eventually decided by the Board of Directors.

Obligations resulting from short-term benefits are accounted for as expenses in the period in which the employee has provided services on an undiscounted basis against a liability that is extinguished with the payment.

domingos da silva teixeira, s.a.

Page 38 of 73

Annual Report 2016

According to applicable labor legislation, the right to vacation and holiday allowance for the period, for this match the calendar year expires on 31 December of each year, being paid only during the following period, the corresponding expenses are recognized as short-term benefits and treated in accordance with the mentioned above.

The benefits resulting from the employment’s cessation, either by unilateral decision of the entity, or by mutual agreement, are recognized as an expense in the period in which they occurred.

Long-term benefits The long-term benefits include a health insurance that covers all employees.

3.2.11.

Financial assets and liabilities

The financial assets and liabilities are accounted for in accordance with the following criterions:

Trade debtors and other receivables Trade debtors and other receivables balances are accounted for at their nominal value and disclosed in the balance sheet, deducted from any accumulated impairment losses, recognized under “Impairment on trade receivables net of reversals�, so as to reflect their net realizable value. These items when current do not include interest because they would be immaterial for the impact of discounting.

At the end of each reporting period trade debtors balances are analyzed in order to assess whether there is any objective evidence that they are not recoverable.

Impairment losses are recognized after events that indicate, objectively and in a quantifiable manner, that all or part of the balance will not be received. For this purpose, the entity takes into consideration market information that demonstrates that the trade debtor is in breach of its responsibilities, as well as historical information of overdue and not received balances. Objective evidence of impairment for a portfolio of receivables could include past experience of collecting payments, an increase in the number of delayed payments in, as well as changes in national or local economic conditions that correlate with default on receivables.

The impairment loss is recognized as an expense in the income statement.

domingos da silva teixeira, s.a.

Page 39 of 73

Annual Report 2016

Whenever defined / agreed with a client the settlement of respective debt into several installments, the dst group opted to value this same debt at amortized cost, satisfying all the conditions set out in IAS 27, namely that: - have a defined maturity; - returns to the holder are fixed amount, variable interest rate during the instrument life, with a typical index for financial market (Euribor) and plus a spread (5%); - does not contain any contractual clause that may result to the holder in loss of par value and accrued interest (excluding the typical cases of credit risk).

Thus the difference between the nominal value and the initial fair value is recognized in the income statement over the period specified, using the effective interest method.

Trade creditors and other payables Debts to suppliers or other third parties are accounted for at nominal value as they do not bear interest and the effect of discounting is immaterial.

Its non- recognition only occurs when they cease their obligations under the contracts, particularly when there has been a liquidation, cancellation or expiration.

Advances from customers The Advances from customers are stated at nominal value.

Discounted bills The entity writes-off financial assets from its financial statements only when it substantially transfers all the risks and benefits inherent to the ownership of such assets to a third party. If the entity substantially retains the risks and benefits inherent to the ownership of those assets, it continues recognizing them in its financial statements as liabilities related to obtained loans correspondent to the monetary counter-entry for the transferred assets.

domingos da silva teixeira, s.a.

Page 40 of 73

Annual Report 2016

State and others public entities The balance assets and liabilities under this heading are established on the basis of existing legislation.

With regard to assets was not recognized any impairment by if it considers that this is not applicable given the specific nature of the relationship.

Loans and other non-current payables Loans and other non-current payables are accounted for at cost as liabilities, net of transaction costs that are directly attributable to the issuance of these liabilities, being expressed in the balance in current or non-current liabilities depending on their maturity occurs within or more than one year, respectively.

Its non- recognition only occurs when they cease their obligations under the contracts, particularly when there has been a liquidation, cancellation or expiration.

The interest and other costs incurred in financings are calculated according to the effective interest rate and recognized in the income statement for the period in accordance with the increase presupposition.

The “non-asset-related financial charges” are recognised as expenses of the period being registered in the income statement under “Interest payable and similar charges”.

Financial assets The entity uses the fair value model in the valuation of shares held in companies listed on a regulated market, whose fair value can be obtained and determined viably.

Cash and cash equivalents The cash and cash equivalents balance includes cash, bank deposits and other short-term investments that can be immediately mobilized without significant risk of value fluctuations.

Financial liabilities and equity instruments Financial liabilities and equity instruments are classified according to the substance of the contractual transaction, regardless of their legal form.

domingos da silva teixeira, s.a.

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Annual Report 2016

A financial instrument is classified as a financial liability when there is a contractual obligation to their settlement to be effected by delivering cash or another financial asset. Financial liabilities are initially recorded at cost, net of transaction costs incurred.

An equity instrument is classified as such when there is not a contractual obligation to their settlement to be effected by delivering cash or another financial asset, evidences a residual interest in the assets of an entity after deducting all of its liabilities.

Costs directly attributable to issue of equity instruments are recognized in equity as a deduction of issue. Amounts paid or received for purchases and sales of equity instruments are recognized in equity, net of transaction costs.

Other financial liabilities This heading includes derivative financial instruments for which there is actual coverage under the NCRF 27.

Are only considered financial instruments to hedge the effective portion of derivatives that are designated as such and that the entity expects that the changes in fair value or cash flows attributable to the hedged item, that risk is being covered, will compensate for virtually any changes in fair value or cash flows of the hedging instrument.

Changes in the fair value of derivative instruments risk coverage of interest rate variability are recognized in equity in the rubric "Financial assets adjustments " in its effective component and in results, under the heading "Increase/decrease in fair value", in its actual not component. The values recorded under the heading "Financial assets adjustments" are transferred to results for the heading "Increase/decrease in fair value" in the period in which the hedged item has no effect on results.

Hedge accounting is discontinued when the hedging instrument reaches maturity, when it is sold or exercised or when the relationship ceases to meet the coverage requirements on NCRF 27 - Financial Instruments.

The effective portion of the hedge derivative instruments are presented in the balance sheet under "Other financial assets" or "Other financial liabilities" depending on their nature is, respectively, a debtor or creditor and as non-current or current depending on the heading where as their instruments covered are presented in the balance sheet.

domingos da silva teixeira, s.a.

Page 42 of 73

Annual Report 2016

3.2.12.

Revenue

Revenue comprehends income associated with sales and services rendered. Revenue is recognized on sales when the buyer takes the risks and benefits inherent to the ownership of the goods sold and as what concerns to services revenue is recognized in the income statement when such services are rendered, taking into consideration the proportion of services rendered in the period and the total services agreed.

Revenue is not recognized when it is related to situations of uncertainty of acceptance or payment of those services.

Whereas invoiced services are higher than the services rendered, the difference is recorded as income to be recognized and is accounted for in the income statement at the time such services are rendered and the correspondent expenses are incurred.

3.2.13.

Construction contracts

The entity recognizes the construction works’ results contract per contract in accordance with the completion percentage method, which is understood to be as the relationship between the expenses incurred on each work at a determined date and the sum of those expenses with the expenses estimated to be incurred for its completion. The differences between the amounts resulting from the application of the completion percentage method with the estimated income and invoiced amounts are accounted for as non-invoiced production or advanced invoicing, which are included within as "Other receivables - Receivables from accrued income " (Asset) or "Deferred - Income to recognize" (Liability).

Changes in work from the amount of revenue settled in the correspondent contract are recognized in the period’s results when it is probable that the customer accepts the revenue amount arising from the variation and that this can be reliably measured.

Claims for costs reimbursement not included in the contract price are included in the contract’s revenue when negotiations are at such an advanced stage that it is probable that the customer accepts the complaint and that it is possible to measure it reliably.

When it is probable that the construction contract’s total expenses exceed the income defined therein, the expected loss is immediately recognized in the period’s income statement.

domingos da silva teixeira, s.a.

Page 43 of 73

Annual Report 2016

3.2.14.

Impairment of assets

At each reporting date, and whenever are disclosed an event or changes in circumstances indicating that the asset’s recorded amount may not be recoverable an impairment of assets evaluation is assessed.

Whenever the amount by which the asset is recorded is higher than its recoverable amount, is recognized as an impairment loss recorded in the income statement as "'Impairment of investments depreciables/amortizables net of reversals” or as "Impairment on trade receivables net of reversals", if it respects the non-depreciable assets.

The recoverable amount is the higher of the net selling price and value in use. The net selling price is the amount obtainable from the sale of the asset in a transaction between independent entities, less the costs directly attributable to the sale. The value in use is the present value of estimated future cash flows that are expected to arise from the continued use of the asset and from its sale at the end of its useful life. The recoverable amount is estimated for each asset individually or, if not possible, to the unit generating cash flows to which the asset belongs.

After the recognition of an impairment loss, the expense related to the amortization/depreciation of the asset is adjusted in future periods to allocate the asset's revised carrying amount, less its residual value (if any) on a systematic basis over the useful life remaining.

Whenever events or changes in circumstances indicate that the carrying amount of an asset is recorded can not be retrieved, it made a new assessment of impairment.

Reversal of impairment losses recognized in previous years is registered when it is concluded that previously recognized impairment losses no longer exist or have decreased. A reversal of an impairment loss is recognized in the income statement under aforementioned. The reversal of the impairment loss is made up to the amount that would be recognized (net of amortization or depreciation) if the impairment loss had not been recorded in previous periods.

3.2.15.

Income tax

The entity is included in the special group taxation regime (RETGS), reason why the period’s income tax is accounted for as an offset to “Shareholders” and not to “State and other public entities”. In RETGS taxable profit of the group is calculated by the dominant society, through the sum of the taxable income and tax losses in periodic statements of each individual companies within the group, correcting the profits distributed among the members of the group who is included in taxable income individual

domingos da silva teixeira, s.a.

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Annual Report 2016

The expense relating to period’s income tax corresponds to the sum of current and deferred taxes.

Current income tax is based on the entity’s taxable profits in accordance with the enforceable tax regulations, whilst deferred taxes result from temporary differences between accounting and tax assets and liabilities. The taxable profit is different from the accounting result, provided that it excludes expenses and revenues that are taxable or deductible in other periods. The taxable profit also excludes expenses and revenues that will never be taxed or deducted.

The entity shall record deferred taxes related to temporary differences between the carrying amount of assets and liabilities and the corresponding tax base as provided in NCRF 25 - Deferred income taxes, whenever it is probable that future taxable profits will be generated against which the differences temporary and can be used based on the standard rate of corporation tax to the balance sheet date. Deferred taxes assets and liabilities are calculated and annually evaluated based under the tax rates in force or announced to be in force at the time of the expected reversal of temporary differences.

The deferred tax assets are recognized only when there is a reasonable expectation of future taxable profits to be deducted from such assets, or in situations where there are taxable temporary differences to offset the deductible temporary differences in the period of its reversal.

At each reporting date a review of those deferred tax assets is carried out and such are adjusted in accordance with the expectations concerning their future use.

Current and deferred taxes are accounted for in the income statement except when are related to items directly recognized as equity. In these cases, the correspondent deferred taxes are also recognized as equity.

In accordance with current legislation, tax returns may be subject to revisions and possible corrections by the Tax and Customs Authority for a period of four years (five years for Social Security), except where there have been tax losses, or inspections, complaints or impeachment, in which cases, depending on the circumstances, the terms are extended or suspended. Accordingly, corrections can be made for the years 2013 and subsequent years, although it is not expected that any significant corrections will have a significant effect on these financial statements.

The taxes are not paid, relating to the current period or the previous are recognized as a liability at the amount that is estimated to be paid based on the rates and tax laws applicable to the balance sheet date. However, if the amounts already paid in respect of such periods exceed the amounts due, are recognized as assets to the extent of the excess.

Current tax is also conditioned by the adjustments, positive or negative, which are to be recognized in the period for current tax of previous periods.

domingos da silva teixeira, s.a.

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Annual Report 2016

3.3. Judgments and estimates (assumptions and uncertainties) The preparation of financial statements in conformity with NCRF standards requires the consideration of certain accounting estimates and assumptions that affect the reported assets and liabilities or revenues and expenses amounts. When necessary, all estimates and assumptions considered by the Board of Directors were made based under its best knowledge of events and transactions in progress at the date of the approval of the financial statements.

Changes to these estimates, which occur after the date of the financial statements, will be recognized in the income statement prospectively.

3.4. Main assumptions concerning the future The financial statements were prepared on a going concern basis from the books and accounting records of the entity.

4.

Cash flow

The cash flow statement is prepared in accordance with the direct method, disclosing receipts and cash payments by operating, investing and financing activities

The cash and bank deposits present the following composition:

Cash in hand Cash at bank Term deposits Total cash in hand, at bank and term deposits

31.12.2016

31.12.2015

38.217,61 1.096.603,71 4.295.466,62 5.430.287,94

28.533,00 1.401.341,38 2.495.466,62 3.925.341,00

There are no amounts of cash and cash equivalents unavailable for use.

5.

Related parties

a)

Information concerning the parent company

The following legal entity is the owner of more than 20% of the entity’s share capital:

dst engenharia & construção, sgps, s.a.

domingos da silva teixeira, s.a.

Participation 100%

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Annual Report 2016

As of December 31, 2016 and 2015, the main balances between the entity, shareholders, group companies, associates and related companies are the following: Companies

Group companies 2bpartner, scr, s.a. bl u, s.a. bysteel, s.a. bysteel, UK despertavantagem, s.a. domingos da si lva tei xeira - angola, s.a. domingos da si lva tei xeira - i mobili ária, s.a. dst - sgps, s.a. dst - wind, s.a. dst 2gether, sgps, s.a. dst ambi ente, sgps, s.a. dst center, s.a. dst hydro,s.a. dst i nternacional II, sgps, s.a. dst Internacional III, sgps, s.a. dst moçambi que, l da. dst solar, s.a. dst telecomunicações, sgps, s.a. dst ventures, sgps, s.a. dstelecom, alentejo e al garve, s.a. dstelecom, norte, s.a. dstelecom, s.a. dstrainrail , s.a. dte, instalações especi ai s, s.a. global sun, s.a. innovation point - i nvestigação e desenvol vimento, s.a. investhome - construção e imobi liári a, s.a. ipplus, s.a. perfil dinami co, l da. tagregados, s.a. tconcrete, s.a. v partner, s.a.

Associated companies barcel os futuro, s.a. caminhaequi , s.a. criar vantagens - águas e resíduos, lda. geswater - águas e resíduos, s.a. minhocom gestão de infraestruturas de tel ecomuni cações, ei m steelgreen, s.a. val icom gestão de i nfraestruturas de telecomunicações, eim ventominho - energias renovavei s, s.a. way2b, sgps, s.a.

Joint ventures dst, abb, parque empresari al tavira, ace teatro circo, ace uni facere, ace way2b, ace

domingos da silva teixeira, s.a.

31.12.2016

31.12.2015

1.388,65 5.573,76 42.010,84 913.708,90 465.827,43 76.923.447,58 (5.461,09) 34.000,00 2.090.395,48 (114.919,50) 4.955,53 (158.268,65) 2.248,00 1.227,15 13,28 165,62 276,49 71.021,87 247.966,25 (4.075.001,47) 358,56 (53.389,13) 27,06 (963.797,06) 115.070,07 11.664,19 75.560.509,81

8.045,21 988,84 (20.770,59) 23,98 4.593,92 848.073,91 (4.516,31) 104.770.270,83 79.105,72 19.000,00 2.090.395,48 20.872,79 55.521,87 390,00 (158.268,65) (1.186.712,48) 154,40 (181.842,82) 5.771,63 96.075,91 (3.714.702,52) (3.496,92) (70.987,12) (9.926,86) 5.562,29 (686.761,65) (641.362,74) 101.325.498,12

2.775.380,33 517.026,19 105,90 10.836,78 116,16 (300.374,98) 116,34 15.120,11 71.287,10 3.089.613,93

1.359.069,09 746.689,77 105,90 10.836,78 55,76 (430.653,63) (28,13) 51.854,97 28.678,49 1.766.609,00

25.000,00 49.220,91 3.772.360,58-

59.459,53 50.165,41 5.000,00 2.811.213,53-

4.175.125,06 82.825.248,80

3.204.531,69 106.296.638,81

Page 47 of 73

Annual Report 2016 During 2016 period, the main transactions between the entity, shareholders, group companies, associates and related companies are the following: 2016 Companies

Group companies 2bpartner, scr, s.a. blu, s.a. bysteel, s.a. domingos da silva teixeira - angola, s.a. domingos da silva teixeira - imobiliária, s.a. dst - sgps, s.a. dst - wind, s.a. dst center, s.a. dst hydro,s.a. dst solar, s.a. dstelecom, s.a. dstrainrail, s.a. dte, instalações especiais, s.a. global sun, s.a. innovation point - investigação e desenvolvimento, s.a. tagregados, s.a. tconcrete, s.a. v partner, s.a.

Associated companies minhocom gestão de infraestruturas de telecomunicações, eim steelgreen, s.a. valicom gestão de infraestruturas de telecomunicações, eim way2b, sgps, s.a.

Joint ventures dst/visabeira ace way2b, ace

domingos da silva teixeira, s.a.

Income from interests

Other operating income

Turnover

Purchases and acquisitions

Other external charges

361,56 21.198,31 107.310,67 88.584,51 379.679,59 21.134,24 553,48 20.385,97 55.308,06 25.805,42 254.205,13 2.565,91 886,62 34.687,22 155.925,18 52.730,01

(110.281,78) (15.000,00) (40.378,90) (33.147,80) (1.123.695,39) -

(2.742.197,41) (1.398.629,85) (12.600,00) (16.798,00) (2.871.451,83) (115.492,55) (1.114,00) (78.353,56) (12.423.201,22) (8.306,88) (21.797,01) (603.884,25) (11.188,92) -

2.753.399,80 -

1.221.321,88

(1.322.503,87)

(20.305.015,48)

2.753.399,80 2.152.190,79

165,36 1.219,96 72,92 213.597,00

(928.320,78) (928.320,78)

(151.402,27) (151.402,27)

511,00 511,00 1.435.429,88

(2.250.824,65)

(20.456.417,75)

1.108,47 1.108,47

1.365,20 7.430,08 134.093,78 5.477,16 2.534,78 547.730,48 1.365,70 26.018,73 268.961,61 12.382,02 577.696,76 2.414,39 164,51 33.305,40 511.470,18 19.780,01

4.950,00 6.788,02 4.950,00 16.688,02

625,61 31.566,16 90.122,34 90.747,95 31.566,16 2.845.256,22 2.200.444,97

Page 48 of 73

Annual Report 2016 During 2015 period, the main transactions between the entity, shareholders, group companies, associates and related companies are the following: 2015 Companies

Group companies 2bpartner, scr, s.a. blu, s.a. bysteel, s.a. derivadas e segmentos, s.a. despertavantagem, s.a. domingos da silva teixeira - angola, s.a. domingos da silva teixeira - imobi liária, s.a. dst - sgps, s.a. dst - wi nd, s.a. dst center, s.a. dst energias renováveis, sgps, s.a. dst hydro,s.a. dst Internacional III, sgps, s.a. dst solar, s.a. dstelecom, al entejo e algarve, s.a. dstelecom, norte, s.a. dstelecom, s.a. dte, instalações especiais, s.a. gl obal sun, s.a. innovati on point - i nvesti gação e desenvolvimento, s.a. investhome - construção e imobiliária, s.a. ipplus, s.a. perfil dinamico, lda. tagregados, s.a. tconcrete, s.a.

Associated companies minhocom gestão de infraestruturas de telecomunicações, eim steelgreen, s.a. valicom gestão de i nfraestruturas de telecomunicações, eim way2b, sgps, s.a.

Joint ventures dst/visabeira ace teatro ci rco, ace way2b, ace

domingos da silva teixeira, s.a.

Other operating income

Purchases and acquisitions

Other external charges

Income from interests

1.445,08 156.549,98 67,97 9.368,80 678,70 19.494,27 70.261,79 281.617,07 5.860,18 132,80 10.322,28 25.890,58 130.422,86

(4.609,46) (540,00) (16.036,42) (58.035,00) (120,00) (25.663,63) (1.492.287,22)

(239.370,53) (102.852,33) (4.673,42) (9.102,00) (1.381.281,25) (1.451.704,54) (21.079,87) (14.941.914,95) (8.551,20) (1.391.182,33) (494.018,01) (2.886,00)

-

6.186,40 11.348,29 230.186,63 6.858,48 2.790,88 9.621,08 8.028,03 15.902,76 3.044,52 67.291,95 7.380,16 4.833,74 1.802,78 47.635,22 7.276,10 7.276,10 307.934,73 468.473,79 23.238,44 14.285,95 52.471,14 3.017,21 2.840,88 45.928,70 35.570,38

-

712.112,36

(1.597.291,73)

(20.048.616,43)

- 1.391.224,34

-

9.998,26 141.768,57

(561.412,68) (561.412,68)

(88.317,10) (88.317,10)

1.489,04 1.489,04

3.600,00 15.711,25 3.600,90 22.912,15

-

1.629,50 -

(167,31)

(1.930,72)

632,01 -

6.000,00 -

(849,99) -

1.629,50 855.510,43

(167,31) (2.158.871,72)

(1.930,72) (20.138.864,25)

632,01 6.000,00 2.121,05 1.420.136,49

(849,99) (849,99)

Turnover

Other losses and expenses

Page 49 of 73

Annual Report 2016 b)

Information related to other group companies and joint ventures

The entity has share capital participations in the following companies: Companies

Headquarters

way2b, sgps, s.a

Braga

31.12.2016

Participation

Equity

20%

31.12.2015

Net Result

(15.362,45)

(13.992,67)

Equity

Net Result

(1.369,78)

(4.966,84)

The entity takes part in the following joint ventures: 31.12.2016 Companies

Headquarters

Participation

Equity

31.12.2015

Net Result

Assets

Equity

Net Result

Assets

assoc/soares da costa, ace

Braga

14,29%

-

-

5.826,24

-

-

5.254,62

assoc - obras públicas, ace

Braga

14,29%

(7.643,43)

(9.079,19)

23.861,81

1.435,76

(9.130,68)

21.871,00

teatro ci rco, ace

Braga

25,00%

-

-

556.284,44

-

-

602.794,53

Tavira

50,00%

-

-

241.546,80

-

-

250.798,80

Braga

20,00%

(13.014.851,38)

(892.635,60)

687.241,60 (12.122.215,78) (1.588.766,49)

443.785,99

Vi ana do Castelo

33,33%

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

(515.764,47)

176.822,84

348.384,10

409.328,88

865.525,94

119.431,04

2.441.586,17

(164.849,78)

parque emp. de tavira, ace way2b, ace agonia parque construção, ace dst visabeira, ace

Lisboa

50,00%

(219.891,48)

águas da linha, ace

Braga

12,50%

(45.418,74)

domingos da silva teixeira, s.a.

(131.672,35) 1.735.519,97

Page 50 of 73

Annual Report 2016 c)

Remuneration of Corporate Bodies

Provided that Board members are not remunerated, the Corporate Bodies’s remuneration in the exercise of their duties in 2016 was 18.450,00 Euros (VAT included), and corresponds to the Statutory Auditor’s fees for Legal Certification of Accounts.

6.

Tangible fixed assets

Information relating to the carrying amounts of tangible fixed assets with reference to 2016 period may be analyzed as follows: Description 1 2 3 4 5

Initial gross book value Initial accumulated depreciations Initial accumulated impairment losses Initial net carrying amount (4 = 1 - 2 - 3) Movements of the period:(5 = 5.1 - 5.2 + 5.3 + 5.4)

5.1

Total additions New acquisitions Other acquisitions Total disposals Depreciations Reversals of impairment losses Transferences of TFA under construction Transferences of/for financial ass ets available for sale Other transferences Final net book value (6 = 4 + 5)

5.2 5.3 5.4 5.5 5.6 6

domingos da silva teixeira, s.a.

Land and Buildings and other other resources structures

Basic equipment

Transport equipment

5.161,48 1.041.062,55 15.859.495,97 8.959.931,80 478.936,32 13.902.285,93 8.383.689,64 5.161,48 562.126,23 1.957.210,04 576.242,16

Administrative Artistic equipment patrimony 3.665.988,30 3.599.767,17 66.221,13

Others

7.500,00 305.689,78 5.781,25 292.006,04 1.718,75 13.683,74

TFA under construction

Total

1.105,00 29.845.934,88 - 26.662.466,35 1.105,00 3.183.468,53

-

(52.522,14) 52.522,14 52.522,14 -

(520.145,69) 96.479,49 95.921,49 558,00 616.625,18 616.625,18 -

507.545,27 782.788,04 750.389,67 32.398,37 275.242,77 275.242,77 -

(23.726,71) 23.603,98 23.603,98 47.330,69 47.330,69 -

(937,50) 937,50 937,50 -

(771,17) 1.226,31 1.226,31 1.997,48 1.997,48 -

(1.105,00) -

(91.662,94) 904.097,82 871.141,45 32.956,37 994.655,76 994.655,76 -

5.161,48

509.604,09

1.437.064,35 1.083.787,43

42.494,42

781,25

12.912,57

(1.105,00) -

(1.105,00) 3.091.805,59

Page 51 of 73

Annual Report 2016 Information relating to the carrying amounts of tangible fixed assets with reference to 2015 period may be analyzed as follows: Land and other resources

Description

1 2 3 4 5

Initial gross book value Initial accumulated depreciations Initial accumulated impairment losses Initial net carrying amount (4 = 1 - 2 - 3) Movements of the period:(5 = 5.1 - 5.2 + 5.3 + 5.4)

5.1

Total additions New acquisitions Other acquisitions Total disposals Depreciations Sales Reductions Reversals of impairment losses Transferences of TFA under construction Transferences of/for financial assets available for sale Other transferences Final net book value (6 = 4 + 5)

5.2

5.3 5.4 5.5 5.6 6

Buildings and other structures

Basic equipment

Transport equipment

5.161,48 939.928,17 14.900.031,19 8.679.529,78 - 427.829,74 13.242.987,44 8.038.953,42 5.161,48 512.098,43 1.657.043,75 640.576,36

Administrative Artistic equipment patrimony

Others

TFA under construction

Total

3.625.428,51 3.538.721,80 86.706,71

7.500,00 334.812,73 4.843,75 278.692,34 2.656,25 56.120,39 (937,50) (41.222,14) 8.958,79 8.958,79 937,50 50.180,93 937,50 13.313,70 - 38.411,23 - (1.544,00) -

(93.950,28) 1.105,00 1.105,00 (1.537,64)

128.049,88 1.542.541,00 1.524.694,81 17.846,19 1.320.973,48 1.130.437,86 192.079,62 (1.544,00) -

1.718,75

(93.517,64) 1.105,00

(93.517,64) 3.183.468,53

- 50.027,80 - 113.254,53 - 113.254,53 - 63.226,73 - 51.106,58 - 12.120,15 -

299.010,79 1.099.857,52 1.099.857,52 800.846,73 659.298,49 141.548,24 -

(64.334,20) 280.402,02 262.902,02 17.500,00 344.736,22 344.736,22 -

(20.544,59) 38.963,14 38.616,95 346,19 61.045,37 61.045,37 1.537,64

5.161,48 562.126,23

1.956.054,54

576.242,16

66.162,12

14.898,25

95.055,28 28.587.447,14 - 25.532.028,49 95.055,28 3.055.418,65

In the periods of 2016 and 2015, the “Costs and reversals of depreciation and amortization� had the following composition: 2016

Description

Tangi ble fixed assets Intangibl e assets

Depreciation Reversals of and depreciation and amortization amortization costs

Total

Depreciation and amortization costs

(994.655,76)

-

(994.655,76)

(1.130.437,86)

(77.168,97)

-

(77.168,97)

(57.233,63)

- (1.071.824,73)

(1.187.671,49)

(1.071.824,73)

domingos da silva teixeira, s.a.

2015 Reversals of depreciation and amortization

Total

- (1.130.437,86) -

(57.233,63)

- (1.187.671,49)

Page 52 of 73

Annual Report 2016

Tangible fixed assets are recognized in accordance with the accounting policy described in Note 3 above.

The net tangible fixed assets are in their entirety affects to the only activity of the entity and there are no assets held by third parties.

In the period were not recorded any impairment losses, due to be convinced of the Administration that the recoverable amount of the asset exceeds its carrying amount.

7.

Leases

The information concerning leases as of December 31, 2016 is as follows: Financial Leases Description

1 Initial gross book value 2 Accumulated amortizations / depreciations 3 Initial impairment losses and reversals 4 Final net book value (4 = 1 - 2 - 3) 5 Total future minimum lease payments at balance sheet date: 5.1 Up to one year 5.2 From one to five years

Tangible fixed assets 3.357.788,97 1.254.166,11 2.103.622,86 2.265.195,71 722.057,84 1.543.137,87

Total

3.357.788,97 1.254.166,11 2.103.622,86 2.265.195,71 722.057,84 1.543.137,87

The information concerning leases as of December 31, 2015 is as follows: Financial Leases Description

1 Ini tial gross book value 2 Accumulated amortizati ons / depreciations 3 Initial impairment losses and reversal s 4 Final net book val ue (4 = 1 - 2 - 3) 5 Total future mini mum lease payments at bal ance sheet date: 5.1 Up to one year 5.2 From one to five years

domingos da silva teixeira, s.a.

Tangible fixed assets 3.114.549,30 1.190.111,62 1.924.437,68 2.088.411,71 571.924,99 1.516.486,72

Total

3.114.549,30 1.190.111,62 1.924.437,68 2.088.411,71 571.924,99 1.516.486,72

Page 53 of 73

Annual Report 2016

8.

Investment properties

The entity has chosen to account for its investment properties in accordance with the cost model. The fair value of investment properties was estimated at â‚Ź 100,000.

The information related to the carrying amounts of investment properties, with reference to the 2016 period can be analyzed as follows:

Description

1 2 3 4 5 6

Ini tial gross book value Initial accumulated depreciations Initial accumulated impairment losses Ini tial gross carrying amount (4 = 1 - 2 - 3) Movements of the period:(5 = 5.1 - 5.2 + 5.3 + ..‌+ 5.9) Final net book val ue(6 = 4 + 5)

Cost model Land and other resources

Total

100.000,00 100.000,00 100.000,00 100.000,00 100.000,00 100.000,00

The information related to the carrying amounts of investment properties, with reference to the 2015 period can be analyzed as follows: Cost model Description

1 2 3 4 5 6

Initial gross book value Initial accumulated depreciations Perdas por imparidade acumuladas iniciais Initial gross carrying amount (4 = 1 - 2 - 3) Movements of the period:(5 = 5.1 - 5.2 + 5.3 + ..‌+ 5.9) Final net book value(6 = 4 + 5)

domingos da silva teixeira, s.a.

Land and other resources

Total

100.000,00 100.000,00 100.000,00 100.000,00 100.000,00 100.000,00

Page 54 of 73

Annual Report 2016

9.

Intangible assets

Information related to the carrying amount of intangible assets with reference to the 2016 period may be analyzed as follows:

Description

With finite useful economic life: 4 Initial gross book value 5 Initial accumulated amortization 6 Initial accumulated impairment losses 7 Initial net carrying amount (7 = 4 - 5 - 6) 8 Movements of the period:(8 = 8.1 - 8.2) 8.1 Total additions New acquisitions 8.2 Total disposals Amortizations 9 Final net book value (9 = 7 + 8)

Software

Industrial Property

Others

992.257,63 11.244,30 75.393,47 842.512,48 7.884,36 28.800,27 149.745,15 3.359,94 46.593,20 (56.798,64) (915,70) (3.106,21) 16.348,42 16.348,42 73.147,06 915,70 3.106,21 73.147,06 915,70 3.106,21 92.946,51 2.444,24 43.486,99

Total

1.078.895,40 879.197,11 199.698,29 (60.820,55) 16.348,42 16.348,42 77.168,97 77.168,97 138.877,74

Information related to the carrying amount of intangible assets with reference to the 2015 period may be analyzed as follows:

Description

With finite useful economic life: 4 Initial gross book value 5 Initial accumulated amortization 6 Initial accumulated impairment losses 7 Initial net carrying amount (7 = 4 - 5 - 6) 8 Movements of the period:(8 = 8.1 - 8.2) 8.1 Total additions New acquisitions 8.2 Total disposals Amortizations 8.3 Reversals of impairment losses 8.4 Transferences of Intangible assets under construction Transferences of/for financial assets available for 8.5 sale 8.6 Other transferences 9 Final net book value (9 = 7 + 8)

domingos da silva teixeira, s.a.

Software

Industrial Property

Others

Total

837.655,13 11.244,30 75.393,47 791.074,12 6.968,66 23.920,70 46.581,01 4.275,64 51.472,77 103.164,14 (915,70) (4.879,57) 62.622,50 62.622,50 51.438,36 915,70 4.879,57 51.438,36 915,70 4.879,57 -

924.292,90 821.963,48 102.329,42 97.368,87 62.622,50 62.622,50 57.233,63 57.233,63 -

91.980,00 149.745,15

91.980,00 199.698,29

3.359,94 46.593,20

Page 55 of 73

Annual Report 2016

10. Financial investments - equity method Variations in “Financial investments – equity method”, with reference to the 2016 period are as follows: Investments in Investments associated in others companies companies Equity method: Initial gross book value Initial net carrying amount Movements of the period Share of associates' profits Sales Other movements of the period Final net book value

978.206,43 978.206,43 (926.683,02) 72.816,98 1.000.000,00 500,00 51.523,41

Total

2.000,00 980.206,43 2.000,00 980.206,43 - (926.683,02) 72.816,98 - 1.000.000,00 500,00 2.000,00 53.523,41

Variations in “Financial investments – equity method”, with reference to the 2015 period are as follows: Investments in Investments associated in others companies companies Equity method: Initial gross book value Initial net carrying amount Movements of the period Share of associates' profits Changes of investee's equity not recognised in the income statement Sales Other movements of the period Final net book val ue

1.206.141,40 1.206.141,40 (227.934,97) 133.578,74 (5.615,41) 259.395,48 (96.502,82) 978.206,43

Total

2.000,00 1.208.141,40 2.000,00 1.208.141,40 - (227.934,97) - 133.578,74 2.000,00

(5.615,41) 259.395,48 (96.502,82) 980.206,43

In the periods of 2016 and 2015, the “Gains/losses charged to subsidiaries, associates and joint-ventures” had the following composition:

Description

Losses and expenses Revenues and income

domingos da silva teixeira, s.a.

2016

2015

(573,32)

(116.816,74)

73.390,30

250.395,48

72.816,98

133.578,74

Page 56 of 73

Annual Report 2016

11. Other financial investments Variations in “Other financial investments” in reference to the 2016 period are as follows: Investments Other financial in others investments companies Other methods: Ini ti al gross book value Ini ti al net carrying amount Movements of the peri od: Other acqui sitions Other movements of the period Final net book value

45.588,00 45.588,00 45.588,00

Total 120.542,89 120.542,89 (45.144,12) 4.850,73 (49.994,85) 75.398,77

74.954,89 74.954,89 (45.144,12) 4.850,73 (49.994,85) 29.810,77

Variations in “Other financial investments” in reference to the 2015 period are as follows: Investments Other financial in others investments companies Other methods: Ini ti al gross book value Ini ti al net carryi ng amount Movements of the peri od: Other acquisitions Sales Other movements of the peri od Final net book value

1.896.001,00 1.896.001,00 (1.850.413,00) 7.088,00 1.850.001,00 (7.500,00) 45.588,00

21.707,40 21.707,40 53.247,49 53.247,49 74.954,89

Total 1.917.708,40 1.917.708,40 (1.797.165,51) 60.335,49 1.850.001,00 (7.500,00) 120.542,89

In the periods of 2016 and 2015, the “Increase/decrease in fair value” decomposed as follows: 2016 Description

Financial i nstruments

domingos da silva teixeira, s.a.

Reductions

Increases

2015 Total

Reductions

Increases

Total

(2.512,15)

- (2.512,15)

-

-

-

(2.512,15)

- (2.512,15)

-

-

-

Page 57 of 73

Annual Report 2016

12. Inventories As of December 31, 2016 and 2015, inventories’ balance was as follows:

Description

31.12.2016

Goods Raw, subsidiary and consumable material s

31.12.2015

19.222,39

35.000,27

1.888.137,29

2.016.271,45

1.907.359,68

2.051.271,72

The movements occurred in the “Cost of goods sold” balance in 2016 was as follows: Description 1 2 3 4 5

Goods

Raw, subsidiary and consumable materials

Openi ng stocks 35.000,27 Purchases 98.400,69 Stocks recl ass ifi cation and regul arization Cl osi ng s toks 19.222,39 114.178,57 Cost of goods sold (5 = 1+ 2 + 3

Total

2.016.271,45 2.051.271,72 19.891.999,10 19.990.399,79 1.888.137,29 1.907.359,68 20.020.133,26 20.134.311,83

The movements occurred in the “Cost of goods sold” balance in 2015 was as follows:

1 2 3 4 5

Description

Goods

Opening stocks Purchases Stocks reclassification and regul arization Closing stoks Cost of goods s old (5 = 1+ 2 + 3 - 4)

13.242,97 132.888,74 35.000,27 111.131,44

domingos da silva teixeira, s.a.

Raw, subsidiary and consumable

Total

2.969.917,46 2.983.160,43 23.921.202,18 24.054.090,92 2.016.271,45 2.051.271,72 24.874.848,19 24.985.979,63

Page 58 of 73

Annual Report 2016

13. Trade debtors As of December 31, 2016 and 2015, the balance of “Trade debtors” was as follows:

Description

31.12.2016

31.12.2015

Trade debtors - current accounts

25.513.395,71

24.810.404,52

Trade debtors - bills of exchange

224.561,52

28.966,81

Trade debtors - with guarantee

1.363.853,15

1.380.197,80

Trade debtors - doubtful accounts

5.902.219,82

4.705.345,78

33.004.030,20

30.924.914,91

(5.902.219,82)

(4.705.345,78)

27.101.810,38

26.219.569,13

Accumulated impairment losses

As of December 31, 2016 and 2015, the balance of trade debtors’ doubtful debts was as follows: 31.12.2016

31.12.2015

Li tigation claims

3.603.503,79

3.141.541,12

Delayed receivables

2.298.716,03

1.563.804,66

5.902.219,82

4.705.345,78

As of December 31, 2016 and 2015, the balance of prepayments was as follows:

Description

31.12.2016

31.12.2015

Trade debtors - current accounts

133.570,47

245.549,08

133.570,47

245.549,08

In the periods of 2016 and 2015, the “Impairment losses” in receivable accounts balance was as follows:

Description

Trade debtors

Impairment losses

(1.222.525,23) (1.222.525,23)

domingos da silva teixeira, s.a.

2016 Reversals of impairment losses

Total

25.651,19 (1.196.874,04) 25.651,19 (1.196.874,04)

Impairment losses

2015 Reversals of impairment losses

(210.797,32) 1.979.477,11 (210.797,32) 1.979.477,11

Total

1.768.679,79 1.768.679,79

Page 59 of 73

Annual Report 2016

14. Other receivables As of December 31, 2016 and 2015, the balance of “Other receivables” was as follows:

Description

31.12.2016

31.12.2015

Debtors for income accruals 12.407,57

3.509.003,04

943.236,05

676.831,95

1.113.126,52

396.478,47

161,11

230.932,33

2.068.931,25

4.813.245,79

Prepayments

1.723.906,36

812.110,68

Other debtors

81.951.385,17

109.817.309,07

85.744.222,78

115.442.665,54

Interests Works in progress Services Others

15. State and other entities As of December 31, 2016 and 2015, the “State and other entities’” balance was as follows:

Description

31.12.2016

31.12.2015

Assets 10.114,00

10.114,00

1.715.765,27

1.438.830,36

265.993,69

274.199,39

1.991.872,96

1.723.143,75

Income tax wi thhol ding

121.002,56

115.789,08

Social Securi ty contri butions

282.380,37

265.987,38

1.151,79

1.442,44

404.534,72

383.218,90

Corporate tax Val ue added tax Others Liabilities

Others

domingos da silva teixeira, s.a.

Page 60 of 73

Annual Report 2016

16. Deferrals As of December 31, 2016 and 2015, the deferrals’ balance was as follows:

Description

31.12.2016

31.12.2015

Deferred costs Future services already invoi ced

6.969,31

9.607,91

-

18.000,00

Insurance

44.654,51

43.796,93

Rents

73.861,12

67.009,56

Interes t payable

5.631,15

5.331,24

Other costs

1.844,61

-

132.960,70

143.745,64

8.450.018,23

12.830.921,17

8.450.018,23

12.830.921,17

Advertising

Deferred income Construction contracts

17. Ordinary share capital The entity's share capital remained unchanged in the period, consisting of 12,500,000 shares, registered and nominative, with a nominal value of one euro. The share capital is totally realized.

According to the deliberation of the General Meeting held on September 26, 2016, it approved the distribution of dividends amounting to 34,000,000.00 Euros, which explains the decrease in the entity's Retained profit.

18. Other equity instruments As other equity instruments is accounted for additional paid-in capital transferred by dst engenharia & construção, sgps, s.a., worth 1.010.000 Euros, do not bear interest ,which the Board of Directors considers not qualifying as a liability.

The return of additional paid-in capital depends on the resolution of the shareholders and can not be performed if the equity drops below the sum of the capital and legal reserves.

domingos da silva teixeira, s.a.

Page 61 of 73

Annual Report 2016

19. Provisions As of December 31, 2016 and 2015, the “Provisions” balance was as follows:

Descripti on

Other provisi ons

31.12.2016

31.12.2015

2.490.782,90

2.282.695,65

2.490.782,90

2.282.695,65

The increase / decrease in the “Provisions” balance during the 2016 and 2015 periods, were as follows: 2016 Reversal

2015 Final Balance

Description

Reinforcement

Reinforcement

Reversal

Final Balance

Other provisions

(372.035,68)

821.596,20 449.560,52

(463.707,72)

120.776,82 (342.930,90)

(372.035,68)

821.596,20 449.560,52

(463.707,72)

120.776,82 (342.930,90)

20. Loans obtained As of December 31, 2016 and 2015, the balance of “Loans obtained” was as follows:

Description

31.12.2016

31.12.2015

Long term loans

5.101.878,77

1.294.154,53

Financial leases

1.543.137,87

1.516.486,72

Commercial paper

1.375.000,00

1.375.000,00

8.020.016,64

4.185.641,25

Short-term loans

4.192.467,75

2.787.785,81

Revolving credit

5.561.102,39

3.561.138,96

Financial leases

722.057,84

571.924,99

10.475.627,98

6.920.849,76

Non-current liabilities

Current liabilities

domingos da silva teixeira, s.a.

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21. Trade creditors As of December 31, 2016 and 2015, the balance of “Trade creditors” was as follows:

Description

31.12.2016

31.12.2015

18.416.477,99

25.924.725,96

Trade creditors - bi lls of exchange

1.318.800,34

2.606.572,60

Trade creditors - invoices in conference

1.522.215,35

2.113.786,26

Trade creditors

Trade creditors - with guarantee

5.851.213,52

5.026.884,58

27.108.707,20

35.671.969,40

22. Other payables As of December 31, 2016 and 2015, the balance of “Other payables” was as follows:

Description

31.12.2016

31.12.2015

Current liabilities 487.804,21

460.849,55

72.336,46

260.335,10

74.499,27

102.320,21

1.219.667,27

1.159.736,96

19.104,02

40.654,67

2.661.194,42

2.405.701,87

56.388,27

93.909,25

4.030.853,25-

3.802.322,96-

2.094.221,52

2.366.052,96

16.043.306,87

11.135.831,70

Shareholders

1.907.848,57

3.226.765,93

Others

1.563.751,52

2.642.213,99

26.200.122,40

23.894.372,19

Staff costs Investment trade creditors Creditors for costs acrruals Insurances Staff costs Interests General and administrative expenses Other costs accruals Factoring Confirmi ng

In the shareholders’ balance is accounted for a liability correspondent to the income tax amount payable to the shareholder in accordance with the Special Group Taxation Regime in which domingos da silva teixeira, s.a. is included.

domingos da silva teixeira, s.a.

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23. Deferred tax assets and liabilities The changes in the balance of “Deferred tax assets and liabilities”, with reference to the 2016 period was as follows: 01.01.2016 Balance Tax Deferred tax assets Trade debtors impairments Depreciated cost

1.726.457,99 157.795,35 1.884.253,34

Non-current Current

Variation Balance Tax

438.137,40 43.602,79 481.740,19

264.340,51 (8.725,96) 255.614,55

63.609,11 (2.225,12) 61.383,99

31.12.2016 Balance Tax 1.990.798,50 149.069,39 2.139.867,89

501.746,51 41.377,67 543.124,18

481.740,19 -

543.124,18 -

The changes in the balance of “Deferred tax assets and liabilities”, with reference to the 2015 period was as follows: 01.01.2015 Balance Tax Deferred tax assets Trade debtors impairments Depreciated cost

1.937.396,44 160.932,69 2.098.329,13

Non-current Current

Variation Balance Tax

494.036,09 44.402,81 538.438,90

(210.938,45) (3.137,33) (214.075,79)

(55.898,69) (800,02) (56.698,71)

31.12.2015 Balance Tax 1.726.457,99 157.795,35 1.884.253,34

538.438,90 -

438.137,40 43.602,79 481.740,19 481.740,19 -

24. Sales and services rendered In the periods of 2016 and 2015, the balance of “Sales and services rendered” was as follows: 2016 Description

National market

2015

Foreign market

Total

National market

Foreign market

Total

Goods sales

1.055.129,14

88.262,01

1.143.391,15

947.756,95

-

947.756,95

Products sales

2.001.316,40

-

2.001.316,40

1.536.079,01

-

1.536.079,01

112.502.205,94

322,50 112.502.528,44

117.710.951,44

- 117.710.951,44

115.558.651,48

88.584,51 115.647.235,99

120.194.787,40

- 120.194.787,40

Services

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Annual Report 2016

25. Other external charges In the periods of 2016 and 2015, this balance was as follows:

Description

2015

54.846.204,53 266.262,52 2.935.318,86

55.418.700,26 304.027,29 3.919.563,71

Water and other fluids

513.851,39

515.731,63

Tools

315.366,72

308.450,28

Subcontractors Electricity Fuels

33.265,64

36.606,17

7.477.443,52

7.352.090,27

Representation expenses

22.623,32

22.171,72

Communication

98.290,52

126.484,23

389.398,98

376.661,79

Office s tationeries Rents and rentals

Insurance

38.587,05

31.714,38

Travel and accommodation

798.933,20

727.265,91

Fees

110.607,07

188.623,43

73.401,83

99.959,09

1.443.729,85

1.908.701,10

Transport of goods

Legal expenses Maintenance and repairs

94.913,89

111.073,71

Cleaning and hygiene

137.288,06

54.288,43

Security

626.893,79

566.831,53

7.013.653,32

4.582.322,16

Software licenses

133.796,62

443.146,68

Tolls

375.286,82

415.292,38

Others

251.487,43

194.105,91

77.996.604,93

77.703.812,06

Advertising and promotion

Special ised labour

26.

2016

Employees benefits, number of employees and staff costs

26.1. Number of employees

Board Members Employees

domingos da silva teixeira, s.a.

2016

2015

5 414 419

5 469 474

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Annual Report 2016

26.2. Staff costs In the periods of 2016 and 2015, this balance was as follows:

Description

2016

2015

7.936.814,18

8.000.763,96

90.496,04

95.249,51

1.585.554,52

1.634.414,34

168.965,05

204.207,34

Social action costs

65.772,58

76.318,81

Trai ning

33.541,89

34.332,42

Heal th and li fe insurance

59.683,69

53.182,21

Other staff costs

18.515,45

(27.287,67)

9.959.343,40

10.071.180,92

Sal aries Compensations Social charges Worki ng and professional il lnes s ins urance

27. Other operating income In the periods of 2016 and 2015, this balance was as follows:

Description

2016

2015

3.063.609,20

3.617.641,48

Sale of non-financial investments

73.222,52

200.908,02

Exchange gains

15.992,21

53.047,75

Cash discounts

122.978,87

78.384,36

Overestimated tax provision

442.493,34

676.557,40

Contractual penalities

202.370,08

156.288,68

Insurance claims

147.440,96

-

Other extraordi nary income

107.552,66

116.165,44

4.175.659,84

4.898.993,13

Other operating income

domingos da silva teixeira, s.a.

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Annual Report 2016

28. Other operating charges In the periods of 2016 and 2015, this balance was as follows:

Description

Taxes and charges

2016

2015

123.874,40

100.929,21

454,07

22.867,37

8.828,00

26.654,48

-

156,74

1.452,75

18.029,72

54.685,00

139.635,61

8.447,37

8.270,00

423,07

2.524,55

659.983,31

943.037,52

340,18

196,96

Factori ng cos ts

46.717,07

132.128,01

Confirmi ng costs

74.172,11

61.409,45

Sel f-confirming costs

28.078,76

245,21

Fi nes and penalti es

39.120,76

700.643,60

8.248,28

28.947,76

183.890,96

114.949,86

1.720,72

61.161,34

1.240.436,81

2.361.787,39

Cash discounts Bad Debts Sale of non-financi al inves tments Pri or years adjustments Donati ons Contri butions Exchange loss es Bank guarantees costs Bill of exchange cos ts

Damages on third parti es Banki ng servi ces Other losses and expenses

29. Interest and other similar revenues In the periods of 2016 and 2015, this balance was as follows:

Description

Contractual interests and interests for delayed receivables Current loans interest Bank deposits interest Other financial income

domingos da silva teixeira, s.a.

2016

2015

7.336,79

114.647,99

2.750.948,67

3.506.964,14

28.593,49

25.254,79

13.859,44

2.918,52

2.800.738,39

3.649.785,44

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Annual Report 2016

30. Interest and other similar expenses In the periods of 2016 and 2015, this balance was as follows:

Description

2016

Bank loans interest

2015

373.153,77

434.006,71

Factoring interest

21.088,68

144.678,54

Lease interest

39.640,74

45.642,42

Confirming interest

10.735,94

3.148,89

-

670,43

1.824,67

4.579,23

372,80

400,55

2.469,87

6.434,57

265.727,78

296.172,69

715.014,25

935.734,03

Self-confi rming interest Penalty interests and i nterests for del ayed payments Other l oans i nterest Bil l of exchange interest Fi nanci al investments interests

31. Commitments related to obtained guarantees As of December 31, 2016 the entity had bank guarantees to replace bidders’ bails amounting to 55,359,398.34 Euro, 190,142,000 Kwanza and 8,480,100.08 Cape Verdean Escudo, as follows: National Euros

International AKZ

CVE

SANTANDER

5.060.494,85

-

-

BCP

1.646.071,61

-

-

BPI

8.572.345,49

-

-

BBVA

492.796,72

-

-

BARCLAYS

201.721,15

-

-

Novo Banco

11.882.496,28

-

-

CGD

20.957.117,20 190.142.000,00 8.480.100,08

BANCO POPULAR

1.201.272,21

-

-

Banco BIC

4.368.257,37

-

-

976.825,46

-

-

Outros

TOTAL 55.359.398,34 190.142.000,00 8.480.100,08

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As of December 31, 2015 the entity had bank guarantees to replace bidders’ bails amounting to 49,814,515.44 Euros, 1,147,500 USD, 190,142,000 kwanzas, 500.000 meticais and 8.480.100.08 Cape Verdean Escudo as follows: International

National Euros

USD

AKZ

MZN

SANTANDER

5.647.293,33

997.500,00

-

BCP

1.808.937,68

-

BPI

9.552.230,57

-

648.350,02

-

-

-

-

-

-

500.000,00

-

-

-

-

-

209.316,14

-

-

-

-

8.766.805,17

-

-

-

-

BBVA BARCLAYS Novo Banco CGD

CVE

15.352.851,56

BANIF

150.000,00 190.142.000,00

- 8.480.100,08

866.684,48

-

-

-

-

BANCO POPULAR

1.426.300,07

-

-

-

-

Banco BIC

4.541.280,81

-

-

-

-

994.465,60

-

-

-

-

BARCLAYS Outros

TOTAL 49.814.515,44

1.147.500,00 190.142.000,00

500.000,00 8.480.100,08

32. Events after the balance sheet date Between the reporting date of the Financial Statements (December 31, 2016) and the clearance date for its disclosure (March 31, 2017), there were no material facts warranting disclosures or changes to the Financial Statements for the period.

33. Disclosures required by law The Management Board reports that the entity has no debts to the State in arrears in accordance with Law-decree number 534/80 of November 7.

Pursuant the requirements of the Article 210 of the Contributory Code, published by the Law number 110/2009 of September 16, the Management Board informs that the situation of the entity with respect to Social Security is regularized within the legally stipulated deadlines.

Pursuant to the requirements of the Article 66º of the Code of Commercial Companies, the entity informs that the Statutory Auditor’s charged fees (Chartered Accountant) amounted to 18,450.00 Euros (VAT included), which solely cover the statutory audit services.

During the period ended December 31, 2016, the entity incurred in research and development (“R&D”) expanses amounting 908.317,52 Euros considered eligible for the use of the Tax Incentive System in Business Research and domingos da silva teixeira, s.a.

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Annual Report 2016

Development (“SIFIDE II”), pursuant to article 6 of Law no. 40/2005, in the wording given by Law No. 162/2014 of October 31.

In this sense, the entity is preparing a candidacy to address the Tax Incentives Certifying Committee for Business R&D, to obtain a declaration proving that the activities carried out effectively correspond to R&D activities. If such request is granted by the competent authorities, the entity will be able to benefit from a corporate income tax (IRC) deduction, whose estimated value amounts to 479,132.74 Euros.

Pursuant to the requirements of paragraphs 1 and 2 of Article 23 of Investment Tax Code (ITC), the entity considered an tax benefit related to the tax regime of investment support (TRIS) relative to 2016 of 19,784.50 euros, corresponding to 25% of the eligible investment of this year (79,738.00 euros).

34. Clearance date to financial statements disclosure The financial statements for the period ended December 31, 2016 were approved by the Board of Directors and authorized to disclosure on March 31, 2017.

Braga, March 31, 2017

The Board of Directors,

The Certified Accountant number 55854,

José Gonçalves Teixeira; Executive Chairman

Susana Maria Macedo Queirós

Joaquim Gonçalves Teixeira; Executive Vice-Chairman

Avelino Gonçalves Teixeira; Non-Executive Vice-Chairman

João Martins Negrais de Matos; Executive Member of the Board of Directors

Eurico António Lopes Soares; Non-Executive Member of the Board of Directors domingos da silva teixeira, s.a.

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Annual Report 2016

E)

Legal Certification of Accounts

domingos da silva teixeira, s.a.

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domingos da silva teixeira, s.a.

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F)

Report and Opinion of the Sole Fiscal Auditor

domingos da silva teixeira, s.a.

Page 73 of 73