Annual report 2011 dst sgps & dst sa

PORTUGAL HAS FUTURE ANNUAL REPORTS 2011 dst, sgps, s.a. and dst, s.a.

José Teixeira Chairman of dst group

Index Annual Report 2011, dst, sgps, s.a.

Message from the Chairman In 2011 all changed a lot again.

Consolidated Management Report

Macroeconomics Framework

R&D and Innovation Research and development are core activities in the group, and were reflected in the creation of a company geared to enhance, evaluate, produce and market innovative ideas. page 5

Society As part of its expanded programme of corporate social responsibility, maecenas activity is particularly important in relation to education and culture and its dissemination. page 5

International Macroeconomics framework

Environment

After a global economic recovery in 2010, which spread to most regions, it is expected a growth slowdown between 2011 and 2013.

dst group kept the environmental management system certifications by the norm NP EN ISO 14001: 2004. page 5

National Macroeconomics framework Quality and certifications During the sovereign debt crisis context in the Eurozone, the Portuguese economy in 2011 intensified its adjustment process of macroeconomic imbalances accumulated over the past years. page 2

The Construction Sector ...in 2011 registered again a decline in its activity, influenced by a highly unfavorable economic environment. page 2

dst group directs its activity in permanent search of improving the satisfaction of their customers, through an appropriate and efficient Management System. page 5 Financial Information. page 5

Consolidated Balance Sheet. page 5 Consolidated Income Statement. page 5

The Water and Environment Sector ... has had very significant developments over the last few decades and especially in the last decade and a half, in particular with regard to the institutional framework. page 2

The Renewable Energy Sector ... has currently a major position in Portugal, resulting from the role that its players have achieved in the national energy market. At the end of 2011, the total renewable installed power reached 10,323 MW. page 2

Wind Energy The worldwide total installed capacity of wind power reached in late 2011, about 239 Gw1... page 2

Solar Energy ... is one of the most promising energy resources. page 3

The Hydropower ... is the worldwide leading source of renewable energy, being one of the most attractive for its maturity and predictability, as well as for its ability to compete economically with other nonrenewable energy sources. page 3

The Telecommunications Sector ... remained attractive to investment, particularly at the level of the New Generation Networks.

Consolidated Statement of Equity Changes in 2010. page 5 Consolidated Statement of Equity Changes in 2011. page 5 Consolidated Cash Flows Statement. page 5

Message from the Chairman In 2011 all changed a lot again.

The external environment continued not to give signs of knowing how to leave the created storm and half world is without solutions to evade so adverse seas under rule of the “Bogey-beast”.

Dominator, turbulent, unpredictable and insane this “Bogeybeast” would demand a strong leadership at the helm and naturally accepted by UE Member States. Not a non legitimized power leadership whose confidence, being non-existent, diffuse and little more than informal lives of hopes looking for masts and ropes of Europe vessel to see if the sons of Zeus, Pollux and Castor, are present to save them from storm.

The mythology does not help and the Greek God, to make matters worse, must be angry.

In our seas, seas of Portugal, "the Bogey-beast is (not) at the end of the sea"!

The "Bogey-beast" is in our sea of all recent days circling around our ship.

The "Bogey-beast", this crisis, needs someone who after trembling three times yells: "Here at the helm I am more than myself: I am a people who want the sea that is yours; And more than the Bogey-beast, that my soul does fear And dwells in the dark of the end of the world, Commands the will, that binds me to the helm, Of King Don João the Second!" Fernando Pessoa in Message.

Leaders need to have the time to understand what is going on.

Not having, neither time to rest nor time to think will give rise to a bravo and barbed problem, always.

Europe lives of responses created everyday for everyday crises.

The assortment of responses is eccentric and revolves corroding the natural order of things.

Europe, and the European leaders are no longer owners of moments of silence and do not prevent the trampling of telephone traffic relief requests.

The Member States do not solve their problems with the hours consumed by our leaders studying the movements that took

Johannes Kepler years to study. Europe, under a state of constant pressure and random turmoil does not have time to think and not thinking means that every day new solutions for unforeseen problems will be pointed out. Its recognition as a familiar one is just a diversion maneuver.

Thus only provisional solutions are found that generate sacrifices in vain.

We all must stop to think about what is happening.

No crisis can restrain our freedom and even less our imagination.

Our dreams cannot be held hostages of any crisis dictated by tactics, by selfishness or by ignorance as well as the economies cannot live of anxiolytics.

European leaders, the Portuguese rulers, the Portuguese opposition, business leaders, entrepreneurs, unions' leaders, workers and families, all must hold their thought and see the problem's inception point that brought us here, to this hell that has almost nothing of allegorical.

Some will have to hire anthropologists and sociologists to know the past, and the movements of the past, and so understand the present to design present solutions with a future.

Others should see life from a new angle to understand his/her role in what will happen on the Jubilee day.

Something has to be done again for the first time so that the direction towards arriving at a b point – to the Cape of Good Hope – be the lower weighted cost one and, not always the shortest distance from a to b is straight. We all have to bow to the intelligence that protects the largest number in order to arrive safer and stronger to a destiny of confidence, of opportunities and where people are the cause of choices.

Every day for the past years at dst we work knowing where the point b is and knowing the difficulties that we have to face on our path.

Difficulties are increasingly aggressive and require from us more knowledge. That requires from us more training. That requires us to discover new solutions to surprise the critter and kill the “Bogeybeast” from the heart.

Our vessel undergoes constant updates by those who have the task of thinking in updates and to study what is going to happen.

Our "forecasters" are employed to predict what will happen to our products and services consumption and, in this way, ahead of stormy weather signals us new routes for other metals, other spices and other silks. What does this means is that we abandon in time what is unconsumed not keeping deadstocks nor without solutions and, in due time, we create amazing solutions and attack business areas and markets where competitors are weaker because they preferred fortunetellers predicts.

The dst group has a bold business plan done in 2011 to 2014, for the times of almost chaos wherein economics lives – but boldness is one of our advantages –whose performance is to be overcome.

Everyone knows dst's originality in green economy's business – renewable energy and waste, water, as well as in telecommunications.

Everyone knows our obsession with innovation and knowledge as everyone knows the taste for beauty of the things we do and the pleasure of sharing the proceeds of things built by us.

Everyone knows that we have lots of business gateways and when one is closed we use another. And they also know that when the lock denies us the key we break our way in!

And, so many doors we have in our portfolio of gateways!

Our potential is brutal! dst has battalions of sophisticated and mobilized soldiers.

We want peace but do not flee the war!

In the near future we will be stronger.

In a further distant future we will be much better.

In dst the difficulties liquidated themselves as debts are paid.

We appreciate your trust in us.

We thank our customers and our financial business partners – those who finance our activity.

To our workers the same again: for the year to come we will back to top and beat the beaten scores.

We assume this duty by our families, by Portugal and because yes.

Annex. page 6 Legal Certification of Consolidated Accounts. page 9 Report and Opinion of the Sole Fiscal Auditor. page 9 Annex to the Board of Director’s Report. page 9

Annual Report 2011, dst, s.a.

Management Report. page 10

Macroeconomics Framework. page 10 International Macroeconomics framework. page 10

page 3

National Macroeconomics framework. page 10

Financial and Economic Analysis

The Construction Sector. page 10

The dst group's turnover reached 192.4 million euro, a decrease of 7.6% compared with 2010, denoting a strong resilience to the country's depressive macroeconomic context. page 3

Business. page 11 Investment. page 11

Business Areas. page 4

Engineering and Construction ... is the core business area in the dst group inasmuch that in the 40s was the start up activity with ... page 4

Renewable Energies The dst group's action on the renewable energies sector is developed through a set of diversified business in technological terms – wind, solar photovoltaic, solar thermal, hydro, oceans, but also in energy efficiency. page 4

Human Resources. page 11 Economic and Financial Analysis. page 11

Future Perspectives. page 11 State and other Public Entities and Social Security debts in arrears. page 11

Subsequent Events. page 11 Environment and Water The proportional turnover of this business area amounted to 32.1 million Euros, a growth of about 6% which corresponds to 1.8 million Euros. page 4

Telecommunications The dst group created in 2008 the dstelecom towards the strategic development and management of a new generation network, founded on the integration of broadband telecommunications services for voice, data and image. page 4

Final Note

Proposed Results Application. page 11 Final Note. page 11 Financial Information. page 11

Individual Balance Sheet. page 11 Individual Income Statement. page 11 Individual Statement of Equity Changes in 2010. page 11

Consolidated Management Report Dear Shareholders,

page 4

Corporate Social Responsibility dst continues a policy of social responsibility based on sustainability strategies that include the concern for the collective welfare and social and environmental effects of its activit. page 5

Individual Statement of Equity Changes in 2011. page 11

In compliance with the legal and statutory regulations, the Board of Directors presents the management report for 2011 fiscal year.

Individual Cash Flows Statement.

As the environment where we operate is directly affected by the international economic evolution, before presenting the company's financial information and its business centers we will do a slight approach to the most important national and international macroeconomic data.

page 11

Human Resources

Annex. page 12

In the year 2011, the best practices in the context of human resources gave the dst group the award of “Excellence at Work” in construction sector.

Legal Certification of Accounts. page 13

page 5

Safety, Hygiene and Health Throughout the year of 2011 were held 1,500 training/awareness actions for the group's employees... page 5

Report and Opinion of the Sole Fiscal Auditor. page 13 Corporate Bodies. page 13 Annex to the Board of Director’s Report. page 13

Âmbito: Construção Civil e Obras Públicas, Ensaios Laboratoriais e Manutenção de Equipamentos e Viaturas.

Concepção, Desenvolvimento, Produção e Aplicação de Betão Betuminoso.

Concepção, Desenvolvimento e Fabrico de Produtos de Madeira e Derivados de Madeira e Mobiliário.

APCER CERTIFICADO N.º 2007/CEP. 2951 CERTIFICADO N.º 2003/CEP. 1951 CERTIFICADO N.º 2006/CEP. 2714 SISTEMA PORTUGUÊS DE QUALIDADE NP EN ISO 9001:2008

domingos da silva teixeira, s.a. rua de pitancinhos apartado 208 - palmeira 4710-911 braga portugal t. +351 253 307 200/1 f. +351 253 307 210 www.dstsgps.com mcrc braga nipc 501 489 126

Macroeconomics Framework International Macroeconomics framework After a global economic recovery in 2010, which spread to most regions, it is expected a growth slowdown between 2011 and 2013. In 2010, the Gross Domestic Product (GDP) grew 5%, while in 2011 increased about 3.7%, according to sources from the International Monetary Fund (IMF) and European Commission (EC).

In 2011, the emerging markets continued to be the engine of economic growth, based on the strong dynamism of Asian countries (China and India), Latin America and Russia. The major advanced economies continued to show very low growth levels.

The international institutions expect a weaker growth in the U.S., a sharp slowdown in Japan and the pursuit of a more moderate growth in the European Union, with very different developments between Member States. This growth was stronger in Germany, Sweden and Poland, more modest in UK and France, and weaker in Italy and Spain. It should also be noted that some peripheral Eurozone countries (Portugal and Greece) will re-

main in recession in 2012, as a result of strong structural adjustment processes in their economies.

The uncertainty about the global economic environment remains high. The persistence of large macroeconomic imbalances (in the U.S. case), the fragility of the real estate market and the continuation of a sluggish labor market increased the risks of downsizing the world economic growth. Alongside this, the sovereign debt crisis remain in some peripheral countries of the Eurozone, increasing the risk of contagion to other countries, which strongly affects the instability of international financial markets and decreases the economic confidence.

In a high risk context in most developed economies and with the continuation of major adjustments and challenges in emerging economies, in 2011, the world economic growth slowed down.

The U.S. and the EU registered a growth of 1.6% and Japan suffered from a recession of 0.4%, associated, in part, with the effects of the earthquake of March 2011.

In Europe, the uncertainty about the solidness of the financial sector and the intensification of sovereign debt crisis in the Eurozone have shaken its still fragile financial system. The financial crisis in the peripheral countries of the Eurozone has led to a more rigorous risk analysis, which resulted in an increase of

Macroeconomic Indicators GPD: USA EUROPEAN UNION - 27 EUROZONE JAPAN

2009

2010

2011(e)

-2,4 -4,1 -4,0 -5,0

3,0 2,0 1,9 4,0

1,6 1,6 1,5 -0,4

Source: GPEARI Finance Percentage variation (e) - estimated

the sovereign risk premium. To face the financial crisis was agreed the reinforcement of stabilization instruments, pointing out the European Financial Stability Fund (EFSF) intervention and the additional resources provided by the IMF to Member States in the form of bilateral loans in an amount that could reach 200 billion euros.

In 2011, the Eurozone increased 1.5 percentage points, however institutions and european markets remain fragile and the recovery in the 27th Europe is expected to remain moderate as a result of the long lasting impact of the financial crisis and of the implementation of strong budgetary control measures in 2011.

2

consolidated dst, sgps, s.a. ANNUAL REPORT 2011

International Macroeconomics framework (cont.)

The rising prices of raw materials, particularly oil and food, were responsible, in part, for the increase of inflation. Inflationary pressures remained contained in the advanced economies and higher in emerging economies. However, the effort required for some Eurozone countries in fiscal consolidation has led to an increase of indirect taxes and the acceleration of administrative prices, which have been boosting a rise in inflation in this region. According to the IMF, in developed economies inflation stood at 2.6% in 2011. The EC expects that the inflation rate in the Eurozone will be below 2% over the next two years due to the foreseen slowdown of energy prices, the persistent slowdown of the economy and moderate wage growth. In November 2011, the annual inflation rate of the Eurozone remained at 3% and in terms of growth of the last 12 months it rose to 2.7%.

Associated with the weak economic growth, the labor market should remain anemic in the Eurozone and employment is expected to remain still in 2012 with a slight increase of 0.3% in 2013.

According to the EC, the unemployment rate is expected to fall to 10.0% in the Eurozone in 2013 (10.1% in 2010). This trend extends to most countries, except Greece, Portugal, Cyprus and Slovenia, where this indicator has been rising significantly.

Macroeconomic Indicators Inflation: USA EUROPEAN UNION - 27 EUROZONE JAPAN Unemployment rate: USA EUROPEAN UNION - 27 EUROZONE JAPAN Industrial production index: USA EUROPEAN UNION - 27 EUROZONE JAPAN

2009 2010

-0,4 1,0 0,3 -1,3

1,6 2,1 1,6 -0,7

9,3 9,6 8,9 9,7 9,4 10,1 5,1 5,1

-11,2 5,3 -13,6 6,8 -14,8 7,4 -21,8 16,6

2011(e)

3,2 3,0 2,6 -0,2

9,0 9,7 10,0 4,9

4,2 4,2 4,6 -3,4

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

In order to ensure easier access to liquidity in the banking sector and to enable a better functioning of the Euro area monetary market, on December 8, the Governing Council reduced by 25 basis points the interest rate reference to 1%,

which in November stood at 1.25%.

Reflecting the low interest rates set by central banks, euro monetary market rates in late 2011 showed a gradual decline in short-term rates in Europe. In the U.S., the interest rates on short-term continued the upward trend started in August 2011, remaining with values below 1%.

In November 2011, the long-term interest rates increased in the euro area, reflecting the growing concerns about sovereign debt crisis and decreased in the U.S., reflecting the uncertainty about the global economic perspectives.

At the end of December 2011, the 3, 6 and 12 months Euribor interest rates stood at 1.024%, 1.178% and 1.356%, respectively. This slight decrease in late 2011 reflected in part, and as mentioned above, the ECB's decision of lowering the reference rate and of adopting unconventional measures to support additional bank credit and monetary market liquidity in the Eurozone.

Reference Interest Rates EUROZONE USA JAPAN UNITED KINGDON

2009 1,00 0,25 0,30 0,50

2010 1,00 0,25 0,10 0,50

2011 1,00 0,25 0,10 0,50

Source: Ministery of Finance / Bank of Portugal 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

2009

2010

2011

0,72 0,90 1,23 1,44 1,62

0,44 0,57 0,81 1,08 1,35

0,62 1,18 1,39 1,64 2,01

0,69

0,34

0,34

0,47

0,23

0,19

Source: Ministery of Finance / Bank of Portuga Percentage

Following its depreciation in 2010, the euro vs U.S. dollar exchange rate fell in 2011, standing at 1.318 USD at the end of the year. The euro depreciation against major international currencies has been driven by the negative perception of the public finances sustainability of some Eurozone Member States Foreign Currencies EUR/USD EUR/JPY EUR/GBP EUR/CHF

2009 1,441 133,160 0,888 1,484

2010 1,336 108,65 0,861 1,250

2011 1,318 102,55 0,844 1,228

Source: Ministery of Finance / Bank of Portugal Foreing currencies parity at the end of the period

The intensification of sovereign debt crisis in the euro area and the increased uncertainty about the global economic growth in coming years contributed to the decline of major international stock index Stock Markest Dow Jones EURO STOXX Nikkei 225 Standard & Poors 500

2009 -25,4 -23,2 -22,5

2010 13,4 7,3 20,3

2011 -3,4 -5,7 11,4

Ssource: Ministery of Finance / Bank of Portugal Percentage variation

In 2011, the price of non-energy raw materials, metals and agricultural goods, showed a significant slowdown. The price of the oil barrel rose significantly compared to 2010 as a result of the increasing global demand. The average Brent oil price in 2011 was of 111 USD per barrel.

Raw Materials

2009

2010 2011(e)

Brent oil USD/Barril (1) 62,45 80,22 Agricultural goods (2) -17,0 33,8 Metals (2) -28,60 48,2

111,09 27,2 17,9

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

The EC also foresees for the Eurozone an export reduction to 3.4% in 2012 (11.3% in 2010 and 6.1% in 2011) and a slowdown in investment, which should only increase 0.5% in 2012. These downward revisions for 2012 are due to the expectation of weaker global economic growth and of occurrence of serious business confidence crisis, which is associated to the combination of weak public finances and financial sector vulnerabilities, placing strong restrictions for credit granting.

Private consumption in the Eurozone is expected to remain stagnant in 2012 (+0.4%), driven by the impact of fiscal consolidation measures in household income and by the lack of labor market improvement measures.

The consolidation efforts made by most countries may lead to an improvement of public finances for the coming years, with an average planned deficit of around 3.2% of GDP in the Eurozone, in 2012 and 2013. This forecast is below the deficit registered since 2009, which stood on average at 5.6% of GDP between 2009 and 2011. However, public debt as a percentage of GDP continues to increase to about 91% average in the years 2012 and 2013, continuing the upwards trend from 2008.

TEKTÓNICA 2012 State of the art technology in the production

editorial comment, Susana Braga last page

Photovoltaic Panels

National Macroeconomics framework Macroeconomics Indicators 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

2009

2010 2011(e)

2,0 -1,0 3,2 2,9 -4,8 -11,9 8,7 -11,8 5,3 -10,9 1,4 -2,6 -0,8 1,4 -8,1 2,0 -17,9 9,3 33,47 -10,34 9,5 10,8

-3,6 -3,2 -11,2 7,3 -4,3 -1,6 3,6 -2,2 2,1 -24,4 12,4

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

During the sovereign debt crisis context in the Eurozone, the Portuguese economy in 2011 intensified its adjustment process of macroeconomic imbalances accumulated over the past years. These imbalances have resulted in high and persistent external financing needs. Along with the tensions in financial markets, these imbalances represent the Portuguese economy's vulnerability, which contributed to the increasing difficulty of accessing to the financial markets on a regular basis for public sector and therefore for the Portuguese banking

sector. Thus, the Portuguese government requested financial assistance from the IMF and EU. This request led to the formalization of a Financial Assistance Programme, in which the Portuguese Government has pledged to adopt measures for macroeconomic imbalances and structural adjustment.

The ongoing fiscal consolidation process will negatively affect the growth of the Portuguese economy between 2011 and 2013 but it is expected to create conditions for sustainable growth in the long term. The IMF projections point to an unprecedented contraction of economic activity and domestic demand, along with a substantial reduction of the external imbalances. According to IMF forecasts, the budget deficit will be 5.9% of GDP, nevertheless the Government points to a 4.5% GDP deficit.

In 2011, it is estimated that GDP contracted 1.6%, reflecting a significant decrease of both public and private domestic demand. The sharp contraction in domestic demand is accompanied with a significant growth of exports, which is not yet sufficient to offset the impact of the demand adjustment by Portuguese residents.

There has been a continued deterioration in the labor market, a net reduction of employment and an increase of unemploy-

ment to historically high levels (12.4% in the third quarter of 2011). On the other hand, the fiscal consolidation measures imply an unprecedented contraction in household disposable income causing a general decrease of the purchasing power and consumers' confidence.

In 2011 the average annual inflation rate rose to 3.6% (1.4% in 2010), reflecting the impact of the increase of indirect taxes and of the rising prices of administrative, transports and energy products.

The Portuguese economy will be marked by structural adjustments of macroeconomic imbalances in the context of the Financial Assistance Programme entered into with the European Union, the Eurozone countries and the IMF. This process, which will intensify in 2012, should lead to a sharp contraction of domestic demand by the end of 2013.

Nevertheless, its success will ensure the recovery of basic macroeconomic balances, the reduction of chronic external financing needs of the Portuguese economy, the resumption of a sustainable growth process and will also insure the return of residents to the funding at the international financial markets. editorial comment, João Matos last page

9 43

The Construction Sector The construction sector in Portugal in 2011 registered again a decline in its activity, influenced by a highly unfavorable economic environment.

The majority of indicators point to a contraction in the sector's production volume and the construction's gross added value added decreased 11.6% in connection with the same 2010 period, along with the 14.1% decrease of construction's investment. In November 2011, the activity level of construction sector decreased 8.3%, the confidence index decreased 6.3% (which has been declining for 41 consecutive months), the employment and the order books followed the same trend, with decreases of 3.2% and 11.6% respectively. The sharp fall in all qualitative indicators of the construction sector clearly shows the deep crisis affecting this industry in Portugal, which becomes even more evident when compared with the situation of the European Union, where there is an increase – albeit slight – of the confidence of the sector's business men and of the order books.

The housing market has been the most penalized by the current economic situation, as is evidenced by data provided by the Bank of Portugal, which show a decrease of 63.4% in new loans for house purchase. This is a consequence of the impact of fiscal consolidation measures in household income and of the restrictions imposed on access to house purchase's financing. These factors, coupled with the growing economic difficulties caused by the rising unemployment and the serious confidence crisis that has settled generally, have led to a drastic decrease of housing demand. As an evidence of the contraction in the construction segment of residential buildings, the licensing of new houses registered a 31.1% fall which corresponds to a reduction of 6.565 houses' licensings. The housing sector was again the sector that registered the largest drop in production, which should have been about 15%.

However, in 2011, the decline in production was also very significant in the nonresidential construction and in the engineering works' segments.

Again due to the economic crisis, the segment of non-residential buildings achieved a significant decrease, with the licensed areas representing a 7.9% reduction when compared to last year's same period.

In the public works segment there was a strong reduction in investment, with the number of tenders launched by the Central Government contracting to 70.3% in 2011 (in comparison with 2010). Taking into consideration the values of the tenders launched by November 2011, a 1,239 million euros reduction occurred, which represents a 31.6% decrease in the value in connection to 2010's homologous period.

According to the businessmen operating

7

in this market, the reduction of public investment and the excess of competition that leads to very low prices have been unfavorable to the evolution of this sector's activity.

The employment related to the construction sector in 2011's third quarter shows a reduction of 3.2% over the second quarter of the year, which resulted in a 14,000 employees decrease in just three months.

In cumulative terms, since 2002, the construction sector's employment decrease reached about 168,000 jobs. The business confidence index fell 6.3%, reaching a new historic low as a result of more than 40 consecutive monthly falls.

According to EC sources, the confidence of the European businessmen operating in the construction sector remained at an average positive level (+0.7%), whilst in Portugal this confidence continues to fall sharply, thus aggravating the gap between Portugal and other EU countries in this regard. Such results significantly from the recent evolution of the order book, which in Portugal decreased 27.4%, clearly opposed to the average 5.2% increase recorded in the EU. see table 1, page 3

The Water and Environment Sector The water and waste sector in Portugal has had very significant developments over the last few decades and especially in the last decade and a half, in particular with regard to the institutional framework. In fact, the entrepreneurship of the inter-municipal and municipal collection, treatment and distribution of water for public consumption, collection, treatment and rejection of effluents and municipal waste collection, and the opening of its management to the private sector occurred with the publication of Law Decree No. 372/93, of 29 October and no. 379/93 of 5 November.

The strategy outlined in the PEAASAR II, fund managers, along with the necessary implementation of infrastructure for achieving the desired service levels with the required quality standards, should ensure that the price of services reflects the cost of water and sanitation, in order to grant the sustainability of services, and promote the efficient use of resources through appropriate environmental practices, ensuring complete compliance with legal obligations, without losing sight of the recommendations for the establishment of socially acceptable fares, in particular those related to the increase of the territorial scale of interventions and the full exploitation of the associated funding.

In Portugal, the sector of water supply and wastewater sanitation is subdivided

lugar de bouçós - gême 4730-180 vila verde portugal tlf. +351 253 109 050 comercial@globalsun.pt www.globalsun.pt

into two strands in their value chain: the "high" and "low": Ÿ“High” systems of wholesale activity: capture systems, water supply and treatment and collection systems, waste water treatment and rejection; Ÿ“Low” systems of retail activity: water distribution systems and domestic waste-water collection.

There is a large number of management entities operating in Portugal (354) and its small size does not allow a desirable – and long-awaited – efficiency, optimization and scale in the water sector. The situation becomes more alarming when adding the dispersion and the small scale of these entities to the short cycle of water that they generate: from the 354 companies only 51 are managing the entire lifecycle of urban water, i.e. water and sanitation, "high" and "low".

However, if on one hand it is known that water tariffs do not cover the full cost of the service, they are not sustainable and must be increased; on the other hand there is a long way to run in the systems optimization, whether by the scale effect or by a service costs reduction.

According to the RASARP 2010 data at the water-supply level the weighted average of the service average price charged by the management entities "on high" is 0.46 €/m3, noting a certain dispersion of service quality, with maximum and minimum values of 0.70 and 0.30€/m3 respectively. In the case of water supply "on low", the weighted average of the service average price is in1.43€/m3, noting a certain dispersion of service quality, with maximum and minimum values of 2.56 and 1.01 €/m3, respectively.

The level of sanitation, according to the RASARP 2010 data, the weighted average of the service average price of fund managers "on high" is 0.32 €/m3, noting a significant spread of quality of service, with minimum and maximum values of 0.62 and 0.24 €/m3 respectively. In the case of sanitation "on low", the weighted average of the service average price is 0.71 €/m3, with a significant spread of service quality, with maximum and minimum values of 2.17 and 0.28 €/m3, respectively.

Although they are average values, these numbers reflect the imbalances that exists in the sector and the need to act urgently towards greater rationality, efficiency and optimization.

and reduce CO2 emissions, the Government has defined strategic lines for the energy sector, approving the National Strategy for Energy (ENE 2020), which estimates that by 2020 dependence on external energy will be reduced in 74%.

Accordingly, renewable energies will have a crucial role to play, and it is expected for 2020 an installed capacity of 8,500 MW in wind energy, 8,600 MW in hydropower and 1,500 MW in solar energy.

In Portugal, the electricity production from renewable energy sources (RES) dropped about 15% in 2011 compared with 2010, a fact to which contributed the decrease of 27% in water production.

Regarding the incorporation of RES in gross consumption of electricity, it reached approximately 50% in 2011.

As for the world total installed capacity of the different sources of renewable energy and its contribution to electricity production, in 2011 the ranking has changed, with solar energy conquering positions: the hydropower ranks first, followed by the wind, solar, biomass, geothermal and wave.

Wind Energy The worldwide total installed capacity of wind power reached in late 2011, about 239 GW1, when at the end of 2010 was about 197 GW, which is a new record increase of 42 GW1 (after an increase of 37.6 GW in 2010).

At the global level, China retained its position as the country with the largest capacity, after installing in year 2011 about 18 GW wind farms, reaching a capacity of 62.7 GW (more than a quarter of the world's installed capacity). The US remained in second place in the ranking with an installed capacity of 46.9 GW (+6.8 GW of new capacity installed in 2011).

On the other hand, in some European countries, there has been some stagnation or even decrease. In Europe, Germany continues to set the pace, with 29.1 GW installed (GW +2 face 2010), followed by Spain with 21.6 GW installed (+1 GW compared to 2010).

In the European Union, the total installed capacity reached approximately 94 GW1, with an increase of 9,616 MW (8,750 MW onshore and 866 MW offshore) in 2011, very close to the increment of 9,648 MW recorded in 2010. see graphic 1, page 3

The Renewable Energy Sector The renewable energy sector has currently a major position in Portugal, resulting from the role that its players have achieved in the national energy market.

At the end of 2011, the total renewable installed power reached 10,323 MW. Committed to reduce dependence on foreign energy, increase energy efficiency

In Portugal, the North and Centre regions are the ones that have the greatest concentration of national wind farms, due to the greater availability of resources.

The wind power installed in Portugal at the end of 2011 accounts for 4.3 GW1, enough to produce 15% of consumed electricity, and is distributed by 218 wind farms, with a total of 2,240 wind turbines throughout the Mainland and offshore. It should be noted the commissioning in December 2011, of

consolidated dst, sgps, s.a. ANNUAL REPORT 2011

the wind turbine from the first offshore wind central at Aguçadoura.

At the end of 2011, Portugal maintains its position, already held in 2010, the sixth European country with largest installed wind power, at the year's end with 4.3 GW1 wind capacity, compared to 3.9 GW in 2010, due to the installation of approximately 0.4 GW new power in 2011. see graphic 2, pág 3

Solar Energy The photovoltaic solar energy is one of the most promising energy resources. In 2011, the photovoltaic sector has consolidated its position in terms of worldwide installed capacity, as the third most important source of renewable energy, despite the global financial and economic crisis.

Indeed, at the end of 2011 the world's total installed capacity reached 67.4 GW1 (an increment of GW 27.4 during 2011), when at the end of 2010 was about 40 GW, in 2009 around 23 GW, and in 2008 less than 16 GW. Europe is leading, with about 21 GW1 installed power in 2011 (growth exceeding 50%), attaining a total capacity of more than 50 GW1 (more than 75% of the world total), followed by Japan (+1 GW) and the USA (+1,6 GW).

According to the previsional data available at this time, it is expected that outside Europe, China occupies the top of the ranking with an installed capacity during 2011 of at least 2 GW1, followed by the USA with 1.6 GW installed in 2011.

As regards the installed power in the EU during the year of 2011, Italy ranks first with an additional capacity of 9 GW, totaling 12.5 GW, followed by Germany, which brought 7.5 GW in 2011, reaching 24.7 GW of total installed capacity.

Portugal, by the end of 2011 has an installed capacity of approximately 150 MW1, in comparison with 130 MW in 2010, and 114 MW in 2009. see graphic 3, page3

In Portugal, at the microgeneration level, a legal regime change brought, as main novelty, transparency in activity access through a simplified system of obtaining interconnection licenses with the PSEN (public service electric network), leading to a clear increase of installed power.

At the end of 2011, and as a result of a memorandum of understanding between the Portuguese State and the Troika, the Ordinance Law No. 284/October 28, 2011 was published, which amends the Law Decree No. 118/October 25, 2010, establishing a rate of 0,32 €/kWh and 10 MW of power's annual quota to be assign.

Thus, the reference fare for 2012 was significantly reduced, which under the Law Decree No. 118/October 25, 2010, amounted to 0.36 €/kWh, as well as the annual quota, which pushes the power originally planned of 25 MW/year for 10 MW/year, equivalent to little more than 2800 installations.

The microgeneration activity, which began with the publication of Law Decree

No. 34/March 8, 2011, came to allow the connection of photovoltaic power plants to the PSEN up to 250kW, provided that installed in buildings with significant consumption, with an installed power less than or equal to 50% of the contracted power, fixing the fare in 0.25 kWh and the annual quota to be allocated at 50 MW power.

T h r o u g h o u t 2 0 11 , w i t h i n t h e microgeneration framework an approximately 31 MW of power were ascribed.

The Ordinance Law No. 285/October 28, 2011, lined up with the aforementioned MoU, lessen the reference fare for 2012, not in 7%, as was originally planned, but in 14%, which means 0.215 €/kWh for 2012, as well as decreased the share of annual power to 30MW

The Hydropower The hydropower is the worldwide leading source of renewable energy, being one of the most attractive for its maturity and predictability, as well as for its ability to compete economically with other non-renewable energy sources. China is by far the largest producer of hydroelectric power in the world, followed by Canada, the USA and Brazil.

In Portugal, the production of electricity reached an installed capacity of 5,271 MW1 at the end of 2011, and, in 2010 was 4,837 MW. Currently, and in terms of an average year, a little more than 30% of electricity consumption in Portugal comes from hydro source.

The hydroelectric sector in Portugal was marked in 2007 by the launch of the national programme for high-potential hydroelectric dams, which are currently running. This programme foresees the hydroelectric exploitations implementation of Padrozelos, Daivões, Vidago, Gouvães, Foz Tua, Pinhosão, Fridão, Girabolhos, Alvito and Almourol. The completion of these projects will result in an increase of installed capacity of 1100 MW. Besides the Dams National Plan, there is no development perspective for this sector throughout 2012. It should be pinpointed that the Law decree No. 25/2012, of February 6th, suspends the assignment of new injection points in the Public Service Electrical Network, and the Order 3316/2012 from the Ministry of the Economy and the Environment suspends all new hydroelectric licensing and extinguishes the ongoing administrative licensing procedures. editorial comment, Margarida Monteiro, page 9

The Telecommunications

Sector In 2011 the global economy remained affected by the international crisis that hit various sectors of activity, despite the

3

telecommunications sector, as expected, remained attractive to investment, particularly at the level of the New Generation Networks.

The New Generation Networks provide a faster telecommunications service, allowing most consumers to access technologically innovative products and services. In the European context, investment aids for new generation networks were maintained through the awarding of financial incentives. This investment aims to promote the mass adoption access to high levels of Internet broadband, and the development of advanced applications to generalize the users' connection to new generation networks. In this sense, the bet on the penetration growth of wireline broadband services remains throughout Europe, especially in areas with lower interest and commercial potential, generalizing the access, namely to Internet.

At the Portuguese market, over the 2011, telecom services sector continued to show a growth in terms of wireline customer base.

In the residential sector continued to attend to a dynamic dispute between PTC (PT Communications), with its MEO product, and the ZON offering (at the level of pay-TV). The competition between them has benefited the consumer with the ability to access the listings in greater numbers and diversity.

According to quarterly indicators published by the sector regulatory body (ICP-ANACOM), pay-TV subscribers (whereas wireline solutions not only but also, DTH – Direct to Home satellite) in late 2011 increased by around 202 thousand, compared with the previous year, reaching an 2.98 million subscribers. Commend that supply fiber FTTH/B (Fiber to the Home/Building) was the one that contributed the most to this service growth, once in every 10 new customers, in net terms, about 6 came from this offer (information published

by ANACOM). see table 2

This economic year has seen the entry of ZON on the business market, particularly in the context of small and medium-sized enterprises and mass business. The market has become more competitive as a result of Optimus and Vodafone offering fixed-mobile convergence solutions, despite the hegemony of the PT group has remained.

At the corporate level, there was a significant pressure over ONI customer portfolio, which resulted in the loss of the company's reference customers. see table 3

There was also an increase in the number of customers Internet access at a fixed location. According to data published by ANACOM with reference to the fourth quarter of 2011, there has been a growth of 5.1% compared to the previous corresponding quarter, reaching 2.2 million customers.

The key technology of fixed broadband Internet access remains ADSL, representing 49.1% of the total with reference

to the fourth quarter of 2011. The number of access via cable modem amounts to 903 million, representing 40.3% of the total access and reflects an increase of 5% compared to the previous corresponding quarter. Fiber optic Internet access (FTTH/B) increased 81.4% against the same period of 2010 and amounted to 237 thousand hits. Thus, this growth represented 10.5% of the total hits. see table 4

As regards fixed broadband customers' market share, and as can be seen in the table 4, the share of customers of the PT Group at the end of the fourth quarter of 2011, stood in 49.4%, more than 2.5 percentage points in the counterpart preceding quarter.

TABLE 1

GRAPHIC 1 Sector Indicators Concrete sales Steel sales Building licenses Public works - Promotions - Adjudications - Works performed GFCF (construction)

The block auction of frequencies in certain spectra ended up having just the presence of the current mobile communications service providers, therefore addling the possibility to a new player enter this market. The ZON and the ONI did not participate in the auction, and there was not the presence of any foreigner operator. In this way, the frequencies at auction were distributed virtually equally between the three current players, with a slight emphasis on the Vodafone. So, the basic conditions for mobile operators to invest in technology that will provide 4G service, with bigger broadband, are defined. editorial comment, Xavier Martin, page 9

2011(e) -15,4 -8,9 -11,0

-29,5 12,3 42,1 -11,7

21,1 -39,1 -15,2 -5,8

-34,1 -1,6 -21,0 -14,1

MW

Installed Capacity in the EU 2011

30.000 25.000 20.000 15.000 10.000 4.302

5.000 0

TABLE 2 - Evolution of the number of pay-TV service subscribers 4thQ10 786 498 992 169 121 104 104 2.775

North Centre Lisbon Alentejo Algarve Azores Madeira total

2thQ11 811 519 1.006 177 125 105 105 2.848

4thQ11 862 555 1.028 190 130 106 106 2.977

Year change 9,5% 11,5% 3,6% 11,9% 7,2% 2,0% 2,3% 7,3%

GRAPHIC 2 Wind Energy - World Total Installed Capacity (MW) 250.000

Source: ICP - ANACOM Unit: Thousand of subscibers

200.000 150.000

TABLE 3 - Evolution of the total number of fixed Internet access customers Quarterly change 4thQ11/3rdQ11 4thQ11/4thQ10 0,8% 5,3% Broadband customer (fixed)) 2.075 2.169 2.186 -1,4% -10,1% 29 26 26 Dial-up Access customers 0,8% 5,1% Total of Customers 2.104 2.195 2.212 th

rd

th

4 Q10 3 Q11 4 Q11

100.000 50.000 0

Source: ICP - ANACOM/INE Unit: Thousand of customers

Portugal

Total installed capacity

TABLE 4 - Evolution of number of broadband access (fixed access)

see table 6

With regard to the wholesale market, the big news in 2011 was the entry of the ZON that, either alone or in partnership with other operators, tried to optimize the asset of its own net susceptible to be shared with other companies in the sector.

In 2011 the switch-off of terrestrial analogue system was prepared, from which the television service is no longer available via analogue. Therefore, several technological and political speeches were made in the course of the year.

Although Portugal is not one of the pioneering countries in digital pattern adoption, which significantly improves the signal quality of open television and offers frequencies to other wireless services providing, the end of the terrestrial analogue signal represents a historic milestone.

2010 -7,0 -23,0 -9,1

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

see table 5

At the end of the fourth quarter of 2011, the number of fixed phone system hits amounted to 4.5 million, an increase of 1.1% against the same period of 2010.

The growth of access via VoIP was 27.0%, including access via fiber optic (FTTH/B) that, according to ANACOM, increased by 94%.

With reference to the end of 2011, the PT Group companies operating in this market had a market share of 58.7% customers in this segment, which represents a decrease of 17.5 percentage points since 2007. This decrease is due to the increase in alternative providers' offers, especially packaged ones.

2009 -15,5 -4,8 -21,5

Quarterly change 4thQ11/3rdQ11 4thQ11/4thQ10 5,3% 1,0% 2.240 -1,2% -0,6% 1.099 49,1% 5,0% 1,5% 903 40,3% 81,4% 17,6% 237 10,6% -93,7% -92,3% 2 0,1%

4thQ10 3rdQ11 4thQ11 Total access, of which: 2.127 2.217 ADSL access 1.112 1.106 % of the total fixed broadband 52,3% 49,9% 860 890 Cable modem access % of the total fixed broadband 40,4% 40,1% 130 201 FTTH/B access % of the total fixed broadband 6,1% 9,1% 25 20 Others % of the total fixed broadband 1,2% 0,9%

GRAPHIC 3 Photovoltaic Solar Energy - World Total Installed Capacity (MW) 25.000 20.000 15.000 10.000

Source: ICP - ANACOM Unit: Thousand of accesss

5.000 0

TABLE 5 - Evolution of the broadband customers share (fixed access) 2011

2010 th

PT Group PT Comunicações PT Prime TMN ZON Multimédia / TV Cabo Group ZON TV Cabo Portugal ZON TV Cabo Madeirense ZON TV Cabo Açoreana Cabovisão Optimus Vodafone AR TELECOM ONITELECOM Other Services Providers

st

4 Q10 46,9% 44,9% 1,9% 0,1% 32,5% 30,1% 1,5% 0,9% 7,9% 6,6% 4,2% 1,2% 0,3% 0,6%

th

1 Q11 47,2% 45,6% 1,5% 0,1% 32,8% 30,4% 1,5% 0,9% 7,7% 6,1% 4,2% 1,1% 0,3% 0,6%

2 Q11 47,8% 46,2% 1,5% 0,1% 32,9% 30,5% 1,6% 0,9% 7,6% 5,8% 4,1% 1,0% 0,3% 0,6%

3rdQ11 48,4% 47,0% 1,4% 0,1% 32,7% 30,2% 1,6% 0,9% 7,3% 5,6% 4,1% 0,9% 0,3% 0,6%

4thQ11 49,4% 48,0% 1,4% 0,1% 33,0% 30,5% 1,6% 0,9% 7,2% 5,4% 4,2% 0,1% 0,1% 0,6%

Total installed capacity New installed capacity in 2011

Source: ICP - ANACOM

TABLE 6 - Number of access via fixed telephone system change Main Total Access Analogue access (of which) Public payphones RDIS and Diginet access Basic Primarys Fractionated Other digital access GSM / UMTS VoIP / VoB

4thQ10 4.477 2.444 32 722 397 267 1 57 442 868

3rdQ11 4thQ11 4thQ11/3rdQ11 4thQ11/4rdQ10 4.511 4.525 0,3% 1,1% 2.360 2.325 -1,5% -4,9% 29 27 -9,5% -15,5% 675 639 -5,2% -11,5% 363 352 -3,0% -11,4% 286 280 -1,9% 4,9% 4 3 -26,7% 462,9% 22 4 -80,9% -92,8% 454 458 0,9% 3,7% 1.022 1.103 7,9% 27,0%

Source: ICP - ANACOM Unit: Thousand of access

Financial and Economic Analysis The dst group's turnover reached 192.4 million euros - see graphic 1 -, a decrease of 7.6% compared with 2010, denoting a strong resilience to the country's depressive macroeconomic context. Moreover, the proportional turnover of the dst group companies regardless the adopted consolidation method reached 254.6 million.

It should be noted that the EBITDA - see graphic 2 - maintained its consistent growth trend setting up above 35 million euros at the end of 2011, reaching 18.6%.

This profitability increase was particularly strong in the area of engineering and construction, which increased 4 percentage points.

The slowdown in growth was not only a result of the dst group's nuclear activity, see graphic 3 - engineering and construction, but also as a result of a year with lower wind intensity causing slowdown in the renewable energy business area.

Therefore, and due to the growth of the environment and water area, its relative weight in the dst group turnover and EBITDA level increased - see graphic 4 -.

The impact on dst group turnover of the latest business areas is increasing, in particular at the level of EBITDA as investments made reaches greater maturity stages with the exception of the telecommunications area which is still under investment.

The group's consolidated result in 2011 exceeded 5 million euros, less than the

previous two years despite the higher operating profitability. This result is a consequence of the adoption of prudence criteria regarding to Clients debt impairment, but also a consequence of the worsening business conditions set of by the national financial institutions- see table 1and graphic 5.

Despite the difficulties of the engineering and construction sector at national level, the business area of engineering and construction of the dst group still represented more than 20% of the consolidated net profit. However, in 2011 were the business areas of renewable energy and environment and water that had the greatest preponderance on the consolidated net result of dst group. In the next chapter of this report the analysis of the results and activities carried on by each one of the areas of dst group in 2011 will be detailed - see graphic 6.

The total net indebtedness has reached, in 2011, 182.7 million euros, without significant change compared to the previous year. However, and as result of profitability increasing the net debt/EBITDA ratio decreased to 5.11 in late 2011 (2010: 5.67). The financial capacity remained unchanged with the financial autonomy ratio in the year of 2011 of 21.44%, a reduction of only 0.21 percentage points compared with the 2010.

GRAPHIC 1 M€

M€

TURNOVER

GRAPHIC 2 EBITDA

GRAPHIC 3

GRAPHIC 4

TURNOVER

EBITDA

78,0%

67,9%

40,00

240,0

35,00

207,0

35,8

30,00

180,0

192,4

32,1

25,00

167,6

20,00

120,0

27,5 0,5%

13,4%

15,00

-3,0%

8,0%

20,2%

8,9%

10,00

60,0

5,00

Eng. & Const.

Renewables Energies

Eng. & Const.

Renewables Energies

Environment

Telecomunications

Environment

Telecomunications

0,00

0,0

2009

2010

2011

2009

TABLE 1

2010

2011 M€

GRAPHIC 5

GRAPHIC 6

16000 14000 Values in €m 2009 Revenues 167.594,7 EBITDA 27.524,7 EBIT 23.890,1 Financial Income -13.308,0 Net Income before Taxes 10.582,1 Taxes -2.027,6 Consolidated Net Income 8.554,5 To: Minority Interest 552,8 dst group 8.001,8

2010 207.026,2 32.103,2 20.800,8 -6.769,2 14.031,6 -3.093,8 10.937,8

2011 192.432,4 -14.593,8 3.658,4 35.761,7 17.666,6 -3.134,2 -9.270,7 -2.501,5 8.395,9 -5.635,7 655,0 -2.438,8 5.957,1 -4.980,7

% -7,6% 10,2% -17,7% 27,0% -67,1% -26,9% -83,6%

48,9 -5.029,6

6,9% -95,8%

3.658

12000

6.793

10000

6000

707,8 5.249,3

75,3%

37,1%

2.501

10.279

655

Eng. & Const.

Renewables Energies

Environment

Telecomunications

Holding and others

49

4000 5.249

659,0 10.278,9

22,0%

-16,9% -17,5%

8000

2000 0 Net profit 2010

EBITDA Deprec and Amort

Financial income

Income revenue Tax

Country Tax

Net Profit 2011

4

consolidated dst, sgps, s.a. ANNUAL REPORT 2011

Business Areas

Engineering and Construction M€

% Net Profit

Proporcional Turnover

250,0

Renewable Energies M€

Proporcional Turnover

M€

% Net Profit

25,0

70,0%

Environment and Water 75,3%

80,0%

63,4% 60,0% 20,0

215,2 150,0

210,6

178,6

21,4

52,6%

50,0%

15,0

40,0%

19,4

60,0%

32,1

37,1%

39,4%

35,0%

30,3

29,0

30,0%

22,6%

30,0%

20,0% 50,0

0,0

0,0% 2009

2010

2011

25,0

0,0%

24,0

0,0 2009

2010

2011

Construction & Engineering is the core business area in the dst group inasmuch that in the 40s was the start up activity with the stone dismount and processing to supply civil works in the region of Braga.

Indeed, the construction & engineering maintains, even today, a very important position within the group and corresponds to its biggest turnover, with more than 210.6 million Euros in 2011 which, in spite of a contraction of -2.1% compared with 2010, still reveal an enormous strength and consolidation considering profound generalized break that this sector felt as a result of an adverse and difficult macroeconomic environment.

Also the Construction & Engineering's contribution to the dst group's net result underlines the importance of this area, insofar as its result in 2011 is 22% of the annual total group. It should be noted that for the progressive reduction of this business area contribution concurred the growth and the maturity level of other business areas in which the dst group attends.

The dst group has an extensive cast of strong technical skills that allow it to be perceived by the market as a landmark of rigor and quality of service in the engineering & construction field.

It was, in part, as a result of this technical knowledge capital and its perception by its customers, which the dst group carried out in 2011, many emblematic works, that protrude, inter alia, the construction of the Embraer Aviation Park in Évora, the execution of the WWTP of Sousa and Cávado/Homem, the riverfront renovation and rehabilitation of Ave River in Santo Tirso, the Decathlon of Leiria and Setúbal and Organic Valorization centers of Braga and Mirandela. Simultaneously, the dst group has kept its involvement in the national modernization project of the high school park.

Cari – a company dedicated to building, rehabilitation, restoration and conservation – has been pursuing a strategy of sustained growth, which enabled it to evolve into a turnover in 2011 of more than 13.2 million Euros, to which contributed some major rehabilitation, restoration and conservation projects, such as the Santa Justa Hotel, Hotel Mercure in Braga, health centers of Ramada and Póvoa de Santo Adrião, and the Oporto's French school.

Through dte, the dst group has a strong presence in the areas of electrical installations, hydraulic, heating, ventilation and air conditioning. This group company has been showing a remarkable performance and reached a turnover of more than EUR 30.6 million in 2011, representing an increase of 14.6% compared to the prior year. This year, dte participated in important projects in this area, namely the Gaiart's Centrum Plaza, Leroy Merlin de Coimbra, the Coaches Museum, the 2nd phase of the Metro of Vila de Conde, among others.

On the other hand, bysteel, the group's company for the area of metal structures construction and assembly and roofs and facades coating, is doing a stable pathway as a reference player in their activity area. The reconciliation of its installed capacity with the technical excellence of its resources allowed it to get a very positive development in terms of industrial production – clearly in counter-cycle regarding its direct competitors – which is reflected in an increase of 348 tons (+6%) of processed steel compared with 2010.

Bysteel took part in important works across the nation, such as the railway stations of Cacém and Barcarena, the Overpass of Azinhaga, the Faro airport and Parque dos Poetas in Oeiras. On the other hand, the year 2011 marked the clear and unambiguous overseas affirmation, which stand out the works of Ocean Towers and River Cuelei Bridge, in Angola.

2009

2010

2009

2011

Alto Minho I 240 25,63% 61,50 2008 Melgaço, Monção, Valença, P. de Coura Promoter Ventominho

Installed capacity (MW) Participation dst group (%) Installed capacity dst group (MW) Production starting year Location (Council)

Arga 36 12,50% 4,50 2006 Caminha

José Gonçalves Teixeira Avelino Gonçalves Teixeira Joaquim Gonçalves Teixeira Hernâni José Gonçalves Teixeira José Manuel Lello Ribeiro de Almeida Teresa Gonçalves Gomes

Espiga 6 12,50% 0,75 2005 Caminha

Emp. Eól. Emp. Eól.

Espiga, s.a. Espiga, s.a.

S. Paio

Alto da Vaca

Total

10 10,63% 1,06 2005 V.N.Cerveira

2,4 25,00% 0,60 2001 V. do Minho

294,40 68,41

Pq. Eólico Emp. Eól.

Cerveir., s.a. Alt. da Vaca, Lda.

The dst group also intends to extend its investments and strengthen its position in the wind energy sector, both nationally and internationally, and it currently has ongoing evaluation processes of wind projects.

The year 2011 was a year in which the dst brand tag itself once more in the photovoltaic and thermal solar market, simultaneously at levels of quality and customer support. In terms of disclosure activities development, and together with the campaign promotion "I own a sunshine ray" framed within microgeneration, dstsolar took place on the main fairs of the sector, namely: Tektónica (Lisbon – May 2011) and Sea Forum (Porto – June 2011).

Dst solar operates in an extremely regulated market, therefore legislative changes that have occurred in 2011 led to some stagnation of the photovoltaic production market. Nevertheless, dst solar has sought to diversify its business in order to bridge the demand reduction for microgeneration. Accordingly, it directed his trade to off-grid installations (self-consumption oriented) and developed several projects for solar thermal installation of medium/large scale projects in institutions such as schools and homes for the elderly, as well as went through the IPSS's project implementation.

The year 2011 marks the start of photovoltaic panels production at the Global Sun assembly unit. In the first half of the year, global sun proceeded to assembling and installation of the production line, its testing phase occurred during July and August with the ramp up of the line, after which it began actual production, with productivity and wasted levels extremely positive. It also should be enhanced the achievement of management systems certification (9001: 2008, THIS SO 14001: 2004, OHSAS 18001: 2007/NP 4397: 2008) and product (IEC 61215/61730).

In the hydropower chapter, dst group constitutes the dst hydro which has been developing a constant activity of "greenfield" project development and partnership proposals analysis for water resources construction and management.

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

The Board of Directors,

2011

The dst group's action on the renewable energies sector is developed through a set of diversified business in technological terms – wind, solar photovoltaic, solar thermal, hydro, oceans, but also in energy efficiency.

The activities carried out, as would be expect, are in different stages of development and maturity, from marketing to exploratory studies.

In this way, and after several years of investment, part of the undertook investments reached the maturity level in 2009 and currently they already are net contributors to the results of the dst group which is consolidating as its subsidiaries and associated companies progress along their investment cycle.

The proportional turnover of this business area amounted to 19.4 million Euros, a decrease compared with the previous year, mainly due to lower wind availability that characterized the year 2011, leading to a drop in wind energy generation this year.

The net profit contribution in 2011 was 3.9 million Euros, which corresponds to approximately 75.3% of the consolidated net result.

In wind energy, the activity started in the mid 90s, making the dst group one of the pioneers betting in this technology in Portugal. In 2008, came into operation the Wind Farm of Alto Minho I, with an installed capacity of 240 MW, thus expanding the group associated company's capacity up to 294.40 MW. With further investment, the dst group installed power passed to 68.41 MW. From March 25th, 2009, with the conclusion of the last sub wind farm (Alto do Corisco) of the Wind Farm of Alto Minho I, all rights assigned to Ventominho were then operational, materialized in harnessing the winds of Melgaço, Monção, Paredes de Coura and Valença counties, being completed the already compromised investments of dst group as shown in the table below.

Final Note Braga, April 16, 2012

2010

2011

-4,0% -8,0%

0,6 0,4

-12,0%

10,0%

0,2

-16,0%

0,0%

0,0

-11,8%

10,1%

26,0

10,0%

2010

20,0% 15,0%

5,0

10,0%

1,1

19,5%

27,0

20,0%

2009 0,0%

-3,8%

25,0%

28,0 10,0

% Net Profit

1,2

0,8

40,0% 100,0

Proporcional Turnover

1,0

30,0%

30,0

50,0%

17,5

40,0%

31,0

52,3%

M€

% Net Profit

32,0

70,0%

200,0

Proporcional Turnover

33,0

Telecommunications

26,8

2009

2010

2011

2009

2010

2011

With the acquisition by Criar Vantagens, Lda., a dst group's associated company, of the entire capital of Aquapor – Serviços, S.A. at the end of 2008, the dst group extended its activity in this market, placing itself as an important national player by adding new concessions to those indirectly previously hold via Agere – Empresa de Águas, Efluentes e Resíduos in Braga. In 2011 this trend was reinforced with this business area to its representation increase in the group's portfolio.

The proportional turnover of this business area amounted to 32.1 million Euros, a growth of about 6% which corresponds to 1.8 million Euros.

The contribution of this business area for dst group's net result in 2011 amounted to 1.9 million Euros, corresponding to about 37.1% of the total.

The target for Waters and Environment area, notably through Aquapor, is the business diversification, and internationalization investment. In the international area, the outlined strategy includes the Maghreb countries, the PALOP (Portuguese-speaking African countries) and Brazil, seeking for local partners for the development of water business areas, similar to what is defined for Portugal. The wide range of skills allows us to address any management model, ranging from the concessions, to projects of design/build/operate and supply services.

In this context, it was created in 2011 a company called Visagua, which is owned by Aquapor and Intelvisa (owned by Intelec and Visabeira), with the objective to position itself as the reference operator in the areas of water supply, sanitation and solid waste in Mozambique.

0,3

-16,9%

0,1 2009

-20,0% 2010

2011

The dst group created in 2008 the dstelecom towards the strategic development and management of a new generation network, founded on the integration of broadband telecommunications services for voice, data and image.

While this business area is still in the investment process, and, therefore, with non relevant operational results, the year 2011 was marked by the setup, management, development and maintenance of an high speed electronic communication network in the Northern zone, and Alentejo and Algarve zones. This project is under development by dstelecom norte, lda. and by dstelecom alentejo e algarve, lda., accounting for an investment of more than 80 million euros.

The coverage of the fiber optic network managed by dst group has a very significant expression across the Portuguese territory, whereas, in addition to developing networks within the framework of this project, Minhocom and Valicom also have relevant infrastructure at this level.

Under the dome of dstelecom, the dst group has been focusing on enhancing their skills within setup, implementation, management and operation of new generation networks, having a strong know-how and expertise in this niche of the telecommunications sector.

In view of the growth of this activity in 2011, the dst group has strengthened its staff in order to ensure the maintenance of technical and commercial capability, quality and accuracy of the services provided and the development of new projects, particularly in markets like South America, where the group has already developed a number of initiatives towards the telecommunications internationalization.

The combination of the technical expertise of the dst group in this area with a truly differentiating product from those currently available on the market, i.e. a type of "operator of operators" which is based on the concept of open networks to all operators, exponentially increases its potential for success, both in the domestic market and in other foreign markets, through exporting a model developed in Portugal.

consolidated dst, sgps, s.a. ANNUAL REPORT 2011

5

Corporate Social Responsibility Dst continues a policy of social responsibility based on sustainability strategies that include the concern for the collective welfare and social and environmental effects of its activit.

As part of its expanded programme of social responsibility it covers such areas as culture, education, health, safety, the environment and the knowledge. This program is cross curricular to the group and is developed on internal and external context involving all employees, and in line with the values of the dst group: Ambition; Passion; Loyalty; Solidarity; Good taste; Courage; Respect; Rigour and Responsibility.

their own foodstuffs. Additionally, it is also the company's intention to build a maintenance circuit, promoting the sport on a regular basis.

In addition to these activities, they are accomplished to attend to theatre plays or music concerts and other shows are encouraged, and birthdays are celebrated at the bar of the offices. The dst group has a stateroom in Theatro Circo de Braga and also a cabin at the Estádio Municipal de Braga, giving employees free access to these two spaces. This was also the year that the dst group reinforced protocols with various entities, ranging from financial to telecommunications, with the goal of providing special conditions to its employees.

The dst group has implemented in 2011 an important measure to strengthen the benefits of its collaborators, to whom offers a life insurance protection up to 20,000 € in the event of death or disability. The measure came up in the context of the Human resources policy pursued by dst group, that by providing better working conditions and life quality for their employees, intend to give them stability and comfort needed to be aligned towards the fulfillment of the company's objectives. In addition to these initiatives, continues to celebrate the birthday of all employees offering a book as a gift.

The dst group continues to invest in training, an investment with a return in the short term, able to boost economic activity founded in knowledge and skills, increasing the competitiveness.

The protocol signed with the Center of New Opportunities of Industrial Association of Minho, in order to encourage its employees to increase their level of schooling and to obtain the 6th, 9th and 12th year degree, was continued along the year 2011, continuing to record great success and adherence.

At the end of 2011, and in the universe of companies held in more than 50%, the group consisted of 918 collaborators, of whom 17.9% are women and 82.1% men, and about 27% are senior management. editorial comment, Margarida Pereira, page 9

Human Resources In the year 2011, the best practices in the context of human resources gave the dst group the award of “Excellence at Work” in construction sector and ranked in second place among approximately 300 large companies from various sectors of activity that took part in a study carried out by the Diário Económico in partnership with Heidrick & Struggles and ISCTE Business School. It was also distinguished as one of the best companies to work for in Portugal. This distinction confirms the belief and direction taken by the group and has an added value by being an independent assessment made by whom, together with the customers, more account in dst: the collaborators.

In 2011 several events were organized for dst group staff, highlighted by the annual board meeting, with the theme "Encounters with Innovation". Bringing together about 200 participants, the event was attended by the performance of the Comedies Cultural Association of Minho as well asf the presence of Teacher Daniel Bessa, current General Director of COTEC Portugal (Business Association for Innovation) which the dst group is a member. One of the highlights was the operational managers general meeting, whose primary purpose is the sharing of information, either by top management, and by those at a daily basis are on the work yard.

The dst group promoted the second futsal tournament consisting of teams from various departments and companies within the group. The great night of qualifying for the final took place on 29 April and was attended by various elements of the administration of the group for the award of prizes to the winning team. More than 120 people, including employees of the dst group, their friends and family, were gathered in October to spend a different day, full of activity, in an area outside of the company's facilities. Titled "Day Out", the participants have joined forces with the goal of cleaning up more than nine hectares of forest and land with growing capacity, promoting the maintenance and upkeep of a true natural heritage that is owned by dst. This land cleanup initiative was done to prepare different land plots where the dst group is creating social gardens available for all employees to go into organic farming by planting

Safety, Hygiene and Health Throughout the year of 2011 were held 1,500 training/awareness actions for the group's employees and 1,800 actions for sub-contractors employees.

Additionally, throughout the year were still carried out various awareness-raising campaigns on the part of the Health and Security Department in order to draw attention, in a different way, for some themes that are very important to the safety and health of workers, such as falls from height, burial and hygiene at workplaces.

Noise controls were performed and exposure to chemical agents on the needed locations, and measurements were implemented in places where the limits were reached, according to specific legislation.

Regarding the examinations and consultations of occupational medicine, as in previous years, they have been carried out at the premises of the group. Services are composed of 4 nurses, one occupational doctor, and two doctors of curative medicine, and always ensuring the presence of a nurse in the company.

During this year were performed around 595 examinations, 96 of them as admission exams. It should be noted that the group has a Cabinet of Stomatology where collaborators had free dental consultations, towards the prevention of oral hygiene.

With the aim of reducing to zero accidents at bysteel factory, was implemented in 2010 a "competition by no accident". This initiative was continued in the year 2011, with the purpose to develop an extra motivation for employees to work safely and increasingly aware of the risks and consequences associated with reckless acts. It also is intended to value those who daily strive to meet the safety requirements and that are cautious in carrying out their daily tasks.

The dst group celebrated the world day of prevention for hygiene, health and safety with an initiative called "Infect yourself". This initiative aimed to "infect" all collaborators and those who work with us, with a “security” virus. For such lectures were given in all working places, pamphlets and manuals were distributed, in order to draw the poster everyone's attention.

years and this project was recognized and distinguished in 2009 at a national and international level. This system – a glass and wood panel that integrates passive solar systems and bioclimatic functions, which translates into greater energy efficiency, and can be applied in new or rehabilitated buildings – came to turn Portugal in the first country in the world to explore the joint structural application of wood and glass with energy characteristics within the framework of sustainable construction.

In August 2011, the Tourist Tower Transportable (ttt) was donated to the People's Republic of China. It was a Portuguese architectural project that became one of the attractions of EXPO Shanghai 2010, in the area reserved for world urban best practices (UBPA). This project was designed by Portuguese architect José Pequeno, under a partnership between the dst and the Universidade do Minho/ISISE, has been selected by the prestigious site of Niels Kolditz on Expositions (worldexpositions.info/shanghai.html), as one of 10 major highlights of the 2010 EXPO.

Society As part of its expanded programme of corporate social responsibility, Maecenas activity is particularly important in relation to education and culture and its dissemination. The dst group has cultural concerns since its genesis, what sets it apart and brings added value. It is a way of doing business is based on a strong cultural base.

Of the various activities and initiatives undertaken in 2011 the following should be underlined: ŸPrincipal patrons of the Theater Company of Braga. ŸMain patron of Braga book fair. The 20th Edition celebrated this year the start of its activities in the historic city centre. Running from April 30 to May 8, the fair had a huge cultural variety and a calendar full of events and shows, being the official Inauguration Ceremony day marked by the Grand Prix of literature promoted by dst group, in what is already the 16th edition of this initiative. ŸAssigns a grand prize of literature, of 15 thousand euros. Maria Velho da Costa was the big winner in 2011 of this project undertaken for more than 15 consecutive years. Her novel titled "Myra" was awarded from 76 Portuguese authors analyzed works or resident in Portugal, published in 2008 or 2009. Ÿ Launched for the second consecutive time, the prize "Emergentes dst", which aims to reward the best work of photography each year at international level.

The prize is supported by "Encontros da Imagem", one of the largest initiatives in the field of Visual Arts in Portugal, which also occurred in Braga. The portfolio by the Hungarian Zoltán Jókay was elected as the best contemporary photography project for 2011. In this second edition, dst has received more than 290 national and international

R&D and Innovation Research and development are core activities in the group, and were reflected in the creation of a company geared to enhance, evaluate, produce and market innovative ideas. The innovation point is dedicated to the creation of new categories of products, services or business models that challenge the established paradigms and generate significant additions of value for consumers, for clients and for the company itself.

Research & development is conducted in-house or through partnerships involving research centers, universities or national and international companies. In line with the latest international trends, evolving from the paradigm of knowledge economy for the economic paradigm of creativity, which has creativity as its critical competence, articulating research and design in the creation of innovative products.

In 2011, innovation point proceeded with the development of the group's institutional Web platforms as well as the development of dst internal applications that support the group's operational activity and r&d. At the same time innovation point developed a candidacy to the 7th Framework Programme under the theme of ICT for efficient water resources management.

The dst group in partnership with the dst, the University of Minho and the architect José Pequeno has been developing the technology project Portuguese Et3 (Energetic Modular Technology) for six

portfolios, twice as many nominations of 2010, 70 of which were subjected to analysis by commissioners, gallery owners and specialist publishers from around the world who attended in Braga during the reading of these portfolios.

The works were on public exhibition at Tibães Monastery in Braga. ŸInvited some collaborators of the dst group to interpret characters from the book "Os Maias" by Eça de Queiroz, to illustrate a special edition of this novel that dst produced. This activity even resulted in a short film. It was created an event at Theatro do Circo de Braga for promoting to colleagues and the general public, the short film and the special edition of the book. To the event hosted by two employees of the company, attended Isabel Pires de Lima, an expertise in the work of Eça de Queiroz and ended with a concert of "Noiserv." It was later inaugurated an exhibition in an art gallery, with pictures of these characters interpreted by our collaborators. ŸPromoted at the headquarters of the dst group, the renewal of the protocol signed between Ventominho – Energias Renováveis and the Comedies of Minho, an association for the promotion of activities and cultural values of Vale do Minho. The event was sponsored by Gabriela Canavilhas, at the time Minister of Culture, and with the presence of several Presidents of the municipalities involved. This event represented once more a dst bet on the investment in Culture, through a major contribution for the next three years of that Association. This collaboration by Ventominho accounts already with more than six years and will prevail until 2013. Ÿ Continuous develops policies to promote books and reading. Thus, on the anniversary of each collaborator is offered a book. The Newsletter of the group is prepared with the active contribution of collaborators who participate by sending articles, without any restriction of themes or literary genres.

In addition, the group also promotes reading by offering books for school libraries and the world day of the book and also by supporting participation on the walk for reading. ŸStrongly encourages the participation of their employees in volunteerism.

The group continues to actively work with the Habitat and with the Food Bank against Hunger. This year at Christmas, more than 250 children as well as elderly and disadvantaged, have benefited from the support of the group's employees, who undertook one more action of social solidarity, this time to help the ' Patronage of Our Lady of the Tower ', an IPSS from Braga. The contribution went through provision of foodstuffs, clothing, footwear and toiletries.

Environment The dst group kept the environmental management system certifications by the norm NP EN ISO 14001: 2004 in the areas of construction and public works,

maintenance of vehicles and equipment, manufacture of wood products and furniture, production and assembly of metal structures (bysteel, s.a.) and certified the area of the production of photovoltaic solar panels (global sun).

In the same way, the group kept the EMAS registration in the areas of maintenance of vehicles and equipment, manufacture of wooden products and furniture and production and assembly of metal structures (bysteel, s.a.). The certifications and EMAS registration are maintained and improved through systematic audits of APCER (Portuguese Association of Certification). The environmental declarations concerning EMAS registrations are available on company's website (www.dstsgps.com).

Assuming the responsibility that group has in protecting the environment during the execution of the various works, the dst proceeds in a systematic way, the implementation of Environmental Management Plans in their contracts, with a view to minimizing the negative impacts that its activity can cause. The environmental management system implemented in the various companies of the group reflects the company's concerns with the preservation of the environment, in particular in the construction industry and public works.

In 2011 an Environment Committee was created to follow and encourage employees to participate in decisions related to environmental management.

During the year of 2011 were undertaken improvement in water network, with the closure of a septic tank and the connection to the public network and the diversion of rainwater diesel supply area.

The group began a campaign to reduce diesel consumption and a study was conducted with the aim of reducing water consumption.

We continue to encourage the delivery of corks by employees and it was distributed 174 economic lamps. The participation in the Eco-school council from the High School Vila Verde remained during the year of 2011.

Quality and Certifications The dst group directs its activity in permanent search of improving the satisfaction of their customers, through an appropriate and efficient Management System, in which they are involved all its collaborators. The motivation of these to the quality is vital, so that the top management invests in a clear and continuing way in communication and training of their human resources. The dst group has well-defined objectives, measurable and consistent with the current management policy. As a company committed to the pursuit of continuous improvement, its activities, performance and results are evaluated and continuously, through cyclic analysis of the results achieved, the verification of the activities/practice areas/detection and improvement opportunities.

The organization is committed to the continuous improvement of its services

and products to meet the needs of the client, always giving priority to quality and struggling through the implementation of practices and procedures leading to proper management of its activities, services and products. Was inserted in this context of a policy of quality and excellence, which the dst group already accustomed its partners, clients and friends, that in 2011, saw another group company be certified by APCER, the global sun.

The dst laboratory also began its certification process in order to extend the scope of the dst to laboratory tests in May of 2012 by APCER. The dst laboratory has its main mission the testing under the quality control of materials used in civil construction and public works, including soils, aggregates for unbound layers, hydraulic concrete and asphaltic concrete.

The quality control plays a key role in works, both in terms of ensuring compliance with the requirements, both in terms of more efficient production processes and lower costs. The lab is also responsible for inspecting and testing within the framework of CE marking of bituminous mixtures from dst central bituminous and by production control of ready-mixed concrete from Tconcrete's centrals.

The dst group has certified by APCER, in the area of quality according to the norm NP EN ISO 9001: 2008, the following areas: ŸDesign, development, production and application of Bituminous Concrete; Design, development and manufacture of wood products and wood and furniture; Construction and Public Works and maintenance of equipment and vehicles - dst, s.a.; ŸDesign, development and production of ready-mixed concrete - tconcrete, s.a.; ŸDesign, development, production and assembly of metal structures and design of engineering projects bysteel, s.a.; Ÿ Processing stations installations and public lighting. Extension installation medium-voltage and low-voltage, electrical installations using electrical energy and heating installations, ventilation, air conditioning and refrigeration. Design and optical fiber installations - dte - empreitadas eléctricas, s.a. ŸPhotovoltaic panels production - global sun, s.a.

The dst, s.a. holds the CE marking in the context of bituminous mixtures for products produced in our central complying the norm EN 13108-1: 2006.

Of the five centrals of ready-mixed concrete from tconcrete, three (Braga, Guimarães and Famalicão) has the control of production certified by APCER, in accordance with the norm NP EN 206-1: 2007.

The tagregados, s.a. holds the CE marking in aggregates, in accordance with the norms: NP EN 126202002+A1:2010;NP EN 13043:2004/AC: 2010; EN 13242:2002+A1:2007; NP EN 13139:2005/AC:2010; NP EN 133831:2010.

Financial Information Translation of financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails.

Amounts expressed in Euros.

Consolidated Balance Sheet

Consolidated Income Statement

Consolidated Cash Flows Statement

For the years ended December 31, 2011 and 2010.

For the years ended December 31, 2011 and 2010.

Notas 2011 2010 27 192.370.231,75 201.213.027,97 28 30.164,53 72.613,48 29 4.293.378,59 5.114.724,05 30 (1.018.819,17) (670.123,87) 31 62.182,46 5.813.175,10 32 (48.903.866,45) (53.432.984,61) 33 (84.235.818,13) (104.696.147,55) 34 (24.772.793,43) (25.099.916,37) 35 (8.131.884,44) (3.747.742,73) 36 77.851,52 108.990,63 37 (3.009.534,04) (2.354.175,60) 38 6.482.814,16 9.466.618,10 39 (4.025.854,14) (3.323.561,15) 29.218.053,21 28.464.497,45 40 (10.041.052,34) (7.663.533,65) 41 (152,78) 19.177.000,88 20.800.811,03 42 4.412.254,53 5.219.033,99 43 (15.193.362,60) (11.988.258,88) 8.395.892,81 14.031.586,14 44 (2.438.820,27) (3.093.773,69) 5.957.072,55 10.937.812,45

For the years ended December 31, 2011 and 2010.

Notes ASSETS Non-current assets Tangible fixed assets Investment properties Goodwil Intangible fixed assets Financial investments - equity method valuation Financial investments - other method valuation Deferred tax assets Current assets Stocks Trade debtors Prepayments Taxation receivable Shareholders Other receivables Deferrals Other financial assets Cash in hand, at bank and and bank term deposits Total assets EQUITY AND LIABILITIES Equity Ordinary share capital Share premiuns Legal reserve Other reserves Retained profit Financial assets adjustments Other changes in equity Net profit/(loss) for the period Minority interests Total equity LIABILITIES Non-current liabilities Provisions Loans Deferred tax liabilities Financial instruments Other payables Current liabilities Trade creditors Prepayments Taxation payable Shareholders Loans due within 1 year Other payables Deferrals Total liabilities Total equity and liabilities

31-12-2011

7, 8 49.260.289,50 9 68.631.223,79 10 120.572.198,48 11 31.681.181,52 12 38.498.340,94 13 7.195.774,45 26 5.869.053,24 321.708.061,91 14 34.821.900,12 15 113.411.186,77 24 1.481.047,47 18 4.542.718,93 17 2.784.650,00 16 12.541.769,32 19 1.093.309,72 20 39.486,14 4 13.374.460,18 184.090.528,62 506.798.590,53

21

25.000.000,00 50.000.000,00 3.063.691,11 165.440,00 14.241.113,00 9.437.168,07 6.033,34 5.249.262,04 1.302.445,04 108.465.152,59

31-12-2010

33.835.589,60 67.424.948,55 119.372.272,29 33.196.276,10 37.160.607,11 9.452.930,69 7.024.661,98 307.467.286,32 34.850.659,56 95.895.879,79 1.470.618,41 7.125.445,32 2.782.609,12 14.579.239,67 640.146,31 94.832,00 15.227.725,66 172.667.155,84 480.134.442,15

25.000.000,00 50.000.000,00 1.477.851,20 165.440,00 6.569.941,52 9.098.356,76 10.278.855,39 1.399.319,99 103.989.764,86

Turnover Subsidies Gains/(losses) on subsidiary, associates companies and joint ventures Changes in production stocks and work in progress Capitalization of own costs 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, amortiz and other amounts written off tangible and intangible fixed assets Impairment on depreciable/amortizable investments (losses/written off 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

Description Operating activities - direct method

7.135.688,88 164.475.588,07 5.428.794,39 553.844,47 29.531.041,03 207.124.956,84

5.249.262,04 707.810.51 5.957.072,55

Share Legal Others Share Capital Reserve Reserves Description Premiun On January 1, 2010 25.000.000,00 50.000.000,00 1.104.846,05 165.440,00

Retained Earnings 773.546,89

10.278.855,39 658.957,06 10.937.812,45

Net Profit/loss on the Period 8.001.761,15

Minority Interests 1.110.074,08

Total 93.888.739,15

373.005,15

- 7.628.756,00

-

-

(8.001.761,15)

-

-

-

-

373.005.15

-(1.832.361,38) - 5.796.394,62

1.365.285,78 1.365.285,78

-

-

-

373.005,15

- 5.796.394,62

1.365.285,78

-

(8.001.761,15) 10.278.855,39 2.277.094,24

12.644,47 (11.217,66) 1.426,81 658.957,06 660.383,87

(454.431,13) (11.217,66) (465.648,79) 10.937.812,45 10.472.163,66

On December 31, 2010 25.000.000,00 50.000.000,00 1.477.851,20 165.440,00 6.569.941,52

9.098.356,76

-

24 15 18 17 23, 8 25 19

69.772.183,59 265.689,08 1.809.212,59 271.209,15 37.993.664,35 45.582.179,72 13.325.581,97 169.019.720,45 376.144.677,29 480.134.442,15

81.044.076,05 59.193,52 1.839.639,87 271.209,15 36.540.340,17 47.959.135,96 21.993.543,44 189.707.138,15 397.333.437,94 505.798.590,53

Share Share Legal Others Retained Financial assets Others changes Capital Premiun Reserve Reserves Earnings Adjustements Equity Description 9.098.356,76 On January 1, 2011 25.000.000,00 50.000.000,00 1.477.851,20 165.440,00 6.569.941,52

10.278.855,39

2.000,00 2.000,00 15.833,32 15.833,32 (388.971,28) (388.971,28) (371.137,96) (371.137,96) 103.989.764,86 1.399.319,99

Net Profit/loss on the Period 10.278.855,39

Minority Interests Total 1.399.319,99 103.989.764,86

- 8.693.015,49

-

- (10.278.855,39)

-

-

-

- 1.585.839,91

221.489,80 (10.664,32) - 8.460.861,37

707.581,77 542.010,79 (285.307,59) (450.878,57)

- 1.585.839,91

- 8.460.861,37

(450.878,57)

6.033,34 6.033,34 (10.278.855,39) 5.249.262,04 6.033,34 (5.029.593,36)

6.527,66 (18.577,91) (12.050,25) 707.810,51 695.760,26

(929.071,57) 6.033,34 548.538,45 (314.549,82) (689.049,60) 5.957.072,55 5.268.022,95

- (789.689,88) - (789.689,88) On December 31, 2011 25.000.000,00 50.000.000,00 3.063.691,11 165.440,00 14.241.113,00

789.689,88 789.689,88 9.437.168,07

6.033,34

Net Profit / Loss for the period Comprehensive income for the year Operations with Shareholders Share capital realizations Share premium realizations Retained profits from subsidiaries Distributions Amounts received to cover losses Others operations

- 1.585.839,91 -

-

-

(24.696.504,16) (24.778.424,47)

Cash flow from operations

25.525.898,29

34.738.082,81

Corporate Tax payments/receivables

(2.924.474,63)

(1.792.019,96)

Operating cash flow (1)

22.601.423,66

32.946.062,85

(4.937.601,66)

(6.977.976,28)

(23.561.838,58) (49.711.397,75)

Intangible assets

(987.439,74)

(2.671.591,90)

Other assets

(3.205.703,18)

-

Revenues from:

-

-

Payments to and on behalf of employees

Tangible fixed assets

-

-

(133.002.406,04) (130.582.131,97)

Payments for:

Financial assets Others changes Adjustements Equity 7.733.0701,98 -

Operations with Shareholders Share capital realizations Share premium realizations Distributions Amounts received to cover losses Others operations

Changes during the year Application of 2010 result Changes in other Equity variations: Equity method Differences from financ. statem. convert.

Adjustments for deferred taxes Other variations recognized in equity

183.187.808,49 190.098.639,25

Payments to trade creditors

Financial investments

Consolidated Statement of Equity Changes in 2011 22 7.103.527,45 23, 8 165.571.343,23 26 4.049.157,55 20 812.096,19 25 30.090.175,37 207.626.299,79

Received from trade debtors

Investment activities

Consolidated Statement of Equity Changes in 2010

Net Profit / Loss for the period Comprehensive income for the year

2010

(32.692.583,15) (59.360.965,93)

Net profit/(loss) for the period attributable to: Shareholders Minority interests

Changes during the year Application of 2009 result Changes in other Equity variations: Equity method Other variations recognized in equity

2011

5.249.262,04

(287.661,71) (287.973,71) (504.661,50) (504.661,50) (792.635,21) (792.635,21) 1.302.445,04 108.465.152,59

Financial investments

333.333,33

Tangible fixed assets

1.387.938,62

312.071,92

Investment subsidies

4.451.020,78

1.993.167,02

Interests

2.669.140,78

7.519.731,99

Dividends

4.200.254,43

2.120.625,58

13.041.687,68

12.920.625,52

Investment cash flow (2)

975.000,00

(19.650.895,47) (46.440.369,42)

Financing activities Revenues from: Loans obtained

5.584.868,51

26.378.086,80

5.584.868,51

26.378.086,80

Payments for: Interests

(10.388.662,18) (10.665.623,26) (10.388.622,18) (10.665.623,26)

Financing cash flow (3)

(4.803.793,67)

15.712.463,55

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

(1.853.265,48)

(2.218.156,98)

Cash and cash equiv. at the begining of the period

15.227.725,66

13.009.568,67

Cash and cash equiv. at the end of the period

13.374.460,18

15.277.725,66

6

consolidated dst, sgps, s.a. ANNUAL REPORT 2011

Annex 1. Entity Identification.

The dst group was constituted in 1999, its registered office is in Palmeira – Braga, being the shareholder company DST SGPS, SA, which object is the management of shareholdings from other entities as an indirect form of exercise the economic activities in engineering and construction sector, water and sanitation, renewable energy, telecommunications and other services.

2. Accounting referential for the financial statements preparation.

2.1. Accounting Normalization System (“SNC – Sistema de Normalização Contabilística”) The financial statements herewith were prepared in accordance with all standards comprised in the SNC. It should be considered that as part of SNC are the Basis for the presentation of financial statements, the Financial Statements Models, the Accounting Code, the Financial Reporting and Accounting Standards (“NCRF”) and the Interpretive Guidelines.

joint ventures is reflected in the value of the corresponding financial participation are presented in the balance sheet under the heading Financial investments - the equity method or Financial investments - other methods, as the case may be.

In January 1, 2009 (date of transition to the NCRF) the company has adopted the exemption of the NCRF 3 - first-time adoption of the NCRF, concerning Business Combinations and adopted as deemed cost at that date, the value of Goodwill in its accounts prepared in accordance with the POC (acquisition cost less accumulated depreciation until December 31, 2008 and less any impairment loss recorded on that date), rather than calculating goodwill retrospectively to the date of the combination on the basis of information available at that date. Full implementation of this exemption to specific cases did not result from: Any adjustment to Goodwill arising: Ÿ From the recognition of intangible assets that were not recognized

separately from Goodwill; ŸFrom the derecognition of intangible assets recognised separately from

The preparation of the financial statements requires the use of relevant estimates and judgments that affect the assets and liabilities amounts, as well as the income and expenses recorded in the reporting period.

These estimates and assumptions result from the best of our knowledge related to the current events and actions, not being expected that significant adjustments to the assets and liabilities amounts may occur in future periods.

Goodwill incorrectly; ŸFrom the contingencies that might affect the price of the transaction and whose outcome could already be known at the date of transition.

Any adjustment in shareholders equity due to: Ÿ The derecognition of assets and liabilities that wouldn't qualify for

recognition in the balance sheet of the acquiree; Ÿ The derecognition of assets and liabilities that do not qualify for

3. Main accounting policies.

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

3.1. Presentation basis.

The financial statements were prepared on a going concern basis, based on historical cost and prepared from the accounting books and records of the entity that were kept in accordance with the NCRF standards in force at the time of the financial statements' preparation, except for the fair value mentioned at the end of note 3.1.5.

The Group has adopted IFRIC 12 - Service Concession Arrangements and SIC 29 - Disclosure - Service Concession Arrangements. The IFRIC 12 sets out the rules to be followed in accounting for concession agreements, respecting to the services provided and to the control power over the concession assets.

Under the concession activity, the Group recognized an intangible asset that corresponds to the right of use and exploitation of the infrastructure provided by the Grantor.

Although it is Group responsibility to finance its construction of infrastructures, since all goods are intended to integrate the concession and will now be automatically subject to the terms of transferable and reversion of assets, they are not considered assets controlled by the Group, therefore they are not recognized as Tangible fixed assets. For the analysis conditions for economic and financial recovery under the concession agreement, we found that certain conditions of rebalancing are directly associated with the demand risk and others are dependent on decisions of the Grantor or other associated entities, and on fluctuations in interest rates in financial markets. And from this analysis we concluded that the conditions for a rebalancing act as security in favor of the Grantor, limiting the margin earned by the Group and placing a ceiling on the return of the concession. As that is not an entitlement to the grantor or on his behalf, the amounts invested in the concession has been recorded as an intangible asset.

Based on the stablished in NCRF (portuguese adoption of IFRS) and IFRIC 12 supplementarily, the accounting policies adopted by the Company were as follows: 3.1.1. 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.

Maintenance and repair expenditures that do not increase the assets' useful life or that do not result in significant improvements in the tangible fixed assets are recognized as expense in the period in which they are incurred.

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.

Depreciations are calculated over the acquisition cost 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.

The average annual depreciation rates were considered as follows:

Buildings and other structures Basic equipment Transport equipment Office equipment Artistic patrimony Other tangible fixed assets

ANNUAL RATE(%) 1 a 20 5 a 33,33 12,5 a 50 6,25 a 33,33 12,5 5 a 33,33

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.

In the subsequent acquisitions January 1, 2009, Goodwill is measured at cost, which is the excess of the cost of business combinations which it concerns over the Group's interest in the fair value of the assets, liabilities and contingent liabilities identifiable at the time of concentration.

Where the acquirer's interest in the fair value of the assets, liabilities and contingent liabilities identifiable exceeds the cost of the business combination, the difference is immediately recognized in the results of the period after re-evaluation of the identification and measurement of assets, liabilities and contingent liabilities identifiable from the acquiree and the measurement of the cost of the concentration.

When Goodwill is part of a cash-generating unit and part of an operation within that unit is disposed, the Goodwill associated with the alienated operation is included in the book value of the transaction to determine the gain or loss of operation. Goodwill derecognised under these circumstances is measured on the basis of relative values between the alienated operation and portion of the cash-generating unit maintained.

Goodwill presented in the balance sheet is measured: occurred before December 31, 2008; Ÿ At cost less impairment for Goodwill from business combinations

occurring on or after January 1, 2009.

Impairment Impairment of Goodwill is tested at least annually. If events or changes in circumstances indicate that it might be impaired according to the NCRF 12 - Ampairment of Assets, impairment of Goodwill is tested more frequently, i.e., whenever conditions so determine.

Impairment losses of Goodwill cannot be reversed.

3.1.4. 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.

Intangible assets are constituted mainly by granting rights and computer programs 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.

Granting rights Software Industrial property Other intangible fixed assets

ANNUAL RATE(%) 2,26 a 15,10 33,33 2,08 a 33,33 2,26 a 33,33

The amortization cost of intangible assets with finite useful lives is recognised in the income statement under the heading "Depreciation and amortization net of reversals".

Any resulting gain or loss from derecognition of an intangible asset (calculated as the difference between the sales value less the cost of the sale and the carrying amount) is included in income for the period in the year in which the asset is derecognised.

There is some details below regarding the concession rights: Concession rights related to the concession activity For the goods (which arise in infrastructure usage rights – IFRIC 12) with useful lives above the concession period, the amortization of initial investment or which may be subsequently adopted or imposed by the Grantor and that materialize in expansion or modernization of initial obligations, should normally be for a period of the concession. However, additional investments, modernization or expansion whose lifetime extends beyond the term of the concession, and that present residual value shall give rise to compensation equivalent to the amount not yet amortised at the date of the end of the concession.

Depreciation is calculated by the sum of units, i.e. by depreciation of contractual investment in economic and financial feasibility study used, based on effluent flow rates charged during this period and the effluent to invoice until the end of the concession provided for in the feasibility study.

At the date of acquisition of the investment, the difference between the cost of the investment and the group's share in the fair value of the assets, liabilities and contingent liabilities identifiable of the acquired company was accounted in accordance with the NCRF 14 - Business Combinations.

In this way:

The Tangible fixed assets in construction relate to acquisitions made which are still under construction or development and are measured at cost of acquisition and depreciated only when they are available for use.

Ÿ The related Goodwill is included in the carrying amount of the

Buildings and other structures

3.1.3. Goodwill.

The Goodwill corresponds to future economic benefits arising from assets which are not able to be individually identified and separately recognized.

The Goodwill on Subsidiaries encompassed in the consolidation are reflected in their individualized heading in the balance sheet. The Goodwill on Subsidiaries not encompassed in the consolidation, the Associates and

b) Financial investments - other methods.

The group use the cost model for financial investments in: ŸOther entities in which are not mandatory the equity or proportional consolidation methods and in which it is unable to reliably determine their fair value, namely investments in companies with securities out of a regulated market. ŸAccording 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.

Impairment The company evaluated the impairment of these assets at the end of the year. Whenever there was an objective evidence of impairment, the company recognized an impairment loss in the income statement.

Objective evidence of impairment took into account observable data that called the attention about the following loss events: ŸSignificant financial difficulty of the issuer; ŸThe disappearance of an active market for financial asset due to financial difficulties of the debtor; ŸObservable data indicating that there is a decrease in the measurement of the estimated future cash flows of a financial group assets since its initial recognition; ŸSignificant changes with an adverse effect occurring in the technological environment, market, economic or legal under which the issuer operates.

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.

3.1.10. Deferrals assets and liabilities.

This item reflects the transactions and other events for which it is not appropriate to its full recognition in the results of the period in which they occur, but that should be recognised in future periods results.

3.1.11. Equity items.

Financial assets ajustments This account includes the adjustments related to the application of the equity method, namely the ownership of changes in equity of the subsidiaries and unassigned profits.

Minority interests Minority interests are part of the results and of the net assets of subsidiaries attributable to equity interests which are not owned, directly or indirectly through subsidiaries, by the shareholder company.

This heading includes: ŸCapital; ŸResults for the period; ŸOther items of capital whose variations of the year, together with the results of the period, make up the full resut.

All equity instruments were individually assessed for impairment.

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

3.1.12. 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.

3.1.6. 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).

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.

3.1.7. Leases.

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

Provisions for future operating losses are not recognized.

Operating leases Leases are classified as operational if the benefits and risks incident to ownership of the asset are retained by the lessor. Rents paid are recognised in the income statement as an expense on a straight-line basis over the term of the lease.

Financial leases Leases are classified as financial leases if a significant part of the risks and benefits inherent to the ownership are transferred to the lessee.

Tangible fixed assets acquired through financial lease contracts and their correspondent liabilities are accounted for in accordance with the financial method. 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.

3.1.8. Costs from loans obtained.

Costs from loans obtained are recognized as expenses in the income statement in accordance with the accrual method.

3.1.13. 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.

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

3.1.14. 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.

The average annual amortization rates used are as follows:

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 revenues and income" or "Other losses and expenses", respectively.

ANNUAL RATE(%) 1 a 10

Impairment Impairment of these assets was determined on the basis of the criteria described in note 3.1.1 - Tangible fixed assets.

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.

ŸAt the deemed cost less impairment, for business combinations that

The companies include in the consolidation evaluate if there is any indication that an asset may be impaired at year end. If there is any indication, companies estimate the recoverable amount of the asset (which is the higher of the fair value of an asset or cash-generating unit less costs to sell and its value in use) and recognize the results of the period impairment where the recoverable amount is less than the carrying amount.

Investment properties are measured at cost. Costs incurred with investment properties in use, including maintenance, repairs, insurance and property taxes are recognized as costs in the period in which they are incurred.

The average annual depreciation rates were considered as follows:

recognised only insofar as they correspond to the interests of other investors in associated, not related to the investor. ŸWhen the value of the investment is reduced to zero, additional losses are taken into account by the recognition of a liability when the company incurs legal obligations or constructive. When later the joint ventures report profits, the Group invested resumes its recognition only after its share of the profits equals the share of losses not recognised.

recognition under the NCRF.

3.1.5. Financial investments. a) Financial investments - equity method.

Investments in subsidiaries and associated companies – being defined as such those entities in which dst group exercises control or significant influence and that are not joint ventures – are recorded in accordance with the equity method.

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.

3.1.2. Investment properties.

Investment properties consist of properties 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.

ŸThe results arising from transactions ' ascendants ' and ' descendants ' are

investment. However, the amortisation of Goodwill is not permitted and is therefore not included in the determination of results resulting from reported; ŸThe excess of the group's share in the fair value of the assets, liabilities and contingent liabilities identifiable from reported above the cost of the investment were excluded from the carrying amount of the investment and were included as income in the period in which the investment was acquired.

Subsequent to the date of acquisition, the carrying amount of investments: ŸWas increased or decreased to recognise the part on the results of the

investee after the date of the acquisition; ŸWas reduced by distributions of received results; ŸWas increased or decreased to reflect, by contrast, changes in the equity

of the group in the reported interest in proportion resulting from these changes in equity that are not recognised in their results.

In the measurement of these investments it was still respected the following provisions concerning the application of this method: ŸThe financial statements of joint ventures were already prepared, or were adjusted extra accounting, in order to match the Group's accounting policies before they can be used in the determination of equity effects; ŸThe financial statements of of joint ventures used in determining the equity effects consist of the same date of the Group;

3.1.9. 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, deducted from impairment losses whenever required.

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.

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

Advances to trade creditors These balances are stated at their cost less impairment losses, whenever applicable.

Trade creditors and other payables Debts to suppliers or other third parties are accounted for at nominal value.

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

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.

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.

Other non-current payables The non-current payables liabilities are recognised at cost.

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 Loans are valued at cost. These loans indexed interest rate short-term reference, and as such their variations contribute to affect the results.

The financing for which there is coverage of fixed interest rate also include changes in fair value (paragraph 37 (b) of the NCRF 27). In funding for which there is coverage of fixed interest rate risk or risk coverage of interest rate variability, their derivatives are presented in «Other financial assets» or «Other financial liabilities», as the case may be and as non-current or current following the same way as the financing is presented in the balance sheet.

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.

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.

3.1.15. 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.

3.1.16. Subsidies.

Subsidies are initially recorded as liabilities when they are received (or are certain to be received) and after assuring that the entity will comply with the associated required conditions.

Operational subsidies are recognized in the income statement in proportion with the expenses incurred.

3.1.17. 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.

With indicators, the asset's recoverable amount is estimated in order to determine the extent of loss impairment.

An impairment loss is recognized for the exceeding asset's carrying amount in relation to its recoverable value. Such loss is recognized in the income statement as "Impairment losses" (and its subsequent reversal, if any, as "Reversal of impairment losses").

3.1.18. 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.

consolidated dst, sgps, s.a. ANNUAL REPORT 2011

3.1.19. Effects of changes in exchange rates.

Transactions denominated in foreign currencies are converted into euros in accordance with the exchange rate prevailing at the date of the transaction.

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.

At the reporting date, assets and liabilities are accounted for in accordance with the period's closing exchange rate.

3.1.20. Income tax.

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.

Deferred taxes 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.

3.2. Other significant accounting policies: Basis of consolidation The consolidated financial statements include, as at December 31, 2011, the assets, liabilities and results of group companies, understood as a set of dst group and its subsidiaries, which are presented in note 6.

As described in no. 6 of Law-Decree no. 158/July 13, 2009, approving the SNC, the entity presents the consolidated accounts of the group constituted by itself and by all subsidiaries on which: a) Regardless of the ownership of capital, it is found that, in alternative: ŸIs able to exercise, or actually exercises, dominant influence or control; ŸPursuing the management as if the two constitute a single entity.

b)Being holder of capital, when one of the following situations occurs: ŸHas a majority of the voting rights, unless it is demonstrated that such

rights do not confer the respective control; ŸHas the right to appoint or remove a majority of the members of the management board of an entity with the power to govern the financial and operating policies of that entity; ŸExercises a dominant influence over an entity, pursuant to a contract celebrated with this entity or from another clause of this social contract; ŸHolds at least 20% of the voting rights and the majority of the holders of the management board of an entity empowered to govern the financial and operating policies of that entity, reports during the financial year to which the consolidated financial statements, as well as, in the preceding financial year and up to the moment they are prepared, have been appointed solely as a result of the exercise of its voting rights; ŸAvailable, by itself or by virtue of an agreement with other holders of the capital of this entity, a majority of its voting rights of capital holders.

Subsidiaries are companies controlled by the dst group and are consolidated by the full consolidation method since the date of acquisition, which is the date on which the group gets control, and continue to be consolidated until the date that control ceases to exist.

In the consolidation process, transactions, balances and unrealised profits on intragroup transactions and dividends between group companies are eliminated. Unrealised losses are also eliminated, unless the transaction reveals evidence of the existence of impairment in assets transferred and not alienated.

The jointly controlled financial investments are included in the consolidation by the proportional consolidation method, from the date that joint control is acquired until the date on which it actually ends. Under this method, assets, liabilities, income and expenses of these businesses were incorporated in consolidated financial statements, line by line, in proportion to the assigned control of dst group.

Associated companies are entities over which the investor has significant influence and which are not considered subsidiaries or joint ventures.

The financial participations in associated companies are consolidated by the equity method, that is, the financial statements include the Group's interest in the total of income and expense recognised of the associate, from the date that significant influence begins until the date on which it actually ends. The dividends received from these companies are recorded as a reduction in the value of financial holdings.

The shares, in relation to which the group does not carry significant influence over their activity, are recognized at the lower value between the purchase cost and the value of achievement.

The amounts of equity of consolidated subsidiaries by integral method, attributable to the shares held by third parties unrelated to the companies included in the consolidation are included in the consolidated balance sheet under the heading of minority interests.

Minority interests on the net income of consolidated subsidiaries are identified and adjusted against the results of the Group and included in the consolidated income statement under the heading of minority interests.

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.

7

% Participation Companies bysteel, s.a.

Cari - Construtores, s.a.

Domingos da Silva Teixeira Empreitadas Eléctricas, s.a.

Domingos da Silva Teixeira - Imobiliária, s.a.

Domingos da Silva Teixeira, s.a. dst wind, s.a. dst Energias Renováveis, sgps, s.a. dst hydro, s.a. dst solar, s.a. dst pedreiras - Extracção de Inertes, s.a. dstelecom, s.a. dstelecom, Alentejo e Algarve, lda. dstelecom, Norte, lda.

EOL Minho - Energias Renováveis, s.a. global sun, s.a.

Fundo de Investimento e Imobiliários HomeInvest Innovation Point Investigação e Desenvolvimento, s.a.

Investhome - Construção e Imobiliária, s.a.

Investhome - sgps, s.a.

Ipplus, s.a.

Monte Dourado - Hipermercados e Imobiliária, s.a.

Perfil dinâmico, lda. tagregados, s.a. tconcrete, s.a. tgeotecnia, s.a. tmodular, s.a. tstone, s.a.

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:

Headquarters Braga Braga

2011 100% 100%

2010 100% 100%

Braga Braga Braga Braga Braga Braga Braga Luanda, Angola Braga Braga Braga Vieira do Minho Braga Lisboa

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 85% 100% 100%

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 85% 100% 100%

Braga Braga Braga Braga Braga Braga Braga Braga Braga Braga Braga

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Companies Investhome - Construção e Imobiliária, s.a.

Domingos da Silva Teixeira, s.a.

Domingos da Silva Teixeira - Imobiliária, s.a.

Cari - Construtores, s.a.

VentoMinho - Energias Renováveis, s.a.

Criar Vantagens - Águas e resíduos, lda. - consolidado total

Companies Investhome - Construção e Imobiliária, s.a.

Domingos da Silva Teixeira, s.a.

Domingos da silva teixeira - Imobiliária., s.a.

Cari - Construtores, s.a.

VentoMinho - Energias Renováveis, s.a.

Criar Vantagens - Águas e Resíduos, lda. - consol. total

Headquarters Braga Braga Barcelos Fundão Caminha Esposende Braga V. Pouca de Aguiar Valença Porto Porto Braga Arcos de Valdevez Esposende Braga

2011 63,36% 33,33% 25,50% 20,50% 25,50% 25,00% 33,33% 25,50% 48,49% 25,00% 49,00% -* 48,49% 25,63% 20,00%

2010 21,12% 33,33% 25,50% 25,50% 25,00% 33,33% 25,50% 48,49% 25,00% 49,00% 33,33% 48,49% 25,63% 20,00%

% Participation He adquarters 2011 2010 Braga 33% 33% Braga 50% 50% Braga 20% 20% Braga 14% n.d.

Braga 14% 14% Braga 33% 33% Tavira 50% 50% 33% Viana do Castelo 33% 33% 33% Braga

Braga Lisboa Braga Braga Anhões Esposende Esposende Lisboa

16,33% 33,30% 12,90% 20,00% 12,50% 10,63% 12,50% 13,00% 10,00%

16,33% 33,30% 12,90% 20,00% 12,50% 10,63% 12,50% 13,00% 10,00%

2010

Board of directors

1.849.116,27

2.048.809,34

Auditors

70.570,72

57.064,00

1.919.689,99

2.105.873,34

527.668,43 210.643,82 317.024,61 44.957,55 26.502,33 26.502,33 25.744,74 24.160,40 1.584,33 44.199,96 361.982,16

525.571,23 525.571,23 421.306,58 798.163,87 798.163,87 (376.857,29) 946.877,81

45.711.889,74 12.515.613,65 33.196.276,10 (1.515.094,58) 984.792,40 984.792,40 2.527.570,96 2.502.534,32 25.036,64 27.683,98 31.681.181,52

Investments Associated Companies 37.160.607,11 37.160.607,11 1.337.733,83 338.374,35 3.128.707,82 4.200.254,43

Total 37.160.607,11 37.160.607,11 1.337.733,83 338.374,35 3.128.707,82 4.200.254,43

(110.729,61) 41.662,50 2.223.298,20 38.498.340,94

(110.729,61) 41.662,50 2.223.298,20 38.498.340,94

Total Other Financial Investments 8.631.851,98 8.851.889,37 601.041,32 8.631.851,98 8.452.930,69 (2.701.731,24) (2.257.156,24) 3.703.477,07 4.148.052,07 4.234.983,08 4.234.983,08 (2.170.225,23) (2.170.225,23) 5.930,120,74 7.195.774,45

2011 24.628.011,04 4.113.598,83 394.608,08 4.074.930,27 1.610.751,90 34.821.900,12

Description Trade debtors - current accounts Trade debtors - bills of exchange Trade debtors - with guarantee Trade debtors - doubtful accounts

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

2010 300.347,81 8.679.372,20 6.248.005,64 15.227,725.66

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

5. Accounting policies, changes in accounting policies and errors.

During the period there were no changes in accounting policies and estimates or material errors related to prior periods.

2010 24.385.831,56 3.721.890,88 181.993,36 4.580,191,85 1.980.751,90 34.850.659,56

2011 109.697.534,89 2.041.243,93 1.672.407,81 18.003.828,13 131.415.014,76 (18.003.827,99) 113.411.186,77

Accumulated impairment losses

Transport Equipment

1.354.256,85 16.492.934,50

Administrative

Artistic

Others

Equipment Patrimony

Total

34.863.999,68

11.938.759,20

5.509.326,53

7.500,00

941.906,88

4.100.370,99 75.209.054,62

2.252.506,39

25.352.798,38

8.913.332,59

4.288.416,24

1.093,75

565.317,68

- 41.373.465,03

3 Initial accumulated impairment losses

-

-

-

-

-

-

-

4 Initial net carrying amount (4=1-2-3)

1.354.256,85

14.240.428,11

9.511.201,30

3.025.426,61

1.220.910,29

6.406,25

376.589,19

4.100.370,99 33.835.589,60

5 Movements of the period (5= 5.1-5.2+5.3+5.4)

-

613.519,65

1.094.069,85

(475.513,76)

137.477,92

(937,50)

163.196,81

13.892.886,94 15.424.699,90

5.1 Total Additions

-

732.688,27

3.658.070,54

682.440,71

671.845,60

-

331.796,67

15.519.240,47 21.596.082,26

331.796,67

15.519.240,47 21.596.082,26

-

New acquisitions

-

732.688,27

3.658.070,54

682.440,71

671.845,60

-

Other acquisitions

-

-

-

-

-

-

-

-

-

5.2 Total Disposals

-

591.607,10

3.015.391,65

1.157.954,48

581.967,68

937,50

383.695,19

-

5.731.553,59

Depreciations

-

591.907,10

2.860.066,91

1.126.245,79

579.123,59

937,50

383.695,19

-

5.539.090,07

Sales

-

-

154.952,74

32.812,68

9.599,08

-

-

-

197.364,50

Reductions

-

-

372,00

(1.103,99)

(6.754,99)

-

2.586,00

-

(4.900,99)

5.3 Transferences of TFA under construction

-

457.254,16

450.493,96

-

47.600,00

-

203.984,00

(1.159.332,12)

-

5.4 Other transferences

-

15.184,32

897,00

-

-

-

11.111,32

(467.021,41)

(439.828,77)

1.354.256,85 14.853.947,76

10.605.271,15

2.549.912,85

1.358.388,21

5.468,75

539.786,00

659.658,42 130.477,03 529.181,39

5.366.332,63 1.857.622,76 3.508.709,86

9. Investment properties.

Information relating to the carrying amounts of investment properties with reference to 2011 and 2010 periods may be analyzed as follows:

Description 1 Initial gross book value 2 Initial accumulated depreciations 3 Initial gross carrying amount 4 Movements of the period: 4.1 Total Additions Acquisitions 4.2 Total Disposals Depreciations Sales 5 Final net book value

Land and Buildings and other other resources structures 15.468.359,19 52.715.448,84 758.859,48 15.468.359,19 51.956.589,36 150.000,00 (1.041.440,61) 150.000,00 970.523,73 150.000,00 970.523,73 2.011.964,34 1.999.427,94 12.536,40 15.618.359,19 50.915.148,75

Investement properties construction Total - 68.183.808,03 758.859,48 - 67.424.948,55 2.097.715,85 1.206.275,24 2.097.715,85 3.218.239,58 2.097.715,85 3.218.239,58 - 2.011.964,34 - 1.999.427,94 12.536,40 2.097.715,85 68.631.223,79

17.993.257,93 49.260.289,50

We notice that in the current year it was used around -196.150,17€ of impairment losses accumulated against doubtful trade debtors.

As of December 31, 2011 the balance of trade debtors' doubtful debts was as follows: Value

Relating to insolvency and business recovery or enforcement proceeding

1.330.401,01

Litigation claims

14.195.069,64

Delayed receivables

2.478.357,49

For more than six months and less than twelve months

958.896,47

For more than twelve months and less than eighteen months

126.760,92

For more than eighteen months and less than twenty-four months

979.065,68

For more than twenty-four months

413.634,42 18.003.828,13

As of December 31, 2011 and 2010, the balance of trade debtors' advanced payments was as follows: Description Services rendered Trade debtors - private

2011 59.193,52 59.193,52

2010

624.567,12 3.617.422,16 300.729,64 4.542.718,93

424.844,87 6.699.058,27 1.542,18 7.125.445,32

903.394,91 55.999,28 660.097,29 220.148,39 1.839.639,87

717.312,11 670.302,28 421.598,20 1.809.212,59

19. Deferrals.

As of December 31, 2011 and 2010, the deferrals' balance was as follows: Description Deferred costs Future services already invoiced Advertising Insurance Rents Interest payable Bank charges Other costs

2011

2010

28.636,63 25,80 191.742,21 7.959,10 352.088,28 52.598,28 460.259,06 1.093.309,72

209,56 316.543,26 10.996,99 209.392,90 53.853,61 49.149,99 640.146,31

20.336.416,81 1.657.126,63 21.993.543,44

9.593.322,66 3.732.259,31 13.325.581,97

Non-current liabilities Derivatives with effective coverage Variable interest rate swaps

2011

2010

39.486,14 39.486,14

94.832,00 94.832,00

812.096,19 812.096,19

553.844,47 553.844,47

22.Provisions.

As of December 31, 2011 and 2010, the provisions' balance was as follows:

-

4.706.674,21 1.727.145,73 2.979.528,47

2011

21. Share Capital.

The entity's share capital remained unchanged in the period, consisting of 5,000,000 shares, registered and nominative, with a nominal value of five euros.

2 Initial accumulated depreciations

Description

Liabilities Income tax withholding Value added tax Social security contributions Others

Description Current assets Financial instruments held for trading

TFA under

-

Description Assets Corporate tax Value added tax Others

20. Other financial assets.

As of December 31, 2011 and 2010, the other financial assets balance was as follows:

2010 89.394.926,74 3.463.534,29 2.871.495,79 10.234.016,69 105.963.973,51 (10.068.093,72) 95.895.879,79

Construction

18. State and other entities.

As of December 31, 2011 and 2010, the State and other entities' balance was as follows:

Deferred income Construction contracts Other income

15. Trade debtors.

As of December 31, 2011 and 2010, the balance of trade debtors was as follows:

Basic

Investement properties Total 1.395.867,97 12.308.834,21 736.209,55 6.589.755,78 659.658,42 5.719.078,42

271.209,15 271.209,15

237.424,97 23.337,13 214.087,85 (93.719,.49) 60.116,53 60.116,53 (33.602,97) 120.368,35

Equipment

Tangible fixed assets 10.912.966,24 5.853.546,23 5.059.420,20

271.209,15 271.209,15

1.147.656,74 875.210,12 272.446,62 (48.334,06) 33.764,00 33.764,00 82.098,06 82.098,06 224.112,56

other Struct.

Description 1 Initial gross book value 2 Accumulated amortizations / depreciations 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

2.782.609,12 2.782.609,12

With finite useful economic life: 43.273.568,38 4 Initial gross book value 11.046.422,58 5 Initial accumulated depreciations 7 Initial net carrying amount (7= 4-5-6) 31.867.145,79 8 Movements of the period:( (8=8.1-8.2+8.3+...+8.6) (1.839.305,16) 8.1 Total Additions 126.362,21 New acquisitions 126.362,21 8.2 Total Disposals 2.359.611,64 Depreciations 2.336.159,33 Reductions 23.452,31 8.4 Transferences of Intangible assets under construction 393.944,27 9 Final net book value (9=7+8) 30.027.840,63

Building and

Financial leases

2.784.650,00 2.784.650,00

Total

Resources

8. Leases.

The information concerning leases as of December 31, 2011 and 2010 is as follows:

2010

Intangible Assets Under Construction

Cost model 2011 235.042,26 9.547.147,79 3.592.270,13 13.374.460,18

Current liabilities Others

2011

Others

Description Land and other

6 Final net book value (6= 4+5)

1.462.253,41 1.589.472,86 369.187,71 424.158,58 2.815.717,71 6.660.790,27 254,717,00 7.918.449,40 14.833.956,97 (254.717,00) 14.579.239,67

Industrial Property

Description Goods Raw, subsidiary and consumable materials Finished goods Products and work in progress Prepayments

7. Tangible fixed assets.

Information relating to the carrying amounts of tangible fixed assets with reference to 2011 and 2010 periods may be analyzed as follows:

1 Initial gross book value

1.622.569,14 704.047,16 404.186,99 445.805,22 768.552,02 3.945.160,53 254.717,00 8.227.820,89 12.427.698,42 368.787,90 (254.717,00) 12.541.769,32

17. Shareholders.

As of December 31, 2011 and 2010, the Shareholders' balance was as follows: Description Current assets Loans franted

14. Inventories.

As of December 31, 2011 and 2010, inventories' balance was as follows:

e) Remuneration of Board of directors The remuneration ascribed to Board of directors in carrying out their functions was as follows: 2011

2010

Software

Investments in Other Methods: others Companies 220.037,39 Initial gross book value 601.041,32 Loans effects 821.078,71 Initial net carrying amount 444.575,00 Movements of the period 44.575,00 Other acquisitions Sales Other movements of the period 1.265.653,71 Final net book value

% Participation 2010

Final Balance 12.897.316 61.436.723 9.646.183 556.382 19.992.500 16.043.095 120.572.199

13. Financial investments - other methods.

Changes in financial investments value in accordance with other methods are as follows:

d) Other subsidiaries indirectly 2011

Deferred tax assets Accumulated impairment losses

2011

Concession Rights

Equity method: Initial gross book value Initial net carrying amount Movements of the period Other acquisitions Share of associates' profits Dividends received from associates Changes of investee's equity not recognised in the income statement Sales Other movements of the period Final net book value

c) Companies consolidated by porportional method

Headquarters

Other investment debtors Other debtors

12. Financial investments - equity method.

Changes in financial investments value in accordance with the equity method are as follows:

** company is owned 15% with special voting rights and 10.63% with nominal voting rights

Companies Agere - Empresa de Águas, Efluentes e Resíduos de Braga - EM Aquapor Serviços, s.a.

Braval - Valorização e Trat. de Resíduos Sólidos, s.a.

Conceito Original, s.a.

EEVM - Empreend. Eólicos do Vale do Minho, s.a.

Empreendimentos Eólicos Cerveirenses, s.a.

Empreendimentos Eólicos da Espiga, s.a.

SP Renovado, s.a. way2b North África, s.a.r.l.

2010 12.897.316 61.436.723 9.646.183 556.382 19.992.500 14.843.168 119.372.272

Opening Acquisitions Balance 12.897.316 61.436.723 9.646.183 556.382 19.992.500 14.843.168 1.199.927 119.372.272 1.199.927

Description

* sold in 2011

Companies CriarVantagens - Águas e Resíduos, lda.

Steelgreen, s.a.

Way2b; ACE Assoc / Soares da Costa, ACE Assoc - Obras Públicas, ACE Teatro Circo, ACE Parque Empresarial de Tavira, ACE Agonia Parque Construção, ACE Unifacere, ACE

Description Debtors for income accruals Interests Works in progress Services Water sales Others

11. Intangible assets.

Information related to the carrying amount of intangible assets with reference to 2011 and 2010 periods may be analyzed as follows:

% Participation Companies 2bpartner - Sociedade Capital de Risco, s.a.

Aquara - Produção, Comercialização de Água, s.a.

Barcelos Futuro, s.a.

CAM - Centro de Atracções Mineiras, s.a.

Caminhaequi, s.a.

EOL Verde - Energia Eólica, s.a.

Geswater - Águas e Resíduos, sgps, s.a.

Inovaguiar, s.a.

MinhoCom - Gestão de Infra. de telec.

Parque Eólico Alto da Vaca, lda.

Porto Digital, Operador Neutro Telecomunicações, s.a.

SERBAUR - Serviços Básicos Urbanos, lda.* ValiCom - Gestão de Infra. de Telecomunicações VentoMinho - Energias Renováveis, s.a.** Way2b, sgps, s.a.

2011 12.897.316 61.436.723 9.646.183 556.382 19.992.500 16.043.095 120.572.199

The movement occurred in Goodwill in the period is indicated in the following table:

b) Associated companies The associated companies valued by the equity method, their registered offices and proportion of capital held directly and indirectly are as follows:

Changes to these estimates, which may occur after the balance sheet date will be recognized in the income statement in a prospective manner.

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.

10. Goodwill.

The consolidation differences ("Goodwill") are the result of positive differences between the acquisition cost of the shares and the proportion of their capital at the time of purchase.

In December 31, 2011 and 2010 this item displays the following composition: Consolidation Differences

6. Related parties. a) Group companies inclued in consolidation by the full consolidation method.

The companies included in consolidation in December 31, 2011 and 2010, their registered offices and proportion of capital held directly and indirectly are as follows:

2010 265.689,08 265.689,08

16. Other receivables.

As of December 31, 2011 and 2010, the balance of other receivables was as follows:

Description 2011 Provisions for investments replacement 880.725,79 Provisions for investment obligation 5.061.910,27 Sludges provisions 333.333,00 Taxes provisions 49.596,62 Processos judiciais em curso 777.961,78 7.103.527,45

2010 902.850,76 5.061.910,27 333.333,00 49.596,62 787.998,88 7.135.688,88

23. Loans obtained.

As of December 31, 2011 and 2010, the balance of loans obtained was as follows: Description Non-current liabilities Long term loans Financial leases Commercial paper Current liabilities Short-term loans Revolving credit Overdrafts Financial leases Others

2011

2010

126.062.633,37 3.508.709,86 27.000.000,00 156.571.343,23

126.286.155,60 4.989.432,47 33.200.000,00 164.475.588,07

14.486.574,03 15.509.817,28 4.629.735,17 1.857.622,76 56.590,94 36.540.340,17

12.529.532,10 18.635.191,01 3.990.946.01 2.764.136,74 73.857,59 37.993.664,35

24. Trade creditors.

As of December 31, 2011 and 2010, the balance of trade creditors was as follows: Description Trade creditors Trade creditors - bills of exchange Trade creditors - invoices in conference Trade creditors - with guarantee Others

2011 64.347.873,83 9.100.973,66 2.162.299,64 5.358.759,33 74.169,59 81.044.076,05

2010 54.314.922,60 7.784.775,98 3.252.589,59 4.321.795,18 98.100,24 69.772.183,59

As of December 31, 2011 and 2010, the balance of trade creditors' advanced payments was as follows: Description

2011

2010

Goods and consumable materials trade creditors

15.895,17

-

Trade creditors - other markets

4.043,52

-

Trade Creditors - invoices in conference

250.577,08

260.618,41

Trade Creditors - General Directorate for Energy Geology 1.210.000,00

1.210.000,00

Trade Creditors - dst group

531,70

-

1.481.047,47

1.470.618,41

25. Other payables.

As of December 31, 2011 and 2010, the balance of other payables was as follows:

8

consolidated dst, sgps, s.a. ANNUAL REPORT 2011

2011 Description Non-current liabilities Concession revenue 15.109.870,22 Investment projects 8.531.450,59 Trade creditors Other creditors 6.448.854,56 30.090.175,37 Current liabilities Staff costs 1.090.334,70 Investment trade creditors 1.593.304,48 619.838,29 Prepayments Creditors for costs acrruals 70.341,35 Insurances Staff costs 2.989.471,93 Interests 1.518.203,00 949.514,90 General and administrative expenses 571.787,49 Other costs accruals 6.099.318,67 Deferred tax liabilities Factoring Investment projects Concession revenue Loans Others

33. General and administrative expenses.

As of December 31, 2011 and 2010, the balance of general and administrative expenses was as follows:

2010 16.570.822,10 4.262.905,34 491.767,85 8.205.545,74 29.531.041,03

Description Subcontractors Electricity Fuels Water and other fluids Tools Office stationeries Rents and rentals Representation expenses Communication Insurance Transport of goods Travel and accommodation Comissions Fees Legal expenses Maintenance and repairs Advertising and promotion Cleaning and hygiene Security Specialised labour Others

1.095.031,83 1.695.414,50 1.040.530,99 45.290,60 2.829.119,11 639.411,63 2.573.360,50 2.265.795,52 8.352.977,36

108.577,67 23.808.005,81 1.074.299,64 1.559.364,44 5.366.519,19 6.639.573,35 47.959.135,96

103.553,09 20.625.169,83 891.824,37 1.336.179,33 4.936.382,05 5.505.116.38 45.582.179.72

2011 58.122.354,62 2.127.170,99 4.831.408,61 662.208,64 326.110,68 131.902,71 6.618.644,93 37.496,04 515.338,64 971.636,12 419.940,38 941.838,83 5.721,99 107.550,11 171.318,81 2.975.387,66 221.201,60 115.334,25 490.187,28 3.075.200,96 1.367.864,00 84.235.818,13

26. Deferred tax assets and liabilities.

The movements occurred in the deferred tax assets and liabilities balance in 2011 was as follows:

Deferred tax assets Trade debtors impairments Reportable tax losses Cancellation of intangible assets Wtritten-off assets Change of useful economic life Provisions for other risks and charges Shares fair value adjustment Written-off integrated assets and assets acquisitions and their depreciation by Dc4 Concessions recognition Public goods obtained from conceding Swap’s fair value recognition Others Non-current Current Deferred tax liabilities NCRF 19 - Construction contracts Investment subsidy Shares fair value adjustment Effect of concession revenue by Dc4 Conseccions recognition Depreciated cost Written-off revenue already delivered to the conceding Others Non-current Current

Balance

Tax

Balance

Tax

1.561.035,75 1.017.222,15 685.916,33 577,62 615.246,09 12.056.417,70

413.674,47 275.853,14 181.767,83 153,07 163.040,21 1.490.225,68

441.014,14 1.346.592,42 (931,21) 54,04 1.331,06 (2.059,25) (1.386.565,50)

115.555,33 381.569,15 (246,77) (6,22) (153,07) (545,70) (369.611,13)

2.002.049,89 2.363.814,57 (931,21) 685.970,37 1.908,68 613.186,84 10.669.852,20

529.229,80 657.422,29 (246,77) 181.761,61 162.494,51 1.120.614,55

9.130.645,17 3.591.753,91 3.460.236,91 798.298,25 32.917.349,88

2.419.620,97 951.814,79 916.962,78 211.549,03 7.024.661,98 7.024.661,98 686.537,47 3.297.739,08 43.659,55 461.793,72 297.590,04 24.790,90 697.990,60 22.246,12 5.532.347,48 5.428.794,39 103.553,09

(2.291.243,06) (897.937,47) (798.220,60) (713.643,32) (172.968,38) (3.047.290,48)

(607.179,41) (237.953,43) (211.528,46) (189.115,48) (45.836,62) (786.820,85)

6.839.402,11 2.693.816,44 2.662.016,31 713.643,32 625.329,87 29.870.059,39

(647.676,79) (3.111.072,49) (18.959,62) (435.653,66) (280.745,62) (24.790,92) (528.414,57) (141.306,72) (5.188.620,39)

(171.634,35) (824.434,21) (5.024,30) (115.448,22) (74.397,59) (6.197,73) (140.029,86) (37.446,28) (1.374.612,54)

1.943.030,60 9.333.225,92 145.793,42 1.306.964,17 842.235,65 68.759,65 1.577.097,65 (57.359,10) 15.159.747,95

1.811.441,56 713.861,36 705.434,32 189.115,48 165.712,41 6.237.841,13 5.869.053,24 368.787,90 514.903,12 2.473.304,87 38.635,25 346.192,50 223.192,45 18.593,17 557.960,74 (15.200,16) 4.157.734,94 4.049.157,55 108.577,39

2011 Description Real state sales Goods sales Products sales Services

2010

National Foreign Market Market 1.270.603,05 440.401,49 70.831,24 16.865.846,66 4.980.003,04 167.806.275,72 936.270,54 186.383.126,93 5.987.104,82

National Foreign Market Market 1.475.402,05 129.840,81 18.958.193,42 882.704,09 179.128.222,94 638.664,66 199.691.659,22 1.521.368,75

28. Government Subsidies and Government supports.

The dst group was granted a subsidy from the Human Potential Operational Programme (“POPH”), an organization at the guardianship of the Labour and Social Solidarity Ministry which is co-financed by the European Social Fund and by the Social Security Budget - National Public Contribution, in the amount of 30.164,53 euros. The total amount of the subsidy is accounted for in the operational subsidies' balance Description

2011

2010

State and other public entities subsidies - POPH

30.164,53

72.613,48

30.164,53

72.613,48

29. Gains and losses attributable to subsidiaries, associated and joint ventures.

As of December 31, 2011 and 2010, the balance of gains and losses attributable to subsidiaries, associated and joint ventures was as follows: Descriptions Losses and expenses Revenues and incomes

2011 (411.843,44) 4.705.222,03 4.293.378,59

2010 (1.966.671,54) 7.081.395,59 5.114.724,05

30. Variation of production inventories.

The movement occurred in the variation of production during the period of 2010 was as follows: Description 1 Closing stocks 2 Stocks reclassification and regularization 3 Opening stock 4 Changes in stocks (4=1+2-3)

Finished Products and Goods Work in Progress Total 181.993,36 4.580.191,85 4.762.185,21 289.505,45 5.142.803,63 5.432.309,08 (107.512,09) (562.611,78) (670.123,87)

The movement occurred in the variation of production during the period of 2011 was as follows: Description 1 Closing stocks 2 Stocks reclassification and regularization 3 Opening stock 4 Changes in stocks (4=1+2-3)

31-12-2011

Balance

27. Sales and services rendered.

As of December 31, 2011 and 2010, the balance of sales and services rendered was as follows

Products and Finished Total Goods Work in Progress 4.074.930,27 4.469.538,35 394.608,08 (726.172,30) (726.172,30) 4.580.191,85 4.762.185,21 181.993,36 (1.231.433,88) (1.018.819,17) 212.614,72

31. Own work.

As of December 31, 2011 and 2010, the balance of own work was as follows: 2011 62.182,46 62.182,46

2010 5.773.425,10 39.750,00 5.813.175,10

2010 6 13 524 93 161 8 25 75 11 -

Description

2011

2010

Board of directors remmunerations

1.849.116,27

2.048.809,34

Salaries

18.167.233,32

18.530.638,06

Compensations

113.089,61

69.833,31

Social charges

3.578.155,22

3.555.170,99

Working and professional illness insurance

574.925,19

354.201,86

Social action costs

195.834,32

292.741,86

294.439,52

248.520,93

24.772.793,43

25.099.916,37

The movements occurred in the cost of goods sold balance in 2011 was as follows

Description 1 Opening stocks 2 Purchases 3 Stocks reclassification and regularization 4 Closing stocks 5 Cost of goods sold (5= 1+2+3-4)

Goods 24.381.268,90 689.933,65 (1.979,66) 24.618.917,04 452.285,51

Raw, subsidiary and consumable materials 3.726.453,55 48.847.820,22 4.122.692,83 48.451.580,94

Reinforc.

Reversl

(125.232,22) 214.543,53 (6.453,33) 26.132,64 (131.685,54) 240.676,17

2011 Reductions Increases Description Total Financial Investments (3.269.877,26) 260.343,22 (3.009.534,04) (3.269.877,26) 260.343,22 (3.009.534,04)

Final balance 89.311,32 19.679,31 108.990,63

2010 Reductions

Increases

and amortiz.

Total

cots

amortiz.

cots.

-

(5.539.090,07) (4.295.010,55)

- (4.295.010,55)

Invest. properties (1.999.427,94)

-

(1.999.427,94)

-

Intangible assets (2.502.534,32)

-

(2.502.534,32) (2.671.591,90)

- (2.671.591,90)

- (10.041.052,34) (7.663.533,65)

- (7.663.533,65)

(10.041.052,34)

(696.931,20)

(696.931,20)

2010

Reversals Total Impairment

losses impairment

Reversals

Total

losses impairment losses

-

-

-

(152,78)

-

(152,78)

-

-

-

(152,78)

-

(152,78)

2011 2.880.156,84 239.528,93 123.765,94 8.648,79 324.831,98 500.421,14 334.900,91 4.412.254,53

2010 2.924.563,57 195.186,05 50.412,63 23.244,96 778.285,61 207.780,78 1.039.560,39 5.219.033,99

Description Bank loans interest Factoring interest Lease interest Confirming interest Self-confirming interets Penalty interets and interets for delayed payments Other loans interets Bill of exchange interest Other interest Other financial costs Banking services Guarantees commissions Others

2011 10.387.717,14 1.310.522,28 155.797,99 23.435,32 39.738,79 72.693,79 945,04 71.726,10 2.721.012,27

2010 7.207.413,57 728.336,86 139.418,63 38.333,77 23.665,29 18.346,73 20.126,34 58.032,33 3.438.083,35

59.904,94 81.969,25 267.899,73 15.193.362,60

54.194,95 96.625,24 165.681,83 11.988.258,88

44. Income tax.

The current tax expense (income) is indicated in the following table 2011

2010

2.804.737,68 (365.917,42) 2.438.820,27

2.709.171,07 384.602,62 3.093.773,69

45. Commitments related to obtained guarantees.

In December 31, 2011, the Group responsibilities provided to third parties were as follows

37. Changes in fair value.

The movement occurred in the rubric of changes in fair value during the periods ended December 31, 2011 and December 31, 2010 was as follows: Total 28.107.722,45 49.537.753,87 (1.979,66) 28.741.609,87 48.903.866,45

and amortiz.

Tangible fixed assets (5.539.090,07)

Description Taxes Corporation tax Desferred taxes

2010

Final balance Current litigation - 10.036,25 10.036,25 Prov. for invest. replacement (38.543,63) 106.358,89 67.815,27 (38.543,63) 116.395,15 77.851,52

Depreciation of deprec.

43. Interest and other similar expenses The expenses and financing losses recognised during the periods ended December 31, 2011 and 2010 are detailed as follows

2010

Reversal

Total

Description Contractual interests and interests for delayed receivables Current loans interest Bank deposits interest Other short-term investments interest Swaps interest Bonds interest Other financial income

36. Provisions.

As of December 31, 2011 and 2010, the balance of provisions was as follows:

Reinforc.

and

42. Interest and other similar revenues.

The interest and other similar revenues recognised during the periods ended December 31, 2011 and 2010 are detailed as follows:

35. Impairment losses in receivable accounts.

The balance of impairment losses in receivable accounts as of December 31, 2011 and 2010 was as follows:

Description

and amortiz.

losses

6 1 7 5 9 542 1.486

2011

Reversals

Description Depreciation of deprec.

Tangible fixed assets

32. Cost of goods sold.

The movements occurred in the cost of goods sold balance in 2010 was as follows:

Goods Description 1 Opening stocks 35.920.736,21 1.497.673,13 2 Purchases 3 Stocks reclassification and regularization (12.635.517,19) 4 Closing stocks 24.381.268,90 401.623,24 5 Cost of goods sold (5= 1+2+3-4)

2010

2011 Reversals

Description

Total Impairment Reversals of Impairment Reversals of Total Descriptions Losses Impairment Llosses Impairment Losses Losse Trade debtors (8.811.821,89) 679.937,45 (8.131.884,44) (4.179.546,61) 431.803,88 (3.747.742,73) (8.811.821,89) 679.937,45 (8.131.884,44) (4.179.546,61) 431.803,88 (3.747.742,73)

Raw, Subsidiary and Consumable Materials Total 7.238.822,60 43.159.558,80 49.518.992,32 51.016.665,44 - (12.635.517,19) 3.726.453,55 28.107.722,45 53.031.361,37 53.432.984,61

2010 676.287,20 18.172,12 388.641,83 90.677,00 92.567,42 163.065,35 24.577,35 11.684,07 67.704,15 374.893,30 169.111,92 25.743,61 301.086,28 22.421,79 4.357,00 13.451,32 678.432,57 200.686,76 3.323.561,15

2011

2011 6 14 502 101 164 5 23 68 16 1 8 8 1 7 5 11 542 1.482

2011

Description Tangible fixed assets Intangible assets

2011 563.630,94 9.681,36 86.091,34 59.616,52 130.861,54 265.702,76 191.251,93 33.837,40 37.303,87 1.922,00 377.857,26 43.912,16 6.181,06 273.917,90 43.912,16 9.602,42 479.444,65 6.964,04 5.442,66 2.361,33 739.053,43 657.305,43 4.025.854,14

40. Costs and reversals of depreciations and amortization.

The amount of depreciation and amortization costs and reversals in the periods ended December 31, 2011 and 2010 was as follows:

Impairment

34.2. Staff costs.

As of December 31, 2011 and 2010, the balance of staff costs was as follows:

Otjer staff costs

Descriptions Taxes and charges Cash discounts Bad debts Financial investements Sale of non-financial investements Prior years adjustements Donations Contributions Underestimated tax provision Losses in financial instruments Exchange losses Bank guarantees costs Bill of exchange costs Factoring costs Conforming costs Self-conforming costs Fines and penalties Damages on third parties Compensations Losses in stocks Banking services Other losses and expenses

41. Impairment on depreciable/amortizable investments net of reversals.

The amount of impairment on depreciable/amortizable investments net of reversals as of December 31, 2011 and 2010, was as follows:

34. Employees benefits, number of employees and staff costs.

34.1. Number of employees: Companies dst, sgps, s.a.

Investhome - Construção e Imobiliário, s.a.

Domingos da Silva Teixeira, s.a.

Domingos da Silva Teixeira - Imobiliária, s.a.

Domingos da Silva Teixeira - Empreitadas Eléctricas, s.a.

Investhome, sgps, s.a. bysteel, s.a. tmodular, s.a. tstone, s.a. tgeotecnia, s.a. tconcrete, s.a. tagregados, s.a. cari , construtores, s.a. steelgreen, s.a.

Fundo de Investimento e Imobiliário HomeInvest Monte Dourado - Hipermercados e Imobiliária, s.a. dst, s.a. - sucursal Espanha ipplus, s.a.

Perfil Dinâmico, Lda dst Energias Renováveis, sgps, s.a. dst wind, s.a. global sun, s.a. dst solar, s.a.

EOL Minho - Energias Renováveis, s.a. dst hydro, s.a. dstelecom, s.a.

Innovation Point - Investigação e Desenvolvimento, s.a. dstelecom Norte, lda. dstelecom Alentejo e Algarve, lda way2b, ACE Criar Vantagens - Águas e Resíduos, lda.

Total

2010 3.291.047,85 2.887.309,10 366.692,36 85.435,13 277.992,27 79.641,00 3.995,86 5.543,99 2.765,31 1.993.167,02 268.601,52 64.001,92 10.112,41 7.816,66 122.495,69 9.466.618,10

39. Other losses and expenses.

The rubric of Other losses and expenses for the periods ended December 31, 2011 and December 31, 2010, decomposes as follows:

Tax

2.590.707,40 12.444.298,41 164.753,04 1.742.617,83 1.122.981,27 93.550,57 2.105.512,21 83.947,62 20.348.368,34

2011 3.024.200,00 291.666,66 1.195.625,37 544.639,20 211.935,99 147.174,92 97.029,68 5.497,66 192.796,67 4.049,45 560.201,31 5.147,59 2.576,72 4.680,66 195.592,30 6.482.814,16

Description Other operating income Financial income Sale of non-financial investments Exchange gains Cash discounts Prior years adjustments Overestimated tax provision Other subsidies Investment subsidies Tax refunds Investements projects - achievement bonuses Contractual penalities Insurance claims Compensations received from employees Gains in stocks Oher extraordinary income

2010 76.592.461,36 1.894.767,00 5.707.942,48 741.576,71 397.996,73 147.205,06 8.948.099,33 22.838,66 612.276,25 913.099,97 164.239,85 788.277,81 9.934,49 159.685,00 110.777,86 2.803.019,80 251.019,10 112.374,98 407.628,08 2.473.944,41 1.436.982,63 104.696.147,55

Variation

01-01-2011

38. Other revenues and income.

The composition of other revenues and income as of December 31, 2011 and 2010, was as follows:

Total

(2.805.348,05) 451.172,45 (2.345.175,60) (2.805.348,05) 451.172,45 (2.345.175,60)

Bank SANTANDER BCP BPI BBVA BARCLAYS BES CGD BPN BANIF BANCO POPULAR BANCO BIC Entidades Concedentes Outros total

Nacional Euros 8.782.863 8.342.843 10.245.175 3.685.330 1.946.059 17.383.606 12.137.157 3.137.126 784.890 969.367 1.310.517 11.426.602 1.488.432 81.639.968

Internacional USD 415.000 959.723 1.374.723

46. Subsequent Events.

In January 2012 was assigned to dst group a premium investment project within the framework of SI innovation, the amount of 874.522,51€, financed by the Operational Pogramme Competitiveness Factors, entity under the responsibility of the Ministry of Economy and Innovation, being co-financed by the FEDER. The annual report and financial statements presented herewith are translations of the annual report and financial statements originally issued in Portuguese in accordance with NCRF standards adopted by the Portuguese authorities and regulations. In the event of any discrepancies, the Portuguese version prevails.

Braga, April 16, 2012 The Board of Directors, José Gonçalves Teixeira Avelino Gonçalves Teixeira Joaquim Gonçalves Teixeira Hernâni José Gonçalves Teixeira José Manuel Lello Ribeiro de Almeida Teresa Gonçalves Gomes

The Chartered Accountant, Susana Maria Macedo Queirós

consolidated dst, sgps, s.a. ANNUAL REPORT 2011

9

Report and Opinion of the Sole Fiscal Auditor

Legal Certification of Consolidated Accounts

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.The members of the Board of Directors covered by paragraph 5 of article 447th of CSC were holders on December 31, 2011 of the following shares: ŸJosé Gonçalves Teixeira held: 1.150.000 shares with a nominal value of five

euros each; ŸJoaquim Gonçalves Teixeira held: 1.150.000 shares with a nominal value of

five euros each; ŸAvelino Gonçalves Teixeira held: 1.150.000 shares with a nominal value of

five euros each; ŸHernâni José Gonçalves Teixeira held: 1.150.000 shares with a nominal

value of five euros each.

2. The following shareholders covered by paragraph 4 of article 448th of the CSC, were the holders, at the close of financial year, at least one-tenth of the capital: ŸJosé Gonçalves Teixeira, with 23,00% of the capital; ŸJoaquim Gonçalves Teixeira, with 23,00% of the capital; ŸAvelino Gonçalves Teixeira, with 23,00% of the capital; ŸHernâni José Gonçalves Teixeira, with 23,00% of the capital.

Braga, April 16, 2012 The Board of Directors, José Gonçalves Teixeira Avelino Gonçalves Teixeira Joaquim Gonçalves Teixeira José Manuel Lello Ribeiro de Almeida Hernâni José Gonçalves Teixeira Teresa Gonçalves Gomes

Comment Margarida Monteiro

Xavier Martin

The available technology to produce Renewable Energy is increasing and proportionally competitive. However, the uncertainties about the investment return in this field, keep some potential investors skeptics.

In our vision, the Portuguese telecoms sector will play a fundamental role to create a new robust and sustainable growth economic model for the country.

Nowadays, several countries are adopting ambitious programs in order to decrease the CO2 emissions to the atmosphere. To make this possible, these countries are making huge investments in solutions for the Renewable Energy production, composed by cleaner advanced technologies together with smart networks.

In recent times, telecoms have consistently been one of the most competitive and innovative industries. For the next future, we anticipate an increasing dynamism based on the fixed-mobile convergence, the development of new applications and devices, the launch of the mobile 4G and, on top of that, the deployment of new fiber optical broadband networks. In this particular area, the dst Group is having a fundamental role through the deployment of new rural broadband networks.

In some countries like Spain, Australia and the United States, it is possible to see several photovoltaic plants grid connection with high level capacity production that assures the small cities' energetic consumption needs.

This trend begun with an undeniable fact: Sun is the biggest Renewable Energy source in the world. According to National Geographic Magazine “each hour of sun radiation that reaches the Earth face, is equal to 21 billion tons of coal, the world biggest energetic resource for the electricity production”.

Portugal is a country with low energy resources such as oil, coal or gas but by contrast, it has a huge potential in the Renewable Energy which can help not only in the energy dependency reduction but also in the environmental conservation, keeping a low level consumption of energy resources which are responsible for high emissions of greenhouse gases.

The vision that supports dst Group's entrance into the telecoms market is associated with the profound transformation of the current telecom operators' business model that, in order to increase efficiency, are more inclined to share a common network. For that purpose, the dst Group is building an open, carrier-neutral network to wholesale transmission and connectivity services.

In the present time, the dst Group is taking advantage of its broad experience in civil works to build two new rural broadband networks, one in the Northern part of the country and a second one for the South. At the same time, we are finalizing the selection of the equipment supplier and

developing the operational procedures for the exploration of the network with the highest industry standards. Being such a pioneering network, we aspire to bundle all this expertise to replicate in other geographies worldwide.

On a more generic basis, we believe that broadband communications will be a truly new, XXI-century utility that would require a global open and transparent infrastructure to avoid the overlapping of redundant investments that we currently find in urban environments. This will free resources to invest in innovative services and applications that will support an offline-to-online substitution in the provision of public and private services, particularly to a more dispersed rural population. The networks that we are developing will fundamentally contribute to that purpose through the facilitation of a high-quality broadband access to the general population and to the business community, that will foster innovative investments and activities. In addition, the availability of new technology and communications means will help to increase the productivity of the primary sector, widely disregarded in the past times,that will contribute to regenerate the economic fabrics of the country.

which have also been included in our Group's portfolio during the last years. This would allow us to be well prepared to develop innovative convergent applications in all these fields.

We do believe that Portugal needs a powerful vision for a new economic growth model and we feel that the networks we are building will give us a protagonist role in this new phase. For that purpose, we are consolidating a service-intensive orientation, much beyond the simpler project approach that we have applied to traditional civil works. The provision of sophisticated telecom services to highly skilled and knowledgeable carrier clients will require from us a very effective operational model that will be supported in tight partnerships that take advantage of the available capacity in the marketplace and prevent us from additional high investments to replicate already existing centers and platforms.

In summary, we are strongly building upon our understanding of the main trends and opportunities that the market, and the country as a whole, is facing. Our main challenge today is to execute and deliver on these global and industry challenges and culminate with success a roadmap that is well advanced. For that purpose, we count on the joint effort of the whole group.

In addition to this, we anticipate a lot of innovation coming from the friction of telecoms with other industries, like energy and environment,

As part of his character, Portugal has a high hydrographic network together with a high annual average solar exposure and also an extensive coastline which benefits from the Atlantic winds. Together, all this features provide a great opportunity to take advantage of the water, sun, wind and waves for energetic potential. The use of these renewable resources can lead to an effective reduction of the fossil fuels' dependency.

Assuming an important commitment with the European Union based on their natural characteristics and huge potential, Portugal has an ambitious target to achieve within respect to energy dependency reduction. First of all, the world needs to promote urgent and effectively sustainable solutions capable to produce an immediate impact on the environmental changes.

These sustainable solutions have to be the answer to the increase of the daily energetic needs.

We believe that until the wind blows, the rain falls and the sun shines in different ways and in different places, certainly we may produce Renewable Energy.

Margarida Pereira “If you want to build up a ship, don't convoke men to collect wood, give orders or divide work. Better to teach them how to be in love and to wish the endless immensity of the sea” (Antoine Saint-Exupéry) How many times we hear and read about people's importance in the companies? Expressions as “people are the organization's greatest asset” or “people make the difference” cross our everyday recursively.

But are we really conscientious about this importance? Do we value the fact of an employee bring with him feelings, ambitions? Do we know that he creates expectations, he gets involved and he searches grow in his job?

If you truly believe that human resources are the organization's greatest asset, you have to put away the idea that: men just work to obtain remuneration, don't feel frustrated with the lack of evolution, don't bother by the fact of not be informed and oriented into the business objectives and of just be treated as a piece – important one, it is clear – in the productive process: the way to reach the target.

The human resource management converges more and more to the valorisation of employees, since they are who have the most valuable knowledge about how to reach the best results, how to identify the problems and how to optimize the internal processes.

Obviously people differ in many skills, whether physical or cognitive, but

it is up to companies knowing how to guide and manage their human resources to they can accompanying the new and constant changing in the environment.

It is not a secret to anyone that the world is changing at a breakneck speed economic, social and behavioural – and speed at which the type of work is changing is also hallucinating, generating significant changes in the professional life of all of us.

The global economy, the technological innovation and the facility with that we access the information available on the internet, generated a new relation between the worker and the company, in which worker assumes a decisive role in the disclosure of the company's name and its image in the market.

The worker becomes an internal customer and as such should be encouraged, heard, challenged and compromised to feel effectively as a part of the company.

Knowing how to encourage the emotional energy of employees, especially those operating at the forefront, is essentially the construction of a collective pride and mutual trust, sharing the challenges, the difficulties but also the overcomings and conquests.

Using the analogy of Antoine Saint-Exupery, we sailed in troubled waters of the oceans and we must know how to guide and lead to fruition the ship that was built with the work and dream of many and that will continue to

sail if we left the past behind, embracing new ways of knowledge and new ways of acting. Because what is required today to workers is substantially more than was some years ago, because, as is known, in 2004 Portugal was one of the countries with lower productivity between the 25 countries in the European Union, what immediately makes us less competitive and less attractive in respect to the capacity of attract investment.

In the knowledge economy, the new exigencies in the work may exclude workers which in the past could be classified as qualified people, but which today do not possess some pre-requirements such as technological formation, versatility of functions, relationship capabilities, emotional intelligence and resilience, among others.

Above all, I believe that, to adapt ourselves and to survive in this turbulent market, we need to function as a collective organism, with “a synergy between the elements”, as Manuel Laranjeira argued at the beginning of the twentieth century.

Let's make a truce with ourselves and know how to challenge our limits with the ambition that characterizes us as innovative company and even irreverent. Let's know how to build with all employees a heritage of values and union, based on an open and transparent communication, which can keep them in love and able to dream with the endless immensity of the sea.

PORTUGAL HAS FUTURE ANNUAL REPORT dst, s.a. 2011

Management Report Dear Shareholders, In compliance with the legal and statutory regulations, the Board of Directors presents the management report for 2011 fiscal year.

As the environment where we operate is directly affected by the international economic evolution, before presenting the company's financial information and its business centers we will do a slight approach to the most important national and international macroeconomic data.

Macroeconomics Framework International Macroeconomics framework

National Macroeconomics framework

After a global economic recovery in 2010, which spread to most regions, it is expected a growth slowdown between 2011 and 2013. In 2010, the Gross Domestic Product (GDP) grew 5%, while in 2011 increased about 3.7%, according to sources from the International Monetary Fund (IMF) and European Commission (EC).

In 2011, the emerging markets continued to be the engine of economic growth, based on the strong dynamism of Asian countries (China and India), Latin America and Russia. The major advanced economies continued to show very low growth levels. The international institutions expect a weaker growth in the U.S., a sharp slowdown in Japan and the pursuit of a more moderate growth in the European Union, with very different developments between Member States. This growth was stronger in Germany, Sweden and Poland, more modest in UK and France, and weaker in Italy and Spain. It should also be noted that some peripheral Eurozone countries (Portugal and Greece) will remain in recession in 2012, as a result of strong structural adjustment processes in their economies.

The uncertainty about the global economic environment remains high.

The persistence of large macroeconomic imbalances (in the U.S. case), the fragility of the real estate market and the continuation of a sluggish labor market increased the risks of downsizing the world economic growth.

Alongside this, the sovereign debt crisis remain in some peripheral countries of the Eurozone, increasing the risk of contagion to other countries, which strongly affects the instability of international financial markets and decreases the economic confidence.

In a high risk context in most developed economies and with the continuation of major adjustments and challenges in emerging economies, in 2011, the world economic growth slowed down. The U.S. and the EU registered a growth of 1.6% and Japan suffered from a recession of 0.4%, associated, in part, with the effects of the earthquake of March 2011.

Macroeconomics Indicators GPD: USA EUROEAN UNION - 27 EUROZONE JAPAN

2009

2010

2011(e)

-2,4 -4,1 -4,0 -5,0

3,0 2,0 1,9 4,0

1,6 1,6 1,5 -0,4

Source: GPEARI Finance Percentage variation (e) - estimated

In Europe, the uncertainty about the solidness of the financial sector and the intensification of sovereign debt crisis in the Eurozone have shaken its still fragile financial system. The financial crisis in the peripheral countries of the Eurozone has led to a more rigorous risk analysis, which resulted in an increase of the sovereign risk premium. To face the financial crisis was agreed the reinforcement of stabilization instruments, pointing out the European Financial Stability Fund (EFSF) intervention and the additional resources provided by the IMF to Member States in the form of bilateral loans in an amount that could reach 200 billion euros.

In 2011, the Eurozone increased 1.5 percentage points, however institutions and european markets remain fragile and the recovery in the 27th Europe is expected to remain moderate as a result of the long lasting impact of the financial crisis and of the implementation of strong budgetary control measures in 2011.

The rising prices of raw materials, particularly oil and food, were responsible, in part, for the increase of inflation. Inflationary pressures remained contained in the advanced economies and higher in emerging economies. However, the effort required for some Eurozone countries in fiscal consolidation has led to an increase of indirect taxes and the acceleration of administrative prices, which have been boosting a rise in inflation in this region. According to the IMF, in developed economies inflation stood at 2.6% in 2011. The EC expects that the inflation rate in the Eurozone will be below 2% over the next two years due to the foreseen slowdown of energy prices, the persistent slowdown of the economy and moderate wage growth. In November 2011, the annual inflation rate of the

Eurozone remained at 3% and in terms of growth of the last 12 months it rose to 2.7%.

Associated with the weak economic growth, the labor market should remain anemic in the Eurozone and employment is expected to remain still in 2012 with a slight increase of 0.3% in 2013. According to the EC, the unemployment rate is expected to fall to 10.0% in the Eurozone in 2013 (10.1% in 2010). This trend extends to most countries, except Greece, Portugal, Cyprus and Slovenia, where this indicator has been rising significantly

Macroeconomics Indicators Inflation: USA EUROPEAN ZONE- 27 EUROZONE JAPAN Unemployment rate: USA EUROPEAN ZONE- 27 EUROZONE JAPAN Industrial production index: USA EUROPEAN ZONE- 27 EUROZONE JAPAN

2009

2010

2011(e)

-0,4 1,0 0,3 -1,3

1,6 2,1 1,6 -0,7

3,2 3,0 2,6 -0,2

9,3 8,9 9,4 5,1

9,6 9,6 10,1 5,1

9,0 9,7 10,0 4,9

-11,2 -13,6 -14,8 -21,8

5,3 6,8 7,4 16,6

4,2 4,2 4,6 -3,4

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

In order to ensure easier access to liquidity in the banking sector and to enable a better functioning of the Euro area monetary market, on December 8, the Governing Council reduced by 25 basis points the interest rate reference to 1%, which in November stood at 1.25%.

Reflecting the low interest rates set by central banks, euro monetary market rates in late 2011 showed a gradual decline in short-term rates in Europe. In the U.S., the interest rates on short-term continued the upward trend started in August 2011, remaining with values below 1%.

In November 2011, the long-term interest rates increased in the euro area, reflecting the growing concerns about sovereign debt crisis and decreased in the U.S., reflecting the uncertainty about the global economic perspectives.

At the end of December 2011, the 3, 6 and 12 months Euribor interest rates stood at 1.024%, 1.178% and 1.356%, respectively. This slight decrease in late 2011 reflected in part, and as mentioned above, the ECB's decision of lowering the reference rate and of adopting unconventional measures to support additional bank credit and monetary market liquidity in the Eurozone.

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

2009

2010

2011

0,72 0,90 1,23 1,44 1,62

0,44 0,57 0,81 1,08 1,35

0,62 1,18 1,39 1,64 2,01

0,69

0,34

0,34

0,47

0,23

0,19

Source: Ministry of Finance / Bank of Portugal Percentage, annual average

Reference Interest Rates EUROZONE USA JAPAN UNITED KINGDON

2009 1,00 0,25 0,30 0,50

2010 1,00 0,25 0,10 0,50

2011 1,00 0,25 0,10 0,50

Macroeconomics Indicators

2009

Expenditures and GDP - Private consumption - Public consumption - GFCF - Exports - Imports - GDP at market prices

-1,0 2,9 -11,9 -11,8 -10,9 -2,6

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

Following its depreciation in 2010, the euro vs U.S. dollar exchange rate fell in 2011, standing at 1.318 USD at the end of the year. The euro depreciation against major international currencies has been driven by the negative perception of the public finances sustainability of some Eurozone Member States.

Foreign Currencies EUR/USD EUR/JPY EUR/GBP EUR/CHF

2009 1,441 133,160 0,888 1,484

2010 1,336 108,65 0,861 1,250

2011 1,318 102,55 0,844 1,228

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

The intensification of sovereign debt crisis in the euro area and the increased uncertainty about the global economic growth in coming years contributed to the decline of major international stock index.

Stock Markets Dow Jones EURO STOXX 50 Nikkei 225 Standard & Poors 500

2009 -25,4 -23,2 -22,5

2010 13,4 7,3 20,3

2011 -3,4 -5,7 11,4

Source: Ministry of Finance / Bank of Portugal Percentage variation

In 2011, the price of non-energy raw materials, metals and agricultural goods, showed a significant slowdown. The price of the oil barrel rose significantly compared to 2010 as a result of the increasing global demand. The average Brent oil price in 2011 was of 111 USD per barrel.

Raw Materials Brent oil USD/Barril (1) Agricutural goods (2) Metals (2)

2009 62,45 -17,0 -28,60

2010 80,22 33,8 40,2

2011(e) 111,09 27,2 17,9

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

The EC also foresees for the Eurozone an export reduction to 3.4% in 2012 (11.3% in 2010 and 6.1% in 2011) and a slowdown in investment, which should only increase 0.5% in 2012. These downward revisions for 2012 are due to the expectation of weaker global economic growth and of occurrence of serious business confidence crisis, which is associated to the combination of weak public finances and financial sector vulnerabilities, placing strong restrictions for credit granting.

Private consumption in the Eurozone is expected to remain stagnant in 2012 (+0.4%), driven by the impact of fiscal consolidation measures in household income and by the lack of labor market improvement measures.

The consolidation efforts made by most countries may lead to an improvement of public finances for the coming years, with an average planned deficit of around 3.2% of GDP in the Eurozone, in 2012 and 2013. This forecast is below the deficit registered since 2009, which stood on average at 5.6% of GDP between 2009 and 2011. However, public debt as a percentage of GDP continues to increase to about 91% average in the years 2012 and 2013, continuing the upwards trend from 2008.

Inflation Industrial Production Index Industrial Turnover Index PSI 20 Index Unemployment rate

2010 2011(e)

2,0 3,2 -4,8 8,7 5,3 1,4

-3,6 -3,2 -11,2 7,3 -4,3 -1,6

1,4 -0,8 2,0 -8,1 9,4 -17,9 33,47 -10,34 10,8 9,5

3,6 -2,2 2,1 -24,4 12,4

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

During the sovereign debt crisis context in the Eurozone, the Portuguese economy in 2011 intensified its adjustment process of macroeconomic imbalances accumulated over the past years. These imbalances have resulted in high and persistent external financing needs. Along with the tensions in financial markets, these imbalances represent the Portuguese economy's vulnerability, which contributed to the increasing difficulty of accessing to the financial markets on a regular basis for public sector and therefore for the Portuguese banking sector. Thus, the Portuguese government requested financial assistance from the IMF and EU. This request led to the formalization of a Financial Assistance Programme, in which the Portuguese Government has pledged to adopt measures for macroeconomic imbalances and structural adjustment.

The ongoing fiscal consolidation process will negatively affect the growth of the Portuguese economy between 2011 and 2013 but it is expected to create conditions for sustainable growth in the long term. The IMF projections point to an unprecedented contraction of economic activity and domestic demand, along with a substantial reduction of the external imbalances. According to IMF forecasts, the budget deficit will be 5.9% of GDP, nevertheless the Government points to a 4.5% GDP deficit.

In 2011, it is estimated that GDP contracted 1.6%, reflecting a significant decrease of both public and private domestic demand. The sharp contraction in domestic demand is accompanied with a significant growth of exports, which is not yet sufficient to offset the impact of the demand adjustment by Portuguese residents.

There has been a continued deterioration in the labor market, a net reduction of employment and an increase of unemployment to historically high levels (12.4% in the third quarter of 2011). On the other hand, the fiscal consolidation measures imply an unprecedented contraction in household disposable income causing a general decrease of the purchasing power and consumers' confidence In 2011 the average annual inflation rate rose to 3.6% (1.4% in 2010), reflecting the impact of the increase of indirect taxes and of the rising prices of administrative, transports and energy products.

The Portuguese economy will be marked by structural adjustments of macroeconomic imbalances in the context of the Financial Assistance Programme entered into with the European Union, the Eurozone countries and the IMF. This process, which will intensify in 2012, should lead to a sharp contraction of domestic demand by the end of 2013. Nevertheless, its success will ensure the recovery of basic macroeconomic balances, the reduction of chronic external financing needs of the Portuguese economy, the resumption of a sustainable growth process and will also insure the return of residents to the funding at the international financial markets.

The Construction Sector The construction sector in Portugal in 2011 registered again a decline in its activity, influenced by a highly unfavorable economic environment.

The majority of indicators point to a contraction in the sector's production volume and the construction's gross added value added decreased 11.6% in connection with the same 2010 period, along with the 14.1% decrease of construction's investment. In November 2011, the activity level of construction sector decreased 8.3%, the confidence index decreased 6.3% (which has been declining for 41 consecutive months), the employment and the order books followed the same trend, with decreases of 3.2% and 11.6% respectively.

The sharp fall in all qualitative indicators of the construction sector clearly shows the deep crisis affecting this industry in Portugal, which becomes even more evident when compared with the situation of the European Union, where there is an increase – albeit slight – of the confidence of the sector's business men and of the order books.

The housing market has been the most penalized by the cur-

rent economic situation, as is evidenced by data provided by the Bank of Portugal, which show a decrease of 63.4% in new loans for house purchase. This is a consequence of the impact of fiscal consolidation measures in household income and of the restrictions imposed on access to house purchase's financing. These factors, coupled with the growing economic difficulties caused by the rising unemployment and the serious confidence crisis that has settled generally, have led to a drastic decrease of housing demand. As an evidence of the contraction in the construction segment of residential buildings, the licensing of new houses registered a 31.1% fall which corresponds to a reduction of 6.565 houses' licensings. The housing sector was again the sector that registered the largest drop in production, which should have been about 15%. However, in 2011, the decline in production was also very significant in the non-residential construction and in the engineering works' segments.

Again due to the economic crisis, the segment of nonresidential buildings achieved a significant decrease, with

the licensed areas representing a 7.9% reduction when compared to last year's same period.

In the public works segment there was a strong reduction in investment, with the number of tenders launched by the Central Government contracting to 70.3% in 2011 (in comparison with 2010). Taking into consideration the values of the tenders launched by November 2011, a 1,239 million euros reduction occurred, which represents a 31.6% decrease in the value in connection to 2010's homologous period.

According to the businessmen operating in this market, the reduction of public investment and the excess of competition that leads to very low prices have been unfavorable to the evolution of this sector's activity.

The employment related to the construction sector in 2011's third quarter shows a reduction of 3.2% over the second quarter of the year, which resulted in a 14,000 employees decrease in just three months. In cumulative terms, since 2002, the construction sector's employment decrease reached about 168,000 jobs. The business confidence index fell

6.3%, reaching a new historic low as a result of more than 40 consecutive monthly falls.

According to EC sources, the confidence of the European businessmen operating in the construction sector remained at an average positive level (+0.7%), whilst in Portugal this confidence continues to fall sharply, thus aggravating the gap between Portugal and other EU countries in this regard.

Such results significantly from the recent evolution of the order book, which in Portugal decreased 27.4%, clearly opposed to the average 5.2% increase recorded in the EU.

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

Sector Indicators Concrete sales Steel sales Building licenses Public Works Promotions Adjudications Works performed GFCF (Construction)

2009 -15,5 -4,8 -21,5

2010 -7,0 -23,0 -9,1

2011(e) -15,4 -8,9 -11,0

-29,5 12,3 42,1 -11,7

21,9 -39,1 -15,2 -5,8

-34,1 -1,6 -21,0 -14,1

ANNUAL REPORT dst, s.a. 2011

11

Economic and Financial Analysis

Business The company's main activity rolls out in the construction and infrastructure areas, which is supported by complementary production centers for construction, such as the departments for the application and production of bituminous mixtures and of logistics and maintenance (which is responsible for the management, conservation and maintenance of the company's equipments).

The year 2011 was characterized by the continuity of work related to contracts entered into in previous years and by the commencement of emblematic works in the non-residential buildings' infrastructure and construction areas. Despite the crisis scenario affecting the industry, the business managed to maintain very positive economic and financial results. The turnover amounted to 111.5 million euros, showing a slight 16% decrease related to the previous year. Flowing against the previous years' trend, the proportion of the infrastructure works in total services rose to 61%, while the civil construction works decreased to 39%.

2009 1.898 103.168 105.066

Turnover Sales Services rendered total

2010 2.494 130.385 132.879

2011 1.792 109.738 111.530

2009 33.107 70.063 103.170

% 39% 61%

2010 62.608 67.777 130.385

% 48% 52%

VAR. -28,13% -15,84% -16,07%

2011 67.031 42.707 109.738

Net assets stood at 155.1 million euros, representing an increase of 18.4 million euros in comparison with the previous year. This growth was mainly due to the increase in current assets, indicating an increase in trade debtors, state and other public entities, as well as in other receivables.

On the liabilities side, there was an increase in trade creditors, other payables and deferred income to be recognized in the following year (namely regarding to construction contracts).

% 61% 39%

Despite of registering a 15.84% decrease, the services rendered reached a very positive value supported by a good working portfolio. In the table below we highlight the major works that were carried out in 2011 and whose turnover represents 76% of the company's global turnover in the year: Localization Lousã Porto Beja Évora Zonas Rurais Norte Vizela Beja Vila Nova de Gaia Beja Leiria Santo Tirso Faro Guimarães Braga Mirandela Leiria Gondomar Évora Alentejo e Algarve Vila Verde Setúbal Braga Santarém Matosinhos

Mil€ Income stamentt

8 000

4 000

140 000

3 000

120 000

2 000

100 000

1 000

Description

2010

40 000

EBITA

20 000

Financial results

Assets

Liabilities

Equity

Despite the 16% decrease of the turnover in comparison with the previous year, 2011 turnover amounted to 111.5 million euros as a result from

Tangible Fixed Assets In line with previous years, the company's fixed assets' structure continues to show an incremental increase in productive net assets. Thus, the investment in the period under review amounted to 1.3 million euros, comprising an increase in the purchase of equipment and vehicles for civil construction works.

Human Resources The company's strategy consists of strengthening its senior and middle staff in order to build a structure under which all the company's growth is based.

Nevertheless in 2011 there was a slight decrease in the number of human capital over the previous year.

2011 5 502 507

The ability to generate cash flow was also positive, with 2011 free cash flows of 7.5 million euros, which highlight the company's management capacity to cope with the difficulties experienced in the sector and in the country.

The 2011 company's growth is reflected in some economical, financial and profitability ratios, namely: 2009

2010

2011

The rotation of fixed assets demonstrates the rather high efficiency level of using assets, which exceeds 100% and therefore reflects the strong investment in productive capacity that the company has been doing in recent years.

Economics Indicators Gross Added Valued * 21.491.106 23.892.634 24.432.453 EBITDA * 6.607.725 8.801.134 9.135.812 EBITDA % 6,29% 6,62% 8,19% Net Debt / EBITDA 4,95 3,33 2,51 Cash-flow* 7.096.748 8.908.839 7.461.802 Rotation of Fixed assets 397,22% 475,56% 383,31% Rot. of Working Capital 104,78% 106,95% 77,22% Rotation of Stocks 334,72% 1 379,22% 1002,54%

0

2011

Regarding the company's capacity to pay up its net debt, it may be observed that the number of years required by the company to pay its banking net debt from its cash balances decreased by nearly five years in 2009 to 2.5 years in 2011, considering constant EBITDA and banking net debt.

7 000

160 000

2010

In the course of 2011 activity, the company generated over 24.4 million euros of gross value added and the earnings before interest, taxes, depreciation, impairments and provisions ("EBITDA") exceeded 9.1 million euros, representing an improvement of 1.57 percentage points.

The company's net income reached a significant 4.5 million euros amount, which allows the continuous equity strengthening and remuneration in order to pursue an ambitious and sustained growth strategy.

9 000

5 000

0

Financial participations In 2011 the balance of financial participations has decreased about 807,000 euros, resulting on one hand from the application of the equity method on associated and subsidiaries companies with a negative value of 1.5 million euros and on the other hand, from the reinforcement of supplementary contributions to companies Cari s.a. and Steelgreen s.a., worth 550,000 euros and 100,000 euros respectively.

2010 5 524 529

In contrast, the financial results show a 65% decrease. Despite of having increased the interest and similar income obtained such were not enough to offset the increase of interest and expenses incurred, which lead to a 22% net income decrease.

60 000

Investment

2009 5 526 531

Along with this slight decrease, the main costs balances decreased considerably.

The cost of goods sold and general and administrative expenses decreased about 21% each, while depreciation and amortizations and impairment of receivables decreased approximately 8%.

180 000

80 000

Rubricas Boards members Employees total

The operating result was 6.2 million euros, which increased 9% in comparison with the 2010 year similar result.

6 000

Mil€ Balance sheet

Unit: thousand Euros

Main works REFER - Reabilitação das Infraestruturas no Troço 2.ª Fase da Inserção Urbana no Metro do Porto Construção do 2.º troço do Adutor do Pisão - Beja Parque Aeronaútico da Embraer em Évora Implant. redes de Banda Larga de Nova Geração - Z. Rurais Norte Execução da ETAR do Sousa Sistema Elevatório de Pedrogão Escola Secundária Almeida Garrett EDIA - Construção de Infraestruturas de rega - Alfundão Adutor da Mata do Urso Ren. e Req. da frente rio de Santo Tirso Abast. de Água no concelho de Faro Interceptor do Ave - 2.ª fase Centro de Valorização Orgânica (CVO) - Braga Centro de valorização Orgânica (CVO) - Mirandela Decathlon de Leiria Gondomar - Plano de Investimentos II Fórum Évora Shopping Inst. Redes Comum. Electrón. Alta Velocidade - Zonas Ruais Sul Execução de ETAR do Cávado - Homem Decathlon Setúbal Construção Liberdade Street fashion Vale de Santarém - Saneamento de Pernes Refinaria de Matosinhos

several works with a significant dimension that started in the period under analysis.

10 000

Unit: thousand Euros

Services rendered Infraestructure Buildings total

As in previous years, the company's performance in 2011 was very positive, which is contrary to the trend in the construction sector.

2011 Operating results Net profit/loss

Consequently, EBITDA increased 334.7 thousand euros (more 4% than in the previous year), reflecting an increase in the company's gross margin. The year of 2011 was marked by a good operating performance of the company. This performance resulted from continuous improvements of efficiency and of rational management of all resources.

Financial Indicators Financial Autonomy General Liquidify General Solvency

25,81% 176,99% 34,78%

25,48% 158,09% 34,19%

25,36% 147,25% 33,97%

Profitability Indicators Gross Margin of Sales Return on Sales Return on Total Assets Return on Equity

83,22% 4,90% 4,59% 17,80%

81,66% 4,33% 4,22% 16,55%

82,80% 4,04% 2,91% 11,47%

The general solvency indicator, which measures the company's ability to offset its debts to third parties with own means, stood at 34.0% in 2011, which shows a slight increase of dependence from its creditors in relation to the previous year.

The general liquidity indicator reflects the company's ability to ensure its shortterm commitments, which 147.3%, greater than 100%, means that the company is fully endowed with the financial means required to meet its short-term liabilities.

As shown in the table above, the company presented profitability ratios slightly lower than those of 2010, with the exception of sales gross margin, which remains a benchmark, standing above 82.8% and denoting the company's high operational efficiency.

The return on equity is a reference indicator that stands at 11.5%, which is higher than any short or medium term financial assets.

The stocks rotation ratio evaluates the stocks "weight" in a given period, which allows the evaluation of the company's efficiency. This ratio showed a positive evolution which is directly related to the decrease of stock level, mainly due to their use in construction works (which is related to the type of construction work) and a concerted effort of reducing the stocks permanency period by purchasing only the stocks required for each stage of the work.

* Amounts in Euros

State and Future Subsequent Perspectives other Public Events Entities and Social Security debts in arrears

No events subsequent to the balance sheet date exist that may have a material impact on the financial statements.

Notwithstanding the current national and international macroeconomic environment, characterized by numerous uncertainties, the company remains investing in its sustained and multifaceted growth.

The financial autonomy ratio of the company stood at 25.4%, measuring its solvency by determining the proportion of assets that are equity financed.

At an economic level, domingos da silva teixeira, s.a. intends to consolidate its turnover and to improve its profitability, reducing debt levels and seeking to increase customer satisfaction through The company does not have debts in its products and services rendered. arrears to the State and other public From a human resources point of view, entities and Social Security. the company will continue with the training plan outlined, as well as promoting the awareness and safety controls in the workplaces.

Proposed Results Application

Final Note

The Board of Directors proposed to General Shareholders' Meeting that the 2011 net positive result of 4,511,187.49 euros (four million five hundred eleven thousand one hundred eighty seven euros and forty nine cents) is transferred as follows: Legal Reserves ..................225,559.37€ Retained Earnings ..........4,285,628.12€

The Board of Directors expresses a word of recognition to all employees and of gratitude to everyone who in one way or another cooperated with the company.

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 20, 2012 The Board of Directors José Gonçalves Teixeira; Chairman Avelino Gonçalves Teixeira; Vice-Chairman Joaquim Gonçalves Teixeira; member of the Board of Directors

In terms of quality, we will start the certification process for Research, Development and Innovation (RDI) management system according to standard NP 4457: 2007 - IDI Management, IDI Requirements Management System

Hernâni José Gonçalves Teixeira; member of the Board of Directors Teresa Gonçalves Gomes; member of the Board of Directors

Financial Information

Translation of financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails.

Amounts expressed in Euros.

Individual Balance sheet For the years ended December 31, 2011 and 2010.

Notes

31-12-2011

31-12-2010

5.548.707,71

ASSETS Non-current assets Tangible fixed assets

7e8

4.638.718,72

Investment properties

9

150.000,00

-

Intangible fixed assets

10

7.022,74

11.736,77

Financial investments under the equity method

11

3.974.286,84

4.796.849,60

Financial investments under other method

12

1.911.061,00

1.895.211,00

Deferred tax assets

25

99.407,53

107.650,74

10.780.496,83

12.360.155,82

1.913.432,63

1.767.035,44

80.795.741,38

68.044.980,60

Current assets Inventories 13 e 30 Trade debtors

14

Advance payments

23

14.995,17

-

State and others public entities

17

2.096.500,33

320.495,90

Shareholders

16

25.607,85

9.921,57

Other receivables

15

57.616.345,00

51.898.088,86

Deferrals

18

417.142,04

443.177,78

Cash and bank deposits

4

Total assets

1.394.029,35

1.763.907,90

144.273.793,75

124.247.608,05

155.054.290,58

136.607.763,87

EQUITY AND LIABILITIES Equity Share capital

19

12.500.000,00

12.500.000,00

Other equity instruments

20

1.010.000,00

1.010.000,00

1.202.645,14

914.678,22

Other reserves

8.122.976,43

8.122,976,43

Retained earnings

12.539.928,23

7.068.556,78

Legal reserve

Financial assets adjustments

(568.185,27)

(568.018,67)

Net Profit/(loss) for the period

4.511.187,49

5.759.338,37

Total equity

39.318.552,02

34.807.531,13

Sales and services rendered Subsidies Gains (losses) on subsidiary, associates companies and joint ventures Own work Cost of goods sold General and administrative expenses Staff costs Impairment on trade receivables net of reversals Provisions (incresased/decrease) Other revenues and income Other losses and expenses Net operating profit (loss) before depreciation and amostization, net financing costs and taxes Depreciation abd amortization net of reversals Depreciation and amortization/amortizable investments net of reversals Net operating profit (loss) before net financing costs and taxes Financial income Financial losses Net profit (loss) before taxes Income tax Net Profit (loss) for the period

Individual Cash Flows Statement

For the years ended December 31, 2011 and 2010.

For the years ended December 31, 2011 and 2010.

Notes 26 27 28 29 30 31 32 33 34 35 36 37 38 39

2011 111.530.153,56 26.926,62 (1.472.396,16) 13.411,46 (19.182.906,70) (74.532.931,11) (10.536.805,52) (987.026,69) 2.059,25 4.570.456,72 (1.280.097,32) 8.150.844,11 (1.965.647,47) 6.185.196,64 4.757.776,93 (4.008.928,66) 6.934.044,91 (2.422.857,42) 4.511.187,49

2010 132.878.881,01 60.684,28 848.596,57 108.207,73 (24.371.269,39) (94.395.840,77) (11.174.727,33) (1.075.470,12) 57.595,36 6.482.408,99 (1.635.807,49) 7.783.258,84 (2.131.626,16) (152,78) 5.651.479,90 3.859.330,43 (1.719.960,04) 7.790.850,29 (2.031.551,92) 5.759.338,37

On January 1, 2010 Changes during the year First adoption of new accounting system Application of 2009 result Changes in other Equity variations: Equity method Adjustments for deferred taxes Other variations recognized in equity Net profit / loss for the period Comprehensive income for the year Operations with shareholders Share capital realizations Share premium realizations Distributions Amounts received to cover losses Other operations On December 31, 2010

Share Capital 12.500.000,00

Other equity Reserve 1.010.000,00

Legal Reserve 669.524,29

Other Reserves 8.122.976,43

Retained Earnings 2.160.224,71

Provisions

21

25.491,69

27.550,94

Loans

22

17.526.035,41

22.867.893,19

Deferred tax liabilities

25

207.106,20

310.659,29

17.758.633,30

23.206.103,42

49.081.633,01

39.381.446,69

Current liabilities Trade creditors

23

State and others public entities

17

405.351,68

1.561.506,88

Shareholders

16

2.592.482,91

2.437.299,29

Loans

8 e 22

6.794.519,22

8.191.558,70

Other payables 24 e 25

25.373.438,03

22.148.088,39

13.729.680,41

4.874.229,37

18

97.977.105,26

78.594.129,32

Total liabilities

115.735.738,56

101.800.232,74

Total equity and liabilities

155.054.290,58

136.607.763,87

Description On January 1, 2011 Changes during the year First adoption of new accounting system Application of 2010 result Changes in other Equity variations: Equity method Adjustments for deferred taxes Other variations recognized in equity

245.153,93

-

4.897.963,10

-

(5.143.17,03)

-

-

245.153,93

-

10.368,97 4.908.332,07

150.578,57 (10.368,97) 140.209,60

-

-

245.153,93

-

4.908.332,07

140.209,60

(5.143.117,03) 5.759.338,37 616.221,34

12.500.000,00

1.010.000,00

914.678,22

8.122.976,43

7.068.556,78

(580.018,67)

150.578.,57 150.578,57 5.759.338,37 5.909.916,95

5.759.338,37 34.807.531,13

Net profit / loss for the period Comprehensive income for the year Operations with shareholders Share capital realizations Share premium realizations Distributions Amounts received to cover losses Other operations On December 31, 2011

Legal Other Reserve Reserves 914.678,22 8.122.976,43

Retained Earnings 7.068.556,78

-

287.966,92

-

5.471.371,45

-

(5.729.338,37)

-

-

-

287.966,92

-

5.471.371,45

(166,60) (166,60)

-

-

287.966,92

-

5.471.371,45

(166,60)

(5.729.338,37) 4.511.187,49 (1.248.150,88)

(166,60) (166,60) 4.511.187,49 4.511.020,89

1.010.000,00 1.202.645,14 8.122.976,43 12.539.928,23

(568.185,27)

-

12.500.000,00

113.743.992,41) (107.753.265,61) (11.340.602,99) (5.349.876,20) (2.203.656,94) (7.553.533,13)

(665.850,00) (3.092.740,31) (5.733.942,42) (150.000,00) (9.642.532,73)

(295.000,00) (1.950.622,74) (6.547.688,68) (8.793.311,42)

923.400,45 5.223.121,61 6.146.522,06 (3.496.010,67)

217.559,15 1.993.167,02 987.972,91 78.190,50 3.276.889,58 (5.516.421,84)

547.148,57 547.148,57

18.258.722,37 18.258.722,27

Cash flow from financing activities (3)

(2.607.090,39) (4.083.928,66) (6.616.019,05) (6.068.870,48)

(3.427.792,20) (2.033.837,77) (550,629,97) 12.752.092,40

Variation in cash and cash equivilents (1) + (2) + (3) Cash and cash equivalents at the begining of the period Cash and cash equivalents at the end of the period

(369.878,55) 1.763.907,90 1.394.029,35

(317.862,57) 2.081.770,47 1.763.907,90

Cash flow from investments activities (2)

-

Other equity Reserve 1.010.000,00

111.228.576,32 (88.021.884,16) (11.781.180,53) 11.425.511,63) (2.230.509,03) 9.195.002,60

Revenues from: Tangible fixed assets Investments subsidies Interests and similar revenues Dividends

Financial Assets Net profit / Loss Total Adjustments of the Period (708.228,27) 5.143.117,03 28.897.614,19

-

Share Capital 12.500.000,00

2010

Investments activities Payments for: Financial investments tangible fixed assets Loans obtained Other assets

Individual Statement of Equity Changes in 2011

Non-current liabilities

2011 Operating activities - direct method Revenues from trade debtors Payments to trade creditors Payments to employes Cash flow from operations Income tax payments/revenue Cash flow from operating activities(1)

Individual Statement of Equity Changes in 2010

Liabilities

Deferrals

Individual Income Statement

Financial assets Net profit / Loss Adjustments of the Period Total (568.018,67) 5.759.338,37 34.807.531,13

4.511.187,49 39.318.552,02

Financing activities Revenues from: Loans obtained Payments for: Revenues granted Interest and similar costs

12

ANNUAL REPORT dst, s.a. 2011

Annex 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 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 in accordance with all standards comprised in the SNC. It should be considered that as part of SNC are the Basis for the presentation of financial statements, the Financial Statements Models, the Accounting Code, the Financial Reporting and Accounting Standards (“NCRF”) and the Interpretive Guidelines.

The preparation of the financial statements requires the use of relevant estimates and judgments that affect the assets and liabilities amounts, as well as the income and expenses recorded in the reporting period.

These estimates and assumptions result from the best of our knowledge related to the current events and actions, not being expected that significant adjustments to the assets and liabilities amounts may occur in future periods.

3. Main accounting policies.

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

3.1. Presentation basis.

The financial statements were prepared on a going concern basis, based on historical cost and prepared from the accounting books and records of the entity that were kept in accordance with the NCRF standards in force at the time of the financial statements' preparation.

3.1.1. 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.

Maintenance and repair expenditures that do not increase the assets' useful life or that do not result in significant improvements in the tangible fixed assets are recognized as expense in the period in which they are incurred.

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.

Depreciations are calculated over the acquisition cost 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.

The average annual depreciation rates were considered as follows: Buildings and other structures Basic equipment Transport equipment Office equipment Artistic patrimony Other tangible fixed assets

ANNUAL RATE(%) 1 a 20 5 a 33,33 12,5 a 50 10 a 33,33 12,5 10 a 33,33

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 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 revenues and income" or "Other losses and expenses", respectively.

3.1.2. 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.

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 amortization rates used are as follows:

Software Industrial property

ANNUAL RATE(%) 10,00 a 33,33 33,33

3.1.3. Investment properties.

Investment properties consist of properties 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. Costs incurred with investment properties in use, including maintenance, repairs, insurance and property taxes are recognized as costs in the period in which they are incurred.

3.1.4. Financial investments. a) Financial investments - equity method Investments in subsidiaries and associated companies – being defined as such those entities in which dst group exercises control or significant influence and that are not joint ventures – are recorded in accordance with the equity method.

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. b) Financial investments - other methods The company uses the cost model in relation to investments in other entities in which are not mandatories the equity or proportional consolidation methods 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.

3.1.5. 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).

3.1.6. Leases.

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

Financial leases Leases are classified as financial leases if a significant part of the risks and benefits inherent to the ownership are transferred to the lessee.

Tangible fixed assets acquired through financial lease contracts and their correspondent liabilities are accounted for in accordance with the financial method. 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.

3.1.7. Costs from loans obtained.

Costs from loans obtained are recognized as expenses in the income statement in accordance with the accrual method (or economic periodization).

3.1.8. 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.

3.1.9. 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.

3.1.10. 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.

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

3.1.11. 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, deducted from impairment losses whenever required.

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.

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

Trade creditors and other payables Debts to suppliers or other third parties are accounted for 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.

Loans and other non-current payables Loans and other non-current payables are accounted for at cost as liabilities.

These loans bear interest indexed to reference short-term rates and its variations affect the net income results.

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.

3.1.12. 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.

3.1.13. 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.

3.1.14. Subsidies.

Subsidies are initially recorded as liabilities when they are received (or are certain to be received) and after assuring that the entity will comply with the associated required conditions.

Operational subsidies are recognized in the income statement in proportion with the expenses incurred.

3.1.15. 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.

With indicators, the asset's recoverable amount is estimated in order to determine the extent of loss impairment.

An impairment loss is recognized for the exceeding asset's carrying amount in relation to its recoverable value. Such loss is recognized in the income statement as "Impairment losses" (and its subsequent reversal, if any, as "Reversal of impairment losses").

3.1.16. Effects of changes in exchange rates.

Transactions denominated in foreign currencies are converted into euros in accordance with the exchange rate prevailing at the date of the transaction.

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.

At the reporting date, assets and liabilities are accounted for in accordance with the period's closing exchange rate.

3.1.17. Income tax.

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.

Deferred taxes are calculated and annually evaluated based under the tax

8. Leases.

The information concerning leases as of December 31, 2011 and 2010 is as follows:

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.

The entity is included in the special group taxation regime, reason why the period's income tax is accounted for as an offset to “Shareholders” and not to “State and other public entities”.

Financial Assets Description Tangible fixed assets 7.707.332,55 1 Initial gross carrying amount 4.221.326,46 2 Accumulated amortizations / depreciations 3.486.006,46 4 Final net carrying aount (4=1-2-3) Total future minimum lease payments at 3.022.848,83 balance sheet date (5=5.1+5.2+5.3) 1.060.339,15 5.1 Up to one year 1.962.509,68 5.2 From one to five years

Cost model Description 4 Inicial gross carrying amount (4=1-2-3) 5 Movemoents of the period (5= 5.1 -5.2 + 5.3 + ... + 5.9) 5.1 Total Additions Aquisitions 5.2 Total Decreases 6 Final net carrying amount (6= 4+5)

Changes to these estimates, which may occur after the balance sheet date will be recognized in the income statement in a prospective manner.

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 Bank deposits Other bank deposits

2011 64.642,13 1.301.137,22 28.250,00 1.394.029,35

5. Accounting policies, changes in accounting policies and errors.

During the period there were no changes in accounting policies and estimates or material errors related to prior periods.

6. 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:

Description With finite usefull life: 4 initial gross carrying amount 5 Initial accumulated amortization 7 Initial net carrying amount (7= 4-5-6) 8 Movements of the period (8=8.1-8.2+8.3+...+8.6) 8.1 Total Addictions 8.2 Total Decreases Amortizations 9 Final net carrying amount (9=7+88)

Saldos 43.477.691,74 234.674,25 5.110,76 879.820,32 7.851,00 126.928,28 342.183,21 560.580,37 703.753,37 113.313,06 68.347,89 311.924,94 6.612,24 830,25 10.981.730,86 11.868,93 5.565,27 6.011,55 22.239,33 1.492,75 20.223,10 12.664.172,60 1.003,10 2.519.004,45 768.178,71 72.069.243,97

Description Goods Raw, subsidiary and consumable materials

Total

877.295,85 4.796.849,60 877.295,85 4.796.849,60 22.962,61 822.562,76 (76.870,79) (1.472.396,16) 100.000,00 650.000,00 166,60 166,60 900.258,46 3.974.286,84

2011 13.239,22 1.900.193,41 1.913.432,63

2010 9.908,91 1.757.126,53 1.767.035,44

14. Trade debtors.

As of December 31, 2011 and 2010, the balance of trade debtors was as follows: Description 2011 Trade debtors - current accounts 79.432.589,51 Trade debtors - receivable titles 210.910,39 Trade debtors - bailed accounts 1.152.241,48 Trade debtors - doubtful accounts 5.377.899,67 86.173.641,05 Accumulated impairment losses (5.377.899,67) 80.795.741,38

Purchases and Aquisittions (18.104,19) (26.134,56) (937.424,86) (284.580,76) (4.199,59) (1.270.443,96)

Net result 31 Dez. 2011 (1.395.525,37) (210.105,21) (458.394,84) 123.342,73 n.a.

94.487,89

The entity takes part in the following joint ventures: Net result 31 Dez. 2011 n.d.

(8.028,01) (1.041.498,74) 244.893,74 (75,12)

Investments in Associated Companies

13. Inventories.

As of December 31, 2011 and 2010, inventories' balance was as follows:

b) Information related to other group companies and joint ventures.

The entity has share capital participations in the following companies:

Equity Companies Particip. 31 Dez. 2011 n.d.

Assoc/Soares da Costa, ACE 14,29% 36.933,58 Assoc - Obras Públ., ACE 14,29% Teatro Circo, ACE 33,33% Parque Emp. de Tavira, ACE 50,00% Way2b, ACE 20,00% (5.383.868,20) 128.932,61 Agonia Parq. Const., ACE 33,33% (1.337,75) Unifacere, ACE 33,33%

Total

11.156,97 783.698,06 2.912,96 771.961,29 (8.244,01) (11.736,77) 1.221,27 4.714,03 1.221,27 4.714,03 1.221,27 4.714,03 7.022,74 7.022,74

Investments in Total Description Others Companies Other methods: 1.895.211,00 1.895.211,00 Initial gross carrying amount 1.895.211,00 1.895.211,00 Initial net carrying amount 15.850,00 15.850,00 Movements of the period 15.850,00 15.850,00 Acquisitions by corporate business concentration 1.911.061,00 1.911.061,00 Final net carrying amount

The main balances at the end of the current period between the entity, its shareholders and other group companies are the following:

Equity Headquarters Particip. 31 Dez. 2011 Guimarães 100% 2.517.646,29 Braga 50% 1.246.603,28 Braga 20% 157.165,34 C. P. de Âncora 20% 190.920,15 Barcelos 20% n.a.

Vila real 20% 135.322,21

772.541,09 769.048,33 3.492,76 (3.492,76) 3.492,76 3.492,76 -

Industrial Property

12. Financial investments - other methods.

Variations in financial investments valued in accordance with other methods are as follows:

100%

The main balances at the end of the current period between the entity, its shareholders and other group companies are the following:

Companies cari, construtores, s.a.

Steelgreen, s.a.

Way2b, sgps, s.a.

Caminhaequi, s.a.

Barcelos Futuro, s.a.

Inovaguiar

Software

Investments in Subsidiaries Description Equity method: 3.919.553,75 Initial gross carrying amount 3.919.553,75 Initial net carrying amount 845.525,37 Movemets of the period Investor’s prportion of investee’s results (1.395.525,37) Changes of investee’s equity not recognised in 550.000,00 the income statement Other movements of the period 3.074.028,38 Final net carrying amount

Participation

Sales and Companies Services Rendered 831,66 dst-sgps, s.a.

23.127,99 Investhome - Construção e Imobiliária, s.a.

Domingos da Silva Teixeira - Imobiliária, s.a.

467.357,37 Domingos da Silva Teixeira - Empreitadas Eléctricas, s.a.

Investhome - sgps, s.a.

117.739,21 bysteel, s.a.

5.004,94 tmodular, s.a. tstone, s.a.

144.522,07 tgeotecnia, s.a.

275.650,27 tconcrete, s.a.

387.665,95 tagregados, s.a.

1.645.364,67 cari, construtores, s.a.

Monte dourado, s.a. ipplus, s.a. dst - Energias Renováveis, sgps, s.a.

2.786,35 dstwind, s.a.

3.310,47 global sun, s.a.

7.436,77 dst solar, s.a.

507,53 dsthydro, s.a.

3.552,92 dstelecom, s.a.

2.420,17 Innovation Point, s.a. dstelecom Norte, lda.

3.087.278,34

Total 150.000,00 150.000,00 150.000,00 150.000,00

11. Financial investments - equity method.

Variations in financial investments valued in accordance with the equity method are as follows:

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

Empresas dst-sgps, s.a.

Investhome - Construção e Imobiliária, s.a.

Domingos da Silva Teixeira - Imobiliária, s.a.

Domingos da Silva Teixeira - Empreitadas Eléctricas, s.a.

Investhome - sgps, s.a. bysteel, s.a. tmodular, s.a. tstone, s.a. tgeotecnia, s.a. tconcrete, s.a. tagregados, s.a. cari, construtores, s.a.

Monte dourado, s.a. ipplus, s.a.

Perfil dinâmico, s.a. dst - Energias Renováveis, sgps, s.a. dstwind, s.a. global sun, s.a. dst solar, s.a.

EOL Minho, s.a. dsthydro, s.a. dstelecom, s.a.

Innovation Point, s.a. dstelecom Norte, lda. dstelecom Alentejo e Algarve, lda.

Land and other resources 150.000,00 150.000,00 150.000,00 150.000,00

10. Intangible assets.

Information related to the carrying amount of intangible assets with reference to 2011 and 2010 periods may be analyzed as follows:

2010 24.715,22 1.583.799,82 155.392,86 1.763.907,90

Investhome - Construção e Imobiliária, s.a.

3.022.848,83 1.060.339,15 1.962.509,68

9. 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 € 150,000.

3.2. 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.

3.3. Main assumptions concerning the future.

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

Total 7.707.332,55 4.221.326,46 3.486.006,46

Assets 31 Dez. 2011 n.d.

149.339,57 3.453.212,72 658.168,37 1.806.693,26 623.806,61 13.685,40

c) Remuneration of Corporate Bodies.

Provided that Board members are not remunerated, the Corporate Bodies's remuneration in the exercise of their duties in 2011 was 16,560.72 euros and corresponds to the Statutory Auditor's fees for Legal Certification of Accounts.

7. Tangible fixed assets.

Information relating to the carrying amounts of tangible fixed assets with reference to 2011 and 2010 periods may be analyzed as follows: Land and Buildings and Description other Recourses other Structuress 5.161,48 939.928,17 1 Initial gross carrying amount 239.148,50 2 Initial accumulated amortizations 3 Inicial accumulated impaiment losses 5.161,48 700.779,67 4 Inicial net carrying amount (4=1-2-3) (47.170,31) 5 Movements of the period (5= 5.1-5.2+5.3) 5.1 Total additions New acquisitions 47.170,31 5.2 Total decreases 47.170,31 Amortizations Sales Reductions 5.3 Other transferences 653.609,36 5.161,48 6 Final net carrying amount (6= 4+5)

Basic Equipments 13.523.360,27 11.252.594,15 2.270.766,12 (426.346,51) 663.451,49 663.451,49 1.089.798,00 936.985,50 152.812,50 1.844.419,61

2010 65.459.230,97 312.379,55 2.265.636,39 4.556.761,29 72.594.008,20 (4.549.027,59) 68.044.980,60

Transactions Cost of Goods Sold (129.493,00) (1.603.564,92) (9.849.902,04) (1.699.039,38) (497.940,72) (10.786,03) (212.152,31) (3.034.119,14) (1.050,00) (2.269,44) (17.040.316,98)

Interests and Similar Income 1.744.482,59 235,84 960.238,29 2.074.956,72

Other Revenues and Income 13.635,73 41.456,51 7.800,00 241.282,07 1.100,00 187.884,97 12,50 72.238,35 1.158.552,45 335.490,28 303.128,36 900,00 2.700,00 5.212,80 6.653,27 11.431,69 28.621,79 5.455,13 110.516,21 3.168,78 2.507,80 2.704.956,72

Other Losses and Expenses (48.743,22) (48.473,22)

As of December 31, 2011 and 2010, the balance of trade debtors' doubtful debts was as follows: Description Value With court claims 5.074.234,59 In arrears: 303.665,08 For more than six months and less than twelve months 9.316,79 For more than twelve months and less than eighteen months 121.627,00 For more than eighteen months and less than twenty-four months 29.714,64 For more than twenty-four months 143.006,65 5.377.899,67

15. Other receivables.

As of December 31, 2011 and 2010, the balance of other receivables was as follows: Description Debtors for income accruals Interests Services rendered Others Other investment debtors Other debtors

2011

2010

1.866.593,00 312.490,54 123.008,21 23.863,33 13.003,21 2.224.820,13 136.011,42 43.017.015,21 38.048.217,29 12.374.509,66 13.713.860,15 57.616.345,00 51.898.088,86

16. Shareholders.

As of December 31, 2011 and 2010, the Shareholders' balance was as follows: Description Current assets Loans granted

2011

2010

25.605,85 25.607,85

9.921,57 9.921,57

Current liabilities Others 2.592.482,91 2.437.299,29 2.592.482,91 2.437.299,29

TransportAdministrative Artistic Others TFA under Equipment equipment patrimony construction Total 8.822.868,37 3.437.065,78 7.500,00 309.848,34 108.207,73 27.153.940,14 6.933.130,61 2.915.113,58 1.093,75 264.151,84 - 21.605.232,43 1.889.737,76 521.952,20 6.406,25 45.696,50 108.207,73 5.548.707,71 (169.905,50) (185.600,99) (937,50) (6.084,44) (73.943,74) (909.988,99) 483.630,50 136.817,30 3.954,06 34.263,99 1.322.117,37 483.630,53 136.817,30 3.954,06 34.263,99 1.322.117,37 - 2.123.898,63 653..536,03 322.418,29 937,50 10.038,50 - 1.960.933,44 322.418,29 937,50 10.038,50 643.383,34 10.416,68 136.229,18 236,99 263,99 -(108.207,73) (108.207,73) 1.719.832,26 336.351,21 5.468,75 39.612,06 34.263,99 4.638.718,72

ANNUAL REPORT dst, s.a. 2011

13

Corporate Bodies 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.

17. State and other entities.

As of December 31, 2011 and 2010, the State and other entities' balance was as follows: Description Assets Income Valued added tax Others

Liabilities Witholding income fax Valued added tax Social Security contributions Others

2011

2010

10.124,54 1.786.242,58 300.133,21 2.096.500,33

33.439,08 1.840,00 285.216,90 320.495,90

82.897,67 315.620,30 6.833,71 405.351,68

99.418,58 860.540,82 335.601,24 265.946,24 1.561.506,88

The movements occurred in the cost of goods sold balance in 2011 was as follows: Raw, subsidiary Description 1 Inicial inventories 2 Acquisitions 3 Reclassif. and regularization of inventories 4 Final inventories 5 Cost of goods sold (5=1+2+3-4)

31. General and administrative expenses.

As of December 31, 2011 and 2010, this balance was as follows: Description Subcontractors Electricity Fuels Water and other fluids Tools Office stationeries Rents and rentals Representation expenses Communication Insurance Transport of goods Travel and accommodation Comissios Fees Legal expenses Maintenance and repairs Advertising and promotion Cleannig and hygiene Security Specialised labour Other

18. Deferrals.

As of December 31, 2011 and 2010, the deferrals' balance was as follows: 2011

2010

124.245,17 56.838,56 230.203,30 5.855,01 417.142,04

237.260,63 37.180,95 168.736,20 443.177,78

Deferred income Construction contrats 13.540.140,47 189.539,94 Other income 13.729.680,41

4.674.918,70 199.310,67 4.874.229,37

Description Deferred Insurance Rents Interest payable Other costs

19. 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.

20. Other equity instruments.

As other equity instruments is accounted for additional paid-in capital transferred by Investhome – Construção e Imobiliária, S.A., worth 1.010.000 euros, which the Board of Directors considers not qualifying as a liability.

21. Provisions.

As of December 31, 2011 and 2010, the provisions' balance was as Description Others provisions

2010 27.550,94 27.550,94

2011 25.491,69 25.491,69

22. Loans obtained.

As of December 31, 2011 and 2010, the balance of loans obtained was as follows: Description 2011 2010 Non-current liabilities Long term loans 5.563.525,73 10.160.892,69 Financial leases 1.962.509,68 2.707.000,50 Comercial paper 10.000.000,00 10.000.000,00 17.526.035,41 22.867.893,19 Current liabilities Short-term loans 4.504.177,92 2.740.437,65 Bailed bank accounts 1.230.002,15 1.003,465,85 Financial leases 1.060.339,15 1.447.655,20 Others - 3.000.000,00 6.794.519,22 8.191.558,70

2010 -

2010

563.224,55 44.741,75

605.675,47 344.948,48

57.720,57 1.258.407,63 465.344,68 613.158,08 14.582,49 2.409.213,45 103.553,09 Deferrerd tax liabilities Factoring 19.743.894,79 Others 2.508.810,40 25.373.438,03

13.510,04 1.328.484,90 1.372.934,16 13.926,22 2.688.561,47 103.553,09 16.431.165,21 1.974.184,67 22.148.088,39

25. Deferred tax assets and liabilities.

As of December 31, 2011 and 2010, the balance of deferred tax assets and liabilities was as follows:

Trade debtors impairments Prov. for other risks and charges

Variation

31-12-2010

Tax

Balance

Tax

378.678,28 100.349,74 27,550,22 7.301,00 406.229,22 107.650,74 107.650,74

(29.047,21) (2.059,25) (31.106,45)

(7.697,51) (545,70) (8.243,21)

Non-current Deferred tax liabilities NCRF 19 - Cosntruction contracts 1.563.065,58 1.563.065,58 Non-current Current

Balance

Tax

349.631,07 92.652,23 25.491,69 6.755,30 375.122,77 99.407,53 99.407,53

414.212,38 (390.766,38) (103.553,09) 1.172.299,20 310.659,29 414.212,38 (390.766,38) (103.553,09) 1.172.299,20 310.659,29 310.659,29 207.106,20 103.553,09 103.553,09

26. Sales and services rendered.

As of December 31, 2011 and 2010, the balance of sales and services rendered was as follows: Description Goods sales Products sales Services rendered

2011

2010

Foreign National Total Market Market 572.005,08 572.005,08 1.220.337,09 1.220.337,09 108.801.540,85 936.270,54 109.737.811,39 110.593.883,02 936.270,54 111.530.153,56

Foreign National Market Total Market 382.984,39 382.984,39 2.110.762,17 2.110.762,17 129.746.469,79 638.664,66 130.385.134,45 132.240.216,35 638.664,66 132.878.881,01

27. Operational subsidies.

The entity was granted a subsidy from the Human Potential Operational Programme (“POPH”), an organization at the guardianship of the Labour and Social Solidarity Ministry which is co-financed by the European Social Fund and by the Social Security Budget - National Public Contribution, in the amount of 26,926.62 euros. The total amount of the subsidy is accounted for in the operational subsidies' balance.

2011 Description State and other public entities subsidies - POHP 26.926,62 26.926,62

2010 60.684,28 60.684,28

28. Gains and losses attributable to subsidiaries, associated and joint ventures.

As of December 31, 2011 and 2010, this balance was as follows: 2011 Description Losses and expenses (1.515.962,29) 43.566,13 Revenues and income (1.472.396,16)

2010 (7.205,02) 855.801,59 848.596,57

29. Own work.

As of December 31, 2011 and 2010, this balance was as follows: Description Tangible fixed assets

2011 13.411,46 13.411,46

2010 108.207,73 108.207,73

30. Cost of goods sold.

The movements occurred in the cost of goods sold balance in 2010 was as follows: Description

Goods

1 Inicial inventories 2 Acquisitions 3 Reclassif. and regularization of inventories 4 Final inventories 5 Cost of goods sold (5=1+2+3-4)

7.707,17 204.292,35 9.908,91 202.090,61

2011 5 502 507

2010 5 524 529

32.2. Staff costs.

As of December 31, 2011 and 2010, this balance was as follows: Description 2011 Salaries 8.313.962,99 Social charges 1.558.747,61 Working ond professional illhess insurance 351.301,09 Social action costs 123.560,43 Other staff costs 189.233,40 10.536.805,52

2010 9.059.855,11 1.670.032,61 187.289,03 165.303,72 92.246,86 11.174.727,33

Impairment Losses (1.615.556,72) (1.615.556,72)

Reversals of Impairment Total Losses 628.530,03 (987.026,69) 628.530,03 (987.026,69)

2010

Impairment Losses (1.450.088,91) (1.450.088,91)

Reversals of Total Impairment Losses 374.618,79 (1.075.450,12) 374.618,79 (1.075.470,12)

34. Provisions As of December 31, 2011 and 2010, this balance was as follows 2011 Description Reinforc. Reversal Final balance - 2.059,25 2.059,25 - 2.059,25 2.059,25 Other provisions

2010 Reinforc. Reversal Final balance 57.595,36 - 57.595,36 57.595,36 - 57.595,36

35. Other revenues and income.

As of December 31, 2011 and 2010, this balance was as follows:

2011

31-12-2011

Description Board members Employes

Trade debtors

24. Other payables.

As of December 31, 2011 and 2010, the balance of other payables was as follows:

Balance

32. Employees benefits, number of employees and staff costs.

32.1. Number of employees:

Description

As of December 31, 2011 and 2010, the balance of trade creditors' advanced payments was as follows:

Deferred tax assets

2010 75.556.677,79 201.687,57 5.033.730,12 557.599,64 203.474,99 63.172,03 6.115.815,87 10.840,00 225.464,43 622.851,40 65.108,81 548.930,97 62.501,51 49.939,03 1.796.814,68 178.765,11 23.239,12 196.422,08 2.112.540,94 770.264,68 94.395.840,77

2011

Description 2011 2010 Trade creditors 38.041.305,82 30.021728,88 Trade creditors - payable titles 5.120.521,95 3.793.821,57 Trade creditors - invoice in conference 1.623.315,96 2.230.632,66 Trade creditors - bailed 4.296.489,28 3.335.263,58 49.081.633,01 39.381.446,69

Description Current liabilities Payable remunerations Investments trade creditors Creditors for costs accruals Insurances Payable remunerations Interests General and Administrative expenses Other costs accruals

2011 57.757.945,04 209.592,33 4.374.164,21 487.100,45 196.253,53 40.152,07 4.906.357,26 14.550,00 149.907,94 619.381,30 15.516,82 617.905,30 67.191,82 44.220,22 1.889.602,34 171.214,61 17.752,01 296.562,84 2.003.956,97 653.604,79 74.532.931,11

33. Impairment losses in receivable accounts.

As of December 31, 2011 and 2010, this balance was as follows:

23. Trade creditors.

As of December 31, 2011 and 2010, the balance of trade creditors was as follows;

Description 2011 Goods and consumable materials trade creditors 14.995,17 14.995,17

Goods and Consumable Total Materials 9.908,91 1.757.126,53 1.767.035,44 101.194,15 19.228.109,74 19.329.303,89 13.239,22 1.900.193,41 1.913.432,63 97.863,84 19.085.042,86 19.182.906,70

Raw, subsidiary and consumable Total materials 5.258.218,00 5.265.925,17 20.668.488,30 20.872.780,65 1.757.126,53 1.767.035,44 24.169.178,78 24.371.269,39

Description 2011 2010 Supplementary revenues 3.547.045,04 3.883.235,71 Alienation of non-financial investments 64.965,84 166.259,39 Favorable exchange differences 10.276,61 837,00 Front payment discounts 106.186,21 141.728,87 Prior years costs 134.048,65 16.944,51 Tax provision overestimate 0,67 0,01 Investments subsidies 192.796,67 Tax refunds 5,41 810,00 Investments projects - realization premiuns - 1.993.167,02 Contractual penalities 429.418,02 233.134,89 Insurance clains 2.654,73 38.973,23 Indemnities received from employees 1.200,46 3.443,84 Other revenues and income 81.858,41 3.874,04 4.570.456,72 6.482.408,99

Legal Certification of Accounts

36. Other losses and expenses.

As of December 31, 2011 and 2010, this balance was as follows: Description Taxes and changes Front payment discounts Alienation of non-financial investments Prior years costs Donations Quotizations Tax provision underestimate Losses in financial instruments Unfavorable exchange differences Costs with bank guarantees Costs with trade bonds Confirming costs Factoring costs Self-confirming costs Fines and penalties Damage caused to third parties Banking services Other losses and expenses

BOARD OF DIRECTORS CHAIRMAN: José Gonçalves Teixeira VICE-CHAIRMAN: Avelino Gonçalves Teixeira MEMBER OF THE BOARD OF DIRECTORS: Joaquim Gonçalves Teixeira MEMBER OF THE BOARD OF DIRECTORS: Hernâni José Gonçalves Teixeira MEMBER OF THE BOARD OF DIRECTORS: Teresa Gonçalves Gomes

2011 2010 136.533,41 148.901,84 5.326,49 14.603,86 30.596,67 102.212,50 39.501,77 62.713,61 139.855,50 170.902,62 11.333,00 18.022,00 1.078,83 468,12 584.253,77 816,26 877,06 234.948,16 274.795,71 2.251,34 1.937,79 15.121,67 242.245,89 152.348,79 41.141,77 6.483,15 2.722,07 28.408,81 33.268,83 22.302,79 6.964,04 150.489,05 143.023,28 52.512,23 36.942,13 1.280.097,32 1.635.807,49

GENERAL SHAREHOLDERS' MEETING PRESIDENT: Teresa Gonçalves Gomes SECRETARY: Sara Cristina Styliano SUPERVISORY BOARD (Sole Fiscal Auditor)

37. Costs and reversals of depreciations and amortization.

As of December 31, 2011 and 2010, this balance was as follows: 2010

2011

Reversals

Reversals Description

Deprec.and

of deprec.

Total

Deprec. and

of deprec.

amortiz. costs and amortiz.

amortiz. costs and amortiz.

costs

costs Tangible fixed assets (1.960.933,44) Intangible assets

(4.714,03) (1.965.647,47)

Total

(259.097,06

- (1.872.529,10) - (259.097,06)

- (1.965.647,47) (2.131.626,16)

- (2.131.626,16)

- (1.960.933,44) (4.714,03) -

(1.872.529,10

38. Interest and other similar revenues.

As of December 31, 2011 and 2010, this balance was as follows: 2011 2010 Description Contractual and on arrears interest 1.164.402,15 2.803.570,73 955.723,18 Interest from loans granted 1.745.565,72 86.499,02 55.046,72 Interest from bank deposits 56.562,27 23.244,96 Interest from other financial investments 21.744,84 Other interest and revenues 1.704.747,77 4.757.776,93 3.859.330,43

39. Interest and other similar expenses.

As of December 31, 2011 and 2010, this balance was as follows: Description 2011 2010 Bank loans interest 2390.910,84 1.025.485,97 Factoring interest 897.140,49 585.488,27 Leasing interest 84.472,75 66.270,44 Confirming interest 24.489,16 Self-confirming interest 33.874,66 15.446,49 Contractual and on arrears interest 24.973,15 988,47 Interest from loans obtained 443,91 Interest from discounted bonds 233,50 Other interest and expenses 576.879,36 1.791,24 4.008.928,66 1.719.960,04

40. Commitments related to obtained guarantees.

As of December 31, 2011 the entity had bank guarantees to replace bidders' bails amounting to 39,858,693 euros and to 1,314,723 USD, as follows: SANTANDER BCP BPI BBVA BARCLAYS BES CGD BPN BANIF BANCO POPULAR BANCO BIC total

National in Euros 8.392.139 5.247.407 6.436.787 3.685.330 1.946.059 2.933.661 4.997.151 2.349.265 727.647 969.367 1.189.943 983.939 39.858.693

Effective: Joaquim Guimarães, Manuela Malheiro e Mário Guimarães, SROC, represented by Dr. Mário da Cunha Guimarães (ROC n.º 1159).

Substitutive: Dr. Joaquim da Cunha Guimarães (ROC n.º 790).

International in USD 355.000 959.723 1.314.723

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, 2011 the members of the Board of Directors were not owners of any of the company's shares.

2. The following shareholders to which is applicable the number 4 of the article 448th of the Trading Companies Code held as of December 31, 2011 at least one tenth of the company's share capital: i) Investhome – Construção e Imobiliária, s.a. with 100% of the company's share capital.

Braga, March 20, 2012 The Board of Directors, José Gonçalves Teixeira; Chairman Avelino Gonçalves Teixeira; Vice-Chairman Joaquim Gonçalves Teixeira; Member of the Board of Directors Hernâni José Gonçalves Teixeira; Member of the Board of Directors Teresa Gonçalves Gomes; Member of the Board of Directors

The annual report and financial statements presented herewith are translations of the annual report and financial statements originally issued in Portuguese in accordance with NCRF standards adopted by the Portuguese authorities and regulations. In the event of any discrepancies, the Portuguese version prevails.

Braga, March 20, 2012 The Board of Directors,

The Chartered Accountant,

José Gonçalves Teixeira; Chairman Susana Maria Macedo Queirós Avelino Gonçalves Teixeira; Vice-Chairman Joaquim Gonçalves Teixeira; Member of the Board of Directors Hernâni José Gonçalves Teixeira; Member of the Board of Directors Teresa Gonçalves Gomes; Member of the Board of Directors

Report and Opinion of the Sole Fiscal Auditor

PORTUGAL HAS FUTURE

Comment João Matos

Susana Braga Understanding the present and at least trying to glimpse the future, entails, almost always, examining the past that has led us to the current reality. Without neglecting the well-know black swans that Nassim Taleb brilliantly illustrates, in my opinion, the current macro-economical scenario can be seen as the corollary of something that could have already been anticipated.

In June 2006 a publication of the european central Bank (ECB) on the financial stability in the Euro area concluded that "the durability of euro area banking sector profitability could, despite its current strength, be tested in the period ahead [… ] given their risk exposures, concerns about financial asset price misalignments have left some euro area financial markets and institutions vulnerable to changes in global liquidity conditions and unexpected credit developments". In 2006 the ECB warned about the vulnerabilities of the system if the credit and liquidity conditions in the market were to change. In September 2008, shortly after Lehman Brothers' bankruptcy, the ECB and FED (Federal Reserve) announced measures to attenuate the pressures in the short-term financial markets. It was the first of several measures undertaken with similar goals which involved a new supervisory body in Europe and in the USA. Concluding this short historical review, in May 2010, an aid package was settled for Greece and, in December of the same year, an aid package was approved for Ireland. On June, the 17th 2011, an aid package was approved for Portugal and later in 2012 a second aid package was extended to Greece.

This sequence of events, whether or not considered black swans, led to the difficult situation of the world economy, whose key players were not able to foresee the consequences of the small signals that were turning up.

their relative positions in the global economy allowed an unthinkable act nowadays.

Even if it seems too optimistic, I believe that today's world will find a way to rebalance, even though that rebalance might implicate a new economic order quite different from the one we know today. We should be prepared for the eventuality that Asian countries, namely China, might assume a dominant position in a near future.

However, we should not allow the "Velhos do Restelo" (borrowing the Portuguese expression meaning conservative forces fueled by fear of the unknown) to cloud the necessary vision that Europe (and Portugal) need to have in order to maintain their influence and relative position in this vast new economic order. Europe is endowed with a level of development that isn't circumscribed to that of the Industrial Revolution. Therefore, it can not compete in such capacity, via mass production at low prices, with inevitable consequences for the environment and the people. It is up to Europe (and Portugal) to find a competitive development model in this process of natural selection, which is simultaneously competitive and consistent with its economy of intelligence, environment and, above all, sustainability. The economy and the world must be sustainable in the long-term and for that it is necessary intelligence, but also endurance, perseverance and of course hard work (yes, because being lucky requires a great deal of hard work) are required. This is the key differentiating factor that might allow Europe (and Portugal) to overcome the challenges posed by the present time in a way that maintains its relative position in the global economic order that will follow.

Historically and cyclically, the economy has been dominated by different Nations at different times, having been rebalanced in times following plagues, wars and crises. Remember that the Treaty of Tordesillas in which Spain and Portugal divided the world in half –

The daily life of the Portuguese people is once again marked by the word crisis. Probably for the most distracted ones, this may come as a surprise. Since April 25th, 1974 we faced and overcame five crises. Yes, it is a fact that we lived through and overcame five recessions in the last 40 years. Not to mention all our history with almost 1000 years, during which the crises and challenges were even more profound and caused extraordinary social and economic ruptures.

The first critical moment after April 25th, 1974 took place in 1977/78 when the IMF implemented the first stabilization program for national and public balances. Even thought I have just heard echoes of this crisis through history books, its causes trace back to post revolutionaries excesses, which unbalanced production costs (especially wages), productivity and export competitiveness, while the country was taking in citizens returned from Angola and Mozambique. The currency devaluation collective anesthetized impoverishment -, due to its almost immediate effect on increasing competitiveness, was the solution for a quick recovery.

Between the years 1980 and 1982, public debt soared and when the central block government of Mario Soares / Mota Pinto took up duty (1983), there were no credit lines or foreign currency available. Even though I was still a child at that time, this particularly painful moment brings back memories up to today.

And who does not remember of "Tal canal" comic tv programme that had a particular vision of the crisis. It was a particularly difficult period with firings, very high interest rates (above 20%) and extra taxes. Part of the solution was, once more, the currency devaluation (12% at one time and 1% per month afterwards).

Only 10 years later and another recession appears in 1993, now marked by a general slowdown caused by the second oil shock.

Again, the currency devaluation, the aforementioned collective anesthetized impoverishment, was part of the solution.

And again 10 years later, after a period of growth and economic euphoria, we faced another recession in 2002/2003. However, on that date our European commitments did not allow us to use the currency devaluation while the country, in political language, was "penniless".

And now, again, we have come to a new recession, a new sum of errors, a new international depressive context - a new collective crossroad. The currency, this easy manipulable element to impoverish collectively and quickly a country is not a solution, not for us, not now. We have dismantled a big part of our

"Here at the helm I am more than myself: I am a people who want the sea that is yours; And more than the Bogey-beast, that my soul does fear And dwells in the dark of the end of the world, Commands the will, that binds me to the helm, Of King Don João the Second!"

Fernando Pessoa, in Mensagem

group www.dstsgps.com

production capacity and we now consume a wide variety of imported products - many of us probably do not realize but, in fact, a large amount of products consumed today is actually imported. A currency devaluation will make these products too expensive or even unreachable, from the most current ones to the most luxurious.

We have been living, in the recent past, years of low interest rates resulting from an economic and monetary integration. We indebted and consumed, we indebted and invested, we indebted without the due prudence from the financial institutions that facilitated new loans to finance assets or projects with risk matrices and own funds clearly unbalanced. Consequently, we have financed projects or assets that have not created value and, most of all, that have not created future sustained cash flows that allow the reimbursement of the debts created during this period.

Suddenly, we are collectively confronted with the need / requirement of living with less – State, Companies and Individuals. The severe credit restrictions and lowering down of disposable income cause a sharp contraction in domestic demand, aggravated by ultimate financial conditions (or even beyond it) of many companies that cannot resist throwing many Portuguese to unemployment and invalidating the market entry of young workers, thus creating an unsustainable social situation.

What is our destiny then? To resign ourselves to slow impoverishment? Certainly not, history does not repeat itself, the actual context is different from all previous crises. It is certain that in difficult and crisis times Portuguese people stand out. We work more, we do more, we create more, we invent more – we go out of the box and face adversity. I believe that this attitude, already used in the past, will make us overcome this crisis. The ability to reinvent traditional businesses such as agriculture, for which we have unique conditions, the ability to produce quality design products, for which we have unique and historical skills, and also the ability to innovate, to export and to compete outside Portugal in international markets, will be determining factors.

Whoever is aware may confirm the existence of some signals of this state of alert and emergency of the Portuguese people. But we are still at the beginning of a path that will be long and hard as the conjuncture solutions of the past will not solve the problems of the current crisis. In fact, it is the difficult path to correct structural imbalances that will increase Portugal's productivity and competitiveness.