Annual report 2013 dst sgps by dst group

Consolidated Annual Report dst â&#x20AC;&#x201C; sgps, s.a. December 31, 2013

Index

CONSOLIDATED MANAGEMENT REPORT

1 - MACROECONOMICS FRAMEWORK 2 - BUSINESS ACTIVITY 3 - MATERIAL EVENTS OCCURRING AFTER THE END OF THE PERIOD 4 - FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES 5 - INFORMATION REQUIRED BY LEGISLATION 6 - AUTHORIZED DISCLOSURE DATE FOR ISSUE THE CONSOLIDATED FINANCIAL STATEMENTS 7 - FINAL NOTE

3 24 38 38 39 39 40

CORPORATE SOCIAL RESPONSIBILITY

HUMAN RESOURCES SAFETY, HYGIENE AND HEALTH R&D AND INNOVATION SOCIETY ENVIRONMENT QUALITY AND CERTIFICATIONS

41 43 45 46 47 50

ANNEX TO THE BOARD OF DIRECTORS CONSOLIDATED REPORT

CONSOLIDATED FINANCIAL INFORMATION

CONSOLIDATED BALANCE SHEET CONSOLIDATED INCOME STATEMENT CONSOLIDATED STATEMENT OF EQUITY CHANGES IN 2012 CONSOLIDATED STATEMENT OF EQUITY CHANGES IN 2013 CONSOLIDATED CASH FLOWS STATEMENT ANNEX

53 54 55 56 57 58

LEGAL CERTIFICATION OF CONSOLIDATED ACCOUNTS

112

REPORT AND OPINION OF THE SOLE FISCAL AUDITOR

113

Consolidated Annual Report 2013

Consolidated Management Report

Dear Shareholders,

In compliance with the legal and statutory regulations, the Board of Directors presents the consolidated management report for 2013 fiscal year.

As the environment where we operate is directly related to the positive evolution or downturn of the global economy, before presenting the companyâ&#x20AC;&#x2122;s financial information and its business centers we will do a slight approach to the most important national and international macroeconomic data.

1 - Macroeconomics Framework 1.1 - International macroeconomics framework Global economic activity has returned to a slowdown in 2013. Emerging countries, which in recent years were the main source of optimism in the global economy, are leaving beyond peaks of cyclical growth, as is the case of the Asian countries. The growth rates of these countries continue to be higher than in advanced economies, but at less robust growth rates compared to those observed in recent years. Thus, in 2013, the world's Gross Domestic Product (GDP) grew by 2.9%, while in 2012 was expected to have increased about 3.3%, according to sources from the International Monetary Fund (IMF) and the European Commission (EC). IMF projections suggest a strengthening of growth in advanced economies, where it shows a relatively strong growth in the United States of America (USA), more moderate recovery in Japan and in the European Union (EU), however, with quite distinct developments between member states. Economic growth will be stronger in the Baltic countries, Sweden and Poland and weakest in the southern countries of the eurozone. The framework of the world economy in 2013 continued to be marked by a high level of uncertainty. In the eurozone, the uncertainty is due to the continuing sovereign debt crisis. Despite the significant improvement of the situation of the financial markets in the eurozone, the decline in interest rates on the most vulnerable countries is not yet reflected in the financing costs of economic agents. For the U.S.A., the greatest risks are related to the uncertainty of the average maturity of public debt reduction and the possible effects that the reduction of monetary stimulus underway by the Federal Reserve might have in the international financial markets volatility and instability. dst - sgps, s.a.

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Consolidated Annual Report 2013 Additionally, in late 2013, there were some signs of financial instability in emerging and developing countries, mainly in those with a higher external deficit, as in India, Indonesia and Brazil. These signs led to capital outflows, exchange rate depreciation and rising financing costs, contributing to a weaker growth of these economies. Fiscal consolidation and correcting internal imbalances in some other economies should continue to constrain demand growth and activity in advanced economies, particularly in the eurozone.

Macroeconomic Indicators

2011

2012

2013(e)

1,8 1,5 1,4 -0,6

2,8 -0,4 -0,7 2,0

1,8 0,1 -0,4 2,0

GDP: USA EUROPEAN UNION EURO AREA JAPAN

Source: GPEARI Finance Percentage variation (e) - estimated

The GDP of the EU and the eurozone began to grow again in late 2013, the EU's GDP increased to 0.1% and the eurozone GDP decreased to minus 0.4%, as a result of the positive development of indicators confidence. For 2014, the IMF predicts a gradual recovery of the eurozone economy, with an expected GDP average annual increasing rate of 1%, reversing the contraction recorded in the previous two years. This improvement should be boosted by the export growth and the acceleration of domestic demand. The prices of raw materials recorded again a slowdown in 2013, as a result of a demand downturn by the major advanced and emerging economies, and due to the significant decrease in food prices, but whose evolution is contradicted by rising prices of metals and agricultural products in 2013. With regard to international oil prices, developments in 2013 also diverged from the trend of falling international prices of other raw materials. Oil prices exhibited some volatility throughout the year, reaching, on average, worth 110USD/bbl (80 â&#x201A;Ź / bbl). In this context, the IMF forecasts indicate an average annual growth reduction in consumer prices in advanced economies of 2.0% in 2012 to 1.4% in 2013. In emerging and developing markets, inflation is expected to remain high in 2013, at about 6.2%, compared to 6.1% in 2012. In line with the weak and slow recovery in economic activity, eurozone market conditions showed no improvement over the previous year. According to the EC, the unemployment rate rose to 11.1% in the EU and 12.2% in the eurozone, reflecting a large disparity between different countries. Thus, among the eurozone countries, is expected a significant increase in the unemployment rate in Cyprus, the Netherlands and Slovenia, countered by a more pronounced decline in Greece and Ireland. dst - sgps, s.a.

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Consolidated Annual Report 2013

Macroeconomic Indicators

2011

2012

2013(e)

3,2 3,1 2,7 -0,3

2,1 2,6 2,5 0,0

1,4 1,7 1,5 0,0

9,0 9,7 10,2 4,6

8,1 10,5 11,4 4,4

7,5 11,1 12,2 4,0

3,4 3,2 3,5 -2,6

3,6 -2,1 -2,5 0,2

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

Inflation: USA EUROPEAN UNION – 27 EURO AREA JAPAN Unemployment rate: USA EUROPEAN UNION – 27 EURO AREA JAPAN Industrial Production Index: USA EUROPEAN UNION – 27 EURO AREA JAPAN Source: IMFI/ European Commission/ Eurostat/ GPEARI Finance Percentage variation (e) - estimated

At the end of 2013, there was a decrease in the global financial uncertainty and risks associated with sovereign debt as progress made in building the European banking union, especially the agreement within the European Union for the first two pillars - Single Supervisory and Resolution Rules. Financial markets reacted positively to this announcement, leading to a yields reduction on government debt in countries under pressure. According to the European Central Bank Council (ECB), the price pressures in the eurozone should remain moderate over the medium term and the monetary and credit conditions are expected to remain contained. Meanwhile, inflation expectations remain firmly anchored in line with the objective of keeping inflation below 2.0% in the medium term. Thus, in December 2013, the ECB decided to keep the rate on the main refinancing operations at 0.25%. The interest rates of the euro money market followed the decline of the official interest rates. So at the end of December 2013, Euribor 3, 6 and 12 months interest rates stood at 0.287%, 0.389% and 0.556%, respectively.

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Consolidated Annual Report 2013 Reference interest rates Eurozone USA Japan United Kingdom

2011

2012

2013

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

0,75 0,25 0,10 0,50

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

2011

2012

2013

0,63 1,02 1,36 1,62 1,95

0,13 0,11 0,19 0,32 0,54

0,45 0,22 0,29 0,39 0,56

0,58

0,31

0,24

0,20

0,18

0,15

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

In December 2013, there was an exchange rate appreciation of the euro against the major international currencies, and the euro stood at $ 1.379 by the end of the year. This reflects, in part, the progress in building up European banking union, with an impact on improving the financing conditions of the countries hardest hit by the sovereign debt crisis.

Foreign currencies EUR/USD EUR/JPY EUR/GBP EUR/CHF

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

2012 1,319 113,61 0,816 1,207

2013 1,379 144,72 0,834 1,228

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

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Consolidated Annual Report 2013 Additionally, international stock market indices had a generally positive trend, highlighted by a significant appreciation of the U.S. main stock index.

Stock markets Dow Jones EURO STOXX Nikkei 225 Standard & Poors 500

2011

2012

2013

-3,4 -5,7 11,4

-6,5 -3,5 8,7

17,5 48,7 19,1

Source: Ministry of Finance / Bank of Portugal Percentage variation

In 2013, the price of non-energy raw materials, including metals and agricultural goods, showed a significant acceleration compared to 2012. The price of the oil barrel fell compared to 2012, remaining, however, at high levels, associated with further geopolitical instability in the Middle East and increasing demand from advanced economies, in line with their economic recovery. The Brent oil price in 2013 was around, on average, $ 110 per barrel.

Raw materials

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

2011

2012

2013(e)

110,82 22,7 13,5

111,6 -12,7 -16,8

110,0 6,3 -2,3

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

In anticipation of a recovery in the European Union, the EC, the IMF and the OECD expect a decrease in budget deficits for the average eurozone countries over the next two years. Regarding the public debt to GDP ratio, it is expected that, on average, in the eurozone countries, will increase slightly in 2014, reversing the trend in the next year, albeit at a very slow pace.

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Consolidated Annual Report 2013

1.2 – National macroeconomic framework The Portuguese economy in 2013 intensified the process of adjusting macroeconomic imbalances accumulated over the past decades, in a context of restricted monetary and financial conditions and maintenance of a contractionary fiscal policy. Current forecasts confirm a mild recovery in the Portuguese economic activity; the economy should register, as of the end of 2013, positive GDP annual rates. The growth of the Portuguese economy will tend to approach the forecasted values for the whole eurozone. This improvement should be based on the strength of goods and services exports and the acceleration of domestic demand, particularly for business investment. Thus, the present economic activity will record a contraction of 1.5% in 2013 and fiscal deficit will be 5.9% of the GDP. Regarding external demand for Portuguese goods, it is estimated for the year 2013 to grow approximately 1%, followed by an increase in 2014 and 2015, both in eurozone and non-eurozone markets. The external demand from noneurozone markets should remain dynamic, however it is expected lower growth rates than those recorded before the financial crisis. Current forecasts are consistent with a reduction in Gross Value Added (GVA) in the main sectors of activity in 2013, although less significant than that recorded in 2012. The activity in some industry and services sub-sectors should continue to be favored by the dynamic behavior of exports, reflecting the underway reorganization of tradable goods and services sectors.

Macroeconomic 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

2011

-3,8 -4,3 -10,7 7,2 -5,9 -1,7 3,5 -0,9 5,7 -27,6 12,7

2012

-5,8 -3,9 -14,9 6,3 -4,7 -3,2 2,8 -3,0 -13,4 2,9 15,7

2013(e) -2,0 -1,5 -8,4 5,9 2,7 -1,0 0,5 -0,1 0,4 16,0 16,6

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

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Consolidated Annual Report 2013 During the year 2013 remained the GDP recomposition trend observed in recent years, characterized by an increase in exports share and a weight reduction of domestic demand. Private consumption is conditioned by developments in real disposable income, which fell significantly in 2013. The domestic demand contribution to GDP growth in 2013 was negative by 2.7 percentage points, while exports contributed positively with 5.9 percentage points, reflecting the continued dynamism of this component. Recent developments in exports reflect beyond doubt a more favorable performance than that observed in most eurozone economies. The exports dynamism in recent years has resulted in significant market share gains, partially associated with a diversification of destination markets, which led in 2013 to a bigger Portuguese exports market share than in the early monetary union. The Harmonized Index of Consumer Prices (HICP) slowed in 2013 to 0.5% (2.8% in 2012), mainly as a result of the dissipation impact of fiscal consolidation measures implemented in 2012. This reduction in inflation will assume a temporary feature, as the forecasts for the upcoming years indicate a moderate acceleration of the HICP, in a context of external inflationary pressures and a frame of moderate global economic recovery and adjustment process continuation of the Portuguese economy. In 2013 employment continued to decline in net terms and unemployment rate increase was observed, which remained at historically high levels, of 15.3% in the 4th quarter of 2013, reaching an annual rate of 16.3%, compared to 15.7% in 2012. The correction of imbalances accumulated over the past decades will persist in the coming years. The adjustment process should take a permanent nature, not only regarding the fiscal consolidation path, but also the set of ongoing structural reforms, such as the external imbalance correction and the resources reallocation in favor of tradable goods and services companies. It should be emphasized the importance of the authorities commitment, in the Stability and Growth Pact (SGP) framework, to achieve a negative budget balance of 0.5% of GDP in the medium term. The fulfillment of this goal is essential to ensure a public debt downward trajectory. This trend will emerge strengthened in an institutional framework that defines rules and budgetary procedures conducive to prudent management of public finances, that promotes investment, innovation and companiesâ&#x20AC;&#x2122; technological progress incorporation, and that encourages households continued investment in education and human capital. These are key factors in ensuring a better and balanced economic growth in the long term. Nevertheless, it is relevant to note that, although the public policies of fiscal deficit and public debt restraint implementation, the latter experienced a rise in 2013 to 129.2% of GDP, compared to 124.1% at the end of 2012.

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Consolidated Annual Report 2013

1.2.1 â&#x20AC;&#x201C; The Construction Sector The construction sector in Portugal continued to suffer, during the year 2013, a significant decline in its activity, influenced by a deeply unfavorable economic environment. According to data published by the EC in the last months of the year there was an increase in the confidence indicator of the Portuguese entrepreneurs as a result of an opinion improvement regarding backlog and employment prospects. However, the majority of indicators point to a contraction in the volume of production in the sector â&#x20AC;&#x201C; the constructionâ&#x20AC;&#x2122;s gross value added (GVA) declined 13.3% compared with the same period of 2012 and investment under construction revealed a fall of 13.0%. The confidence indicator and the economic activity index rebounded in the last months of 2013, as well as the order backlog index. In the 4th Quarter of 2013 there were increases of 7.8% in the sector activity level, of 72.9% in the confidence index, of 27.1% in employment prospects and of 112.4% on portfolio orders compared to the same period of 2012. The main activity constraints faced by companies were, during the year 2013, the insufficient demand and the financial aspects. Analyzing the evolution of the activity carried out by the business segment, there is a slight recovery of activity in non-residential buildings, stabilization in public works and a strong decrease of the housing segment. The consumption of concrete in the domestic market recorded a cumulative decrease, since the beginning of 2013, of 22.8%, which confirms that the consumption of this essential raw material for the industry will reach a new record low. The housing market has been the most penalized by the current economic climate, as a consequence of the fiscal consolidation measures impact in family income and of the imposed restrictions on access to finance for house purchase. These factors, combined with the growing economic difficulties resulting from the rising of unemployment, have led to a drastic reduction in housing demand. Confirming the contraction in the construction segment of residential buildings, the licensing of new dwellings notes a fall down of 35.3%. For non-residential buildings, there has been a year on year fall of 2.9% of the licensed area; noteworthy was the decrease of commercial and non-merchant buildings licensing and the tourism and agriculture buildings increase. In the public works segment there is a strong reduction in investment, with a work awarded value of EUR 776 million, which represents a decrease of 22.4% compared to the one billion awarded in 2012. As for the Central Government tenders there was an annual slight increase of 2.6%, to EUR 1,536 million, compared to EUR 1,497 million in the previous year. The employment provided by the construction sector recorded on the 4th Quarter of 2013 a reduction of 18.8% over the same quarter of the previous year, which resulted in a decrease of 67 thousand jobs. Cumulatively, since 2012, the dst - sgps, s.a.

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Consolidated Annual Report 2013 decrease in the construction sector employment has already reached about 320 thousand jobs, i.e., a reduction of 53% of the sector workforce. The unemployment arising from the construction sector decreased in the last months of 2013, a fall of 6.6% compared to 2012. This evolution was influenced by factors such as emigration, retirement and loss of the unemployment benefits rights.

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

2011

2012

2013(e)

-15,6 -10,5

-26,7 -17,0

-22,8 -26,4

-6,4 -8,0 -15,4 -11,4

-2,0 -2,9 -6,2 -18,1

-41,2 -39,7 -49,0 -13,0

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

1.2.2 - The Water and Environment Sector The water and environment (namely, waste) sector in Portugal has been experiencing 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 publication of Law Decree No. 372/93, of 29 October and No. 379/93, of 5 November promoted the entrepreneurship of the inter-municipalities and municipalities for the collection, treatment and distribution of water for public consumption, as well as the collection, treatment and rejection of effluents and municipal waste collection, furthermore it opened its management to the private sector. The strategy outlined in the PEAASAR II defines that management entities 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, thus ensuring the sustainability of services, and promoting the efficient use of resources through appropriate environmental practices. Furthermore, it should guarantee the 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 territorial interventions and to the full exploitation of the project funds.

In Portugal, the water supply and wastewater sanitation sector is subdivided in two strands in their value chain: the "high" and "low":

“High” systems of wholesale activity: systems for capture, treatment and supply of water, and also systems for collection, treatment and rejection of waste water.

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Consolidated Annual Report 2013

“Low” systems of retail activity: water distribution systems and domestic waste-water collection.

There is a large number of management entities operating in Portugal 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 those entities to the short cycle of water that they manage.

Currently the imbalances in water sector are an unquestionable fact and recognized by all players in the industry, imposing the need to act urgently to achieve greater rationality, efficiency and optimization. From the institutional point of view, during the year 2013 little or nothing was done to correct the imbalances facing the industry since the announced plan of merging municipal systems does not come to check and, consequently, the vertical integration systems (integration of municipal systems in multi-municipal) and sub-concession to private entities did not happen.

Even so, the preconditions were created for such corrections might happen - there is political will and capacity.

Effectively, were approved and published two important qualifications: Law No. 35/2013 of 11 June, amending called Sectors Demarcation Law, and a month later, the Law Decree No. 92/2013, which proceeds to the revision of Law Decree No. 379/93, or, in other words, repeals the Law Decree No. 379/93 and creates a new legal framework for exploration and management of municipal systems.

In these two degrees, it is stated in the explanatory memorandum that the performance line designed by the Government alleges: in promoting tariff balancing, in the resolution of the tariff deficits, on implementation of vertical integration strategies of municipal systems, and in the aggregation of existing municipal systems in new larger systems.

Particularly in the amendment of the Sectors Demarcation Law, the Government considered that the legal system was especially limiting the access of the private sector to the management of municipal systems, and so the strategy outlined in opening the water subsector to privates was achieved through giving the possibility of current dealers of municipal systems to sublet such activities to private entities. dst - sgps, s.a.

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Consolidated Annual Report 2013

But the State maintains the public nature of multi-municipal systems, as well as the powers of direction, consent, approval, monitoring and suspending the respective acts. Regarding the Legal Framework for multi-municipal systems, it is recalled that the Law Decree No. 379/93, of November 5, focused on both systems: multi-municipal and municipal. With this change, the new law now focuses exclusively on the rules applicable to municipal systems. However, as regards the deadlines for grants, there is a large discrepancy between the period of 50 years admitted to the multi-municipal concessions and the maximum non-renewable, of 30 years for municipal concessions. In this aspect, it is yet to be understood the unequal treatment between management entities. In fact, for concessions that entail substantial investment plans for expansion, and whose values should be reflected in the price paid by the final consumer, the period of 30 years is manifestly punitive when compared with the period defined here for 50 years.

1.2.3 - The Renewable Energy Sector Due to the expression that its players have assumed in the national energy landscape, the renewable energy sector is increasingly taking a prominent place in Portugal. At the end of 2013, total renewable installed power reached 11,066 MW. Committed to reducing dependency on foreign energy, to increasing energy efficiency and to reducing 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 dependency on external energy will be reduced in 74%. In this sense, renewable energy will have a key role to play, providing up to 2020 an installed capacity of 8,500 MW in wind power, 8,600 MW in hydropower and 1,500 MW in solar energy. Compared to 2012, the year was a record in electricity production from renewable sources. According to the latest report by the General Directorate of Energy and Geology (DGEG), the renewable sources accounted for 56.7% of electricity production, a value 51% higher than in 2012. This increase was primarily due to the water component, which grew 126%, mainly due to an increase in installed capacity and climatic conditions of the year. Regarding installed capacity, the most significant increase occurred at the photovoltaic solar energy level, with a growth of 76.9% in 2013.

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Consolidated Annual Report 2013 Thus, Portugal currently has 278 MW of photovoltaic solar energy installed capacity, approximately half of which comes from micro production units, i.e. decentralized production. Wind Energy The Wind Energy Global Council released statistics regarding the wind market in 2013. The sector has a global cumulative capacity of 318,137 MW, an increase of almost 200,000 MW in the last five years. Outside Europe and the U.S. the global market grew slightly, led by China and by a strong year in Canada. The European Union has a total of 116 GW of wind power installed capacity, which covers about 8% of the electricity consumption. China has an installed capacity of 77 GW, an increase of 23% compared to last year. In Portugal, the North and Centre regions are the ones that have the highest concentration of national wind farms, due to the greater availability of resources. The installed capacity of wind power in Portugal at the end of 2013 stood at 4.63 GW, spread by 228 wind farms throughout the mainland territory, sufficient to produce 23% of the consumed electricity. Compared to 2012, there was an electricity production increase from this source by about 20%. In 2013, Portugal preserved the position that already held in past 3 years, as the sixth European country with largest installed wind power. By the end of 2014 more than 200 MW of wind power capacity is expected to be implemented. Solar Energy Due to its energy potential, the photovoltaic solar energy is one of the most promising energy resources. In 2013, despite the global financial and economic crisis, the photovoltaic sector has consolidated the global position achieved in previous years, as the third most important source of renewable energy. Therefore, and after being achieved the 102 GW in 2012, at the end of 2013 the worldâ&#x20AC;&#x2122;s total installed capacity reached 135 GW. It should also be pinpointed that the global investment value in new facilities has decreased about 12% compared to 2012, mainly due to equipment prices reduction. Europe was the only world region where the solar power generation declined as well as its investment: from 22.4 GW in 2012 to 17.2 GW in 2013 provided to the network. However it maintained its global market position, due to an even dst - sgps, s.a.

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Consolidated Annual Report 2013 higher power generation capacity concentration, representing about 55% of the global market. The trend for the coming years will be that the large investments in this area arise out of Europe. The Asia-Pacific and Latin America regions present at the moment a huge growth, while the Middle East and Africa are still developing their markets, showing great potential for the sector. In Portugal, the installed capacity at the end of the year 2013 reached approximately 278 MW, increasing 22% when compared with the previous year. In 2012, this capacity was only 227 MW, 150 MW in 2011 and 130 MW in 2010.

In Portugal, at the microgeneration level, a change in the legal system brought more transparency into the activity access through a simplified system of interconnection licenses achievement 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 (“MoU”) entered into between the Portuguese State and the Troika, the Ordinance Law No. 284/2011, of October 28, was published amending the Law Decree No. 118/2010, of October 25, establishing a rate of 0,32 €/kWh and 10 MW of power’s annual quota to be assigned. Thus, the reference fare for 2012 was significantly reduced, which under the Law Decree No. 118-A/2010, of October 25, amounted to 0.36 €/kWh, as well as the annual quota, which drags the power originally planned of 25 MW/year to 10 MW/year, equivalent to slightly more than 2800 installations. For 2013, the share of power stands at 10 MW. However, the fare price was reduced by about 40%, decreasing to € 0.19 / kWh. Compared to 2014, the rate fell to € 0.066 / kWh of produced energy, which penalizes the microproduction sector in Portugal. On the other hand, the microgeneration activity, which began with the publication of Law Decree No. 34/2011, of March 8, allowed the connection to the PSEN of photovoltaic power plants up to 250 kW, as long as they were 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. The Ordinance Law No. 285/ 2011 of October 28, lined up with the abovementioned MoU, reduced 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. For 2013, the allocated power share was 30 MW and the reference tariff attributed was also heavily revised downwards to € 0.15 / kWh. In the year 2014, the annual power quota for the subsidized regime stood at 30 MW, but the reference tariff was reduced to € 0.106 / kWh, also setting serious difficulties to the microgeneration sector for 2014. dst - sgps, s.a.

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Consolidated Annual Report 2013

The Hydropower The hydropower is the worldwide leading source of renewable energy, being one of the most attractives 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 world largest producer of hydroelectric power, followed by Canada, USA, Brazil and Russia. In Portugal, the installed capacity is stabilized with a value of approximately 5,575 MW, which, on an average year, corresponds to slightly more than 30% of the electricity consumed in Portugal. In 2007, the hydroelectric sector in Portugal was marked 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, Daiv探es, Vidago, Gouv達es, Foz Tua, Pinhos達o, Frid達o, Girabolhos, Alvito and Almourol. The completion of these projects will result in an increase of installed capacity of 1.054 MW. By 2020, it is expected to reach 7,000 MW of installed capacity, according to the targets set. Regarding the Law decree No. 25/2012, of February 6, that suspended the assignment of new injection points into the Public Service Electrical Network, and the Order 3316/2012, of March 6, from the Ministry of the Economy and the Environment that suspended all new hydro-electric licensing and extinguished the ongoing administrative licensing processes, which turned impossible all new hydro-electric licensing and extinguished the ongoing administrative licensing processes, besides the Dams National Plan, there is no development perspective for this sector. Despite not having been made any investment in new dams, the year 2013 was a very productive one regarding the water component, which grew an unexpected 126% over the previous year. This growth primarily reflects the production capacity increase in some existing dams, boosted by the use of water stored in reservoirs. In 2013 there was an increase of the produced energy, mainly from an increase in the installed capacity and from the year with favorable climatic conditions.

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Consolidated Annual Report 2013

1.2.4 – The Telecommunications Sector The year of 2012 was conditioned by the deepening economic recession in Portugal and the telecommunications market was not indifferent to this context. At a structural and regulatory level it should be pinpointed the following events that took place during this year: On August 27, 2013 occurred the merger by incorporation of the company OPTIMUS – SGPS, S.A. into ZON Multimédia - Serviços de Telecomunicações e Multimédia, SGPS, S.A. (which changed the company designation into ZON OPTIMUS, SGPS, S.A.); On September 9, 2013 the European Commission formally published the final recommendation on NGA (“Next Generation Access Networks”) non-discrimination and defrayal; under the presentation and proposal of the so-called Digital Single Market package. The Recommendation (non-binding one) aims to promote investment and innovation in new network infrastructures, while effective competition is ensured. The recommendation seeks to:

(i) ensure an effective playing level field by applying non-discrimination stricter rules;

(ii) set predictable and stable access prices to copper networks;

(iii) increase the regulatory level to prevent a regulated prices imposition on the wholesale access to Next Generation Networks;

“Connected Continent” – European Commission's proposal for a new "Digital Single Market" Regulation. The European Commission presented in September 2013, a proposal on "Digital Single Market" Regulation, aiming to improve the supply of cross-border European services and to promote sustainable competition in domestic market and global competitiveness of the European Union, with particular impact on the establishment of an European single license for electronic communications services provision, convergence of regulatory measures, standardization of services at European level, harmonization of procedures for spectrum allocation, Net Neutrality and transparency, international voice traffic and roaming and consumer protection. The European Commission intends to seek this Regulation approval by the European Parliament in spring 2014, although dissenting views on various aspects of the proposal have already been expressed, particularly by committees of the European Parliament itself; At the consumer level, in December 2013, ANACOM has released on its website a tool that allows consumers to test their Internet service speed. This tool is called NET.Mede and is intended to be the first phase of monitoring actions and quality control of the fixed and mobile internet access services promoted by ANACOM ;

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Consolidated Annual Report 2013 The focus of dst group is the wholesale segment of the telecommunications market, but the procurement of services depends upon the evolution of demand of retail services from our client operators. On that basis, and according to the quarterly indicators published by the Portuguese National Regulatory Authority (ICPAnacom), pay-TV subscribers reached 3.17 million subscribers, more 8,5 thousand subscribers than in the previous quarter. When compared with the last year same period, there is a positive change of 1.58%, i.e. 49,400 more subscribers. Table A â&#x20AC;&#x201C; Trend in the total number of subscription television services YoY

4th Q12

4th Q13

North

930

953

2,51%

Centre

593

605

2,09%

Lisbon

1.075

1.083

0,72%

Alentejo

210

215

2,56%

Algarve

141

146

3,39%

Azores

-7,24%

Madeira

2,28%

3.122

3.171

1,58%

Total So urce: ICP - A naco m

(Year)

Unit: tho usands o f subscribers

The increase in the subscribersâ&#x20AC;&#x2122; number of television service technology by subscription in 4Q13 was due to the growth of products supported in FO (FTTH / B) and ADSL, with an increase of the FO service in 2013 of 79 thousand subscribers, compared to 4Q12. Television services provided through public telephone network (xDSL) were also included in this positive variation of 73 thousand subscribers. In this period and in the opposite direction, the cable TV and direct to home (DTH) subscribers numbers fell 4% and 7% per cent, respectively.

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Page 18 of 113

Consolidated Annual Report 2013 by technology

At the end of the fourth quarter of 2013, cable TV services represented 44% of total subscribers, while DTH were 19%, xDSL represented 15% and optical fiber (FTTH/FTTB) accounted for 22% of all the subscribers.

In the fiscal year under review, ZON/TV Cabo Group managed to retain the largest share of TV subscribers with 47.8%, followed by PT Comunicações (PTC) and Cabovisão, with 41.5% and 7.1% respectively. At the end of 4T2013, and according to information provided by the Telecommunications Barometer of Marktest-Fixed Network, about 58.7% of households with paid TV had over 80 channels available, representing an increase of 10 percentage points compared with the previous quarter. On the other hand, access to the premium channels decreased by 1.2 percentage points. (Source: IPC - ANACOM). There also has been an increase in the number of fixed Internet access services customers. According to data disclosed by ANACOM, in 3Q2013 it increased 7.2% yearly and reached 2.6 million customers.

Table B – Trend of the customers’ total number of fixed internet access 4th Q12 Broadband custom ers (fixed) Dial-up access customers Total number of Custom ers So urce: ICP - A naco m

dst - sgps, s.a.

1stQ13

2nd Q13

3rd Q13

4th Q13

YoY 4th Q13/4th Q14 unit

2.286

2.311

2.343

2.384

2.440

154

6,7%

-1

-3,6%

2.311

2.336

2.367

2.408

2.464

153

6,6%

Unit: Tho usands o f custo mers

Page 19 of 113

Consolidated Annual Report 2013

Like 2012, ADSL remained in 2013 the main technology for fixed broadband internet access, which represents a 42.8% of the total share with reference to the fourth quarter of 2013, notwithstanding having suffered a slight decrease when compared to the same period of 2012. The number of cable modem access services represents 37.9% of the total services. On the other hand, the internet access services supported on optical fiber (FTTH/B) increased 26.5% comparing to the same period of 2012, being this the technology that has mostly grown. The number of users who actually accessed to Internet by mobile broadband was 3.9 million (an increase of 7.7% when compared with the same period of 2012). The evolution of mobile broadband has been driven mainly by the increasing number of smartphone users. (Source: IPC - ANACOM). Table C â&#x20AC;&#x201C; Trend of broadband accesses numbers (fixed access) 4th Q12

3rd Q13

YoY %

4th Q13 th

4 Q13/3 Q13 4th Q13/4th Q12 Total acesses, of which:

2.391

2.507

2.563

ADSL acesses

1.078

1.092

1.096

45%

44%

43%

948

965

972

40%

38%

363

428

459

27%

15%

17%

18%

1,43

23,00

36,14

57%

2420%

% of Total Fix ed broadband Cable modem acesses % of Total Fix ed broadband FTTH/B acesses % of Total Fix ed broadband Others % of Total Fix ed broadband So urce: ICP - A naco m

Unit: Tho unsands o f acesses

Regarding the market shares for fixed broadband access, and as can be seen in the following table, by the end of the fourth quarter of 2013 the PT Group market share was 50.5%, which compares with 51.3% in the previous corresponding quarter.

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Page 20 of 113

Consolidated Annual Report 2013 Table D – Trend of broadband accesses market share (fixed access) 2012

2013

YoY

Operator 4th Q13

51,50%

51,10%

50,50%

-0,08pp

51,50%

51,40%

51,10%

50,50%

-0,07pp

0,00%

0,00pp

0,00%

36,80%

36,20%

n.a.

ZON TV Cabo Portugal

29,90%

29,60%

n.a.

ZON TV Cabo Madeirense

1,60%

n.a.

ZON TV Cabo Açoreana

0,90%

0,80%

n.a.

Optimus

4,50%

4,20%

n.a.

33,00%

32,90%

32,70%

n.a.

30,60%

30,50%

30,20%

n.a.

ZON TV Cabo Madeirense

1,50%

1,60%

n.a.

ZON TV Cabo Açoreana

0,90%

n.a.

Cabovisão

6,70%

6,50%

6,30%

6,20%

6,10%

-0,6pp

Optimus

4,30%

4,20%

4,30%

n.a.

Vodafone

3,90%

4,10%

4,50%

5,10%

6,50%

2,6pp

ONITELECOM

0,30%

0pp

Other Services Providers

0,50%

0,40%

-0,1pp

PT Comunicações TMN ZON OPTIMUS Group

ZON Multimédia / TV Cabo Group ZON TV Cabo Portugal

1stQ13

51,30%

51,50%

51,20%

So urce: ICP - A naco m

2nd Q13

4th Q13 vs 4th Q12

3rd Q13

PT Group

4th Q12

Unit: %

The ZON Optimus Group has an access market share of 36.2%, resulting from the merger of ZON with Optimus that occurred in the third quarter of 2013, and its share declined by about 0.6 percentage points (this trend may have been influenced by the obligations imposed by the Competition Authority in connection with the merger between these providers, including the revokation possibility of customers’ contracts regardless the retention period). Vodafone was by the 3rd consecutive quarter, the provider that, in net terms, more subscribers collected, reached a share of 6.5% in the quarter (plus 1.4 percentage points than in 3T2013). Regarding the number of main telephone accesses it was registered a negative annual growth of 0.6%, nevertheless the VoIP / VoB accesses grew (+11.5%), including the FO (FTTH / FTTB) networks supported accesses – which increased by 25.5% - and the Cable TV networks (+1.4%). At the end of 2013, PT Group maintained its market share compared to the previous corresponding period, at 56.4% in this segment, 0.8% less than a year earlier. ZON Optimus Group ranks as the second largest operator with a share of 31.2%.

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Consolidated Annual Report 2013 Table E – Number of fixed telephone accesses YoY

3rd Q12

1stQ13

3rd Q13

4.568.334

4.541.686

4.543.980

-0,53%

2.217.166

2.151.795

2.113.265

-4,69%

(of w hich) Publique Pay phones

24.293

23.323

22.868

-5,87%

ISDN and Diginet Acesses

603.833

570.659

544.183

-9,88%

Basic

317.678

298.828

281.152

-11,50%

Primary

279.900

265.770

257.399

-8,04%

Fractioned

2.933

2.851

2.821

-3,82%

Other digital acesses

3.322

3.210

2.811

-15,38%

Total Main Acesses Analogue Acesses

GSM / UMTS VoIP / VoB So urce: ICP - A naco m

3 Q13 / 3rd Q12

454.358

448.413

443.663

-2,35%

1.292.976

1.370.819

1.442.869

11,59% Unit: 1acess

For the year 2014, a new consult to the Market is expected to be launched by ANACOM, since this institution intends to impose the obligation of virtual access to fiber optic (advanced bitstream), but with geographical differentiation in its implementation. This process was not completed in 2013, as a result of the changes that have taken place in the domestic market (merger between Zon and Optimus and investments initiated by Vodafone and Altice in expanding their fiber networks) and the EC recommendation on non-discrimination and costing methodologies NGA, which was eventually published in September 2013.

1.2.5 – The Venture Capital Sector The Portuguese venture capital industry after experienced a crisis, is currently on a growth phase. This fact mainly stems from markets short liquidity, which has led to greater demand for venture capital to strengthen companies’ equity. Consequently, there are new investment funds and different types of market participants. As happened in the '80s, venture capital companies (“VCC”) are currently averse to undertake investments in start-ups, unlike what happens, for example, in the U.S., where they continue to support the expansion of this type of investment At the end of 2013, Portugal had 79 venture capital funds ("VCF") and 34 VCC. Data disclosed by Portuguese Securities Market Commission (“CMVM”) indicate that the dynamics of the capital venture activity over the past decade mainly results from the increase in VCF and not otherwise, as the number of VCC is stagnant since 2009. The revitalization funds had the biggest highlight in transactions in 2013, which is not quite surprising, given that these transactions require greater capital investment. This type of fund acts at a more operational level and with greater orientation towards dst - sgps, s.a.

Page 22 of 113

Consolidated Annual Report 2013 internationalization, cost reduction and consolidation (companies mergers within the sector), in order to help companies that currently experience periods of great difficulties to become profitable. The venture capital investments in Portugal have shown an atypical behavior regarding its industry pattern, since investors rather than taking shareholders risks have instead chosen to make capital contributions through paid provisions, which greatly resembles a bank loan. Thus, the overall risk of operations is substantially reduced, since the return on equity ceases to depend solely on profits from activity or from the sale of shares. The operational program COMPETE, under the Support Financing and Risk Sharing System of Innovation (SAFPRI), had a significant importance to the sector expansion since it supported, in 2013, about 22 VCF oriented to SMEs investments, both at the initial phase of its life cycle and in the expansion phase of its activity. The year 2013 was also marked by the launch of Revitalize funds, which have provided some € 220 million to support growth projects, internationalization and export of viable SMEs. They are managed on a regional basis: Northern (80 million euros), Center (€ 80 million) and South (60 million euros). On the European scene, like Portugal, funds raised by venture capital have mainly been directed to VCF, with private equity characteristics, specialized in buyout transactions involving the acquisition of a company’s capital majority, with an eventually use of substantial debt amounts. In short, a growth sector influence is still expected to occur, given the substantial capacity of funds raised by operators and not yet invested in companies’ shares. Moreover, the European Union program Horizon 2020 foresees that 3 billion Euros will be available to finance venture capital investments, mainly in projects at seed or early stages.

dst - sgps, s.a.

Page 23 of 113

Consolidated Annual Report 2013

2 - Business activity

Turnover

250,0

235,1

46,0

200,0

46,5

42,0

198,6

M€

192,4

EBITDA

50,0

38,0

150,0

34,0 100,0

35,8

36,2

2011

2012

30,0 2011

2012

2013

The period of 2013 reflects the progressive and successful consolidation that dst group has been recording in recent years and in several business areas that has a presence. Indeed, in clear countercycle, 2013 marks the best year ever in the group’s history, with significant growth of its turnover, profitability, international operations and human resources, as well as with the setting-up of a new business area Ventures - to face the growing challenges of responsiveness and innovation that the world currently poses to companies. Thus, in the year under review, the consolidated turnover of dst group reached 235.1 million euros, which represents an increase of 18.3% compared to 2012 and that, in absolute terms, exceeds 36.4 million euros. In this line, the proportional turnover of the companies comprising dst group, regardless of the consolidation method adopted, experienced a growth of 9.6%, surpassing 303 million euros. The substantial growth in dst group’s turnover was accompanied by a more than proportional growth of its operating profitability, which demonstrates the prudent policy of the group approaching business and investment opportunities. In this way, the group consolidated EBITDA amounted to 46.5 million euros in 2013, with an EBITDA margin of 19.8%. In absolute terms, EBITDA increased 10.4 million euros compared to 2012 (i.e., +28.6%) and the consolidated net income after minority interests had an increase of 3.2 million euros, reaching 13.3 million euros. At this level, it should remarked the positive effect that dst group’s diversification in its various business areas contributed to maintaining positive levels of operating profitability: the Renewable Energies and Environment & Water areas account for over 35% of consolidated EBITDA in 2013. dst - sgps, s.a.

Page 24 of 113

Consolidated Annual Report 2013

Turnover

EBITDA 81,3% 63,4%

0,3%

16,4% 10,3%

Eng&Const

Ren Ener

-3,6%

8,0% Environment

16,5% Telecommunications

Eng&Const

Ren Ener

Environment

Telecommunications

Nevertheless, the business area which was in the genesis of dst group maintained a notable performance in the period under review, to the extent that the consolidated turnover of Engineering & Construction increased 35.8 million euros when compared to 2012, reaching out 211.2 million euros in 2013. Furthermore, the consolidated turnover of Environment & Water business grew in the year by 11% to more than 20.2 million euros. In turn, its operating profit remained stable when compared to 2012, reflecting a contribution of 17.9% for dst group’s EBITDA in the period. In turn, the Renewable Energies business area presented a positive evolution of its operational profitability, with positive impact to its contribution to dst group’s consolidated EBITDA in 2013 and represented 17.8% of the global 46.5 million euros recorded in the period. Year 2013 was also a year of huge investments in the telecommunications business, reason why this area still does not have a relevant turnover and its net income was necessarily negative in 2013, around 1.1 million euros. Moreover, should be emphasized dst group’s presence in Ventures area, which bet became intensified in 2013, with the development, by innovationpoint – investigação e desenvolvimento, s.a., of several innovative projects, and with the acquisition of the majority share capital participations of 2bpartner – sociedade capital de risco, s.a., a venture capital company that performed multiple processes of analysis and due diligence projects, approving two investments during the year 2013. In this context, naturally, Ventures business area does not yet have a turnover that may be representative of its potential growth and its contribution to dst group’s consolidated net income in 2013 was negative (0.2 million euros). The group’s consolidated net income in 2013 was higher than 13.3 million euros, representing an increase of 31.6% over the previous year and being the highest consolidated net income in dst group’s history.

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Page 25 of 113

Consolidated Annual Report 2013 This result arises mainly from the maintenance of operating profitability, as well as from the significant improvement in financial results compared to 2012 due to lower debt levels and strict policy of managing credit risk.

values in m€

Economic analysis

2011

Turnover EBITDA EBIT Financial Income Net Income before Taxes Taxes Net Consolidated Net Income To: Minority Interest dst group

EBITDA

Deprec and amort

2012

2013

192.432,4 35.761,7 17.666,6 -9.270,7 8.395,9 -2.438,8 5.957,1

198.628,2 36.168,3 25.467,5 -11.759,6 13.707,9 -2.957,2 10.750,7

235.068,0 46.527,9 24.606,9 -8.510,1 16.096,8 -2.181,2 13.915,5

707,8 5.249,3

641,5 10.109,2

607,0 13.308,6

Financial Income

Income tax

Minority Interests

2.181

607

∆

∆%

36.439,9

18,3%

10.359,6

28,6%

-860,6

-3,4%

3.249,5

-27,6%

2.388,9

17,4%

775,9

-26,2%

3.164,8

29,4%

-34,5

-5,4%

3.199,3

31,6%

Net Income 2013

50.000 45.000 40.000

10.662

35.000

000 €

30.000 25.000

8.510

20.000

46.528 15.000 10.000 5.000

13.309

In 2013, dst group’s Engineering & Construction business area remained generally immune to the hardly negative context which crosses this business sector, reason why grew its consolidated turnover (+20.4%), EBITDA (+34.5%), Net Income (+15.4%) and number of countries where it has presence.

dst - sgps, s.a.

Page 26 of 113

Consolidated Annual Report 2013 Nevertheless, dst group remains being cautious with the importance of its business diversification for future sustainability, reason why this business area lost weight to the group’s consolidated results, which amounted to 37.2 % (4.9 million euros) of the global amount in 2013.

In this context, in 2013, the Renewable Energies area reinforced its dominance in the contribution to dst group’s consolidated net income (55.6% of total), and the Environment & Water area contributed with more than 2.2 million euros, equivalent to 16.9% of the global consolidated net income.

Net Income

-8,2%

37,2%

55,6%

16,9%

-1,5%

Eng&Const

Ren Ener

Environment

Telecommunications

Ventures

Year 2013 was also marked by the conclusion of dst group’s investment - of 85 million euros – in Next Generation Networks ("NGN"), which is materialized in 9,000 km of optical fiber infrastructure in 79 national municipalities.

At the end of 2013, dst group’s total net assets stood at 544.2 million euros, which represents an increase of 100 million euros in 4 years.

In its turn, dst group’s equity amounted to 168.6 million euro at the end of 2013, compared with 144.6 million euros in late 2012, and gives rise to a financial autonomy ratio of 31% by the end of 2013.

Moreover, the group’s total liabilities met a very favorable development in 2013, bearing in mind that they decreased 14 million euros in the period, standing out at 375.6 million euros at the end of the period.

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Page 27 of 113

Consolidated Annual Report 2013 In the pursuit of international expansion that dst group is promoting, in 2013 there were projects and commercial initiatives in 17 countries, both in demanding African geographies, and in sophisticated European markets, among others. At this level, the group's focus remains on diversifying geographies - as a way to increasingly relativize the importance of Angola to its international operations - always based on a strict cautious policy when approaching markets and investments associated with the ongoing internationalization process. Equally relevant is the fact that international projects have been built in different business areas, namely, Engineering & Construction, Renewable Energies and Environment & Water. The international turnover in 2013 amounted to approximately 10 million euros, totaling approximately 36.9 million euros in the last three periods.

International turnover 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2011

2012 Angola

dst - sgps, s.a.

France

Brazil

2013 Others

Page 28 of 113

Consolidated Annual Report 2013 Meanwhile, total net debt amounted to 135 million euros in 2013, which consolidates a decrease of 31.8 million euros (19.0%) when compared to the end of 2012 and of 47.8 million euros (-26.1%) when compared to 2011. To this evolution contributed the divestment in non-core assets and the amortization of medium and long term debt plans.

Noteworthy that at the end of 2013, net debt allocated to the Engineering & Construction (87.4 million euros) represented 64.7% of the consolidated total. Telecommunications area has medium and long term financing of 24.3 million euros, mainly for the construction of NGN. This positive effect, along with the increase of dst groupâ&#x20AC;&#x2122;s profitability in 2013, led to an improvement of the net debt / EBITDA ratio, which stood at 2.90 at the end of 2013 (2012: 4.61). dst groupâ&#x20AC;&#x2122;s financial capacity thus met, in 2013, a significant increase, with financial autonomy ratio settled at 30.98% in 2013, an increase of 3.91 percentage points when compared to 2012.

dst - sgps, s.a.

Page 29 of 113

Consolidated Annual Report 2013 The next chapter of this report details the analysis of the results and the activity of each of the business areas of dst group in 2013.

Business Areas ENGINEERING & CONSTRUCTION Net Income

Proportional turnover 250,0

6,0 5,0

245,2 150,0

210,6

Mâ&#x201A;Ź

4,0

Mâ&#x201A;Ź

200,0

3,0

221,3

5,0

4,3

2,0 1,0

1,2 100,0

0,0 2011

2012

2013

2011

2012

2013

Total

Engineering & Construction is the genetic basis of dst group and, despite the successful and progressive diversification process, this business area is still relevant in the group sphere, having recorded the highest turnover in its history, with amounts in the order of 245.2 million euros in 2013. This record represents an increase of 10.8% compared to 2012 and is a sign of the extraordinary responsiveness of dst group to the deeply degraded context which the industry and its key players are facing. For this remarkable record achieved in 2013 should not be lessened the positive impact of the ongoing internationalization process, whose international operations within this business area remained consolidated in about 10 million euros; and the group has significantly increased the number of countries where it has presence, in a year marked by the strong investment in commercial relationships in other jurisdictions with favorable business potential. In this business area, year 2013 was also highlighted by the stabilization of its operating profitability, which achieved an EBITDA margin of 15.1%, representing an increase of 1.6 percentage points from 2012. dst group has a wide scope of strong technical skills that allow it to be perceived by the market as a landmark of rigour and service quality in Engineering & Construction field. dst - sgps, s.a.

Page 30 of 113

Consolidated Annual Report 2013

As a result of this important technical knowledge capital and of its widespread perception by customers, dst group undertook, in 2013, several works of recognized impact and technical complexity. In this respect, stand out as examples, among others, the works of Continental Mabor, CEIIA Aeronautics Unit, Hydraulic Circuit of Baleizão, Center for Meat Processing of Santarém, Sanitation Network of Santarém, the WWTP of Pombal, the Redevelopment of School André Soares, the Ecopark Braval - 2nd Phase, the construction of the Landfill of Gestal, the Wind Farms of Mértola and Leiranco, the construction of Warehouse 10 & 11 from Pole 2 Logistics Platform in Matosinhos and the construction of Hangar Everjets - AFSC. It should also be emphasized the unique know-how that dst group has at the level of building up new generation networks broadband, which was consolidated with the implementation of these networks in Rural areas of North and Alentejo and Algarve. In the same way, dst group is a reference player in the specific sector of urban rehabilitation, reason why its company cari - construtores, s.a has recognized credentials in the construction, rehabilitation, restoration and conservation market, having participated in some relevant construction works at this level in 2013, as are the cases of ESCAT of Bragança, the Innovation and Logistics Center of Valencia and the Redevelopment Villa D'Este Buildings. Moreover, dst group has significant competitive advantages in relation to its main competitors in Engineering & Construction due to the fact of incorporating in its operations the entire value chain of the business sector, particularly in the award of electrical installations, heating, ventilation and air conditioning (HVAC), hydraulic works and telecommunications - through domingos teixeira da silva - empreitadas eléctricas, s.a. (“dte”) - and the construction and assembly of steel structures and roofs and facades coating through bysteel, s.a. (“bysteel”). In 2013, dte recorded a turnover of more than 48.7 million euros and consolidated an exclusive know-how when compared to other competitors, namely associated to telecommunications sector, where it recorded a turnover of approximately 33.4 million euros in 2013. In this year, dte participated in major projects in the specialties in which it operates, as are examples Sousa Martins Hospital in Guarda, APDL – Terminal of Leixões, Embraer, Hospital-Horta Faial, Aeroville Cinemas (France) and WWTP of Pombal, among others. Meanwhile, in a deeply recessive national environment in the metal structures constructions, bysteel entered into very large and highly complex contracts, as are examples Meat Processing Center of Santarém, expansion of industrial unit of Continental Mabor, expansion of industrial production unit of Sebastião & Martins and the construction of the new industrial unit of Vista Alegre. dst - sgps, s.a.

Page 31 of 113

Consolidated Annual Report 2013

On the other hand, bysteel’s international activity was reinforced in 2013 by maintaining its presence in the Angolan market and by strongly focusing on the French market, which was defined as a priority in Europe and which led to a huge success in 2013, driven out from the conclusion of several contracts for design project, manufacturing and execution of steel structures for some reference customers at European and global level, as Bouygues and Vinci groups, among other clients.

RENEWABLE ENERGIES

Proportional turnover

Net Income 8,0

25,0

7,0 6,0 20,0

23,2 15,0

24,2

M€

5,0 4,0

7,4

3,0

19,4

2,0

4,0

4,9

1,0 0,0

10,0 2011

2012

2013

2011

2012

2013

Portugal

dst group's activity in the Renewable Energies business area is developed through a set of businesses diversified in technological terms, namely, wind, solar photovoltaic, solar thermal, hydro, oceans energies and energy efficiency. After a journey of growth and sustained development of operations and projects in the Renewable Energies area, the proportional turnover amounted to 24.2 million euros, representing an increase of 4.1% from 2012 and of 24.7% when compared to 2011. This business area recorded a consolidated net income of 7.4 million euros in 2013, corresponding to approximately 55.6% of dst group’s consolidated net income of the period. In wind energy, the activity started in the mid 90s, making dst group one of the pioneers betting in this technology in Portugal.

dst - sgps, s.a.

Page 32 of 113

Consolidated Annual Report 2013 In 2008, came into operation the Wind Farm of Alto Minho I, with an installed capacity of 240 MW, thus expanding the group associated companies’ capacity up to 294.40 MW. With further investment, dst group installed power overpassed 68.41 MW.

Since March 25th, 2009, with the conclusion of the last wind sub-farm (Alto do Corisco) of the Wind Farm of Alto Minho I, all rights assigned to Ventominho – Energias Renováveis, S.A. started being operational, materialized in harnessing the winds of Melgaço, Monção, Paredes de Coura and Valença counties, being completed dst group’s investments as shown below.

Wind farm Installed capacity (MW) dst group participation (%) dst group installed capacity (MW) Beginning of operations Location (municipality) Wind turbines number Wind turbines model

Alto Minho I

Arga

Espiga

S. Paio

PE Alto Vaca

TOTAL

240

2,4

25,63%

12,50%

10,63%

25,00%

61,50

4,50

0,75

1,06

0,60

2008

2006

2005

2006

2002

Caminha

Vila Nova de Cerveira

Vieira do Minho

Melgaço, Monção, Valença, P.Coura

Caminha

120

Enercon E-70 E4, E-82

Vestas V90 - 3MW

Enercon E-70 E4

Enercon E-40

Promoter

294

68,41

Parque Eólico do Alto da Vaca, Lda.

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

In turn, the year 2013 was marked by a strong commercial activity of global sun s.a., with great focus on proven quality and reliability of its products, although penalized by a reduction in solar photovoltaic tariffs.

Within its Efficiency / Energy Certification, dst solar s.a. succeeded, in 2013, as becoming certified as ESE (Energy Service Company) and its now prepared to enter into the energy services market, providing services in the energy efficiency area, where the cost of investment is supported by the energy savings effectively obtained.

In a year highlighted by the difficulties caused by the drastic decrease in the energy rate injected in the Electric Public Service Network (RESP), within the legal framework that regulated the minigeneration (Law Decree 34/2011) - with a 30% reduction in the rate - dst solar s.a. sought to diversify its activity in order to bridge the demand reduction caused by this fact. dst - sgps, s.a.

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Consolidated Annual Report 2013

Therefore, dst solar directed its activity to other areas, particularly with regard to targeted investments to increase energy efficiency through solar energy, either electrical or thermal. This strategy allowed the company to mitigate the decline in minigeneration market, contributing for the settlement of dst solar’s brand in the market. In 2012, dst group incorporated pip solar s.a., which is a company whose main activity is the promotion, construction and operation of power plants using renewable, including solar photovoltaic sources for the production and sale of electric energy, and the study, development and implementation of renewable energy projects. In 2013, the activity of this company focused primarily on the development of the project which it was granted: a lot of power in Zone Network 10 under the “Concursal procedure for allocation of 150MVA capacity injection on main power utility for electricity produced from solar photovoltaic plants, including solar photovoltaic concentration technology and associated reception points”. In the hydropower area, dst hydro s.a. continues to carry out a constant activity of developing "greenfield" project as well as analyzing partnership proposals for building and managing hydroelectric exploitations.

ENVIRONMENT & WATER

Porportional turnover

30,0

2,2

32,1 25,0

31,5

33,0

Net Income

M€

2,4

M€

35,0

2,0

2,2

2,3

2012

2013

1,9 1,8

20,0 2011

2012

2013

2011

Portugal

In 2013, Environment & Water activities kept the unavoidable relevance it gathered in dst group since the acquisition by the company Criar Vantagens, Lda. – dst group’s associated company – of the entire share capital of Aquapor – Serviços, S.A. (“Aquapor”) in late 2008.

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Consolidated Annual Report 2013 The proportional turnover of this business area amounted to 33 million euros in 2013, and its contribution to dst group’s consolidated net income in 2013 amounted to 2.3 million euros, corresponding to 16.9% of its total. The main group’s objectives for Environment & Water business area, through Aquapor, are the diversification of the businesses’ portfolio and the focus on internationalization. Indeed, in the international area, the outlined strategy includes the Maghreb countries, the PALOP (Portuguese-speaking African countries) and Brazil, seeking local partners for the development of water business operations, similar to the procedures outlined for Portugal. So, in 2013, together with Visabeira group, dst group - namely, through the participation held by Aquapor in Visaqua – Gestão de Infra-estruturas e Serviços ambientais, S.A. - reinforced efforts in order to position itself as a reference operator in the water supply, sanitation and solid waste areas in Mozambique. Additionally, dst group remains highly active in identifying potential alternatives for consolidating and strengthening its operations in the Environment & Water field, as exemplified by the privatization process of Empresa Geral do Fomento, S.A. (“EGF”) in Portugal.

TELECOMMUNICATIONS Net Income

Proportional turnover 1,2

0,0 -0,2

0,8

-0,4

0,6

M€

2011

1,0

1,1

-0,6

2012

2013

-0,7 -0,9 -1,1

1,0

0,4

-0,8

0,6 0,2

-1,0

0,0

-1,2

2011

2012

2013

Since 2008, telecommunications business area is an unquestionable certainty with respect to its potential for growth and development of dst group’s operations, either in Portugal or anywhere in the globe, including participating in the building up of networks and in managing next generation broadbands.

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Consolidated Annual Report 2013 In 2013 the telecommunications business area recorded an overall growth of its activity as a result of more aggressive business strategy and wider services’ portfolio presented to customers and potential customers. Nevertheless, this area is still starting-up and rising up strong commercial development within the major telecom operators, reason why it does not yet present a significant turnover and its contribution to dst group’s results is still negative. Indeed, 2013 period remarks the conclusion of the Next Generation Networks project in the North and South of Portugal, which is an investment that started in 2011 and amounted to approximately 85 million euros. Additionally, dst group intends to develop fiber optic networks projects in strategic locations. dstelecom s.a. has been focusing on expanding its competencies in the installation, implementation, management and operation of next generation networks, having currently a differentiator factor of strong know-how and expertise in this telecommunications sector niche. During 2013, the company consolidated its know-how through the strengthening of its staff, as well as its experience by building up a new infrastructure to link Chaves – Mirandela – Valpaços, which resulted in the raising of a new reference customer by leasing the use of that infrastructure. The networks of North and Alentejo and Algarve areas currently built, in terms of backbone, assume the setting of the image herewith. Within this project, the year 2014 will mark the start of the new generation networks operating activities, namely with dstelecom norte and dstelecom alentejo & algarve. With respect to subsidiaries Minhocom – Gestão de Infraestruturas E.I.M. and Valicom – Gestão de Infraestruturas E.I.M. in 2014, they are planned to consolidate market share due to the commercial strategy that is being pursued, namely expanding the services portfolio and rising up synergies with dstelecom norte s.a. network, which will give a new impetus to those infrastructures. For 2014 there is also the expectation of involving dstelecom s.a. in new national and international projects that are currently under review, whose concept is in line with the projects that have been developed, i.e., of operator of operators, with open network and equal access. It is dst group’s conviction that this operating model will contribute to the growth of dst - sgps, s.a.

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Consolidated Annual Report 2013 the sector, to improve the quality of services provided to the end customer and to enhance competition between the various market players. dst group foresees for 2014 a strong consolidation of its telecommunications business area staff, with plans to hire a large number of ground teams, force field teams, as well as employees for supporting administrative level and for its Operations and Control Center - NOC ("Network Operations Center"). dst groupâ&#x20AC;&#x2122;s optimism concerning this business area remains extremely high, especially considering that, in order to support the growing option for higher bandwidth, optical fiber continues to be the fastest growing technology in Portugal, replacing copper as the preferred technology.

VENTURES

The conviction with which dst group embraces innovation, entrepreneurship and creativity is already a trademark since long years ago. However, this perspective has a strong sense of economic rationale based under the investment opportunities in this business area. Effectively, Ventures business area had a negative net income of 200 thousand euros, but its growth potential is immeasurable, particularly through innovationpoint and 2bpartner. innovationpoint is a dst group company dedicated to potentiate, evaluate, produce and commercialize innovative ideas, notably through the creation of new product categories, services or business models that challenge established paradigms and create significant added value for consumers, customers and for dst group itself. This companyâ&#x20AC;&#x2122;s dynamism was the basis of diverse and innovative projects, as are the examples of Shair, PowerTracker Vocation, Rayleague, among others.

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Consolidated Annual Report 2013 In July 2013, innovationpoint obtained certification in standard NP4457 (SGIDI) and continued supporting several dst group companies in finding innovative solutions to the challenges they face on their daily basis. In turn, 2bpartner carries out investments in venture capital and in venture capital funds management, through purchasing shares or units of venture capital funds, respectively. Having been established in 2007, 2bpartner took the first operational steps in 2011, by raising up fund Minho Inovação e Internacionalização (“MII”), with an initial budget of 4 million euros. After having carried out several steps necessary for developing its effective activities - including some changes in its shareholder structure, culminating with the acquisition of the majority of its share capital by dst group - 2bpartner started its operations in 2013. In this period, the company carried out multiple processes’ analysis and due diligence projects. In the last quarter of 2013, two investments were approved (Sphere Ultrafast Photonics and AR Publisher), to be implemented in early 2014.

3 - Material events occurring after the end of the period No events subsequent to the balance sheet date exist that may have a material impact on the financial statements.

4 - Financial Risk Management Objectives and Policies Within the economic and financial context in which the Entity operates is essential to have a risk management strategy fully integrated into the overall strategy of the organization that increase its degree of resilience and gradually become immune to unforeseen and adverse effects. Therefore, risk analysis is ensured by the group’s different business units in which the Entity operates. A prior identification study of the risks classified as the most critical is undercooked, and risk management strategies are defined for control procedures implementation that reduce them to an acceptable level. Through the control procedures implementation the Entity seeks to ensure the efficiency and effectiveness of its operations, as well as assets safeguarding, financial reporting reliability and compliance with laws and regulations. The ultimate goal will be the trade-off maximization between risks and business margins, in order to achieve, in a sustained way, the group’s strategic objectives in which it operates.

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5 - Information required by legislation The Board of Directors advises that the group does not have debts in arrears to the State, in compliance with the terms of Law-decree number 534/80 of November 7. In compliance with the provisions of the Article 210 of the Contributory Code, published by the Law number 110/2014 of September 16, the Board advises that the situation of the group before the Social Security is regularized within the legally stipulated deadlines.

6 - Authorized disclosure date for issue the consolidated financial statements The consolidated financial statements for the period ended December 31, 2013 were approved by the Management Board for issue on April 24, 2014.

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

Braga, April 24, 2014

The Board of Directors,

José Gonçalves Teixeira; Chairman

Avelino Gonçalves Teixeira; Vice Chairman

Joaquim Gonçalves Teixeira; Vice Chairman

Hernâni José Gonçalves Teixeira; member of the Board of Directors

João Martins Negrais de Matos; executive member of the Board of Directors

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Corporate Social Responsibility

Since its genesis, dst group pursues a policy of social responsibility based on sustainability strategies that include the concern for the collective welfare and the social and environmental effects of its activities. dst groupâ&#x20AC;&#x2122;s programme for social responsibility covers areas as culture, education, health, safety, environment and knowledge. This programâ&#x20AC;&#x2122;s curriculum is transversal to the group and is developed in internal and external context involving all employees, aligned with dst groupâ&#x20AC;&#x2122;s values: Ambition, Passion, Loyalty, Solidarity, Good Taste, Courage, Respect and Rigour. The concern of dst group for social responsibility matters not only increases the personal wealth of each employee as well as contributes to the environment in which it operates transmitting to the market the position of an "cult, cosmopolitan and cool" group, projecting an image of modernity and of social, cultural and economic dynamism.

Human Resources In terms of general characterization of dst group as of December 31, 2013, its population was constituted by 931 employees, of which 173 were female and the remaining 758 were male, with an average age of 37.5 years.

Number of employees

2012

2013

YoY 12/13

Female Male Total

165 728 893

173 758 931

4,8% 4,1% 4,3%

Average age

37,1

37,5

1,1%

Concerning the turnover rate, which remained relatively stable in comparison with the previous year, it is noteworthy that, in 2013, 113 employees severed their connection to dst group, and 151 new admissions were approved. This fact corroborates the group's growth, in the exact extent of 38 new jobs created, which represents a growth of the human structure of 4.3% when compared to 2012.

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Consolidated Annual Report 2013 Description Employees entries Employees exits Rotation Index Numb. of senior managers

2012

2013

YoY 12/13

123 128 14,05%

151 113 14,18%

22,8% -11,7%

271

336

24,0%

Regarding the 151 admissions recorded in 2013, it is relevant to note that the average age is 32.1 years, which reflects the renewal and growth by hiring young graduates and employees with different levels of professional experience. This reality, combined with the increasing number of senior managers (from 271 to 336), reveals a more professional group as a way to cope with the constant challenges, as well as its continuous search for improvements, efficiency, organizational growth and maturity. This is also possible due to the group’s aggressive policy regarding the continuous investment in executive training of its staff, as among other initiatives, the protocol entered into with Porto Business School for another edition of the Advanced Management Program, to which attended 26 senior executives of the group, between January and July 2013. The year 2013 reflected the continuity of the human resources’ good practices policy. During this year was implemented the "meal card", a social benefit which had a significant uptake to employees. As part of these good practices, the constant and transparent communication with employees marked the annual calendar of events. The annual employees’ meeting entitled "Encounters with Restlessness” brought together more than 280 participants and had Professor Félix Ribeiro as special guest. This meeting was also an opportunity to honor employees who celebrated 25 years of work in dst group. Specific meetings were also held with various actors of dst group’s value chain, as the case of supervisors, drivers and shunters. dst group also promoted the fourth futsal tournament played in its sports complex. Comprising two football fields for five players and a tennis court, all of them with artificial turf, with a space of aerobic maintenance machines, this space enables the development of outdoor physical activities while providing a great living space. Complementary to these activities, regularly attendance to shows, music concerts and theater are promoted, as well as employees´ anniversary celebrations, with the celebration of the each employee’s birthday, solemnized by the group with a book as gift.

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Consolidated Annual Report 2013 dst group has protocols with Theatro Circo of Braga and Sporting Clube de Braga, in order to facilitate its employees access to these spaces. Like last year, dst group continued to reinforce the establishment of new protocols with various entities, providing special conditions to its employees. The protocol signed with a reputable hair stylist and image consultant (Peter Remy) who, in the anniversary of each lady, offers an image consulting session may be enhanced as an example. In dst group, women were also honored with the chance to enjoy, every Thursdays, manicure services, installed in a space located within the office, which was specifically created for this purpose.

Safety, Hygiene and Health The group annually develops a comprehensive program of Hygiene, Health and Safety audits, covering constructions yards and production centers. These audits, according to its nature and extent may take the form of Management System audits or technical audits. Throughout the year of 2013, 884 training/awareness actions were held for the group's employees and 2.500 actions for sub-contractors' employees. Additionally, throughout the year were carried out multiple awareness-raising campaigns by the Health and Security Department in order to draw attention, in a different way, for some matters that are essential to safety and health of workers, such as falls from height, burial and hygiene at workplaces. In 2013 the project "Safety Moment" was started, by placing, at strategic points, posters with allusive Hygiene, Health and Safety issues. These themes are changed fortnightly. Noise measurements and chemical agents exposition tests were performed where needed, having been implemented measures in places where limits were reached, according to specific legislation. As in previous years, the examinations and consultations of occupational medicine were carried out at dst groupâ&#x20AC;&#x2122;s medical facilities. The services are assured by four nurses, one occupational doctor and two doctors of curative medicine, being one nurse permanently present in the groupâ&#x20AC;&#x2122;s premises.

Moreover, dst group has dental services and gives them free access to its employees. Beyond medical examinations compliance, the "Healthy Living" program has begun, which consists in screening for high cholesterol and diabetes. All employees with high levels will be subject to training / information for changing eating habits. Besides this training, employees in such a situation are referred to a dietitian. After 6 months of follow-up new dst - sgps, s.a.

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Consolidated Annual Report 2013 test tests will be performed and medical appointments arranged. Also during 2013 other screening tests were also performed, such as spirometric and audiometric exams. Within emergency situations management, simulacra exercises were performed throughout all dst group, aiming to test the respective emergency plans. The performance of our subcontractors / suppliers is essential to the groupâ&#x20AC;&#x2122;s success. We believe that relationships based upon trust, cooperation and shared value creation with our subcontractors / suppliers result in the ability to innovate and strengthen Safety, Hygiene and Health policies, and at the same time, improve the quality of the provided safety and health services. Regardless the type and scale of the construction or the work involved, the use of subcontractors has always implied at each hiring stage, strictly service quality control, in which safety and health at work are determinant factors. Therefore, security technicians interfered in all construction works, in order to regulate subcontractors / suppliers activity as follows:

In the procurement procedures (binding obligations on Safety, Hygiene and Health);

During works (subcontractorsâ&#x20AC;&#x2122; performance in terms of Safety, Hygiene and Health is accompanied by safety technicians through methodologies for security level assessing and to verify compliance with legal requirements).

In general, the attribution of personal protective equipment (PPE) per worker follows the risk assessment process of the activities developed by him / her and that are in compliance with our risk assessment matrix. However, dst group emphasizes the organizational and collective protection measures in performed activities complemented with the use of PPE and appropriate clothing. The PPE's delivery action is preceded by an awareness session and training regarding their proper use, conducted by a Safety, Hygiene and Health technician.

At the end of 2013 has begun the campaign of protective boots replacement. This amendment aims to improve the workersâ&#x20AC;&#x2122; comfort, by significantly reducing their weight and increasing the sole flexibility.

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R&D and Innovation Since an early stage dst group embraced Research & Development as a key activity for its diversification strategy, which implies a clear commitment to new technologies.

Accordingly, the group acquired innovationpoint, a company dedicated to enhance, evaluate, produce and commercialize innovative ideas. This company is focused on the creation of new product categories, services or business models that challenge established paradigms and generate significant added value for consumers, for customers and for dst group itself.

The dynamism of innovationpoint is the basis of many innovative projects, examples of which are the following projects:

Shair - platform supported by dst group for art and emerging artist dissemination and marketing. The platform concept provides an opportunity given to artists to exhibit their works subjecting them to public scrutiny, and the most voted ones will then be publically exhibited at the Emerging dst Gallery;

PowerTracker - software for energy production monitoring with the possibility to be expanded to mobile platforms and the ability to make reports and sent alarms signals, without installing any additional hardware in generating plants;

Rayleague.com - social network for football scouting that aims to democratize the process of players’ selection worldwide, assisting their promotion and opportunity to live their dream. This project has over 1 million views distributed across 178 countries and with athletes from 136 countries, clearly revealing itself as an international product;

Embedded systems - during this year began this area exploitation with terminals development that incorporate electronic component design with software and product design, in order to offer turnkey solutions which meet customers’ needs best;

Bologna 4 students – application that supports the study organization for college students;

Gasmappers.com - community network for sharing information on fuel prices;

Where-to-invest-in-Portugal.com - territorial marketing platform for municipalities;

SmarBraga.com - platform for Braga’s environmental monitoring;

Lappiz.com - social network for college students sharing knowledge;

dst Mobility - development and implementation of sustainable electric mobility solutions;

Vocation - software for mobile devices developed in partnership with the multinational human resources SHL that enables the user to perform a battery of tests in order to determine one’s real vocation in a simple and fairly accurate way. Vocation is available in the three major domestic operators and worldwide, in the Apple store and in the Android Market.

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Consolidated Annual Report 2013 Nevertheless, the research and development activity is not limited to innovationpoint. dst group has partnerships with research centres, universities and national and international companies. The R&D component across the entire dst group remained particularly active in 2013, notably with the certification of its RDI management system under NP 4457, for which contributed electronic tools developed by innovationpoint in partnership with external consultants. The profound success of this project results from the deep commitment between dst groupâ&#x20AC;&#x2122;s Board of Directors and all the members engaged in it, and the group has now 5 certified companies: global sun, cari, dte, steelgreen and innovationpoint. In addition, dst, dstelecom and bysteel are finalizing the respective certification procedures.

Across the whole group is fostered an active culture of innovation to all its employees, which the internal communication campaign "decidinovar" (I decided to innovate) and the encouragement given by the Board of Directors for all employees to devote at least half an hour a day exclusively to creativity and innovation are good examples.

Society dst group's extensive program for social responsibility also kept the emphasis on patronage, focusing on promotion and on the dissemination of culture and education. As a group based under the triple C - cultured, cosmopolitan and cool concepts, it prioritizes cultural activities since its inception, raising its positioning and differentiating itself in the way of doing business.

Among various activities and initiatives undertaken in 2013, the following deserve recognition:

Main Maecenas of the Theatre Company of Braga;

Main Maecenas of Braga Book Fair;

Assignment of the Grand Prize of Literature in the amount of 15,000 euros, being the 2013 edition for works of poetry published in 2010 or 2011;

For the fourth consecutive time, dst group promoted the International Photography Award "Emergentes dst ", which rewards every year the best international photographic work. The award is supported by "Encontros da Imagem", one of the largest initiatives in the field of visual arts in Portugal, which is also an original event born in Braga. This year, for the first time, the first prize was awarded ex aequo to two photographers: Tito Mouraz and Sanne De Wilde;

Continued development of books and reading support policy. A book is offered in the anniversary of each employee. dst group's newsletter is issued relying on the active contribution of employees who participate by submitting articles, with unrestricted subjects. Additionally, the group also promotes reading by offering books to school libraries, as well as by having in the groupâ&#x20AC;&#x2122;s library all kinds of literature for the enjoyment of employees;

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dst group strongly encourages the participation of its employees in voluntary work. Therefore, the group continues to actively collaborate with Habitat and Banco Alimentar Contra a Fome (Food Bank against Hunger).

Environment Environmental Certification dst group renewed in 2013 the environmental management system certification 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”, and maintained the certification by the NP EN ISO 14001:2004 norm in “solar panels’ production”. Likewise, dst group has maintained EMAS registration, in the areas of “maintenance of vehicles and equipment”, “manufacture of wood products and furniture” and “design, development, production and assembly of metal structures”. The certification and EMAS registration are sustained and improved through systematic audits from APCER (Portuguese Certification Association). Environmental claims related to EMAS registrations are available on the dst group website (www.dstsgps.com).

Operational Control The group activity of bituminous mixtures became covered by 3rd Stage CELE regime (2013-2020) (European Emission Trading System) and went on to be exempted from Tax on Petroleum and Energy Products (ISP). APA issued the Greenhouse Gases Title (TE GEE.306.01 III) in September 2013 and an operator account was open at the Portuguese Emission Allowances Registration integrated in the European Union Registry (RPLE-RU). The connection work of the treated water in the hydrocarbon separation of the fueling station to the public sanitation collector was done. The five-yearly inspections of fueling stations were performed and a deposits tightness test was included. It was requested and accepted the Renewal of Operating Permit Compressed Air Reservoir complex. Also, air emissions from natural gas boiler of Bituminous Central and biomass boiler were monitored and the results demonstrated compliance with the ELVs. In February an application for registry revocation in SGCIE regarding the intensive energy consuming installation (bituminous central) was submitted, given that the productive activity (Table 1) declined in recent years, falling from 500 annual TEP, which was not accepted by ADENE. Thus, ARCE’s Implementation Report and Progress (REP) was submitted and validated.

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Consolidated Annual Report 2013 It were reported â&#x20AC;&#x201C; to the Portuguese Environment Agency - the quantities of fluorinated gases in the group installed equipment and the leaks detection in equipment over 3 kg gas was performed.

Continuous improvement With the installation of dowels flow control, cisterns regulation and information campaigns, the daily average of water consumption per employee decreased from 65.9 to 47.4 liters, less than the average value in Portugal. Regarding construction activity, dst group systematically proceeds to the implementation of Environmental Management Plans in their contracts, aiming to minimize negative impacts that their activities may cause, particularly concerning waste management. In dst groupâ&#x20AC;&#x2122;s construction contracts the percentage of mixed construction waste and demolition waste (waste that is not suitable for recycling or unsorted) has been declining over the years, reaching 4% in 2013 (vide illustration).

% of unsorted waste and non-recoverable 12 10 8 6 4 2 0 2009

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2010

2011

2012

2013

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Consolidated Annual Report 2013 Apart from land removable in 2013 were produced in dst group 4803.9 tons of waste, well below previous years. This is explained by reusing at the construction yard itself the inert waste from demolitions and from the works performed, especially hydraulic infrastructures ones, that produce less waste (vide illustration below).

Waste producion of dst group (ton) 20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 2009

2010

2011

2012

2013

Waste production in dst group The main produced residues were aggregates (43%), bituminous (24%) and metal (15%). Despite being sent for recycling 46 tons of waste oil / oily sludge, 47 tons of plastic and 32 tons of paper / card, this represents a very low percentage of the total waste produced. The following table shows the amount of waste received by the Waste Management Unit and in dst group over the last years:

Waste received at dst complex Description

Quantity (ton) 2010

2011

2012

2013

UGR

8.297

7.643

5.030

4.455

dst

23,5

30,0

49,3

70,0

Environmental awareness The environmental awareness campaign focused on GreenCork launched by Quercus, of which dst group joined a few years ago, and within it energy-saving lamps are distributed to employees in exchange of bottles filled up with cork stoppers. The “Eu reduzo 20%” (“I reduce 20%”) Campaign continues, which aims a 20% reduction in fuel consumption, and promotes the reduction of pollution emissions released into the atmosphere. It was also gave continuity to employees awareness for the group’s good environmental practices implementation. dst - sgps, s.a.

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In 2013, and for the second consecutive year, dst group participated in the European Week for Waste Reduction, promoting actions that focused on different messages placement on dst group intranet banners during the event days (November 18, 19, 20, 21 and 22).

dst group continues to participate in the Eco School Council of the Vila Verde Secondary School, participating in the Council meetings. At the last meeting it becomes available to receive trainees. In environmental management, dst group hosted an internship program from Tecminho, a forming company. Apart from waste management, which represents the largest share, in 2013 dst group environmental management costs mainly arise from internal and external audits, inherent the implemented EMS and from fees paid for 52 noise licenses issued for construction works (26%). The complexâ&#x20AC;&#x2122;s plastic and cardboard sent for recycling generated revenue that exceeds 1,000.00 Euros.

Quality and certifications To succeed in an industry whose macroeconomic environment is highly turbulent requires careful attention and responsiveness that allows for continuous adaptation in order to face the growing market competitiveness.

Therefore, dst group continues to direct its activity to the permanent improvement of customers satisfaction, through an appropriate and efficient Management System, in which all the employees are involved. dst group invests in the employees education since it considers it vital to the mobilization and commitment towards Quality. dst group has well defined objectives, that are quantifiable and consistent with the current Management Policy. As an economic group committed to the pursuit of continuous improvement, its activities, performance and results are continuously and cyclical evaluated through activities / practices verification and the identification of improvement opportunities / areas. The organization is committed with the continuous enhancement of its products and services in order to satisfy customer needs, giving always priority to quality and striving for the implementation of practices and procedures conducive to proper management of its activities, products and services.

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Consolidated Annual Report 2013 The concern for quality begins in budgeting. The Quality Plans drawn up for the contests are done with the rigor required for that in the construction yard the industry legislation is totally fulfilled and, on the other hand, to ensure that customersâ&#x20AC;&#x2122; expectations are always exceeded. The increasing competitiveness forces us to improve at all levels. Whenever necessary, processes are changed to improve productivity, reduce costs, increase quality and improve customer satisfaction. Developing its core business is an ever-present organization goal, in particular with the consubstantiation with technological means, qualified human resources and with adopting effective management policies, in order to increase competitiveness, productivity and to be able to conquer the most demanding customers.

Strengthening the culture of innovation supported by an enhanced creativity, surveillance, production and knowledge are also fundamental purposes for the sustainability of dst group. dst group is certified by APCER in quality according to NP EN ISO 9001:2008 in the following areas:

Design, development, production and application of bituminous concrete;

Construction and public works, laboratory testing, maintenance of equipment and vehicles, design, development and manufacture of wood and products of wood, furniture and assembly work: dst, s.a.

Conception, development and production of concrete: tconcrete, s.a.;

Conception, development, production and assembly of metal structures and design of engineering projects: bysteel, s.a.;

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 â&#x20AC;&#x201C; empreitadas elĂŠctricas, s.a.;

Production of photovoltaic panels: global sun, s.a.

The group company named cari - construtores, s.a., is also certified in quality area, but awarded by EIC certification entity, with the following scope:

Heritage restoration and refurbishment, building construction and public works.

domingos da silva teixeira, s.a. holds the CE label in the context of bituminous mixtures for products produced in our central complying the norm EN 13108-1: 2006.

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Annex to the Board of Directors Consolidated 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, 2013 of the following shares: •

José Gonçalves Teixeira held: 1.230.000 shares with a nominal value of five Euros each;

•

Joaquim Gonçalves Teixeira held: 1.230.000 shares with a nominal value of five Euros each;

•

Avelino Gonçalves Teixeira held: 1.230.000 shares with a nominal value of five Euros each;

•

Hernâni José Gonçalves Teixeira held: 1.230.000 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: •

José Gonçalves Teixeira, with 24,60% of the capital;

•

Joaquim Gonçalves Teixeira, with 24,60% of the capital;

•

Avelino Gonçalves Teixeira, with 24,60% of the capital;

•

Hernâni José Gonçalves Teixeira, with 24,60% of the capital.

Braga, April 24, 2014 The Board of Directors,

José Gonçalves Teixeira; Chairman

Joaquim Gonçalves Teixeira; Vice Chairman

Avelino Gonçalves Teixeira; Vice Chairman

Hernâni José Gonçalves Teixeira; member of the Board of Directors

João Martins Negrais de Matos; executive member of the Board of Directors

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Consolidated Annual Report 2013

Consolidated Financial Information

Consolidated Balance sheet For the years ended December 31, 2013 and 2012. Translation of financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails. Amounts expressed in euros NOTES

DATES 31-12-2013

31-12-2012

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

7, 8 9 10 11 12 13 26

108.688.411,68 44.698.320,72 120.572.198,48 35.520.114,30 43.977.130,83 6.989.465,40 2.104.776,91 362.550.418,31

73.607.225,93 73.417.205,06 120.572.198,48 30.021.695,07 39.313.977,39 11.142.212,47 3.955.844,89 352.030.359,29

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

14 15 24 18 17 16 19 20 4

38.484.363,19 80.343.661,08 3.633.018,57 7.057.431,13 13.762.832,40 1.565.743,53 36.774.162,24 181.621.212,14 544.171.630,45

35.296.206,08 102.199.035,71 548.289,15 5.921.506,51 2.752.000,00 14.008.773,63 864.880,81 40.974,83 20.542.875,18 182.174.541,89 534.204.901,18

25.000.000,00 50.000.000,00 5.187.379,11 165.440,00 22.890.925,18 11.003.496,07 39.631.289,51 13.308.556,55 1.373.503,45 168.560.589,88

25.000.000,00 50.000.000,00 3.814.736,61 165.440,00 16.426.576,14 8.829.010,62 28.890.862,17 10.109.216,05 1.339.242,28 144.575.083,88

Liabilities Non-current liabilities Provisions Loans Deferred tax liabilities Financial instruments Other payables

22 23, 8 26 20 25

8.572.224,16 135.506.075,87 12.422.248,72 737.415,48 19.168.311,46 176.406.275,69

8.659.700,26 147.000.930,71 12.257.558,95 1.009.954,99 20.861.873,73 189.790.018,63

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

24 15 18 23, 8 25 19

81.599.585,69 2.804.284,48 2.302.581,76 42.077.971,09 45.766.499,90 24.653.841,98 199.204.764,89 375.611.040,58 544.171.630,45

75.751.489,14 1.255.892,18 2.745.529,00 51.309.264,18 26.121.620,22 42.656.003,94 199.839.798,67 389.629.817,31 534.204.901,18

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

Total liabilities Total equity and liabilities

Braga, April 24, 2014 the Board of Directors, dst - sgps, s.a.

the Chartered Accountant, Page 53 of 113

Consolidated Annual Report 2013

Consolidated Income Statement For the years ended December 31, 2013 and 2012. Translation of financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails. Amounts expressed in euros PERIODS NOTES

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, amortization and other amounts written off tangible and intangible 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

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

Earnings per share

2013

2012

27 28

235.068.023,82 6.851,65

198.625.191,85 132.836,94

12 14 29 14 30 31 15 22 13 32 33

8.465.607,96 (598.752,43) (59.231.615,62) (112.184.172,71) (25.636.106,88) (13.392.028,57) (139.953,63) 854.379,78 10.022.169,84 (9.384.132,02) 33.850.271,19 (9.243.415,30) 24.606.855,89 2.869.633,69 (11.379.731,97) 16.096.757,62 (2.181.230,87) 13.915.526,75

6.159.651,65 792.584,20 2.960,00 (55.434.895,72) (94.110.101,05) (25.151.252,95) (1.820.454,89) 46.089,91 207.996,34 10.815.648,47 (5.664.307,02) 34.601.947,74 (9.134.454,58) 25.467.493,16 3.230.941,59 (14.990.565,68) 13.707.869,08 (2.957.168,02) 10.750.701,06

13.308.556,55 606.970,20 13.915.526,75

10.109.216,05 641.485,01 10.750.701,06

2,78

2,15

0 34 35 36

Braga, April 24, 2014 the Board of Directors,

dst - sgps, s.a.

the Chartered Accountant,

Page 54 of 113

Consolidated Annual Report 2013

Consolidated Statement of Equity Changes in 2012 Translation of financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails. Amounts expressed in euros Notes On January 1, 2012 Changes during the year Application of 2011 result Changes in other Equity variations: Equity method Investment subsidy Differences from financial statements convertion Adjustments for deferred taxes Other variations recognized in equity

Share capital

Share premiuns

Legal Reserve

25.000.000,00 50.000.000,00 3.063.691,11

Other Reserves

Retained Earnings

165.440,00 14.241.113,00

On December 31, 2012

9.437.168,07

Other changes in equity 6.033,34

Minority interests

Total

5.249.262,04 1.302.445,04 108.465.152,59

751.045,51 -

4.498.216,53

(2.043.216,12) 38.539.819,72

751.045,51

(26.063,19) - (9.633.229,48) (729.838,42) (143.554,52) 3.559,96 2.885.301,77 (1.307.996,08) 28.884.828,83 (5.249.262,04) 3.559,96 10.109.216,05 641.485,01 10.109.216,05 1.947.490,01

(26.063,19) (9.633.229,48) (869.832,98) 25.967.477,95 10.750.701,06 12.056.706,06

- (699.838,63) - (699.838,63) 165.440,00 16.426.576,14

699.838,63 699.838,63 8.829.010,62 28.890.862,17

(5.249.262,04)

25.000.000,00 50.000.000,00 3.814.736,61

(878.774,56) (1.164.441,56) (4.301,78) - 38.544.121,50

Net Profit / Loss of the period

Net Profit / Loss for the period Comprehensive income for the year Operations with Shareholders Share capital realizations Retained profits from subsidiaries Distributions Others operations

Financial Assets Adjustments

3,33 3,33 - (646.615,02) (646.615,02) 38.363,96 38.363,96 - (608.247,73) (608.247,73) 10.109.216,05 1.339.242,28 144.575.083,87

Braga, April 24, 2014 the Board of Directors,

dst - sgps, s.a.

the Chartered Accountant

Page 55 of 113

Consolidated Annual Report 2013

Consolidated Statement of Equity Changes in 2013 Translation of financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails.

Notes

On January 1, 2013 Changes during the year Application of 2012 result Changes in other Equity variations: Equity method Investment subsidy Differences from financial statements convertion Other variations recognized in equity

Share capital

Share premiuns

Legal Reserve

25.000.000,00 50.000.000,00 3.814.736,61

Other Reserves

Retained Earnings

165.440,00 16.426.576,14

- 1.372.642,50 -

- 1.372.642,50

1.586,84 - (1.088.261,29) - 7.468.857,04

Net Profit / Loss for the period Comprehensive income for the year Operations with Shareholders Retained profits from subsidiaries Distributions Others operations On December 31, 2013

25.000.000,00 50.000.000,00 5.187.379,11

8.736.573,55 (179.545,64) (1.496,41)

Financial Assets Adjustments

Other changes in equity

8.829.010,62 28.890.862,17

Net Profit / Loss of the period

Minority interests

Total

10.109.216,05 1.339.242,28 144.575.083,87

- (10.109.216,05) 993.051,69 - 10.886.890,05 -

813.506,05 10.885.393,64

176.579,49 (146.451,05) 346,27 (11,66) 8.988,99 1.169.977,45 10.740.427,34 (10.109.216,05) 8.988,99 13.308.556,55 606.970,20 13.308.556,55 1.955.201,47

31.715,28 (1.078.937,69) 10.651.677,28 13.915.526,75 15.263.758,02

- (1.004.508,00) 1.004.508,00 - (1.004.508,00) 1.004.508,00 165.440,00 22.890.925,18 11.003.496,07 39.631.289,51

- (619.228,05) (619.228,05) 37.530,03 37.530,03 - (581.698,02) (581.698,02) 13.308.556,55 1.373.503,45 168.560.589,88

Braga, April 24, 2014 the Board of Directors,

dst - sgps, s.a.

the Chartered Accountant,

Page 56 of 113

Consolidated Annual Report 2013

Consolidated Cash Flows Statement For the years ended December 31, 2013 and 2012. Translation of financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails.

Description

Notes

Amounts expressed in euros PERIODS 2013

2012

Operating activities - direct method Received from trade debtors

237.634.443,97

239.763.503,97

Payments to trade creditors

(172.870.549,74)

(152.387.389,32)

(25.614.463,56)

(22.879.104,78)

39.149.430,68

64.497.009,87

(1.418.472,71)

(3.310.727,03)

37.730.957,96

61.186.282,84

Payments to and on behalf of employees Cash flow from operations Corporate Tax payments/receivables Operating cash flow (1)

Investment activities Payments for: Financial investments

(2.733.904,29)

(5.783.938,31)

Tangible fixed assets

(41.223.037,49)

(35.667.703,10)

Intangible assets

(6.927.835,64)

(866.348,15)

Loans

(3.420.973,81)

(5.782.441,43)

Other assets

(6.862.909,21)

(54.305.751,23)

(54.963.340,21)

7.982.304,16

Revenues from: Financial investments Tangible fixed assets

124.995,90

Other assets

25.351.547,17

Investment subsidies

13.404.537,61

32.574.073,28

Interests

3.494.025,09

4.199.132,05

55.137.954,19

36.773.205,33

832.202,96

(18.190.134,88)

Loans granted

(10.841.039,86)

(22.325.472,82)

Interests

(11.490.834,00)

(13.502.260,14)

(22.331.873,86)

(35.827.732,96)

(22.331.873,86)

(35.827.732,96)

Investment cash flow (2)

Financing activities Revenues from: Loans obtained

Payments for:

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

16.231.287,06

7.168.415,00

cash and cash equivalents at the begining of the period

20.542.875,18

13.374.460,18

36.774.162,24

20.542.875,18

cash and cash equivalents at the end of the period

Braga, April 24, 2014 the Board of Directors,

dst - sgps, s.a.

the Chartered Accountant,

Consolidated Annual Report 2013

Annex For the year ended December 31, 2013. Translation of financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails.

Entity Identification

dst group was constituted in 1999, its registered office is in Palmeira – Braga, being the shareholder company DST – SGPS, S.A., which object is the management of shareholdings from other entities as an indirect form of exercises the economic activities in engineering and construction sector, water and sanitation, renewable energies, telecommunications and other services. These financial statements are the Entity's individual financial statements. All the amounts presented in these notes are expressed in Euros, unless otherwise stated.

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. These standards of SNC are regulated by the following legislation: • Law-decree number 158/2009 of July 13 (SNC), with amendments introduced by law number 20/2010 of August 23; • Ordinance number 986/2009 of September 7 (Financial Statements Models); • Notice number 15652/2009 of September 7 (Conceptual Framework); • Notice number 15655/2009 of September 7 (Financial Reporting and Accounting Standards); • Ordinance number 1011/2009 of September 9 (Accounting Code). In order to ensure the proper and true expression of the financial position and the entity’s performance, were used the standards that integrate the SNC, referred to above, in all aspects pertaining to the recognition, measurement and disclosure.

dst - sgps, s.a.

Page 58 of 113

Consolidated Annual Report 2013 However where the SNC do not respond to particular aspects of transactions or situations are complementarily applied in the following order, the International Accounting Standards, as adopted pursuant to Regulation (EC) number 1606/2002 of the European Parliament and Council of July 19, the International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as issued by the IASB, and respective SIC-IFRIC interpretations.

Main accounting policies

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

3.1. Presentation basis The accompanying financial statements have been prepared assuming the business continuity, based on the historical cost convention and prepared from the entityâ&#x20AC;&#x2122;s accounting records, kept in accordance with IFRS in force at the date of the financial statements preparation. The group adopted the provisions of IFRIC 12 - Service Concession Arrangements and SIC 29 - Disclosure - Service Concession Arrangements. The IFRIC 12 defines the rules to be followed in the concession arrangements, given the services provided and its control power over the concession assets. Under the concession activity, the Group recognized an intangible asset that represents the right to the infrastructure use and exploitation provided by the Grantor. Although it is the group responsibility to finance the infrastructure construction, since all goods are to integrate the concession and automatically will be subject to the non-transferability terms and assets reversal, are not considered as assets controlled by the Group, and therefore not recognized as tangible fixed assets. Through the analysis performed to the economic and financial rebalancing conditions provided on the concession agreement, it is founded that certain rebalancing conditions are directly associated with the demand risk, while others are on the Grantorâ&#x20AC;&#x2122;s dependence or other associated entities, and from the interest rates fluctuations in financial markets. And based on this analysis it was concluded that the rebalancing conditions act as a Grantorâ&#x20AC;&#x2122;s guarantee, limiting the margin earned by the Group and by placing a ceiling on the grant return. But that does not constitute a right to receive from the Grantor or his behalf, whereby the values invested in the concession were recognized as an intangible asset. Based on the IFRS provisions and complementarily on the IFRIC 12, the accounting policies adopted by the Company were as follows:

dst - sgps, s.a.

Page 59 of 113

Consolidated Annual Report 2013 3.1.1. Continuity assumption Under the continuity assumption, the Entity has evaluated the information available and its future expectations, taking into account the entity's ability to continue with your business. Of the evaluation resulted that the business is able to proceed assuming its continuity.

3.1.2. Accruals assumption (or economic periodization) The Entity records its income and expenses in accordance with the rules of the increase, by which income and expenses are recognized as they are generated, regardless of when they are received or paid. The differences between the amounts received and paid and the corresponding income and expenses are recognized under "Deferrals" or "Other payables or Other receivables.

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

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

3.1.5. Compensation The assets and liabilities, income and costs are reported separately in the respective items of the balance sheet and the income statement, so that no assets were compensated for any liability or any expense for any income, both vice-versa. Gains and losses arising from a group of similar transactions are reported on a net basis, ie, gains and losses from exchange rate differences and gains or losses arising on financial instruments held for trading. These gains and losses are reported separately if they are materially relevant.

3.1.6. Comparative Information The accounting policies and measurement bases adopted at December 31, 2013 are comparable with those used in preparing the financial statements for December 31, 2012. dst - sgps, s.a.

Page 60 of 113

Consolidated Annual Report 2013 The comparability of the information between periods is continuously improvement object in order to be increasingly an instrument of help to users allowing them to take economic decisions and assessing the trends in financial information for forecasting purposes.

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

3.2.1.

Transactions in foreign currency

The Entityâ&#x20AC;&#x2122;s financial statements are presented in euros; the euro is the functional and presentation currency. The transactions in foreign currency (currency other than the functional currency of the entity) are recognized at exchange rates of the dates of the transactions. At each reporting date, the carrying amounts of monetary items denominated in foreign currency are updated at the exchange rates that date. The carrying amounts of non-monetary items are recognized at fair value denominated in a foreign currency are updated to the exchange rates of the dates on which the respective fair values were determined. The carrying amounts of non-monetary items are recognized at historical cost, denominated in a foreign currency are not upgraded. Positive or negative exchange differences driven out from differences between the exchange rates in force at the transaction dates and at the dates of collection, payment or of balance sheet are recognized as income and/or expenses in the periodâ&#x20AC;&#x2122;s income statement as foreign exchange gains and/or losses.

3.2.2.

Tangible fixed assets

Tangible fixed assets are recognized at acquisition cost, net of related depreciation and any impairment losses. The acquisition cost includes all expenditure directly attributable to the acquisition of such assets and to their availability in local and operational conditions required. Subsequent charges are included in the acquisition cost of the asset or recognized as separate assets, as appropriate, when it is probable that future economic benefits will flow to the entity through its use and its cost can be reliably measured. Tangible assets in progress, fixed assets still under construction or completion, are accounted for at acquisition cost deducted of eventual impairment losses. The depreciation of these assets starts at the moment that they are available for use.

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Page 61 of 113

Consolidated Annual Report 2013 Depreciation are calculated from the straight-line method, applied annually under duodecimal attribution since the date the assets are ready for use and in the required conditions in terms of quality and technical, to operate according to intended by the Entity, considering the most appropriate economic rates to allow the full reintegration of the assets during their estimated useful lives. The estimated useful lives is determined taking into account the expected use of the asset by the entity, the natural wear expected, the subjection to technical obsolescence and salvage value attributable. Provided that the Entity does not have a reliable estimate of the residual value of its assets it was considered null value for depreciation of tangible fixed assets purposes. Whenever there is evidence that a significant change occurred in the useful life or in the residual amount of an asset, its depreciation is reviewed on a prospective basis in order to reflect such new expectations.

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

Annual Rate (%)

5 to 100

1 to 20

2 to 20

5 to 50

2 to 8

12,5 to 50

Office equipment

3 to 16

6,25 to 33,33

Artistic patrimony

12,5

3 to 20

5 to 33,33

Buildings and other structures Basic equipment Transport equipment

Other tangible fixed assets

The depreciation method and useful lives of the various assets are reviewed annually. The effect of any changes to these estimates will be recognized prospectively in the income statement. Repairs and maintenance expenses that do not increase the useful life of the assets and do not results in significant improvements in the elements of tangible fixed assets are recognized as an expense in the period in which they are incurred. The major repairs relating to the replacement of equipment are recorded in tangible fixed assets and depreciated at rates corresponding to the residual life of the respective assets. The gains or losses resulting from the write-off or sale of tangible fixed assets are determined by the difference between the amount received from the sale and the assets' carrying amount and are recognized in the income statement as "Other revenues and income" or "Other losses and expenses", respectively. dst - sgps, s.a.

Page 62 of 113

Consolidated Annual Report 2013 3.2.3.

Intangible assets

Intangible assets are accounted for at acquisition cost deducted from amortizations and any accumulated impairment losses. Intangible assets only are recognized if it is probable that they will produce future economic benefits to the entity and if they are controllable and can be reliably measured. Most intangible assets consist of software and are amortized in accordance with the straight-line method with duodecimal attribution since the date the assets are ready for use, considering the most appropriate economic rates to allow the full reintegration of the assets during their estimated useful lives. No residual value is considered. The average annual depreciation rates and the useful lives were considered as follows:

Granting rights Software Industrial property Other intangible fixed assets

Useful live

Annual Rate (%)

4 to 42

2,36 to 25,7

33,33

10 to 48

2,08 to 10

3 to 42

2,36 to 33,33

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

Concession rights related to the concession activity For the goods (which arise in infrastructure usage rights â&#x20AC;&#x201C; 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, dst - sgps, s.a.

Page 63 of 113

Consolidated Annual Report 2013 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.

3.2.4.

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 entityâ&#x20AC;&#x2122;s current activity. Investment properties are measured at cost less any accumulated impairment losses. The costs incurred with investment properties in use, such as maintenance, repairs, insurance and property taxes are recognized in the income statement of the period to which they relate. The improvements in respect of which it is estimated that generate future additional economic benefits are capitalized under investment properties.

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

Buildings and other constructions

3.2.5.

Useful live

Annual Rate (%)

10 to 100

1 to 10

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 is reflected in their individualized heading in the balance sheet. The Goodwill on Subsidiaries not encompassed in the consolidation, the Associates and joint ventures is reflected in the value of the corresponding financial participation are presented in the balance sheet under the heading Financial investments â&#x20AC;&#x201C; the equity method or Financial investments â&#x20AC;&#x201C; other methods, as the case may be.

dst - sgps, s.a.

Page 64 of 113

Consolidated Annual Report 2013 In January 1, 2009 (date of transition to the NCRF) the company has adopted the exemption of the NCRF 3 - firsttime 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: • From the recognition of intangible assets that were not recognized separately from Goodwill; • From the derecognition of intangible assets recognised separately from Goodwill incorrectly; • From 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: • The derecognition of assets and liabilities that wouldn't qualify for recognition in the balance sheet of the acquiree; • The derecognition of assets and liabilities that do not qualify for recognition under the NCRF. 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 reevaluation 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: • At the deemed cost less impairment, for business combinations that occurred before December 31, 2008; • At cost less impairment for Goodwill from business combinations occurring on or after January 1, 2009.

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Page 65 of 113

Consolidated Annual Report 2013 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 â&#x20AC;&#x201D; impairment of assets, impairment of Goodwill is tested more frequently, i.e., whenever conditions so determine. Impairment losses of Goodwill cannot be reversed.

3.2.6.

Financial investments

Financial investments - equity method

Investments in subsidiaries and associates are valued according to the equity method, defining themselves as such entities over which the Group exercises control or significant influence, generally investments representing more than 20% of the capital of a company, and they are not Joint Ventures. For the determination of control or significant influence are taken into consideration the interests existing at the present date in accordance with potential voting rights. According to the equity method, the financial investments are recognized at their acquisition cost, adjusted by the amount corresponding to the company participation in the net results of associates and subsidiaries, against profit or loss for the period, and by the dividends received, net of accumulated impairment losses. Any excess of the acquisition cost over the value of the equity percentage held is considered "Goodwill", being added to the value of the financial asset and its recovery analyzed annually as part of the investment, and if the difference is negative ("Badwill"), after reassessment of the valuation process and if it remains in the income statement. Is performed an assessment of investments in subsidiaries and associated companies or other when there are indications that the asset may be impaired, and recognized a loss in the income statement whenever it is confirmed. When the proportion of the Company in accumulated losses of associated company or subsidiary exceeds the value of the investment is recognized, the investment is reported at nil value while the equity of the associated company is not positive, except when the entity has made commitments to the associated our subsidiary company, registering such cases a provision under the liability item 'Provisions' to meet these obligations.

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Page 66 of 113

Consolidated Annual Report 2013 The unrealized gains on transactions with associated companies are eliminated in proportion to the interest of the company in the associated company against the investment in these companies. The unrealized losses are similarly disposed, but only to the extent that the loss does not evidence that the asset transferred is in impaired. 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 related Goodwill is included in the carrying amount of the investment. However, the amortisation of Goodwill is not permitted and is therefore not included in the determination of results resulting from reported;

•

The 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: •

Was increased or decreased to recognise the part on the results of the investee after the date of the acquisition;

•

Was reduced by distributions of received results;

•

Was 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: •

The 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;

•

The financial statements of joint ventures used in determining the equity effects consist of the same date of the Group;

•

The results arising from transactions ' ascendants ' and ' descendants ' are recognised only insofar as they correspond to the interests of other investors in associated, not related to the investor.

•

When 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 recognized.

Impairment Impairment of these assets was determined on the basis of the criteria described in note 3.2.2 - Tangible fixed assets. dst - sgps, s.a.

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Consolidated Annual Report 2013 b)

Financial investments - other methods

The company uses the cost model in relation to investments in other entities in which the equity or proportional consolidation methods are not mandatory and in which it is unable to reliably determine their fair value, namely investments in companies with securities out of a regulated market. According to the cost model investments are initially recognized at acquisition cost, which includes transaction costs, and subsequently its value is decreased by eventual impairment losses. The group uses the cost model for financial investments in: •

Other 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.

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. 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: •

Significant financial difficulty of the issuer;

•

The disappearance of an active market for financial asset due to financial difficulties of the debtor;

•

Observable 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;

•

Significant changes with an adverse effect occurring in the technological environment, market, economic or legal under which the issuer operates.

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.

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Consolidated Annual Report 2013 3.2.7.

Inventories

Goods, raw materials, subsidiary and consumable materials are valued at the lower of their average acquisition cost and net realizable value (estimated sales price net of costs to be incurred for their disposal), using the FIFO as cost formula. The finished and semi-finished products, by-products and products and work in progress are valued at production cost or net realizable value (if this is lower). The production costs include the cost of raw materials, direct labor and manufacturing overheads. If the net realizable value is lower, in particular due to the decrease in the market price, deterioration or obsolescence, rising of finishing or necessary costs to perform the sale, or of the recoverable value by using the conversion into finished products whose market price has been reduced, it is justified the recognition of impairments in the periods that the adjustment needs are found, using replacement cost as a reference. The reversal of impairment losses recognized in prior periods is recorded when there is evidence that impairment losses are no longer justified or decreased, being expressed in the income statement as "Impairment of inventory net of reversals". However, the reversal is only done up to the amount of the accumulated impairment losses. The expenses related to inventory sold are recorded in the same reporting period in which revenue is recognized.

3.2.8.

Leases

The classification as operating or financial leases depends on the respective contractâ&#x20AC;&#x2122;s substance and not on its form. Lease contracts are classified as finance leases, if through tem are substantially transferred all the risks and rewards of ownership of the asset leased or otherwise as operating leases. Financial leases

Tangible fixed assets acquired through financial lease contracts and their correspondent liabilities are recognized in accordance with the provisions of NCRF 9 - Leases. According to this method the cost of the asset is recorded as tangible fixed asset, the correspondent responsibility is accounted for as a liability and the financial charges included in the rent and the depreciations of the leased assets are recognized as expenses in the income statement in the period to which they relate. Operating leases In leases considered operational, the rents payable are recognized as expense in the income statement over the period of the lease and in accordance with the obligations inherent to these dst - sgps, s.a.

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Consolidated Annual Report 2013 3.2.9.

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 entityâ&#x20AC;&#x2122;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 entityâ&#x20AC;&#x2122;s control; or (ii) current obligations arising from past events that are not recognized because it is unlikely that resources flows affecting economic benefits are required to offset the obligation or because the amount of the obligation cannot be measured with enough reliability. Contingent liabilities are not recognized in the entity's financial statements but are disclosed unless the possibility of a funds outflow affecting future economic benefits is remote, in which case they are not even disclosed.

3.2.10. Provisions Provisions are recognized in accordance with the effectively required amounts to cover estimated losses, are revised at each balance sheet date and are adjusted to reflect the best estimate at that date. Provisions are recognized if and only if the entity has a present liability (legal or constructive) resulting from a past event and if it is probable that for the resolution of such obligation a resources outflow occurs and that the amount of the obligation can be reasonably estimated. Provisions for future operating losses are not recognized.

3.2.11. Employee benefits Short-term benefits The employeesâ&#x20AC;&#x2122; 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.

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Consolidated Annual Report 2013 According to applicable labor legislation, the right to vacation and holiday allowance for the period, for this match the calendar year expires on 31 December of each year, being paid only during the following period, the corresponding expenses are recognized as short-term benefits and treated in accordance with the mentioned above. The benefits resulting from the employmentâ&#x20AC;&#x2122;s cessation, either by unilateral decision of the entity, or by mutual agreement, are recognized as an expense in the period in which they occurred. Long-term benefits The long-term benefits include a health insurance that covers all employees.

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

Trade debtors and other receivables Trade debtors and other receivables balances are accounted for at their nominal value and disclosed in the balance sheet, deducted from any accumulated impairment losses, recognized under â&#x20AC;&#x153;Impairment on trade receivables net of reversalsâ&#x20AC;?, so as to reflect their net realizable value. These items when current do not include interest because they would be immaterial for the impact of discounting. At the end of each reporting period trade debtors balances are analyzed in order to assess whether there is any objective evidence that they are not recoverable. Impairment losses are recognized after events that indicate, objectively and in a quantifiable manner, that all or part of the balance will not be received. For this purpose, the Entity takes into consideration market information that demonstrates that the trade debtor is in breach of its responsibilities, as well as historical information of overdue and not received balances. Objective evidence of impairment for a portfolio of receivables could include past experience of collecting payments, an increase in the number of delayed payments in, as well as changes in national or local economic conditions that correlate with default on receivables. The impairment loss is recognized as an expense in the income statement.

dst - sgps, s.a.

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Consolidated Annual Report 2013 Whenever are settled with a customer payment conditions that foresee instalments, dst group considered such amount in accordance with its amortized cost, bearing in mind all conditions set forth in NCRF 27 regulation, namely: -

Having a defined maturity;

Fixed amount reimbursements, with a variable interest rate indexed to a general market standard (Euribor), added up of a spread;

Not having any clauses that may arm the nominal amount of the credit nor its interest (excluding general credit risk).

In this sense, the difference between the nominal amount of the credit and its initial fair value is recognized in the Profits & Loss statement in accordance with the effective interest method.

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 as they do not bear interest and the effect of discounting is immaterial. Its non- recognition only occurs when they cease their obligations under the contracts, particularly when there has been a liquidation, cancellation or expiration.

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

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Consolidated Annual Report 2013 State and others public entities The balance assets and liabilities under this heading are established on the basis of existing legislation. With regard to assets was not recognized any impairment by if it considers that this is not applicable given the specific nature of the relationship. Loans and other non-current payables Loans and other non-current payables are accounted for at cost as liabilities, net of transaction costs that are directly attributable to the issuance of these liabilities, being expressed in the balance in current or non-current liabilities depending on their maturity occurs within or more than one year, respectively. Its non- recognition only occurs when they cease their obligations under the contracts, particularly when there has been a liquidation, cancellation or expiration. The interest and other costs incurred in financings are calculated according to the effective interest rate and recognized in the income statement for the period in accordance with the increase presupposition. Financial assets The Entity uses the fair value model in the valuation of shares held in companies listed on a regulated market, whose fair value can be obtained and determined viably. Cash and cash equivalents The cash and cash equivalents balance includes cash, bank deposits and other short-term investments that can be immediately mobilized without significant risk of value fluctuations.

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

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Consolidated Annual Report 2013 An equity instrument is classified as such when there is not a contractual obligation to their settlement to be effected by delivering cash or another financial asset, evidences a residual interest in the assets of an entity after deducting all of its liabilities. Costs directly attributable to issue of equity instruments are recognized in equity as a deduction of issue. Amounts paid or received for purchases and sales of equity instruments are recognized in equity, net of transaction costs.

Other financial liabilities This heading includes derivative financial instruments for which there is actual coverage under the NCRF 27. Are only considered financial instruments to hedge the effective portion of derivatives that are designated as such and that the entity expects that the changes in fair value or cash flows attributable to the hedged item, that risk is being covered, will compensate for virtually any changes in fair value or cash flows of the hedging instrument. Changes in the fair value of derivative instruments risk coverage of interest rate variability are recognized in equity in the rubric "Financial assets adjustments " in its effective component and in results, under the heading "Increase/decrease in fair value", in its actual not component. The values recorded under the heading "Financial assets adjustments" are transferred to results for the heading "Increase/decrease in fair value" in the period in which the hedged item has no effect on results. Hedge accounting is discontinued when the hedging instrument reaches maturity, when it is sold or exercised or when the relationship ceases to meet the coverage requirements on NCRF 27 - Financial Instruments. The effective portion of the hedge derivative instruments are presented in the balance sheet under "Other financial assets" or "Other financial liabilities" depending on their nature is, respectively, a debtor or creditor and as non-current or current depending on the heading where as their instruments covered are presented in the balance sheet.

3.2.13. Equity items Financial assets adjustments 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.

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Consolidated Annual Report 2013 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: •

Capital;

•

Results for the period;

•

Other items of capital whose variations of the year, together with the results of the period, make up the full result.

3.2.14. 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. Revenue is not recognized when it is related to situations of uncertainty of acceptance or payment of those services. Whereas invoiced services are higher than the services rendered, the difference is recorded as income to be recognized and is accounted for in the income statement at the time such services are rendered and the correspondent expenses are incurred.

3.2.15. 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. dst - sgps, s.a.

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Consolidated Annual Report 2013 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.

3.2.16. Subsidies and Government assistance Government subsidies are recognized at their fair value when there is sure to be received and that the Entity will comply with the conditions of the grant. Operational subsidies are intended to cover expenses incurred and recorded, particularly with the development of vocational training actions, and they are recognized as income as the expenses are incurred, regardless of the time of receipt of the grant. The outright grants, to finance tangible and intangible assets are recognized in equity and recognized in the income statement in proportion to the respective depreciation and amortization of subsidized assets.

3.2.17. 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. Whenever the amount by which the asset is recorded is higher than its recoverable amount, is recognized as an impairment loss recorded in the income statement as "'Impairment of investments depreciables/amortizables net of reversals” or as "Impairment on trade receivables net of reversals", if it respects the non-depreciable assets. The recoverable amount is the higher of the net selling price and value in use. The net selling price is the amount obtainable from the sale of the asset in a transaction between independent entities, less the costs directly attributable to the sale. The value in use is the present value of estimated future cash flows that are expected to arise from the continued use of the asset and from its sale at the end of its useful life. The recoverable amount is estimated for each asset individually or, if not possible, to the unit generating cash flows to which the asset belongs.

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Consolidated Annual Report 2013 After the recognition of an impairment loss, the expense related to the amortization/depreciation of the asset is adjusted in future periods to allocate the asset's revised carrying amount, less its residual value (if any) on a systematic basis over the useful life remaining. Whenever events or changes in circumstances indicate that the carrying amount of an asset is recorded can not be retrieved, it made a new assessment of impairment. Reversal of impairment losses recognized in previous years is registered when it is concluded that previously recognized impairment losses no longer exist or have decreased. A reversal of an impairment loss is recognized in the income statement under aforementioned. The reversal of the impairment loss is made up to the amount that would be recognized (net of amortization or depreciation) if the impairment loss had not been recorded in previous periods.

3.2.18. Income tax The Entity is included in the special group taxation regime (RETGS), reason why the period’s income tax is accounted for as an offset to “Shareholders” and not to “State and other public entities”. In RETGS taxable profit of the group is calculated by the dominant society, through the sum of the taxable income and tax losses in periodic statements of each individual companies within the group, correcting the profits distributed among the members of the group who is included in taxable income individual The expense relating to period’s income tax corresponds to the sum of current and deferred taxes. Current income tax is based on the entity’s taxable profits in accordance with the enforceable tax regulations, whilst deferred taxes result from temporary differences between accounting and tax assets and liabilities. The taxable profit is different from the accounting result, provided that it excludes expenses and revenues that are taxable or deductible in other periods. The taxable profit also excludes expenses and revenues that will never be taxed or deducted. The Entity shall record deferred taxes related to temporary differences between the carrying amount of assets and liabilities and the corresponding tax base as provided in NCRF 25 - Deferred income taxes, whenever it is probable that future taxable profits will be generated against which the differences temporary and can be used based on the standard rate of corporation tax to the balance sheet date. Deferred taxes assets and liabilities are calculated and annually evaluated based under the tax rates in force or announced to be in force at the time of the expected reversal of temporary differences.

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Consolidated Annual Report 2013 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. Tax returns may be subject to review and possible corrections by the tax authorities for a period of four years (ten years for Social Security). So corrections may be made for the years 2009 and following, not being expected, however, that the possible course corrections will significantly affect the financial statements. The above time limit may be extended or suspended provided that tax benefits have been obtained, there are inspections, claims or contestations ongoing, or has been tax losses, in which, over a period of six years after its occurrence, relatively to previous periods to 2010, four years for the period from 2010 to 2012 and five years for subsequent periods, these are susceptible of deduction to the taxable income that may be generated. The taxes are not paid, relating to the current period or the previous are recognized as a liability at the amount that is estimated to be paid based on the rates and tax laws applicable to the balance sheet date. However, if the amounts already paid in respect of such periods exceed the amounts due, are recognized as assets to the extent of the excess. Current tax is also conditioned by the adjustments, positive or negative, which are to be recognized in the period for current tax of previous periods. The tax effects of the transition adjustments resulting from the succession of accounting standards are regulated by article 5 of the Law-decree number 159/2009 of July 13, which provides that such adjustments contribute to the formation of profit taxable in a 5 year period, in equal parts, beginning in 2010 and ending in 2014.

3.3.

Other significant accounting policies:

Basis of consolidation The consolidated financial statements include, as at December 31, 2013 and 2012, the assets, liabilities and results of group companies, understood as a set of dst group and its subsidiaries, which are presented in note 6.

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Consolidated Annual Report 2013 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:

•

Is able to exercise, or actually exercises, dominant influence or control;

•

Pursuing the management as if the two constitute a single entity;

Being holder of capital, when one of the following situations occurs:

•

Has a majority of the voting rights, unless it is demonstrated that such rights do not confer the respective control;

•

Has 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;

•

Exercises a dominant influence over an entity, pursuant to a contract celebrated with this entity or from another clause of this social contract;

•

Holds 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;

•

Available, 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. dst - sgps, s.a.

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Consolidated Annual Report 2013 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.

3.4.

Judgments and estimates (assumptions and uncertainties)

The preparation of financial statements in conformity with NCRF standards requires the consideration of certain accounting estimates and assumptions that affect the reported assets and liabilities or revenues and expenses amounts. When necessary, all estimates and assumptions considered by the Board of Directors were made based under its best knowledge of events and transactions in progress at the date of the approval of the financial statements. Changes to these estimates, which occur after the date of the financial statements, will be recognized in the income statement prospectively.

3.5.

Main assumptions concerning the future

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

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Consolidated Annual Report 2013 4.

Cash flow

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

The cash and bank deposits present the following composition:

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

2013

2012

142.754,00 14.845.998,75 21.785.409,49 36.774.162,24

244.091,91 11.518.363,52 8.780.419,75 20.542.875,18

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

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.

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Consolidated Annual Report 2013 6.

Related parties

a) Group companies include in consolidation by the full consolidation method The companies included in consolidation in December 31, 2013 and 2012, their registered offices and proportion of capital held directly and indirectly are as follows COMPANIES

Headquarters

Bysteel, S.A. Braga CARI - Construtores, S.A. Guimarães Domingos da Silva Teixeira - Empreitadas Eléctricas, S.A. Braga Domingos da Silva Teixeira - Imobiliária, S.A. Braga Domingos da Silva Teixeira, S.A. Braga DST - Wind, S.A. Braga DST Energias Renováveis, SGPS, S.A. Braga DST Hydro,S.A. Braga DST Solar, S.A. Braga DST Angola, S.A. (ex - DST Pedreiras - Extração de Inertes, S.A.) Luanda, Angola DST Moçambique, S.A. Maputo, Moçambique DSTelecom, S.A. Braga DSTelecom, Alentejo e Algarve, S.A. Braga DSTelecom, Norte, S.A. Braga Derivadas e Segmentos, S.A. Braga Blu, S.A. Braga Global Sun, S.A. Braga Pip Solar, S.A. Braga Fundo Investimento e Imobiliário Homeinvest Lisboa Innovation Point - Investigação e Desenvolvimento, S.A. Braga Investhome - Construção e Imobiliária, S.A. Braga Investhome - SGPS, S.A. Braga IPPLUS, S.A. Braga Monte Dourado - Hipermecados e Imobiliária, S.A. Braga Perfil Dinâmico, Lda. Braga Despertavantagem, S.A. Braga Argumentinicial, S.A. Braga Tagregados, S.A. Braga Tconcrete, S.A. Braga Tgeotecnia, S.A. Braga Tmodular, S.A. Braga Tstone, S.A. Braga 2BPartner - Sociedade Capital de Risco, S.A. Braga

dst - sgps, s.a.

% Participation 2013 2012 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 86% 86%

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Consolidated Annual Report 2013 b) Associated companies The associated companies valued by the equity method, their registered offices and proportion of capital held directly, less than 50%, are as follows: COMPANIES

Headquarters

Barcelos Futuro, S.A. CAM - Centro de Atracções Mineiras, S.A. Caminhaequi, S.A. EOL Verde - Energia Eólica, S.A. Geswater - Águas e Resíduos, S.A. Inovaguiar, S.A. MINHOCOM Gestão de Infraestruturas de telecomunicações, EIM Parque Eólico Alto Vaca, Lda. Porto Digital, Operador Neutro de Telecomunicações, S.A. Steelgreen, S.A. VALICOM Gestão de Infraestruturas de telecomunicações, EIM VentoMinho - Energias Renováveis, S.A. * WAY2B, SGPS, S.A.

Barcelos Fundão Caminha Esposende Braga Vila Pouca de Aguiar Valença Porto Porto Vila Verde Arcos de Valdevez Esposende Braga

% Participation 2013 2012 25,50% 25,50% 20,50% 20,50% 25,50% 25,50% 25% 25% 33,33% 33,33% 25,50% 25,50% 48,49% 48,49% 25% 25% 49% 49% 50% 50% 48,49% 48,49% 25,63% 25,63% 20% 20%

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

c) Companies consolidated by proportional method COMPANIES Criar Vantagens - Águas e Resíduos, Lda. Steelgreen, S.A. Way2B, ACE Assoc/Soares da Costa, ACE Assoc - Obras Públicas, ACE Teatro Circo, ACE Parque Emp. de Tavira, ACE Agonia Parque Construção, ACE Unifacere, ACE Construtores Águas da Linha, ACE DST Visabeira, ACE SURE, Sustainable Renewable Energies, Corp.

dst - sgps, s.a.

Headquarters Braga Braga Braga Braga Braga Braga Tavira Viana do Castelo Braga Braga Lisboa New Castle, EUA

% Participation 2013 2012 33,33% 33,33% 50% 50% 20% 20% 14,29% 14,29% 14,29% 14,29% 25% 25% 50% 50% 33,33% 33,33% 33,33% 33,33% 12,50% 12,50% 50% 50% 51% 51%

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Consolidated Annual Report 2013 d) Other indirectly subsidiaries, which percentage of participation is less than 20%, and the investment is registered by the cost method are as follows: COMPANIES

Headquarters

AGERE - Empresa de Águas, Efluentes e Resíduos de Braga - EM Aquapor Serviços, S.A. Braval - Valorização e Tratamento de Resíduos Sólidos, S.A. Conceito Original, S.A. EEVM - Empreendimentos 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.

Braga Lisboa Braga Braga Anhões Esposende Esposende Lisboa

% Participation 2013 2012 16,33% 16,33% 33,33% 33,33% 12,90% 12,90% 20% 20% 12,50% 12,50% 10,63% 10,63% 12,50% 12,50% 13% 13% 10% 10%

e) Remuneration of Corporate Bodies The Corporate Bodies’ remuneration in the exercise of their duties during 2013 was as follows:

2013

Board of directors 1.267.134,57 Auditors 78.183,22 1.345.317,79

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Consolidated Annual Report 2013 7.

Tangible fixed assets

Information relating to the carrying amounts of tangible fixed assets with reference to 2013 period may be analyzed as follows: Description 1 Initial gross book value 2 Initial accumulated depreciations 3 Initial accumulated impairment losses 4 Initial net carrying amount (4 = 1 - 2 - 3) 5 Movements of the period:(5 = 5.1 - 5.2 + 5.3 + 5.4) 5.1

5.2

5.3 5.3 5.5 5.6 6

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

dst - sgps, s.a.

Land and other resources

Buildings and other structures

Basic equipment

Transport equipment

Administrative equipment

1.512.956,85 17.677.040,49 38.237.803,94 12.750.890,64 - 3.444.838,65 30.465.230,98 11.083.799,34 1.512.956,85 14.232.201,84 7.772.572,97 1.667.091,31

Artistic patrimony

TFA under construction

Others

6.430.145,34 5.330.255,07 1.099.890,27

7.500,00 1.551.620,06 2.968,75 1.117.154,36 4.531,25 434.465,70

65.201.069,45 31.663.726,17 31.663.722,83 3,34 786.754,41 785.999,41 755,00 34.324.097,69

8.169.447,51 5.794.071,30 5.785.256,22 8.815,08 2.254.975,67 2.166.566,13 52.707,20 (59.790,61) 95.492,95 4.630.351,88

(305.746,51) 744.165,08 623.294,89 41.231,70 79.638,49 1.049.911,59 1.002.977,72 46.933,87 -

(285.108,40) 122.245,03 108.500,07 9.436,95 4.308,01 407.353,43 399.003,11 8.350,32 -

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

1.512.956,85 79.433.271,29 15.942.020,48

1.361.344,80

814.781,87

Total

46.883.515,75 125.051.473,07 - 51.444.247,14 46.883.515,75 73.607.225,93

5.269.803,79 (42.967.342,59) 2.770.386,36 180.667,49 2.767.812,45 180.667,49 2.573,91 328.422,13 1.739,66 220.585,31 25.354,83 82.481,99 1.739,66 2.827.839,56 (41.782.289,13) -

3.593,75 5.704.269,49

35.081.185,75 41.275.261,43 41.129.253,95 59.483,73 86.523,75 4.830.094,39 4.576.069,18 124.995,90 33.536,36 95.492,95 -

(1.363.981,29) (1.363.981,29) 3.916.173,16 108.688.411,68

Page 85 of 113

Consolidated Annual Report 2013 Information relating to the carrying amounts of tangible fixed assets with reference to 2012 period may be analyzed as follows: Land and other resources

Description

1 Initial gross book value 2 Initial accumulated depreciations 3 Initial accumulated impairment losses 4 Initial net carrying amount (4 = 1 - 2 - 3) 5 Movements of the period:(5 = 5.1 - 5.2 + 5.3 + 5.4) 5.1 Total additions New acquisitions Other acquisitions 5.2 Total disposals Depreciations Sales Reductions 5.3 Reversals of impairment losses 5.4 Transferences of TFA under construction Transferences of/for financial assets available 5.5 for sale 5.6 Other transferences 6 Final net book value (6 = 4 + 5)

Buildings and other structures

Basic equipment

Transport equipment

1.354.256,85 17.698.061,25 38.818.136,44 12.589.491,22 - 2.844.113,49 28.212.865,29 10.039.578,37 1.354.256,85 14.853.947,76 10.605.271,15 2.549.912,85 158.700,00 158.700,00 158.700,00 -

Administrative Artistic equipment patrimony

Others

TFA under construction

Total

6.225.928,04 4.867.539,83 1.358.388,21

7.500,00 1.486.212,87 17.993.257,93 2.031,25 946.426,87 5.468,75 539.786,00 17.993.257,93

96.172.844,60 46.912.555,10 49.260.289,50

(621.745,92) (2.832.698,19) 5.484,66 742.358,03 5.484,66 628.091,87 114.266,16 615.673,48 2.531.966,54 600.725,16 2.252.365,69 277.623,19 14.948,32 1.977,66 (11.557,10) 3.800,00

(882.821,55) 181.095,44 158.870,44 22.225,00 1.063.916,99 1.044.220,97 32.490,34 (12.794,32) -

(258.497,94) 204.620,64 201.058,51 3.562,13 461.568,58 462.715,24 348,67 (1.495,33) (1.550,00)

(937,50) (105.320,30) 28.890.257,82 23.931,09 28.985.017,76 23.931,09 28.985.017,76 937,50 170.727,49 50.026,95 937,50 170.727,49 25.026,97 24.999,98 18.226,10 (44.732,99)

24.346.936,43 30.301.207,61 30.161.154,33 140.053,29 4.894.817,52 4.531.692,04 335.489,17 27.636,31 (35.813,99)

- (1.046.889,67) 1.512.956,85 14.232.201,84 7.772.572,97

1.667.091,31

1.099.890,27

4.531,25

(1.023.639,67) 73.607.225,93

23.250,00 434.465,70 46.883.515,75

As of December 31, 2013 and 2012, the â&#x20AC;&#x153;Costs and reversals of depreciation and amortizationâ&#x20AC;? had the following composition: 2013

dst - sgps, s.a.

Description

Depreciation and amortization costs

Tangible fixed assets

Reversals of depreciation and amortization

2012

Total

Depreciation and amortization costs

Reversals of depreciation and amortization

Total

(4.576.069,18)

- (4.576.069,18)

(4.531.692,04)

- (4.531.692,04)

Investment properties (1.873.948,43)

- (1.873.948,43)

(2.076.927,94)

- (2.076.927,94)

Intangible assets

(2.793.397,70)

- (2.793.397,70)

(2.525.834,60)

- (2.525.834,60)

(9.243.415,30)

- (9.243.415,30)

(9.134.454,58)

- (9.134.454,58)

Page 86 of 113

Consolidated Annual Report 2013 Tangible fixed assets are recognized in accordance with the accounting policy described in Note 3 above. The net tangible fixed assets are in their entirety affects to the only activity of the Entity and there are no assets held by third parties. In the period were not recorded any impairment losses, due to be convinced of the Administration that the recoverable amount of the asset exceeds its carrying amount.

Leases

The information concerning leases as of December 31, 2013 is as follows: Financial Leases 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 5.1 Up to one year 5.2 From one to five years

Tangible fixed Investment assets properties

Total

5.409.582,82 1.922.788,33 7.332.371,15 3.102.902,96 1.105.512,97 4.208.415,93 2.306.679,86 817.275,36 3.123.955,22 2.232.045,11 817.275,36 3.049.320,47 1.068.998,61 177.799,71 1.246.798,32 1.163.046,50 639.475,65 1.802.522,15

The information concerning leases as of December 31, 2012 is as follows: Financial Leases 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 5.1 Up to one year 5.2 From one to five years

dst - sgps, s.a.

Tangible fixed assets 6.285.325,02 3.464.748,25 2.820.576,78 2.228.149,19 1.276.244,73 951.904,45

Investment properties 526.920,36 16.666,67 510.253,69 992.187,77 174.841,07 817.346,70

Total

6.812.245,38 3.481.414,92 3.330.830,47 3.220.336,96 1.451.085,80 1.769.251,15

Page 87 of 113

Consolidated Annual Report 2013 9.

Investment properties

The information related to the carrying amounts of investment properties, with reference to the 2013 period can be analyzed as follows: Cost model Description

1 Initial gross book value 2 Initial accumulated depreciations 4 Initial gross carrying amount (4 = 1 - 2 - 3) 5 Movements of the period:(5 = 5.1 - 5.2) + + ..â&#x20AC;Ś+ 5.9) 5.1 5.3 Total additions 5.2

Total disposals Depreciations Sales Others Final net book value(6 = 4 + 5)

Land and other resources 15.618.359,19 15.618.359,19

Buildings and other structures

62.634.061,23 4.835.215,36 57.798.845,87

Total

78.252.420,42 4.835.215,36 73.417.205,06

(8.948.388,59) (19.770.495,75) (28.718.884,34) 8.948.388,59 19.770.495,75 28.718.884,34 1.873.948,43 1.873.948,43 8.948.388,59 16.403.158,58 25.351.547,17 1.493.388,74 1.493.388,74 6.669.970,60 38.028.350,12 44.698.320,72

The information related to the carrying amounts of investment properties, with reference to the 2012 period can be analyzed as follows: Cost model Description

dst - sgps, s.a.

Acquisitions Total disposals Depreciations Final net book value(6 = 4 + 5)

Land and other resources

Buildings and other structures

Total

15.618.359,19 55.771.152,02 71.389.511,21 - 2.758.287,42 2.758.287,42 15.618.359,19 53.012.864,60 68.631.223,79 - 4.785.981,27 4.785.981,27 - 6.862.909,21 6.862.909,21 - 6.862.909,21 6.862.909,21 - 2.076.927,94 2.076.927,94 - 2.076.927,94 2.076.927,94 15.618.359,19 57.798.845,87 73.417.205,06

Page 88 of 113

Consolidated Annual Report 2013 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, 2013 and 2012 this item displays the following composition: Consolidation Differences 2013 2012

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

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: 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

dst - sgps, s.a.

Opening Balance

12.897.316 61.436.723 9.646.183 556.382 19.992.500 16.043.095 120.572.199

Other variations

Acquisitions

Impairment

Final balance

- 12.897.316 - 61.436.723 9.646.183 556.382 - 19.992.500 - 16.043.095 - 120.572.199

Page 89 of 113

Consolidated Annual Report 2013 11.

Intangible assets

Information related to the carrying amount of intangible assets with reference to the 2013 period may be analyzed as follows:

Description

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

dst - sgps, s.a.

Concession rights

Industrial Property

Software

Others

45.228.687,42 1.203.434,16 188.462,32 755.311,16 16.099.824,89 1.045.364,84 131.000,04 267.792,79 29.128.862,52 158.069,32 57.462,28 487.518,37 2.836.768,49 2.555.718,12 5.750.994,58 1.351.635,93 5.668.656,66 1.351.635,93 82.337,92 2.972.574,70 159.899,10 2.605.878,06 144.782,67 366.696,64 15.116,43 58.348,61

- 1.363.981,29 31.965.631,01 2.713.787,44

(9.571,64) 73.025,31 - 89.532,46 - 89.532,46 9.571,64 120.994,71 9.571,64 33.165,32 3.245,33 - 84.584,06 -

Intangible assets under construction

Total

189.782,57 47.565.677,63 - 17.543.982,56 189.782,57 30.021.695,07 42.478,96 205.315,13 205.315,13 -

5.498.419,23 7.397.478,10 7.315.140,18 82.337,92 3.263.040,16 2.793.397,70 369.941,97 99.700,49 -

- 104.487,56 (162.836,17)

47.890,64 560.543,68

- 1.363.981,29 232.261,53 35.520.114,30

Page 90 of 113

Consolidated Annual Report 2013 Information related to the carrying amount of intangible assets with reference to the 2012 period may be analyzed as follows:

Description

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

dst - sgps, s.a.

Concession rights

Industrial Property

Software

Intangible assets under construction

Others

43.770.422,55 1.181.420,74 203.822,00 596.786,38 13.742.581,91 957.308,18 83.453,65 234.804,22 30.027.840,63 224.112,56 120.368,35 361.982,16 (898.978,11) 284.835,72 284.835,72 2.401.776,94 2.357.242,98 44.533,96 -

(66.043,24) (62.906,07) 125.536,21 22.013,42 5.640,32 152.807,45 22.013,42 5.640,32 152.807,45 88.056,66 47.546,39 37.382,56 88.056,66 47.546,39 32.988,57 4.393,99 -

1.217.963,11

2.250,00

29.128.862,52

Total

946.877,81 46.699.329,48 - 15.018.147,97 946.877,81 31.681.181,51 (757.095,24) (1.659.486,45) 463.117,87 928.414,78 463.117,87 928.414,78 - 2.574.762,55 - 2.525.834,60 48.927,95 -

10.111,32 (1.220.213,11) -

- (23.250,00) 158.069,32 57.462,28 487.518,37

10.111,32 -

(23.250,00) 189.782,57 30.021.695,07

Page 91 of 113

Consolidated Annual Report 2013 12.

Financial investments - equity method

Variations in “Financial investments – equity method”, with reference to the 2013 period are as follows: Investments in associated companies Equity method: Initial gross book value Initial net carrying amount Movements of the period Share of associates' profits Dividends received from associates Changes of investee's equity not recognised in the income statement Other movements of the period Final net book value

Total

39.313.977,39 39.313.977,39 39.313.977,39 39.313.977,39 4.663.153,44 4.663.153,44 8.605.226,24 8.605.226,24 4.780.544,26 4.780.544,26 1.297.666,22

1.297.666,22

(459.194,76) (459.194,76) 43.977.130,83 43.977.130,83

Variations in “Financial investments – equity method”, with reference to the 2012 period are as follows: Investments in associated companies 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 Other movements of the period Final net book value

Total

38.498.340,94 38.498.340,94 38.498.340,94 38.498.340,94 815.636,45 815.636,45 2.368,32 2.368,32 6.368.426,08 6.368.426,08 4.240.889,33 4.240.889,33 (882.903,74)

(882.903,74)

(431.364,88) (431.364,88) 39.313.977,39 39.313.977,39

As of December 31, 2013 and 2012, the “Gains/losses charged to subsidiaries, associates and joint-ventures” had the following composition:

Description

Losses and expenses Revenues and income

dst - sgps, s.a.

2013

2012

(56.509,88)

(413.706,39)

8.522.117,84

6.573.358,04

8.465.607,96

6.159.651,65 Page 92 of 113

Consolidated Annual Report 2013 13.

Financial investments - other methods

Variations in “Financial investments – other methods” in reference to the 2013 period are as follows: Investments Other financial in others investments companies Other methods: Initial gross book value Initial net carrying amount Movements of the period: Other acquisitions Sales Other movements of the period Final net book value

1.861.102,16 1.861.102,16 4.183,94 4.183,94 1.865.286,10

Total

11.142.212,47 11.142.212,47 (4.152.747,07) 2.733.904,29 7.982.304,16 1.095.652,80 6.989.465,40

9.281.110,31 9.281.110,31 (4.156.931,01) 2.733.904,29 7.982.304,16 1.091.468,86 5.124.179,30

Variations in “Financial investments – other methods” in reference to the 2012 period are as follows: Investments Other financial in others investments companies Other methods: Initial gross book value Initial net carrying amount Movements of the period: Other acquisitions Sales Other movements of the period Final net book value

1.265.653,71 1.265.653,71 595.448,45 8.671,66 586.776,79 1.861.102,16

5.930.120,74 5.930.120,74 3.350.989,57 5.960.733,57 2.735.618,48 125.874,48 9.281.110,31

Total

7.195.774,45 7.195.774,45 3.946.438,02 5.969.405,23 2.735.618,48 712.651,27 11.142.212,47

As of December 31, 2013 and 2012, the “Increase/decrease in fair value” decomposed as follows: 2013 Description

Financial investments

dst - sgps, s.a.

Reductions

Increases

2012 Total

Reductions

Increases

Total

(111.102,03) 965.481,81 854.379,78

(722.828,94) 930.825,28 207.996,34

(111.102,03) 965.481,81 854.379,78

(722.828,94) 930.825,28 207.996,34

Page 93 of 113

Consolidated Annual Report 2013 14.

Inventories

As of December 31, 2013 and 2012, inventories’ balance was as follows: Description

Goods Raw, subsidiary and consumable materials

2013

2012

23.394.074,64

24.251.302,15

6.140.322,02

4.479.336,17

757.594,47

1.038.523,72

Products and work in progress

3.721.468,96

4.039.292,15

Prepayments

4.470.903,10

1.487.751,90

38.484.363,19

35.296.206,08

Finished goods

As of December 31, 2013, the “Changes in production stocks and work in progress” was as follows:

Description 1 2 3 4

Closing stocks Stocks reclassification and regularization Opening stock Changes in stocks (4 = 1 + 2 - 3)

Finished goods

Products and work in progress

Total

757.594,47 3.721.468,96 4.479.063,43 1.038.523,72 4.039.292,15 5.077.815,87 (280.929,25) (317.823,19) (598.752,44)

As of December 31, 2012, the “Changes in production stocks and work in progress” was as follows:

Description 1 2 3 4

dst - sgps, s.a.

Closing stocks Stocks reclassification and regularization Opening stock Changes in stocks (4 = 1 + 2 - 3)

Finished goods

Products and work in progress

Total

1.038.523,72 4.039.292,15 5.077.815,87 - 184.306,68 184.306,68 394.608,08 4.074.930,27 4.469.538,35 643.915,64 148.668,56 792.584,20

Page 94 of 113

Consolidated Annual Report 2013 The movements occurred in the “Cost of goods sold” balance in 2013 were as follows:

Description 1 2 3 4 5

Goods

Raw, subsidiary and consumable materials

Opening stocks 24.251.302,15 Purchases 1.219.241,57 Stocks reclassification and regularization Closing stoks 23.394.074,64 2.076.469,08 Cost of goods sold (5 = 1+ 2 + 3

4.479.336,17 58.816.132,39 6.140.322,02 57.155.146,54

Total 28.730.638,32 60.035.373,96 29.534.396,66 59.231.615,62

The movements occurred in the “Cost of goods sold” balance in 2012 were as follows:

1 2 3 4 5

15.

Description

Goods

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

24.618.917,04 798,23 24.251.302,15 368.413,13

Raw, subsidiary and consumable 4.122.692,83 55.423.125,92 4.479.336,17 55.066.482,58

Total 28.741.609,87 55.423.924,16 28.730.638,32 55.434.895,71

Trade debtors

As of December 31, 2013 and 2012, the balance of “Trade debtors” was as follows: Description

2012

Trade debtors - current accounts

76.304.256,14

98.505.174,88

Trade debtors - bills of exchange

1.763.010,52

1.182.343,54

Trade debtors - with guarantee Trade debtors - doubtful accounts

Accumulated impairment losses

dst - sgps, s.a.

2013

2.276.394,43

2.511.517,29

30.656.364,12

19.574.912,22

111.000.025,20

121.773.947,92

(30.656.364,12)

(19.574.912,22)

80.343.661,08

102.199.035,71

Page 95 of 113

Consolidated Annual Report 2013 As of December 31, 2013 and 2012, the balance of trade debtorsâ&#x20AC;&#x2122; doubtful debts was as follows: Description

2013

Relating to insolvency and business recovery or enforcement proceedings

1.761.467,50

Litigation claims

2012

1.561.572,58

22.769.746,33 14.888.708,29

Delayed receivables

6.125.150,30

3.124.631,35

30.656.364,12 19.574.912,22

As of December 31, 2013 and 2012, the balance of prepayments was as follows:

Description

Trade debtors - current accounts

2013

2012

2.804.284,48

1.255.892,18

2.804.284,48

1.255.892,18

As of December 31, 2013 and 2012, the impairment losses in receivable accounts balance was as follows:

Description

Trade debtors

dst - sgps, s.a.

Impairment losses

2013 Reversals of impairment losses

Total

(14.846.995,83) 1.454.967,27 (13.392.028,57) (14.846.995,83) 1.454.967,27 (13.392.028,57)

Impairment losses

2012 Reversals of impairment losses

Total

(3.910.902,17) 2.090.447,28 (1.820.454,89) (3.910.902,17) 2.090.447,28 (1.820.454,89)

Page 96 of 113

Consolidated Annual Report 2013 16.

Other financial assets

As of December 31, 2013 and 2012, the balance of “Other financial assets” was as follows: Description

2013

2012

Current assets Financial instruments held for trading

40.974,83

737.415,48

1.009.954,99

737.415,48

1.009.954,99

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

17.

Other receivables

As of December 31, 2013 and 2012, the balance of “Other receivables” was as follows: Description

2013

2012

Debtors for income accruals 1.784.813,44

1.898.670,56

2.757.628,04

3.249.360,24

Services

286.765,53

25.813,18

Water sales

420.202,91

367.772,97

Others

570.759,01

824.951,45

5.820.168,93

6.366.568,39

7.877.072,24

7.527.887,57

13.697.241,18

13.894.455,96

320.308,22

369.034,67

Interests Works in progress

Other debtors Deferred tax assets Accumulated impairment losses

dst - sgps, s.a.

(254.717,00)

13.762.832,40

14.008.773,63

Page 97 of 113

Consolidated Annual Report 2013 18.

Shareholders

As of December 31, 2013 and 2012, the “Shareholders’” balance was as follows: Description

2013

2012

Current assets Loans granted

19.

2.752.000,00

State and other entities

As of December 31, 2013 and 2012, the “State and other entities’” balance was as follows: Description

2013

2012

Corporate tax

1.105.746,23

1.827.367,33

Value added tax

5.619.520,90

3.720.838,12

332.164,00

373.301,06

7.057.431,13

5.921.506,51

Income tax withholding

343.750,59

935.927,35

Value added tax

820.538,03

887.997,41

Social Security contributions

603.871,24

646.660,99

Others

534.421,90

274.943,26

2.302.581,76

2.745.529,00

Assets

Others Liabilities

dst - sgps, s.a.

Page 98 of 113

Consolidated Annual Report 2013 20.

Deferrals

As of December 31, 2013 and 2012, the deferralsâ&#x20AC;&#x2122; balance was as follows: Description

2013

2012

Deferred costs Future services already invoiced Insurance Rents

1.007.633,68

226.528,24

111.029,55

154.585,56

12.418,47

10.436,36

87.647,87

30.171,71

Bank charges

117.293,20

180.238,53

Other costs

229.720,76

262.920,41

1.565.743,53

864.880,81

Interest payable

Deferred income Future services already invoiced Construction contracts Rents Other income

21.

1.686.778,86

31.250,00

21.795.663,89

40.884.050,09

1.168.475,23

1.561.581,20

2.924,00

179.122,65

24.653.841,98

42.656.003,94

Realized 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. The share capital is totally realized.

dst - sgps, s.a.

Page 99 of 113

Consolidated Annual Report 2013 22.

Provisions

As of December 31, 2013 and 2012, the “Provisions” balance was as follows: Description

2013

2012

928.572,74

907.294,43

5.061.910,27

Sludges provisions

333.333,00

Current litigation

812.434,06

2.307.565,94

Other provisions

1.435.974,09

49.596,62

8.572.224,16

8.659.700,26

Provisions for investments replacement Provisions for investment obligation

The increase / decrease in the “Provisions” balance during the 2013 and 2012 periods, were as follows: 2013 Description Current litigation Provisions for investments replacement Other provisions

Reinforcement

2012

Reversal

Final Balance

(643.892,07) 1.832.870,95 (66.437,93) (1.307.654,20)

45.159,62

(21.278,31)

- (1.307.654,20)

(2.017.984,20) 1.878.030,57

dst - sgps, s.a.

1.188.978,88

(139.953,63)

Reinforcement (9.163,03)

Final Balance

Reversal 8.473,65

(689,38)

- 46.779,29 46.779,29 -

(9.163,03) 55.252,94 46.089,91

Page 100 of 113

Consolidated Annual Report 2013 23.

Loans obtained

As of December 31, 2013 and 2012, the balance of “Loans obtained” was as follows:

Description

2013

2012

Long term loans

124.647.937,23

125.757.605,93

Financial leases

1.802.522,15

1.769.251,15

Commercial paper

7.450.000,00

16.950.000,00

Non-current liabilities

1.605.616,50

2.524.073,63

135.506.075,87

147.000.930,71

Short-term loans

17.255.022,48

20.555.881,79

Revolving credit

18.836.596,30

24.679.242,06

Overdrafts

3.678.696,97

3.931.617,72

Financial leases

Investment projects Current liabilities

24.

1.246.798,32

1.451.085,80

Investment projects

918.457,16

516.512,66

Others

142.399,86

174.924,16

42.077.971,09

51.309.264,18

Trade creditors

As of December 31, 2013 and 2012, the balance of “Trade creditors” was as follows: Description

2013

2012

67.280.041,40

58.401.658,93

Trade creditors - bills of exchange

4.878.945,58

8.578.125,04

Trade creditors - invoices in conference

3.373.664,07

2.519.799,61

Trade creditors - with guarantee

5.784.535,26

5.935.713,54

282.399,38

316.192,02

81.599.585,69

75.751.489,14

Trade creditors

Others

dst - sgps, s.a.

Page 101 of 113

Consolidated Annual Report 2013 As of December 31, 2013 and 2012, the balance of “Trade creditors’ advanced payments” was as follows:

Description

Trade creditors

2013

2012

1.971.613,06

496.540,35

25.655,63

1.661.405,51

26.093,17

3.633.018,57

548.289,15

Trade creditors - other markets Trade creditors - Intra-Community

25.

Other payables

As of December 31, 2013 and 2012, the balance of “Other payables” was as follows:

Description

2013

2012

14.180.332,49

14.430.188,24

4.987.978,97

6.431.685,49

19.168.311,46

20.861.873,73

1.189.554,01

480.437,41

928.606,44

1.681.863,99

101.165,25

8.717,47

Staff costs

2.893.400,97

3.117.910,29

Interests

1.204.332,53

587.663,14

General and administrative expenses

3.281.318,01

906.856,95

Other costs accruals

7.451.045,44

993.540,00

14.931.262,20-

5.614.687,85-

858.302,61

155.347,96

15.037.588,69

10.375.113,65

5.340.948,66

1.614.447,05

4.206.854,05

4.199.132,05

2.904.764,66

1.408.576,81

45.766.499,90

26.121.620,22

Non-current liabilities Concession revenue Other creditors Current liabilities Staff costs Investment trade creditors Creditors for costs acrruals Insurances

Deferred tax liabilities Factoring Concession revenue Loans obtained Others

dst - sgps, s.a.

Page 102 of 113

Consolidated Annual Report 2013 26.

Deferred tax assets and liabilities

As of December 31, 2013 and 2012, the balance of â&#x20AC;&#x153;Deferred tax assets and liabilitiesâ&#x20AC;? was as follows: 01.01.2013 Balance Tax Deferred tax assets Trade debtors impairments Reportable tax losses Cancellation of intangible assets Written-off assets 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 Swaps' fair value recognition Depreciated cost Others

Non-current Current

dst - sgps, s.a.

31.12.2013 Balance Tax

1.976.138,75 1.790.390,23 1.862,41 124,40 613.186,84 2.833.975,19

434.524,99 435.499,15 493,54 12,42 162.494,51 751.003,42

(251.366,05) (1.387.929,09) (1.001,47) (62,00) 327.386,97 (1.389.470,38)

(79.618,03) (345.967,36) (265,39) (6,22) 87.107,55 (418.767,32)

1.724.772,70 402.461,14 860,94 62,40 940.573,82 1.444.504,81

354.906,97 89.531,79 228,15 6,21 249.602,06 332.236,10

4.175.826,00

1.106.593,89

(2.667.731,92)

(706.948,96)

1.508.094,08

399.644,93

1.795.874,94 2.229.781,43 911.502,23 489.283,77 16.817.946,21

475.906,86 590.892,08 241.548,09 129.677,45 4.328.646,41

(897.937,47) (237.953,43) (432.231,02) (114.541,22) (328.193,40) (86.971,25) 168.248,73 46.268,40 (173.200,23) (45.898,06) (7.033.487,34) (1.903.561,29)

897.937,47 1.797.550,42 583.308,83 168.248,73 316.083,55 9.784.458,87

237.953,43 476.350,86 154.576,84 46.268,40 83.779,39 2.425.085,12

3.959.611,74 369.034,67

Deferred tax liabilities NCRF 19 - Construction Contracts 1.295.353,77 343.268,76 Investment subsidy 44.774.414,64 11.284.257,17 Shares' fair value adjustment 132.118,36 33.610,95 Effect of Concession revenue by DC4 871.308,57 230.896,77 Concessions recognition 561.490,00 148.794,85 Depreciated cost 49.581,76 12.395,44 Written-off revenue already delivered to the 1.044.479,47 conceding 276.787,06 Others 312.814,75 82.895,91 49.041.561,32 12.412.906,91 Non-current Current

Variation Balance Tax

12.257.558,95 155.347,96

2.104.776,90 320.308,22

(665.438,78) 10.007.721,38 (14.612,71) (415.155,55) (280.744,37) (24.790,92) (532.614,57) (150.108,08) 7.924.256,41

(176.772,58) 1.422.534,68 (6.584,64) (110.016,22) (74.397,59) (6.197,73) (141.142,86) (39.778,64) 867.644,42

629.914,99 166.496,18 54.782.136,01 12.706.791,85 117.505,65 27.026,31 456.153,02 120.880,55 280.745,63 74.397,26 24.790,84 6.197,71 511.864,91 135.644,20 162.706,68 43.117,27 56.965.817,73 13.280.551,33 12.422.248,72 858.302,61

Page 103 of 113

Consolidated Annual Report 2013 27.

Sales and services rendered

As of December 31, 2013 and 2012, the balance of “Sales and services rendered” was as follows: 2013 Description

National market

Real estate sales Goods sales Products sales Services

28.

2012

Foreign market

982.500,00

National market

Total

982.500,00

248.587,97 993.332,58 13.780.888,23 3.896.140,90

1.241.920,55 17.677.029,13

Foreign market

299.168,05

Total

299.168,05

626.237,31 1.833.549,67 13.265.376,63 3.556.257,54

2.459.786,98 16.821.634,17

212.781.537,13 2.385.037,02 215.166.574,15

179.041.245,91

3.356,74 179.044.602,65

227.793.513,32 7.274.510,50 235.068.023,82

193.232.027,90 5.393.163,95 198.625.191,85

Operational subsidies

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 6,851.65 Euros. The total amount of the subsidy is accounted for in the operational subsidies’ balance.

Description

2013

State and other public entities subsidies - POPH

29.

2012

6.851,65

132.836,94

6.851,65

132.836,94

Own work

As of December 31, 2013 and 2012, this balance was as follows: Description

Tangible fixed

dst - sgps, s.a.

2013

2012

2.960,00

Page 104 of 113

Consolidated Annual Report 2013 30.

Other external charges

As of December 31, 2013 and 2012, this balance was as follows: Description

2012

71.379.621,70 2.387.173,12 4.531.160,42

63.176.552,07 2.169.874,26 4.128.171,30

Water and other fluids

668.050,82

541.689,81

Tools

412.920,07

405.466,07

Office stationeries

103.562,81

81.957,46

8.830.913,87

6.575.956,51

47.422,31

65.903,10

Subcontractors Electricity Fuels

Rents and rentals Representation expenses

490.479,19

528.953,53

2.238.928,74

988.477,76

564.120,99

3.135.718,04

1.492.623,45

1.819.005,48

6.621,68

5.392,66

Fees

449.410,86

167.269,23

Legal expenses

279.604,33

336.901,99

2.333.021,75

3.026.411,26

Communication Insurance Transport of goods Travel and accommodation Comissions

Maintenance and repairs Advertising and promotion Cleaning and hygiene

211.505,64

181.284,11

99.004,05

107.638,02

588.117,42

535.156,76

13.446.031,19

3.856.815,28

Software licenses

342.687,16

196.704,02

Tolls

531.247,81

553.959,38

Others

749.943,36

1.524.842,98

112.184.172,71

94.110.101,05

Security Specialised labour

dst - sgps, s.a.

2013

Page 105 of 113

Consolidated Annual Report 2013 31.

Employees benefits, number of employees and staff costs

31.1.

Number of employees Empresa dst - sgps, s.a.

2012

investhome - construção e imobiliária, s.a.

domingos da silva teixeira, s.a.

491

494

102

156

151

tmodular, s.a.

tstone, s.a.

tgeotecnia, s.a.

tconcrete, s.a.

domingos da silva teixeira - imobiliária, s.a. domingos da silva teixeira - empreitadas eléctricas, s.a. investhome - sgps, s.a. bysteel, s.a.

tagregados, s.a.

cari - construtores, s.a.

steelgreen, s.a.

Fundo Investimento e Imobiliário Homeinvest

monte dourado - hipermecados e imobiliária, s.a.

ipplus, s.a.

perfil dinamico, lda

despertavantagem, s.a.

argumentinicial, s.a.

dst energias renováveis, sgps, s.a.

dst - wind, s.a.

global sun, s.a.

dst solar, s.a.

pip solar, s.a.

dst hydro,s.a.

dstelecom, s.a.

derivadas e segmentos, s.a.

blu, s.a.

innovation point - investigação e desenvolvimento, s.a.

2bpartner, scr, s.a.

dst moçambique, lda.

dstelecom, norte, s.a.

dstelecom, alentejo e algarve, s.a.

criar vantagens - águas e resíduos, lda.

593

606

way2b, ace

1.555

1.523

domingos da silva teixeira - angola, s.a.

Total

dst - sgps, s.a.

2013

Page 106 of 113

Consolidated Annual Report 2013

31.2.

Staff costs

As of December 31, 2013 and 2012, this balance was as follows: Description

2012

1.267.134,57

1.626.975,88

19.109.735,94

18.647.961,52

336.119,48

138.847,82

3.808.473,33

3.651.212,82

Working and professional illness insurance

422.722,47

503.830,72

Social action costs

303.744,04

306.919,30

Other staff costs

388.177,06

275.504,90

25.636.106,88

25.151.252,95

Board of directors remmunerations Salaries Compensations Social charges

32.

2013

Other revenues and income

As of December 31, 2013 and 2012, this balance was as follows: Description

Other operating income

2012

2.679.236,36

6.221.598,71

53.038,16

3.642,50

4.808.951,28

1.326.308,67

Exchange gains

397.429,64

944.942,78

Cash discounts

161.837,21

239.023,88

Prior years adjustments

242.007,54

138.184,91

Overestimated tax provision

579.563,77

27.343,00

3.782,33

3.255,33

265.247,05

900.556,24

11.235,25

2,31

519.721,30

363.393,48

20.302,98

13.712,99

279.816,98

633.683,68

10.022.169,84

10.815.648,47

Financial investments Sale of non-financial investments

Other subsidies Investment subsidies Tax refunds Contractual penalities Gains in stocks Other extraordinary income

dst - sgps, s.a.

2013

Page 107 of 113

Consolidated Annual Report 2013 33.

Other losses and expenses

As of December 31, 2013 and 2012, this balance was as follows: Description

2013

Taxes and charges

895.348,74

820.535,80

79.292,01

13.205,46

Cash discounts Bad Debts

98.087,12

79.629,62

Sale of non-financial investments

332.382,66

589.070,23

Prior years adjustments

120.437,99

707.706,59

Donations

92.120,77

68.815,21

Contributions

18.278,29

28.905,63

140.252,94

45.100,26

Underestimated tax provision Exchange losses

472.638,65

580.510,97

1.093.221,62

1.163.455,04

1.667,24

4.220,15

257.911,59

160.201,06

19.333,44

20.543,05

6.879,35

4.989,38

1.108.546,45

67.730,56

949.657,50

31.300,08

Compensations

4.954,66

8.361,99

Losses in stoks

10.377,66

1.905,00

Banking services

1.691.411,86

1.190.071,13

Other losses and expenses

1.991.331,50

78.049,82

9.384.132,02

5.664.307,02

Bank guarantees costs Bill of exchange costs Factoring costs Confirming costs Self-confirming costs Fines and penalties Damages on third parties

34.

2012

Interest and other similar revenues

As of December 31, 2013 and 2012, this balance was as follows: Description

Contractual interests and interests for delayed receivables Current loans interest

dst - sgps, s.a.

2013

2012

1.901.641,60

2.131.414,78

97.295,95

224.745,48

Bank deposits interest

355.498,42

378.988,34

Other short-term investments interest

127.038,77

144.369,11

Bonds interest

160.806,49

262.463,89

Other financial income

227.352,47

88.959,99

2.869.633,69

3.230.941,59 Page 108 of 113

Consolidated Annual Report 2013

35.

Interest and other similar expenses

As of December 31, 2013 and 2012, this balance was as follows: Description

2013

Bank loans interest

2012

7.435.047,60

9.644.144,73

Factoring interest

609.048,52

1.015.965,75

Lease interest

67.472,13

112.460,96

Confirming interest

32.521,69

24.780,44

Self-confirming interest

44.444,67

38.099,17

Penalty interests and interests for delayed Other loans payments interest

101.789,11

123.763,47

252.609,28

98.759,94

53.048,70

60.402,81

2.191.347,21

3.439.410,18

89.233,24

86.082,58

Guarantees commissions

224.294,44

193.398,14

Others

278.875,39

153.297,51

11.379.731,97

14.990.565,68

Bill of exchange interest Other interest Other financial costs Banking services

36.

Income tax

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

Description

2013

Taxes Corporation tax 2.708.506,98 Deferred taxes

dst - sgps, s.a.

2012

2.283.687,45

(527.276,12)

673.480,57

2.181.230,87

2.957.168,02

Page 109 of 113

Consolidated Annual Report 2013 37.

Commitments related to obtained guarantees

As of December 31, 2013 the group had bank guarantees to replace biddersâ&#x20AC;&#x2122; bails amounting to 74.683.715 euros and 2.081.983 USD, as follows:

BCI/CGD

International

Euros

USD

150.000

11.050.176

934.205

BCP

4.422.199

BPI

14.279.272

1.920.648

SANTANDER

BBVA BARCLAYS

677.288

BES

7.097.582

CGD

14.681.475

767.778

BPN

372.587

BANIF

735.705

BANCO POPULAR

962.963

4.881.849

380.000

Enti da des concedentes 10.573.724 Outros 2.878.247

TOTAL 74.683.715

2.081.983

Ba nco BIC

38.

National

Events After the Balance Sheet Date

Between the reporting date of the Financial Statements (December 31, 2013) and the clearance date for its disclosure (April 24, 2014), there were no material facts warranting disclosures or changes to the Financial Statements for the period.

39.

Disclosures Required by Law

The Management Board reports that the entity has no debts to the State in arrears in accordance with Law-decree number 534/80 of November 7. Pursuant the requirements of the Article 210 of the Contributory Code, published by the Law number 110/2009 of September 16, the Management Board informs that the situation of the group with respect to Social Security is regularized within the legally stipulated deadlines.

dst - sgps, s.a.

Page 110 of 113

Consolidated Annual Report 2013 Pursuant to the requirements of the Article 66º of the Code of Commercial Companies, the Entity informs that the Statutory Auditor’s charged fees (Chartered Accountant) amounted to 78.183,22 euros, which solely cover the statutory audit services.

40.

Clearance date to financial statements disclosure

The financial statements for the period ended December 31, 2013 were approved by the Board of Directors and authorized to disclosure on April 24, 2014.

Braga, April 24, 2014

The Board of Directors,

The Chartered Accountant,

José Gonçalves Teixeira; Chairman

Susana Maria Macedo Queirós

Avelino Gonçalves Teixeira; Vice Chairman

Joaquim Gonçalves Teixeira; Vice Chairman

Hernâni José Gonçalves Teixeira; member of the Board of Directors

João Martins Negrais de Matos; executive member of the Board of Directors

dst - sgps, s.a.

Page 111 of 113

Consolidated Annual Report 2013

Legal Certification of Consolidated Accounts

dst - sgps, s.a.

Page 112 of 113

Consolidated Annual Report 2013

Report and Opinion of the Sole Fiscal Auditor

dst - sgps, s.a.

Page 113 of 113