BRISA Concessão Rodoviária, S.A. Quinta da Torre da Aguilha, Edifício BRISA, São Domingos de Rana Share capital of Euros Commercial

Transcription

1 BRISA Concessão Rodoviária, S.A. Quinta da Torre da Aguilha, Edifício BRISA, São Domingos de Rana Share capital of Euros Commercial Registration and Corporate Tax Number

2 Contents 1 INTRODUCTION... 3 The Year in Review... 3 Corporate profile... 4 Macroeconomic Overview CHARACTERISTICS OF THE CONCESSION AND CORPORATE BUSINESS FINANCIAL REPORT FORESEEABLE DEVELOPMENT CORPORATE GOVERNANCE RISK MANAGEMENT - GOALS AND POLICIES PROPOSAL FOR THE APPROPRIATION OF RESULTS FINANCIAL STATEMENTS Statement of Financial Position Statement of Results and Other Comprehensive Income Statement of Changes in Equity Cash-flow statement NOTES TO THE FINANCIAL STATEMENTS LEGAL CERTIFICATION OF THE ACCOUNTS REPORT OF THE AUDIT BOARD TRAFFIC STATISTICS GOVERNING BODIES Page 2

3 1 Introduction The Year in Review JUNE Bond issue in the amount of 120M SEPTEMBER Repayment of 500M bond issue NOVEMBER Appointment of Audit Board at the General Shareholders Meeting Page 3

4 Corporate profile BRISA Concessão Rodoviária, S.A. (BCR) was created to operate the Brisa Concession following the corporate reorganisation of the Brisa Group in The Company's corporate objective is the construction, maintenance and operation of motorways and respective service areas and the planning and development of public infrastructures, pursuant to a concession contract. The history of the concession dates from the foundation of the Group, back in Over four decades, the concession's activity has resulted in it being the main road axis in Portugal, spanning from north to south and east to west, with two major arteries providing access to Spain. Under the terms of the Concession Contract, Brisa Concessão Rodoviária is to operate this major network until December BCR shares Brisa Group corporate culture, based on values such as Ethics, Innovation and Excellence and strongly directed to the promotion of mobility and interurban, inter-regional and international accessibility, with important economic and social benefits for the communities it serves. Brisa Group views social responsibility from a long term perspective aimed at creating value to all different stakeholders. A Sustainability Report is published every year, disclosing its policy and main strategic vectors, as well as the performance of its economic, environmental and social indicators. Page 4

5 Macroeconomic Overview saw a gradual improvement in major macroeconomic indicators following the deterioration of both public and private demand in 2012 as result of the ongoing economic adjustment process and a restrictive fiscal policy put in place in Portugal. According to the latest forecasts (December ) issued by national and international agencies, in the year under review GDP should have fallen between 1.5% to 1.8% (vs. -3.2% in 2012), with private consumption tumbling by 2.0% to 2.5% (vs. -5.4% in 2012). Prices and Financial Markets In, Portuguese inflation reached record lows at 0.27%, falling slightly below latest projections. In December, the year-on-year rate of change stood at 0.2% after being negative in the preceding months, but it still is one tenth below the annual average change. This shows continuing pressure towards zero inflation, which could result in a deflation scenario. Note that in 2009 prices fell (-0.83%), but stopped decreasing in the following year. The outlook for inflation in 2014, according to both Banco de Portugal and the Government, is for 0.8%. As far as interest rates are concerned, following a first cut in May (from 0.75% to 0.50%), in November the European Central Bank Council lowered its reference rate to 0.25%, reaching a new historical low. As result, short-term interest rates denominated in Euro also stood at historically low levels and remained relatively stable throughout. The exchange rate of the euro against the US dollar stood at at the end of December, corresponding to an appreciation of 4.5% as compared to December The average exchange rate, however, stood at 1.328, corresponding to an appreciation of 3.3% compared to Following a steep decrease throughout 2012, the cost of Portuguese sovereign debt suffered fluctuations in, one of which was felt more strongly in July due to political instability. However, an increase in confidence levels sustained by positive macroeconomic figures, led to further decreases in the cost of debt in the second half of the year, with 10-year Treasury bonds closing at around 6.1%, falling by 90 basis points compared to the end of This positive Page 5

6 development was also seen in terms of perceived credit risk, as measured by pricing of its Credit Default Swaps (CDS), which recovered to 352 b.p. at the end of the year from 443 b.p. in January. Fuel Prices Following an increase in fuel prices at the pump in 2012 (+6.5% and +5.8% for gasoline and diesel, respectively), in retail prices decreased, though not at the same pace as they had risen in the previous year. Monthly evolution of retail prices of fuel, Source: General-Directorate for Energy and Geology Annual average retail price of fuel, AGR Gasoline % Diesel % AGR - Annual Growth rate Notwithstanding this drop in prices, cumulative sales as of October still recorded losses as against This development was mainly due to the financial burden faced by both companies and households in the present financial crisis. Page 6

7 Evolution in car fuel retail sales, (Cumulative quantities as of October) Source: General-Directorate for Energy and Geology The car market The number of cars sold in Portugal in totalled nearly 127 thousand, corresponding to a 12% rise in sales compared to 2012, in marked contrast with previous years (-41% in 2012 and -30% in 2011). However, according to ACAP, the market remained below 2009's levels, as 2012 sales were exceptionally low. According to the same association, the renewal of corporate car fleets and the rent-a-car business keep the car market afloat, since sales to individuals remain stagnant. Cumulative monthly evolution of new car sales in Portugal, ,0% 20,0% 10,0% 0,0% -10,0% -20,0% Light Veh. Heavy Veh. 21,1% 11,5% -30,0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: ACAP, Associação Automóvel de Portugal Page 7

8 A14 A8 Mari nha Grande Fi gu eira da Fo z A15 Mira A17 Leiri a N14 Ma ia Ma tos in ho s A28 A20 Po rto Ga ia A4 A1 Es pin ho A41 A43 3 Av eiro Ca nta nhede Pombal Go nd om ar Coim bra AR 2 Characteristics of the Concession and Corporate Business Economic indicators: Operating Income 1 : 439.6M EBITDA 1 : 316.9M EBITDA Margin 1 : 72.1% Number of employees: 14 1 EBITDA=Operating profit+provisions, amortisation, A3 A1 A4 depreciation, adjustments and reversals Does not include income associated to the construction A14 The motorway network operated by BCR A1 consists of 12 motorways totalling 1,123.9 km, including the future motorway access A5 A10 A13 A6 to the New Lisbon Airport. BCR presently operates 11 motorways covering a total of A2 1,100.2 km in length, of which 1,014.1 km consist of tolled stretches, while 4.3 km is the link to the Alto da Guerra on the A12 N 0 50 Kilometers motorway, with a 2x1 lane profile. The network under concession will be completed following construction of the A33 motorway, i.e. the access to the New Lisbon Airport, which is pending Government approval. The network runs from North to South, East to West, including the country's main road axes, namely the coastal corridor and the Lisbon-Madrid connection. It also includes important circular roads around the metropolitan areas of Lisbon and Oporto. According to the latest concession contract negotiated with the Portuguese State, the concession will end in December Page 8

9 Characteristics of the Concession in Lenght (kms) Toll free Tolled Total 2x1 lanes 2x2 lanes 2x3 lanes 2x4 lanes A1 - Auto-estradado Norte A2 - Auto Estrada do Sul A3 - Auto-estrada Porto - Valença A4 - Auto-estrada Porto - Amarante A5 - Auto-estrada da Costa do Estoril A6 - Auto-estrada Marateca - Elvas A9 - Circular Regional Externa de Lisboa A10 - Auto-estrada Bucelas - Carregado - IC A12 - Auto-estrada Setúbal - Montijo A13 - Auto-estrada Almeirim - Marateca A14 - Auto-estrada Figueira da Foz - Coimbra Total Investment in the network: widening, expansion and maintenance In what concerns investment as required under the concession contract, in BCR continued the construction works of the Soure Junction in the Pombal/Condeixa sub-stretch of the A1 Motorway. This should be completed during the first quarter of The motorway link to the Poceirão Logistics Platform remains suspended, as construction of the platform itself has not progressed. Lane widening works in various sub-stretches went ahead according to plans and as provided in the concession contract. The awarding of the Widening and improvement works to 2x3 lanes of the Carvalhos / Santo Ovídeo sub-stretch on the A1 will take place in the first quarter of 2014 and works should start in the following quarter. The contract for the design/construction of the New North Tunnel of Águas Santas, included in the widening works of the Águas Santas / Ermesinde substretch of the A4 Porto / Amarante motorway is planned to start in the second half of Page 9

10 As regards road maintenance, in addition to certain specific works carried out, the following construction works were completed: Improvement of road - Vila Franca de Xira II / A1/A10 Junction / Carregado sub-stretches of the A1 motorway; Improvement of road - Coimbra Sul / Coimbra Norte sub-stretch of the A1 motorway; Improvement of the left N/S lane of the Grândola Norte / Grândola Sul sub-stretch of the A2 motorway; Improvement of the Ermesinde / Valongo sub-stretch of the A4 motorway; Improvement of the Montemor-o-Novo Nascente / Évora Poente substretch of the A6 motorway; Improvement of unstable slopes on the Arruda dos Vinhos / Carregado (A1) sub-stretch of the A10 motorway. As of 31 December a number of improvement works were still under way, namely the stabilisation of embankment slopes on the St.ª Iria da Azóia / Alverca e Condeixa / Coimbra Sul sub-stretches and the renovation and structural repair of overpass 282 on the Coimbra Sul / Coimbra Norte sub-stretch of the A1 motorway. The following works are still in awarding phase: Maintenance of engineering structures on the A1, A2 and A5 motorways; Construction of the drainage system over Laje and Grande da Pipa rivers on the Bucelas / Arruda dos Vinhos / Carregado sub-stretches of the A10 - Bucelas / Carregado (A1) / IC3 (A13); Renovation and structural reinforcement of hydraulic crossings on the Carcavelos / Estoril / Alcabideche (PH046 and PH048) sub-stretch of the A5 motorway and Maia / Santo Tirso (PH 026 and PH 037.1) sub-stretch of the A3 motorway. Meanwhile, the company is assessing proposals submitted for the renovation works of the hydraulic crossings of the drainage system on the Santo Tirso / Famalicão (PH s km and km ) sub-stretch on the A3 motorway and the Vila Verde / Santa Eulália (PH s km and km ) sub-stretch Page 10

11 on the A14 motorway and for the repair of structures on the Fogueteiro / Coina sub-stretch of the A2 motorway. During the year under review, BCR maintained its regular inspections to road infrastructure, monitoring pavements, slopes and containment structures and other works. The resulting information was introduced into the Pavement and Structures Management Systems and will be used in future improvement, reinforcement and stabilisation projects. The first half of saw the completion of various works including the construction of acoustic barriers on the Fogueteiro / Coina sub-stretch of the A2 motorway, the Paredes / Penafiel sub-stretch of the A4 Porto/Amarante motorway and the Maia / Santo Tirso sub-stretch of the A3 Porto / Valença motorway. Construction of acoustic barriers on the Coina / Palmela / Setúbal junction (A2/A12) sub-stretches of the A2 was still under way at the end of the year. In the second half of the year the company launched a tender for the design and construction of acoustic barriers on the Porto (VCI) / EN12 / Águas Santas and Famalicão/Cruz sub-stretches of the A3 and Penafiel / IP9 / Amarante sub-stretches of the A4 motorway. Direct investment in the network under concession totalled 28.9M, mainly widening and pavement works and the new Soure junction. Major repairs, which are considered as expenditure, are nevertheless accounted for as operating costs. Direct investment in the concession M New stretches Major repairs Complementary projects Other Total Page 11

12 Traffic on the network In, Average Annual Daily Traffic (AADT) recorded by Brisa Concessão Rodoviária totalled vehicles. Compared to 2012, traffic fell by 2.6%. In terms of kilometres travelled, this change was negative by -2.8%, as February had one day less than February Traffic continued to be affected by the adverse macro-economic situation, although figures were not as bad as 2012's (when AADT fell 14.0%). Indeed, traffic improved quarter-on-quarter in and grew in the fourth quarter of the year. Traffic growth in quarter-on-quarter terms 2,4% -4,0% -0,6% -2,8% -9,9% 1T 2T 3T 4T In, organic growth stood at -2.2%, with positive growth in the last quarter of the year, although still not enough to offset the loss suffered in the 1 st quarter. Despite a day less in February, several holidays with good traffic figures contributed to a better performance for the year. Finally, completion of the A33 motorway belonging to the Baixo Tejo concession and the revision of toll tariffs in the formerly toll-free motorways (ex-scut) resulted in a 0.7% loss in total traffic on Brisa Concessão Rodoviária. Breakdown of annual traffic change Decom position Organic grow th -2.2% Calendar effect 0.1% Competition -0.7% Final Growth -2.8% Page 12

13 Breakdown by motorway Motorways that recorded a larger drop in traffic in the year under review were those combining business and seasonal traffic (seasonal traffic is more leisurerelated - this is the case of the A2 motorway, which was, however, also affected by the opening of the Baixo Tejo concession). As a matter of fact, these motorways started to lose leisure-related traffic in 2012 and this development continued in, aggravated by additional losses in areas with a larger share of business traffic. The A9 (CREL Lisbon Outer Ring Road) did not follow this trend as it was the motorway that had the largest traffic loss, although it serves mainly commuters and work-related travel. Part of this loss was due to the IC17 (CRIL), which continued to attract travellers who formerly used the A9 motorway. Conversely, but also due to the present economic crisis, remaining motorways with commuter and service traffic also lost demand (except for the A4), though less than the motorways referred to above. Change in annual traffic per motorway 0,5% -1,6% -2,8% -2,4% -2,8% -2,8% -2,9% -2,8% -3,8% -5,2% -5,6% -7,4% A1 A2 A3 A4 A5 A6 A9 A10 A12 A13 A14 BCR Analysis by class of vehicle The breakdown of traffic per type of vehicle shows higher losses from heavy vehicles, which fell by 5.4%, whilst light vehicles dropped by 2.7%. Page 13

14 The breakdown of traffic per toll class thus shows a slight increase in Class 1 traffic as compared to remaining classes, contributing to a small decrease in the percentage of heavy vehicles, to 4.8% in from 4.9% in Traffic structure per toll class Class 2012 CL1 84.4% 84.8% CL2 10.8% 10.4% CL3 0.6% 0.6% CL4 4.3% 4.2% Traffic structure by type of vehicle 95,2% 4,8% Light ,1% 4,9% Heavy Page 14

15 3 Financial Report Operating income In BCR's operating income (excluding income associated to construction) fell by 1.7% to 439.6M, as follows: M 2012 Var. Toll revenues % Service areas % Other revenues % Total % Toll Revenues collected by Via Verde represented, in, over 70% of the total toll revenues (68% in 2012). The Profit and Loss Statement includes 14.7M operating income and also operating costs, reflecting the recognition of income and charges with the acquisition of assets allocated to the concession. This was recorded so as to comply with IAS 11 and article 14 IFRIC 12. Therefore, total operating income and costs and operating margins should exclude income and costs recognized pursuant to IAS 11. Operating costs Operating costs for the year totalled 277.2M, as follows: M 2012 Var. Supplies and Services % Personnel costs % Other costs % Sub-Total % Amortization and Provisions % Total % Page 15

16 "Supplies and Services" mainly relate to the sub-contracting of operation and maintenance services in the motorway network under concession and electronic toll collection costs. "Amortization and Provisions" includes a provision in the amount of 14.3M net of reversals in the amount of 6.8M, pursuant to IFRIC 12 relating to future major repairs in the network. Financial results In BCR recorded financial losses of 124.9M, improving by 2.3M in relation to the previous year. M 2012 Var. Interest income % Financial income % Interest paid % Other financial costs % Financial expenses % Investment income % Net Financial Results % Financial income made up entirely of interest income totalled 4.8M, thus falling by 1.2M in relation to the amount posted in 2012, reflecting a decline in bank deposit rates during. Financial expenses totalled 130.2M, which compares to 133.4M in The increase in Interest Paid (+ 4.4M due to higher interest rates) was offset by a decrease in Other Interest and Financial Expenses (- 7.5M as result of lower banking fees). Net Results Net income totalled 27.5M, whilst profit before tax amounted to 37.5M, representing a decrease of 4.5M compared to Page 16

17 Financial Position At the end of total net assets amounted to 3 067M, corresponding almost entirely to intangible assets allocated to BCR's motorway network. Equity totalled 687M and total liabilities amounted to 2 380M. In relation to 2012, total liabilities increased by 328M and equity rose by 32M. Financial Debt Despite the adverse environment that continued in, BCR maintained strong liquidity, reducing the amount of its debt and extending maturities, principally as a result of a 120M bond issue maturing in 2020 and the negotiation and extension of short term credit lines and commercial paper for a total amount of 320M. At the end of, BCR s net debt amounted to M, having fallen by 180.6M as against the same period of the previous year. Cash at the end of the year totaled 138.7M, of which 135M is placed in reserve accounts. As of 31 December, BCR's gross debt amounted to M, which is 352.2M less than as at 31 December 2012, as follows: 2012 M Var. Bonds EIB Commercial Paper Gross Debt (a) Cash resources Net Debt (a) This amount corresponds to the nominal value of debt, which totalled M in, net of accrued interest and expenses associated to the issuing and placing of the loans, which are recognized according to the effective interest method throughout the life of the loans. Page 17

18 Bonds In June BCR carried out a bond issue in the amount of 120M and repaid a 500M bond issue which was due in September. At the end of the year BCR had 6 bond issues with a total nominal value of M, the characteristics of which were as follows: M Nominal Rate Maturity Bond % 2014 Bond % 2015 Bond % 2016 Bond % 2018 Bond Var (Eur6M) 2020 Bond %* 2032 * Fixed interest rate of 6% in the first five years and remuneration indexed to the consumer price index (excluding housing) as from the sixth year to maturity. Bank loans As far as bank loans are concerned, BCR is financed by a sole loan with the European Investment Bank (EIB), which has variable interest rate indexed to the 6-month Euribor rate. This loan will be repaid in fixed half-year instalments from June 2014 to December At 31 December the amount recorded in the balance sheet concerning this loan totalled 628.2M. The amount of outstanding commercial paper as of the same date totalled 82M. Page 18

19 Repayment profile of debt The next five years will see the maturity of several bond issues and one commercial paper programme. From 2019 to 2030 the repayment profile of BCR debt will be more constant, staying always below 100M. BCR keeps a close eye on the performance of financial markets so as to carefully select the most efficient financing options, namely those with longer average debt maturity in line with its long term assets. Structure per type of interest 32% 68% Fixed Variable As of December, BCR had approximately 68% of fixed interest rate debt and 32% floating interest rate debt. The weighted average cost of debt (including the impact of derivative financial instruments) was 4.37%. Page 19

20 BCR's ratings are BBB (Rating Watch Negative) given by Fitch Ratings and Ba2 (Negative Outlook) from Moody s. Moody's Ba2 (Negative Outlook) Fitch Ratings BBB (Rating Watch Negative) BCR ratings were affected by the sharp deterioration in Portugal's rating, particularly during It should be noted, however, that at the end of ratings awarded to BCR by the said agencies were above those provided to the Portuguese Republic (by one notch in Moody s case and two notches in Fitch's case). This fact shows the company's financial solidity and strong financial structure, which means that creditors are duly safeguarded. On 26 November, Fitch Ratings put BCR on Rating Watch Negative, adding that this would be reviewed if by 31 December the Net Debt/EBITDA ratio was below 6.5x. By the end of this ratio was 6.44x. BCR's contract includes a set of covenants providing protection to its creditors. BCR's creditworthiness and the use funds from new loans are limited by various factors, one of which concerns the maintenance of a minimum rating of Baa3/BBB-. Following Moody's revision of BCR's long term rating down to Ba1 on 29 November 2011 BCR became subject to trigger event, which means that the company must have its creditors authorisation to pay dividends to its shareholder and must use the funds from new loans to repay existing financial debt and/or deposit them in an account allocated to the repayment of outstanding debt. Additionally, there are four financial ratios (namely Net Senior Debt/EBITDA, Historic ICR, Forward Looking ICR and CLCR), which are subject to two thresholds - one in the form of trigger event and the other in the form of event of default implying different consequences if exceeded. As of 31/12/ all ratios stood within the applicable levels. Furthermore, improvements were seen, specifically as concerns the Net Senior Debt/EBITDA ratio, which evolved from Page 20

21 7.01 at the end of 2012 to 6.88 as of 30/06/, standing at 6.44 at the end of, i.e. below the 6.50 trigger event level. Historic ICR ratio also moved from 2.12 at 30/06/ to 3.16 at the end of, thus returning to above the minimum 2.25 trigger event level. 4 Foreseeable Development BCR's activity in 2014 is likely to follow the same trend as in. Motorway traffic may well record a small rise, which should push revenues slightly upwards with toll rates remaining unchanged. Operating costs should continue to be stable. As far as investment is concerned, there are plans for two major widening works and several road repair and structures works. Taking into account the foreseeable evolution of financial markets, which remain unstable and fragile, BCR will seek to maintain its strong financial position, assessing and implementing the most efficient financing solutions in the light of current market conditions and future prospects. 5 Corporate Governance As far as corporate governance is concerned, BCR adopted a governance structure specifically designed to ensure and show the separation within the Brisa Group of all rights, obligations, assets and liabilities allocated to the concession, as approved by council of ministers' resolution no. 198-B/2008 of 31 December, which is operated by BCR alone. CAPITAL STRUCTURE The Company's share capital is of (seventy five million Euros), fully subscribed and paid up, divided into (fifteen million) unlisted shares with a nominal value of 5 (five Euros) each. There are no different classes of shares or rights. Page 21

22 Each share corresponds to one vote and there are no voting restrictions. All shares are indirectly held by BRISA Auto-Estradas de Portugal, S.A., through its equity participation in BRISA Participações, S.G.P.S., S.A. and, in turn, its equity participation in BRISA-Concessão Rodoviária, S.G.P.S., S.A., which holds 100% of BCR s shares. Limitations as to the transferability or ownership of the shares representing the share capital of BCR are those deriving from its concession contract. Any change to the Articles of Association is the exclusive responsibility of the General Meeting, under the terms of its article 16. COMPOSITION OF THE BOARD OF DIRECTORS The Board of Directors of BCR is made up of 10 (ten) members, including three independent directors who must satisfy the following requirements: (a) they cannot carry out any executive duties in the Company; (b) they are not covered by any of the incompatibility situations provided in paragraph one of Article 414-A of the Companies Code, except for the one provided in respective sub-paragraph b); (c) they cannot exercise or have exercised any managing function (whether or not of executive nature) in any Related Party. SPECIAL REQUIREMENTS OF INDEPENDENT DIRECTORS In brief terms, the above mentioned paragraph 1 of article 414-A of the Companies Code establishes the incompatibility regime applicable to supervising bodies, which is particularly demanding. Namely, independent directors cannot: a) benefit from private advantages provided by the company; b) Not applicable. c) be members of the managing boards of any company under a parentsubsidiary or group relationship with the supervised company; d) be members of any corporation holding control over the supervised company; Page 22

23 e) directly or indirectly, provide services or hold a material commercial relationship with the supervised company or any company holding a control or group relationship with the latter; f) hold office in a competing company or exercise a competing activity on behalf of the latter or be bound in any way to the interests of a competing company; g) be spouses, relatives and kin in direct lineage up to and including the third lineage, in the collateral line, of persons prevented under the terms of paragraphs a), c), d) and e) above, as well as spouses of the persons covered by provisions in paragraph e); h) perform management or supervising functions in five companies other than in law firms, statutory auditing firms and statutory auditors, the latter being subject to provisions in article 76 of Decree-law 487/99 of 16 November; i) be statutory auditors presenting other incompatibilities according to the relevant legislation; j) be persons who are banned, incapacitated, insolvent, bankrupt or sentenced to penalties involving the prohibition, even if temporary, of performing public functions. SPECIFIC POWERS Financing contracts entered by BCR provide that: a) all contracts with related parties which BCR may enter, renew, revoke or alter shall be approved by at least 2 of the 3 independent directors referred to above; b) BCR general meeting shall only approve dividend payment proposals that were previously approved by at least 2 of the 3 independent directors referred to above; c) the said prior approvals shall only occur if such distribution has no materially negative impact on the Company's credit profile. The Board of Directors has no powers to decide on any share capital increases. FUNCTIONING OF THE BOARD OF DIRECTORS Page 23

24 There are no specific rules for the composition of the Board of Directors except that it must include at least three independent members, under the terms previously explained. Member Manuel Eduardo Henriques de Andrade Lamego is the managing director with powers to manage the current affairs of BCR, within the scope of the general policies approved by the Board of Directors. The powers delegated to the managing director are as follows: I - Jointly with another director or attorney-in-fact duly mandated for the purpose: a) Open, operate and close bank accounts; b) Accept, draw, endorse and pay bills of exchange, cheques and invoice statements of accounts held by BCR; c) Deposit cash in bank accounts held by BCR with banks and other credit institutions; d) Under the terms specifically established by the BA, take out and cancel loans with banks and other credit institutions in Portugal and/or abroad. e) Enter, revoke, terminate, rescind or cease, in any way and at any title, insurance, leasing or long term rental contracts. II - Separately: a) Within the limits of his/her financial powers, authorise payments, correct and settle accounts with debtors and creditors; b) Sign, dispatch and receive correspondence; c) Pay taxes and duties, namely to the Treasury (Direcção Geral do Tesouro e Finanças) and Social Security (Instituto de Gestão Financeira da Segurança Social), claim undue payments and receive cancellation letters and respective amounts; d) Issue receipts and give discharge; e) Obtain any relevant registrations with respective land, commercial and industrial registrar offices, requesting annotations and cancellations; f) Sign any document that may be required to retrieve from postal office or railway office or any other any postal order or registered mail or any other mail addressed to BCR; g) Hire and exercise disciplinary, managing and supervision authority over BCR personnel and represent BCR in its relations with its employees; Page 24

25 h) Prepare and submit to the Board of Directors, in a timely manner, all elements required for the resolutions to be taken by the Board, according to the Agenda of respective meeting; i) Inform the Board of Directors of matters requiring technical studies or special services; j) Act on behalf of BCR before any Ministry, General Directorate, Government department, municipal council and any other public or private office or entity; k) Carry out the financial, operational, business, administrative, advertising and promotional management of BCR; l) Represent BCR in Court or otherwise, as plaintiff or defendant, bring and keep abreast of legal proceedings, accept responsibility and withdraw from or compromise in such lawsuits, and enter into arbitration agreements; Under the terms of the Companies Code, in companies with BCR's governance model (board of directors and audit board), it falls to shareholders in general meeting to submit proposals for the appointment and replacement of members of the board of directors and audit board. There are no statutory restrictions to the submission of proposals and election of these two bodies. In case of resignation or definitive impediment of a director during the course of his mandate, the Board of Directors will co-opt a new member, who will be subject to the approval of the first general meeting occurring after the co-opting concerned. AUDIT BOARD At the General Meeting held on the 26th November shareholders decided to change the supervisory body by appointing an Audit Board to replace the existing Sole Auditor structure. Page 25

26 6 Risk Management - goals and policies The Risk Management Policy is established at Group level, involving directly the governing bodies of the various companies of the Brisa Group as well as all remaining corporate structures. Risk Management aims at ensuring a sustainable business development, safeguarding the Group's value, based on best practices, allowing to capitalize internal know-how to efficiently manage the risks to which the Group is exposed, namely in the environmental, legal, financial and operational fields. Risk management is a cornerstone of corporate governance. As such, it is part of Brisa s culture and management processes, and employees have the responsibility to mitigate risk factors, minimizing their impact and identifying improvement and/or return opportunities, where possible. In this context, BCR's risk management policy is an integral part of the risk management system of the Brisa Group, which is based on an integrated, structured, systematised and transversal model designed according to the internationally recognised method COSO (Committee of Sponsorship Organizations of the Treadway Commission), which views to ensure the use of the best Corporate Governance practices at the following levels: - Fixing of strategic goals in terms of risk taking; - Aligning of the risks effectively incurred with the group's strategic direction; - Identification of the main risks associated to the group's activities and respective causes; - Analysis and assessment of the impact and likelihood of occurrence of each potential risk; - Establishing mechanisms to control the execution of the risk management measures adopted and follow their impact and effectiveness; - Adoption of internal information and communication mechanisms for the various components of the system, as well as risk alerts; - Regular assessment of the system implemented and adoption of changes deemed necessary. Page 26

27 To this end, the Group implemented a tool for the integrated management of the risk management system, in line with the aspects referred to above, in order to sustain the convergence process of risk management with strategic planning. This integrated risk management system allows for an up-to-date identification and assessment of the main risks in the Brisa Group business portfolio, in order to determine the measures to control and/or mitigate such risks. This is particularly relevant in the present unstable economic and financial environment, allowing for a strategic and sustained management of the Group. In accordance with the governance model adopted by BCR - consisting of a board of directors and an audit board - these two bodies play a crucial role in the creation and monitoring of internal control and risk management systems, assessing their operation and adjusting them to corporate needs. The main objective of BCRs internal control system is to guarantee the quality of the financial report. Therefore, the process of preparation and disclosure of financial information is duly formalized, and this information is regularly and systematically analyzed by BCR management and supervised by the audit board. Following the risk assessment carried out within the scope of the system described above, the following major risk groups likely to affect BCR's normal business development were identified as: Operational Risks BCR is a leading company in the road and transport sector. As such, risk management is mandatory for the sustainable development of its operations. Continued investment in excellence and innovation at different operating levels, with special focus on clients expectations, namely as concerns traffic safety, comfort and traffic movement and the quality of roads and rendered services shows BCR's as well as the Group's commitment to improvement and constitutes a positive differentiating factor in relation to its peers. Within this scope, BCR is continuously organising road safety campaigns, improving the network's safety features by carrying out improvement and widening works in accordance with the Group's required standards and the law, viewing to create the necessary conditions for a better traffic flow. The existence Page 27

28 of a management and crisis communication model to respond to emergency situations and the establishment of specific contingency plans for the different areas attest for the concern and rigour placed in the management of the Group's operations. In terms of Occupational Health and Safety, the Brisa Group has a specialised structure, which supervises and ensures the central and local coordination of the health and safety plans associated to risk activities. The Operational Coordination Centre, backed by telematics and road safety structures, ensures the recording, processing and availability of updated and timely information to clients and complementary services. The Brisa Group fosters innovation with a subsidiary company fully devoted to it. This enables the Group to achieve its engagement to this critical area, remaining at the forefront of technological evolution and modernisation of its infrastructures and operations, based on a commendable and innovating partnership policy with various companies and reference universities. Its constant concern for developing efforts to identify operating risks and defining management measures to mitigate them is part of the Group's strategy to face a continuously changing and increasingly demanding and globalised world, where safety is crucial. These activities help to establish mitigating measures in line with current business needs but also to act ahead of and prevent potential risk situations. Regulation & Compliance Risks The operation of road concessions is subject to specific and comprehensive regulations. Hence, the risk stemming from regulatory changes is particularly relevant. The Legal Department follows the regulatory evolution of BCR's activities closely and suggests legal steps and solutions deemed suited to the normal development of the company's operations, in accordance with the legal framework in force at any time. We point out the work developed over the last few years viewing the convergence of procedures and practices to new road safety requirements. Page 28

29 Environmental Risks Environmental management through design, construction and operation phases is a top priority of Brisa's risk management system. Measures to identify environmental risk situations have long been carried out to allow taking preventive actions and mitigate impacts, in light of the environmental policy followed by BCR and the Brisa Group at all levels. This environmental risk management includes eco-efficiency measures, which is a way of integrating environmental risk management throughout the value chain, i.e. in terms of impacts on the environment and the management of related costs and benefits. The existence of environmentally certified companies according to ISO standards, which are internationally recognized as guidelines for corporate environmental management, and the adoption by the Group of its own specific guidelines (Environmental Policy Statement), eco-efficiency criteria, quantitative goals for environmentally critical indicators, plus a Sustainability Management Information System, all strengthen the Group's strict standards as it continuously seeks improvement and a sustainable business performance. Information systems risk The Information Systems area is a crucial instrument for sustained growth, given the continuous technological innovation and its contribution to improving efficacy and efficiency in business processes. The laying down of a medium / long-term risk management strategy in information systems, including a Disaster Recovery solution, which by definition, is closely related to business processes, enables to significantly reduce the risk of operating losses in those circumstances. At the same time, it ensures the efficacy of investments made and allows for a quick reaction in the event of sudden changes in business environment. The systematic and parallel development of activities in multiple areas, including areas relating to safety of information and resilience to failures in infrastructures, has also provided greater efficiency in handling this type of risks. As far as internal controls and information supporting processes are concerned, systems are constantly reassessed, based on the best practices in this area, namely the ITIL framework. Page 29

30 Amongst the activities developed in to mitigate these risks and strengthen the existing corporate policy in this area, following a critical assessment of the systems and applications which support the Group's business processes - known as Business Impact Analysis (BIA), tests to the implemented Disaster Recovery Solution were carried out, thus ensuring that in the event of disaster, the Group will have all the information means required to continue operating. Financial Risks As with the majority of companies, BCR is exposed to a number of financial risks deriving from its business activity. These include in particular: liquidity and interest rate risk resulting from its financial indebtedness; counterparty risk to which the Company is exposed, as it contracts interest rate risk hedging operations and implements treasury management. Following the splitting-off and ring-fencing of Brisa Concession, the financial risks to which BCR is subject were strongly mitigated thanks to the implementation of an innovative financial structure. Note that BCR financial structure follows a risk hedging policy with its own risk management requirements and guidelines, including, for instance, a minimum ratio of fixed rate debt, non-existence of significant foreign exchange exposure, as well as a minimum financial solidity (according to rating) required from counterparties to perform financial operations. Even against an adverse macroeconomic background BCR's access to credit and its liquidity position has remained strong thus mitigating its refinancing risk. Page 30

31 7 Proposal for the appropriation of results The Board of Directors proposes to allocate the Net Income for the year in the amount of 27,531,474 as follows: 5% corresponding to 1,376,574 to legal reserves The remaining, in the amount of 26,154,600, to the Other Reserves account. Under the terms of paragraph 1-c) of article 245 of the Securities Code, and in compliance with legal and statutory provisions, the Board of Directors submits to shareholders for consideration the condensed financial statements and management report relating to, in the firm belief that to the best of its knowledge, the information contained therein was prepared in accordance with the relevant accounting standards, providing a true and fair view of the assets and liabilities and the financial situation of the issuer and that the management report contains a faithful account of the information required. São Domingos de Rana, 25 February The Board of Directors Vasco Maria Guimarães José de Mello (chairman) João Pedro Stilwell Rocha e Melo João Pedro Ribeiro de Azevedo Coutinho António José Lopes Nunes de Sousa Daniel Alexandre Miguel Amaral Manuel Eduardo Henriques de Andrade Lamego Page 31

32 Michael Gregory Allen Miguel José Pereira Athayde Marques João Filipe Maia de Lima Mayer Emanuel José Leandro Maranha das Neves Page 32

33 8 Financial Statements Statement of Financial Position as of 31 December 2012 and (amounts in Euro) Notes 2012 Non-current assets: Tangible fixed assets Intangible assets Advances to be forwarded as tangible fixed assets Deferred tax assets Other non current assets Total non-current assets Current assets: Inventories Other investments Trade and other receivables Other current assets Cash and cash equivalent Total current assets Total assets Shareholders' equity: Share capital Supplementary capital Share premiums Legal reserve Other reserves Net profit for the year Total shareholders' equity Non-current liabilities: Loans Provisions Other non current liabilities Total non-current liabilities Current liabilities: Provisions Suppliers Loans Suppliers of investment Other accounts payable Other current liabilities Total current liabilities Total liabilities and equity he accompanying notes form an integral part of the statement of financial position for the period ended 31 December 20 The Accountant, no THE BOARD OF DIRECTORS Page 33

34 Statement of Results and Other Comprehensive Income for the Years ended as of 31 December 2012 and (amounts in Euro) Notes 2012 Operating income: Rendered Services Other operating income Income associated to construction service Total operating income Operating expenses: Supplies and services 4 ( ) ( ) Personnel costs ( ) ( ) Provisions, amortisation, depreciation, adjustments and reversals 10, 11, 22 and 23 ( ) ( ) Tax ( ) ( ) Other operating expenses ( ) ( ) Expenses associated to construction service 3 ( ) ( ) Total operating expenses ( ) ( ) Operating Results Financial expenses 6 ( ) ( ) Financial income Investment income Profit before tax Income tax 7 ( ) ( ) Net profit for the year Other income and expenses recognised under Shareholders' Equity which will be reclassified to results: Increase/(decrease) in the fair value of financial instruments ( ) Income recognised directly in shareholders' equity ( ) Total net profit and loss and other comprehensive income for the year Earnings per share: Basic Diluted The accompanying notes form an integral part of the results and other comprehensive income for the year ended 31 December. The Accountant, no THE BOARD OF DIRECTORS Page 34

35 Statement of Changes in Equity for the years ended as of 31 December 2012 and (amounts in Euro) Share Supplementary issue Legal Other Profit/(loss) Notes Share capital apital contributions premiums reserve Reserves for the year Total Balance at 1 January Net profit for Increase/(decrease) in the fair value of financial instruments net of tax ( ) - ( ) Total net profit and loss and other comprehensive income for the year ( ) Appropriation of net profit for 2011: Transferred to legal reserve ( ) - Transferred to other reserves ( ) - Balance at 31 December Balance at 1 January Net profit for Increase/(decrease) in the fair value of financial instruments net of tax Total net profit and loss and other comprehensive income for the year Appropriation of net profit for 2012: Transferred to legal reserve ( ) - Transferred to other reserves ( ) - Balance at 31 December The accompanying notes form an integral part of the statement of changes in shareholders' equity for the year ended 31 December. The Accountant, no THE BOARD OF DIRECTORS Page 35

36 Cash-flow statement for the years ended as of 31 December 2012 and (amounts in Euro) Notes 2012 OPERATING ACTIVITIES: Cash receipts from clients Cash paid to suppliers ( ) ( ) Cash paid to personnel ( ) ( ) Flows generated by operations Income tax received/paid ( ) Payments for the replacement of infrastructures ( ) ( ) Other receipts/(payments) relating to operating activities ( ) Net cash from operating activities (1) INVESTING ACTIVITIES: Cash receipts relating to: Other investments Tangible and intangible fixed assets Interest and similar income Cash payments relating to: Other investments 14 - ( ) Tangible and intangible fixed assets ( ) ( ) ( ) ( ) Net cash from investing activities (2) ( ) FINANCING ACTIVITIES: Cash receipts relating to: Borrowings Cash payments relating to: Borrowings ( ) ( ) Interest and similar costs ( ) ( ) Derivative financial instruments ( ) ( ) ( ) ( ) Net cash from financing activities (3) ( ) ( ) Variation in cash and cash equivalents (4) = (1) + (2) + (3) ( ) Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the period The accompanying notes form an integral part of the cash flow statement for the year ended 31 December. The Accountant, no THE BOARD OF DIRECTORS Page 36