INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION

Transcription

1 INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION MARTIFER GROUP 9 Months 2011

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3 HIGHLIGHTS MAIN EVENTS INTERIM MANAGEMENT REPORT - ECONOMIC AND FINANCIAL ANALYSIS - ANALYSIS BY SEGMENT - SHARE PERFORMANCE INTERIM CONSOLIDATED FINANCIAL INFORMATION

4 HIGHLIGHTS HIGHLIGHTS Operating Revenues of M EBITDA of -4.9 M, justified by abrupt hold ups in some projects in backlog and by the restructuring plan within Metallic Construction Net reported Profit attributable to shareholders of M Net Debt of M, less 44.9 M than in the 1H2011 Stable order book: 542 M (292 M in Metallic Construction and 250 M in Solar) Main financial indicators Reported Figures - non audited 9M 9M M IFRS 2011 Marg Marg. Var. % Restated Revenues % EBITDA % % n.m. EBIT % % n.m. Financial Results n.m. Profit before tax n.m. Income tax n.m. Consolidated Net Profit % % n.m. Attributable to non-controlling interests % to shareholders >100% 4 MARTIFER SGPS, S.A. INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION 9 MONTHS 2011

5 MAIN EVENTS FEBRUARY 2011 Martifer sells its participations in REpower Portugal and Powerblades Martifer sold its 50 % share in the REpower Portugal joint venture to REpower Systems AG, which is now the sole owner of the company. In addition, Martifer also sold its 10% share in the rotor blade manufacturer joint venture Powerblades to REpower Systems AG. Competency Authority authorizes the sale of Home Energy to EDP On the 21st of February the Competency Authority approved, without any conditions or obligations, the sale of Home Energy to EDP Serviços. The Home Energy sale contract was signed on the 30th of December 2010, subject to the aforementioned authorization. SEPTEMBER 2011 Martifer sells wind farms in Poland Martifer Renewables sold its wind farms projects in Poland: Leki Dukielskie (10MW) and Bukowsko (18MW), both already under operation, and has settled the sale of Rymanow (26MW), which is ready-to-build, for the total amount of 385M PLN (approximately 89.5 million euros at the exchange rate of the transaction date) to the IKEA Group. SUBSEQUENT EVENTS OCTOBER 2011 Martifer Solar signs an EPC contract for the construction of 22MWp in Portugal Martifer Solar signed an agreement with a company managed by BNP Paribas Clean Energy Partners for the construction of a 22MWp photovoltaic solar installation in Portugal. Martifer Metallic Constructions signs contracts for the construction of three football stadiums in Brazil Metallic Constructions was awarded, between September and October 2011, the contracts for the construction of three football stadiums in Brazil: Arena Fonte Nova, in Salvador da Bahia; Castelão Stadium, in Fortaleza; and Grémio Stadium, in Porto Alegre. The total amount of the three stadiums is BRL million. MARTIFER SGPS, S.A. INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION 9 MONTHS

6 INTERIM MANAGEMENT REPORT ECONOMIC AND FINANCIAL ANALYSIS Income Statement M 9M11 Reported 9M10 Restated Var. % 9M10 Reported Revenues % Earnings before depreciation, amortization and provisions & impairment losses (EBITDA) n.m EBITDA margin -1.4% 9.8% pp 10.1% Depreciation & Amortization % 19.8 Provisions & Impairment Losses n.m Operating Income (EBIT) n.m. 5.6 EBIT margin -5.3% 1.1% -6.4 pp 1.3% Financial Results n.m. 0.1 Profit before taxes n.m. 5.7 Income tax n.m. 5.6 Net Profit n.m. 0.1 Attributable to non-controlling interests % 3.4 Attributable to shareholders >100% -3.3 per share Note: Results presented according to the consolidated financial statements (reported values) non-audited. To allow a better understanding of the operational performance of the Group, values need to be adjusted for non-recurring events. In the 9 months 2011 adjustments reached 4 million euro of net capital gains from the sale of the participations in Home Energy, REpower Portugal, Arestalfer and IWP Sp.Z.o.o..and Bukowsko Wind Energy Sp.Z.o.o. (wind farms Leki Dukielskie and Bukowsko). In the 9 months 2010, adjustments reached 13.4 million euro of impairment losses and 13.1 million euro of capital gains relative to Prio Energy and Prio Foods share sales. 6 MARTIFER SGPS, S.A. INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION 9 MONTHS 2011

7 Revenues In the 9 month period of 2011, Operating Revenues decreased by 11.4% YoY to million euro, on a comparable basis. The outstanding growth performance of Martifer Solar revenues was not sufficient to compensate the reduction of revenues in the Metallic Construction business area. On the back of the lower activity in the wind segment, the reduced activity in Iberia and Eastern Europe and the abrupt hold ups in some projects in backlog, the Metallic Construction business area presented a decrease in the period of 31.3 % YoY, in Revenues. Stronger markets such as the UK, France and Brazil should gradually compensate for the weak performance in the Iberian market. The Solar business continued to present strong revenue growth, approximately 30 % YoY, to million euro. This impressive growth was achieved as a result of the strategy implemented during 2010, by which Martifer Solar successfully diversified its activity to several geographies throughout 2011, taking advantage of the current buoyancy of the photovoltaic sector. Revenues 9M M 2010 M Weight M Weight Var. % Martifer Consolidated % Metallic Constructions % % -31.3% Solar % % 29.9% Others, Adj. and Eliminations % % -70.1% Note: Others include RE Developer, Holding and Shared Services The Group has been gradually achieving higher international exposure, reducing its business risk in Iberia and, at the same time, preparing to take advantage of the future growth expected in other developing economies as well as in some mature European markets. By the end of the 9 month period 2011, the distribution of consolidated Revenues by geography was as follows: Portugal 35.8%, Spain 4.4%, Eastern Europe (Poland, Czech Republic, Romania, Slovakia) 6.6%, Angola 8.0%, Central & Southern Europe (Italy, Greece, Belgium, France, UK, Ireland) 32.5%, USA 6.6% and Rest of the World (Morocco, Brazil, Australia) 6.1%. BREAKDOWN OF REVENUES BY GEOGRAPHY 32,5% 6,1% Portugal 6,6% Spain 35,8% Eastern Europe 4,4% 6.6% 8,0% Angola Central & Southern Europe USA Rest of World MARTIFER SGPS, S.A. INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION 9 MONTHS

8 EBITDA and Net Profit In the 9 month period of 2011, consolidated EBITDA registered -4.9 M, with a margin of -1.4 %, mostly due to the weak operational performance in Metallic Constructions impacted by lower activity and by the restructuring plan under implementation, the results of which will only be evident in In particular, this weak operational performance in Metallic Constructions is explained by the negative margins in 2011 in Eastern Europe and Australia and by the impact of the integration of the wind cluster in Portugal, which presented a reduced level of activity with the consequent inability to dilute fixed costs. In the Solar segment, the EBITDA margin is lower than the previous year mainly due to the tougher competitive environment and to the internationalization effort and the associated costs of entry, despite the signs of improvement in the last quarter. This positive trend is expected to continue until the end of the year. EBITDA 9M M 2010 M Marg. M Marg. Var. % Martifer Consolidated % % n.m. Metallic Constructions % % n.m. Solar % % -55.4% Others, Adj. and Eliminations % Note: Others include RE Developer, Holding and Shared Services The Depreciations dropped by 22.6%, from 18.9 million euro to 14.7 million euro, which is mostly explained by the sale of fixed assets in the RE developer. The consolidated Earnings Before Interest and Taxes (EBIT) reached a negative 19.3 million euro, which compares with a positive 4.6 million euro in the same period of the previous year. Net Financial Expenses totalled 17.5 million euro, including a 4.0 M net capital gain from the sale of the shareholdings in Home Energy, REpower Portugal, Arestalfer and in the polish wind farms Leki Dukielskie and Bukowsko. Net foreign exchange result was negative in the 9 months of 2011, reaching a 1.7 M loss mostly due to the depreciation of the Angolan Kwanza against the Euro. Net interest expense was 13.8 M in the period. The net contribution from the application of the Equity Method to the subsidiaries Prio Energy and Prio Foods (accounted at 49%) was negative in 0.8 M. The new companies accounted by the equity method contributed with negative 0.9 M. The Net Profit attributable to shareholders in the 9 Months of 2011 amounted to million euro. 8 MARTIFER SGPS, S.A. INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION 9 MONTHS 2011

9 CAPEX As already stated in previous interim reports, the capital expenditure of Metallic Constructions in 2011 results from a strategic long term decision of entering a new market, Brazil. The investments made by Solar and RE Developer are short term investments, necessary to complete renewable energy projects under development or already under construction, that the Group expects to sell by 2013, in line with its net debt reduction plan. The amount of investment in fixed assets in the first 9 months of 2011 (Capex) reached 46.3 million euro as follows: (i) construction of RE Developer s wind farms in Romania (6.5 million euro), which the Group expects to dispose of in the medium term; (ii) development of solar projects in the USA and France by Martifer Solar (29.7 million euro), to be sold by 2013; (iii) construction of Metallic Construction s new facility in Brazil and varied maintenance capex (9.0 million euro) and (iv) investment in information technology (1.1 million euro). In the period, the Group accounted for the disposal of the wind farms projects in Poland, Leki Dukielskie (10MW) and Bukowsko (18MW), which led to the reduction of consolidated Capex when compared to the first half of MARTIFER SGPS, S.A. INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION 9 MONTHS

10 Financial Position M Fixed Assets (including Goodwill) Other non-current financial assets Other non-current assets Inventory and Receivables Cash and cash equivalents Sep-11 Dec-10 Restated Var. Dec-10 Var % % % % % % % % % % Total Assets 1, , % 1, % Shareholders Equity Non-controlling interests % % % % Total Equity % % Non-current debt and leasings Other non-current liabilities Current debt and leasings Other current liabilities % % % % % % % % Total Liabilities % % Total assets on the 30th of September 2011 amounted to 1,049.7 million euro, while non-current assets reached million euro, compared to 1,092.7 million euro and million euro respectively at the end of Total Equity decreased from million euro at the end of 2010 to million euro at the end of the first 9 months of Financial autonomy is approximately 29%. 10 MARTIFER SGPS, S.A. INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION 9 MONTHS 2011

11 Net Debt M Metallic Construction Solar RE Developer Holding Martifer Consolidated Corporate Net Debt allocated to operating activities Corporate Net Debt allocated to non-operating activities Non-Recourse Net Debt Total Net Debt Holding debt allocated to business units Note: Net Debt = Borrowings + Financial Leases (+/-) Derivatives Cash and Cash Equivalents The Group s Consolidated Net Debt on the 30th September 2011 totalled million euro, decreasing 44.9 million euro from the net debt of million euro registered in the first semester of This reduction is mostly due to the divestment in the wind farms in Poland, Leki Dukielskie and Bukowsko. It is Martifer Group s objective to have a debt level between 230 million euro and 250 million euro by the end of Considering the present debt level (356.4 M ), it is our goal to pursue further debt reduction of 106 million euro up to 126 million euro in the next two years (2012 and 2013) by the sale of non-core assets, mainly wind farms, solar projects and, residually, from the sale of real estate projects. After the sale of Leki Dukielskie and Bukowsko, the Martifer Group still has 229 million euro worth of renewable energy projects: 132 million euro in wind farm projects (Portugal, Poland, Romania and Brazil) and 97 million euro in solar projects (Portugal, Spain and the United States). Additionally, Martifer has 28 million euro invested in real estate projects (Portugal, Poland and Romania). We strongly believe that a debt reduction of 106 million euro to 126 million euro is possible by 2013 (40% to 50% of the potential) in order to fulfill the Group s strategic objective. MARTIFER SGPS, S.A. INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION 9 MONTHS

12 ANALYSIS BY SEGMENT Metallic Construction SECTOR TRENDS The metallic construction sector continues suffering with the lack of investment in public and private infrastructures resultant from the economic slowdown and financial crisis, which is deteriorating quarter on quarter in 2011; hence, the competition for the projects available is tougher. The economic conditions in Europe experienced a further downturn in the 3rd quarter, as the European sovereign debt crisis intensified. Emerging markets have been driving economic growth and there has been significant demand for metallic structures, mostly in Asia and South America. The BRIC countries have been the only ones to show some positive signs in demand for building and construction. On a market by market analysis: PORTUGAL Since the Government asked the European Union and FMI for a bailout, there is an austerity programme under implementation, which includes a reduction in public investment (even some that was already contracted). The economy could recover in 2013, but most probably it will only do so in 2014 or SPAIN Despite the fact that the Minister of Civil Works has announced 10 billion euro bids of new projects this year, double the value awarded last year, which could represent a good opportunity, the lack of demand continues in ANGOLA Still showing strong dynamics, both from the public and the private sectors, this market is becoming increasingly competitive and demanding. UK All indicators envisage that 2012 will be a positive year with increasing demand, despite the escalation of the crisis in Europe. FRANCE In 2011 we have been witnessing a recovery in the French construction market, with the ramp-up of significant public investments, but also with an increase in private investment, both in the residential and the non-residential (office buildings) sectors. EASTERN CENTRAL EUROPE The economic growth in these countries is very slow at the moment; the construction market only now seems to show improvement on the demand side. BRAZIL The country with higher expected growth rate for the following years, with significant public investment due to enormous infrastructural needs and specific events like the World Cup in 2014 and the Olympic Games in 2016, which will power the building works. OTHER GEOGRAPHIES The North of Africa and the Middle East are interesting geographies to look out for in the next months and years, as some interesting contracts are being awarded, even though current political and social turmoil recommends caution and judicious selection of markets/projects; other countries in Latin America are growing markets of interest, following the footsteps of Brazil. 12 MARTIFER SGPS, S.A. INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION 9 MONTHS 2011

13 ACTIVITY The Order Book in the Metallic Construction business totalled 292 million euro with projects located in 15 countries. From the last awarded projects, the most significant are the three football stadiums in Brazil, that amount to BRL million. We would like to highlight that the 18.6% weight of the Brazilian order book already exceeds Iberia, which only represents 17.3% of the total works in backlog. ORDER BACKLOG FEATURED PROJECTS Project Location Total Value Beginning Year End Year Artenius PTA plant Sines, Portugal Euro 26.6 M Galp Petrogal (conversion of refinery) Sines, Portugal Euro 28.4 M Coach Museum Lisbon, Portugal Euro 5.5 M Ulla Bridge Corunna, Spain Euro 20.8 M Repsol Head Quarters Madrid, Spain Euro 20.5 M Amiens Hospital Amiens, France Euro 7.0 M Office Building ZAC Victor Hugo Paris, France Euro 3.2 M CHU D'Orleans Paris, France Euro 9.6 M Lille Stadium (locksmiths) Lille, France Euro 5.9 M Cement Plan Ghhent, Belgium Euro 4.4m Carfi Siedlce, Poland PLN 11.7 M Bridges in the new A1Highway Torun, Poland PLN 66.1 M Renault Factory Tangier, Morocco Euro 42.3 M Canberra Airport Terminal Canberra, Australia AUD 10.6 M Alstom Mannheim 9 Mannheim, Germany Euro 19.7 M Morocco Mall Casablanca, Morocco Euro 6.3 M Office Building in Luanda Luanda, Angola Euro 13.3 M Financial City Luanda, Angola Euro 13.1 M Edinburgh International Conference Centre Edinburgh, Scotland GBP 8.3 M Scotland s National Arena Glasgow, Scotland GBP 12.9 M Birmingham New Street Birmingham, England GBP 8.2 M Nissan Battery Plant Cacia, Portugal Euro 5.4 M BBVA Headquarters Madrid, Spain Euro 12.0 M King Abdullah Financial District Riad, Saudi Arabia Euro 20.8 M Deva Bridge Deva, Romania RON 30.9 M Vale Verde Shopping São Paulo, Brazil BRL 13.0 M Fonte Nova Stadium Salvador, Brazil BRL Castelão Stadium Fortaleza, Brazil BRL Grémio de Porto Alegre, Stadium Porto Alegre, Brazil BRL Note: Variations in some of the projects values between periods may occur due to changes in the total value of contracts. MARTIFER SGPS, S.A. INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION 9 MONTHS

14 BREAKDOWN OF THE BACKLOG BACKLOG - TOTAL 292 M 18.6% 11.9% 17.3% Iberia Central Europe Eastern Europe 5.9% 11.7% 34.6% Angola Brazil Others RESULTS Metallic Construction Revenues reached million euro during the 9 months of On a YoY comparison, there was a decrease justified by lower activity and unfavorable sector environment, particularly in Iberia and Eastern Europe, not yet compensated by the new strategic geographies. We call to mind that the Group had taken the decision to increase its position outside Iberia, strengthening its presence in mature markets with a higher consumption of steel and aluminium constructions, such as the UK and France. At the same time, the company is increasing its presence in emerging countries such as Brazil, where it is starting activities this year, with an industrial plant already under construction in Pindamonhangaba, São Paulo region. This facility will have a production capacity of 12,000 tonnes/year of metallic structures. The EBITDA in the period amounted to a negative 18.1 million euro, corresponding to a % margin. Besides the previously mentioned unfavorable sector environment, three main factors are contributory to this negative performance: (i) negative margins in Eastern Europe and Australia; (ii) the integration of the wind cluster into metallic constructions and (iii) the abrupt hold ups in some of the backlog projects, which occasioned a reduction in the level of activity and productivity with the consequent inability to dilute fixed costs. As a consequence of the sector trends previously mentioned, namely the reductions in margins and the lower demand for projects, Metallic Constructions is implementing the New Step Programme, announced on the FY 2010 results presentation, to enhance its operational efficiency and reduce the capital employed. Nevertheless, the results of this restructuring programme will only be evident in Net Financial Expenses amounted to 9.9 million euro, which compares to 6.5 million euro in the same period last year, mostly justified by the depreciation in Angolan Kwanza relative to the euro (1.2 M ) and increase in shareholder loans in the period, due to the negative results of this business area. Net Profit totalled million euro, of which 0.2 million euro attributable to non-controlling interests from Martifer Angola. 14 MARTIFER SGPS, S.A. INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION 9 MONTHS 2011

15 Net Financial Debt in Metallic Constructions on the 30th of September 2011 reached million euro, less 6.0 million euro than in the FY 2010 (on a comparable basis). Added to this we have 46.0 million euro of debt from the Holding. Of the total Net Debt, 28 million euro is allocated to projects in the Retail area, not considered core business. Total capex in the period was 9.0 million euro, showing an increase when compared to the same period in 2010, which is explained by investment in the new plant located in São Paulo, Brazil. Metallic Construction 9M 9M10 Var. % M 2011 Restated Revenues % EBITDA n.m. EBITDA Margin -10.6% 5.0% pp EBIT n.m. EBIT Margin -15.1% 1.0% pp Net Financial Expenses % Income tax n.m. Net Profit >100% Attributable to non-controlling interests % Attributable to shareholders >100% MARTIFER SGPS, S.A. INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION 9 MONTHS

16 Solar SECTOR TRENDS International Outlook According to Bloomberg New Energy Finance (BNEF), Global demand for modules is between 24.2 and 28.6 GW in 2011 and, in an optimistic scenario, could reach 31.6 GW in With the strong reduction of solar systems costs, solar PV increasingly becomes an alternative to conventional electricity sources, proving to be part of the energy solution for the present and future. On a market by market analysis: ITALY The market is having another record year, despite the regulatory uncertainties during the first semester. According to BNEF, by the end of the year, 7.5GW to 8.5GW will have been added. PORTUGAL The Government announced the objective of 1,500 MW of solar capacity installed by 2020; by the end of 2010, there was a tender for 150 MW of PV. New legislation for medium size generation has also been published, assuring a 30 MW/year market until 2020; together with the 10 MW/year of micro-generation, the country now has a stable legislation guaranteeing 75 MW/year of new PV installations up to SPAIN The new Renewable Energy Plan for the country forecasts 7.25 GW of PV installed by 2020, which generates a market of around 500 MW per year. FRANCE After a good 2010, the Government has defined a cap/corridor system with annual objectives per market segment, which will likely toughen the competition; it is one of the promising markets for 2011 due to all the permits issued under the previous legislation, probably reaching between 1.1 and 1.6 GW. The market is still adapting to the new system, and shall remain stable in the commercial, industrial and agriculture segments. BELGIUM The PV market is experiencing another very active year. The official numbers from Flemish electricity show that Flanders alone installed 291 MW as of 1 October 2011, more than it installed during the whole of The changes in the support scheme are significant and there will be a decrease in installations from July 2011 onwards. The market in 2011 should be between 348 and 481 MW and the rooftop segment will continue stable. GREECE The market appears to have finally taken off, with MW forecasted for 2011 and for the next few years, mainly in small and medium installations. Over 150MW have been installed in the first semester of 2011, according to Helapco. UK This market s potential for 2011 may be less than initially expected due to the adjustments made on the FiT that will affect the ground segment. By May 2011, the market had already installed 60 MW. USA Strong market, especially in California (representing 60% of total installations), should reach between 1.5 and 1.8 GW this year. INDIA The PV market is ramping up and 2011 may reach 200 MW of new installed capacity. 16 MARTIFER SGPS, S.A. INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION 9 MONTHS 2011

17 RESULTS Solar Revenues grew by 29.9% YoY in the 9 months of 2011, totalling million euro, as a consequence of the intense growth strategy implemented during 2010, which continues to produce effects throughout The geographies with higher contribution in terms of Revenue in the period were France, Italy, USA, Portugal and Belgium. In Portugal, the weight of the Distribution business increased significantly, already representing, in the 9 months of 2011, a contribution to the consolidated Revenues of 38.3 million euro. The company s strategic position is to concentrate on mature countries which have a favourable regulatory framework, and emerging countries with good solar potential for the execution of on-grid and off-grid solutions. However, it is important to note that margins in the solar segment have been reduced along the value chain due to significant reductions in government supports and to an increase in competition. The Solar business area presented an EBITDA of 7.8 million euro, with the EBITDA margin reaching 4.2%. Although having improved since June 2011 and being expected to continue improving until the end of the year, the reduction, when compared to the same period last year, is due to three main issues: i) tougher competitive environment; ii) internationalization effort and its associated costs of entry; iii) increased weight of the distribution business with lower margins. As already mentioned, it is expected that the EBITDA margin will register an improvement in the last quarter of the year with significant contributions from France, Belgium, Portugal and the USA. This improvement should compensate the lower performance in UK, Czech Republic and Slovakia, suffering from the changes in the regulatory framework in the first half of Net Financial Expenses recorded 1.2 million euro, mainly justified by Martifer Solar s robust capital structure and tight working capital control. Net Profit totalled 4.7 million euro that compares YoY with 9.1 million euro. The level of capex in the period totalled 29.7 million euro. This value is explained by the investment in project development, mostly in the USA and France, expected to be sold until Net Financial Debt on the 30th September 2011 stood at 77.1 million euro, an increase of 47.4 million euro from FY 2010 (on a comparable basis). This variation is explained by capex and financial investments made in the period. The backlog of turnkey contracts (signed) is 250 million euro, with Italy, France, USA, Belgium and India as the geographies with the most significant contributions. Martifer Solar managed to keep a sustainable and robust backlog compensating the reduction in some of the traditional markets by new markets. MARTIFER SGPS, S.A. INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION 9 MONTHS

18 Solar 9M 9M10 Var. % M 2011 Restated Revenues % EBITDA % EBITDA Margin 4.2% 12.2% -8.0 pp EBIT % EBIT Margin 3.9% 10.7% -6.8 pp Net Financial Expenses % Income tax % Net Profit % Attributable to non-controlling interests n.m. Attributable to shareholders % 18 MARTIFER SGPS, S.A. INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION 9 MONTHS 2011

19 Others RESULTS The results of the Others segment groups the activity of the Holding and Shared Services companies together with RE Developer. From the total amount of Revenues, RE Developer contributed in the 9 months of 2011 with 11.2 million euro, of which 2.5 million euro from Poland (before the sale to IKEA, which occurred at the end of September), 3.1 million euro from Brazil and 4.1 million euro from Spain, corresponding to 42.7 MW of wind assets in operation and 7.23MW of Solar parks in Spain, and 1.5 million euro of services rendered. Total EBITDA of RE Developer reached 3.0 million euro in the 9 months of 2011, representing an EBITDA margin of 26.4%. Net Profit attributed to shareholders in the 9 months of 2011 was 8.4 million euro negative, suffering from the impact of net financial expenses that amounted to 7.6 million euro. Total net capex of RE developer in the period reached 6.5 million euro, mostly in the construction of the wind farm in Romania (Babadag). Net Financial Debt of RE Developer amounted to 25.6 million euro, a reduction of 23.9 million euros versus FY 2010 (on a comparable basis). To this debt we should add 83.8 million euro of debt at the Holding level allocated to the business area, a lower amount when compared to the first half 2011 and to the FY The reduction in the financial debt was possible due to the sale of the wind farms in Poland. RE Developer 9M 9M Var. % M Restated Revenues % EBITDA % EBITDA Margin 26.4% 50.5% p.p. EBIT % EBIT Margin -14.6% -83.6% 69.0 p.p. Net Financial Expenses >100% Income tax n.m. Net Profit % Attributable to non-controlling interests % Attributable to shareholders % MARTIFER SGPS, S.A. INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION 9 MONTHS

20 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 SHARE PERFORMANCE Martifer PSI-20 Source: Reuters Martifer s share price performance in the 9 months 2011 decreased by 22.5%, which compares to a decrease of 22.4 % in the PSI-20, major Euronext Lisbon market index. Martifer s share price ended the 9 months of 2011 at 1.20 /share; the highest price achieved was /share and the lowest price was 0.95 /share. The average volume of stock traded during the period was 38,877 shares. After the Summer, the sovereign crisis intensified, with increased worries about the situation in Greece and the contagion to other European countries. The fear of the euro zone s sustainability grew day after day, and led to chaotic performance of the European markets, mostly the periphery ones. At the end of the 9 month period in analysis, some of the global markets, after a short time rebound, returned to negative territory, such as the Dow Jones Industrial (-3.66 %), the S&P (-7.73 %) and the Nasdaq (-0.91 %). Greece, Spain, Italy and Portugal had their performances penalized by the indebtedness crisis. In these circumstances, small caps stock performances were more affected than the indexes, and Martifer stock was penalized by this occurrence and by the poor performance of the Construction and Solar sectors. At the end of the 9 months of 2011, Martifer s market capitalization totalled 120 million euro. 20 MARTIFER SGPS, S.A. INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION 9 MONTHS 2011

21 PURCHASE OF OWN SHARES Date Market / Transaction Size (shares) PRICE ( ) Shares Held 03-Jan-11 Euronext Lisbon Purchase 5, , Jan-11 Euronext Lisbon Purchase , Jan-11 Euronext Lisbon Purchase 10, , Jan-11 Euronext Lisbon Purchase 5, , Jan-11 Euronext Lisbon Purchase 9, , Jan-11 Euronext Lisbon Purchase 8, , Jan-11 Euronext Lisbon Purchase 2, , Jan-11 Euronext Lisbon Purchase 12, , Jan-11 Euronext Lisbon Purchase 2, , Jan-11 Euronext Lisbon Purchase 7, , Jan-11 Euronext Lisbon Purchase 14, , Jan-11 Euronext Lisbon Purchase , Jan-11 Euronext Lisbon Purchase 17, , Jan-11 Euronext Lisbon Purchase 2, , Jan-11 Euronext Lisbon Purchase 8, , Jan-11 Euronext Lisbon Purchase 15, , Jan-11 Euronext Lisbon Purchase 2, , Jan-11 Euronext Lisbon Purchase , Jan-11 Euronext Lisbon Purchase 1, , Feb-11 Euronext Lisbon Purchase 6, , Feb-11 Euronext Lisbon Purchase 6, , Feb-11 Euronext Lisbon Purchase 1, , Feb-11 Euronext Lisbon Purchase 8, , Feb-11 Euronext Lisbon Purchase 2, , Feb-11 Euronext Lisbon Purchase 4, , Feb-11 Euronext Lisbon Purchase 8, , Feb-11 Euronext Lisbon Purchase 6, , Feb-11 Euronext Lisbon Purchase 4, , Feb-11 Euronext Lisbon Purchase 18, , Feb-11 Euronext Lisbon Purchase 20, , Mar-11 Euronext Lisbon Purchase 7, , Mar-11 Euronext Lisbon Purchase 5, , Mar-11 Euronext Lisbon Purchase 4, , Mar-11 Euronext Lisbon Purchase 3, , Mar-11 Euronext Lisbon Purchase 2, , Mar-11 Euronext Lisbon Purchase , Mar-11 Euronext Lisbon Purchase 4, , Mar-11 Euronext Lisbon Purchase , Mar-11 Euronext Lisbon Purchase 2, , Mar-11 Euronext Lisbon Purchase 2, , Mar-11 Euronext Lisbon Purchase 99, , Mar-11 Euronext Lisbon Purchase 21, , Mar-11 Euronext Lisbon Purchase 27, , Mar-11 Euronext Lisbon Purchase 10, , Mar-11 Euronext Lisbon Purchase 27, , Mar-11 Euronext Lisbon Purchase 8, , Mar-11 Euronext Lisbon Purchase 6, ,002, Mar-11 Euronext Lisbon Purchase 1, ,003, Mar-11 Euronext Lisbon Purchase 1, ,004, Mar-11 Euronext Lisbon Purchase 12, ,017, Mar-11 Euronext Lisbon Purchase 2, ,019, Mar-11 Euronext Lisbon Purchase 1, ,020, Mar-11 Euronext Lisbon Purchase ,021,453 MARTIFER SGPS, S.A. INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION 9 MONTHS

22 Date Market / Transaction Size (shares) PRICE ( ) Shares Held 01-Abr-11 Euronext Lisbon Purchase 1, ,022, Abr-11 Euronext Lisbon Purchase 1, ,023, Abr-11 Euronext Lisbon Purchase 2, ,025, Abr-11 Euronext Lisbon Purchase 1, ,027, Abr-11 Euronext Lisbon Purchase 2, ,030, Abr-11 Euronext Lisbon Purchase ,030, Abr-11 Euronext Lisbon Purchase ,031, Abr-11 Euronext Lisbon Purchase ,031, Abr-11 Euronext Lisbon Purchase ,032, Abr-11 Euronext Lisbon Purchase ,033, Abr-11 Euronext Lisbon Purchase ,034, Abr-11 Euronext Lisbon Purchase 1, ,035, Abr-11 Euronext Lisbon Purchase 3, ,039, Abr-11 Euronext Lisbon Purchase 3, ,042, Abr-11 Euronext Lisbon Purchase 1, ,044, Abr-11 Euronext Lisbon Purchase 2, ,046, Mai-11 Euronext Lisbon Purchase 3, ,049, Mai-11 Euronext Lisbon Purchase 1, ,051, Mai-11 Euronext Lisbon Purchase 6, ,057, Mai-11 Euronext Lisbon Purchase ,058, Mai-11 Euronext Lisbon Purchase 2, ,060, Mai-11 Euronext Lisbon Purchase 4, ,064, Mai-11 Euronext Lisbon Purchase 13, ,078, Mai-11 Euronext Lisbon Purchase 11, ,089, Mai-11 Euronext Lisbon Purchase 10, ,100, Mai-11 Euronext Lisbon Purchase 15, ,115, Mai-11 Euronext Lisbon Purchase 19, ,135, Mai-11 Euronext Lisbon Purchase 15, ,151, Mai-11 Euronext Lisbon Purchase 39, ,190, Jun-11 Euronext Lisbon Purchase 23, ,214, Jun-11 Euronext Lisbon Purchase 14, ,228, Jun-11 Euronext Lisbon Purchase 12, ,241, Jun-11 Euronext Lisbon Purchase 20, ,261, Jun-11 Euronext Lisbon Purchase 28, ,290, Jun-11 Euronext Lisbon Purchase 36, ,326, Jun-11 Euronext Lisbon Purchase 4, ,330, August-11 Euronext Lisbon Purchase ,331, August-11 Euronext Lisbon Purchase ,331, August-11 Euronext Lisbon Purchase 10, ,341,214 Following these transactions, Martifer held at the end of the first nine months of 2011, 1,341,214 own shares representing 1.34% of its share capital. 22 MARTIFER SGPS, S.A. INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION 9 MONTHS 2011

23 Oliveira de Frades, 9 th November 2011 The Board of Directors, Carlos Manuel Marques Martins (Chairman of the Board of Directors) Jorge Alberto Marques Martins (Vice-Chairman of the Board of Directors) Luis Filipe Cardoso da Silva (Member of the Board of Directors) Arnaldo José Nunes da Costa Figueiredo (Member of the Board of Directors) Mário Jorge Henriques Couto (Member of the Board of Directors) Luís Valadares Tavares (Member of the Board of Directors) Jorge Bento Ribeiro Barbosa Farinha (Member of the Board of Directors) MARTIFER SGPS, S.A. INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION 9 MONTHS

24 INTERIM CONSOLIDATED FINANCIAL INFORMATION CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED INCOME STATEMENTS FOR THE 9 MONTH PERIODS ENDED 30 SEPTEMBER 2011 AND 2010 (TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN PORTUGUESE - NOTE 26) NOTES 9M 2011 (NON AUDITED) 9M 2010 RESTATED (NON AUDITED) 9M 2010 (NON AUDITED) Sales and services rendered 3 and 4 340,497, ,854, ,074,495 Other income 5 20,801,149 9,110,974 9,062,568 Cost of goods sold and subcontractors (260,319,311) (252,850,206) (256,090,740) Gross profit 100,979, ,115, ,046,323 External supplies and services (57,109,188) (58,086,333) (59,998,826) Staff costs (57,858,447) (56,875,418) (57,871,708) Other operational gains and losses 9,100,724 (335,738) (336,538) 4 (4,887,551) 39,818,000 41,839,250 Amortizations 4, 11 and 12 (14,661,649) (18,931,924) (19,837,790) Provisions and impairment losses 6 and ,583 (16,331,867) (16,409,153) Operating Income 4 (19,282,617) 4,554,209 5,592,307 Financial Income 7 20,348,168 31,519,386 31,193,895 Financial Expenses 7 (36,088,852) (28,944,903) (29,521,760) Gains and losses on associated companies 8 (1,709,387) (1,544,637) (1,548,821) Income tax 2,663,526 (5,474,429) (5,605,995) Profit for the period 4 (34,069,162) 109, ,626 Attributable to: non-controlling interests 654,775 3,396,080 3,396,080 owners of Martifer (34,723,937) (3,286,454) (3,286,454) Earnings per share: Basic 9 (0.3510) (0.0329) (0.0329) Diluted 9 (0.3510) (0.0329) (0.0329) The accompanying notes are part of these financial statements MARTIFER SGPS, S.A. INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION 9 MONTHS

25 CONSOLIDATED INCOME STATEMENTS FOR THE 3 MONTH PERIODS ENDED 30 SEPTEMBER 2011 AND 2010 (TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN PORTUGUESE - NOTE 26) 3 RD QUARTER 2011 (NON AUDITED) 3 RD QUARTER 2010 RESTATED (NON AUDITED) 3 RD QUARTER 2010 (NON AUDITED) Sales and services rendered 116,220, ,199, ,489,839 Other income 11,487, , ,986 Cost of goods sold and subcontractors (98,198,525) (109,084,558) (109,234,759) Gross profit 29,510,202 60,280,694 61,893,066 External supplies and services (17,477,247) (24,576,126) (25,221,997) Staff costs (19,504,391) (18,991,188) (19,378,125) Other operational gains and losses 979,610 2,648,434 2,297,458 (6,491,826) 19,361,814 19,590,403 Amortizations (4,975,585) (6,402,753) (6,696,104) Provisions and impairment losses 862,131 (1,599,204) (1,635,062) Operating Income (10,605,280) 11,359,857 11,259,237 Financial Income 5,750,747 2,438,207 2,306,913 Financial Expenses (13,007,603) (10,612,815) (10,765,410) Gains and losses on associated companies (902,707) (460,988) 26,612 Income tax 568,421 (4,314,672) (4,417,763) Profit for the period (18,196,422) (1,590,411) (1,590,411) Attributable to: non-controlling interests 1,233,480 1,756,243 1,756,243 owners of Martifer (19,429,902) (3,346,655) (3,346,654) Earnings per share: Basic (0.1969) (0.0335) (0.0335) Diluted (0.1969) (0.0335) (0.0335) The accompanying notes are part of these financial statements 26 MARTIFER SGPS, S.A. INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION 9 MONTHS 2011

26 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE 9 MONTH PERIODS ENDED 30 SEPTEMBER 2011 AND 2010 (TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN PORTUGUESE - NOTE 26) 9M 2011 (NON AUDITED) 9M 2010 (NON AUDITED) Profit for the period (34,069,159) 109,626 Fair value of cash flow hedges (derivatives), net of tax (64,548) (1,014,313) Fair value of available for sale financial assets, net of tax - (3,970,251) Exchange differences arising on (i) translating foreign operations; (ii) net investment in subsidiaries and (iii) goodwill (5,791,382) 2,904,329 Income recognized directly in equity (5,855,930) (2,080,235) Total comprehensive income for the period (39,925,092) (1,970,609) Attributable to: non-controlling interests 722,119 3,940,338 owners of Martifer (40,647,211) (5,910,947) The accompanying notes are part of these financial statements MARTIFER SGPS, S.A. INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION 9 MONTHS

27 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AT 30 SEPTEMBER 2011 AND 31 DECEMBER 2010 (TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN PORTUGUESE - NOTE 26) NOTES 30 SEPTEMBER 2011 (NON AUDITED) 31 DECEMBER 2010 RESTATED (NON AUDITED) Assets Non-current assets 31 DECEMBER 2010 (AUDITED) Goodwill 10 17,965,446 18,236,652 20,689,425 Intangible assets 11 40,891,925 22,393,910 28,658,371 Tangible assets ,113, ,718, ,482,823 Investment property 13 14,615,029 14,981,893 14,981,893 Financial investments under the equity method 14 23,662,460 32,907,298 11,954,290 Other non-current financial assets 15 2,732,917 20,156,393 20,186,393 Other non-current receivables 116,827,078 84,598,270 83,172,197 Deferred tax assets 11,030,435 5,867,238 6,446, ,839, ,860, ,571,462 Current assets Inventories 16 40,299,563 48,421,135 56,367,267 Trade receivables 199,772, ,994, ,884,487 Other receivables 49,711,282 34,127,966 34,394,644 Current tax assets 20,369,264 22,117,487 20,779,511 Other current assets ,963, ,669, ,387,543 Cash and cash equivalents 75,748,285 74,518,350 76,666, ,863, ,849, ,479,884 Total assets 4 1,049,703,045 1,092,709,805 1,126,051,346 Equity Issued capital 18 50,000,000 50,000,000 50,000,000 Reserves 252,901, ,151, ,153,874 Profit for the period (34,723,937) (55,016,713) (54,894,057) Equity attributable to owners of Martifer 268,177, ,135, ,259,817 Non-controlling interests 18 34,762,057 30,988,178 30,988,178 Liabilities Non-current liabilities Total equity 302,939, ,123, ,247,995 Borrowings ,102, ,366, ,443,037 Obligations under finance leases 16,082,799 15,786,906 31,398,405 Other non-current liabilities 16,412,100 5,750,207 11,520,910 Provisions 20 10,529,984 18,067,021 16,588,337 Deferred tax liabilities 8,139,182 10,328,339 10,334, ,267, ,299, ,284,703 Current liabilities Borrowings ,496, ,684, ,654,519 Obligations under finance leases 6,976,960 6,747,569 8,573,620 Trade payables 175,369, ,769, ,532,331 Other payables 31,156,041 69,367,744 63,621,163 Current tax liabilities 24,121,557 19,176,982 21,878,594 Other current liabilities 21 48,920,885 41,166,327 43,884,568 Derivatives 454, , , ,496, ,287, ,518,648 Total liabilities 4 746,763, ,586, ,803,351 Total equity and liabilities 1,049,703,045 1,092,709,805 1,126,051,346 The accompanying notes are part of these financial statements 28 MARTIFER SGPS, S.A. INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION 9 MONTHS 2011

28 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE 9 MONTH PERIODS ENDED 30 SEPTEMBER 2011 AND 2010 (TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN PORTUGUESE - NOTE 26) Issued capital Treasury stock Share premium Revaluation of fixed assets Fair value reserves Available for sale investments Cash flow hedge derivatives Foreign currency translation reserves Stock options reserves Other reserves and accumulated earnings Net profit for the year Equity attributable to owners of the parent Balance at 1 January ,000, ,500,000 17,549,418 8,261,660 (2,889,017) (21,479,368) 17,347 41,405, ,705, ,070,394 50,957, ,028,029 Appropriation of the profit of ,705,245 (107,705,245) - - Comprehensive income for the period: Profit for the period (3,286,454) (3,286,454) 3,396, ,626 Exchange differences arising on (i) translating foreign operations and (ii) net investment in subsidiaries ,094, ,094, ,056 1,447,899 Exchange differences arising on goodwill ,191, ,191, ,271 1,456,430 Changes in fair value (3,970,251) (940,244) (4,910,496) (74,069) (4,984,565) Total comprehensive income for the period (3,970,251) (940,244) 2,286, (3,286,454) (5,910,948) 3,940,338 (1,970,610) Distribution of dividends (10,000,000) - (10,000,000) - (10,000,000) Acquisition of treasury stock (69,700) (69,700) - (69,700) Stock options 73, ,595-73,595 Sale of available for sale investments (4,493,125) (4,493,125) - (4,493,125) Other changes in equity of subsidiaries (446,037) - (446,037) (991,479) (1,437,516) Changes in the consolidation perimeter (1,333,700) - 2,152,658 5,591, ,410,172 (32,075,936) (25,665,764) Balance at 30 September ,000,000 (69,700) 186,500,000 16,215,718 (201,717) (1,676,603) (13,602,152) 90, ,664,317 (3,286,454) 372,634,350 21,830, ,464,908 Balance at 1 January ,000,000 (852,587) 186,500,000 15,927,250 - (228,755) (13,497,358) 113, ,191,829 (54,894,057) 309,259,817 30,988, ,247,995 Appropriation of the profit of (54,894,057) 54,894, Comprehensive income for the period: Profit for the period (34,723,937) (34,723,937) 654,775 (34,069,162) Exchange differences arising on (i) translating foreign operations and (ii) net investment in subsidiaries (5,597,160) (5,597,160) 76,984 (5,520,176) Exchange differences arising on goodwill (270,237) (270,237) (969) (271,206) Other changes in equity of subsidiaries, net of tax (55,878) (55,878) (8,670) (64,548) Total comprehensive income for the period (55,878) (5,867,397) - - (34,723,937) (40,647,211) 722,119 (39,925,092) Distribution of dividends Acquisition of treasury stock - (1,125,568) (1,125,568) - (1,125,568) Stock options , ,180-64,180 Increase on capital of subsidiaries ,065,784 3,065,784 Other changes in equity of subsidiaries , ,778 (863,836) 88,942 Changes in the consolidation perimeter , ,578 Transactions with non-controlling interests (326,504) - (326,504) 75,234 (251,270) Balance at 30 September ,000,000 (1,978,155) 186,500,000 15,927,250 - (284,633) (19,364,755) 177, (34,723,937) 268,177,492 34,762, ,939,549 The accompanying notes are part of these financial statements Noncontrolling interests Total equity MARTIFER SGPS, S.A. INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION 9 MONTHS

29 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE 9 MONTH PERIODS ENDED 30 SEPTEMBER 2011 AND 2010 (TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN PORTUGUESE - NOTE 26) OPERATING ACTIVITIES 9M 2011 (NON AUDITED) 9M 2010 RESTATED (NON AUDITED) 9M 2010 (NON AUDITED) Receipts from customers 465,979, ,500, ,318,203 Payments to suppliers (391,079,693) (320,086,256) (325,063,868) Payments to employees (56,439,949) (55,883,447) (55,915,359) Cash (used in)/generated from operations 18,460,155 15,530,389 16,338,976 Income taxes paid 4,029,272 (4,147,400) (4,308,126) Other receipts/(payments) relating to operating activities (26,814,674) 13,433,809 14,963,380 Cash generated from other operating activities (22,785,402) 9,286,409 10,655,253 Net cash (used in)/generated by operating activities (1) (4,325,247) 24,816,798 26,994,229 INVESTING ACTIVITIES Receipts arising from: Financial assets 13,263,072 33,427,657 35,192,530 Tangible assets 2,915,575 16,643,841 16,776,098 Intangible assets 22,750,373 3,047 3,047 Interest and similar income 2,135,973 1,097,220 1,102,058 Dividends - 2,743,689 2,743,689 Others - 120, ,989 41,064,994 54,036,443 55,938,411 Payments arising from: Financial assets (5,238,750) 2,286,325 (2,999,082) Tangible assets (18,392,656) (4,923,013) (8,580,317) Intangible assets (28,769,620) 78,637 (4,104,712) Others - (2,671) (202,401) (52,401,026) (2,560,722) (15,886,512) Net cash generated by investing activities (2) (11,336,032) 51,475,721 40,051,900 FINANCING ACTIVITIES Receipts arising from: Borrowings 679,442, ,456, ,205,675 Issue of equity shares, supplementary capital and share premiums 5,878,505 (532,450) - Grants and donations 707,293 Others - 46, , ,028, ,970, ,656,071 Payments arising from: Borrowings (643,894,476) (706,560,862) (715,312,518) Leasings - (14,183,789) (14,817,436) Interest and similar costs (17,539,914) (12,656,920) (13,541,922) Dividends - (9,403,336) (10,000,000) Acquisition of treasury stocks (1,978,155) (69,700) (69,700) Others (1,013,698) (1,039,343) (1,040,099) (664,426,244) (743,913,951) (754,781,676) Net cash (used in)/generated by financing activities (3) 21,602,070 (38,943,636) (28,125,605) Net increase in cash and cash equivalents (4) = (1) + (2) + (3) 5,940,791 37,348,883 38,920,524 Changes in the consolidation perimeter and others (1,061,958) (6,236,413) (4,177,006) Effect of foreign exchange currencies (3,648,898) 1,861,934 1,861,934 Cash and cash equivalents at the beginning of the period 74,518,350 23,553,902 24,844,210 Cash and cash equivalents at the end of the period 75,748,285 56,528,307 61,449,661 The accompanying notes are part of these financial statements 30 MARTIFER SGPS, S.A. INTERIM MANAGEMENT REPORT AND FINANCIAL INFORMATION 9 MONTHS 2011