Q U E I R O Z G A LVÃO PA RT I C I PA Ç ÕES CONCESSÕES S.A.

Transcription

1 Q U E I R O Z G A LVÃO PA RT I C I PA Ç ÕES CONCESSÕES S.A.

2 managerial report To the Stockholders, In accordance with the by-laws, we are submitting for your consideration the annual report of the management, and the related financial statements for the year ended December 31, 2008, of Queiroz Galvão Participações Concessões S.A. The Management is grateful to all those who contributed toward the results achieved, especially our team of collaborators for their hard work and dedication, to suppliers and service providers for their good quality and punctuality and to clients for their faith in our work. Rio de Janeiro, April 14, BOARD OF DIRECTORS Antonio de Queiroz Galvão President João Antonio de Queiroz Galvão Vice-President Ricardo de Queiroz Galvão Counselor EXECUTIVE BOARD Marcos de Queiroz Galvão Ricardo de Queiroz Galvão DIRECTOR Mardonildo Oliveira Olímpio 2 ACCOUNTANT Flávio de Castro e Souza CRC-RJ

3 CONSOLIDATED BALANCE SHEETS At December 31, 2008 and 2007 (in thousands of US dollars) ASSETS CONSOLIDATED HOLDING COMPANY Current assets: Cash 9,325 8, ,606 Marketable securities 23,966 15,911 21,113 11,516 Trade accounts receivable 14,621 13,703 4,710 - Inventories 460 3, Taxes recoverable 1,924 2,817 1,661 2,519 Related parties 19,368 13,784 39,789 32,347 Other accounts receivable 1,127 16,151-2,729 Total current assets 70,791 73,983 67,551 52,717 Non current assets: Long-term assets: Marketable securities 7,072 12, Judicial deposits 1,078 3, Deferred income tax 1,720 2, Other accounts receivable 3,353 2, Permanent assets: Subsidiary and Associated companies , ,840 Other investments Fixed assets 155, , Intangible Deferred assets 12,104 23, Total non current assets 180, ,164 70, ,699 See notes to financial statements. 251, , , ,416 3

4 CONSOLIDATED BALANCE SHEETS At December 31, 2008 and 2007 (in thousands of US dollars) LIABILITIES CONSOLIDATED HOLDING COMPANY Current liabilities: Loans and debentures 16,260 24, Trade accounts payable 2,332 18, Fiscal and social obligations 2,169 3, Dividends payable - 7,767-6,360 Payroll and social securities Creditor for grant Other accounts payable 4,472 4, Total current liabilities 26,286 58, ,484 Non current liabilities: Long-term liabilities: Loans 63, , Fiscal and social obligations 5,554 6, Other accounts payable 16,401 18, Deferred income Discount and agio in investments consolidated - (164) - - Total non current liabilities 85, , Minority interest 2,992 5, Shareholders equity: Capital stock 89, ,557 89, ,557 Capital reserve Revaluation reserve - 8,736-8,736 Profit reserve 46,959 32,684 46,959 32,684 Total shareholders equity 136, , , ,000 See notes to financial statements. 251, , , ,416 4

5 CONSOLIDATED STATEMENTS OF INCOME Years ended December 31, 2008 and 2007 (in thousands of US dollars) CONSOLIDATED HOLDING COMPANY Service income 111, , Equity in earnings ,830 20,724 Tax over revenue (6,771) (8,857) - - Cost of services (48,248) (104,770) - - Gross profit 56,884 71,118 21,830 20,724 Operating income (expenses): Administrative (15,257) (20,527) (46) (145) Depreciation (4,414) (6,389) - - Tax expenses (98) (1,391) (36) (614) Other 3,110 (170) (392) 216 (16,659) (28,477) (474) (543) Financial income 4,760 6,984 2,071 2,033 Financial expenses (11,795) (17,957) (35) (184) (7,035) (10,973) 2,037 1,849 Profit before income tax and social contribution 33,190 31,668 23,393 22,030 Minority interest - (458) - - Social contribution (2,866) (2,772) (141) (117) Income tax (7,668) (7,383) (380) (314) Deferred income tax and social contribution Net income 22,872 21,599 22,872 21,599 Earning per share 3,69 3,48 Number of shares of the capital stock 6,197,736 6,197,736 See notes to financial statements. 5

6 STATEMENTS OF CHANGES IN SHAREHOLDER S EQUITY Years ended December 31, 2008 and 2007 (in thousands of US dollars) CAPITAL STOCK CAPITAL RESERVE REVALUATION RESERVE PROFIT RESERVE Legal reserve RETAINED (LOSS) EARNINGS TOTAL Balances at December 31, , ,363 12, ,946 6 Gain (loss) on translation 20, ,555 23,174 Constitution of legal reserve ,020 (1,020) - Constitution of profit reserve ,138 (8,138) - Constitution of revalation reserve - - 8, ,641 Dividends paid (6,360) (6,360) Net income for the year ,599 21,599 Balances at December 31, , ,736 10,802 21, ,000 Gain (loss) on translation (28,698) (6) (2,115) (2,615) (5,297) (38,731) Constitution of legal reserve ,144 (1,144) - Constitution of profit reserve ,628 (37,628) - Constitution of revalation reserve - - (6,621) - (685) (7,306) Net income for the year ,872 22,872 Balances at December 31, , , ,835 See notes to financial statements.

7 STATEMENT OF CASH FLOW Year ended December 31, 2008 (in thousands of US dollars) CONSOLIDATED HOLDING COMPANY Cash flows from operating activities: (Loss) for the year 22,872 22,872 Adjustments for: Depreciation 13,429 - Equity in earnings - (21,830) Minority interest (947) - Interest expenses 7,035 (2,036) 42,389 (995) Decrease (increase) in accounts receivable (4,368) (4,710) Decrease (increase) in inventories 2,264 - Decrease (increase) in recoverable taxes Decrease (increase) in other accounts receivable 13,682 2,068 Increase (decrease) in suppliers (11,828) - Increase (decrease) in salaries, charges and tax obligations to pay 104 (52) Increase (decrease) in related parties (8,920) (15,273) Increase (decrease) in other trade accounts payable (1,951) (4,821) Cash flows from operating activities 31,583 (23,533) ( - ) interests paid (19,217) (35) Net cash used in operating activities 12,366 (23,568) Cash flows used in investing activities ( - ) Additions in Fixed assets 32,957 - ( - ) Additions Subsidiary and Associated - 38,047 Dividends received - (6,621) Interests received 4,760 2,071 Net cash used in investing activities 37,718 33,497 Cash flows from financing activities Financing (paid) received (37,076) - Financings contracted 2,143 - Net cash used in financing activities (34,933) - Increase in cash and cash equivalents 15,150 9,929 Cash and cash equivalents, beginning of the year 23,934 15,121 7 Cash and cash equivalents, end of the year 33,291 21,390 Gain on translation 5,793 3,660 Increase in cash and cash equivalents 15,150 9,929 See notes to financial statements.

8 Notes to Consolidated Financial Statements At December 31, 2008 and 2007 (in thousand of US dollars) (A translation of the original report in Portuguese containing financial statements prepared in accordance with accounting practices generally accepted in Brazil) 1 OPERATIONS The Queiroz Galvão Participações Concessões S.A. is a privately held Company whole owned subsidiary of Queiroz Galvão S.A. The Company was incorporated on February 01, 1998 as part of an ample corporate reorganization process of the Queiroz Galvão S.A. group which included new strategic plans and the realignment of operation by area of activity within that scenery the Company was created with the objective to increment the participation of the Queiroz Galvão Group in other companies originated from public concessions in the areas of sanitation, energy, highways and engineering. The investments and the respective activity areas are as follow: SANITATION Águas do Paraíba S.A. (direct participation 20.00%) (direct participation 20.00%) Águas de Juturnaíba S.A. (direct participation 22.56%) (direct participation 22.56%) Saneamento Ambiental Águas do Brasil (direct participation 28.51%) - Águas de Niterói S.A. (direct participation 20.00%) (direct participation 20.00%) Águas das Agulhas Negras (direct participation 50.00%) (direct participation 50.00%) Águas do Imperador S.A. (direct participation 20.00%) (direct participation 20.00%) Headlight Vital Energia S.A. (direct participation %) (direct participation %) GMS Gestão e Manut. de Saneam. Básico (direct participation 20.00%) (direct participation 20.00%) Queiroz Galvão Saneamento S.A. - (direct participation %) HIGHWAY/ SUBWAY Rio-Teresópolis S.A. (direct participation 8.83%) (direct participation 8.83%) Rodovias Integradas do Paraná S.A. (direct participation 24.08%) (direct participation 24.08%) Rio Barra S.A. (direct participation 50.00%) (direct participation 50.00%) Queiroz Galvão Rodovias S.A. (direct participation %) (direct participation %) ENERGY Companhia Energética Santa Clara (direct participation %) (direct participation %) Queiroz Galvão Energética S.A. (direct participation %) (direct participation %) Headlight Vital Energia S.A. (direct participation %) (direct participation %) Companhia Energética Chapecó (direct participation 59.00%) (direct participation 59.00%) Mucuri Energética S.A. (direct participation %) (direct participation %) OTHER Mucuripe Veículos e Serviços Ltda. - (direct participation 94.15%) 8

9 Notes to Consolidated Financial Statements At December 31, 2008 and 2007 (in thousand of US dollars) 2 PRESENTATION OF FINANCIAL STATEMENTS The financial statements have been prepared in accordance with accounting practices adopted in Brazil, which include the criteria established by Law nº 6.404/76 with changes introduced by Law nº /07 additional rules of the Brazilian Securities and Exchange Commission CVM, and the Brazilian Independent Accountants Institute (IBRACON). 2.1 Adjustment of Law nº /07 On December 28, 2007 was promulgated the Law nº , with term from 1 January 2008, which changes, repeals and adds new provisions to Law nº 6.404/76 (Brazilian Corporate Law). This law had, mainly, the objective of update the Brazilian corporate law to facilitate the process of convergence of accounting practices adopted in Brazil with those contained in international accounting standards (IFRS) and allow new accounting standards and procedures are dispatched by the regulators in line with international standards of accounting. To attend the Law nº /07, the company developed the Statement of Cash Flows for the year ended December 31, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Income and expenses Income and expenses are recorded in accordance to the accrual basis method of accounting. b. Marketable securities Marketable securities are represented by investments in fixed income securities and are stated at cost, plus accrued income to the balance sheet date. c. Permanent assets Investments in subsidiaries and affiliates are accounted for by the equity method. Fixed assets are stated at cost (monetarily corrected up to December 31, 1995). Depreciation is calculated using the straight-line method over the useful lives of the assets. d. Translation into United States dollars The United States dollar amounts result from translation of the financial statements at the year-end rate of exchange as follows: R$ 2,337 per US$1.00 R$ 1,7713 per US$1.00 The translation should not be construed as representation that the real (R$) amounts actually represent or have been, or could be converted into United States dollars.

10 Notes to Consolidated Financial Statements At December 31, 2008 and 2007 (in thousand of US dollars) 4 CONSOLIDATED FINANCIAL STATEMENTS The consolidated financial statements at December, and 2007 include the holding Company Queiroz Galvão Participações Concessões S.A. and the subsidiaries details of the investors and ownership percentages are described on note The financial statements have been prepared in accordance with the rules and procedures established by the Brazilian Securities and Exchange Commission (CVM Instruction nº 247/96). The consolidation process resulted from the application of the percentages describes on note 1 to the balance sheet and statement of income accounts of the investors, adjusted by the following eliminations: a. Income and expenses, reserves and other results among the consolidated companies; b. Asset and liability balances among the consolidated companies; c. Unrealized profits and basses from transactions among the consolidated companies; d. Due to the nature of consolidation characterized by a proportional consolidation, there was no minority interest in the consolidated financial statements.

11 Notes to Consolidated Financial Statements At December 31, 2008 and 2007 (in thousand of US dollars) 5 INVESTMENTS IN SUBSIDIARIES AND AFFILIATES Following are the details of the Investments in Queiroz Galvão Paticipações Concessões S.A. at December 31, 2008 and 2007: 11 COMPANIES: Cantidad de acciones ON* Quantity of Preferred shares Participation % 2008 Capital Stock Shareholders Equity Equity Equity in Earnings Águas de Niterói S.A ,501 Águas do ParaíbaS.A. 2,670 5, ,809 18,748 3, Águas do Imperador S.A ,028 Águas de Juturnaíba S.A. 1,880,071 3,760, ,458 6,964 1,571 (166) Águas das Agulhas Negras Saneamento Ambiental Águas do Brasil 32,240, ,727 43,693 12,457 3,419 Rio-Teresópolis S.A. 48,788 37, ,522 25,459 2, Rodovias Integradas do Paraná S.A. 15,571,473 15,571, ,305 16,856 4,059 2,340 Companhia Energética Santa Clara 35,000, ,976 15,473 15,473 3,585 Companhia Energética Chapecó 12,783,333 25,566, ,813 2,833 1,671 (711) Mucuri Energética S.A. 20, (53) (53) (62) Rio Barra S.A. 5,373, ,505 5,505 2,753 - Queiroz Galvão Saneamento S.A. 1, Queiroz Galvão Rodovias S.A. 1, Queiroz Galvão Energética S.A. 45,001, ,534 24,297 24,297 8,228 Headlight Vital Energia S.A. 20, ,156 1,156 1,602 Mucuripe Veículos Com.e Serv.Ltda (500) ON = Ordinary 69,382 21,830

12 Notes to Consolidated Financial Statements At December 31, 2008 and 2007 (in thousand of US dollars) 2007 Quantity of ON* shares Quantity of Preferred shares Participation % Capital Stock Shareholders Equity Equity Equity in Earnings EMPRESAS: Águas de Niterói S.A. 2,000 4, ,241 84,631 16,926 2,249 Águas do Paraíba S.A. 2,670 5, ,900 25,977 5, Águas do Imperador S.A. 2,000 4, ,980 13,786 2, Águas de Juturnaíba S.A. 1,880,071 3,760, ,937 10,156 2,455 (26) Águas das Agulhas Negras 100, Rio-Teresópolis S.A. 48,788 37, ,372 28,985 2, Rodovias Integradas do Paraná S.A. 15,571,473 15,571, ,554 25,845 6,224 2,324 Companhia Energética Santa Clara 35,000, ,759 23,407 23,407 3,578 Companhia Energética Chapecó 12,783,333 25,566, ,696 5,328 3,143 (637) Mucuri Energética S.A. 2, Rio Barra S.A. 5,373, ,264 7,264 3,632 - Queiroz Galvão Saneamento S.A. 1, Queiroz Galvão Rodovias S.A. 1, Queiroz Galvão Energética S.A. 45,001, ,051 39,793 39,793 8,716 Headlight Vital Energia S.A. 1, ,191 1,191 2,069 Mucuripe Veículos Com. e Serv. Ltda. 13,273, ,494 6,811 6, ON = Ordinarias Nominativas 113,840 20,724 12

13 Notes to Consolidated Financial Statements At December 31, 2008 and 2007 (in thousand of US dollars) 6 INVENTORIES CONSOLIDATED Storehouse Raw material 2 5 Other 2 2 Vehicles - 3,128 7 FIXED ASSETS AND INTANGIBLE 7.1 Fixed Assets 460 3,594 ESTIMATED USEFULL LIVES (YEARS) CONSOLIDATED CONSOLIDATED Buildings 25 86, ,820 Field equipments and other 5 and 10 93, ,746 Highway improvements 5 26,941 36,235 Other fixed assets Other 607 2,394 Vehicles 5 1,895 2, , ,981 Less: Accumulated depreciation (65,398) (89,955) 143, ,026 Lands 8,160 13,202 Work in process 3,482 5, Intangible CONSOLIDATED Trademarks and technology 3 6 Telephone lines 2 4 Software , ,290 13

14 Notes to Consolidated Financial Statements At December 31, 2008 and 2007 (in thousand of US dollars) 8 RELATED PARTIES The balance of loan contracts and transactions with related parties are: COMPANIES Queiroz Galvão S.A. 16,584 21,881 Queiroz Galvão Energética S.A. 6,349 1,795 Construtora Queiroz Galvão S.A. 6,619 8,762 Companhia Energética Santa Clara 4,544 - Mucuri Energética S.A. 3,073 - Rio Barra S.A Rio Teresópolis S.A Rodovias Integradas do Paraná S.A Headlight Vital Energia S.A. (530) (699) Saneamento Ambiental Águas do Brasil 1,532 - Águas do Paraíba S.A Mucuripe Veículos Com. e Serv. Ltda Agropecuária Rio Arataú S.A Other related parties - (28) 9 CAPITAL 39,789 32,347 The capital, subscribed and fully paid, comprises 6,197,736 ordinary nominative shares with no par value. The shareholders have the right to a minimum dividend of 3% of the net income for the year, according to the company s by-law on December 31, 2008 the equity value of each share is R$ 51,62 equivalent to US$ FINANCIAL INSTRUMENTS The financial instruments are recorded for in the balance sheet accounts as of December 31, 2008 and 2007 at compatible market value. The management of these instruments is made in a strategic way with the objective of liquidity, rentability and security. The investment control consists of a permanent follow-up of the contracted rates compared to the daily market rates. The company does not operate with derivatives or any other risk asset. 11 CONTINGENCIES 14 The Company s management, based on the opinion of its legal advisors believes that the appropriate referrals and arrangements for any fiscal, tax, pension and labor liability purposes; have been taken in each situation and are sufficient to preserve the company s equity no indications, in December 31, 2008, of the need to recognize any provision for contingencies in the financial statements. The accounting records and operations are subject to examination of tax authorities in different mature dates according to the specific tax laws applicable.

15 Independent Auditors Report The Board of Directors and Shareholders Queiroz Galvão Participações e Concessões S.A. Rio de Janeiro RJ We have audited the accompanying holding and consolidated balance sheets of Queiroz Galvão Participações e Concessões S.A. as of December 31, 2008, and the related statements of income, changes in shareholders equity and cash flows for the year then ended. These financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on these financial statements. 2. We conducted our audit in accordance with auditing standards generally accepted in Brazil. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the financial position of holding and consolidated Queiroz Galvão Participações e Concessões S.A. at December 31, 2008, the results of its operations, the changes in its shareholders equity and cashflows for the year then ended, in accordance with accounting practices adopted in Brazil. 4. Previously, we have audited the holding and consolidated financial statements for the year end of December 31, 2007, regarding the balance sheets, statements of income, changes in shareholders equity and changes in financial position for the year then ended on which we issued a non qualified opinion dated April 16, As mentioned in note 2.1, Brazilian accounting practices have been changed since January 1st, Holding and controlled financial statements referring to the year end of December 31, 2007, presented with the financial statements of 2008 were made according to accounting practices generally accepted in Brazil until December 31, 2007 and, as allowed by the CPC Technical Statement 13 Initial Adoption of Law nº /07 and Provisory Measure 449/08, are not being presented with adjustments for comparison purposes between both year ends. Rio de Janeiro, April 16, CRC-RJ-2026-O Mário Vieira Lopes Contador-CRC-RJ /O