01 | martifer groupweb3.cmvm.pt/sdi/emitentes/docs/pc55067.pdf · 2014, following an investment...

2 ANNUAL REPORT 2014

01 | MARTIFER GROUP Message from the Board Highlights Key Financial Indicators Main Events

02 | GUIDELINES Activity International Presence History Market Environment

03 | FINANCIAL PERFORMANCE Consolidated Result Analysis Revenues EBITDA and Net Profit Consolidated Capex Consolidated Capital Structure Analysis

04 | ANALYSIS BY SEGMENT Metallic Constructions RE Developer Solar

05 | INDIVIDUAL FINANCIAL INFORMATION

06 | MARTIFER SHARE PERFORMANCE

07 | FUTURE PROSPECTS

08 | MAIN RISKS Financial Risks Operational Risks Legal Risks

09 | PROPOSAL OF RESULTS ALLOCATION

10 | OTHER INFORMATION

ANNUAL REPORT 2014 3

11 | CONSOLIDATED FINANCIAL STATEMENTS

12 | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13 | INDIVIDUAL FINANCIAL STATEMENTS

14 | NOTES TO INDIVIDUAL FINANCIAL STATEMENTS


This translation into English of the Portuguese document was made only for the convenience of non-Portuguese speaking shareholders. For all intents and purposes, the Portuguese version shall prevail.


01 | MARTIFER GROUP MESSAGE FROM THE BOARD Dear Shareholders,

The past few years, and 2014 in particular, were especially difficult for the companies in the construction segment and, particularly, for Martifer.

However, we have been taking measures to overcome the difficulties faced during these last years.

In 2014, we continued to follow the strategy of selling non-core assets, having concluded the sale of the participation in Nutre, and we initiated the process of selling Martifer Solar, which we expect to be settled in 2015.

In the metallic construction area in 2014:

We increased equity; We endowed the Group, through West Sea, with an infrastructure that allows the pursuit of new opportunities in the naval

segment; We entered a new market, Algeria, having been awarded the “Djelfa” project.

In the RE Developer area:

We completed the sale of Rosa dos Ventos in Brazil, and signed a conditional sale agreement of the Gizalki wind farm in Poland to Ikea Group;

We leveraged the project Ventinveste with the financing obtained for project Âncora.

Keeping in mind the steps taken throughout the year, we are more focused on the main goals defined in the Group’s strategy:

Reinforcement of the international presence, focusing on three core geographies (Europe and the Middle East, Africa, and Latin America) and on attractive opportunities with high profitability;

Focus on the metallic construction core business (metal mechanical construction, aluminium and glass façades, infrastructures for oil & gas, and naval industry);

Adoption of a new organizational model:

Resizing and readapting the structure, aligning it with the international presence;

Improvement of the business processes and operational efficiency;

Development and retention of human resources;

Optimization of the industrial footprint and adjustment of production layouts; Improvement of the Group’s financial situation:

Divestment in non-core businesses and sale of real estate assets;

Reduction of cash costs, through a program for the optimization of the cost structure and the working capital;

Gradual decrease of the net debt and the debt/EBITDA ratio;

Adequacy of the inflows maturity of the operational activity and investment (divestment) to the outflows of the financing activity.

We believe that the strategy we have defined will lead, in the future, to an improvement in the Group’s profitability.

Stakeholders, we thank you once again for the trust placed in us.


HIGHLIGHTS

• Total Revenues of 226 M€, from which 201 M€ in Metallic Construction and 25 M€ in RE Developer

• Total Revenues in the 4Q2014 with an increase of over 50 % when compared with 3Q2014

• EBITDA of 6 M€, which corresponds to a consolidated EBITDA Margin of 3 %

• Net Profit of continued operations strongly influenced by the reinforcement of provisions and impairment losses (39 M€) as well as financial expenses (30 M€)

• Consolidated Net Profit attributable to shareholders of -94 M€, strongly penalized by the net profit of discontinued operations of -31 M€, and by the reinforcement of provisions and impairment losses

• Consolidated Net Debt reduction to 283 M€, a 53 M€ decrease compared with 2013

MAIN FINANCIAL INDICATORS

M€ Dec-14 Dec-13 Var. (%) Revenues 225.8 319.9 -29% EBITDA 6.0 15.7 -62% EBITDA margin 3% 5% -2.3 pp Depreciation & Amortization -14.6 -14.3 -2% Provisions & Impairment Losses -38.6 -28.3 -37% EBIT -47.3 -26.9 -76% EBIT margin -21% -8% -12.5 pp Financial Results -19.4 -34.4 44% Profit before taxes -66.7 -61.2 -9% Income tax -4.9 -3.6 -35% Profit after taxes on continued operations -71.5 -64.8 -10% Discontinued operations’ Result -65.2 -5.9 <-100% Attributable to non-controlling interests -34.4 -1.7 <-100% Attributable to shareholders -30.7 -4.2 <-100% Net Profit -136.7 -70.8 -93% Attributable to non-controlling interests -43.2 -1.8 <-100% Attributable to shareholders -93.5 -69.0 -36% Earnings per share € -0.957 -0.705 -36%


MAIN EVENTS

JANUARY 2014

West Sea signs a contract for the subconcession of Estaleiros Navais de Viana do Castelo

After an international public tender, Martifer Energy Systems and Navalria, subsidiaries of Martifer Group, were awarded with the subconcession for the “private use of public domain and of the areas allocated to the dominial concession” formarly attributed to the company Estaleiros Navais de Viana do Castelo (ENVC).

Martifer Group, via its new subsidiary West Sea – Estaleiros Navais, Lda., aims to develop its activity in the national and international markets and implement in the areas included in the ENVC subconcession a shipbuilding and repair project, which is expected to create 400 new jobs in the next three years. With this subconcession, Martifer Group will increase its capacity in shipbuilding and repair. The contract was signed in January 2014.

Martifer Solar USA INC and Martifer Aurora LLC begin the voluntary process for Chapter 11

On 21st January 2014 the affiliates Martifer Solar USA INC and Martifer Aurora Solar LLC started voluntary restructuring processes under Chapter 11 (US Bankruptcy Code).

320

226

16

6

-71

-137

8

15

-200 -100 0 100 200 300 400

2013

2014

Capex Net Profit EBITDA Revenues


FEBRUARY 2014

Martifer Renewables concludes the sale of Rosa dos Ventos

On 27th February, Martifer Renewables concluded, through its subsidiary Martifer Renováveis Geração de Energia e Participações, S.A., 55 % owned, the sale of 100% of the shares in the company Rosa dos Ventos Geração e Comercialização de Energia, to the Brazilian company CPFL for $R70.3m. Rosa dos Ventos Geração e Comercialização de Energia SA owns the 14.7 MW wind farm. The sale agreement by both entities was established on 18 June 2013.

MARCH 2014

Martifer concludes two new ships for Douro Azul

Navalria, Martifer‘s subsidiary, concluded the construction of the two hotel ships Viking Hemming and Viking Torgil, for the company Douro Azul in March.

The ships, which will operate cruises in the Douro River, were built in one year and have a distinctive feature: a round shaped bow that allows the creation of an exterior deck with capacity for 42 passengers.

APRIL 2014

Martifer Metallic Constructions increases its equity

Martifer Metallic Constructions increased via Martifer SGPS’ main shareholders its equity in around 28 million euros.

Martifer Solar and Adenium Energy Capital werw awarded a PPA for a 10 MW PV plant in Jordan

Martifer Solar and Adenium Energy Capital were awarded a Power Purchase Agreement (PPA) with the national utility of Jordan, NEPCO (National Electric Power Company) for a 10 MW AC solar PV plant.

Martifer Solar has been selected as the lead developer and will provide engineering, procurement and construction (EPC) services. Following the connection of the plant, Martifer Solar will be responsible for the related operations and maintenance (O&M) service.

The project will be developed with Adenium Energy, which will finance it in around USD$ 26 million.

Martifer Solar concludes the construction of a 78.4 MW PV portfolio for Lightsource Renewable Energy in the UK

Martifer Solar concluded a 78.4 MW portfolio of photovoltaic plants in the United Kingdom. The utility-scale combined capacity consists of five plants, which are located in the counties of Cambridgeshire, Devon, Nottingham and Swindo, and were built for Lightsource Renewable Energy.


Martifer SGPS, S.A. Annual General Meeting

Martifer SGPS, S.A.’s Annual meeting took place on 28th April 2014, with a participation of 79.85 % of its total share capital, and all the proposals in the Agenda presented in the Call Notice were approved unanimously.

MAY 2014

WEST SEA takes office of the Establishment of the subconcession

On 2nd May 2014, the company West Sea - Estaleiros Navais, Lda, a part of the Martifer Group, took office of the subconcession, following the “subconcession for private use of public domain and of the areas allocated to the dominial concession” previously attributed to the company Estaleiros Navais de Viana do Castelo (ENVC).

JUNE 2014

Martifer Renewables signs the conditional sale agreement of the Gizalki wind farm to the Ikea Group

A conditional sale agreement was celebrated, in which IKEA Group will finance the development of the Gizalki wind farm (36 MW), in Poland, which is ready to build. The sale of the Gizalki project will only be concluded after its construction and connection to the grid. The sale of these assets is part of the asset rotation policy, implemented by Martifer Renewables’ management team, RE Developer business area of Martifer Group.

JULY 2014

Most assets of Martifer Solar USA INC sold to BayWa

The development of the Chapter 11 process initiated by Martifer Solar USA INC in January led to the sale approvak by the court of Nevada of most of Martifer Solar USA, Inc’s assets on 1st July. to the proponent BayWa by 7.6 million USD. The result of the sale is framed with the assets’book value.

Martifer Solar prevails with 8 MW PV plant in Ukraine

Martifer Solar concluded a new 8 MW PV plant, named Shargorod, in the Vinnytsia region, in Ukraine.

Ventinveste SA signs a deal with Ferrostaal GmbH

In July 2014, the company Âncora Wind – Energia Eólica, S.A., aimed to establish a partnership between Ventinveste, S.A. and Ferrostaal, GmbH for the development of wind projects totalling 171 MW included in the Ventinveste Consortium. The construction should begin after the financial closing, expected by the end of 2014.


AUGUST 2014

Martifer SGPS agrees to transfer its shareholding position in Nutre SGPS

Martifer SGPS decided, during the first semester of 2014, to sell the participation held in Nutre SGPS, SA. During the 3rd quarter of 2014, following an investment proposal presented by Orchadia, S.A. group, the transference of the shares held in Nutre SGPS, SA was agreed. The transfer was still subject to the accomplishment of several conditions (including, amongst others, decisions of Public and Governmental Authorities). The amount of the transfer is in line with the value of the financial investment.

SEPTEMBER 2014

Martifer SGPS decides to focus the Group’s activity in metallic constructions (steel structures, aluminium and glass façades, oil & gas infrastructures and naval industry)

Martifer SGPS decided in September, to focus the Group’s activity in metallic constructions (steel structures, aluminium and glass façades, oil & gas infrastructures and naval industry) and fulfil the active sale plan of its 55 % share of Martifer Solar. As the sale is highly likely, Martifer Solar’s assets and liabilities were respectively classified as “non current assets held for sale” and “liabilities associated to non current assets held for sale”, being Martifer Solar’s Net Profit presented as “discontinued operations’ result”.

DECEMBER 2014

Ventinveste SA secures 175 M€ financing for 171.6 MW of wind energy

Ventinveste secured financing for the construction of 171.6 MW of wind energy in Portugal and the entry into force of turnkey contracts for the construction of the “Âncora” project, a partnership established between Ventinveste, SA and Ferrostaal GmbH. The 175 million euros financing agreement was signed with a consortium of banks consisting of Banco BPI, ING and Santander. The construction of the four wind farms shall start in December 2014 and the farms are expected to be fully operational by the end of 2016.

Martifer sells 49 % of Nutre

Martifer concluded the sale of its 49 % share in its subsidiary Nutre, SGPS, S.A. (“Nutre”) to CERES AGRICULTURE HOLDINGS COӦPERATIEF U.A., for 19.6 million euros, continuing the process of selling non-core assets.

West Sea signs its first shipbuilding contract

DouroAzul signed with West Sea the contract for the construction of a new hotel ship, Viking Osfrid, which will be used for touristic cruises in the Douro River. Its construction started in the beginning of 2015 and is expected to be concluded by the end of that year.

Martifer enters Algeria with a project in the energy sector

Martifer Metallic Constructions was awarded a project in Algeria, a market in great expansion in the metallic construction sector. It is the construction of the cooler of a gas fuelled thermo electrical plant, located in Djelfa.


SUBSEQUENT EVENTS

No facts that affect the released financial information have occurred since the reference date of the results.


02 | GUIDELINES ACTIVITY Martifer began its activity in 1990 in the steel structures sector. Since 2014, as a consequence of the strategic focus of the business, Martifer has concentrated its operations in the metallic construction sector, controlled by Martifer S.G.P.S., S.A..

The Group also has other activities and financial participations: RE Developer – Promotion and Development of wind farms (Martifer Renewables) and Martifer Solar, the later has been considered an asset held for sale since September 2014.

HOLDING

Martifer S.G.P.S., S.A. is the holding company of the Group. With the changes in the governance model implemented in 2012, Martifer S.G.P.S., S.A. positions itself as a financial holding, establishing and defining rules and policies for the Group and monitoring the activity of the business areas, which were given a greater degree of independence and power.

The business areas act independently, although they follow the strategic guidelines defined at the holding level, with the annual budgets and business plans approved by Martifer’s executive board members.

At the end of the year, the Holding and the support services had 50 employees.

METALLIC CONSTRUCTION

Martifer Metallic Constructions is a player with global recognition in the sector. The company is focused in three major geographic areas: Europe and the Middle East, Africa, and Latin America, and has industrial units that allow it, from those areas, to build the most complex projects in diversified places such as, Amazonia in Brazil, and Jeddah in Saudi Arabia. Its industrial units are located in Portugal, in Romania, in Angola, in Mozambique (in partnership), in Brazil and in Algeria (in partnership).

This business area bases its development strategy on the differentiation of its engineering quality and its vocation for complex projects. The company aims to follow a directed strategy, by partnering with companies from complementary segments, which will allow it not only to offer more complete solutions, but also to gain a greater dimension, especially on the international stage.

It provides global and innovative engineering solutions, namely in the metal mechanical construction, aluminium and glass façades, infrastructures for oil & gas and naval industry (via its subsidiaries Navalria and West Sea) segments.

This industrial and commercial activity has a production capacity that allows it to complete projects in several continents and at the end of 2014 it employed 2,485 people.

RE DEVELOPER

Martifer Renewables acts as a developer of renewable energy, mainly in wind power projects. More than accumulating MWs in operation, Martifer Renewables’ strategy is focused on the rigorous use of capital in the development and construction of projects, having implemented an asset rotation policy that can be applied to projects under development, under construction and in operation.

This business area currently has 49 MW of wind farms and solar plants in operation in Spain and in Romania with an impact on Revenues. In Portugal, the company holds a 50 % share in 31 MW of wind farms in operation, which contribute to the results through the equity method. In 2014, Martifer Renewables through its subsidiary Ventinveste celebrated a partnership for the construction of 171.6 MW of wind projects in Portugal, and agreed to the sale of the 36 MW Gizalki project, in Poland.


Since its foundation, more than 250 MW of renewable assets have already beendeveloped and built in several geographies. Following its asset rotation strategy, this area has had, in the last sold projects, relevant companies as partners, such as IKEA in Poland and Santander in Brazil.

This business area employed 35 people at the end of the year and is present in five countries: Portugal, Spain, Romania, Poland and Brazil.

SOLAR

Martifer Solar plays a leading role in the photovoltaic industry because of its ability to adapt to a fast-moving industry and its proved track record underpinned by cutting-edge technology, advanced technical qualifications and a skilled and motivated team.

The area’s main activities are project development, installation of EPC (Engineering, Procurement and Construction) projects, specialized O&M services and distribution via its subsidiary MPrime.

Martifer Solar covers all market segments: ground mounted, rooftop, BIPV, small generation and off-grid solutions

Operating since 2006, it continues to expand internationally by initiating activity in new countries. Martifer Solar is present in more than 20 countries throughout Europe, Africa, Asia and the Middle East, North America and South America. Martifer Solar has participated in the implementation of more than 560 MW of PV energy worldwide.

The area employed 304 people at end of 2014.

In September 2014, the Group started to classify the solar business unit (composed by Martifer Solar, SA and its subsidiaries) as a non current asset held for sale. This change resulted from the fact that Martifer SGPS is presently putting into action its plan to sell its economic interest (currently 55 %) in Martifer Solar.


In summary, the group is currently organized as follows:


INTERNATIONAL PRESENCE


HISTORY

1990

In February 1990, Martifer is formed as a limited company, with the capital of approximately 22,500 Euros (4,500 thousand escudos) and is headquartered in the Industrial Zone of Oliveira de Frades, where it continues to be today.

At the end of its first year of activity, Martifer had 18 employees and a turnover of 240,000 Euros.

1998

On 26th May, the company which already has 100 employees, is transformed into a Public Limited Company thereby changing its shareholder structure. The company's capital is held by MTO SGPS (currently I’M SGPS) and ENGIL SGPS.

In Portugal, Expo 98 takes place with Martifer participating in several projects, such as the Vasco da Gama Tower.

1999

In November, Martifer begins its internationalisation process in Spain with the objective of becoming one of the reference companies in metallic constructions in this country.

2002

Martifer creates its second plant in Portugal, located in Benavente, to meet the construction needs for the Euro2004 stadiums.

2003

In February 2003, Martifer continues with the internationalisation process by building an industrial unit in Gliwice, Poland. It starts operating in the 2nd semester of 2004.

2004

In February, Martifer begins activity in the renewable energy equipment sector, through Martifer Energia. This company dedicates itself to the manufacturing of metallic towers for wind turbines and is based in the Industrial Zone of Oliveira de Frades.

In November, Martifer SGPS, S.A. is created with the objective to manage the social holdings of all Martifer Group companies.


2005

The metallic structures activity widens its market to Central Europe, opening branches in Romania, the Czech Republic, Slovakia and Germany.

Investments are initiated in the area of Agriculture and Bio fuel in Romania.

Martifer becomes one of the reference shareholders of the German company REpower Systems AG, one of the largest producers worldwide of wind power equipment, ending the year with a financial holding of 25.4 %. In June, REpower Portugal is formed, aimed at the market of building and giving assistance to wind farms and assembling wind turbines.

In August, Martifer Group creates yet another company called M Energy (today, Martifer Renewables) with the main purpose of centralising the management of all the activities in the area related to the promotion of renewable energy.

2006

In March, through the Ventinveste Consortium, Martifer submitted its application to the tender for the attribution of licences for the production of wind power in Portugal.

In May, Martifer Solar is formed with the social object related to the projecting, design, manufacturing and installation of solar panels.

At the end of the year, Martifer is awarded the 1st prize of excellence for the promotion of new areas of investment and business, awarded by the Chamber of Commerce and Industry of Romania.

2007

In February, Martifer, together with the Indian Group Suzlon, launches a takeover bid on REpower. The consortium takes control of 56.93 % of the company, and, thanks to an agreement between Areva and Suzlon, the consortium took control of 87.1 % of the voting rights of REpower. Martifer agrees to sell its participation in REpower to Suzlon in 2009 for 270 million euros.

The Ventinveste consortium - formed by Martifer, Galp Energia, Enersis, Efacec and REpower Systems AG - came in first place in "Phase B" of the public tender launched by the Portuguese government for the attribution of 400 MW of injection capacity and the respective reception points associated to the production of electric power in wind farms.

In June, the initial public offer (IPO) for the Company was concluded. The Company gained 199 million in funds through the offer of 25 million shares which were placed at the peak of the price range, 8.00 € per share. After the IPO, the Company had 65 thousand new shareholders.

Martifer Solar formalised the contract with Spire Corporation for the turn key supply of the automated production line of photovoltaic modules with an annual capacity of 50 MW.

The Group was also awarded "Organic Grower of the Year 2007” by A.T. Kearney’s "Global Growth Assessment”.


2008

Martifer Energy Systems buys Navalria. The acquisition price amounted to 4.7 million Euros.

The Chairman and Vice-Chairman of Martifer, Carlos Martins and Jorge Martins win the 2nd edition of the national award attributed by Ernst & Young, Entrepreneur of the Year 2007.

The industrial units for assembly of wind turbines, components for wind farms and PV modules start production.

2009

Martifer and Hirschfeld create a Joint Venture for the production of wind energy components in the USA.

The metallic construction plant in Angola (15,000 tonnes of capacity) begins production in the 2nd semester of the year.

Martifer Renewables surpasses 100 MW of installed capacity in May and, at the end of the year, is awarded 217.8 MW in the first wind power auction held in Brazil.

In October, the Group adopts the government's new model: Carlos Martins takes on the role of Chairman, Jorge Martins becomes CEO and Mário Couto is appointed CFO.

2010

In March, Martifer sold 11 % of Prio Foods and Prio Energy for 13.75 million Euros, thereby reducing its participation from 60 % to 49 % in these companies and in the respective subsidiaries.

Also in March, the subsidiary Martifer Metallic Constructions acquired 45 % of the capital of Martifer Alumínios from HSF SGPS, taking possession of the company's entire capital.

In April, Martifer Solar increased its capital to 50 million Euros to meet the company's investment needs, thereby strengthening its capital structure.

In September and in October, Martifer Solar finalises the construction of the two largest photovoltaic solar plants in the African Continent in the islands of Sal and Santiago, in Cape Verde.

At the end of the year and following the asset rotating policy of Martifer Renewables, the Group sold the wind farms held in Germany, Bippen and Holleben, with 53.1 MW of installed capacity.

Still in December, Martifer Solar signs an agreement with EDP to sell 60 % of Home Energy.


2011

Martifer becomes a multinational company with over 3,000 employees worldwide and focused essentially on two business areas: metallic constructions and solar.

This year, the Group increases its exposure to markets outside Europe with its entry into promising markets. In the metallic constructions area, the first semester highlights the start of the construction of a metallic structure plant in one of the markets with the biggest growth potential in the next years: Brazil. In

solar, we witnessed the awarding of the first photovoltaic solar energy project in India in June.

In February, and following the strategic guideline of the Group to focus itself on its core activities, Martifer sold its 50 % participation in REpower Portugal to REpower Systems AG.

2012

2012 is the year of full operation of Martifer Metallic Constructions’ factory in Brazil. With a capacity to produce 12,000 tons of steel structure per year, this unit aims to respond to the great projects of the company in Brazil.

Martifer Solar is awarded its first contract in Brazil: a PV installation with 300 kW in a General Motors plant in Joinville, State of Santa Catarina. The company also continues its internationalization process entering Ukraine, Romania and Mexico.

2013

In 2013, Martifer Solar builds Latin America’s largest PV plant (30 MW) in Mexico. The company was in charge of the Engineering, Procurement and Construction of the plant and was also responsible for the following O&M services.

Martifer Renewables concluded the third wind farm in Poland (Rymanów) for Ikea Group. The farm with 26 MWp was inaugurated in June.

In November, following an international public tender, Martifer Energy Systems and Navalria, Martifer Group’s subsidiaries, are awarded the subconcession of the lands and the infrastructures of ENVC.


2014

In the beginning of the year, Martifer signs the contract for the subconcession of the lands and the infrastructures of the old Viana do Castelo Shipyard (ENVC). It is in May that West Sea, the company created by Martifer to administer the subconcession, starts operating in Viana do Castelo. At the end of the year, West Sea signs the first shipbuilding contract.

Also in 2014, Brazil hosts the FIFA World Cup. Martifer Metallic Constructions participated in the construction of three stadiums:

Arena Fonte Nova (Salvador da Bahía), Arena Castelão (Fortaleza) and Arena da Amazônia (Manaus). Martifer Solar was also present in this event, with the installation of the PV roof of the Mineirão Stadium, in Belo Horizonte.


MARKET ENVIRONMENT

GLOBAL ECONOMY

Economic Growth

Recent projections for global economic growth aim for a greater growth in 2015, when compared to 2014 – 3.5 % versus 3.3 % observed throughout the last year. However, the distinction, in terms of evolution, between developed and emerging countries is clear, having on the one hand emerging economies significantly contributing to world growth and, on the other hand other economies presenting less robust growth. In fact, contrasting with the evident stagnation in the European Union, emerging countries and the United States have been showing strong and consistent growth. These countries present themselves as the main opportunity both for growth and for the development of new projects.

The current scenario, strongly affected by the price drop in the energy sector as well as other commodities, leads to a second


and important difference: raw materials’ importing countries and exporting countries. Importing countries benefit from relatively lower prices and due to these lower prices exporting countries reduce their total revenues.

Taking this into account, developed economies, namely the European Union, are interested in promoting measures that increase their commercial competitiveness towards the rest of the world. In fact, policies carried out by the European Central Bank (ECB) have been strongly pushing Europe’s common currency, which in 2014 depreciated 11 % in relation to the US Dollar.

Currency depreciation is an important stimulus to exports, since it allows the economies to be more competitive, presenting slightly cheaper terms of trade than in the inverse situation. Together with this, the decreasing trend of the raw materials price also reduces the level of resources needed to import.

The ECB also lowered, in 2014, interest rates to historical lows, which, for the corporate sector, means a significant reduction in financing costs, being an opportunity to carry out new ventures and projects that could have been unapproachable until then.

In summary:

1. Euro depreciation expected for 2015.

2. Reference interest rates in historical lows.

3. Drop in oil price to 2009 lows.

4. Projection of a 1.5 % growth for Portugal.

5. Renegotiation of sovereign debt of European countries in difficulties, namely Greece, which will reduce instability about the future of the common currency and will stop pressuring the market negatively, for example, the yields of issued debt.

6. Exit of troika from Portugal, having the country reached positive results throughout the entire adjustment program.

7. Optimistic forecast for inflation of 1.1 %, which leads to believe that deflationary tensions will be surpassed in 2015, as well as a substantial reduction in unemployment, which has been gradually reducing since 2013.

8. Bond yields dropped to historical lows, with investors returning to sovereign debt.


Global Indicators – (2009-2015e)

2010 2011 2012 2013 2014f 2015e

GDP, Annual var. %

USA 3.0% 1.8% 2.3% 2.2% 2.2% 3.1%

Euro Zone 1.9% 1.5% -0.7% -0.4% 0.8% 1.3%

Germany 3.7% 3.3% 0.7% 0.5% 1.4% 1.5%

Portugal 1.9% -1.3% -3.2% -1.4% 1.0% 1.5%

Inflation, Annual var. %

USA 1.6% 3.1% 2.1% 1.5% 2.0% 2.1%

Euro Zone 1.6% 2.7% 2.5% 1.3% 0.5% 0.9%

Germany 1.2% 2.5% 2.1% 1.6% 0.9% 1.2%

Portugal 1.4% 3.6% 2.8% 0.4% 0.0% 1.1%

Unemployment Rate, Annual var. %

USA 9.6% 8.9% 8.1% 7.4% 6.3% 5.9%

Euro Zone 10.1% 10.2% 11.3% 11.9% 11.6% 11.2%

Germany 7.1% 6.1% 6.8% 5.3% 5.3% 5.3%

Portugal 10.8% 12.7% 15.7% 16.2% 14.2% 13.5%

Weight of the Deficit, % GDP

USA -9.0% -8.7% -7.0% -4.1% -3.4% -3.1%

Euro Zone -6.2% -4.1% -3.7% -3.0% -2.5% -2.3%

Germany -4.1% -0.8% 0.2% -0.2% 0.0% -0.1%

Portugal -9.9% -4.4% -6.4% -4.9% -4.0% -2.5%

Price of Crude

USD per Barrel 84.0 107.4 111.1 110.8 115.0 75.0

Interest Rates, End of year (%)

Interest Rates

- Fed (Fed Funds) 0.25% 0.25% 0.25% 0.25% 0.75% 0.12%

- ECB 1.00% 1.00% 0.75% 0.25% 0.50% 0.05%

- BoE 0.50% 0.50% 0.50% 0.50% 0.75% 0.50%

Long-term Interest Rates (10 y Bonds)

USA 3.30% 1.88% 1.76% 3.03% 3.50% 3.00%

Euro Zone 2.95% 1.83% 1.32% 1.93% 2.60% 1.60%

United Kingdom 3.40% 1.98% 1.83% 3.02% 3.50% 2.90%

Exchange Rates, End of year

EUR/USD 1.33 1.30 1.32 1.38 1.35 1.15 Source: Reuters, IMF reports, OECD, INE, World Bank, European Central Bank


THE PULSE OF PORTUGAL

Portugal left with success, in May 2014, the adjustment plan outlined by troika, having presented signs of economic recovery by the end of the third quarter. GDP showed an increase above expected and unemployment decreased. These factors lead to believe that Portugal, despite the adversities, has the potential to grow and surpass obstacles.

The European Commission and the Monetary Fund praised the performance of the Portuguese economy several times throughout the adjustment plan.

According to the Economic Bulletin issued in December 2014 by Banco de Portugal (the Portuguese Central Bank), there are several indicators that show the good performance:

Recovery of confidence indicators in 2014, becoming positive for all the sectors in the Portuguese economy;

The contribution of the total internal and external investment for the GDP growth stopped being negative, to become

positive, signalling, on one hand the strong attractiveness of the Portuguese economy to foreign investment and on the

other hand, the recovery in terms of internal investment;

In 2014, the contribution from the volume of imports to GDP growth decreased, and the contribution from exports

increased, revealing that, in this area, Portugal shows strength for the coming years. It is projected that they will continue

to grow in 2015 and 2016, with highlight to service and goods exports, excluding energy;

For the next 2 years, Banco de Portugal estimates that private consumption, as well as real disposable income, will

increase substantially in the country compared to the last 6 years.

Therefore, after the severe adjustment plan faced by the country which demanded important sacrifices and which we successfully left the forecasts are beyond positive for the next years.


According to recent developments, the main risk for the European Union member countries relates to deflation threats. It is important for the economies to avoid, at all costs, deflationary situations, otherwise, they can enter a recessive spiral. The European Central Bank, entity in charge of the EU monetary policy and of the compliance with the goal of inflation under but close to 2 %, is currently preparing an important Quantitative Easing program that aims to relieve matters related to European sovereign debts as well as to counter the deflationary trends through a significant liquidity injection.

Despite having complied with the goals for 2014, Portugal needs to continue to demonstrate excellence and integrity throughout 2015, so progress continues to be seen and accumulate.

Business Environment

For 2015, we can foresee an improvement in business environment, since, on one hand, a world GDP increase is forecasted and on the other hand, because an increase in international businesses is expected. The fact that global economies are jointly growing at a 3.8 % pace signals an increase in the demand of goods and services in prospect and consequently, an increase in the number of deals made. The increase in international deals is closely related to globalization, since, as we previously indicated, in scenarios like this, the companies’ growth strategies include emerging countries.

BUSINESS ENVIRONMENT

WORLD REAL GDP INTERNATIONAL TRADE

2011 3.8 6.6

2012 2.9 2.6

2013 3.0 2.7

2014 3.2 3.4

2015 3.8 5.0

Source: The Economist


MARKET RISKS AND VOLATILITY

The main volatility index – Vix index – closed 2014 at 19.2 points, after reaching the highest year level at 26.25 in October and the minimum level of 10.32 in July. The index has shown a steady decrease since the economic and financial turbulent times, when it reached the peak levels of 79.13 and 42.96 points, respectively in September 2008 and 2011.

Source: Reuters

However, the following items are identified as the main risks for 2015:

a. European Central Bank not being successful in fighting the deflation threat that haunted European economies in the last quarter of 2014.

b. Enforcement of advanced commercial protectionist measures among countries that include taxation of imports and / or exports and that, by reducing free circulation, create barriers to transactions and commercial relations between companies of different countries.

c. Recurrent conflicts between Russia and Ukraine, as well as in Syria, constituting sources of political instability in these countries and in neighbouring ones.

d. Deceleration of emerging economies.

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03 | FINANCIAL PERFORMANCE INTRODUCTORY NOTE In September 2014, the Group started to classify the solar business unit (consisting of Martifer Solar, SA and its subsidiaries) as a non current asset held for sale. This change resulted from the fact that Martifer is presently putting into action its plan to sell its economic interest (currently 55 %) in Martifer Solar.

Since the requirements of IFRS 5 are fulfilled, the contribution to Martifer’s consolidated results coming from this segment is presented in an autonomous line in the Consolidated P&L and the values YoY were adjusted to allow comparison. The contribution of assets and liabilities of the operational unit, classified as held for sale, are also presented in separate lines from the Group’s remaining consolidated assets and liabilities on 31st December 2014.

The breakdown of these contributions is included in the Notes to Consolidated Financial Statements.

CONSOLIDATED RESULTS ANALYSIS

M€ Dec-14 Dec-13 Var. (%) Revenues 225.8 319.9 -29% EBITDA 6.0 15.7 -62% EBITDA margin 3% 5% -2.3 pp Depreciation & Amortization -14.6 -14.3 -2% Provisions & Impairment Losses -38.6 -28.3 -37% EBIT -47.3 -26.9 -76% EBIT margin -21% -8% -12.5 pp Financial Results -19.4 -34.4 44% Profit before taxes -66.7 -61.2 -9% Income tax -4.9 -3.6 -35% Profit after taxes on continued operations -71.5 -64.8 -10% Discontinued operations’ Result -65.2 -5.9 <-100% Attributable to non-controlling interests -34.4 -1.7 <-100% Attributable to shareholders -30.7 -4.2 <-100% Net Profit -136.7 -70.8 -93% Attributable to non-controlling interests -43.2 -1.8 <-100% Attributable to shareholders -93.5 -69.0 -36% Earnings per share € -0.957 -0.705 -36%


REVENUES

REVENUES Dec-14 Dec-13 M€ WEIGHT M€ WEIGHT VAR. (%)

Martifer Consolidated 225.8 100% 319.9 100% -29% Metallic Constructions 200.5 89% 276.1 86% -27%

RE Developer 24.7 11% 44.1 14% -44%

Others, Holding and Adjust. 0.6 -0.9 0% n.m.

In 2014, the total Operating Revenues were 29 % lower than in 2013, reaching 226 million euros, of which 201 million in Metallic Constructions and 25 million euros as RE Developer.

The Revenues as RE Developer – 25 million euros – include the significant contribution of the revenues from the sale of renewable assets, mainly wind farms, continuing the asset rotation strategy.

Sales and services rendered in Metallic Constructions are still penalized by the strong recession in the construction sector, particularly in Europe, which the Group has been trying to overturn through internationalization, clearly turning to emerging countries, which presented themselves as the engine for construction worldwide.

As can be verified in the chart below, Portugal represents only 24 % of the total sales and services rendered, with the remaining 76 % resulting from four different regions: the European Union (excluding Portugal) – 32 %, Angola – 13 %, Brazil – 25 % and Saudi Arabia – 6 %.

BREAKDOWN OF SALES AND SERVICES RENDERED – 2014 VERSUS 2013

Portugal 24%

European Union (other)

32% Other 0%

Angola 13%

Brazil 25%

Saudi Arabia 6%

2014

Portugal 25%


28% Other 1%

Angola 9%

Brazil 23%

Saudi Arabia 13%

Australia 1%

2013


EBITDA AND NET PROFIT

EBITDA Dec-14 Dec-13

€M MARG. M€ MARG. VAR. (%) Martifer Consolidated 6.0 3% 15.7 5% -62% Metallic Constructions -7.3 -4% -18.7 -7% 61%

RE Developer 12.9 52% 35.4 80% -64%

Others, Holding and Adjust 0.4 -1.0 n.m.

In 2014, the Consolidated EBITDA reflects a significant decrease, when compared with 2013, from 16 million euros to 6 million euros. This decrease in the EBITDA results mainly from the reduction of the EBITDA as RE Developer, which had significantly contributed to the Group’s EBITDA in 2013, with the sales of wind farms consummated in that financial year.

In Metallic Constructions, the EBITDA at the end of 2014 amounted to -7 million euros, which compare with 19 million euros in 2013, showing therefore a significant improvement. This area is still strongly affected by thr recession in the construction sector, particularly in Europe, with direct consequences in margins. Additional unexpected costs in projects also negatively contributed to the performance in the period.

As RE Developer, the EBITDA recorded 13 million euros, with a 52 % margin vs. an 80 % margin YoY and results mainly from the sale of wind farms.

Depreciation & Amortization remained practically unchanged, reaching 15 million euros. Provisions and impairment losses for fixed assets registered 39 million euros, which compare with 28 million euros in the previous year.

Earnings Before Interest and Taxes (EBIT) reached -47 million euros, which compares with -27 million euros in 2013.

Net Financial Expenses totalled 19 million euros, comparing with 34 million euros in the previous year. Net interest expense was 22 million euros, net foreign exchange was positive in 3 million euros.

Net Profit in 2014 was negative in 137 million euros (-71 million euros in 2013), strongly penalized by the discontinued operations’ result (-65 million euros, corresponding to Martifer Solar’s consolidated net profit contribution to the Group).

Net Profit attributable to shareholders was -94 million euros, which compares with -69 million euros in 2013.

NET PROFIT Dec-14 Dec-13

M€ WEIGHT M€ WEIGHT VAR. (%) Martifer Consolidated -136.7 100% -70.8 100% -93% Metallic Constructions -68.4 50% -54.2 77% -26%

RE Developer 0.6 0% 9.9 -14% -94%

Solar (discontinued operation)* -66.7 49% -7.6 11% <-100%

Others. Holding and Adjust -2.2 -18.8 27% 88% * Consolidated Net Profit of Martifer Solar (contribution to the Group was -65 million euros). The difference is related with consolidation adjustments, included in “Others. Holding and Adjust”


CONSOLIDATED CAPEX The amount of investment in tangible and intangible fixed assets in 2014 was 15 million euros, mostly applied in the metallic construction unit (13 million euros), which corresponds mainly to investment in infrastructures, continuing the internationalization strategy.

Capex Dec-14 Dec-13*

M€ WEIGHT M€ WEIGHT VAR. (%) Martifer Consolidated 15.0 -11% 7.9 -11% 90% Metallic Constructions 13.3 -10% 5.4 -8% >100%

RE Developer 1.7 -1% 2.4 -3% -29%

Others, Holding and Adjust. 0.0 0% 0.1 0% n.m. *on a comparable basis INVESTMENT IN TANGIBLE AND INTANGIBLE FIXED ASSETS 2013 – 2014 (M€)

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CONSOLIDATED CAPITAL STRUCTURE ANALYSIS

FINANCIAL POSITION

€M Dec-14 Dec-13 VAR. % Fixed Assets (including Goodwill) 181.7 230.0 -21% Other non current assets 91.2 164.9 -45% Inventory and Receivables 188.5 322.9 -42% Cash and cash equivalents 23.0 39.2 -41% Assets held for sale 148.3 30.8 >100% Total Assets 632.7 787.8 -20% Shareholders Equity 40.3 100.0 -60% Non-controlling interests -22.9 36.8 n.m. Non-controlling interests related with assets held for sale -2.1 2.9 n.m. Total Equity 15.3 139.7 -89% Non-current debt and leasings 229.4 236.8 -3% Other non-current liabilities 36.5 37.5 -3% Current debt and leasings 76.1 138.1 -45% Other current liabilities 143.4 224.5 -36% Liabilities related with Assets held for sale 132.0 11.2 >100% Total Liabilities 617.4 648.1 -5%

The total assets amounted to 633 million euros (788 million on 31st December 2013), while non-current assets reached 273 million euros (395 million euros in 2013).

Total equity on 31st December 2014 recorded 15 million euros, which compares with 140 million euros on 31st December 2013. This decrease is mainly due to the period’s net profit, which is partly offset by the equity increase in Martifer Metallic Constructions.

The financial autonomy ratio on 31st December 2014 was 2 %.


NET DEBT

The Group’s Consolidated Net Debt (Borrowings + Financial Leases (+/-) Derivatives – Cash and Cash Equivalents) on 31st December 2014 totalled 283 million euros, showing a significant 53 million euros decrease when compared with the end of 2013. This variation almost totally results from the decision of the Group to sell Martifer Solar, and the consequent classification as asset held for sale (see introductory note).

€M Metallic Constructions RE Developer Holding Solar Martifer

Consolidated Gross Debt 2014 131 46 129 * 306

Net Debt 2014 114 41 128 * 283

Net Debt FY2013 135 13 136 51 336 *see introductory note

Note: Net Debt = Borrowings + Financial Leases (+/-) Derivatives – Cash and Cash Equivalent

The Group continues focused on the Net Debt reduction process, so it will continue to be committed in the process of selling non-core assets: solar segment, wind farms and residually the sale of real estate projects, throughout 2015.

Additionally, and considering the medium / long term nature of the investments made, the Group has sought to restructure its debt so it can follow the maturity of the associated assets, not jeopardising the obligations arising from its operational short term activity.

Therefore, the Group expects to adequate the inflows maturity of the operational activity and investment (divestment) to the outflows of the financing activity.

By the end of 2014, the Group tried, with the main financial institutions, to restructure its debt by rescheduling maturities over time, extending the average loan maturity to make it more coincident with the permanence of its long term assets and to have a maturity that allows the cash surpluses to be sufficient to comply with its obligations.

The Group expects to conclude the negotiation process throughout the first half of 2015.

Metallic Construction;

114

RE Developer;

41

Holding; 128


TREND OF CONSOLIDATED NET DEBT (€M)

NET DEBT STRUCTURE – short term vs medium / long term

At the end of 2014, the net debt structure of medium / long term and short term was 74 % and 26 %, respectively.

The debt structure by type of interest rate in medium and long term debt of the Group, at the end of 2014, was 2 % fixed and 98 % floating rate. In the short term debt, the rate was 18 % fixed and 82 % floating.

485 444

321 330

377 336

283

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DEBT STRUCTURE – FIXED VS FLOATING RATE – 2014

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Fixed - M/L Term Floating - M/L Term


04 | ANALYSIS BY SEGMENT METALLIC CONSTRUCTIONS

SECTOR TRENDS

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• According to the Euroconstruct’s analysis, published in November 2014, after 7 years of severe recession in the construction sector, period during which it lost around 21 % of volume, a significant recovery is expected from 2015 onwards in Europe.

• Also according to Euroconstruct and to forecasts of global growth, it is expected that, despite being slow, the growth in the construction sector will be gradual. However, forecasts aim firstly to a growth below global economic recovery and afterwards the inverse situation.

• Recovery is highlighted especially in the construction / civil engineering sub-sector, which contrasts with the residential and non-residential sub-sectors that still present some difficulties.

• The scenario is different depending on the territory. For Eastern Europe it is expected an around 3.0 % growth in the next years, having presented a 4.8 % growth in 2014. Western countries will, however, have a less robust growth.

• Emerging countries present themselves as the engine for construction at a global scale.

CONSTRUCTION SECTOR AND CURRENT GROWTH IN EUROPE


ACTIVITY

Order book at the end of 2014 reached 245 million euros, spread by several countries.

From the most recent contracts, we highlight the following projects:

• In Brazil, Museu do Amanhã (“Tomorrow’s Museum”) and São Paulo CENESP Business Centre

• In Saudi Arabia, Abi Bakr bridge

• In Angola, Sodiba beer factory

• In Algeria, Djelfa combined cycle station

• In Portugal, Âncora Project, and Viking Osfrid and Scenic ships

• In the UK, Kensington building

ORDER BOOK BY GEOGRAPHY

Geography Value (M€) % Africa 74 30%

Algeria 13 5%

Sub-Saharan Africa 61 25%

Latin America 23 9%

Eastern Europe 17 7%

Middle East 27 11%

Western Europe 104 42%

Construction 79 32%

Naval 25 10%

TOTAL 245 100%

RESULTS

€M Dec-14 Dec-13 VAR. % Revenues 200.5 276.1 -27% EBITDA -7.3 -18.7 61% EBITDA Margin -4% -7% 3.1 pp

Depreciation & Amortization -6.8 -7.4 9%

Provisions & Impairment Losses -37.3 -8.4 <-100% EBIT -51.4 -34.6 -49% EBIT margin -26% -13% -13.1 pp

Financial Results -16.7 -15.1 -10%

Profit before taxes -68.1 -49.7 -37%

Income tax -0.3 -4.5 92% Net Profit -68.4 -54.2 -26% Attributable to non-controlling interests 0.3 0.2 39%

Attributable to shareholders -68.7 -54.4 -26%


Revenues in the Metallic Constructions segment reached 201 million euros in 2014, resulting from the difficulties in the sector, especially in Europe, in spite of the effort that the Group has been making with internationalization and focusing on countries with economic growth and an infrastructure investment plan.

The sales and services rendered in this segment are still focused on the external market.

The EBITDA at the end of 2013 amounted to -7 million euros, which compares with -19 million euros in 2013. EBITDA in 2014 was not only affected by the deterioration of the market conditions in Europe (with effects on margins), but also by the entrance costs in new markets and delays in some projects.

The negative EBIT in 51 million euros registered in 2014 is negatively affected by provisions and impairment losses for onerous contracts in 2014.

The Net Financial Expenses in 2014 reached 17 million euros (15 million euros in 2013).

The Net Profit at the end of the year 2014 totalled -68 million euros, of which 0.3 million euros are attributable to non-controlling interests.

The Net Financial Debt in the Metallic Constructions area on 31 st December 2014 reached 114 million euros, 13 million euros less than on 31 st December 2013.

The total CAPEX at the end of 2014 reached 13 million euros, a value that corresponds to investments in infrastructures continuing the internationalization strategy.

Portugal 25%

European Union 29%

Other 0%

Angola 13%

Brazil 26%

Saudi Arabia

7%


RE DEVELOPER

SECTOR TRENDS

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• Global Wind Energy Council reports that new markets outside OECD continue to arise and to make a difference in the total wind energy market.

• Although the market continues to be dominated by Asia and Europe, Brazil is expected to reach the third or fourth place throughout the next year in the top 10 ranking regarding cumulative installed capacity.

• Because it is a highly subsidized sector, led by authorities and local governments, it has the power to attract investors that need financing and the government intervention in the business may substantially condition the development of projects.

• The European market significantly decreased in the last years, contrasting with strong investments in Brazil, where authorities have already contracted more than 10 GW until 2018.


ACTIVITY

RE Developer currently has 49 MW of wind farms and solar parks in Spain and Romania contributiing to the revenues. In Portugal, this business area controls 50 % of the wind farms in operation with a 31 MW capacity, which contribute to results through the equity method.

In 2014, Martifer Renewables, via its subsidiary Ventinveste, celebrated a partnership for the construction of 171.6 MW of wind projects in Portugal. It reached an agreement for the sale of the 36 MW Gizalki project in Poland and concluded the sale of Rosa dos Ventos (14.7 MW), therefore continuing its asset rotation policy.

RESULTS

€M Dec-14 Dec-13 VAR.% Revenues 24.7 44.1 -44% EBITDA 12.9 35.4 -64% EBITDA Margin 52% 80% -28 pp

Depreciation & Amortization -6.4 -5.1 -27%

Provisions & Impairment Losses -1.3 -19.3 93% EBIT 5.2 11.1 -53% EBIT margin 21% 25% -4.1 pp

Financial Results 0.0 -1.9 98%

Profit before taxes 5.2 9.2 -44%

Income tax -4.5 0.8 n.m. Net Profit 0.6 9.9 -94% Attributable to non-controlling interests 5.3 0.6 >100%

Attributable to shareholders -4.7 9.3 n.m.

The RE Developer’s total Revenues amounted to around 25 million euros, and result not only from the solar parks and wind farms in operation, totalling 40 MW and located in Spain and Romania, respectively, but also from the sale of Rosa dos Ventos, in Brazil.

The EBITDA reached 13 million euros in 2014, showing a 64 % decrease when compared with the previous year, essentially justified by the fact that the sale of wind farms in 2014 had a lower impact than the sales in the previous year, but also affected by the reduction of MWs in operation and by the negative impact of the instability in the Romanian market in the performance of the Babadag wind farm.

The Net Profit was positive in 0.6 million euros in 2014, being the net profit attributable to shareholders negative in around 5 million euros due to non proportional distribution of dividends in Brazil.

The total Capex made in 2014 was 2 million euros and results from costs in the development of projects mainly in Brazil, but also in Poland.

The Net Debt at the end of 2014 totalled around 41 million euros, a 27 million euros increase YoY, justified by the debt related to solar plants in operation in Spain.


DISCONTINUED OPERATIONS’ RESULT (SOLAR) As described in the introductory note on chapter 3 – Financial Performance, in September 2014, the Group started to classify the solar business unit (consisting of Martifer Solar, SA and its subsidiaries) as a non current asset held for sale. This change resulted from the fact that Martifer is presently putting into action its plan to sell its economic interest (currently 55 %) in Martifer Solar.

Since the requirements of IFRS 5 are fulfilled, the contribution to Martifer’s consolidated results, coming from this segment, is presented in an autonomous line in the Consolidated P&L and the values YoY were adjusted to allow comparison. The contribution of assets and liabilities of the operational unit classified as held for sale are also presented in separate lines from the Group’s remaining consolidated assets and liabilities on 31st December 2014.

The discontinued operations’ Result (-65 million euros) therefore corresponds to the Net Profit of Solar activity attributable to the Group.

We present the analysis of the main aspects of the performance and position of this segment on 31 st December 2014 below.

ACTIVITY

The backlog of turnkey contracts (signed) is 290 million euros and is spread by Europe, Asia, America and Africa.

The strategic positioning of the company is based on focusing on mature markets with a favourable regulatory framing and emerging markets with good solar potential for the execution of on and off grid solutions. However, it is important to highlight that the margins in the solar segment were reduced throughout the value chain, with significant cuts in government support and an increase in competition.

RESULTS

Martifer Solar ended 2014 with a 67 million euros loss, with the contribution to the Group reaching -65 million euros.

€M Dec-14 Dec-13 VAR.% Revenues 119.1 274.7 -57% EBITDA -27.2 11.8 n.m. EBITDA Margin -23% 4% -27.1 pp

Depreciation & Amortization -2.6 -3.1 16%

Provisions & Impairment Losses -19.9 -4.9 <-100% EBIT -49.6 3.9 n.m. EBIT margin -42% 1% -43.1 pp

Financial Results -8.3 -14.8 44%

Profit before taxes -57.9 -11.0 <-100%

Income tax -8.8 3.3 n.m. Net Profit -66.7 -7.6 <-100% Attributable to non-controlling interests -9.5 1.6 n.m.

Attributable to shareholders -57.2 -9.2 <-100%

Revenues in 2014 decreased by 57 % YoY, totalling 119 million euros. This reduction is mainly justified by the delay in projects in the UK and in Jordan, and also by the reduction of the activity in Portugal and in the Ukraine. This last one due to the political and military turmoil in the region.


The EBITDA at the end of 2014 was -27 million euros (around 12 million euros in 2013), with a -23 % margin vs. 4 % YoY, mainly because of additional costs in the project in Mexico, due to a partial destruction of the plant after a force majeure event, and in the USA where, in January 2014 the subsidiaries Martifer Solar USA INC and Martifer Aurora Solar LLC incurred in Chapter 11. In the last quarter, following the “settlement, plan support and release agreement”, with the consequent loss of control in these companies, they no longer integrate the consolidation perimeter, and the related non recoverable assets’ loss was recognized.

The EBIT in 2014 was strongly affected by the high impairment loss registered in FTP Power investment.

These facts are the greatest contributors to the high losses registered in the last quarter of the year.

The Net Financial Expenses in 2014 reached 8 million euros (in 2013, 15 million euros), being the variation explained by not recurring to financing from financial institutions for the project Silverado, whose alienation occurred in 2013.

The Net Profit was negative in 67 million euros and is a consequence of the effects that conditioned EBITDA in 2014 and of impairment and provision following the activity in the USA, in Mexico, in Portugal and in Spain.

The Capex registered in 2014 was 1 million euros, explained mainly by the activity of project development in Japan, in the UK, in France, in Chile, and in other countries.

The Net Debt registered on 31st December 2014 was 58 million euros, 7 million euros more than in 2013. Despite the debt being relatively controlled, the increase of only 7 million euros arises from Capex financing needs and support to treasury in the US subsidiaries.


05 | INDIVIDUAL FINANCIAL INFORMATION During 2014, the level of services that the Holding company provided to other Group companies was similar to 2013, when a great part of the services that had been previously provided by the company have been transferred to the Business Areas, following the strategy of allocating greater autonomy to the Business Areas, with consequent greater decentralization and accountability.

The Net Profit of Martifer, SGPS, SA, the holding company of the Group, was negative amounting to 122 million euros, comparing with a negative Net Profit of 49 million euros in the previous year.

The negative Net Result in 2014 is mainly due to the recognition of impairment losses in some of its subsidiaries’ and associates’ participations.


06 | MARTIFER SHARE PERFORMANCE SHARE PERFORMANCE | 2014

SOURCE: Reuters

TRADED VOLUME | 2014 –‘000 shares

SOURCE: Reuters

Martifer shares closed 2014 dropping around 73 %, with the PSI-20, Euronext Lisbon’s main index, decreasing around 27 % when compared with the end of 2013. Martifer’s share price closed the year at 0.187€/share (0.73€/share at the end of 2013). The maximum price achieved was 1.20 €/share (0.82€/share in 2013) and minimum 0.186 €/share (0.45€/share in 2013). The average volume of shares traded daily during 2014 was 66 898 shares (66474 shares in 2013).

Martifer’s market value on 31st December 2014 was 18 million euros.

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PURCHASE OF OWN SHARES In accordance with CMVM regulation 5/2008, namely article 11, numbers 1 and 2, we confirm that Martifer SGPS, SA (Martifer) didn’t purchase own shares on the Stock Exchange during 2014. Therefore, Martifer holds 2,215,910 own shares representing 2.22 % of its share capital, the same as in 2013.


07 | FUTURE PROSPECTS Martifer Group has been taking important steps in the last years, always focused on the main defined strategic goals, having as main purpose the improvement of profitability and the consequent turnaround of the Group.

Today, we are focused on the Group’s original business area – metallic constructions – in its several segments: metal mechanical construction, aluminium and glass façades, infrastructures for oil & gas and naval industry.

We started the adoption of a new organizational model in 2014:

− Resizing and readapting the structure, aligning it with the international presence; − Improvement of the business processes and operational efficiency; − Development and retention of human resources; − Optimization of the industrial footprint and production layouts.

We have been working to improve the Group’s financial situation:

− Divestment in non-core businesses and sale of real estate assets; − Reduction of cash costs; − Gradual decrease of the net debt and the debt/EBITDA ratio; − Adequacy of the inflows maturity of the operational activity and investment (divestment) to the outflows of the financing activity.

The action plan is based, therefore, on 4 goals:

1. Adoption of a new organizational model • Resizing and readapting the structure • Improvement of the business processes and operational efficiency

2. Decrease of indebtedness through the divestment in non-core businesses and sale of non-core assets, allowing for:

• Reduction of the cash costs • A Gradual debt reduction

3. Reinforcement of the international presence, focusing on three core geographies (Europe and the Middle East, Africa and Latin America) and in attractive opportunities profitable above average. 4. Focus on the Group’s original business area – metallic constructions – in its several segments: metal mechanical construction, aluminium and glass façades, infrastructures for oil & gas and naval industry.

It is based on this strategy that the Group expects to, in the present, overcome challenges, aiming to ensure its long term sustainability.


08 | MAIN RISKS FINANCIAL RISKS

A) PRICE RISK

The volatility of the prices of raw material constitutes a risk for the Group, both in metallic constructions and in solar. The changes in the price of steel and aluminium impact the operational activity of the metallic constructions and the changes in solar panel prices can also influence the solar activity. Martifer has sought to mitigate this risk the same way in both areas, by including clauses in the contracts with customers that allow it to pass on raw-material price fluctuations and by negotiating fixed prices for large scale projects with its suppliers.

B) CURRENCY RISK

Currency risk reflects the possibility of registering gains or losses resulting from changes in the foreign exchange rates between different currencies. The Group’s internationalization forces it to be exposed to currency risk from different countries.

Exposure to currency risk results mainly from operational activities (in which expenses, income, assets and liabilities are expressed in a currency other than the reporting currency of the Group), from transactions between these subsidiaries and other Group companies and from the existence of transactions with external parties made by the operational companies in a currency other than the reporting currency of the Group.

The Group’s currency risk management policy aims to reduce the sensitivity of its results in exchange rate variations.

Subsidiaries, in their day-to-day operational activities, seek to use their local currency. Likewise, loans contracted by foreign subsidiaries are preferably denominated in their local currency.

Concerning exchange rates’ hedging, hedges are sporadic as their cost is sometimes considered excessive in relation to the risk level involved. However, whenever considered suitable, the Group contracts exchange rates hedging in order to cover the risk.

Usually, operations on exchange rates are only performed when they are to be used in covering risks in pre-existing or contracted positions and the coverage terms are negotiated in order to fit the terms of the covered instrument, to maximize the coverage efficiency.

C) INTEREST RATE RISK

Interest rate risk reflects the possibility of changes in future interest charges on loans contracted due to the evolution of the market interest rate levels.

The cost of financial debt contracted by the Group is indexed to short term base rates, reviewed with a year or less frequency, plus a negotiated risk premium. Therefore, variations in interest rates may affect the Group’s results.

The Group’s exposure to interest rates is related to financial liabilities contracted with a fixed and / or floating rate. In the first case, the Group faces a risk of fair value variation on these assets or liabilities, since every change in market rates involves an opportunity cost. In the second case, such change has a direct impact on interest value, consequently causing cash variations.

By the end of 2014, the medium and long term debt exposed to a fixed rate was 1.75 % (98.25 % floating rate), which compares with 3 % fixed rate and 97 % floating rate in 2013.

In more significant long-term loans and whenever it considers it appropriate the Group relies, when it considers it appropriate, on fixed interest rate loans or uses interest rate derivatives to hedge exposure to interest rate risk them. The amounts, interest due


dates and repayment schedules of the loans underlying the interest rate derivatives are identical to those of the loans they hedge, and so being they are considered perfect hedges.

At the end of 2014, the Group sought to renegotiate premium risk rates (spread) with financial institutions in order to allow a lower exposure to interest rate risks and, consequently, meet the treasury resources stipulated in the restructuring plan.

D) LIQUIDITY RISK

Liquidity risk reflects the Group’s ability to satisfy its financial responsibilities with the financial resources available.

The main goal of the liquidity risk management program is to ensure that the Group has available, whenever needed the financial resources to satisfy its responsibilities and pursue the outlined strategies, honouring all its obligations towards third parties, through an adequate management of the financing cost / maturity ratio.

Additionally, and considering the medium / long term nature of the investments made, the Group has sought to restructure its debt so it can follow the maturity of the associated assets, not jeopardising the obligations arising from its operational short term activity.


By the end of 2014, the Group triedto restructure its debt with the main financial institutions, by rescheduling maturities over time, extending the average loan maturity to make it more coincident with the permanence of its long term assets and a maturity that allows the cash surpluses to be sufficient to comply with its obligations.

The Group expects to conclude the negotiation process in the first semester of 2015.

E) CREDIT RISK

The worsening of the worldwide economic conditions and the escalation of the adversities facing local, national and international economies can influence Martifer Group’s clients’ default rate, with possible negative impacts on the Group’s results.

The Group undergoes credit risk in its operational activity – clients and other receivables.

Aware of this reality, the Group tries to assess all its clients’ credit risk in order to establish credit limits, with the ultimate purpose of ensuring the collection of the amounts due within the negotiated periods.

With this objective in mind, the Group uses credit rating agencies, regular risk analysis and credit control and collects from and manages cases in litigation, procedures which are all considered essential to manage the credit conceeded and to minimize the risk of credit default.

OPERATIONAL RISKS

A) METALLIC CONSTRUCTIONS

Operational risks in the metallic constructions area, which also incorporated the energy equipment area as of 2011, are currently divided into three risk sources – client, supplier and external risk, which in turn are sub-divided into specific problems.


Under client risk one can identify, for example, issues at the contractual level, such as the lack of convergence in the interpretation and application of the contractual dispositions, the distaste or dissatisfaction with the service / product and also the risk of non-payment of the price stipulated following the delivery of the projects.

In terms of demand volatility, it is important to note that the business area partly depends on the launch of public tenders for public infrastructures (e.g. bridges, airports, train stations). Within the scope of public tenders, Martifer is subject to complex regulatory demands, specific to each country, namely in matters concerning the presentation of the proposals and the preparation of complex administrative documentation files to satisfy the project’s specifications defined by the contracting entity. This may represent additional costs for Martifer Group. It must be highlighted that, despite the dependence on public tenders, Martifer has been able to win deals not subject to public tenders, thereby reducing its exposure to this risk.

Under supplier risk, Martifer Construções, as a specialist in engineering projects, relies on subcontractors very often. If these fail in the execution of their work the project’s delivery deadline cannot be met, in a domino effect. In other words, there is also a risk of delays in delivering the projects, with the inherent contractual penalties.

Finally, in terms of external risks and considering that the area of metallic constructions is strongly correlated with economic growth and with gross fixed capital formation, it is therefore sensitive to the current economic environment. Accordingly, the worsening of the sovereign debt crisis in Europe also raises other problems, namely the austerity plans that imply severe transversal cuts in public investment and the significant decrease in liquidity throughout the financial system, which often causes highly attractive projects to be shelved due to lack of capital.

In order to mitigate these risks, the metallic constructions area diversified its projects in different geographies, namely by entering markets that register stronger growth in the construction sector, such as Angola, Brazil and Algeria, or even by ‘visiting countries’ such as Saudi Arabia, which will allow to compensate both the effects of economic recession in Portugal and the economic slowdown in Europe.

B) SOLAR

In the turn-key park installation activity, end-client delays in obtaining the necessary licences or unanticipated delays in the delivery of equipment may disrupt the initially foreseen calendars for the completion of the respective projects. Despite the fact that this type of delay usually carries no contractual penalties, in some cases this situation can constitute a risk for the Group given the planning difficulties it can present.

Additionally, the financial market crisis has been hampering the promoters’ access to funding, resulting in the postponement of some projects. The diversification of the business throughout the value chain and the diversified client portfolio inside and outside the Group, currently being adopted, shall reduce the possible impact of this situation.

The solar photovoltaic modules produced by the company are traded with a 5-year warranty and a 25-year performance warranty. As a result, this sector is exposed to the risk of warranty claims many years after the sale of the equipment. Accordingly, any quality or performance problems that may occur can result in high costs. The performance of solar systems is also guaranteed in terms of the modules acquired for the construction of solar parks; however, the Group’s responsibility, in this case, is diminished since there is a right of recourse vis-à-vis the suppliers.

Additionaly, most of the equipment used in the production of solar photovoltaic modules is customized with specific raw materials, with a resulting dependency risk on key raw material suppliers. The Group has sought to mitigate this risk by establishing long-term contracts for some raw-materials, carefully selecting suppliers and working towards bringing together a diversification of suppliers for each of the relevant raw-materials.

C) RE DEVELOPER

The productivity indices associated with the renewable energy business depends on the volume of energy produced by the wind farms and their profitability, factors that depend on the location of the wind farms and on the seasons of the year (seasonality). Given that the wind turbines only operate when the wind velocity is within specific parameters and the parameters depend on the


supplier and the type of turbine, if the said velocity is not within the parameters or if it is at the lower end of the limits, the energy production of the wind farms will be reduced.

The readiness and power curve of each turbine is contractually guaranteed, with indemnities being payable by the suppliers for situations where their readiness is not satisfied or the power curve is not attained.

This risk is also mitigated through the geographical distribution of the wind turbines in the wind farms, allowing the set-off of wind velocity variations at each farm and ensuring the relative stability of the volume of total energy produced.

LICENCING:

Wind farms and solar parks are subject to rigorous regulations in matters such as the development, construction, licensing and operation. If the relevant authorities in the jurisdictions in which the Group operates stop or reduce their support in the development of wind farms and solar parks, such actions may have a significant impact on the activity.

LEGAL RISKS Martifer is subject to the national and local laws and regulations in the various geographies and markets where it operates. These aim to ensure labour rights, environment protection, spatial planning and the maintenance of an open and competitive market. Thus, the legal and regulatory changes that affect the conditions conducive to the development of the Groups’ activities and that consequently harm or impede the attainment of the strategic objectives require the Company to adapt to the new regulatory realities.

The management of legal risk is carried out by the legal department of the holding company and of each of the Group’s Business Areas and is monitored within the scope of reviews performed by internal legal and fiscal service providers dedicated to the respective activities, which operate in the dependence of the Board of Directors and management, conducting their work in articulation with the other fiscal and financial departments, so as to ensure the protection of the Company’s interests and ultimately of the stakeholders’, in strict compliance with their legal duties.

The members of the legal departments and internal advisory service providers referred to above have specialized formal qualifications and undergo regular formal training and updating.

Legal and fiscal advisory services are also ensured, nationally and internationally, by external professionals, selected amongst reputable firms and in accordance with the highest standards of competence, ethics and experience.


09 | PROPOSAL OF RESULTS ALLOCATION The Board recommends to the General Shareholders’ Meeting, the allocation of the net loss, resulting from the Individual Financial Information totalling of 121,612,931 euros, recorded in 2014, to Retained Earnings.

Oliveira de Frades, 31 st March 2015

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)

Pedro Nuno Cardoso Abreu Moreira (Member of the Board of Directors)

Luís Filipe Cardoso da Silva (Member of the Board of Directors)

Arnaldo José Nunes da Costa Figueiredo (Member of the Board of Directors)

Jorge Bento Ribeiro Barbosa Farinha (Member of the Board of Directors)

Luís Valadares Tavares (Member of the Board of Directors)


10 | OTHER INFORMATION BUSINESS DEVELOPED BY NON-EXECUTIVE MEMBERS OF THE BOARD OF DIRECTORS In addition to incorporating Martifer SGPS, SA’s Board of Directors, each non-executive board member integrates, at least, one of the nominated Committees by the Board (Committee for Corporate Governance, Committee for Ethics and Conduct or Committee for Risk). Each of these Committee’s rules is published in the Group’s website and the functions and activities developed throughout 2014 are outlined in the Corporate Governance Report.

Throughout the year, the non-executive members of the Board have shared and expressed relevant opinions regarding specific business segments based on their performance, the risks associated and outlook, keeping regular communication with the executive Board Members, and the Board Members and Directors of the business units.

PERMITS GIVEN TO BUSINESS TRANSACTIONS BETWEEN THE COMPANY AND ITS BOARD MEMBERS, ACCORDING TO ARTICLE 397 OF THE PORTUGUESE COMPANIES CODE In 2014, the following deals or transactions were made between the company and the Board of Directors or the Supervisory Board: The subsidiary company Martifer Metallic Constructions, SGPS, S.A., suffered share capital increase, performed with the entry

in capital of the company Vector Diálogo – SGPS, S.A., totalling 9,700,000.00 euros (nine million and seven hundred thousand euros), through new in kind contributions, with an agio to be deliberated, and the emission of 9,700,000 (nine million and seven hundred thousand) bearer shares, with a nominal value of one euro each, with the share capital increasing from 29,050,000.00 euros (twenty-nine million and fifty thousand euros) to 38,750,000.00 euros (thirty-eight million, seven hundred and fifty thousand euros), receiving a favourable opinion from the company’s Supervisory Board on 27th March 2014.

The company sold 49 % of the share capital owned in the company NUTRE SGPS, S.A. to a Dutch cooperative to be constituted by the companies CERES INVESTMENTS LIMITED and SEVERIS, SGPS, S.A., having as counterpart the emission of Loan Notes, due on 30th December 2016. NUTRE SGPS, S.A., according to its balance sheet on 31st December 2013, showed an equity of 6,985,097.00 euros, presenting liabilities totalling 87,086,336.00 euros, therefore being financially unbalanced and also needing a financial debt restructuring. Considering that i) the value of the transaction of 19,600,000.00 euros corresponded to the value registered on the company’s balance sheet on 30th June 2014, not forthcoming any loss due to this sale and ii) the price largely exceeded the correspondent to the share in equity of NUTRE SGPS, S.A., the Supervisory Board issued a favourable opinion to the sale on 11th September 2014.

OTHER INFORMATION Martifer SGPS, S.A. doesn’t present any debt to the State or any other public entity, including Social Security.


MANDATORY INFORMATION SHAREHOLDINGS OF THE MEMBERS OF THE MANAGEMENT AND SUPERVISORY BODIES In accordance with articles 447 and 448 of the Portuguese Companies Code, the securities issued by Martifer SGPS, SA and companies dominated by it, held by members of the governing bodies in the period from 1st January 2014 through to 31st December 2014, are the following:

HOLDER GOVERNING BODY NO. SHARES HELD ON 31/12/2014

Carlos Manuel Marques Martins Board of Directors 347,100

Jorge Alberto Marques Martins Board of Directors 230,260

I’M – SGPS, S.A. * Board of Directors 42,697,047

Arnaldo José Nunes da Costa Figueiredo Board of Directors 3,000

Luís Filipe Cardoso da Silva Board of Directors 2,000

MOTA-ENGIL, SGPS, S.A. ** Board of Directors 37,500,000

Luís Valadares Tavares Board of Directors -

Jorge Bento Ribeiro Barbosa Farinha Board of Directors -

Mário Rui Rodrigues Matias*** Board of Directors -

Manuel Simões de Carvalho e Silva Supervisory Board -

Carlos Alberto da Silva e Cunha Supervisory Board -

João Carlos Tavares Ferreira de Carreto Lages Supervisory Board -

Hermínio António Paulos Afonso Statutory Auditor, representing PricewaterhouseCoopers -

José Carreto Lages Chairman of the General Meeting -

* Directors Carlos Manuel Marques Martins and Jorge Alberto Marques Martins are holders of the share capital of I’M SGPS, SA and are, respectively, its Chairman of the Board of Directors and Director. ** Directors Arnaldo José Nunes da Costa Figueiredo and Luís Filipe Cardoso are Directors of MOTA-ENGIL, SGPS, S.A. *** Resignation on 6th January 2015. Co-optation by Pedro Nuno Cardoso Abreu Moreira on the same day


EVENTS DESCRIBED IN ARTICLE 447 OF THE PORTUGUESE COMPANIES CODE

NAME OF THE MEMBER OF THE GOVERNING BODY GOVERNING BODY NO. SHARES HELD

ON 31/12/2014

Carlos Manuel Marques Martins Board of Directors 347,100


Mário Rui Rodrigues Matias Board of Directors 0

Arnaldo Nunes da Costa Figueiredo Board of Directors 3,000

Pedro Nuno Cardoso Abreu Moreira* Board of Directors 0


Luis António de Valadares Tavares Board of Directors 0

Jorge Bento Ribeiro Barbosa Farinha Board of Directors 0

Manuel Simões de Carvalho e Silva Supervisory Board 0

Carlos Alberto da Silva e Cunha Supervisory Board 0

João Carlos Ferreira de Carreto Lages Supervisory Board 0

Juvenal Pessoa Miranda Supervisory Board 0

* Co-opted by the Board of Directors on 6th January 2015, after the resignation of the Board Member Mário Rui Rodrigues Matias Directors Carlos Manuel Marques Martins and Jorge Alberto Marques Martins, respectively Chairman and Vice-Chairman of the Board of Directors, besides the shares held as described above, are sole equal shareholders of I’M SGPS, SA, that on 31st December 2014 held a total of 42,697,047 shares of Martifer SGPS, S.A..

Transactions by the members of the governing bodies in 2014:

Member of the Governing Body Date Purchase Alienation Average Price

Carlos Manuel Marques Martins* 15-12-2014 5,000 - 0.198











*purchases by the company Black & Blue, S.A. (Carlos Manuel Marques Martins is a shareholder and a Board member of this company)


HOLDERS OF QUALIFYING SHAREHOLDINGS According to paragraph 1b) of article 8 of CMVM regulation number 5/2008, and fulfilling article 448 of the Portuguese Companies Code, the following is the list of qualifying shareholders, with an indication of the number of shares and percentage of voting rights held, calculated according to article 20 of the Securities Code (CMVM), as of 31st December 2014:

SHAREHOLDERS NO. OF SHARES % OF SHARE CAPITAL

% OF VOTING RIGHTS 1

I’M – SGPS, SA 42,697,047 42.70% 43.63%

Carlos Manuel Marques Martins* 347,100 0.35% 0.35%

Jorge Alberto Marques Martins* 230,260 0.23% 0.24%

Total Imputable to I’M – SGPS, SA 42,997,337 43.00% 43.94%

Mota-Engil – SGPS, SA 37,500,000 37.50% 38.32%

Arnaldo José Nunes da Costa Figueiredo ** 3,000 0.00% 0.00%

Luís Filipe Cardoso da Silva ** 2,000 0.00% 0.00%

Total Imputable to Mota-Engil , SGPS, SA 37,505,000 37.51% 38.32%

1 % Voting rights = Number shares / (N.º Number shares – Own shares * Holder of a position in the Governing Bodies of I’M SGPS, SA ** Holder of a position in the Governing Bodies of Mota-Engil SGPS, SA


STATEMENT OF COMPLIANCE ACCORDING TO ARTICLE 245, NUMBER 1, PARAGRAPH C) OF THE SECURITIES CODE (CMVM) (Free translation from the original in Portuguese)

Dear Shareholders,

According to article 245, number 1, paragraph c) of the Securities Code (CMVM) and to the best of our knowledge:

(i) The information contained in the consolidated management report faithfully reports the evolution of trading, the performance and the position of Martifer SGPS, SA and of the companies in its consolidation perimeter and contains a description of the main risks and uncertainties facing its business; and

(ii) The information contained in its financial statements and accompanying notes, was prepared in accordance with the applicable accounting practices, giving a true and fair view of the assets, liabilities, financial position and financial results of Martifer SGPS, SA and of the companies included in its consolidation perimeter.

Oliveira de Frades, 31st March 2015


Carlos Manuel Marques Martins (Chairman of the Board of Directors)

Jorge Alberto Marques Martins (Vice-Chairman of the Board of Directors)







11 | CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED INCOME STATEMENTS FOR THE YEARS AND QUARTERS ENDED 31ST DECEMBER 2014 AND 2013 (Amounts expressed in Euro)

(Translation of consolidated financial statements originally issued in Portuguese - Note 44)

NOTES FY 2014 FY 2013 4th QUARTER

2014 (NOT AUDITED)

4th QUARTER 2013

(NOT AUDITED)

Sales and services rendered 3, 4 188,907,997 272,632,258 54,850,052 66,006,157

Other income 5 36,911,006 47,306,454 12,729,491 19,949,306

Cost of goods sold 6 (55,328,809) (79,047,783) (18,300,801) (18,278,941)

Subcontractors 7 (33,997,204) (72,546,228) (9,512,768) (21,378,479)

External supplies and services 8 (48,387,513) (66,032,041) (12,885,152) (13,182,171)

Staff costs 9 (58,151,851) (63,137,609) (14,960,854) (15,862,174)

Other expenses 10 (23,949,574) (23,444,204) (14,434,514) (7,827,962)

3 6,004,052 15,730,847 (2,514,546) 9,425,736

Amortizations 3, 18, 19 (14,633,359) (14,312,607) (3,583,699) (3,707,303)

Provisions 3, 11 (36,573,865) (5,084,160) (6,144,254) (2,257,535)

Impairment losses 3, 11 (2,057,171) (23,214,686) 50,375 (4,735,877)

Operating income 3 (47,260,343) (26,880,606) (12,192,124) (1,274,979)

Financial income 12 9,117,405 22,423,394 5,136,762 615,031

Financial expenses 12 (29,696,065) (31,671,161) (7,740,164) (7,111,555)

Gains / (losses) on associate companies and joint arrangements 3, 13 1,172,815 (25,113,721) 273,589 (8,468,962)

Profit before tax of continued operational units (66,666,188) (61,242,094) (14,521,937) (16,240,465)

Income tax 14 (4,864,257) (3,600,830) (2,602,419) 1,643,600

Profit after tax of continued operational units (71,530,445) (64,842,924) (17,124,356) (14,596,865)

Earnings from discontinued operations 28 (65,171,979) (5,908,517) (40,598,915) (7,421,172)

Attributable to: -

non-controlling interests 28 (34,428,519) (1,658,652) (23,290,734) (3,780,099)

owners of Martifer (30,743,460) (4,249,865) (17,308,181) (3,641,073)

Profit for the year 3 (136,702,424) (70,751,441) (57,723,271) (22,018,037)

Attributable to:

non-controlling interests 29 (43,166,600) (1,790,277) (24,447,640) (3,258,394)

owners of Martifer (93,535,824) (68,961,164) (33,275,630) (18,759,640)

Earnings per share: 16

Basic (0.9566) (0.7052) (0.3403) (0.1918)

from continued operations (0.6422) (0.6618) (0.1633) (0.1546)

from discontinued operations (0.3144) (0.0435) (0.1770) (0.0372)

Diluted (0.9566) (0.7052) (0.3403) (0.1918)

from continued operations (0.6422) (0.6618) (0.1633) (0.1546)

from discontinued operations (0.3144) (0.0435) (0.1770) (0.0372)

NOTE: In September 2014, the Group started to classify the solar business unit (composed by Martifer Solar, SA and its subsidiaries) as a non current asset held for sale. Since the requirements of IFRS 5 were fulfilled, the contribution to Martifer’s consolidated results, coming from this segment, is presented in an autonomous line in the Consolidated Income statement and the values YoY were adjusted to allow comparison. The breakdown of these contributions is included in the Notes to Consolidated Financial Statements (Note 28).

The accompanying notes are part of these financial statements


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS AND QUARTERS ENDED 31ST DECEMBER 2014 AND 2013

(Amounts expressed in Euro)


FY 2014 FY 2013 4th QUARTER

2014 (NOT AUDITED)

4th QUARTER 2013

(NOT AUDITED) Profit for the year (136,702,424) (70,751,441) (57,723,271) (22,018,037)

Fair value of cash flow hedges (derivatives), net of tax (362,032) 1,276,461 72,114 113,391

Exchange differences arising on (i) translating foreign operations; (ii) net investment in subsidiaries and (iii) goodwill (294,561) (3,239,581) (4,311,411) 1,187,005

Income recognized directly in equity (656,593) (1,963,120) (4,239,297) 1,300,396 Total comprehensive income for the period (137,359,017) (72,714,561) (61,962,568) (20,717,641) Attributable to:

non-controlling interests (46,227,226) (1,876,517) (28,078,636) (3,181,691)

owners of Martifer (91,131,791) (70,838,043) (33,883,932) (17,535,949) Total comprehensive income for the period

from continued operations (71,242,460) (67,517,421) (21,478,797) (14,102,472)

from discontinued operations (66,116,557) (5,197,140) (40,483,771) (6,615,168)

NOTE: In September 2014, the Group started to classify the solar business unit (composed by Martifer Solar, SA and its subsidiaries) as a non current asset held for sale. Since the requirements of IFRS 5 were fulfilled, the contribution to Martifer’s consolidated results, coming from this segment, is presented in an autonomous line in the Consolidated Income statement and the values YoY were adjusted to allow comparison. The breakdown of these contributions is included in the Notes to Consolidated Financial Statements (Note 28).



CONSOLIDATED STATEMENTS OF FINANCIAL POSITION FOR THE YEARS ENDED 31ST DECEMBER 2014 AND 2013 (Amounts expressed in Euro)


NOTES FY 2014 FY 2013

ASSETS Non-current assets Goodwill 17 10,980,675 12,909,431 Intangible assets 18 4,327,472 7,503,472 Tangible fixed assets 19 166,415,160 209,544,798 Investment properties 20 14,367,300 16,195,865 Financial assets under the equity method 3, 21 7,798,516 41,282,069 Available for sale investments 22 2,191,512 575,621 Other non-current receivables 24 62,150,851 92,479,001 Deferred tax assets 14 4,720,190 14,360,132 272,951,676 394,850,389 Current assets Inventories 23 15,135,531 26,515,807 Trade receivables 24 87,582,767 121,615,674 Other receivables 24 36,187,928 51,455,759 Income tax 14, 25 744,905 1,779,777 Current tax assets 25 7,974,973 17,396,316 Other current assets 26 40,904,841 104,115,097 Cash and cash equivalents 27 22,981,322 38,843,709 Derivatives 37 - 388,468 Non current assets held for sale 28 148,265,754 30,812,048 359,778,022 392,922,655

Total assets 3 632,729,698 787,773,044 EQUITY Issued capital 29 50,000,000 50,000,000 Share premium 186,500,000 186,500,000 Treasury stock (2,868,519) (2,868,519) Reserves (99,805,371) (64,654,736) Profit for the year (93,535,824) (68,961,164) Equity attributable to owners of Martifer 29 40,290,287 100,015,581 Non-controlling interests 29 (22,882,274) 36,784,990 Non-controlling interests attributable to non current assets held for sale 28 (2,060,023) 2,891,441 Total equity 15,347,990 139,692,012 LIABILITIES Non-current liabilities Borrowings 30 215,538,471 222,842,770 Obligation under finance leases 31 13,830,713 13,917,683 Other non-current liabilities 32 12,381,230 13,725,090 Provisions 33 23,199,209 22,326,882 Deferred tax liabilities 930,496 1,494,669 265,880,119 274,307,094 Current liabilities Borrowings 30 73,645,092 133,751,722 Obligation under finance leases 31 2,481,603 4,357,014 Trade payables 32 63,638,919 130,031,422 Other payables 32 27,179,264 28,851,369 Income tax 14 1,258,326 3,278,785 Current tax liabilities 35 8,995,347 15,325,642 Other current liabilities 36 42,091,465 46,827,457 Derivatives 37 216,614 164,254 Liabilities related with non current assets held for sale 28 131,994,958 11,186,273 3 351,501,588 373,773,938 Total liabilities 617,381,707 648,081,032

Total equity and liabilities 632,729,698 787,773,044



CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED 31ST DECEMBER 2014 AND 2013 (Translation of consolidated financial statements originally issued in Portuguese - Note 44)

ISSUED CAPITAL

SHARE PREMIUM

TREASURY STOCK

FAIR VALUE RESERVES FOREIGN

CURRENCY TRANSLATION

RESERVES

OTHER RESERVES

NET PROFIT OF THE YEAR

EQUITY ATTRIBUTABLE TO OWNERS OF

THE PARENT

NON-CONTROLLING

INTERESTS

TOTAL EQUITY

CASH FLOW

HEDGE DERIVATIVES

Balance at 1 January 2013 50,000,000 186,500,000 (2,868,519) (902,433) (18,903,670) 18,306,920 (55,852,988) 176,279,310 50,975,912 227,255,223 Appropriation of the profit of 2012 - - - - - (55,852,988) 55,852,988 - - - COMPREHENSIVE INCOME FOR THE YEAR: Profit for the year - - - - - - (68,961,164) (68,961,164) (1,790,277) (70,751,441) Exchange differences arising on (i) translating foreign

operations and (ii) net investment in subsidiaries - - - - (2,373,439) - - (2,373,439) (139,906) (2,513,345)

Exchange differences arising on goodwill - - - - (713,448) - - (713,448) (12,788) (726,236) Other changes in equity of parent company and

subsidiaries - - - 1,210,008 - - - 1,210,008 66,454 1,276,461

Total comprehensive income for the year - - - 1,210,008 (3,086,887) - (68,961,164) (70,838,043) (1,876,517) (72,714,560) Other changes in equity of parent company and

subsidiaries - - - - - (1,500,314) - (1,500,314) (293,325) (1,793,639)

Changes in the consolidation perimeter - - - - - (1,551,175) - (1,551,175) (9,874,758) (11,425,933) Non-controlling interests transactions - - - - - (2,374,197) - (2,374,197) 745,119 (1,629,078) Balance at 31st December 2013 50,000,000 186,500,000 (2,868,519) 307,575 (21,990,557) (42,971,754) (68,961,164) 100,015,581 39,676,431 139,692,012

Balance at 1 January 2014 50,000,000 186,500,000 (2,868,519) 307,575 (21,990,557) (42,971,754) (68,961,164) 100,015,581 39,676,431 139,692,012

Appropriation of the profit of 2013 - - - (68,961,164) 68,961,164 - - -

COMPREHENSIVE INCOME FOR THE YEAR: Profit for the year - - - (93,535,824) (93,535,824) (43,166,600) (136,702,424) Exchange differences arising on (i) translating foreign

operations and (ii) net investment in subsidiaries - - - 2,716,484 2,716,484 (2,994,900) (278,416)

Exchange differences arising on goodwill - - - (8,880) (8,880) (7,265) (16,145) Other changes in equity of parent company and

subsidiaries - - - (303,571) (303,571) (58,461) (362,032)

Total comprehensive income for the year - - - (303,571) 2,707,604 - (93,535,824) (91,131,791) (46,227,226) (137,359,017) Acquisition of treasury stock - - - - - - - - - -

Stock options – service value - - - - - - - - - -

Equity increase in subsidiaries - - - - - - - - - -

Other changes in equity of parent company and subsidiaries - - - - - (5,541,582) - (5,541,582) (5,154,706) (10,696,288)

Changes in the consolidation perimeter - - - - - (58,508) - (58,508) (4,230,209) (4,288,717) Non-controlling interests transactions - - - - - 37,006,587 - 37,006,587 (9,006,587) 28,000,000 Balance at 31st December 2014 50,000,000 186,500,000 (2,868,519) 4,004 (19,282,953) (80,526,421) (93,535,824) 40,290,287 (24,942,297) 15,347,990



CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS AND QUARTERS ENDED 31ST DECEMBER 2013 AND 2014 (Translation of consolidated financial statements originally issued in Portuguese - Note 44)

NOTES FY 2014 FY 2013 4th QUARTER 2014 (NOT AUDITED)

4th QUARTER 2013 (NOT AUDITED)

OPERATING ACTIVITIES

Receipts from customers 186,215,670 357,926,223 7,600,508 (15,199,869) Payments to suppliers (161,579,157) (274,775,605) (41,460,061) 3,801,115 Payments to employees (42,881,294) (63,082,748) (783,934) (7,334,995) Cash generated by operating activities from continued operations (18,244,781) 20,067,870 (34,643,487) (18,733,749)

Income tax paid/received (4,254,094) (208,671) (1,986,191) 502,507

Other receipts/(payments) relating to operating activities 9,347,134 (1,558,013) 33,108,170 (15,613,316) Cash generated by other operating activities from continued operations 5,093,040 (1,766,684) 31,121,979 (15,110,809)

Net cash generated by operating activities from discontinued operations (2,927,493) 14,142,503 (5,287,371) 53,974,792

Net cash generated by operating activities (1) (16,079,234) 32,443,688 (8,808,879) 20,130,234 INVESTING ACTIVITIES

Receipts arising from: Financial assets 42 23,722,134 7,587,349 1,359,012 - Intangible assets 468,724 1,116,952 - (65,708) Tangible fixed assets 15,890,560 1,902,886 6,842,605 1,784,944 Investment grants 139,068 2,550,723 (1,834) 2,545,771 Interest and similar income 1,256,897 2,538,952 1,171,691 215,229 Others 5,700,685 1,061,983 5,503,677 782,132 47,178,069 16,758,845 14,875,151 5,262,368 Payments arising from: Financial assets 42 - (1,622,859) - - Tangible fixed assets (14,858,320) (7,109,912) (3,508,674) 1,540,837 Intangible assets 128,871 (486,619) 239,215 916,695 Others (286,120) (849,894) (101,746) (495,129) (15,015,569) (10,069,283) (3,371,205) 1,962,404 Net cash generated by investing activities from discontinued operations 561,140 5,251,002 2,040,360 5,466,013

Net cash generated by investing activities (2) 32,723,640 11,940,564 13,544,306 12,690,785 FINANCING ACTIVITIES Receipts arising from: Borrowings 408,250,707 748,169,614 131,190,267 246,417,096 Issue of equity shares, supplementary capital and share premiums 29 28,000,000 13,000,000 -

Others 3,142 894,855 (48,122) (717,951) 436,253,849 749,064,469 144,142,145 245,699,145 Payments arising from: Borrowings (421,264,705) (738,308,857) (142,728,611) (252,933,446) Leasings (903,174) (2,480,857) (399,980) (249,242) Interest and similar costs (20,405,045) (21,852,723) (4,941,099) (5,479,748) Payments arising from: 29 (12,292,147) (100,112) - Others (368,717) (4,689,231) (368,717) (3,088,683) (455,233,788) (767,331,668) (148,538,519) (261,751,119) Net cash generated by financing activities from discontinued operations (8,006,184) (24,566,657) (5,161,063) (8,526,297)

Net cash generated by financing activities (3) (26,986,123) (42,833,856) (9,557,437) (24,578,271) Net increase in cash and cash equivalents (4)=(1)+(2)+(3) (10,341,717) 1,550,396 (4,822,010) 8,242,748

Changes in the consolidation perimeter and others (959,370) (439,256) (731,777) 3,440,715 Effect of foreign exchange currencies 913,623 (292,000) (417,963) 523,203 Cash and cash equivalents at the beginning of the period 38,843,709 38,024,569 34,427,995 26,637,043 Cash and cash equivalents at the end of the period

from continuing operations 22,981,322 23,425,980 22,981,322 23,425,980 from discontinued operations 28 5,474,923 15,417,730 5,474,923 15,417,730

NOTE: In September 2014, the Group started to classify the solar business unit (composed by Martifer Solar, SA and its subsidiaries) as a non current asset held for sale. Since the requirements of IFRS 5 were fulfilled, the contribution to Martifer’s consolidated cash flows, coming from this segment, is presented in an autonomous line in the Consolidated Statements Of Cash Flows and the values YoY were adjusted to allow comparison (Note 28).



12 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS INTRODUCTORY NOTE Martifer SGPS, S.A., with its registered head-office at Zona Industrial, town of Oliveira de Frades – Portugal (‘Martifer SGPS’ or ‘Company’), and its group of companies (all denominated ‘Group’), have as their main activities metallic constructions (metal mechanical constructions, aluminium and glass façades, infrastructures for oil & gas and naval industry) and the promotion and development of renewable energy projects (Note 3).

Martifer SGPS was incorporated on 29th October 2004, having its share capital been realized through the delivery of shares, valued at their market value, that the shareholders held in Martifer Construções, S.A., a company that was incorporated in 1990 and which, at that time, was the holding company of the current Martifer Group.

As of June 2007, after the initial public offering, the Martifer SGPS, S.A. shares have been listed on Euronext Lisbon.

In September 2014, Martifer SGPS’s Board of Directors decided, following the strategy to focus on the metallic construction area, to sell its stake in Martifer Solar (composed by Martifer Solar S.A. and its subsidiaries, currently held by 55 % by the Group). As the sale is highly likely, and the requirements of IFRS 5 were fulfilled, Martifer Solar’s assets and liabilities were classified as “non current assets held for sale” and “liabilities associated to non current assets held for sale”, respectively, being Martifer Solar’s Net Profit presented as “discontinued operations’ result” (Note 28).

On 31st December 2014, the Group developed its activity mainly in Portugal, in Spain, in Slovakia, in Romania, in Angola, in Brazil, in the United States of America, in Mozambique, in Ireland, in Bulgaria, in the Netherlands, in France, in Morocco, in the United Kingdom, in Saudi Arabia, in Germany, in Malta and in Algeria.

All the amounts presented in these notes are expressed in Euros (rounded to the unit), unless otherwise stated.

1. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PREPARATION

These accompanying consolidated financial statements relate to the consolidated financial statements of Martifer Group and were prepared in accordance with the International Financial Reporting Standards (“IFRS”), as adopted by the European Union, in force at the beginning of the economic period started on 1st January 2014. These are the International Financial Reporting Standards, issued by the International Accounting Standards Board ("IASB"), and interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC") or by the previous Standing Interpretations Committee ("SIC"), that have been endorsed by the European Union.

These consolidated financial statements have been prepared from the books and accounting records of the companies included in the consolidation (Note 2) and have been prepared under the historical cost convention, except for the reevaluation of certain non-current assets and certain financial instruments, which are stated at fair value.

The accounting policies and mensuration criteria adopted by the Group in the 2014 financial period are consistent with those applied in the financial statements of the previous financial period, presented for comparative purposes, except in respect of the standards and interpretations entering into force on or after 1st January 2014, the adoption of which has not had a significant impact on the Group’s comprehensive income or financial position.


Adoption of new, amended or revised standards and interpretations

The following standards, interpretations, amendments and revisions endorsed by the European Union and with mandatory effects from 1st January 2014 on, have been adopted for the first time in the period ending on 31st December 2014:

EFFECTIVE DATE

IAS 32 – Financial Instruments: Presentation 01-01-2014

IAS 36 – Impairment of Assets 01-01-2014

IAS 39 – Financial Instruments: Recognition and Measurement 01-01-2014

Changes in IFRS 10, 12 and IAS 27: Investment Entities 01-01-2014

IFRS 10 – Consolidated Financial Statements 01-01-2014

IFRS 11 – Joint Arrangements 01-01-2014

IFRS 12 – Disclosure of Interest in Other Entities 01-01-2014

Changes in IFRS 10, 11 and IAS 27: Transition 01-01-2014

IAS 27 – Separate Financial Statements 01-01-2014

IAS 28 – Investments in Associates and Joint Ventures 01-01-2014

The adoption of the standards, interpretations, amendments and revisions mentioned above had no significant impact on the Group’s 2014 Consolidated Financial Statements.

Standards effective on or after 1st July 2014, not yet endorsed by the European Union

As at this date, the following standards, interpretations, changes and revisions have already been issued but have not yet been endorsed by the European Union:

EFFECTIVE DATE

IAS 1 – Presentation of Financial Statements 01-01-2016

IAS 16 and IAS 38 – Amortization/depreciation calculation methods 01-01-2016

IAS 16 and IAS 41 – Agriculture: Plants that produce consumable biological assets 01-01-2016

IAS 19 – Employee Benefits 01-07-2014


Changes in IFRS 10 and IAS 28: Sale and Contribution of Assets to an Associate or Joint Venture 01-01-2016

Changes in IFRS 10, 12 and IAS 28: Application of Consolidation Exemption 01-01-2016


Improvements in norms 2010 – 2012 01-07-2014


IFRS 9 – Financial Instruments 01-01-2018

IFRS 14 – Regulatory Deferral Accounts 01-01-2016

IFRS 15 – Revenue from Contracts with Customers 01-01-2017

Standards and changes effective from 1 July 2014

EFFECTIVE DATE


IFRIC 21 – Levies 17-06-2014

There are no estimated significant effects from the adoption of these standards on the Financial Statements of the Group.

The 1st January 2004 corresponds to the first period of application, by the Group, of the IAS/IFRS, in accordance with IFRS 1 – ’First-time adoption of the International Financial Reporting Standards‘.


The consolidated financial statements are presented in Euros since this is the main currency of the Group’s operations. The financial statements of Group companies expressed in foreign currency were converted to Euros in accordance with the accounting policies described in Note 1 xv).

In the preparation of the consolidated financial statements, in accordance with IAS/IFRS, the Group’s Board of Directors adopted certain assumptions and estimates that can affect the assets and liabilities reported, as well as the profits and losses incurred in the reporting periods (Note 1 xxvi)). All the Board of Directors’ estimates and assumptions were made taking into consideration the best knowledge available at the financial statements’ approval date, and the information available at that time.

The accompanying consolidated financial statements were prepared for appreciation and approval by the annual Shareholder’s General Meeting. The Board of Directors has approved them for issuance, on 31st March 2015 and believes that these will be approved without any changes.

BASIS OF CONSOLIDATION

The Group’s consolidation methods are as follows:

a) Group companies

Investments in the companies the Group directly or indirectly owns more than 50% of the voting rights at the Shareholder’s General Meetings and / or is able to establish the financial and operational policies so as to benefit from their activities (definition of control normally used by the Group) are included in the consolidated financial statements using the full consolidation method.

The equity and net profit attributable to minority shareholders are shown separately in the consolidated statement of financial position (in the equity caption ‘non-controlling interests’) and in the consolidated income statement (included in the consolidated net profit attributable to non-controlling interests) respectively. Companies included in the consolidated financial statements using the full consolidation method are listed in Note 2.

In business combinations occurring after 1st January 2004, the assets and liabilities of each subsidiary (including contingent liabilities) are measured at fair value on the date of acquisition as established in IFRS 3. Any excess of the cost of the business combination over the Group’s interest in the fair value of the identifiable assets and liabilities acquired is recognized as Goodwill or, when identified, added to the asset that originated such difference. Any excess of the Group’s share in the fair value of the identifiable assets acquired over the cost of the business combination (Badwill) is recognized as income in the income statement for the year, after the reassessment of the estimated fair value. Non-controlling interests include their proportion of the fair value of net identifiable assets, liabilities and contingent liabilities determined at the date of acquisition of the Group companies.

In business combinations occurring after 1st January 2011 (IFRS 3R), any excess of the cost of the business combination, of the fair value of any investment held before the acquisition of control and of the value of non-controlling interests, over the fair value of assets, liabilities and identifiable contingent liabilities is recognized as Goodwill. If the cost of the business combination, the fair value of any investment held before the acquisition of control and the value of non-controlling interests, is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in the income statement for the year. Transaction costs arising in business combinations occurring after this date are recognized as an expense when incurred.

Transactions of disposal or acquisition of shares to / from non-controlling interests do not result in the recognition of gains, losses or Goodwill and in any difference between the value of the transaction and the carrying value of the investment traded is recognized in equity.

The negative results generated in each period by subsidiaries with non-controlling interests are allocated, based on the percentage held, to non-controlling interests, even if these become negative.

The non-controlling interests, recognized in business combinations, are measured at their respective proportion of the fair value of identified net assets, transaction by transaction.

The results of the Group companies acquired or disposed of during the year are included in the consolidated income statement as of the date of their acquisition and up to the date of their disposal.

Adjustments to the financial statements of Group companies are done, whenever necessary, in order to adapt their accounting policies to those used by the Group. All intra-group transactions, balances and distributed dividends are eliminated in the consolidation process. Whenever the Group has, in substance, control over other entities incorporated for a specific purpose, even if no share capital interests are directly held in those entities, they are consolidated using the full consolidation method. At 31st December 2014, there are no entities in this situation.


b) Associate and jointly controlled companies

Investments in associate companies (companies in which the group has significant influence but does not have control over the financial and operational decisions of those companies - mainly investments representing between 20 % and 50 % of the company’s share capital) and in jointly controlled companies (companies in which the Group shares control with other partners) are included in the accompanying consolidated financial statements in accordance with the equity method in the caption ‘Investments in associate companies and joint arrangements’.

Under the equity method, investments are recorded at cost, adjusted by the amount corresponding to the share of changes in equity and net profit of associate and jointly controlled companies and by the dividends received, net of impairment losses.

The assets and liabilities of each associate and jointly controlled company (including contingent liabilities) are identified at their fair value on the acquisition date. Any excess of the cost of acquisition over the Group’s share of the fair value of the identifiable assets and liabilities of the associate companies is recognized at the date of acquisition as Goodwill. This Goodwill is included in the carrying amount of the investment in associate companies and joint arrangements and analysed annually for recoverability as part of the financial asset. Any excess of the Group’s share of the fair value of the identifiable assets and liabilities over the cost of the business combination (Badwill), after reassessment, is immediately recognized in the income statement.

An assessment of the investments in associate and jointly controlled companies is performed whenever there is evidence that the asset might be impaired. Any impairment loss detected is recorded in the income statement.

When the Group’s share of losses exceeds the carrying amount of the investment, such investment is reported at nil value for as long as the equity of the associate or jointly controlled company is negative, except when the Group has assumed commitments in respect of said associate or jointly controlled companies. In this case a provision is recorded for those commitments.

The Group’s share of unrealized gains arising from transactions with associate and jointly controlled companies is eliminated. Unrealized losses are eliminated, but only to the extent that there is no evidence of impairment of the assets transferred.

Investments in associate and jointly controlled companies consolidated using the equity method are listed in Note 2.

MAIN ACCOUNTING POLICIES, JUDGEMENTS AND ESTIMATES

The main accounting policies, judgements and estimates used in the preparation of the Group’s consolidated financial statements for the years presented are as follows:

i) Goodwill

The excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets, liabilities and contingent liabilities of subsidiaries, associate companies or jointly controlled companies at the date of acquisition, is recorded in the caption ‘Goodwill’ (in the case of investments in subsidiaries) or in the caption ‘Investments in associate companies and joint arrangements’ (in the case of investments in associate companies or jointly controlled companies).

Goodwill arising on acquisitions prior to the date of transition to IFRS (1st January 2004) or Goodwill arising from the constitution of the Group is recorded at its net carrying amount, calculated in accordance with generally accepted accounting principles in Portugal, and is subject, as of that date, to annual impairment tests.

Goodwill is not amortized but it is subject to impairment tests on an annual basis when its carrying amount is compared to its recoverable amount. Impairment losses identified during the year are recorded in the income statement in the caption ‘Provisions and impairment losses’. The recoverable amount is the highest between the fair value less the cost to sell and the value in use. The fair value less cost to sell is the amount that could be obtained in an arms-length transaction. The value in use is the present value of the estimated future cash flows from the continuous use of such asset and from its sale at the end of its life-cycle. The recoverable amount is estimated individually for each asset, or, when this is not possible, for the cash-generating unit to which the asset belongs.

ii) Non-current assets held for sale

Non-current assets are classified as held for sale if their carrying amount is to be recovered through a sale transaction rather than through their continued use. Nevertheless, such classification requires that the sale be highly probable and that the asset (or disposal group) is available for immediate sale in its present condition. In addition, the Board of Directors must be committed to the sale, which should occur in the short-term (normally, but not exclusively, within one year from the date of that classification).


Non-current assets (and disposal groups) classified as held for sale are measured at the lowest of their carrying amount and their fair value less cost to sell and are not amortised or depreciated during the period they are classified as held for sale.

iii) Intangible assets

Intangible assets acquired by the Group are stated at their acquisition cost, net of depreciation and accumulated impairment losses. Intangible assets are only recognized if they are controlled by the Group and if their cost can be reliably measured.

Intangible assets comprise mainly software and other rights, which are depreciated on a straight-line basis over a 3-year period, and costs incurred obtaining licences to explore wind farms, which are depreciated in line with the license period granted (currently 20 years).

Costs incurred with the licensing of wind farms are recognized as intangible assets if, and only if, all of the following requirements have been fulfilled:

- economic feasibility studies confirm that the wind farms will generate future economic benefits; - the Group has the technical and financial capacity to install and explore those wind farms; and - the expenditure attributable to the wind farms during the licencing phase can be reliably measured.

Expenditure on research and installation activities related with wind farms is recognized as an expense in the year in which it is incurred.

The remaining research expenses are recognized as costs in the year in which they are incurred.

Intangible assets acquired in a business combination are identified and recognized separately from Goodwill if their fair value can be reliably measured. The cost of such intangible assets is the fair value on the acquisition date.

Subsequent to initial recognition, intangible assets acquired in a business combination are recorded at cost less accumulated amortization and impairment losses, on the same basis as intangible assets acquired separately. These assets are depreciated on a straight-line basis, usually during the period over which the economic benefits are expected to occur.

iv) Tangible assets

Tangible assets are recorded at their acquisition cost, net of depreciation and accumulated impairment losses.

Depreciation is calculated on a straight-line basis over the assets’ life-cycle, land is not subject to depreciation.

Tangible assets in progress are fixed assets still under construction / development and are recorded at their acquisition cost, net of impairment losses. Those assets are depreciated as of the moment they become available for use with the quality and technical conditions required to operate efficiently. Depreciation is calculated on a straight-line basis, over the expected useful life for each class of tangible assets. The useful life is estimated taking into consideration the expected use of each class of tangible assets, as well as their natural consumption and technical obsolescence.

The depreciation rates used correspond to the following estimated life-cycles:

Buildings 20 to 50 years

Equipment: Basic equipment 3 to 7 years Transportation equipment 4 to 5 years Tools and dies 3 to 5 years Office equipment 3 to 10 years

Other tangible assets: Equipment installed in wind and solar farms 15 to 20 years Other tangible assets 3 to 10 years

Maintenance and repair costs that neither increase the life-cycle nor create significant improvements in tangible assets, are recognized as costs in the year in which they occur.


v) Leasing

Leases are classified as (i) finance leases whenever the terms of the lease substantially transfer all the risks and rewards of ownership to the lessee. All other leases are classified as (ii) operating leases.

A lease is classified as finance or operating depending on the substance of the transaction rather than on the form of the contract.

Fixed assets acquired under finance lease contracts and the related liabilities are recorded in accordance with the financial method. Under this method the tangible assets, the corresponding accumulated depreciation (as defined in iii) and iv) above) and the liabilities are recorded in accordance with the contracted financial plan. In addition, the interest included in lease payments and the depreciation of the tangible assets are both recognized as expenses in the income statement for the year to which they relate.

Assets under long-term rental contracts are recorded in accordance with the operational lease method. In accordance with this method, the rents paid are recognized as expenses over the rental period.

vi) Investment properties

An investment property is a property held to earn rentals and / or for capital appreciation and not for use in the course of current operations.

Investment property is initially measured at cost, including transaction costs. Subsequent to the initial recognition, investment property is measured at fair value, and gains or losses arising from changes in the fair value are included in the income statement for the period in which they arise.

Costs incurred with investment property (maintenance, repair, insurance and property tax), as well as the related revenue and rental income are included in the income statement for the period in which they arise.

vii) Financial assets and liabilities

Financial assets and liabilities are recognized in the Group’s statement of financial position when, and only when, the Group is a contractual party to the instrument.

a) Financial instruments:

The Group classifies financial instruments in the following categories: ‘Financial investments at fair value through profit or loss’, ‘Borrowings and receivables’, ‘Held-to-maturity investments’ and ‘Available-for-sale investments’. The classification depends on the intention inherent to the investment’s acquisition.

The classification is made at the initial recognition and re-appreciated on a quarterly basis.

Financial assets at fair value through profit or loss: this category is divided into two: ‘financial assets classified as held for trading’ and ‘financial assets designated by the Group at fair value through profit or loss’. A financial asset is classified under this category, namely if it is acquired for the purpose of selling it in the short-term. Derivatives are also classified as instruments held for trading, except if designated as effective hedging instruments. Financial instruments in this category are classified as current if they are held for trading or if it is expected that they are going to be realized within twelve months of the end of the reporting period;

Held-to-maturity financial assets: this category includes financial assets, non-derivative, with fixed or variable reimbursements with a fixed maturity, and which the Board of Directors intends to hold to maturity.

Available-for-sale financial assets: these include financial assets, non-derivative, that are designated as available-for-sale and those that are not classified as ‘borrowings and receivables’, ‘held-to-maturity investments’ or ‘financial assets at fair value through profit or loss’. This category is classified as non-current, unless the Board of Directors intends to sell them within 12 months from the end of the reporting period.

Held-to-maturity financial assets are classified as non-current, unless their maturity is less than a year from the end of the reporting period. Financial assets designated by the Group at fair value through profit or loss are classified as current in the statement of financial position.

All purchases and sales of financial instruments are recognized on the trade date, this means, on the date when the Group assumes the risks and obligations inherent to the acquisition and disposal of the assets. These investments are initially measured at cost, which is the fair value of the consideration paid for it, including transaction costs, with the exception of ‘Financial investments at


fair value through profit or loss’. In the latter case, the financial assets are initially recognized at their fair value and the transactions costs are recognized in the income statement. Financial investments are derecognized when the right or obligation to receive or pay financial flows, respectively, has expired or has been transferred, and, therefore, all the risks and benefits have been transferred.

‘Available-for-sale financial assets’ and ‘Financial assets at fair value through profit or loss’ are subsequently measured and recorded in the financial statements at fair value.

Gains and losses, realized or not, resulting from a change in the fair value of the ‘Financial investments at fair value through profit or loss’ are recognized in the income statement for the year. Gains and losses resulting from a change in the fair value of ‘Available-for-sale assets’ are recognized directly in the statement of comprehensive income, under the caption ‘Fair value reserves – Available-for-sale assets’ until the investment is sold, received or in any way alienated, at which moment the accumulated gain or loss is recognized in the income statement.

The fair value of financial assets is based on current market prices. If the market on which the investments are traded is not active (no quoted price exists), the Group establishes the instrument’s fair value using other valuation techniques such as recourse to similar transactions, discounted cash flow analysis or the use of option pricing models to reflect the specific circumstances. The fair value of listed investments is calculated using the closing price on Euronext Lisbon at the end of the reporting period.

To determine the fair value of a financial asset or liability when there is an active market, the market price is applied. This constitutes level 1 of the hierarchy of fair value, as defined in IFRS 13 – Fair value: mensuration and disclosure.

If the market on which the investments are traded is not active, which is the case for some financial assets and liabilities, valuation techniques generally accepted in the market, based on market assumptions, are used. This constitutes level 2 of the hierarchy of fair value, as defined in IFRS 13.

The entity applies valuation techniques for unlisted financial instruments, such as, derivatives, financial investments at fair value through profit or loss and available-for-sale investments. The valuation models most frequently used are discounted cash flow analysis and option valuation models which incorporate market information such as interest rate curves.

For some complex financial instruments, complex valuation models with assumptions and information that is not directly observable in the market, and for which an entity applies internal estimates and assumptions, are used. This constitutes level 3 of the hierarchy of fair value, as defined in IFRS 13. ‘Borrowings and receivables’ and ‘Held-to-maturity investments’ are recorded at their amortized cost using the effective interest rate method.

Financial assets are assessed, by the Group, for indicators of impairment at each reporting period. In the case of equity instruments classified as available-for-sale, a significant decline or a prolonged decline in their fair value to amounts lower than their acquisition cost, are indicators of impairment. For all other financial assets objective evidence of impairment could include:

- significant financial difficulty of the issuer or counterparty; or - default or delinquency in interest or main payments; or - it becoming probable that the borrower will enter bankruptcy or financial restructuring.

For financial assets carried at amortized cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of the estimated future cash flows, discounted at the financial asset’s original effective interest rate.

The carrying amount of the financial assets is reduced directly by the impairment losses for all financial assets with the exception of trade and other receivables, for which the carrying amount is reduced through the use of an allowance account. When a trade or other receivable is considered uncollectable, it is written-off against the allowance account. Subsequent recoveries of amounts previously written-off are credited in the income statement for the period. Changes in the carrying amount of the allowance account are recognized in the income statement in the caption ‘Accumulated impairment losses’.

With the exception of ‘Available-for-sale investments’, which correspond to capital instruments in another company, if in a subsequent period the amount of the impairment loss decreases and the decrease can be objectively related to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through the income statement.

b) Trade receivable and other receivables

Trade and other debtors balances do not bear interest and are recorded at their nominal value less any impairment losses, recognized in the allowance account ’Accumulated impairment losses‘, in order to reflect their net realizable value.


c) Borrowings

Borrowings are recorded as liabilities at their nominal value, net of up-front fees and commissions related with the issuance of these instruments. Financial expenses are calculated based on the effective interest rate and are recorded in the income statement on an accruals basis.

d) Trade payables and other payables

Accounts payable that do not bear interest are recorded at their nominal value, which is substantially equivalent to their fair value.

e) Financial liabilities and equity instruments

Financial liabilities and equity instruments are classified and accounted for based on their contractual substance. The Group classifies as equity instruments the contracts that evidence the Group’s residual interest in a group of assets after deducting all of its liabilities. The Group classifies as financial liabilities all those that are expected to give rise to a disbursement of funds.

f) Derivatives

The Group uses derivative instruments to manage its exposure to financial risks. Derivative instruments are only used for hedge accounting purposes, with the appropriate approval of Group’s Board of Directors, and never for speculative purposes.

The derivative instruments used by the Group, classified as cash flows hedges, are exclusively related to the hedging of interest rates and exchange rates on loans obtained. The loan’s amount, the interest’s maturity and the loan’s reimbursement plans inherent to the hedging instrument are in all respects similar to the established conditions for the contractual loans, configuring totally effective correlations.

The criteria used by the Group to classify the derivative instruments as cash flow hedges are as follows:

- The hedge is expected to be highly effective in offsetting changes in the cash flows attributable to the hedged risk; - Hedge effectiveness can be reliably measured; - There is adequate documentation on the transaction at the inception of the hedge; - The transaction to be hedged is highly probable.

Cash flow hedges are initially recorded at fair value, if any, and subsequently reevaluated at their fair value. The effective portion of the changes in the fair value of derivatives that are designated and qualify as cash flow hedges is deferred in the statement of comprehensive income in the caption ‘Fair value reserves – Cash flow hedge derivatives’, being transferred to results in the same periods the hedged instruments affect these. The gains or losses relating to the ineffective portion are immediately recognized in the income statement, when determined.

Hedge accounting is discontinued when the hedging instrument expires or is sold. When a hedging instrument no longer qualifies for hedge accounting, the accumulated gain or loss deferred in the statement of comprehensive income remains in equity and subsequent reevaluations of the derivative are recorded in the income statement.

g) Green certificates

At present there is no accounting standard or interpretation in the International Financial Reporting Standards (IFRS) that deals specifically with the accounting for emission permits or renewable energy certificates.

Green certificates are instruments that approve the production of a certain volume of electricity from renewable energy sources.

Upon receipt of the green certificates, the company recognizes an asset under “Other short-term investments” as well as its corresponding “Deferred income”. The deferred income is recorded in the income statement when the green certificates are sold. Subsequent to the initial recognition, the green certificates are valued at the transaction price available at that date. At the end of each period, the green certificates are valued using their fair value, which corresponds to their market price on that date. The differences arising are recorded in the income statement as “Other financial income” or as “Other financial expenses”.

Green certificates are valid for a given period as from their issue date (16 months in Romania). The carrying amount of the expired green certificates (due to lack of use within the validity period) is recorded in “Other financial expenses”.


h) Notes receivable and factoring

The Group only derecognizes a financial asset when, and only when, the contractual rights to the cash flows from the financial asset expire; or it substantially transfers the contractual risks and rewards inherent to the possession of such financial asset to a third party. If the Group substantially retains the risks and benefits inherent to the possession of such assets, it continues to recognizes these in its financial statements, recording a liability in the caption ‘Borrowings’ as the monetary collateral for the assets ceded.

Therefore, notes receivable and factored accounts receivable are recorded at each reporting period as liabilities in the statement of the financial position, with the exception of ‘non-recourse factoring’ operations, until the underlying assets are fully collected by the Group.

viii) Cash and cash equivalents

Cash and cash equivalents include cash on hand, cash at banks, term deposits and other treasury applications with a maturity of less than three months, which are subject to an insignificant risk of change in value.

ix) Inventories

Merchandise and raw-, subsidiary and consumable materials are stated at the lowest of their average acquisition cost or net realizable value (estimated sales price less cost to make the sale). Finished and intermediate goods are recorded at production cost (which includes the cost of incorporated raw-materials, direct labour and overheads), which is lower than their market value.

Impairment losses are recognized in the income statement when it is estimated that the inventories’ net realizable value is lower than its carrying amount (Note 10).

x) Accrual basis

Expenses and income are recorded in the year to which they relate, regardless of their date of payment or receipt. The captions of ’Other non-current assets’, ‘Other current assets’, ‘Other non-current liabilities’ and ‘Other current liabilities’ include expenses and income relating to the current period, whose payment and receipt will occur in future periods, as well as payments and receipts in the current period but which relate to future periods.

xi) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue is recorded net of returns, rebates and similar allowances.

a) Construction contracts (metallic structure constructions and the construction of turnkey wind farms and solar parks)

The Group recognizes income and costs associated with construction contracts, on an individual basis, using the stage of completion method. Under this method, at the end of each period, income and expenses are recognized with reference to the stage of completion of the contract activity. The stage of completion is determined based on the ratio between costs incurred to the balance sheet date and the total estimated contract costs.

The difference between income determined applying this ratio and the total amount invoiced is recorded in ‘Other current assets’ as ‘Work in progress’ or in ‘Other current liabilities’ as ‘Advanced invoicing’, respectively.

Revenue arising on contract variations is recorded when these are agreed with the customer, or when negotiations are at an advanced stage and it is probable that these will be favourable to the Group, and it can be reliably measured.

To cater for the costs that will be incurred during the guarantee period, the Group recognizes a provision, created on an annual basis, to cover for such legal obligation. This provision is estimated taking into consideration the annual production as well as the historical costs incurred in the past with this obligation.

Claims for reimbursement of expenditure not covered in the contract price are included in the contract revenue when negotiations with the client are at an advanced stage and it is probable that these will be favourable to the Group, and they can be reliably measured.

When it is likely that the total estimated costs of the construction contract will exceed the revenue negotiated, the expected loss is immediately recognized in the income statement.


b) Short-term construction contracts

In these types of contracts, the Group recognizes revenue and costs as they are billed or incurred, respectively.

c) Recognition of revenue resulting from real estate activity

Relevant costs incurred with real estate projects include the direct construction costs, the costs associated with the realization of the projects as well as their licensing costs. Borrowing costs attributable to real estate projects are capitalized until the project is completed.

Borrowing costs are only capitalized if the project is in progress, i.e. if it is awaiting licenses from local authorities, or if it is under construction. In all other cases, it is considered to be suspended and no capitalization of borrowing costs occurs.

Revenue on these types of operations is generated and recognized when the contractual position held by the Group is transferred, which, generally, coincides with the signing of the transfer deed.

d) Revenue recognition related with the sale of goods (merchandise and finished products)

Revenue from the sale of goods is only recognized when all the following conditions are met:

- the Group has transferred to the buyer the significant risks and rewards of ownership of the goods; -the Group neither retains continuing managerial involvement to the degree usually associated with ownership nor

effective control over the goods sold; - the amount of revenue can be reliably measured; - it is probable that the economic benefits associated with the transaction will flow to the entity; and - the costs incurred or to be incurred related to the transaction can be reliably measured.

xii) Own worked capitalized

The internal costs (materials, staff and production costs) incurred during the production of tangible fixed assets are capitalized only when the following requirements are fulfilled:

- the underlying assets are identifiable; - there is strong probability that the assets will generate future economic benefits; and - the production costs can be reliably measured.

xiii) Costs incurred with proposal preparation

Costs incurred with proposal preparation are recognized in the income statement as they are incurred due to the unpredictability of their outcome.

xiv) Balances and transactions in foreign currency

Individual financial statements:

All the assets and liabilities expressed in foreign currencies are translated to the functional currency, using the official exchange rates at the reporting date. The exchange differences, favourable or unfavourable, originated by the differences between the exchange rates on the transaction dates and those used at the collection, payment or in the reporting period, are recognized in their gross amounts as profits and losses in the income statement for the period.

Consolidated financial statements:

Assets and liabilities of the Group’s foreign operations are translated into Euros using the exchange rates prevailing at the reporting date in the preparation of the consolidated financial statements. Income and expense items, as well as cash flows, are translated at the average exchange rates of the year. In addition, some medium-, long-term or undefined maturity loans granted to subsidiaries, denominated in a currency other than the Euro are considered as part of the Group's net investment. Whenever exchange differences arise, they are recorded in equity and recognized in the Group’s foreign currency translation reserve. Such exchange rate differences are recognized in the income statement in the year in which the foreign entity is disposed of.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and therefore, are translated at the closing rate.


The following exchange rates have been used in the preparation of the financial statements:

1 € EQUALS: CLOSING RATE AVERAGE RATE

31 DECEMBER 2014

31 DECEMBER 2013 EVOLUTION

IN % 31 DECEMBER 2014

31 DECEMBER 2013 EVOLUTION

IN %

Australian dollar 1,483 1,542 -3.9% 1,472 1,378 6.8%

Bulgarian Lev 1,956 1,956 0.0% 1,956 1,956 0.0%

Czech koruna 27,735 27,427 1.1% 27,536 25,980 6.0%

Polish zloty 4,273 4,154 2.9% 4,184 4,200 -0.4%

New Romanian leu 4,483 4,471 0.3% 4,444 4,419 0.6%

US dollar 1,214 1,379 -12.0% 1,329 1,328 0.0%

South African Rand 14,035 14,566 -3.6% 14,404 12,833 12.2%

Brazilian real 3,221 3,258 -1.1% 3,121 2,869 8.8%

Thai Baht 39,910 45,178 -11.7% 43,147 40,830 5.7%

Angolan kwanza 124,910 133,830 -6.7% 130,294 127,801 2.0%

Moroccan dirham 10,990 11,237 -2.2% 11,151 11,109 0.4%

Pound sterling 0,779 0,834 -6.6% 0,806 0,849 -5.1%

Canadian dollar 1,406 1,467 -4.1% 1,466 1,368 7.1%

Mozambique metical 40,100 40,840 -1.8% 41,135 39,662 3.7%

Mexican peso 17,876 17,912 -0.2% 17,655 16,966 4.1%

Saudi Riyal (Saudi Arabia)/ SAR 4,560 5,167 -11.7% 4,982 4,982 0.0%

Chilean Peso 737,820 722,020 2.2% 756,857 661,113 14.5%

Hryvna (Ukraine) 18,975 11,183 69.7% 15,634 10,732 45.7%

xv) Income tax

Income tax for the period includes the current and deferred income tax, in accordance with IAS 12. Current income tax is calculated based on taxable profits and taking into consideration the local tax laws applicable to each Group company.

Deferred tax is recognized on timing differences arising between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax base used in the calculation of taxable profit, as well as on certain tax credits attributed to the Group, and is accounted for using the balance sheet liability method.

Deferred tax assets and liabilities are measured and annually reevalued at the tax rates expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates (and tax laws) enacted or substantively enacted.

Deferred tax assets are generally recognized for all deductible timing differences to the extent that it is probable that taxable profits will be available against which those deductible timing differences can be used. The carrying amount of deferred tax assets is reviewed at each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow for all or part of the asset to be recovered.

The deferred tax amount resulting from transactions or events recognized directly in equity is also registered directly in equity, not affecting the income for the year.

xvi) Borrowing costs

Borrowing costs are recorded in the income statement on an accrual basis.

Borrowing cost related to loans obtained to finance the construction of tangible fixed assets and some inventories (real estate projects) are capitalized, forming part of the asset’s carrying amount. The capitalization begins when the preparation of the construction activity starts and ceases when the asset enters into use, at the end of its production or construction or when the project is suspended.


xvii) Provisions

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. These provisions are reviewed at each reporting period and are adjusted to reflect the best estimate at the date, taking into consideration all the risks and uncertainties inherent to such estimates. When a provision is determined using the future cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

The provisions recognized by the Group result mainly from:

i) Construction guarantees

The Group recognizes a provision for the costs estimated to be incurred in the future with construction guarantees provided on metallic structures and solar parks and wind farms that were sold. This provision is recognized on the date of the sale or when the service is rendered, thus affecting the profit made on the deal. At the end of the guarantee period (a 5-year average) any remaining amount of provision is reversed in the income statement.

ii) Onerous contracts

The Group recognizes a provision for onerous contracts when, for construction contracts in progress, it is established that the costs to be incurred to satisfy the obligation assumed exceed the future economic benefits. This analysis is made on a contract by contract basis, based on information provided by the project managers.

iii) Legal claims in progress

A provision for legal claims in progress is recognized when there is a reliable estimate of the costs to be incurred as a consequence of lawsuits proposed by third parties.

iv) Financial assets accounted for under the equity method

A provision is recognized whenever an associate or jointly controlled company has a negative equity and it is considered that the Group has assumed responsibilities over and above its share of the capital.

xviii) Government grants

Grants received for staff training programmes and new hiring actions are recognized as income in the same period the relevant expenses are incurred.

Grants received to finance tangible fixed asset investments are recorded as deferred income and are recognized as income, in the caption ‘Other operating income’, on a straight-line basis over the expected life-cycle of the underlying assets.

xix) Impairment of tangible and intangible assets excluding Goodwill

At each reporting period and whenever an event or change in circumstance is identified, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that these assets are impaired. When the asset carrying amount is greater than its recoverable amount, an impairment loss is recognized and recorded in the caption ‘Impairment losses’. The recoverable amount is the higher of fair value less cost to sell and value in use. The fair value less cost to sell is the amount that could be obtained in an arms-length transaction. Value in use is calculated by assessing the estimated future cash flows generated by the asset discounted to the present value, taking into consideration its residual value. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

The reversal of impairment losses recorded in previous years is recognized when the underlying reasons that caused that entry are no longer applicable and, consequently, the asset is no longer impaired. The reversal of impairment losses is recognized in the income statement as an operating result. However, the reversal of an impairment loss is performed just up to the limit of the amount that would be recorded through the historical cost, or through the reevalued amount, net of amortization and depreciation, if the impairment loss had not been recorded in previous years.


xx) Employee benefits

Variable remunerations

According to the statutes of some Group companies, the shareholders of those companies approved at the General Meeting or within a Remuneration Committee elected by the shareholders, the fixed and variable remuneration to be distributed to the members of governing bodies. Bonus payments are recorded in the period to which they relate.

xxi) Statement of financial position presentation

Assets to be realized and liabilities to be settled twelve months after the reporting date are classified as non-current. Likewise, given their nature, ‘Deferred taxes’ and ‘Provisions’ are classified as non-current in the statement of financial position.

xxii) Contingent assets and liabilities

Contingent liabilities are not recorded in the consolidated financial statements. Instead, they are disclosed in the notes to the financial statements unless the probability of a cash outflow is remote, in which case no disclosure is made.

Contingent assets are not recorded in the consolidated financial statements but are disclosed when future economic benefits are probable.

xxiii) Consolidated cash flow statement

The consolidated cash flow statement is prepared using the direct method, according to IAS 7. The Group classifies as ‘Cash and cash equivalents’ applications which mature in less than three months and which are subject to an insignificant risk of change in value.

The consolidated cash flow statement is classified into operating, investing and financing activities. Operating activities include cash receipts from clients, cash payments to suppliers, cash payments to and on behalf of employees and other operating activities’ payments and receipts. Investing activities’ cash flows include, essentially, payments and receipts related with acquisitions and sales of tangible and intangible assets and investments.

Financing activities’ cash flows include, essentially, payments and receipts of loans and borrowings, financial lease contracts and dividend payments.

xxiv) Subsequent events

Events occurring after the reporting period that provide further evidence of conditions existing at the end of the reporting period (“adjusting events”), are recognized in the consolidated financial statements. Events occurring after the reporting period that are indicative of conditions occurring after the end of the reporting period (“non-adjusting events”), if material, are disclosed in the notes to the consolidated financial statements.

xxv) Judgements and estimates

In the process of preparing the Group’s consolidated financial statements the Board of Directors used its best knowledge and accumulated experience in past and / or current events in making certain assumptions as to future events.

The most significant accounting estimates reflected in the consolidated financial statements for the years ended on 31st December 2014 and 2013 include:

- The life-cycle of the tangible assets; - Fair value of the investment properties; - Impairment analysis of goodwill; - Recognition of provisions and impairment losses; - Revenue recognition on construction contracts and guarantees;

- Recognition of deferred tax assets arising from tax losses; - Fair value of derivatives.

The estimates used were based on the best information available during the preparation of the consolidated financial statements and on the best knowledge of past and present events. Although future events are neither controlled by the Group nor foreseeable,


some can occur and have an impact on the estimates. Changes to the estimates used by the Board, that occur after the date of these consolidated financial statements, will be recognized in net income, in accordance with IAS 8, using a prospective methodology.

xxvi) Financial risk management

Financial markets include a high degree of uncertainty, to which the Group is exposed. This uncertainty is translated into several risks, to which the Group is exposed, namely price risk, currency risk, interest rate risk, liquidity risk and credit risk.

a) Price Risk

The volatility of raw material prices constitutes a risk for the Group, both in metallic constructions and in solar. The changes in the price of steel and aluminium impact the operational activity of the metallic constructions and the changes in solar panel prices can also influence solar activity. Martifer has sought to mitigate this risk the same way in both areas, by including clauses in its contracts with customers that allow it to pass on raw-material price fluctuations and by negotiating fixed prices for large scale projects with its suppliers.

b) Currency Risk

Currency risk reflects the possibility of registering gains or losses resulting from changes in the foreign exchange rates between different currencies. The Group’s internationalization forces it to be exposed to the currency risk of different countries.


The Group’s currency risk management policy aims to reduce the sensitivity of its results to exchange rate variations.


In which relates to exchange rates hedging, hedges are sporadic as their costs are sometimes considered excessive in the face of the level of the risks involved. However, whenever considered suitable, the Group contracts exchange rates hedging, in order to cover the risk.


The relevant amounts of the Group’s assets and liabilities recorded in a currency other than the Euro are as follows:

1 € EQUALS: ASSETS LIABILITIES

FY 2014 FY 2013 FY 2014 FY 2013 New leu (Romania) 153,491,552 178,617,896 80,784,186 84,573,826

Zloty (Poland) 48,873,273 60,902,163 72,153,956 80,031,053

US Dollar (the U.S.A.) 58,399,403 114,478,896 91,895,201 110,218,307

Kwanza (Angola) 47,788,457 45,813,174 35,859,913 35,838,507

Real (Brazil) 58,631,399 72,434,209 32,374,745 48,267,550

Moroccan dirham (Morocco) 811,748 766,620 1,377,394 1,337,244

Australian dollar (Australia) 628,133 832,131 4,633,416 4,110,628

Czech koruna (Czech Republic) 22,477 364,564 6,912 239,859

Canadian dollar (Canada) - 382,910 - 361,210

Pound sterling (the United Kingdom) 52,449,377 46,284,346 49,565,474 40,846,792

Mexican Peso (Mexico) 2,402,537 10,509,694 14,610,584 14,685,844

Saudi Riyal (Saudi Arabia) 16,923,521 13,224,670 16,488,074 13,197,907

Hryvnia (Ukraine) 483,099 1,726,114 670,552 1,010,205


If a negative change of 1 p.p. in the foreign exchange rates of the currencies just identified were to occur, the likely impact on the Group’s financial statements may be shown as follows (amounts in Euro):

1 € EQUALS: LOCAL CURRENCY CHANGE AGAINST

EURO

FY 2014 FY 2013

IMPACT ON

PROFITS IMPACT ON EQUITY IMPACT ON

PROFITS IMPACT ON EQUITY

New leu (Romania) 1% 208,991 (719,875) 70,936 (931,129)

Zloty (Poland) 1% 46,437 230,502 80,582 189,395

US Dollar (the U.S.A.) 1% 355,801 331,642 87,183 (42,184)

Pound sterling (the United Kingdom) 1% 23,439 (28,553) (42,039) (53,837)

Czech koruna (Czech Republic) 1% 719 (154) (680) (1,235)

Moroccan dirham (Morocco) 1% (169) 5,600 3,848 5,650

Australian dollar (Australia) 1% 5,960 39,656 68,578 32,460

Kwanza (Angola) 1% (16,013) (118,104) (5,937) (98,759)

Real (Brazil) 1% (75,308) (259,967) (21,649) (239,274)

Canadian dollar (Canada) 1% - - 5,912 (215)

Mexican Peso (Mexico) 1% 89,631 120,872 40,171 41,348

Saudi Riyal (Saudi Arabia) 1% (3,671) (4,311) (3,178) (265)

Hryvnia (Ukraine) 1% 7,323 1,856 (3,750) (7,088)

c) Interest Rate Risk

Interest rate risk reflects the possibility of changes in future interest charges on loans contracted due to the evolution of market interest rate levels.

The cost of financial debt contracted by the Group is indexed to short term base rates, reviewed yearly or less, plus a negotiated risk premium. Therefore, variations in interest rates may affect the Group’s results.

The Group’s exposure to interest rates is related to financial liabilities contracted with a fixed and / or floating rate. In the first case, the Group faces a risk of fair value variation on these assets or liabilities, since every change in market rates involves an opportunity cost. In the second case, such change has a direct impact in interest value, consequently causing variations in cash.

By the end of 2014, medium and long-term debt exposed to a fixed rate was 1.75 % (98.25 % floating rate), which compares with 3 % (fixed rate) and 97 % (floating rate) in 2013.

In the more significant long-term loans, and whenever is considered appropriate, the Group relies on fixed interest rate loans or uses interest rate derivatives to hedge exposure to interest rate risk on the said loans. The amounts, interest due dates and repayment schedules of the loans underlying the interest rate derivatives are identical to those of the loans they hedge, and, as such, are considered perfect hedges.

At the end of 2014, the Group sought to renegotiate premium risk rates (spread) with financial institutions in order to allow for a lower exposure to interest rate risks and, consequently, to meet the treasury resources stipulated in the restructuring plan.

The analisys of the sensitivity to variation for more or less 1 p.p. in interest rate is presented on note 30 ‘Borrowings’.

d) Liquidity Risk

Liquidity risk reflects the Group’s ability to satisfy its financial responsibilities with the available financial resources.

The main goal of the liquidity risk management program is to ensure that the Group has available the financial resources to satisfy its responsibilities and pursue the outlined strategies at any time, honouring all its obligations towards third parties, through an adequate management in financing cost / maturity ratio.

Additionally, and considering the medium / long-term nature of the investments made, the Group has sought to restructure debt so it can follow the maturity of the associated assets, not jeopardising the obligations arising from its operational short-term activity.


By the end of 2014, the Group tried to restructure its debt with the main financial institutions by rescheduling maturities over time, extending the average loan maturity to make it more coincident with the permanence of its long term assets and a maturity that allows the cash surpluses to be sufficient to comply with its obligations.

The Group expects to conclude the negotiation process in the first half of 2015.


e) Credit Risk

The worsening of the worldwide economic conditions and the escalation of the adversities facing local, national and international economies can influence Martifer Group’s Clients’ default rate, with possible negative impacts on the Group’s results.

The Group is subject to credit risk in the operational activity – Clients and other receivables.

Aware of this reality, the Group seeks to evaluate all its Clients’ credit risk in order to establish credit limits, with the ultimate purpose of ensuring the collection of the amounts due within the periods negotiated.

With this objective in mind, the Group uses credit rating agencies, who regularly analyse risk and credit control, and collects from and manages cases in litigation, procedures which are all considered essential to manage the credit conceeded and to minimize the risk of credit default.

xxvii) Operational Risk Management

a) Metallic Constructions

Operational risks in the Metallic Constructions area, which also incorporated the energy equipment area as of 2011, are currently divided into three sources of risk – client, supplier and external risk, which in turn are sub-divided into specific problems.

Under client risk one can identify, for example, issues at the contractual level, such as the lack of convergence in the interpretation and application of the contractual dispositions, the distaste or dissatisfaction with the service / product and also the risk of non-payment of the price stipulated following the delivery of the projects.

In terms of demand volatility, it is important to note that the business area depends, in part, on the launch of public tenders for public infrastructures (e.g. bridges, airports, train stations). Within the scope of public tenders, Martifer is subject to complex regulatory demands, specific to each country, namely in matters concerning the presentation of the proposals and the preparation of complex administrative documentation files to satisfy the project specifications defined by the contracting entity, that may represent additional costs. It is to be highlighted that, despite the said dependence on public tenders, Martifer has been able to win deals not subject to public tender, thereby reducing its exposure to this risk.

Under supplier risk, Martifer Construções, as a specialist in engineering projects, relies very often on subcontractors, who may fail in the execution of their work and jeopardize, through a domino-effect, the meeting of project delivery deadlines. In other words, there is also a risk of delays in delivering the projects, with the inherent contractual penalties.

Finally, in terms of external risks, and considering that the area of Metallic Constructions is strongly correlated with the economic growth and with gross fixed capital formation, it is therefore sensitive to the current economic environment. Accordingly, the worsening of the sovereign debt crisis in Europe also raises other problems, namely the austerity plans that imply severe transversal cuts in public investment and the significant decrease in liquidity throughout the financial system, which often causes highly attractive projects to be shelved due to lack of capital.

In order to mitigate these risks, the metallic construction area diversified its projects throughout different geographies, namely by entering markets that register stronger growth in the construction sector, such as Angola, Brazil and Algeria, or even visiting countries such as Saudi Arabia, which will allow to compensate both the effects of economic recession in Portugal and the economic slowdown in Europe.

b) Solar

In the turn-key solar PV park installation activity, end-client delays in obtaining the necessary licences or unanticipated delays in the delivery of equipment may disrupt the calendars initially foreseen for the completion of the projects. Despite the fact that this type of delay usually carries no contractual penalties, in some cases this situation can constitute a risk for the Group given the planning difficulties it may present.

Additionally, the financial market crisis has been hampering the promoters’ access to funding, resulting in the postponement of some projects. The diversification of the business throughout the value chain and the diversified client portfolio, inside and outside the Group, is in the process of being adopted and should reduce the possible impact of this situation.

The solar PV modules produced by the company are traded with a 5-year warranty and a 25-year performance warranty. As a result, this sector is exposed to the risk of warranty claims years after the sale of the equipment. Accordingly, any quality or performance problems that may occur can result in high costs. The performance of solar systems is also guaranteed in respect of the modules acquired for the construction of solar parks; however, the group’s responsibility, in this case, is diminished in that there is a right of recourse vis-à-vis the suppliers.


On the other hand, most of the equipment used in the production of solar PV modules is customized for specific raw materials, with a resulting dependency risk on key raw material suppliers. The Group has sought to mitigate this risk by establishing long-term contracts for some raw-materials, carrying out a meticulous selection of suppliers and working towards garnering a diversification of suppliers for each of the relevant raw-materials of the production process.

c) RE Developer

The productivity indices associated with the renewable energy business depends on the volume of energy produced by the wind farms and their profitability. These factors depend on the location of the wind farms and on the seasons of the year (seasonality). Given that the wind turbines are only driven when the wind velocity is within specific parameters, and these depend on the supplier and the type of turbine, if the said velocity is not within the parameters or if it is at the lower end of the limits, the energy production of the wind farms will suffer a reduction.


This risk is also mitigated through the geographical distribution of the wind farms, allowing for the set-off of the wind velocity variations on each farm and ensuring the relative stability of the volume of total energy produced.

LICENCING:

Wind farms and solar parks are subject to rigorous regulations in matters such as the development, construction, licensing and operation. If the relevant authorities in the jurisdictions in which the Group operates stop or reduce their support for the development of wind farms and solar parks, such actions may have a significant impact on the activity.

xxviii) Legal Risk Management

Martifer is subject to the national and local laws and regulations in the various geographies and markets where it operates, which aim to assure, amongst others, worker rights, protection of the environment and spatial planning and the maintenance of an open and competitive market. Thus, the legal and regulatory changes that affect the conditions conducive to the development of the Groups’ activities and, consequently, prejudice or impede the attainment of the strategic objectives require the Company to adapt to the new regulatory realities.

The management of legal risk is carried out by the legal department of the holding company and of each of the Group’s business areas and is monitored within the scope of reviews performed by internal legal and fiscal service providers dedicated to the respective activities, which operate in the dependence of the Board of Directors and management, conducting their work in articulation with the other fiscal and financial departments, so as to assure the protection of the Company’s interests and, ultimately, the stakeholders’, in strict compliance with their legal duties.


Legal and fiscal advisory services are also assured, nationally and internationally, by external professionals, selected amongst reputable firms and in accordance with the highest standards of competence, ethics and experience.

2. GROUP COMPANIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS The Group companies included in the consolidated financial statements, their consolidation methods, registered offices and percentage of share capital held by the Group on 31st December 2014 and 2013 are the following:

COMPANIES CONSOLIDATED USING THE FULL CONSOLIDATION METHOD

SHARE CAPITAL HELD PERCENTAGE FY 2013

COMPANY HEAD OFFICE DESIGNATION DIRECTLY INDIRECTLY DIRECTLY INDIRECTLY

Martifer SGPS, S.A. Oliveira de Frades Martifer SGPS Holding

Martifer Inovação e Gestão, S.A. Oliveira de Frades Martifer Inovação 100.00% - 100.00% 100.00% Martifer Gestiune Si Servicii, S.R.L. Bucharest Martifer Inovação Roménia 100.00% - 100.00% 100.00%

Martifer Metallic Constructions SGPS, S.A. Oliveira de Frades

Martifer Metallic Constructions 75.00% - 75.00% 100.00%



COMPANY HEAD OFFICE DESIGNATION DIRECTLY INDIRECTLY DIRECTLY INDIRECTLY Martifer - Construções Metalomecânicas, S.A. Oliveira de Frades Martifer Construções - 79.18% 79.18% 100.00%

Martifer Mota-Engil Coffey Construction Joint Venture Limited Dublin MMECC 1) - 47.51% 47.51% 60.00%

Martifer – Construcciones Metálicas España, S.A. Madrid Martifer Espanha - 75.00% 75.00% 100.00% Martifer – Construções Metálicas Angola, S.A. Luanda Martifer Angola - 59.06% 59.06% 78.75% Martifer Construction Limited Dublin Martifer Irlanda - 75.00% 75.00% 100.00% Martifer Polska Sp. Zo.o. Gliwice Martifer Polska - 75.00% 75.00% 100.00% Martifer Constructions, SAS Rungis Martifer França - 75.00% 75.00% 100.00% Martifer Constructii SRL Bucharest Martifer Constructii - 75.00% 75.00% 100.00% Park Logistyczny Biskupice Gliwice Biskupice - 75.00% 75.00% 100.00% Martifer Konstrukcje Sp. Z o.o. Gliwice Martifer Konstrukcje - 75.00% 75.00% 100.00% Martifer Slovakia S.R.O. Bratislava Martifer Slovakia - 75.00% 75.00% 100.00% Sociedade de Madeiras do Vouga, S.A. Albergaria-a-Velha Madeiras do Vouga - 75.00% 75.00% 100.00% Martifer - Gestão de Investimentos, S.A. Oliveira de Frades MGI - 75.00% 75.00% 100.00%

Nagatel Viseu, Promoção Imobiliária, S.A. Oliveira de Frades Nagatel Viseu - 75.00% 75.00% 100.00% Martifer Retail & Warehousing Angola, S.A. Luanda Martifer Retail Angola - 75.00% 75.00% 100.00% Martifer Aluminium Pty, Ltd Sidney Sassall - 75.00% 75.00% 100.00% Martifer - Alumínios, S.A. Oliveira de Frades Martifer Alumínios - 75.00% 75.00% 100.00%

Martifer Alumínios Angola, S.A. Luanda Martifer Alumínios Angola - 75.00% 75.00% 100.00% Martifer Aluminium Limited Dublin Martifer Aluminium Irlanda - 75.00% 75.00% 100.00%

Martifer Aluminium UK Limited London Martifer Aluminium Reino Unido - 75.00% 75.00% 100.00%

Martifer Aluminium SAS Rungis Martifer Aluminium França - 75.00% 75.00% 100.00% Martifer Alumínios Ltda São Paulo Martifer Alumínios Brasil - 74.99% 74.99% 99.99%

Martifer UK Limited London Martifer UK - 75.00% 75.00% 100.00% MT Construction Maroc, S.A.R.L. Tangier Martifer Marrocos - 75.00% 75.00% 100.00% Martifer - Construções Metálicas, Ltda. Fortaleza Martifer Brasil - 74.85% 74.85% 99.80% Saudi Martifer Constructions LLC Riyadh Martifer Arábia Saudita - 75.00% 75.00% 100.00%

Martifer Beteiligungsverwaltungs GmbH Vienna Martifer GmbH 100.00% - 100.00% 100.00% M City Gliwice Sp. Zo.o Gliwice M City Gliwice - 75.00% 75.00% 100.00%

Martifer Energy Systems II, SGPS, S.A. Oliveira de Frades Martifer Energy Systems II 100.00% - 100.00% 100.00% Martifer Energia S.R.L. Bucharest Martifer Energia Roménia - 100.00% 100.00% 100.00% Martifer Energia LLC Kiev Martifer Energia Ucrânia - 100.00% 100.00% 100.00% Martifer Wind Energy Systems LLC San Angelo TX Martifer Wind USA - 100.00% 100.00% 100.00%

Martifer Energy Systems PTY Cape Town Martifer Energia África do Sul - 85.00% 85.00% 85.00%

Navalria – Docas, Construções e Reparações Navais, S.A. Aveiro Navalria - 100.00% 100.00% 100.00%

Gebox, S.A. Ílhavo Gebox - 100.00% 100.00% 100.00% West Sea - Estaleiros Navais, Lda. Oliveira de Frades West Sea - 100.00% 100.00% 100.00%

Martifer Global SGPS, S.A. Oliveira de Frades Martifer Global 100.00% - 100.00% 100.00% Martifer Construcciones Peru, S.A. Lima Martifer Peru - 100.00% 100.00% 100.00% Global Holding Limited Zebbug Global Holding Limited - 100.00% 100.00% 100.00%

Global Engineering & Construction Limited Zebbug Global Engineering - 100.00% 100.00% 100.00%

Martifer Solar SGPS, S.A. Oliveira de Frades Martifer Solar SGPS 100.00% - 100.00% 100.00%

Martifer Solar, S.A. Oliveira de Frades Martifer Solar 4) - 55.00% 55.00% 55.00%

Martifer Solar Sistemas Solares, S.A. Madrid Martifer Solar Sistemas Solares4) - 55.00% 55.00% 55.00%

Solar Parks Construccion Parques Solares ETVE, S.A. Madrid Solar Parks4) - 55.00% 55.00% 55.00%

Parque Solar Seseña III, S.L. Madrid Seseña III4) - 55.00% 55.00% 55.00% MTS Solar Sistemas Solares, S.A. Mexico City Martifer Solar México4) - 54.45% 54.45% 54.45% Martifer Solar Chile Holding, Lda Santiago, Chile Martifer Solar Chile4) - 55.00% 55.00% 55.00% Martifer Solar Chile Operaciones Limitada Santiago, Chile Solar Chile Operaciones4) - 55.00% 55.00% 55.00% Martifer Solar Sistemas Solares Equador

S.A. Sangolquí Martifer Solar Equador4) - - - 54.45%

Martifer Solar Servicios México Cidade do México Martifer Solar Servicios México4) - 55.00% 55.00% 55.00%

Martifer Solar S.R.L. Milão Martifer Solar Itália4) - 55.00% 55.00% 55.00% MTS1 S.R.L. Siracusa MTS14) - 55.00% 55.00% 55.00% MTS2 S.R.L. Siracusa MTS24) - 55.00% 55.00% 55.00% MTS3 S.R.L. Siracusa MTS34) - 55.00% 55.00% 55.00% Martifer Solar RO S.R.L. Bucharest Martifer Solar Roménia4) - 55.00% 55.00% 55.00%

Martifer Solar Inc. S. Francisco CA Martifer Inc. 4) - 55.00% 55.00% 55.00% Martifer Solar USA, Inc. Santa Monica CA AEM 6) - - - 54.61%

Martifer Aurora Solar, LLC Santa Monica CA Solar Aurora 1) 6) - - - 54.07% MT Silverado Fund I LLC S. Francisco CA Silverado 1) 4) - 31.42% 31.42% 31.42% Martifer Solar Finance LLC S. Francisco CA Martifer Solar Finance4) - 55.00% 55.00% 55.00%

Martifer Solar Hellas, A.T.E. Athens PVI 1) 4) - 39.13% 39.13% 39.13% Martifer Solar Angola Luanda Martifer Solar Angola 1) 4) - 41.25% 41.25% 41.25%



COMPANY HEAD OFFICE DESIGNATION DIRECTLY INDIRECTLY DIRECTLY INDIRECTLY Martifer Solar N.V. Deerlijk Martifer Solar Bélgica4) - 55.00% 55.00% 55.00% Martifer Solar UK Limited London Martifer Solar UK4) - 55.00% 55.00% 55.00%

MTS Exbury Solar Limited London MTS Exbury Solar Limited4) - 55.00% 55.00% -

MTS Manton Manor Solar Limited London MTS Manton Manor Solar Limited4) - 55.00% 55.00% -

MTS Stud Farm Solar Limited London MTS Stud Farm Solar Limited4) - 55.00% 55.00% -

MTS Penderi Solar Limited London MTS Penderi Solar Limited4) - 55.00% 55.00% -

Martifer Solar S.A.S. Lyon Martifer Solar França4) - 55.00% 55.00% 55.00%

Martifer Solar CZ Prague Martifer Solar República Checa4) - 55.00% 55.00% 55.00%

Home Energy France SAS Lyon Home Energy França 4) - 55.00% 55.00% 55.00% PVGlass S.r.l Milan PVGlass Itália4) - 55.00% 55.00% 55.00% MPrime Solar Solutions, S.A. Oliveira de Frades Mprime4) - 55.00% 55.00% 55.00%

MPrime GMBH Munich MPrime GMBH4) - 55.00% 55.00% 55.00% Sol Cativante, Lda. Sever do Vouga Sol Cativante 4) - 55.00% 55.00% 55.00% Martifer Solar Investments, B.V. Amsterdam Martifer Solar Holanda4) - 55.00% 55.00% 55.00%

Martifer Solar Canadá, Ltd. Toronto Martifer Solar Canadá5) - - - 55.00% MTS6 S.R.L. Siracusa MTS64) - 55.00% 55.00% 55.00% Martifer Solar SK s.r.o. Dolny Kubin Martifer Solar Eslováquia4) - 55.00% 55.00% 55.00% Ginosa Solar Farm, S.R.L. Rome Ginosa Solar Farm4) - 55.00% 55.00% 55.00% Solar Spritehood S.R.L Rome Solar Spritehood4) - 55.00% 55.00% 55.00% MTS7, S.R.L. Rome MTS74) - 55.00% 55.00% 55.00% Canopy - Naos Paris Canopy Naos4) - 55.00% 55.00% 55.00% Steadfast Fairview Solar, Ltd Andover Steadfast Fairview Solar4) - 55.00% 55.00% 55.00% Steadfast Molland Solar, Ltd Andover Steadfast Molland Solar4) - - - 55.00% Martifer Solar UA, LLC Kiev Martifer Solar Ucrânia4) - 55.00% 55.00% 55.00% Inspira Martifer Solar Limited Mumbai Inspira Martifer Solar 1) 4) - 28.05% 28.05% 28.05% Societé Developpement Local SA Dakar Martifer Solar Senegal 1) 4) - 28.05% 28.05% 28.05% Martimak Solar Besiktas Martimak1) 4) - 44.00% 44.00% 44.00% Martiper Solar Besiktas Martiper1) 4) - 44.00% 44.00% 44.00% Martifer Solar Singapura PTE. LTD. Singapore Martifer Solar Singapura4) - 55.00% 55.00% 55.00% Martifer Solar Japan KK Tokio Martifer Solar Japan4) - 55.00% 55.00% 55.00%

Solariant Portfolio GK One Tokio Solariant Portfolio GK One4) - 55.00% 55.00% -

EVIVA SOLAR 1 LTD Athens Eviva Solar 14) - 54.90% 54.90% 54.90% EVIVA SOLAR 2 LTD Athens Eviva Solar 24) - 54.90% 54.90% 54.90% MTS Francis Court Solar Limited London MTS Francis2) 4) - - - 55.00% MTS Spittleborough Solar Limited London MTS Spittleborough4) - - - 55.00% MTS Tonge Solar Limited London MTS Tonge4) - 55.00% 55.00% 55.00% MTS Rydon Solar Limited London MTS Rydon4) - - - 55.00%

Martifer Solar MZ, S.A. Maputo Martifer Solar Moçambique 1) 4) - 28.05% 28.05% 28.05% Greencoverage Unipessoal, Lda. Oliveira de Frades Greencoverage4) - 55.00% 55.00% 55.00% Martifer Solar, Ltda Pindamonhangaba Martifer Solar Brasil4) - 54.45% 54.45% 54.45% Visiontera Unipessoal, Lda Oliveira de Frades Visiontera4) - 55.00% 55.00% 55.00% Inovsun, Lda. Oliveira de Frades Inovsun4) - - - 55.00% Martifer Solar Middle East Dubai Martifer Solar Middle East4) - 55.00% 55.00% 55.00% Belive in Bright Unipessoal, LDA. Oliveira de Frades Belive in Bright4) - 55.00% 55.00% 55.00% Montidílico Unipessoal, LDA. Oliveira de Frades Montidílico4) - - - 55.00%

Martifer Renewables SGPS, S.A. Oliveira de Frades

Martifer Renewables SGPS 100.00% - 100.00% 100.00%

Martifer Renewables, S.A. Oliveira de Frades Martifer Renewables SA - 100.00% 100.00% 100.00% Martifer Renovables ETVE, S.A.U. Madrid Martifer Renovables - 100.00% 100.00% 100.00%

Eurocab FV 1 S.L. Madrid Eurocab 1 - 100.00% 100.00% 100.00% Eurocab FV 2 S.L. Madrid Eurocab 2 - 100.00% 100.00% 100.00% Eurocab FV 3 S.L. Madrid Eurocab 3 - 100.00% 100.00% 100.00% Eurocab FV 4 S.L. Madrid Eurocab 4 - 100.00% 100.00% 100.00% Eurocab FV 5 S.L. Madrid Eurocab 5 - 100.00% 100.00% 100.00% Eurocab FV 6 S.L. Madrid Eurocab 6 - 100.00% 100.00% 100.00% Eurocab FV 7 S.L. Madrid Eurocab 7 - 100.00% 100.00% 100.00% Eurocab FV 8 S.L. Madrid Eurocab 8 - 100.00% 100.00% 100.00% Eurocab FV 9 S.L. Madrid Eurocab 9 - 100.00% 100.00% 100.00% Eurocab FV 10 S.L. Madrid Eurocab 10 - 100.00% 100.00% 100.00% Eurocab FV 11 S.L. Madrid Eurocab 11 - 100.00% 100.00% 100.00% Eurocab FV 12 S.L. Madrid Eurocab 12 - 100.00% 100.00% 100.00% Eurocab FV 13 S.L. Madrid Eurocab 13 - 100.00% 100.00% 100.00%



COMPANY HEAD OFFICE DESIGNATION DIRECTLY INDIRECTLY DIRECTLY INDIRECTLY Eurocab FV 14 S.L. Madrid Eurocab 14 - 100.00% 100.00% 100.00% Eurocab FV 15 S.L. Madrid Eurocab 15 - 100.00% 100.00% 100.00% Eurocab FV 16 S.L. Madrid Eurocab 16 - 100.00% 100.00% 100.00% Eurocab FV 17 S.L. Madrid Eurocab 17 - 100.00% 100.00% 100.00% Eurocab FV 18 S.L. Madrid Eurocab 18 - 100.00% 100.00% 100.00% Eurocab FV 19 S.L. Madrid Eurocab 19 - 100.00% 100.00% 100.00%

Eviva Energy S.R.L. Bucharest Eviva Roménia - 100.00% 100.00% 100.00% Eviva Nalbant S.R.O. Bucharest Eviva Nalbant - 100.00% 100.00% 100.00% Eviva Agighiol S.R.L. Bucharest Eviva Agighiol - 99.00% 99.00% 99.00% Eviva Casimcea S.R.O. Bucharest Eviva Casimcea - 99.00% 99.00% 99.00% Premium Management Consulting, S.R.L. Bucharest Premium Management - 85.00% 85.00% 85.00% MW Topolog, S.R.L. Bucharest MW Topolog - 99.00% 99.00% 99.00%

Martifer Renewables, S.A. Gliwice Eviva Polónia - 100.00% 100.00% 100.00% Martifer Renewables Pty, Ltd. Sidney Eviva Austrália - 100.00% 100.00% 100.00% Eviva Beteiligungsverwaltungs GmbH Vienna Eviva GmbH - 100.00% 100.00% 100.00%

Eviva Hidro S.R.L. Bucharest Eviva Hidro 1.00% 99.00% 100.00% 100.00% Martifer Deutschland GmbH Berlin Martifer Deutschland - 100.00% 100.00% 100.00%

Wind Farm Odrzechowa Sp. Zo.o Gliwice Wind Odrzechowa - 100.00% 100.00% 100.00% Eviva Gizalki Sp. Zo.o Miastko Eviva Gizalki 5) - - - 100.00% Wind Farm Bukowsko Sp. Zo.o Gliwice Wind Farm Bukowsko - 100.00% 100.00% 100.00% Wind Farm Markowa Sp. Zo.o Gliwice Wind Farm Markowa - 100.00% 100.00% 100.00% Wind Farm Lada Sp. Zo.o Gliwice Wind Farm Lada - 100.00% 100.00% 100.00% Wind Farm Jawornik Sp. Zo.o Gliwice Wind Farm Jawornik - 100.00% 100.00% 100.00% Wind Farm Piersno Sp. Zo.o Gliwice Wind Farm Piersno - 100.00% 100.00% 100.00% Wind Farm Oborniki Sp. Zo.o Gliwice Wind Farm Oborniki - 100.00% 100.00% 100.00% Martifer Renewables Brazil B.V. Amsterdam Renewables Holanda - 100.00% 100.00% 100.00%

Martifer Renewables Investments ETVE, S.A. Madrid Eurocab 21 - 100.00% 100.00% 100.00% Martifer Renewables Italy BV Amsterdam Renewables Italy Holanda - 100.00% 100.00% 100.00%

Martifer Renewables Brasil Participações LTDA Fortaleza Martifer Renewables Brasil - 100.00% 100.00% 100.00%

Vesto EAD Varna Vesto - - - 100.00% DVP1 Limited Varna DVP1 - - - 100.00% DVP2 Limited Varna DVP2 - - - 100.00% Martifer Renováveis - Geração de Energia

e Participações S.A. Fortaleza Ventania - 55.00% 55.00% 55.00%

Eólica Cajueiro da Praia, Ltda . Fortaleza Cajueiro - 55.00% 55.00% 55.00% Eólica Coqueirais, Ltda. Fortaleza Cacimbas - - - 55.00% SBER – Sociedade Brasileira de

Energias Renováveis, Ltda. Fortaleza SBER 1) - 41.25% 41.25% 41.25%

Melosa – Geração de Energia e Participações, Ltda. Fortaleza Melosa - 55.00% 55.00% 55.00%

Eólica Paraipaba, Ltda . Fortaleza Paraipaba - - - 55.00% Eólica Chapadão, Ltda. Fortaleza Chapadão - - - 55.00% Rosa dos Ventos - Geração e

Comercialização de Energia, S.A Fortaleza Rosa dos Ventos3) - - - 55.00%

Eólica Macaúbas, Ltda. Fortaleza Macaúbas - - - 54.99% Eólica Sobradinho, Ltda. Fortaleza Sobradinho - - - 54.99%

MSPAR Energia e Participações, SA Barueri MSPAR - 100.00% 100.00% 55.00% Martifer Renewables O&M Sp. z o.o. Gliwice Martifer Renewables O&M - 52.00% 52.00% 52.00%

1) The consolidation of these companies using the full consolidation method is a consequence of the Group having stepped shareholdings, exercising control at each level.

2) Its prior designation was MTS Downs Farm Solar Limited.

3) This company on 31st December 2014, was classified as a non-current asset held for sale (Note 28).

4) This company on 31st December 2014, was classified as a non-current asset held for sale (Note 28).

5) This company on 31st December 2014, is consolidated via equity method (Note 21).

6) This company on 31st December 2014, desconsolidates due to loss of control following the “settlement, plan support and release agreement”.


COMPANIES CONSOLIDATED USING THE EQUITY METHOD

The companies consolidated using the equity method; their registered offices and the percentage of share capital held by the Group are as follows:

SHARE CAPITAL HELD PERCENTAGE FY 2013 COMPANY HEAD OFFICE DESIGNATION DIRECTLY TOTAL DIRECTLY TOTAL Metallic Construction Associate companies:

Liszki Green Park, Sp. Zo.o Gliwice Liszki Green Park - 33.75% 33.75% 45.00% Martifer Amal, S.A. Nacala Martifer Amal - 35.00% 35.00% 35.00%

Martifer Amal, S.A. Oliveira de Frades Martifer Amal - 30.00% 30.00% 30.00%

Martimetal Spa Alger Martimetal - 49.00% 49.00% - Joint control companies:

Promoquatro – Investimentos Imobiliários, Lda.

Oliveira de Frades Promoquatro - 37.50% 37.50% 50.00%

M City Bialystok Sp. Zo.o Gliwice M City Bialystok - 37.50% 37.50% 50.00% M City Radom Sp. Zo.o Gliwice M City Radom - 37.50% 37.50% 50.00% M. City Szczecin Sp. Z o.o. Gliwice M City Szczecin - 37.50% 37.50% 50.00%

Solar Associate companies:

Parque Solar Seseña I, S.L. Madrid Seseña I 2) - 20.61% 20.61% 20.61% Canaverosa Renovables, SL Madrid Canaverosa 2) - 26.94% 26.94% 26.94% Empresa de Energia Renovable Maria

del Sol Norte S.A. Santiago Maria del Sol2) - 26.95% 26.95% 26.95%

MSN Solar Uno SpA Santiago MSN Solar Uno2) - 26.95% 26.95% 26.95% MSN Solar Dos SpA Santiago MSN Solar Dos2) - 26.95% 26.95% 26.95% MSN Solar Tres SpA Santiago MSN Solar Tres2) - 26.95% 26.95% 26.95% MSN Solar Cuatro SpA Santiago MSN Solar Cuatro2) - 26.95% 26.95% 26.95% MSN Solar Cinco SpA Santiago MSN Solar Cinco2) - 26.95% 26.95% 26.95% Martifer Solar Canadá, Ltd. Toronto Martifer Solar Canadá 2) - 27.50% 27.50% -

Renewables Associate companies:

Eviva Gizalki Sp. Zo.o Miastko Eviva Gizalki 3) - 100.00% 100.00% - Joint control companies:

Ventinveste, S.A. Lisbon Ventinveste SA 6,00% 42.50% 48.50% 46.00% Ventinveste Eólica, SGPS, S.A. Lisbon Ventinveste Eólica 4) - - - 46.00%

Ventinveste Indústria SGPS, S.A. Oliveira de Frades Ventinveste Indústria - - - 46.00%

Âncora Wind – Energia Eólica, S.A Lisbon Âncora 24.25% 24.25% 0.00% Parque Eólico do Douro Sul, S.A. Lisbon PE Douro Sul - 24.25% 24.25% 46.00% Parque Eólico de Vale do Chão,

S.A. Lisbon PE Vale do Chão - 24.25% 24.25% 46.00%

Parque Eólico de Torrinheiras, S.A. Lisbon PE Torrinheiras - 48.50% 48.50% 46.00% Parque Eólico do Pinhal do Oeste, S.A. Lisbon PE Pinhal do Oeste - 48.50% 48.50% 46.00% Parque Eólico de Vale Grande. S.A. Lisbon PE Vale Grande - 48.50% 48.50% 46.00% Parque Eólico do Cabeço Norte, S.A. Lisbon PE Cabeço Norte - 48.50% 48.50% 46.00% Parque Eólico da Serra do Oeste, S.A. Lisbon PE Serra do Oeste - 48.50% 48.50% 46.00% Parque Eólico do Planalto, S.A. Lisbon PE Planalto - 48.50% 48.50% 46.00% Eviva Dunowo, Sp. Z o.o. Gliwice Eviva Dunowo - 50.00% 50.00% 50.00% SPEE 3 – Parque Eólico do Baião,

S.A. Lisbon SPEE 3 - 50.00% 50.00% 50.00%

SPEE 2 – Parque Eólico de Vila Franca de Xira, S.A.

Oliveira de Frades SPEE 2 - 50.00% 50.00% 50.00%

Parque Eólico da Penha da Gardunha, Lda.

Oliveira de Frades

PE Penha da Gardunha - 50.00% 50.00% 50.00%

Other Associate companies:

Nutre SGPS, S.A. Oliveira de Frades Prio SGPS - - - 49.00%

Nutre, S.A. Oliveira de Frades Prio Foods - - - 49.00%

Nutre - Industrias Alimentares, S.A. Oliveira de Frades Prio Alimentar - - - 49.00%

Nutre MZ. S.A. Maputo Nutre Moçambique - - - 49.00%

Nutre Farming, S.R.L. Bucharest Nutre Farming Roménia - - - 49.00%

Prio Agromart S.R.L. Bucharest Prio Agromart - - - 49.00% Prio Balta S.R.L. Bucharest Prio Balta - - - 49.00% Prio Facaieni S.R.L. Bucharest Prio Facaieni - - - 49.00% Prio Ialomita S.R.L. Bucharest Prio Ialomita - - - 49.00% Prio Rapita S.R.L. Bucharest Prio Rapita - - - 49.00%


SHARE CAPITAL HELD PERCENTAGE FY 2013 COMPANY HEAD OFFICE DESIGNATION DIRECTLY TOTAL DIRECTLY TOTAL

Nutre Farming West Part S.R.L. Bucharest Nutre West Part - - - 49.00% Prio Terra Agricola S.R.L. Bucharest Prio Terra Agricola - - - 49.00% Prio Turism Rural S.R.L Bucharest Prio Turism Rural - - - 49.00% Agromec Balaciu Bucharest Agromec Balaciu - - - 42.60% Miharox S.R.L. Bucharest Miharox - - - 40.47% Zimbrul. S.A. Bucharest Zimbrul - - - 49.00% Agrozootehnica. S.A. Bucharest Agrozootehnica - - - 48.98% Prio Agrotrans S.R.L. Bucharest Prio Agrotrans - - - 49.00%

Nutre Brasil LTDA S. Luís do Maranhão Prio Foods Brasil - - - 49.00%

Prio Extractie S.R.L. Bucharest Prio Extractie - - - 22.05% Prio Agro Industries. Sp. Z o.o. Gliwice Prio Polónia - - - 49.00% Prio Biocombustibil S.R.L. Bucharest Prio Biocombustibil - - - 22.05% Prio Meat S.R.L Bucharest Prio Meat - - - 49.00% Prio Foods – AJFS Construções, ACE Lisbon Prio Foods ACE - - - 24.50% Nutre Farming B.V. Amsterdam Nutre Farming - - - 49.00%

Bunge Prio Cooperativa U.A. Amsterdam Bunge Prio Cooperativa - - - 22.05%

Bunge Roménia S.R.L. Buzau Bunge Roménia - - - 22.05% Centralrest, Lda Ilhavo Centralrest - - - 9.80% Prio Agriculture, B.V. Delft Prio Holanda - - - 49.00% Porthold Project Development BV Amsterdam Porthold - - - 49.00% Fertilis Agro-Indústrias, Lda Luanda Fertilis - - - 29.40%

Prio Energy SGPS. S.A. Oliveira de Frades Prio Energy SGPS 1) 5% - 5.00% 10.00%

Prio Biocombustíveis. S.A. Oliveira de Frades

Prio Biocombustíveis 1) - 5.00% 5.00% 10.00%

Prio Energy. S.A. Oliveira de Frades Prio Energy 1) - 5.00% 5.00% 10.00%

Mondefin Coimbra Mondefin 1) - 5.00% 5.00% 10.00% Prio Parque de Tanques de Aveiro,

S.A. Oliveira de Frades Prio Tanques 1) - 5.00% 5.00% 10.00%

Prio.E-Electric, S.A. Oliveira de Frades Prio.E-Electric 1) - 5.00% 5.00% 10.00%

PRIO.E - Mobility Solutions, Lda _PT Oliveira de Frades Park Charge 1) - 5.00% 5.00% 10.00%

Prio. E – SGPS, S.A. Oliveira de Frades Prio E SGPS 1) - 5.00% 5.00% 10.00%

Share Motivation, Lda. Oliveira de Frades Share Motivation 1) - 5.00% 5.00% 10.00%

IMO 505, Lda Coimbra IMO 5051) - 5.00% 5.00% - Prio Gas Lisboa, SA Aveiro Prio Gas 1) - 2.50% 2.50% -

1) The consolidation of this company using the equity method is a consequence of the Group having significative influence over the company which holds this share, which in turn has the same control over the investee.

2) This company on 31st December 2014 was classified as a non-current asset held for sale (Note 28). 3) The consolidation of this company using the equity method is a consequence of the Group having only significative influence over it (Note 21). 4) Company merged in Ventinveste, S.A.

During the periods ended on 31st December 2014 and 2013, the changes occurring in the consolidation perimeter were as follows:

Companies incorporated:

FY 2014 HEAD OFFICE Metallic Constructions

Associate companies:

Martimetal Spa Argel

Solar

Subsidiary companies:

MTS Exbury Solar Limited London

MTS Manton Manor Solar Limited London

MTS Stud Farm Solar Limited London

MTS Penderi Solar Limited London

MTS Hill Farm Solar Limited London

RE Developer



FY 2014 HEAD OFFICE

Âncora Wind – Energia Eólica, S.A Lisbon

Other


Prio Gas Lisboa, SA Aveiro

FY 2013 HEAD OFFICE Metallic Constructions

Subsidiary companies: Martifer Aluminium SAS Rungis

Martifer Alumínios Ltda São Paulo

West Sea - Estaleiros Navais, Lda. Oliveira de Frades

Martifer Construcciones Peru, S.A. Lima

Global Holding Limited Zebbug

Global Engineering & Construction Limited Zebbug


Martifer Amal, S.A. (Portugal) Oliveira de Frades

Solar


Martifer Solar Servicios Mexico Mexico City

Martifer Solar Japan KK Tokio

MTS Francis Court Solar Limited London

MTS Spittleborough Solar Limited London

MTS Tonge Solar Limited London

MTS Rydon Solar Limited London

Visiontera Unipessoal, Lda Oliveira de Frades

Martifer Solar Middle East Dubai

Belive in Bright Unipessoal, LDA. Oliveira de Frades

Montidílico Unipessoal, LDA. Oliveira de Frades


MSN Solar Uno SpA Santiago

MSN Solar Dos SpA Santiago

MSN Solar Tres SpA Santiago

MSN Solar Cuatro SpA Santiago

MSN Solar Cinco SpA Santiago

FTP Power LLC New York

Renewables


Eólica Macaúbas, Ltda. Fortaleza

Eólica Sobradinho, Ltda. Fortaleza

MSPAR Energia e Participações, SA Barueri

Martifer Renewables O&M Sp. z o.o. Gliwice

Other


Nutre Farming West Part S.R.L. Bucharest

Companies acquired:

FY 2014 HEAD OFFICE Solar

Subsidiary Companies:

Solariant Portfolio GK One Tokio

Other:


IMO 505, Lda Coimbra

Prio Gas Lisboa, SA Aveiro


FY 2013 HEAD OFFICE Other:


Fertilis Agro-Indústrias, Lda Luanda

Companies sold / liquidated:


MTS Spittleborough Solar Limited London

Montidílico Unipessoal, LDA. Oliveira de Frades

Inovsun, Lda. Oliveira de Frades

MTS Francis Court Solar Limited London

MTS Hill Farm Solar Limited London

MTS Rydon Solar Limited London

Steadfast Molland Solar, Ltd Andover

Martifer Solar Sistemas Solares Equador S.A. Sangolquí

Renewables

Vesto EAD Varna

DVP1 Limited Varna

DVP2 Limited Varna

Rosa dos Ventos - Geração e Comercialização de Energia, S.A Fortaleza

Ventinveste Indústria SGPS, S.A. Oliveira de Frades

Eólica Coqueirais, Ltda. Fortaleza

Eólica Paraipaba, Ltda . Fortaleza

Eólica Chapadão, Ltda. Fortaleza

Eólica Macaúbas, Ltda. Fortaleza

Eólica Sobradinho, Ltda. Fortaleza

Other

Nutre SGPS, S.A. Oliveira de Frades

Nutre, S.A. Oliveira de Frades

Nutre - Industrias Alimentares, S.A. Oliveira de Frades

Nutre MZ. S.A. Maputo

Nutre Farming, S.R.L. Bucharest

Prio Agromart S.R.L. Bucharest Prio Balta S.R.L. Bucharest Prio Facaieni S.R.L. Bucharest Prio Ialomita S.R.L. Bucharest Prio Rapita S.R.L. Bucharest Nutre Farming West Part S.R.L. Bucharest Prio Terra Agricola S.R.L. Bucharest Prio Turism Rural S.R.L Bucharest Agromec Balaciu Bucharest Miharox S.R.L. Bucharest Zimbrul. S.A. Bucharest Agrozootehnica. S.A. Bucharest Prio Agrotrans S.R.L. Bucharest Nutre Brasil LTDA S. Luís do Maranhão

Prio Extractie S.R.L. Bucareste

Prio Agro Industries. Sp. Z o.o. Gliwice

Prio Biocombustibil S.R.L. Bucharest

Prio Meat S.R.L Bucharest

Prio Foods – AJFS Construções, ACE Lisbon

Nutre Farming B.V. Amsterdam


FY 2014 HEAD OFFICE Bunge Prio Cooperativa U.A. Amsterdam

Bunge Roménia S.R.L. Buzau

Centralrest, Lda Ilhavo

Prio Agriculture, B.V. Delft

Porthold Project Development BV Amsterdam

Fertilis Agro-Indústrias, Lda Luanda



MTS4 S.R.L. Siracusa

MPrime Italia S.r.l Oliveira de Frades

Sol Cativante VII, Lda. Viseu

Eviva Mepe Atenas

MTS Trewidland Solar, Ltd Londres

Steadfast Apsley Solar, Ltd Andover

LRCC – La Rad Campo Charro – Energias Renováveis, Lda. São Martinho do Porto

Renewables


Martifer Renewables Bippen GmbH Berlim

Energia Wiatrowa Sp. Zo.o Gliwice

Other

Joint arrangements:

Macquarie Capital Wind Fund Pty Limited Sidney

Changes in the consolidation method:

In 2014:

MTS 3 – from equity to full consolidation method due to the increase in participation by Martifer Solar Itália from 49 % to 100 %.

Martifer Solar Canadá – from full consolidation to equity method due to the reduction of participation by Martifer Solar Investments B.V. from 100 % to 50 %.

Eviva Gizalki - from full consolidation to equity method due to loss of control over same, namely for not managing its financial and operational policies (Note 21).

In 2013:

Prio Agriculture B.V. (Prio Holanda) - from full consolidation to equity method due to its sale by Martifer Renewables SGPS, S.A. to Nutre SGPS, S.A.

Porthold Project Development BV (Porthold) - from full consolidation to equity method due to the sale of Prio Agriculture B.V. by Martifer Renewables SGPS, S.A. to Nutre SGPS, S.A. MTS 3 - from full consolidation to equity method due to decrease in the shareholding held by Martifer Solar Itália from 100% to 49%.

Ventinveste Indústria SGPS, S.A. – from full consolidation to equity method due to loss of control over same, namely for not managing its financial and operational policies.

Other changes in the consolidation perimeter:

In 2014:

MS Par Energia e Participações – transfer of shareholding from Martifer Renováveis, SA to Martifer Renewables Brasil Participações, Ltda.

Prio Energy SGPS – decrease in the share held by Martifer SGPS, SA, from 10 % to 5 %.

Martifer Metallic Constructions SGPS, S.A – decrease in the share held by Martifer SGPS, SA, from 100% to 75%.


Martifer Aluminium PTY – transfer of shareholding from Martifer Alumínios, SA to Martifer Metallic Constructions SGPS, SA.

Ventinveste, S.A – increase in the share held directly and indirectly by Martifer SGPS, SA from 46% to 48,5%

FTP Power LLC (previously FTP Solar LLC) – discontinuation of the equity method in virtue of the loss of significant influence (Note 28).

Martifer Solar USA – deconsolidates due to the loss of control verified with the signature of the “settlement, plan, support and release agreement”.

Martifer Aurora Solar LLC – deconsolidates due to the loss of control verified with the signature of the “settlement, plan, support and release agreement”.

In 2013:

Porthold Project Development BV (Porthold) – increase in the shareholding held by Prio Agriculture B.V from 55% to 100%. Eviva Gizalki Sp.Zo.o (Eviva Gizalki) – increase in the shareholding held by Martifer Renewables SGPS, S.A. from 72% to 100%. Martifer Solar USA, Inc. (AEM) – increase in the shareholding held by Martifer Solar Inc. from 63.5% to 99.293%. Eviva Nalbant S.R.O. (Eviva Nalbant) – increase in the shareholding held by Eviva Energy S.R.L. from 99% to 100%. Rosa dos Ventos S.A. (Rosa dos Ventos) – increase in the shareholding held by Martifer Renováveis-Geração de Energia e Participações, S.A. from 97.5% to 100%. Prio Energy SGPS - decrease in the shareholding held by Martifer SGPS, S.A. from 49% to 10%.

PV Glass, SA – merger by incorporation in Martifer Solar S.A.

PV Glass, Srl – change in shareholder structure as a result of the merger by incorporation of PV Glass in Martifer Solar S.A.

M City Gliwice Sp. Zo.o – increase in the shareholding held by Martifer GmbH from 52.6% to 97.8% and a further increase of 2% through Martifer Metallic Constructions, SGPS, S.A.

3. INFORMATION BY BUSINESS SEGMENTS The Group bases its disclosure of information on the primary segments of its internal organisation for management purposes.

The Group is organised in two business areas: ‘Metallic Constructions’ and ‘RE Developer’, that are coordinated and supported by Martifer SGPS, SA.

The Metallic Constructions business area includes all the construction activities involving metal mechanical constructions, aluminium and glass façades, infrastructures for oil & gas and naval industry. The RE Developer segment includes the promotion and development of renewable energy projects, with special emphasis on the wind sector.

The amounts presented in ‘Other’ are related to the services rendered by Martifer SGPS, S.A., Martifer Inovação e Gestão S.A. (MIG) and Martifer Gestiune Si Servicii, S RL (MIG RO).

In September 2014, the Group started to classify the solar business unit (composed by Martifer Solar, SA and its subsidiaries) as a non current asset held for sale. Since the requirements of IFRS 5 were fulfilled, the contribution to Martifer’s consolidated results, coming from this segment, is presented in an autonomous line in the Consolidated P&L and the values YoY were adjusted to allow comparison. The breakdown of these contributions are in the Notes to Consolidated Financial Statements (Note 28).

The accounting policies used in the preparation of the information by each business segment are the same as the ones used in the preparation of the attached financial statements (Note 1).

On 31st December 2014 and 2013, the breakdown of sales and services rendered by primary segments is as follows:

SALES TO EXTERNAL CUSTOMERS INTERSEGMENT SALES TOTAL

FY 2014 FY 2013 FY 2014 FY 2013 FY 2014 FY 2013

Metallic Constructions 179,331,294 253,516,407 33,946,559 61,739,088 213,277,853 315,255,495

RE Developer 9,711,819 17,870,145 758,734 2,058,587 10,470,553 19,928,732

Others 1,249,161 1,409,657 4,541,729 3,690,859 5,790,890 5,100,516

190,292,274 272,796,208 39,247,022 67,488,534 229,539,296 340,284,742

Intersegment eliminations (35,588,422) (65,656,976)

Own work capitalized (Note 5) (5,042,877) (1,995,508)

188,907,997 272,632,258


Sales and services rendered to non-group clients by geographical segments are as follows:

FY 2014 FY 2013

Iberian Peninsula

Metallic Constructions 54,508,612 79,649,412

RE Developer 5,254,348 5,135,086

Others 1,108,386 1,174,584



RE Developer 3,210,350 5,809,397

Others 126,037 235,073

Other markets


RE Developer 1,067,206 6,925,662

188,907,997 272,632,258 The sales and services rendered in the ‘Metallic Constructions’ segment decreased by 30 % to Euro 178 million in 2014, due to the difficulties felt in the sector, mainly in Europe. The Group is focused in reverting this trend through internationalization, turning to emerging countries.

On 31st December 2014 and 2013, the earnings before interest, taxes, amortization, provisions and impairment losses (EBITDA), the earnings before interest and taxes (EBIT) and the profit after tax by primary segment are as follows:

EBITDA EBIT PROFIT AFTER TAX

FY 2014 FY 2013 FY 2014 FY 2013 FY 2014 FY 2013

Metallic Constructions (7,284,819) (18,731,186) (51,393,311) (34,608,778) (68,411,237) (54,188,284)

RE Developer 12,904,338 35,382,800 5,192,718 11,066,257 614,180 9,900,593

Others 384,533 (920,767) (1,059,750) (3,338,085) (3,733,388) (20,555,233)

6,004,052 15,730,847 (47,260,343) (26,880,606) (71,530,445) (64,842,924)

Non-current operation held for sale (note 28)

(65,171,979) (5,908,517)

6,004,052 15,730,847 (47,260,343) (26,880,606) (136,702,424) (70,751,441) In 2014, the Consolidated EBITDA reflects a significant decrease, when compared with 2013, from Euro 16 million to Euro 6 million. This decrease in EBITDA results mainly from the reduction of the EBITDA in RE Developer, which had significantly contributed to the Group’s EBITDA in 2013, with the sales of wind farms performed in that financial year.

In Metallic Constructions, the EBITDA at the end of 2014 amounted to Euro -7 million, showing a 63 % improvement, which compares with Euro -19 million in 2013. The EBITDA in 2014 was not only affected by the deterioration of market conditions in Europe (with effects on margins), but also by the entrance costs in new markets and delays in some projects.

In RE Developer, the EBITDA reached Euro 13 million in 2014, showing a 64 % decrease when compared with the previous year, essentially justified by the fact that the sales of wind farms in 2014 had a lower impact than the sales in the previous year, but also affected by the reduction of MWs in operation and by the negative impact of the instability in the Romanian market in the performance of the Babadag wind farm.

The gains and losses in associate companies, the carrying amount of the investments in associate companies, as well as the increases and reversals of provisions and impairment losses by primary segment are as follows:

LOSSES IN ASSOCIATE COMPANIES GAINS IN ASSOCIATE COMPANIES

CARRYING AMOUNT OF THE FINANCIAL ASSETS RECORDED

UNDER EQUITY METHOD

FY 2014 FY 2013 FY 2014 FY 2013 FY 2014 FY 2013

Metallic Constructions 467,155 493,734 - - 722,768 421,031

RE Developer 2,587 543 449,587 464,597 5,564,732 1,548,391 Non-current discontinued

operation held for sale (note 28) - - - - (*) 36,625,842

Other (note 13) - 26,648,989 1,192,970 1,564,948 1,511,016 2,686,807

469,742 27,143,266 1,642,557 2,029,545 7,798,516 41,282,069


PROVISIONS AND IMPAIRMENT LOSSES RECORDED IN THE YEAR REVERSALS OF PROVISIONS AND IMPAIRMENT

LOSSES RECORDED IN THE YEAR

FY 2014 FY 2013 FY 2014 FY 2013

Metallic Constructions (note 11) 37,716,031 8,644,357 386,977 200,381

RE Developer (note 11) 1,550,224 19,970,730 248,243 712,072

Others 596,212 -

39,266,255 29,211,299 635,219 912,453

The Group’s net assets and liabilities by operating segments on 31st December 2014 and 2013 are as follows:

ASSETS LIABILITIES

FY 2014 FY 2013 FY 2014 FY 2013

Metallic Constructions 310,078,424 331,230,804 306,200,108 307,847,934

RE Developer 157,464,362 166,932,839 63,327,919 44,917,163

Holding e MIGs 521,568,741 525,799,738 161,701,757 163,855,470

Non-current discontinued operation held for sale (note 28) 143,313,447 254,606,180 137,358,237 180,727,147

Intra-group eliminations (499,695,276) (490,796,517) (51,206,314) (49,266,682)

632,729,698 787,773,044 617,381,707 648,081,032

The Group’s capital expenditure (acquisition of tangible and intangible assets) and depreciation / amortization, by operating segments up until 31st December 2014 and 2013 were as follows:

CAPITAL EXPENDITURES AMORTIZATIONS

FY 2014 FY 2013 FY 2014 FY 2013

Metallic Constructions 13,310,159 5,446,425 6,963,558 7,433,616

RE Developer 1,681,481 2,426,902 6,228,282 5,057,885

Others 18,091 74,975 1,441,519 1,821,105

15,009,731 7,948,302 14,633,359 14,312,606

Net assets and capital expenditure by geographical areas were as follows:

ASSETS CAPITAL EXPENDITURES

FY 2014 FY 2013 FY 2014 FY 2013

Iberian Peninsula 277,102,155 327,928,884 2,419,640 1,318,472

European Union (other) 233,800,945 273,897,513 3,495,055 2,002,586

Other markets 121,826,598 185,946,647 9,095,035 4,627,244

632,729,698 787,773,044 15,009,731 7,948,302

The amount of assets and liabilities at 31st December 2014 and 2013 include amounts relating to ‘Assets held for sale’ (Note 28).

4. SALES AND SERVICES RENDERED On 31st December 2014 and 2013, the breakdown of the sales and services rendered was as follows:

FY 2014 FY 2013

Revenue from the sale of merchandise 16,877,890 34,510,498

Revenue from the sale of goods 58,317,393 85,762,179

Services rendered 113,712,714 152,359,581

188,907,997 272,632,258

In 2014, sales and services rendered decreased 31 %, when compared with 2013, to Euro 188 million. This decrease was influenced primarily from the reduction of activity in Portugal and Saudi Arabia, mainly in the Metallic Constructions segment.


5. OTHER INCOME On 31st December 2014 and 2013, the breakdown of the caption ‘Other income’ was as follows:

FY 2014 FY 2013

Change in production 656,997 5,287,402

Own work capitalised 5,042,877 1,995,508

Reversals of impairment losses:

Trade debtors (Note 24) 265,273 1,690,474

Other impairment losses 779,109 2,577,429

Supplementary income 1,617,559 1,491,518

Gains in inventories 34,019 585,302

Capital Gains in non-financial assets 20,454,680 12,318,264

Operating subsidies 222,470 29,055

Investments subsidies 164,322 167,802

Foreign exchange gains 4,101,128 4,078,790

Other operational gains 3,572,572 17,084,911

Total 36,911,006 47,306,455

The amount of ‘Own work capitalized’ in 2014, as in the previous year, is essentially related to the construction of infrastructures in the Metallic Constructions segment.

On 31st December 2014 ‘Capital Gains in non-financial assets’ include the profit arising from the sale of 100 % of shares in the company Rosa dos Ventos Geração e Comercialização de Energia, SA, for the total amount of Brazilian Real 70.3 million to the Brazilian company CPFL. The sale was agreed on 18 June 2013.

On 31st December 2014 the reversal of ‘other impairment losses’ is the result of an impairment constituted in previous periods in Martifer Construções, related with the Sostanj (Slovenia) and the Manheim (Germany) projects, of the client Alstom (note 11).

The caption ‘foreign exchange gains’ is related with exchange variations in non financial transactions, mainly in non-Euro Zone Group companies (note 1).

In 2013, ‘Other operational gains’ included the profit arising from the formalization, in November 2013, of the disposal Martifer Renewables, SGPS, S.A., of the ‘Option to Buy Rights’ it held in respect of the shares of the company MS Participações Societárias, SA, to Banco Santander (Brasil), SA.

In 2013, ‘Capital Gains in non-financial assets’ included the profit arising on the formalization, in June 2013, of the disposal by Martifer Renewables, SGPS, S.A. of the shares it held in Energia Wiatrowa, Sp. Zo.o. This disposal, agreed to on 30 September 2011, was subject to compliance with certain terms and conditions defined in the contract, namely the conclusion of the Rymanów project, a wind farm with 13 turbines, in the region of Podkarpackie, being developed by Wiatrowa.

6. COST OF GOODS SOLD On 31st December 2014 and 2013 the cost of goods sold was as follows:

FY 2013 MERCHANDISE

RAW-MATERIALS, SUBSIDIARIES

AND OTHER CONSUMABLES

TOTAL

Opening balance 4,248,938 5,740,349 9,989,287

Purchases 10,322,492 66,780,642 77,103,134

Changes in the consolidation perimeter, currency exchange differences, transfers and others 1,155,019 2,939,252 4,094,271

Closing balance 4,067,430 8,071,479 12,138,909

11,659,019 67,388,764 79,047,783


FY 2014 MERCHANDISE

RAW-MATERIALS, SUBSIDIARIES

AND OTHER CONSUMABLES

TOTAL

Opening balance 4,067,430 8,071,479 12,138,909

Purchases 9,666,850 44,466,499 54,133,349

Changes in the consolidation perimeter, currency exchange differences, transfers and others (435,246) (387,919) (823,165)

Closing balance 3,276,957 6,843,327 10,120,284

10,022,077 45,306,732 55,328,809 In 2014, this caption decreased when compared with 2013, as a consequence of the decrease in sales and of the stock reduction policy.

7. SUBCONTRACTORS On 31st December 2014 and 2013, costs with subcontractors were as follows:

FY 2014 FY 2013

Subcontractors 33,997,204 72,546,228

33,997,204 72,546,228

The subcontracts are related with construction works carried out mainly in the ‘Metallic Constructions’ segment, and the decrease in the amount in 2014 is a direct consequence of the reduction in sales.

8. EXTERNAL SUPPLIES AND SERVICES The breakdown in external supplies and services on 31st December 2014 and 2013 was as follows:

FY 2014 FY 2013

Transportation of goods 6,633,487 15,812,225

Specialized works 10,886,355 11,389,344

Leases and rents 12,272,660 17,197,721

Service Fees 1,485,836 2,057,809

Travelling expenses 3,996,127 4,942,616

Electricity and Fuel 2,827,055 3,526,562

Insurance 2,308,957 2,834,251

Maintenance and repairs 1,563,430 1,525,880

Communications 897,904 1,079,316

Security 892,985 812,467

Legal and notarial fees 183,388 468,663

Commissions 195,971 399,995

Advertising 391,483 196,447

Cleaning, health and safety 544,284 523,654

Tools and devices 326,772 728,539

Other 2,980,819 2,536,552

48,387,513 66,032,041 In general, a decrease of external supplies and services is verified, following the sharp reduction of activity in 2014 and the Group’s effort to reduce costs.

The decrease of ‘Transportation of goods’ in 2014 is directly related to the decrease in sales and the decentralization of the production activity, in the Metallic Constructions segment from the Iberian Peninsula to other markets, namely Brazil and Saudi Arabia, with the consequent cost reduction in maritime transportation.

‘Specialized works’ include costs with auditing, consulting, information systems, studies and reports, highlighting, in the RE Developer segment, consulting costs associated with the sale of Rosa dos Ventos.


9. STAFF COSTS On 31st December 2014 and 2013, staff costs were as follows:

FY 2014 FY 2013

Salaries 45,335,404 48,510,204

Social contributions 12,816,447 14,627,405

58,151,851 63,137,609

The social charges relate primarily to social security contributions, the food and health subsidies, insurance costs and indemnities.

AVERAGE STAFF NUMBERS

During 2014 and 2013, the Group’s average staff numbers were as follows:

FY 2014 FY 20131)

Directors 18 21

Other employees 2,649 2,650

2,667 2,671

Portuguese 1,389 1,518

Portuguese in foreign countries and foreigners 1,278 1,153

2,667 2,671

1) On a comparable basis, meaning, without Solar (note 28)

10. OTHER EXPENSES On 31st December 2014 and 2013, other expenses were as follows:

FY 2014 FY 2013

Taxes 5,575,851 5,604,135

Impairment losses:

Trade debtors (Note 24) 592,161 4,207,879

Other impairment losses 3,268,582 2,906,567

Losses in inventories 81 1,523,895

Losses in non-financial assets 9,002,765 271,738

Foreign exchange losses 2,305,869 4,410,792

Trade debtors write-off 263,854 946,980

Fines and penalties 246,485 518,595

Other operational losses 2,693,926 3,053,623

23,949,574 23,444,204

The caption ‘Other impairment losses’ includes inventory impairments and impairments associated with ongoing projects in the Metallic Constructions segment.

The caption ‘Unfavourable exchange differences’ is related with the occurrence of foreign exchange variations in non-financial transactions, primarily in the non-Euro Zone Group affiliates (Note 1).

The caption ‘Foreign exchange losses’ registered a strong increase due to the sale of assets in the Metallic Constructions segment and to costs in discontinued wind projects in the RE Developer segment in Brazil.


11. PROVISIONS AND IMPAIRMENT LOSSES The provisions and impairment losses for the periods ended on 31st December 2014 and 2013 were as follows:

FY 2014 FY 2013

Impairment losses

Goodwill (Note 17) - 4,658,577

In intangible assets (Note 18) - 573,641

In financial investments 3,992 -

In tangible fixed assets (Note 19) 2,053,179 17,982,468

2,057,171 23,214,686

Provisions (Note 33)

Arising from the use of the equity method 511,790 683,335

Quality guarantees (63,456) 148,859

Legal claims in progress 8,584,261 1,708,355

Onerous contracts 26,744,094 -

Others 797,176 2,543,611

36,573,865 5,084,160

In 2014, the caption ‘Provisions for onerous contracts’ is mainly related to estimated responsibilities associated to possible contractual obligations in the operational activity of the Metallic Constructions segment, constituted throughout the year, and most of them already materialized in 2014.

The reinforcement of provisions for ‘Legal claims in progress’ is mainly due to a provision in Martifer Construções for an indemnity to Alstom related to the Sostanj (Slovenia) and the Manheim (Germany) legal claims. This indemnity was agreed and paid in 2014.

12. NET FINANCIAL RESULTS The net financial results for the years ended on 31st December 2014 and 2013 may be analysed as follows:

FINANCIAL INCOME FY 2014 FY 2013

Loans and accounts receivable (including bank deposits)

- Interest income 1,323,391 2,574,506

Financial assets available for sale - Gains on the sale of financial assets (99,225) 17,411,096

Other financial income related to other financial assets - Foreign exchange gains 3,018,807 1,700,136

- Other financial income 4,874,432 737,656

9,117,405 22,423,394

FINANCIAL EXPENSES FY 2014 FY 2013

Loans and accounts payable

- Interest expenses in bank loans and in finance leases 22,703,297 22,505,952

- Of which included in the acquisition cost of assets in progress - -

Available for sale financial assets - Losses on the sale of financial assets - 515,479

Other financial income related to other financial liabilities

- Foreign exchange losses 2,188,076 3,257,262

- Other financial expenses 4,804,692 5,392,468

29,696,065 31,671,162

In the period ending on 31st December 2013, the capion ‘Gains on the sale of financial assets’ included gains arising from the disposal of part of the shareholding position held in PRIO ENERGY SGPS, S.A. in July 2013 to the fund represented by the


managing company OXY CAPITAL – SOCIEDADE DE CAPITAL DE RISCO, S.A., which brought the Group’s shareholding position down from 49 % to 10 %. This operation was approved by the Portuguese Competition Authority in September 2013.

By the end of the first half of 2014, following the agreement signed in 2013, Martifer SGPS, SA reduced its stake in PRIO ENERGY SGPS, SA to 5 %, this reduction has no impact on the 2014 results.

The captions ‘Foreign exchange gains / (losses)’ are essentially related with exchange variations registered in non-Euro Zone Group companies (Note 1).

‘Other financial income’ in 2014 concern mainly to the agreement signed in November between Martifer SGPS and Barclays which refers to the Contract for Organization, Placement, Registry and Subscription Guarantee of Commercial Paper, which has resulted in a Euro 4.25 million debt relief.

The ‘other financial expenses’ concerns mainly with bank commission costs.

13. GAINS / (LOSSES) IN ASSOCIATE COMPANIES AND JOINT ARRANGEMENTS On 31st December 2014 and 2013, the gains and losses in associate companies and joint-ventures were as follows:

FY 2014 FY 2013

Nutre Group 1,364,038 (26,648,990)

Prio Energy Group (171,551) 1,564,948

SPEE 2 – Parque Eólico de Vila Franca de Xira, S.A. 482,476 294,712

SPEE 3 – Parque Eólico do Baião, S.A. 202,079 169,754

Eviva Gizalki Sp. Zo.o (234,968) -

Promoquatro – Investimentos Imobiliários, Lda. (120,260) (65,976)

Liskin Green Park (28,495) (283,855)

Martifer Amal (212,198) (143,904)

Martimetal Spa (106,202) -

Other (2,104) (411)

1,172,815 (25,113,721)

Gains related with Nutre Group are mainly due to the concession of supplementary payments in 2014, totalling Euro 1.5 million.

The detail of the financial investments is presented in Note 21.

14. INCOME TAX The detail of the assets and liabilities that originated deferred taxes on 31st December 2014 and 2013 was as follows:

FY 2014 FY 2013 DEDUCTIBLE TEMPORARY DIFFERENCES BASIS DEFERRED TAX BASIS DEFERRED TAX With impact in Net Profit

Provisions not accepted for tax purposes 122,377 41,608 11,358,995 2,941,771

Tax losses 17,641,521 4,556,170 33,532,693 11,204,142

Others 775,607 84,482 1,075,555 132,764

18,539,505 4,682,260 45,967,243 14,278,676 With impact in Equity

Fair value of derivatives - - 164,254 43,527

Others 252,863 37,929 241,469 37,929

252,863 37,929 405,723 81,457

18,792,368 4,720,190 46,372,966 14,360,132


FY 2014 FY 2013 TAXABLE TEMPORARY DIFFERENCES BASIS DEFERRED TAX BASIS DEFERRED TAX

With impact in Net Profit

Differences between cost and fair value 1,197,918 317,448 1,197,918 317,448

Deferral of capital gains taxation (450,750) (119,449) 586,846 100,318

Accruals not accepted for tax purposes 294,452 78,030 3,108,054 423,885

Others 17,639 3,351 - -

1,059,259 279,381 4,892,818 841,652

With impact in Equity

Fair value on the acquisition of subsidiaries 3,260,832 619,558 3,260,832 619,558

Others 140,510 31,557 148,979 33,459

3,401,343 651,115 3,409,812 653,018

4,460,602 930,496 8,302,629 1,494,669

Variation on deferred tax assets of provisions not accepted for tax purposes mainly result from the annulment of deferred taxes in the ‘RE Developer’ segment in Spain.

Reduction of deferred tax assets of tax losses is primairily due to annulment of deferred taxes in the ‘Solar’ segment in the USA, included in ‘Result from discontinued operations’ (note 28).

Deferred tax assets and liabilities, by geographical segments, are as follows:

DEFERRED TAX ASSETS DEFERRED TAX LIABILITIES

FY 2014 FY 2013 FY 2014 FY 2013

Portugal 2,116,635 2,253,870 927,145 1,223,482

Spain 2,056,022 4,189,069 - -

Australia - - - -

Brazil 41,608 - - -

Canada - 267,760 - -

Poland - - 3,351 -

Romania 444,488 445,662 - -

Slovakia - 433 - -

Italy - 42,000 - 233,816

USA 61,437 7,161,338 - 37,371

4,720,190 14,360,132 930,496 1,494,669

Of the amount of deferred tax assets related with tax losses booked on 31st December 2014 totalling Euro 4,556,170, approximately 45 % were generated in Portugal and expire in 2015. The Group recognized these deferred tax assets related with tax losses values based on projections realized for the each business activity, demonstrating that positive taxable net profits will be generated to ensure their recoverability.

The decrease in deferred tax assets and liabilities is mainly due to the classification of the Solar segment as a non current asset held for sale (note 28). According to tax returns and tax estimates of the companies that recognize deferred tax assets in respect of tax losses carried forward, on 31st December 2014 and 2013, using tax rates applicable on those dates, the relevant details are as follows:

31 DECEMBER 2014 31 DECEMBER 2013

TIME LIMIT BASIS DEFERRED TAX BASIS DEFERRED TAX

2014 - - 395,472 104,629

2015 393,193 104,196 - -

2016 6,436,793 1,638,744 6,076,302 1,610,220

2017 3,958,129 757,208 2,785,385 445,662

2018 - - 353,118 107,127

2019 - - - -

2020 1,687,494 506,247 1,452,384 435,714



TIME LIMIT BASIS DEFERRED TAX BASIS DEFERRED TAX

2021 3,373,785 849,055 3,373,785 849,055

2022 369,254 110,775 403,657 121,096

2024 1,422,872 589,946 329,473 101,539

2025 - - - -

2026 - - - -

2027 - - 6,175,168 2,470,067

2028 - - 11,168,439 4,691,273

2032 - - 265,565 70,375

2033 - - 753,946 197,385

17,641,521 4,556,170 33,532,693 11,204,142

On 31st December 2014, the deferred tax assets and liabilities were, respectively, Euro 4,720,190 and Euro 930,496 (2013: Euro 14,360,132 and Euro 1,494,669, respectively), with a negative impact on the income statement of Euro 1,681,071 (2013, on a comparable basis, meaning, without Solar: positive impact of Euro 2,187,032).

In 2014, deferred tax assets recognized on tax losses were annulled in what concerns risks of recoverability materialized, based on projections made by the respective businesses. We highlight the value of deferred taxes in the Solar segment, concerning the activity in the USA, included in ‘Result from discontinued operations’ (note 28).

On 31st December 2014 and 2013, taking into consideration the Portuguese tax legislation applicable to dividends, no deferred tax liabilities were recorded for the timing differences arising on the appropriation of the results of affiliated companies, due to their immaterial effect on the accompanying financial statements.

The reconciliation between current tax and income tax is summarized as follows:

FY 2014 FY 2013 Current tax 3,183,186 1,413,798 Deferred tax - generated by temporary differences (95,748) (686,199)

Deferred tax - annulment of temporary differences 2,541,671 (580,912)

Effect of changes in the income tax rate (26,141) (26,574)

Deferred tax - tax losses recognition (591,826) 3,634,167

Other (146,886) (153,451)

Deferred tax 1,681,071 2,187,031 Income tax 4,864,257 3,600,829

On 31st December 2014 and 2013, the reconciliation between the current and effective tax rate is as follows:

FY 2014 FY 2013

Profit before tax (66,666,188) (61,242,094)

Income tax rate (nominal rate of 24.5% in 2014 and 26.5 % in 2013) (16,333,216) (16,229,155)

Non-taxable gains and losses:

Sale of financial assets (2,321,616) (966,875)

Costs not accepted for tax purposes:

Depreciations on revalued fixed assets - -

Impairment losses 504,007 6,151,892

Others 713,451 1,343,271

Results of associates using equity method (287,340) 6,655,136

Tax benefits (274,222) 48,093

Not recognized deferred tax assets arising from losses of current year 16,973,761 2,170,732

Annulment of deferred tax assets in the year 2,541,671 (580,911)

Different tax rates 3,352,954 4,511,520

Excess/ Insufficiency of income tax estimate 55,423 99,981

Other adjustments (60,616) 397,146

Effective income tax 4,864,257 3,600,830


In 2014, Martifer SGPS and its companies located in Portugal are individually taxed and are subject to a tax rate of 23 % in terms of corporate income tax (‘Imposto sobre o Rendimento das Pessoas Colectivas’ or IRC), increased by a municipal surcharge that can reach 1.5 % of the taxable profit.

Additionally, on the portion of taxable profits above Euro 1,500,000 and not exempt from corporate income tax (IRC), the following additional state surcharges are applied: 3 % on the amount above Euro 1,500,00 and up to Euro 7,500,00; 5 % on the amount above Euro 7,500,00 and up to Euro 35,00,00; and 7 % on the amount of of taxable profits which exceed Euro 35,000,000.

According to Article 88 of the Tax Code ‘Imposto sobre o Rendimento das Pessoas Colectivas’, Portuguese companies are also subject to autonomous taxes on some expenses, at tax rates defined in the code indicated.

During 2011, Martifer SGPS, SA opted for the special taxation of groups of companies’ mechanism (Regime Especial de Tributação de Grupos de Sociedades “RETGS”), which contemplates the companies in which it holds, directly or indirectly, at least 75 % of their capital and that simultaneously meet the other conditions set by that mechanism.

The remaining affiliated companies of the Group, not contemplated by this mechanism, are taxed individually, based on their taxable profits and the tax rates applicable.

After the changes in corporate income tax (IRC) for 2015, decreed on 31st December 2014, deferred taxes in Portugal were calculated based on a 21 % rate.

The net income generated by foreign subsidiaries is taxed at local tax rates, namely, those generated in Spain, in Poland, in Romania, in France, in Italy, in Belgium, in the United States of America, in Brazil and in the United Kingdom are taxed at 28 %, 19 %, 16 %, 34.43 %, 27.5 %, 33.99 %, 35 %, 16.5 % and 21 % respectively.

Additionally, the Polish tax authorities granted Martifer Polska an income tax relief, for a period of 19 years. However, as this tax benefit is directly related to future taxable income and its quantification is not possible, it has not been recorded.

According to the current tax legislation in Portugal, tax returns of Portuguese companies can be reviewed by the tax authorities for a period of four years (and five years for Social Security), except when tax losses have been generated, tax benefits have been granted or when any review, claim or impugnation is in course, under which circumstances the periods can be extended or suspended. Therefore, all annual tax returns for the year 2011 through 2014 are still open to such review.

As corroborated and supported by our lawyers, there are no material assets or liabilities associated with possible or probable tax contingencies or additional assessments by the Tax Authorities that should be disclosed in the Notes to the consolidated financial statements on 31st December 2014 and 2013.

On 31st December 2014 and 2013, income tax receivable and payable is as follows:

FY 2014 FY 2013

Income tax – Assets 744,905 1,779,777

Income tax – Liabilities - (3,278,785)

744,905 (1,499,008)

15. DIVIDENDS In 2014 and 2013, the Group did not distribute dividends.

16. EARNINGS PER SHARE Martifer SGPS, SA has only issued ordinary shares and, as such, no shares have special voting or dividend rights.

Martifer has just one type of potential ordinary dilutive shares: stock options. In order to calculate diluted earnings per share it is necessary to determine whether these stock options, irrespective of whether they are exercised or not, have a diluting effect, which happens when the option exercise price is lower than the average market price of the shares.


Since the average market price of Martifer’ s shares, during the period between 1st January 2014 and 31st December 2014, was Euro 0.69, below that of the exercise price of the stock options (Euro 3.84), these stock options are non-diluting because, if the options were to be exercised, the number of outstanding shares would be reduced.

Therefore, on 31st December 2014 there are no differences between the basic earnings per share and the diluted earnings per share calculation. The share capital of Martifer SGPS, SA is represented by 100,000,000 ordinary shares, fully paid up, representing a share capital of Euro 50,000,000.

The average number of shares outstanding is net of 2,215,910 shares corresponding to the volume of own shares acquired by Martifer SGPS, SA.

On 31st December 2014 and 2013, the basic and diluted earnings per share may be summarised as follows:

FY 2014 FY 2013

Profit for the year (I) (93,535,824) (68,961,164)

Weighted average number of shares outstanding (II) 97,784,090 97,784,090

Basic and diluted earnings per share (I) / (II) (0.9566) (0.7052)

from continuing operations (0.6422) (0.6618)

from assets held for sale (0.3144) (0.0435)

17. GOODWILL The movements occurring during the years ended on 31st December 2014 and 2013 may be summarised as follows:

FY 2014 FY 2013

Gross amount

Opening balance 17,568,009 19,043,523

Acquisition of subsidiaries 329,311 -

Sale of subsidiaries (359,777) (749,278)

Effect of foreign currency exchange differences (16,145) (726,236)

Write-off of goodwill fully impaired - -

Reclassification of non-current assets held for sale (note 28) (1,882,146) -

Closing balance 15,639,252 17,568,009

Accumulated impairment losses

Opening balance 4,658,577 95,555

Impairment losses recognized in the year (note 11) - 4,658,577

Sale of subsidiaries - (95,555)

Write-off of goodwill fully impaired - -

Closing balance 4,658,577 4,658,577

Carrying amount at the beginning of the period 12,909,432 18,947,968

Carrying amount at the end of the period 10,980,675 12,909,432


The breakdown of ‘Goodwill’, on 31st December 2014 and on 31st December 2013, was as follows:

FY 2014 FY 2013

COST IMPAIRMENT LOSSES CARRYING AMOUNT CARRYING AMOUNT

Martifer Construções 5,448,792 - 5,448,792 5,448,792

Sassall Aluminium 4,658,577 (4,658,577) - -

Martifer Metallic Constructions 3,898,809 - 3,898,809 3,898,809

Navalria 1,618,675 - 1,618,675 1,618,675

Martifer Solar (note 28) - - - 1,493,776

Martifer Solar USA (note 28) - - - 359,777

Martifer Solar Hellas (note 28) - - - 72,205

MGI 8,373 - 8,373 8,373

Martifer GmbH 6,026 - 6,026 6,026

M PRIME GMBH - - - 3,000

Total 15,639,252 (4,658,577) 10,980,675 12,909,432

Both the fair value allocation of the assets and liabilities acquired as well as the goodwill calculation were performed using the financial statements of the acquired companies at the date of acquisition.

The Group performs annual impairment tests on Goodwill, at the end of each year, as disclosed in the section ‘Main accounting policies, judgements and estimates’.

For impairment assessment purposes, Goodwill was allocated to the cash generating units that are expected to benefit from the business combination within each operational segment. The recoverable amount for each cash generating unit was determined based on its value in use, using the discounted cash flow method, supported by the business plans drawn up by the persons in charge of each unit and approved by the Board of Directors of the Group. Different discount rates were used according to the risks inherent to each company.

On 31st December 2014, the methods and assumptions used in the identification, or not, of any impairment loss in the more significant amounts of Goodwill recorded by each of the segments in the accompanying financial statements, was as follows:

METALLIC CONSTRUCTIONS

MARTIFER CONSTRUÇÕES MARTIFER METALLIC CONSTRUCTIONS NAVALRIA

Goodwill 5,448,792 3,898,809 1,618,675

Period used 5 years cash flow projection 5 years cash flow projection 5 years cash flow projection

Growth rate (g) 1 2.00% 2.00% 1.00%

Average growth rate of EBITDA for 5 years 2 13% 18% -1%

Discount rate 3 7.37% 7.37% 8.48%

1 Growth rate used to extrapolate cash flows beyond the business plan period 2 Average growth rate estimated based on the company’s 5-year business plan, carried out according to the Board of Directors’ estimates and assumptions, based

on their best knowledge at the date of the approval of financial statements 3 Discount rate applied to the projected cash flows

The Board of Directors, based on the discounted value of the provisional cash flows of the cash generating units of this business segment, discounted at the applicable rate, concluded that, on 31st December 2014, the carrying amount of the net assets, including Goodwill, did not exceed its recoverable amount.

The projected cash flows are based on the historic performance and on the expectations of efficiency improvements. Those in charge of this segment believe that (in a scenario of normality) a change in the main assumptions used in the calculation of the recoverable amount would have the impact shown on the following table:


MARTIFER CONSTRUÇÕES:

Martifer Construções

WACC increase in 1.0

p.p.

WACC decrease in 1.0

p.p.

Var. turnover +5.0 p.p.

(1)

Var. turnover -5.0 p.p.

(1)

Increase in EBITDA/Turnover margin in 0.5 p.p.

(2)

Decrease in EBITDA/Turnove

r margin in 0.5 p.p. (2)

Weighted Average Cost of Capital (WACC) 7.37% 8.37% 6.37% 7.37% 7.37% 7.37% 7.37%

CAGR turnover [2014 ; 2019] (3) 12.67% 12.67% 12.67% 17.67% 7.67% 12.67% 12.67%

EBITDA / Turnover average margin [2014 ; 2019] 5.99% 5.99% 5.99% 5.99% 5.99% 6.49% 5.49%

Net Book Value 5,449 5,449 5,449 5,449 5,449 5,449 5,449

Total recoverable amount 10,577 (1,034) 27,347 24,944 (9,692) 19,156 4,024

Estimated impact 5,128 (5,449) 21,898 19,495 (5,449) 13,707 (1,425)

Conclusions of the sensitivity analysis No impairment Impairment No impairment No impairment Impairment No impairment Impairment

(1) Yearly variation of turnover in 5 p.p. (2014=100 %), maintaining a constant EBITDA / Turnover margin. (2) Variation in EBITDA / Turnover margin, maintaining a constant turnover (3) Estimated Average growth rate based on the company’s 5-year business plan, carried out according to the Board of Directors’ estimates and assumptions

MARTIFER METALLIC CONSTRUCTIONS:

MMC WACC

increase in 1.0 p.p.


p.p.


(1)


(1)


(2)

Decrease in EBITDA/Turnover margin in 0.5 p.p.

(2)


CAGR turnover [2014 ; 2019] (3) 18.3% 18.3% 18.3% 23.3% 13.3% 18.3% 18.3% EBITDA / Turnover average margin [2014 ; 2019] 5.83% 5.83% 5.83% 5.83% 5.83% 6.3% 5.3%

Net Book Value 3,899 3,899 3,899 3,899 3,899 3,899 3,899

Total recoverable amount 41,849 16,328 79,110 99,546 (29,846) 62,768 6,289

Estimated impact 37,950 12,430 75,211 95,648 (3,899) 58,869 2,390

Conclusions of the sensitivity analysis No impairment No impairment No impairment No impairment Impairment No impairment No impairment

(1) Yearly variation of turnover in 5 p.p. (2014 = 100 %), maintaining a constant EBITDA / Turnover margin. (2) Variation in EBITDA / Turnover margin, maintaining a constant turnover (3) Estimated average growth rate based on the company’s 5-year business plan, carried out according to the Board of Directors’ estimates and assumptions

NAVALRIA:

Navalria WACC

increase in 1.0 p.p.


p.p.


(1)


(1)


(2)


(2)


CAGR turnover [2014 ; 2019] (3) -0.81% -0.81% -0.81% -0.31% -1.31% -0.81% -0.81%


Net Book Value 1,619 1,619 1,619 1,619 1,619 1,619 1,619

Total recoverable amount 2,308 1,462 3,417 2,691 2,342 2,571 2,189

Estimated impact 689 (157) 1,799 1,072 723 953 570

Conclusions of the sensitivity analysis No impairment Impairment No impairment No impairment No impairment No impairment No impairment

(1) Yearly variation of turnover in 0.5 p.p. (2014 = 100 %), maintaining a constant EBITDA / Turnover margin. (2) Variation in EBITDA / Turnover margin, maintaining a constant turnover (3) Estimated Average growth rate based on the company’s 5-year business plan, carried out according to the Board of Directors’ estimates and assumptions


18. INTANGIBLE ASSETS This caption is analysed as follows:

FY 2014 FY 2013

Gross amount, reduced by impairment losses:

Software and other rights 18,687,921 19,447,719

Intangible assets in progress 127,117 1,198,497

18,815,038 20,646,216 Accumulated depreciation:

Software and other rights 14,487,566 13,142,744

Intangible assets in progress - -

Advances for the acquisition of intangible assets - -

14,487,566 13,142,744

Carrying amount 4,327,472 7,503,472

The value registered in ‘Software and other rights’ is mainly related with computer software acquired by the Group companies.

The gross amount of ‘Intangible assets’, net of impairment losses, for the periods ended on 31st December 2014 and 2013, may be analysed as follows:

FY 2013 SOFTWARE AND OTHER RIGHTS

INTANGIBLE ASSETS IN

PROGRESS

ADVANCES FOR THE ACQUISITION OF INTANGIBLE ASSETS

TOTAL

Opening balance 1st January 2013 26,145,255 24,119,844 99,623 50,364,722

Additions 266,038 296,203 - 562,241

Sales, disposals and write-offs (4,570,620) (1,872,100) - (6,442,720)

Effect of foreign currency exchange differences (466,238) (508,448) (4,313) (978,999)

Changes in the consolidation perimeter (1,940,517) (698,191) - (2,638,708)

Impairment losses (note 11) (573,641) - - (573,641)

Transfers and other movements 587,442 (20,138,811) (95,310) (19,646,679)

Closing balance 31st December 2013 19,447,719 1,198,497 - 20,646,216



PROGRESS


TOTAL

Opening balance 1st January 2014 19,447,719 1,198,497 - 20,646,216 Reclassification to non current assets held for

sale (note 28) (448,746) (967,150) - (1,415,896)

Additions 70,213 58,658 - 128,871

Sales, disposals and write-offs (636,924) - - (636,924)

Effect of foreign currency exchange differences 49,248 2,651 - 51,899

Transfers and other movements 206,411 (165,540) - 40,871

Closing balance 31st December 2014 18,687,921 127,116 - 18,815,037

The sale of intangible assets during the 2013 period is mainly related with operating licences in Portugal in the Solar segment in the amount of Euro 6.4 million.


The amounts of the accumulated depreciation of ‘Intangible assets’, for the periods ended on 31st December 2014 and 2013, may be analysed as follows:



PROGRESS


TOTAL

Opening balance 1st January 2013 10,922,850 - - 10,922,850

Additions 2,293,943 - - 2,293,943


Effect of foreign currency exchange differences (17,327) - - (17,327)

Changes in the consolidation perimeter (16,230) - - (16,230)

Transfers and other movements (22,029) - - (22,029)

Closing balance 31st December 2013 13,142,745 - - 13,142,745



PROGRESS


TOTAL

Opening balance 1st January 2014 13,142,745 - - 13,142,745 Reclassification to non current assets held for sale (note 28) (384,741) - - (384,741)

Additions 1,876,474 - - 1,876,474


Effect of foreign currency exchange differences 2,889 - - 2,889

Transfers and other movements 18,397 - - 18,397

Closing balance 31st December 2014 14,487,565 - - 14,487,565

Carrying Amount:

31st December 2013 6,304,974 1,198,497 - 7,503,472 31st December 2014 4,200,356 127,116 - 4,327,472

19. TANGIBLE FIXED ASSETS This caption is analysed as follows:

FY 2014 FY 2013

Gross amount, reduced by impairment losses:

Land and buildings 85,294,132 102,774,904

Equipment 100,487,147 125,126,472

Tangible assets in progress 15,049,013 12,988,029

Other tangible assets 49,280,291 54,281,804

250,110,583 295,171,209 Accumulated depreciation:

Land and buildings 20,957,152 19,542,256

Equipment 46,238,960 50,836,319

Other tangible assets 16,499,311 15,247,837

83,695,423 85,626,413 Carrying amount 166,415,160 209,544,797


The gross amounts of land and buildings, equipment, tangible assets in progress and other fixed assets, net of impairment losses, for the periods ended on 31st December 2014 and 2013, may be analysed as follows:

FY 2013 LAND AND BUILDINGS EQUIPMENT

TANGIBLE ASSETS IN

PROGRESS

OTHER TANGIBLE ASSETS TOTAL

Opening balance 1st January 2013 91,325,592 105,292,661 97,542,317 62,614,240 356,774,810

Reclassification for assets held for sale (2,822,470) (16,217,256) (165,113) (1,901,942) (21,106,781)

Additions 407,685 1,776,531 5,874,600 1,286,853 9,345,669

Sales, disposals and write-offs (149,220) (6,137,172) (129,910) (222,810) (6,639,112)

Reevaluations - - - 42,687 42,687

Effect of foreign currency exchange differences (3,735,213) (4,305,947) (2,204,405) (455,067) (10,700,632)

Changes in the consolidation perimeter 8,835,062 - (6,591,847) 42,687 2,285,902

Impairment losses (note 11) - (25,000) (10,464,242) (7,493,226) (17,982,468)

Transfers and other movements 8,913,471 44,742,653 (70,873,371) 453,756 (16,763,491)

Closing balance 31st December 2013 102,774,906 125,126,470 12,988,029 54,367,178 295,256,583


TANGIBLE ASSETS IN

PROGRESS

OTHER TANGIBLE ASSETS TOTAL

Opening balance 1st January 2014 102,774,906 125,126,470 12,988,029 54,281,804 295,171,209

Reclassification for assets held for sale (10,600,418) (14,618,301) (4,100,050) (5,223,749) (34,542,518)

Additions 133,708 1,624,652 13,079,736 42,764 14,880,860

Sales, disposals and write-offs (15,953,853) (3,987,325) (2,069,800) 127,134 (21,883,844)

Effect of foreign currency exchange differences 135,550 368,933 (98,007) 7,744 414,220

Changes in the consolidation perimeter 415,276 (11,845,539) 8,225,339 42,687 (3,162,237)

Impairment losses (note 11) (1,408,318) - (644,861) - (2,053,179)

Transfers and other movements 9,797,281 3,818,257 (12,331,373) 1,907 1,286,072

Closing balance 31 st December 2014 85,294,132 100,487,147 15,049,013 49,280,291 250,110,583

Capital expenditure in 2014 was mainly applied in infrastructures, continuing the internationalization strategy in the Metallic Constructions segment. ‘Sales, disposals and write-offs’ are mainly related to the sale of buildings and equipment in the Metallic Constructions segment, and by the RE Developer segment (Euro 1.7 million).

The amounts of the accumulated depreciation of land and buildings, equipment, tangible assets in progress and other fixed assets, for the periods ended on 31st December 2014 and 2013, may be analysed as follows:


TANGIBLE ASSETS IN

PROGRESS

OTHER TANGIBLE

ASSETS TOTAL

Opening balance 1st January 2013 17,935,741 52,821,114 - 12,650,431 83,407,286 Reclassification for non-current assets held for

sale (note 28) (1,607,539) (4,692,085) - (221,041) (6,520,664)

Additions 3,462,175 8,044,628 - 3,242,666 14,749,469

Sales, disposals and write-offs (59,910) (5,374,903) - (67,528) (5,502,341)

Effect of foreign currency exchange differences (233,937) (1,345,858) - (66,980) (1,646,775)

Changes in the consolidation perimeter 14,987 (3,241) - 2,616 14,362

Transfers and other movements 30,739 1,386,663 - (292,327) 1,125,075

Closing balance 31st December 2013 19,542,256 50,836,318 - 15,247,837 85,626,412



TANGIBLE ASSETS IN

PROGRESS

OTHER TANGIBLE

ASSETS TOTAL

Opening balance 1st January 2014 19,542,256 50,836,318 - 15,247,837 85,626,412 Reclassification for non-current assets held for

sale (note 28) (1,699,554) (8,579,315) - (1,009,295) (11,288,164)

Additions 3,463,558 6,840,260 - 2,259,030 12,562,848

Sales, disposals and write-offs (454,373) (2,918,943) - (1,482) (3,374,798)

Effect of foreign currency exchange differences 105,264 151,638 - 3,221 260,123

Changes in the consolidation perimeter - 22 - - 22

Transfers and other movements - (91,019) - - (91,019)

Closing balance 31st December 2014 20,957,151 46,238,961 - 16,499,311 83,695,423

Carrying Amount:

31st December de 2013 83,232,650 74,290,151 12,988,029 39,033,967 209,544,798 31 st December de 2014 64,336,981 54,248,186 15,049,013 32,780,980 166,415,160

The valuation criteria and depreciation rates used for tangible fixed assets are disclosed in captions iv) and v) of the section ‘Main accounting policies, judgements and estimates’ in Note 1 ‘Accounting Policies’.

The acquisition cost of Tangible fixed assets held by the Group, acquired under financial leases, ot 31st December 2014 amounted to Euro 31,299,257 and their carrying amount to Euro 24,260,626.

On 31st December 2014 and 2013, there were no tangible fixed assets pledged or mortgaged to financial institutions as guarantees for loans granted, except for those acquired through financial lease contracts or through Project Finance and those mentioned in Note 38.

During the year, the Group assessed the estimated recoverable amount of some tangible fixed assets, taking into account internal and external factors which indicated that some assets might be recorded at a value higher than their recoverable amount.

The assessment of impairment losses in tangible and intangible fixed assets of the Group was based on the business plans of the companies, using the assumptions described below.

RE Developer

SPAIN ROMANIA

Tangible fixed assets 31,683,860 52,025,494

Period 20 years 25 years

Growth rate (g) 1 0.0% 0.0%

Average growth rate of Turnover 2 (2.20)% 33.4%

Discount rate 3 6.6% 6.5%

1 Growth rate used to extrapolate cash flows beyond the business plan period 2 Average growth rate estimated based on the company’s 5-year business plan, carried out according to the Board of Directors’ estimates and assumptions, based

on their best knowledge at the date of the approval of financial statements

3 Discount rate applied to the projected cash flows

The projected cash flows are based on the historic performance and on the expectations of efficiency improvements. Those in charge of this segment believe that (in a scenario of normality) a change in the main assumptions used in the calculation of the recoverable amount would be impacted as follows:


SPAIN:

WACC increase

in 1.0 p.p.


p.p.


(1)


(1)


(2)


(2)


CAGR turnover [2014; 2019] (3) (0.78%) (0.78%) (0.78%) 0.22% (1.78%) (0.78%) (0.78%)

EBITDA / Turnover average margin [2014; 2019] 79.35% 79.35% 79.35% 79.35% 79.35% 78.85% 78.85%

Net Book Value 31,684 31,684 31,684 31,684 31,684 31,684 31,684


Estimated impact 193 (1,536) 2,089 2,041 (1,510) 361 26 Conclusions of sensitivity analysis No impairment Impairment No impairment No impairment Impairment No impairment No impairment

(1) Yearly variation of turnover in 1 p.p. (2014 = 100 %), maintaining a constant EBITDA / Turnover margin. (2) Variation in EBITDA / Turnover margin, maintaining a constant turnover (3) Estimated average growth rate based on the company’s 5-year business plan, carried out according to the Board of Directors’ estimates and assumptions

ROMANIA:

WACC increase

in 1.0 p.p.


p.p.


(1)


(1)


(2)


(2)


CAGR turnover [2014 ; 2019] (3) 4.30% 4.30% 4.30% 5.30% 3.30% 4.30% 4.30%

EBITDA / Turnover average margin [2014; 2019] 64.65% 64.65% 64.65% 64.65% 64.65% 65.66% 64.14%

Net Book Value 52,025 52,025 52,025 52,025 52,025 52,025 52,025


Estimated impact - (3,902) 4,405 5,096 (4,526) 339 (339) Conclusions of sensitivity analysis No impairment Impairment No impairment No impairment Impairment No impairment Impairment

(1) Yearly variation of turnover in 1 p.p. (2014 = 100 %), maintaining a constant EBITDA/Turnover margin. (2) Variation in EBITDA/Turnover margin, maintaining a constant turnover (3) Estimated average growth rate based on the company’s 5-year business plan, carried out according to the Board of Directors’ estimates and assumptions

In the period, impairments were recognized for all Oborniki assets owned in Poland totalling Euro 576,625.40, since there was a risk of non development due to the current economic constraints around these projects.


METALLIC CONSTRUCTIONS

MARTIFER CONSTRUÇÕES

Tangible fixed assets 36,177,634

Period 5 years

Growth rate (g) 1 2%

Average growth rate of Turnover for 5 years 2 13%

Discount rate 3 7.37%

1 Growth rate used to extrapolate cash flows beyond the business plan period 2 Average growth rate based on the company’s 5-year business plan, carried out according to the Board of Directors’ estimates and assumptions, based on their

best knowledge at the date of the approval of financial statements

3 Discount rate applied to the projected cash flows

The projected cash flows are based on the historic performance and on the expectations of efficiency improvements. Those in charge of this segment believe that (in a scenario of normality) a change in the main assumptions used in the calculation of the recoverable amount will not result in further impairment losses, as shown below:

Martifer Construções

WACC increase in 1.0 p.p.

WACC decrease in 1.0 p.p.


(1)


(1)


(2)


(2)


CAGR turnover [2014 ; 2019] (3) 12.67% 12.67% 12.67% 17.67% 7.67% 12.67% 12.67%


Net Book Value 38,193 38,193 38,193 38,193 38,193 38,193 38,193


Estimated impact 9,173 (2,438) 25,944 23,540 (11,096) 17,752 2,620 Conclusions of sensitivity analysis No impairment Impairment No impairment No impairment Impairment No impairment No impairment

(1) Yearly variation of turnover in 5 p.p. (2014 = 100 %), maintaining a constant EBITDA / Turnover margin. (2) Variation in EBITDA / Turnover margin, maintaining a constant turnover (3) Estimated Average growth rate based on the company’s 5- year business plan, carried out according to the Board of Directors’ estimates and assumptions

20. INVESTMENT PROPERTIES The caption ‘Investment properties’ relates to the following investment properties held by the Martifer Group: Benavente Business Centre, Warehouses in Albergaria-a-Velha (Portugal) and the plant in Vagos (Portugal), all held for rental income.

These assets are carried at their fair market value, based on independent appraisals made by specialized entities, applying the RICS Valuation Standards (RICS Red Book). Martifer Group performs regular reevaluations of these properties. The gains and losses arising on changes in the fair value are taken to the income statement in the period in which they arise.

On 31st December 2014 and 2013, the movements occurring in the caption ‘Investment properties’ are as follows:

FY 2014 FY 2013

Opening balance 16,195,865 16,206,768

Transfers (note 24) (1,828,565) -

Changes in fair value - -

Effect of foreign currency exchange differences (10,903)

Reclassification to non-current assets held for sale (note 28) - -

Closing balance 14,367,300 16,195,865


The Aricesti land (Romania), was reclassified to the caption ‘Other debtors’, based on the fundamented opinion of the lawyers that have accompanied the judicial ongoing process related to the claim of legitimate ownership, since the most plausible outcome should be the refund of the purchase value and of any losses caused to Martifer.

The table below presents the global value of the assessments performed in the period, as well as the values at which the assets are booked in the Group’s financial statements:

FAIR VALUE INDEPENDENT APPRAISAL

Gebox 3,588,000 3,589,000

Mad. Vouga 1,415,300 1,421,000

Benavente 9,364,000 9,391,000

14,367,300 14,401,000

Earnings obtained from investment properties in 2014 amounted to Euro 444,992 (Euro 662,819 in 2013) and are recorded in the caption ‘Sales and Services Rendered’.

21. FINANCIAL ASSETS UNDER THE EQUITY METHOD On 31st December 2014 and 2013, financial assets under the equity method were as follows:

% SHARES HELD ON

31-12-2013 EQUITY

31-12-2013 NET INCOME

2013 FY 2013

Prio Energy 10.00% 26,868,069 826,536 2,686,807

SPEE 3 - Parque Eólico de Baião, SA 50.00% 999,706 339,507 499,853

SPEE 2 - Parque Eólico de Vila Franca de Xira, SA 50.00% 2,096,367 589,424 1,048,183

FTP Solar LLC1) 11.75% 27,904,281 (43,355) 36,287,978

Promoquatro - Investimentos Imobiliários, Lda 50.00% 240,519 (131,952) 120,260

Martifer Amal, S.A. (Portugal) 30.00% 50,000 50,000 15,000

Martifer Amal, S.A. (Mozambique) 35.00% 816,489 (411,155) 285,771

Canaverosa1) 29.61% 278,279 35,233 136,301

Parque Sesena 11) 20.63% 524,434 213,456 196,663

Other subsidiaries 5,254

41,282,069

1) Reclassified in 2014 to non-current asset held for sale (note 28)

% SHARES HELD ON 31-12-2014

EQUITY 31-12-2014

NET INCOME 2014 FY 2014

Prio Energy 5.00% 30,220,314 1,160,419 1,511,016

Eviva Gizalki 100.00% 3,877,141 (122,779) 3,877,141

Martimetal 49.00% 1,197,688 (216,739) 586,867

SPEE 3 - Parque Eólico de Baião, SA 50.00% 1,063,864 404,158 531,932

SPEE 2 - Parque Eólico de Vila Franca de Xira, SA 50.00% 2,311,319 964,952 1,155,660

Promoquatro - Investimentos Imobiliários, Lda 50.00% (537,945) (778,465) -

Martifer Amal, S.A. (Portugal) 30.00% (43,050) - -

Martifer Amal, S.A. (Mozambique) 35.00% 404,013 (563,423) 141,404

Other subsidiaries (5,504)

7,798,516

In 2013, Martifer Solar, through its subsidiary Martifer Silverado Fund LLC, headquartered in the USA and 57.125 % owned by Martifer Solar Inc., constituted in partnership with Fir Tree Solar LLC the company FTP Solar LLC. In the creation of this new company, Martifer Silverado Fund LLC delivered its capital by delivering projects under development owned by it, as well as some associated liabilities (net contribution of USD 22,214,400), while Fir Tree Solar LLC, entered the share capital with cash (contribution of USD 37,177,817). The shares held by Martifer Silverado Fund LLC and Fir Tree Solar LLC in the company FTP Solar LLC were, at the end of 2013, 37.4 % and 62.6 %, respectively.


Since the conditions of IFRS 10 are fullfiled, the transferred projects were evaluated at their fair value, based on the evaluation performed by Novogradac & Company LLP.

In 2014, this participation is included in the value of non current assets held for sale (note 28).

On 31st December 2014 and 2013, the movements occurring in this caption are as follows:

FY 2014 FY 2013

Opening balance 41,282,069 15,680,011

Acquisitions - 36,302,978

Application of the equity method (728,995) 1,706,974

Decrease in share capital - (2,043,840)

Sales - (10,208,467)

Changes resulting from the loss of control in subsidiaries 3,877,141 4,900

Effect of foreign currency exchange differences - (22,387)

Reclassification to non current assets held for sale (note 28) (36,620,942) -

Other changes (10,758) (138,099)

Total 7,798,516 41,282,069 In the end of the 1st half of 2014 Martifer SGPS, SA decreased its equity investment in Prio Energy SGPS to 5%. Since the company maintains a position in the Board of that associate, and consequently significant influence exists, the consolidation through equity method was kept. According to the share purchase agreement, the value of the participation will be reviewed again, in 2016, based on recurrent consolidated EBITDA in 2015.

Martifer Renewables, SGPS, SA agreed to the sale of the total shares of Eviva Gizalki, Sp. Zo.o. in 2014 with IKEA Retail Sp. Zo.o., implying the compliance of certain requirements set out in the contract. The terms of the contract, which implies that the company builds the wind farm until 2016, do not allow Martifer Renewables, SGPS, SA to maintain the control of the subsidiary but only significative influence in its management. As a consequence, the consolidation method changed from full consolidation to the equity method.

Financial investments are obtained at their recoverable amount, whenever there is evidence of impairment. The existence of impairment evidence is considered when the equity of the subsidiaries (considered, when applicable, consolidated equity) is below their purchase value.

22. AVAILABLE FOR SALE INVESTMENTS On 31st December 2014 and 2013, available for sale investments were the following:

FY 2014 FY 2013

Non-current financial investments 1,954,435 338,166

Others 237,077 237,457

2,191,512 575,621 On 31st December 2014 and 2013, the movements occurring in the caption ‘Available-for-sale investments’ were as follows:

FY 2014 FY 2013

Opening balance 575,621 2,310,267

Additions 1,896,367 306,925

Reductions (24,715) (235,268)

Reclassification to assets held for sale (10,378) (1,607,994)

Changes in the consolidation perimeter - (189,688)

Other (245,384) (8,619)

2,191,512 575,621

The increase in this caption in 2014 is due to the attribution of green certificates held by Eviva Nalbant, Srl.

The available for sale investments do not have a defined maturity.


23. INVENTORIES On 31st December 2014 and 2013, inventories were as follows:

FY 2014 FY 2013

Raw-materials, subsidiaries and other consumables 5,611,712 10,584,174

Work in progress 3,610,149 3,795,980

Merchandise 2,596,749 5,663,577

Finished goods 3,316,921 6,472,076

15,135,531 26,515,807

In 2014, a decrease in inventories occurred, when compared with 2013, as a consequence of the reduction in the Group’s activity and of the reclassification of the Solar segment as a non-current asset held for sale.

24. TRADE RECEIVABLES AND OTHER RECEIVABLES On 31st December 2014 and 2013, trade receivables and other receivables, other than those previously described in Notes 21 and 22, are detailed below.

The detail of the captions ‘Trade receivables’ and ‘Other receivables’, for the periods ended on 31st December 2014 and 2013 is as follows:

NON CURRENT CURRENT

FY 2014 FY 2013 FY 2014 FY 2013

Cost:

Trade receivables:

Trade receivables 739,397 29,132,168 87,642,194 123,985,850

Notes receivables - - - 763,697

Doubtful trade receivables - - 12,390,293 25,620,958

739,397 29,132,168 100,032,487 150,370,505 Other receivables:

Related companies (note 40) 38,524,408 61,480,963 13,635,740 14,993,979

Advances to suppliers 5,222 2,718 7,194,649 10,199,844

Others 22,997,663 1,982,307 20,615,943 33,699,529

61,527,293 63,465,988 41,446,332 58,893,352 62,266,690 92,598,156 141,478,819 209,263,858

On 31st December 2014, the caption ‘Others’ includes Euro 19.6 million related to the sale of the 49 % share held in Nutre to CERES AGRICULTURE HOLDINGS COÖPERATIEF U.A., since the share purchase agreement, defines that the value is due in 2016.

The amount of trade and other receivables in 2014 had a sharp reduction due to the reclassification of the solar segment to non-current assets held for sale (note 28).

Accumulated impairment losses in accounts receivable are as follows:

NON-CURRENT CURRENT

FY 2014 FY 2013 FY 2014 FY 2013

Accumulated impairment losses:

Doubtful trade receivables - - 12,449,720 28,754,831

Other receivables 115,839 119,154 5,258,404 7,437,595

115,839 119,154 17,708,124 36,192,426 Carrying amount – trade receivables 739,397 29,132,168 87,582,767 121,615,674 Carrying amount – other receivables 61,411,454 63,346,833 36,187,928 51,455,757 Total 62,150,851 92,479,001 123,770,695 173,071,432


The changes in accumulated impairment losses relating to accounts receivable are as follows:

TRADE RECEIVABLES OTHER RECEIVABLES FY 2014 FY 2013 FY 2014 FY 2013

Opening balance 28,754,831 18,362,123 7,556,749 7,900,645

Additions (note 10) 592,161 14,963,000 3,992 237,987

Application / Reversal (note 5) (6,153,355) 1,771,787 (3,516,126) 539,450

Changes of consolidation perimeter, foreign currency exchange rate difference and transfers (158,690) (2,798,505) 1,373,206 (42,433)

Reclassification to non-current assets held for sale (note 28) (10,585,227) (43,578)

Total 12,449,720 28,754,831 5,374,243 7,556,749 The value in the caption ‘Application/Reversal’ includes, not only the amount of the reversal decribed in Note 5, but also around Euro 6 million from thr annulment of completely provisioned balances.

On 31st December 2014 and 2013, the ageing’s of accounts receivable, before accumulated impairment losses, were as follows:

FY 2013 PAST DUE

TOTAL NOT DUE UNTIL 90 DAYS 90 TO 180 DAYS

180 TO 360 DAYS

MORE THAN 360 DAYS

Trade receivables 153,118,018 74,837,527 21,401,481 9,241,465 15,725,098 31,912,448

Notes receivables 763,697 498,273 - - 246,884 18,540

Doubtful trade receivables 25,620,958 4,827,467 146,482 2,471,811 300,561 17,874,637

Other receivables 122,359,340 89,175,934 3,103,543 1,225,931 9,512,847 19,341,085

Total 301,862,013 169,339,201 24,651,506 12,939,207 25,785,390 69,146,710

FY 2014 PAST DUE

TOTAL NOT DUE UNTIL 90 DAYS 90 TO 180 DAYS

180 TO 360 DAYS

MORE THAN 360 DAYS

Trade receivables 88,381,591 43,339,962 14,642,077 5,437,479 5,537,590 19,424,483

Notes receivables - - - - - -

Doubtful trade receivables 12,390,293 - 23,402 - 101,445 12,265,446

Other receivables 102,973,624 74,286,452 4,742,476 - - 23,944,696

Total 203,745,508 117,626,414 19,407,955 5,437,479 5,639,035 55,634,625

The Group’s credit risk exposure is attributable, primarily, to accounts receivable from its operating activities. The amounts presented in the statement of financial position are net of accumulated impairment losses for doubtful debts, which have been estimated by the Group based on its experience, current conditions and the economic environment.

On 31st December 2014, the accounts receivable recorded as ‘Doubtful trade debtors’ was considered to be totally impaired.

For the remaining outstanding balances, the Group considers that there has been no deterioration of the credit capacity of the counterparts and, therefore, that such balances are not uncollectible.

The average collection period of the Group’s accounts receivable during 2014 was 355 days, the main factor behind this being the current economic environment. Despite this unfavourable environment, the Group is committed to the compliance with its credit risk policy, namely in terms of the criterious selection of given credit, both in quantity and in quality, as well the respective collection.

The Board of Directors believes that the amount recorded in the caption ‘Trade and other receivables’ is very similar to its fair value, considering, in particular, that the accounts receivables more than 180 days overdue are not expected to generate important losses in addition to the impairment losses recorded.

The Group does not charge any interest as long as the established collection period (on average 90 days) is being respected. After that period, interest is invoiced if contractually agreed, and in accordance with the applicable law, depending on each situation, which tends to occur only in extreme situations.

On 31st December 2014 and 2013 the non-current balances with related companies refer mainly to supplementary capital granted, bearing no interest and with no reimbursement date.

On 31st December 2014 and 2013, the Group does not have any ‘held-to-maturity’ financial assets or ‘financial assets at fair value through profit or loss’.


25. CURRENT TAX ASSETS On 31st December 2014 and 2013, ‘current tax assets’ are as follows:

FY 2014 FY 2013

Value added tax 5,071,580 13,628,629

Tax in other countries 633,052 1,394,267

Other taxes 2,270,341 2,373,420

Current tax assets 7,974,973 17,396,316

The value added tax corresponds to the recoverable amount of this tax, essentially in respect of the acquisition of turbines, in the RE Developer segment (Euro 2.2 million). The remaining value is mainly due to the activity in Portugal and in Romania, primarily for export, in the Metallic Constructions segment.

In the caption ‘Other taxes’ are reflected the values of tax over revenues (ICMS, PIS, COFINS and ISS) to pay in Brazil, related to projects in the Metallic Constructions segment.

26. OTHER CURRENT ASSETS On 31st December 2014 and 2013, the breakdown of the caption ‘Other current assets’ is as follows:

FY 2014 FY 2013

Accrued income:

Construction contracts

Cost 43,554,431 102,714,982

Impairment losses (7,132,109) (5,769,831)

Carrying amount 36,422,322 96,945,151

Interest to be received 97,803 31,309

Other accrued income 1,933,955 4,225,822

38,454,080 101,202,282 Prepayments:

Insurances 578,537 732,194

Financial expenses 40,362 533,108

Rents 32,948 485,044

Other prepayments 413,222 797,360

1,065,069 2,547,706 Other (current) financial assets 1,385,692 365,109 40,904,841 104,115,097

On 31st December 2014, the caption ‘Other prepayments’ includes, essentially, the prepayments relating to specialized works, that will be rendered / performed during 2015.

The caption ‘Other current financial assets’, on 31st December 2014, refers mainly to green certificates that the Group received for the production of electricity in Romania that were still unsold on 31st December 2014.


On 31st December 2014 and 2013, the information regarding construction contracts in progress was as follows:

FY 2014 FY 2013

Total costs incurred with construction contracts in progress:

- Metallic Constructions 477,742,213 721,684,287

- Solar - 43,643,305

Costs incurred with construction contracts in progress in the year:


- Solar - 30,354,212

Total revenue incurred with construction contracts in progress:


- Solar - 51,508,209

Revenue incurred with construction contracts in progress in the year:


- Solar - 204,360,317

Advanced payments received from customers for the construction contracts in progress:

- Metallic Constructions (note 32) 4,379,791 14,338,148

Retentions by customers in construction contracts in progress:


- Solar -

Guarantees provided to customers in relation to construction contracts in progress:

- Metallic Constructions (note 38) 19,445,406 25,362,443

- Solar - 2,043,933

Accrued income and accounts receivables related with construction contracts in progress:


- Solar - 48,121,646

Total of Production not invoiced (construction contracts) 43,554,431 102,714,982

Deferred income and accounts payable related with construction contracts in progress:

- Metallic Construction 20,972,205 13,168,576

- Solar - 7,181,830

Total of Production invoiced and not yet performed (construction contracts) – Note 36 20,972,205 20,350,406

The guarantees provided to customers, in the Metallic Constructions segment, disclosed in Note 38, include both construction contracts in progress and finished construction contracts. The average period of the guarantees is five years.


On 31st December 2014 and 2013, the Group’s main construction contracts in progress justifying the outstanding balance of the caption ‘Production not invoiced - construction contracts’ are as follows:

FY 2014 FY 2013

Stade de Lyon (Martifer Construções) 5,083,578

Museu do Amanhã (Martifer Construções BR) 4,781,466

Birmingham New Street - Facade and Cladding Works (Martifer UK) 1,167,143

Edifício Marina Baía- Luanda (Martifer Construções) 1) 2,822,385 2,822,385

Baltic Arena Gdansk (Martifer Polska) 2,087,737

Edifício Kilamba (Martifer Angola) 1,479,087

Viaduc Hachef (Martifer Construções) 1,302,824

Nova Sede Corporativa da EDP Lisboa (Martifer Construções) 1,193,826

Scotland's National Arena (Martifer Construções e Martifer UK) 3,858,672 9,099,251

Iter TB 03 (Martifer Construções) 1,139,967

Kasc-Supporting Towers (Martifer RO) 814,851

Viaduct Sibiu (Martifer RO) 812,019

Graneleiro Facaieni (Martifer RO) 807,454

Transcarioca (Martifer Contruções BR) 789,484 1,824,769

Estação Juá (Martifer Contruções BR) 753,762

Centro Paralimpico (Martifer Contruções BR) 698,376

Iter (Martifer RO) 647,943

Renault Tanger Mediterranee (Martifer Construções) 646,928

Arena da Amazônia (Martifer Construções BR) 606,406

The Horizon (Martifer Alumínios) 598,621

Condomínio Esso 2059 (Martifer Angola) 580,479

Estação Metro Salvador (Martifer Construções BR) 564,912

1822 - Futura Fabrica da Cerveja (Martifer Angola) 563,990

Abbots (Martifer Solar UK) 8,861,314

Aura Solar I (Martifer Solar MX) 6,530,061

Development (Martifer Solar UK) 1,795,035

Halchiu (Martifer Solar IT) 2,133,397

KAFD Parcel 5.03 (Martifer Alumínios) 2,553,923

Little Morton (Martifer Solar UK) 2,567,788

Magurele (Martifer Solar RO) 3,264,960

Mingay (Martifer Solar UK) 6,849,257

Orissa Project (Inspira Solar IN) 1,860,494

Tillhouse (Martifer Solar UK) 2,354,748

Ponte da Ulla (Martifer Construções) 5,705,213

33,801,910 58,222,595

1) This amount the total with impairment losses.

27. CASH AND CASH EQUIVALENTS The ‘Cash and cash equivalents’ caption may be analysed as follows:

FY 2014 FY 2013

Cash and cash equivalents:

Bank deposits 22,905,607 38,781,082

Cash 75,715 62,627

22,981,322 38,843,709


’Cash and cash equivalents‘ includes cash on hand and in banks, maturing in no more than 3 months, which is subject to an insignificant risk of change in value. On 31st December 2014 and 2013, no restrictions exist as to the usage of the amounts recorded in the caption ‘Cash and cash equivalents’.

28. ASSETS HELD FOR SALE Negotiations are underway for the sale of the real estate project in Szczecin (Poland) in the Metallic Constructions segment, previously classified as an investment property with its sale being highly probable. The Group continues committed to selling these assets. Thus, the conditions set by IFRS 5 are satisfied for the mantainance of this asset as Asset held for sale within a period over 12 months, the asset was kept as a non current asset held for sale.

Martifer SGPS, SA decided in September 2014, to focus the Group’s activity in Metallic constructionS (steel structures, aluminium and glass façades, oil & gas infrastructures and naval industry) and fulfil the active sale plan of its 55 % share of Martifer Solar. As the sale is highly likely, Martifer Solar’s assets and liabilities were classified as “non-current assets held for sale” and “liabilities associated to non-current assets held for sale” respectively, being Martifer Solar’s Net Profit presented as “discontinued operations’ result” (the values YoY were adjusted to allow comparison).

On 31st December 2013, this caption also included assets and liabilities of the company Rosa dos Ventos Geração e Comercialização de Energias, SA, which has already been sold, as well as the lands and industrial building of Martifer Polska, Sp. Zo.o. from the Metallic Constructions segment.

The breakdown of the assets and the liabilities associated with the assets held for sale on 31st December 2014 and 2013 is as follows:


Goodwill 1,906,896 -

Intangible assets 1,186,599 -

Tangible Fixed Assets 17,159,333 22,048,574

Investment properties 1) 4,988,563 5,002,006

Financial assets under the equity method 14,263,512 -

Available for sale investments 1,419,852 1,357,067

Deferred tax assets 994,876 -

Inventories 5,165,675 -

Other non-current receivables 63,391,030 1,865,544

Current tax assets 5,645,539 3,060

Other current assets 26,667,413 135,622

Cash and cash equivalents 5,474,923 400,175

Derivatives 1,543 -

Total assets held for sale 148,265,754 30,812,048 Non-controlling interests attributable to Assets held for sale (2,060,023) 2,891,441 Non-current liabilities 26,810,843 -

Borrowings 42,130,808 10,889,344

Trade payables 34,682,918 2,621

Other payables 4,169,611 255,297

Current tax liabilities 9,005,572 29,777

Other current liabilities 15,144,525 9,234

Derivatives 50,681 -

Liabilities related to Assets held for sale 131,994,958 11,186,273 Assets net of liabilities and non-controlling interests related to Assets held for sale 18,330,819 16,734,334

1) Szczecin real estate project.


The total value of Martifer Solar’s consolidated assets, on 31st December 2014, were Euro 143 million, being the contribution to the Group of Euro 143 million (on 31st December 2013 it reached Euro 254 million). The value of non-current assets totals Euro 70 million, being the contribution to the Group Euro 71 million (on 31st December 2013, Martifer Solar’s assets reached Euro 103 million).

Consolidated equity value of Martifer Solar on 31st December 2014 totalled Euro 6 milhões, being the contribution to the Group Euro 11 million (on 31st December 2013 Martifer Solar’s Equity reached Euro 74 million). The decrease is mainly due to the period’s net income.

Consolidated equity value of Martifer Solar attributable to the Group is Euro 14 million, being the contribution to the Group Euro 13 million.

Investment registered in 2014 was Euro 1 million, mainly explained by the development activities in new projects in Japan, in the UK, in France, in Chile and others.

The Net Debt registered on 31st December 2014 was Euro 58 million, Euro 7 million more than in 2013. Despite the debt being relatively controlled, the increase of only Euro 7 million arises from Capex financing needs and support to treasury in the American subsidiaries.

The Detail of the result attributable to discontinued activities on 31st December 2014 and 2013 is as follows:

FY 2014 FY 2013

Sales and services rendered 108,307,715 245,137,813

Other income 9,858,833 27,845,695

Cost of goods sold (63,664,631) (111,276,094)

Subcontractors (26,198,035) (69,815,081)

External supplies and services (28,245,447) (40,756,642)

Staff costs (15,742,738) (18,481,295)

Other operational gains and losses (10,092,944) (19,121,094)

(25,777,247) 13,533,302

Amortizations (2,580,503) (3,055,034)

Provisions and Impairment losses (19,893,463) (4,888,852)

Operating income (48,251,213) 5,589,416

Financial income 7,925,365 2,933,090

Financial expenses (15,947,341) (17,864,283)

Gains / (losses) on associate companies and joint arrangements (125,740) 97,302

Profit before tax (56,398,929) (9,244,475)

Income tax (8,773,051) 3,335,958

Profit after tax (65,171,980) (5,908,517) Profit for the year (65,171,980) (5,908,517) Attributable to:

non-controlling interests (34,428,519) (1,658,652)

owners of Martifer (30,743,460) (4,249,865)

As referred in the Management Report, revenues in 2014 suffered a sharp decrease YoY, mainly justified by the delay in projects in the UK and in Jordan, and also by the reduction of the activity in Portugal and in the Ukraine. This last one due to the political and military turmoil in the region.

The EBITDA is negative and strongly reduced when compared to 2013, mainly because of additional costs in the project in Mexico due to a partial destruction of the plant after a force majeure event, and in the USA where in January 2014 the subsidiaries Martifer Solar USA INC and Martifer Aurora Solar LLC incurred in Chapter 11. In the last quarter, following the “settlement, plan support and release agreement, with the consequent loss of control in these companies, they no longer integrated the consolidation perimeter, and the related non-recoverable assets’ loss was recognized.

The EBIT in 2014 was strongly affected by the high impairment loss registered in FTP Solar investment, a company created in 2013 by Martifer Solar, through its subsidiary Martifer Silverado Fund LLC, hedquartered in the USA, in partnership with Fir Tree Solar LLC. In the creation of this new company, Martifer Silverado Fund LLC delivered its capital by delivering projects under


development owned by it, as well as some associated liabilities, while Fir Tree Solar LLC, entered the share capital in cash. In 2014, C2E LLC sold its subsidiary Sustainable Power Group LLC (sPower LLC) to FTP Solar LLC (whose name was meanwhile changed to FTP Power LLC) in exchange of a share in this company, with the teams of sPower LLC and Silverado Power LLC (partner of Martifer Solar Inc at Martifer Silverado Fund I LLC) being merged. The shares held by Martifer Silverado LLC, Fir Tree Solar and S2E LLC in the company FTP Power LLC were, by the end of 2014, of 1.8 %, 95.9 % and 2.3 % respectively. Following an evaluation performed by an independent company, Reinvention Capital Advisors Co., an impairment of around Euro 20 million was registered in 2014 (in 2013 an impairment of Euro 0.7 million was registered).

These facts are the greatest contributors to the high losses registered in the last quarter of the year.

The Net Financial Expenses decrease in 2014 is explained by not recurring to financing from financial institutions in project Silverado. Its alienation occurred in the end of 2013.

The Net Profit is a consequence of the effects that conditioned EBITDA in 2014 and of the impairment and the provision following the activity in the USA, in Mexico, in Portugal and in Spain.

Detailed cash flows of discontinued activities on 31st December 2014 and 2013 is as follows:

FY 2014 FY 2013

Net cash generated by operating activities (2,927,493) 14,142,503

Net cash generated by investing activities 561,140 5,251,002

Net cash generated by financing activities (8,006,184) (24,566,657)

Net increase in cash and cash equivalents (10,372,537) (5,173,152)

Changes in the consolidation perimeter and others 320,089 (290,468)

Effect of foreign exchange currencies 109,642 (84,476)

Cash and cash equivalents at the beginning of the period 15,417,730 20,965,826

Cash and cash equivalents at the end of the period 5,474,923 15,417,730

29. SHARE CAPITAL, RESERVES, TREASURY SHARES AND NON-CONTROLLING INTERESTS Share capital and treasury shares

Martifer SGPS’ share capital, fully subscribed and paid up on 31st December 2014 and 2013 amounts to Euro 50,000,000 and is represented by 100,000,000 bearer shares with a nominal value of Euro 50 cents each. All shares have the same rights, corresponding to one vote per share. During 2014 and 2013, no changes occurred in the number of shares of the Group.

During 2014, Martifer SGPS did not acquire treasury shares on the stock exchange. Martifer holds 2,215,910 own treasury shares, corresponding to 2.22 % of its share capital.

On 31st December 2014, the share capital of the company was held as follows: 42.70 % by I’M SGPS, S.A., 37.5 % by Mota-Engil SGPS, S.A. and 2.22 % are treasury shares. The remaining 17.58 % represents free-float listed on Euronext Lisbon.

Share premium

The share premium corresponds to additional amounts obtained with the issuance of share capital increases. In accordance with the Portuguese commercial legislation, the amounts included in this caption follow the regime established for the ‘Legal reserve’, and consequently, they are non-distributable, except in the event of the liquidation of the company. However, they may be used to absorb losses, after all the other reserves are exhausted, or to increase share capital.

Reserves

Legal reserve

Portuguese commercial legislation requires that at least 5 % of the annual net profit be appropriated to a legal reserve, until such reserve attains at least 20% of the share capital. This reserve is non-distributable, except in the event of the liquidation of the company. However, it may be used to absorb losses, after all the other reserves are exhausted, or to increase share capital.


This reserve is included in the caption ‘Other reserves’ and amounts to Euro 7,696,844.

Own treasury shares

The Group holds 2,215,910 own treasury shares, corresponding to 2.22 % of its share capital. In accordance with the Portuguese legislation, it is mandatory to keep undistributable reserves in the amount of own treasury shares, included in ‘Other Reserves’.

Fair value reserves – Cash flow hedge derivatives

‘Fair value reserves – Cash flow hedge derivatives’ reflect the fair value changes in the cash flow hedges considered effective and cannot be distributed to shareholders nor used to absorb losses.

Foreign currency translation reserves

Foreign currency translation reserves reflect the foreign currency exchange differences arising from: (i) translation of foreign operations; (ii) net investment in subsidiaries and (iii) goodwill. These reserves cannot be distributed to shareholders nor used to absorb losses, being transferred to the income statement when the affiliates are sold or liquidated.

Stock option reserves

Stock option reserves reflect the fair value of the services rendered by some workers, reviewed, at each reporting date, considering the number of options expected to become exercisable.

There was no stock options plan in the Group on 31st December 2014.

Other reserves

In addition to the legal reserve, this caption includes the results of prior years and an undistributable reserve in the amount of Euro 2,868,519 relating to the value of the treasury shares.

In accordance with the Portuguese legislation, the amount of the distributable reserves is determined taking into consideration the individual financial statements of Martifer, SGPS, SA, which has been prepared in accordance with IFRS.

On 31st December 2014 Martifer, SGPS, SA does not have distributable reserves.

Non-controlling interests

The movements in the non-controlling interests are as follows:

FY 2014 FY 2013

Opening balance 39,676,431 50,975,912

Net profit of the year (43,166,600) (1,790,277)

Other changes in equity of subsidiaries (5,154,704) (86,240)

Changes in the consolidation perimeter (4,230,209) (9,874,758)

Transactions with non-controlling interests (9,006,587) 745,119

Others (3,060,627) (293,325)

(24,942,297) 39,676,431

From continued operations (22,882,274) 36,784,990

From which attributable to non-current assets held for sale (Note 28) (2,060,023) 2,891,441

Non controlling interests on 31st December 2014 reflect: i) the impact of decrease in participation in Martifer Metallic Constructions, SGPS, SA, owned by Martifer, SGPS, SA at 75, following the equity increase (Euro 28 million) in this company by the new shareholder Vector Diálogo, SGPS, SA; ii) the impact of the sale of Rosa dos Ventos in the RE Developer segment; iii) the impact of deconsolidation of Martifer Solar USA and Martifer Aurora Solar LLC, following the loss of control (Note 2); iv) the distribution of dividends in the RE Developer segment of Euro 12 million to a minority shareholder for a value different from its capital share; and v) the classification of Martifer Solar as a non-current asset held for sale (Note 28).


% NON-CONTROLLING INTERESTS

FY 2013 FY 2013

Metallic Constructions

Martifer Construções Angola 21.25% 818,221

Solar

Martifer Solar 45.00% 29,974,130

Martifer Solar Itália 45.00% 3,596,695

Silverado Fund LLC 68.58% 2,724,069

Martifer Solar UK 45.00% 1,983,684

Martifer Solar Hellas, A.T.E. 60.87% (559,460)

Martifer Solar Inc. 45.00% (2,114,444)

Martifer Solar França 45.00% 1,707,199

Martifer Solar Bélgica 45.00% 1,647,949

Martifer Solar Sistemas Solares 45.00% 931,201

M Prime 45.00% 1,519,716

Solarparks 45.00% 189,388

PV Glass - -

Martifer Solar México 45.55% (1,902,566)

AEM 45.39% (4,995,559)

Other

Rosa dos Ventos 46.37% -

Martifer Renováveis – Geração de Energia e Participações 45.00% 1,409,304

Non controlling interests associated to non-current assets held for sale (note 28) 2,891,441

Other non controlling interests (< Euro 500,000) (144,538)

39,676,430

% NON-CONTROLLING INTERESTS

FY 2014 FY 2014

Metallic Construction

Martifer - Construções Metalomecânicas, S.A. 25.00% (7,132,255)

Martifer - Alumínios, S.A. 25.00% (5,962,520)

Martifer Metallic Constructions, SGPS, S.A. 25.00% (3,664,488)

Martifer Aluminium Pty, Ltd 25.00% (3,244,930)

Martifer Constructii S.R.L. 25.00% (3,184,647)

Martifer Polska Sp. Zo.o. 25.00% (2,467,012)

Martifer – Construções Metálicas Angola, S.A. 40.94% 2,053,776

Martifer Renováveis - Geração de Energia e Participações S.A. 45.00% 827,794

Non controlling interests associated to non current assets held for sale (Note 28) (2,060,023)

Other non controlling interests (< Euro 500,000) (107,993)

(24,942,297)

30. BORROWINGS On 31st December 2014 and 2013, borrowings may be analysed as follows:

FY 2013 UNTIL 1 YEAR BETWEEN 1 AND 3 YEARS

BETWEEN 3 AND 5 YEARS

MORE THAN 5 YEARS TOTAL

Financial institutions borrowings:

Bank loans 57,100,333 46,334,767 91,213,197 55,289,820 249,938,117

Bank overdrafts 15,808,078 - 707,711 1,808,595 18,324,384

Authorized overdrafts 42,592,133 412,160 4,395,956 10,135,017 57,535,266

Other borrowings:

Commercial paper 8,000,000 3,000,000 3,250,000 - 14,250,000

Other borrowings 10,251,178 1,712,287 1,926,745 2,656,515 16,546,725

133,751,722 51,459,214 101,493,609 69,889,947 356,594,492


FY 2014 UNTIL 1 YEAR BETWEEN 1 AND 3 YEARS


MORE THAN 5 YEARS TOTAL


Bank loans 14,448,560 33,760,563 88,624,207 71,088,200 207,921,530

Bank overdrafts 13,458,228 - 812,636 1,784,259 16,055,123

Authorized overdrafts 24,238,327 205,556 3,498,822 12,045,122 39,987,827

Other borrowings:

Commercial paper 5,000,000 - - - 5,000,000

Other borrowings 16,499,977 723,155 999,962 1,995,989 20,219,083

73,645,092 34,689,274 93,935,627 86,913,570 289,183,563

On 31st December 2014, the Group’s net debt was Euro 282,731,171. The net debt calculation includes, besides the borrowings mentioned above, ‘finance leases’, ‘derivatives’ and ‘cash and cash equivalents’. The decrease, when compared with 2013, is mainly due to the reclassification to liabilities associated to non current assets held for sale (Note 28).

The Group continues focused on reducing Net Debt; as such, it continues committed to the process of selling non-core assets: the solar segment, wind farms and, residually, the sale of real estate projects, throughout 2015.

Additionally, and considering the medium / long term nature of the investments made, the Group has sought to restructure its debt so it can follow the maturity of the associated assets, not jeopardising the obligations arising from its operational short-term activity.


By the end of 2014, the Group tried to restructure its debt by rescheduling maturities over time with the main financial institutions, extending the average loan maturity to make it more coincident with the permanence of its long term assets and a maturity that allows the cash surpluses to be sufficient to comply with its obligations.

The Group expects to conclude the negotiation process in the first half of 2015.

Other borrowings

The amount of ‘Other borrowings’ includes approximately Euro 2.7 million in obligations under finance leases (related to the financing of the real-estate projects recorded as ‘Work in progress’ – Note 19) which, in the event of the sale of the referred projects, will be settled at that moment and not in accordance with the established reimbursement plan, which contractually occurs after 2014.

This caption also includes Euro 7.8 million from a payment to a suppliers’ grouped credit line and Euro 5.5 million from short-term loans contracted in Brazil.

The caption ‘Other borrowings’ also includes the loans obtained from the Portuguese Agency for Foreign Investment and Commerce (Agência para o Investimento e Comércio Externo de Portugal - AICEP), Institute for Support to Medium and Small Companies and to Investment (Instituto de Apoio às Pequenas e Médias Empresas e ao Investimento - IAPMEI), as support for the investment carried out by the Group amounting Euro 2.2 million.

On 31st December 2014 and 2013, the outstanding borrowings are denominated in the following currencies:

FY 2013 FINANCIAL INSTITUTIONS BORROWINGS OTHER BORROWINGS TOTAL

Real 8,082,814 4,297,957 12,380,771

Euro 269,919,935 26,498,768 296,418,703

Zlotis 4,270,858 - 4,270,858

New Leu 18,333,320 - 18,333,320

Rupee 317,835 - 317,835

American Dollar 24,873,005 - 24,873,005

325,797,767 30,796,725 356,594,492


FY 2014 FINANCIAL INSTITUTIONS BORROWINGS OTHER BORROWINGS TOTAL

Real 302,991 5,534,794 5,837,785

Euro 246,438,425 19,684,289 266,122,714

Zlotis -

New Leu 14,171,179 14,171,179

Rupee -

American Dollar 3,051,885 3,051,885

263,964,480 25,219,083 289,183,564

The average interest rates of the bank overdrafts and the borrowings are as follows:

FY 2013 AVERAGE RATES RANGE OF INTEREST RATES (%)


Bank loans 6.05% [ 1.22% to 12.30% ]

Bank overdrafts 6.45% [ 3.13% to 8.00% ]

Authorized overdrafts 5.82% [ 4.22% to 7.22% ]

Other borrowings:

Commercial paper 5.99% [ 5.80% to 6.34% ]

Other borrowings 2.81% [ 0.00% to 10.00% ]

FY 2014 AVERAGE RATES RANGE OF INTEREST RATES (%)


Bank loans 5.51% [ 3.00% to 23.00% ]

Bank overdrafts 4.32% [ 3.02% to 6.46% ]

Authorized overdrafts 5.68% [ 4.73% to 6.46% ]

Other borrowings:

Commercial paper 6.38% [ 6.38% ]

Other borrowings 10.30% [ 0.00% to 25.34% ]

The average interest rates on borrowings, by geography, are as follows:

COUNTRY INDEX SPREAD

Spain Euribor [ 3.5 to 6.50 ]

Portugal Euribor [ 2.25 to 9.50 ]

Romania Robor [ 2.50 to 3.75 ]

Of all the borrowings, only about 6% of the bank loans bear a fixed interest rate. The fixed interest rates are in line with market rates. The remaining bank loans bear interest rates that are indexed to the market rates for the respective terms; it is therefore considered that the fair value of these borrowings is similar to their carrying amount.

On 31st December 2014, the main bank borrowings of the Group are as follows:

COMPANY CONTRACT CURRENCY

VALUE (EURO)

CONTRACT DATE PERIOD

GRACE PERIOD OF

CAPITAL

INSTALMENT PAYMENTS

FIRST INSTALMENT

AMOUNT

LAST INSTALMENT

AMOUNT

Martifer SGPS EUR 26,250,000 aug-10 10 Years 1 + 2 years Quarterly 1,640,625 331,949

Martifer Construções SA EUR 2,150,000 may-11 8 Years 4 months + 1.5 years Monthy 32,673 375,000

Martifer Aluminios SA EUR 1,500,000 may-10 8 Years 4 months + 1.5 years Monthy 22,795 260,000

Martifer Metallic Construction SGPS EUR 20,000,000 may-11 5 Years 1 year Quarterly 1,250,000 2,031,250

Gebox SA EUR 6,500,000 sep-10 7 Years 2 years Quarterly 325,000 412,698

Martifer Energy Systems SGPS EUR 5,250,000 feb-08 8,5 Years 1.5 years Monthy 76,924 650,000

Martifer SGPS EUR 3,660,500 sep-10 3,6 Years - Quarterly 498,938 48,027



VALUE (EURO)


GRACE PERIOD OF

CAPITAL

INSTALMENT PAYMENTS

FIRST INSTALMENT

AMOUNT

LAST INSTALMENT

AMOUNT

Martifer SGPS EUR 15,000,000 oct-12 5 Years 1 ano Half-yearly 10,250,000 791,667

Martifer SGPS EUR 1,900,000 dec-12 7 Years 2 years Quarterly 95,000 95,000

Martifer Construções SA EUR 5,000,000 dec-12 7 + 10 Years

2 + 2 years Quarterly 117,188 1,250,000

Martifer SGPS EUR 7,500,000 dec-12 7 Years 1 +1 year Anual 1,302,638 1,711,063

Martifer Construções SA EUR 2,500,000 mar-13 9,2 Years 1 quarter + 2 years Monthy 64,103 30,306

Martifer Construções SA EUR 5,000,000 mar-13 3 Years - Half-yearly 774,649 894,309

Martifer Aluminios SA EUR 1,000,000 apr-13 9,2 Years 1 year Monthy 25,641 9,081

Martifer SGPS EUR 5,000,000 mar-13 7 Years 2 years Quarterly 250,000 250,000

Martifer SGPS EUR 50,000,000 may-13 7 Years 2 years Quarterly 2,500,000 2,500,000

Martifer SGPS EUR 20,000,000 nov-13 7 Years 2 years Quarterly 1,000,000 1,000,000

Martifer SGPS EUR 8,000,000 nov-13 7 Years 2 years Quarterly 400,000 400,000

Martifer Metallic Construction SGPS EUR 14,000,000 jun-14 10 Years 2 years Quarterly 338,710 3,500,000

Martifer Construções SA EUR 2,500,000 nov-14 2,3 Years - Bullet - 2,500,000

Martifer SGPS EUR 2,500,000 nov-14 2,1 Years - Bullet - 2,500,000

Martifer Aluminios SA EUR 2,600,000 nov-14 1,2 Years 1 quarter Monthy 216,667 216,667

Martifer - Construções Metalicas Ltda BRL 141,244 oct-14 1,5 Years - Bullet 141,244

Martifer - Construções Metalicas Ltda BRL 140,605 oct-14 1,5 Years - Bullet 140,605 Martifer Renewables Investiments

ETVE, S.L. EUR 11,500,000 dec-11 4 Years - Quarterly 718,750 722,500

Martifer Renewables ETVE, S.A.U. [ES] EUR 27,770,000 nov-14 12,7 Years 2 years Quarterly 700,000 600,000

On 31st December 2014, the main Project Finance obtained by the Group are as follows:


VALUE (EUROS)


GRACE PERIOD OF

CAPITAL

INSTALMENT PAYMENTS

FIRST INSTALMENT

AMOUNT

LAST INSTALMENT

AMOUNT

Eviva Nalbant, srl_RO RON 18,071,897 apr-11 13 years 2 years + 1 half Half-yearly 1,505,389 1,199,042

This amount is presented in the caption ‘Bank loans’.

On 31st December 2014, the main renewable commercial paper programmes was the following:

COMPANY MAXIMUM AMOUNT (EUROS) CONTRACT DATE PERIOD AMOUNT USED

Martifer SGPS, SA 5,000,000 15-09-2010 10-09-2015 5,000,000

The average interest rate applied to these paper programmes was 6.38 %.

For some of the borrowings referred to above, and in accordance with the Group’s interest rate risk management policy, it contracted several derivative instruments, which are described in Note 37, to convert the variable rates in force into fixed rates.

On 31st December 2014, the Group’s interest rate sensitivity analysis may be summarized as follows:

ESTIMATED IMPACT 2014

Change in financial results due to a 1 p.p. alteration of the interest rate applied to the entire debt 2,891,836

Fixed-rate hedging 162,481

Interest rate derivatives instruments hedging -

Sensitivity of the financial results due to interest rate changes 2,729,355

For this financing, the guarantees indicated on note 38 were provided.


31. OBLIGATION UNDER FINANCIAL LEASES On 31st December 2014, the major finance lease contracts were as follows:

ASSET DESCRIPTION PERIOD CONTRACT AMOUNT

PURCHASE PERIOD

PURCHASE OPTION

AMOUNT GUARANTEES

Martifer equipment 201 months 6,000,000 End of contract 120,000 Blank promissory note

Martifer equipment 201 months 1,250,000 End of contract 22,500 Blank promissory note Various pieces of equipment (stripping camera, cutting table, Calandra) 180 months 2,192,058 End of contract 43,841 Blank promissory note

Mobile metallic structure 201 months 8,850,000 End of contract 177,000 Blank promissory note

Mobile metallic structure 85 months 5,185,415 End of contract 103,708 Blank promissory note

Various pieces of equipment 97 months 5,090,531 End of contract 101,811 Blank promissory note

Cutting table and stripping robot 95 months 963,200 End of contract 19,264 Blank promissory note

Ford Mondeo Station Diesel 149 months 24,975 End of contract 500 Blank promissory note

Mobil metallic structure 84 months 1,190,000 End of contract 23,800 Blank promissory note Autonomous pieces A, B, C, D, E, F, G, H, I, J, L, M and N 96 months 6,366,458 End of contract 1,619,686 Blank promissory note

Milling machine 60 months 90,000 End of contract 900 Promissory note guaranteed by Martifer SGPS

Urban building 206 months 2,656,515 End of contract Blank promissory note

Rural building 148 months 955,000 End of contract 21,100 Blank promissory note Land and building Gebox - Vagos 2 parcels (articles no. 2874 and no. 2896) 182 months 47,284 End of contract 1,946 Promissory note guaranteed by

Motofil and Martifer SGPS Land and building Gebox - Vagos parcels no. 104, 106, 108, 110, 112, 114, 132, 133, 134, 135, 136 and 137

182 months 3,901,356 End of contract 1,804,000 Promissory note guaranteed by Motofil and Martifer SGPS

Overhead crane, Hydraulic Calandra 60 months 412,500 End of contract 4,125 Promissory note guaranteed by Martifer SGPS

Wind Energy converters 144 months 18,205,554 End of contract 364,111 Blank promissory note

Energy converters 144 months 9,007,897 End of contract 180,158 Blank promissory note

On 31st December 2014 and 2013, obligations under finance leases contracts were as follows:

MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE

PAYMENTS

FY 2014 FY 2013 FY 2014 FY 2013

No more than 1 year 3,071,572 4,919,326 2,481,603 4,357,014

More than 1 year and less than 5 years 9,744,719 9,522,716 8,217,999 8,264,091

More than 5 years 6,363,406 6,140,899 5,612,714 5,653,592

19,179,698 20,582,942 16,312,316 18,274,697

Future finance charges (2,867,382) (2,308,246)

Current value of leasing contract rents 16,312,316 18,274,696 16,312,316 18,274,697 Included in the financial statements as:

- Current borrowings 3,071,572 4,919,326 2,481,603 4,357,014

- Non-current borrowings 13,240,743 13,355,370 13,830,713 13,917,683

16,312,316 18,274,696 16,312,316 18,274,697

Additionally, on 31st December 2014 and 2013, rentals associated with operational lease contracts are as follows:

FY 2014 FY 2013

No more than 1 year 1,485,827 1,068,325

More than 1 year and less than 5 years 133,649 542,087

More than 5 years 105,134 27,921

1,724,610 1,638,333

On 31st December 2014 the caption ‘External supplies and services’ includes the amount of Euro 1,780,651, relating to operational lease rentals.


32. TRADE PAYABLES AND OTHER PAYABLES On 31st December 2014 and 2013, trade payables and other payables may be analysed as follows:

NON CURRENT CURRENT

FY 2014 FY 2013 FY 2014 FY 2013

Trade payables 11,522,691 11,972,874 63,638,919 130,031,422

Other creditors

Fixed assets suppliers - - 791,014 1,016,400

Related companies and other shareholders (Note 40) 7,247 421,870 924,734 3,648,374

Advanced payments received from customers - - 19,217,883 16,532,026

Other creditors 851,292 1,330,346 6,245,633 7,654,569

Other payables 858,539 1,752,216 27,179,264 28,851,369 Total 12,381,230 13,725,090 90,818,183 158,882,791

The balance of non-current ‘Trade payables’ is primarily related with retentions on work performed by external parties, which will be released at the end of the guarantee period. These amounts bear no interest.

On 31st December 2014 and 2013, this caption includes balances payable to suppliers resulting from the Group’s operating activities, as well as from tangible and intangible asset acquisitions. The Board of Directors believes that the carrying amount of these balances is very similar to their fair value and that the effect of the financial discounting of these amounts is not material. The reduction in this caption is the result not only of the reduction in activity, but also of the transference of the Solar segment to ‘Liabilities related with Assets held for sale’ (Note 28).

On 31st December 2014 and 2013, the ageing of accounts payable in the captions ’Trade payables’ and ‘Other payables’ was as follows:

FY 2013 PAST DUE

TOTAL NOT DUE UNTIL 90 DAYS

90 TO 180 DAYS

180 TO 360 DAYS

MORE THAN 360 DAYS

Trade payables 142,004,296 72,268,176 27,331,272 11,872,408 15,953,487 14,578,953

Other payables 30,603,585 17,544,612 2,316,938 449,539 2,471,987 7,820,509

Total 172,607,881 89,812,788 29,648,210 12,321,947 18,425,474 22,399,462

FY 2014 PAST DUE

TOTAL NOT DUE UNTIL 90 DAYS 90 TO 180 DAYS 180 TO 360 DAYS MORE THAN 360 DAYS

Trade payables 75,161,610 39,439,880 9,983,147 7,006,362 7,771,345 10,960,876

Other payables 28,037,803 5,361,532 8,325,045 1,206,744 5,091,078 8,053,404

Total 103,199,413 44,801,412 18,308,192 8,213,106 12,862,423 19,014,280

The decrease in this caption results not only from the reduction in activity, but also from the transfer of balances of the Solar segment to ‘Liabilities related with Assets held for sale’ (Note 28).

The average payment period of the Group hovers around 485 days.

Accounts payable more than 180 days overdue relate to amounts payable to trade creditors with which the Group maintains regular commercial relations.

On 31st December 2014 and 2013, the non-current balances due to ‘associate companies and to other shareholders’ relate, primarily, to loans obtained from jointly controlled entities and associate companies, that bear interest at Euribor 3M increased by a 6.75 % spread.

Besides the financial liabilities previously disclosed and in Notes 30 and 31, also previously disclosed, the Group does not have any other financial liabilities.


33. PROVISIONS The information relating to ‘Provisions’ on 31st December 2014 and 2013, may be detailed as follows:

FY 2014 FY 2013

Quality guarantees 1,447,244 3,335,399

Legal claims in progress (Note 11) 1,258,968 1,553,533

Provisions arising from the use of the equity method 6,763,255 5,450,401

Onerous Contracts (Note 11) 5,777,177 16,043

Others 7,952,565 11,971,506

23,199,209 22,326,882

The movements occurring in the caption ‘Provisions’ during the period ended on 31st December 2014 are as follows:

OPENING BALANCE ADDITIONS REDUCTIONS APPLICATIONS

CHANGE OF CONSOLIDATION

PERIMETER, EXCHANGE RATE

DIFFERENCES, TRANSFERS

TRANSFER TO LIABILITIES RELATED

WITH ASSETS HELD FOR SALE

CLOSING BALANCE

Quality guarantees 3,335,399 - (63,456) - (5,060) (1,819,639) 1,447,244

Legal claims in progress 1,553,533 788,631 (23,551) 67,792 30,853 (1,022,705) 1,258,968 Provisions arising from the use of the equity method 5,450,401 511,790 - - 808,545 (7,480) 6,763,255

Onerous Contracts 16,043 26,963,337 (219,243) 21,234,842 267,925 (16,043) 5,777,177

Others 11,971,506 8,795,864 (179,507) 9,132,662 (176,230) (3,326,406) 7,952,565

22,326,882 37,059,622 (485,757) 30,435,296 926,033 (6,192,273) 23,199,209

Quality guarantee provisions were recorded to meet potential quality problems resulting from the Group’s operating activities. On average, quality guarantees have a 5 year limit. The provisions reflect a percentage of the construction value, which varies between 0.04 % and 0.18 %, depending on the business segment and the company. The value related to the Solar segment was transferred to ‘Liabilities related with Assets held for sale’ (Note 28).

In 2014, provisions for onerous contracts concern to estimated responsibilities associated to possible contract obligations in the operational activity of the Metallic Constructions segment.

The amount of other provisions at 31December 2014 includes approximately Euro 3 million of a provision recorded in companies Eurocab 12 to 19 about a dispute regarding the compliance of requirements in the application of the tariff regime that regulates the activity of production of electricity, in a special regime. It also includes provisions to estimate responsabilities associated with possible contractual obligations in operacional activities in approximately Euro 5 million.

As referred to in note 1, a provision for invesments in associate companies which capital is negative (based on the owned shareholding) was constituted.

Considering the uncertainties surrounding these provisions, as well as their nature, the Group did not financially discount these amounts.

34. CONTINGENT LIABILITIES On 31st December 2014, the contingent liabilities are as follows:

a) On 29th October 2009, Martifer Polska, in consortium with ‘Ocekon Engineering s.r.o.’ (Slovakia), concluded with Energomontaz – Południe S.A. an agreement for Works, whose object was the manufacture, execution, delivery and installation of the steel roof on the Baltic Arena Stadium in Gdańsk (Poland), in the approximate amount of Euro 11.3 million. On 2 September 2010, Martifer received a notice of the immediate termination of the agreement from Energomontaz – Południe S.A., without any prior warning. The main reason alleged for the termination were delays in the execution, which, in Martifer’s opinion, was totally unfounded and ultimately ineffective. On 17th December 2010, Martifer lodged an official lawsuit in the Court in Katowice, against Energomontaz. The amount of the lawsuit was approximately Euro 12.6 million, including


interest, the cost of the capital involved and the damages caused to Martifer by the lack of cooperation. On 17th January 2012, Energomontaz - Południe SA lodged its legal suit against Martifer, involving Euro 5.8 million. Court hearings are in progress and Martifer Group has recognized in its financial statements impairment losses relating to the account receivable, production not invoiced and the executed bank guarantee; therefore it considers that this litigation risk is adequately covered in its financial statements. Meanwhile, the company Energomontaz has entered a bankrupcy process. In April 2013, Martifer submitted the list of claims, totalling Euro 16.9 million, to the insolvency administrator. To date, there is no information on the list of credits of the insolvency estate.

b) On 28th April 2011, the construction contract no. 3/Z/2011 was signed between Martifer Konstrukcje and Śląskie Centrum Logistyczne. On 15th May 2012, Sląskie Centrum Logistyczne S.A. levied Martifer Konstrukcje with a penalty of approximately Euro 540,000 since, in their opinion, Martifer was behind in terms of contract execution. This penalty was treated by the client as an amount due and deducted from the receivables balance. On 4th October 2012, Martifer Konstrukcje sp. z o.o. lodged with the Court in Gliwice an action against Śląskie Centrum Logistyki S.A., in which Martifer claims:

The amount of Euro 540,000 plus interest as of 2nd June 2012, for the non-payment of the invoice dated 27th April 2012, based on the construction agreement;

The amount of Euro 540,000 plus interest as of the date of the court case, as a penalty for delays in the completion of the final acceptance;

The amount of Euro 133,000 plus interest as of the date of the court case, as payment for additional work.

The Court hearings commenced in January 2014, and the Court of First Instance rendered the decision, on 10 July 2014, with the following terms:

Conviction to Śląskie Centrum Logistyczne to indemnify Martifer Konstrukcje with a total of Euro 51,436.32 plus interests counting from 27th October 2012;

Absolution on the remaining claims formulated by Martifer Konstrukcje; and Conviction to Śląskie Centrum Logistyczne to pay court fees totalling Euro 5,607.24.

The Value of the compensation attributed to Martifer Konstrukcje is related to the payment of additional work. Martifer Konstrukcje did not conform itself with this decision and interposed na appeal on 3rd September 2014, not being, to date, scheduled the appeal trial hearing.

c) Martifer signed, on 1st August 2014, an investment agreement denominated “Agreement”, related with a Euro 30 million investment in Nutre, SGPS, SA to be performed by a company to be owned in 80 % by Ceres Invesment, and within which, depending on certain conditions, Martifer sells its 49 % share held in Nutre, SGPS, SA’s share capital. The closing of the transaction occurred on 19th December 2014, when 50 % of the investment was executed by Ceres Investments. However, all documentation related to the investment and transfer of shares was in custody of a Notary until the date Ceres Investments executes the remaining investment, of Euro 15 million, which occured in January 2015. According to the investment agreement mentioned above, Martifer SGPS, SA is responsible, in proportion to the sold share, for the payment of compensations to third parties due by Nutre SGPS SA or any of its subsidiaries, in case they are condemned and the amount of compensation exceeds an accumulated total of Euro 500,000, with a maximum of Euro 14.7 million, by facts that occurred before the date of the investment agreement, and on a 3 year period after the closing of the operation. To date, Martifer SGPS SA was not notified of any occurrence from which may surge the obligation to compensate the acquirer of its share on Nutre SGPS, SA, as indicated above.

The Group's expectation is that no losses will occur with these processes over and above the ones already recognized in its financial statements.


35. CURRENT TAX LIABILITIES On 31st December 2014 and 2013 ‘Current tax liabilities’ are as follows:

FY 2014 FY 2013

Value added tax 2,145,790 10,976,641

Social security contributions 3,678,660 2,289,946

Personnel income tax withheld 249,716 755,630

Other taxes 2,921,181 1,303,425

Tax in other countries - -

Current tax liabilities 8,995,347 15,325,642

36. OTHER CURRENT LIABILITIES On 31st December 2014 and 2013, other current liabilities are as follows:

FY 2014 FY 2013

Accrued expenses Holiday pay and bonuses 5,000,578 5,867,390

Interest borne but not yet overdue 5,274,578 3,922,237

Production performed by third parties not yet invoiced 1,304,965 4,865,198

Other accrued expenses 2,941,373 7,377,052

14,521,494 22,031,877 Deferred income Production invoiced and not yet performed (related to construction contracts) (Note 26) 20,972,205 20,350,406

Subsidies / Government grants (Note 39) 688,811 1,753,735

Other deferred income 5,908,955 2,691,439

27,569,971 24,795,580 42,091,465 46,827,457

The ‘Other accrued expenses’, on 31st December 2014, relate to the supplies and external services rendered in 2014 not yet invoiced. ‘Other deferred income’ include the amount received in the sale of Repower, which is associated to the construction of wind towers for the Âncora Wind project.

On 31st December 2014 and 2013, the Group’s main construction contracts in progress justifying the outstanding balance of the caption ‘Production invoiced and not yet performed (related to construction contracts)’ are as follows:

FY 2014 FY 2013

Âncora Project (Martifer Construções) 2,039,363 -

Stadium Steel Structure - Erection (Martifer Arábia Saudita) 1,416,418 -

Scenic River Cruiser (West Sea) 1,274,870 -

Kafd Parcel (Martifer Alumínios) 2,215,903 -

Projecto Sambiente (Martifer Angola) 997,646 -

Kero Rocha Pinto (Martifer Angola) 885,383 -

Halls- Centro Olimpico (Martifer Construções BR) 866,374 -

Martifer-Amal_Fábrica de Moçambique (Martifer Construções) 750,930 788,021

Grand Stade de Lyon (Martifer França) 665,779 -

Birmingham New Street - WP3201 (Martifer Alumínios) 610,829 800,113

Building facades (Martifer Arábia Saudita) 567,585 -

Torre Serrano (Martifer Alumínios) 553,251 -

Hotel Tivoli Estoril Residence (Martifer Alumínios) 534,278 -


FY 2014 FY 2013 Bridges 1-6 Trinidad (Martifer RO) 532,978 -

Loures Business Park (Martifer Construções) 515,627 -

PF Lisboa / Porto (Martifer Solar) - 5,459,987

KASC (Martifer Arábia Saudita) - 2,282,377

KASC (Martifer Construções) - 875,720

Ancelle (Martifer Alumínios França) - 843,441

Viking Torgil (Navalria) - 793,588

2062 - Edifício Kilamba (Martifer Angola) - 745,595

Stade Lille - Charpente Métallique (Martifer França) - 620,905

0110 - Aeroporto Namibe - EM (Martifer Angola) - 568,807

Centro Polivalente Barceló - Madrid (Martifer Alumínios) - 540,062

Sawmill Tier One Solar (Martifer Solar USA) - 514,372

Others 6,544,991 5,517,418 20,972,205 20,350,406

37. DERIVATIVES The Group uses derivatives to manage its exposure to interest rate risk so as to reduce the Group’s exposure to variable interest rates on its financing contracts, thereby fixing interest rates. On 31st December 2014 and 2013, the derivative contracts in place were as follows:

31st December 2013

DERIVATIVE COMPANY COUNTERPART NOCIONAL TYPE CLOSING DATE FAIR VALUE

Non Deliverable Foreign Exchange Forward

Martifer Metallic Constructions SGPS SA

BANCO ESPIRITO SANTO SA 3,400,000 Fixed Exchange rate 3,3030.

Sell BRL Buy EUR 25-Jun-2014 18,483

Deliverable Foreign Exchange Forward


BANCO ESPIRITO SANTO SA 1,000,000 Fixed Exchange rate 1,3150.

Sell USD Buy EUR 26-Mar-2014 35,323



Monex Europe 3,000,000 Fixed Exchange rate 3. Sell BRL Buy EUR 23-Jan-2014 75,688

EUR CALL / USD PUT - Forward Sintético

Martifer Construcoes Metalomecânicas SA

BANCO ESPIRITO SANTO SA 2,130,000 Fixed Exchange rate EUR Call

USD Put strike 1,3380 19-Jun-2014 47,512



INTL FCStone Markets, LLC 1,255,000 Fixed Exchange rate 1,3494.

Sell USD Buy EUR 4-Apr-2014 19,725



Monex Europe 3,500,000 Fixed Exchange rate 1,3010. Sell USD Buy EUR 22-May-2014 184,559

Interest rate swap Martifer Solar, S.A. Montepio 901,822 Receives Euribor if higher than 1% and pays Euribor 3M ( SWAP with CAP- 15,000€)

5-Apr-2019 7,178

388,468

Interest rate swap Martifer Solar, S.A. Santander Totta 5,550,000 Fixed Rate 2.24% and receives Euribor 3M 21-Oct-2015 (164,254)

(164,254)

31st December 2014

DERIVATIVE COMPANY COUNTERPART NOCIONAL TYPE CLOSING DATE FAIR VALUE

EUR CALL / GBP PUT - Forward Sintético

Martifer Metallic Constructions SGPS SA Novo Banco 1,000,000 Fixed Exchange rate EUR Call

GBP Put strike 0.8280 20-May-2015 (73,118)

EUR CALL / GBP PUT - Forward Sintético

Martifer Metallic Constructions SGPS SA Novo Banco 1,000,000 Fixed Exchange rate EUR Call

GBP Put strike 0.8320 5-Jun-2015 (78,479)

Deliverable Foreign Exchange Forward

Martifer Metallic Constructions SGPS SA Monex Europe 1,000,000 Fixed Exchange rate 0.825.

Sell GBP Buy EUR 10-Jun-2015 (68,237)

Martifer Metallic Constructions SGPS SA FC Stone Regular margin calls 3,221

(216,614)

The fair value of the above derivative contracts has been determined by the counterparties and, as these derivatives qualify as cash flow hedges, they have been recorded in the equity caption ‘Fair value reserves – Derivatives’ and in ‘Derivatives’, under Assets and Liabilities.


The fair value valuation of the derivatives contracted by the Group (essentially interest rate swaps) was performed by the respective financial institutions acting as counterparties. The fair value valuation model used by the counterparties is based on the discounted cash flows method, using the swaps par rates, listed in the Interbank market, and available on Reuters and/or Bloomberg terminals, for the negotiated periods, which are used to calculate the forward interest rates and discount factors. The present value of the fixed cash flows (fixed leg) and the present value of the variable cash flows (floating leg) are then calculated. From the addition of the two legs results the NPV (Net Present Value or discounted value of the future cash flows or fair value of the derivatives).

38. COMMITMENTS Financial Guarantees

On 31st December 2014 and 2013, the financial guarantees (bank guarantees and credit insurance) provided by the Group to third parties, namely to customers whose civil works are performed by Group companies may be detailed, by currency, as follows:

FY 2014 FY 2013

Euro 62,776,134 106,829,281

Zlotys 1,527,692 2,186,048

New Leu 582,705 88,200

US dollar 57,260,888 53,300,201

Australian dollar - 348,352

Moroccan Dirham 81,825 80,027

Pound Sterling 14,845,136 3,335,944

Rupee 5,452,876 11,247,833

Rupia 544,845 518,356

Chilean Peso 59,758 -

143,131,859 177,934,242

The breakdown, by Group company, is as follows:

FY 2014 FY 2013

Martifer Construções 28,049,199 39,596,777

Martifer Metallic Constructions SGPS 8,034,731 12,878,285

Martifer Solar 14,905,136 23,899,626

Navalria 13,382 709,882

West Sea Lda 435,500 -

Martifer Alumínios 7,627,965 8,207,459

Martifer Solar Sistemas Solares 37,350 3,214,891

Martifer Construcciones Metalicas Espanha 1,252,100 2,494,421

Martifer Solar NV 1,459,388 18,757,320

Martifer Polska 554,820 662,451

Martifer Constructii 1,367,981 551,671

Eviva Nalbant SRL - 27,511

Sassal Aluminium PTY LTD - 348,352

Martifer Construções SK 853,427 479,546

Martifer Konstrukcje 841,132 1,117,069

EUROCAB FV 1 SL 29,770 29,770

EUROCAB FV 8 SL 11,227 11,227

EUROCAB FV 9 SL 11,227 11,227

EUROCAB FV 10 SL 11,227 11,227

EUROCAB FV 11 SL 11,227 11,227

EUROCAB FV 12 SL 11,227 11,227


FY 2014 FY 2013

EUROCAB FV 17 SL 11,227 11,227

EUROCAB FV 18 SL 11,227 11,227

Martifer Solar USA, INC - 2,275,771

Martifer Silverado Fund, LLC 53,062,359 46,713,806

Martifer Construções SAS 70,000 1,059,757

Martifer Construções Lda (Brasil) 5,452,876 10,905,292

Martifer Aluminios Lda (Brasil) - 342,540

Martifer Construções Angola 3,763,951 2,936,698

Inspira Martifer Solar Lda - 518,356

Martifer Energia RO SRL - 128,400

Martifer Solar Srl 2,411,610 -

Inspira Martifer Solar Lda 544,845 -

MARTIFER SOLAR CHILE OPERACIONES [CH] 59,758 -

MARTIFER SOLAR UK [UK] 12,225,987 -

143,131,859 177,934,242

On 31st December 2014, there were no commitments relating to import documentary credits. On 31st December 2013, , the commitments relating to import documentary credits were as follows:

FY 2013

Martifer Solar, S.A. 5,147,669

Martifer Construções, S.A. 1,931,028

Martifer Solar Sistemas Solares 434,469

7,513,166

Additionally, the most significant operating guarantees in force are as follows:

FY 2014 FY 2013

Martifer Solar SA 4,118,277 3,625,553

Martifer Solar Sistemas Solares 33,795,789 33,533,190

Martifer SGPS 88,898,000 88,898,000

126,812,065 126,056,743

The amount presented, in 2014 and 2013, includes a Euro 26.5 million guarantee in favour of BP Portugal, securing the payments on the acquisition of fuel by Prio Energy, S.A., as well as other guarantees assumed under contracts to build solar parks.

As EPC contracts entered into by Martifer Solar to build solar parks oblige it and / or associate companies to provide certain guarantees, amongst which, concerning the quality of the materials and design, the photovoltaic facilities, the performance ratios and the power output of the installed photovoltaic modules, Martifer SGPS has agreed to endow Martifer Solar and / or its associate companies with the necessary means to fully comply with these contractual obligations. Martifer Solar is presently considered to have the capacity to support its own commitments, without recourse to the Holding Company.

The amount of the Martifer Solar, SA commitments relates to guarantees provided for the development and construction of solar parks.

Pledges or Mortgages

On 31st December 2014 the assets pledged or mortgaged to financial institutions were as follows:

COMPANY GUARANTEE ASSET VALUE DEBT AMOUNT

Martifer Metallic Constructions SGPS Share pledge of Martifer Aluminios SA 45 % (nr. shares 225,000) 225,000 16,250,000 Martifer SGPS Share pledge of Martifer Solar SA 55 % (nr. shares 27,500,000) 27,500,000 6,638,986

Martifer SGPS Mortgage of building in Oliveira de Frades (article 1943) - Components’ plant Assets pledge Martifer Construções 7,666,657 15,499,448

Martifer Construções SA 5 M€ Generic Mortgage of building Vale Tripeiro, lot 10 - I/J/K/L/M/N/O (Benavente) 3,250,068 5,000,000


Martifer SGPS Generic Mortgage (7.5M€) of industrial building Towers’ plant (article 1914). 8,901,266

83,000,000 2nd degree share pledge of Martifer Solar SA 55 % (nr. shares 27,500,000) 1st degree share pledge of Martifer Renewables SGPS 65 % (nr. shares 65,000,000) 65,000,000

Martifer SGPS

1st degree mortgage of industrial building Cutting Unit (Monoblocos). 1st degree mortgage of administrative building 2nd degree mortgage of industrial building Tower’s plant (article 1914).

1,364,366 1,900,000

Martifer Construções SA 5,790,505 3,249,564

Martifer Alumínios SA 3,249,936

Navalria SA 1,590,260

Martifer SGPS Mortgage of building in Oliveira de Frades (article P-2003) Unit OlF MTC 577,639 7,500,000

Martifer Construções SA Motgage of industrial building MT Alumínios (article 2079) 1,249,681 5,000,000

Martifer Construções SA

2nd degree share pledge of 25% of Martifer Renewables SGPS (nr. shares 25,000,000) 25,000,000

2,955,286

Martifer Construções SA - Martifer Alumínios SA 1,000,000 Martifer Alumínios SA - Promoquatro Lda 2,000,000

Martifer Energy Systems SGPS 3,000,000

Martifer SGPS Loan Note Class A n. 5 pledge 4,500,000 2,500,000

Martifer Construções SA Promisory Loan Note Class A n. 6 pledge 4,500,000 2,500,000

Martifer Alumínios SA Mortgage of pilot building Mortgage of Warehouse in Alverca Mortgage of Warehouse in Trofa Mortgage of Land and Warehouse in Albergaria

102,173 2,600,000

Martifer Metallic Constructions SGPS

218,183

14,000,000 84,524

1,415,300

Martifer Renovables ETVE, S.A.U.

1st degree share pledge of 100% shares of the following companies: Eurocab FV 1, S.L., Eurocab FV 2, S.L., Eurocab FV 3, S.L., Eurocab FV 4, S.L., Eurocab FV 5, S.L., Eurocab FV 6, S.L., Eurocab FV 7, S.L., Eurocab FV 8, S.L., Eurocab FV 9, S.L., Eurocab FV 10, S.L., Eurocab FV 11, S.L., Eurocab FV 12, S.L., Eurocab FV 13, S.L., Eurocab FV 14, S.L., Eurocab FV 15, S.L., Eurocab FV 16, S.L., Eurocab FV 17, S.L., Eurocab FV 18, S.L., Eurocab FV 19, S.L.,

425,000 27,770,000

Share pledge of 50 % of Martifer Renovables ETVE shares 65,100

Martifer Construções Metálicas LTDA Security deposit Banco Safra

201,819

65,264

Martifer Construções Metálicas LTDA Security deposit Banco Safra 140,273

Martifer Construções Metálicas LTDA Security deposit Banco Safra 140,041

Martifer Construções Metálicas LTDA Security deposit Banco Itaú 93,147

54,207

Martifer Construções Metálicas LTDA Security deposit Banco Itaú 283,948

Martifer Constructii SRL Motgage of the factory 4,198,332 615,449

Eviva Nalbant Mortgage of farm land and all equipment/construction included in the project/farm 114,638

13,555,730 Share pledge of 100% of Eviva Nalbant shares 781

Pledge over all movable assets (insurance, bank accounts, accounts receivable, intelectual property, etc.) 1,267,594

Martifer Solar SA Mortgage of estate and Promisory pledge of equipment/stock 8,846,980 4,757,913

172,558,753 226,816,305


Regarding fixed assets acquired, attention is drawn to the following contractual commitments:

On 27th November was signed the renegotiation agreement of the agreement for the ‘Attribution of Energy Injection Capacity to the National Electricity Grid for Electrical Energy produced at Wind Parks’ celebrated between Ventinveste S.A. and the Portuguese Authorities (Direcção Geral de Energia e Geologia (DGEG) on 18th September 2007 was signed. This agreement allowed the change in the societary structure and the complete separation between the industrial cluster and the wind cluster. Regarding the industrial commitments, negotiations with DGEG allowed for the exoneration of Martifer Group of all investment and job creation obligations in the industrial cluster. It was also agreed that all the principles upon which the research financing to be determined by the Ministry of Economy and Innovation (through the Innovation Fund) would be definitely formalized.

39. SUBSIDIES AND GOVERNMENT GRANTS On 31st December 2014, investment subsidies and government grants attributed to the Group are as follows:

INVESTMENT AMOUNT

SUBSIDIES GRANTED

DEFERRED INCOME (NOTE 36)

AMOUNT RECORDED IN

INCOME STATEMENT Buildings and other constructions 5,797,465 4,203,885 431,238 76,673

Basic equipment 7,832,920 2,373,768 257,452 86,700

Other Investments subsidies 150,620 142,409 121 950

Closing balance 13,781,005 6,720,062 688,811 164,322

On 31st December 2014, operational subsidies and government grants attributed to the Group recorded in the income statement caption ‘Other gains and losses’ are as follows:

COMPANY DESIGNATION AMOUNT RECORDED IN THE INCOME STATEMENT (NOTE 5) Martifer Construções Training grant 215,567

Martifer Alumínios State and Other Public Entities 686

Navalria Requalification of equipment 2,362

Martifer Inovação e Gestão State and Other Public Entities 3,711

West Sea State and Other Public Entities 144

222,470

40. RELATED PARTIES a) Balances and transactions

Group companies have commercial relations with each other that qualify as related parties transactions. All of these transactions are performed on an arm’s length basis.

Consequently, all these transactions are eliminated, since the consolidated financial statements disclose information regarding the holding company and its subsidiaries as if they were a single entity.

The amounts of the balances and transactions with associate companies and joint-ventures, as well as with other shareholders and shareholder-related companies, are as follows:

COSTS REVENUES ACCOUNTS RECEIVABLE ACCOUNTS PAYABLE

FY 2014 FY 2013 FY 2014 FY 2013 FY 2014 FY 2013 FY 2014 FY 2013

Associate companies 456,641 520,440 1,429,223 8,045,978 5,804,058 63,890,558 458,850 1,739,781

Joint Ventures 1,965 11,237 2,749,988 1,318,881 41,745,438 33,791,721 942,851 1,184,598

Other related parties 3,301,725 39,151 2,233,316 2,633,823 4,697,138 4,084,915 3,728,268 12,837,186

3,760,331 570,828 6,412,527 13,007,414 52,246,635 115,828,125 5,129,969 16,127,785


In addition to the balances and transactions described in the tables above and below, no other balances or transactions exist with the Group’s related parties.

Accounts receivable and payable vis-à-vis related parties will be cash settled and are not covered by any guarantees. On 31st December 2014 and 2013, no impairment losses were recognized in connection with accounts receivable with related parties.

b) Board of Directors and key management staff remuneration

On 31st December 2014 and 2013, the Board of Directors and the key management staff remuneration amounted to Euro 940,825 and Euro 1,045,109, respectively.

This remuneration is determined by the Remuneration Committee, taking into consideration the individual performance and the evolution in this type of labour market.

Remuneration assigned to the Board of Directors and to key management staff, by remuneration grade, may be summarized as follows (amounts in Euro):

FY 2014 FY 2013

Fixed remuneration 819,464 945,401

Variable remuneration 121,361 99,708

940,825 1,045,109

Both the statement on the remuneration policy applicable to the management and supervisory bodies of Martifer SGPS, approved in accordance with Law 28/2009, as well as the total amount of the remuneration attributed to the members of these bodies, individually and aggregated, are presented in the Corporate Governance Report.

Martifer SGPS, S.A.’s Board of Directors is constituted by:

i. Carlos Manuel Marques Martins

ii. Jorge Alberto Marques Martins

iii. Pedro Nuno Cardoso Abreu Moreira

iv. Arnaldo José Nunes da Costa Figueiredo

v. Luís Filipe Cardoso da Silva

vi. Jorge Bento Ribeiro Barbosa Farinha

vii. Luis Valadares Tavares

41. SUBSEQUENT EVENTS Since the reference date of the results, no facts that affect the released financial information occurred.


42. CASH RECEIVABLES / CASH PAYMENTS RELATED TO FINANCIAL ASSETS Cash receivables and cash payments related to financial assets in 2014 and 2013 were as follows:

FY 2014 FY 2013

Cash Receivables:

Sale of Vesto 80,000 -

Sale of Rosa dos Ventos 23,642,134 -

Sale of MTS Spittleborough Solar Limited 38,720 -

Sale of 50% da MT Solar Canada 26,675 -

Sale of MTS Francis Court 128 -

Sale of MTS Hill Farm 1 -

Sale of MTS Rydon Solar, Ltd 42,665 -

Sale of Steadfast Molland Solar 49,473 -

Sale of Gargano Solar Park s.r.l. 15,000 -

Sale of Eviva Mepe - 124,000

Sale of Prio Agriculture BV - 13,780

Sale of Wiatrowa - 7,573,569

Sale of LRCC - 1,989,180

Sale of 51% da MTS3 - 419,604

Sale of MTS4 - 1,960,932

Sale of Sol Cativante VII - 50,000

Receivables:

continued operational units 23,722,134 7,587,349

discontinued operational units 172,661 4,543,716

Cash Payments:

Aquisition of 100% Solariant Portfolio GK One (272,074) -

Aquisition of 28% Eviva Gizalki - (1,000,000)

Aquisition of 2,5% Rosa dos Ventos - (622,859)

Payments:

continued operational units - (1,622,859)

discontinued operational units (272,074) -


43. APPROVAL OF THE FINANCIAL STATEMENTS The accompanying consolidated financial statements were approved by the Board of Directors on 31st March 2015. Furthermore, the attached financial statements for the period ended on 31st December 2014, are still subject to approval on the annual Shareholder’s General Meeting. The Board of Directors believes that these will be approved with no significant changes.

44. EXPLANATION ADDED FOR THE TRANSLATION OF THE FINANCIAL STATEMENTS These financial statements are a translation of the consolidated financial statements originally issued in Portuguese, in accordance with the International Financial Reporting Standards as adopted by the European Union. In the event of discrepancies, the Portuguese version prevails.


The Registered Accountant The Board of Directors

__________________________________ __________________________________

Isabel Cristina Loureiro Silva Carlos Manuel Marques Martins (Chairman)

__________________________________

Jorge Alberto Marques Martins (Vice-Chairman)

__________________________________


__________________________________


__________________________________


__________________________________


__________________________________



13 | INDIVIDUAL FINANCIAL STATEMENTS INDIVIDUAL INCOME STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(TRANSLATION OF INDIVIDUAL FINANCIAL STATEMENTS ORIGINALLY ISSUED IN PORTUGUESE - NOTE 26)


Sales and services rendered 2 1,016,372 449,728 Other operational gains 244,502 35,378 Supplies and external services 3 (381,089) (469,932) Staff costs 4 (589,932) (571,139) Other operational losses (23,760) (13,529) 266,093 (569,494) Depreciation 9 and 10 (8,076) (19,230) Provisions 5 - (596,212) Impairment losses 5 (119,189,472) (65,786,553) Operational earnings (118,931,455) (66,971,489) Interest and similar revenue 6 7,794,453 28,705,303 Interest and similar expenses 6 (10,508,639) (11,237,308) Earnings before taxes (121,645,641) (49,503,494) Corporate income tax 7 32,710 123,499 Net income for the period (121,612,930) (49,379,995) Earnings per share: Basic 8 (1,2427) (0.5046) Diluted 8 (1,2427) (0.5046)



INDIVIDUAL STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013


FY 2014 FY 2013

Net income for the year (121,612,930) (49,379,995)

Fair value of cash flow hedges (derivatives), net of tax - 100,705

Income recognised directly in equity - 100,705 Total comprehensive income for the year (121,612,930) (49,279,290)



INDIVIDUAL STATEMENTS OF FINANCIAL POSITION AT 31 DECEMBER 2014 AND 2013


NOTES 31 DECEMBER 2014 31 DECEMBER 2013

Assets Non-current assets Intangible fixed assets 9 1,189 6,187 Tangible assets 10 4,749 5,577 Financial Investments 11 160,287,373 291,854,870 Group companies 12 22,141,319 19,824,842 Other accounts receivable 13 19,600,000 1,752,346 Deferred tax assets 7 2,065,066 1,752,346 204,099,695 313,443,820 Current assets Trade receivables 13 3,331,425 2,911,231 Advances to trade creditors - - Corporate income tax 7 165,972 - State and other public entities 14 - Group companies 12 5,934,932 19,319,180 Other accounts receivable 13 2,296,336 336,502 Deferred expenses 12,814 115,767 Cash and cash equivalents 15 598,842 1,539,580 12,340,321 24,222,260 Total Assets 216,440,014 337,666,080 Equity Share capital 16 50,000,000 50,000,000 Treasury Stock 16 (2,868,519) (2,868,519) Share premiums 16 186,500,000 186,500,000 Legal reserves 16 7,696,844 7,696,844 Other reserves 16 2,868,519 2,868,519 Retained earnings 16 (63,162,425) (13,782,430) Other changes in equity - - Net profit for the year (121,612,930) (49,379,995) Total Equity 59,421,489 181,034,420 Liabilities Non-current Provisions 19 618,500 618,500 Borrowings 17 104,184,334 119,257,146 Other accounts payable 7 290,125 - 105,092,959 119,875,646 Current Trade payables 18 938,867 1,028,326 Corporate income tax 7 - 78,351 State and other public entities 14 60,551 59,438 Group companies 12 25,150,567 8,731,502 Borrowings 17 23,343,601 25,630,759 Other accounts payable 18 2,431,980 1,227,637 Derivatives - - 51,925,566 36,756,014 Total Liabilities 157,018,525 156,631,660 Total Equity and Liabilities 216,440,014 337,666,080



INDIVIDUAL STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013


SHARE CAPITAL TREASURY

STOCK SHARE

PREMIUMS LEGAL

RESERVES OTHER

RESERVES RETAINED EARNINGS

OTHER CHANGES IN

EQUITY

NET PROFIT FOR THE YEAR TOTAL

Balance at the beginning of 2013 50,000,000 (2,868,519) 186,500,000 7,696,844 2,868,519 (1,264,544) (100,705) (12,517,886) 230,313,709 Appropriation of the profit of 2012 - - - - - (12,517,886) - 12,517,886 - Comprehensive income for the year: - -

Profit for the year - - - - - - - (49,379,995) (49,379,995) Fair value of cash flow hedges (derivatives) - - - - - - 100,705 - 100,705 Fair value of available for sale financial assets - - - - - - - - - Gains on revaluation of properties - - - - - - - - -

Total comprehensive income for the year - - - 100,705 (49,379,995) (49,279,290) Distribution of dividends - - - - - - - - - Acquisition of treasury stock - - - - - - - - - Stock options - - - - - - - - - Sales of available for sale financial assets - - - - - - - - - Share capital increase in subsidiaries - - - - - - - - - Other operations - - - - - - - - - Balance at the end of 2013 50,000,000 (2,868,519) 186,500,000 7,696,844 2,868,519 (13,782,430) - (49,379,995) 181,034,419 Balance at the beginning of 2014 50,000,000 (2,868,519) 186,500,000 7,696,844 2,868,519 (13,782,430) - (49,379,995) 181,034,419 Appropriation of the profit of 2013 - - - - - (49,379,430) - (49,379,995) - Comprehensive income for the year: - -

Profit for the year - - - - - - - (121,612,930) (121,612,930) Fair value of cash flow hedges (derivatives) - - - - - - - Fair value of available for sale financial assets - - - - - - - - - Gains on revaluation of properties - - - - - - - - -

Total comprehensive income for the year - - - (121,612,930) (121,612,930) Distribution of dividends - - - - - - - - - Acquisition of treasury stock - - - - - - - - - Stock options - - - - - - - - - Sales of available for sale financial assets - - - - - - - - - Share capital increase in subsidiaries - - - - - - - - - Other operations - - - - - - - - - Balance at the end of 2014 50,000,000 (2,868,519) 186,500,000 7,696,844 2,868,519 (63,162,425) - (121,612,930) 59,421,489



INDIVIDUAL CASH FLOW STATEMENTS FOR THE PERIODS ENDED DECEMBER 31, 2014 AND 2013



OPERATING ACTIVITIES: Receipts from customers 801,644 3,041 Payments to suppliers (446,761) (142,621) Payments to employees (470,435) (551,601)

Cash generated from operations (115,552) (691,181)

Income tax paid (173,036) 373,788 Other receipts/(payments) relating to operating activities 234,377 (284,407)

Cash generated from other operating activities 61,341 89,381

Net cash generated by operating activities (1) (54,211) (601,800) INVESTING ACTIVITIES: Receipts arising from:

Financial assets 24 23,080,260 92,786,985 Tangible assets 3,549 5,767 Interest and similar income 772,834 1,563,563 Dividends 6 2,942,492

23,856,643 97,298,807 Payments arising from: -

Financial assets 24 (18,643,735) (94,158,008) Tangible assets (7,843) (2,641) Intangible assets (1,750)

(18,651,678) (94,162,399)

Net cash generated by investing activities (2) 5,204,965 3,136,408 FINANCING ACTIVITIES: Receipts arising from: 33,668,947

Borrowings 33,668,947 491,096,608 491,096,608 Payments arising from: (31,345,659)

Borrowings (8,414,780) (481,315,043) Interest and similar costs (11,224,813) Acquisition of treasury stock (39,760,439) -

(6,091,492) (492,539,856)

Net cash generated by financing activities (3) 33,668,947 (1,443,248) Net increase in cash and cash equivalents (4)=(1)+(2)+(3) (940,738) 1,091,360 Effect of foreign exchange currencies - Cash and cash equivalents at the beginning of the year 1,539,580 448,220 Cash and cash equivalents at the end of the year 598,842 1,539,580



14 | NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS INTRODUCTORY NOTE Martifer SGPS, S.A. (“Company”) is a limited company, with its registered office at Zona Industrial, Apartado 17, Oliveira de Frades - Portugal, incorporated on October 29, 2004 and having as its principal activities the management of shareholdings held and the rendering of support services to the Group companies.

From June 2007, and following the successful an Initial Public Offer (IPO), Martifer SGPS, S.A. started trading on the Portuguese Stock Exchange, Euronext Lisbon.

The Company is obliged, in terms of Article 4 of Regulation no. 1606/2002, of the European Parliament and Council, of July, 19, to prepare its consolidation financial statements in conformity with the International Financial Reporting Standards as adopted by the European Union in terms of Article 3 of the said regulation.

The company adopted for the first time, in the 2010 economic period, the International Financial Reporting Standards, as adopted by the European Union.

All the amounts presented in these notes are expressed in Euro, unless otherwise indicated.

1. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PREPARATION

The attached financial statements relate to the individual financial statements of Martifer SGPS, SA and were prepared in accordance with the International Financial Reporting Standards (‘IFRS’), as adopted by the European Union, which came into effect at the beginning of the economic period started 1 January 2014. These are the International Financial Reporting Standards, issued by the International Accounting Standards Board (‘IASB’), and interpretations issued by the International Financial Reporting Interpretations Committee (‘IFRIC’) or by the previous Standing Interpretations Committee (‘SIC’), that have been endorsed by the European Union

These consolidated financial statements have been prepared on a going concern basis from the books and accounting records of the companies included in the consolidation (Note 2) and have been prepared under the historical cost convention, except for the revaluation of certain non-current assets and certain financial instruments, which are stated at fair value.

The accounting policies and mensuration criteria adopted by the Group in the 2014 financial period are consistent with those applied in the financial statements for the previous financial period, presented for comparative purposes, except in respect of the standards and interpretations entering into force on or after 1 January 2014, the adoption of which has not had a significant impact on the Group’s comprehensive income or financial position.


Adoption of new, amended or revised standards and interpretations

The following standards, interpretations, amendments and revisions endorsed by the European Union and with mandatory effects from 1 January 2014, have been adopted for the first time in the period ending in 31 December 2014:

EFFECTIVE DATE

IAS 32 – Financial Instruments: Presentation 01-01-2014

IAS 36 – Impairment of Assets 01-01-2014

IAS 39 – Financial Instruments: Recognition and Measurement 01-01-2014

Changes in IFRS 10, 12 and IAS 27: Investment Entities 01-01-2014

IFRS 10 – Consolidated Financial Statements 01-01-2014


IFRS 12 – Disclosure of Interest in Other Entities 01-01-2014

Changes in IFRS 10, 11 and IAS 27: Transition 01-01-2014


IAS 28 – Investments in Associates and Joint Ventures 01-01-2014

The adoption of the standards, interpretations, amendments and revisions mentioned above had no significant impact on the Group’s 2014 Consolidated Financial Statements.

Standards effective in or after 1 July 2014, not yet endorsed by the European Union

As at this date, the following standards, interpretations, changes and revisions have already been issued but have not yet been endorsed by the European Union:

EFFECTIVE DATE

IAS 1 – Presentation of Financial Statements 01-01-2016

IAS 16 and IAS 38 – Amortization/depreciation calculation methods 01-01-2016

IAS 16 and IAS 41 – Agriculture: Plants that produce consumable biological assets 01-01-2016

IAS 19 – Employee Benefits 01-07-2014


Changes in IFRS 10 and IAS 28: Sale and Contribution of Assets to an Associate or Joint Venture 01-01-2016

Changes in IFRS 10, 12 and IAS 28: Application of Consolidation Exemption 01-01-2016




IFRS 9 – Financial Instruments 01-01-2018

IFRS 14 – Regulatory Deferral Accounts 01-01-2016

IFRS 15 – Revenue from Contracts with Customers 01-01-2017

Standards and changes effective from 1 July 2014

EFFECTIVE DATE


IFRIC 21 – Levies 17-06-2014

It is not estimated significant effects from the adoption of these standards on the Financial Statements of the Group.

1 January 2004 corresponds to the first period of application, by the Group, of the IAS/IFRS, in accordance with IFRS 1 – ’First-time adoption of the International Financial Reporting Standards‘.


The consolidated financial statements are presented in Euros since this is the main currency of the Group’s operations. The financial statements of Group companies expressed in foreign currency were translated to Euros in accordance with the accounting policies described in Note 1 xv).

In the preparation of the consolidated financial statements, in accordance with IAS/IFRS, the Group’s Board of Directors adopted certain assumptions and estimates that can affect the assets and liabilities reported, as well as the profits and losses incurred in the reporting periods (Note 1 xxvi)). All the Board of Directors’ estimates and assumptions were performed taking into consideration the best knowledge available at the financial statements’ approval date, and the informations available on that date.

The accompanying consolidated financial statements were prepared for appreciation and approval by the annual Shareholder’s General Meeting. The Board of Directors has approved them for issuance, on 31 March 2015, and believes that these will be approved without any changes.

MAIN ACCOUNTING POLICIES, JUDGEMENTS AND ESTIMATES

The main accounting policies, judgements and estimates used in the preparation of the Group’s consolidated financial statements for the years presented are as follows:

i) Non-current assets held for sale

Non-current assets are classified as held for sale when their value is recovered through a sales transaction as opposed to through their continued use or when the Company loses control over a significant operational unit. However, such classification requires that the sale transaction be highly probable, that the asset is available for immediate sale, that the Board of Directors is committed to its sale and that it occurs in the short period (normally, but not exclusively, in the space of one year).

Non-current assets classified as held for sale are recorded at the lower of their carrying value or realisable value net of selling expenses, and the depreciation of fixed assets affected to an operational unit held for sale is interrupted during the related period.

ii) Intangible assets

Intangible assets acquired by the Company are stated at their acquisition cost, net of accumulated depreciation and impairment losses, and are only recognized if it is probable that future economic benefits will flow from them to the Company, their value can be reliably measured and if they are controlled by the Company.

Intangible assets comprise mainly software and other industrial property rights, which are depreciated on a straight-line basis over a 3 year period.

iii) Tangible fixed assets

Tangible assets are recorded at their acquisition cost, net of depreciation and accumulated impairment losses.

The depreciation rates used correspond to the following estimated useful lives:

Transportation equipment 4 years Office equipment 3 to 5 years

Maintenance and repair costs that neither increase the useful life nor create significant improvements in tangible fixed assets are recognized as costs in the year in which they are incurred.

iv) Financial assets and liabilities

Financial assets and liabilities are recognized in the balance sheet when the Company is a contractual party to the instrument.

a) Financial instruments:

The Company classifies financial assets in the following categories: ‘Financial assets at fair value through profit or loss’, ‘Borrowings and receivables’, ‘Held-to-maturity investments’ and ‘Available-for-sale financial assets’. The classification depends on the intention inherent to the investment’s acquisition.


The classification is made at the initial recognition date and re-appreciated on a quarterly basis.

- Financial assets at fair value through profit or loss: this category is divided into two sub-categories: ‘financial assets classified as held for trading’ and ‘financial assets designated at fair value through profit or loss’. A financial asset is classified under this category, namely, if it is acquired for the purpose of selling it in the short term. Derivatives are also classified as instruments held for trading, except if designated as an effective hedging instrument. Financial instruments in this category are classified as current if they are held for trading or if it is expected that they are going to be realized within twelve months from the balance sheet date;

- Held-to-maturity investments: this category includes financial assets, non-derivative, with fixed or variable reimbursements with a fixed maturity, and which the Board of Directors intends to hold to maturity

- Available-for-sale financial assets: these include financial assets, non-derivative, that are designated as available-for-sale or those that are not and cannot be classified in the preceding categories. This category is classified as non-current, unless the Board of Directors has the intention to sell the investment within 12 months from the balance sheet date.

Held-to-maturity investments are classified as non-current investments, unless their maturity is less than a year from the balance sheet date. Financial assets designated by the Group at fair value through profit or loss are classified as current.

All purchases and sales of financial instruments are recognized on the trade date, irrespective of the date of the financial settlement.

These financial assets are initially measured at cost, which is the consideration paid for them, and include transaction costs in the case of available-for-sale investments.

After the initial recognition, financial assets valued at fair value through profit or loss and the available-for-sale investments are re-valued at their fair values with reference to their market value at the balance sheet date (measured by their quoted price or through an independent valuation), without regard for any transaction costs that may be incurred until their sale. Financial assets not quoted and in respect of which it is not possible to reliably estimate their fair value, are maintained at acquisition cost less impairment losses.

Gains and losses resulting from a change in the fair value of the ‘available–for-sale financial assets’ are recognized directly in equity, under the caption Fair value reserves until the investment is sold, received or in any way alienated, or until the fair value of the investment falls below the acquisition cost and this corresponds to an imparity, at which moment the accumulated gain or loss is recognized in the income statement.

Gains and losses resulting from changes in the fair value of ‘Financial assets at fair value through profit or loss’ are recognized in the income statement, under the caption ‘Gains/losses in financial assets’.

‘Held-to-maturity investments’ are recorded at their amortized cost using the effective interest rate method, net of capital repayments and interest received.

Investments in subsidiaries and associated companies, as laid down by IAS 27, are valued at acquisition cost net of impairment losses.

b) Trade and other receivables

Trade and other receivable amounts have no implicit interest and are recorded at their nominal value less any impairment losses, recognized in the allowance account ‘Accumulated Impairment losses’, in order to reflect their net realization value.

c) Borrowings

Borrowings are recorded as liabilities at the nominal value received, net of up-front fees and commissions relating to the issuance of these instruments. Financial expenses are calculated based on the effective interest rate and are recorded in the income statement on an accruals basis.

d) Trade and other payables

Accounts payable, which do not bear interest, are recorded at their nominal value which is substantially equivalent to their fair value.

e) Financial liabilities and equity instruments


Financial liabilities and equity instruments are classified based on their contractual substance. The Company classifies as equity instruments those contracts that evidence a residual interest of the Group in a group of assets after deducting a group of liabilities.

f) Derivatives

The Company uses derivative instruments solely to manage its exposure to financial risks by hedging these, and not with a trading objective. The use of derivative instruments has been approved by the Company’s Board of Directors.

The derivative instruments used by the Company, classified as cash-flows hedges, are exclusively related to the hedging of interest rates on loans obtained. The loan amount, interest maturity and loan reimbursement plans inherent to the hedging instrument are in all respects similar to the established conditions for the contracted loans, resulting in perfect hedges.

Interest rate derivatives (Cash-flow hedges) are initially recorded at cost, if any, and subsequently re-valued at their fair value. The portion of the changes in the fair value of derivatives effectively covered are deferred in the statement of comprehensive income in the caption ‘Fair value reserves – Derivatives’, being transferred to the income statement in the same period that the hedge instrument affects the income statement. The gain or loss relating to the ineffective portion is recognized immediately in the income statement, when determined.

Hedge accounting is discontinued when the hedging instrument expires or is sold. When a hedging instrument no longer qualifies for hedge accounting the cumulative gain or loss that was deferred in the statement of comprehensive income in the caption ‘ Fair value reserves – Derivatives’ is transferred to the income statement for the period and the subsequent revaluations of the derivative are also recorded in the income statement.

v) Cash and cash equivalents

Cash and cash equivalents include cash on hand, cash at banks, term deposits and other treasury operations with a maturity under three months, readily convertible to a known amount of cash, and which are subject to insignificant value changes.

vi) Revenue recognition and accrual based accounting

Revenue and expenses are recorded in the period to which they relate, regardless of their date of payment or receipt. The captions of ‘Other accounts receivable’, ‘Deferred expenses’ and ‘Other accounts payable’ include expenses and income relating to the current period, where payment and receipt will occur in future periods, as well as payments and receipts in the current period but which relate to future periods.

Dividends from investments are recognized when the Company’s right to receive them has been established.

Interest revenue is accrued on a time basis, with reference to the principal outstanding and the effective interest rate applicable for the operations.

vii) Balances and transactions expressed in foreign currency

All the assets and liabilities expressed in foreign currencies are translated to the functional currency, using the official exchange rate at the reporting date. The exchange differences, favourable or unfavourable, originating from the differences between the exchange rates at the transaction dates and those used at the collection, payment or at the balance sheet date, are recognized at their gross amount as gains and losses in the income statement.

viii) Income Taxes

The Income tax charge for the period includes current and deferred tax, in accordance with IAS 12. Current tax is calculated based on the taxable profit, in accordance with the local tax laws applicable to the location where the Company has its registered office.

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax base used in the calculation of taxable profit as well as in respect of some fiscal credits attributed to the Company, and it is accounted for using the balance sheet liability method.

Deferred tax assets and liabilities are measured at the tax rates and based on the tax legislation expected to apply in the period in which the differences reverse, and evaluated annually using tax rates (and tax laws) that have been enacted or substantively enacted at each balance sheet date.


Deferred tax assets are generally recognized to extent that there is a reasonable probability that taxable profits will be available against which to offset them. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

The deferred tax amount that results from transactions or events recognized directly in equity is registered directly in equity as well, not affecting the net income for the period.

ix) Interest charges on borrowings

Borrowing costs incurred with borrowings are recorded in the income statement on the accrual basis.

x) Provisions

Provisions are recognized when, and only when, the Group has an existing obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation and a reliable estimate can be made of the amount of the said obligation. These provisions are reviewed at each balance date and are adjusted to reflect the best estimate at that date, taking into consideration all the risks and uncertainties inherent to such estimates. When a provision is determined using the future cash flows estimated to settle the existing obligation, its carrying amount is the present value of those cash flows.

xi) Impairment of assets

The Company reviews the carrying amounts of its assets at each balance sheet date or whenever there is any indication (an event or alteration of circumstances) that these assets may have suffered an impairment loss. When the asset carrying amount is greater than its recoverable amount an impairment loss is recognized and recorded in the caption ‘Provisions and impairment losses’. The recoverable amount is the higher of fair value less selling costs and value in use. The fair value less selling costs is the amount that can be obtained in an arms-length transaction. Value in use is calculated by assessing the estimated future cash flows to be generated by the asset and its residual value, all discounted to their present value. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

The reversal of impairment losses recorded in previous years is recognized when the underlying reasons that caused that entry are no longer applicable and, consequently, the asset is no longer impaired. The reversal of impairment losses is recognized in the income statement as an operational result. However, the reversal of an impairment loss is only recognised up to the amount that would be recorded using the historical cost, or the revalued amount, net of amortization and depreciation, if the impairment loss had not been recorded in previous years.

xii) Employee benefits

Variable remunerations

According to the statutes of some Group companies, the shareholders of those companies approved at the General Meeting or a Remuneration Committee elected by shareholders, establish the fixed and variable remuneration to be distributed to members of governing bodies . Bonus payments are recorded in the period to which they relate.

xiii) Statement of financial positions presentation

Assets to be realized and liabilities to be settled twelve months after the reporting date are classified as non-currents. Likewise, given their nature, ‘Deferred tax’ and ‘Provisions’ are classified as non-current on the statement of financial position.

xiv) Contingent assets and liabilities

Contingent liabilities are not recorded in the financial statements. Instead, they are disclosed in the notes to the financial statements, unless the probability of a cash outflow is remote.

Contingent assets are not recorded in the financial statements but are disclosed in the notes to the financial statements when future economic benefits are probable.


xv) Cash Flow Statement

The cash flow statement is prepared, using the direct method, in accordance with IAS 7. The Company classifies as ‘Cash and cash equivalents’ treasury operations which mature in less than three months, readily convertible to a known amount of cash, and which are subject to insignificant value changes.

The cash flow statement is classified by operating, investing and financing activities. Operating activities include cash receipts from clients, cash payments to suppliers, cash payments to and on behalf of employees and other operating activities’ payments and receipts. Investing activities’ cash flows include, essentially, payments and receipts related with the acquisitions and sales of tangible and intangible assets.

Financing activities’ cash flows include, essentially, payments and receipts of loans and borrowings, financial lease contracts and dividend payments.

xvi) Subsequent events

Events occurring after the balance sheet date that provide additional information about conditions existing at the balance sheet date (adjusting events), are recognized in the financial statements. Events occurring after the balance sheet date that provide information on conditions occurring after the balance sheet date (non-adjusting events), if material, are disclosed in the notes to the financial statements.

xvii) Judgements and estimates

In preparing the financial statements the Board of Directors used its best knowledge and accumulated experience of past and current events in making certain assumptions as to future events.

The most significant accounting estimates reflected in the financial statements for the periods ended at 31 December 2013 and 2012 include:

- Impairment analysis of financial assets; - Recording of provisions and impairment losses; - Fair value of financial instruments; and - Recognition of deferred tax assets in respect of reportable tax losses.

Estimates used are based on the best information available during the preparation of the financial statements. However, events may occur in subsequent periods that, not being foreseeable, were not considered in these estimates. Changes to the estimates that occur after the date of these financial statements, will be recognized in net income, in accordance with IAS 8, using the prospective methodology.

xviii) Financial risk management

Uncertainty, a characteristic of the financial markets, translates into a number of risks to which the activities of the Martifer Group are exposed, namely price risk, currency risk, interest rate risk, liquidity risk and credit risk.

a) Currency risk

Currency risk is the possibility of registering gains or losses resulting from the changes in the foreign exchange rates between different currencies. The Company’s exposure to currency risk results from the existence of foreign based subsidiaries in countries with a currency other than the Euro and of transactions between these subsidiaries and other Group companies and the existence of transactions made by companies operating in currency other than the reporting currency of the Group.

The currency risk management policy of the Company aims to reduce the sensitivity of its income statement to foreign exchange rate variations.

b) Interest rate risk

Interest rate risk reflects the possibility of changes in future interest charges in loans borrowings obtained as a result of changes in market interest rate levels.


The Company relies on external financing to fund its activity and it is exposed to interest rate risk as a significant part of its borrowings are indexed to market interest rates.

In the more significant long term loans the Company relies on fixed interest rate loans or uses interest rate derivatives to hedge exposure to interest rate risk on these loans. The amounts, interest due dates and repayment schedules of the interest rate derivatives are identical to those of the loans they hedge and, as such, these derivatives are considered perfect hedges.

c) Liquidity risk

Liquidity risk reflects the prospect of the Company not satisfying its financial responsibilities with the available financial resources.

The main objective of liquidity risk management policy is to ensure that the group has at its disposal at any time the sufficient financial resources to meet its responsibilities and proceed with strategy outlined, honoring all commitments with third parties, through proper management of the relation cost - maturity of debt.

In addition, and given the nature of medium / long-term investments made the Group sought to restructure the debt so that it may accompany maturity of the associated assets, without compromising the commitment resulting from its short-term operational activity.

In this respect, the Group intends to match the maturity of inflows from operating activity and (dis) investment to outflows from financing activity.

In the end of 2014, the Group sought among the major financial institutions restructure its debt through rescheduling of maturity over time, extending the average maturity of debt to make it more consistent with the degree of permanence of its long term assets and a maturity to enable that cash surpluses are adequate to meet its responsibilities.

The Group expects to complete the negotiation process during the first half of 2015.

The financial management monitors the implementation of risk management policies set by the management to ensure that the economic and financial risks are identified, measured and managed in accordance with such policies.

d) Credit risk

The Company’s credit risk results fundamentally from its relationship with financial institutions, occurring within the scope of its normal activity, associated with the potential default, by the financial institutions, with which it has contracted, in the regular course of business, term deposits, current accounts and derivatives.

To mitigate this risk, the Company diversifies its counterparties, to avoid an excessive concentration of credit risk, and privileges the contracting of less complex financial instruments in detriment of instruments which structure is not fully known.

2. SALES AND SERVICES RENDERED Sales and services rendered for the periods ended 31 December 2014 and 2013 refer, essentially, to management fees charged to Group companies:

FY 2014 FY 2013

Services rendered (Note 22) 1.016.372 449.727

1.016.372 449.727

During 2014 the volume of services provided by the Holding to the other companies of the Group markedly increased due to the fact that a part of the services provided were invoiced to the business areas as well as the increase of the services provided by the administration.


3. SUPPLIES AND EXTERNAL SERVICES The breakdown of supplies and external services for the periods ended 31 December 2013 and 2012 is as follows:

FY 2014 FY 2013

Specialized services 261,030 260,611

Insurance 56,178 75,138

Fees 14,675 96,100

Travel and accommodation 27,745 15,551

Fuel 5,541 9,374

Communication 2,918 4,194

Repairs and maintenance 2,827 2,866

Stationery 221 2,829

Legal and notarial fees 3,861 2,054

Gifts 66 -

Travelling expenses 2,044 1,153

Others 3,983 63

381,089 469,932 The captions “Supplies” and “External Services” have decreased in 2014 which is closely related to the personal liability insurance and fees, registed in “Insurance” and “Fees”.

The caption “Specialized Services” is essentially related with the provision of financial and consulting services.

4. STAFF COSTS O Staff costs for the periods ended 31 December 2014 and 2013 can be analysed as follows:

FY 2014 FY 2013

Remuneration 477,377 432,183

Social charges:

Other 112,555 138,956

589,932 571,139 At 31 December 2014 and 2013, the caption ‘Other’ includes, essentially, costs supported with social security, social responsibility costs, training costs, medical expenses and with labour accident insurance.

The increase in the caption “Staff Costs” in 2014 is due to the fact that the employees allocated to the entity are of a superior hierarchical level.

During 2014 and 2013, the company’s average staff number was as follows:

FY 2014 FY 2013

Directors 5 2

Employees 9 8

14 10

5. PROVISIONS AND IMPAIRMENT LOSSES Provisions and impairment losses for the periods ended 31 December 2014 and 2013 are as follows:

FY 2014 FY 2013

Impairment losses in financial assets (Note 11) 119,189,472 65,786,553

Provisions - 596,212

119,189,472 66,382,765


At the end of 2014, impairment losses on shares, amounting to Euro 119 million, were recorded, resulting from the impairment test performed on those assets. The reinforcement of the impairment losses for the year is mainly due to the deterioration of the equity capital of its subsidiaries, motivated by the losses of operational activities (see Note 11).

Impairment tests for various financial assets of the company have been prepared in accordance with the Discounted Cash Flow evaluation model (DCF). The values of these evaluations are determined by past performance and the expectation of market development, with future cash-flow projections, for a five year period, being drawn up for each of the businesses, based on medium/long term plans approved by the Board of Directors.

These estimates were made considering a discount rate and a growth rate as mentioned on Note 11.

6. FINANCIAL RESULTS The financial results for the periods ended 31 December 2014 and 2015 may be analysed as follows:

FY 2014 FY 2013

Interest and similar revenue

Borrowings and accounts receivable (including bank deposits)

Interest earned 2,014,453 1,564,779

Other revenue and financial gains relating to other financial assets 4,250,000

Dividend income - 2,942,492

Other revenue and financial gains 1,530,000 24,198,032

Total interest and similar revenue 7,794,453 28,705,303

Interest and similar expenses

Borrowings and accounts payable

Interest charges on bank loans 9,513,736 9,925,626

Other expenses and financial losses relating to other financial liabilities

Losses on the sale of the financial assets 560,293 -

Other expenses and financial losses 434,609 1,311,682

Total interest and similar expenses 10,508,638 11,237,308

In period of 2013, the caption ‘Dividend income’ refers to the dividends received from the subsidiary Martifer Solar, SGPS.

During 2014 the caption "other revenue and financial gains” is mainly related to the agreement with BARCLAYS, concerning the settlement of commercial paper of Eur 9.616.688,56, obtaining a debt relief in the amount above mentioned.

Gains on the sale of the financial assets include an amount of Eur 1.530.000 due the sale of the participation in NUTRE SGPS, S.A. to CERES AGRICULTURE HOLDINGS COOPERATIEF U.A.

Losses on the sale of financial assets include an amount of Eur 560.293 in June 2014 regarding the Closing of Prio Energy SGPS, S.A. During 2013 the caption “Dividend Income” is related to the dividends received from its subsidiary Martifer Solar, SGPS, S.A. Gains on the sale of financial assets mainly take into account the gain resulting from the sale of the participation in PRIO ENERGY SGPS, S.A. to a fund represented by management company OXY CAPITAL – SOCIEDADE DE CAPITAL DE RISCO, S.A., participation from 49% to 10%. This operation was approved by the Competition Authority in September 2013.

The caption ‘Other expenses and financial losses’ results, essentially, from the fees incurred in the issuance of commercial paper.


7. INCOME TAX The breakdown of assets giving rise to deferred taxes in the periods ended 31 December 2014 and 2013 may be analysed as follows:

FY 2014 FY 2013

Tax losses carried forward 2,027,137 1,714,417

Fair value of derivatives 37,929 37,929

Deferred tax assets 2,065,065 1,752,346

In accordance with the tax statements presented by companies that recorded deferred tax assets arising from tax losses carried forward, as at 31 December 2014 and 2013, and using exchange rates effective at that time, tax losses carried forward can be summarised as follows:


TAX LOSSES

CARRIED FORWARD

DEFERRED TAX ASSET TIME LIMIT

TAX LOSSES CARRIED

FORWARD


Generated in 2009 393,193 104,196 2015 393,193 104,196 2015

Generated in 2010 - - - - - -

Generated in 2011 6,076,302 1,610,221 2015 6,076,302 1,610,221 2015

Generated in 2014 1,180,075 312,720 2026 - - -

7,649,570 2,027,137 6,469,945 1,714,417

The variation in the deferred tax assets is related with the transfer of these assets from the subsidiaries that are part of the special taxation of groups of companies’ mechanism (“RETGS”), of which, the company is the dominant company, doesn’t originating impact in the Income Statement.

Deferred tax assets arising from tax losses carried forward registed, have in basis projections realized for the respective business areas, which predicts positive taxable profits suporting its recuperability.

On 31st December 2014 there are tax losses, calculated by the companies taxed under the Special Regime for Taxation of Corporate Groups (RETGS) which the Company is the dominant company before and during the application of RETGS, amounting to Euro 197,928,780.80 (Euro 139,236,143.15 on 31st December of 2013) whose deferred tax assets in the amount of Euro 44,533,975.68 (Euro 36,897,577.94 on 31st December of 2013) in a perspective of prudence is not registered. The decomposition can be analyzed as follows:


TAX LOSSES

CARRIED FORWARD


TAX LOSSES CARRIED

FORWARD


Generated in 2008 27,564,225 6,201,951 2014 26,724,890 7,082,098 2014

Generated in 2009 11,817,774 2,658,999 2015 6,256,289 1,657,917 2015

Generated in 2010 19,515,648 4,391,021 2014 19,125,556 5,068,272 2014

Generated in 2011 24,942,511 5,612,065 2015 25,525,476 6,764,251 2015

Generated in 2012 24,924,811 5,608,082 2017 24,749,335 6,558,574 2017

Generated in 2013 37,128,239 8,353,854 2018 36,854,588 9,766,466 2018

Generated in 2014 52,035,571 11,708,004 2026 - - -

197,928,780 44,533,975 139,236,143 36,897,578 The reconciliation of the income tax charge for the period and the current tax charge may be analysed as follows:

FY 2014 FY 2013

Current tax 3,875 11,985

Under / (over) taxation estimates (36,585) (135,484)

Deferred taxes relating to the reversal of timing differences - -

Tax charge for the period (32,710) (123,499)


At 31 December 2014 and 2013, the reconciliation between the normal and effective rate is as follows:

FY 2014 FY 2013

Net income before taxes (121,645,641) (49,503,494)

Nominal income tax on results (nominal rate 23% - 25%) (27,978,497) (12,375,873)

Costs not deductible for tax purposes:

Permanent differences - 304

Impairment losses 27,413,578 16,446,635

Provisions not accepted - 149,053

Restituition of not deductible taxes and over taxation estimates (9,146) (163,888)

Capital gain in sale of financial assets 223,033 (5,947,042)

Accounting capital losses (530) -

Non deductibility of interest 617,644 -

IRC and other taxes which directly or indirectly are applicable to taxable profits [art.º 45, n.º 1, a)] - 130,017

Other 265 (60,891)

Tax benefits 1,536 (8,972)

Tax losses arising in this period in respect of which no deferred tax assets were recognised 178,183 1,830,657

Under / (over) taxation estimates (1) (36,585) (135,484)

Autonomous taxation (2) 3,875 11,985

Municipality tax (3) - -

Effective tax charge on income (1) + (2) + (3) (32,710) (123,499)

Martifer SGPS, S.A. and its subsidiaries are subject to corporate income tax (IRC) at the normal rate of 25. In addition, a municipal surcharge, in this case of 3% is also applied. When the taxable profit subject to corporate income tax is between € 1,500,000 and € 7,500,000 there is an additional state surcharge of 5% and for the amount above of € 7,500,000 applies a taxe rate of 7%.

In terms of article 88 of the Corporate Tax Code, the company is, additionally, subject to autonomous tax over a number of expenses, at the rates laid down in the said Code.

Since January 2011, Martifer SGPS, SA is covered by the “RETGS”, which comprises companies in which it holds, directly or indirectly, at least 75% of its capital and meet simultaneously with the other conditions set by that mechanism. The remaining Martifer Group companies, not covered by the special tax mechanism, are taxed individually, based on their taxable profit and at the applicable tax rates.

In accordance with the legislation in force, tax declarations remain subject to review and adjustment by the tax authorities during a period of four years (five years for social security), except when there are tax losses, fiscal benefits were conceded, or inspections, claims or impugnations are underway, in which cases, depending on the circumstances, the period is extended or suspended. Consequently, the tax declarations for the years 2011 through 2014 may be subject to review.

The payment of 36 instalments regarding the IRC 2013 in the total amount of Eur 512.042, and that on noncurrent liabilities is considered Eur 290.125, is underway based on an agreement with the Tax Authority.

The Board of Directors believes that any adjustments resulting from reviews/inspections by the tax authorities will have no significant impact on the financial statements at 31 December 2014.

8. EARNINGS PER SHARE Martifer SGPS has issued solely ordinary shares so there are no special dividends or voting rights.

Martifer has a single type of potentially dilutive ordinary share: share options. To calculate the diluted earnings per share it is necessary to determine whether these options, regardless of whether they may or not be exercised, have a dilutive effect, which occurs when the option exercise price is lower than the quoted share price.


Considering that Martifer’s quoted share price averaged Euro 0.69 between January 1, 2014 and December 31, 2014, which is lower than the option exercise price (Euro 3.84), the latter can be considered non-dilutive as their exercising would result in a reduction in the ordinary shares in circulation.

Hence, at 31 December 2014 there is no difference between the basic and diluted earnings per share calculation.

Martifer SGPS SA’s share capital is represented by 100,000,000 ordinary shares, totally subscribed and realized, representing a share capital of Euro 50,000,000.

The weighted average number of shares in circulation is reduced in 2,215,910 shares, corresponding to own shares acquired by Martifer SGPS.

At 31December 2014 and 2013, the calculation of earnings per share, basic and diluted, may be demonstrated as follows:

FY 2014 FY 2013

Net profit for the period (I) (121,612,930) (49,379,995)

Weighted average number of shares in circulation (II) 97,784,090 97,784,090

Earnings per share, basic and diluted (I) / (II) (1.2436) (0.5049)


9. INTANGIBLE ASSETS Gross intangible assets for the period ended 31 December 2014 and 2013 may be analysed as follows:

SOFTWARE AND OTHER RIGHTS

OTHER INTANGIBLE

ASSETS

ADVANCES ON ACCOUNT OF INTANGIBLES TOTAL

31 December 2013

Opening balance 1,349 40,515 - 41,864

Additions - 1,750 - 1,750

1,349 42,265 - 43,614

31 December 2014

Opening balance 1,349 42,265 - 43,614

Additions - - - -

1,349 43,265 - 43,614

Accumulated amortization and impairment losses for the period ended 31 December 2014 and 2013 may be analysed as follows:

SOFTWARE AND OTHER RIGHTS

OTHER INTANGIBLE

ASSETS

ADVANCES ON ACCOUNT OF INTANGIBLES TOTAL

31 December 2013

Opening balance 1,349 25,424 - 26,773

Additions - 10,654 - 10,654

1,349 36,078 - 37,427

31 December 2014

Opening balance 1,349 36,078 - 37,427

Additions - 4,998 - 4,998

1,349 41,076 - 42,425

Net amount:

2013 - 6,187 - 6,187

2014 - 1,189 - 1,189

10. TANGIBLE FIXED ASSETS Gross amounts in respect of transportation and office equipment and other tangible fixed assets for the periods ended 31 December 2014 and 2013 may be analysed as follows:

TRANSPORTATION EQUIPMENT OFFICE EQUIPMENT

OTHER TANGIBLE FIXED

ASSETS TOTAL

31 December 2013

Opening balance 55,424 32,954 - 88,378

Additions - 3,564 - 3,564

Sales and write-offs (6,920) - - (6,920)

48,504 36,518 - 85,022

31 December 2014

Opening balance 48,504 36,518 - 85,022

Additions - 2,250 - 2,250

Sales and write-offs (16,763) (2,339) - (19,102)

31,742 36,429 - 68,170


Accumulated depreciation and impairment losses respecting transportation and office equipment and other tangible fixed assets for the periods ended 31 December 2014 and 2013 may be analysed as follows:

TRANSPORTATION EQUIPMENT

OFFICE EQUIPMENT

OTHER TANGIBLE FIXED ASSETS TOTAL

31 December 2013 Opening balance 43,191 28,831 - 72,023

Additions 6,013 2,563 - 8,576

Sales and write-offs (1,153) - - (1,153) 48,051 31,394 - 79,445 31 December 2014

Opening balance 48,051 31,394 - 79,445 Additions 453 2,625 - 3,078

Sales and write-offs (16,763) (2,339) - (19,102)

31,742 31,680 - 63,423

Net amount: 2013 453 5,124 - 5,577 2014 - 4,749 - 4,749

11. FINANCIAL INVESTMENTS At 31 December 2014 and 2013, the breakdown of financial investments in subsidiaries and associated companies was as follows:

% HELD ACQUISITION VALUE

SUPPLEMENTARY CAPITAL IMPAIRMENT LOSS TOTAL

31 December 2013 Nutre SGPS 49% - 58,909,000 (39,309,000) 19,600,000

Martifer Renewables, SGPS 100% 99,765,968 159,462,327 (145,330,835) 113,897,460

Eviva Hidro 1% 47 2,006,564 (2,006,611) - Martifer Metallic Constructions, SGPS 100% 12,261,256 106,280,401 (30,083,614) 88,458,043

Martifer Inovação e Gestão 100% 101,291 6,176,455 (2,148,492) 4,129,254

Martifer GMBH 100% 21,800 97,817 - 119,617 Ventinveste SA 5% 2,500 - - 2,500

Martifer Energy Systems SGPS 100% 6,087,775 32,010,327 - 38,098,102

Prio Energy SGPS 10% 534,201 586,386 - 1,120,586 Martifer Gestiuni si Servicii 100% 1,265 - - 1,265

Martifer Solar SGPS 100% 26,280,763 - - 26,280,763

Martifer Global, SGPS 100% 50,000 227,750 (155,470) 122,280 CEC 25,000 - - 25,000

145,131,865 365,757,027 (219,034,022) 291,854,870 % HELD ACQUISITION

VALUE SUPPLEMENTARY CAPITAL IMPAIRMENT LOSS TOTAL

31 Dezember de 2014

Martifer Renewables, SGPS 100% 99,765,986 145,462,327 (153,291,132) 91,937,163

Eviva Hidro 1% 47 2,006,564 (2,006,611) - Martifer Metallic Constructions, SGPS 100% 12,273,756 123,089,899 (88,537,702) 46,825,953

Martifer Inovação e Gestão 100% 101,291 6,176,455 (2,148,492) 4,129,254

Martifer GMBH 100% 21,800 99,971 (2,821) 118,950 Ventinveste SA 5% 3,000 805,000 (808,000) -

Martifer Energy Systems SGPS 100% 6,087,775 36,165,765 (39,415,740) 2,837,800

Prio Energy SGPS 10% 267,100 293,193 - 560,293 Martifer Gestiuni si Servicii 100% 1,265 - - 1,265

Martifer Solar SGPS 100% 26,280,763 - (12,429,068) 13,851,695

Martifer Global, SGPS 100% 50,000 227,750 (277,750) - Ancora Wind – Energia Eólica, S.A. 1% 1 - - 1

CEC 25,000 - - 25,000

144,877,766 314,326,924 (298,917,316) 160,287,373


On 31st December 2014 the caption decreased due to the sale of NUTRE SGPS, S.A. Eur 19,6 million regarding the sale of the participation in Nutre to CERES AGRICULTURE HOLDINGS COOPERATIEF U.A. as a result of the fact that in the contract of sale mentions that the amount will be received in 2016.

The financial investements are measured as to its recoverable amount whenever there are impairment indicators, being considered for evidence whenever the Equity of subsidiaries (considering the consolidated equity whenever applicable) is lower than their acquisition value. Based on this principle, we identified indicators of impairment in the shareholdings in Martifer Inovação e Gestão, S.A., Martifer Metallic Constructions, SGPS, S.A., Martifer Energy Systems, SGPS, S.A., Martifer Global, SGPS, S.A. The impairment tests performed consider the following assumptions:

To Martifer Global, SGPS, S.A. it was considered, as a valid indicator, the amount of consolidated and individual Equity, respectively, and, as a consequence, impairment losses of Euro 122.280 (Note 5). Concerning Martifer Inovação e Gestao S.A., there is no impairment calculations since they are irrelevant.

This assumption is justified by the fact that these companies render services to the group and the amount of its assets is not significant.

For the shareholdings of Martifer Metallic Constructions, SGPS, S.A., Martifer Energy Systems, SGPS, S.A., it was considered adequated to assess its recoverable amount based on the value in use, using a discounted cash flow method, supported by the business plans drawn by the people in charge of each business unit and approved by the respective Board of Directors and using different discount rates according to the risks inherent to each business.

At 31 december 2014, it was recorded impairment losses in Martifer Metallic Constructions, SGPS, S.A. and Martifer Energy Systems, SGPS, S.A. of Euro 97.869.828. The methods and assumptions used in the identification, or not, of any impaiment losses to these financial assets were as follows:

MARTIFER METALLIC CONSTRUCTIONS E MARTIFER ENERGY SYSTEMS

Equity 59,813,069

Financial asset 49,663,753

Period used Projeções de cash flows para 5 anos

Growth rate (g) 1 2.00%

Average growth rate of EBITDA for five years 13.00%

Discount rate 2 7.37%

1 Growth rate used to extrapolate the cash flows beyond the business plan period 2 Discount rate applied to the projected cash flows

For the cases in which it was apured impairment loss, carrying amount was adjusted to the use value resulting from impairment loss test.

The impacts of a change (of normal scenarios) of the main assumptions used in the recoverable amount calculation would have the impact constant in the table below:

MMC WACC increase in 1,0 p.p.

WACC decrease in 1,0

p.p.


(1)


(1)


(2)


(2) Weighted Average Cost of Capital (WACC) 7.37% 8.37% 6.37% 7.37% 7.37% 7.37% 7.37%

CAGR turnover [2014 ; 2019] (3) 18.26% 18.26% 18.26% 23.26% 13.26% 18.26% 18.26% EBITDA / Turnover average margin [2014 ; 2019] 5.83% 5.83% 5.83% 5.83% 5.83% 6.33% 5.33%

Net Book Value 49,664 49,664 49,664 49,664 49,664 49,664 49,664 Total recoverable amount 49,664 24,144 86,925 107,361 (22,031) 70,583 14,104 Estimated impact - (25,520) 37,262 57,698 (49,664) 20,919 (35,559)

Conclusions of sensitivity analysis Impairment No impairment No impairment Impairment No impairment Impairment

(1) Yearly variation of turnover in 5 p.p. (2014=100 %), maintaining a constant EBITDA/Turnover margin. (2) Variation in EBITDA/Turnover margin, maintaining a constant turnover (3) Estimated Average growth rate estimated based on the company’s 5 year business plan, carried out according to the Board of Directors’ estimates and assumptions


For Martifer Renewables, SGPS, S.A. Group considers as a valid indicator consolidated Equity, and in this way, it was reversed part of impairment registed in previous years, in the amount of Euro 7,960,297 and Martifer Solar SGPS, S.A., in the amount of Euro 12,429,068.

This principle was based on the fact that Martifer Renewables, SGPS, S.A. has a low sales volume considering its assets, and include in its consolidated essentially assets related to wind farms for which, when applicable, have been made measurements to its realisable value and recorded the respective impairments so the consolidated equity already reflects these adjustments.

Supplementary capital doesn’t bear interests neither repayment term.

12. GROUP COMPANIES At 31 December 2014 and 2013, shareholder loans and other financial operation balances (assets) are as follows:

31 DECEMBER 2014 31 DECEMBER 2013 NON-CURRENT CURRENT TOTAL NON-CURRENT CURRENT TOTAL

Nutre, SGPS, SA - 1,071,409 1,071,409 - 1,071,409 1,071,409

Navalria - - - - 9,128 9,128

Prio Energy, SGPS, SA - - - - - -

Martifer Alumínios, S.A. - - - - 85,880 85,880

Martifer Renewables, SGPS, SA - - - - 178 178 Martifer Metallic Constructions, SGPS, SA - 896,894 896,894 - 15,528,281 15,528,281

Martifer Inovação e Gestão, SA - 1,555,275 1,555,275 - 695,674 695,674 Martifer Energy Systems, SGPS, SA - 196,078 196,078 - 74,361 74,361

Martifer Solar, SGPS, SA 1,400,000 127,400 1,527,400 - 1,660,869 1,660,869

Ventinveste, SA 20,726,319 - 20,726,319 19,809,842 - 19,809,842

Martifer GMBH 15,000 1,699 16,999 15,000 1,699 16,699

Martifer Global, SGPS - 2,085,707 2,085,707 - 191,232 191,232

Outras - 470 470 - 469 469

22,141,319 5,934,932 28,076,251 19,824,842 19,319,180 39,144,022

On 27th November 2014 it was signed the renegotiation agreement of the Contract for the allocation of capacity of power injection on the electric system network of public service for electric energy produced through wind centrals concluded on 18th September 2007 between Ventinveste, S.A and Direcção Geral de Energia e Geologia (DGEG). This agreement has allowed the alteration of the corporate structure and the complete and absolute separation between the industrial cluster and the wind cluster. Concerning the industrial compromises the negotiations with DGEG has allowed Martifer the exoneration of all investment obligations and job creation in the industrial cluster. It was also fixed the principles according to which the research funding commitment, to be appointed by the Ministry of Economy and Innovation (through the Innovation Fund) would be definitely settled.

These loans bear interest at a market rate.


The liabilities presented by the company, with Group companies, at 31 December 2014 and 2013, are as follows:


Martifer Construções SA 1,936,164 1,657,732

Martifer Solar SGPS 5,872 16,042

Gebox 1,000 -

Navalria 58,213 -

Martifer Solar Srl - -

Martifer Gestão de Investimentos 33,057 60,579

Martifer Renewables, SGPS 22,789,734 6,665,457

Martifer Aluminios SA (79,616) -

Martifer Renewables, SA 12,925 17,743

Martifer Inovação e Gestão 65,612 70,299

Soc.Madeiras do Vouga 4,500 10,697

Martifer Metallic Constructions, SGPS 4,207 34,073

Martifer Energy Systems SGPS 5,109 195,380

Martifer Global, SGPS 541 -

Nagatel 4,500 3,500

25,150,567 8,731,502

At 31 December 2014, the amount presented in Group companies in liabilities refers mainly to liabilities that the company has with its subsidiaries under the special taxation of groups of companies’ mechanism (“RETGS”).

The main amounts relate to the transfer of tax losses carried forward that have been recognized by the subsidiaries and that, according with the Directors’ expectation, will be recovered within the Group.

13. TRADE RECEIVABLES AND OTHER ACCOUNTS RECEIVABLE At 31 December 2014 and 2013, the trade and other accounts receivable ageing analysis are as follows:

31 DECEMBER 2013 OVERDUE

TOTAL NOT OVERDUE LESS THAN 90 DAYS

90 TO 180 DAYS

180 TO 360 DAYS

MORE THAN 360 DAYS

Clients, current accounts 2,911,231 1,080,446 9,773 140 531,448 1,289,424

Other debtors 336,502 830 - 282,555 - 53,117

3,247,733 1,081,275 9,773 282,695 531,448 1,342,541

31 DECEMBER 2014 OVERDUE

TOTAL NOT OVERDUE

LESS THAN 90 DAYS

90 TO 180 DAYS

180 TO 360 DAYS

MORE THAN 360 DAYS

Clients, current accounts 3,331,425 2,102,042 80,486 182 52,490 1,096,225

Other debtors 21,896,336 20,439,330 485,720 342,389 628,898 -

25,227,761 22,541,372 566,206 342,570 681,387 1,096,225

The company considers that there is no deterioration of credit rating of the counterparty (including subsidiaries and associate companies) meaning that the old balances are not at risk of uncollectibility.

The increase in the caption “Other Debtors” is related to the sale of NUTRE SGPS, S.A. and until December 2016 CERES AGRICULTURE HOLDINGS COOPERATIEF U.A. has to pay the amount of EUR 19.600.000 under the terms of the contract of sale.


14. STATE AND OTHER PUBLIC ENTITIES At 31 December 2014 and 2013, the balances of the captions ‘Corporate income tax’ and ‘State and other public entities’ are as follows:


Assets:

Other taxes 165,972 -

Total 165,972 -

Liabilities:

Withholding taxes (7,276) (12,368)

Value added taxes (38,635) (34,116)

Social Security contributions (14,639) (12,954)

Total (60,551) (59,438)

15. CASH AND CASH EQUIVALENTS The caption ‘Cash and cash equivalents’ may be analysed as follows:


Bank deposits 598,842 1,539,580

Cash and its equivalents include short term bank deposits, with maturities not exceeding 3 months, for which the risk of value alteration is insignificant. At 31 December 2014 and 2013, there were no restrictions associated with the balances of the caption ‘Cash and cash equivalents’.

16. SHARE CAPITAL, RESERVES AND OWN SHARES Share capital

Martifer SGPS’s share capital, fully subscribed and realized at December 31, 2014, amounted to Euro 50,000,000 and is represented by 100,000,000 bearer shares with a par value of 50 cents each. All shares have the same rights, namely one share one vote. During the 2014 and 2013 economic periods there were no changes in the number of shares representing the Company’s share capital.

Treasury Stock

During the 2014 economic period, Martifer SGPS didn’t acquired, through the stock exchange, own shares. The Group held 2,215,910 treasury shares, corresponding to 2.22% of its capital. In accordance with Portuguese commercial legislation, company is required to keep unavailable a reserve corresponding to the own shares amount, in which is included the caption other reserves.

At 31 December 2014, the share capital of Martifer SGPS, S.A. was held in 42.7% by I’M SGPS, S.A., 37.5% by Mota-Engil SGPS, S.A., and 2.22% are treasury shares. The remaining 17.58% represents free-float listed in Euronext Lisbon.

Share premium

Share premiums correspond to excess amounts gained with the issue of or an increase in share capital. In accordance with Portuguese commercial legislation, the amounts included in this caption must comply with the regime applicable to ‘legal reserves’, that is, they are not distributable except in the event of liquidation, but they may be used to offset losses, after all the other reserves have been used up, and/or be incorporated in share capital.


Reserves

Legal reserve

Portuguese commercial legislation establishes that at least 5% of the annual net income must be used to increase the legal reserve until the latter represents at least 20% of the share capital. This reserve is non-distributable, except in the event of liquidation, but may be used to offset losses, after all the other reserves have been used up, and/or be incorporated in share capital.

Other reserves

At 31 December 2014, this caption includes, a reserve, that is not available, amounting to Euro 2.868.519 (2013: Euro 2.868.519), related to the own shares amount.

Under Portuguese legislation, the amount of reserves considered distributable is determined based on the Company’s individual financial statements, prepared in accordance with International Financial Reporting Standards (IFRS). At 31 December 2014, Martifer SGPS, S.A. has no distributable reserves available.

17. BORROWINGS O The borrowings obtained, with reference to the periods ended 31 December 2014 and 2013, are as follows:

UP TO 1 YEAR BETWEEN 1 AND 3 YEARS


OVER THAN 5 YEARS TOTAL

31 December 2013

Amounts due to financial institutions:

Bank loans 2,399,088 3,900,448 67,884,098 41,222,600 115,406,234

Bank overdrafts - - - - -

Authorized Overdrafts 15,231,671 - - - 15,231,671

Other loans obtained:

Commercial paper 8,000,000 3,000,000 3,250,000 - 14,250,000

25,630,579 6,900,448 71,134,098 41,222,600 144,887,905

UP TO 1 YEAR BETWEEN 1 AND

3 YEARS BETWEEN 3 AND

5 YEARS OVER THAN 5

YEARS TOTAL

31 December 2014

Amounts due to financial institutions:

Bank loans 2,844,153 23,884,399 60,991,409 19,308,526 150,221,412

Authorized Overdrafts 15,499,448 - - - 15,499,448

Other loans obtained:

Commercial paper 5,000,000 - - - 5,000,000

23,343,601 23,884,399 60,991,409 19,308,526 170.720.860

The financing of the Company, including authorized overdrafts, have renewal clauses, so that it is Board of Directors’ expectation that, similarly to what has happened in the past and based on current negotiations with creditors, a part of this funding will be renewed at the period of its liquidation. The liquidation of the remaining funding is expected to occur with the sale of non-core assets by the subsidiaries, which will enable them to restore loans and supplementary capital to the company, namely the sale of wind farms in Romania.

Given the nature of medium / long-term investments made, the group sought to restructure the financial debt so that accompany maturity of the associated assets, without compromising the commitment resulting from its short-term operational activity. So in the end of 2014 the group tried among the major financial institutions to restructure its debt through rescheduling of maturity over time,


attempting to extend the average maturity of the debt to make it more consistent with the degree of permanence of its long-term assets and a maturity that allows cash surpluses to fulfill its responsibilities.

This restructuring process is currently approved by the major financial institutions and it provides an interest-only lending during four years with its adjustment regarding the Spread.

At 31 December 2014, the Company’s main renewable commercial paper programmes are as follows:

MAXIMUM CONTRACT AMOUNT (EUROS) CONTRACT DATE CONTRACT TERM AMOUNT UTILIZED

Martifer SGPS 5,000,000 Sep-10 Sep-2015 5,000,000

The average interest rate on borrowings, during 2014, was 6.38% (in 2013 was 6.152%).

18. TRADE PAYABLES AND OTHER ACCOUNTS PAYABLES The information regarding trade and other accounts payable for the periods ended December 31, 2014 and 2013 may be analysed as follows:


Trade payables 938,867 1,028,326

Expense accruals 2,199,461 1,225,467

Other accruals 96,129 -

Other creditors 136,390 2,170

Other creditors 2,431,980 1,227,637

Total 3,370,847 2,255,963

At 31 December 2014 and 2013, this caption includes amounts due to suppliers arising from the Company’s operational activity and from the acquisition of tangible and intangible fixed assets. The Board of Directors believes that the fair value of these balances do not differ significantly from their carrying value and the impact of updating these amounts is not material.

At 31 December 2014 and 2013, the ageing of accounts payable in captions ’Trade payables’ and ‘Other payables’ is as follows:

FY 2013 OVERDUE

TOTAL NOT OVERDUE LESS THAN 90 DAYS

90 TO 180 DAYS

180 TO 360 DAYS

MORE THAN 360 DAYS

Trade payables 1,028,326 277,145 66,457 10,395 7,624 666,705

Other creditors 2,170 - - - - 2,170

1,030,496 277,145 66,457 10,395 7,624 668,875

FY 2014 OVERDUE

TOTAL NOT OVERDUE

LESS THAN 90 DAYS

90 TO 180 DAYS

180 TO 360 DAYS

MORE THAN 360 DAYS

Trade payables 938,867 373,114 9,295 8,979 4,002 543,475

Other creditors 136,390 136,390 - - - -

1,075,257 209,504 9,295 8,979 4,002 543,475

The accounts payables due for more than 180 days refers to amounts to pay to trade creditors in which the Group mantains regular comercial relations.

Besides the financial liabilities disclosed above and in Notes 16 and 17, the Group does not have any other financial liabilities.


19. PROVISIONS The amount of provisions, of Euro 618,500, refers to potencial contractual obligations related with its subsidiaries.

20. COMMITMENTS Operating Guarantees

At 3 December 2014 and 2013, the main operating guarantees issued by the Company are as follows:


Martifer SGPS 88,898,000 88,898,000

The amount indicated, in 2014 and 2013, includes a guarantee in favour of BP Portugal, to guarantee payment of fuel purchases made by Prio Energy, S.A., (Euro 26.5 million), as well as other guarantees regarding solar park construction commitments, to ensure payments resulting from the purchase of fuel by Prio Energy, SA. Prio took expressly and irrevocably a refund of any sums paid by Martifer SGPS to the beneficiary bail, to ensure payments resulting from the purchase of fuel by Prio Energy, SA. Prio took expressly and irrevocably a refund of any sums paid by Martifer SGPS to the beneficiary bail.

Given that the EPC solar park construction contracts require Martifer Solar and/or companies it has shareholdings in to guarantee, amongst others, the quality of the materials and design, photovoltaic installations, the achievement of certain performance and wattage ratios with the photovoltaic modules, Martifer SGPS undertook to provide Martifer Solar and/or companies it has shareholdings in with the means necessary to guarantee full compliance with contractual obligations.

Martifer Solar is presently considered to have the capacity to support its own commitments without recourse to the Holding Company.

Pledges or Mortgages

At 31 December 2014 the collateral given by the Company may be summarized as follows:

COMPANY GUARANTEE ASSET VALUE DEBT AMOUNT

Martifer, SGPS, S.A. Share pledge of Martifer Solar SA 27,500,000 6,638,986

Martifer, SGPS, S.A. Mortgage of building in Oliveira de Frades (Components’ plant) Assets pledge MT Construções 7,666,657 15,499,448

Martifer, SGPS, S.A. | Martifer Construções, S.A. | Martifer Aluminios, S.A. | Navalria, S.A. *

Mortgage of industrial building (Monoblocos) Mortgage of administrative building Mortgage of industrial building (Towers’ plant)

1,900,000 1,364,366

5,790,505

Martifer, SGPS, S.A. Penhor Loan Note Class A n. 5 4,500,000 2,500,000

Martifer, SGPS, S.A. Mortgage of building in Oliveira de Frades (article P-2003) Plant OlF MTC 577,639 7,500,00

Martifer, SGPS, S.A.

Pledge of 2nd level shares Martifer Solar SA Pledge of 1st level shares Martifer Renewables SGPS Pledge of 2nd level shares Martifer Solar SA 55% (No of shares 27.500.000)

73,901,266 83,000,000

121,300,433 109,538,434

‘*Besides the loan of the company, these mortgages also warrant the current account of the Martifer Construções, S.A., Martifer Alumínios, S.A and Navalria, S.A., amounting to Euro 8 million.


21. REMUNERATION PAID TO MANAGEMENT, THE SUPERVISORY BOARD AND THE CHARTERED ACCOUNTANT Remuneration attributed to the key management personnel, by remuneration category, can be summarized as follows:

FY 2014 FY 2013

Fixed remuneration 116,367 122,695

Variable remuneration - -

116,367 122,695

The remuneration attributed to the Supervisory Board in 2014 amounted to Euro 14,400 (2013: Euro 14,400) and the remuneration paid to the Chartered Accountant amounted to Euro 41,520 (2013: Euro 102,400).

The remuneration policy applicable to Martifer’ s management and supervisory bodies, approved in terms of Law 28/2009, as well as the annual remuneration received by the members of the said bodies, in total and individually, are presented in the Corporate Governance Report.

22. RELATED PARTIES Beyond the balances and transactions described in the notes above, the balances or transactions performed with related parties are as follows:

COSTS REVENUES ACCOUNTS RECEIVABLE ACCOUNTS PAYABLE

FY 2014 FY 2013 FY 2014 FY 2013 FY 2014 FY 2013 FY 2014 FY 2013

Shareholders - - - - 74,579 74,579 - - Group and associated companies 628,192 368,225 2,314,495 2,105,721 339,211,336 388,849,384 24,957,222 9,628,412

628,192 368,225 2,314,495 2,105,721 339,285,915 388,923,963 24,957,222 9,628,412

Accounts receivable include supplementary capital amounts registed in financial investments. (see Note 11).

23. CASH RECEIVABLES / CASH PAYMENTS RELATED TO FINANCIAL ASSETS Cash receipts and cash payments related to financial assets in 2014 and 2013 is mainly due to supplementary capital (see Note 11).

24. SUBSEQUENT EVENTS The restructuring process is currently approved by the major financial institutions and there is an interest-only lending during 4 years with its adjustment regarding the spread.

It is expected that the debt restructuring process became effective the next few months, since the process has already been approved by the major financial institutions.


25. APPROVAL OF THE FINANCIAL STATEMENTS These financial statements were approved by the Board of Directors on March 31, 2015. Additionally, the attached financial statements are pending approval at the Shareholders General Meeting. However, the Board of Directors of the Company believes these will be approved without significant alterations.

26. EXPLANATION ADDED FOR TRANSALATION OF THE FINANCIAL STATEMENTS These financial statements are a translation of the individual financial statements originally issued in Portuguese in accordance with the International Financial Reporting Standards as adopted by the European Union. In the event of discrepancies, the Portuguese version prevails.

Oliveira de Frades, March 31, 2015.

The Chief Accountant The Board of Directors

__________________________________ __________________________________ Isabel Cristina Loureiro Silva Carlos Manuel Marques Martins

__________________________________ Jorge Alberto Marques Martins

__________________________________ Arnaldo José Nunes da Costa Figueiredo

__________________________________ Luís Filipe Cardoso da Silva

__________________________________ Luís Valadares Tavares

__________________________________ Jorge Bento Ribeiro Barbosa Farinha

__________________________________ Pedro Nuno Cardoso Abreu Moreira


AUDIT AND FISCAL REPORTS

190 CORPORATE GOVERNANCE REPORT 2014

CONTENTS PART I INFORMATION ON SHAREHOLDER STRUCTURE, ORGANISATION AND CORPORATE GOVERNANCE

A. Shareholder Structure

B. Corporate Boards and Committees

C. Internal Organisation

D. Remuneration

E. Related Party Transactions

PART II CORPORATE GOVERNANCE ASSESSMENT

ANNEXES

Annex I – Professional Qualifications

Annex II – Positions held and duties carried out by the members of the Board of Directors

Annex III - Statement on the remuneration policy for 2014

Note: This translation into English of the Portuguese document was made only for the convenience of non-Portuguese speaking shareholders. For all intents and purposes, the Portuguese version shall prevail.


PART I Information on shareholder structure, organisation and corporate governance

A. SHAREHOLDER STRUCTURE

I. CAPITAL STRUCTURE

1. Capital Structure The share capital of Martifer SGPS, S.A., Public Company (henceforth also referred to as ‘Company’ or Martifer’), amounts to € 50,000,000.00 (fifty million Euros), is fully subscribed and paid up and is represented by 100,000,000 (one hundred million) nominative, scriptural shares, with a par value of € 0.50 (fifty cents) each.

All the shares are ordinary, no different categories of shares existing, nor rights and duties beyond those foreseen in law or in the Company’s Articles of Association (henceforth also ‘Articles of Association’).

All the shares issued by Martifer have been admitted to trading on the Euronext Lisbon regulated market, corresponding to ISIN Code PTMFR0AM0003, trading under the Mnemo Code MAR.

The itemized information on the distribution of share capital by the reference shareholders is present in Section 7, Part I of the Corporate Governance Report.

2. Restrictions on transfer and ownership of shares

There are neither restrictions on the free transfer of the Company’s shares, nor shareholders holding special rights. Consequently, all shares admitted to trading on the stock exchange are freely transmissible in accordance with the normal regulations applicable.

3. Own shares

During 2014, no transactions involving own shares occurred. Consequently, at 31 December 2014 the Company held, as it did in 2013, own shares totalling 2,215,910, representative of 2.22 % of its share capital. These shares correspond to 2.22% of the voting rights of the Company.

4. Impact of changes in shareholder control over the Company on important agreements

Martifer neither celebrated nor is it part of any important agreement that comes into effect, is amended or terminates in the event of a change in shareholder control over the Company due to a takeover bid.

Similarly, the Company has not adopted, via the approval of any statutory provisions or other measures adopted by the Company, rules or regulations designed to prevent the success of takeover bids.

Likewise, there are no statutory provisions limiting the number of votes that can be held or exercised by a single shareholder, individually or in conjunction with other shareholders.

CORPORATE GOVERNANCE REPORT 2014 193

5. Countermeasures in the event of changes in shareholder control

During the 2014 financial period, no countermeasures were adopted in the event of changes in shareholder control.

6. Shareholder Agreements that the Company is Aware of

The shareholders agreement and its subsequent amendments celebrated between the two major shareholders of Martifer, namely I’M - SGPS, S.A. (ex “MTO-SGPS, S.A.”) and Mota-Engil SGPS, SA (hereafter both referred to as “Parties”), regulate some of the main aspects of the Company’s corporate life, namely:

- The Parties agree to exercise their voting rights at the General Meeting in a concerted manner regarding matters for which the law requires a resolution passed by a qualified majority.

- At the request of any of the Parties, these undertake to deliberate over all changes to Martifer’s Articles of Association considered necessary to guarantee, in the widest terms permitted by law, the proper implementation of all the provisions contained in the Shareholder Agreement.

- The shareholders' agreement contains no restrictions on the transfer of securities.

The Shareholder Agreement will remain in force for an indefinite period of time, but any of the intervening Parties can freely terminate it by renouncing it with a minimum notice period of 30 days prior to the effective date of the termination.

II. SHAREHOLDINGS AND BONDS HELD

7. Qualifying Holdings

At 31 December 2014, the main shareholders holders of qualifying holdings continued to be the companies I’M SGPS, S.A. and Mota-Engil SGPS, S.A..

The directors of Martifer, Mr Carlos Manuel Marques Martins and Mr Jorge Alberto Marques Martins, are the majority shareholders of the company I´M SGPS, S.A., holding, respectively, shares representing 48 % and 50 % of its share capital.

Mota-Engil SGPS, S.A.’s voting rights are held, pursuant to Article 20 of the Securities Code (Código de Valores Mobiliários - CVM), by the company Mota-Engil, SGPS, SA.

To both these shareholders combined is imputed, at 31 December 2014, 80.48% of the voting rights of the Company, under the shareholder agreement in force at that date.

The 347,100 shares held by the shareholder Carlos Manuel Marques Martins are held on an indirect basis, under the household of this Member of the Board of Directors of the Company, through the company BLACK AND BLUE INVESTMENTS, SA, of which that Member is a minority shareholder.

The 230,260, 3,000 and 2,000 shares held respectively by the shareholders and directors Jorge Alberto Marques Martins, Arnaldo José Nunes da Costa Figueiredo and Luís Filipe Cardoso da Silva are held on a direct basis.


On 31 December 2014, based on the information made available to the Company, the following entities were holders of qualifying shareholdings, calculated in accordance with no. 1 of Article 20 of the Securities Code, in the share capital of the Company:

SHAREHOLDERS NO. SHARES % OF SHARE CAPITAL % OF VOTING RIGHTS1

I’M – SGPS, SA 42,697,047 42.70% 43.66%

Carlos Manuel Marques Martins* 347,100 0.3471% 0.3471%

Jorge Alberto Marques Martins* 230,260 0.23% 0.24%

Total Imputable to I’M – SGPS, SA 43,274,407 43.28% 44.25%

Mota-Engil – SGPS, SA 37,500,000 37.50% 38.35%

Arnaldo José Nunes da Costa Figueiredo ** 3,000 0.00% 0.00%

Luís Filipe Cardoso da Silva ** 2,000 0.00% 0.00%

Total Imputable to Mota-Engil, SGPS, SA 37,505,000 37.51% 38.35%

1 % Voting rights = No. Shares Held / (No. Total Shares – Own Shares)

* Member of a corporate body of I’M SGPS, SA; ** Member of a corporate body of Mota-Engil SGPS, SA

8. Number of shares and bonds held by members of the management and supervisory boards (In accordance with the dispositions of no. 5 of Article 447 of the Portuguese Commercial Companies Code – “CCC”)

NAME OF THE MEMBER OF THE CORPORATE BODY CORPORATE BODY SHARES HELD AT 31.12.2013

Carlos Manuel Marques Martins* Board of Directors 347,100


Mário Rui Rodrigues Matias Board of Directors 0

Pedro Nuno Cardoso Abreu Moreira Board of Directors 0

Arnaldo Nunes da Costa Figueiredo Board of Directors 3,000


Luis António de Valadares Tavares Board of Directors 0

Jorge Bento Ribeiro Barbosa Farinha Board of Directors 0

Manuel Simões de Carvalho e Silva Supervisory Board 0

Carlos Alberto da Silva e Cunha Supervisory Board 0

João Carlos Ferreira de Carreto Lages Supervisory Board 0

Juvenal Pessoa Miranda Supervisory Board 0

*The 347,100 shares held by the shareholder Carlos Manuel Marques Martins are held on an indirect basis, under the household of this Member of the Board of Directors of the Company, through the company BLACK AND BLUE INVESTMENTS, SA, of which that Member is a minority shareholder.

**The Board Member Pedro Nuno Cardoso Abreu Moreira was co-opted by the Board of Directors of the Company, on January 6, 2015, after the resignation of the board member Mário Rui Rodrigues Matias

Note: There are bonds held by members of the Board and supervisory bodies.


9. Special powers of the Board of Directors, namely in matters concerning resolutions of capital increases

In accordance with the Articles of Association in force, the Board of Directors is authorised, having obtained a positive opinion from the Supervisory Board and in compliance with the remaining provisions of the Company’s Articles of Association, to increase the company’s share capital in cash, once or more than once, up to a maximum limit of one hundred and twenty-five million Euros. The Board of Directors will set the terms and conditions of each capital increase, as well as the form and date/period of the subscription and realisation, as set forth by Article 4, Number 8 of the Company Bylaws, as amended by the resolution approved on the General Meeting Assembly held on May 25,2007.

Up till the present date, no capital increase has yet occurred pursuant to these powers attributed to the Board of Directors.

10. Significant Business Relationships between the Holders of Qualifying Holdings and the Company

At 31 December 2014, the main shareholders holders of qualifying holdings continued to be the companies I’M SGPS, S.A. and Mota-Engil SGPS, S.A..

During the 2014 financial period, no significant business or commercial transactions occurred between the Company and the holders of qualifying holdings in the Company.

Regarding the business or transactions between holders of qualifying holdings in the Company and other Company affiliates fall within the normal activities of these companies and were conducted under normal market conditions.

B. CORPORATE BOARDS AND COMMITTEES

I. GENERAL MEETING

a) a) Composition of the Presiding Board of the General Meeting

11. Details and position of the members of the Presiding Board of the General Meeting and respective terms of office

The Board of the Shareholders’ General Meeting comprises a chairman, a vice chairman and a secretary; the present holders of these positions having been elected at the 11 April 2012 Shareholders’ General Meeting, for a three-year term of office, ending on 31 December 2014.

The members of the Board of the Shareholders’ General Meeting are:

CHAIRMAN José Carreto Lages

VICE CHAIRMAN Francisco Artur dos Prazeres Ferreira da Silva

SECRETARY Ana Maria Tavares Mendes


12. Restrictions on the right to vote

The Company Articles of Association do not establish any percentage or maximum limit regarding the exercising of voting rights by any shareholder. The Company has not issued preference shares without voting rights.

The Shareholders’ General Meeting is, therefore, comprised of shareholders holding Martifer shares, each share carrying one vote.

Shareholders can participate provided they hold shares, at the least, up to five days prior to the date set for the General Meeting, and provided these shares are registered in their name in securities’ accounts.

Up to three days prior to the date set for the General Meeting, a certificate, issued by the relevant entity, shall be presented to the Company as proof of ownership of the shares. In the event of suspension of the General Meeting, the Company does not require the blockage of the shares for the full suspension period; instead, compliance with the ordinary notice period for the first meeting suffices.

Shareholders may be represented at Shareholders’ General Meetings by way of a written proxy mandate addressed to the Chairman of the General Meeting Board. Said mandate may also be sent by electronic mail in accordance with the respective Shareholders’ General Meeting convening notice instructions.

Shareholders may also exercise their vote by correspondence on all matters subject to approval at the General Meeting.

The proposals to be submitted for approval at the General Meeting, as well as the other information necessary for the preparation and participation at said meetings are made available to the shareholders up to 21 days prior to date of the General Meeting, at Martifer’s registered office and in the Company’s Website. Such documentation can be consulted in the Company’s Website at http://www.martifer.pt/. In addition to the Company’s Website, said documentation is also made available to shareholders, for consultation, at the company’s registered office during working hours, as well as in the CMVM’s Information Disclosure System (www.cmvm.pt), as from the date the convening notice is issued. The Company’s Website also discloses the minutes of the General Meetings within five days following said meetings.

Martifer has been applying and implementing measures to promote and encourage shareholder participation in general meetings:

− Postal vote;

− Availability of proxy letters and voting ballots in the Company’s Website;

− Disclosure in the Website, in Portuguese and English languages, of the general meeting convening notice, the different forms of

voting and the procedures to adopt for correspondence voting or for voting through a proxy;

− Disclosure in the Website, in Portuguese and English languages, of the preparatory documentation relating to the various points

on the Agenda;

− The creation of an internet email address, publicised in the convening notice, exclusively dedicated to the general meeting, in

order to facilitate the clarification of any doubts.

13. Details of the maximum percentage of voting rights that may be exercised by a single shareholder or by shareholders that are in any relationship as set out in no. 1 of Article 20

There is no restriction on the number of votes that can be held or exercised by a single shareholder or group of shareholders.


14. Shareholders' resolutions that, imposed by the articles of association, may only be taken with a qualified majority

Article 18 of the Company’s Articles of Association establishes both for a first or second call notice, the rule of a simple majority of the votes issued to pass resolutions, unless otherwise foreseen in the CCC or in the Articles of Association.

The only exception to this rule relates to the provision in the Company’s Articles of Association that sets a qualified majority of two-thirds of the votes counted for the passing of resolutions relating to the unfair dismissal of directors.

II. MANAGEMENT AND SUPERVISION

a) Composition

15. Details of the corporate governance model adopted

Martifer’s corporate governance structure comprises a Board of Directors, a Supervisory Board and a Statutory Auditor, all elected at Shareholders’ General Meetings. For the term of office corresponding to the triennium 2012-2014, the Board of Directors delegated powers governing the day-to-day affairs of the Company to three executive directors, under the terms and within the limits defined in Point 21.1 below.

The members comprising the corporate bodies, the General Meeting Board and the Remuneration Setting Committee were elected for a triennium (2012-2014). The Remuneration Setting Committee, elected at a Shareholders’ General Meeting, is responsible for setting the remuneration of the members of the Company’s corporate bodies as well as for defining the general guidelines to be observed in objectively setting the amounts.

16. Regras estatutárias sobre requisitos procedimentais e materiais aplicáveis à nomeação e substituição dos membros do Conselho de Administração

The members of the Board of Directors are proposed and elected every third year by the Shareholders at a Shareholders’ General Meeting or co-opted by the Board of Directors, subject to ratification at the General Meeting, their re-election being permitted once or more than once.

In accordance with the Articles of Association, a member of the management board may be designated by a minimum number of Shareholders, holding at least 10% of the share capital, who voted against the proposal to elect the directors passed.

The Board of Directors designates the Chairman and Vice Chairman from amongst its members and, to the extent it considers pertinent and appropriate, constitutes an Executive Committee or delegates powers to executive directors.

The substitution of directors is made as set forth in Article 393 of the CCC. In accordance with the Company’s Articles of Association, for the purposes of substituting directors under no. 1 of said Article of the CCC, absence is qualified as permanent when, without acceptable justification to the management body, a director is absent from more than five meetings, consecutive or not.

17. Composition of the Board of Directors

In accordance with the Company’s Articles of Association, Martifer’s Board of Directors is composed of 5 to 9 members, elected at a General Meeting.


The term of office of the members nominated to the Board of Directors is 3 calendar years and there are no restrictions regarding their re-election. The members of the Board of Directors are considered vested as soon as they are elected and remain in office until replaced by newly elected directors.

At 31 December 2014, the Board of Directors was composed of 7 members, elected at the Company’s General Meeting for a three calendar year term of office, ending on 31 December 2014.

At 31 December 2014, the composition of the Board of Directors for the 2012-2014 term of office was as follows:

NAME OF DIRECTOR FIRST NOMINATION END OF CURRENT TERM OF OFFICE

Carlos Manuel Marques Martins (Chairman of the BD) 2004 2014

Jorge Alberto Marques Martins (Vice Chairman) 2004 2014

Mário Rui Rodrigues Matias * 2013 2014

Pedro Nuno Cardoso Abreu Moreira** 2015 2014

Arnaldo José Nunes da Costa Figueiredo 2010 2014

Luis Filipe Cardoso da Silva 2010 2014

Luis António de Castro de Valadares Tavares 2008 2014

Jorge Bento Ribeiro Barbosa Farinha 2008 2014

*The Director Mário Rui Rodrigues Matias resigned from office of the Company’s Board of Directors on 6 January 2015

** Director Pedro Nuno Cardoso Abreu Moreira was co-opted by the Company’s Board of Directors, on 6 January 2015, following the resignation from office of Director Mário Rui Rodrigues Matias.

18. Distinction between executive and non-executive members

NAME OF DIRECTOR STATUS (Executive / Non-executive) INDEPENDENT or NON- INDEPENDENT

Carlos Manuel Marques Martins (Chairman of the BD) Executive -

Jorge Alberto Marques Martins (Vice Chairman) Executive -

Mário Rui Rodrigues Matias* Executive -

Pedro Nuno Cardoso Abreu Moreira** Executive -

Arnaldo José Nunes da Costa Figueiredo Non-executive Non-independent

Luis Filipe Cardoso da Silva Non-executive Non-independent

Luis António de Castro de Valadares Tavares Non-executive Independent

Jorge Bento Ribeiro Barbosa Farinha Non-executive Independent




At 31 December 2014, of the 7 directors on the Board of Directors, 4 are non-executive directors, whose duties are to monitor and appraise the management of the Company by the executive directors, 2 of these 4 non-executive directors being independent directors.

Given the Company’s size and shareholder structure, the number of independent directors is considered adequate. To verify the independence of the members of the Board of Directors, the criteria used is that foreseen in Article 414, no. 5 of the CCC, as well as that established in Point 18.1 of Annex 1 of the 4/2104 Regulation of the CMVM and in Recommendation II. 1.7 Code of Corporate Governance of the CMVM (2013).

19. Professional qualifications of the members of the Board of Directors

The experience and knowledge of the members of the Board of Directors is detailed in their curricula, presented in the document attached to this report as Annex I; these attest, in a rigorous and specific manner, their ability to carry out the duties attributed to them.

20. Customary and meaningful family, professional or business relationships of members of the Board of Directors with shareholders that are assigned qualifying holdings

The Chairman of the Board of Directors, Carlos Manuel Marques Martins and the Vice Chairman, Jorge Alberto Marques Martins, both hold shares and voting rights in one of the major shareholders, I’M - SGPS, S.A.. The abovementioned Board Members are brothers.

Non-executive directors Arnaldo José Nunes da Costa Figueiredo and Luis Filipe Cardoso da Silva both exercise management functions in Mota-Engil Group companies; Mota-Engil SGPS, S.A., Martifer’s other major shareholder, being the holding company of said Group.

The remaining Board Members have no kinship relations between them.


21. Organisational charts or flowcharts concerning the allocation of powers between the various corporate boards, committees and/or departments within the Company, including information on delegating powers, particularly as regards the delegation of the Company's daily management

21.1 ORGANOGRAMAS

21.2 POWER DELEGATION

In accordance with the Articles of Association and under Article 407, no. 3 of the CCC, daily management powers were delegated to three executive directors, positions now held by Messrs Carlos Manuel Marques Martins, Jorge Alberto Marques Martins and Mário Rui Rodrigues Matias (and after the resignation from the latter on Pedro Nuno Cardoso Abreu Moreira). Said executive directors are responsible for the execution of the strategic decisions taken by the Board of Directors, as well as for the daily management of the holding company, whilst company managing financial shareholdings, all within the scope of the powers delegated to them.

The duties delegated to the executive directors include the guidance afforded to the various Business Areas’ performance, as well as the running of the corporate services, the supervision of all the business areas, the promotion of synergies between these, the deployment of the resources necessary, the management of human and financial resources, the definition of the strategies for each business area and the supervision of the attainment of the objectives of each business area, establishing policies transversal to the Company as a whole. It is also the executive directors’ duty to exercise the powers that, at any moment, have been delegated to them by resolution of the Board of Directors, except over matters for which the delegation of powers is forbidden by law or by the Articles of Association.

According to the Board of Directors’ resolutions dated 18 May 2012 and 30 August 2013, the following powers and respective limits were delegated:

GENERAL MEETING

Remuneration Setting Committee

Company Secretary

Ethics and Conduct Committee

Corporate Governance Committee

Risk Committee

Board of Directors STATUTORY AUDITOR (ROC) Supervisory Board

Directors with delegated powers

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− Subscription, acquisition or disposal of shareholdings in any companies;

− Acquisition or disposal of real estate or other assets;

− Investment or commitment to invest, excluding those involving new business areas;

− Acquisition and disposal of own shares within the limits of the resolution of the Company’s General Meeting;

− Investment and disinvestment foreseen in the annual budgets or, if not foreseen, which amount is below five million Euros;

− Contracting of services;

− Hiring of employees, defining levels, categories, remuneration conditions and other benefits or complements;

− Exercising of disciplinary powers and applying sanctions;

− Issuance of binding instructions to wholly controlled Martifer – SGPS, S.A. group companies, as defined in the Portuguese Commercial Companies Code;

− Participation in Joint-Ventures and in Economic Interest Groups and, additionally, celebration of consortium and associative partnership contracts, incorporation or participation in any other forms of temporary or permanent associations of companies and/or private or public entities, except when the said associations have as their objective projects involving turnover in excess of one hundred million Euros;

− Appointment of representatives to the general meetings of the companies in which Martifer – SGPS, S.A., Public Company, has shareholdings and determination of voting intentions at said meetings;

− Representation of the company in court and outside it, actively or passively, including the submission, opposition and appeal regarding any legal or arbitration proceedings, including also the confession , withdrawal, or transactions extinguishing lawsuits or pending issues and the acceptance of arbitration commitments; and

− Appointment of proxies to carry out specific acts or categories of acts, defining the extent of the respective mandates.

Pursuant to Article 407, no. 1 of the Portuguese Commercial Companies Code, the Board of Directors also attributed to Director Mário Rui Rodrigues Matias the special charge of assuming responsibility for the Financial Area, as well as of Company Representative vis-à-vis relations with the Market and with the CMVM.

Further to the resigination from office of the Director Mario Rui Rodrigues Matias, on January 6, 2015, the Company appointed to chief of the financial office, as well as for Company’s Representative for Securities Markets relations and the CMVM Pedro Nuno Cardoso Abreu Moreira

Save for the matters that cannot be delegated by law pursuant to Article 407, nos. 4 and 8 of the CCC, the Board of Directors has expressly stated that certain matters are excluded from the powers delegated to Executive Directors, namely the:

I. definition of the strategy and general policies of the Company; II. definition of Martifer Group corporate structure; and III. taking of decisions that should be considered strategic given their amounts, risk or special characteristics, the exclusion of the

latter deriving from the Board of Directors’ Regulation.

The delegation of powers will cease with the passing of a resolution by the Board of Directors or, automatically, with the end of the term of office of the Board of Directors that delegated said powers.


b) Functioning

22. Availability and place where rules on the functioning of the Board of Directors may be viewed The Board of Directors’ Organisational and Functional Regulation is presented in Martifer’s Website at – www.martifer.pt (Tab: Investors, Section: Corporate Governance/Articles of Association).

23. The number of meetings held and the attendance report for each member of the Board of Directors The Board of Directors meets regularly, once per quarter and, as defined in the Articles of Association and in the respective Regulation, whenever the Chairman or two board members call a meeting; valid resolutions being passed with the attendance or representation of a majority of its members.

Without prejudice to the above and considering the fact that the Chairman of the Board of Directors accumulates the position of Executive Director, the Board of Directors’ Regulation sets forth that the non executive directors may, even so, conduct meetings, when such meeting is called by a non-executive director on his own initiative or at the request of any two of those directors, for the purposes of exercising their powers of monitoring, supervising and appraising the activity of the members to whom the Board of Directors delegated powers.

To that end, and in order to safeguard the exercising, in an independent and informed manner, of the powers of the non-executive directors referred to in the previous paragraph, the following mechanisms and procedures were instituted by the Board of Directors and enshrined in its Regulation:

(i) obligation to deliver to the directors sans delegated powers all the information considered necessary or convenient and that is requested by them of the Company or of any of the directors with delegated powers;

(ii) the satisfaction of the requests of directors with no delegated powers shall be made in an appropriate and timely manner; (iii) possibility of any non-executive director requesting the calling of meetings so that non-executive directors can exercise the

powers attributed to them; and (iv) the specialised committees with monitoring, supervisory and appraisal competencies over the activities of the directors with

delegated powers shall be presided and largely composed of directors with no delegated powers.

During the 2014 financial year, no constraints were detected regarding the management and operations of the Company; it can therefore be considered that the mechanism that assures the coordination of the work of the non-executive directors is safeguarded.

In 2014, the Board of Directors met eight times. The minutes are written up and signed by the Directors and the Company Secretary and recorded in the respective minute book, with copies also being sent to the Chairman of the Supervisory Board.

The attendance level of each Director at said meetings, in the conduct of his respective duties, was as follows:

NAME OF DIRECTOR ATTENDANCE

Carlos Manuel Marques Martins (Chairman of the BD) 100%

Jorge Alberto Marques Martins (Vice Chairman) 90%

Mário Rui Rodrigues Matias 100%

Arnaldo José Nunes da Costa Figueiredo 90%

Luis Filipe Cardoso da Silva * 80%

Luis António de Castro de Valadares Tavares * 90%

Jorge Bento Ribeiro Barbosa Farinha* 80%

* The director justified his absence and was represented by another director at the respective meeting, as per proxy letter issued to the effect.

http://www.martifer.pt/


24. Competent Corporate Boards undertaking the performance appraisal of executive directors

The Company’s Corporate Governance Committee is composed of non-executive members of the Company’s Board of Directors and presided over by an independent director that meets all the independence and compatibility requirements foreseen in Point 18.1 of Annex I of the 4/2013 Regulation of the CMVM and in Recommendation II.1.7 of the CMVM (2013). This Committee has, amongst others, the power to appraise the performance of the executive directors and the overall performance of the Board of Directors, as well as that of the various committees in existence.

The Company’s Remuneration Committee also undertakes, within its scope of powers, the performance appraisal of the members of the Board of Directors, endeavouring towards a convergence of the interests of the directors, the remaining corporate bodies and the managers with the interests of the Company, promoting a long-term perspective.

25. Predefined criteria for assessing executive directors' performance

Directors’ performance is appraised based on the principles listed in the Remuneration Policy Statement. The remuneration policy and the remuneration of the Company’s Corporate Bodies is reviewed annually and submitted for approval at the Company’s Annual Shareholders’ General Meeting.

The remuneration policy is oriented along principles and criteria based on the duties carried out, the degree of complexity and responsibility assumed, the alignment of the interests of the management board members with the interests of the company, the performance appraisal, the economic situation of the company and general market conditions for equivalent situations, as better set out in Point 70 below.

26. The availability of each member of the Board of Directors and details of the positions held at the same time in other companies, within and outside the group, and other relevant activities undertaken by members of this Board throughout the financial year

The indication and description of the positions held and duties carried out by the members of the Board of Directors are better described in the document attached to the present report as Annex II.


c) Committees within the Board of Directors or Supervisory Board and Board Delegates

27. Details of the Committees created within the Board of Directors and the place where the rules on the functioning thereof are available

With the aim of adopting the best corporate governance practices, the Board of Directors nominated 3 (three) specialised committees to boost its operational effectiveness.

The Corporate Governance, Ethics and Conduct and the Risk Committees have their own regulations that lay down the rules relating to their composition, functioning and powers, which can be consulted in the Company’s Website at http://www.martifer.pt/ (Tab: Investors, Section: Corporate Governance/Articles of Association).

28. Details of the Board Delegates

The Board Delegates nominated by the Company’s Board of Directors are:

- Carlos Manuel Marques Martins;

- Jorge Alberto Marques Martins;

- Mário Rui Rodrigues Matias; and

- Pedro Nuno Cardoso Abreu Moreira



The powers delegated to the Board Delegates are set down in Point 21.2 above.

Corporate Governance Committee

COMPANY SECRETARY

Ethics and Conduct Committee Risk Committee

BOARD OF DIRECTORS



29. Description of the powers of each of the committees established and a summary of activities undertaken in exercising said powers

CORPORATE GOVERNANCE COMMITTEE

The Corporate Governance Committee shall, as per the respective Regulation, be composed of 2 to 6 members that are also members of the Supervisory Board and/or Board of Directors, but that do not exercise executive functions. Presently, the Corporate Governance Committee has the following composition:

PRESIDENT Mr. Jorge Bento Farinha (Independent, non-executive Director)

MEMBERS Mr. Luis Valadares Tavares (Independent, non-executive Director) Mr. Luís Cardoso da Silva (non-independent and non-executive Director)

The Corporate Governance Committee has the power to issue suggestions for the improvement of Martifer’s Corporate Governance Model, with the purpose of promoting the compliance with rigorous ethical and deontological principles and the observance of practices which assure compliance with the norms and established corporate governance best practices that sustain a diligent, effective, balanced, ethical conduct and responsibility promoting management, from the perspective of the interests of the shareholders and other stakeholders.

Other than the presence of its members in informal meetings and in work groups, the Corporate Governance Committee met formally twice in 2014. This Committee records the minutes of its meetings.

The Corporate Governance Committee has its own Regulation, which lays down the rules regarding its composition, functioning and powers, which can be consulted in the company’s Website at http://www.martifer.pt/ (Tab: Investors, Section: Corporate Governance/Articles of Association and Regulations).

The Corporate Governance Committee has as its main responsibilities and powers to:

− evaluate and develop the corporate governance model; − reflect on the governance system adopted and verify its effectiveness; − advise and propose to the Company’s relevant corporate bodies the promotion of measures aimed at improving Corporate

Governance; − undertake performance appraisals of the executive directors and of the Board of Directors as a whole, as well as of the other

Committees in existence.

ETHICS AND CONDUCT COMMITTEE

The Ethics and Conduct Committee is composed of three to seven members, nominated by the Board of Directors, which also designates the President. Presently, the Ethics and Conduct Committee has the following composition:


MEMBERS Mr. Rui Correia (Human Resources Manager of the Group); Mr. José Nunes de Oliveira (Martifer’s Legal Department Manager); and Ms. Raquel Ferreira Alves (Internal Audit Department Manager)

The Ethics and Conduct Committee has its own Regulation, which lays down the rules relating to its composition, functioning and powers regarding the elaboration, implementation, monitoring and control of ethics and conduct norms at the Martifer Group. The Ethics and Conduct Committee Regulation can be consulted in the Company’s Website at http://www.martifer.pt/ (Tab: Investors, Section: Corporate Governance/Articles of Association).




The Ethics and Conduct Committee is also responsible for constituting and assuring compliance with the irregularities disclosure policy regarding irregularities occurring inside the Martifer Group, under which employees can communicate, in an adequate, immediate and confidential (if requested) manner whilst safeguarding their professional integrity, information relating to the denunciation of irregularities occurring within Martifer, establishing and publicizing the most adequate and effective communication channels for this purpose.

The Ethics and Conduct Committee coordinates its activity with the company’s Supervisory Board, given the specific powers resting with that board, namely those laid down in the CCC.

The Committee meets periodically or whenever it is called by its President, by convening notice sent by the President to its members with a minimum notice period of seven working days, which will also indicate the respective agenda. The Ethics and Conduct Committee writes up minutes of all its meetings.

RISK COMMITTEE

The Risk Committee is composed of three to six members that integrate the Board of Directors and/or the Supervisory Board, but the majority of the members cannot hold executive functions. The Chairman of the Company’s Board of Directors may not form part of the Risk Committee, but may participate in the meetings, without the right to vote. The Risk Committee has the following composition:


MEMBERS Mr Arnaldo Figueiredo (Non-independent, non-executive Director) Mr. Jorge Alberto Marques Martins (Executive Director)

The Risk Committee has its own Regulation, which lays down the rules relating to its composition, functioning and powers regarding the preparation, implementation and monitoring of a risk management system transversal to the Martifer Group. The Risk Committee Regulation can be consulted in the company’s Website at http://www.martifer.pt/ (Tab: Investors, Section: Corporate Governance/Articles of Association).

The mission of the Risk Committee is to propose and monitor the implementation of the Martifer Group’s risk management policy, which aims to establish a strategy for the prevention and management of risk transversal to the Martifer Group, so as to reduce the exposure to risk and safeguard the Groups’ worth and the creation of value for its stakeholders.

The main responsibilities attributed to the Risk Committee are to:

− issue recommendations or opinions as to: (a) the definition of a risk policy for Martifer Group; (b) the content, format and methodologies to consider in investment analysis reports, be they organic or of company acquisitions; and (c) the creation of risk identification, monitoring, control and management systems of a (i) legal and contractual, (ii) financial, (iii) technical and operational, (iv) commercial, (v) environmental, (vi) political and (vii) other nature, that the Risk Committee considers relevant;

− ensure compliance with the guiding principles of the Martifer Group Risk policy, assisting the Board of Directors with the setting of the strategic objectives of the company in matters of risk assumption;

− prepare opinions on financing operations and investments that require the prior opinion of the Risk Committee;

− submit to the Board of Directors proposals and suggestions of methodologies to identify and cover risks that are appropriate and that should be adopted by Martifer Group as measures aimed at improving the risk management model in place and to facilitate the pursuit of higher corporate objectives;

− inform the Board of Directors of any situation or occurrence of which it has become aware that, in its opinion, configures non-compliance with the Risk identification, monitoring and control rules and practices; and

− monitor and analyse the reflections and guidance produced on risk management by national and international organisms, so as to take advantage of these to improve the Martifer Group Risk Management model.

In addition to the informal meetings and the presence of its members in work groups, the Risk Committee met formally for 4 timesduring 2014.



III. SUPERVISION

a) Composition

30. Details of the Supervisory Board

Martifer’s supervisory model is based on a Supervisory Board and a Statutory Auditor (ROC). The functional separation between the Supervisory Board and the Statutory Auditor basically follows a division of the functions into two: the political supervision being exercised by the Supervisory Board, with the review and certification of the financial statements resting with the Statutory Auditor.

31. Composition of the Supervisory Board with details of the articles of association’s minimum and maximum number of members, duration of the term of office, number of effective members, date of first appointment and date of end of the term of office for each member

The Company’s Supervisory Board is composed of three effective members and an alternate member, elected at the 11 April 2012 General Meeting, for the triennium 2012-2014, re-electable as permitted by law.

The members of the Supervisory Board may only be elected, as a rule, at the Shareholders’ General Meeting and, in the event of a vacancy in the Supervisory Board, such vacancy shall be filled by the alternate member. If another vacancy occurs, such vacancy can only be filled through the election of a new member at a Shareholders’ General Meeting.

The members, Mr Manuel Simões de Carvalho e Silva (President) and Mr Carlos Alberto da Silva e Cunha (Member) were appointed for the first mandate in 2008, ending the current and second mandate in 2014. The members, Mr João Carlos Tavares Ferreira de Carreto Lages (Member) and Mr Juvenal Pessoa Miranda (Alternate) were appointed for the first mandate in 2012, ending their current mandate in 2014.

32. Details of the members of the Supervisory Board

Currently, Martifer’s Supervisory Board has the following composition:

PRESIDENT Mr Manuel Simões de Carvalho e Silva

MEMBERS Mr Carlos Alberto da Silva e Cunha Mr João Carlos Tavares Ferreira de Carreto Lages

ALTERNATE Mr Juvenal Pessoa Miranda

33. Professional qualifications of each member of the Supervisory Board and other important curricular information

The experience and knowledge of the members of the Supervisory Board are better described in their curricula presented in the document attached to this report and attest, in a rigorous and specific manner, their ability to carry out the duties attributed to them.

The Company’s Supervisory Board is composed of independent members, who are subject to the legal and regulatory requirements regarding incompatibility, independence, and specialisation in force, namely those foreseen in Article 414-A of the CCC, as well as the independence criteria referred to in no. 5 of Article 414 of the CCC.

The members comprising the Supervisory Board meet the incompatibility and independence criteria identified above with, at 31 December 2014, none of the members holding Martifer shares, in compliance with Article 447 of the CCC.


b) Functioning

34. Availability and place where the rules on the functioning of the Supervisory Board may be viewed

The Supervisory Board’s powers are described in its respective Regulation, which can be consulted in the company’s Website at http://www.martifer.pt/ (Tab: Investors, Section: Corporate Governance/Articles of Association).

35. The number of meetings held and the attendance report for each member of the Supervisory Board

The Supervisory Board meets, at the minimum, once a quarter, whenever its President decides or whenever any of the members request he call a meeting. The President is responsible for calling and running the meetings. Resolutions are passed when the majority of the members are present and by a simple majority of the votes expressed.

In 2014, the Supervisory Board met 7 times, minutes being prepared of all the meetings.

The attendance level of each Member at said meetings, in the conduct of his respective duties, was as follows:

ATTENDANCE

MR Manuel Simões de Carvalho e Silva 100%

MR Carlos Alberto da Silva e Cunha 100%

MR João Carlos Tavares Ferreira de Carreto Lages 100%

36. The availability of each member of the Supervisory Board, indicating the positions held simultaneously in other companies, inside and outside the Group, and other relevant activities undertaken

All the members of the Supervisory Board demonstrated throughout the 2014 financial year full availability to exercise the functions attributed to them, having regularly attended meetings called as well as being present whenever such presence was considered convenient.

In so far as the activities of the members of the Supervisory Board are concerned, the Member, Mr Carlos Alberto da Silva e Cunha, who is a statutory auditor, the President of the Supervisory Board, Mr Manuel Simões Carvalho e Silva, and the Member, Mr João Carlos Tavares Ferreira de Carreto Lages, the last two holding Honours degrees in Law and practicing Law, a significant part of which Commercial and Company Law, endow this board with important operational knowledge of the Company’s business areas.

The President is adequately supported by the remaining members of the Supervisory Board.

Within the scope of the most relevant activities of the members of the Supervisory Council we refer to the information contained in Point 33, it being understood that the members do not exercise any other position in the Martifer Group.


c) Powers and duties

37. Description of the procedures and criteria applicable to the supervisory body for the purposes of hiring additional services from the external auditor

The Company’s External Auditor has been the company PricewaterhouseCoopers & Associados, SROC, SA (PwC) since the 2010 financial period. The change in External Auditors followed a market consultation that year, which was the object of analysis and assessment by the Supervisory Board.

Services falling outside the statutory and external audit scope requested by Martifer Group companies from the External Auditor and from other entities belonging to the same network, in 2014, do not attain relevant amounts. The Supervisory Board approved the engagement of services outside the scope of the statutory and external audit from the External Auditor, considering that these services, in addition to not exceeding a relative weight in excess of 30% of the total services rendered to the Company, do not impair the External Auditors’ independence.

Additionally, any new service to be rendered by PwC and its companies (national or international) to the Martifer Group is subject to the prior approval of both the management of Martifer and the PwC Partner responsible for the PwC work at the Martifer Group, within the scope of its quality control system.

Martifer’s Supervisory Board, within the scope of its supervisory duties vis-à-vis the company’s activity, has analytical and appraisal responsibilities over the more significant aspects of the relationship with the External Auditor, namely in aspects relating to the independence of its work. During 2013, the Company’s Supervisory Board appraised the activity carried out by the External Auditor, having concluded that it was conducted in a manner consistent with applicable regulations and norms, and that it had acted with technical rigor, transparency and elegance.

The Supervisory Board furthermore reflects, whenever necessary or adequate in function of developments at the Company or the market configuration in general, on the adequacy of the External Auditor vis-à-vis the performance of the duties attributed to it.

38. Other duties of the supervisory body

In addition to the duties described in the previous point, the Supervisory Board has the powers set forth in law and in the Articles of Association, amongst others, those relating to the monitoring of the Company’s operations, the compliance with the applicable legislation, Articles of Association and regulations, as well as to issue opinions on the budget, the balance sheet, the inventories and the annual financial statements.

Hence, in exercising its powers and carrying out its duties, the Supervisory Board proposes to the General Meeting:

− Nominates the Company’s effective and alternate Statutory Auditors;

− Monitors the Statutory Auditors’ independence, namely in respect of the rendering of additional services and the scope of these, and in respect of the statutory audit of the Company’s financial statements;

− Examines, whenever it considers convenient and with regularity, the Company's bookkeeping;

− Monitors the Company’s activity and compliance with the applicable laws, Articles of Association and regulations;

− Represents or arranges to represent itself at the Board of Directors’ meetings whenever it considers such presence convenient;

− Requests the call of the Shareholders’ General Meeting whenever it considers such call convenient;

− Examines situations periodically presented to it by the Board of Directors during its term of office;

− Issues opinions on the budget, the balance sheet, the inventories and the annual accounts.

The Supervisory Board is also responsible for representing the Company vis-à-vis the External Auditor, and for:

− proposing the supplier of these services and the respective remuneration;


− ensuring that conditions adequate for the rendering of these services are made available at the Company;

− annually appraising the services rendered as well as for acting as the Company’s go-between, receiving, simultaneously with the Board of Directors, the respective reports; and

− proposing the destitution of the External Auditor with just cause.

Finally, Martifer’s Supervisory Board is responsible for inspecting and assessing the effectiveness of the risk management systems and monitoring of the activity of internal audit, including the functioning of the systems of internal control and risk management, both the object of regular monitoring and evaluation by the Supervisory Board within the scope of its functional and legal powers, as can be inferred from the minutes of the meetings and the annual report and opinion issued by the Supervisory Board.

IV. STATUTORY AUDITOR

39. Details of the statutory auditor and the partner that represents same

The Statutory Auditors, effective and alternate, were elected for the triennium 2012-2014 at the 10 April 2013 General Meeting, following the resignation on 25 February 2013 of the Statutory Auditor and of the respective alternate, are:

PRESIDENT PRICEWATERHOUSECOOPERS & Associados – Sociedade de Revisores Oficiais de Contas, Lda., Statutary Auditor (effective)

ALTERNATE Mr JOSÉ PEREIRA ALVES, Staturary Auditor (alternate)

The Statutory Auditor can only be elected at a General Meeting. If a vacancy occurs in this body it shall be filled by the alternate member, and, if the latter does not remain in that function, it can only be filled through the election of a new member at a Shareholders’ General Meeting.

The Statutory Auditor may be represented by Hermínio António Paulos Afonso or by António Joaquim Brochado Correia, it being understood that for the 2014 financial year the representative of the Statutory Auditor was Hermínio António Paulos Afonso.

40. Indication of the number of years that the statutory auditor consecutively carries out duties at the company and/or group

As better described in the previous point, the current Statutory Auditor, PricewaterhouseCoopers & Associados, SROC, Lda, was appointed at the General Meeting of 10 April 2013, carrying out its duties since then.

41. Description of other services that the statutory auditor provides to the company

The Statutory Auditor also provides the Company with External Audit services, as described in the follow points that.


V. EXTERNAL AUDITOR

42. Details of the external auditor appointed in accordance with Article 8 and of the partner that represents same in carrying out these duties, and the respective registration number at the CMVM

The Company’s External Auditor is the company PricewaterhouseCoopers & Associados, SROC, SA (PwC) registered under no. 9077 at the Comissão de Mercado de Valores Mobiliários (CMVM), pursuant to a contract initially celebrated for that financial year, and which has been extended to the 2014 financial year.

PwC has, since 2010, been represented by Mr Herminio António Paulos Afonso.

43. Indication of the number of years that the external auditor and respective partner that represents same in carrying out these duties have consecutively carried out duties at the company and/or group

As better described in the previous point, the External Auditor, PricewaterhouseCoopers & Associados, SROC, Lda. and the respective statutory auditor partner representing the prior in the conduct of its duties, have exercised said duties consecutively at the Company since 2010, ie around 5 years.

44. Rotation policy and schedule of the external auditor and the respective partner that represents said auditor in carrying out such duties

In so far as a rotation schedule of the External Auditor is concerned, the Martifer Group has no formal policy regarding External Auditor rotation.

The Supervisory Board carries out an annual assessment of the External Auditor’s work, ensuring compliance with those laid down in Article 54 of Decree-law no. 487/99, of 16 November (amended by Decree-law no. 224/2008, of 20 November), relating to the rotation of the partner responsible for the execution of the work.

Nevertheless, both the External Auditor and its partner, a Statutory Auditor representing it in the carrying out of said duties, are still in a second term of office in the Company, and therefore complying with the rules presently in force.

45. Details of the Board responsible for assessing the external auditor and the regular intervals when said assessment is carried out

The Supervisory Board, in the conduct of its functions, carries out an annual assessment of the External Auditor’s independence. Additionally, the Supervisory Board, throughout each financial period and whenever necessary or adequate in function of developments in the activity of the Company or the general market configuration, reflects on the adequacy of the External Auditor vis-à-vis the conduct of its duties.


46. Details of services, other than auditing, carried out by the External Auditor for the Company and/or companies in a control relationship and an indication of the internal procedures for approving the recruitment of such services and a statement on the reasons for said recruitment

In addition to auditing services, tax advisory services in respect of foreign companies and a due diligence in respect of an affiliate were carried out for the Company and/or the Group’s companies.

The approval and recruitment of the services rendered by the External Auditor, other than the auditing services, was based on the procedures described in Point 37, it being understood that said recruitment occurred due to the lack of internal resources at the relevant company.

The Supervisory Board approved the engagement of services outside the scope of the statutory and external audit from the External Auditor, considering that these services, in addition to not exceeding a relative weight in excess of 30% of the total services rendered to the Company, do not impair the External Auditors’ independence.

Additionally, any new service to be rendered by PwC and its companies (national or international) to the Martifer Group is subject to the prior approval of both the management of Martifer and the PwC Partner responsible for the PwC work at the Martifer Group, within the scope of Martifer’ s quality control system.

47. Details of the annual remuneration paid by the Company and/or legal entities in a control or group relationship to the auditor and other natural or legal persons pertaining to the same network and the percentage breakdown relating to the services in question

During the 2013 financial period, the annual remuneration paid to the auditors and other private or corporate bodies belonging to the same network, borne by the Company and / or legal entities in a control or group relationship, amounted to 444.808 thousand Euros (including expenses and remuneration paid by foreign subsidiaries). The breakdown of that remuneration is as follows:

OTHER 2014 % 2013 % 2012 %

Statutory and external audit services 305,485 99.00% 365,508 90.68% 373,226 85.10%

Other due diligence / verification services 0 0.00% 0 0.00% - -

Tax advisory services 3,065 1.00% 34,506 8.56% 41,899 8.80%

Other services outside the statutory audit scope 0 0.00% 3,074 0.76% 29,050 6.10%

Total 308,550 100.00% 403,088 100.00% 444,175 100.00%

MT SGPS 2014 % 2013 % 2012 %

Statutory and external audit services 41,720 100.00% 41,720 100.00% 32,655 100.00%

Other due diligence / verification services 0.00% 0.00% 0.00%

Tax advisory services 0.00% 0.00% 0.00%

Other services outside the statutory audit scope 0.00% 0.00% 0.00%

Total 41,720 10.35% 41,720 100.00% 32,655 100.00%

GLOBAL TOTAL 350,270 444,808 476,830

** Including individual and consolidated accounts


C. INTERNAL ORGANISATION

I. ARTICLES OF ASSOCIATION

48. Rules governing amendment to the Articles of Association (Article 245-A/1/h))

Martifer’s Articles of Association do not contain special rules regulating amendments to the same; being, thus, applicable the rules laid down in the CCC. Hence:

− Constitutive quorum: the provisions laid down in Article 383 of the CCC apply. At a first meeting, for a Shareholders’ General Meeting to pass resolutions on amendments to the Company’s Articles of Association, the presence, or representation, of shareholders holding at least one third of the company’s share capital is required;

− Deliberative quorum: the provisions laid down in Article 18 of the Articles of Association and Article 386, no. 3 of the CCC apply, namely, corporate resolutions in a Shareholders’ General Meeting as to amendments to the Articles of Association are taken, at a first or second meeting, by two thirds of the votes issued.

II. REPORTING OF IRREGULARITIES

49. Reporting means and policy on the reporting of irregularities in the company

The policy on the reporting of irregularities defines the Ethics and Conduct Committee as the entity responsible for the reception and management of denunciations or reports of irregularities, without prejudice to the Supervisory Board’s own powers in this matter.

In complement to the Supervisory Board, the Committee pursues, applies and follows up on the procedures underlying the denunciation of internal irregularities, affording the appropriate internal treatment to the denunciations and reporting of irregularities and ensuring the rapid resolution of the facts denounced.

In this manner, Martifer Group seeks to create conditions that allow any employee to freely report his concerns on these matters to the Ethics and Conduct Committee and to facilitate the early detection of irregular situations that, being practiced, could damage the Martifer Group, as well as its stakeholders.

Any notification, reporting or denunciation of irregularities occurring internally at the Martifer Group is forwarded directly in a special mail box, which can be accessed solely by the President of the Ethics and Conduct Committee. The anonymity and confidentiality are assured whenever so requested in the report or denunciation. This channel was considered the most appropriate and independent means for the reception of denunciations, without prejudice to those being received through the post.

The direct reporting of irregularities to the Supervisory Board, and all those that are of the exclusive competence of the Supervisory Board, are likewise immediately reported to that body’s President by the President of the Ethics and Conduct Committee.

During 2014, no irregularities were reported to the Martifer Group’s Ethics and Conduct Committee.

The Company’s reporting and denunciation of irregularities policy is disclosed in the Company’s Website at http://www.martifer.pt/, as well as in the Company’s intranet site.

Martifer’s reporting of irregularities policy applies to the entire Martifer Group perimeter.



III. INTERNAL CONTROL AND RISK MANAGEMENT

50. Individuals, boards or committees responsible for the internal audit and / or implementation of the internal control systems

Board of Directors

The risk policy is defined by the Board of Directors based on the analysis and measurement of risk, which also coordinates and develops risk management processes so as to guarantee an integrated risk management streamlined with the strategy and objectives of the Martifer Group.

Risk Committee

Martifer’s Risk Committee, which constitutes a Specialised Committee of the Board of Directors, has as its main attributions the compliance with the guiding principles subjacent to Martifer Group Risk policy, aiding the Board of Directors with the setting of the Company’s strategic objectives in matters pertaining to the assumption of risk, issuing recommendations and opinions, amongst others, on the definition of a Risk Policy for the Martifer Group and as to the creation of risk identification, monitoring, control and management systems of a (i) legal and contractual, (ii) financial, (iii) technical and operational, (iv) commercial, (v) environmental, (vi) political and (vii) other nature.

The composition, functioning, attributions and powers of the Risk Committee are described in Point 29 above, and can be consulted in the Company’s Website at http://www.martifer.pt/ (Tab: Investors, Section: Corporate Governance / Articles of Association).

Supervisory Board

The assessment of the risk management and control systems constitutes a matter which is the object of regular analysis and discussion by Martifer’s Supervisory Board, within the scope of the framework of its legal powers.

External Audit

As part of its duties it evaluates the risks subjacent to the reliability and integrity of the accounting and financial information, reporting on same to the Supervisory Board.

Internal Audit Department

Martifer has in its organisational structure an Internal Audit Department that carries out its activities with the purpose of assessing the effectiveness and efficiency of the internal control system and of the business processes throughout the Martifer Group, in an independent and systematic manner, that verifies whether the assets at Martifer Group level are duly recorded and sufficiently protected against risks and losses, that examines and evaluates the accuracy, the quality and the application of operational, accounting and financial controls, promoting effective control at a reasonable cost and proposing measures that reveal themselves to be necessary to overcome potential weaknesses detected in the internal control systems.

Martifer’s internal audit department reports functionally to Mr. Jorge Bento Ribeiro Barbosa Farinha, a non-executive, independent director sitting on the Company’s Board of Directors.

The scope of the audits to be conducted in order to assess the quality of the control processes that assure compliance with the objectives of the Internal Control System, namely those that guarantee the efficiency of the operations, the reliability of the financial



and operational reports and the respect for the law and regulations, is defined annually. Internal control deficiencies are reported up the hierarchy, the gravest matters being reported directly to the Board of Directors.

The activities of the Internal Audit Department, including the functioning of the internal control and risk management systems, are regularly monitored by the Company’s Supervisory Board whilst supervisory body, within the scope of its functional powers, namely those foreseen in paragraph i) of Article 420 of the CCC. It should be pointed out that the Company’s Supervisory Board meets regularly, fully complying with all its duties and attributions, as can be inferred from the minutes of the meetings and from the Supervisory Board’s annual report and opinion.

Planning and Management Control and Consolidation and Reporting Departments

Martifer also has a Planning and Management Control Department that, supported by the Company’s information systems produces, monitors and analyses management information, raising questions at unit level.

The consolidated financial statements are prepared by Martifer’s Consolidation and Reporting Department, which guarantees consistency in the application of the accounting policies adopted.

It should be highlighted that the risks subjacent to the reliability and integrity of the accounting and financial information are also assessed and reported on as part of the activities of the Statutory and External Auditors.

It should also be pointed out that there is an Ethics and Conduct Code and a system for the reporting of irregularities, which fosters Martifer Group’s control culture.

51. Details, even if through the inclusion of an organisational chart, of hierarchical and/or functional dependency in relation to other boards or committees of the Company

Regarding hierarchical or functional dependency amongst the corporate bodies and departments responsible for the implementation and monitoring of the internal control systems, better described in the preceding point:

− The Risk Committee is a specialised committee constituted by the Board of Directors, formed primarily by non-executive members of the Board of Directors and/or the Supervisory Board, and is chaired by an independent director;

− The Supervisory Board is elected at the Company’s Shareholders’ General Meeting and is an independent body;

− The External Auditor, proposed by the Supervisory Board, is elected at the Company’s Shareholders’ General Meeting and the results of its activity are assessed by the Supervisory Board;

− The Internal Audit Department reports functionally to an independent non-executive director of the Board of Directors – Professor Jorge Bento Farinha;

− The Planning and Management Control and the Consolidation and Reporting Departments both report to the Company’s Board of Directors.

52. Other functional areas responsible for risk control

We consider that this point is already explained in detail in the preceding point and, therefore, refer thereto for the response to this point.


53. Details and description of the major economic, financial and legal risks to which the company is exposed in pursuing its business activity

FINANCIAL RISKS

A) PRICE RISK

The volatility of raw material prices constitutes a risk for the Group, both in metallic construction and solar. The changes in the price of steel and aluminium impact the operational activity of the metallic construction and the changes in solar panel prices can also influence solar activity. Martifer has sought to mitigate this risk the same way in both areas, meaning, by including clauses in its contracts with customers that allow it to pass on raw-material price fluctuations and by negotiating fixed prices for large scale projects with its suppliers.

B) CURRENCY RISK

Currency risk reflects the possibility of registering gains or losses resulting from changes in the foreign exchange rates between different currencies. The Group’s internationalization forces it to be exposed to currency risk from different countries.


The Group’s currency risk management policy aims to reduce the sensitivity of its results to exchange rate variations.


Concerning exchange rates hedging, hedges are sporadic as its costs are considered, sometimes, excessive in the face of the level of the risks involved. However, whenever considered suitable, the Group contracts exchange rates hedging, in order to cover the risk.


C) INTEREST RATE RISK

Interest rate risk reflects the possibility of changes in future interest charges on loans contracted due to the evolution of market interest rate levels.

The cost of financial debt contracted by the Group is indexed to short term base rates, reviewed with a one year or less frequency, plus a negotiated risk premium. Therefore, variations in interest rates may affect the Group’s results.

The Group’s exposure to interest rates is related to financial liabilities contracted with a fixed and/or floating rate. In the first case, the Group faces a risk of fair value variation on these assets or liabilities, since every change in market rates involves an opportunity cost. In the second case, such change has a direct impact in interest value, consequently causing variations in cash.

By the end of 2014, medium and long term debt exposed to a fixed rate was 1.75 % (98.25 % floating rate), which compares with 3 % (fixed rate) and 97 % (floating rate) in 2013.


In the more significant long-term loans, the Group relies, when it considers it appropriate, on fixed interest rate loans or uses interest rate derivatives to hedge exposure to interest rate risk on the said loans. The amounts, interest due dates and repayment schedules of the loans underlying the interest rate derivatives are identical to those of the loans they hedge, and, as such, are considered perfect hedges.

At the end of 2014, the Group sought to renegotiate premium risk rates (spread) with financial institutions in order to allow for a lower exposure to interest rate risks and, consequently, meet the treasury resources stipulated in the restructuring plan.

D) LIQUIDITY RISK

Liquidity risk reflects the Group’s ability to satisfy its financial responsibilities with the available financial resources.

The main goal of the liquidity risk management program is to ensure that the Group has available, at any time, the financial resources to satisfy its responsibilities and pursue the outlined strategies, honouring all its obligations towards third parties, through an adequate management in financing cost/maturity ratio.

Additionally, and considering the medium/long term nature of the investments made, the Group has sought to restructure debt so it can follow the maturity of the associated assets, not jeopardising the obligations arising from its operational short term activity.


By the end of 2014, the Group tried, with the main financial institutions, to restructure its debt by rescheduling maturities over time, extending the average loan maturity to make it more coincident with the permanence of its long term assets and a maturity that allows the cash surpluses to be sufficient to comply with its obligations.

The Group expects to conclude the negotiation process throughout the first half of 2015.

E) CREDIT RISK

The worsening of the worldwide economic conditions and the escalation of the adversities facing local, national and international economies can influence Martifer Group’s clients’ default rate, with possible negative impacts on the Group’s results.

The Group is subject to credit risk in the operational activity – Clients and other receivables.

Aware of this reality, the Group seeks to evaluate all its clients’ credit risk in order to establish credit limits, with the ultimate purpose of ensuring the collection of the amounts due within the periods negotiated.

With this objective in mind, the Group uses credit rating agencies, regularly analyses risk and credit control, and collects from and manages cases in litigation, procedures which are all considered essential to manage the credit conceded and to minimize the risk of credit default.

OPERATIONAL RISKS

A) METALLIC CONSTRUCTION

Operational risks in the Metallic Construction area, which also incorporated the energy equipment area as from 2011, are currently divided into three sources of risk – client, supplier and external risk, which, in turn, is sub-divided into specific problems.


Under client risk one can identify, for example, issues at the contractual level, such as the lack of convergence in the interpretation and application of the contractual dispositions, the distaste or dissatisfaction with the service/product and also the risk of non-payment of the price stipulated following the delivery of the projects.

In terms of demand volatility, it is important to note that the business area depends, in part, on the launch of public tenders for public infrastructures (ex. bridges, airports, stations). Within the scope of public tenders, Martifer is subject to complex regulatory demands, specific to each country, namely in matters concerning the presentation of the proposals and the preparation of complex administrative documentation files to satisfy the project specifications defined by the contracting entity, that may represent additional costs for the Martifer Group. It is to be highlighted that, despite the said dependence on public tenders, Martifer has been able to win business not subject to public tender, thereby reducing its exposure to this risk.

Under supplier risk, Martifer Construções, as a specialist in engineering projects, relies very often on subcontractors, who may fail in the execution of their work and jeopardize, through a domino-effect, the meeting of project delivery deadlines. In other words, there is also a risk of delays in delivering the projects, with the inherent contractual penalties.

Finally, in terms of external risks, and considering that the area of Metallic Construction is strongly correlated with economic growth and with gross fixed capital formation, it is therefore sensitive to the current economic environment. Accordingly, the worsening of the sovereign debt crisis in Europe also raises other problems, namely the austerity plans that imply severe transversal cuts in public investment and the significant decrease in liquidity throughout the financial system, which often causes highly attractive projects to be shelved due to lack of capital.

In order to mitigate these risks, the metallic construction area diversified its projects throughout different geographies, namely by entering markets that regiter stronger growth in the construction sector, such as Angola, Brazil and Algeria, or even visiting countries such as Saudi Arabia, which will allow to compensate both the effects of economic recession in Portugal and the economic slowdown in Europe.

B) SOLAR

In the turn-key park installation activity, end-client delays in obtaining the necessary licences or unanticipated delays in the delivery of equipment may disrupt the calendars initially foreseen for the completion of the respective projects. Despite the fact that this type of delay usually carries no contractual penalties, in some cases this situation can constitute a risk for the Group given the planning difficulties it can present.

Additionally, the financial market crisis has been hampering the promoters’ access to funding, resulting in the postponement of some projects. The diversification of the business throughout the value chain and the diversified client portfolio, inside and outside the Group, in the process of being adopted should reduce the possible impact of this situation.

The solar photovoltaic modules produced by the company are traded with a 5-year warranty and a 25-year performance warranty, as a result of which this sector is exposed to the risk of warranty claims years after the sale of the equipment. Accordingly, any quality or performance problems that may occur can result in high costs. The performance of solar systems is also guaranteed in respect of the modules acquired for the construction of solar parks; however, the group’s responsibility , in this case, is diminished since there is a right of recourse vis-à-vis the suppliers.

On the other hand, most of the equipment used in the production of solar photovoltaic modules is customized for specific raw materials, with a resulting dependency risk on key raw material suppliers. The Group has sought to mitigate this risk by establishing long-term contracts for some raw-materials, carrying out a judicious selection of suppliers and working towards garnering a diversification of suppliers for each of the relevant raw-materials of the production process.

C) RE DEVELOPER

The productivity indices associated with the renewable energy business depends on the volume of energy produced by the wind farms and its profitability, factors that depend on the location of the wind farms and on the seasons of the year (seasonality). Given that the wind turbines are only driven when the wind velocity is within specific parameters, which parameters depend on the


supplier and the type of turbine, if the said velocity is not within the parameters or if it is at the lower end of the limits, the energy production of the wind farms will suffer a reduction.


This risk is also mitigated through the geographical distribution of the wind farms, allowing for the set-off of the wind velocity variations at each farm and ensuring the relative stability of the volume of total energy produced.

LICENCING:

Wind farms and solar parks are subject to rigorous regulations in matters such as the development, construction, licensing and operation of power plants. If the relevant authorities in the jurisdictions in which the Group operates stop or reduce their support for the development of wind farms and solar parks, such actions may have a significant impact on the activity.

LEGAL RISKS Martifer is subject to the national and local laws and regulations in the various geographies and markets where it operates, which aim to assure, amongst others, worker rights, protection of the environment and spatial planning and the maintenance of an open and competitive market. Thus, the legal and regulatory changes that affect the conditions conducive to the development of the Groups’ activities and, consequently, prejudice or impede the attainment of the strategic objectives require the Company to adapt to the new regulatory realities.

The management of legal risk is carried out by the legal department of the holding company and of each of the Group’s Business Areas and is monitored within the scope of reviews performed by internal legal and fiscal service providers dedicated to the respective activities, which operate in the dependence of the Board of Directors and management, conducting their work in articulation with the other fiscal and financial departments, so as to assure the protection of the Company’s interests and, ultimately, the stakeholders’, in strict compliance with their legal duties.


Legal and fiscal advisory services are also assured, nationally and internationally, by external professionals, selected amongst reputable firms and in accordance with the highest standards of competence, ethics and experience.

54. Description of the procedure for identification, assessment, monitoring, control and risk management

RISK MANAGEMENT SYSTEMS

Risk Management is one of the components of Martifer’s culture, being present in all management processes and representing a responsibility of all managers and employees at the various levels of organisation.

Risk policy is defined by the Board of Directors based on the analysis and measurement of risk, which also coordinates and develops risk management processes in order to guarantee an integrated risk management streamlined with the strategy and objectives of the Group.

In parallel, Martifer continues to implement internal control and risk management procedures with the objective of reinforcing the integrated risk management, establishing a strategy for the prevention and management of risk transversal to the Group, so as to reduce


exposure to risk and safeguard the value of the Group. The procedure is characterised, summarily, by the identification of the risks in each business area, accompanied, in parallel, by the formalisation of an assessment, management, prevention and mitigation of risk process, to be elaborated by the Company’s Board of Directors, supported by the Risk Committee.

Risk Management comprises the processes of identifying current and potential risks, analysing their possible impact on the strategic objectives of the organisation and estimating the probability of their occurrence, in order to determine the best way to manage exposure to these.

All these risks are duly identified, assessed and monitored, and it is the responsibility of the different structures in the company to manage and/or mitigate them.

Risk Management at Martifer Group starts at the operational company level, with the identification, measurement and analysis of the different risks to which it is subject, with special emphasis on risks of an operational and market nature, seeking to estimate the probability of the occurrence of the various factors that determine such risks and their potential impact on the business of the Company or activity in question.

Without prejudice to the definition of the risk strategy by Martifer’s Board of Directors, the persons responsible for the operations are also responsible for the implementation of risk control mechanisms, which are scrutinised by the competent Financial, Tax and Legal Departments.

The identification of the risks is a responsibility transversal to the different levels of the organisation, specific templates having been created to identify and categorise the main risks in each Business Area, as well as the new risks that may arise as the respective activities develop, including:

(i) economic and business risks, (ii) financial risks, and (iii) legal risks.

The Risk Committee is also responsible for the analysis and issuance of opinions, which are submitted to the Board of Directors on, amongst others, new Group investments above certain amounts and new geographies for Martifer Group’s activities.

The efficiency of these mechanisms is periodically assessed by the Holding Company, through the Internal Audit Department, during the execution of the audit plan covering the financial aspects, information systems, processes and conformity with the procedures approved. This audit plan is prepared and developed annually, based on a prior assessment of the business risks, the mechanisms and assessments of the internal audit department being monitored and verified by the Company’s Supervisory Board within the scope of its functional powers.

The function of Planning and Management Control also promotes and supports the integration of risk management in the companies’ planning and management control processes.

It is an objective of the Holding Company to obtain an integrated vision of the risks the Group faces in each of its different activities or business areas and to guarantee the consistency of the resulting risk profile with that of the Group’s global strategy and, in particular, to determine what it considers an acceptable risk level, given the structure of its capital.

To this effect, operations with the highest relevance and impact on Martifer Group, as well as those of a more financial nature are directly assessed and validated by the Financial, Tax and Legal Departments at the Holding Company level, in line with the policies and risk strategies set by management.


55. Core details on the internal control and risk management systems implemented in the company regarding the procedure for reporting financial information (Article 245-A/1/m)

Concerning the release of financial information, the Martifer Group promotes strict cooperation amongst all the bodies, departments and remaining participants in the process, so that the financial information is prepared in accordance with the legal requirements in force, complying with the best practices of transparency, relevance and reliability, is subject to an effective verification, whether by internal analysis, by the supervisory bodies and the External Auditor, is approved by the responsible corporate body and its disclosure complies with all the legal requirements and recommendations, namely those of the CMVM.

In the financial information disclosure process we highlight:

− The use of accounting policies that are explained in the Notes to the Financial Statements;

− The financial information is analysed by the persons responsible for the management of the respective business areas, seeking to exercise permanent monitoring and the respective budgetary control;

− The accounting records and the preparation of the financial statements are prepared by the Financial, Accounting and Planning and Management Control Departments, that guarantee the control over the recording of the transactions of the business processes and over the balances of the asset, liability and equity accounts;

− The consolidated financial statements are prepared periodically, on a quarterly basis, by the Consolidation and Reporting Department and validated by the Planning and Management Control Department;

− The Management Report is prepared by the competent internal departments, with the contribution and additional review of the various business and support areas. The Statutory Auditor also reviews the content of this report (the annual and half-yearly versions) and its conformity with the supporting financial information;

− The Group’s financial statements are prepared under the supervision of the executive directors of the Group. The documents comprising the half-yearly and annual reports are sent for the review and approval of the Board of Directors. Subsequent to their approval, these documents are sent to the External Auditor, who issues his legal certification of the accounts and the External Audit’s Report;

− The Statutory Auditor carries out both an annual audit and a limited review at the half-year of the individual and consolidated accounts, carried out in accordance with the Auditing Standards in force.

IV. INVESTOR ASSISTANCE

56. Department responsible for investor assistance, composition, functions, the information made available by said department and contact details

Martifer privileges a permanent contact with the capital market, seeking to guarantee a permanent access to information on the Group in a continued and consistent manner, be it through the disclosure of periodic financial information or through contacts with institutional investors, namely by participating in road-shows and conferences, or through permanent contact with financial analysts.

Shareholders and investors can generally obtain all the relevant Group information from Martifer’s Website at http://www.martifer.pt/, in particular from the Investor Relations page, where they can find, in addition to the mandatory information of a corporate and financial nature, information on the evolution of its quoted share price. Shareholders and Investors can also contact the Investor Assistance Office, which assures a permanent contact with the market.

During the 2014 financial year, Martifer participated in various events amongst which roadshows, seminars, one-on-one meetings and conferences aimed at institutional investors.

The Investor Relations and Communications Office seeks to assure the market, investors, analysts and journalists the disclosure of information on the Martifer Group in a continued, opportune and balanced manner.

The main functions of the Investor Assistance Office are, amongst others:


− Assuring, vis-à-vis the authorities and the market, compliance with the legal and regulatory reporting obligations applicable to Martifer SGPS, SA. The disclosure of information falling within the scope of “ announcement of privileged information”, the announcement of quarterly information on the activities and results of the Group and the preparation of the annual, half-yearly and quarterly reports and financial statements, are to be highlighted;

− Satisfy investor (institutional and private), financial analyst and other agents’ requests for information;

− Supporting and advising Martifer’s Executive Committee in aspects relating to the company’s public status, an example being the monitoring of the evolution of Martifer’s quoted share price, in its multiple aspects, supporting the Executive Committee with the direct contacts it regularly maintains with financial analysts and institutional investors (national and foreign), through conferences, meetings and road-shows. At an organic level, the Investor Assistance Office reports directly to the Executive Committee of the Board of Directors of Martifer SGPS.

− Information made available by the Investor Assistance Office:

• Investor Kit

• General Information

• Main Indicators

• Corporate Governance

• Corporate Bodies

• Articles of Association

• Ethics and Conduct

• General meetings

• Share Price Quotation

• Agenda

• Publications

• Financial Information

• Presentations

• Notices

The Investor Assistance Office may be contacted at the following contacts: [email protected] Martifer SGPS, Apartado 17 3684-001 Oliveira de Frades Portugal Telephone: +351 232 767 702 Fax: +351 232 767 750

57. Market Liaison Officer

For purposes of the Securities Code, the Market Liaison Officer is, currently, Mr Pedro Nuno Cardoso Abreu Moreira, that took over after the resignation of Mr. Mário Rui Matias, that resigned on January 6, 2015. Mr. Pedro Nuno Cardoso Abreu Moreira Martifer SGPS, Apartado 17 3684-001 Oliveira de Frades Portugal Telephone: +351 232 767 702 Fax: +351 232 767 750


58. Data on the extent and deadline for replying to the requests for information received throughout the year or pending from preceding years

− Requests for information received by the Investor Assistance Office recorded a significant increase as from the second-half of 2014, which is justified by the improvement in the financial markets’ expectations regarding Portugal and company performance. Information requests were by and large made by institutional investors, but some information requests were also placed by small retail investors.

− The Market Liaison Office aims to minimize the response time for the requests, and when an immediate response is not possible, it shall not exceed 24 hours, except for exceptional circumstances.

V. WEBSITE

59. Address(es)

Martifer has a Website bearing the electronic address (http://www.martifer.pt/) with a wide range of information on the Martifer Group.

60. Place where information on the firm, public company status, registered office and other details referred to in Article 171 of the Commercial Companies Code is available

Information can be consulted at the following electronic address:

http://www.martifer.com/pt/grupo/legal-disclaimer/

61. Place where the articles of association and regulations on the functioning of the boards and / or committees are available


http://www.martifer.pt/pt/grupo/investidor/corporate-governance/estatutos/

62. Place where information is available on the names of the corporate bodies' members, the Market Liaison Officer, the Investor Assistance Office or comparable structure, respective functions and contact details


http://www.martifer.pt/pt/grupo/investidor/corporate-governance/orgaos-sociais/

http://www.martifer.pt/pt/grupo/investidor/informacoes-gerais/gabinete-de-apoio/

http://www.martifer.com/pt/grupo/legal-disclaimer/

http://www.martifer.pt/pt/grupo/investidor/corporate-governance/estatutos/

http://www.martifer.pt/pt/grupo/investidor/corporate-governance/orgaos-sociais/

http://www.martifer.pt/pt/grupo/investidor/informacoes-gerais/gabinete-de-apoio/


63. Place where the documents are available and relate to financial accounts reporting, which should be accessible for at least five years and the half-yearly calendar on company events that is published at the beginning of every six months, including, inter alia, general meetings, disclosure of annual, half-yearly and where applicable, quarterly financial statements


http://www.martifer.pt/pt/grupo/investidor/publicacoes/informacoes-financeiras/

64. Place where the notice convening the general meeting and all the preparatory and subsequent information related thereto is disclosed


http://www.martifer.pt/pt/grupo/investidor/corporate-governance/assembleias-gerais/

65. Place where the historical archive on the resolutions passed at the company's General Meetings, share capital and voting results relating to the preceding three years are available



D. REMUNERATION

I. Power to establish

66. Details of the powers for establishing the remuneration of corporate boards, members of the executive committee or chief executive and directors of the company

The remuneration policy and the remuneration of the Company’s Corporate Bodies is established by a Remuneration Setting Committee, elected at the Shareholders’ General Meeting. This policy is reviewed annually and submitted for approval at the Company’s Annual Shareholders’ General Meeting, where at least one representative of said Remuneration Setting Committee is present.

The Remuneration Setting Committee’s activity is dedicated to the preparation of master guidelines and the determination of the remuneration policy of the Company’s corporate bodies, to monitoring the execution of that policy and to guaranteeing the alignment of the actions of those bodies with the interests of the Company.

The Remuneration Setting Committee has as its main powers:

− Defining the remuneration policy of the Corporate Bodies of the Company, particularly of the executive members of the Board of Directors, fixing the criteria to determine the variable component of the remuneration;

http://www.martifer.pt/pt/grupo/investidor/publicacoes/informacoes-financeiras/




− Determining the various components of the fixed and variable remuneration, possible benefits and complements, as well as the annual remuneration payable to the members of Martifer’s Corporate Bodies;

− Monitoring the performance of the executive members of the Board of Directors for the purposes of determining the variable remuneration;

− Monitoring the performance of the non-executive members of the Board of Directors;

− Submitting, in an advisory capacity, an informative exposition on the company’s remuneration policy to the annual General Meeting.

The Remuneration Setting Committee sporadically requests, if necessary, from Martifer’s internal departments (namely the Human Resources Department, the Planning and Management Control Department and the Legal Department) specialised information and data of a technical nature, amongst other, relating to the structure of the company, results of the Group and members and activities of the corporate bodies. The information requested and received by the Committee is aimed at the compilation of a body of information and technical data that permits the definition and implementation of the Group’s remuneration policy.

The information requested is provided free of charge, and the Committee has no need to hire persons, natural or legal, to carry out its duties.

The External Auditor is also obliged to verify the application of the policies described and the remuneration systems of the corporate bodies, being obliged to report any potential non-conformity detected to the Supervisory Board.

II. Remuneration Committee

67. Composition of the remuneration committee, including details of individuals or legal persons recruited to provide services to said committee and a statement on the independence of each member and advisor

The composition of the current Remuneration Setting Committee, elected at a Shareholders’ General Meeting for a three-year term of office (2012-2014), is as follows:

PRESIDENT António Manuel Queirós Vasconcelos da Mota

MEMBERS Maria Manuela Queirós Vasconcelos Mota dos Santos Júlia Maria Rodrigues de Matos Nogueirinha

The members of the Remuneration Setting Committee are independent of the management body, considering the explanation contained in the paragraph that follows.

During the 2014 corporate period, a member of the Remuneration Setting Committee – Ms. Júlia Matos – was also a member of a corporate body of a company, which share capital is held by two executive directors of the Company, namely Messrs Carlos Marques Martins and Jorge Marques Martins. However, the Company considers that the independence of the Remuneration Setting Committee is safeguarded not only because of the professional training of this member in particular, but also because of the fact that the remaining members of the Committee, which for the majority, are independent from the executive members of the management body of the Company.

No persons were hired to integrate the Remuneration Setting Committee.


68. Knowledge and experience in remuneration policy issues by members of the Remuneration Committee

The Company considers that all the indivuduals comprising this Remuneration Setting Committee, totally fit to carry out their duties with excellence from a professional training perspective or based on positions previously held,.

Ms. Maria Manuela Queirós Vasconcelos Mota dos Santos is President of the Human Resources Development Commission of the Mota-Engil Group.

The experience and knowledge of the members of the Remuneration Setting Committee are better described in their curricula presented in the document attached to this report and attest, in a rigorous and specific manner, their ability to carry out the duties attributed to them.

III. Remuneration structure

69. Description of the remuneration policy of the Board of Directors and Supervisory Board as set out in Article 2 of Law No. 28/2009 of 19 June

The remuneration of the members of the Board of Directors and of the Supervisory Board of the Company is determined, in terms of the Articles of Association, by the Remuneration Setting Committee, which submits a annual document, for appraisal at the General Meeting, containing the general guidelines to be followed in establishing the specific amounts to attribute to the members of the various Corporate Bodies.

At the Company’s General Meeting of 28 April 2014, the remuneration policy of the management and supervisory bodies, prepared by the Remuneration Setting Committee, in compliance with Article 2 of Law no. 28/2009, of 19 June, and available in the Company’s Website at http://www.martifer.pt/ (Tab: Investors, Section: Corporate Governance /General Meeting), was discussed and submitted for approval.

In general terms, said remuneration policy of the management and supervisory bodies seeks to closely follow the CCC and the Portuguese Securities Market Commission’s Corporate Governance Code provisions applicable, this being reflected in the statement submitted for approval at the General Meeting referred to in the point that follows.

In defining the remuneration policy for the 2014 year, the legal provisions foreseen in (i) the CCC, namely in Article 399; (ii) Law 28/2009, of 19 June; (iii) the 2010 Corporate Governance Code issued by the CMVM; and (iv) the special regime laid down in the Company’s Articles of Association, were considered.

70. Information on how remuneration is structured so as to enable the aligning of the interests of the members of the Board of Directors with the Company's long-term interests and how it is based on the performance assessment and how it discourages excessive risk taking

Martifer’s remuneration policy aims to promote the convergence of the interests of the directors, those of the other corporate bodies and of the managers with the Company’s interests, namely those regarding the creation of value for the shareholder and real growth for the Company, privileging a long-term perspective.

Hence, the Committee structured the components of the remuneration of the Management bodies so as to reward their performance in achieving high and, simultaneously, sustained growth, discouraging, however, excessive risk-taking. Additional determining factors include the company’s economic situation and general market conditions practiced for equivalent functions.


The remuneration of the executive members of the Board of Directors shall comprise a fixed and, when so deliberated by the Remuneration Setting Committee, a variable component, with the latter variable part of the remuneration to not exceed 5% (five per cent) of the results for the period, as laid down in law and in Article 20, no. 3 of the Articles of Association.

The informative principles observed by the Committee in establishing the remuneration are:

a) DUTIES CARRIED OUT, degree of complexity inherent to the duties, responsibilities attributed, time spent and the added value to the Company of the work produced. Other duties carried out at group companies are also relevant, in virtue of the increased responsibilities and of their constituting additional sources of revenue.

b) ALIGNMENT OF THE INTERESTS OF THE MEMBERS OF THE MANAGEMENT BODY WITH THOSE OF THE COMPANY, appraisal of the performance of the members of the management body and of the creation of value for the shareholders.

c) ECONOMIC SITUATION OF THE COMPANY, present and future, privileging the interests of the Company in the long-term term and the achievement of real growth for the Company and the creation of value for its shareholders, based on criteria defining the economic situation of the Company, amongst others, those of a financial nature.

d) GENERAL MARKET CONDITIONS FOR EQUIVALENT SITUATIONS, considering that the remuneration shall be aligned with market practice, permitting it to serve as a means to achieving high individual and collective performance, assuring the interests of the member but essentially those of the Company and of the shareholders.

The general guidelines governing the remuneration policy followed by the Remuneration Setting Committee during the 2014 financial period were those contained in the Remuneration Policy Statement, which was subject to resolution at the Company’s General Meeting of 28 April 2014, and which is attached to this report as Annex III.

71. Reference, where applicable, to there being a variable remuneration component and information on any impact of the performance appraisal on this component

As described in more detail in the preceding point the remuneration of the executive members of the Board of Directors shall comprise a fixed and, when attributed, a variable component.

The fixed component of the remuneration of the members of the Board of Directors with executive functions, as well as of the non-independent, non-executive members (when attributed), shall consist of a monthly amount payable fourteen times a year, the variable portion not being permitted to exceed five per cent of the results for the financial period, as laid down by law and in Article 20, no. 3 of the Articles of Association.

In setting all remuneration, including, namely, in distributing the total amount of the variable remuneration amongst the members of the Board of Directors, the general principles consigned above shall be observed: duties carried out, alignment with the interests of the Company, privileging the long-term, the situation of the Company and market criteria.

The process of attributing variable remuneration (VR) to the executive members of the Board of Directors shall follow the criteria laid down by the Remuneration Setting Committee, namely, their position in the hierarchy, the performance appraisal carried out, the company’s real growth, seeking in determining those criteria to strengthen the convergence of the interests of the Management bodies with those of the Company, privileging the long-term perspective, this perspective being considered in the performance criteria applied to Management. The following will therefore be decisive for the appraisal and mensuration of VR:

− the contribution of the executive directors to the results obtained;

− the profitability of the businesses from the shareholder perspective;

− the evolution of the share price quotation; and

− the extent to which the projects integrated and measured by the Balanced Scorecard of the Group are realised.


During the course of 2013, no contracts were celebrated, be it with the Company, or with third parties, which effects are to mitigate the risk inherent to the variable remuneration established by the Company for the members of the management board.

72. The deferred payment of the remuneration’s variable component, specifying the relevant deferral period

During the 2014 financial year, no variable remuneration was attributed to the directors of Martifer; consequently, the issue of deferral of this remuneration component did not arise. On the other hand, the Remuneration Policy of the management and supervisory bodies, drawn up by the Remuneration Setting Committee and approved at the General Meeting of 28 April 2014, does not foresee the deferral of variable remuneration, when attributed.

Therefore, during the relevant financial year the company’s directors did not receive variable remunerations and, consequently, the issue of deferral of this remuneration component did not arise.

73. The criteria whereon the allocation of variable remuneration on shares is based, and also on maintaining company shares that the executive directors have had access to, on the possible share contracts, including hedging or risk transfer contracts, the corresponding limit and its relation to the total annual remuneration value

Martifer’s existing Remuneration Plan in Stock Options was constituted and attributed in the 2008 corporate period, foreseeing the deferral of the exercising of the options for a period of 4 years; consequently, the exercising of the options related thereto expired during the 2013 corporate period.

Regarding the 2008 Plan, none of the directors exercised their option rights during the respective deferral period.

During the course of the 2014 corporate year, the Company neither implemented nor attributed another stock and/or stock options plan and, consequently, no variable remuneration was allocated on shares to the directors and no criteria were established for the maintenance of those shares by the executive directors.

74. The criteria whereon the allocation of variable remuneration on options is based and details of the deferral period and the exercise price

As better described in the preceding, and given that during the fiscal year 2014, the Company has not implemented, nor charge allocation of shares and / or share purchase option plan, point the Company considers this point not applicable.

75. The key factors and grounds for any annual bonus scheme and any additional non-financial benefits

The Company has neither implemented any annual bonus scheme nor any additional non-financial benefits.


76. Key characteristics of the supplementary pensions or early retirement schemes for directors and date when said schemes were approved at the General Meeting, on an individual basis

The Company does not have supplementary pensions or early retirement schemes for the members of the management and supervisory bodies and for other managers, as defined in no. 3 of Article 248-B of the Securities Code.

77. Details on the amount relating to the annual remuneration paid as a whole and individually to members of the Company's Board of Directors

DIRECTOR EXECUTIVE DIRECTOR

FIXED REMUNE-RATION

VARIABLE REMUNE-RATION

STOCK OPTIONS

ATTENDANCE FEES TOTAL (€)

Carlos Manuel Marques Martins (Chairman) Yes 0 0 0 0 0

Jorge Alberto Marques Martins (Vice Chairman) Yes €27,300,90 0 0 0 €27,300,00

Mário Rui Rodrigues Matias Yes €60,367,68 0 0 0 €60,367,68

Arnaldo Nunes da Costa Figueiredo No 0 0 0 0 0

Luis Filipe Cardoso da Silva No 0 0 0 0 0

Luis António de Valadares Tavares No 0 0 0 €25,000,00 €25,000,00

Jorge Bento Barbosa Farinha No 0 0 0 €25,000,00 €25,000,00

78. Any amounts paid, for any reason whatsoever, by other companies in a control or group relationship, or are subject to a common control

During 2013, only the following members of the Board of Directors earned a fixed remuneration from the following Company affiliates:

DIRECTOR COMPANY FIXED REMUNERATION

Carlos Manuel Marques Martins Martifer Construções Metalomecânicas, S.A. €70,428,96

Jorge Alberto Marques Martins Martifer Construções Metálicas, Lda (Brasil) R$ 63,002,00 (i)

Jorge Alberto Marques Martins SPEE 2 - Parque Eólico de Vila Franca de Xira, S.A. €28,000,00

Jorge Alberto Marques Martins SPEE 3 - Parque Eólico de Baião S.A €28,000,00

(i) Remuneration received in local currency – Brazilian Real, which global amount corresponds to €19,548.23, at the 31/12/2014 foreign exchange rate (R$ 3.2229), i.e. that of the last day of the financial period being reported on.

79. Remuneration paid in the form of profit sharing and/or bonus payments and the reasons for said bonuses and/or profit sharing being awarded

During the 2014 financial period, no remuneration was paid in the form of profit sharing and/or bonus payments.


80. Compensation paid or owed to former executive directors concerning contract termination during the financial year

During 2014, no compensation was paid, nor is it owed, to former executive directors in respect of contract termination.

81. Details of the annual remuneration paid, as a whole and individually, to the members of the Company's Supervisory Board for the purposes of Law no. 28/2009, of 19 June

MR MANUEL SIMÕES DE CARVALHO E SILVA €4,800.00

MR CARLOS ALBERTO DA SILVA E CUNHA €4,800.00

MR JOÃO CARLOS TAVARES DE CARRETO LAGES €4,800.00

MR JUVENAL PESSOA MIRANDA € 0.00

TOTAL € 14,400.00

82. Details of the remuneration in said year of the Board of the General Meeting

JOSÉ CARRETO LAGES €1,200.00

FRANCISCO ARTUR DOS PRAZERES FERREIRA DA SILVA €0.00

ANA MARIA TAVARES MENDES €400.00

TOTAL € 1,600.00

V. Agreements with remuneration implications

83. Envisaged contractual restraints for compensation payable for the unfair dismissal of directors and relevance thereof to the remunerations’ variable component

The Company has neither established nor agreed to any contractual restraints for compensation payable to directors of the Company on unfair dismissal.

Likewise, the Remuneration Policy approved at the General Meeting of 28 April 2014 does not foresee any calculation or determination formula for the amount due to a director in these circumstances; consequently, the normal regime would apply in such circumstances.


84. Reference to the existence and description, with details of the sums involved, of agreements between the company and members of the Board of Directors and managers, pursuant to Article 248-B/3 of the Securities Code that envisages compensation in the event of resignation or unfair dismissal or termination of employment following a takeover bid (Article 245-A/1/l))

The Company is not part to any agreement with the members of the management body or other managers, as defined in no. 3 of Article 248-B of the Securities Code, that foresees compensation in the event of resignation, unfair dismissal or employment termination following a takeover bid.

VI. Share-Allocation and/or Stock Option Plans (“stock options”)

85. Details of the plan and the number of persons included therein

Martifer currently has no active Remuneration Plan in Stocks and Stock Options.

86. Characteristics of the plan (allocation conditions, non-transfer of share clauses, criteria on share-pricing and the exercising option price, the period during which the options may be exercised, the characteristics of the shares or options to be allocated, the existence of incentives to purchase and/or exercise options

As better described in the preceding point, the Company has no active Stock or Stock Options Plan; consequently, the information pertaining to this point is not applicable.

87. Stock option plans for the company employees and staff

The Company has no active Stock or Stock Options Plan; consequently, the information pertaining to this point is not applicable.

88. Control mechanisms for a possible employee-shareholder system inasmuch as the voting rights are not directly exercised by said employees (Article 245-A/1/e))

The Company has no active Stock or Stock Options Plan; consequently, the information pertaining to this point is not applicable.

E. RELATED PARTY TRANSACTIONS

I. Control mechanisms and procedures

89. Mechanisms implemented by the Company for the purpose of controlling transactions with related parties (For said purpose, reference is made to the concept resulting from IAS 24)

Transactions with Directors of Martifer or with entities in a group or dominant relationship in which the former are likewise also Directors, irrespective of the amount, are subject to the prior approval of the Board of Directors with the approval of the supervisory body, in terms of Article 397 of the CCC.


90. Details of transactions that were subject to control in the referred year

In 2014, the following deals or transactions were made between the company and the Board of Directors or the Supervisory Board:

The subsidiary company Martifer Metallic Constructions, SGPS, S.A., suffered share capital increase, performed with the entry in capital of the company Vector Diálogo – SGPS, S.A., totalling 9,700,000.00 euros (nine million, seven hundred thousand euros), through new in kind contributions, with an agio to be deliberated, and the emission of 9,700,00 (nine million, seven hundred thousand) bearer shares, with a nominal value of one euro each, with the share capital increasing from 29,050,000.00 euros (twenty nine million and fifty thousand euros) to 38,750,000.00 euros (thirty eight million, seven hundred and fifty thousand euros), receiving a favourable opinion from the company’s Supervisory Board on 27 March 2014.

The company sold 49 % of the share capital owned in the company NUTRE SGPS, S.A. to a Dutch cooperative to be constituted by the companies CERES INVESTMENTS LIMITED and SEVERIS, SGPS, S.A., having as counterpart the emission of Loan Notes, due on 30 December 2016. NUTRE SGPS, S.A., according to its balance sheet on 31 December 2013, showed an equity of 6,985,097.00 euros, presenting liabilities totalling 87,086,336.00 euros, being, therefore, financially unbalanced, and also needing a financial debt restructuring. Considering that i) the value of the transaction of 19,600,000.00 euros corresponded to the value registered on the company’s balance sheet on 30 June 2014, not forthcoming any loss due to this sale and ii) the price largely exceeded the correspondent to the share in equity of NUTRE SGPS, S.A., the Supervisory Board issued a favourable opinion to the sale on 11 September 2014.

91. A description of the procedures and criteria applicable to the Supervisory Body when same provides preliminary assessment of the business deals to be carried out between the company and the holders of qualifying holdings or entity relationships with the former, as envisaged in Article 20 of the Securities Code

The Supervisory Board established the procedures and criteria necessary to define the relevant ‘level of significance’, of business between the company and the holders of qualifying holdings or entities with which the former are linked in any relationship of dominium or group, in excess of which amount the intervention of the supervisory body is required.

Hence, without prejudice to the provisions foreseen in Article 397 of the CCC, deals between, on the one hand, the Company or Group companies and, on the other hand, holders of qualifying holdings or entities with which the former are linked in any relationship, shall be subject to assessment and prior approval of the Supervisory Board if they meet any one of the following criteria:

a) Are for an amount equal to or in excess of half-a-million Euros, or, when lower, when aggregated with other transactions

carried out with the same Shareholder holder of qualifying holdings, during the same financial period, result in an amount

equal to or in excess of one million Euros, except those relating to normal Company business;

b) Regardless of the amount, when they may cause a material impact on the Company’s reputation, in matters concerning the

independence in its relations with holders of qualifying holdings.

II. Data on business deals

92. Details of the place where the financial statements including information on business dealings with related parties are available, in accordance with IAS 24, or alternatively a copy of said data

Business dealings with related parties are described in Note 39 of the Notes to the Consolidated Financial Statements, forming part of the 2014 Consolidated Report and Accounts, available in the Company’s Website at http://www.martifer.pt/ (Tab: Investors, Section: Financial Information).


PART II Corporate Governance Assessment 1. 1. Details of the Corporate Governance Code implemented Martifer, whilst issuer of shares that have been admitted to trading on an official stock exchange, is subject to the Portuguese Securities Market Commission’s (“Comissão do Mercado de Valores Mobiliários”, henceforth also CMVM) Regulation no. 4/2013, of 18 July 2013, and abides by the recommendations contained in the 2013 Corporate Governance Code approved by the CMVM, both documents available in the CMVM’s Website at www.cmvm.pt.

Martifer has not voluntarily adhered to any other corporate governance code.

The present report was prepared and follows, under no. 2 of Article 4 of CMVM Regulation no. 4/2013, the model appended to said Regulation, having as its reference the 2013 CMVM Corporate Governance Code.

2. Analysis of compliance with the Corporate Governance Code implemented

In the matter of Corporate Governance and whilst Public Company, Martifer has sought to promote the implementation and adopt the best corporate governance practices, including those contained in the new 2013 CMVM Corporate Governance Code, guiding its policy along the highest standards of conduct, ethics and social responsibility, which are intended to be transversal to the Group.

It is an objective of the Board of Directors to implement an integrated and effective management of the Group, enabling the Company to create value by promoting and guaranteeing the legitimate interests of its Shareholders, clients, suppliers, employees, the capital market as well as of the community in general, permanently seeking transparency in its relations with the investors and the market.

Martifer considers that, despite the fact that it does not comply fully with the recommendations contained in the 2013 CMVM Corporate Governance Code, as amply described and justified in the following chapters of this report, the degree of adoption of the recommendations is extremely wide and thorough.

3. Analysis of compliance with the Corporate Governance Code adopted

3.1 STATEMENT ON THE ACCEPTANCE OF THE CORPORATE GOVERNANCE CODE

Pursuant to and for the purposes of that laid down in paragraph o) of no. 1 of Article 245-A of the Securities Code, the recommendations included in the CMVM’s Corporate Governance Code, with the indication of whether adopted or not, whenever applicable to Martifer’s structure, and references to the text in the report where the form of adoption is described in greater detail, are listed below:


CMVM RECOMMENDATIONS ADOPTION REFERENCE

CHAPTER, TITLE, SECTION

I.1. On this point should have been itemized the information on the allocation of the sharecapital capital by the shareholders, or included a reference to the point of the Report where such information is provided.

Adopted Parte I A. I - 1

I.2. The Company should expressly mention the possibility (or not) of said shareholder agreements set forth restrictions on the transfer of securities or voting rights. Adopted Parte I

A. I - 6

I.3. We recall that, in regulatory terms, the description of the qualified stakes should include a clear indication about the different titles, allocation, reason why we suggest the adoption of exposure model presented by CMVM Circular on Annual Accounts (2.3), available at http://www.cmvm.pt/CMVM/Recomendacao/Circulares/Documents/Circular%20Contas%20Anuais%202013%20%282014-01-24%29.pdf

Adopted Parte I A. II - 7

I.4. Should have been expressly mentioned the existence of bonds held by members of the Board and supervisory bodies. Adopted Parte I

A. II - 8

I5. The Company should have mentioned the date on which the special powers of the Board of Directors were assigned. Adopted Parte I

A. II - 9

I.6. Should have been included information on family relationships between the members of the board of directors and shareholders to whom is attributable qualified stakes of more than 2% of the voting rights.

Adopted Parte I B. II a) -20

I.7 Should have been given the correct link to the website where the accountability documents are available. Adopted Parte I

C. V - 63

I.8 The Company should have mentioned the fact whether it is provided or not (along with payment of variable remuneration in the financial year) the deferral of the variable component, when assigned.

Adopted Parte I D. III - 72

I.9 On this point the amounts involved in the transactions subject to control in the relevant year should have been specified. Adopted Parte I

E. I - 90

3.2 CLARIFICATIONS AS TO DIVERGENCES BETWEEN THE COMPANY’S GOVERNANCE PRACTICES AND THE CMVM RECOMMENDATIONS

In this chapter, the grounds for the non-adoption or non-application of every single recommendation, which should be read together with the table presented in the preceding chapter, are explained.

The Company considers to have adopted, in this Corporate Governance Report, all CMVM’s recommendations.

4. Other Information

Besides the information and explanations presented in the present Report, there is no additional information of relevance that should be presented for a proper understanding of the model and the governance practices adopted by Martifer.




__________________________________

Carlos Manuel Marques Martins

__________________________________

Jorge Alberto Marques Martins

__________________________________

Pedro Nuno Cardoso Abreu Moreira

__________________________________

Arnaldo José Nunes da Costa Figueiredo

__________________________________

Luís Filipe Cardoso da Silva

__________________________________

Luís Valadares Tavares

__________________________________

Jorge Bento Ribeiro Barbosa Farinha


ANNEX I

Professional Qualifications

BOARD OF DIRECTORS

Carlos Manuel Marques Martins is the Chairman of the Management Board of Martifer (Chairman of the Board of Directors and executive director) and one of the founding shareholders of Martifer Group in 1990, having started his professional activities in 1987 in the Company Carvalho & Nogueira, Lda, as Director of Production in the iron sector. He has a degree in Mechanical Engineering completed at FEUP (Faculdade de Engenharia, Universidade do Porto).

Jorge Alberto Marques Martins is a Board Member of Martifer (Vice Chairman of the Board of Directors and executive director) and one of the founding shareholders of Martifer Group in 1990, having started his professional activities in 1987 at SOCARPOR - Sociedade de Cargas Portuárias (Douro e Leixões), Lda as Adjunct to the Financial Director. He has a degree in Economics completed at FEP (Faculdade de Economia, Universidade do Porto) and a MBA completed at UCP (Universidade Católica Portuguesa).

Mário Rui Rodrigues Matias is a member of the Board of Directors of Martifer (non executive and non-independent director) since 30th August 2013. He completed a specialization course having receive a degree as Perito Contabilista no Instituto Superior de

Contabilidade e Administração de Lisboa (1973) and also attended courses of vocational training in the areas of

Accounting (POC and CNS), Taxation, Management, Human Resources and Marketing. Also held completed a

postgraduated studies at Universidade Católica in PAGECO - Forward Management Plan for Construction. Between 1973 and 1984 he worked as Administrative and Financial Officer in various organizations. From 1984 to 1990 he worked in the following companies: Auditur – Sociedade de Revisores Oficiais de Contas, Amável Calhau, Justino Romão & José Maria Ribeiro da Cunha, SROC e Mazars, SA. Between 1990 and 1995 he worked for Terrazul , SA , part of the Ciments Français Group , as the Administrative and Financial Director of many of the Group companies, namely: Duartes , SA , CIB , SA , BETASA , SA , JODOFER , SA , BETAZUL SA and BETABEIRAS , SA . Between 1995 and 2000 he worked for Cimpor - CONCRETE, SA, which incorporated the Terrazul Group, SA. He also worked as the Administrative and Financial Director for the Industrial Concrete Field. In 2000 he was appointed as director of the company " OPCA - PUBLIC WORKS AND ARMED CEMENT , SA " , now renamed " OPWAY - ENGINEERING , SA " , being a member of the Board of Directors of the holding company, as well as other Group companies, including OPWAY , SGPS , SA , OPWAY - . ESTATE , SA , OATA , SA and SARRION , SA. Most recently he was Chairman of the Board of Directors of the following companies: Pavicentro , SA , Pavilis , SA , Pontave , SA , Paviseu , SA , Pavijopace , the Pavi Brazil , Marmetal , SA , Margrimar , LDA . , Recigreen , SA , Recigroup , SGPS , RECIPNEU and Recipav and Chairman of the Supervisory Board of Lusoscut- Auto Estradas do Grande Porto S.A., Lusoscut - Auto Estradas da Costa de Prata S.A., Lusoscut - Auto Estradas das Beiras Litoral e Alta, S.A..

Pedro Nuno Cardoso Abreu Moreira is a member of the Board of Directors of Martifer (executive and non-independent director) since January 6, 2015, date on which he was co-opted further to the resignation of Mr. Mário Rui Rodrigues Matias. He has a degree in Economics at Faculdade de Economia da Universidade do Porto (1999), and has been granted an Advanced Management Programme for Managers by Oporto Business School and an In-Company Executive Training Programme by AESE Business School. Has extensive international experience, initially being appointed to perform corporate financial coordination functions within Mota Engil Group's operations in Central Europe, Africa and Latin America; lived between 2008 and 2014 in Warsaw and Budapest, and was appointed to several board positions of the Mota-Engil Group's operations in Central Europe in the areas of Real Estate, PPP / PFI, M&A and Corporate Development. During this period was appointed as member of the Board of Directors at several companies within Mota Engil Group, notably Mota Engil Central Europe SA (Poland), Mota-Engil Real Estate Management (Holding Real Estate Central Europe), Mota Engil EC CZ (Czech Republic) Mota-Engil EC Slovakia (Slovakia), Mota-Engil Magyar (Hungary), Mota Engil EC RO (Romania)), Mota-Engil Brand Management (Netherlands), Mota-Engil Brand Development (Ireland).

Arnaldo José Nunes da Costa Figueiredo is a member of the Board of Directors of Martifer (non executive and non independent director) since 30th April 2010. He has a degree in Civil Engineering at Faculdade de Engenharia da Universidade do Porto (1977).


He was Chairman of Mota-Engil, Engenharia e Construção, SA and of the Board of Directors of MEITS - Mota-Engil, imobiliária e turismo, SA; Manager of Mota Internacional, LDA.; Chairman of Board of the Shareholders General Assembly of Maprel-Nelas, Indústria de Pré-Fabricados em Betão, SA; Member of the Board of the Shareholders General Assembly of Paviterra, SARL; Chairman of the Remuneration Committee (on behalf of Mota-Engil, Engenharia e Construção, SA) of Ferrovias e Construções, SA; of Aurimove – Sociedade Imobiliária, SA; of Nortedomus – Sociedade Imobiliária, SA; and of Planinova – Sociedade Imobiliária, SA.

Luís Filipe Cardoso da Silva is a member of the Board of Directors of Martifer - SGPS, S.A. (non executive and non independent director) since 30th April 2010. He has a degree in Economics at Faculdade de Economia da Universidade do Porto. He was director of MESP, Mota-Engil Serviços Partilhados Administrativos e de Gestão SA; MESP Central Europe Sp. z.o.o.; and Mota-Engil Brand Management B.V. He was member of the General and Supervisory Board of Vortal - Comércio Electrónico, Consultadoria e Multimédia, SA and member of the Superior Board of Ascendi Group, SGPS, SA, as well as member of the Supervisory Board of several companies of Ascendi Group.

Jorge Bento Ribeiro Barbosa Farinha is a Board member at Martifer SGPS, SA since 2008. In his academic work, he is a teacher since 1987, in the category of Assistant Professor at Faculdade de Economia, Universidade do Porto from 1989 and since 1991 he occupied several positions at EGP / University of Porto Business School (EGP - UPBS). He was also a teacher at Instituto de Estudos Superiores Empresariais (ISEE), Universidade do Porto (1999-2001), and Vice President of the Pedagogical Council at Faculdade de Economia do Porto (FEP, 2002-2006). In his extra-academic activities, he was a Financial Analyst of Capital Markets at Cisf- Companhia de Investimentos e Serviços Financeiros, S.A. (1987-1989), a Senior Analyst of the Mergers & Acquisitions Department at Banco Português de Investimento, S.A. (1990-1992 ), Sub-director of the Mergers & Acquisitions Department at Banco Português de Investimento, S.A. (1992-1993), partner of Cf&A Associados - Consultores de Gestão, Lda (1993-1994), partner of Futop – Consultores de Gestão, S.A. ( 1994-1995) and a non-executive Board member at Enotum.com (companies establishment helper in the area of telecommunications) (2000-2002). He has a degree in Economics (Faculdade de Economia, Universidade do Porto), a MBA at INSEAD (Institut Européen d'Administration des Affaires, Fontainebleau, France) and a PhD in Accounting and Finance by the University of Lancaster (Management School), UK. He is a non-executive and independent Board member.

Luís António de Castro de Valadares Tavares is a Board member at Martifer SGPS, SA (independent non-executive director) since 2008. Since 1980 he is Professor of Systems Management at Instituto Superior Técnico, Universidade Técnica de Lisboa, and, from 2002, President of the Centre for Prospective - OPET. He is president of APMEP - Portuguese Association of Public Markets and EDP´s Customer Ombudsman, an EDP independent entity. Previously, he was President of the National Institute of Administration (2003-2007), First Coordinator of the Master Degree in Operational Research and Systems Engineering (IST), Director of the Distance Education in Management Program (Dislogo) at UCP, Director and Founder of the Master Degree in Health Engineering at UCP, First Coordinator of the MBA at the Inter-University Institute of Macau, General Director of the Studies and Planning Office at the Ministry of Education (PRODEP),, Manager of the Program for the Development of Education in Portugal (PRODEP), Director of the World Bank‟s Program for Educational System Financing, Director of the Minerva Program (Informatics in Schools), Vice-President of the Committee for Education (OCDE), President of the Committee for Education (OCDE), President of the Education Committee of the European Communities (first Portuguese Presidency), First President of the Portuguese Association of Operational Research (APDIO), Vice-President of the Operational Research Societies Federation (IFORS), Visiting Professor at the following Universities: North Carolina (Raleigh, USA), Colorado (Denver, USA) , Columbia (NY, USA), Princeton (NY, USA), UCLA (Los Angeles, USA), Business School of the University of Newcastle (Newcastle, UK), Paris-Dauphine (Paris, France), Mohammed (Rabat, Morocco), Middle East Technical University (Ankara, Turkey), Technical of Poznan (Poznan, Poland), Technical of Helsinki (Helsinki, Finland); PUC (Rio de Janeiro, Brazil); Federal of Santa Catarina (Florianopolis). He has a degree in Civil Engineering completed at IST, a Masters Degree in Operations Research completed at the University of Lancaster (UK), a PhD degree in Science and Engineering completed at IST, and Aggregated in Operational Research at IST.

SUPERVISORY BOARD

Chairman of the Supervisory Board


Manuel Simões de Carvalho e Silva has a degree in Law, completed at Faculdade de Direito, Universidade de Coimbra. He is a lawyer in the district of Aveiro and boundaries since October 1980 focusing on areas such as civil law, labor, commercial, corporate and criminal law. He is the Chairman of the Supervisory Board.

Members of the Supervisory Board

Carlos Alberto da Silva e Cunha holds a Diploma in Advanced Studies (program of PhD degree on Management Sciences), completed at Vigo University, Spain. A Master degree in Accounting and Administration completed at the University of Minho and is Postgraduate in "The Impact of the Euro in Business" by the Institute for High Studies on Finances and Tax. He has a degree in Auditing and the course of Specialized High Studies in Auditing at Instituto Superior de Contabilidade e Administração do Porto. He also has a graduation completed in Accounting at Instituto Comercial do Porto. He is a registered Auditor in the official list since March 1990. Also performs duties as Assistant Professor, teaching at Escola de Economia e Gestão, Universidade do Minho as well at Universidade Lusíada, in Oporto. In 2008 and 2009 was invited to teach in the Post-Graduation Course "Fraud Management " promoted by Faculdade de Economia, Universidade do Porto.

João Carlos Tavares Ferreira de Carreto Lages has a degree in Law completed at Universidade Católica Portuguesa, Centro Regional do Porto. Since 1995 he practices Law in Oliveira de Frades District, also advocating in several causes all over the country. He was a Member of the Management Board of APA, SA, Management of Aveiro´s Harbor, being responsible for the following Departments: Marketing and Public Relations, Safety and Environment, Human Resources and Pilots. In July 2002 he co-founded the Carreto Lages & Associados Law Office, located in Aveiro and Oliveira de Frades, acting as an associate Manager.

Juvenal Pessoa Miranda has a degree in Economics from Universidade de Coimbra. He is registered with the Câmara dos Técnicos Oficias de Contas (Chamber of Registered Accountants) and carries out the activities of economist, consultant and specialist at the Tribunal da Comarca do Baixo Vouga – Juízo do Comércio (Court of the County of Baixo Vouga – Trade Section).

STATUTORY AUDITOR

PRICEWATERHOUSECOOPERS & Associados – Sociedade de Revisores Oficiais de Contas, Lda.,., tax identification number 506 628 752, with registered office at Palácio Sottomayor, Rua Sousa Martins, 1 – 3º, 1050-217 Lisboa, registered with the Ordem dos Revisores oficiais de Contas under the number 183, and registered at CMVM under the number 9077.

José Pereira Alves, tax identification number 105 189 030, registered with the Ordem dos Revisores oficiais de Contas under the number sob o nº 711. Não é detentor de acções da sociedade Martifer SGPS, S.A..

REMUNERATION COMMITTEE

António Manuel Queirós Vasconcelos da Mota has a degree in Civil Engineering (Inland Communications) completed at Faculdade de Engenharia, Universidade do Porto. Currently performs duties as Chairman of the Board of Directors of Mota-Engil, SGPS, SA, a position he holds since 2000. He has already served as Chairman of the Board in other companies, in particular, Mota-Engil, Engenharia e Construção, SA (2003-2006), Mota-Engil Internacional, SA (2000-2003), Engil - Sociedade de Construção Civil, SA (2000-2003) and Mota & Companhia, SA (1995-2003), where he also held the position of Vice-Chairman (1987-1995). He started his professional life in 1977 as a trainee in Mota & Companhia, Lda, and between 1979 and 1981, he worked in several departments of the same company, where he also worked as General Director of Production (1981-1987).

Maria Manuela Queirós Vasconcelos Mota dos Santos has a degree in Economics from the Faculdade de Economia, Universidade do Porto. She has worked in several companies of Mota-Engil Group, being responsible for the Human Resources Department. Presently she is a member of the Board of Directors at Mota-Engil, SGPS, SA.

Júlia Maria Rodrigues de Matos Nogueirinha has a degree in Law from Faculdade de Direito da Universidade de Coimbra and is registered with the Portuguese Bar Association since 2002. She is presently a member of the Board of Directors of I’M SGPS, S.A ,


having held the post of Member of the Board of Directors in other companies of the I’M group, namely in Almina – Minas do Alentejo, S.A.


ANNEX II

Positions Held and Activities Undertaken by the members of the Board Of Directors

CARLOS MANUEL MARQUES MARTINS

a) Positions within the Martifer Group: CHAIRMAN OF THE BOARD OF DIRECTORS: Martifer - SGPS, S.A. Martifer Global SGPS, S.A. Martifer Metallic Constructions SGPS, S.A. Martifer Construções Metalomecânicas, S.A. Martifer – Alumínios, S.A. Martifer - Gestão de Investimentos, S.A. Sociedade de Madeiras do Vouga, S.A. Navalria- Docas,constr. e reparações navais, S.A. Gebox, S.A. Martifer Energy Systems, SGPS, S.A. Nagatel Viseu - Promoção Imobiliária, S.A. Martifer – Amal, S.A Martifer Construcciones Metálicas España, S.A. Martifer Aluminium PTY LTD (Austrália) Martifer Beteiligungsverwaltungs GmbH (Áustria) Eviva Beteiligungsverwaltungs GmbH MEMBER OF THE BOARD OF DIRECTORS: Martifer – Inovação e Gestão, S.A. Martifer Renewables SGPS, S.A. Martifer Renewables, S.A. Prio Agriculture B.V. (Holanda) Porthold B.V. (Holanda) Martifer Aluminium LTD (UK) Martifer Construction UK, LTD (UK) Martifer Aluminium LTD (Irlanda) Martifer Construction Ltd (Irlanda) Martifer Constructions SAS (França) Martifer Aluminium SAS (França) MT Constructions Maroc, SARL (Marrocos) Martifer Construcciones PERÚ, SA Martifer Construções Metalomecânicas, SA, Suc. Colombia Martifer Mota Engil Coffey Joint Venture Limited MEMBER OF THE SUPERVISORY BOARD: Martifer Renewables, SA (Polónia) MANAGER: Parque Eólico da Penha da Gardunha, Lda. Promoquatro - Investimentos Imobiliários Lda. CHAIRMAN OF THE REMUNERATION COMMITTEE: Martifer Renewables, S.A. SECRETARY: Martifer Renovables ETVE S.A.


b) Positions in companies with shareholding by Martifer Group: CHAIRMAN OF THE BOARD OF DIRECTORS: Prio E. SGPS, S.A. Prio Energy, S.A. Prio Biocombustíveis, S.A. Mondefin Combustíveis, S.A.

MARTIMETAL Spa Prio Parque de Tanques De Aveiro, S.A. PRIO.E – Electric, S.A. Nutre SGPS, S.A. Nutre, S.A. Nutre - Indústrias Alimentares, S.A Nutre Farming West Part SRL (Roménia) Nutre Brasil, Ldta. (Brasil) Prio Agro Industries Sp. Z.o.o (Polónia) Agromec Balaciu S.A. (Roménia) Agrozootehnica Facaeni S.A. (Roménia) Miharox S.A. (Roménia) Prio Agricultura Ialomita SRL (Roménia) Prio Agro Facaeni SRL (Roménia) Prio Agromart SRL (Roménia) Prio Balta SRL (Roménia) Prio Rapita SRL (Roménia) Prio Terra Agricola SRL (Roménia) Prio Turism Rural SRL (Roménia) Prio Agrotrans SRL (Roménia) Prio Meat SRL (Roménia) Zimbrul SRL (Roménia) MEMBER OF THE BOARD OF DIRECTORS: Ventinveste, S.A. Bunge Prio Cooperatie U.A. Nutre Farming B.V. Nutre – MZ MANAGER: Centralrest, Lda.

a) Positions outside the Group:

CHAIRMAN OF THE BOARD OF DIRECTORS: I’M - SGPS, S.A. I´M Mining, SGPS, S.A. ESTIA – SGPS, S.A. ESTIALIVING, SGPS S.A. Tavira Gran Plaza, SA EPDM – Empresa de Perfuração e Desenvolvimento Mineiro, SA Severis, SGPS S.A. MEMBER OF THE BOARD OF DIRECTORS: ESTIALIVING, SGPS S.A. PCI - Parque de Ciência e Inovação, S.A. Estia Retail & Warehousing S.R.L. Mamaia Investments S.R.L. OFFICE BUILDING VACARESTI SRL


MANAGER: Exclusipolis, SGPS, Lda. PANNN - Consultores de Geociências, Lda.

SOLE DIRECTOR: Black and Blue Investimentos, S.A. Expertoption, SGPS, SA JORGE ALBERTO MARQUES MARTINS

a) Positions within the Martifer Group:

CHAIRMAN OF THE BOARD OF DIRECTORS: Martifer – Inovação e Gestão, S.A. Martifer Solar - SGPS, S.A. Martifer Solar Ltda. (Brasil) Martifer Renewables, SGPS, S.A. Martifer Renewables, S.A. MPRIME – Solar Solutions, S.A. Martifer Renovables ETVE, S.A. (Espanha) Martifer Renewables Investments ETVE, S.L. SPEE 3 - Parque Eólico do Baião, S.A. VICE-CHAIRMAN OF THE BOARD OF DIRECTORS: Martifer - SGPS, S.A. Martifer Global SGPS, S.A. Martifer Metallic Constructions - SGPS, S.A. MEMBER OF THE BOARD OF DIRECTORS: Martifer Energy Systems, SGPS, S.A.

SPEE 2 – Parque Eólico de Vila Franca de Xira, S.A. Martifer Renewables Italy B.V. (Holanda)

Martifer Renewables Brazil B.V. (Holanda) Martifer Beteiligungsverwaltungs GmbH (Austria) Eviva Beteiligungsverwaltungs GmbH (Austria) Martifer Deutschland GmbH (Alemanhã) Martifer Renováveis Geração de Energia e Particip S.A. Rosa dos Ventos Geração e Comerc. de Energia S.A. (Brasil) Martifer – Construções Metálicas, Ltda (Brasil) Martifer Wind Energy Systems LLC (EUA) Martifer Construcciones Metálicas España, S.A. MEMBER OF THE SUPERVISORY BOARD: Martifer Renewables, SA (Poland) MANAGER: Martifer Contruções Metálicas Ltda. Martifer – Aluminios, Ltda Global Holding Limited Global Engineering & Consulting Limited SOLE DIRECTOR: Martifer Renewables Investments Etve, S.L. CHAIRMAN OF THE REMUNERATION COMMITTEE: Martifer Alumínios, S.A.

Martifer – Construções Metalomecânicas, S.A.


MEMBER OF THE REMUNERATION COMMITTEE: Martifer Renewables, S.A. SECRETARY: Martifer Construcciones Metálicas España REPRESENTATIVE: EUROCAB FV 1, S.L.; EUROCAB FV 2, S.L.; EUROCAB FV 3, S.L.;

EUROCAB FV 4, S.L.; EUROCAB FV 5, S.L.; EUROCAB FV 6, S.L.; EUROCAB FV 7, S.L.; EUROCAB FV 8, S.L.; EUROCAB FV 9, S.L.; EUROCAB FV 10, S.L.; EUROCAB FV 11, S.L.; EUROCAB FV 12, S.L.; EUROCAB FV 13, S.L.; EUROCAB FV 14, S.L.; EUROCAB FV 15, S.L.; EUROCAB FV 16, S.L.; EUROCAB FV 17, S.L.; EUROCAB FV 18, S.L.; EUROCAB 19, S.L.

b) Positions in companies with shareholding by Martifer Group:

MEMBER OF THE BOARD OF DIRECTORS Ventinveste, S.A. c) Positions outside the Group:

MEMBER OF THE BOARD OF DIRECTORS: I´M– SGPS, S.A. I´M Mining, SGPS, S.A.

ESTIA SGPS, S.A.

Manager: BRASEME -INVESTIMENTOS e Consultoria, Lda. MÁRIO RUI RODRIGUES MATIAS*


MEMBER OF THE BOARD OF DIRECTORS: Martifer - SGPS, S.A. Martifer Metallic Constructions SGPS, S.A.

Martifer – Construções Metalomecânicas, S.A. Martifer - Alumínios, S.A. Martifer Gestão de Investimentos, S.A. Nagatel Viseu - Promoção Imobiliária, S.A. Sociedade de Madeiras do Vouga, S.A. Martifer Energy Systems, SGPS, S.A. Navalria - Docas, Construções e Reparações Navais, S.A. Gebox, S.A. Martifer Global, SGPS, S.A. Martifer – Amal, S.A. Martifer Inovação e Gestão, S.A. Martifer Solar SGPS, S.A. Martifer Renewables, SGPS, SA Martifer Renewables, S.A. Martifer Construcciones Metalicas Espana S.A.


MT Constructions Maroc, SARL

MANAGER: Promoquatro - Investimentos Imobiliários, Lda. WEST SEA – Estaleiros Navais, Lda.

b) Positions within the Martifer Group: MEMBER OF THE BOARD OF DIRECTORS: Ventinveste, S.A.

c) Positions outside the Group:

MEMBER OF THE GENERAL BOARD: AEM - Associação de Empresas Emitentes de Valores Cotados em Mercado **

*Resigned to all the positions within the Martifer Group and with shareholding by Martifer Group on December 31, 2014, except for Martifer - SGPS, S.A., where resignation was filed on January 6, 2015.

** Resigned from office at this association on January 31, 2014.

ARNALDO JOSÉ NUNES DA COSTA FIGUEIREDO


CHAIRMAN OF THE BOARD OF DIRECTORS: Martifer Metallic Constructions SGPS, S.A.

MEMBER OF THE BOARD OF DIRECTORS: Martifer - SGPS, S.A.

b) Positions outside the Group:

CHAIRMAN OF THE MANAGEMENT BOARD: Mota-Engil, Indústria e Inovação, SA

VICE-CHAIRMAN OF THE MANAGEMENT BOARD: Mota-Engil, SGPS, SA (vice-chairman and executive director)

MEMBER OF THE GENERAL BOARD: AEM-Associação de Empresas Emitentes de Valores Cotados em Mercado

ELO – Associação Portuguesa para o Desenvolvimento Económico e a Cooperação

CHAIRMAN OF THE GENERAL MEETING: Mercado Urbano, S.A.

MEMBER OF DIRECTOR: Tabella Holding, B.V.


LUÍS FILIPE CARDOSO DA SILVA

a) Positions within the Martifer Group: MEMBER OF THE BOARD OF DIRECTORS: Martifer - SGPS, S.A.

b) Positions outside the Group: MEMBER OF THE BOARD OF DIRECTORS: Mota-Engil, SGPS, SA (member and executive director)

MESP - Mota-Engil, Serviços Partilhados, Administrativos e de Gestão, SA. Mota-Engil Brand Management B.V. LUIS ANTÓNIO DE CASTRO DE VALADARES TAVARES

Positions within the Martifer Group:


Does not take part on any other company inside or outside Martifer Group.

JORGE BENTO RIBEIRO BARBOSA FARINHA

Positions within the Martifer Group:


Does not take part on any other company inside or outside Martifer Group.


ANNEX III

[STATEMENT ON THE REMUNERATION POLICY OF THE MANAGEMENT AND SUPERVISORY BODIES

TO BE SUBMITTED FOR APPROVAL OF THE GENERAL MEETING ON 28 APRIL 2014] Statement of the Remuneration Committee regarding the remuneration policy of the management and supervisory bodies (article 2 of Law no. 28/2009, of 19 June)

I - INTRODUCTION

In use of a legal right conferred by Article 399º of the Portuguese companies code (CSC), the Bylaws of Martifer SGPS, in its

article 20, delegate to a Remuneration Committee the powers to decide on the remunerations of the Management and

Supervisory Bodies of the Company.

According to the applicable provisions of the Articles of Association, the Remuneration Committee was appointed by the

Shareholders General Meeting on281th April 2014, to exercise its duties for the three year period years 2012-2014 and

currently is formed by:

António Manuel Queirós Vasconcelos da Mota (Presidente)

Maria Manuela Queirós Vasconcelos Mota dos Santos (Vogal)

Júlia Maria Rodrigues de Matos Nogueirinha (Vogal)

In order to promote a clear and legitimate fixing of the remuneration of corporate bodies, the Remuneration Committee, in

compliance with article 2 of Law 28/2009, of 19 June, hereby submits for approval of the General Meeting of Shareholders of

Martifer SGPS, S.A. of 28 April 2014, this declaration on the policy of remunerations of the Management and Supervisory Board.

This statement seeks to follow closely the applicable provisions of the CSC and the 2013 Corporate Government Code of

Comissão Mercado dos Valores Mobiliários (“CMVM”).

It is also relevant to point out that the present statement, more than mandatory by law, intends to be an important instrument

of good Corporate Governance, aiming the proper information of the shareholders, the protection of their interests and the

transparency of Corporate Governance in matters of remuneration of Corporate Bodies.

II – REGULATORY REGIME

In the definition of the remuneration policy to be established by the Remunerations Committee, were first taken into account

the legal provisions of CSC, namely in its article 399º; the Law 28/2009, 19 June, concerning the regime of approval and

disclosure of remunerations policy of the Management and Supervisory Bodies in Listed Companies, as well the 2013 Corporate

Governance Code of CMVM, in particular the provisions of Recommendation II.3.3.

In second place, it has also been taken into consideration, for the definition of the remuneration policy, the special regime

established in the Company’s Bylaws. The Portuguese Companies’ Code provides, in Article 399, the statutory scheme of

remuneration for the board of directors, which, in summary, establishes that:


- The setting of the remunerations is a responsibility of the General Shareholders' Meeting or by a committee appointed by it

for this purpose and shall take into account the duties performed and the economic situation of the company;

- The remuneration may be fixed or partially represent a percentage of the financial year´s profit, nevertheless the maximum

percentage allocated to the directors shall be authorized by a clause of the articles of association and shall not be levied on

the distribution of reserves or to any portion of the profits not legally available for distribution to the shareholders.

Regarding the members representing the Supervisory Board and the Board of the General Meeting the Portuguese Companies’

Code provides that remuneration shall consist of a fixed amount which is equally determined either on a General Shareholders'

Meeting or by a committee appointed by it for this purpose, taking into consideration each member's performance and the

company's economic situation.

Moreover, Articles 13 and 20 of the Articles of Incorporation state the following:

- The remunerations of the members of the Corporate Bodies shall be fixed by the Remuneration Committee;

- The General Meeting that elects the corporate bodies shall also elects the Remuneration Committee;

- As The remuneration of the Board of Directors may be formedby a fixed part and a variable one , the latter representing a

percentage that can never exceed five per cent of the net profits for the year; and

- The remuneration of the Supervisory Board shall consist of a fixed amount.

III – GENERAL PRINCIPLES

The Remunerations Committee pursues, in its remunerations policy, to promote the convergence of the interests of Directors,

other Corporate Bodies and Managers with the interests of the Company, namely shareholder value creation and real growth of

the Company, privileging here a long term perspective.

Pursuing this aspiration, and accordingly to the policy adopted in previous years, the Committee structured the integrant

components of the income of the Board of Directors in order to reward their performance, discouraging however excessive

risks-taking. This way, it is intended to promote a high-level sustained growth.

Finally, it is relevant to say that is determinant in this Committee’s mission the economic position of the Company as well the

general market practices for similar situations.

Specifying the general policy herein stated, we hereby present to the shareholders the principals informants observed by this

Committee in the definition of the remunerations:

a) Interests alignment between the Management and Supervisory Bodies and the Company – Performance

evaluation

In the decision of the remuneration of each member of the Board of Directors, shall be taken into account, for each single

member, the functions performed by individual members, the complexity of his duties, the responsibilities that are, in fact,

attributed to him, the time dedicated and the added value the result of his work brings to the Company.

In that extent, one cannot fail to differentiate the remuneration between the Executive Board members and the non-

Executive Board members, as well as the remuneration amongst each of the cited group.


There are also duties performed in other controlled companies which cannot be excluded from this consideration, as this

means, on one side, there is an increase in terms of responsibility and, on the other, in terms of the collective source of

income.

b) Interests alignment between the Management and Supervisory Bodies and the Company – Performance

evaluation

In order to grant an efficient alignment of interests of the Management and Supervisory Bodies with the ones of the

Company, this Committee shall not fail to pursue a policy that rewards the Board Directors by the performance of the

Company in a long term perspective and in the creation of value for the shareholder.

c) Economic position of the Company

This criterion has to be understood and interpreted carefully. The size of the Company and the inevitable complexity of

management associated to it is clearly one of the relevant aspects to determine the economic situation of the Company and

of remuneration, understood in its broader sense. To a higher level of complexity, corresponds a higher remuneration, but it

has to be adjusted accordingly to other criteria informants of the economic situation of the Company (of financial nature,

human resources nature, etc).

d) Market Criteria

The balance between supply and demand is unavoidable when setting any remuneration and the situation regarding members

of the Corporate Bodies is no exception. Only by taking into account market practices will allow the Company to maintain

professionals guided to perform at an adequate level of complexity and responsibility, It is important that the remuneration is

aligned with market practices and that it is stimulant, allowing it to become an instrument to help achieve a single and

collective high level of performance, thus ensuring not only the individual interest, but mostly the interests of the Company

and of the shareholders.

IV – CONCRETE OPTIONS

Based on the above mentioned principles, this Committee disclosure the relevant information regarding the concrete options of

the remunerations policy, which hereby are submitted to the Company’s shareholders appreciation:

1st Remuneration of Executive members of the Board of Directors, shall be made up of a fixed and, when so determined by the

Remuneration Committee, a variable part, and, according to the law and article 20.3 of the Articles of Association, the

variable part may not exceed 5% (five per cent) of the annual net profit.

2nd Remuneration for non-Executive independent members of the Board of Directors, members of the Supervisory Board and

members of the Board of the General Meeting shall only consist of a fixed part.

3rd The fixed part of the remuneration of the Executive members of the Board of Directors, as well the non-Executive Members

non independent (when applicable), shall consist in a monthly amount payable fourteen times per annum.

4th A fixed remuneration, for each participation in the meetings of the Board of Directors, shall be set for the non-Executive and

independent Board members.

5th Fixed remuneration of members of the Supervisory Board shall be set in a monthly value payable twelve times per annum.

6th In setting all remunerations, including in distributing the global amount of the variable pay of the members of the Board of

Directors, the general principles referred to above will be observed: functions carried out, alignment with the interests of the

company, privileging the long term, the company situation and market criteria.

7th Fixed remuneration of the members of the Board of the General Meeting will be a predetermined value for each meeting.


8th The process of attribution of variable remuneration to Executive members of the Board of Directors must follow the criteria

proposed by the Remunerations Committee, namely their hierarchal stand, evaluation of performance and real growth of the

Company, seeking to promote in those the convergence of the interests of the Management Body with the Company, with

emphasis on the long-term performance. Thus, will be considered decisive for the evaluation and measurement of the VR:

The contribution of the Executive Directors for the results obtained;

The profitability of business in the perspective of the shareholder;

The evolution of the stock quotes;

The degree of achievement of the projects integrated in and measured by the Balanced Scorecard of the Company.

9th Notwithstanding the policies above mentioned of protection of the shareholders and Company’s interests on the long term,

the Committee, in search of the best practices of Corporate Governance regarding remuneration policies of the Corporate

Bodies, continues: (i) promoting a study and comparative analysis of remuneration policies and practices of other groups of

companies in the same sector with respect to the fixing of remuneration for future implementation and adoption in Martifer,

as well as (ii) studying the possibility of adoption of politics that, shown to be feasible and balanced to all actors, foresee the

possibility of the variable remuneration – when attributed - to be payable, in part or totally, only after clearance of the fiscal

accounts of all the mandate and, on the other hand, that allows a limitation to the variable remuneration in case the results

show a relevant deterioration of the company’s Performance in the last cleared fiscal year or when it is expected in the

designated year.

V – LIMITS

In case of verification of an permanent and not exceptional increase of the volume of activity associated with the exercise of the

functions by General Meeting and the Supervisory Board members, the maximum amount payable to the members of the

governing bodies, in particular the members of the General Meeting and the Supervisory Board may not exceed, respectively,

either individually or in aggregate, 25% of the average amount paid on the last 3 financial years, for the corresponding member of

the governing body.

VI – OTHER RESPONSIBILITIES

Regarding the process of hiring or appointing members to its governing bodies, the Company shall not enter into any contracts

or agreements with such members that allow the recognition or assignment of the right to receive payment of any damages or

compensation beyond the amounts legally payable, in the event of dismissal or termination of service.

It is our understanding that, in light of what is said in the above, these options should be maintained until the next General

Meeting.

The Remuneration Committee,

REPORT AND OPINION OF THE SUPERVISORY BOARD On the consolidated Accounts of 2014

(TRANSLATION OF A REPORT ORIGINALLY ISSUED IN PORTUGUESE) Dear Shareholders, 1. In accordance with the law, statutes and our mandate, we enclose our report on our supervisory activity and our

opinion on Martifer – SGPS, S.A. management report and consolidated accounts for the year ending December 31, 2014, as well as on the proposals presented by the Board of Directors

2. We followed regularly the activity of the company and of its major subsidiaries, having received from the executive members of the Board and from company officials all required explanations and support for the completion of our duties.

3. We noted that the Group’s turnover sharply decreased to around 189 million euros, equity was reduced to around 15 million euros and liabilities reached 617 million euros, to assets of around 732 million euros. Net profit was very negative in around 137 million euros.

4. We accompanied the preparation of the consolidated accounts, the work of the statutory auditor with whom we met several times and we reviewed the Legal Certification of Consolidated Accounts, which have our agreement.

5. Within the scope of competence conferred upon us, we have found that:

a) The Consolidated Statements of Financial Position, the Consolidated Income Statements, the Consolidated Statements of Comprehensive Income, the Consolidated Cash-flow Statements and the Consolidated Statement of Changes in Shareholders’ Equity, and respective accompanying Notes give a true and fair view of the Company and its subsidiaries financial position and financial results.

b) The accounting policies and valuation criteria used are in accordance with the International Financial Reporting Standards.

c) The Management Report shows a clear picture of the most significant aspects of the evolution of the businesses and the position of the Company and its subsidiaries, describing clearly the most important activities of the Group.

d) As a consequence of the major losses referred previously, the company is following a debt restructuring plan; therefore, the Group’s financial recovery relies on the completion of this plan and the success of future operations of the Group’s companies.

6. Therefore, taking into account the information received from the Board of Directors and from the statutory auditor, and the conclusions of the Legal Certification of Consolidated Accounts and the Auditor’s Report on Consolidated Financial Statements issued by the external auditors, we are of the opinion that:

a) The Management Report should be approved.

b) The Consolidated Financial Statements should be approved.

Oliveira de Frades, 09 April 2015

___________________________________________________ Manuel Simões de Carvalho e Silva Chairman of the Supervisory Board ___________________________________________________ Carlos Alberto da Silva e Cunha Member of the Supervisory Board

___________________________________________________ João Carlos Tavares Ferreira de Carreto Lages Member of the Supervisory Board

REPORT AND OPINION OF THE SUPERVISORY BOARD On the individual Accounts of 2014

(TRANSLATION OF A REPORT ORIGINALLY ISSUED IN PORTUGUESE) Dear Shareholders,

1. In accordance with the law, statutes and our mandate, we enclose our report on our supervisory activity and our

opinion on Martifer – SGPS, S.A. management report and individual accounts for the year ending December 31, 2014, as well as on the proposals presented by the Board of Directors

2. We followed regularly the activity of the company and of its major subsidiaries, having received from the executive members of the Board and from company officials all required explanations and support for the completion of our duties.

3. We accompanied the work of the statutory auditor, with whom we met several times, and we reviewed the Legal Certification of Accounts, which has our agreement

4. Within the scope of competence conferred upon us, we have found that:

a) The management report and financial statements show a clear picture of the financial position, financial results and cash flows of the Company

b) It is our duty to point out that the net profit in the period was very negative, in around 122 million euros, mainly due to the recognition of impairment losses in participations in some subsidiaries and affiliated companies. Consequently, the company is following a debt restructuring plan; therefore, the Group’s financial recovery relies on the completion of this plan and the success of future operations of the Group’s companies.

c) The accounting policies and valuation criteria used, in accordance with the generally accepted accounting principles in Portugal, are appropriate to understanding the net worth of the Company at the end of the financial year and its results.

d) The proposal of results allocation is adequate under the current circumstances.

5. Therefore, taking into account the information received from the Board of Directors, from the statutory auditor and the conclusions of the Legal Certification of Accounts, we are of the opinion that:

1) The Management Report should be approved;

2) The Individual Financial Statements should be approved;

3) The proposal of results allocation should be approved.

Oliveira de Fradxes, 09 April 2015



STATEMENT OF COMPLIANCE (In the terms of article 245, number 1, paragraph C of the Securities Code)

Dear Shareholders,

We hereby declare that as to the best of our knowledge:

i) The information in the individual and consolidated financial statements, as well as in the appendices, was

compiled in accordance with the applicable accounting standards, giving a true and appropriate picture of the

assets and liabilities, financial position and performance of Martifer - SGPS, S.A. and of the companies included

in the consolidation perimeter;

ii) The information contained in the Management Report truthfully represents the operational performance and

position of Martifer – SGPS, S.A. and the companies included in the consolidation perimeter, including a

description of the main risks and uncertainties faced by the company

Oliveira de Frades, 09 April 2015



PricewaterhouseCoopers & Associados - Sociedade de Revisores Oficiais de Contas, Lda.o′Porto Bessa Leite Complex, Rua António Bessa Leite, 1430 - 5º, 4150-074 Porto, Portugal

Tel +351 225 433 000 Fax +351 225 433 499, www.pwc.com/ptMatriculada na Conservatória do Registo Comercial sob o NUPC 506 628 752, Capital Social Euros 314.000

PricewaterhouseCoopers & Associados - Sociedade de Revisores Oficiais de Contas, Lda. pertence à rede de entidades

que são membros da PricewaterhouseCoopers International Limited, cada uma das quais é uma entidade legal autónoma e independente.

Sede: Palácio Sottomayor, Rua Sousa Martins, 1 - 3º, 1069 - 316 Lisboa, Portugal

Inscrita na lista das Sociedades de Revisores Oficiais de Contas sob o nº 183 e na Comissão do Mercado de Valores Mobiliários sob o nº 9077

Audit Report for Statutory and Stock Exchange Regulatory Purposes onthe Consolidated Financial Information

(Free translation from the original in Portuguese)

Introduction

1 As required by law, we present the Audit Report for Statutory and Stock Exchange RegulatoryPurposes on the financial information included in the Directors’ Report and in the attachedconsolidated financial statements of Martifer, S.G.P.S., S.A., comprising the consolidatedstatement of financial position as at December 31, 2014, (which shows total assets of Euro 632,729,698and total shareholder's equity of Euro 15,347,990 including negative non-controlling interests of Euro24,942,297 and a net loss of Euro 93,535,824), the consolidated statement of income by nature, theconsolidated statement of comprehensive income, the consolidated statement of changes in equity andthe consolidated statement of cash flows for the year then ended, and the corresponding notes to theaccounts.

Responsibilities

2 It is the responsibility of the Company’s Board of Directors (i) to prepare the Directors’ Reportand the consolidated financial statements which present fairly, in all material respects, the financialposition of the Company and its subsidiaries, the consolidated results and the consolidatedcomprehensive income of their operations, the changes in consolidated equity and the consolidatedcash flows; (ii) to prepare historic financial information in accordance with International FinancialReporting Standards as adopted by the European Union and which is complete, true, up-to-date, clear,objective and lawful, as required by the Portuguese Securities Market Code; (iii) to adopt appropriateaccounting policies and criteria; (iv) to maintain appropriate systems of internal control; and (v) todisclose any significant matters which have influenced the activity, financial position or results of theCompany and its subsidiaries.

3 Our responsibility is to verify the financial information included in the financial statementsreferred to above, namely as to whether it is complete, true, up-to-date, clear, objective and lawful, asrequired by the Portuguese Securities Market Code, for the purpose of issuing an independent andprofessional report based on our audit.

Scope

4 We conducted our audit in accordance with the Standards and Technical Recommendationsissued by the Institute of Statutory Auditors which require that we plan and perform the audit toobtain reasonable assurance about whether the consolidated financial statements are free frommaterial misstatement. Accordingly, our audit included: (i) verification that the Company and itssubsidiaries’ financial statements have been appropriately examined and, for the cases where such anaudit was not carried out, verification, on a sample basis, of the evidence supporting the amounts anddisclosures in the consolidated financial statements and assessing the reasonableness of the estimates,based on the judgements and criteria of the Board of Directors used in the preparation of theconsolidated financial statements; (ii) verification of the consolidation operations and the utilization of

Audit Report for Stock Exchange Regulatory Purposes Martifer S.G.P.S, S.A.

December 31, 2014 PwC 2 of 2

the equity method; (iii) assessing the appropriateness of the accounting principles used and theirdisclosure, as applicable; (iv) assessing the applicability of the going concern basis of accounting; (v)assessing the overall presentation of the consolidated financial statements; and (vi) assessing thecompleteness, truthfulness, accuracy, clarity, objectivity and lawfulness of the consolidated financialinformation.

5 Our audit also covered the verification that the information included in the Directors’ Report isconsistent with the financial statements as well as the verification set forth in paragraphs 4 and 5 ofArticle 451º of the Companies Code.

6 We believe that our audit provides a reasonable basis for our opinion.

Opinion

7 In our opinion, the consolidated financial statements referred to above, present fairly in allmaterial respects, the consolidated financial position of Martifer, S.G.P.S., S.A. as at December 31,2014, the consolidated results and the consolidated comprehensive income of its operations, thechanges in consolidated equity and the consolidated cash flows for the year then ended, in accordancewith International Financial Reporting Standards as adopted by the European Union and theinformation included is complete, true, up-to-date, clear, objective and lawful.

Report on other legal requirements

8 It is also our opinion that the information included in the Directors’ Report is consistent withthe consolidated financial statements for the year and that the Corporate Governance Report includesthe information required under Article 245º-A of the Portuguese Securities Market Code.

Emphasis

9 Without qualifying our opinion expressed in paragraph n. 7 above, as mentioned in Note 1 xxvii)of the Notes to the Consolidated Financial Statements, we draw attention to the fact that the Group isrenegotiating its debt with financial institutions. Additionally, the impairment tests of Goodwill andTangible Assets were performed based on the assumptions disclosed in Notes 17 and 19. The Board ofDirectors expects that the final outcome of the negotiations and the development of its business,levered by the actual sales orders, will enable the conditions for the company to solve its commitmentsand recover the value of its assets.

April 9, 2015

PricewaterhouseCoopers & Associados- Sociedade de Revisores Oficiais de Contas, Lda.represented by:

Hermínio António Paulos Afonso, R.O.C.

PricewaterhouseCoopers & Associados - Sociedade de Revisores Oficiais de Contas, Lda.o′Porto Bessa Leite Complex, Rua António Bessa Leite, 1430 - 5º, 4150-074 Porto, Portugal

Tel +351 225 433 000 Fax +351 225 433 499, www.pwc.com/ptMatriculada na Conservatória do Registo Comercial sob o NUPC 506 628 752, Capital Social Euros 314.000

PricewaterhouseCoopers & Associados - Sociedade de Revisores Oficiais de Contas, Lda. pertence à rede de entidades

que são membros da PricewaterhouseCoopers International Limited, cada uma das quais é uma entidade legal autónoma e independente.

Sede: Palácio Sottomayor, Rua Sousa Martins, 1 - 3º, 1069 - 316 Lisboa, Portugal

Inscrita na lista das Sociedades de Revisores Oficiais de Contas sob o nº 183 e na Comissão do Mercado de Valores Mobiliários sob o nº 9077

Audit Report for Statutory and Stock Exchange Regulatory Purposes onthe Individual Financial Information

(Free translation from the original in Portuguese)

Introduction

1 As required by law, we present the Audit Report for Stock Exchange Regulatory Purposes on thefinancial information included in the Directors’ Report and in the attached financial statements ofMartifer, S.G.P.S., S.A., comprising the statement of financial position as at December 31, 2014(which shows total assets of Euro 216,440,014 and total shareholder's equity of Euro 59,421,489including a net loss of Euro 121,612,930), the statement of income by nature, the statement ofcomprehensive income, the statement of changes in equity and the statement of cash flows for the yearthen ended, and the corresponding notes to the accounts.

Responsibilities

2 It is the responsibility of the Company’s Board of Directors (i) to prepare the Directors’ Reportand the financial statements which present fairly, in all material respects, the financial position of theCompany, the results and the comprehensive income of its operations, the changes in equity and thecash flows; (ii) to prepare historic financial information in accordance with International FinancialReporting Standards as adopted by the European Union and which is complete, true, up-to-date, clear,objective and lawful, as required by the Portuguese Securities Market Code; (iii) to adopt appropriateaccounting policies and criteria; (iv) to maintain an appropriate system of internal control; and (v) todisclose any significant matters which have influenced the activity, financial position or results of theCompany.

3 Our responsibility is to verify the financial information included in the financial statementsreferred to above, namely as to whether it is complete, true, up-to-date, clear, objective and lawful, asrequired by the Portuguese Securities Market Code, for the purpose of issuing an independent andprofessional report based on our audit.

Scope

4 We conducted our audit in accordance with the Standards and Technical Recommendationsissued by the Institute of Statutory Auditors which require that we plan and perform the audit toobtain reasonable assurance about whether the financial statements are free from materialmisstatement. Accordingly, our audit included: (i) verification, on a sample basis, of the evidencesupporting the amounts and disclosures in the financial statements, and assessing the reasonablenessof the estimates, based on the judgements and criteria of the Board of Directors used in thepreparation of the financial statements; (ii) assessing the appropriateness of the accounting principlesused and their disclosure, as applicable; (iii) assessing the applicability of the going concern basis ofaccounting; (iv) assessing the overall presentation of the financial statements; and (v) assessing thecompleteness, truthfulness, accuracy, clarity, objectivity and lawfulness of the financial information.

Audit Report for Stock Exchange Regulatory Purposes Martifer, S.G.P.S., S.A.

December 31, 2014 PwC 2 of 2

5 Our audit also covered the verification that the information included in the Directors’ Report isconsistent with the financial statements as well as the verification set forth in paragraphs 4 and 5 ofArticle 451º of the Companies Code.

6 We believe that our audit provides a reasonable basis for our opinion.

Opinion

7 In our opinion, the financial statements referred to above, present fairly in all material respects,the financial position of Martifer, S.G.P.S., S.A as at December 31, 2014, the results and thecomprehensive income of its operations, the changes in equity and the cash flows for the year thenended, in accordance with International Financial Reporting Standards as adopted by the EuropeanUnion and the information included is complete, true, up-to-date, clear, objective and lawful.

Report on other legal requirements

8 It is also our opinion that the information included in the Directors’ Report is consistent withthe financial statements for the year and that the Corporate Governance Report includes theinformation required under Article 245º-A of the Portuguese Securities Market Code.

Emphasis

9 Without qualifying our opinion expressed in paragraph n. 7 above, as mentioned in Note 1xxvii) of the Notes to the Individual Financial Statements, we draw attention to the fact that theCompany is renegotiating its debt with financial institutions. Additionally, the impairment tests offinancial investments were performed based on the assumptions disclosed in Note 11. The Board ofDirectors expects that the final outcome of the negotiations and the development of its business,levered by the actual sales orders, will enable the conditions for the company to solve its commitmentsand recover the value of its assets.

April 9, 2015

PricewaterhouseCoopers & Associados- Sociedade de Revisores Oficiais de Contas, Lda.represented by:

Hermínio António Paulos Afonso, R.O.C.