CONSTRUTORA QUEIROZ GALVÃO S.A.

CONSTRUTORA
QUEIROZ GALVÃO S.A.
C O N S T R U TO R A
Q U E I R O Z
G A LVÃ O
S . A .
2
B A L A N Ç O S P AT R I M O N I A I S C O N S O L I D A D O S
Em 31 de dezembro de 2008 e 2007 (em milhares de reais)
MANAGERIAL REPORT
To the Stockholders,
In accordance with the by-laws, we are submitting for your consideration the annual
report of the management, and the related financial statements for the year ended
December 31, 2009, of Construtora Queiroz Galvão S.A. The Management is grateful to all those who contributed toward the results achieved,
especially our team of collaborators for their hard work and dedication, to suppliers
and service providers for their good quality and punctuality and to clients for their faith
in our work.
Rio de Janeiro, April 12th, 2010.
BOARD OF DIRECTORS
EXECUTIVE BOARD
Advisory Council:
Directors
Maurício José de Queiroz Galvão
President
André Gustavo de Farias Pereira
Ildefonso Colares Filho
Luiz Evaldo Rios Leite
Luiz Ronaldo Cherulli
Nilton Marchetti
Petrônio Braz Junior
Ricardo da Bôa Viagem Parahyba
Rui Novais Dias
Rui Vaz da Costa Filho
Urbano Ramos de Andrade Lima
Fernando de Queiroz Galvão
Vice President
Marcos de Queiroz Galvão
Ricardo de Queiroz Galvão Counselor
Accountant
Edson Ferreira
CRC-RJ 59.443/0-0
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S . A .
C O N S O L I D AT E D B A L A N C E S H E E T S
At December 31, 2009 and 2008 (in thousand of US dollars)
CONSOLIDATED
ASSETS
2009
HOLDING COMPANY
2008
2009
2008
Current assets:
Cash
100,209
63,093
40,502
9,160
Marketable securities 597,393
393,762
461,305
231,767
Trade accounts receivable
452,186
294,058
532,708
321,018
Inventories
141,554
114,492
103,112
39,834
Tax recoverable
43,075
6,542
2,721
341
Prepaid expenses
19,998
11,705
3,764
3,480
Other receivables
16,384
30,294
1,020
354
Total current assets
1,370,799
913,946
1,145,132
605,954
13,450
9,028
13,450
9,028
5,848
4,044
-
-
72,495
72,700
277
171
-
-
287,909
203,088
30,398
15,744
2,226
1,751
770,423
421,389
160,430
101,638
26,400
16,973
20,048
14,752
Non current assets:
Long-term assets:
Marketable securities Deposits for fiscal investiments
Other accounts receivable
Investments in subsidiaries and affiliates (note 6)
Other investments
Fixed assets (note 5)
Intangible assets
Deferred assets
Total non current assets
7,999
2,866
-
-
927,013
542,744
484,340
330,429
2,297,812
1,456,690
1,629,472
936,383
(continued)
See notes to financial statements.
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S . A .
C O N S O L I D AT E D B A L A N C E S H E E T S
At December 31, 2009 and 2008 (in thousand of US dollars)
CONSOLIDATED
LIABILITIES
HOLDING COMPANY
2009
2008
2009
2008
Trade accounts payable
214,795
188,476
52,622
23,686
Loans
296,481
104,656
63,692
39,679
Payroll and social securities and tax
and social contribution payable
80,585
49,689
40,590
19,673
Other accounts payable
42,491
16,935
15,149
635
634,352
359,756
172,053
83,673
474,524
233,336
168,492
49,692
Tax and social contribution payable
12,358
11,634
10,904
9,372
Related parties
25,637
82,745
84,221
62,204
Other accounts payable
42,671
26,433
-
-
Deferred income tax and social contribution
27,227
21,267
27,227
15,342
Discount of price
(5,255)
(1,535)
-
-
Deferred income
116,470
40,709
116,452
34,202
Total non current liabilities
693,632
414,589
407,296
170,812
Minority interest
(80,295)
447
-
-
482,452
299,529
482,452
299,529
4,446
3,312
4,446
3,312
21,498
16,548
21,498
16,548
Current liabilities:
Total current liabilities
Non current liabilities:
Loans Shareholders’ equity:
Capital stock (note 7)
Capital reserve
Revaluation reserve
Earning reserve
Total shareholder’s equity
See notes to financial statements.
541,727
362,508
541,727
362,508
1,050,123
681,898
1,050,123
681,898
2,297,812
1,456,690
1,629,472
936,383
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S . A .
C O N S O L I D AT E D S TAT E M E N T S O F I N C O M E
Years ended December 31, 2009 and 2008 (in thousand of US dollars)
CONSOLIDATED
2009
HOLDING COMPANY
2008
2009
2008
Service income
3,000,765
1,633,562
2,317,765
1,201,063
-
-
62,621
7,172
(2,434,962)
(1,331,618)
(1,939,515)
(985,398)
565,803
301,944
440,871
222,837
(281,332)
(148,625)
(97,679)
(58,072)
Depreciation
(27,011)
(19,842)
(10,159)
(10,233)
Tax expenses
(16,315)
(8,727)
(11,895)
(5,549)
Other
(15,581)
(28,443)
1,177
490
(340,239)
(205,637)
(118,556)
(73,364)
Equity in earnings of subsidiaries and affiliates
Cost of services
Gross profit
Operating income (expenses):
Administrative
Financial income
187,830
134,492
44,383
31,989
Financial expenses
(96,412)
(48,792)
(54,101)
(14,644)
Financial expenses - interest on shareholders’ equity
(53,986)
(34,232)
(53,986)
(34,232)
53,986
34,232
53,986
34,232
91,418
85,700
(9,718)
17,345
Profit before social contribution and income tax
316,982
182,007
312,597
166,818
Social contribution
(15,704)
(6,625)
(9,717)
(3,312)
Income tax
(33,088)
(23,057)
(26,057)
(12,144)
13,340
(951)
-
-
281,530
151,374
276,823
151,362
(4,707)
(12)
-
-
276,823
151,362
276,823
151,362
0.33
0.18
843,584,781
843,584,781
Reversion - interest on shareholders’ equity
Reversal of deferred income tax and social contribution
Income before minority interest
Minority interest
Net income
Earning per share
Number of shares of the capital stock
See notes to financial statements.
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S . A .
S TAT E M E N T S O F C H A N G E S I N S H A R E H O L D E R S ’ E Q U I T Y
Years ended December 31, 2009 and 2008 (in thousand of US dollars)
CAPITAL
STOCK
ADVANCE FOR
FUTURE
INCREASE IN
CAPITAL
CAPITAL STOCK RESERVE
EARNING RESERVE
REVALUATION LEGAL REALIZABLE
RESERVE
RESERVE PROFITS
RETAINED
EARNINGS
TOTAL
Balances at December 31, 2007
302,116
14,112
4,370
22,646
29,523
-
389,307
762,074
Gain on translation
(73,131)
(3,416)
(1,058)
(5,482)
(7,146)
-
(94,237)
(184,470)
Capital increase
70,544
(10,696)
-
-
-
-
(59,848)
-
Parcial split off -
-
-
-
-
-
-
-
Realization of the revaluation reserve
-
-
-
(616)
-
-
616
-
Dividends paid
-
-
-
-
-
-
(12,837)
(12,837)
Net income for the year
-
-
-
-
-
-
151,362
151,362
Constitution of earning reserve
-
-
-
-
-
332,563
(332,563)
-
Financial expenses - interest on shareholders’ equity
-
-
-
-
-
-
(34,232)
(34,232)
Legal reserve
-
-
-
-
7,568
-
(7,568)
-
Balances at December 31, 2008
299,529
-
3,312
16,548
29,945
332,563
-
681,898
Gain on translation
102,493
-
1,134
5,663
10,246
113,797
-
233,332
80,430
-
-
-
-
-
-
80,430
Realization of the revaluation reserve
-
-
-
(713)
-
-
713
-
Dividends paid
-
-
-
-
-
(168,374)
-
(168,374)
Net income for the year
-
-
-
-
-
-
276,823
276,823
Constitution of earning reserve
-
-
-
-
-
209,709
(209,709)
-
Financial expenses - interest on shareholders’ equity
-
-
-
-
-
-
(53,986)
(53,986)
Legal reserve
-
-
-
-
13,841
-
(13,841)
-
482,452
-
4,446
21,498
54,032
487,695
-
1,050,123
Appropriation of earnings:
Capital increase
Appropriation of earnings:
Balances at December 31, 2009
See notes to financial statements.
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S . A .
S TAT E M E N T O F C A S H F L O W
Years ended December 31, 2009 and 2008 (in thousand of US dollars)
CONSOLIDATED
HOLDING COMPANY
2009
2008
2009
2008
276,823
151,362
276,823
151,362
87,684
(4,707)
11,309
(91,418)
279,691
56,148
(4,349)
8,426
(85,700)
125,887
44,404
(62,621)
4,623
9,718
272,947
29,208
(7,172)
5,131
(17,345)
161,186
(158,128)
(27,062)
(36,533)
(403)
(57,108)
26,319
(8,241)
(43,763)
8,765
(89,322)
82,745
29,985
(211,690)
(63,278)
(2,380)
(5,478)
22,017
28,936
(52,822)
(28,488)
617
(3,215)
3,278
30,896
39,777
97,448
(96,412)
13,718
33,317
153,091
(48,791)
20,917
110,180
172,172
(54,101)
7,400
73,788
161,744
(14,644)
1,036
104,300
118,071
147,100
(472,535)
(292,872)
(113,114)
(64,236)
187,830
134,492
(22,675)
44,383
36,103
31,989
(284,705)
(158,380)
(91,406)
3,856
433,013
80,430
226,012
-
142,813
80,430
39,270
-
(222,360)
(47,069)
(222,360)
(47,069)
291,083
178,943
883
(7,799)
7,415
124,863
27,548
143,157
Cash and cash equivalents, beginning of the year
456,855
438,021
240,927
224,260
Cash and cash equivalents, end of the year
697,602
456,855
501,807
240,927
(233,332)
106,029
(233,332)
126,490
7,415
124,863
27,548
143,157
Cash flows from operating activities:
Loss for the year
Adjustments for:
Depreciation
Equity in earnings of subsidiaries and affiliates
Minority interest
Net value of fixed asset written off
Interest expenses
Decrease (increase) in accounts receivable
Decrease (increase) in inventories
Decrease (increase) in recoverable taxes
Decrease (increase) in other accounts receivable
Increase (decrease) in related parties
Increase (decrease) in suppliers
Increase (decrease) in salaries, charges
and tax obligations to pay
Increase (decrease) in other trade accounts payable
Cash flows from operating activities
(-) Interests paid
Net cash used in operating activities
Cash flows used in investing activities
(-) Additions in fixed assets
(-) Additions in invest.In affiliates and subsidiaries
Interests received
Net cash used in investing activities
Cash flows from financing activities
Financing
Capital increase
Financial expenses - interest on shareholders’ equity and dividends
Net cash used in financing activities
Increase in cash and cash equivalents
Gain on translation
Increase in cash and cash equivalents
See notes to financial statements.
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N O T E S T O C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
Years ended December 31, 2009 and 2008 (in thousand of US dollars)
(A translation of the original report in Portuguese containing financial statements
prepared in accordance with accounting practices generally accepted in Brazil)
1 > OPERATIONS
The company is primarily engaged in the engineering construction field, including construction of bridges, tunnels,
barriers, roads, buildings, airports and other related works.
2 > PRESENTATION OF FINANCIAL STATEMENTS
The financial statements have been prepared in accordance with accounting practices adopted in Brazil, which
include the criteria established by Law nº 6404/76 with changes introduced by Law nº 11.638/07 additional
rules of the Brazilian Securities and Exchange Commission – CVM, and the Brazilian Independent Accountants
Institute (IBRACON).
3 > SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a.Income and expenses
•Income and expenses are recorded for in accordance to the accrual basis method of accounting.
•The income tax expense is calculated at the rate of 15% applied on taxable income plus a 10% surcharge and
includes fiscal incentives.
•The social contribution expense was computed at the rate of 9% applied on adjusted taxable income before
income tax, in accordance to current legislation.
•Deferred income tax and social contribution relate to income and expenses recorded for in accordance to
Brazilian generally accepted accounting principles but regarded as taxable or deductible in different periods for
tax purposes.
b.Marketable securities
Marketable securities are represented by investments in fixed income securities and are stated at cost, plus accrued income to the balance sheet date, which do not exceed the market value.
c. Trade accounts receivable
Trade accounts receivable are represented by invoices or promissory note not paid in balance sheets date, as
well as executed service, but which income didn’t happen yet.
d.Inventories
Inventories are stated at the lower of the average cost or market.
e.Permanent assets
Permanent assets are stated at cost (monetarily corrected cost up to December 31, 1995), including the following:
• Investments in subsidiaries and affiliates are accounted for by the equity method based on the invested financial statements. Other investments are stated at cost.
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N O T E S T O C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
Years ended December 31, 2009 and 2008 (in thousand of US dollars)
• Depreciation of fixed assets is calculated using the straight-line method over the useful lives of the assets.
• Deferred assets are represented by actual disbursements, net of related income. The amortization is calculated using the straight-line method at annual rates of 10% and 20%.
f. Deferred income tax and social contribution
Deferred income tax and social contribution were calculated relate to income and expenses recorded in accoun
ting principles but regarded as taxable or deductible in different periods for tax purposes.
g.Deferred income cost
Income and cost of short-term constructions are recognized as “Deferred Income” being credit and charged to
income at the conclusion of the construction.
Income and cost sales of units under construction or constructed are accounted for as “Deferred Income” at the
tine of signature of the formal sale’s contract. The recognition in the income statement occurs at the time the
company receives the installments from the clients.
h.Translation into United States dollars
The United States dollar amounts result from translation of the financial statements at the year-end rate of
exchange as follows:
2009
2008
R$ 1.7412 per US$ 1.00
R$ 2.337 per US$ 1.00
The translation should not be construed as representation that the real (R$) amounts actually represent or have
been, or could be converted into United States dollars.
4 > CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements as of December 31, 2009 and 2008 comprehend the holding company Queiroz
Galvão S.A. and the subsidiaries mentioned on note 6.
Such financial statements have been prepared based on rules and procedures established by the Brazilian Security
and Exchange Commission – CVM (CVM Instruction nº 247/96). The process of consolidation of the balance sheet
and income statement accounts correspond to the sum of accounts of the assets, liabilities, income and expenses,
by nature, and adjusted by the elimination of:
•Income and expenses and reserves among them.
•Any asset or liability balance among them.
•The effects originated from transactions realized among the consolidated companies.
•Excess and discount of price over the carrying value of the investments were based on future results expectation,
which in accordance with the Instruction of the Security and Exchange Commission – CVM, have been classified
as deferred income. The minority interests are demonstrated on the liability side.
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N O T E S T O C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
Years ended December 31, 2009 and 2008 (in thousand of US dollars)
5 > FIXED ASSETS AND INTANGIBLE
ESTIMATED
USEFULL
LIVES
(YEARS)
2009
2008
2009
Field equipments
5
268,695
198,445
221,787
132,248
Fixed assets in progress
4
431,609
179,780
-
-
Vehicles
5
182,251
138,435
90,509
58,943
Buildings
25
18,924
10,573
2,750
1,846
Mainteinance equipments
10
33,697
21,307
8,695
5,817
Lands
-
10,227
10,673
22,832
14,195
Furniture and fixtures
10
85,025
34,730
3,245
2,371
Other fixed assets
10
FIXED ASSETS
CONSOLIDATED
HOLDING COMPANY
2008
43,071
30,694
8,049
17,754
1,073,499
624,637
357,867
233,174
(303,076)
(203,246)
(197,437)
(131,536)
770,423
421,389
160,430
101,638
Software
5,014
3,184
1,558
-
Award rights of concession
2,042
-
-
-
Trademarks and technology
19,175
13,657
18,321
14,620
169
132
169
132
26,400
16,973
20,048
13,782
Less:
Accumulated depreciation
INTANGIBLE
Telephone lines
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N O T E S T O C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
Years ended December 31, 2009 and 2008 (in thousand of US dollars)
6 > INVESTMENTS IN SUBSIDIARIES AND AFFILIATES
2009
Agropecuária Rio Arataú S.A.
Queiroz Galvão International Ltda.
Queiroz Galvão Alimentos S.A.
%
2008
%
101
7.64
39
7.64
22,104
100.00
5,608
100.00
537
7.71
935
7.71
12.38
Concessionária Rio Teresópolis S.A
7,468
12.38
5,566
CHC – Centrales Hidroeletricas de Centroamerica S.A.
4,598
100.00
-
-
Cia. Siderúrgica Vale do Pindaré
7,017
10.37
4,549
10.37
Siderúrgica do Maranhão S.A.
5.34
2,176
5.34
1,157
SOMAH Participações Empresariais S.A.
1
100.00
-
-
Queiroz Galvão Desenvolvimento Imobiliário Ltda.
-
-
71,447
100.00
Pedreira Guarany Ltda.
15,740
99.47
5,781
99.47
Queiroz Galvão Engenharia S.A.
2,439
100.00
-
-
Queiroz Galvão Serviços Especiais de Eng. Ltda.
1,451
99.99
2,584
99.99
51
100.00
71
100.00
-
40.59
-
40.59
Ecourbis Ambiental S.A.
3,379
57.80
3,468
57.80
Enob Concessões S.A.
5,182
63.25
-
-
RG Sul Participações S.A.
2,658
100.00
17,012
100.00
Intersur Concesiones S.A.
3,235
33.33
1,599
33.33
Joint Ventures
8,846
65.00
4,936
65.00
Q. Galvão Importação e Exportação Ltda.
Queiroz Petro S.A.
Constructora Recife S.A.C.
Locav Locadora Ltda.
Constructora SUR S.A.
8,699
100.00
7,808
100.00
10,958
100.00
19,899
100.00
524
33.33
2,474
33.33
EOL Energy
-
-
1,130
90.20
NEDL Construções de Dutos do Nordeste Ltda.
-
14.60
-
14.60
Construtora Queiroz Galvão S.A. – Sucursal Bolívia
-
88.06
7,574
88.06
Construtora Queiroz Galvão S.A. – Sucursal Chile
-
100.00
-
100.00
40,171
100.00
6,766
100.00
Construtora Queiroz Galvão – Sucursal Líbia
-
100.00
(265)
100.00
Construtora Queiroz Galvão S.A. – Sucursal Nicaragua
-
100.00
-
100.00
5,778
100.00
3,899
100.00
291
99.88
-
-
Construtora Queiroz Galvão – Sucursal Angola
Construtora Queiroz Galvão S.A. – Sucursal Peru
Queiroz Galvão & Galvão III Torres Des. Imob. Ltda.
Queiroz Galvão & Galvão IX Torres Des. Imob. Ltda.
Estaleiro Atlântico Sul S.A.
Quebec – Construção, Montagem e Transporte de Estruturas Ltda.
1,068
99.88
-
-
131,582
49.50
28,281
49.50
1,856
65.00
767
65.00
287,909
203,088
The investments includes discount of price over amount R$ 8.480 equivalent of USD 4.870 and an agio over amount of R$ 14.665 equivalent of USD 8.422 in 2009.
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N O T E S T O C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
Years ended December 31, 2009 and 2008 (in thousand of US dollars)
7 > CAPITAL
The capital, subscribed and fully paid, comprises 840,353,965 ordinary nominative shares with no par value. On
December 31, 2009 the Company’s book value per thousand of shares was R$ 2.18 equivalent to US$ 1.25 (R$ 1.90
equivalent to US$ 0.81 in 2008).
The shareholders have the right to a minimum dividend of 3% of the net income for the year, according to the
company’s by-law. The shareholders’ general meeting has the power to decide for lower distribution or retention
of the whole net income. Also, 5% of the net income for the year is appropriated to legal reserve limited to 20% of
the capital stock.
8 > FINANCIAL INSTRUMENTS
The financial instruments are recorded for in the balance sheet accounts as of December 31, 2009 and 2008 at
compatible market value. The management of these instruments is made in a strategic way with the objective of
liquidity, profitability and security.
The investment control consists of a permanent follow-up of the contracted rates compared to the daily market
rates. The company does not operate with derivatives or any other risk assets.
9 > CONTINGENCIES
The Company’s management, based on the opinion of its legal advisors believes that the appropriate referrals
and arrangements for any fiscal, tax, pension and labor liability purposes; have been taken in each situation and
are sufficient to preserve the company’s equity no indications, in December 31, 2009, of the need to recognize any
provision for contingencies in the financial statements. The accounting records and operations are subject to examination of tax authorities in different mature dates according to the specific tax laws applicable.
C O N S T R U TO R A
Q U E I R O Z
G A LVÃ O
S . A .
13
INDEPENDENT AUDITORS’ REPORT
(A translation of the original report in Portuguese containing financial statements
prepared in accordance with accounting practices generally accepted in Brazil)
THE BOARD OF
DIRECTORS AND SHAREHOLDERS
CONSTRUTORA QUEIROZ GALVÃO S.A.
RIO DE JANEIRO – RJ
1. We have audited the accompanying holding and consolidated balance sheets of Construtora Queiroz Galvão S.A.
as of December 31, 2009, and the related statements of income, changes in shareholders’ equity and cash flows
for the year then ended. These financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements.
2. We conducted our audit in accordance with auditing standards generally accepted in Brazil. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. In our opinion, the accompanying financial statements referred to above present fairly, in all material respects,
the financial position of holding and consolidated Construtora Queiroz Galvão S.A. at December 31, 2009, the
results of its operations, the changes in its shareholders’ equity and cashflows for the year then ended, in accordance with accounting practices adopted in Brazil.
Rio de Janeiro, April 12, 2010.
Mário Vieira Lopes
Contador-CRC-RJ 60.611/O