QUEIROZ GALVÃO S.A.

QUEIROZ GALVÃO S.A.
Q U E I R O Z
G A LVÃ O
2
S . A .
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 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.
ADVISORY COUNCIL
Antônio de Queiroz Galvão
President
João Antônio de Queiroz Galvão
Vice President
BOARD OF DIRECTORS
EXECUTIVE BOARD
Antônio Augusto de Queiroz Galvão
President
Antônio Augusto de Queiroz Galvão
Fernando de Queiroz Galvão
Marcos de Queiroz Galvão
Mauricio José de Queiroz Galvão
Ricardo de Queiroz Galvão
Roberto de Queiroz Galvão
Director
Ricardo de Queiroz Galvão Vice President
Carlos de Queiroz Galvão
Fernando de Queiroz Galvão
Marcos de Queiroz Galvão
Maurício José de Queiroz Galvão
Roberto de Queiroz Galvão
Counselor
ACCOUNTANT
Flávio de Castro e Souza
CRC-RJ 60.913
Q U E I R O Z
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3
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
129,220
Marketable securities
Trade accounts receivable
83,090
66
90
755,717
526,196
-
-
696,418
399,074
-
-
Inventories
287,183
157,795
-
-
Taxes recoverable
100,426
54,941
8,098
5,533
Prepaid expenses
21,104
12,298
-
-
Other receivables
51,537
40,336
-
-
Total current assets
2,041,606
1,273,730
8,164
5,623
26,030
16,100
-
-
8,468
6,480
-
-
social contribution
16,277
2,332
-
-
Other receivables
135,654
124,176
-
-
-
1,860,637
1,239,800
30,227
15,377
-
-
1,737,663
1,076,101
-
-
Non current assets:
Long-term assets:
Marketable securities
Judicial deposits
Deferred income tax and
Investments in subsidiaries (note 5)
Other investments (note 5)
Fixed assets (note 6)
Intangible assets
27,735
17,134
-
-
Deferred assets
22,337
15,470
-
-
2,004,392
1,273,169
1,860,637
1,239,800
4,045,998
2,546,899
1,868,801
1,245,423
Total non current assets
(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
276,227
180,937
-
-
Loans
542,209
258,608
-
-
159,070
87,571
13,090
8,943
640
780
-
-
108,549
86,401
83,551
73,122
45,238
31,470
-
-
1,131,932
645,767
96,641
82,065
813,025
487,501
-
-
Current liabilities:
Income tax and social contribution and
payroll and social security
Concession creditors
Dividends payable
Others accounts payable
Total current liabilities
Non current liabilities:
Loans
Concession creditors
1,443
1,075
-
-
Taxes and social contributions payable
17,414
17,170
-
-
Related parties
11,326
76,568
(45,467)
4,522
Deferred income tax and social contribution
30,905
21,977
-
-
159,518
74,943
-
-
24,831
18,825
-
-
Others accounts payable
Discount of price
Deferred income
Total non current liabilities
Minority interest
116,582
40,795
-
-
1,175,045
738,855
(45,467)
4,522
(78,607)
3,440
-
-
709,281
528,455
709,281
528,455
Shareholders´ equity: (note 7)
Capital stock
Capital reserve
Revaluation reserve
Earning reserve
See notes to financial statements.
759
566
759
566
8,684
6,470
8,684
6,470
1,098,903
623,346
1,098,903
623,346
1,817,627
1,158,837
1,817,627
1,158,837
4,045,998
2,546,899
1,868,801
1,245,423
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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
Service income
Equity in earnings of subsidiaries and affiliates (note 5)
Cost of services
Gross profit
HOLDING COMPANY
2008
2009
2008
3,706,995
2,364,720
-
-
-
-
322,097
252,209
(2,889,730)
(1,851,279)
-
-
817,265
513,440
322,097
252,209
Operating income (expenses):
Administrative
(392,575)
(201,520)
(16)
(82)
Depreciation
(36,559)
(25,347)
-
-
Tax expenses
(23,724)
(13,093)
(5,830)
(4,004)
Other
(17,934)
(26,065)
-
-
(470,791)
(266,026)
(5,846)
(4,086)
Financial income
Financial expenses
Financial expenses- interest on shareholders’ equity
Reversion - interest on shareholders’ equity
Profit before social contribution and income tax
226,149
168,692
-
-
(176,652)
(113,276)
(2)
-
(53,986)
(36,885)
(53,986)
(36,885)
53,986
36,885
53,986
36,885
49,497
55,416
(2)
0
395,971
302,831
316,248
248,123
Social contribution
(28,602)
(19,194)
-
-
Income tax
(56,868)
(39,433)
-
-
10,762
4,119
-
-
321,263
248,322
316,248
248,123
(5,015)
(199)
-
-
316,248
248,123
316,248
248,123
0.30
0.23
1,060,285,439
1,056,483,784
Reversal of deferred social contribution and income tax Income before minority interest
Minority interest
Net income for the year
Earning per share
Number of shares of capital stock
See notes to financial statements.
Q U E I R O Z
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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)
EARNING RESERVE
CAPITAL
STOCK
CAPITAL
RESERVE
REVALUATION
RESERVE
LEGAL
RESERVE
REALIZABLE
PROFITS
RETAINED
EARNINGS
TOTAL
697,228
746
26,050
48,542
51,174
520,516
1,344,256
(168,773)
(181)
(6,306)
(11,750)
(12,387)
(125,997)
(325,395)
Dividends payable
-
-
-
-
-
(64,185)
(64,185)
Realization of the revaluation reserve
-
-
(13,274)
-
-
6,195
(7,079)
Net income for the year
-
-
-
-
-
248,123
248,123
Balances at December 31, 2007
Gain on translation
Appropriation of net income:
Legal reserve
-
-
-
12,406
-
(12,406)
-
Constituition of Realizable Profits reserve
-
-
-
-
-
(535,361)
(535,361)
Financial expenses-interest on shareholders’ equity
-
-
-
-
535,361
(36,885)
498,476
Balances at December 31, 2008
528,455
566
6,470
49,198
574,148
-
1,158,837
Gain on translation
180,826
194
2,214
16,835
196,461
-
396,528
-
-
-
-
-
316,248
316,248
Legal reserve
-
-
-
15,812
-
(15,812)
-
Constituition of Realizable Profits reserve
-
-
-
-
246,450
(246,450)
-
Financial expenses-interest on shareholders’ equity
-
-
-
-
-
(53,986)
(53,986)
709,281
759
8,684
81,845
1,017,058
-
1,817,627
Net income for the year
Appropriation of net income:
Balances at December 31, 2009
See notes to financial statements.
Q U E I R O Z
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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
2009
HOLDING COMPANY
2008
2009
2008
316,248
248,123
316,248
248,123
155,427
111,939
-
-
-
-
(322,097)
(252,209)
(82,046)
(1,914)
-
-
33,966
12,777
-
-
(49,497)
(55,416)
2
-
374,098
315,509
(5,846)
(4,086)
-
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 assets written off
Interest expenses (income) - net
Decrease (increase) in accounts receivable
(297,345)
8,520
-
Decrease (increase) in inventories
(129,388)
(48,703)
-
-
(45,485)
8,476
(2,565)
(4,625)
Decrease (increase) in other accounts receivable
(57,348)
(91,172)
-
-
Increase (decrease) in related parties
(65,242)
76,568
(49,989)
(12,635)
Increase (decrease) in suppliers
95,291
(12,443)
-
-
Increase (decrease) in salaries, charges and tax obligations to pay
71,499
100,272
4,147
74,574
Decrease (increase) in recoverable taxes
Increase (decrease) in other trade accounts payable
211,683
12,742
10,429
-
Cash flows from operating activities
157,763
369,769
(43,824)
53,229
( - ) Interests paid
(176,652)
(113,276)
(2)
-
Net cash used in operating activities
(18,889)
256,493
(43,826)
53,229
Cash flows used in investing activities
( - ) Additions in Fixed assets
(868,424)
(372,419)
-
-
( - ) Additions in Invest.in affiliates and subsidiaries
(14,851)
-
(298,741)
54,947
Interest on shareholders’ equity
(53,986)
(101,070)
(53,986)
(101,070)
(7,079)
Realization of the revaluation reserve
Interests received
Net cash used in investing activities
-
-
-
226,149
167,760
-
-
(711,112)
(305,729)
(352,727)
(53,202)
Cash flows from financing activities
Financing
609,124
122,685
-
-
Net cash used in financing activities
609,124
122,685
-
-
(120,877)
73,449
(396,553)
26
Cash and cash equivalents, beginning of the year
609,286
706,967
90
85
Cash and cash equivalents, end of the year
884,937
609,286
66
90
Gain on translation
(396,528)
171,130
(396,528)
21
Increase in cash and cash equivalents
(120,877)
73,449
(396,553)
26
Increase in cash and cash equivalents
See notes to financial statements.
Q U E I R O Z
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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
Queiroz Galvão S.A. is a closely-held holding company, incorporated at February 01, 1998 as part of an ample
restructuration process of the Queiroz Galvão group, including new strategic plans and the realignment of operations by business areas. In this context the company has as its main activity investment in the capital of other
companies and consulting and management as well.
A shareholders’ extraordinary general meeting held as of August 31, 1998, approved the conversion of the following existing group companies into whole owned subsidiaries of the holding company:
Construtora Queiroz Galvão S.A.
Operations: Performs general civil engenering work, taking responsibility for the full or piecework construction,
for the administration work only, or for execution work. Also participates in the capital of other companies with
correlates activities.
Queiroz Galvão Participações-Indústria e Agropecuária S.A.
Operations: Participation in the capital of companies mainly in the industry and farming fields.
Queiroz Galvão Participações-Concessões S.A.
Operations: To increment the participation of the Queiroz Galvão group in the capital of companies mainly in the
field of public concessions, sanitation, energy and highway.
Queiroz Galvão Óleo e Gás S.A.
Operations: Performance of services of extraction and production of oil and gas, as well as purchase, import,
export, leasing and sale of equipments to the oil industry.
Vital Engenharia Ambiental S.A.
Operations: Increase the Queiroz Galvão group activities in the areas of services rendering, commerce and
transport, through participation in the capital of companies in these line of business. Changed the activities to
Develop and rendering services related to Environmental.
To stimulate the participation of Queiroz Galvão group in the services areas or concessions of public services of
urban cleaning, construction of sanitary terrains, and other similar services.
Queiroz Galvão Desenvolvimento Imobiliário S.A.
Operations: Increase the Queiroz Galvão group activities in the areas of purchase, sale and construction for sale
of buildings.
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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)
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
•Service income, the related costs and other 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% over the taxable income plus a 10% surcharge, which
includes fiscal incentives. Social contribution expense was calculated at the rate of 9% applied on adjusted
profit before income tax as per the legislation in force.
•Deferred income tax and social contribution relate to temporally differences in income and expenses accounted which are taxable, for income tax purposes, in the future (mostly in the cash basis of accounting).
b.Marketable securities
Marketable securities are represented by investments in fixed income securities, banking certificate of deposits, which and debentures are stated at cost, plus accrued income to balance sheet date and do not exceed the
market values.
c. Inventories
Inventories are stated at the lower of the average cost or market.
d.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 investor financial statements. Other investments are stated at cost.
•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 accrued income. The amortization is calculated using the straight-line method at annual rates of 10% and 20%.
Q U E I R O Z
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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)
e.Deferred income
Income and cost of short-term constructions are recognized as “Deferred Income” being credited and charged
to income at the conclusion of the construction.
The result of the sales of the units, concluded on under construction, is accounted for as “Deferred Income”
at the time of the formalization of any document representing the sales commitment. The appropriation as
income is made at the moment of the receipt of the installments.
f. 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 to US$ 1.00
R$ 2.337 to US$ 1.00
The translation should not be construed as representation that the real (R$) amounts actually represent or
have been, or could be converted into United States dollars.
4 > SUMMARY OF THE MAIN PROCEDURES USED IN THE CONSOLIDATED OF THE FINANCIAL STATEMENTS
The following procedures were adopted in the consolidation of the financial statements:
a.Elimination of assets and liability balances among consolidated companies;
b.Elimination of the income and expense balances as well as non realized profits among the consolidated companies;
c.Reclassification of minority shareholders’ interest in the consolidated financial statements.
d.The consolidated financial statements include the companies mentioned in note 5.
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S . A .
N O T E S T O C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
Years ended December 31, 2009 and 2008 (in thousand of US dollars)
5 > PARTICIPATION IN WHOLE OWNED SUBSIDIARIES
2009
QUANTITY OF
ON SHARES % OF INTEREST
CAPITAL
STOCK – US$
SHAREHOLDERS’ INVESTMENTS
EQUITY – US$
US$
EQUITY IN
EARNING – US$
Investors
Construtora Queiroz Galvão S.A.
840,353
100
482,452
1,050,122
1,050,122
276,823
Queiroz Galvão Participações Concessões S.A.
38,279
100
120,606
165,501
165,501
36,935
Queiroz Galvão Óleo e Gás S.A.
3,757,819
100
246,436
334,667
334,667
(1,423)
127,167
100
73,034
106,631
106,631
9,373
79,979
100
68,882
137,812
137,812
(16,690)
7,576
100
43,463
65,903
65,904
17,079
1,860,637
322,097
Queiroz Galvão Desenv.Imobiliário S.A.
Queiroz Galvão Part.-Ind. e Agropecuária S.A.
Vital Engenharia Ambiental S.A.
2008
QUANTITY OF
ON SHARES
% OF INTEREST
CAPITAL
STOCK – US$
SHAREHOLDERS’ INVESTMENTS
EQUITY IN
EQUITY – US$
US$
EARNING – US$
840,353
100
299,529
681,898
681,898
151,362
3,757,819
100
128,083
250,407
250,407
49,837
79,979
100
51,321
115,113
115,113
12,935
7,576
100
4,510
55,548
55,548
15,203
38,279
100
89,859
136,835
Investors
Construtora Queiroz Galvão S.A.
Queiroz Galvão Óleo e Gás S.A.
Queiroz Galvão Part.-Ind. e Agropecuária S.A.
Vital Engenharia Ambiental S.A.
Queiroz Galvão Participações Concessões S.A.
136,835
22,872
1,239,800
252,209
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S . A .
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 > FIXED ASSETS
6.1.Fixed asset
CONSOLIDATED
YEARS TAXES DEPRECIATION
2009
2008
Field equipments
20%
277,552
254,920
Civil construction
4% and 8%
480,346
316,058
Probes and drilling oil equipment
14% and 20%
27,355
15,463
Machines and equipments
10% and 20%
231,141
146,212
Vehicles
20% and 40%
213,855
153,076
10%
36,943
26,941
6.6% and 10%
88,303
56,695
10%
36,024
21,619
Road improvement
Permanent plantation and forests
Work utensils and other
Installations
10%
73,031
14,528
Buildings
4%, 4.26% and 4.33%
198,991
9,056
Airplanes
20%
18,515
3,911
Construction in progress
-
9,458
9,141
Development
-
481,755
304,421
Exploration
-
92,217
59,817
-
76,523
52,156
many
68,196
47,474
2,410,205
1,491,489
672,542
415,388
1,737,663
1,076,101
Software
6,284
3,284
Award rights of concession
2,042
-
Trademarks and technology
19,232
13,712
177
138
27,735
17,134
Lands
Other fixed assets
Less:
Accumulated depreciation
6.2.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)
7 > SHAREHOLDERS’ EQUITY
The paid-in capital is represented by 1,060,285,439 ordinary nominative shares, with no par value. At December
31, 2009 the Company’s book value per thousand of shares was equivalent to US$ 1,714.28 (US$ 1,096.88 in 2008).
The net income for the year deducted by the interest on shareholders’ equity is destined as follows:
• 5% is accounted for as legal reserve, up to the limit of 20% of the capital;
• 3% is paid to the shareholders as a compulsory minimum dividend. However the general shareholder general
meeting has the power to approve the distribution of a different amount or to retain the whole profit.
8 > RELATED PARTIES
The transactions were made at usual market rates, terms and values.
9 > 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 on any other risk assets.
10 > 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.
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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
QUEIROZ GALVÃO S.A.
RIO DE JANEIRO – RJ
1. We have audited the accompanying holding and consolidated balance sheets of 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 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