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MANAGEMENTREPORT

FINANCIALSTATEMENTS

CORPORATEGOVERNANCE REPORT

2015

2015

MANAGEMENTREPORT

FINANCIALSTATEMENTS

CORPORATEGOVERNANCE REPORT

MANAGEMENT REPORT

Message from the Chairman

Overview of the indicators

I. Activity Report

1. Economic environment

2. Company activity

3. Business Development

4. Economic and Financial Analysis

5. Investments

II. Compliance with Legal Guidelines

1. Management goals

2. Financial risk management

3. Average payment time and disclosure of late payments

4. Compliance with the Shareholder’s recommendations

5. Remunerations

6. Public Manager Statute

7. Public procurement

8. National Public Purchasing System and State car fleet

9. Measures to reduce operating expenditure

10. State’s treasury unity principle

11. Audits conducted by the Court of Auditors

12. Information disclosed on the SEE site

13. Sistematisation of information on compliance with legal guidelines

III. Prospects for the future

IV. Relevant events after the reporting period

V. Proposal for the appropriation of profits

9

10

22

23

24

31

33

41

42

43

44

46

47

47

49

49

50

50

51

52

52

53

54

56

58

Outline of the year11

FINANCIAL STATEMENTS AND NOTES

Financial statements

Balance sheet

Profit & loss account

Cash-flow statement

Statement of changes in equity capital

Notes to the Financial Statements

1. Identification of the entity

2. Accounting standards used to prepare the financial statements

3. Bases of presentation and accounting policies

4. Cash flows

5. Accounting policies, changes to accounting estimates, errors and restatements

6. Tangible fixed assets

7. Intangible assets

8. Shareholdings – asset equivalence method

9. Shareholdings – other methods

10. Inventories

11. Clients

12. State and other public entities

13. Other receivables

14. Deferrals

15. Paid-up capital

16. Other equity capital instruments

17. Legal reserves

18. Other reserves

19. Retained earnings

62

63

64

65

66

70

71

72

74

85

87

87

89

90

92

92

96

98

100

101

103

103

103

104

104

20. Provisions

21. Borrowings

22. Other payables

23. Suppliers

24. Advances from clients

25. Advances to suppliers

26. Sales and provision of services

27. Operating subsidies

28. Gains/losses of subsidiaries, affiliated companies and joint-ventures

29. Changes in production inventories

30. Work performed for own purposes

31. Cost of goods sold and materials consumed

32. Third-party supplies and services

33. Staff costs

34. Other income and gains

35. Other expenditure and losses

36. Depreciation and amortisation expenditure/reversal

37. Interest and similar costs

38. Income tax for the financial year

39. Related parties

40. Bank guarantees

41. Operating leases

42. Environmental issues

43. Events after the balance sheet date

105

106

107

108

109

109

110

110

111

112

112

113

114

115

116

117

118

119

119

121

123

123

124

125

CORPORATE GOVERNANCE REPORT

I. Mission, goals and policies

II. Capital structure

III. Shareholdings and bonds

IV. Company boards and committees

A. Board of the General Meeting

B. Board of the General Meeting

C. Supervision

D. Statutory Auditor

E. External auditor

V. Internal organisation

A. Articles of association and communications

B. Internal supervision and risk management

C. Regulations and Codes

D. Special reporting duties and Internet site

VI. Remunerations

A. Powers to set remunerations

B. Remunerations Committee

C. Remuneration structure

D. Remuneration disclosure

VII. Transactions with related and other parties

VIII. Analysis of the Company’s economic, social and environmental sustainability

IX. Corporate governance assessment

128

130

132

136

137

137

143

147

148

150

151

151

152

154

156

157

157

157

157

158

160

174

MANAGEMENTREPORT

Conhecimento no lugar certoKnowledge in the right placeemef.pt

9

Manuel Tomás Cortez Rodrigues Queiró

MESSAGE FROMTHE CHAIRMAN

The event that marked 2015 was the company’s privatisation process which did not meet with success, as is publicly known. But this outcome had to do with the difficulties encountered in the course of the process and not with the evaluation of the company’s intrinsic value which was not only confirmed but also enhanced by the interest shown by a number of potential investors.

The focus must now be on heightening and consolidating this value. The challenges the Company was previously facing are yet to be overcome, although there are currently other more urgent ones such as the consolidation of a sustainable financial structure and staff rejuvenation in order to simultaneously guarantee the acquired know-how, experience and competencies.

While ever improving the relationship with its shareholder CP, but acting in an increasingly liberalised market, faced with the challenge of growing competition to which EMEF continues to be subject and with the constraints inherent to the corporate public sector, we are still looking towards EMEF’s future with true and well founded optimism.

A number of positive signs were registered in the course of 2015, such as the professionalism with which the CPA 4000 R1 large repairs project was prepared

and presented and the award to EMEF of the General Overhaul of the Metro do Porto Eurotram fleet, the latter in totally competitive circumstances. These signs allow for the forecast of the company’s continuity and confirm its capacity to meet the challenges in the market and sector to which it pertains.

Also positive is the financial profit achieved during the financial year, which is set out in this document and allows for the conclusion that EMEF is continuing down the path towards an increasingly sustainable financial capacity.

We are therefore certain that EMEF will not stop and that, to this end, all the company Boards and Staff will keep up their clearly proven professionalism, diligence and competence.

This is the direction that this Board of Directors will take as regards the duties the Country has entrusted to it, and will make the fulfilment of these duties its mission.

We would like to conclude with a word of appreciation and praise for all the EMEF Staff, without whom the good results shown in this report would not have been attained.

The operating profit/loss is shown by the indicators in the table below:

OVERVIEW OF THE INDICATORS

MANAGEMENT REPORT 10

INDICATORS

Profit/LossOperating profit/loss

Operating income

Operating expenditure

(Euros)

EBITDA*

Net profit/loss

BusinessTurnover

GAV

GAV per capita

InvestmentsInvestments

Human ResourcesTotal staff at year end

Average for the year

∆ %2015 2014

-2%

6%

6%

-10%

52%

6%

-7%

-1%

269%

-5%

-6%

2 208 873

60 637 187

58 428 314

3 138 311

1 378 050

58 562 230

29 096 139

29 464

399 079

979

988

2 244 053

57 357 328

55 113 274

3 473 879

909 485

54 993 577

31 143 200

29 717

108 184

1 030

1 048

*Includes terminations by mutual agreement and impairment losses

11

OUTLINE OF THE YEAR

1. PUBLIC PROCUREMENT

Under Ministerial Order no. 1876/14-SET of 22.09.2014 of the Secretariat of State for the Treasury on the Procurement Rules for EMEF, it was decided that “It falls on the Company to assess, in accordance with the law, whether it is subject to the Public Procurement Code”.

The same Ministerial Order shows the Secretary of State for the Treasury’s agreement to the arguments put forward by EMEF which demonstrate that the Public Procurement Code (CCP) is not applicable to the Company, as its business activity is carried on in accordance with market and competition rules.

Following this repeal of the Ministerial Order that subjected EMEF to Part II of the CCP, a Quality Functional Procedure named “PFQ 06.2.0 – Procurement” was drawn up establishing the Company’s internal procurement rules. As a Schedule to the PFQ, the EMEF Pre-Contractual Regulation, which defines the rules that the Company and all parties having an interest in purchase procedures must undertake to abide by, was also approved.

The “PFQ 06.2.0 – Procurement” was drawn up in order to facilitate the Company’s purchase procedures while still fully applying the principles governing public procurement, notably those of transparency, equality and competition.

In 2015 EMEF applied the “PFQ 06.2.0 – Procurement” to its purchase procedures.

2. PRIVATISATION PROCESS

Decree-Law no. 70/2015 of 6 May approved EMEF’s privatisation process, by means of a reference direct sale that should have led to the disposal of up to 100% of its share capital to private parties, while reserving 5% for the Company’s employees by way of public offering.

The tender specifications for the reference direct sale was approved by Council of Ministers Resolution no. 30-A/2015 of 8 May.

The procedure was conducted by CP with Banco Big as financial advisors and SRS & Associados as legal advisors.

The Company’s support areas were involved in the preparation of the necessary Due Diligences.

Two proposals were received, but CP, E.P.E.’s reasoned report concluded that, of the proposals put forward by ALSTOM Transport Holdings, B.V. and BAVARIA Industries Group AG,

only the ALSTOM Transport Holdings, B.V. proposal complied with the tender specifica-tions’ minimum requirements legally needed for assessment and valuation within the context of this privatisation process. In accordance with article 14 of the tender specifica-tions, the Government examined the proposal.

In order to reinforce the absolute transparency of the privatisation process, the Govern-ment decided to make all information data relating to the procedures adopted in the afore-mentioned transaction available to the Court of Auditors.

By Council of Ministers Resolution no. 46-A/2015, the Government decided that a round of negotiations should be held with the tenderer ALSTOM Transport Holdings, B.V..

Following the aforementioned round of negotiations, the shareholder CP prepared its report in which it concluded that the conditions for the ALSTOM Transport Holdings, B.V. proposal to be accepted had not been met as, in light of public interest, the attainment of the goals underlying the direct sale process was not sufficiently guaranteed. The public offering for sale to employees was therefore also without effect.

Accordingly, by Council of Ministers Resolution no. 52-C/2015 the Government declared EMEF’s privatisation process to be closed without any shareholdings having been sold.

3. CONTRACTS WITH CLIENTS

In 2015 specific contracts were concluded with CP concerning the rolling stock series the maintenance of which is ensured by EMEF, as well as concerning the R1-repair on the 10 tilting trains owned by CP. Service contracts with other clients were also signed or renewed, notably CP Carga, REFER/IP; Metro do Porto and NAP.

1. PUBLIC PROCUREMENT

Under Ministerial Order no. 1876/14-SET of 22.09.2014 of the Secretariat of State for the Treasury on the Procurement Rules for EMEF, it was decided that “It falls on the Company to assess, in accordance with the law, whether it is subject to the Public Procurement Code”.

The same Ministerial Order shows the Secretary of State for the Treasury’s agreement to the arguments put forward by EMEF which demonstrate that the Public Procurement Code (CCP) is not applicable to the Company, as its business activity is carried on in accordance with market and competition rules.

Following this repeal of the Ministerial Order that subjected EMEF to Part II of the CCP, a Quality Functional Procedure named “PFQ 06.2.0 – Procurement” was drawn up establishing the Company’s internal procurement rules. As a Schedule to the PFQ, the EMEF Pre-Contractual Regulation, which defines the rules that the Company and all parties having an interest in purchase procedures must undertake to abide by, was also approved.

The “PFQ 06.2.0 – Procurement” was drawn up in order to facilitate the Company’s purchase procedures while still fully applying the principles governing public procurement, notably those of transparency, equality and competition.

In 2015 EMEF applied the “PFQ 06.2.0 – Procurement” to its purchase procedures.

2. PRIVATISATION PROCESS

Decree-Law no. 70/2015 of 6 May approved EMEF’s privatisation process, by means of a reference direct sale that should have led to the disposal of up to 100% of its share capital to private parties, while reserving 5% for the Company’s employees by way of public offering.

The tender specifications for the reference direct sale was approved by Council of Ministers Resolution no. 30-A/2015 of 8 May.

The procedure was conducted by CP with Banco Big as financial advisors and SRS & Associados as legal advisors.

The Company’s support areas were involved in the preparation of the necessary Due Diligences.

Two proposals were received, but CP, E.P.E.’s reasoned report concluded that, of the proposals put forward by ALSTOM Transport Holdings, B.V. and BAVARIA Industries Group AG,


only the ALSTOM Transport Holdings, B.V. proposal complied with the tender specifica-tions’ minimum requirements legally needed for assessment and valuation within the context of this privatisation process. In accordance with article 14 of the tender specifica-tions, the Government examined the proposal.

In order to reinforce the absolute transparency of the privatisation process, the Govern-ment decided to make all information data relating to the procedures adopted in the afore-mentioned transaction available to the Court of Auditors.

By Council of Ministers Resolution no. 46-A/2015, the Government decided that a round of negotiations should be held with the tenderer ALSTOM Transport Holdings, B.V..

Following the aforementioned round of negotiations, the shareholder CP prepared its report in which it concluded that the conditions for the ALSTOM Transport Holdings, B.V. proposal to be accepted had not been met as, in light of public interest, the attainment of the goals underlying the direct sale process was not sufficiently guaranteed. The public offering for sale to employees was therefore also without effect.

Accordingly, by Council of Ministers Resolution no. 52-C/2015 the Government declared EMEF’s privatisation process to be closed without any shareholdings having been sold.

3. CONTRACTS WITH CLIENTS

In 2015 specific contracts were concluded with CP concerning the rolling stock series the maintenance of which is ensured by EMEF, as well as concerning the R1-repair on the 10 tilting trains owned by CP. Service contracts with other clients were also signed or renewed, notably CP Carga, REFER/IP; Metro do Porto and NAP.

13

EMEF IN 2015

On 30 January, EMEF hosted in its Rebolei-ra facilities the presentation of the InTrain project – project for the research and development of components for railway car interiors, which was attended by close to 200 guests.

The EMEF General Manager Alberto Casta-nho Ribeiro, the chairman of the Ibermol-des Group and representative of SETSA, consortium leader, Joaquim Menezes and the Almadesign CEO José Rui Marcelino hosted the event for an audience that included the President of the Portuguese Agency for Innovation, the President of the Republic’s Advisor for Innovation, the

Mayor of Marinha Grande, the Vice-Mayor of Pombal, the Chairman of Metro/Carris, among the representatives of a number of other institutitions.

The InTrain project resulted in a full-scale mock-up of a user friendly inside of a suburban train, focusing on the integration of eco-efficient materials and technologies and with an innovative design, which was presented to the national and international entities attending. The EMEF general manager pointed out that “this is the proof that when companies want to, they manage, by working together, to bring added value to what they produce”.

JANUARY


On 3 and 5 February, in the course of their visit to Portugal, upon Nomad Tech’s invitation, Tangshan Railway Vehicle Co, an affiliated company of China CNR Corporation Limited, one of the largest Chinese rolling stock manufacturers, visited the EMEF facilities in Porto and Amadora.

The deputy general manager, Chen Liang and the Chinese delegation were welcomed by the heads of Nomad Tech, Augusto Costa Franco and Nomad Digital, Nuno Freitas and Ken Cowley, by the

EMEF general manager, Castanho Ribeiro, by the head of Business Development, Carlos Matos Carvalho and by the head of the company’s High-Speed Maintenance Unit, Pedro Moreira.

Within the scope of its business development strategy, in which internationalisation is an essential pillar, EMEF promoted the presentation of the company and of its technical and technological potential, with a view to strengthening its position in the international market.

FEBRUARY

15

FEBRUARY

On 20, 23 and 24 February, the ceremonies for the award of silver and gold pins to members of staff having completed respectively 25 and 40 years of active service in this industry were held.

The ceremonies, which took place in Entroncamento, Contumil and Reboleira, were attended by the EMEF Board of Directors and all the Management Team, and were presided by Cristina Pinto Dias, its Chairwoman, who in her speech pointed out that these ceremonies “… mark the progress of EMEF and its staff, the custodians of Centenary Railway

Culture and Knowledge (…); it was the work performed by this Team of close to 1,000 members that we transformed 2014 into our Turning Point Year, one in which our company registered one of the best results of recent times. Consequently, on behalf of the EMEF Board of Directors, I would like to sincerely and gratefully thank each and every one of you”.

These events came to a close by the Board of Directors and the Management Team socialising with over 650 participants.


On 15 and 17 April, the 3rd World Congress on Rail Training was held in Lisbon, promoted by UIC – International Union of Railways – in a partnership with CP, REFER, Fertagus and Instituto Superior Técnico.

This event, aimed at promoting excellence in rail training by sharing knowledge and experience and at identifying new challenges in this area, was attended by approximately 200 people from 40 countries across the world.

The event’s programme included speeches by members of the Fernave Human Resources Department and two technical visits on the 15th and 16th to the Nomad Tech Innovation Centre in Reboleira, which revealed the technical valences developed within the scope of rail Innovation and Engineering in result of this joint-venture.

APRIL

17

MAY

On 19 May, a meeting of the EMEF Managers was held and attended by the Board of Directors, in the course of which its Chairwoman Cristina Pinto Dias introduced the new Member, Nuno Sanches Osório, who addressed the attendees and spoke of his academic qualifications and experience in the fields of economy, finance and corporate management, stating that he will be at EMEF’s disposal to support the pursuance of its strategic goals, which are also his own.

The Chairwoman spoke of the current challenges, namely the privatisation process which took place in the company, within the scope of which a space was opened so that the Management Team and the Board of Directors could exchange ideas. In his address, the General Manager, Alberto Castanho Ribeiro, praised the quality and dedication of the EMEF management team and listed the strategic goals for the year, the key words for which are enhancing capacities, restructuring, internationalisation, new markets and growth.

All 17 Managers attending pointed out the importance of having strict and meticulous Works Planning in place, notably as regards maintenance and repairs. This is a highly topical issue as the Contracting of these services by EMEF with CP, Comboios de Portugal, E.P.E., its largest Client and Shareholder allows for a considerable cost rationalisation for CP and leverages efficiency gains in the EMEF internal procedures with clear productivity gains for both companies.

The meeting ended with the presentation by the Executive Management of the accumulated profit/loss as at April 2015, which validates the sustainable development strategy that is being followed by EMEF.


Approximately 25 schoolchildren aged 10 and 11 and a few teachers from the Sto. António Secondary School visited the Barreiro railway facilities on 1 June, World Children’s Day.

The visit started at the Railroad Workers’ District, then went on to the first Barreiro Station (currently an EMEF workshop), the Locomotive Turntable and the South and Southeast Station. In the EMEF workshop, the children were given the opportunity of seeing diesel locomotivos, disassembled engines and many mechanical parts, as well as the hustle and bustle of workshop work.

From the EMEF workshop, the visitors went by train to the old Lavradio Station (Espaço L), where they saw a railway exhibition at Barreiro, and then they returned to Barreiro.

The purpose of this visit was to promote and stimulate the interest in preserving the cultural heritage and social memory for future generations, by introducing schoolchildren living in the Borough to the importance of railways.

JUNE

19

AUGUST

Within the scope of the cooperation provided to offer Practical Training in a Work Context to the student Igor Coelho, who is taking a Professional Course to become a Mechatronics Technician, EMEF received special thanks from the Maria Lamas Secondary School in Torres Novas.

Since the start of its activity, EMEF has participated with the Employment and Vocational Training Institute (“IEFP”) and other entities in vocational training actions. In November 2012, it signed a cooperation protocol with the IEFP for dual system learning courses, under which it is required to provide practical training in a work environment to students taking technical and professional courses in the areas of accounting and taxation, IT sciences, transport services, metallurgy and metalworking and automation electronics, as an entity offering work-linked support.

EMEF is thus continuing to contribute to improving youths’ qualifications and facilitating their integration in the labour market, whilst observing the social responsibility principles by which it abides.


On 2 October, EMEF welcomed the Mechanical Engineering students from Instituto Superior Técnico (Lisbon School of Engineering) for a field trip to the Southern Workshop Unit.

In Barreiro, the group of students were given the opportunity of visiting the diesel engine, fuel injection materials, compressor and turbo compressor workshops and test benches pertaining to CCG220 – Rotables Repair Shop, within the scope of the subject of Thermal Engines, the main goal of which was to enable these students to have contact with the different types of diesel engines used in railways.

Teachers and students considered this opportunity to be an added value to acquiring technical knowledge, allowing for the deepening of the knowledge acquired in class.

Within the scope of the Eco-Driving Project, tests have been performed in real operating conditions on the Caíde Line, for the purpose of better assessing the energy savings that can be obtained by way of greater energy efficiency in train driving.

The Eco-Driving Project, developed by Nomad Tech, a joint venture between EMEF and Nomad Digital, in partnership with CP and Toshiba, started in December 2013 and has the dual goal of providing Train Drivers with a simple and intuitive tool to support driving decision and Operational Managers with in-depth knowledge on the performance of train/ driver duos.

By installing the tablet application NT-DAS (Driver Advisory System) in four UME 3400 units in service on the Caíde Line, Nomad Tech and CP have managed to assess the real energy savings, the results being considered as very positive.

OCTOBER

21

NOVEMBER

Consolidated by over 20 years of experience in the maintenance of rail rolling stock, on 13 November EMEF obtained certification as Entity in Charge of Maintenance (ECM) for freight cars in the four functions set out in Regulation (EU) No. 445/2011 of 10 May, and is currently the only Portuguese company holding this certification.

The maintenance of rail vehicles is important to ensure the safety of rail traffic. Under Regulation 445, the certification of entities in charge of

maintenance provides proof of the responsibility and traceability of the maintenance operations performed on goods freight cars.

The results achieved in EMEF, following the audit conducted by APNCF (Portuguese Association for Rail Standardisation and Certification), are the fruit of the dedication, involvement and indispensable joint effort of all the Company, which is thus endowed with the capability to provide full service to all its clients who own goods rolling stock.

CERTIFICADO DE ENTIDADE DE MANUTENÇÃO

que confirma a aceitação do sistema de manutenção da entidade responsável pela manutenção (ERM) na UniãoEuropeia, em conformidade com a Diretiva 2004/49/CE e o Regulamento (UE) n.º 445/2011

ACTIVITYREPORT

23

In 2015 a relatively moderate pace of economic recovery was registered, in particular taking into account the harshness of the previous years’ contraction. Projections indicate that recovery at a gradual pace will continue, reflecting the need for additional adjustment in the balance sheets of the various economic agents, both public and private, following the international financial crisis and the sovereign debts crisis in the Euro area.

In 2015 the Gross Domestic Product (GDP) grew 1.5% in volume, i.e. 0.6 percentage points (p.p.) more than in the previous year. The contribution of domestic demand towards the GDP annual variation increased to 2.5.p.p. in 2015 (2.2 p.p. in 2014), due to an intensified growth in final consumption expenditure, as investment decelerated. Net external demand registered a less negative contribution, from -1.3 p.p. in 2014 to -1.0 p.p. reflecting the acceleration in the Exports of Goods and Services. Also to be noted is a significant gain in the terms of trade, the import deflator having registered a marked decrease as a result of the fall in energy prices.

Gross Value Added (GVA) at 2015 base prices registered a 1.1% increase in volume. However, the year’s GVA for industry decelerated, registering an increase of only 1.5% against a 1.9% growth in 2014.

Employment in the joint branches of activity registered a variation of 1.4% in 2015, the same rate as in the previous year. In turn, gainful employment kept a 1.8% growth in 2015.

In 2015, the Consumer Price Index (CPI) registered an average variation rate of 0.5% (-0.3% in the previous year). Excluding energy and unprocessed food, the CPI average variation rate rose from 0.1% in 2014 to 0.7% in 2015. As to Portugal’s Harmonised Index of Consumer Prices (HICP), it registered an average variation rate of 0.5% in 2015 (-0.2% in the previous year).

ECONOMICENVIRONMENT

I ACTIVITY REPORT // 1.

The services provided by EMEF continued to be characterised by the supply of full maintenance to its Clients’ fleets, covering three main segments:

• repair and modernisation of rail vehicles and their components and equipment, an area in which the predominant characteristic is industrial production;

• rolling stock routine maintenance, the characteristic of which is response geared to providing direct support to operators’ railway activity, associated to specific levels of service for each type of operation, notably availability and reliability;

• reconditioning of rolling stock.

In addition to its main activity, the Company also provided:

• an around-the-clock prevention service for emergency work on the rolling stock;

• rescue operations on the track whenever necessary;

• calibration tests on monitoring and measuring equipment, both for in-house use and for clients;

• analyses of oils, lubricants and insulators, to establish their condition and that of the equipment they lubricate, used either by EMEF to provide its maintenance services or by external clients.

In 2015, a considerable increase in the EMEF Provision of Services occurred. A 6% increase in turnover was achieved whilst the total average number of staff decreased by 6%. However, variable operating expenditure (invoiceable consumption and subcontracting) registered an increase of 35%. The Company’s work productivity sustained a not very significant decrease (-0.8% vis-à-vis 2014) when measured by resorting to the GVA per capita indicator.

COMPANYACTIVITY



25

The most relevant aspects of the activities carried on by the Company in each of its activity areas are set out below.

REPAIR AND MODERNISATIONThis activity continued to be carried on by the Northern, Centre and Southern Workshop Units, located in Contumil, Entroncamento and Barreiro, respectively.

It continued to include the types of scheduled repairs on tractive and towed passenger stock (R-type repairs), on goods towed stock (safety repairs – RS and RSP) and on equipment (gene-ral repairs – RG and intermediate repairs – RI), other repairs for unforeseen reasons or due to accidents or vandalism on rail vehicles (repairs due to breakdowns – RAV and repairs due to accidents – RAC), as well as rolling stock modifications/modernisation in accordance with clients’ specific requests.

Overall, the repair plan for 2015 agreed upon with the Clients was complied with. Throughout the year 28 R-type repairs to the Client CP’s fleet were concluded (18 to carriages, 1 to an elec-trical multiple unit, 2 to diesel locomotives and 7 to diesel multiple units, the work on the elec-trical multiple unit and on one of the diesel ones having started in 2014), which represents an increase of 22% when compared to 2014. 444 RSP made to the freight car fleet of the Client CP-Carga, for which the annual plan was practically complied with, and 16 RSP to other clients’ fleets.

Contrary to what had been scheduled, the CPA4000 half-life repair works did not begin, the repair work to the 1900 diesel locomotive started only in September and, of the two R2-type repairs scheduled for the 3150/3250 electrical multiple units, only one started in September.

With regard to the repair of wheelsets, in addition to the wheelset repair work on the CP and CP Carga rolling stock, reference should be made to the following:

• Wheelsets and transmissions for SERFER (Peruvian transport company);

• Wheelset turning for Mota Engil and GMF;

• Wheelsets for Fertagus;

• 4700 and 5600 locomotive wheelsets for SIMEF.

In the area of bogies repair, in addition to the bogies repair work done on CP and CP Carga stock, reference should be made to the work performed for Fertagus.

Overall, in 2015 the repair segment enabled the Company to generate an income of EUR 27,770 thousand, representing 47.5% of its total income and a 2% increase when compared to 2014.


MAINTENANCE

This activity continued to be carried on at the three Workshop Units and at the High-Speed Maintenance Unit, covering the workshops located in Northern Portugal (Contumil, Guifões, Sernada do Vouga and Mirandela), in Central Portugal (Entroncamento) and in Southern Portugal (Barreiro, Poceirão, Vila Real de Santo António, Campolide, Santa Apolónia and Oeiras).

The goal of this activity focused on fulfilling the maintenance programmes set out in the fleet/market segment-specific contracts concluded with each client: CP, CP Carga, Metro do Porto and RENFE.

At the same time, the Company continued to provide seasonal maintenance services to historic trains pertaining to CP and that have a strong impact on its image.

37% ROTABLES

36% GOODS TOWED STOCK

14% PASSENGER TOWED STOCK

12% ENGINE MATERIAL

1% TRACK

INCOME PER TYPE OF MATERIAL

INCOME PER OPERATION

61% NORMAL OPERATION

37% OTHER

1% ACCIDENTS

1% BREAKDOWNS

27

RECONDITIONING

In this area, the following ongoing operations should be highlighted:

• Full reconditioning of the 0186 team locomotive, which entails, among other works, the reconstruction of its team boiler and the change in its burning from coal to “fuel”, a service performed with the cooperation of experts in boiler design and manufacture and monitored by EMEF technicians;

• Re-engineering of the traction engines repair procedures for the fleet in service on the Cascais line, with a view to significantly reduce the number of breakdowns and thus improve availability.

Overall, in 2015 the current maintenance segment enabled the Company to generate an income of EUR 30,639 thousand, representing 52.5% of its total income and an 11% increase on 2014.

INCOME PER OPERATION

65% SET PRICE (EXCLUDES CS)

31% OTHER

2% PREVENTION & RELIEF

2% VANDALISM

72% ENGINE MATERIAL

15% METRO DO PORTO

5% PASSENGER TOWED STOCK

5% GOODS TOWED STOCK

2% MISC.

1% TRACK

INCOME PER TYPE OF MATERIAL


With regard to initiatives at the design or proposal submission stages, particular reference should be made to the following:

• Reconditioning of Schindler narrow-gauge passenger cars for tourist operation;

• Reconditioning of a Diesel narrow-gauge locomotive for tourist operation;

• Recovery of old streetcar bogies for STCP;

• Re-design of passenger cars WC in order to obtain functional, image and comfort improvements.

ENGINEERING, INNOVATION AND DEVELOPMENT

With regard to optimising procedures, to be pointed out are the following:

• The technical documentation review procedures (maintenance cycles, quality plans and technical specifications) were streamlined, thus allowing for control and standardisation of documentation across the Company;

• The procedure to review the technical specifications backing the purchase of materials was improved, thus ensuring its technical suitability to meet needs, and, whenever possible, detailing of technical characteristics allowing for broader consultation of suppliers and better purchase conditions;

• Quality plans for material series were developed, identifying and defining improvements in maintenance plans, in order to attain better technical performance and availability for the client, and also taking into account the profitability of the assigned maintenance resources and the containment or reduction of operating costs;

• A computer system/model applied to rotables management was developed, in order to enable the timely identification of the location and condition of the different depot parts;

• The repair monitoring and control procedures were enhanced, as this was an essential condition for a better and more adequate coordination of the various in-house staff participating in these procedures, with the ultimate goal of complying with the annual repairs plan;

• The repair of the passenger information system electronic components was internalised by using resident technical knowledge and specialised manpower;

• The rotables management methodology was changed at the level of production in articulation with Logistics, thus allowing for the increased control of repair needs,

confirmation of defects and assessment / decision on repair or disposal;

• Magnetoscopy tests were implemented for technical assessment, searching and control of possible fissures in bogies, to the detriment of the formerly used non-destructive tests, thus allowing for more reliable control and a significant reduction in the number of man hours and materials;

• A continued technical analysis was developed to assess the possibility of extending the time for the replacement of the oil and filters, which, regardless of the reduction of man hours and of the waste management environmental impact, will contribute to the annual cost savings due to not purchasing materials;

• Taking the daily monitoring of the trains as a basis and applying the maintenance under condition methodology allowed for the extension of the time for the replacement of brake blocks, which translate into saving man hours and reducing materials acquisition costs;

• A technical study was started to assess the viability of using new brake blocks, with a view to reducing the man hours needed to replace them and the cost of acquiring materials;

• A technical study was carried out to replace original equipment with new types of equipment incorporating national production elements, thus allowing for a significant reduction in costs when compared to the purchase of original models;

• A design/implementation project was developed to replace the video playing / broadcasting system in CPA trains, by substituting the DVD players by Media Players, which allow for a significant improvement in the reliability of the system and quality of services provided to customers. In addition, this represents a reduction in maintenance/repair costs;

• Internalisation of the repair of certain rotable equipments, in respect of which it was concluded that intervention operations could be carried out by resorting to EMEF qualified workers;

• Study and implementation of changes on test benches, in order to allow for the testing of new equipment as well as to complement previously carried out tests;

• Design / implementation study of a test bench of Cummins engine fuel pump injectors, in order to ensure adequate tuning after repairs and reduce the testing time of the multiple units, with the resulting reduction in fuel consumption and environmental impact;

• Adaptation of the Diesel engine test bench in order to widen the range of equipment being tested (from low power to 700HP engines), with the resulting reduction in testing and running-in time at the release of units as well as in fuel consumption and environmental impact;

• Reorganisation of the procedures for the repair of train air conditioning equipment, including the construction of a test bench for the detection of leaks and the comprehensive testing of the equipment in the workshop, thus shortening the unit testing time and corresponding energy consumption, as well as reducing handling needs to rectify tunings involving the risk of cooling fluid leaks (environmental impact).















29













31

Among the goals to be attained in 2015, the following actions should be highlighted:

Contracting• The strategy to adopt a tariff prices policy was continued;• A contract was signed with CP for the CPA 4000 units fleet R1-repair;• The scope of the provision of maintenance services to Metro do Porto Eurotram

and Tram-Train series was widened;• EMEF’s bid in the tender for the provision of 960,000 km revision services to Metro

do Porto Eurotram vehicles was selected;• A multiannual contract was signed with Infraestruturas de Portugal for the maintenance

of track equipment;• A multiannual contract was signed with CP Carga for the maintenance of railway

freight cars;• A multiannual contract was signed with ADP for the maintenance of railway freight

cars and in which EMEF becomes fleet ERM.

Procedural organisation• Consolidation of the use of the new application “price quotes”, based on SAP and

aimed at institutionally interconnecting sales, production and invoicing, providing advantages in the areas of:

• Efficiency• Procedural dematerialisation• Full integration in the Company’s information system• Provision of complete information on the development of each project/work

to other Company areas, notably the financial area, which benefit from this constantly updated information.

InternationalisationInternationally, EMEF developed a certain amount of activity, although with a limited number of bids, among which can be highlighted, due to their dimension and value, those referring to Diesel engines repair for Irish Rail and rotables repair for TMB- Transportes Metropolitanos de Barcelona.

BUSINESSDEVELOPMENT



Although none of these bids was selected, EMEF’s participation in the tenders can be deemed positive, as it contributed for better knowledge of the market, of the positioning strategies of the other bidders and also of its own production and cost factors vis-à-vis the competition. This acquired knowledge can be an essential element for EMEF to be able to find solutions and a better adjustment of its competitive positioning in future opportunities.

However, this ambition to internationalise its activity is strongly conditioned by the Company’s somewhat ambiguous situation, as, on the one hand, it is subject to a number of limitations due to being a state-owned company and, on the other, its business is carried on in a competitive market, where its privately-owned competitors have a greater acting flexibility and can quickly adjust their production strategies and factors. The limits that are imposed on EMEF in the fields of personnel admission and remuneration have hampered a number of its bidding possibilities, as the risk of contract default due to a possible lack of resources was too high.

33

OPERATING PROFIT/LOSS

In 2015, EMEF registered a slight decrease in its Operating Profit/Loss, a EUR -35 thousand drop when compared to the previous year. This is explained by the fact that the Company’s increase in operating income was proportionally offset by the increase in its operating expenditure.


ECONOMIC ANDFINANCIAL ANALYSIS

The increase in income was largely due to a greater volume of repair operations.

OPERATING PROFIT/LOSS(Euros)

Sales & services

Additional income

Changes in production inventory

Other income

2014

57 357 328

54 993 577

1 249 809

-120 173

1 234 115

55 113 274

13 895 729

1 794 758

9 342 947

25 662 779

2 473 776

1 241 271

702 013

2 244 053

∆%

6%6%

-36%

-27%

16%

6%18%

146%

0%

-2%

-92%

-10%

169%

-2%

2015

60 637 187

58 562 230

795 232

-153 043

1 432 768

58 428 314

16 396 296

4 408 895

9 309 281

25 104 008

210 160

1 114 171

1 885 503

2 208 873

Operating Income

Operating ExpenditureGoods sold & consumed

Subcontracts

Third-party supplies & services

Staff costs without terminations

Terminations by mutual agreement

Depreciation & amortisation expenditure/reversals

Other expenditure

Operating Profit/Loss


It can be seen that in 2015 the maintenance segment weighed slightly more than the repair segment and that both activity segments developed favourably when compared to 2014.

INCOME* PER ACTIVITY SEGMENT

Activity segmentRepair

Maintenance

2015 2014 ∆ %

27 770 135

(Euros)

27 212 795 2%

27 660 609 11%30 639 052

* Sales + Services + Changes in production inventory

58 409 187 54 873 404 6%

INCOME PER SEGMENT 2015

52,5% MAINTENANCE

47,5% REPAIR

INCOME PER SEGMENT 2014

50,4% MAINTENANCE

49,6% REPAIR

35

With regard to the turnover progress per client, the table below shows that CP, CP Carga and Metro do Porto kept their position as the Company’s most important clients. Together, they represented 91.1% of the Company’s sales and provision of services.

EXPENDITURE

In 2015, an increase in the Company’s operating expenditure was registered – EUR 3.4 million. The most significant increases are entered under the following headings:

• Cost of Goods sold and materials consumed (EUR 2.5 million);

• Subcontracts (EUR 2.6 million);

• Other expenditure (EUR 1.2 million).

These increases were partially offset by the decrease in total expenditure with personnel (EUR 2.8 million), resulting from several mutual agreement severances agreed upon in the course of the previous year.

TURNOVER PER CLIENT(Euros)

CP

CP CARGA

BOMBARDIER/PROMETRO/METRO DO PORTO

EMEF/SIEMENS ACE

RENFE

MOTA - ENGIL

INFRAESTRUTURAS DE PORTUGAL

OTHER

2014

54 993 577

38 336 600

7 429 338

4 107 178

2 893 997

1 068 989

11 529

715 878

430 068

∆%

6%-4%

59%

12%

9%

-11%

1161%

-8%

-20%

2015

58 562 230 36 870 983

11 846 208

4 604 579

3 144 506

952 324

145 361

656 202

342 067

Client63%

20%

8%

5%

2%

0%

1%

1%

70%

14%

7%

5%

2%

0%

1%

1%


A policy of cost-containment by way of an efficient management of the rationalisation of third-party supplies and services, as well as of the implementation of reduction in pay policies imposed by the successive Budget laws, was applied in EMEF with the following results:

COST VARIATION & STRUCTURE

0

10.000.000

20.000.000

30.000.000

40.000.000

50.000.000

60.000.000

OTHER COSTS & LOSSES

IMPAIRMENT LOSSES

TERMINATIONS BY MUTUAL AGREEMENT

STAFF COSTS WITHOUT TERMINATIONS

THIRD-PARTY SUPPLIES & SERVICES

SUBCONTRACTS

COST OF GOODS SOLD & MATERIALS CONSUMED

20152014

DEPREC. & AMORT.EXPENDITURE/REVERSALS

COST CONTAINMENT PLAN

CCP

2011 Absolute %

Travel/Accommodation (EUR k)

Communications (EUR k)

Daily allowances (EUR k)

16 396

13 718

19

107

25 104

25

55 218

13 896

11 138

61

125

25 663

22

50 696

13 564

9 599

36

159

29 010

36

52 173

15 631

9 540

43

190

25 349

44

50 519

18%

23%

-68%

-15%

-2%

15%

9%

28 323

11 217

48

209

31 945

71

71 485

30 388

13 830

138

290

38 417

120

82 635

2 501

2 580

-42

-18

-559

3

4 522

2015 2014 2013 2012 2010

2015/2014 fluctuation

Cost goods sold & mat.cons. (EUR k) (1)ESF (EUR k) (2)

Staff costs w/out compensation (EUR k) (3)

Total (1) + (2) + (3)

37

FINANCING COSTS AND NET PROFIT/LOSS

Financing costs breakdown and changes are shown in the table below:

The overall decrease under the heading Interest and Similar Costs borne with financing results mainly from the reduction in the reference interest rate and the spreads charged by financers, as well as from the reduction of indebtedness, in particular linked to the use of bank overdrafts to their cap.

In spite of the description in Note 21 – Borrowings set out in the Annex to the Financial Statements, the heading Interest on Shareholder’s loans includes the accrual accounting of expenditure referring to interest for the periods between the maturity date of each loan contract and the end of 2015.

The net profit/loss registered an increase of EUR 469 thousand when compared to 2014 financial year. This resulted from the decrease in interest and similar expenditure due to the decrease of financial debt and of interest rates on this debt.

FINANCING COSTS

Financing Costs

(Euros)

Interest on bank loans

Interest on Shareholder's loans

Interest on bank overdrafts

Other costs relating to borrowings

95 627

516 031

59 920

36 344

2015

707 923 136 123

810 313

224 699

73 417

2014

1 244 552 -30%

-36%

-73%

-50%

∆%

-43%

NET PROFIT/LOSS(Euros)

Operating Income

Operating Expenditure

Operating Profit/Loss

Financing costs

Income tax for the financial year

Net Profit/Loss

2015

60 637 187

58 428 314

2 208 873

707 923

-122 900

1 378 050

2014

57 357 328

55 113 274

2 244 053

1 244 552

-90 017

909 485

∆%

6%

6%

-2%

-43%

-37%

52%


ASSET STRUCTURE

ASSETS

At the close of 2015, Assets had registered an increase of only EUR 0.7 million on the previous year. This resulted mainly from the EUR 1.3 million increase in the current assets final balance, the financial liquid assets being the heading that registered the most significant increase.

ASSET CHANGES & STRUCTURE

0

10.000.000

20.000.000

30.000.000

40.000.000

50.000.000

TANGIBLE FIXED ASSETS & INTANGIBLE ASSETS

SHAREHOLDINGS

OTHER CAPITAL INVESTMENTS

INVENTORIES

OTHER ASSETS & BALANCES

20152014

CHANGES IN THE ASSET STRUCTURE(Euros)

Non-current Tangible fixed assets & intangible assets

Shareholdings

Other capital investments

Current Inventories

Other assets & balances

Capital, Reserves & Retained EarningsNet profit/lossNon-current liabilities Provisions

Borrowings

Current liabilities Borrowings

Other liabilities

2014

7 656 7837 243 046

413 737

0

37 003 29718 087 803

18 915 494

44 660 080

5 592 460909 485

4 049 527987 027

3 062 500

34 108 60815 920 638

18 187 970

44 660 080

∆ €

-606 032-715 446

109 414

0

1 352 302511 967

840 335

746 270

909 485468 566

-1 059 733-184 733

-875 000

427 953-1 545 638

1 973 591

746 270

∆%

-8%-10%

26%

0%

4%3%

4%

2%

16%52%-26%

-19%

-29%

1%-10%

11%

2%

2015

7 050 7516 527 600

523 151

0

38 355 60018 599 771

19 755 829

45 406 350

6 501 9451 378 0502 989 794

802 294

2 187 500

34 536 56114 375 000

20 161 561

45 406 350

Balance Sheet Heading

Assets

Total Assets

Total Equity Capital & Liabilities

Equity Capital & Liabilities

39

EQUITY CAPITAL

Where equity capital is concerned, in 2015 there was a EUR 1.4 million increase compared to the previous year, as illustrated in the chart below:

CHANGES IN EQUITY CAPITAL

The change in equity capital during the 2015 financial year resulted solely from the net profit for the year, of the same amount.

LIABILITIES

In terms of total Liabilities, at the close of 2015 a EUR 0.6 million was registered. This was due to:

• The closing balance under the heading Suppliers increasing by EUR 2.1 million compared to 2014, due to the purchase of materials for the Metro do Porto Eurotram and Tram-Train fleets maintenance, to the purchase of materials to comply with the freight car contract signed with the client CP Carga and to the extension of average payment times, which increased from 64 days in 2014 to 74 days at the end of 2015;

• The reduction of (short-term and medium and long-term) bank loans by EUR 2.4 million, corresponding to a 44% decrease. The Shareholder’s loan did not undergo any change;

• A EUR 0.6 million decrease in amounts owed to the State and other public entities, resulting from the decrease in VAT due to the decrease in invoicing during the two last months of 2015 when compared to 2014, as well as to the decrease in the amount of income tax and social security contributions withholdings resulting from the decrease in total staff numbers from 1030 to 979, offset by the increase in income tax rates.

2014

2015

1.000.000 2.000.000 3.000.000 4.000.000 5.000.000 6.000.000 7.000.000 8.000.000


FINANCIAL RESOURCES – CHANGES IN THE FINANCIAL DEBT

At the close of 2015, the total financial debt had decreased by EUR 2.4 million compared to 2014, as a result of the compliance with the medium and long-term debt repayment plans and of the lesser use of bank overdrafts, which was facilitated by the payment received in December of a great volume of invoicing from the client CP.

As has already been mentioned, a EUR 2.4 million reduction in (short-term and medium and long-term) bank loans was registered, EUR 1.3 million of which resulted from the lesser use of bank overdrafts. This reduction was achieved with own resources and facilitated by the payment received in December of a great volume of invoicing from the client CP.

LIABILITIES CHANGES & STRUCTURE

0

5.000.000

10.000.000

15.000.000

20.000.000

25.000.000

30.000.000

35.000.000

40.000.000

PROVISIONS

NON-CURRENT BORROWINGS

CURRENT BORROWINGS

OTHER LIABILITIES

20152014

CHANGES IN THE DEBT

0

5.000.000

10.000.000

15.000.000

20.000.000

M/L-TERM DEBT

S-TERM DEBT

20152014

41

Continuing with a containment policy in terms of investments, these were limited to the equipment considered to be strictly necessary for the Company to pursue its activity. Thus being, in 2015 investments attained approximately EUR 399 thousand.

Compared to 2014, investment increased, in spite of the aforementioned containment policy, by approximately 269%, mainly due to needs related with the works carried out in the Company facilities and the necessary purchase of transport equipment, as can be seen in the charts below that show the development in investment since 2013 and the distribution of the investment made in 2015 by type of goods among the Company’s assets.

CHANGES IN INVESTMENT

2013 2014 2015

44.760

399.079

108.184

62% FACILITIES & BUILDINGS

11% MOVEMENT & TRANSPORT EQUIPMENT

7% BASIC EQUIPMENT

7% OTHER EQUIPMENT & TOOLS

5% FIXED ASSETS IN PROGRESS

4% MEASURING, TESTING & PRECISION, ENVIR. & SAFETY APPARATUS

4% IT EQUIP.

INVESTMENTS BY NATURE


INVESTMENTS

COMPLIANCEWITHLEGALGUIDELINES

43

The following overall indicators were monitored. These reveal that it was not possible to achieve the 2015 goals, but they show an improvement when compared to 2013:

MANAGEMENT GOALSII COMPLIANCE WITH LEGAL GUIDELINES // 1.

MANAGEMENT GOALS

EBITDAwithout terminations

2015 GOAL 2014 2013

2015 Performance

> 5 948 5 948

2015

3 348

CALCULATION FORMULA

Profit/loss net of depreciation,financing costs & taxes +provisions + adjustments +terminations by mutual agreement [EUR 10³]

INDICATOR

302

Weight of operatingcosts in turnoverwithout terminations

< 92% 92%94%(Cost of goods sold & materials consumed +ESF + staff costs - terminationsby mutual agreement)/Turnover

102%


The EMEF financial activity is exposed essentially to access to credit risk and interest rate risk.

The liquid assets available in the course of the financial year were generated by the Company’s activity, by resorting to bank credit lines negotiated before 2011 and by the Shareholder’s loans.

In order to ensure compliance with competition rules, EMEF has endeavoured to find alternatives to the Shareholder’s loans, and to resort to the Shareholder’s guarantees to a lesser degree.

In accordance with Order no. 101/09 SETF of 30/01, the table below shows the progress in the implementation of measures aimed at mitigating the effects of the financial markets’ volatility on EMEF’s financial situation.

FINANCIAL RISKMANAGEMENT

II COMPLIANCE WITH LEGAL GUIDELINES // 2.

Diversification of financing instrumentsDiversification of the available interest rate modalities

Diversification of loaning entities

Contracting of risk hedging instruments

Consolidation of interest-bearing liabilities:replacement of short-term liabilities by medium/long-termliabilities under favourable conditions

Contracting of operations to minimise their financial costs(all-in-cost)Reduction of real guarantees to a minimum

Reduction of restrictive covenants to a minimum

Adoption of a policy to minimise the allocation of borrowedcapital to the financial coverage of investmentsChoice of investments with a provensocial/business profitability, which benefitfrom Union co-funding and equity capitalUse of self-financing and divestment proceeds

Quantification/description

In 2015, EMEF obtained funds by extended short-term credit lines.In 2015, EMEF financing took the form of extending short-termcredit lines, the reference interest rates for which were 3- and6-month Euribor, despite having sought better conditionsIn 2015, EMEF continued to be financed by Portuguese banksand the Shareholder EMEF did not resort to risk hedging instruments

In 2015, EMEF only resorted to short-term financing in orderto meet cash-flow needs. It extended short-term operationswith the Shareholder in light of not having generatedsufficient funds for their repaymentAll consultations made and resulting contracts were aimedat successfully minimising the operations' total costEMEF did not provide any real guaranteesfor the financing it contractedThe effort to renegotiate credit line conditionsin order to minimise the effects of existing clauses continued

In 2015, the EMEF investment was negligibleand fully funded by operational cash flows

Y

"Financial Risk ManagementOrder no.101/09-SETF of 30-01"

Compliance

Risk assessment procedures& hedging measures adopted

Adoption of an active policyto increase fixed capital

Measures aimed at optimisingthe Company's financial structure

X X

X

X

X

X

X

X

X

X

X

N N.A.

45

Financial charges (Euros)

Annual average financing rate (%)

2011

707 923

3,82%

1 244 552

5,62%

1 664 455

6,83%

1 884 694

6,77%

1 542 969

4,60%

2015 2014 2013 2012Items

Loans secured

of which granted by the DGTF

Capital increases in cash

Capital increases by debt to equity conversion

Adjusted indebtedness

16 562 500

0

0

0

0

18 983 138

0

0

0

0

-2 420 638

0

0

0

0

-13%

2015 2014 Absolute Fluctuation Fluctuation %Interest-bearing liabilities (Euros)

STRUCTURE OF DEBT TO BANKS AND THE SHAREHOLDER(Euros)

Bank loans

Loans from the Shareholder

Bank overdrafts

Total debt

3 062 500

13 500 000

0

16 562 500

4 141 367

13 500 000

1 341 770

18 983 138

-1 078 867

0

-1 341 770

-2 420 638

-26%

0%

100%

-13%

2015 2014 ∆ € ∆%



AVERAGE PAYMENT TIMEAND DISCLOSURE OF LATEPAYMENTS

Payment time (days)

2015 2014 2015/2014 fluctuation

74 64 10

Average Payment Time

Acquisition of capital

Total

0-90 days 90-120 120-240

0 0 0

21 308 9 3321 646 477

Matured Debts

Acquisition of goods & services 1 646 477 21 308 9 332

240-360

0

14 043

14 043

> 360*

0

19 067

19 067

* The figures shown in the > 360-day column result essentially from blocked balances relating to paymentsthat have been suspended for a number of reasons, awaiting the supplier's credit note, awaiting the settlement of a dispute, etc..

Matured debts under Article 1 of DL 65-A/2011

(euros)

47


No recommendations were issued by the shareholder.

COMPLIANCE WITHTHE SHAREHOLDER’SRECOMMENDATIONS


The members of the Board of Directors are not remunerated by EMEF, as they were elected under article 20(4) of Decree-Law no. 71/2007 of 27 March. The sole expenditure results from travel at the service of EMEF.

REMUNERATIONS

BOARD OF DIRECTORS

2013-2015 Cristina Maria dos Santos Pinto Dias*

Maria Isabel de Jesus da Silva Marques Vicente**

GM

GM

NameAppointmentTerm of Office

(start-end)

Chairwoman

Member

Position Identify EntityResolution Date

Option for OriginPosition Remuneration

*Resigned from office on 22/07/2015 - **Resigned from office on 30/03/2015

Payer

15/03/13

15/03/13

2015 Manuel Tomás Cortez Rodrigues Queiró

Nuno Serra de Sanches Osório

Shareholder's decision

GM

Chairman

Member

11/08/15

08/05/15

Cristina Maria dos Santos Pinto Dias


282

239

230

250

0

0

Travel Accommodation Daily Allowance

Name

Annual Expenditure relating to Travel (Euros)

Other

Identify Amount (EUR)

Total Travel

Expenditure

532

489

Seguros 21€


SUPERVISIONBoard of Auditors

2015 Arlindo José Crespo Rodrigues

Ana Maria dos Santos Malhó

Carla Manuela Serra Geraldes

Kept the positions

to which they were

appointed in 2014

Not remunerated

Not remunerated

Not remunerated

Name

AppointmentTerm of office(start-end)

Chairman

Member

Alternate Member

Position

Arlindo José Crespo Rodrigues



0

0

0

0

0

0

0

0

0

Gross Remuneration Reductions Amount after reductionsName

Annual Remuneration (Euros)

(monthly)Resolution Date

Set Remuneration

STATUTORY AUDITOR

2015 Horwath &

Associados,

SROC, Lda

Kept the position

to which they were

appointed in 2014

5 395

Name

ContractedRemuneration(Euros)

Term of Office(start-end)

SROC

Position

Horwath & Associados, SROC, Lda 5 395 0 5 395

Gross Remuneration Reductions Amount after reductionsName


SROC/ROC Identification Termsof officein the Company

4186

Number

Appointment

Resolution Date

EXTERNAL AUDITOR

Pinto Ribeiro,

Lopes Rigueira &

Associados, SROC, LDA.

197 9199

Registered w/OROC under no.Name Registered with CMVM under no. Date

Identification of the External Auditor (SROC/ROC) Contract Date

1/8/2014

Term

2014-2016

4 500 0 4 500

Service Provision Amount Remuneration Reductions Amount after reductions


49

The Directors did not use credit cards or other payment instruments to cover disbursements made on company business. Moreover, no expenses falling within the scope of personal representation expenses were reimbursed to them.

PUBLIC MANAGER STATUTEII COMPLIANCE WITH LEGAL GUIDELINES // 6.

As previously referred, in 2015 EMEF’s procurement activities were governed by the “PFQ 06.2.0 – Procurement” quality functional procedure.

The Company did not perform any act or enter into any contract for the purchase of goods or services or public works involving more than EUR 5 million.

PUBLIC PROCUREMENTII COMPLIANCE WITH LEGAL GUIDELINES // 7.

In 2015, 4,038 procedures amounting to EUR 27,122,524 were awarded on the electronic platform used by EMEF (ACINGOV). Other direct negotiation procedures were carried out by electronic data transmission, due to the successful bidders (sole suppliers of the goods to be acquired) refusing to register with this platform. In 2015, 35 procedures were concluded outside the platform in a total of EUR 539,300, the awards having attained an aggregate amount of EUR 27,661,824.

NUMBER OF PROCEDURES AWARDED PER MONTH

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

200

250

300

350

400

450

500

550

2015

EMEF uses the State Car Fleet. In 2015, it leased five cars, purchased four cars and returned two cars to the leasing companies.

NATIONAL PUBLICPURCHASING SYSTEMAND STATE CAR FLEET



In strict compliance with the relevant instructions of the Cost Containment Plan, the measures set out for this purpose continued to be applied, notably those laid down in the 2015 Budget, with particular emphasis on the following:

1. With regard to the acquisition of services:

a) The instructions set out in Order no. 438/10-SETF of 10 May 2010, which require that contracts involving more than EUR 125,000 have an economic justification and no alternative in-house solution, continued to be complied with;

b) The rule set out in article 75 of Law no. 82-B/2014 of 31 December (2015 Budget Law) was always complied with, by reducing the value of service agreements having the same object that were concluded or renewed in 2015. However, the truth is that the vast majority of the agreements concluded or extended in 2015 having already been the object of the same measures in 2012, 2013 and 2014, under paragraph 9 of the same legal provision, this reduction in remuneration having produced a much reduced impact in 2015.

MEASURES TO REDUCEOPERATING EXPENDITURE


51

2. The remuneration reduction imposed by article 2 of Law no. 75/2014 was applied to the staff.

3. The remuneration structure for the members of the Board of Directors and the staff does not include any portion relating to management or performance bonuses. Accordingly, the Company did not bear any cost of this nature.

EBITDA withoutcompensation (EUR k)

Travel/Accommodation (EUR k)

Daily allowances (EUR k)

2012

Communications (EUR k)

(3) Staff costs (EUR k)(3.1) of which,for compensation (EUR k)

COST CONTAINMENT PLAN

50 519

2013

52 173

2014

50 696

2015

55 218

Goal

(*)

(*)

(*)

(1) Cost goods sold& mat. Cons.(EUR k)(2) ESF (EUR k)

2011

71 485

2010

82 635

2015/2014FluctuationAbsolute %

2015/2010FluctuationAbsolute %

3 348

16 396

13 718

19

25

107

25 314

210

5 948

13 896

11 138

61

22

125

28 137

2 474

302

13 564

9 599

36

36

159

29 822

812

11 874

15 631

9 540

43

44

190

27 056

1 707

5 142

28 323

11 217

48

71

209

35 791

3 846

1 173

30 388

13 830

138

120

290

40 055

1 637

-2 599

2 501

2 580

-42

3

-18

-2 822

-2 264

-44%

18%

23%

-68%

15%

-15%

-10%

-92%

2 175

-13 992

-111

-118

-95

-183

-14 740

-1 427

185%

-46%

-1%

-86%

-79%

-63%

-37%

-87%

4 522 9% -27 416 -33%(4) Total Expenditure = (1)+(2)+(3)-(3.1)

63 26750 93654 99458 562 76 039 82 768 3 569 6% -24 206 -29%(5) Turnover (EUR k)

80%102%92%94% 94% 100% 0,02 2% 0 -6%Weight of Expenditure in Turnover (4)/(5) (%)

Human Resources 979

828

151

1 030

874

156

1 069

906

163

1 112

911

201

1 236

1 013

223

n.a.

n.a.

n.a.

-51

-46

-5

-5%

-5%

-3%

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

Staff membersMiddle-management positions

453%556%560%548% 454% n.a. -0,12 -2% n.a. n.a.Staff Members/Middle-Management Positions

Motor Vehicles57

281

50

224

47

231

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

7

57

14%

26%

n.a.

n.a.

n.a.

n.a.

Number of motor vehicles

Expenditure withmotor vehicles (EUR k)

(*)

(*) in line with 2014

(*)


There is no specific reference to EMEF on the SEE website, although the information for which Order no. 14277/2008 of 14 May provides was prepared and sent to the Inspectorate-General of Finance and the Directorate-General for the Treasury and Finance by the intermediary of its sole shareholder CP – Comboios de Portugal, E.P.E..

However, most of the information that is supposed to be available on the SEE site is published on the EMEF site, as will be explained in further detail in chapter V, paragraph D of the Company Governance Report.

INFORMATION DISCLOSEDON THE SEE SITE


EMEF is the holder of an account with the Agência de Gestão da Tesouraria e da Dívida Pública - IGCP, E.P.E. (treasury and public debt management agency). However, this account was only residually operated given the lack of funds and the fact that EMEF continuously resorted to bank overdrafts.

Due to the fact that EMEF registered a cash surplus in December 2015, this has been channelled to the IGCP, as required by law.

STATE’S TREASURYUNITY PRINCIPLE


The Court of Auditors did not conduct any audits to the Company.

AUDITS CONDUCTED BYTHE COURT OF AUDITORS


53


COMPLIANCE WITH LEGAL GUIDELINES

EBITDA without terminations (EUR 10³)

Weight of operating costs in Turnover without terminations

Management Goals/ Business Plans & Budget:

Quantification/ Identification

3 348

94%

Justification/Reference to

Report paragraph

Financial risk managementIndebtedness growth capsChanges in the average payment time to suppliersDisclosure of payments in arrears

3,82%

-2 420 638/-13%

+10 days

1 710 227 €

Shareholder's recommendation on the last approval of accounts date:

Non-award of management bonusesunder Article 41 of Law 82-B/2014

Company boards - remuneration reduction in force in 2015

External Auditor - remuneration reductionunder Article 75 of Law 82-B/2014

Other staff - remuneration reductionin force in 2015

Other staff - remuneration increase not permittedunder Article 38 of Law 82-B/2014

Remunerations0

0

302 586€ Amount not paid in 2015due to restrictions

183 404€ Amount not paid in 2015due to restrictions

Use of credit cards

Article 32 of the Public Manager StatuteCredit cards

are not used

No expenseswere disbursed

Reimbursement of personal representation expenses

Public ProcurementApplication of public procurementrules by the Company

Application of public procurement rulesby the affiliated companies

Contracts submitted to the prior approval of the Court of Accounts

Audit conducted by the Court of Accounts

Number of vehicles

Expenditure with vehicles

Car fleet57 vehicles

280 638€

Operating Costs of State-Owned Enterprises(Article 61 of Law 82-B/2014)

The weight of operatingcosts in Turnover w/outterminations increased

by 2 p.p.

Number of workers

Number of senior staff workers

Staff Reduction (Article 60 of Law 82-B/2014)46

5

Principle of Treasury Unity(Article 125 of Law 82-B/2014)

5 000 000€ The Company registeredtreasury surpluses

which it channelledto the IGCP

SYSTEMATISATION OFINFORMATION ON COMPLIANCEWITH LEGAL GUIDELINES

Y

ComplianceN N.A.

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

PROSPECTSFOR THEFUTURE

55

Given that EMEF’s privatisation was not achieved, its development strategy must be redefined within the framework of the new government’s guidelines.

Irrespective of these guidelines, EMEF’s future will be marked by the process of consolidation of its technical and financial structure.

As regards this latter aspect, it is paramount to complete the outlined restructuring process, readjusting the Company’s establishment plan, for which it is considered essential to rejuvenate and reinforce the competencies of its technical staff.

The process that has already been started in the Centre Workshop Unit – the Company’s reorganisation in accordance with a philosophy of business units – should be extended to the whole of the Company, in order to enable it to achieve a more effective and competitive position in the market.

As a matter of fact, the recent privatisation of CP Carga had the effect that more than 20% of EMEF’s turnover is now outside CP’s universe, which will subject the Company to directly compete with other operators in tenders launched by its own shareholder.

In this context, it becomes crucial to provide the Company with management mechanisms and instruments to enable it, on the one hand, to deepen and enlarge its competencies in order to respond to productivity improvement challenges, and, on the other, to provide it with a better acting capacity and agility while overcoming the administrative constraints resulting from it being a State-owned company, enabling it to give swift and effective answers in an increasingly competitive market and thus ensuring its future sustainability.

The instability and uncertainty regarding the development of the Metro do Porto subconcession process may have repercussions on EMEF’s economy and market widening strategy, in particular in the light rail repair and maintenance area. However, if it is provided with conditions enabling it to achieve a better competitive position in the market, EMEF will have all the skills and competencies needed to keep ensuring its participation in this fleet’s repair and maintenance process.

Still regarding its relations with Metro do Porto, to be noted is that, in 2016, EMEF will initiate the performance of the contract for the Eurotram fleet 960,000 Km general overhaul, for which it was selected in an international public tender launched in 2015, which confirms what was mentioned above.

Where EMEF’s internationalisation is concerned, it is assumed that its strategy should be to continue to establish partnerships that enable it to access and respond to the demands of new markets, both geographical and sectoral, its main actions being focused on the rotables repair market.

III PROSPECTS FOR THE FUTURE

RELEVANTEVENTS AFTERTHE REPORTINGPERIOD

57

On 19 October 2015 a contract was signed between Transdev and EMEF for the maintenance of the Metro do Porto rolling stock fleets, the beginning of which depended on the contract covering the Metro do Porto, S.A. Transport System Subconcession becoming effective.

Due to the early 2016 Government decision of reverting the ongoing sub-concession process, the contract between Transdev and EMEF will not become effective.

IV RELEVANT EVENTS AFTER THE REPORTING PERIOD

PROPOSALFOR THEAPPROPRIATIONOF PROFITS

59

Under the relevant provisions of the law and of the articles of association, it is hereby proposed that the net profit/loss for the 2015 financial year – profit of EUR 1,378,050,74 (one million three hundred and seventy eight thousand fifty Euros and seventy four cents) – be carried forward to the retained earnings account.

Lisbon, 29 March 2016

V PROPOSAL FOR THE APPROPRIATION OF PROFITS

Chairman Member

Manuel Tomás Cortez Rodrigues Queiró Nuno Serra de Sanches Osório

The Board of Directors

FINANCIALSTATEMENTS AND NOTES


FINANCIALSTATEMENTS

63

BALANCE SHEETI FINANCIAL STATEMENTS

BALANCE SHEET AS AT 31 DECEMBER 2015EMEF - Empresa de Manutenção de Equipamento Ferroviário, S.A.

ASSETS

Tangible fixed assets

Intangible assets

Notes 2015 2014

Shareholdings - asset equivalence method

6

Total non-current assets

6 504 296 7 239 127

23 304 3 919

7 050 751 7 656 783

Non-current assets

Shareholdings - other assets

7

8

9

Current assetsInventories

Clients

Advances to suppliers

10

Total current assets

18 599 771 18 087 803

8 412 943 13 878 079

38 355 600 37 003 297

Other receivables

11

25

13

71 640 1 760

4 928 046 4 730 886

Deferrals 14 527 361 274 381

Cash in hand & bank deposits 4 5 815 839 30 387

TOTAL ASSETS 45 406 350 44 660 080

EQUITY CAPITAL & LIABILITIES

Paid-up capital

Other equity capital instruments

Legal reserves

15

Net profit/loss

8 100 000 8 100 000

10 316 222 10 316 222

1 378 050 909 485

EQUITY CAPITAL

Other reserves

16

17

18

95 506 95 506

617 458 617 458

Retained earnings 19 (12 627 242) (13 536 727)

TOTAL EQUITY CAPITAL 7 879 995 6 501 945

LIABILITIES

Provisions

Borrowings

20

Total non-current liabilities

802 294 987 027

2 187 500 3 062 500

2 989 794 4 049 527

Non-current liabilities

21

523 151 413 737

- -

Suppliers

Advances from clients

23

Total current liabilities

7 026 645 4 846 483

- 110 838

34 536 561 34 108 608

Current liabilities

24

State & other public entities 3 354 634 3 954 26812

Borrowings 14 375 000 15 920 63821

Other payables 4 739 319 3 944 19722

Deferrals 5 040 963 5 332 18414

TOTAL LIABILITIES 37 526 355 38 158 135

TOTAL EQUITY CAPITAL & LIABILITIES 45 406 350 44 660 080


Chief Financial Officer Chairman

Sónia Maria Vieira Caneira Cunha Leão Manuel Tomás Cortez Rodrigues Queiró

Chartered Accountant

Paula Cristina Tavares Serra Ribeiro

Member


PROFIT ANDLOSS ACCOUNT

FINANCIAL STATEMENTS AND NOTES 64

I FINANCIAL STATEMENTS

PROFIT & LOSS ACCOUNT AS AT 31 DECEMBER 2015Financial year ended on 31 December 2015

INCOME & EXPENDITURESales & services provided

Operating subsidies

Notes 2015 2014

Gains/losses of subsidiaries, affiliated companies and joint-ventures

26

Profit/loss before depreciation, financing costs & taxes

58 562 230 54 993 577

6 649 52 329

3 323 044 3 485 325

Changes in production inventories

27

28

29

453 565 357 737

(153 043) (120 173)

Works performed for own purposes 30 1 140 2 637

Cost of goods sold & materials consumed 31 (16 396 296) (13 895 729)

Third-party supplies & services 32 (13 718 177) (11 137 705)

Staff costs 33 (25 314 167) (28 136 555)

Impairment of inventories (losses/reversals) 10 (418 132) (83 395)

Impairment of receivables (losses/reversals) 11 (7 225) 11 100

Provisions (increases/decreases) 20 184 733 11 446

Other income & gains 34 1 209 395 1 815 900

Other expenditure & losses 35 (1 087 628) (385 843)

Operating profit/loss (before financing costs & taxes) 2 208 873 2 244 053Depreciation & amortisation expenditure/reversals 36 (1 114 171) (1 241 271)

Profit/loss before taxes 1 500 951 999 502Interest & similar costs 37 (707 923) (1 244 552)

Net profit/loss for the financial year 1 378 050 909 485Income tax for the financial year 38 (122 900) (90 017)





Paula Cristina Tavares Serra Ribeiro

Member


65

CASH FLOWSTATEMENT


CASH-FLOW STATEMENT

OPERATING ACTIVITIESReceipts from clients

Payments to suppliers

31-12-2015 31-12-2014

Payments to the staff

Cash generated by transactions

77 712 297 70 646 552

(36 378 085) (30 103 873)

17 570 845 13 757 219

Income tax payment/refund

Other receipts/payments

8 410 1 808

(8 734 659) (7 842 089)

(8 726 250) (7 840 281)

FLOWS OF OPERATING ACTIVITIES [1] 8 844 596 5 916 939

INVESTMENT ACTIVITIESReceipts from:


Capital investments

- -

Interest & similar income

333 333 269 403

- -

Dividends - -

333 333 269 403

Payments relating to:


Capital investments

(362 328) (70 639)

- -

(23 763 366) (26 785 460)- -

Other assets - -

(362 328) (70 639)

FLOWS OF INVESTMENT ACTIVITIES [2] (28 995) 198 764

FINANCING ACTIVITIESReceipts from:

Borrowings

Paying-up of capital & other equity capital instruments

1 808 474 5 066 523

- -

1 808 474 5 066 523

Payments relating to:

Borrowings

Interest & similar costs

(4 229 112) (9 907 433)

(609 437) (1 276 773)

Other financing operations - -

(4 838 549) (11 184 206)

FLOWS OF FINANCING ACTIVITIES [3] (3 030 074) (6 117 683)

VARIATIONS IN CASH AND CASH EQUIVALENTS [4]=[1]+[2]+[3] 5 785 526 (1 980)

EFFECTS OF EXCHANGE RATE FLUCTUATIONS (75) (23)

CASH & CASH EQUIVALENTS AT THE START OF THE FINANCIAL YEAR 30 387 32 390

CASH & CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 5 815 839 30 387

66

STATEMENTOF CHANGESIN EQUITY CAPITAL

FINANCIAL STATEMENTS AND NOTES


POSITION AT THE START OF 2015

First adoption of accounting standards

Changes in accounting policies

Paid-upcapital

Financial statement

Total changes for the financial year

8 100 000

- -

Changes during the financial year

Realisation of the surplus resulting from the

Net Profit/Loss for the financial year

Surpluses resulting from the revaluation of

Adjustments resulting from deferred taxes

Other recognised changes

Comprehensive Income

Transactions with holders

Total of transactions with holders - -

Capital increases/decreases

Payment of issue bonuses

Distributions

POSITION AT THE END OF 2015 8 100 000 -

Capital injections to cover losses

Other transactions 16

1

2

3

4=2+3

5

Otherequitycapital

instruments

10 316 222

-

-

10 316 222

Issuebonuses

-

-

-

revaluation of tangible fixed assets & intangible assets

tangible fixed assets & intangible assets & their variation

- - - -

-

-

-

-

Legalreserves

-

-

95 506

-

95 506

Otherreserves

-

-

617 458

-

617 458

of equity capital in 2015


Shares(own

shares)

conversion differences

Notes

to the equity capital

6=1+2+3+5

Non-distri-butablereserves

Equity capital allocated to the parent company's shareholders

STATEMENT OF CHANGES IN EQUITY CAPITAL2015

67

Retainedearnings

-

909 485

(12 627 242)

-

(13 536 727)

909 485

Adjustmentsto

financialassets

-

-

-

-

-

Revaluationsurpluses

-

-

-

-

-

Otherchangesin equitycapital

-

-

-

-

-

Netprofit/loss

for thefinancial

year

-

(909 485)

1 378 050

1 378 050

909 485

(909 485)

1 378 050

Total

-

-

7 879 995

1 378 050

6 501 945

1 378 050

-

Minorityshareholdings

-

-

-

-

-

-

Totalequitycapital

-

-

7 879 995

1 378 050

6 501 945

1 378 050

-

-





Financial statement










Total of transactions with holders



Distributions

POSITION AT THE END OF 2015


Other transactions







STATEMENT OF CHANGES IN EQUITY CAPITAL2014

8 100 000

- -

- -

8 100 000 -

16

1

2

3

4=2+3

5

10 316 222

-

-

10 316 222

-

-

-

- - - -

-

-

-

-

-

-

95 506

-

95 506

-

-

617 458

-

617 458

6=1+2+3+5


5

15




Financial statement













Distributions



Other transactions







Paid-upcapital

Otherequitycapital

instrumentsIssue

bonusesLegal

reservesOther

reserves

Shares(own

shares)Notes

Non-distri-butablereserves

68FINANCIAL STATEMENTS AND NOTES

-

(3 390 285)

(13 536 727)

-

(10 146 442)

(3 390 285)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

3 390 285

909 485

909 485

(3 390 285)

3 390 285

909 485

-

-

6 501 945

909 485

5 592 460

909 485

-

-

-

-

-

-

-

-

-

6 501 945

909 485

5 592 460

909 485

-

-





Financial statement













Distributions



Other transactions







Retainedearnings

Adjustmentsto

financialassets

Revaluationsurpluses

Otherchangesin equitycapital

Netprofit/loss

for thefinancial

year TotalMinority

shareholdings

Totalequitycapital

69

NOTES TO THEFINANCIALSTATEMENTS

71

EMEF – Empresa de Manutenção de Equipamento Ferroviário S.A., hereinafter referred to as “EMEF”, is a public limited liability company with registered offices at Rua D. Afonso Henriques, 2330-519 Entroncamento, which was set up in December 1992 and started operating on 30 January 1993.

EMEF is owned by CP – Comboios de Portugal, E.P.E., a company with registered offices at Calçada do Duque, no. 20, 1249-109 Lisbon. It has several production facilities spread across Northern, Central and Southern Portugal. Its main business activity is the manufacture, reconditioning, large repair and maintenance of railway equipment and vehicles.

As at 31 December 2015, EMEF had the following shareholdings:

a) EMEF/SIEMENS ACE – Serviços Integrados de Manutenção e Engenharia Ferroviária, A.C.E. (Complementary Group of Companies), the object of which is the synergy and optimisation of the member companies in the area of the maintenance of “LE 5600” and “LE 4700” electric locomotives under an agreement concluded between the ACE and CP – Comboios de Portugal E.P.E.. EMEF holds a 51% interest in the ACE;

b) Nomad Tech, Lda., where it holds a 35% interest and the object of which is the provision of engineering, innovation and technology services applied to the transport sector, the manufacture, repair and maintenance of components and the development of IT solutions.

IDENTIFICATION OF THE ENTITYII NOTES TO THE FINANCIAL STATEMENTS // 1.

The EMEF financial statements were prepared in accordance with the SNC - Sistema de Normalização Contabilística (Accounting Standards System), first adopted by the Company in 2010 and governed by the following legislation:

• Decree-Law no. 158/2009 of 13 July (SNC), as amended by Law no. 20/2010 of 23 August;

• Ministerial Order no. 986/2009 of 7 September (Financial Statement Templates);

• Notice no. 15652/2009 of 7 September (Conceptual Framework);

• Notice no. 15655/2009 of 7 September (NCRF - Normas Contabilísticas e de Relato Financeiro – Financial Accounting and Reporting Standards);

• Ministerial Order no. 1011/2009 of 9 September (Accounting Code).

The financial statements now presented reflect the results of the Company’s operations and its financial position for the years ended on 31 December 2015 and 2014. All amounts are expressed in Euros (EUR).

These statements were prepared on the basis of the ongoing EMEF operations and on an accrual basis, in accordance with the qualitative characteristics of understandability, relevance, materiality, reliability, faithful representation, substance over form, neutrality, prudence, completeness and comparability.

Under article 7(4) (a) of Decree-Law no. 158/2009 of 14 July, the Company is not filing consolidated financial statements.

ACCOUNTING STANDARDSUSED TO PREPARETHE FINANCIAL STATEMENTS


II NOTES TO THE FINANCIAL STATEMENTS // 2.

2.1 / ACCOUNTING STANDARDS

73

No derogations were made to the SNC provisions producing materially relevant effects and susceptible of distorting the true and appropriate image to be transmitted to those interested in the information made available.

2.2 / DEROGATIONS TO THE SNC PROVISIONS

There are no headings in the balance sheet and in the profit/loss account the contents of which cannot be compared to those for the previous financial year.

2.3 / CONTENTS OF THE FINANCIAL STATEMENTS NOT COMPARABLE TO THOSE FOR THE PREVIOUS YEAR

The financial statements were prepared in accordance with the historical cost principle and with the NCRF. This requires that the EMEF Management Body make assessments, estimates and assumptions affecting the application of accounting policies and the value of assets, liabilities, income and expenditure. The estimates and associated assumptions are based on historical experience and other factors deemed relevant on a case-by-case basis, thus establishing the basis for the assessment of assets and liabilities, the valuation of which would not be possible by resorting to other sources. The actual results may differ from the estimates.

Issues requiring more in-depth assessment or which are more complex, or for which the assumptions and estimates are deemed significant, are detailed in Note 3.3 – Main estimates and assessments.

BASES OF PRESENTATIONAND ACCOUNTING POLICIES



3.1 / BASES OF PRESENTATION AND MEASUREMENT

The main accounting policies applied in the preparation of the financial statements are described in the following paragraphs and were applied consistently to the reporting periods.

A. TANGIBLE FIXED ASSETS

Tangible fixed assets are recorded at cost, which includes their purchase price, import duties and non-reimbursable purchase taxes, net of discounts and rebates.

3.2 / RELEVANT ACCOUNTING POLICIES

75

They also include costs directly imputable to assets for their placement at the required location under conditions to perform the operations for which they were purchased or produced, net of the applicable accumulated depreciation and impairment losses.

Maintenance and repair costs not increasing the useful life of these assets are recorded as expenditure in the period during which they occurred.

Subsequent expenditure is included in the assets’ carrying amount whenever it is expected to generate future economic benefits for EMEF.

Gains or losses arising from write-offs or disposals are the difference between the realisable value and the book value of assets, which are recognised as either income or expenditure for the reporting period. Where revalued assets were sold, the amounts carried under revaluation surpluses are transferred to retained earnings.

DepreciationsDepreciations are calculated on the basis of purchase prices, according to the straight-line method in twelfths based on rates corresponding to the anticipated useful life of each type of asset. The most important anticipated useful lives fall into the value ranges shown in the table below:

Land is not subject to depreciation.

B. INTANGIBLE ASSETS

EMEF recognises an intangible asset whenever it has control over it, the asset is identifiable, it is likely to generate future economic benefits for the Company and its cost can be measured reliably.

Intangible assets with a finite useful lifeIntangible assets with a finite useful life are recorded at cost, net of accumulated depreciation and impairment losses.

Software acquisition and developmentThe costs incurred with software acquisitions are capitalised, as are the additional expenses required for its implementation. These costs are amortised using the straight-line method in twelfths throughout its anticipated useful life.

Buildings & other constructions

Number of years

2 to 20

Basic equipment 1 to 16

Transport equipment 1 to 11

Office equipment 1 to 12

Other tangible fixed assets 1 to 14


IT programmes maintenance costs are recognised as expenditure for the period in which they occur.

The anticipated useful lives of IT programmes are shown in the table below:

C. LEASING

EMEF classifies leasing operations as financial leases or operating leases depending on the substance of the transactions and not the form of the contract.

Financial leasing operations are those where the lessor transfers all the risks and benefits inherent to holding the leased assets to the lessee. All other leasing operations are classified as operating leases.

Payments made by EMEF under operating lease agreements are carried under expenditure for the period to which they refer.

D. SHAREHOLDINGS

EMEF shareholdings are recognised using the asset equivalence method, i.e. the financial statements include the Company’s interest under the total recognised profits and losses of its subsidiaries, affiliated companies and jointly controlled entities, between the date on which the significant influence takes effect and that on which it actually ends.

Losses are only recognised up to the limit of the interest held in subsidiaries, affiliated companies or joint-ventures, as applicable. Additional losses must be accounted, by the recognition of a liability, only to the extent the investor has incurred legal or constructive obligations or made payments to the investee.

Investments in subsidiariesShareholdings in subsidiaries presuppose either the control over more than one half of the voting rights or the power to manage the Company’s financial and operating policies or its economic activity, in order to obtain benefits therefrom, irrespective of the interest held being below 50%.

Investments in affiliated companiesShareholdings in affiliated companies presuppose a significant influence, i.e. the power to exercise over 20% of the affiliated company’s voting rights, but not to control its financial and operating policies.

Computer programmes

Number of years

1 to 3

77

Jointly controlled entitiesJointly controlled entities are those in which the Company has joint control under an agreement concluded for that purpose.

E. INVENTORIES

The criteria for inventory recognition and measurement (raw and other materials, finished and intermediate products and products and works in progress) are detailed below:

Recognition and measurementRaw and other materials and consumables are measured either at acquisition cost or net realisable value, whichever the lower. The net realisable value corresponds to the estimated selling price in the normal course of business, net of selling costs. Costs are deemed to include the amounts inherent to the purchase, conversion and others incurred to place the inventories in their proper place, under conditions to be used or sold.

Products and works in progress are valued either at production cost (which includes incorporated materials, subcontracting services, direct labour and general manufacturing costs) or net realisable value, whichever the lower.

Finished products that are transferred from products and works in progress upon completion are valued either at production cost or net realisable value, whichever the lower.

In the recognition and measurement of products and works in progress and of finished products inventories, the Company also takes into account the provisions of NCRF 19 – Construction contracts, as regards the costs associated to such construction contracts.

The method adopted for the costing of outputs is the average weighted cost.

Inventory impairment lossesThe Company reduces the inventory cost (write-down) to its net realisable value where these assets are carried at amounts higher than those that would foreseeably result from their sale or use.

The amount of inventory adjustments to net realisable values is recognised as expenditure for the period in which the loss occurs. The criteria adopted to calculate impairment losses are based on the term of each specific service agreement and their consumption/rotation prospects. These criteria are systematised in Note 10.


Upon the circumstances having caused the adjustment to the value of inventories ceasing, or when there is an increase in the net realisable value due to a change in economic circumstances, the adjustment amount will be reversed/reinforced.

F. RECEIVABLES

Receivables are recorded at face value and presented in the balance sheet net of the impairment losses associated thereto.

Impairment losses are recorded, by setting these off against expenditure, on the basis of the regular assessment of objective evidence of impairment associated to third party receivables on the balance sheet date. The recorded impairment is reversed by setting it off against gains during the relevant period in the event of a drop in the estimated loss occurring.

As a rule, third party receivables arising from the operating activity do not earn interest.

G. CASH AND CASH EQUIVALENTS

Cash and cash equivalents cover cash in hand and demand deposit accounts, as well as short-term high liquidity capital investments that are promptly convertible into known amounts of cash and are subject to a residual risk of changes in value.

H. TRANSACTIONS IN FOREIGN CURRENCY

Transactions in foreign currency are converted into Euros at the exchange rate prevailing on the transaction date.

Monetary assets and liabilities expressed in foreign currency are converted into Euros at the exchange rate prevailing on the date of the financial statements. Exchange variations resulting from this conversion are recognised in the profit/loss for the reporting period.

The exchange rate variations resulting from the settlement and reporting of monetary items at exchange rates differing from those initially recorded in the course of the reporting period or reported in previous financial statements are recognised in the profit/loss for the financial year in which they occur.

The exchange rates applied on the statement of financial position date were the following:

US Dollar - USD

2015 2014

1,0887 1,2082

0,73395 0,7764

Exchange rate

Currency

Pound Sterling - GBP

79

I. CAPITALISATION OF BORROWING COSTS

Borrowing costs are recognised as expenditure for the reporting period in which they occur and are not capitalised, even where they can be directly imputed to the acquisition, construction or production of an asset that is classified.

J. PROVISIONS

Provisions are recognised where:• EMEF has a present, legal or constructive obligation resulting from a past event; • It is likely that an outflow of resources will be required for the fulfilment of this

obligation; • The amount of the obligation can be estimated reliably.

Provisions are reviewed on each balance sheet date and adjusted so as to reflect the best estimate on that date.

K. CONTINGENT ASSETS AND LIABILITIES

EMEF does not recognise contingent assets and liabilities and only discloses these when inflows/outflows of resources translating into economic gains or losses are likely to occur.

L. RECOGNITION OF INCOME AND EXPENSES

Income and expenses are recorded for the reporting period to which they refer irrespective of when these are received or paid, on an accrual basis. The differences between the amounts received and those paid and the corresponding income and expenditure are recorded under the headings for asset or liability deferrals, depending on whether the sums involved are receivables or payables.

At year’s end, estimates for non-recognised amounts are prepared, which put back into the profit and loss account statement the amounts relating to income and expenses, the actual value of which is not known but relate to the reporting period.


M. RECOGNITION OF REVENUE

Revenue is recorded for the reporting period to which it refers, irrespective of the date it is received, on an accrual basis.

Sales and service provisions are recognised net of taxes, rebates or discounts and other costs inherent to their conclusion, at the fair value of the amount received or to be received.

Sale of goodsThe revenue generated by the sale of goods is only recognised where all of the following requirements have been met:

• EMEF has transferred to the purchaser the significant risks and advantages associated to the ownership of the goods;

• EMEF does not continue to be involved in the management to an extent generally associated to holding the goods sold or to actually control these;

• The revenue amount is measured reliably;• It is likely that the economic benefits associated to the transaction will translate

into an inflow for the Company;• The transaction costs incurred or to be incurred are measured reliably.

Service provisionThe revenue associated to a service provision is recognised by reference to the finishing stage of the transaction as at the balance sheet date, provided its outcome can be estimated reliably. The outcome of a transaction can be estimated reliably when all of the following requirements have been met:

• The revenue amount is measured reliably;• It is likely that the economic benefits associated to the transaction will translate

into an inflow for the Company;• The finishing stage of the transaction as at the balance sheet date can be

measured reliably;• The transaction costs incurred and the cost of concluding it are measured reliably.

Where the outcome of a transaction cannot be estimated reliably and it is not likely that the costs incurred will be recovered, the revenue is not recognised.

The percentage of completion method is adopted for the recognition and measurement of the revenue from the provision of maintenance and repair services in cases where the outcome of the transaction is estimated reliably, in keeping with the above-referred requirements. Where the requirements to consider the outcome of the transaction as having been estimated reliably are not all met, the Company recognises the expenses incurred but no revenue, due to it not being likely that the costs incurred will be recovered, in observance of the provisions of NCRF 20 – Revenue.

81

N. FINANCING COSTS/INCOME

Financing costs/income includes the interest paid on borrowings, the interest received from capital investments and similar revenue received and costs paid.

Interest is recognised on an accrual basis.

O. FINANCIAL INSTRUMENTS

The Company only recognises a financial asset, a financial liability or an equity capital instrument where it becomes a party to the instrument’s contractual provisions, under the terms of NCRF 27 – Financial Instruments.Initial costs do not include the transaction costs of the financial assets or liabilities as measured at fair value set off against profits/losses.

ImpairmentOn each balance sheet date an assessment of the objective evidence of impairment is made, notably resulting in an adverse impact on estimated future cash-flows of the financial assets or group of financial assets that can be measured reliably.

As regards financial assets presenting impairment indicators, their recoverable value is calculated and the impairment losses are recorded by setting these off against profits/losses.

P. INCOME TAX RELATING TO THE REPORTING PERIOD

Income tax recorded under profit/loss only includes the effect of current taxes.

Deferred tax assets are only recorded where there are reasonable expectations that sufficient taxable profits will arise in the future to allow these to be used.

Deferred tax liabilities are recognised for all taxable temporary differences (save for goodwill which is not tax deductible), for differences resulting from the initial recognition of assets and liabilities not affecting either the accounting or the tax profit and for differences relating to investments in subsidiaries, to the extent that it is not likely that they will be reversed in the future.

In this respect, the main estimates and assessments used in the financial statements are detailed in Note 3.3.

Q. OPERATING SUBSIDIES

Operating subsidies are recognised in the profit/loss account in the same reporting period as that in which the associated expenses are incurred, as of the time it becomes likely that they will be received.


R. EVENTS AFTER THE BALANCE SHEET DATE

The material events occurring after the balance sheet date not allowing for adjustments are set out in Note 44.

The events which occurred after the balance sheet date in connection with the conditions prevailing on the balance sheet date were taken into account when preparing the financial statements.

3.3 / MAIN ESTIMATES AND ASSESSMENTS

The main accounting estimates and assessments used to apply the accounting principles are detailed in this note, in order to facilitate the understanding of how their application affects the profit/loss reported by the Company and its disclosure.

The estimates and assessments impacting the EMEF financial statements are assessed continuously and represent the best estimate on each reporting date, taking into account the historical performance, accumulated experience and expectations concerning future events that, under the present circumstances, the Company believes to be reasonable. The intrinsic nature of the estimates and assessments may cause the actual impact of the circumstances that had been the object of estimates for reporting purposes to differ from these estimates.

In many cases there are alternatives to the accounting process adopted by the Company. The results could be different had a different process been adopted.

It is considered that the choices made were appropriate and that the financial statements accurately reflect, in all materially relevant aspects, the Company’s financial position and the result of its operations.

ProvisionsThe provisions set aside are recorded according to the best estimate, on the balance sheet date, of the disbursement required to fulfil the obligation.

Recoverability of clients’ and other debtors’ outstanding balancesImpairment losses relating to clients’ and other debtors’ outstanding balances are based on the assessment by EMEF of the likelihood of recovering the receivables balances, the ageing of the balances, the cancellation of debts, frequent defaults and other factors deemed to be relevant. Other circumstances and facts susceptible of changing the likelihood of collecting the receivables balances, such as economic circumstances, are also taken into account. This assessment process may lead to changes in the amount estimated for impairment that suffice to mitigate clients’ and other debtors’ risk of defaulting. These changes are reflected in the profit/loss for the reporting period.

83

Recognition of revenueWhen recognising revenue, EMEF assesses whether the requirements enabling it to apply the percentage of completion method have been met. This method applied to service provision takes into account the total estimated costs for each work/service (an amount that is calculated by the operating area based on the work to be performed and the Company’s past experience with works of a similar nature) and the sale price of the service agreed upon with the client.

Where there are indicators evidencing the probability of the costs incurred not being recovered, the revenue is not recognised.

Impairment losses - inventoriesThe assumptions/criteria adopted in this respect are detailed in Note 10 – Inventories.

3.4 / MAIN ASSUMPTIONS RELATING TO THE FUTURE

Given that EMEF’s privatisation was not achieved, the establishment plan readjustment and Company reorganisation process will continue, in order to rejuvenate and reinforce the competencies of its technical staff and enable it to act in a more effective and competitive way in the market.

The challenges EMEF will face in the near future are many:

CP Carga’s recent privatisation, which has as its consequence that more than 20% of EMEF’s turnover will relate to clients outside CP’s universe, demands that the Company, although subject to administrative constraints resulting from its statute as State-owned company, becomes capable to operate in a more competitive market, in direct competition with other operators even in tenders launched by its own shareholder.

Early in 2016 the Government decided to revert the process of Metro do Porto subconcession to Transdev, a company with which EMEF had signed a fleet maintenance services contract. This will require a re-positioning of EMEF in the market in order to ensure that it keeps participating in that fleet’s maintenance and repair.


In 2016 EMEF will start providing the 960,000 Km general overhaul services to Metro do Porto Eurotram fleet, a contract for which it was selected in an international public tender held in 2015. This is evidence of the technical capability and competence EMEF gained in the repair and maintenance of light railway trains.

EMEF’s internationalisation strategy will continue by way of the establishment of partnerships that enable it to access and respond to new geographical and sectoral markets’ demands, its main focus being the equipment repair market.

The main sources of uncertainty are detailed in Note 3.3 – Main Estimates and Assessments.

3.5 / MAIN SOURCES OF UNCERTAINTY IN THE ESTIMATES

85

The Cash Flow Statement was prepared in accordance with the direct method, whereby cash inflows and outflows for operating, investment and financing activities are disclosed.

EMEF classifies interest paid as a financing activity, dividends received as an investment activity and interest received as an operating activity.

As at 31 December 2015, all cash and cash equivalents balances were available to be used. The heading Cash in Hand and Bank Deposits is composed of the following balances:

CASH FLOWSII NOTES TO THE FINANCIAL STATEMENTS // 4.

Cash in hand

31-12-2015 31-12-2014

500

500

500

500

2 000 2 000

Central services

Northern Workshop Unit

Entroncamento Workshop Unit

Southern Workshop Unit

500

500

500

500

Bank deposits at sight53 969

524 084

178 324

494

1 043

1 500

54 045

328

5 000 052

5 813 839 28 387

Novo Banco

Banco BPI, SA

Banco Comercial Português

BCP - Entroncamento Workshop Unit

BCP - Northern Workshop Unit

BCP - Central Services

Caixa Geral de Depósitos

Crédito Agrícola

IGCP - Agência de Gestão da Tesouraria e da Dívida Pública

14 985

-

-

1000

786

154

11 082

328

52

Cash & cash equivalents 5 815 839 30 387

87

TANGIBLE FIXED ASSETSII NOTES TO THE FINANCIAL STATEMENTS // 6.

In the course of the reporting period, EMEF did not introduce any changes to its accounting policies or estimates, nor did it make any retrospective restatements of any amounts shown in its financial statements.

ACCOUNTING POLICIES,CHANGES IN ACCOUNTINGESTIMATES, ERRORSAND RESTATEMENTS


Gross value:

31-12-2015 31-12-2014

1 592 530

6 372 674

14 906 901

1 658 890

2 217 908

2 570 108

29 319 012 28 977 936

Land & natural resources


Basic equipment

Transport equipment

Office equipment

Other tangible fixed assets

1 592 530

6 118 198

14 888 125

1 635 052

2 208 951

2 535 079

Accumulated depreciation & impairment1 112 809

(78 354)

21 780 261

22 814 716 21 780 261

Depreciation for the financial year

Write-offs for the financial year

Accumulated depreciation from previous years

1 239 965

(1 161 626)

21 701 922

Investments in progressTangible fixed assets in progress 41 453

41 453

Net book value 7 239 1276 504 296

-

-

Similarly to previous years, during the reporting period the containment policy regarding the acquisition of tangible fixed assets was continued: acquisitions amounted to EUR 378,332.

The greatest increase was registered in the heading Buildings and Other Constructions, notably concerning works on railway embankments and the remodelling of public areas.

A financing referred to in Note 21 – Borrowings was contracted for the acquisition in 2008 of an urban property at Amadora.

Gross value

Openingbalance

29 019 389 378 332

Land & natural resources


Basic equipment

Transport equipment

Office equipment


Investments in progress

- Fixed assets in progress

Advances on account

of investments

-

-

29 970

41 565

17 673

41 357

247 766

-

Accumulated depreciation& impairment

-

-

-

-

-

- -

-

-

-

-

-

Total 6 504 2967 239 127


Basic equipment

Transport equipment

Office equipment


Additions

1 592 530

6 118 198

14 888 125

1 635 052

2 208 951

2 535 079

41 453

-

-

-

-

-

-

-

-

-

Revaluations/Impairments

-

-

-

-

-

-

-

-

Disposals

-

-

-

-

-

-

-

-

Assetsclassifiedas heldfor sale

-

-

(45 937)

(17 727)

(8 716)

(6 328)

-

-

Write-offs

-

254 476

34 743

-

-

-

(289 219)

-

Transfers

-

-

-

-

-

-

-

-

Otherchanges

1 592 530

6 372 674

14 906 901

1 658 890

2 217 908

2 570 108

-

-

Closingbalance

(78 708) 29 319 012

2 938 016

12 686 464

1 633 403

2 012 019

2 510 359

325 089

666 721

6 135

81 145

33 718

-

-

-

-

-

-

(45 583)

(17 727)

(8 716)

(6 328)

-

-

-

-

-

-

-

-

-

-

3 263 105

13 307 603

1 621 812

2 084 448

2 537 749

21 780 261 1 112 809

- - - - -

(78 354)- - - 22 814 716


The changes under the heading Tangible Fixed Assets in the course of 2015 are those shown in the table below:

89

INTANGIBLE ASSETS


The gross value of this heading increased when compared to the homologous period, due not only to the purchase of computer programmes but also to the start of a project to implement a document management solution that will come to its end in the course of 2016, which explains the value that was carried on in the heading Investments in Progress.

The slight increase in amortisations vis-à-vis the previous year resulted from the acquisitions made in the course of the reporting period.

Gross value

31-12-2015 31-12-2014

1 152 686

18 750

1 171 436 1 150 689

Computer programmes


1 150 689

-

Accumulated depreciation & impairment1 362

-

1 146 771

1 148 133 1 146 771

Amortisation for the financial year

Reversals for the financial year

Accumulated amortisation from previous years

1 306

(805)

1 146 270

Net book value 3 91923 304

Gross value

1 150 689 20 747

Computer programmes


1 997

18 750

Accumulated depreciation& impairment

-

- -

-

Total 23 3043 919

Computer programmes

1 150 689

-

-

-

-

-

-

-

-

-

-

-

-

-

1 152 686

18 750

- 1 171 436

1 146 771 1 362 - - - - 1 148 133

1 146 771 1 362

- - - - -

-- - - 1 148 133

Openingbalance Additions

Revaluations/Impairments Disposals

Assetsclassifiedas heldfor sale Write-offs Transfers

Otherchanges

Closingbalance


SHAREHOLDINGS– ASSET EQUIVALENCEMETHOD


The movement of shareholdings recognised by applying the asset equivalence method is shown in the table below:

The partners in EMEF/SIEMENS ACE – Serviços Integrados de Manutenção e Engenharia Ferroviária (ACE - complementary group of companies) are EMEF, S.A. and SIEMENS, which hold 51% and 49% respectively. In 2015, the ACE registered a EUR 718,923 net profit, EMEF having recorded in its accounts by way of the asset equivalence method the sum of EUR 366,651 relating to its interest in the ACE. The amount relating to the previous year, EUR 344,151, was paid by the ACE to EMEF in the course of 2015.

31-12-2015

523 151 523 151

EMEF/Siemens Ace

Nomad Tech Lda

Gross value

-

-

Impairment

366 651

156 500

366 651

156 500

Net value

31-12-2014

Gross value

-

-

Impairment

344 151

69 586

344 151

69 586

Net value

413 737 413 737

413 737 -

EMEF/Siemens Ace

Nomad Tech Lda

Opening balance

-

-

Additions

344 151

69 586-

-

Disposals AEM

(344 151)

-

Other changes

366 651

86 915

366 651

156 500

Closing balance

453 565 523 151

Gross value

- (344 151)

91

EMEF also holds a 35% interest in the company Nomad Tech, Lda., with a nominal value of EUR 56,000. The other 65% are held by the following partners: Nomad Holding Limited (51%), Augusto António Moreira da Costa Franco (7%) and Nuno Pinto da Cruz Elite de Freitas (7%). The company was set up as a private limited liability company on 11 November 2013 and started operating on 1 December 2013, the object of which is the provision of engineering, innovation and technology services applied to the transport sector, the manufacture, repair and maintenance of electronic components and the development of IT solutions.

Nomad Tech closes its financial year on 30 June of each year. When it closed its accounts on 30 June 2015, the company registered a EUR 165,776 net profit, of which EMEF recognised a sum of EUR 58,022 in its accounts, relating to its 35% interest in the company. Of this amount, EMEF recognised in income EUR 17,307 in 2014 and EUR 40,714 in 2015, given that between January and June 2015 Nomad Tech registered a EUR 116,326 net profit.

During the period between July and December 2015 Nomad Tech registered a EUR 132,002 net profit, which implied the recognition of a EUR 46,201 income in 2015 in the EMEF profit and loss account by nature.

Nomad Tech’s other equity capital headings remained unchanged between 31 December 2014 and 31 December 2015.

Thus being, applying the asset equivalence method to the shareholding in Nomad Tech for the whole of 2015 resulted in the recognition in the EMEF financial statements of a EUR 86,915 net profit.

The financial information relating to the affiliated companies is shown in the table below:

EMEF/Siemens Ace

Nomad Tech Lda

Shareholding%

31.12.2015

31.12.2015

Referencedate

51

3511 308 917

1 860 789

Assets Liabilities

718 923

447 143

Equity capital

10 589 995

1 413 645

718 923

132 002*

Netprofit/loss

Gross value

* This amount refers to the Net Profit/loss between 01/07/2015 and 31/12/2015.

As has already been mentioned, Nomad Tech closes its financial year on 30 June of each year.


SHAREHOLDINGS– OTHER METHODS


EMEF has small holdings in the entities referred to in the table below, which are recognised at cost minus entirely recognised impairment losses, in light of it being unlikely that it will recover the value of these holdings.

There was no movement for 2015 relating to these two holdings in the EMEF financial statements.

INVENTORIES


31-12-2015

34 444 -

Fundação Museu Nacional Ferroviário

INEGI - Instituto de Engenharia Mecânica

e Gestão Industrial

Gross value

31 944

2 500

Impairment

31 944

2 500

-

-

Net value

31-12-2014

Gross value

31 944

2 500

Impairment

31 944

2 500

-

-

Net value

34 444 -34 444 34 444

Gross value

31-12-2015 31-12-2014

26 276 735

977 114

27 253 848 27 235 281

Raw & other materials & consumables

Finished & intermediate products

25 927 367

1 307 914

Accumulated impairments(493 400)

9 147 478

8 654 078 9 147 478

Impairments for the financial year

Impairments for previous financial years

(709 158)

9 856 636

Net book value 18 087 80318 599 771

93

Raw and Other Materials and ConsumablesThe heading Raw and Other Materials and Consumables registered a EUR 349,367 increase compared to the previous year. This increase resulted from the combined effect of acquisitions registering a higher value than consumption, in an amount of EUR 1,297,684, and of inventory regularisations resulting from the write off of materials considered to be obsolete or unsuitable for the material series in use or from losses/surpluses identified by counts held during 2015, in an amount of EUR 948,316.

On 26 December 2014, EMEF signed with Metro do Porto a contract for the provision of maintenance services to its fleet, with a duration of 4 months – from January to April -, the time-span which was estimated to probably elapse until the initial date of the contract for the subconcession of the Porto Metropolitan Area Light Metro System. After the termination of this initial contract, EMEF was entrusted with the provision of this service, which went on during the whole of 2015.

Within the scope of these contracts and in order to allow for the services to be provided without any breach of quality or continuity, Metro do Porto provided EMEF with its own spare parts, on condition that these would be replaced at the end of the contract. As these parts were not entered in the EMEF inventory, no consumption (cost) was recorded as they were put to use. In order to recognise the cost for the relevant period, the value to pay in 2016 for the acquisition and/or repair of the spare parts to be replaced was estimated as at 31 December 2015. This estimate was based on the value of the orders already placed with the relevant suppliers or, where no order was placed, on the costs incurred with the purchase of parts bearing similar characteristics. Thus being, the value on the regularisa-tions column as at 31 December 2015 includes an amount of EUR 671,405 (positive sign) relating to the estimated value of inventories consumed during this period.

25 927 367 (16 396 296)


Opening balance

17 022 574

Purchases

25 927 367 (16 396 296)

Consumption Adjustments

26 276 735

Closing balance

(276 911)

(276 911)17 022 574 26 276 735


Finished and intermediate productsThe heading Finished and Intermediate Products registered a EUR 330,800 decrease, resulting from two factors: on the one hand, the write off during 2015 of materials considered to be obsolete and unsuitable for the material series in use, which amounted to EUR 177,757, and, on the other hand, the fact that output for production exceeded manufacture by EUR 153,043.

Impairment lossesThe updating of inventory impairment losses is indexed to the term of each specific service agreement concluded with clients and calculations are made based on the number of years prior to the contracts expiring and on the prospects for materials consumption/rotation.

The adopted criteria are:

1. Inventories of active series or equipment consumed over the last 9 years

All materials assigned to active series or equipment or classified as strategic are deemed to be current and therefore not subject to impairment, this not applying to the surplus resulting from the anticipated average consumption until the end of the relevant contract. A 75% impairment is applied to any such surplus. No impairment is applied to materials having no consumption history over the last 9 years and having been acquired within the last 2 years.

2. Inventories of active series or equipment not consumed over the last 9 years

All materials which, although pertaining to active series, were acquired over 2 years earlier and have not been consumed over the last 9 years will be subject to an 80% impairment of their value. No impairment is applied to materials that were acquired in the course of the last 2 years.

1 307 914 (279 370)

Finished & intermediate products

Opening balance

126 327

Production

1 307 914 (279 370)

Outputs Adjustments

977 114

Closing balance

(177 757)

(177 757)126 327 977 114

95

3. Inventories of inactive series or equipment whether or not consumed over the last 9 years

All materials classified as pertaining to an inactive material series or equipment will be subject to a 95% impairment of their value.

4. Inventories classified as unfit not consumed over the last 9 years

Inventories classified as unfit by the Logistics Department that have not been consumed over the last 9 years will be subject to a 95% impairment of their value.

5. Inventories classified as unfit consumed over the last 9 years

Inventories classified as unfit by the Logistics Department that have been consumed over the last 9 years, but whose consumption prospects are residual in light of the available information, will be subject to an 80% impairment of their value.

6. Inventories classified as obsolete

Inventories classified as obsolete by the Logistics Department will be subject to a 95% impairment of their value.

7. Inventories classified as strategic

Inventories classified as strategic by the Logistics Department that have not been consumed over the last 9 years will be subject to the creation of an impairment loss at a fixed rate, calculated on 75% of their value depending on the number of years prior to the contract term expiring. In the last year, the assets will have a 25% net realisable value.

8. Unidentified inventories

For inventories which are essentially materials intended for maintenance (paint products, industrial cleaning, electrical and electronic materials, bearings, fixing/joining elements, …), some of which may be applied to other clients’ equipment, in light of their having no connection to the above-referred framework agreement and of their nature, impairment losses will be recognised taking as a basis their average consumption and an estimate of their being needed over a period of 3 years.

If average consumption is maintained, where the inventory is not depleted within 3 years a 95% impairment will be applied to the surplus.

Where it has been acquired over 2 years ago and there are no records of it being consumed, a 95% impairment will be applied.


Inventory impairment movement for the 2015 financial year can be broken down as follows:

Accumulated impairments registered a EUR 493,400 decrease when compared to the previous year, resulting essentially from the write off of goods considered as obsolete/scrap as previously mentioned, their impairment losses having already been recognised. This explains the high value under the “Uses” column of the above table.

The EUR 636,717 inventory impairment increases, as well as the EUR 218,584 reversals, result exclusively from the application of the above mentioned impairment calculation criteria.

As at 31 December 2015 and 31 December 2014, the heading Clients was broken down as shown in the table below:

CLIENTSII NOTES TO THE FINANCIAL STATEMENTS // 11.

Impairment - Raw & other materials & consumables

Impairment - Finished & intermediate products

Opening balance Increases

(8 591 204) (605 094) 204 967

(31 622) 13 617(556 274)

(9 147 478) (636 717) 218 584

Reversals Uses Closing balance

744 468

167 064

911 533

(8 246 863)

(407 215)

(8 654 078)

Clients' current accountsGeneral

Parent company

31-12-2015 31-12-2014

Joint-ventures

5 267 765 5 350 672

2 608 867 7 885 801

Clients - Withholding of guarantees466 656 587 772

- 3 395

Doubtful debt clients 166 634 232 979

Clients' sureties 48 450 48 450

8 558 372 14 109 069

Accumulated impairmentsImpairment uses in the financial year 92 786 11 100

Impairment losses/reversals for the financial year (7 225) -

Impairments recognised in previous financial years (230 990) (242 089)

(145 429) (230 990)

Total 8 412 943 13 878 079

97

Compared to 2014, to be noted is the overall decrease in clients’ balances, mainly the Clients - Parent Company, which dropped by EUR 5,276,934.

The variation under the heading Clients - Parent Company results partly from the decrease in the volume of services provided, but also from the improvement of payment times due to a strict monitoring of debts and to the integration of CP in the State consolidation perimeter.

The table below shows the impairment losses movement in 2015:

The heading Clients Accumulated Impairment Losses registered a EUR 85,560 net decrease. To be noted is the use of the provision created for the client Marginal - Ind. Metalomecânica, SA after its debts were recognised as irrecoverable.

The table below shows the ageing of the EMEF, S.A. client balances as at 31 December 2015 compared to those registered in 2014:


Parent company

Past-due byover 360 days Total

Joint-ventures

- 5 267 765

- 2 608 867

Doubtful debt clients(37 455) 466 656

141 756 166 634

Clients' sureties - 48 450

Impairments(138 361) (145 429)General

Total

31-12-2015

(34 060) 8 412 943

Past-due by180 to 360 days

-

103 791

(53 796)

24 878

48 450

(7 068)

116 255


1 522

2 336

40 238

-

-

-

44 095

Past-due by90 days

1 079 106

106 560

21 614

-

-

-

1 207 280

Notmatured

4 187 138

2 396 181

496 054

-

-

-

7 079 373


Parent company

Joint-ventures

- 5 350 672

50 567 7 885 801

Clients' withholding of guarantees- 587 772

- 3 395

Clients' sureties - 48 450

Impairments(230 532) (230 990)General

Total

31-12-2014

53 015 13 878 079

441

37 255

279 105

-

-

(458)

316 343

317

5 464

6 072

-

-

-

11 854

261 080

143 868

37 551

-

-

-

442 499

5 088 833

7 648 647

265 043

3 395

48 450

-

13 054 368

Doubtful debt clients 232 979 232 979----

Past-due byover 360 days Total



Past-due by90 days

Notmatured


Closing balance

92 786 (145 429)

Total 92 786 (145 429)458

458(7 683)

(7 683)

UsesReversalsIncreases

(230 990)

(230 990)

Opening balance


Impairments were recorded only for the heading General Clients, the balances of clients which were not yet past-due having been considered as not having matured.

Moreover, the negative values registered in the past-due by 180 to 360 days and by over 360 days periods of the table for Clients – Joint ventures concern regularisations made to previous years and 2015 invoices that, as at 31 December 2015, had already been paid.

Later, an error in invoicing was detected, and it was agreed upon by the parties to make the relevant regularisation. The value in question will be deducted from pending payments by way of an offsetting procedure.

Assets – Income TaxEMEF is subject to the RETGS - Regime Especial de Tributação dos Grupos de Sociedades (special tax framework for groups of companies), provided for by Article 69 of the CIRC - Código do Imposto sobre o Rendimento das Pessoas Colectivas (Corporate Income Tax Code).

As CP - Comboios de Portugal, E.P.E. is the controlling company, it is responsible for the payment of the Pagamento Especial por Conta (PEC) (Special Payment on Account).

STATE AND OTHERPUBLIC ENTITIES


AssetsIncome tax

31-12-2015 31-12-2014

- -

LiabilitiesIncome tax 94 566 65 632

Withholding of income tax 265 758 305 367

VAT payable 2 508 273 3 045 559

486 037 537 711Social Security contributions

3 354 634 3 954 268

99

In light of the consecutive losses registered by the group companies and of the impossibility of deducting these from the tax assessed, CP decided to apply for its refund. Within the scope of this application, the Tax Authority conducted an inspection to the 2014 accounts. This inspection was successfully completed in the course of 2015 and did not result in any correction being made.

The recognition of the PEC amounts as expenditure in the financial statements of the group companies occurs upon the refund being refused by the Tax Authority.

Liabilities - TaxesCompared to the previous year, the heading State and Other Public Entities registered a decrease of close to 15%, mainly as a result of the following circumstances:

• Increase of the heading Income Tax of approximately 44%. This increase was due, on the one hand, to the increase in separate taxation calculated as a result of the enlargement of the tax basis to light commercial vehicles as referred to in article 7(1)(b) of the Motor Vehicle Tax Code (Código do Imposto sobre Veículos), and, on the other hand, to the increase in the current tax for the period, resulting from the increase in net profits.

• Decrease in the income tax and social security contributions withholdings by approximately 13% and 9% respectively, as a result of the decrease in total staff numbers from 1030 to 979 employees.

• Decrease in value added tax by approximately 18%, mainly as a result of the decrease in invoicing during the two last months of 2015 when compared to the 2014 figures.


OTHER RECEIVABLESII NOTES TO THE FINANCIAL STATEMENTS // 13.

This heading registered an increase of about 4.17% compared to the last financial year, which translated into EUR 197,160.

The most significant variations were registered under the following headings:

Accrued IncomeThe 132% increase registered in 2015 is mainly due to the increase in activity vis-à-vis the previous year, expressed in the number and value of the works in progress as at 31 December 2015.

Sundry Debtors• The unwarranted EUR 1,418,121 payment to BCP Factoring for the assignment of claims

of Marginal, in the meantime declared insolvent, to two different banks: Caixa de Crédito Agrícola Mútuo and Banco Comercial Português is still outstanding. A 50% provision was set aside as reported in Note 20 – Provisions.

• Under a protocol signed on 14 May 2009, Metropolitano de Lisboa (ML) and EMEF agreed that ML would demolish a building owned by EMEF to make way for a building site to support the works for the construction of the Reboleira intermodal station, would reconstruct an equivalent building within no more than 6 months of the completion of the station and would bear all reconstruction costs up to a EUR 2,250,000 cap. The works were expected to be completed by 30 May 2012. However, due to the time elapsed, EMEF lost all interest in the construction of such a building, which led to the signature of an addendum to the aforementioned protocol. In this addendum, the parties agreed that ML would pay EMEF an indemnity of EUR 2,000,000 in accordance with a payment plan then established. The first tranche, of EUR 600,000 was paid on the date of signature of the Addendum, and the other tranches are scheduled to be paid in the course of 2016.

It was this first tranche of EUR 600,000 that constituted the main contribution for the decrease, of approximately 15%, in this component.

Advances to investment suppliersStaff

31-12-2015 31-12-2014

48 367 35 523

Accumulated impairment

Accrued income 1 320 137 571 452

Sundry debtors 3 107 698 3 668 951

Reimbursement of expenses 451 844 454 960

4 928 046 4 730 886

4 928 046 4 730 886

DEFERRALSII NOTES TO THE FINANCIAL STATEMENTS // 14.

Expenditure to be recognisedInsurance

31-12-2015 31-12-2014

408 274 179 163

Miscellaneous 119 088 95 218

527 361 274 381

ASSETS

Income to be recognisedInvoices on account-works to be performed

31-12-2015 31-12-2014

5 031 640 5 316 714

Other receivables with deferred income 9 324 15 471

5 040 963 5 332 184

LIABILITIES

Expenditure to be recognised - InsuranceThe 127% variation from the previous year results from two factors – an increase in the insurance premium, due to the change in the insured capitals of the policies contracted in 2015, and the change of the payment frequency, which became biannual. Thus, at the end of 2014 the value corresponding to a quarter was outstanding in this heading, unlike 2015, for which a six-month payment is invoiced in most insurances.

Expenditure to be recognised - SundryThe approximately 25% increase in this heading vis-à-vis 2014 results mainly from the value of school bus passes for the children of active staff transferred from CP for the period between January and July 2016.

Income to be recognised – Invoicing on account of works to be performedInvoicing on account of works to be performed comprehends the movements relating to partial invoices issued to clients in accordance with the established contractual terms, as well as the corresponding deductions relating to the revenue the works in progress at year end are expected to generate.

This heading registered a EUR 285,074 decrease at the end of 2015 compared to the previous year, resulting from the conclusion at the end of this year of works on rolling stock and equipment for which partial invoices had been issued at the start of the works.

101


To be noted is that this balance includes a sum of EUR 3,460,927 corresponding to 20% of the overall value of the contract for the half-life service (R1) to the ten CPA 4000 of the series, which was invoiced in November 2015. The same value, initially invoiced in November 2014, was cancelled in February 2015 as a result of CP and EMF having signed an agreement to repeal the relevant contract. The same amount was again recorded when a new contract was concluded for the same amount.

The remaining EUR 1,570,713 registered in this heading as at 31 December 2015 result mainly from the invoicing of 60% at the start of the following works:

• Locomotive 0186 – Change in burning from coal to fuel/diesel • Multiple unit 3254 – R2 service• Locomotive 1905 – R2 service• CPA 4000 – Supply and replacement of the traction converters command wiring

harnesses,which, in aggregate, amount to EUR 1,328,697.

Income to be recognised – Other deferred incomeThe Instituto de Emprego e Formação Profissional, IP (IEFP) (employment and vocational training institute), in its capacity as entity responsible for the implementation of the Internship Job Measure, created by Ministerial Order no. 204-B/2013 of 18 June, as amended by Ministerial Orders no. 375/2013 of 27 December and no. 20-A/2014 of 30 January and by Order no. 1573-B/2014 of 30 January, and EMEF, in its capacity as promoter Company, started a programme of 12-month internship jobs in 2014. Each intern is awarded a monthly internship grant in accordance with his/her qualifications. IEFP contributes to these grants. At the end of 2014 the account showed the grant amount awarded although it had not yet been disbursed. This amount was recognised as income proportionally to the expenditure incurred in each month of work provided.

At the end of 2015 the balance also shows the values relative to leases that were invoiced beforehand but refer to January 2016.

103

PAID-UP CAPITALII NOTES TO THE FINANCIAL STATEMENTS // 15.

The Company’s share capital is EUR 8,100,000, represented by 8,100,000 ordinary shares with a par value of EUR 1 each, is totally paid-up as at 31 December 2015 and wholly held by CP, E.P.E..

OTHER EQUITYCAPITAL INSTRUMENTS


This heading concerns supplementary/accessory share capital granted by CP, amounting to EUR 10,316,222.

LEGAL RESERVES


In accordance with Article 295 of the Código das Sociedades Comerciais (Commercial Companies Code) and the EMEF articles of association, 5% of the annual profit is required to be set aside for legal reserve, until such time as it reaches an amount corresponding to 20% of the Company’s share capital. This reserve can only be used to cover losses or increase the share capital.

Due to the losses that have been carried over from previous financial years, EMEF has decided to entirely cover these losses instead of setting aside any amount for the legal reserve.


OTHER RESERVESII NOTES TO THE FINANCIAL STATEMENTS // 18.

The free reserves under this heading resulted from the decision to apply the profit obtained between 1995 and 1998.

RETAINED EARNINGS


The change in retained earnings resulted from the capitalisation of the 2014 net profits, which amounted to EUR 909,485, in accordance with the resolution passed by the General Meeting on 26 March 2015.

In the heading Retained Earnings were registered the revaluation surpluses resulting from the tangible fixed assets free revaluation carried out in 2002 to all assets with a purchase price over EUR 200, under Accounting Standard no. 16. In 2015, part of this reserve – EUR 4,782 – was realised. However, this realisation has no impact whatsoever on the total amount of the heading Retained Earnings, as it was but a reclassification between subheadings within the same heading. As at 31 December 2015, the revaluation to be realised attained EUR 8,112. To be noted is that, despite their being set out under the heading Retained Earnings, the revaluation surpluses will only be available after they are realised.

Position at start of financial year

31-12-2015 31-12-2014

617 458 617 458

617 458 617 458

105

The changes are shown in the table below:

PROVISIONSII NOTES TO THE FINANCIAL STATEMENTS // 20.

The movement under the heading Provisions for the 2015 financial year can be broken down as shown in the table below:

Legal proceedings This heading showed a balance of EUR 93,234 as at 31 December 2015 and corresponds to the estimated current value of future liabilities. The amount shown essentially reflects the legal proceedings filed by EMEF employees and former employees.

Compared to the previous year, there was a significant decrease resulting mainly from the decision of the Proceedings brought against EMEF and other defendants on grounds of the accident occurred in 2008 on the Tua Line for an amount of EUR 192,202, in which EMEF was acquitted.

In the course of 2015 provisions were created for other proceedings, but EMEF’s success in these led to their cancellation before the end of the financial year.

Other provisionsLegal proceedings filed against Millennium BCP et al regarding the assignment of future claims to two different entities, as referred in Note 13 – Other Receivables.

Retained earnings

Other transfers Closing balance

909 485 (12 158 874)

Retained earnings - settlement of surpluses 4 782 1 226 943

Retained earnings - conversion adjustments - (1 703 423)

Retained earnings - realisation of Revaluation Reserve - 2002 (4 782) 8 112

909 485 (12 627 242)

Opening balance

(13 068 358)

1 222 161

(1 703 423)

12 894

(13 536 727)

Pending legal proceedings

Closing balance

(338 209) 93 234

Other provisions - 709 060

Increases

153 475

-

ReversalsOpening balance

277 967

709 060

(338 209) 802 294153 475987 027


BORROWINGS II NOTES TO THE FINANCIAL STATEMENTS // 21.

The loans granted by the Parent company, of EUR 13,500,000, under Decree-Law no. 133/2013 of 3 October were due in 2015. As at the end of the year, they had not been renewed.

Borrowing breakdown by maturity is shown in the table below:

31-12-2015 31-12-2014

2 187 500 3 062 500

2 187 500 3 062 500

Bank loans

Non-current

Bank loans

Overdrafts

875 000

-

1 078 867

1 341 770

14 375 000 15 920 638

Credit institutions & financial companies

Current

Parent company - Loans 13 500 000 13 500 000

Total 16 562 500 18 983 138

31-12-2015

< 1 year

1 to 5 years

31-12-2014

875 000

2 187 500

-

-

13 500 000

1 078 867

3 062 500

1 341 770

-

13 500 000

16 562 500 18 983 138

Bank loans

Credit institutions & financial companies

Overdrafts< 1 year

Parent Company - Loans

< 1 year

Shareholders

107

The following table shows, as at 31 December 2015, future payments of non-current loans’ outstanding capital and estimated interest.

CP is EMEF’s guarantor for the EUR 7,000,000 loan contracted with the banks BPI and BES to finance the acquisition of the urban property located at Amadora. In the event of EMEF defaulting, CP will be responsible for its repayment. As at 31 December 2015, the outstanding amount was EUR 3,062,500.

OTHER PAYABLES


Accrual basis creditors As at 31 December 2015, the most significant amount under this heading corresponds to increased staff costs to be disbursed in 2016 in respect of estimated holiday pay, holiday bonus and related charges, amounting to EUR 3,203,946, which represents an insignificant increase – 0.03% - compared to the previous year. Although this variation takes into account the repayment of salary cuts, its effect is offset by the reduction of staff numbers as described in Note 33 – Staff Costs.

31-12-2015

Investment suppliers

Accrual basis creditors

Other creditors

Staff

31-12-2014

110 411

4 564 796

22 440

41 673

77 215

3 801 783

33 678

31 522

4 739 319 3 944 197

Current

2017

Repayments

Estimated future payments of interest

2018

875 000

44 780

875 000

22 282

919 780 897 282

Bank loans

Credit institutions & financial companies 2019 Total

437 500

2 705

2 187 500

69 767

440 205 2 257 267


This heading also includes the accrual accounting of EUR 771,171 relating to the estimated replacement or external repair value of spare parts used or consumed within the scope of the service contract signed with Metro do Porto, S.A,. The replacement value is estimated at EUR 671,405, and the cost of external repairs at EUR 99,776. The contract provides for all materials delivered to EMEF at its start to be entirely replaced at its termination.

This is explained in detail in Note 10 – Inventories.

SUPPLIERS


As at 31 December 2015 and compared to the previous year, to be noted is an overall increase of the balance under the heading Suppliers, in particular General Suppliers.

The purchase of materials for the maintenance of the Metro do Porto fleets and the CP Carga freight cars, as well as for the CPA R1 Project, due to start in 2016, contributed to this increase.

On the other hand, to be noted is a significant volume of materials delivered and invoiced at the end of the year and an increase in average payment times, from 64 days at the end of 2014 to 74 at the end of 2015.

31-12-2015

General

Parent company

Supplier - withholding of guarantee

Suppliers - sureties

31-12-2014

6 141 352

14 154

19 632

42 188

809 319

4 199 058

88 185

2 595

-

556 645

7 026 645 4 846 483

Suppliers' current acounts

Invoices pending reception & validation

109

ADVANCES FROM CLIENTSII NOTES TO THE FINANCIAL STATEMENTS // 24.

The amount registered as at 31.12.2014 was received within the scope of the CARGOVIBES project, funded under the Seventh Framework Programme (FP7) and concluded on 31 March 2014. This resulted from a surplus in advance payments of EUR 100,383, after all costs effectively incurred by EMEF had been calculated and covered. EMEF repaid the resulting amount to the developer in 2015; therefore, as at 31 December there is no outstanding amount in this heading.

31-12-2015

Tno - Nederlandse Organisatie Voor

Toegepast Natuurwetenschappe

31-12-2014

- 110 838

- 110 838

ADVANCESTO SUPPLIERS


The heading Advances to Suppliers registered a EUR 69,880 increase compared to 2014. The balance as at 31 December 2015 results from an advance relating to the award of a contract for the manufacture of a boiler for Steam Locomotive 0186, which is being modified in EMEF’s workshop (change of burning from coal to fuel/diesel).

31-12-2015

Advances to general suppliers

31-12-2014

71 640 1 760

71 640 1 760


SALES AND PROVISIONOF SERVICES


In 2015, provision of services registered a EUR 3,568,653 increase compared to the previous year, in result of a significant increase in activity, particularly rolling stock maintenance, which increased by 11% compared to the previous year. This variation results from a substantial increase in operations for the clients CP Carga and Metro do Porto.

31-12-2015

Maintenance

Repair

31-12-2014

30 619 920

27 942 310

27 632 352

27 361 224

58 562 230 54 993 577

Services provided

Total 58 562 230 54 993 577

OPERATING SUBSIDIESII NOTES TO THE FINANCIAL STATEMENTS // 27.

31-12-2015

IEFP - Internship Job Measure subsidies

(under Ministerial Order 204-B/2013)

31-12-2014

6 649 10 477

6 649 10 477

State & other public entities

IDMEC (Wearwheel Project) subsidies

Thales ( Secur-ED Project) subsidies

TNO (Cargovibes Project) Subsidies

Universidade do Porto (Maxbe Project) subsidies

-

-

-

8 141

35 956

(2 673)

427

41 852

Other Entities

In the course of 2015 the following operating subsidies were recognised as income:

111

In 2014, under Ministerial Order no. 204-B/2013, EMEF applied for the Internal Job Measure, for a period of one year. In the course of 2015, The Company received from the Instituto de Emprego e Formação Profissional, IP (IEFP) an amount of EUR 6,649, corresponding to the remainder of the financial contribution for the 12-month internships that were granted in accordance with the level of qualifications of each intern.

GAINS/LOSSES OF SUBSIDIARIES,AFFILIATED COMPANIESAND JOINT VENTURES


The gains /losses of subsidiaries, affiliated companies and joint ventures are set out in the table below:

The changes registered under this heading are detailed in Note 8 – Shareholdings – Asset Equivalence Method.

Nomad Tech

Application of the asset equivalence method

Total

LOSSES

Emef/Siemens Ace

Nomad Tech

31-12-2014

3 722

3 722

357 737

344 151

17 307

361 459

Application of the asset equivalence method

31-12-2015

-

-

453 565

366 651

86 915

453 565

GAINS


CHANGES INPRODUCTION INVENTORIES


The main changes in the production inventories are explained in Note 10 – Inventories.

WORK PERFORMEDFOR OWN PURPOSES


In 2015, the test bench for the UQE3500 brake blocks, the construction works of which had begun in 2010, was concluded.

31-12-2015

Finished and intermediate products 977 114

977 114

Closing inventories

Finished and intermediate products 177 757

177 757

Reclassification & adjustment of inventories

Finished and intermediate products 1 307 914

(153 043)

31-12-2014

1 307 914

1 307 914

-

-

1 428 087

(120 173)

Opening Inventories

31-12-2015


31-12-2014

1 140 2 637

1 140 2 637

113

COST OF GOODS SOLDAND MATERIALS CONSUMED


The cost of goods sold and materials consumed increased by EUR 2,500,567. This increase, which was more than proportional to the increase in services provisions, resulted mainly from the increase in maintenance for Metro do Porto due to changes in the consistence of the services provided resulting from the new contract concluded in December 2014.

31-12-2015


31-12-2014

16 396 296 13 895 729

16 396 296 13 895 729


THIRD-PARTYSUPPLIES AND SERVICES


In 2015, a 23% increase in third-party supplies and services was registered compared to the previous year.

The main reasons for this change, which amounted to EUR 2,580,472, were:• An increase in subcontracting to respond to the increase in the work volume

contracted with clients, which it was impossible to provide with the in-house resources available;

• The need to adjust the Company’s insurance portfolio to the contractually established demands of its clients, which translated into an increase of approximately EUR 115,000 compared to 2014;

Specialised works

Advertising & propaganda

Surveillance & security

Fees

Maintenance & repair

Specialised servicesSUBCONTRACTS

MaterialsFast-wear tools & utensils

Books & technical documents

Office supplies

Gifts

Power & fluidsElectricity

Fuel

Water

Travel, accommodation & transportTravel & accommodation

Staff transport

Goods transport

Other

Miscellaneous servicesRents & leases

Communications

Insurance

Litigation & notaries

Representation expenses

Cleaning, hygiene & comfort

Other services

31-12-2015

809 434

3 084

646 422

39 030

963 463

13 718 177

316 458

2 444

36 241

6 250

697 740

220 581

105 090

19 330

510

186 628

26 761

4 102 558

106 836

376 216

3 240

3 470

459 239

178 255

4 408 895

31-12-2014

665 065

11 566

658 787

65 653

1 267 317

11 137 705

232 767

2 553

32 724

173

687 719

250 862

79 640

61 072

2 408

177 914

22 773

4 219 673

125 259

260 843

2 445

5 040

424 894

85 800

1 794 758

115

• Waste collection, which implied, in line with the aforementioned increase in work volume, a EUR 82,500 increase in the heading Miscellaneous/Other Services;

• Acquisition of expert services, notably technical and legal advisors and IT support, among others, which in aggregate led to an increase of approximately EUR 143,000 in expert services.

There were no relevant changes under the other headings.

STAFF COSTS


Staff costs decreased by approximately 10% during the reporting period. If compensation is excluded from this analysis, the drop is but of 2.2%.

On 1 January 2015, with the entry into force of Law no. 75/2014 of 12 September, the reversion of salary cuts in force since 2011 began to be applied. On that date, 20% of the salary cuts value was reinstated. Despite this increase in staff costs due to the partial reinstatement of previous remunerations, the decrease in staff numbers from 1030 to 979 generated a decrease in the total staff costs.

A 91.5% decrease was registered in mutual agreement severance payments – 5 departures in 2015, against 66 in 2014.

The heading Other Staff Costs includes several costs, notably those relating to travel allowances, amounting to EUR 673,339, personal accident insurance, health insurance, vocational training, occupational medicine and additional sick pay.

31-12-2015

Remuneration of company board members

Remuneration of staff

Compensation

Charges on remuneration

Accidents at work & occupational diseases insurance

Social action costs

Other staff-related costs

31-12-2014

5 395

19 219 740

210 160

4 332 449

598 981

100 437

847 005

5 676

19 771 491

2 473 776

4 470 976

613 701

76 039

724 896

25 314 167 28 136 555


OTHER INCOMEAND GAINS


Generally, in 2015 a decrease of EUR 606,505 was registered in this heading, mainly explained by the decrease in supplementary income relating to the assignment of materials, of approximately EUR 522,000.

31-12-2015

Additional income

Prompt payment discounts

Inventory gains

Corrections to previous financial years

Estimated tax surplus

Favourable exchange rate differences

Non-capital investments - claims

Non-capital investments - TFA sales

Other

31-12-2014

795 232

1 373

1 948

299 238

63 223

118

22 105

-

26 157

1 249 809

1 115

6 286

274 100

-

79

170 131

350

114 030

1 209 395 1 815 900

117

The figure shown under Other Expenditure and Losses results mainly from:

• Fees costs registered under the heading Taxes, in the amount of EUR 50,930, paid to the Court of Auditors for the granting of prior approval to contracts concluded with clients, notably CP and CP Carga;

• A EUR 250,000 irrecoverable debt concerning a debt relief to Metro de Lisboa as part of the agreement contained in the Addendum to the Protocol signed between EMEF and this company;

• Inventory losses in the amount of EUR 203,456 resulting from the write off of obsolete and deteriorated materials in respect of which impairment losses covering their full value had not been created;

• Corrections to previous financial years, of which to be highlighted are EUR 211,921 relating to Guifões electricity and water supply costs, the lump sum for railway transport passes referring to 2014 and the value of which was not known at the close of this period, and the settlement of amounts invoiced in previous financial years that were cancelled in 2015.

• Contractual penalties in the amount of EUR 43,000 applied by Metro do Porto within the scope of the contract for the maintenance of the Tram-Train and Eurotram fleets, which were registered under the heading Other.

OTHER EXPENDITUREAND LOSSES


31-12-2015

Taxes

Non-recoverable debts

Inventory losses

Non-capital investments

Corrections to previous financial years

Banking services

Unfavourable exchange rate differences

Financial expenditure & losses - Interest paid

Other

31-12-2014

65 617

251 833

216 489

354

442 412

39 603

156

3 504

67 660

13 813

-

161 044

1 275

179 580

12 379

48

249

17 455

1 087 628 385 843


DEPRECIATION ANDAMORTISATIONEXPENDITURE/REVERSAL


The expenditure recorded under this heading results from the depreciation or amortisation of goods in accordance with their useful life defined in Note 3.2 – Relevant Accounting Policies.

The decrease in the depreciation and amortisation of tangible fixed assets and intangible assets in 2015 is directly associated to the trend towards the increase in acquisitions, to which can be added the fact that the useful life of certain assets ended at the close of 2014 or in the course of 2015.

31-12-2015

(1 114 171)

Expenditure

31-12-2014

(1 241 271)


Intangible assets

(1 112 809)

(1 362)

(1 239 965)

(1 306)

119

INTEREST ANDSIMILAR COSTS


The overall decrease under the heading Interest and Similar Costs borne with borrowings results mainly from the reduction in the reference interest rate and the spreads charged by the financers as well as from the decrease in total borrowings.

Despite the description in Note 21 – Borrowings, the heading covering the interest paid on loans granted by the Shareholder includes the accrual accounting of interest costs in the periods between the maturity date of each loan contract and the close of 2015.

31-12-2015

707 923

31-12-2014

1 244 552

Interest on bank loans

Interest on loan from the Shareholder

Other interest

Other borrowing-related expenditure

95 627

516 031

59 920

36 344

136 123

810 313

224 699

73 417

INCOME TAXFOR THE FINANCIAL YEAR


The income tax for the financial year recognised in the profit & loss account concerns not only the separate taxation assessed in accordance with the tax rules in force on the reporting date, but also the estimate of the tax to be paid on taxable profits.


The increase from the previous year results, on the one hand, from the increase in the separate taxation assessed consequent to the widening of the tax basis to light goods vehicles as referred to in article 7(1)(b) of the Vehicles Tax Code and, on the other hand, from the increase in the net profits for the reporting period.

The EMEF tax losses that are to be carried over as at 31 December 2015 are set out in the table below:

Under the tax laws in force, tax losses generated can be carried over and deducted by resorting to the FIFO (first-in, first-out) method over the financial years set out in the table above, without, however, exceeding the set cap of 70% of taxable profit.

31-12-2015

(122 900)

31-12-2014

(90 017)

Income tax for the financial year (122 900) (90 017)

PERIOD DURING WHICH LOSSES MAY BE DEDUCTED TAX PROFIT/LOSS

2011

2013

4 anos

5 anos

(1 583 918)

(3 965 417)

LOSSES CARRIED FORWARD (YEARS)

2012-2015

2014-2018

121

RELATED PARTIESII NOTES TO THE FINANCIAL STATEMENTS // 39.

As at 31 December 2015 and 31 December 2014, the balances between the related parties concerning the CP, E.P.E. shareholder structure were:

NameNature ofrelations

A

B

B

A

A

CP

CP Carga

Ecosaúde

EMEF/Siemens - ACE

Nomad Tech

309 702

-

-

91

14 256

ClientsOther

receivables

Advancesfrom

clientsOther

payables Borrowings

2 608 867

3 868 859

-

446 003

20 653

2 850

-

-

-

277 460

-

-

-

-

-

14 154

-

12 308

-

361 863

Deferrals

13 500 000

-

-

-

-

Suppliers

5 131 071

-

-

250

4 992

Assets Liabilities

2015

a)

a)

a)

b)

a) This amount refers in its entirety to the heading Deferrals

b) This amount refers in its entirety to the heading Accrual Basis Debtors & Creditors.

A

B

B

A

A

CP

CP Carga

Ecosaúde

EMEF/Siemens - ACE

Nomad Tech

343 551

-

-

2 418

145 712

7 885 801

3 399 891

-

268 923

318 849

-

-

-

5 652

219

-

-

-

-

-

88 185

-

11 527

-

384 429

13 500 000

-

-

-

-

5 738 131

-

-

750

5 000

2014

a)

a)

a)

b)

b)

a) This amount refers in its entirety to the heading Deferrals

b) This amount refers in its entirety to the heading Accrual Basis Debtors & Creditors.

b)

NameNature ofrelations Clients

Otherreceivables

Advancesfrom

clientsOther

payables Borrowings DeferralsSuppliers

Assets Liabilities


The transactions between the related parties were those shown in the tables below:

Name

Natureof

Relations

A

B

B

B

A

A

CP

CP Carga

Ecosaúde

Fernave

EMEF/Siemens - ACE

Nomad Tech

227 431 c)

-

-

-

37 455

30

Rawmaterials

Tangiblefixed

assets

Third-partysupplies

& services

Otherexpenditure

& losses

Financingcosts

& losses

19 812

-

450

-

-

-

6 743

-

-

-

-

-

4 190 438 a)

-

1 690

-

1 226 531

659 223 b)

-

67 531

6 150

-

-

Sales &provision

of services

516 031 d)

-

-

-

-

-

Staffcosts

36 688 859

11 876 497

-

-

3 135 630

-

Inventories Expenditure

2015

215 200

4 251

-

-

440 432

153 237 e)

Otherincome& gains

Investments Income

a) Includes EUR 42,441 relating to the accrual accounting of expenditure

b) Includes EUR 16,708 relating to the accrual accounting of expenditure

c) Includes EUR 81,323 relating to the accrual accounting of expenditure

d) Includes EUR 170,275 relating to the accrual accounting of expenditure

e) Includes EUR 4,992 relating to the accrual accounting of income

A

B

B

B

A

A

CP

CP Carga

Ecosaúde

Fernave

EMEF/Siemens - ACE

Nomad Tech

94 058

-

-

323

1 146

4 130

43 727

-

500

-

-

-

10 578

-

-

-

-

-

4 551 574 a)

-

1 475

-

-

874 134

559 662 b)

-

70 330

3 720

-

-

810 313 c)

-

-

-

-

-

37 972 423

7 399 050

-

-

2 882 939 d)

-

2014

655 727

-

-

-

532 721

217 814 e)

a) Includes EUR 38,375 relating to the accrual accounting of expenditure

b) Includes EUR 18,392 relating to the accrual accounting of expenditure

c) Includes EUR 65,388 relating to the accrual accounting of expenditure

d) Includes EUR 5,652 relating to the accrual accounting of income

e) Includes EUR 219 relating to the accrual accounting of income

The following expenses were borne in respect of specialised work performed in the course of the financial year:

Audit & tax consultancy

External audit

Tax consultancy

Supervisory Board

4 500

9 020

5 395

Name

Natureof

RelationsRaw

materials

Tangiblefixed

assets

Third-partysupplies

& services

Otherexpenditure

& losses

Financingcosts

& losses

Sales &provision

of servicesStaffcosts

Inventories Expenditure

Otherincome& gains

Investments Income

123

Bank guarantees received

Bank guarantees provided

Bank guarantees

31-12-2015

567 580

4 310 663

31-12-2014

750 339

780 649

4 878 243 1 530 988

Comfort letters (Credit lines)

Comfort letters (Bank guarantees)

Sureties (m/l-term loans)

Shareholder's guarantees

Total amount

6 987 979

3 910 648

3 062 500

Amount used

-

3 910 648

3 062 500

13 961 127 6 973 148

BANK GUARANTEESII NOTES TO THE FINANCIAL STATEMENTS // 40.

The above-identified commitments are not shown in the financial statements that were presented.

OPERATING LEASES


Future payments relating to operating leases as at 31 December 2015 and 31 December 2014 came to the totals set out in the table below:

Under one year

Between 1 & 5 years

31-12-2015

58 588

71 442

31-12-2014

90 779

74 293

130 030 165 072


ENVIRONMENTAL ISSUESII NOTES TO THE FINANCIAL STATEMENTS // 42.

A number of actions were taken in the environmental field, in particular:

• The waste collection and treatment policy was continued. In April 2015, a waste treatment contract was signed with the company Renascimento and its performance has been followed and monitored;

• In-house assessment of the compliance with ISO 9001, NP 4427, Regulation (EU) no. 445/2011 and HST Standards, as well as of environmental requirements;

• Contracting of an Environmental Liability insurance policy, in accordance with the provisions of Decree-Law no. 147/2008;

• Monitoring and verification of the implementation of the actions provided for by the Agreement for the Rationalisation of Energy Consumption (ARCE) concluded as a result of the energy audits conducted by Accredited Entities to the Centre Workshop Unit (Entroncamento) and the Northern Workshop Unit (Guifões). The Performance and Progress Report on the Centre Workshop Unit (Entroncamento) was concluded, delivered and approved by DGEG (Directorate-General for Energy and Geology) in 2015.

• Several studies on solutions associated with the recommended energy rationalisation measures (MRE), notably concerning lighting improvement, were conducted.

• At the end of 2015, EMEF began the consultations procedure with entities accredited by DGEG (Directorate-General for Energy and Geology) for the realisation of energy audits to the facilities in which EMEF carries on its activity and is party to energy contracts (Decree-Law no. 68-A/2015). For legal purposes, the DGEG upheld an EMEF application requesting that the energy audit reports for which the above mentioned decree-law refers be postponed to the end of the first semester of 2016.

As regards the environment, in the course of 2015, costs amounting to EUR 143,231 were disbursed, against EUR 96,873 during the previous year, the breakdown of which is set out below:

92,7% WASTE MANAGEMENT

5,4% WATER MONITORING

1,9% MONITORING OF GASEOUS EMISSIONS

ENVIRONMENTAL COSTS 2015

125

“Waste management” includes the channelling of waste, including the Safetykleen waste, to an appropriate licensed destination, waste management charges and cleaning of the WWTP and of the Oil Separators.

“Water monitoring” comprises liquid effluent (wastewater) analyses and control analyses to water for human consumption.

“Gaseous emissions monitoring” concerns the characterisation of the gaseous effluents of chimneys in the facilities where EMEF carries on its activity.

The increase of approximately 32% compared to the previous year’s expenditure in environmental issues resulted from the overall cleaning of the Centre Workshop Unit WWTP, which had never been done before.

EVENTS AFTERTHE BALANCE SHEET DATE


On 19 October 2015, Transdev and EMF signed a contract for the maintenance of the Metro do Porto rolling stock fleets, the start of performance of which depended on the Metro do Porto, S.A. Transport System Subconcession contract becoming effective.

Given the early 2016 Government decision to revert the ongoing subconcession process, the aforementioned contract between EMEF and Transdev will not become effective.






Paula Cristina Tavares Serra Ribeiro Nuno Serra de Sanches Osório

Member

CORPORATE GOVERNANCE REPORT


MISSION,GOALSAND POLICIES

129

EMEF aims to become the national reference in the area of railway rolling stock.

Traditionally linked to the railway transport sector, EMEF has taken on the mission of creating value for its clients, staff and Shareholder. It is acknowledging this mission that motivates the Company, gives its sense and is a way of bonding the effort made daily by each and every person working for EMEF.

The way in which these broad goals are to be attained is set out in policies based on a set of principles that translate into:

• Developing client-oriented activity;• Creating safety conditions for the staff and the railway rolling stock;• Protecting the environment;• Managing the activity in such a way as to ensure economic and financial sustainability

and continued independent operation.

I MISSION, GOALS AND POLICIES

CAPITALSTRUCTURE

131

The Company’s share capital is EUR 8,100,000, divided into and represented by 8,100,000 shares with a par value of one Euro each. It has been totally paid-up in cash and other assets recorded in the company books. Shares are either registered or bearer and may be dematerialised or represented by certificates of 1, 5, 10, 50, 100, 500, 1,000 or 5,000 shares. Shares are reciprocally convertible on request of the shareholders, who will bear the cost of any such conversion.

The shares are held by CP – Comboios de Portugal, E.P.E., and there are no constraints to their ownership and/or transferability.

There are no shareholders’ agreements imposing any constraints on the Company.

II CAPITAL STRUCTURE

SHAREHOLDINGSAND BONDS

133

III SHAREHOLDINGS AND BONDS

At the 2015 year-end, EMEF had holdings in the following business entities:

EMEF/SIEMENS ACE is a complementary group of companies set up in 2009 by EMEF and SIEMENS and its object is the synergy and optimisation of the group members’ activity as regards the maintenance of LE5600 and LE4700 Electric Locomotives under an agreement concluded between the ACE and CP – Comboios de Portugal, E.P.E..

NOMAD TECH is a private limited liability company set up in November 2013 between EMEF and NOMAD Digital for the purpose of providing Railway Telemanagement solutions – such as Maintenance Based on Condition (MBC) and Energy Efficiency – to the railway market worldwide.

EMEF also has the following holdings in associations and foundations:

ENTITIES IN WHICH EMEF IS A FULL OR FOUNDING MEMBER

Year of admission

INEGI - Instituto de Engenharia Mecânica

e Gestão Industrial

Comments

2006

Entity

EMEF is a full member of this Institute

with a EUR 2,500 subscription,

corresponding to 500 units

Interest

2 500

FMNF - Fundação Museu Nacional Ferroviário 2007 EMEF is equated to a founding member. EMEF's contribution

was made in kind, under the form of providing services to

recover the locomotive turntable.

31 944

SHAREHOLDINGS

EMEF

EMEF/SIEMENS ACE

NOMAD TECH, Lda

51% of the net profit/loss

35% of the capital

Entity

CORPORATE GOVERNANCE REPORT 134

EMEF MEMBERSHIPS

Year of admission

NERSANT

Associação Empresarial da Região de Santarém

Justification

1996

Entity

On 4 October 1996, the EMEF Executive Committee resolved to authorise EMEF to

become a member of this Association, in light of the company's registered office being

located in Entroncamento and of this membership offering the advantage of

automatically becoming an AIP (Portuguese Industrial Association) member, of

facilitating the access to CSF structural funds and of obtaining subsidised interest rates

on loans under the memorandum of understanding signed with BES.

IPQ

Instituto Português para a Qualidade

1995 EMEF is currently registered as a Class B correspondent, with the following

advantages: free of charge delivery of standards (Portuguese, European and

ISO) issued yearly and discounts on the purchase of standards in general,

which are necessary for the Quality Management System and its Certification.

ANEME - Associação Nacional das Empresas

Metalúrgicas e Eletromecânicas

2007 On 1 February 2007, the EMEF Executive Committee resolved to reapply for

admission to this Association, in order to enjoy the advantages it offers to

internationalisation, which extends to both Argentina and Mozambique.

APNCF - Associação Portuguesa para a

Normalização e Certificação Ferroviária

1996 EMEF is equated to a founding member.

No financial guarantees were provided by the Company to other entities, nor did it take on any debts or liabilities of other entities.

The significant trade relations between EMEF and its sole shareholder (CP, E.P.E.) are set out in Chapter VII (Transactions with Related and Other Parties) of this Report.

With regard to the mechanisms adopted to prevent conflicts of interests and in strict compliance with the good governance principles applicable to State-owned companies set out in Decree-Law no. 133/2013, particularly in Article 51 thereof, the EMEF Directors abstain from intervening in decisions involving their own interests; for instance, expenses made by a given Director must be approved by another Director. Moreover, the Company Directors have no shareholdings in its capital or any relations with its suppliers, clients, financial institutions or other business partners susceptible of causing a conflict of interests.

COMPANYBOARDS ANDCOMMITTEES

137

BOARD OF THE GENERAL MEETINGIV COMPANY BOARDS AND COMMITTEES // A.

BOARD OF THE GENERAL MEETING

Position Name

Maria Romana da Cunha PaulinoCorreia de Vasconcelos

Maria Filipa Alves Marvão Lucas Martins

Annual Remuneration (EUR)

Set (1) Gross paid (EUR) (2)

0

0

0

0

(1) - Attendance fee; (2) - Before remuneration reductions

ChairwomanC

Secretary

2013-2015

Term of office(start-end)

MANAGEMENT AND SUPERVISIONIV COMPANY BOARDS AND COMMITTEES // B.

BOARD OF DIRECTORS

Position

2013-2015

2015

Name

Cristina Maria dos Santos Pinto Dias *

Maria Isabel de Jesus da Silva Marques Vicente **



Legal form ofappointment

No. of termsof office in

the Company

Chairwoman

Member

Chairman

Member

GM resolution

GM resolution

Shareholder's decision

GM resolution

1

1

1

1

*Resigned from office on 22/07/2015 - **Resigned from office on 30/03/2015

Comments

Not remunerated

Not remunerated

Not remunerated

Not remunerated

The management and supervision structure of the Company comprises a Board of Directors, a Supervisory Board and a Statutory Auditor.

The members of the company boards are elected by the General Meeting, without prejudice to any such other decisions as may be made by the sole Shareholder.

The Board of Directors is composed of two executive members of the CP – Comboios de Portugal, E.P.E. Board of Directors, elected by the General Meeting for a term of three years.

There are no resolutions by the shareholders that, under the articles of association, can only be passed by a qualified majority.



In the absence or definitive impediment of any Director, a substitute will be co-opted, any such cooption to be confirmed in the next following General Meeting. The term of office of the new Director will expire at the end of the term for which the replaced Director had been elected.

SUMMARISED CURRICULA VITAE

Master’s Degree in Operational Research and Systems Engineering (academic part), Instituto Superior Técnico, 1983-1985, and Degree in Civil Engineering, Science and Technology Faculty of Universidade de Coimbra, 1978

Chairman of EMEF-Empresa de Manutenção de Equipamentos Ferroviários, SA since August 2015.

Chairman of the Board of Directors of Comboios de Portugal, E.P.E. since February 2013.

Chairman of the Board of Directors of CP Carga – Logística e Transporte de Mercadorias, S.A. since March 2013.

Lecturer, Assistant Professor, Universidade de Coimbra, Science and Technology Faculty, Town Planning, Land-Use Planning and Transport Laboratory (1980-2013).

Managing Partner of Conprojur, Consultadoria e Projetos Urbanos, Lda., Coimbra, a project coordination company (2006-2013).

Director of Soturis – Sociedade Imobiliária e Turística, SA (2002-2005).

Member of the Portuguese Parliament (CDS), where he was a member of the Public Works, Environment and Local Power Parliamentary Committee, of the Education Parliamentary Committee and of the European Integration Parliamentary Committee. Contributed to the definition of options for the National Road Plan, Rail Network, Port and Airport Infrastructures, Porto Light Rail System, TGV, final decision for Co-incineration and Hazardous Waste Policy, regional and local Natural Gas Network and National Energy Production Policy (1983-1987, 1991-1995 and 1999-2002).

Consultant and Designer (1989-1993).

Navy Sub-lieutenant (1978-1980).

MANUEL TOMÁS CORTEZ RODRIGUES QUEIRÓ (Chairman since August 2015)

139

Master’s Degree in Energy and Environmental Economics and Policy, ISEG, 1995, Degree in Economics from Universidade Técnica de Lisboa, (ISEG), 1985-1990 and Post-Graduation in Transport Higher Studies at Instituto Superior de Transportes, ISTP, 1999-2000.

Deputy Chairwoman of the Board of Directors of Comboios de Portugal, E.P.E. since February 2013 and Director of the same company between June 2010 and February 2013.

Chairwoman of the Board of Directors of EMEF-Empresa de Manutenção de Equipamentos Ferroviários, S.A. (March 2013-August 2015).

President of SIMEF since July 2014.

Member of the Nomad Tech, S.A. Board since this company was set up (November 2013).

President of TIP-Transportes Intermodais do Porto, ACE since March 2013.

Director of OTLIS-Operadores de Transportes da Região de Lisboa since July 2010.

Head of the Organisational Development and Change Management Directorate of CP (February 2005-June 2010).

Member of the Board of Directors of the Lisbon Metropolitan Transport Authority Establishment Committee (2004-2005).

Advisor to Professor António Carmona Rodrigues – Minister for Public Works, Transport and Housing of the 15th Constitutional Government – in the areas of transport, the economy and finance (2003-2004).

Economic Regulation Director of the former Instituto Nacional de Transporte Ferroviário (Railway Transport National Institute). Held several management positions in public enterprises of relevance in Portugal.

Lecturer at Instituto Superior de Economia e Gestão for the Leadership & Management post-graduation, in the subject Change Management, and author of several opinion pieces published in the Monthly Supplement – Public Transport – Intelligent Mobility of a daily newspaper.

CRISTINA MARIA DOS SANTOS PINTO DIAS (Chairman until August 2015)


Degree in Economics from the Economy Faculty of Universidade Nova de Lisboa, 1989, and attendance of PADE - Programa de Alta Direção de Empresas (Corporate Top Management Programme) at AESE Business School, 2011.

Board Member of the EMEF, SA Board of Directors since May 2015.

Board Member of the CP, EPE Board of Directors since May 2015.

Director of APL – Lisbon Port Authority (2013-2015).

Executive Director of ETE Logística, S. A., Director of Autoguer - Aluguer de Automóveis e Equipamento, S. A., Manager of ETE Logística de Moçambique, L.da. and Manager of Transportes Sousa Mendes — Transporte de Mercadorias, Lda. (2008-2013).

Chairman of the Board of Directors of ATI - Arnaud Transitários (Ilhas), S. A. and Director of Logisdar - Logística e Transporte de Mercadorias, S. A. (2005-2008).

Chief of Staff of the Secretary of State for the Sea (2004-2005).

Investment Director of Intermoney Valores - Sucursal em Portugal (2003-2004).

Director and Member of the Executive Committee of Banif - Banco de Investimento, S. A., Director and Member of the Executive Committee of Banifundos Cisalpina — Soc. Gestora de Fundos Mobiliários, S. A., Director and Member of the Executive Committee of Banif Patrimónios — Soc. Gestora de Patrimónios, S. A. and Chairman of the Board of Auditors of APFIN — Associação das Sociedades Gestoras de Fundos de Investimento e de Patrimónios (1999-2002).

Chairman of Finivalor - Soc. Gestora de Fundos de Investimento Mobiliário, S. A. and Director of Finipatrimónio - Soc. Gestora de Patrimónios, S. A. (1996-1999).

Investment Director of Carnegie Portugal - Soc. Gestora de Patrimónios, S. A. (1994-1996).

Deputy Director of Espírito Santo - Soc. Gestora de Patrimónios, S. A. (1991-1994).

Trader for CISF - Corretora, Soc. Corretora de Valores Mobiliários, S. A. (1989-1991).

NUNO SERRA SANCHES OSÓRIO(Board Member since May 2015)

141

Degree in Corporate Organisation and Management from Instituto Superior de Ciências do Trabalho e da Empresa (ISCTE).

Executive member of the CP, E.P.E. Board of Directors, responsible for the economy and finance areas (February 2013-May 2015).

Executive member of the EMEF, S.A. Board of Directors; Sole Director of ECOSAÚDE, S.A.; Manager of SAROS, Lda.; Member of the FMNF Board of Directors on behalf of CP, E.P.E. since March 2013.

Vice-President and Member of the IMTT Governing Board, responsible for the areas of finance and organisation and management, between October 2007 and February 2012. By reason of these competences, Member of the AMTL-IP Executive Board.

Deputy Chairwoman of the Board of Directors of Portugal Vela 2007, S.A., the State-owned company that organised the world sailing championships in 2007, responsible for the areas of finance and organisation (November 2005-October 2007).

Chief of Staff of the Secretary of State for the Treasury and Finance between March and July 2005.

Deputy Director-General for the Treasury, responsible for the State Financial Intervention Department, notably covering the State-owned Enterprises Sector, between July 2001 and March 2005.

Assistant Advisor at the State Secretariat for the Treasury and Finance, responsible for the area of State-owned Enterprises, between October 2000 and July 2001.

Tax Inspector at the Inspecção-Geral de Finanças (IGF), in the State-owned Enterprises audit department, between September 1991 and October 2000.

Administrative Inspector at the Inspecção-Geral da Administração do Território (IGAT) between 1988 and September 1991.

Senior Official of the Central Planning Department of the Ministry for Finance and the Plan (1985-1988).

Administrative Official at the Direcção-Geral de Viação (1974-1985).

Academic career: lecturer at the former Instituto Superior de Novas Profissões (INP), which presently forms part of the Instituto Superior de Gestão, having lectured several subjects in the Financial Area (1986-2011).

MARIA ISABEL DE JESUS DA SILVA MARQUES VICENTE(Director until May 2015)


COMPANYORGANISATION CHART

IV COMPANY BOARDS AND COMMITTEES

The Board of Directors held 37 meetings in the course of 2015. Attendance by the members of the Board of Directors was very high and all absences were duly justified.

The members of the EMEF Board of Directors currently in office are also directors in the Shareholder and are not remunerated by the former.

The Company Board responsible for assessing the performance of the executive directors is the General Meeting and there are no pre-determined criteria to be applied to this assessment.

There are no committees or managing directors in the Board of Directors or the Supervisory Board.

Board of Directors

Support AreasCoordinating Director

Operating AreasCoordinating Director

Engineering

Nothern Workshop Unit

Centre Workshop Unit

Southern Workshop Unit

High-SpeedMaintenance Unit

Finance

Logistics

IT Systems

Human Resources

General Manager

BusinessDevelopment

Integrated ProductionPlanning

Management Control

Legal Dept. and Executive Secretariat

Safety, Quality and the Environment

Internal Audit

143

SUPERVISION

IV COMPANY BOARDS AND COMMITTEES // C.

The supervision of the Company is entrusted to a Supervisory Board composed of a chairman, two acting members and an alternate member and to a Statutory Auditor or a Statutory Audit Firm, all of which are elected for a one-year term by the General Meeting.

SUPERVISORY BOARD

Position

2015

Name




Legal formof appointment

No. of terms of officein the Company

Chairman

Member

Alternate Member

3

3

4

Comments

Remained in the office

to which they were

appointed in 2014

Position Name




Annual remuneration


Chairman

Member

Alternate Member

0

0

0

0

0

0

(1) - Gross annual set; (2) - Before remuneration reductions


2015


SUMMARISED CURRICULA VITAE

Degree in Law from Universidade Clássica de Lisboa, Post-graduation in the area of Personnel at the former Instituto para o Desenvolvimento dos Recursos Humanos, now called Instituto Superior de Gestão, and attendance of the second Curso Geral de Gestão (General Management Course) in 1989 at the Economics Faculty of Universidade Nova de Lisboa.

Chairman of the EMEF and CP Carga Supervisory Boards since March 2013.

General Manager of FERNAVE – Formação Técnica, Psicologia Aplicada e Consultoria em Transportes e Portos, S.A. since August 2014.

Held several positions in CP, E.P.E., notably Director responsible for the DCC - Direcção de

ARLINDO JOSÉ CRESPO RODRIGUES(Chairman)

Contratualização, Compras e Serviços Gerais (April 2011-March 2013), Coordinating Director of CP - Serviços (CP’s Unidade de Serviços Partilhados) (2010- March 2011), Member of the CP-Lisboa Executive Directorate (2008-2010) and Member of the USGL – Unidade de Suburbanos da Grande Lisboa Executive Committee (2002-2008).

CP Representative in OEINERGE (Agência Municipal de Energia e Ambiente de Oeiras) in the capacity as Chairman of its Supervisory Board (2010-2012).

Managing Director of SESI – Sociedade de Ensino Superior e Investigação, S.A. (2001-May 2002).

Executive Member of the PEC-TEJO – Indústria de Produtos Pecuários de Lisboa e Setúbal, S.A. Board of Directors and concurrently non-executive Member of PEC - Produtos Pecuários de Portugal, SGPS (1998-2001).

Director of PORTUCEL INDUSTRIAL – Empresa Produtora de Celulose, S.A. and PORTUCEL FLORESTAL – Empresa de Desenvolvimento Agro-Florestal, S.A. (1997-1998).

Chairman of the Board of the General Meeting of RAIZ – Instituto de Investigação da Floresta e Papel, Portucel Viana, Portucel Embalagem, Portucel Tejo, Portucel Recicla, Gescartão and Tecnocel (1995-1999).

Member of the Board of Directors of Papéis INAPA, S.A. in the capacity as representative of Portucel SGPS (1995-1997).

Director of PORTUCEL – Empresa de Celulose e Papel de Portugal, SGPS, S.A. - the Portucel Group holding company - and Member of the Board of Directors of Portucel Industrial, Portucel Florestal and Gescartão, SGPS, S.A. (1993-1997).

Chairman of the Board of Directors of Companhia do Papel do Prado concurrently with the positions held in the Portucel Group (1994-1997).

Director of DOCAPESCA, Portos e Lotas, S.A. (1990-1993).

Member of the Management Committee of DOCAPESCA/Sociedade Concessionária da Doca de Pesca de Pedrouços and of SLV – Serviço de Lotas e Vendagem (1988-1990).

Member of the Supervisory Board of Companhias Reunidas de Congelados e Bacalhau, S. A. (C.R.C.B.S.A.) (1986-1988)

Chief of Staff of the Secretary of State for Fisheries (1985-1988).

Advisor to the Ministry for the Sea (1985).

Official and subsequently Management Officer of the Crédito Predial Português staff (in the areas of Pre-Litigation and Human Resources Management) (1975-1985).


Degree in Law from Universidade Clássica de Lisboa, Post-graduation in the area of Personnel at the former Instituto para o Desenvolvimento dos Recursos Humanos, now called Instituto Superior de Gestão, and attendance of the second Curso Geral de Gestão (General Management Course) in 1989 at the Economics Faculty of Universidade Nova de Lisboa.

Chairman of the EMEF and CP Carga Supervisory Boards since March 2013.

General Manager of FERNAVE – Formação Técnica, Psicologia Aplicada e Consultoria em Transportes e Portos, S.A. since August 2014.

Held several positions in CP, E.P.E., notably Director responsible for the DCC - Direcção de

Contratualização, Compras e Serviços Gerais (April 2011-March 2013), Coordinating Director of CP - Serviços (CP’s Unidade de Serviços Partilhados) (2010- March 2011), Member of the CP-Lisboa Executive Directorate (2008-2010) and Member of the USGL – Unidade de Suburbanos da Grande Lisboa Executive Committee (2002-2008).

CP Representative in OEINERGE (Agência Municipal de Energia e Ambiente de Oeiras) in the capacity as Chairman of its Supervisory Board (2010-2012).

Managing Director of SESI – Sociedade de Ensino Superior e Investigação, S.A. (2001-May 2002).

Executive Member of the PEC-TEJO – Indústria de Produtos Pecuários de Lisboa e Setúbal, S.A. Board of Directors and concurrently non-executive Member of PEC - Produtos Pecuários de Portugal, SGPS (1998-2001).

Director of PORTUCEL INDUSTRIAL – Empresa Produtora de Celulose, S.A. and PORTUCEL FLORESTAL – Empresa de Desenvolvimento Agro-Florestal, S.A. (1997-1998).

Chairman of the Board of the General Meeting of RAIZ – Instituto de Investigação da Floresta e Papel, Portucel Viana, Portucel Embalagem, Portucel Tejo, Portucel Recicla, Gescartão and Tecnocel (1995-1999).

Member of the Board of Directors of Papéis INAPA, S.A. in the capacity as representative of Portucel SGPS (1995-1997).

Director of PORTUCEL – Empresa de Celulose e Papel de Portugal, SGPS, S.A. - the Portucel Group holding company - and Member of the Board of Directors of Portucel Industrial, Portucel Florestal and Gescartão, SGPS, S.A. (1993-1997).

Chairman of the Board of Directors of Companhia do Papel do Prado concurrently with the positions held in the Portucel Group (1994-1997).

Director of DOCAPESCA, Portos e Lotas, S.A. (1990-1993).

Member of the Management Committee of DOCAPESCA/Sociedade Concessionária da Doca de Pesca de Pedrouços and of SLV – Serviço de Lotas e Vendagem (1988-1990).

Member of the Supervisory Board of Companhias Reunidas de Congelados e Bacalhau, S. A. (C.R.C.B.S.A.) (1986-1988)

Chief of Staff of the Secretary of State for Fisheries (1985-1988).

Advisor to the Ministry for the Sea (1985).

Official and subsequently Management Officer of the Crédito Predial Português staff (in the areas of Pre-Litigation and Human Resources Management) (1975-1985).

145

Degree in Business Management from Universidade Católica Portuguesa, post-graduation in Corporate Finance at INGED-ISCTE Executive Education.

Member of the Supervisory Board of EMEF- Empresa de Manutenção de Equipamento Ferroviário, S.A. and CP Carga – Logística e Transportes Ferroviários de Mercadoria, S.A. (since March 2013).

Head of the Financial Department pertaining to the CP Financial Directorate (since 2013).

CP Chief Financial Officer responsible for financial and treasury management (2011-2013).

Responsible for the Group’s Financial Management - Corporate Finance, in charge of managing financial resources and optimising financing conditions, by negotiating borrowing terms and managing loan agreements and risk management instruments (2007-2011).

Responsible for the GGFC Short-Term Financial Management, having ensured contacts with the Banks to contract borrowings, with a view to optimising the available financial resources (2003-2007).

Senior Officer of the Financial Management Office, having participated in setting up external financing operations and in managing and monitoring the various financing and related agreements (1998-2003).

Credit analysis and assessment for CETELEM- Sociedade Financeira de Aquisição a Crédito (1996-1998).

Member of the Board of Directors of Eurofima - European Company for the Financing of Railroad Rolling Stock.

ANA MARIA DOS SANTOS MALHÓ(Member)


Degree in Economics from the Economics Faculty of Universidade do Porto.

Statutory auditor since 2002. Manager of the Deloitte & Touche audit department (1996-2003).

She worked for an audit multinational, with different levels of responsibility, where she acquired 15 years of experience in auditing, 9 of which in the capacity as Statutory Auditor, performing her duties in several of the largest national and international companies operating in different business areas. Currently (and since 2004) she is a partner in Horwath & Associados and responsible for various audit/reviewing tasks.

CARLA MANUELA SERRA GERALDES(Alternate Member)

The Supervisory Board is independent from the management and its functioning and duties are defined in the Company’s articles of association.

The Supervisory Board currently in office was elected in the Ordinary General Meeting held on 15 March 2013 for the 2013 financial year, its term of office was extended on 24 April 2014, it remained in office in 2015 and it met 5 times in the course of 2015.

Its members have individually or jointly continued to monitor the Company’s activity, notably by reading the minutes of the Board of Directors and the Company’s Performance Reports. They also monitored the progress of the Company’s privatisation process and examined and issued their opinion on the PAO – Plano de Actividades Operacional (Operational Business Plan) prepared for 2015.

147

STATUTORYAUDITOR

IV COMPANY BOARDS AND COMMITTEES // D.

The EMEF statutory auditor is Horwath & Associados, SROC – Sociedade de Revisores Oficiais de Contas (statutory audit firm), Lda., which is registered with the OROC – Ordem dos Revisores Oficiais de Contas (statutory auditors’ association) under no. 186 and with the CMVM – Comissão do Mercado de Valores Mobiliários (securities market commission) under no. 9171, represented by Sónia Bulhões Costa Matos Lourosa, ROC – Revisora Oficial de Contas (statutory auditor) no. 1128.

Horwath & Associados, SROC, Lda. was appointed for the first time as the SROC responsible for the Legal Certification of Accounts in the 30-03-2012 General Meeting until the end of its term of office on 31-12-2012, was re-elected on 15-3-2013 for the 2013 financial year and again on 24-4-2014, and remained in office in 2015.

The statutory auditor or statutory audit firm is responsible for performing the duties set out in the law and for carrying out all examinations and verifications required for the review and legal certification of the accounts.

Horwath & Associados, SROC, is responsible for the review and legal certification of the EMEF accounts as well as those of other CP Group companies.

The current amount resulted from a call for tenders where the awarding criterion was the lowest price and it has not increased from the previous years (2013 and 2014).

ROC

Position

2015

Name

Horwath & Associados, SROC, Lda

Legal formof appointment

No. of termsof office in the Company

SROC 4

Comments

Remained in the office

to which they were

appointed in 2014

Position

2015

Name

Horwath & Associados, SROC, Lda

Annual remuneration


SROC 5 395 5 395

(1) - Gross annual set; (2) - Before remuneration reductions




EXTERNAL AUDITORIV COMPANY BOARDS AND COMMITTEES // E.

As has already been mentioned herein, the EMEF external auditor is Pinto Ribeiro, Lopes Rigueira & Associados, SROC, LDA., which is registered with the OROC under no. 197 and with the CMVM under no. 9199 and represented by Joaquim Eduardo Pinto Ribeiro, ROC no. 1015.

The annual fees paid in 2015 are shown in the table below:

This company does not provide audit services to any of the entities in which EMEF holds an interest.

As for the sums paid by CP Group members, this information is set out in the CP (parent company) Report and Accounts.

EXTERNAL AUDITOR

(EUR)

Value of official review of accounts

Value of tax consultancy services

Value of services other than review of accounts

(%)

0

0

4 500

0%

0%

100%

Remuneration paid to SROC (includes separate and consolidate accounts)

Total paid by the Company to the SROC 4 500

INTERNALORGANISATION

151

ARTICLES OF ASSOCIATIONAND COMMUNICATIONS

V INTERNAL ORGANISATION // A.

The articles of association may be amended upon decision of the sole Shareholder.

INTERNAL SUPERVISIONAND RISK MANAGEMENT

V INTERNAL ORGANISATION // B.

In addition to the previously herein described governance model, EMEF has the following at its disposal:

• Organisation chart, mission and powers of each body and delegation of powers;

• A set of internal standards incorporated in the quality system, in addition to others relating notably to internal control, not incorporated in this system;

• Internal auditThe functional areas of Internal Audit and Risk Management are ensured by the parent company through its Internal Audit, Risk Assessment, Quality and the Environment Office, the scope of which encompasses the entire CP Group;

• Management ControlThis area is responsible for the continuous monitoring of the EMEF activity and its main duties are set out below:

a. To prepare the Company’s annual plan, involving the definition of programmes and actions, in close cooperation with the different organisational areas and units;

b. To ensure the monitoring of the implementation of the approved programmes and budgets, by examining deviations and detecting situations requiring corrective measures;

c. To monitor the implementation of the Company’s annual plan, in order to ensure the timely awareness of the progress of programmed activities and budgets and the detection of situations requiring corrective and/or additional measures to overcome the deviations that must be managed;

d. To ensure the preparation and distribution of standardised periodical reports on the physical and budgetary performance of the Company and of each of its organic units.

Control activities are also performed, notably in respect of the physical counts and of the Company’s inventory and tangible fixed asset write-offs.

EMEF’s activity is exposed to inherent risk factors, such as credit and liquidity risk and interest rate risk associated to cash flows, resulting from its financing, these not constituting, however, any relevant financial risk.

Risk management is carried out in accordance with the stipulations of Order no. 101/09 – SETF and on the basis of principles of preservation of the Company’s financial independence, thus enhancing its financial balance and the return on capital invested.


In addition to the previously herein described governance model, EMEF has the following at its disposal:

• Organisation chart, mission and powers of each body and delegation of powers;

• A set of internal standards incorporated in the quality system, in addition to others relating notably to internal control, not incorporated in this system;

• Internal auditThe functional areas of Internal Audit and Risk Management are ensured by the parent company through its Internal Audit, Risk Assessment, Quality and the Environment Office, the scope of which encompasses the entire CP Group;

• Management ControlThis area is responsible for the continuous monitoring of the EMEF activity and its main duties are set out below:

a. To prepare the Company’s annual plan, involving the definition of programmes and actions, in close cooperation with the different organisational areas and units;

b. To ensure the monitoring of the implementation of the approved programmes and budgets, by examining deviations and detecting situations requiring corrective measures;

c. To monitor the implementation of the Company’s annual plan, in order to ensure the timely awareness of the progress of programmed activities and budgets and the detection of situations requiring corrective and/or additional measures to overcome the deviations that must be managed;

d. To ensure the preparation and distribution of standardised periodical reports on the physical and budgetary performance of the Company and of each of its organic units.

Control activities are also performed, notably in respect of the physical counts and of the Company’s inventory and tangible fixed asset write-offs.

EMEF’s activity is exposed to inherent risk factors, such as credit and liquidity risk and interest rate risk associated to cash flows, resulting from its financing, these not constituting, however, any relevant financial risk.

Risk management is carried out in accordance with the stipulations of Order no. 101/09 – SETF and on the basis of principles of preservation of the Company’s financial independence, thus enhancing its financial balance and the return on capital invested.

REGULATIONS AND CODESV INTERNAL ORGANISATION // C.

In addition to the provisions of general law applicable to commercial companies carrying on industrial activity and to State-owned companies, the Company is governed by a number of regulations, with particular emphasis on:

1. Articles of Association of the Company

2. Company-level Agreements

3. Code of Ethics

4. Internal Regulation of the Ethics Committee

5. Quality Handbook

6. Environmental Quality and Safety Policy

7. Environmental Functional Procedures

8. Quality Functional Procedures

9. Internal Standards

10. Human Resources Handbook

11. Human Resources Policy

12. Human Resources Procedures

13. Professional Categories Regulation

14. Car Fleet Management Regulation

15. General Conditions applying to the Acquisition of

Goods and Services

16. Blood Alcohol Control Regulation

17. Safety and Hygiene at Work Procedures Handbook

Internal Regulations

153

External Regulations

1. Ministerial Order no. 53/71 of 3 February – as amended by Ministerial Order no. 702/80 of 22 September – General regulation on health, safety and hygiene at work for industrial establishments and other related regulations (noise at work, chemical substances, fire safety, work equipment, etc.)

2. Decree-Law no. 243/86 of 20 August – General Regulation on Hygiene and Safety at Work in Commercial Establishments, Offices and Services and other related regulations (eye shielding equipment, fire safety, etc.)

3. Decree-Law no. 78/2004 of 3 April – Prevention and control of pollutant emissions into the air

4. Decree-Law no. 73/2011 of 17 June, amending and republishing Decree-Law no. 178/2006 of 5 September – General waste management scheme

5. Decree-Law no. 09/2007 of 17 January – General regulation on noise

6. Decree-Law no. 71/2007 of 27 March – Public Manager Statute

7. Part I of the Public Procurement Code8. Decree-Law no. 71/2008 of 15 April – Energy-intensive

consumption management system9. Decree-Law no. 147/2008 of 29 July, as amended

by Decrees-Law no. 245/2009 of 22 September, 29-A/2011 of 1 March and 60/2012 of 14 March - Legal framework on liability for damage to the environment

10. Order no. 438/10-STEF of 10 May – Guidelines for the acquisition of services exceeding EUR 125,000 and for the application of public procurement rules

11. Decree-Law no. 27/2011 of 17 February – Technical conditions contributing to the increased safety of the rail system and promoting safe circulation

12. Commission Regulation (EU) no. 445/2011 of 10 May – System of certification of entities in charge of maintenance for freight wagons and other related regulations

13. Decree-Law no. 130/2012 of 22 June, amending and republishing Law no. 58/2005 of 29 December – Management of surface and underground waters

14. Decree-Law no. 169/2012 of 1 August – Responsible Industry System (RIS)

15. Decree-Law no. 127/2013 of 30 August – only Chapter V – Facilities using organic solvents

16. Decree-Law no. 133/2013 of 3 October, repealing Decree-Law no. 558/99 – Legal framework of the State-owned enterprises sector and public enterprises and Resolution of the Council of Ministers no. 49/2007 of 28 March – Good corporate governance principles for the State-owned enterprises sector

17. Law no. 3/2014 of 28 January, republishing Law no. 102/2009 of 10 September – Legal framework for the promotion of health and safety at work, within the scope of the Labour Code and other related regulations

18. Decree-Law no. 41/2014 of 18 March transposing Directive 2013/9/EU which amends Annex III of Directive 2008/57/EC on the interoperability of the rail system in the Community into Portuguese law, amending Decree-Law no. 27/2011 of 17 February for the second time

19. of technicians handling substances that damage the ozone layer (ODS)

20. Regulation (EU) no. 1005/2009 of 16 September – on substances that deplete the ozone layer

21. Commission Regulation (EU) no. 321/2013 of 13 March – concerning the technical specification for interoperability relating to the subsystem ‘rolling stock — freight wagons’ of the rail system in the European Union (as amended by Regulation (EU) no. 1236/2013 of 2 December)

22. Decree-Law no. 273/2003 of 9 October – on the minimum health and safety at work requirements to be observed in temporary or mobile construction and civil engineering yards

23. Decree-Law no. 50/2005 of 25 February – Directive on work equipment

24. Decree-Law no. 103/2008 of 24 June – Machinery Directive – aimed at ensuring the free circulation of machinery and their accessories, and setting out the essential requirements on health and safety of workers and consumers.

Decree-Law no. 35/2008 of 27 February – Certification


EMEF carries on its activity in the strict observance

of social responsibility and sustained development

principles. To this end, the adoption of an ethically

correct conduct is an undeniable reference internally

and in the relations with Clients, Suppliers and the

community in general.

The Ethics Code results from adopting certain Values and

Principles which define conduct standards, mould the

EMEF identity and image and are the reference for all those

that come into direct or indirect contact with this Company.

It was approved by the EMEF Works Council, divulged

among the staff and sent to the Authority for Working

Conditions in accordance with the law and is therefore

one of the Company’s internal regulations.

Thus being, the Ethics Code is understood and

assumed to be a commitment made by all the

EMEF staff members and Corporate Boards without

exception. It applies to all those employed by EMEF,

irrespective of their labour ties and hierarchical

position.

Ethics Code

SPECIAL REPORTING DUTIESAND INTERNET SITE

V INTERNAL ORGANISATION // D.

Pursuant to article 44 of Decree-Law no. 133/2013, the Company divulges information on the EMEF site. The Company’s address on the Internet is: www.emef.pt.

REMUNERATIONS

157

POWERS TOSET REMUNERATIONS

VI REMUNERATIONS // A.

The General Meeting holds the powers to set the remunerations of the members of the Company’s Boards.

REMUNERATIONSCOMMITTEEThe Company does not have a remunerations committee.

REMUNERATIONSTRUCTUREGiven that the members of the Company boards perform duties in the parent company, they are not remunerated by EMEF, save for the statutory auditor – Horwath & Associados, SROC, Lda. – the fees of which amount to EUR 5,395 per annum under the terms of the relevant service agreement.

REMUNERATIONDISCLOSUREThe annual amount of the remunerations paid to the members of the Company’s boards can be seen in the CP (parent company) Annual Report & Accounts.

VI REMUNERATIONS // B.

VI REMUNERATIONS // C.

VI REMUNERATIONS // D.

TRANSACTIONSWITH RELATEDAND OTHERPARTIES

159

VII TRANSACTIONS WITH RELATED AND OTHER PARTIES

The transactions concluded with related parties were those shown in the table below:

INFORMATION ON RELEVANT TRANSACTIONS WITH RELATED ENTITIES

Acquisition of goods & services

CP, EPE

CP CARGA

ECOSAÚDE

FERNAVE

EMEF/SIEMENS, ACE

NOMAD TECH

Sales, provision of services & other income

5 619 679

-

69 671

6 150

37 455

1 226 561

36 904 058

11 880 748

-

-

3 576 062

153 237

Entity

(Euros)

Transactions result from agreements entered into between the parties, orders, invoicing and the payment/collection thereof. Meetings are arranged between the parties to assess the degree of compliance by these with their obligations

In observance of the applicable legal provisions, awards have been publicly disclosed under the terms and by the means established by law.

The Company has internal procurement procedures in place set out in the delegation of powers and duties relating to the authorisation of expenditure.

The suppliers that account for over 5% of Third-Party Supplies and Services and exceed EUR 1 million are shown in the table below:

SUPPLIERS REPRESENTING OVER 5% OF THIRD-PARTY SERVICES & SUPPLIES

C P - COMBOIOS DE PORTUGAL EPE

NOMAD TECH LDA

GESTION MAQUINARIA FERROVIARIA SL

Amounts net of VAT

4 515 438

1 226 531

642 997

Company

(Euros)

ANALYSIS OFTHE COMPANY’SECONOMIC,SOCIAL ANDENVIRONMENTALSUSTAINABILITY

161

VIII ANALYSIS OF THE COMPANY’S ECONOMIC, SOCIAL AND ENVIRONMENTAL SUSTAINABILITY

// ECONOMIC RESPONSIBILITYIn the pursuance of its business, in 2015 EMEF continued to abide by efficiency criteria by way of significant cost containment and the careful rationalisation of resources, processes and procedures, in addition to taking steps to increase its national and international market share.

// ENVIRONMENTAL RESPONSIBILITYEMEF guarantees its commitment to the Environment by way of its Quality, Environment and Safety Policy and its Quality Management System has been certified since the year 2000 in accordance with standard NP EN ISO 9001.

In order to comply with the above, the overall annual internal audit programme focused not only on the requirements of standards NP EN ISO 9001, NP 4427 and Occupational Safety, but also on assessing Environmental Management requirements, thus contributing to the improvement of EMEF’s environmental performance.

In the course of 2015, a number of actions were carried out in the areas of Safety, Quality and Environment, with particular emphasis on the following:

• Waste managementFollowing the national call for tenders launched in late 2014 (with the cooperation of the legal and logistics departments), a new waste management contract was awarded to the company “Renascimento”, which was signed on 6 April 2015).The contract manager ensured the monitoring and management of the overall waste contract in force, covering all the EMEF workshop units. The assessment of this contract/service to date has continued to reveal quite positive performance.

• Environmental LiabilityFurther to the work previously started and following an “Open Consultation” procedure, on 1 July 2015 EMEF contracted specific Environmental Liability insurance, in accordance with Decree-Law no. 147/2008.

• Energy intensive consumption management system (SGCIE – sistema de gestão de consumos intensivos de energia).Under Decree-Law no. 71/2008 of 15 April which regulates the SGCIE, this system also forms part of a plan for the rationalisation of energy consumption and resulting reduction of its cost.


The facilities covered by this system are the Centre Workshop Unit (POC – Entroncamento) and the Northern Workshop Unit (PON – Guifões). In 2015, the 2014 Performance and Progress Reports (REP) provided for by the Agreement for the Rationalisation of Energy Consumption (ARCE) were prepared in order to ascertain the implementation of the previously scheduled actions.

The REP for the POC (Entroncamento) was concluded, delivered and approved by the DGEG - Direção Geral de Energia e Geologia (directorate general for energy and geology) in 2015.

Through its Facilities Maintenance and Safety division, EMEF conducted studies on solutions associated to the recommended energy rationalisation measure (MRE), notably those to improve lighting, taking the existing constraints into account.

• Energy AuditsIn order to comply with Decree-Law no. 68-A/2015 of 30 April, in late 2015 EMEF consulted entities accredited by the DGEG for the realisation of energy audits to the facilities in which EMEF carries on its activity and is party to energy contracts. The DGEG upheld an EMEF application requesting that the energy audit reports for which the above mentioned decree-law refers be postponed to the end of the first semester of 2016.

• Air conditioning equipmentIn 2015, four technicians working in the Centre Workshop Unit were certified for the Handling of Fluorinated Greenhouse Gases (GFEE) in Cooling Equipment under Decree-Law no. 56/2011 of 21 April.

• Liquid and gaseous effluent monitoringLiquid and gaseous effluent monitoring was carried out locally by the Workshop Units, as provided for in environmental procedures and legal requirements, in order to comply with the specified limits.

• Environmental internal and external communications- Delivery of the waste tables and their upload to the SILiAmb Portal (Integrated

System for Environmental Licensing);- Delivery of information to the APA (Portuguese Environment Agency), regarding

the quantity recovered in the handling of greenhouse gases in fixed equipment;

- Incorporation of data for the INE “2014 Management and Protection of the Environment survey “;

- Consolidation and transmission of data to be included in the CP, EPE sustainability report for 2014.

163

• As for the EMEF Workshop Units, the following was implemented:- Analysis and monitoring of requirements relating to the handling of refrigerants,

in order to achieve improvements with respect to liquid and gaseous effluents, solvents, industrial licensing inspections, waste production records, etc.

- Follow-up of monitoring and data transmission plans to the Competent Authorities, notably solvent management plans, annual waste records (SIRAPA) and monitoring of gaseous and liquid effluents.

• Works on the Tractive Stock Workshop – Centre Workshop UnitA technical justification was issued to support the decision relating to works to be performed on the Tractive Stock Workshop to meet environmental improvement requirements.

// SOCIAL RESPONSIBILITY• Gender Equality Principle

The Code of Ethics expressly disapproves any type of discrimination, coercion and harassment notably due to gender and EMEF has an Ethics Committee to which any occurrence, complaint or irregular situation susceptible of constituting the breach of the rules set out in this Code may be reported.

The external recruitment process ensures equal opportunities and treatment of all job applicants.

The EMEF pay and training policies observe the principle of non-discrimination by reason of gender.

The competencies of the EMEF members of staff of both genders are assessed equally in promotions and career advancement and in the access to management or middle management positions.

In absolute terms, the number of women in middle management positions was maintained in 2015 but in percentage terms it decreased compared to 2014.

Senior executives 25

Gender

Female Male

Directors

Department heads

111

QUALIFICATIONS

2014 % 2015 % 2014 % 2015 %

23% 25 23% 86 77% 86 77%

2014 2015

111

2

8

15

25

13%

32%

2

8

11%

32%

13

17

87%

68%

16

17

89%

68%

18

25

Middle management

Highly-qualified & qualified professionals

Semi-qualified professionals

Non-qualified professionals

0

19

1

0

93

824

1

1

0%

2%

100%

0%

0

16

1

0

0%

2%

100%

0%

93

805

0

1

100%

98%

0%

100%

89

761

0

1

100%

98%

0%

100%

89

777

1

1

45 1 0304% 42 4% 985 96% 937 96% 979


• Customer service and level of satisfactionThe maintenance programmes set out in the maintenance agreements specific to each fleet/market segment, performed for the clients CP, CP-Carga and Metro do Porto, were generally complied with for all fleets having contracted maintenance. The average values per market segment weighted against set price, availability and reliability values are shown in the tables below:

Alfa & intercity

Lisbon suburban trains

Porto suburban trains

Porto light rail system

Regional trains

Goods (engine material)

Average annual availability

98%

56%

96%

100%

79%

85%

Market segment

Alfa & intercity

Lisbon suburban trains

Porto suburban trains

Regional trains

Goods (engine material)

Annual reliability(average kilometres travelled between incidents imputable to the rolling stock)

562 716

37 820

390 459

65 032

34 715

Market segment

165

• Hygiene and Safety at workThe following graphs show the progress of the annual values over the last 5 years of some of the most relevant accidents at work indicators (which include commuting accidents).

2015

FREQUENCY RATE (fr)2011-2015

2014201320122011

0

50

100

fr - BAD (WORLD HEALTH ORGANISATION CLASSIFICATION)

fr - AVERAGE

fr - GOOD

fr - VERY GOOD

FREQUENCY RATE (OVERALL)

TREND LINE

fr(number of accidents with sick leave) x 106

number of working hours per man=

41,949,5

37,8

50,543,6

SERIOUSNESS RATE (sr)2011-2015

sr - BAD (WORLD HEALTH ORGANISATION CLASSIFICATION)

sr - AVERAGE

sr - GOOD

sr - VERY GOOD

SERIOUSNESS RATE (OVERALL)

TREND LINE

20152014201320122011

1000

0

2000

3000

888,2

1167,4

611,5

1179,3 1177,6

sr(number lost working days) x 106

number of working hours per man=


Between 2011 and 2015, there has been fluctuation in the overall values of the frequency rate (Fr) and seriousness rate (Sr) indicators.

The comparison between 2014 and 2015 revealed that in 2015 ten less accidents occurred, which translated into a 9.8% overall decrease in the total number of accidents compared to 2014, and a 18.6% decrease in the number of accidents involving sick leave. The number of man hours worked in 2015 and used to calculate the statistical indexes dropped by 6% compared to 2014. The combination of these factors in the calculation of these overall statistical indexes (EMEF) allows for the conclusion that they improved in 2015 vis-à-vis 2014.

• Human resources management

Meetings with the ORT (workers’ organisations)Aware of the importance of close communication with the workers’ representation structures, particularly as regards the understanding of their position on the organisational environment, the relevant aspects of the Company’s day-to-day activity and its future, the Board of Directors and the Executive Management continued their policy of dialogue and frequent meetings with the representatives of the Works Council and of the Unions. Noteworthy are the effort and understanding of the workers’ organisations in the analyses made, the measures adopted and the results obtained throughout the year, which allowed for social stability and a positive working atmosphere, the outcome of which were the good results attained by the Company.

EmployabilityIn 2015, the adjustment of human resources to the workload and to the Company reorganisation continued.

On 31 December 2015, the EMEF staff had 979 members, 96% of which were men and the other 4% women.

167

The staff numbers for the last decade are set out below:

On the same date, all EMEF staff members were bound to the Company under open-ended employment contracts; there were also 14 workers holding a loaning of labour contract, 2 workers under a secondment agreement and another under a public interest loaning of labour agreement.

CHANGES IN STAFF NUMBERS

0,0

0,5

1,0

1,5

2,0

20152014201320122011201020092008200720062005

1 06

9

1 11

0

1 23

31 48

6

1 59

0

1 62

0

1 54

3

1 48

2

1 53

6

979

1 03

0

985

45

937

42

LABOUR TIE

Open-ended employment

contract - workers admitted

directly by EMEF

Open-ended employment

contract - Workers transferred

from CP to EMEF

Loaned labour/Secondment/Public

interest loaned labour

Fixed-term employment contract

Total

402

572

11

0

985

20

19

6

0

45

422

591

17

0

1 030

41,0%

57,4%

1,7%

0,0%

100,0%

42,6%

55,7%

1,7%

0,0%

100,0%

397

529

11

0

937

20

16

6

0

42

417

545

17

0

979

Men Women Total %

2015

Men Women Total %

2014


left the Company (4 were loaned to SIMEF), 38 of which by mutual agreement.

The average age was 47.6 years old and average seniority was of 24.2 years. Both figures increased by approximately half a year compared to 2014.

REASON FOR LEAVING THE COMPANY

Lapsing of loaning of labour contract

Termination by the worker

Death

Disability retirement (+2/3)

Old-age retirement (standard)

Termination by mutual agreement

Assignment of contractual position

Lapsing of fixed-term contract

Total

0

2

0

5

0

30

0

0

37

0

1

0

0

0

3

0

0

4

0

3

0

5

0

33

0

0

41

0

8

2

5

0

38

0

2

55

0

8

2

5

0

35

0

2

52

0

0

0

0

0

3

0

0

3

Men Women Total

2015

Men Women Total

2014

AVERAGE AGE

Workers admitted directly by EMEF

Workers transferred from CP to EMEF

Loaned labour/secondment/Public interest loaned labour

37,1

54,0

50,9

47,7

40,6

56,5

43,7

47,1

37,3

54,1

48,4

47,1

38,4

54,7

49,4

47,6

38,2

54,6

51,9

47,6

41,6

56,6

44,7

47,7

Men Women Total

2015

Men Women Total

2014

AVERAGE SENIORITY



Loaned labour/Secondment/Public interest loaned labour

11,9

32,4

18,9

22,1

11,9

34,6

16,3

23,9

11,9

32,5

18,0

23,8

12,9

33,0

18,9

24,2

12,9

33,0

19,8

24,3

12,9

34,2

17,3

21,7

Men Women Total

2015

Men Women Total

2014

In 2015, the number of staff members continued to decrease. 55 workers

169

EDUCATION

Primary

Secondary

Higher

47,4%

40,0%

12,6%

46,6%

39,1%

10,0%

0,8%

0,9%

2,6%

Men Women Total

EDUCATION



Loaned labour/Secondment/Public interest loaned labour

12,3%

36,8%

0,0%

49,1%

20,7%

18,1%

0,3%

39,1%

7,9%

2,5%

1,4%

11,8%

8,7%

2,8%

1,1%

12,6%

12,6%

34,8%

0,0%

47,4%

21,7%

18,1%

0,3%

40,0%

Primary Secondary Higher Primary Secondary Higher

2014 2015

The characteristics of the EMEF staff in terms of education are shown in the table below by gender and contractual tie:

In 2015, a small percentage increase was registered in the “Higher Education” and “Secondary Education” groups, as was a decrease in the “Primary Education” group. These changes resulted essentially from the departure of staff members.


AbsenteeismAbsenteeism attained 8.81%, this representing a 0.05% decrease compa-red to 2014. The main cause of absenteeism in EMEF continued to be “Illness”, which decreased by 4% compared to the previous year. Absen-ces resulting from “Accidents at Work” remained at the same level as in 2014 and those resulting from “Other” causes registered an 8% increase, essentially due to leaves of absence granted by the Board of Directors in 2015. Absenteeism due to “Strikes” also decreased (3%).

58% ILLNESS

14% OTHER

10% ACCIDENTS AT WORK

8% STRIKE

5% FOUR-MONTHLY DISPENSATION

5% WORKS COUNCIL MEETINGS

CAUSES OF ABSENTEEISM 2014

54% ILLNESS

22% OTHER

10% ACCIDENTS AT WORK

5% STRIKE

5% FOUR-MONTHLY DISPENSATION

4% WORKS COUNCIL MEETINGS

CAUSES OF ABSENTEEISM 2015

171

Vocational TrainingWith a view to developing professional competencies, in 2015 EMEF maintained its policy of providing in-house vocational training.

Thus being, in-house training actions represented 86% of the training hours provided, whereas external training actions corresponded to the other 14%.

89% IN-HOUSE

11% EXTERNAL

EXTERNAL/IN-HOUSE TRAINING IN 2014

EXTERNAL/IN-HOUSE TRAINING IN 2015

86% IN-HOUSE

14% EXTERNAL


1,156 trainees participated in these training actions, distributed among the following qualification levels:

13,490 training hours were given, distributed as follows:

NUMBER OF TRAINEES

HIGHLY-QUAL.& QUAL. PROF.

MIDDLE MANAG.SENIOR EXECUTIVES

1 11

6

900

298

159

135

97

2014

2015

TRAINING HOURS PER QUALIFICATION LEVEL

HIGHLY-QUAL.& QUAL. PROF.

MIDDLE MANAG.SENIOR EXECUTIVES

2014

2015

9 63

0

10 4

50

2 94

6

1 64

9

1 39

1

1 20

5

173

Human Resources Management SystemEMEF has a Human Resources Management System (SGRH) based on Portuguese Standard 4427:2004, the certification of which was renewed by APCER (Portuguese Certification Association) in 2015.

In 2015, SGS conducted a monitoring audit to the Human Resources Management System certification in accordance with the same Portuguese Standard, which was successfully completed.

The works to implement the “Competencies Matrix” for all operational activities carried on by the Company continued in 2015, in order to guarantee and prove that workers possessed the necessary competencies to perform their tasks with regard to the provision of Maintenance services.

The EMEF Human Resources Policy acknowledges that Social Responsibility is the reference for Human Resources management and is aimed at fulfilling the following objectives:

1. To promote the personal and professional well-being of the Company staff;

2. To promote the continued updating of its staff’s academic, technical and professional competencies in order to adequately meet the current and future needs of the Company’s activity;

3. To promote and heighten the effectiveness of the Human Resources Management System by continuously seeking to improve the methods and techniques to be adopted in observance of the Company level Agreements and of the applicable provisions of the law.

In 2015, EMEF granted 29 curricular internships, offering practical training in a work environment.

Regular meetings were held with the Company’s Works Council.

A survey to assess the level of in-house satisfaction was conducted.

In order to enable the staff to conciliate their working and family and personal life, the following are made available:

• Flexible working hours provided these are compatible with their duties;• Leave of absence for one day every four months, without pay, pursuant to the legal

provisions governing the “effects of justified absences”;• The possibility of taking 6 (six) holiday working days in half-days.

As regards health and social support, EMEF guarantees its staff members:

• The payment of a supplement to the Social Security sick pay;• The payment in full of their net pay where they suffer temporary total disability

resulting from an accident at work;• Health insurance;• Personal injury insurance;• Pre-school allowance (for workers with children in day care, kindergarten or

childminders registered with Social Security).

CORPORATEGOVERNANCEASSESSMENT

175

In continuing its effort to restructure and consolidate the changing process started a few years back and in light of the results for the various indicators and other information contained in this report, the Board of Directors believes that EMEF complied with the established principles of Good Governance.

In the economic, financial, social and environmental areas, the indicators generally reveal to have gone beyond expectations, this pointing to compliance with the Good Governance principles, as the Company improved its competitiveness and quality without neglecting the principles of social responsibility, sustainable development and respect for the users of rail transport and for its Clients.


IX CORPORATE GOVERNANCE ASSESSMENT


Chairman Member

Manuel Tomás Cortez Rodrigues Queiró Nuno Serra de Sanches Osório

Serviços CentraisRua das Indústrias, 21

2700-460 AMADORAPORTUGAL

Tel.: (+351) 211 027 700 Fax: (+351) 213 578 875

[email protected]

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