J.P. Sá Couto, SA – Financial Statements

0 J.P. Sá Couto, SA – Financial Statements


TABLE OF CONTENTS

Management Report ...................................................................................................................................................................... 1

Financial statements - Balance Sheet as at 31 December 2014 and 2013 15

- Income Statement by Nature for the periods ended 31 December 2014 and 2013 16

- Cash Flow Statement for the periods ended 31 December 2014 and 2013 17

- Statement of Changes in Equity for the periods ended 31 December 2014 and 2013 18

Notes to the Financial Statements 1. Introduction .......................................................................................................................................................................................... 21

2. Accounting standards used in the preparation of the financial statements ..................................................................... 21

3. Summary of significant accounting policies ................................................................................................................................ 25

4. Cash flow – Cash and cash equivalent .......................................................................................................................................... 37

5. Tangible assets ................................................................................................................................................................................... 37

6. Intangible assets .................................................................................................................................................................................. 38

7. Financial Investments......................................................................................................................................................................... 39

8. Deferred tax assets ............................................................................................................................................................................ 41

9. Inventories ............................................................................................................................................................................................ 41

10. Trade debtors ...................................................................................................................................................................................... 42

11. Advances to suppliers ........................................................................................................................................................................ 43

12. State and other public entities ......................................................................................................................................................... 43

13. Other debtors ...................................................................................................................................................................................... 44

14. Deferred expenses ............................................................................................................................................................................. 44

15. Other financial assets ........................................................................................................................................................................ 45

16. Share Capital ........................................................................................................................................................................................ 45

17. Legal reserves ...................................................................................................................................................................................... 45

18. Other reserves .................................................................................................................................................................................... 46

19. Provisions .............................................................................................................................................................................................. 46

20. Borrowings ............................................................................................................................................................................................ 46

21. Trade creditors .................................................................................................................................................................................... 47

22. Advance payments from clients .................................................................................................................................................... 48

23. Other creditors .................................................................................................................................................................................... 48

24. Other financial liabilities .................................................................................................................................................................... 49

25. Sales and services rendered ............................................................................................................................................................ 49

26. Increase / decrease in production ................................................................................................................................................. 49

27. Costs of good sold and materials consumed ............................................................................................................................. 50

28. External supplies and services ........................................................................................................................................................ 50

29. Personnel expenses ........................................................................................................................................................................... 51

30. Other operating income .................................................................................................................................................................... 51

31. Other operating expenses ................................................................................................................................................................ 52

32. Amortisation and depreciation losses / reversals ..................................................................................................................... 52

33. Interest and similar income / similar expenses .......................................................................................................................... 52

34. Income taxes ........................................................................................................................................................................................ 53

35. Dividends and earnings per share .................................................................................................................................................. 54

36. Related parties ..................................................................................................................................................................................... 55

37. Subsequent events ............................................................................................................................................................................. 56

38. Contingencies ...................................................................................................................................................................................... 56

39. Guarantees provided .......................................................................................................................................................................... 57

40. Environmental information ............................................................................................................................................................... 57

41. Legally required information ............................................................................................................................................................ 57

42. Financial statements approval ......................................................................................................................................................... 58

Statutory Audit Report ............................................................................................................................................................ 59



FINANCIAL YEAR 2014

In compliance with the articles 65 and 66 of the Portuguese Commercial Company Law, we hereby submit for

your consideration the Management Report, Financial Statements and related documents required by law or

regulation concerning J.P. Sá Couto, SA (hereinafter, JP-IK), for the period ended 31 December 2014.

1. BUSINESS REVIEW AND COMPANY POLICY

As forecasted in the previous management report, the instability felt in Venezuela in terms of obtaining loans

and foreign currency for payments abroad, led to a revenue decrease of JP-ik, although smaller than originally

forecasted.

In fact, the difficulties felt by Venezuela (main market of JP-ik in recent years) resulted in the country buying the

equipment that it had until then purchased from JP-ik directly from China (due to financing constraints). JP-ik

managed to maintain its positioning in this market: directly through the supply of services in this country,

through a contract drawn up between YOUTSU (ACE 50 % owned by JP-ik) and a Chinese Company, and

indirectly through the supply of some raw materials to that same Chinese Company. In this way we managed to

ensure that the project continues along the lines initially drawn, without JP-ik having to take on Venezuela’s

country risk.

REVENUE EVOLUTION (MILLION EUROS)

53 62 65 73 69 6497

165

280

222

370356

427

331

0

50

100

150

200

250

300

350

400

450

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014


This means that the decrease in revenue of about 96 million euros (-22%) to 331 million euros was essentially

due to the shift from the supply of equipment (hardware) to the provision of services in Venezuela, which is a

route that JP-ik wants to consolidate in other projects.

REVENUE BREAKDOWN BY SEGMENTS AND MARKETS

2010 2011 2012 2013 2014

Distribution 76.881.767 € 90.781.140 € 116.693.613 € 127.404.622 € 123.207.367 €

TSUNAMI 10.094.949 € 6.145.250 € 4.657.871 € 4.941.108 € 2.299.679 €

E-Escolas Project 12.557.080 € - € - € - € - €

Education 122.766.717 € 272.861.406 € 234.971.135 € 294.722.165 € 205.947.889 €

Bolivia - € - € - € - € 44.126.625 €

Venezuela 97.692.692 € 155.066.307 € 154.641.362 € 189.896.774 € 43.943.148 €

Argentina - € 65.383.393 € 21.921.036 € 42.398.051 € 42.879.655 €

Brazil 792 € 245 € 478.507 € 4.081.271 € 23.832.192 €

Panama - € 1.587 € 23.571.328 € 10.521.167 € 16.103.476 €

Peru - € - € - € 281.251 € 7.487.697 €

Uruguay 3.098.685 € 7.856.310 € 12.442.478 € 9.523.502 € 4.994.315 €

Taiwan - € - € - € 2.771.685 € 4.987.443 €

Saudi Arabia - € - € - € 1.144 € 3.500.355 €

Spain - € 20.079 € 3.151.514 € 824.260 € 3.227.641 €

Mexico - € 457.841 € 2.323.863 € 18.870.783 € 1.344.105 €

Zimbabwe - € - € - € 538.905 € 1.272.739 €

South Africa - € - € - € 234.454 € 1.123.001 €

Nigeria 766.939 € 214.256 € 2.268.415 € 1.062.443 € 720.928 €

United Kingdom 51.826 € 77.352 € 1.113.416 € 1.398.172 € 716.469 €

Portugal 242.325 € 447.172 € 158.790 € 86.185 € 617.825 €

Colombia - € - € - € 623.345 € 569.848 €

British Virgin Islands - € - € 64.974 € 1.234.308 € 232.611 €

USA 324.528 € 392.357 € 1.126.104 € 1.113.577 € 206.446 €

Egypt - € - € 60.651 € 2.401.635 € 187.614 €

Sweden 714 € 2.278 € 574.300 € 246.737 € 147.262 €

Angola - € - € 808.967 € 845.781 € 121.535 €

Israel - € 969.225 € 1.327.729 € 59.402 € 109.774 €

Ireland - € 100.623 € 472.469 € 35.454 € 35.489 €

Paraguay 138.261 € 215.213 € 5.910.401 € 1.160.666 € 17.487 €

Hungary 1.765.296 € 970.411 € 2.292 € 2.531 € 7.282 €

The Netherlands - € - € 158.636 € 433.255 € 1.414 €

Costa Rica 305.725 € 864.574 € 178.537 € 52.268 € 1.150 €

Chile - € 364.488 € 593.956 € 470.489 € 1.055 €

Gabon - € - € 506.371 € 1.762.404 € - €

E-Escolinhas Project 18.009.540 € 38.239.844 € - € - € - €

Honduras - € - € - € 466.361 € - €

Other 369.394 € 1.217.851 € 1.115.038 € 1.323.904 € 3.431.309 €

TOTAL 222.300.514 € 369.787.795 € 356.322.618 € 427.067.896 € 331.454.934 €

Considering the above table, which represents a division of the revenue by business area, it becomes evident

the significant decrease recorded in the Venezuela project (it is worth noting that we continue to identify the

Venezuela project as such, even though this project was, in 2014, exclusively materialised through China, and

the amounts presented as income result from the sale of raw materials to the Chinese entity that started

supplying the country directly, as already mentioned).


Thus, if only in relation to the Venezuela project there was a reduction in the revenue of about 146 million euros

(- 77 %), if we were to exclude this project, the revenue of JP-ik would have had a positive evolution of about 50

million euros (21 %) from 2013 to 2014. Performing the same exercise by removing the Venezuela project only

from the Education business area, we see a greater emphasis in the growth recorded in other geographies

(growth of 57 million euros: about 54 %).

Other aspects to consider:

The Distribution Business Area (without TSUNAMI) suffered a reduction of 3.1 % (-4 million euros in

2013 to 2014): this reduction ends up being positive for the Company in terms of business profitability,

since during 2014 the major supply contracts were renegotiated with the large national retail chains,

decreasing the discount levels granted: this renegotiation was very difficult and we were concerned

that its impact on sales could have been much higher. However, since this particular business was not

being profitable, this measure was required in order to find ways of providing the business with sufficient

means of support. We know that, however, since the greatest impact is going to be felt during 2015,

further revenue reductions are likely to take place, although further renegotiations may occur, always

with the ultimate goal of ensuring a minimum profitability that ensures the business structure. These

renegotiations can encompass the customers, as well as the actual manufacturers, making them see

the importance of increasing the distribution margin that, based on characteristics of the business and

the risks associated to it, has been clearly reduced.

Maintain a very significant level of exports, representing about 63 % of the Company’s total turnover

(69 % in 2013).

Implementing the first phase of the BOLIVIA project, for which a branch was created in 2014 (whose

accounts are integrated in those of JP-ik, contained in this report). It should be noted that this project

resulted from the signing alongside a Bolivian Public Company of a USD 57 million contract (to be

executed in 2014), as a result of the successful award in a public international tender launched by the

Government of Bolivia. This contract was of particular importance, for it resulted in new contractual

additions (in 2014, there was an award for a new additional order of 60,000 computer kits to be delivered

during 2015, and additional orders of 280 thousand computer kits for 2015 in the process of being

awarded); the project is thus likely to achieve the size and scale of the contracts implemented in

Venezuela until 2013. Moreover, Bolivia today presents itself as a country with a stability that promotes

business growth and the implementation of a major Education project by JP-ik, including components

that go beyond the simple sale of equipment (such as those of industrial consulting on the


implementation of an assembly line, educational training for teachers, the implementation of school

infrastructure with our pop-up school, etc.,).

Expand the international market to an even greater number of countries (some of which already have

a significant expression) that allow us to optimistically envisage the continuity of international business.

Strengthen the network of international partners that, besides ensuring a recurring international sales

revenue, also guarantee our proximity to any major business opportunities that may arise almost

anywhere worldwide. In this way we continue to reinforce the international visibility of JP-ik, by

continuing to invest in new product development and solutions focused on the Educational market,

seeking to address the actual environment of high competitiveness and global turbulence and leverage

off the added value that our project represents to JP-ik and its stakeholders.

SALES in EUR 2011 2012 2013 2014

Domestic market .120.330.451 € 117.883.698 € 5 % 131.619.967 € 12 % . 124.155.726 € - 6 %

Foreign market 249.457.344 € 238.438.921 € 131 % 295.447.928 € 24 % 207.299.208 € - 30 %

TOTAL 369.787.795 € 356.322.618 € 66 % 427.067.896 € 20 % 331.454.934 € - 22 %

Summing up, although JP-ik has recorded a decrease in revenue in the domestic (mainly resulting from the

Distribution business) and international market (mainly resulting from Education business), this reduction was

accompanied not only by a set of internal measures aimed to provide the Company with flexibility to overcome

any periods of greater difficulty (with processes and procedures restructuring to increase efficiency and

effectiveness), but also through an expansion work of its core skills in terms of services that allows the

forecasting of the future in a more optimistic manner, less dependent on equipment sales, thereby increasing

the sustainability levels, with a clear focus on profitability rather than volume.

This means that the Company's policy for the coming years will be to continue strengthening the integrated

services component in projects implemented at an international level, with the ultimate goal of increasing the

profitability generated by the business. This policy of focusing on profitability will also be followed in the

Distribution market, even if this means a downward adjustment of the revenue (which we will seek to mitigate

with a product portfolio that is much richer, diversified and capable of producing higher added value, not only

for the Company but also if not mainly - for the customer). We will continue to guide our actions with the

objective of increasing the perceived level of our value proposition, seeking to attract new customers, but

above all to create lock-in mechanisms that increase the loyalty levels of customers and current partners, which

continue to be the most valuable assets of JP-ik.


It is through the success of our customers and partners that we want to continue to maintain our success!

Note also that, after years of investigation associated with the case known as "VAT Carousel" (Case No 11/02.1

TELSB), the trial finally took place between 23rd September 2013 and 19th February 2014, and the outcome

thereof (in March 2014) confirmed the inevitable: acquittal requested by the public prosecution itself, an

unmistakable sign that the entire proceedings were unfounded. JP-ik suffered significant financial and image

losses in the defence process, mainly due to the bad publicity that it had received over the past few years. We

only wish to give a word of thanks to all those who believed in JP-ik and remained at our side. They have been

and will be an integral part of our success.

2. INVESTMENT

During 2014, total investment stood at 1.9 million euros, and the main investments were related to:

Completion of projects started in 2012 and 2013: improvement and rehabilitation of the Perafita

facilities and restructuring of the Company’s Information systems. In these two items the total

investment allocated for the 2014 financial year was of about 549 thousand euros and 384 thousand

euros, respectively.

An advance regarding the acquisition of a plot of land with 8,000 m2 located behind the headquarters

of JP-ik, which will be used for the purposes of building a car park for the employees and a separate area

for loading and unloading. Of the global price of 330,000 euros, 150,000 euros have already been paid

(the remaining 180,000 euros will be paid at the time of the deed).

Preparation of a preliminary study for transformation of the land in front of JP-ik into an industrial area

with the construction of warehouses, including a feasibility and investor prospecting study. Investment

of about 300 million euros, with a view to profiting from the land held by the Company (which was

acquired in previous years for the construction of the new facilities of JP-ik, a project since then

abandoned).

Acquisition of basic equipment, office and transport, in a total of 293 thousand euros.

In terms of intangible assets, in 2014 JP-ik completed the challenging project initiated in 2012 to improve

processes, spearheaded in two distinct areas: the design of a Supply Chain Management system capable of

meeting the requirements of an increasingly international market and the reengineering of computer systems


and processes, with the adoption of a new ERP (even though the above projects were initiated in 2012, with

2013 being the year in which part thereof entered in production, some components were completed in 2014).

3. EXPENSES AND INCOME

Through the evolution of the activity of JP-ik, in particular with the strengthening of the services component in

the international projects implemented during 2014, it was possible to see an increase in the gross margin of

1.9 p.p. (from 6.8 % in 2013 to 8.7 % in 2014). This evolution turned out to be one of the defining factors for the

year. Apart from being an embodiment of the defined strategy it also allowed the accommodation of the

recorded decrease of 96 million euros in revenue. In fact, even with this substantial reduction, JP-ik released a

margin in 2014 of 29 million euros, up 24 thousand euros to that registered in 2013.

Also noteworthy was the financial performance obtained by YOUTSU (joint venture held 50 % by JP-ik), which

in 2014 amounted to 3.432 thousand euros (in 2013: 4.121 thousand euros), recorded in the income statement

under the caption ‘Gains / losses in subsidiaries, associates and joint ventures’, and in the balance sheet under

the caption ‘Financial Investments - equity method’. It should be noted that in 2014 YOUTSU only had in its

results 1.5 million euros relating to the service agreement signed with the Chinese Company, of a total

contracted amount of 36 million USD.

In terms of External Supplies and Services (which had an overall increase of about 1.8 million euros), we highlight

as major contributions:

- Subcontracts increase due to maintenance and support of equipment delivered under the Panama

and Peru projects (reaching a total of 1.2 million euros compared to 4 thousand euros in 2013);

-Increase on transport of goods of about 1 million euros, mainly due to the Bolivia project.

Regarding personnel expenses, the registered decrease (about 656,000 euros) resulted from the continuation

of our human resources optimisation strategy given the resources freed by the business and the need for

adjustment due to the planned reduction in turnover for 2014. Therefore, apart from some specific outputs,

adjustments were also made in terms of variable remuneration, as well as a reduction in the Directors’

remuneration.

It is worth highlighting the reversal of inventory impairments in the amount of 1 million euros, resulting from the

sale of material for a higher amount than that estimated to be possible in 2013.


As a result of the above, and despite the very negative impact of the financial exchange rate differences (total

net unfavourable difference of about 6 million euros), EBITDA1 showed a favourable growth of 58 %, reaching

almost 30 million euros and representing 6.2 % of the turnover, as can be seen in the table below:

2012 2013 var. 2014 var.

Revenue 356.322.618 427.067.896 20 % 331.454.934 - 22 %

Gross Margin 24.222.191 28.976.637 20 % 29.000.780 0 %

EBITDA 1 18.173.853 12.589.766 - 31 % 19.907.826 58 %

EBT (Earnings Before Taxes) 14.655.510 9.055.159 - 38 % 9.832.664 9 %

Net Profit 10.317.819 6.736.001 - 35 % 7.268.349 8 %

Net Cash Flow 2 10.875.601 9.406.460 - 14 % 7.563.720 - 20 %

_____________________________________________

1 Given by Profit before depreciation, financial expenses and taxes less Provisions (increases/reductions). 2 Given by Net Profit less Amortisation and depreciation expenses, Provisions, Inventories impairment and Trade debtors impairment,

We continue to see that, against a backdrop of domestic and international financial and economic crises, the

economic performance of JP-ik and notwithstanding the reduction in turnover registered in 2014, continues

to be very favourable. The Company continues to pursue a successful path, guided by the demand of the

healthier markets and the offer of differentiating and aggregated solutions that bring added value to the final

customer, which enables it to continue to be distinguished in the domestic and international scene and

deserving of the confidence of all its stakeholders.

4. RISKS AND UNCERTAINTIES

The Company’s activity is exposed to a variety of financial risks: market risk (including interest rate and

exchange rate risk), credit risk, liquidity risk, and capital risk.

In this context, it implemented an integrated risk management program, which sought to minimise the potential

adverse effects of these risks on the financial performance of the Company, through specific coverage policies.

Given that exchange risk can produce the most potentially adverse effects, through the Company’s

international presence, JP-ik opted for a natural hedging of this risk, by using USD throughout the entire

international business – purchases, sales, debt and all other related transactions are denominated in USD. In

this way, although in accounting terms significant exchange rate variations may occur, since the actual currency

flows are all performed in USD, no actual losses or gains occur, assuming the continuity of operations.


Another risk to which JP-ik is particularly attentive is credit risk. In this regard, in the domestic market the

Company has contracted a credit insurance policy, and on international sales, in addition to this instrument, JP-

ik also insures itself through letters of credit or similar mechanisms.

5. RELEVANT FACTS OCCURRED AFTER YEAR END

JP-IUSA, a joint venture formed in early 2015 by JP Sá Couto, SGPS S.A. and the Mexican group IUSA took part

in April 2015, in a public tender for the distribution of 960 thousand tablets to the Secretary of Public Education

of Mexico (a deal that exceeds 100 million USD). The devices are intended for fifth grade public school students

in 15 Mexican states.

The Secretary for Public Education of Mexico (SEP) announced JP-IUSA as the winning entity of the public

tender for the delivery of the one thousand educational tablets to students in the fifth grade during the following

school year of 2015-2016.

We believe this will be the first of several large-scale projects that we may implement in Mexico. The choice of

JP-IUSA reflects the quality of the solutions we have developed for Education, but also the strength of our

strategic partnerships.

With a presence in Mexico since 2010 and 120 thousand educational devices delivered to date, the partnership

with the IUSA Group and this new public project reinforces the growth of JP-ik in the country.

There are no facts or events that occurred after year’s end that require adjustments and/or disclosure in the

Company’s Financial Statements.

6. OUTLOOK

Seeking to ensure the sustainability and future growth of JP-ik, in 2015 we will continue to consider as priorities

the following actions defined in 2014:

Education Segment:

- Continue the development of new educational products, considering the touchscreen technology;

new versions of products already developed in 2014 (Tablets and Detachables) will be created, to


deal with the latest technological developments. In 2014 we have already started the marketing of

some of these devices.

- Reinforce and consolidate the services area in the field of Education, namely in the field of

classroom infrastructure and pedagogical training.

- Increase the number of projects and sales in several countries. The main projects foreseen for

2015 will be those of Bolivia and Mexico, although the latter will not be executed directly by JP-ik, but

through the Mexican subsidiary of the JP Group. There are also good prospects for South Africa in

addition to the traditional markets of South America.

- Increase the focus on the first global brand of educational equipment for private use created in

2014 by JP-ik ("Mymaga"). After the first pilot projects carried out in Germany, France and the United

Kingdom still in 2014, for 2015 the prospects are to broaden the project to other European

countries.

Distribution Segment:

- The year of 2015 will primarily be one of process optimisation and profitability increase, as opposed

to sales increase.

- Extend the portfolio of official Distribution of main market brands, seeking to create a product mix

that will enable an increase of the margin and at the same time strengthen the position of one of the

largest and best national distributors.

- Offer traditional Distribution customers a set of complementary services and solutions to

business, enabling actions of cross-selling with other Group companies and allowing the

improvement of the value proposition that JP-ik has to offer the market.

7. DEBTS TO TAX ADMINISTRATION AND SOCIAL SECURITY

In compliance with all due legal dispositions, we hereby state that as at 31st December 2014 there were no

overdue debts to the State or to the Social Security and that the Company punctually pays all taxes and

contributions to which it is bound.


8. HUMAN RESOURCES AND SOCIAL SERVICES

The average number of workers in JP-ik during 2014 was 243 employees (2013: 254).

The Company employs a young team of highly qualified staff who stand out for their great flexibility, ability to

operate in an efficient and coordinated fashion, and strict customer orientation.

Within the sphere of the training policy, in 2014 we continued with the development of specific occupational

valuation programs, reinforcing the technical, personal and social development component of some positions,

as well as the aptitude for the use of new technologies as a way of increasing productivity and the quality of the

products and services offered by our Company.

9. OTHER INFORMATION

Own shares [art. 66, no. 5 – d) of the Portuguese Commercial Company Law]

The Company has not acquired or alienated its own shares during the 2014 financial year, nor does it own any

such shares as at 31st December 2014.

10. FINAL REFERENCES

The Board of Directors wishes to thank all those that collaborated with the Company in 2014, namely the

following:

- The Official Entities and Financial Institutions with whom we work, for their provided support and the

confidence shown;

- Our clients and suppliers, for their preference, with our best wishes that they may maintain a long-

lasting relationship with our Company;

- The Statutory Auditor, External Auditors and to all the consultants who have assisted us, for their

assistance and expertise;

- All our staff, for their dedication, competence, and understanding.

- To all the shareholders, especially to J. P. Sá Couto SGPS S.A. for the support in achieving the goals

and for continuing to believe in the project.


11. PROPOSED APPROPRIATION OF PROFITS

As for the positive Net Profit of 7.268.349,11 euros, we propose the following application:

Free Reserves 6.768.349,11 €

Distribution of Dividends 500.000,00 €

Furthermore, we propose the attribution to the Company’s employees as a participation in its net profit, of the

amount of 500.000,00 euros. This amount was recognised as an expense in 2014’s financial statements.

Perafita, Matosinhos, 15th May 2015

The Board of Directors,

JORGE MANUEL F. M. SÁ COUTO JOÃO PAULO F. M. SÁ COUTO

(CHAIRMAN) (VICE-CHAIRMAN)


ANNEXES REFERRING

PORTUGUESE COMMERCIAL COMPANY LAW

ARTICLE 447 OF THE PORTUGUESE COMMERCIAL COMPANY LAW

Shares held by members of the Governing Bodies and respective transactions:

BOARD OF DIRECTORS

OPENING

BALANCE

01/01/14

ACQUISITIONS DISPOSALS

CLOSING

BALANCE

31/12/14

QTY. DATE QTY. AVERAGE

VALUE DATE QTY.

AVERAGE

VALUE QTY.

Jorge Manuel F. M. Sá Couto 6.000 - - - - 6.000

João Paulo F. M. Sá Couto 12.100 - - - - 12.100

ARTICLE 448 OF THE PORTUGUESE COMMERCIAL COMPANY LAW

Annex referred to in article 448 of the Portuguese Commercial Company Law

SHAREHOLDERS OF JP-ik No. SHARES HELD ON 31/12/2014

J.P. SÁ COUTO SGPS, S.A. 2.475.000

SHAREHOLDERS OF J.P. SÁ COUTO, SGPS, S.A. No. SHARES HELD ON 31/12/2014

Jorge Manuel F. M. Sá Couto 4.999.775

João Paulo F. M. Sá Couto 4.999.775


JORGE MANUEL F. M. SÁ COUTO

(CHAIRMAN)

JOÃO PAULO F. M. SÁ COUTO

(VICE CHAIRMAN)



JP SÁ COUTO, SA

BALANCE SHEET AS AT 31 DECEMBER 2014 AND 2013 (Amounts in EUR)

ASSETS Notes 31.12.2014 31.12.2013

Non-current assets:

Tangible assets 5. 7.086.374 6.260.122

Intangible assets 6. 1.129.323 1.068.972

Financial investments - equity method 7. 3.432.288 4.121.255

Financial investments - other methods 7. 35.251 34.625

Deferred tax assets 8. 285.577 407.714

Other debtors 13. 443.100 272.751

Total non-current assets 12.411.913 12.165.441

Current assets:

Inventories 9. 65.376.591 32.277.537

Trade debtors 10. 76.112.963 98.543.083

Advances to suppliers 11. 1.083.777 1.248.090

State and other public entities 12. 1.655.819 1.385.626

Other debtors 13. 7.750.561 7.343.308

Deferred expenses 14. 250.063 245.049

Other financial assets 15. 250.000 250.000

Cash and cash equivalents 4. 9.340.065 13.393.112

Total current assets 161.819.840 154.685.806

TOTAL ASSETS 174.231.753 166.851.247

EQUITY AND LIABILITIES 31.12.2014 31.12.2013

EQUITY:

Share capital 16. 2.500.000 2.500.000

Legal reserves 17. 500.000 500.000

Other reserves 18. 25.091.033 22.426.901

Net profit 7.268.349 6.736.001

Total Equity 35.359.382 32.162.902

LIABILITIES

Non-current liabilities:

Provisions 19. 977.201 1.352.433

Borrowings 20. 2.400.336 3.704.243

Total non-current liabilities 3.377.536 5.056.676

Current liabilities:

Trade creditors 21. 67.852.680 67.012.493

Advance payments from clients 22. 289.781 251.306

State and other public entities 12. 3.650.325 4.307.347

Borrowings 20. 57.239.652 34.763.977

Other current creditors 23. 6.462.397 23.201.903

Other financial liabilities 24. - 94.644

Total current liabilities 135.494.835 129.631.670

TOTAL LIABILITIES 138.872.371 134.688.346

TOTAL EQUITY AND LIABILITIES 174.231.753 166.851.247

THE ACCOMPANYING NOTES FORM AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

The Chartered Accountant, The Board of Directors,

Pedro Lopes Jorge Sá Couto

T.O.C. No. 68609 João Paulo Sá Couto


JP SÁ COUTO, SA

INCOME STATEMENT BY NATURE

FOR THE PERIODS ENDED 31 DECEMBER 2014 AND 2013

(AMOUNTS IN EUR)

Notes 31.12.2014 31.12.2013

Sales and services rendered 25.;36, 331.454.934 427.067.896

Gains/losses in subsidiaries, associates and join ventures 7. 3.432.288 4.121.255

Increase / (decrease) in production 26. 5.174.332 6.570.352

Cost of goods sold and materials consumed 27. (307.628.486) (404.661.610)

External supplies and services 28. (10.173.634) (8.339.883)

Personnel expenses 29. (7.086.429) (7.742.925)

Inventory impairments (losses /reversals) 9. 1.052.347 (1.177.212)

Receivables impairments (losses /reversals) 10.; 13. (701.044) (409,573)

Provisions (increases / decreases) 19. 375.232 (291.833)

Other operating income 30.; 24. 10.599.874 7,041.580

Other operating expenses 31. (6.216.355) (9.880.114)

Earnings before depreciation, interest and taxes 20.283.058 12.297.933

Amortisation and depreciation (losses / reversals) 32. (1.021.905) (791.841)

Operating income (before financing costs and taxes) 19.261.153 11.506.092

Interest and similar income 33. 2.203.791 8.722.030

Interest and similar expenses 33. (11.632.280) (11.172.962)

Earnings before taxes 9.832.664 9.055.159

Income taxes 34. (2.442.177) (2.314.741)

Deferred taxes 34. (122.137) (4.417)

Profit for the year 7.268.349 6.736.001

Basic earnings per share 35. 2.91 2.69






JP SÁ COUTO, S. A.

CASH FLOW STATEMENT

FOR THE PERIODS ENDED 31 DECEMBER 2014 AND 2013

(Amounts EUR)

Notes 31.12.2014 31.12.2013

Operating Activities

Receipts from trade debtors 420.500.634 415.492.736

Payments to trade creditors (375.524.521) (380.465.605)

Payments to personnel (6.762.903) (7.493.251)

Net cash flow from operations 38.213.210 27.533.879

Payment/receipt of income taxes (448.246) (2.936.976)

Other receipts/payments 5.362.745 (6.817.459)

4.914.499 (9.754.435)

Cash Flow from Operating Activities (1) 43.127.708 17.779.444

Investment Activities

Payments regarding:

Tangible fixed assets (1.364.050) (1.883.067)

Intangible assets (273.494) (447.380)

Financial investments - (2.115)

(1.637.544) (2.332.561)

Receipts from:

Tangible fixed assets 40.996 -

Interest and similar income 229.016 222.820

Dividends 4.121.693 5,597.051

4.391.705 5.819.872

Cash Flow from Investment Activities (2) 2.754.161 3.487.310

Financing Activities

Receipts from:

Borrowings 334.182.860 252.924.320

334.182.860 252.924.320

Payments regarding:

Borrowings (368.270.547) (255.381.877)

Interest and similar expenses (6.305.269) (5.501.688)

Dividends (4.100.000) (5.006.300)

Other financing operations (4.720.072) -

(383.395.887) (265.889.865)

Cash Flows from Financing Activities (3) (49.213.027) (12.965.545)

Net decrease/increase in cash and cash equivalents (1+2+3) 4. (3.331.158) 8.301.209

Foreign exchange rate effect (721.889) -

Cash and cash equivalents at the beginning of the year 4. 13.393.112 5.091.903

Cash and cash equivalents at end of the year 4. 9.340.065 13.393.112






JP SÁ COUTO, SA

STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED DECEMBER 31, 2014 (Amounts in EUR)

Notes Share capital Legal reserves Other reserves Net Profit Total Equity

BALANCE AS AT 1ST JANUARY 2014 (1) 2.500.000 500.000 22.426.901 6.736.001 32.162.902

Changes in the period - - 6.736.001 (6.736.001) -

Appropriation of profits

Other changes in equity - - 28.131 - 28.131

(2) 2.500.000 500.000 29.191.033 - 32.191.033

Net profit for the period (3) 7.268.349 7.268.349

Comprehensive income (4=2+3) 7.268.349 7.268.349

Operations with shareholders

Dividends Distribution 18. - - (4.100.000) - (4.100.000)

(5) - - (4.100.000) 7.268.349 (4.100.000)

BALANCE AS AT 31ST DECEMBER 2014 (1+2+3+5) 2.500.000 500.000 25.091.033 7.268.349 35.359.382

The Chartered Accountant,





JP SÁ COUTO, SA

STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 31 DECEMBER 2013 (Amounts shown in EUR)

The Chartered Accountant,




Notes Share capital Legal reserves Other reserves Net income for the period Total Equity

BALANCE AS AT 1ST JANUARY 2013 (1) 2.500.000 500.000 17.109.082 10.317.819 30.426.901

Changes in the period

Appropriation of profits - - 10.317.819 (10.317.819) -

(2) 2.500.000 500.000 27.426.901 - 30.426.901

Net profit for the period (3) 6.736.001 6.736.001

Comprehensive income (4=2+3) 6.736.001 6.736.001

Operations with shareholders

Dividends Distribution 18 - - (5.000.000) - (5.000.000)

(5) - - (5.000.000) 6.736.001 (5.000.000)

BALANCE AS AT 31ST DECEMBER 2013 (1+2+3+5) 2.500.000 500.000 22.426.901 6.736.001 32.162.902




NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31ST DECEMBER 2014 AND 2013

1. INTRODUCTION

J.P. Sá Couto, SA (hereinafter, JP-ik) has its headquarters at Rua da Guarda, 675, Perafita, Matosinhos. The

Company was incorporated by public deed on 3rd March 1989 as a private limited Company, and was converted

into public limited liability Company in 2004. 99 % of the Company is owned by J. P. Sá Couto, SGPS, S.A.,

headquartered in the same building.

The Company’s main activity is the manufacturing of computers and the distribution of informatics

components, which accounts for 100 % of the revenue.

On 14th April 2014, JP Sá Couto, SA – Bolivia Branch, a Company with its headquarters in La Paz, Bolivia, was

incorporated.

It is the opinion of the Board of Directors that these Financial Statements reflect truthfully and accurately the

operations of JP-ik, as well as its position and financial performance and associated cash flows.

2. ACCOUNTING STANDARDS IN THE PREPARATION OF THE FINANCIAL

STATEMENTS

A) BASIS OF PREPARATION

In 2014 the financial statements of JP-ik were prepared according to the Portuguese Local GAAP - Accounting

Normalisation System (SNC), which comprises the Accounting and Financial Reporting Standards (NCRF),

adapted by the Commission of Accounting Standards (CNC) from the International Financial Reporting

Standards (IFRS -formerly known as International Accounting Standards) issued by the International

Accounting Standards Board (IASB) and adopted by the European Union (EU).

The preparation of financial statements in compliance with the NCRF requires the use of estimates,

assumptions and critical judgments in the process of determining the accounting policies to be adopted by JP-

ik, with significant impact in the carrying amount of assets and liabilities, as well as the income and expenses for

the reporting period.


Although these estimates are based on the best experience of the Board of Directors and on their best

expectations in relation to current and future events and actions, the current and future results may differ from

these estimates.

B) GOING CONCERN ASSUMPTION

These financial statements have been prepared under the assumption that the Company will continue its

activities for the foreseeable future, and they are based on the accounting books and records of the Company

which are kept in accordance with the accounting normalisation system standards.

C) ACCRUAL BASIS

The Company records its income and expenses in the period to which they relate, whereby revenue and profit

are recognised as they are generated, regardless of when they are received or paid. The amounts received and

paid and the corresponding revenues and costs are recorded under the caption ‘Other debtors / creditors’ and

‘Deferrals’ (Note 13, 14 and 23).

D) CLASSIFICATION OF NON-CURRENT ASSETS AND LIABILITIES

Assets and liabilities due in more than one year from the balance sheet date are classified as non-current assets

and liabilities, respectively. Additionally, due to their nature, the assets and liabilities arising on deferred tax and

the provisions are classified as non-current assets and liabilities.

E) CONTINGENT ASSETS AND LIABILITIES

Contingent liabilities, where the outflow of funds affecting the future economic benefits is deemed only

possible, are not recognised in the financial statements, and are disclosed in the notes to the Financial

Statements, unless the probability of a outflow of funds affecting future economic benefits is remote, in which

case they are not subject to disclosure.

Contingent assets are not recorded in the financial statements, but are disclosed in the notes to the Financial

Statements when future economic benefits are probable.

F) FINANCIAL LIABILITIES

Financial liabilities are classified in accordance with the contractual substance regardless of the legal form they

assume.


G) SUBSEQUENT EVENTS

Events occurring after the balance sheet date that provide additional information about conditions that existed

at that time are reflected in the financial statements.

Events occurring after the balance sheet date that provide information on the conditions that occurred after

the balance sheet date, if material, are disclosed in the notes to the financial statements.

H) DEROGATION OF SNC STANDARDS

During the period to which these financial statements refer, there were no exceptional cases requiring the

derogation of any provision under the SNC.

I) VALUE JUDGEMENTS

The fair value of financial instruments traded in the active markets is determined based on listed market prices

at the balance sheet date.

The nominal value of trade and other receivables, adjusted by any impairment losses, and the nominal value of

any trade and other payables is estimated to be close to their fair value.

J) MAIN ASSUMPTIONS CONCERNING THE FUTURE

Estimates and judgments are continually evaluated and based on historical experience and other factors,

including expectations of future events that are believed to be reasonable under the circumstances.

In the determination of its accounting records and evaluation of its assets and revenues, the Company makes

use of estimates and assumptions relating to events whose effects will only be fully known in future financial

years. To a large extent it has been established that the values recorded were confirmed in the future. All

variations that may arise will be recorded in the periods in which their final effects are determined.

The value of financial investments subject to impairment tests conducted at the end of the year, is affected by

the implementation of the assumptions used in these same tests.

K) RISK MANAGEMENT

The Company’s activity is exposed to a variety of financial risks: market risk (including interest rate and

exchange rate risk), credit risk, liquidity risk, and capital risk.

The Company has a risk management program, which focuses its analysis on the financial market seeking to

minimise the potential adverse effects of these risks on the financial performance of the Company.


Risk management is conducted by the Financial Department, based on policies approved by the Board of

Directors. The Board of Directors provides principles for risk management as a whole and policies covering

specific areas, such as exchange risk, interest rate risk, credit risk and that of investing surplus liquidity.

MARKET RISK / INTEREST RATE RISK / EXCHANGE RATE RISK

The Board of Directors of JP-ik has considered in recent years using instruments of risk coverage in respect of

the variation in interest rate, and has contracted swaps for this purpose, as described in the Note 24. All interest

bearing debt generates interests at a variable rate. Loans issued with variable rates expose the Company to

cash flow risk associated with the interest rate.

In its operational activities, JP-ik uses the US dollar (USD) for large volume purchases and sales. The hedging

made is natural (through loans and overnight deposits in USD) sporadically using foreign exchange swaps. On

31st December 2014 and 2013, there was no open position in such instruments.

CREDIT RISK

Credit risk results essentially from customer balances receivable. Credit risk is assessed by the Company's

Financial Management, taking into account the history of commercial relations, its financial position, as well as

other information that can be obtained through the business network of JP-ik. The credit limits set are regularly

analysed and revised, if necessary. All credits are insured through a credit insurance institution, COSEC in 2014

and CREDIT y Caución SA - PORTUGAL BRANCH in 2015. Credit risk is not considered to be significant.

LIQUIDITY RISK

The hedging of liquidity risk, defined as the ability to meet the commitments assumed, is achieved, essentially,

through the availability at a central level of a set of immediately available credit facilities. These facilities provide

JP-ik with the ability to liquidate positions within a very short period, giving it the necessary flexibility to conduct

its activity.

Liquidity risk management implies maintaining sufficient value in cash and bank deposits, the viability of floating

debt consolidation through an adequate amount of credit facilities and the capacity to liquidate market

positions. The management of treasury requirements is done based on annual planning, which is revised

quarterly and adjusted daily. Related with the dynamics of the underlying business, the Treasury of the

Company intends to maintain the flexibility of the floating debt, by maintaining the credit facilities available.


CAPITAL RISK

The primary aim of the Board of Directors is to ensure the continuity of operations, while providing adequate

remuneration for the shareholders and the corresponding benefits to other stakeholders of the Company. To

achieve this goal it is essential that there is a careful management of the capital employed in the business,

seeking to ensure an optimal structure thereof, thereby achieving the necessary reduction in its cost. In order

to maintain or adjust the capital structure considered appropriate, the Board may propose to the General

Shareholders Meeting the measures deemed necessary.

JP-ik seeks to maintain a level of equity appropriate to the characteristics of the main business and to ensure

continuity and expansion. The balance of capital structure is monitored based on the gearing ratio (defined as:

net interest bearing debt / (net interest bearing debt + equity)).

31.12.2014 31.12.2013

GEARING RATIO 0,59 0,44

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of the financial statements are described below.

These policies have been consistently applied to all periods presented, unless otherwise indicated.

3.1. INVESTMENTS

IN ASSOCIATES AND JOINT VENTURES

Associates are all entities in which JP-ik has significant influence but not management control. In legal terms

this influence normally occurs in companies where the shareholding is between 20 % and 50 % of the voting

rights. Investments in associated companies are accounted using the equity method.

The Company’s share of post-acquisition profit or loss is recognised in the income statement and its share of

the post-acquisition movements in other comprehensive income is recognised in other comprehensive

income with a corresponding adjustment to the carrying amount of the investment. When the Company's

share in the losses of the Associate equals or exceeds its interest, the Company does not recognise the further

losses, unless it has incurred in obligations or made payments on behalf of the associate.


In the event that any severe long-term restrictions occur that significantly impair the capacity to transfer funds

to the holding Company or in the case that the investments are acquired and held solely for the purpose of sale

in the near future, the cost method is applied.

Youtsu, ACE is considered an incorporated joint venture, constituted in 2007, and held in equal shares by JP-ik

and “Prológica – Sistemas Informáticos, S.A.”. The amount corresponding to the share of the profits allocated

to JP-ik, is recorded under the caption ‘Financial Investments - equity method’, and joint ventures are valued

using the equity method.

OTHER INVESTMENTS

“Other investments” include all investments where the Company owns less than 20 % of the voting rights.

These investments are measured at fair value, and the subsequent changes in fair value are recorded as gains

or losses income. If the fair value cannot be measured accurately the participation will be measured at cost,

which in this case it will be subject to impairment tests. Any impairment losses that may be recorded are not

reversible.

3.2. FUNCTIONAL AND PRESENTATION CURRENCY

The financial statements of JP-ik are presented in euros. Euro is the company’s functional and presentation

currency.

Transactions in foreign currency are converted to the functional currency using the prevailing exchange rates

on the transaction dates.

The exchange rate gains and losses resulting from the payments/receipts of the transactions as well as the

exchange rate conversion on the balance sheet date of the monetary assets and liabilities denominated in

foreign currency, are recognised in the income statement under the caption ‘Interest and similar income’ /

‘Interest and similar expenses’, if related to borrowings, or under ‘Other operating income / Other operating

expenses’, for all other balances/transactions.

3.3. TANGIBLE ASSETS

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


Depreciation is calculated once the assets are in use, using the straight-line method in accordance with the

useful life for each group of assets.

The depreciation rates used correspond to the following estimated useful lives:

ASSET CLASS YEARS OF USEFUL LIFE

Buildings and other Structures 5 to 20

Basic Equipment 4 to 8

Transportation Equipment 4 to 8

Tools and Utensils 3 to 7

Office Equipment 2 to 10

Other tangible fixed assets 1 to 4

Maintenance and repair expenses that do not increase the useful life of these assets are considered as expense

in the period in which they occur.

Tangible assets in progress represent assets still under construction and are recorded at cost of acquisition

less any impairment losses.

These assets are depreciated from the moment when the underlying assets have been completed or are in a

state of use.

Gains or losses resulting from the sale or disposal of tangible assets are determined by the difference between

the selling price and the net book value on the date of sale/disposal, and are recorded in the income statement

in ‘Other operating income’ or ‘Other operating expenses’ , depending on whether these are gains or losses.

3.4. INTANGIBLE ASSETS

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

These assets are only recognised if it is deemed probable that there will be future economic benefits from these

for the Company, if they are controlled by the Company and their value can reasonably be measured.

Development expenses are capitalised when the Company demonstrates its ability to complete its

development and starts trading or using it, and for which it is probable that the asset created will generate future


economic benefits. The development expenses that do not meet these criteria are recorded as expenses in

the financial year in which they incurred.

Internal costs associated with maintaining and developing software are recorded as expenses in the income

statement when incurred, except in those situations where these expenses are directly related to projects

which will probably generate economic benefits for the Company. In these situations these costs are capitalised

as intangible assets.

Depreciation is calculated, after the goods are in use, using the straight-line method, in accordance with the

period of estimated useful life, which is generally 3 years.

The depreciation rates used correspond to the following estimated useful lives:

ASSET CLASS YEARS OF USEFUL LIFE

Software 3

Industrial property and other rights 3

Where these assets are related to brands and patents without a defined useful life, no depreciation is calculated,

and their value is subject to impairment testing on an annual basis.

3.5. ASSET IMPAIRMENT

Whenever the determined recoverable amount is less than the book value of assets, JP-ik assesses whether

the loss situation is of a permanent and final nature, and if so it records the corresponding impairment loss. In

cases where the loss is not considered permanent and final, a disclosure is made of the reasons supporting that

conclusion.

The recoverable amount is the fair value of the asset less sales costs or its value in use, whichever is higher. For

the determination of impairment, assets are allocated at the lowest level for which there are separately

identifiable cash flows (cash-generating units).

Non-financial assets for which there have been recognised impairment losses are evaluated on each reporting

date, on the possible reversal of impairment losses. When it is not necessary to record or reverse impairment,


amortisation and depreciation of the assets are recalculated prospectively in accordance with the recoverable

amount.

3.6. FINANCIAL ASSETS

The Board of Directors determines the classification of its financial assets, on the date of initial recognition in

accordance with NCRF 27 - Financial instruments.

Financial assets can be measured:

(a) At cost or amortised cost less any impairment loss; or

(b) At fair value with changes in fair value recognised in the income statement.

The Company classifies and measures at cost or amortised cost, the financial assets: i) that in terms of time are

on sight or have a defined maturity; ii) with fixed return, fixed interest rate or variable interest rate corresponding

to a market index; iii) that have no contractual clause that may result in the loss of the nominal value and

accumulated interest.

For assets carried at amortised cost, the interest received to be recognised in each period is determined

according to the effective interest rate method, which corresponds to the rate that exactly discounts

estimated future cash receipts over the expected life of the financial instrument.

The financial assets that constitute granted loans, receivables (such as trade debtors, other debtors, etc.) and

equity instruments, as well as any associated derivative contracts which are not traded on an active market or

whose fair value cannot be determined accurately, are recorded at cost or amortised cost.

The Company classifies and measures at fair value the financial assets that do not comply with the conditions

to be measured at cost or amortised cost, as described above. Financial assets which constitute equity

instruments quoted on the active market, derivative contracts and financial assets held for sale are measured

at fair value. Fair value variations are recorded in the income statement under the captions ‘Other operating

income / expenses’, except those related to derivative financial instruments that qualify as cash flow hedging.


On each financial reporting date, the Company evaluates the existence of value loss indicators for the financial

assets that are not measured at fair value through profit and loss. Should there any objective evidence of

impairment exist, JP-ik recognizes an impairment loss in the income statement.

The financial assets are derecognised when the rights to the cash flows generated by these investments expire

or are transferred, as well as all risks and benefits associated with their possession.

Loans granted and receivables

Loans granted and other receivables are non-derivative financial assets with fixed or determinable payments

that are not listed in an active market. These assets are created when the Company provides money, goods or

services directly to a debtor. These are included under current assets, except when their maturities exceed 12

months over the balance sheet date, in which case they will be classified as non-current.

3.7. DERIVATIVE FINANCIAL INSTRUMENTS

Derivative financial instruments are initially recorded at fair value on the transaction date, and subsequently

valued at market value - "mark-to-market". The Company holds exclusively negotiation derivative financial

instruments, whose gains or losses in fair value are recorded in the income statement.

3.8. INCOME TAX

JP-ik is subject to Corporate Income Tax (IRC) at a rate of 23 % on an assessment basis. To the IRC collection

amount assessed, Municipal surcharge is added, levied on the recorded taxable profit of 1.5 %, as well as State

surcharge rate of 3 % on the profit of more than 1.5 million euros up to 7.5 million euros and 5 % on the profit in

excess of 7.5 million euros, and also the specific taxation on charges at the rates provided in the article 88 of

the Corporate Income Tax Code. In the calculation of income taxes, to which is applied the mentioned tax rate,

the amounts that are not accepted for tax purposes are added and deducted from the accounting result. This

difference, between accounting and taxable income, can be of temporary or permanent nature.

In accordance with the current legislation, tax declarations are subject to review and correction by the tax

authorities during a period of four years (10 years for Social Security, until 2000, and five years from 2001

onwards), except where tax losses have been reported, or there are ongoing inspections, complaints or


appeals, cases in which, depending on the circumstances, the deadlines are extended or suspended. Therefore,

tax returns for the years 2011 to 2014 are still subject to review.

JP-ik records deferred taxes, corresponding to temporary differences between the carrying amount of assets

and liabilities and the corresponding tax basis, as defined by NCRF25 - Deferred taxes. In 2014, the rate used

for the calculation of deferred tax was the effective tax rate.

3.9. INVENTORIES

Consumer goods and raw materials are stated at acquisition cost or net realisable value, if lower than the

weighted average cost through the costing method of outputs. The inventories are reduced to their net

realisable value in cases where the value of these goods is less than the lowest of the average acquisition or

realisable costs.

The intermediate and finished products, the sub-products and work in progress are stated at the lower of

production cost (including the cost of the raw materials incorporated, labour and manufacturing overheads) or

net realisable value. In cases where the net realisable value is lower than the cost, impairment losses are

recognised. The allocation of fixed production overheads is based on the standard capacity of the facilities.

The reversal of prior period adjustments is recorded when there are indications that the adjustments are no

longer justified or have decreased, and are stated in the income statement under the caption ‘Inventory

impairments (losses/reversals)’. However, this reversal is limited to the amount of the accumulated amount of

impairment losses recognised.

The expenses relating to inventories sold are recorded in the same reporting period in which the revenue is

recognised.

The Company uses the permanent inventory system, in accordance with the provisions of article 12(1) of

Decree 158/2009 of 13th July.


3.10. TRADE DEBTORS AND OTHER RECEIVABLES

The amounts under ‘Trade debtors’ and ‘Other receivables’ are not subject to interest and are stated at their

nominal value reduced by any impairment losses, recognised under ‘Receivables impairments (losses /

reversals)’, so that they reflect their net realisable value.

3.11. CASH AND CASH EQUIVALENTS

Cash and cash equivalents includes cash on hand, bank deposits, and other short term investments of high

liquidity with maturities of up to three months. Bank overdrafts are stated as a current liability under the caption

‘Borrowings’.

3.12. FINANCIAL LIABILITIES

The Board of Directors determines the classification of its financial liabilities on the date of initial recognition in

accordance with NCRF 27 - Financial instruments.

The financial liabilities may be classified/measured as:

(a) At cost or amortised cost; or

(b) At fair value, with changes in fair value recognised in the income statement

JP-ik classifies and measures the cost or amortised cost, financial liabilities: i) that are on sight or have a defined

maturity; ii) with fixed return, fixed interest rate or variable interest rate corresponding to a market index; and iii)

that have no contractual clause which may result in a change to the responsibility for the payment of the

nominal value and accumulated interest.

For liabilities carried at amortised cost, the interest expense to be recognised in each period is determined

according to the effective interest rate method, which corresponds to the rate that exactly discounts the

estimated future cash payments, over the expected life of the financial instrument.


Financial liabilities that constitute obtained loans, payables (such as suppliers, other creditors, etc.) and equity

instruments, as well as any associated derivative contracts which are not traded on active markets or whose

fair value cannot be determined accurately, are recorded at cost or at amortised cost.

Financial liabilities (or parts of financial liabilities) are derecognised only when they are extinguished, i.e. when

the obligation established in the contract is settled, cancelled or expires.

3.13. SHARE CAPITAL

Ordinary shares are classified as equity when paid-up.

3.14. PROVISIONS

The Company periodically analyses any obligations that may arise from past events and that should be the

object of recognition or disclosure. The subjectivity inherent to the determination of the probability and the

amount of internal resources necessary to liquidate the obligations may lead to significant adjustments, due to

either the variance in the assumptions used, or to the future recognition of provisions formerly disclosed as

contingent liabilities.

3.15. TRADE CREDITORS AND OTHER PAYABLES

Trade creditors and other payables do not bear interest, and are recorded at their nominal value, which is

considered equivalent to their fair value.

3.16. BORROWINGS

Loans are recorded as liabilities at their nominal value net of commissions related to their issuance. The financial

charges ascertained according to the effective interest rate are recorded in the income statement on an

accrual basis.


Loans are classified as current liabilities, unless the Company has the unconditional right to defer the

settlement of the liabilities for more than 12 months after the reporting date.

3.17. LEASES

Leasing contracts are classified as financial leases if through them all the risks and rewards inherent to the

ownership of the assets under lease are substantially transferred and as operating leases if through them all the

risks and rewards inherent to ownership of the assets under lease are not substantially transferred.

The classification of leases, as financial or operational, is done based on economic substance and not on the

form of the contract.

Tangible assets acquired under financial lease contracts as well as the corresponding liabilities are accounted

for using the financial method, recognising the tangible fixed asset, corresponding accumulated depreciation,

as defined in policy 3.3 above, and the outstanding payments, in accordance with the contractual financial plan.

Additionally, the interest included in the value of the rentals and the depreciation of fixed tangible assets are

recognised as expenses in the income statement in the period to which they relate.

In operating lease contracts, rent due is recognised as an expense in the income statement on a linear basis

during the term of the lease agreement.

3.18. REVENUE AND ACCRUAL BASIS

Revenue comprises the fair value of the consideration received or receivable for the sales and services

rendered under the normal activity of the Company. Revenue is recognized net of the Value-Added Tax (VAT),

rebates and discounts.

Revenue is recognized when it can be reasonably measurable, it is probable that the Company will obtain future

economic benefits, and the specific criteria described below are met. Revenue is not considered as reasonably

measurable until all the contingencies related to a sale are substantially resolved. The Company bases its

estimates on historic results, considering the type of customer, the nature of the transaction and the specific

details of each agreement.


The interest received is recognised as an accrual, taking into account the amount owed and the effective rate

during the period to maturity.

Transactions in currencies other than the euro are converted into the functional currency using the exchange

rate on the date of the transactions. The foreign exchange gains and losses resulting from the payment of

transactions as well as from the exchange rate conversion at the balance sheet date of the monetary assets

and liabilities denominated in foreign currency, are recognised in the income statement, as financial expenses

if related to loans, and as operating profits or losses, for all other balances/transactions.

i) Exchange rates considered

Exchange rates used to convert balances expressed in foreign currency as at 31st December 2014 and 2013,

were as follows:

2014 2013

YEAR END

AVERAGE

FOR THE

YEAR

YEAR END

AVERAGE

FOR THE

YEAR

US Dollar (USD) USD 1,2141 1,3286 1,3791 1,3281

Pounds Sterling GBP 0,7789 0,8063 0,8337 0,8493

Source: Bloomberg

Dividends are recognised when there is a right to receive them.

3.19. MAIN ESTIMATES AND JUDGEMENTS

In the preparation of the financial statements in accordance with the NCRF, the Board of Directors uses

estimates and assumptions that affect the application of policies and reported amounts. Estimates and

judgments are continuously assessed and based on the experience of past events and other factors, including

expectations regarding future events considered likely given the circumstances in which the estimates are

based or the result of information or experience gained.

Estimates were determined based on the best information available at the date of the preparation of the

financial statements. Nevertheless, there may be situations in subsequent periods which, due to not being

foreseeable at this date, have not been considered in those estimates. Changes to these estimates that may

occur after the date of the financial statements will be recognised in income statement, prospectively.


RELEVANT ACCOUNTING ESTIMATES

Provisions

JP-ik periodically analyses any obligations resulting from past events and that must be the object of recognition

or disclosure.

The subjectivity inherent to the determination of the probability and the amount of internal resources

necessary for the liquidation of the obligations may lead to significant adjustments, due to either the variance

in the assumptions used or to the future recognition of provisions previously disclosed as contingent liabilities.

Tangible assets, intangible assets and investment properties

Determining the useful lives of the assets, as well as the depreciation method to be applied, is essential to

determine the amount of depreciation to recognise in the income statement for each year.

These two parameters are defined in accordance with the best judgement of the Board of Directors for assets

and businesses in question, also taking into consideration the practices adopted for companies in the sector

internationally.

Impairment

The determination of possible impairment losses can be triggered by the occurrence of various events, many

of which are outside the sphere of influence of JP-ik, such as: availability of future loans, the cost of capital, as

well as any other changes, whether internal or external, to JP-ik.

The identification of the impairment indicators, the future cash flow estimate and the determination of the fair

value of assets imply a higher degree of judgement from the Board of Directors regarding the identification and

assessment of the different impairment indicators, expected cash flows, applicable discount rates, useful lives

and residual values.

Deferred Tax Assets

Deferred tax assets are recognised only when it is probable that sufficient tax profits will be generated to utilize

the temporary difference. Deferred tax assets are reviewed annually and reduced whenever their future use

ceases to be likely.


The determination of deferred taxes is based on the tax rates (and laws) enacted or substantively enacted as

at the balance sheet date and that are expected to apply in the period of the realisation of deferred tax assets

or the liquidation of liabilities arising on deferred taxes.

The nominal tax rate considered for the purposes of measuring deferred taxes was the effective tax rate.

4. CASH FLOW - CASH AND CASH EQUIVALENTS

As at 31st December 2014 and 2013 the balances under this caption were as follows:

31.12.2014 31.12.2013

Cash at hand 33.573 98.623

Demand bank deposits 1.222.214 3.048.506

Term bank deposits 8.084.279 10.245.984

Total 9.340.065 13.393.112

5. TANGIBLE ASSETS

The changes occurred in tangible fixed assets and accumulated depreciation, in the periods of 2014 and 2013

were the following:

31.12.2014

Land and

natural

resources

Buildings

and other

structures

Basic

equipment

Transportation

equipment

Office

Equipment

Other

tangible

assets

Assets in

progress

Total

Tangible

assets

COST:

Balance as at 1st January 2014 2.972.418 1.400.884 1.633.103 616.955 1.387.461 153.748 1.704.265 9.868.836

Acquisitions 330.000 12.425 82.714 113.941 97.096 28.239 849.234 1.513.649

Disposals - - (450) (66.712) - - - (67.162)

Adjustments, transf. and write-offs - 1.615.360 - (27.500) (8.658) (7.313) (1.615.360) (43.471)

Balance as at 31st December 2014 3.302.418 3.028.669 1.715.367 636.685 1.475.899 174.674 938.140 11.271.853

ACCUMULATED DEPRECIATION

AND IMPAIRMENT LOSSES:

Balance as at 1st January 2014 - (505.394) (1.442.887) (258.556) (1.286.444) (115.432) - (3.608.714)

Depreciation expense - (302.867) (123.214) (99.512) (110.993) (18.432) - (655.018)

Disposals - - 450 58.987 - - - 59.437

Adjustments, transf. and write-offs - - (13) 14.446 1.511 2.872 - 18.816

Balance as at 31st December 2014 - (808.261) (1.565.664) (284.636) (1.395.926) (130.992) - (4.185.479)

Net Value as at 31st December 2014 3.302.418 2.220.409 149.703 352.049 79.973 43.682 938.140 7.086.374


31.12.2013

Land and

natural

resources

Buildings

and other

structures

Basic

equipment

Transportation

equipment

Office

Equipment

Other

tangible

assets

Assets in

progress

Total

Tangible

assets

COST:

Balance as at 1st January 2013 2.972.418 1.311.735 1.534.723 619.180 1.253.691 95.751 - 7.787.497

Acquisitions - 89.149 98.381 82.913 133.770 48.319 1.587.488 2.040.020

Disposals - - - (85.137) - - - (85.137)

Adjustments, transf. and write-offs - - - - - 9.679 116.777 126.456

Balance as at 31st December 2013 2.972.418 1.400.884 1.633.103 616.955 1.387.461 153.748 1.704.265 9.868.836

ACCUMULATED DEPRECIATION


Balance as at 1st January 2013 - (367.534) (1.285.785) (180.742) (1.156.365) (75.476) - (3.065.902)

Depreciation expense - (137.860) (157.102) (105.311) (130.080) (39.956) - (570.308)

Disposals - - - 27.497 - - - 27.497

Balance as at 31st December 2013 - (505.394) (1.442.887) (258.556) (1.286.444) (115.432) - (3.608.714)

Net Value as at 31st December 2013 2.972.418 895.490 190.217 358.399 101.017 38.316 1.704.265 6.260.122

The amount under the caption “Assets in progress” at 31st December 2014 is related to the completion of

construction works and the acquisition of land and projects in Gabon (634.370 euros) for the construction of a

production plant, and the preliminary study for the allocation of plots in the industrial area of Perafita (300.000

euros).

Total depreciation of tangible assets during the period amounted to 655.018 euros (570.308 euros in 2013).

6. INTANGIBLE ASSETS

During the periods ended 31st December 2014 and 2013, the changes in intangible assets and their

depreciation, were as follows:

31.12.2014 Software Industrial

Property

Other

intangible

assets

Intangible

assets in

progress

Total Intangible

assets

COST:

Balance as at 1st January 2014 874.346 50.000 76.960 343.989 1.345.295

Acquisitions 42.370 - - 384.868 427.238

Adjustments, transf. and write-offs 608.857 - - (608.857) -

Balance as at 31st December 2014 1.525.573 50.000 76.960 120.000 1.772.533

ACCUMULATED AMORTISATION


Balance as at 1st January 2014 (196.184) (3.179) (76.960) - (276.323)

Depreciation expense (363.419) (3.468) - - (366.887)

Disposals - - - - -

Adjustments, transf. and write-offs - - - - -

Balance as at 31st December 2014 (559.603) (6.647) (76.960) - (643.210)

Net Value as at 31st December 2014 965.970 43.353 - 120.000 1.129.323


31.12.2013 Software Industrial

Property

Other

intangible

assets

Intangible

assets in

progress

Total Intangible

assets

COST:

Balance as at 1st January 2013 4.846 - 76.960 755.393 837.199

Acquisitions 43.053 50.000 - 415.043 508.096

Adjustments, transf. and write-offs 826.447 - - (826.447) -

Balance as at 31st December 2013 874.346 50.000 76.960 343.989 1.345.295

ACCUMULATED AMORTISATION


Balance as at 1st January 2013 (1.346) - (53.443) - (54.790)

Depreciation expense (194.838) (3.179) (23.516) - (221.533)

Balance as at 31st December 2013 (196.184) (3.179) (76.960) - (276.323)

Net Value as at 31st December 2013 678.162 46.821 - 343.989 1.068.972

Intangible assets are mostly related to the investment made in the new ERP system implemented during 2013

and 2014.

The caption “Intangible assets in progress" concerns the design and development of the product - Storage and

charging Cart for tablets and laptops (120.000 euros) to complete during 2015.

Amortisation of intangible assets amounting to 366.887 euros (221.533 euros in 2013) is included in the caption

‘Amortisation and depreciation losses /reversals’.

7. FINANCIAL INVESTMENTS

EQUITY METHOD

The amount of 3.432.288 euros under the caption: ‘Financial Investments - equity method’ corresponds to the

JP-ik’s share in 2014 results of the joint venture Youtsu, ACE, in which the Company holds 50% of shares and

voting rights.

Transactions between Youtsu and JP-ik were performed within the arm’s length principle.


During the period ended 31st December 2014 the changes in the value of financial investments were as follows:

31st December 2014 Opening

balance

Dividends

received

Gain attributable

to the Company Total

FINANCIAL INVESTMENTS - EQUITY METHOD

In Joint Ventures

Youtsu - ACE 4.121.255 (4.121.255) 3.432.288 3.432.288

Total 4.121.255 (4.121.255) 3.432.288 3.432.288

Gains relating to the Equity Method were recorded in the income statement under the caption ‘Gains / losses

in subsidiaries, associates and joint ventures’.

There were no acquisitions or disposals of shares in the period:

YOUTSU, ACE

31.12.2014 31.12.2013

Net Profit for the period 6.864.576 8.242.511

% of ownership 50 % 50 %

Financial investments - Equity Method 3.432.288 4.121.255

The financial information used for the application of the equity method corresponds to that included in the

financial statements presented by Youtsu, ACE for the periods ended 31st December 2014 and 2013.

OTHER METHODS

The caption ‘Financial investments – other methods’ includes investments in the companies identified below,

in which the Company has no significant control.

31st December 2014 Opening

balance

Acquisition of

Shares Total

FINANCIAL INVESTMENTS - OTHER METHODS

AMB3E 10.000 - 10.000

SPGM 5.010 - 5.010

NORGARANTE 17.500 - 17.500

AEP 2.100 - 2.100

Contributions to FCT 15 626 641

Total 34.625 626 35.251


8. DEFERRED TAX ASSETS

The changes occurred in deferred tax assets, in the periods ended 31st December 2014 and 2013, in

accordance with the temporary differences that generated them, were as follows:

INCREASES DECREASES

Balance as at

1st January

2014

Net

profit Equity

Net

profit Equity

Balance as at

31st December

2014

DEFERRED TAX ASSETS

Intangible Assets R&D Expenses 2.533 - - (2.533) - -

Impairment losses on trade receivables - 11.961 - - - 11.961

Provision for product guarantees 378.681 - - (105.065) - 273.616

Losses on financial instruments 26.501 - - (26.501) - -

407.714 11.961 - (134.099) - 285.577

INCREASES DECREASES

Balance as at

1st January

2013

Net

Profit Equity

Net

profit Equity

Balance as at

31st December

2013

DEFERRED TAX ASSETS

Intangible Assets R&D Expenses 5.473 - - (2.940) - 2.533

Provision for product guarantees 320.864 57.818 - - - 378.681

Losses on financial instruments 85.795 - - (59.295) - 26.501

412.132 57.818 - (62.235) - 407.714

9. INVENTORIES

As at 31st December 2014 and 2013, the detail of Inventories was as follows:

31.12.2014 31.12.2013

Merchandise 41.380.448 16.176.360

Raw materials 14.848.709 13.180.422

Finished goods 12.318.055 7.143.723

68.547.212 36.500.505

Inventories adjustments (3.170.621) (4.222.968)

65.376.591 32.277.537

The increase of the total value of inventory results from the impact of the Branch in Bolivia, which amounts to

27.137.549 euros.


During the period ended as at 31st December 2014, movements in Inventories Adjustments were the

following:

ADJUSTMENTS 31.12.2014 TOTAL

GOODS

RAW

MATERIALS

FINISHED

PRODUCTS

Balance as at 1st January 2014 1.539.040 2.301.769 382.159 4.222.968

Increase 135.501 690.856 427.532 1.253.888

Reversal (911.957) (1.261.409) (132.869) (2.306.235)

Balance as at 31st December 2014 762.584 1.731.216 676.822 3.170.621

10. TRADE DEBTORS

As at 31st December 2014 and 2013, the amounts stated under ‘Trade debtors’ had the following composition:

TRADE DEBTORS 31.12.2014 31.12.2013

Current accounts receivable 76.112.963 98.543,083

Doubtful accounts receivables 2.833.595 2.511.312

78.946.558

101.054.396

Accumulated impairment losses (2.833.595) (2.511.312)

76.112.963 98.543.083

Of the total amount of 76.112.963 (98.543.083 euros in 2013), 3.604.429 euros (18.107.729 euros in 2013)

were subject to factoring contract with recourse. The corresponding advance is recorded under the caption

‘Other creditors’ – (Note 23) and 8.694.261 euros (without value in 2013) were the object of factoring contract

without recourse. The latter contract was in 2015 converted into a contract with recourse.

31.12.2014 31.12.2013

TRADE DEBTORS

OTHER

CLIENTS

RELATED

PARTIES (Note

36)

TOTAL

OTHER

CLIENTS

RELATED

PARTIES (Note

36)

TOTAL

Current acc. receivable 73.628.856 2.484.107 76.112.963 61.209.287 37.333.796 98.543.083

Doubtful acc. receivable 2.833.595 - 2.833.595 2.511.312 - 2.511.312

76.462.451 2.484.107 78.946.558 63.720.600 37.333.796 101.054.396


During the periods ended 31st December 2014 and 2013, movements in receivables’ accumulated impairment

losses were as follows:

Impairment losses 31.12.2014 31.12.2013

Balance as at 1st January 2.511.312 2.101.740

Increase 596.666 650.877

Decrease (274.383) (241.305)

Adjustments - -

Balance as at 31st December 2.833.595 2.511.312

11. ADVANCES TO SUPPLIERS

The balance under this caption, in the amount of 1.083.777 euros (1.248.090 euros in 2013), comprises the

advances made to suppliers regarding orders to be fulfilled.

12. STATE AND OTHER PUBLIC ENTITIES

On 31st December 2014 and 2013, the caption ‘State and other public entities’ included the following assets

and liabilities:

31.12.2014 31.12.2013

ASSETS LIABILITIES ASSETS LIABILITIES

Corporate income taxes (IRC) - 134.890 1.385.626 136.689

Value added tax (VAT) - 3.276.761 - 3.828.533

Tax credit - Bolivia Branch 1.655.819 - - -

Taxes withheld to third parties - 125.465 - 218.886

Social Security - 113.208 - 123.239

1.655.819 3.650.325 1.385.626 4.307.347


13. OTHER DEBTORS

AS at 31st December 2014 and 2013, the caption ‘Other debtors’ was as follows:

31.12.2014 31.12.2013

NON-CURRENT CURRENT NON-CURRENT CURRENT

Credit facility Loan - MGBO - 4.714.784 - -

Vendor funds - 1.215.298 - 3.785.230

Stock discounts and rebates - 952.289 - 1.471.763

Rappel to be obtained - 611.732 - 1.518.432

Bolivia Branch - Other debtors - 382.597 - -

Other debtors - 141.782 - 282.334

Personnel - 70.893 - 169.877

Other receivables due to accrued income - 39.946 - 115.672

Securities and collaterals provided 443.100 - 272.751 -

443.100 8.129.322 272.751 7.343.308

Accumulated impairment losses - (378.761) - -

Other debtors 443.100 7.750.561 272.751 7.343.308

Impairment losses 31.12.2014 31.12.2013

Balance as at 1st January - -

Increase 378.761 -

Balance as at 31st December 378.761 -

The amount on 31st December 2014 of the item “Credit facility loan – MGBO” is related to the credit facility

agreement between JP-ik and the Bolivian Company “MGBO – Tecnologia”, which has no fixed repayment date

and does not accrue interest.

The constitution of impairment losses refers to the line item "Vendor funds”.

14. DEFERRED EXPENSES

At 31st December 2014 and 2013 the balances of the item “Deferred expenses” were as follows:

31.12.2014 31.12.2013

DEFERRALS - ASSETS

Insurance fees 105.278 86.140

Other 74.777 94.620

Rents deferred expenses 39.486 26.926

Confirming Interest 30.521 37.363

250.063 245.049


15. OTHER FINANCIAL ASSETS

This caption includes, essentially, bonds and other applications that do not have a listed market price in an active

market and whose fair value cannot be reliably measured. These investments are measured at the cost of

acquisition less any accumulated impairment losses.

31.12.2014 31.12.2013

Balance as at 1st January 250.000 250.000

Balance as at 31st December 250.000 250.000

On 31st December 2014 and 2013, this item included bonds in BPN (150.000 euros) and other investments in

CGD (100.000 euros - Caixa Seguro Capital Mais).

16. SHARE CAPITAL

On 31st December 2014 the Company’s capital, fully subscribed and paid-up, was composed of 2.500.000

shares with the nominal value of 1 euro each.

J.P. Sá Couto, SGPS, S.A. is the holder of 99 % of the capital, which corresponds to 2.475.000 euros.

17. LEGAL RESERVES

The Portuguese commercial legislation stipulates that a minimum of 5 % of the annual profit is to be transferred

to the legal reserve until its balance constitutes at least 20 % of the share capital. This reserve is not

distributable, except in the event of the Company being liquidated, but may be used to absorb losses after all

other reserves have been exhausted or incorporated into the share capital.

The legal reserves are fully constituted.


18. OTHER RESERVES

These reserves are constituted in accordance with the articles of association and by proposal of the Board of

Directors, which is subject to approval in a General Assembly.

The variation in this caption is due to the appropriation of 2013 profits and the ensuing dividends distribution of

4.100.000 euros in 2014.

19. PROVISIONS

The movements in the accumulated provisions occurred during the periods ended 31st December 2014 and

2013, were as follows:

31.12.2014 31.12.2013

Balance as at 1st January 1.352.433 1.060.599

Increases in the period 33.669 1.335.050

Decreases in the period (408.901) (1.043.216)

Balance as at 31st December 977.201 1.352.433

The reduction in the provision of product guarantees to customers’ results from the criterion followed based

on historical cost already incurred with the assistance of machines in guarantee, assuming that this cost is linear

during the guarantee’s lifetime.

20. BORROWINGS

At 31st December 2014 and 2013 the balances under this caption were as follows:

31.12.2014 31.12.2013

CURRENT NON-CURRENT TOTAL CURRENT NON-CURRENT TOTAL

Bank loans 57.073.915 2.071..888 59.145.803 29.126.023 3.259.649 32.385.671

Overdrafts 10.000 - 10.000 5.464.375 - 5.464.375

Financial leases 35.737 88.448 124.185 53.579 84.594 138.174

Other loans (Note 36) 120.000 240.000 360.000 120.000 360.000 480.000

Total debt 57.239.652 2.400.336 59.639.988 34.763.977 3.704.243 38.468.220


Loans are recorded as liabilities at the nominal value received, and are stated in the balance sheet in current or

non-current liabilities, depending on whether their maturity occurs at less or more than one year, respectively.

Their derecognition only occurs when the obligations arising out of the contracts cease, in particular where their

liquidation, cancellation or expiry has taken place.

Other loans item concerns the loan between AT Informática – Assistência Técnica Informática, Lda. and JP-ik,

which accrues interest at a rate corresponding to the simple arithmetical average of the three-month EURIBOR

rates, plus a spread of 3,875 %, with maturity in October 2017.

In exchange for the loans for major projects (Venezuela, Bolivia, Brazil) there is a generic pledge over the

inventories acquired for the same, as well as, over the Magalhães brand.

Non-current loans are repayable in accordance with the following repayment terms:

31.12.2014 31.12.2013

1 to 5 years 2.400.336 3.704.243

More than 5 years - -

Total 2.400.336 3.704.243

On 31st December 2014, the Company used the following types of goods acquired under financial lease

agreements:

31.12.2014

ASSETS ACQUIRED THROUGH

FINANCIAL LEASING

ACQUISITION

COST

ACCUMULATED

DEPRECIATION

CARRYING

AMOUNT

Basic equipment 19.915 19.915 -

Transportation equipment 356.912 140.342 216.570

Total 376.827 160.257 216.570

The Company’s Borrowings are denominated in the following currencies:

31.12.2014 31.12.2013

EUR 9.713.288 € 19.064.308 €

USD 49.926.700 € 19.403.912 €

59.639.988 € 38.468.220 €


21. TRADE CREDITORS

At 31st December 2014 and 2013, the amount under the caption ‘Trade Creditors’ was as follows:

31.12.2014 31.12.2013

GENERAL

SUPPLIERS

GROUP / RELATED

PARTIES

(Note 36)

TOTAL

GENERAL

SUPPLIERS

GROUP / RELATED

PARTIES

(Note 36)

TOTAL

Current accounts

payable 67.213.028 639.652 67.852.680 66.654.660 357.833 67.012.493

67.213.028 639.652 67.852.680 66.654.660 357.833 67.012.493

22. ADVANCE PAYMENTS FROM CLIENTS

In this item the advances are registered the advances made by customers regarding sales to be made.

23. OTHER CREDITORS

On 31st December 2014 and 2013, the amount under the caption ‘Other creditors’ had the following

composition:

31.12.2014 31.12.2013

CURRENT CURRENT

Factoring with recourse 3.604.429 18.107.729

Accrued staff costs 741.711 756.452

Accrued interest 568.102 406.071

Personnel 502.337 506.622

Funds to be conceded to clients 433.893 857.851

Other Creditors due to additional Expenses 370.512 2.472.988

Other accounts payable 173.001 -

Insurance payable 68.413 94.191

Total 6.642.397 23.201.903


24. OTHER FINANCIAL LIABILITIES

As at 31st December 2014, the amount under ‘Other financial liabilities’ had the following composition:

The fair value of swap transactions corresponds to the "mark-to-market" value determined by the respective

bank based on the contractual conditions. The contract swap interest rate matured in April 2014.

The adjustments in fair value are recorded under the caption ‘Other operating income / expenses’ in the income

statement (Note 30).

25. SALES AND SERVICES RENDERED

Sales and services rendered in the periods of 2014 and 2013 were as follows:

31.12.2014 31.12.2013

DOMESTIC

MARKET

FOREIGN

MARKET TOTAL

DOMESTIC

MARKET

FOREIGN

MARKET TOTAL

Sales 140.412.058 190.923.843 331.335.901 131.522.754 295.418.515 426,941,269

Services rendered 65.442 53.591 119.033 97.214 29.413 126,627

140.477.500 190.977.434 331.454.934 131.619.967 295.447.928 427,067,896

26. INCREASE / DECREASE IN PRODUCTION

The demonstration of the variation in production for the periods ended 31st December 2014 and 2013 was as

follows:

FINISHED PRODUCTS AND WORK IN

PROGRESS: 31.12.2014

31.12.2013

Balance as at 1st January 7.143.723 573.371

Adjustments - -

Balance on 31st December (Note 9) 12.318.055 7.143.723

Increase / decrease in production 5.174.332 6.570.352

Reference Value: Maturity

Fair value on

31.12.2014

Fair value on

31.12.2013

Interest rate swap € 1.500.000 08-04-2014 - (94.644)

- (94.644)


27. COST OF GOODS SOLD AND MATERIALS CONSUMED

The cost of goods sold and materials consumed for the periods ended on 31st December 2014 and 2013 was

as follows:

2014 2013

RAW

MATERIALS,

SUBSIDIARIES

AND

CONSUMABLES

GOODS

TOTAL

RAW

MATERIALS,

SUBSIDIARIES

AND

CONSUMABLES

GOODS

TOTAL

Balance as at 1st January 13.180.422 16.176.360 29.356.782 33.469.329 12.892.386 46.361.716

Adjustments - - - - (21.661) (21.661)

Purchases 82.304.511 252.196.351 334.500.862 21.442.435 366.235.902 387.678.337

Balance on 31 December 14.848.709 41.380.449 56.229.158 13.180.422 16.176.360 29.356.782

Cost of Goods Sold and

Materials Consumed (80.636.224) (226.992.262) (307.628.486) (41.731.342) (362.930.268) (404.661.610)

28. EXTERNAL SUPPLIES AND SERVICES

The distribution of supplies and external services in the periods ended 31st December 2014 and 2013, was as

follows:

31.12.2014 31.12.2013

Transportation of goods 2.744.935 1.776.495

Specialised services 2.514.490 2.529.750

Subcontracts 1.287.476 89.684

Travel and accommodation 789.099 720.352

Insurance 504.834 645.890

Rents and leases 453.189 431.140

Advertising and marketing 443.931 617.636

Service Fees 226.105 342.538

Communication 216.509 194.997

Materials 208.690 177.108

Representation expenses 206.873 192.363

Banking services 190.012 240.053

Maintenance and repairs 122.023 102.765

Energy and fluids 110.306 130.754

Litigation and notary services 48.118 4.488

Cleaning, hygiene and comfort 35.926 27.818

Other 71.118 116.050

10.173.634 8.339.883

The significant variation of the item transports of goods results from the projects with Bolivia and with Brazil.


29. PERSONNEL EXPENSES

The allocation of personnel expenses for the periods ended 31st December 2014 and 2013 was as follows:

31.12.2014 31.12.2013

Remuneration of the governing bodies 320.350 456.050

Personnel remuneration 4.721.895 5.042.485

Bonuses 500.000 500.000

Charges on remunerations 1.058.597 1.152.459

Insurance 24.174 28.398

Other personnel expenses 461.413 563.532

7.086.429 7.742.925

The average number of employees of the Company for the period of 2014 was 243 and of 254 for the period of

2013.

30. OTHER OPERATING INCOME

The other operating income, for the periods ended 31st December 2014 and 2013, was as follows:

31.12.2014 31.12.2013

Exchange rate gains 6.976.097 4.461.178

Operating expenses recovery 1.896.895 1.293.723

Excess Tax Estimate 503.345 478.380

Gains on Financial Instruments 94.644 188.947

Additional income 89.095 141.963

Other 1.039.797 477.390

10.599.874 7.041.580

The significant variation in foreign exchange differences is due to the evolution of the dollar in 2014 when

compared to 2013.


31. OTHER OPERATING EXPENSES

The other operating expenses in the periods ended 31st December 2014 and 2013 were as follows:

31.12.2014 31.12.2013

Tax on transactions - Bolivia Branch 1.053.951 -

Exchange rate losses 1.013.919 5.478.849

Inventory losses 897.690 1.289.318

Offers and samples 124.732 285.194

Donations 342.721 261.080

Losses on financial instruments 50.788 185.237

Other 2.732.554 2.380.437

6.216.355 9.880.114

The item of Losses on inventories includes an 849.023 euros write-off for obsolete informatics material.

The significant variation in foreign exchange differences is due to the evolution of the dollar in 2014 when

compared to 2013.

32. AMORTISATION AND DEPRECIATION LOSSES / REVERSALS

In the periods ended 31st December 2014 and 2013, amortisation and depreciation expenses were as follows:

31.12.2014 31.12.2013

Tangible assets 655.018 570.308

Intangible assets 366.887 221.533

1.021.905 791.841

33. INTEREST AND SIMILAR INCOME / EXPENSES

Interest and similar income /expenses, for the periods of 2014 and 2013, had the following composition:

INTEREST AND SIMILAR INCOME 31.12.2014 31.12.2013

Exchange rate gains 2.015.292 6.927.802

Interest and financial costs recovery 188.499 1.794.228

2.203.791 8.722.030

INTEREST AND SIMILAR EXPENSES

Interest 5.239.161 5.829.556

Exchange rate losses 6.393.119 5.343.406

11.632.280 11.172.962

(9.428.489) (2.450.933)


The significant variation in foreign exchange differences is due to the evolution of the dollar in 2014 compared

to 2013.

34. INCOME TAXES

The breakdown of the amount of tax for the period recognised in the financial statements is as follows:

31.12.2014 31.12.2013

Current taxes (2.442.177) (2.314.741)

Deferred taxes (122.137) (4.417)

Income taxes for the period (2.564.314) (2.319.159)

Income taxes (2.564.314) (2.319.159)

The tax rates as at the balance sheet date for the periods ended 31st December 2014 and 2013 were the

following:

INCOME TAX 31.12.2014

Tax rate 23 %

Municipal surcharge 1.50 %

State tax

Over € 1.5 million to € 7.5 million 3 %

Over € 7.5 million to € 35 million 5 %

More than € 35 million 7 %

CURRENT TAX FOR THE PERIOD 31.12.2013

Tax rate 25 %

Municipal surcharge 1.50 %

State tax

Over € 1.5 million to € 7.5 million 3 %

More than € 7.5 million 5 %

The applicable tax rate for the year ended 31st December 2014 was 23 % (25 % for 2013), plus 1.5 % municipal

surcharge and 3 % state tax on the profit in excess of 1.5 million euros up to 7.5 million euros and 5 % on the

profit exceeding 7.5 million euros.


The reconciliation of the theoretical and the effective tax rate is as follows:

31.12.2014 31.12.2013

PROFIT BEFORE TAXES 9.832.664 9.055.159

Nominal Tax rate 23 % 25 %

EXPECTABLE INCOME TAX 2.261.513 2.263.790

Tax Difference – Bolivia Branch 19.568 -

TAX EFFECT PRODUCED BY:

Tax benefits (22.600) (320.898)

Tax benefits - previous years (115.769) (64.060)

Other specific taxations 77.419 60.215

Municipal surcharge 129.162 130.624

State tax 235.541 240.414

Permanent Differences (38.666) -

Other 18.146 9.074

INCOME TAX FOR THE PERIOD 2.564.314 2.319.159

EFFECTIVE TAX RATE 26,08 % 25,61 %

35. DIVIDENDS AND EARNINGS PER SHARE

Earnings per share for the periods ended 31st December 2014 and 2013 were calculated taking into account

the following amounts:

NET PROFIT: 31.12.2014 31.12.2013

Net profit considered to calculate basic earnings per share:

Net profit 7.268.349 6.736.001

Effect of the potential shares:

Interest related to convertible bonds (net of tax) - -

Net profit considered to calculate diluted earnings per share 7.268.349 6.736.001

NUMBER OF SHARES:

Weighted average number of shares used to calculate basic earnings per share 2.500.000 2.500.000

Effect of potential ordinary shares from convertible bonds - -

Weighted average number of shares used to calculated diluted earnings per share 2.500.000 2.500.000

Basic earnings per share 2.91 2.69

Diluted earnings per share 2.91 2.69

During the periods ended 31st December 2014 and 2013 there were no changes to the number of shares.


36. RELATED PARTIES

Transactions and balances between the Company and related parties on 31st December 2014 and 2013 are

shown in the table below:

TRANSACTIONS:

SALES AND SERVICES RENDERED 31.12.2014 31.12.2013

ALGAPLUS 86 -

AT INFORMÁTICA 98.246 13.891

YOUTSU 454.584 191.225.668

JP SÁ COUTO ANGOLA 77.080 896.294

João Paulo Sá Couto 1.136 5.153

Jorge Manuel Sá Couto 21.750 1.998

652.882 192.143.006

PURCHASES AND SERVICE ACQUISITIONS 31.12.2014 31.12.2013

JP SÁ COUTO SGPS 317.133 457.072

AMG 1.395.158 -

IMOTSU 472.464 500.977

AT INFORMÁTICA 1.719.913 3.320.944

YOUTSU 41.473 -

3.946.141 4.278.993

INTEREST ON LOANS OBTAINED 31.12.2014 31.12.2013


16.244 21.568

BALANCES:

TRADE DEBTORS 31.12.2014 31.12.2013


AMG 108 -

JPMW 515.303 -

YOUTSU 151.153 35.793.454

AMPLITUDE NET 38.827 -

JP SÁ COUTO ANGOLA 1.482.375 1.299.894

João Paulo Sá Couto 1.363 6.159

Jorge Manuel Sá Couto 21.574 2.314

2.508.899 37.333.796

TRADE CREDITORS 31.12.2014 31.12.2013

JP SÁ COUTO SGPS 284.826 9.533

IMOTSU 24.045 4.062


YOUTSU 23.721 -

AMG 226.053 -

639.652 357.833


LOANS OBTAINED 31.12.2014 31.12.2013

AT INFORMÁTICA 360.000 480.,000

360.000 480.000

The terms or conditions applied between the Company and related parties are substantially identical to those

that would be contracted, accepted and applied between independent entities in comparable transactions.

The remunerations to the Governing Bodies were the following:

31.12.2014 31.12.2013

BOARD OF DIRECTORS REMUNERATION 334.540 734.338

Fixed 312.500 590.481

Variable 22.040 143.858

STATUTORY AUDITOR’S REMUNERATION 19.200 16.200

37. SUBSEQUENT EVENTS

After the reporting date, and until the preparation of this report, there were no facts likely to change the

situation disclosed in the accounts for the purposes of the provisions article 66, no. 5 – b) of the Portuguese

Commercial Company Law.

38. CONTINGENCIES

All proceedings that where lodged against JP-ik have already been archived or subject to acquittal, most

notably (due to the exposure in the press) the acquittal requested by the Portuguese Public Prosecutor’s office

and granted by the judges in the case known as “VAT Carrousel”


39. GUARANTEES PROVIDED

The Bank guarantees provided by the Company as at 31st December 2014 were the following:

Bank Beneficiary Currency Amount Income

BBPI MICROSOFT EUR 500.000 06/03/2015

Santander DA IIEE ALGECIRAS EUR 109.596 03/09/2017

Santander C CEIBAL APOYO EDUCACION USD 90.125 10/10/2015

Santander C CEIBAL APOYO EDUCACION USD 182.000 22/12/2015

Total Guarantees provided in EUR 609.596 EUR

Total Guarantees provided in USD 272.125 USD

40. ENVIRONMENTAL INFORMATION

The Company adopts the necessary measures concerning the environmental area, in order to comply with

current legislation.

The Board of Directors of JP-ik does not foresee any risks related to environmental protection and

improvement, and JP-ik has not incurred in any infringements concerning this matter during the 2014 financial

year.

41. LEGALLY REQUIRED INFORMATION

The Board of Directors reports that the Company does not have any overdue debts to the State under Decree-

Law 534/80 of 7th November.

In compliance with the provisions of Decree-Law no. 411/91 of 17 October, the Board of Directors reports that

the Company has paid all its Social Security contributions within the legally stipulated time-limits.

For the purposes of article 55, no. 5 – d) of the Portuguese Commercial Company Law, during the period of

2014, the Company did not trade its own shares, and does not own any of its own shares as at 31st December

2014.


No authorisations were granted under Article 397 of the Portuguese Commercial Company Law, therefore

there is nothing to declare for the purposes of article 66, no 2 – e) of the Portuguese Commercial Company

Law.

42. FINANCIAL STATEMENTS APPROVAL

These Financial Statements were approved by the Board of Directors on the 14th of May 2015.

There were no relevant changes in the conditions as at the balance sheet date.

Subsequent to 31st December 2014 and to date, there have been no material events that may materially affect

the financial position and the future results of the Company.


JORGE MANUEL F. M. SÁ COUTO JOÃO PAULO F. M. SÁ COUTO

(CHAIRMAN) (VICE-CHAIRMAN)

The Chartered Accountant

PEDRO ABREU CRUZ LOPES

(TOC NO. 68609)




Documents

J.P. Sá Couto, SA – Financial Statements