Abertis Infraestructuras S.A.
Annual Report 2003

Plain-text annual report

10.000 8.000 6.000 4.000 2.000 0 250 200 150 100 50 0 What are the financi al res ources? Abertis Group - Breakdown of liabilities Wh a t is o bta i ned ? Profit attributed to parent company Equity Provisions for liabilities & expenses Debt Other liabilities 400 300 200 100 0 1999 2000 2001 2002 2003 1999 2000 2001 2002 2003 Balanced financial structure Equity, which exceeds 3,000 million euros, represents 32% of total liabilities, and Debt, 37%. The provisions for liabilities and expenses, which basically correspond to the reversion fund, exceed 2,280 million euros. Profit has increased from 149 million euros in 1999 to 355 million in 2003 The expansion of the Group is carried out in a way that is compatible with increasing profits. The merger with Aurea results in a profit of 355 millon euros for 2003, which represents an 81.9% increase over 2002 (up 11.2% compared to the aggregate profit of Acesa and Aurea for 2002). How is i t d istributed? How is it va lu ed? Total dividends Evolution abertis vs Íbex-35 (Base 31/12/00 = 100) 200 150 100 50 0 abertis share price IBEX-35 1999 2000 2001 2002 2003 2000 2001 2002 2003 One of the highest dividend yields Outperforming the IBEX-35 Total dividends for 2003 exceed 237 million Euros. The steady accumulative growth of 5 % per share per annum is maintained. The Ibex 35 rose 28% in 2003, but remains below its closing level at the end of 2000. In contrast, abertis is one of the 4 shares in the index that closed up in each of the last three years. Highlights of the year 1st quarter 2003 • Incorporation of the company Araba Logística (in which abertis logística has a 39.5% holding) in Vitoria, which will develop Arasur, the Multimodal Platform at Alava. • abertis strengthens its presence in Autostrade (increasing holding to 7.98%) following the completion of the Public Takeover Offer for Autostrade made by the core shareholders, structured through the company Schemaventotto. • Incorporation of the company Sevisur Logística (in which abertis logística has a 60% holding), which will develop the logistic platform for the port of Seville under the name of Zal Sevilla. 2nd quarter 2003 • Inauguration of A-6 Connection with Segovia by Castellana de Autopistas. • abertis’ shareholding in Saba reaches 99.23% after acquiring 39.91% of the shares for 134 million. • General shareholders’ meeting approves the financial statements for 2002 and agrees to pay a final dividend of Infraestructuras and Aurea Concesiones de Infraestructuras, leading to the creation of abertis. 0.223 per share. At the same time, it approves the merger of Acesa • Saba reaches 100% control of its Portuguese subsidiary Spel, with the acquisition of 50% of the company, involving an investment of 17.4 million. • On 30 May the merger of Acesa and Aurea is effective asot 1 January 2003. abertis is listed for trading on the Barcelona, Bilbao, Madrid and Valencia Stock Exchanges on 2 June. • abertis telecom increases its shareholding in Xfera from 5.69% to 8.36%. The guarantees presented as shareholder of Xfera are reduced from 153.2 million to 39.2 million. 3rd quarter 2003 • The merger of Aucat and Holdaucat is completed (both companies 100% owned by abertis) effective for accounting purposes asot 1 January 2003. • abertis increases its presence in international stock exchange indexes and is included in the Dow Jones Stoxx Sustainability Index. • The extraordinary general meeting approves the bonus issue of 1 share for every 20 shares held (for an amount of share. 75 million) and the payment of an interim dividend of 0.229 per • abertis telecom increases its shareholding in Tradia to 100 % on acquiring the outstanding 5 % for the sum of 6.6 million. • Inauguration of the Radial-2 Madrid-Guadalajara of the Henares Highway, in which abertis holds 22.49%. 4th quarter 2003 • In 2004 abertis is awarded the Alicante Ring Road highway concession, after submitting a tender as part of a consortium. • ASF and abertis sign an agreement to collaborate on technical matters related to highway management and share future projects for the management of car parks and logistic platforms. • abertis completes, after gaining clearance from the Competition Authorities, its acquisition of Retevision Audiovisual, the leading company in Spain in the transportation and broadcast of audiovisual signals. • The Silleda-Lalín stretch of the Santiago-Alto de Santo Domingo highway is inaugurated, operated by Autopista Central Gallega, in which abertis holds 18%. Annual report summary Chairman’s letter Annual report Governing bodies Strategy Structure and activity Shareholders and stock market Financial information Sustainability Report (1) Social Responsibility, a way of working Sustainability Indicators Strategic Plan for Corporate Social Responsibility Terminology 1 2 3 4 5 1 2 3 4 4 8 11 17 19 47 53 140 145 149 178 191 Corporate Governance Report (2) (annex) (1) The criteria of the Global Reporting Initiative (GRI) have been used to prepare the Sustainability Report. (2) The Corporate Governance Report is included as an annex. Chairman’s letter De ar s h areho lde rs, Annual report 5 It is with great satisfaction that I present you with the 2003 results, which represent an exceptional year worthy of your confidence in the project that we have begun as the new abertis. Creating value for shareholders with an adequate combination of low risk, growth, return and service, under management focused on maintaining a steady and sustainable dividend policy, is the fundamental strategic objective for activity in all the business sectors in transport and communication infrastructures where we are present. This has been an excellent year in which two fundamental operations were successfully completed: firstly, the merger of Acesa and Aurea in May, giving rise to abertis; and secondly, the acquisition of Retevisión Audiovisual in December to be incorporated into our telecommunications infrastructure sector of activity, in an operation that gives abertis telecom a position of leadership in the market. Together with the priority of creating shareholder value, we promote excellence in the quality of service to our clients and the development of a business organisation committed to the country and the different regions in which we have a very direct local presence, where we continue investing, generating employment and facilitating commercial and industrial activity, as well as the mobility of citizens. An essential characteristic of our organisation is to ensure on-going dialogue with the public administration as our activity includes operating infrastructures under administrative concessions and operating in heavily regulated sectors. The Spanish economy has performed strongly during the year with continued strength in consumption and construction, key elements in the 2.4 % growth in Gross Domestic Product, in contrast to the scant 0.4% increase across the Euro zone. Optimism regarding a gradual recovery in the international economy is supported by an extraordinary improvement in productivity levels in the United States, with a complete lack of inflationary pressure, at a rate of 2.3%, although the labour market has not improved and has yet to create employment. This is the first annual report presented for Abertis Infraestructuras, recording a profit due to the parent company of 355 million euros, an increase of 11.2% over the aggregate results of Acesa and Aurea in 2002. abertis proposes to pay total dividends of 237.4 million euros, 52 % more than the previous year after the inclusion of new shares issued in the merger share exchange and the 5% increase in issued shares following the bonus share issue. The gross dividend per share of 0.452 euros equates to a dividend yield of 3.8% based on the year end closing price, a level which continues to give the company one of the highest dividend yields amongst the main listed companies in Spain. In 2003 the ordinary shares of abertis revalued by 17%, taking into account the adjustment for the bonus issue. The merger gave the company a new dimension, with greater visibility in the investment community, greater weighting in the stock exchange indexes and an improved position with respect to opportunities for development. This outlook saw the share price mark annual and historical highs. Chairman’s letter 6 Annual report Leadership in distinct sectors Our business model focuses the organisation on being one of the leading infrastructure operators in Europe in four key sectors: highways, telecommunication infrastructures, car parks and the promotion of logistic service areas. The strategy of diversification initiated five years ago does not prevent our group from being highly specialised in the sectors where we enjoy a position of leadership in Spain. In the highway sector abertis has not just consolidated a position of leadership, as indicated by the total length of the highway networks managed by the country’s three leading operators - Acesa, Aumar and Iberpistas – but during the year new highways, in which abertis has shareholdings, have also opened to traffic and they will undoubtedly become key highway axes in their areas. These are the AP-51 highway connection with Segovia, the Silleda-Lalín Centre stretch of the Santiago-Alto de Santo Domingo highway, and the opening of the R-2, R-3 and R-5 radial highways giving access to the city of Madrid. The portfolio of highway concessions under direct management represents 84% of total group operating income and therefore contributes to the economic strength that provides support to the combination of growth projects, both highways that are beginning to operate and investments in other sectors that have yet to reach maturity. Internationally, abertis continues to maintain an excellent capacity to work with the leading European operators in the highway sector such as the Italian company Autostrade and the Portuguese company Brisa, with cross shareholdings and joint research projects. In a similar manner, abertis signed an agreement with the French company Autoroutes du Sud de la France (ASF) in 2003 to collaborate on technical questions related to highway management and to working together on future projects in France. This situation allows abertis to occupy a privileged place in the business environment of the new Europe, with the expansion to new member states and the prospect of new opportunities in the area of infrastructures that, without doubt, will arise and will require the involvement of private investment. As a final note on this fundamental sector for our group, special attention should be given to the development and implementation of the new tele-toll, which now allows one system to be used on different highways in Spain, with the clear advantages of convenience, safety, environmental protection and improved traffic flow. In the area of technology, managed through the shared services centre serviabertis, the company is leading knowledge on tele- toll system in Spain and, at the same time, is playing an authoritative role in Europe. We are now leaders in the sector of telecommunication infrastructures following the acquisition of Retevisión Audiovisual, the leading company in Spain in transporting radio and television signals, which was authorised by the Competition Authorities and the Council of Ministers. With Tradia, a company in which abertis gained 100% control in 2003, leadership in Catalonia is assured. It also brings innovation and possibilities for new services through a great capacity for client service. Annual report 7 In the car park sector, Saba also holds its position and, more importantly, has the best profile in terms of location, quality and services for its clients. During 2003, abertis acquired a further 40% of Saba to raise its shareholding to almost 100%. Its international expansion has continued through new projects and the extension of concessions in Italy, as well as increasing its shareholding in the Portuguese company Spel by 50 % to gain 100% control. In reference to the area of logistics, work got underway in 2003 on two important projects in Álava and Seville, which sees this activity expanding beyond Catalonia. We continue to be interested in investing in new logistic platforms when the opportunities that the market offers meet the criteria of abertis logística for this sector, characterised by a lack of private operators like us that are not property development companies. Our objective, as always, is to make long-term investments and be involved in management together with the local partners whose knowledge of this field is much greater. A commitment of these characteristics requires projections of long-term profitability and solvent quality ratios in all the logistic projects that carry the seal of abertis. Corporate Governance and Social Responsibility During 2003, abertis has worked hard to adopt regulatory instruments that provide the best Corporate Governance, integral management under guidelines of Social Responsibility and, in general, best practices of transparency with financial markets required by companies in the 21st Century. In the Annual Report on Corporate Governance, which is included as an annex, abertis provides extensive information on the shareholding structure of the company, the Board of Directors, the board committees, and the regulations of the Annual General Meeting, amongst other matters. The Strategic Plan for Social Responsibility is also included. Its objective is to establish the lines of action for the corporation to make available a management system for Social Responsibility to ensure continuous improvement in all companies of the group. In any event, beyond the regulation on good governance and strict compliance with it, it is fundamental for all of us that form part of abertis that, more than ever, we are able to build an organisation day by day in which the ethical behaviour of people goes beyond the technical and bureaucratic aspects. This is our commitment to shareholders, to our employees and to our clients. We thank them all for their confidence. I would also like to thank the members of the Board of Directors, the management team and all the employees and collaborators for their commitment and dedication. Isidre Fainé, Chairman of abertis Annual report 10 Annual report 1 1.1 1.2 1.3 1.4 2 3 3.1 3.2 3.3 Governing bodies Board of Directors Delegated board committees Management team Business units Strategy Structure and activity Structure Human resources Activity for the year Highways Car Parks Logistic Services Telecommunications infrastuctures Airports 3.4 Performance for the year Consolidated figures Parent company figures Shareholders and stock market Stock market conditions Evolution of the share Evolution of share capital - Increases Dividend and shareholder yield Shareholders Significant shareholdings Market information Financial information Consolidated annual accounts 4 4.1 4.2 4.3 4.4 4.5 4.6 4.7 5 5.1 5.2 Parent company annual accounts 102 11 12 13 14 15 17 19 20 21 23 25 33 36 39 41 42 42 44 47 48 48 50 50 51 51 51 53 54 1 Governing bodies 1.1 Board of Directors 1.2 Delegated board committees 1.3 Management team 1.4 Business units 1 1 Board of Directors 12 Annual report The members of the Board of Directors of abertis at the time of preparing the annual accounts for 2003 are: Isidro Fainé Casas (Chairman) Pablo Vallbona Vadell (1st Deputy Chairman) Carmen Godia Bull (2nd Deputy Chairman) Ángel García Altozano (3rd Deputy Chairman) Salvador Alemany Mas (Chief Executive Officer) Jordi Aristot Mora Gilberto Benetton Caixa d’Estalvis de Catalunya, represented by Josep María Loza Xuriach Enrique Corominas Vila Dragados Obras y Proyectos, S.A., represented by Demetrio Ullastres Llorente Maria Isabel Gabarró Miquel Carlos Godó Valls Comunidades Gestionadas, S.A., represented by Antonio García Ferrer Ernesto Mata López Enric Mata Tarragó Vasco de Mello Jordi Mercader Miró José Luis Olivas Martínez Ramón Pascual Fontana Unicaja, represented by Braulio Medel Cámara Miquel Roca Junyent (Secretary, non-board member) Juan Arturo Margenat Padrós (Deputy Secretary, non-board member) In 2004 the following have ceased to act as board members: Dragados Concesiones de Infraestructuras, S.A., Julio de Miguel Aynat and Grupo Dragados, S.A. In 2003 Braulio Medel Cámara ceased to act board member, and became the representative of Unicaja. In 2003, as a result of the merger between Acesa Infraestructuras, S.A. and Áurea Concesiones de Infraestructuras, S.A., which led to abertis, the following people ceased to act as board members: Enrique Alcántara-García Irazoqui, Antoni Brufau i Niubó, Jean-Louis Chaussade, Pere Antoni de Dòria i Lagunas, Ricard Pagès i Font and Antoni Vila i Bertrán. Annual report 13 1 2 Delegated board committees Executive Committee Isidro Fainé Casas (Chairman) Pablo Vallbona Vadell Carmen Godia Bull Ángel García Altozano Salvador Alemany Mas Caixa d’Estalvis de Catalunya, represented by Josep María Loza Xuriach José Luis Olivas Martínez Miquel Roca Junyent (Secretary) Juan Arturo Margenat Padrós (Deputy Secretary) In 2004 the following have ceased to act as committee members: Dragados Concesiones de Infraestructuras, S.A. and Julio de Miguel Aynat. During 2003 the following ceased to act as committee members: Enrique Alcántara-García Irazoqui, Antoni Brufau i Niubó and Enric Mata Tarragó. Audit and Control Committe e Ernesto Mata López (Chairman) Caixa d’Estalvis de Catalunya, represented by Josep María Loza Xuriach Enrique Corominas Vila Juan Arturo Margenat Padrós (Secretary) During 2003 Enrique Alcántara-García Irazoqui ceased to act as committee member. N omi nation and Re mune ration Co mmi ttee Jorge Mercader Miró (Chairman) Maria Isabel Gabarró Miquel Ángel García Altozano Juan Arturo Margenat Padrós (Secretary) 1 3 Management team 14 Annual report Chief Executive Officer: Salvador Alemany Mas Company Secretary: Juan Arturo Margenat Padrós Director of Legal Services: Marta Casas Caba Director of Legal Services Madrid: Jesús Pozo Soler Managing Director of Corporate Management Officer: Josep Martínez Vila Director of Investment Analysis: David Díaz Almazán Director of Tax Planning: José María García Martín Director of Operational Development: Jordi Graells Ferrández Director of Corporate Security: Lluís Jiménez Arrebola Director of Management Planning and Control: Jordi Lagares Puig Director of Organisational Development: Joan Rafel Herrero Director of Construction: Rodolfo Vicente Bach Managing Director of International Highways Officer: Rafael Mourelle Morales Director of Financial Coordination: Carlos Alberola Fioravanti Chief Financial Officer: Miguel Abeniacar Trólez Director of Finance: Lluís Subirà Laborda Director of Institutional Relations and Quality: Ricard Maxenchs Roca Director of Studies and Corporate Communication: Enric Venancio Fillat Shared services centre Managing Director of serviabertis: Josep Padrós Busquets Deputy Managing Director. Director of Infrastructures and Technical Services: Juan Rodríguez de la Rubia Deputy Managing Director. Director of serviabertis Madrid: Antonio Rodríguez López Director of Administration and Purchasing: Manuel Cruces Socasau Director of Corporate Organisation and Systems: Jordi Pujol-Xicoy Gimferrer 1 4 Business units Highways Annual report 15 Managing Director for Catalonia and Aragon (Acesa and Aucat): Lluís Serra Serra Managing Director for East-South: Rafael Mourelle Morales Managing Director for Centre-North (Iberpistas): José María Morera Bosch Managing Director of Aumar: Américo Jiménez Rodríguez Managing Director of A6: Rubén Fernández Fuentes Managing Director of Castellana: Jose Antonio López Casas Managing Director of Aulesa: Manuel Benito Izquierdo Managing Director of Gco: José Luis Giménez Sevilla Managing Director of APR: Rafael Acosta Rosario Managing Director of Iberpistas Chile and Gesa: Enrique Balaguer Ferrer Car parks Managing Director of Saba: Joan Font Alegret Chief Executive Officer of Saba Italia: Mássimo Pastorelli Chief Executive Officer of Spel: António Henrique de Oliveira Mendes Chief Executive Officer of Rabat: Vicente Benetito Gimeno Logistic services Managing Director of abertis logística: Joaquim Gay de Montellà Ferrer-Vidal Managing Director of Sevisur: Francisco Rodríguez Piñero Telecommunication infrastructures Managing Director of Tradia: Tobías Martínez Gimeno Managing Director of Retevisión: Josep Canós Ciurana 41 Business units 16 Annual report Airports Managing Director of Codad: Gonzalo Iglesias Valdés Companies under joint control Chief Executive Officer of Avasa: Santiago Corral y López-Dóriga Managing Director of Trados 45: Jesús Martínez Pérez Managing Director of Parc Logístic: Joaquín Zueras Abizanda 2 Strategy 2 Strategy 18 Annual report abertis is firmly committed to being one of the leading groups in Europe in the management of infrastructures serving mobility and communications with the objective of continuing to provide its shareholders a balanced combination of investments that assure: • An appropriate combination of low risk, growth and return • The maintenance of a solid and sustainable dividend policy • Excellence in the quality of service to our clients • The development of an organisation that brings wealth and well-being to the surrounding area To achieve this its investments are selected on the basis of the following key lines: • Management of infrastructures • Commitment to long-term investments gaining a significant presence in the decision making bodies and providing the management expertise that abertis has accumulated over time • Involvement in projects where the overall risks and expected cash flow can be clearly estimated at the outset At the same time, in the subsequent management and co-ordination of the projects, special attention is given to the projection within the organisation and the interaction and awareness of the environment and the territory, as well as the requirements of transparency in corporate governance. These issues are covered in the Sustainability Report and the Corporate Governance Report respectively, as part of this annual report. 3 Structure and activity 3.1 Structure 3.2 Human res ources 3.3 Acctivity for the year Highways Car Parks Logistic Ser vices Telecommunications Airpor ts 3.4 Perfor mance for the ye ar Cons olidated figures Parent company figures 3 1 Structure 20 Annual report ABERTIS INFRAESTRUCTURAS serviabertis HI GH WAYS C A R PA RKS Acesa Aumar Iberpistas Autopista A-6 Aucat Castellana Aulesa Proconex GCO APR Gesa Avasa Trados 45 Túnel del Cadí Autema Concesiones de Madrid Henarsa Accesos Madrid Central Gallega Brisa Coviandes Autostrade Elqui Ausol RMG AIR P ORTS Codad Saba Parbla Satsa Spasa Saba Italia Rabat Spel L O G I ST I C S E RV I C E S abertis logística Sevisur Areamed 2000 Parc Logístic de la Zona Franca Arasur Cilsa TELECOMMUN IC ATION INFRA STRUCTUR ES abertis telecom Tradia Retevisión Torre de Collserola Subsidiary companies Joint venture companies Other holdings Annual report 21 3 2 Human Resources This year has seen a consolidation in the process of developing the new organisational reality. The support structures and business units have achieved greater levels of coordination and, consequently, new possibilities are opening for synergies in both knowledge and operations. The experience of integrating businesses and, at the same time, dealing with change are aspects that have become part of the employees’ skills base, which are useful in facing situations now and in the future that require flexibility, agility and the capacity to respond in ambiguous environments. Development of individuals Training has continued to be one of the fundamental lines of personnel management policy across the group’s different businesses. Of special note is the effort made by the different companies in the area of training in Workplace Health and Safety, an effort rewarded by a decline in workplace accidents. Work has continued on influencing client culture through the development of different training initiatives aimed at strengthening this vision. Evidence of the commitment given to the development of employees is seen in the thousands of hours of training given and the hundreds of courses organised across the different business units of the abertis group. The dividends from this commitment can be seen in the fact that a large number of vacant positions are covered by internal promotions. Notwithstanding this, looking outwards to maintain the flow of new ideas and renewal has been encouraged through collaboration programs with universities, leading to the incorporation of young people under scholarships, amongst other benefits. Internal communication In addition to the existing publications Acesa Informa and Flaix Laboral, of Acesa; Lasetze of Aucat; Hora SABA, and Cuadernos de Autopista, of Iberpistas, a new publication was added in September 2003, the abertis magazine, which is published quarterly and distributed to all employees in the group with the aim of uniting them and informing them of the different realities with the new dimension of the business. Work has been done during this year on improving and promoting the corporate Intranet, a project that concluded at the beginning of 2004. Aside from the functional improvements, it provides a space to share information and knowledge. Social interaction amongst employees continues to be encouraged with the organisation of different sporting and cultural activities in which employees from different business areas of abertis have participated. An event of note at the end of the year was the public presentation of the abertis Choir, which gave a small concert during the Christmas period. Health and safety In general, the levels of workplace accidents have declined in the different companies, with reductions of over 30% in some cases. The effort made in the area of training (first aid, emergency plans, fire fighting, accident assistance, risks of moving loads, electrical and mechanical risks and the risks of height, along with many others) together with the support given to the Health and Safety Committees, the awareness building campaigns and the 23 Human Resources 22 Annual report technical work are bearing fruits. However, rather than aiming for the lowest workplace accident rates in the sector, the objective of our companies should be to achieve an environment free of accidents. Labour relations This year has been especially active with respect to labour relations. Companies such as Acesa, Aucat and Saba have signed new agreements; until 2005, in the case of Acesa, and until 2006, for Aucat and Saba. In those companies where no new agreement has been negotiated, the committee has been renewed, and in the case of Iberpistas, the negotiation of a new agreement has commenced. Beyond the difficulties involved in these processes, signing these agreements is a source of satisfaction, as it is a good indicator of the willingness of the parties to reach an understanding in the common objective of seeking a balance between improving labour conditions for employees and the business development. Evolution of average equivalent workforce abertis (1) serviabertis (2) Acesa Group (3) Iberpistas Group Aumar (4) Aulesa (4) Trados 45 (4) Saba Group abertis telecom Group abertis logística Group Codad (4) Total (5) 2003 101 74 1,951 669 665 49 1 920 257 11 43 2002 697 - 1,283 725 - - - 991 294 5 - 4,741 3,995 (1) In 2002, the first six months corresponded to concession activity and the second six months to corporate services as parent of the Group. (2) Commenced its activity in November 2002. (3) For comparative purposes we have included the workforce of the company Gco, as the shareholding was transferred to Acesa in 2003. In addition, the company Acesa began its activity in the second half of 2002. Incorporated in the Group in 2003. (4) (5) The total of the average equivalent workforce does not coincide with the figures given in the annual report due to the accounting criteria for consolidation (4,617 employees in 2003). The acquisition of Retevisión Audiovisual was finalised in December 2003, so its employees have not been included in calculating the average equivalent workforce. If Retevisión Audiovisual were taken into account, the average equivalent workforce would rise to almost 5,800 employees. 3 3 Activity for the year Distribution of operating income: Annual report 23 Contribution by sector National/International 5 % 7 % Car Parks Telecommunications 6 % International 3 % Airports 1 % Logistics 84 % Highways 94 % National Accumulated investment by shareholdings (*) (million euros) 231 (9%) Car Parks 46 (2 %) Airports 57 (2 %) Logistics 346 (13%) Telecommunications 1,980 (74%) Highways (*) does not include investment in Acesa, Aumar or Iberpistas. 33 Activity for the year Highways Annual report 25 The highway concessions business unit continues to be the main activity of abertis and represents 84% of total operating income. The merger with Aurea during 2003 has clearly strengthened this activity with the incorporation of Aumar (second national operator), as well as other highway concessionaires both nationally and internationally. The current portfolio of concessions provides an excellent combination both geographically and in terms of the level of maturity of the projects (from well established concessions to projects under construction or in the initial phase of their activity), which ensures a balanced combination of future flows for shareholders. Spain: In Spain abertis directly manages more than 1,500 km of highways, which represents 63 % of the national toll highway network in service. On a national level, the highways business unit is divided into three geographical zones, whose head companies are the operators that historically have been the leaders in Spain: Catalonia- Aragon zone through Acesa, Centre-North zone through Iberpistas and East-South zone through Aumar. Highways under direct or shared management Highway Montgat-Palafolls (C-31/C-32) Barcelona-La Jonquera (C-33/AP-7) Barcelona-Tarragona (AP-2/AP-7) Montmeló-El Papiol (AP-7) Zaragoza-Mediterráneo (AP-2) Tarragona-Alicante (AP-7) Sevilla-Cádiz (AP-4) Villalba-Adanero (AP-6) Villacastín-Ávila (AP-51) San Rafael-Segovia (AP-61) Castelldefels-El Vendrell (C-32) León-Astorga (AP-71) Bilbao-Zaragoza (AP-68) M-45 Tramo II Total Km 49 150 100 27 216 374 94 70 23 28 58 38 294 15 1,534 Concessionary % shares End concession Acesa 100 2021 Aumar 100 2019 A-6 Castellana Aucat Aulesa Avasa Trados 45 100 100 100 79.2 50.0 50.0 2031-2036 2031-2036 2039 2055 2026 2029 Highways in Spain Santiago 5 León Alto de Santo Domingo Astorga Bilbao 4 26 Annual report Adanero Ávila Navalcarnero 6 Segovia Guadalajara Madrid Arganda del Rey Zaragoza Valencia Alicante 3 1 La Jonquera Palafolls Barcelona Tarragona 2 direct or joint management other shareholdings b 1 2 a 5 Aulesa a) León-Astorga (AP-71) Central Gallega b) Santiago-Alto Sto. Domingo (AP-53) 38 km 57 km Acesa a) Barcelona-Tarragona (AP-2/AP-7) Aucat b) Castelldefels-El Vendrell (C-32) 100 km 6 58 km a b g c h f e d A-6 a) Villalba-Adanero (AP-6) 70 km Castellana b) Villacastín-Ávila (AP-51) c) San Rafael-Segovia (AP-61) 23 km 28 km 7 Seville Cadiz Acesa a) Montgat-Palafolls (C-31/C-32) 49 km b) La Jonquera-Barcelona (C-33/AP-7) c) Montmeló-El Papiol (AP-7) Túnel del Cadí d) Túnel del Cadí (C-16) Autema e) Sant Cugat-Manresa 150 km 27 km 30 km 48 km Aumar a) Tarragona-Alicante (AP-7) 374 km Acesa b) Zaragoza-Mediterráneo (AP-2) 216 km Concema d) M-45 Tramo I Trados 45 e) M-45 Tramo II 15 km 15 km Accesos Madrid f) Madrid-Arganda del Rey (R-3) 33 km 53 km g) Madrid-Navalcarnero (R-5) Henarsa h) Madrid-Guadalajara (R-2) Aumar a) Sevilla-Cádiz (AP-4) 81 km 94 km a Avasa a) Bilbao-Zaragoza (AP-68) 294 km 7 a d e b c a a b b a 1 2 3 4 33 Activity for the year Activity Annual report 27 In general, the evolution of the activity of the group's main concessions has been favourable, with all highways registering traffic growth. The comparable combined average daily traffic (ADT) (Acesa, Aucat, Aumar, A6 and Avasa) rose to 27,354 vehicles, 3.7 % more than the previous year. Key data of the companies that directly manage highways Thousand euros Var. 2.9% 4.6% 4.2% (**) Operating income Var. EBITDA Var. 513,095 8.3% (*) 386,219 6.1% (*) 304,663 8.2% 257,297 8.6% 93,195 13.0% 76,547 8.9% (*) 6,279 (**) 2,361 (**) 38,543 23,323 28,781 5,039 27,492 9.3% 72,693 15.3% 60,831 15.5% Concessionary ADT 2003 Acesa Aumar A6 Castellana Aucat Aulesa Avasa 4,271 (**) 4,306 12,811 3.7% 118,238 (**) 7.2% Trados 45 73,455 13.4% 19,438 48.7% 1,706 95,545 17,972 (**) 7.5% 56.8% (*) Figures for 2002. Includes the concessionary activity of the first six months carried out by their respective parent companies. (**) Aulesa activities commenced in December 2002, and Castellana in November 2002 and April 2003. The other concessions under direct management (Castellana, Aulesa and Trados 45) are in the first phase of their activity, so their data does not reflect the real level of future activity and is not comparable with the previous year. Castellana inaugurated the Ávila-Villacastín stretch in November 2002 and the San Rafael-Segovia stretch in April 2003. Likewise, Trados 45 (under shadow toll) and Aulesa opened to traffic in April and December 2002 respectively. Volume of business The national highway concessions managed directly represent 81.5% of all Group operating income, totalling 1,046 million euros, 71 % more than the previous year. Comparing this figure with the consolidated income of Acesa and Aurea in 2002, the increase was 16.8%. This increase is due to the positive evolution in the national highway activity already noted and the inclusion of Iberpistas for the entire year (only six months in 2002). EBITDA for these highways totalled 829 million euros, an increase of 16.2 % against the pro forma 2002 figure. 33 Activity for the year 28 Annual report Other shareholdings abertis also has shareholdings in the following concessionary companies, although it does not have a majority holding. Highway Km Concessionary % holding End concession Túnel del Cadí (C-16) Tramo I (M-45) Madrid-Arganda del Rey (R-3) Madrid-Navalcarnero (R-5) Madrid-Guadalajara (R-2) Sant Cugat-Manresa (C-16) 30 14 33 53 81 48 Túnel del Cadí Concema Accesos Madrid Accesos Madrid Henarsa Autema Santiago-Alto Sto. Domingo (AP-53) 57 Central Gallega 37.2 25.0 23.3 23.3 22.5 22.3 18.0 2023 2032 2049 2049 2024 2037 2074 Autema and Túnel del Cadí have continued to show a positive evolution, with increased traffic and income. The other companies are in an early phase of operation: Concema commenced its activity in April 2002, Henarsa in October 2003, the Central Galacian highway, in stages, in December 2002 and December 2003 and Accesos de Madrid in February 2004. The result for the year in each of these shareholdings is positive, and together they contributed 3 million euros to the consolidated profit of abertis. In 2004, a consortium in which abertis participates has been awarded the Alicante Ring road toll highway. International: Annual report 29 abertis has shareholdings in a series of international projects as shown in the following map: During the year an agreement was signed with ASF to collaborate on technical questions of highway management and to share future projects in France. Also the existing strategic international alliances have been strengthened with the main European operators, Brisa and Autostrade, with which abertis holds crossed shareholdings. Highways managed directly Country Argentina Puerto Rico (*) 57.6% voting rights. Concessionary % holding Km End concession GCO APR 48.6 (*) 75.0 53 2 2018 2027 International high ways 30 Annual report United Kingdom RMG A1-M Alconbury 22 km London RMG A419/417 Swindon-Gloucester 52 km Oporto Lisbon Portugal Brisa 1,106 km Puerto Rico APR Puente Teodoro Moscoso 2 km Colombia Coviandes Bogotá-Villavicencio 86 km Genoa Rome Naples Italy Autostrade 3,401 km Chile Elqui Los Vilos-La Serena 229 km Argentina GCO Luján-Buenos Aires 53 km Ausol Acceso Norte de Buenos Aires 119 km direct management other shareholdings 33 Activity for the year Other shareholdings Annual report 31 Country Argentina Colombia United Kingdom United Kingdom Chile Portugal Italy Concessionary % holding Km End concession Ausol Coviandes RMG RMG Elqui Brisa Autostrade 45.2 39.0 25.0 25.0 25.0 10.0 8.0 119 86 22 52 229 1,106 3,401 2020 2013 2026 2026 2022 2032 2038 In general, the evolution of the activity internationally has been very positive, with significant increases in traffic and income. The recovery of the economy in Argentina stands out, having commenced in 2002 and strengthened during 2003, resulting in a 13 % increase in transits for Gco, with income up 15 %, recording a profit in 2003. This recovery, and the anticipated renegotiation of the concession contracts with the administrations that awarded the concessions, gives an optimistic outlook for the evolution of the highway concessions that abertis has in Argentina. During 2003, following the Public Takeover Offer made by the core shareholders of Autostrade for the Italian concessionary, abertis has increased its indirect shareholding from 3.85% to 7.98 % without any additional investment. 33 Activity for the year Car Parks Annual report 33 Saba Aparcamientos, S.A. (Saba), the leading operator in the car park sector in Spain and one of the leaders in Europe, is the head company of the business unit for this activity. During the year, abertis has acquired a further 40% of Saba, to gain control of almost 100 % of the company. Key data of car park companies Company Country % holding No. spaces Spain Spain Portugal Andorra Spain Italy Morocco 99.2 100 100 90.3 88.0 60.0 51.0 42,763 4,936 15,850 295 947 12,525 3,765 81,081 Saba Parbla Spel Spasa Satsa Saba Italia Rabat Activity No. cities present 25 5 7 1 1 11 1 The Group manages more than 81,000 parking spaces distributed in a total of 141 operating units and is present in more than 50 cities. During the year vehicle rotation in the group's car park network has been affected by the termination of the concessions of the Metered Zone in Rome and Bolzano, registering 44.2 million vehicles, below the 2002 figure. Isolating this effect, there was an increase of 2.3% thanks to the positive evolution of the activity in the other businesses of the Group. The number of pass holders also increased by 3.4 %, to 22,444. Concerning the activity of Saba, the opening in March 2003 of the PA parking building at Barcelona Airport with 2,470 new spaces was particulady significant, bringing the total number of parking spaces managed by Saba in that car park to 13,140. Parbla, S.L. was awarded the operation of 320 spaces in Cerdanyola del Vallès (Barcelona). 33 Activity for the year 34 Annual report During the year, the process of the group's expansion has developed, particularly through Saba Italia which was awarded new car parks in Genoa (174 spaces), Sassari (1,740 spaces), Milan (340 spaces) and Pisa (392 spaces), and with the extension of the period of some of its concessions. Also of note was the opening of some car parks in Milan. It is anticipated that significant investments will continue to be made in this country, as it is a relatively unexploited market which offers business opportunities. In May 2003, Saba increased its shareholding in Spel by 50 %, taking 100% control of the company, consolidating its position in Portugal. At 31 December 2003, Spel’s contribution to the group was management of 19 centres and 15,850 parking spaces. In October this company began to operate the car park of Leiria, with 140 spaces, a project that involves the construction of another 309 parking spaces. In the international area the activity of Rabat Parking, S.A. also stands out with the opening of a car park with 448 spaces. Figures The car park sector represents 7% of the operating income, totalling 91 million euros, an increase of 5.6% on the previous year. The contribution to consolidated EBITDA is 33 million euros, 3.8% more than the previous year. During 2003 the results of Saba were influenced by a combination of three factors: the loss of the blue zone in Rome and Bolzano, for one part; the improvement in activity at a national level; and lastly, the increased contribution from Spel to the Group figures, after gaining 100 % control of the Company. Location of Saba car parks Annual report 35 Andorra 1 Barcelona Madrid Rome Lisbon Rabat 1 Location of Saba car parks in Catalonia Barcelona Badalona Blanes Cadaqués Cerdanyola Cornellà Figueres Girona Igualada Mataró Platja d’Aro Puigcerdà Sabadell Salou St. Joan Despí Sta. Perpètua de Mogoda Tarragona Terrassa Vic Vilafranca del Penedès Vilanova i la Geltrú 33 Activity for the year 36 Annual report Logistic Services The logistic service business unit is channelled through abertis logística, holder of the Group's shareholdings in this activity. This business unit is made up of a combination of projects at different phases of development in Barcelona, Álava and Seville: Key data of the logistic services companies Company City % holding Total area (m2) Current state abertis logística / CIM Vallès Barcelona 100.0 70,000 Operative Sevisur Seville Parc Logístic Zona Franca Barcelona Álava Barcelona Barcelona Arasur Cilsa Areamed 2000 Activity 60.0 50.0 39.5 32.0 50.0 250,000 Under construction 375,000 Operative 2,100,000 Under construction 2,200,000 Operative - Operative abertis logística continues operating the integrated goods area of the Central Integral de Mercancías (CIM) del Vallès, which increased income by 16 % in 2003, thanks to the positive evolution of the activity in the majority of services offered (truck parking, service station, hotel, food services, commercial area and mechanical repairs) and increased occupation in the leased offices building. The Parc Logístic de la Zona Franca, company held equally by the Consorcio de la Zona Franca de Barcelona (50%) and abertis logística, reached 100% occupation during 2003 in more than 100,000 m2 of warehouses and 20,000 m2 of leased offices. As a result, operating income increased 54% to 11 million euros, and EBITDA increased 95% to 8 million euros. Given the positive evolution of the activity and the full occupation of the logistics area, the promotion of new office buildings is now underway. CILSA, Centro Intermodal de Logística, S.A., in which abertis logística holds 32% and the Port Authority of Barcelona holds 51%, is developing Zal Barcelona and Zal Prat in two phases, a logistics area of more than 200 hectares in the port zone of Barcelona. The promotion of Zal Barcelona has been completed during 2003, achieving full occupation, and the works for the development of Zal Prat have continued. Operating income reached 12 million euros, up 9% on 2002 and EBITDA rose 20% to 4 million euros. Logistic infrastructures 1 Álava 3 Seville Barcelona 2 Annual report 37 1 Álava Arasur 210 hectares 2 Barcelona CIM Vallès PLZF CILSA (ZAL I + ZAL II) 7 hectares 38 hectares 220 hectares 3 Seville Sevisur 25 hectares New projects Highlights during the year were the start of new logistics projects in Álava and Seville, which were awarded at the end of 2002. Sevisur Logística S.A., owned by abertis logística (60 %), several Andalusian savings banks and the Seville Port Authority, was awarded the Zal Seville Port concession in December 2002. Sevisur will manage, under a 30 year concession, a 25 hectare site to develop logistics warehouses to be leased and 10 hectares for the provision of services. In February 2003 Arasur Logística S.A. was incorporated, in which abertis logística holds a 39.5% share acting as an industrial, technical and management partner, with the other shares held by the Caja Vital, the Diputación Foral de Álava and the Autonomous Government of the Basque Country. Arasur will construct and operate an inter-modal logistics platform, that it will own, in an area of more than 200 hectares in the south of Álava province. Figures The logistic services business unit recorded operating income of 15 million euros and contributed EBITDA of 6 million euros to the consolidated accounts of abertis. 33 Activity for the year Telecommunication infrastructures Annual report 39 abertis telecom is the parent company of the telecommunication infrastructures business. In addition to holding the shareholdings of abertis in this sector, it provides technical assistance and operates the fibre optic cabling located along the Acesa highways. In September abertis telecom acquired the outstanding 5% of the shares in Tradia to gain 100% control of the Company. In December 2003 the acquisition of 100% of Retevisión from the Auna group was finalised. With this operation, abertis consolidates its line of activity in the management of telecommunication infrastructures. Key data of the telecommunication infrastructure companies Company abertis telecom Tradia Retevisión Torre de Collserola % 100 100 100 36.0 No. of sites - 678 2,400 - Tradia is one of the main Spanish companies specialised in leasing telecommunication infrastructures for mobile telephone operators, radio broadcasters and closed user groups. The provision of Services to Public Administrations (SAP) continues to be one of the Company's main activities and, in particular, the roll-out of digital trunking networks and communications consulting. This activity has increased 38%. Tradia has improved and expanded services in the audiovisual market and, in the sector of broadcasting radio programs and private television, a 15% increase was recorded. The services of leasing infrastructure and transporting data for the main mobile telephone operators and LMDS have increased by 7% compared to the previous year. The results for the year show the impact of the significant investment program that the Company has undertaken and the positive evolution of the main activities. As a result, turnover has increased 25% to 67 million euros, and EBITDA rose to 17 million euros, up 57% on 2002. Retevisión Audiovisual offers services of transport and broadcasting of television and radio signals at a national level on analogical and digital networks. It has a network with 2,400 sites, including the emblematic Torrespaña in Madrid and Torre de Collserola in Barcelona (in which it has a 36% shareholding). Tradia and Retevisión sites 40 Annual report In 2002, Retevisión spun off the activity of installing and operating fixed telecommunication networks and services to Auna Telecomunicaciones, S.A., leading to the creation of Retevisión Audiovisual. Consequently, 2003 is the first full year in which the company has only undertaken its audiovisual activity. It is expected that the company will register a positive evolution in both income and EBITDA next year. The acquisition of Retevisión enables abertis to obtain synergies through complementary geography and clients, and in turn, it offers the possibility of expanding the current activities of Tradia at the national level. During 2003 abertis telecom has acquired the proportional share of the Vivendi Group's holding in Xfera without any outlay, increasing its shareholding from 5.69% to 8.36%. abertis has provisioned 100% of the investment given that the commercial and technical roll-out is on hold, awaiting the availability of UMTS technology, for which Xfera holds an operating licence. 33 Activity for the year Airports Annual report 41 abertis has an 85% shareholding in Codad, the company holding the concession for the construction and management of the second runway at Bogotá airport and management of the first runway, which is already built. Codad operates under a contract with guaranteed minimum income. Consequently, although the number of flights has declined by 4%, operating income in Colombian pesos rose 20% and EBITDA rose 15%, with the contribution to the consolidated accounts of abertis being 21 and 18 million euros respectively. 42 Annual report 3 Performance for the year 4 Consolidated figures for abertis Balance sheet (million euros) Assets 2003 2002 Liabilities Consolidated Net fixed assets Intangible fixed assets Tangible fixed assets Investments 7,684 262 6,622 800 4,957 87 4,288 582 Equity Share capital Share premium Reserves Profit Interim dividend Consolidation goodwill fund Deferred expenses Current assets 909 632 460 925 274 303 Minority interests Negative consolidation difference Deferred income Consolidated 2003 2002 3,107 1,576 580 716 355 (120) 28 41 96 2,034 1,037 116 765 195 (79) 90 22 24 Provisions for liabilities and expenses 2,285 1,387 Long-term creditors 2,640 1,607 Short-term creditors 1,488 1,295 Total assets 9,685 6,459 Total liabilities 9,685 6,459 The 50% increase in the consolidated balance sheet figures is due to the incorporation of the Aurea shareholdings in the consolidation scope, as well as the consolidation of Retevisión at the end of the year. Consolidated assets total almost 9,700 million. Tangible fixed assets, primarily consisting of investment in highways and other concession assets, represent 68 % of the total. The variation of the consolidation goodwill fund is principally due to an increase of 155 million euros following the merger and the acquisition of shareholdings during the year, and a reduction of 149 million euros due to the transfer of the consolidation goodwill generated in the merger of Aucat and Holdaucat during the year to financial investments. Almost 75% of the deferred expenses are the result of the deferral of financial charges established in the accounting standard in force for highway concessionary companies. On the liabilities side, equity now exceeds 3,100 million euros (32% of total liabilities) and debt totals 3,611 million, representing a debt to equity ratio of 116%. Also of note are the provisions for liabilities and expenses, which include the reversion fund and represent 24 % of total liabilities. This financial equilibrium allows abertis to face both its selective investment policy and the investments in improving the infrastructures managed with guarantees. Annual report 43 Profit and loss account (million euros) Operating income Operating expenses EBITDA Depreciation and reversion fund Operating profit Financial result Profit from associated companies Amortisation goodwill / Negative consolidation differences Profit from ordinary activities Extraordinary profit (loss) Corporation tax Minority interests Profit for the year Consolidated 2002 2003 1,282 (367) 915 790 (257) 533 (220) (131) 695 (151) 30 (36) 538 4 (187) 0 355 402 (94) 30 (19) 319 (29) (99) 4 195 The 2003 profit and loss account of the abertis group is not comparable to the previous year due to the inclusion of the Aurea group and the incorporation of a full year of the Iberpistas Group (only six months in 2002). Consolidated operating income and expenses have increased due to the incorporations mentioned and the positive performance of the activity of the companies that the Group is now made up of. As a result, operating profit rose 73% (up 12 % on aggregate figure of Acesa and Aurea for 2002), maintaining, and even improving slightly, the profit margin of the previous year. The financial result reflects the effects of the incorporation of the Iberpistas Group midway through 2002 as well as the companies involved in the merger with Aurea. Taking away these effects, the result would have remained practically stable with respect to the previous year. Profit from companies consolidated by equity accounting remained at the same level as the previous year, although this is due to two factors: the incorporation of the companies under the ownership of Aurea on one side, and the lower contribution from Autostrade on the other side, as a result of the Public Takeover Offer made by the core shareholders, which has more than doubled the shareholding in the company (increased to 8%). 43 Performance for the year 44 Annual report The amortisation of the goodwill fund has increased significantly for two main reasons: in the first place, the 2002 accounts only included amortisation of Iberpistas for six months and, secondly, the impact of acquisitions and incorporations during the year (basically the acquisition of 40% of Saba). The impact of all these changes has seen profit from ordinary activities increase 69 %. Extraordinary profits, obtained basically from the sale of the former head office of abertis, helped the consolidated profit of the Group reach 355 million euros, a figure that represents an 82% increase over the previous year (up 11.2 % over the aggregate total for Acesa and Aurea). Figures for the parent company abertis infraestructuras Balance sheet (million euros) Assets 2003 2002 Liabilities Parent Co. Parent Co. 2003 2002 Net fixed assets Intangible fixed assets Tangible fixed assets Investments Deferred expenses Current assets 4,778 6 15 4,757 3,233 1 12 3,220 9 14 588 203 Equity Share capital Share premium Reserves Profit Interim dividend 3,069 1,576 580 704 329 (120) Provisions for liabilities and expenses 41 Long-term creditors Short-term creditors 1,369 896 2,010 1,037 116 753 183 (79) 42 606 792 Total assets 5,375 3,450 Total liabilities 5,375 3,450 The merger with Aurea has led to a significant increase in the balance sheet figures, with year on year growth of 56%. The position as parent company of the group is reflected in the assets, where investments (portfolio of shareholdings) represents 88% of the total, and the liabilities side reflects the financing of these shareholdings through a combination of equity (57 %) and debt (40%). Of the increase in equity, 928 million corresponds to the increase in capital and the share premium related to the merger. Profit for the year of 329 million euros, has enabled an interim dividend of 120 million euros to be paid (in accordance with the established dividend policy), with a final dividend to be paid in 2004. Profit and loss account (million euros) Operating income Operating expenses EBITDA Depreciation and reversion fund Operating profit Financial result Profit from ordinary activities Extraordinary profit (loss) Corporation tax Profit for the year Annual report 45 Parent Co. 2003 2002 18 (29) (11) (3) (14) 332 318 (8) 19 329 226 (62) 164 (33) 131 107 238 (20) (35) 183 The 2002 and 2003 profit and loss account for the parent company are not comparable due to the merger already detailed, and because the 2002 accounts include six months of the concessionary activity before the highway activity was transferred to the current Acesa. As parent company of the combined shareholdings, the profit and loss account is primarily concentrated in the financial result, which shows the dividends received from subsidiary and associated companies as well as the financial expenses related to the structure of the liabilities. The balance mainly corresponds to structural expenses as parent of the group. The financial result totalled 332 million euros, enabling net profit to increase by 80% with respect to 2002 to reach 329 million euros. This represents an 8.3 % increase compared to the aggregate profit and loss account of Acesa and Aurea for 2002. 46 Annual report 4 Shareholders and stock market 4.1 Stoc k market conditions 4.2 Evolution of the share 4.3 Evolution of share capital - Increases 4.4 Dividend and shareholder yie ld 4.5 Shareholders 4.6 Sign ifican t shareholdin gs 4.7 Market information 4 Shareholders and stock market 48 Annual report 1 Stock market conditions After three consecutive years of heavy losses on stock markets (a period in which our share was one of the few positive exceptions), 2003 was finally a year of recovery. The early months of the year were marked by the same doubts that had been hanging over stock markets in the previous year: the weakness of the economy, which reduced business profits, and the possibility of imminent war in Iraq at the time, dragging equity indexes down to their lows in February and March. From April, investors appeared to enter into a climate of less uncertainty, once the initial phase of the Iraq conflict had passed, which led to rises on Wall Street and the main European exchanges. The good business results, supported by an environment of low interest rates (linked to the improvement in macroeconomic indicators in the United States and to a lesser extent in Europe) fed the recovery in the majority of international stock markets. Within the euro zone, neither the weakness of the recovery in Germany, France or Italy, nor the drop in the dollar and the resulting historical maximums for the euro, nor the breaching of the Stability Pact, prevented 2003 from becoming the first year of gains since 1999. The better evolution of the Spanish economy with respect to other European countries, and the resulting increase in investor confidence in the Spanish stock market, saw the Ibex 35 rise 28% in 2003, its best performance in the last five years. This increase occurred in a climate of lower volatility and greater liquidity, size and presence of the Spanish stock market amongst all the markets. 2 Evolution of the share The ordinary shares of abertis rose 17% in 2003, after adjusting for the bonus issue. In the early part of the year, the share prices of Acesa and Aurea were in a bullish period that accentuated in the months of April and May, with the prospects of a merger between the companies being finalised. In June the exchange of Acesa shares for Aurea shares was made, with the shares in Aurea becoming abertis shares, with trading under the new name commencing on the 2nd of the month. The merger gave the company a new dimension, with greater visibility amongst the investment community, greater weight in the stock market indexes and a better position for development opportunities. This expectation saw the share price rise to annual and historical highs (adjusting the price for capital increases). In the second half of the year, the share price began to decline slightly to the last quarter, when it received a new boost to reach 12.00 euros, recovering from the adjustment to the share price related to the bonus share issue in October. abertis ordinary shares - 2003 Annual report 49 The shares of abertis are listed on the four Spanish Stock Exchanges and traded on the electronic interconnected market. The ordinary Class A shares are included in the Ibex 35 stock index. They are also included in relevant international indexes, such as Standard & Poor's Europe 350, the Eurotop 300 or the Dow Jones Stoxx Sustainability Index, which includes leading European listed companies that are the most profitable in their sector of activity and have adopted criteria of sustainability in the management of their growth. Volume Unadjusted price Adjusted price Close (euros) 13 12.5 12 11.5 11 10.5 10 6,832 6,300 Volume (thousand shares) 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 J F M A M J J A S O N D Comparison of the evolution of abertis and the main indexes Evolution over 3 years (2001-2003) (Base 31/12/00 = 100) 2000 abertis A Adjusted close: 8.04 Variation last 3 years: abertis A: +49 % Ibex 35: –15 % Eurotop 300: –38 % 2003 abertis A Close: 11.99 160 150 140 130 120 110 100 90 80 70 60 50 40 31/12/2000 31/12/2001 31/12/2002 31/12/2003 abertis A (*) abertis B (*) Ibex 35 Eurotop 300 (*) Adjusted for increases in capital 50 Annual report 4 Shareholders and stock market The 17% rise in the ordinary shares of abertis in 2003, together with those recorded in the two previous years, represents an accumulated increase in these three years of 49%. For its part, the Ibex 35 closed the 2003 year with a rise of 28% which, added to the movement recorded in the two previous years, represents a decline over the last three years of 15%, as shown in the graph. Taking May 2002 as a reference, coinciding with the date when the main shareholders of Acesa and Aurea announced their agreement to seek a merger of the two companies, the increase in the ordinary share price of abertis was 25% at the close of 2003. In the last 3 years, only four companies, including abertis, out of the 35 companies that make up the Ibex index, recorded a positive annual change, whereas in 2003 all but one company closed with rises for the year. On the other hand, the performance of the privileged Class B shares are affected by their characteristics (they have the right to a preference dividend based on the period they are held), which has meant that since the shares were listed for trading on 29 July 2002, they have had low liquidity, low volumes and have traded infrequently. The market capitalisation of abertis at the end of 2003 was 6,296 million euros, of which 5,853 correspond to Class A shares and 443 to Class B shares. The increase in its market capitalisation compared to 2002 is due to an increase in the number of shares, with shares issued in the Aurea share swap, and the good performance of the share price. 3 Evolution of share capital - Increases At 31 December 2003, the share capital of abertis was 1,576 million euros, represented by 525,220,358 bearer shares with a nominal value of 3 euros each, fully subscribed and paid up, of which 488,183,992 are ordinary Class A shares and 37,036,366 are Class B preference shares. During 2003 there have been two increases in capital: • May-June As a result of the merger with Aurea, capital was increased by a nominal sum of 464 million euros by issuing 154,579,950 ordinary Class A shares, with a share premium of 464 million euros, used in the share swap of Aurea shares for Acesa shares at the rate of 93 Acesa shares for every 43 Aurea shares. The new shares had dividend rights from 1 January 2003. • October The General Meeting of 16 September approved an increase of capital to be charged against reserves for a total of 75 million euros, by issuing and circulating 25,010,493 ordinary Class A shares, for all shareholders, whether Class A or Class B, with 1 new share for every 20 shares held. Between October 10th and October 24th 61.7 million rights were traded, with a maximum price of 0.58 euros and a minimum price of 0.56 euros. The new shares were admitted for trading on 6 November, with dividend rights from 1 January 2003. 4 Dividend and shareholder yield During the first six months, dividend payments were made by Acesa and Aurea, in accordance with the terms established in the Merger Operation approved in December 2003. Annual report 51 Thus, Acesa paid a final dividend for 2002 on 16 April of 0.223 euros gross per share and Aurea paid a final dividend of 0.4823 euros gross per share on the same date and an extraordinary dividend of 1 euro per share. Following the merger, abertis paid an interim dividend for 2003 on 12 November of 0.229 euros gross per share. This amount, together with the final dividend to be paid in the first six months of 2004, represents a total dividend of 0.452 euros gross per share, charged against profits for 2003. The amount set aside by abertis for dividends in 2003 totals 237.4 million euros. This amount is 52 % more than the previous year, due to new shares issued for the share exchange made in the merger with Aurea, and also include the 5% increase in the number of shares following the increase for the bonus share issue. The dividend yield is 3.8% with respect to the year end closing price; with this figure the company continues to have one of the highest dividend yields amongst the main listed companies in Spain. 5 Shareholders During 2003, abertis has maintained its commitment to communication and transparency, keeping an open dialogue with shareholders, investors and financial markets. The company has a website www.abertis.com, to facilitate access to company information with a complete section dedicated to investor relations. In addition, abertis also has a Shareholder Telephone Service (902 30 10 15) to answer queries and provide information to our shareholders. The company also publishes the abertis magazine, which has become a source of information for all those who want to know the latest news at abertis. 6 Significant shareholdings The size of the holdings of the core group of shareholders in the company are provided in the Corporate Governance Report which is included with this Annual Report. 7 Market information Information for 2003: Class A shares Class B shares Trading frequency Trading days Traded volume (No. shares) Equivalent percentage of shares Cash value of trades (million ) Market capitalisation (30/12/03) (million ) abertis share options 100% 250 257,902,032 53% 3,045.48 5,853.33 43,731 39% 98 144,130 0.4% 1.76 442.58 0 4 Shareholders and stock market 52 Annual report Evolution of the last three years: Ibex 35 Close Year change High/Low Ibex Utilities Close Year change High/Low Eurotop 300 Close Year change High/Low Class A shares Close/Adjusted close (1) Year change/ Adjusted year change (1) High/Low High/Low (adjusted) (1) Weight in Ibex 35 Class B shares Close/Adjusted close (1) Year change/ Adjusted year change (1)(2) High/Low High/Low (adjusted) (1) 2003 2002 2001 7,737.2 28.2% 7,760.4 15,073.0 31.9% 15,217.0 957.9 11.8% 957.9 / 5,452.4 / 10,992.8 / 682.7 6,036.9 –28.1 % 8,554.7 11,429.2 –32.9 % 17,348.0 857.0 –32.2% 1,279.7 / 5,364.5 / 6,498.4 8,397.6 –7.8 % 10,132.0 17,033.5 –5.5 % / 10,311.6 / 20,880.3 13,459.7 1,264.9 –17.5% 1,545.5 / 998.9 / 797.2 11.99 / 11.99 10.80 / 10.29 11.19 / 10.15 11.0% 12.90 12.29 2.14 11.95 –2.0% 14.00 13.41 / / / / / / / / 16.6% 10.80 10.29 / / / –3.5% 11.99 10.88 1.55 1.3% 10.28 9.32 / / / 20.2% 11.89 10.27 1.12 26.2% 9.26 8.40 11.95 12.19 / 11.67 2.4% –10.7% 13.65 11.05 12.48 10.58 / / / –0.8% 11.77 10.76 (1) Adjustment for bonus share issues (2) In 2002, the annual change in B shares is calculated against closing price on first day of issue (29/07/02). Class A shares Stock price ratios on consolidated figures 0.68 Earnings per share (EPS) (1) 0.68 Adjusted profit per share (1) (2) 0.45 Dividend per share (DPS) 0.45 Adjusted dividend per share (2) PER (share price/EPS) 17.7 Adjusted PER (adjusted price/EPS) (2) Dividend yield Pay out (DPS/EPS) 17.7 3.8% 67% 0.60 0.57 0.45 0.43 18.1 17.2 4.1% 76% 0.59 0.53 0.45 0.41 19.0 17.2 4.0% 77% (1) Figure for 2002 only consider shares from the Takeover Offer share exchange for Iberpistas during six months (2) Ajustment for bonus share issues. www.abertis.com 5 Financial information 5.1 Cons olidated annual accounts Co n s o l i d a t e d m a n a ge m e n t re p o r t Auditor ’s repor t on cons olidated accounts 5.2 Parent company annual accounts Pa re n t c o m p a ny m a n a ge m e n t re p o r t Auditor ’s repor t on parent company accounts 5 1 Consolidated annual accounts and management report of the abertis group for 2003 Consolidated balance sheet at 31 December (thousand euros) 54 Annual report A S S E T S Fixed assets Start-up costs Intangible fixed assets Research and development expenses Computer software Administrative concessions Goodwill Studies and projects Other Amortisation Tangible fixed assets Highway investments Land and natural resources Buildings and other constructions Machinery and vehicles Installations, tooling and furniture Other fixed assets Other fixed assets under construction Depreciation Investments Investments in subsidiaries consolidated by equity accounting Loans to subsidiaries consolidated by equity accounting Long-term securities portfolio Long-term deposits and guarantees Other credits Provisions Consolidation goodwill Deferred expenses Current assets Inventories Accounts receivable Advance payments to creditors Trade debtors Debtors – Public Treasury compensation Sundry debtors Personnel Public Treasury Provisions Short-term investments Short-term share portfolio Interest receivable Other credits Treasury Cash Banks and credit institutions Prepayments and accrued income Total assets 2003 7,684,184 7,654 254,193 6,495 34,140 54,960 209,775 1,101 18,965 (71,243) 6,622,253 6,085,044 13,676 385,273 212,882 659,574 39,284 46,907 (820,387) 800,084 593,123 0 48,642 4,497 188,195 (34,373) 908,943 631,848 459,684 7,096 278,148 230 108,976 95,827 48,013 518 33,499 (8,915) 141,060 14,547 177 126,336 26,293 3,029 23,264 7,087 2002 4,957,359 6,061 80,981 5,427 16,472 54,230 44,000 727 170 (40,045) 4,287,756 4,008,175 4,154 280,789 167,980 68,366 17,654 98,294 (357,656) 582,561 498,237 6,000 33,425 1,425 58,426 (14,952) 924,506 274,284 302,532 6,920 223,126 162 59,848 78,014 34,397 320 54,039 (3,654) 53,363 47,843 349 5,171 17,198 1,971 15,227 1,925 9,684,659 6,458,681 Annual report 55 L I A B I L I T I E S Equity Share capital Share premium Reserves of parent company Revaluation reserves Legal reserve RD 1564/1989 Voluntary reserve Reserves in fully consolidated companies Reserves in companies consolidated by equity accounting Exchange differences Profit and loss attributed to parent company Consolidated profits Profits due to minority interests Interim dividend paid during year Minority interests Negative consolidation differences Deferred income Provisions for liabilities and expenses Reversion fund Other provisions Long-term creditors Bond issues Loans with credit entities Disbursement pending on shares in group companies Other creditors Short-term creditors Bond issues Loans with credit entities Loans Interest on loans Loans with companies consolidated by equity accounting Trade creditors Trade creditors Other creditors Other non-trade credits Public Treasury Accrued payroll expenses Other debts Deposits and guarantees received Accrued expenses Total liabilities 2003 3,107,354 1,575,661 579,690 896,422 479,495 158,668 258,259 (24,356) 10,200 (165,194) 355,206 355,369 (163) (120,275) 27,844 40,889 95,573 2,285,414 2,213,112 72,302 2,639,501 656,428 1,846,714 3,353 133,006 1,488,084 12,568 1,118,216 1,107,459 10,757 0 182,258 118,410 63,848 172,730 95,229 12,206 59,001 6,294 2,312 2002 2,033,390 1,036,890 115,553 739,403 554,526 140,387 44,490 25,152 5,047 (4,983) 195,329 191,511 3,818 (79,001) 89,576 22,487 23,862 1,386,685 1,318,029 68,656 1,607,351 60,000 1,443,541 55,598 48,212 1,295,330 553 1,037,263 1,017,437 19,826 22,447 160,239 140,851 19,388 74,180 43,777 7,792 16,319 6,292 648 9,684,659 6,458,681 15 Cons olidated annual accounts and management repor t of the aber tis group for 2003 Consolidated profit and loss account at 31 December (thousand euros) 56 Annual report Expenses Personnel expenses Salaries and wages Social security Pension fund and other personnel-related liabilities Amortisation and depreciation of fixed assets Movement in trading provisions Other operating expenses External services Taxes Charge to reversion fund Total operating expenses Operating profit Financial costs and related expenses Total financial expenses 2003 176,174 141,860 33,023 1,291 86,098 2,369 323,260 177,316 13,326 132,618 2002 130,493 102,784 27,097 612 60,579 2,214 198,405 115,783 10,174 72,448 587,901 391,691 695,248 159,137 159,137 402,354 103,046 103,046 Amortisation of consolidation goodwill 36,795 19,964 Profit on ordinary activities Losses on disposal of fixed assets and extraordinary expenses 537,808 20,006 318,884 48,007 Extraordinary profits Consolidated profit before tax Corporation tax Consolidated profit for the year Due to minority interests Profit due to parent company 4,028 - 541,836 186,467 289,886 98,375 355,369 163 191,511 (3,818) 355,206 195,329 Income Operating revenue Toll income Discounts and rebates on toll income Provision of services Annual report 57 2003 1,226,299 1,075,176 (32,669) 183,792 2002 761,583 645,441 (26,400) 142,542 Work done by the company on fixed assets 1,346 3,976 Other operating income Sundry income and other management income 55,504 55,504 28,486 28,486 Total operating income 1,283,149 794,045 Other interests and related income Total financial income 7,688 9,091 7,688 9,091 Negative financial result Shere in profit and loss of companies consolidated by equity accounting Reversion of negative consolidation differences 151,449 29,904 900 93,955 29,569 880 Profits from disposal of fixed assets and extraordinary income 24,034 19,009 Extraordinary loss - 28,998 15 Cons olidated annual accounts and management repor t of the aber tis group for 2003 ABERTIS INFRAESTRUCTURAS, S.A. NOTES TO THE ANNUAL CONSOLIDATED ACCOUNTS FOR 2003 58 Annual report NOTE 1. ACTIVITY a) Activity ABERTIS INFRAESTRUCTURAS, S.A. (hereinafter abertis or the Company) was incorporated in Barcelona on 24 February 1967. On 30 May 2003 (date of registering the merger deed indicated in section b) of this note) the company changed its name from ACESA INFRAESTRUCTURAS, S.A. to its current name. The registered office of the Company is Avenida del Parc Logístic, nº 12-20, Barcelona. abertis is the parent company of a group dedicated to the management of infrastructures serving mobility and communications operating in four sectors of activity: highway concessions, car parks, logistic services, and telecommunications. Its business purpose is the construction, maintenance and operation of highways under concession; the management of highway concessions in Spain and internationally; the construction of roads; the complementary activities to construction, maintenance and operation of highways such as service stations, integrated logistics and/or transport centres and/or car parks, as well as any other activity related with transport infrastructures and communication and/or telecommunications serving mobility and the transport of people, goods and information, with the necessary authorisation, should it be required. The Company can develop its business purpose, especially the concessionary activity, directly or indirectly through its shareholding in other companies, being subject, in this respect, to the legal dispositions in force at the time. b) Merger On 8 April 2003, the extraordinary general meetings of shareholders of ACESA Infraestructuras, S.A. and AUREA, Concesiones de Infraestructuras, S.A. (AUREA) approved the merger of both companies by absorption, where the former company was to absorb the latter company, effective for accounting purposes from 1 January 2003, the date from which it is understood that AUREA operations were conducted on account of the Company. The merger was effected through an exchange of AUREA shares for abertis shares (at the rate of 43 shares in the former for 93 shares in the latter). To cover this share exchange the Company increased capital as detailed in note 11. The merger project approved by the respective general meetings of shareholders established that the difference between the nominal value of the new shares issued by the Company and the adjusted book value of AUREA will be treated as a premium on issue (see note 11). The audited balance sheet of the AUREA company accounts at 31 December 2002 that was included in the Company is as follows: Assets Net fixed assets Start-up costs Intangible fixed assets Tangible fixed assets Investments Current assets Liabilities Equity Provisions for risks and expenses Long-term creditors Short-term creditors Thousand euros Annual report 59 105 5,294 11,236 1,407,852 1,424,487 43,649 1,468,136 Thousand euros (*) 1,033,820 6,512 346,839 80,965 1,468,136 (*) Prior to incorporating the value of this company’s patrimony in the accounts of abertis, dividends from Aurea totalling 105,943 thousand euros were paid out. In the tables and movements shown in this annual report, the column “Incorporation due to merger” reflects the consolidated balances included as at 1 January 2003. NOTE 2. BASIS OF PRESENTATION AND CONSOLIDATION The consolidated annual accounts represent the consolidation of the parent company, abertis, and the subsidiary and associated companies detailed in the Annex. a) True and fair view The consolidated annual accounts have been prepared by the administrators of abertis with the objective of providing a true and fair view of its equity, the financial situation and the consolidated profit and loss account for the year ended 31 December 2003, based on the accounting records, both of abertis and its subsidiary companies, in accordance with the Rules for the Preparation of Consolidated Annual Accounts approved by Royal Decree 1815/91, dated 20 December 1991, and following the General Accounting Plan and the rules for the adaptation of the General Accounting Plan for highways, tunnels and other toll routes applicable to highway concessionary companies. All the companies in the consolidated group work to a financial year end at 31 December. 60 Annual report 15 Cons olidated annual accounts and management repor t of the aber tis group for 2003 The necessary adjustments and reclassifications have been made to standardise accounting policies in those cases where there are significant differences with respect to the parent company to obtain a true and fair representation of the Group; the companies consolidated by equity accounting have been standardised, provided the necessary information was available. All the balances and significant transactions between consolidated companies have been eliminated in the consolidation process. b) Comparison of information The annual accounts for 2003 are not comparable with the 2002 accounts for the following reasons: • The 2003 accounts reflect greater activity arising from the merger noted in 1b). • In the 2003 accounts the Iberpistas group is fully consolidated for the full year (in 2002, consolidated from June). c) Accounting principles of consolidation The consolidation methods applied to obtain the consolidated annual accounts are as follows: • Fully consolidated: Used for those companies where abertis holds a majority position of more than 50% of the share capital or voting rights, or maintains control over management and administration, and which represent a significant interest with respect to presenting a true and fair view of the consolidated accounts. The value of the share of minority shareholders in the capital and profit and loss account of fully consolidated subsidiary companies are included under “Minority interests in the liabilities of the consolidated balance sheet”, and “Profits attributed to minority interests in the consolidated profit and loss account”, respectively. • Proportional consolidation: Used for those companies where there is joint management (multi-group companies). • Consolidated by equity accounting: Used for those companies in which the direct or indirect shareholding is greater than 20% (3% if publicly listed) and less than 50% of the share capital; those companies where the holding is less than 20% but there is a significant influence in the management; and those companies where the holding is 50% or more, but the interest is not significant with respect to presenting a true and fair view of the consolidated accounts. d) Variations in the consolidation perimeter The most significant variations in the consolidation perimeter and the companies that make it up during 2003 were as follows: • As consequence of the merger with Aurea the following companies were incorporated: Annual report 61 Fully consolidated: Autopistas Aumar, S.A.U.C.E. (Aumar) (100%) Compañía de Desarrollo Aeropuerto El Dorado, S.A. (Codad) (85%) Equity accounting: Aurea Limited (Aurea Ltd) (100%) Gestión Integral de Concesiones, S.A. (Gicsa) (100%) Autopistas de León, S.A.C.E. (Aulesa) (79.2%) (*) Autopistas de Puerto Rico, S.A. (APR) (75%) (*) Autopista Trados-45, S.A. (Trados 45) (50%) Autopistas del Sol, S.A. (Ausol) (45.16%) Concesionaria Vial de los Andes, S.A. (Coviandes) (39.04%) Pt Operational Services Limited (PTY) (33.3%) Road Management Group Limited (RMG) (25%) Concesiones de Madrid, S.A. (Concema) (25%) Infraestructuras y Radiales, S.A. (Irasa) (increase of 15%) Erredosa Infraestructuras, S.A. (Erredosa) (increase of 15%) Autopista del Henares, S.A.C.E. (Henarsa) (increase of 15%) (*) fully consolidated during the first nine months of the financial year • The following companies cease to be fully consolidated and are now consolidated by equity accounting given that they have little relevance to the consolidated figures of abertis: serviabertis, Proconex and Iberpistas Chile. • In March 2003, the shareholding that abertis had in Grupo Concesionario del Oeste –Gco– (48.6%) was transferred to Autopistas Concesionaria Española, S.A (Acesa). • Merger of Aucat with Holdaucat with effect from 1 January 2003 for accounting purposes. • During the year abertis increased its indirect shareholding in the Italian concessionaire Autostrade, S.p.A. from 3.85% to 7.98%, without any additional direct funding, as a result of the Public Takeover Offer presented by the company NewCo28 (100% owned by Schemaventotto, S.p.A.) for Autostrade, S.p.A. and the subsequent merger of these two companies. • Following the amortisation of the portfolio of shares proceeding from the compulsory Public Takeover Offer of Iberpistas in June 2003, abertis owned 99.8% of the shares. • Increase of the shareholding in Saba after buying an additional 39.91 % in April 2003. With this purchase abertis owned 99.24 % of the shares, taking into account the effect of the amortisation of the portfolio of shares proceeding from the compulsory Public Takeover Offer. • Saba acquired 50% of Spel to gain 100% control of the company. As a result of this acquisition, Spel is fully consolidated from 1 January 2003, having previously being consolidated by equity accounting. 15 Cons olidated annual accounts and management repor t of the aber tis group for 2003 62 Annual report • In 2003 it was agreed to dissolve Iniciativa de Serveis de Salou, S.A. with complete cession of universal title of its assets and liabilities in favour of Parbla, 100% owned by Saba. • Given the relative importance of the logistic activity in the group, abertis logística is now fully consolidated and its subsidiary companies Areamed and Parc Logístic de la Zona Franca, by proportional integration. These companies were previously consolidated by equity accounting. • Incorporation of Sevisur Logística, S.A (fully consolidated) and Araba Logística, S.A. (equity accounting) in which abertis logística holds 60.03% and 39.5% respectively. • abertis telecom has increased its shareholding in Tradia to 100% after buying the 5% outstanding in September 2003. • Acquisition at the end of 2003, by abertis telecom, of 100 % of the company Retevisión I, S.A.U. (fully consolidated) and inclusion of the associated company Torre de Collserola (36% under equity accounting). The accounting consolidation is effective from 31 December 2003, being included in the balance sheet on that date, without any impact on the profit and loss account for the year. NOTE 3. ACCOUNTING POLICIES The most significant accounting policies applied in the preparation of these consolidated annual accounts are as follows: a) Consolidation goodwill Corresponds to the difference between cost and book value of parent company share holdings in subsidiary companies on the date of first consolidation, or the amount of latent capital gains on acquisition, when applicable. Goodwill is amortised systematically over a period of twenty years, or, in the case of toll highways and other concessions, over the maximum remaining period of the life of the concession, given that this period is a better match for generating the required resources for recovery. b) Negative differences on first consolidation In the case of shares whose purchase price at the time of acquisition was below the book value of the investment, this difference is treated as a negative difference on first consolidation, being applied over the useful life of the assets of the company where the difference arises. c) Conversion of financial statements in foreign currencies for foreign companies The financial statements prepared in foreign currencies corresponding to subsidiary companies in countries outside of the euro zone are converted to euros using the exchange rate at close: • Capital and reserves are converted at the historical exchange rates. Annual report 63 • Entries in the profit and loss account are converted applying the average exchange rate for the period. • The other entries in the balance sheet have been converted at the exchange rate at close. The differences arising from this conversion are shown separately in the movements of the distinct balance sheet items detailed in the notes to these annual accounts. After applying this procedure, exchange differences are shown in the accounts as “Exchange differences” under equity in the consolidated balance sheet, except in the case of Gco, due to the existing exchange rate hedge. The exchange rate differences resulting on conversion with respect to this company (having deducted the part corresponding to minority interests) is shown directly as an amount to be recovered under “Financial investments - Other credits” (46,347 thousand euros) as there is an exchange rate hedge (see note 21 d). d) Start-up costs Corresponds to expenses incurred on incorporation, establishment and share capital increases, which are amortised using the straight line method over a maximum period of five years. e) Intangible fixed assets The items included in intangible fixed assets are valued at acquisition price or their cost of production and amortised as follows: • Goodwill. Amortised on a straight line basis over a period of 20 years, given that this is the period over which the investment is expected to be recovered. • Administrative concessions. Correspond to the amounts paid to obtain the right to operate some car parks and they are amortised over the concession period. • Other amounts are amortised on a straight line basis over a maximum period of five years. Nevertheless, the balance pending amortisation will be carried to profit and loss account in the event that the asset is found to be obsolete. f) Tangible fixed assets Tangible fixed assets are valued at acquisition cost, revalued in accordance with various legal measures. Personnel costs and other expenses, as well as financing costs directly imputable to highway investments, are capitalised as part of the investment until entry into operation. Costs of refurbishment, enlargement or improving tangible fixed assets are capitalised only when they increase capacity, productivity or extend the useful life of the asset, provided that it is possible to know or estimate the net book value of the assets which are removed from the list, having been replaced. 15 Cons olidated annual accounts and management repor t of the aber tis group for 2003 64 Annual report The costs of repair and maintenance are charged to the profit and loss account in the year in which they are incurred. The amortisation of tangible fixed assets is calculated systematically using the straight line method, based on the estimated useful life of the assets, taking into consideration wear and tear derived from normal use. Of the combined investments represented by highway investments, the major part is amortised through allocation to the reversion fund, where technically only the installations and other works of replacement are amortised according to their estimated useful life. The depreciation rates used to calculate the decline in value of the fixed assets are as follows: Buildings and other constructions Machinery Tooling Other installations Furniture Computer equipment Other fixed assets Tollgate machinery Highway investments g) Financial assets and investments Rate 2 - 16% 6 - 30% 7 - 37.5% 7 - 20% 10 - 25% 20 - 37.5% 3 - 30% 5.6 - 12% 2 - 20% Investments in companies consolidated by equity accounting are stated at book value as shown in their annual accounts at 31 December. Other financial investments are valued at acquisition price, or market price if the value has declined. h) Deferred expenses This entry includes: • Financial expenses incurred in financing the investment in highways which, in accordance with the rules applicable to the sector, are recorded against profit and loss account based on the proportion of total toll income projected in the companies financial plans. • Leases paid in advance that are charged to the profit and loss account over the life of the respective contracts. • Expenses derived from hedging operations that are recorded monthly over the period that the operation is in place (see note 21. d). • Expenses incurred in raising loans which are amortised on a straight line basis over the loan period. i) Inventories Annual report 65 Inventories consist primarily of spare parts for fixed assets and are valued at cost, calculated using the average weighted price method, making the necessary valuation adjustments and raising the corresponding provisions. j) Minority interests This account reflects the interest of minority shareholders in the net book value of fully consolidated companies at 31 December. The interests of the minority shareholders in results of the year from fully consolidated companies is shown as “Results attributed to Minority interests”. k) Reversion fund The reversion fund of the Group companies is generated annually throughout the concession period for assets subject to reversion, by means of regular charges to the profit and loss account until the fund totals the net book value of the assets to be reverted plus the estimated costs to be incurred in order to hand these over in suitable condition for use, as provided for under the terms of the concession agreement. In the case of the Spanish concessionary companies, the allocation to the reversion fund is calculated on the basis of real toll income each year compared with the projected total in the respective Financial Plan until the end of the concession, in accordance with the terms of adaptation of the General Accounting Plan. l) Other provisions Pursuant to the prudence principle, the Group companies register the provisions which they consider necessary in relation to the inherent risks in the business which could affect them. m) Deferred income This entry includes: • Capital grants that are recorded when the requirements for their payment are met, which are recognised in the profit and loss account from when they are paid and allocated over the estimated useful life of the assets financed. • Compensation from the Administration for works done by Aumar that are recognised in the profit and loss account in proportion to projected toll income until the end of the concession. • Income for the cession of the use of assets under concession (parking spaces, fibre optic cabling) that are recognised in the profit and loss account on a straight line basis over the life of the concession. 15 Cons olidated annual accounts and management repor t of the aber tis group for 2003 66 Annual report n) Commitments for pensions and other personnel related liabilities abertis, Acesa, Aumar and Retevisión externalise through an insurance policy the current value of its future payment obligations to employees in respect of certain retirement payments and other obligations. o) Trade and non-trade debtors and creditors The debits and credits incurred in operations, whether or not produced in the ordinary course of business, are recorded at nominal value, making the necessary valuation adjustments to cover bad debt provisions. Amounts due within one year of balance date are classified as short-term and amounts due after this date are considered long-term. p) Corporation tax The consolidated profit and loss account for the year reflects the corporation tax expense on fully consolidated companies. Its calculation includes tax accrued during the year, the effect of timing differences between the tax assessment base and book profit, as well as tax credits and deductions due to Group companies. abertis pays tax on a consolidated basis, together with those subsidiaries that meet the requirements established in current legislation (see note 17). q) Foreign exchange differences Transactions in currencies other than the euro are recorded at the exchange rate on the transaction date. Exchange rate differences generated at the close of the financial year on current transactions are recorded as a loss in the profit and loss account, if negative, or deferred till maturity in the case of profits. r) Accounting for income and expenses Income and expenses are recorded on the accruals basis, that is, when the real transfer of goods and services takes place, irrespective of when the corresponding financial transaction occurs. s) Actions affecting the environment Annually amounts destined to meeting legal requirements related to the environment are recorded either as an expense or an investment, depending on their nature. The amounts recorded as investments are amortised over their useful life. No allocation has been made for liabilities or expenses of an environmental natural, given that there are no contingencies related with the protection of the environment. NOTE 4. INTANGIBLE FIXED ASSETS Annual report 67 The amounts and changes in 2003 in the intangible fixed asset accounts are as follows: Balance 31.12.02 Incorporation due to merger Change in perimeter Increase Decrease Transfer Exchange difference Balance 31.12.03 R+D expenses 5,427 - - 1,673 (605) Computer applications Administrative concessions Goodwill fund Studies and projects Other Total 16,472 800 14,067 2,860 (56) 54,230 - 323 426 (19) 44,000 7,823 - 2 (1,501) 159,451 727 170 - 3 306 18,461 231 331 (163) - - - - - - - 6,495 (3) 34,140 - - - - 54,960 209,775 1,101 18,965 121,026 8,626 33,157 5,523 (2,344) 159,451 (3) 325,436 The initial goodwill fund of 44,000 thousand euros comes from the company Tradia. As a consequence of the take-over merger in 2003 of the companies Aucat and Holdaucat, the goodwill carried under Consolidation goodwill (see note 7) has been transferred to Intangible fixed assets. The changes in accumulated amortisation during the year were: Balance 31.12.02 Incorporation due to merger Change in perimeter Increase Decrease Transfer Exchange difference Balance 31.12.03 R+D expenses 2,004 - - 970 99 Computer applications Administrative concessions Goodwill fund Studies and projects Others Total 8,098 217 5,432 5,189 (108) 23,889 - 6,053 2,537 16 - 2,793 (4,190) 10,524 - - 1 - 1 165 5,907 106 1,647 (55) (50) 40,045 2,755 11,520 21,229 (4,304) - - - - - - - - 3,073 (2) 18,826 - - - - 22,508 19,114 216 7,506 (2) 71,243 15 Cons olidated annual accounts and management repor t of the aber tis group for 2003 68 Annual report NOTE 5. TANGIBLE FIXED ASSETS The amounts and changes during 2003 in the tangible fixed assets were as follows: Balance 31.12.02 Incorporation due to merger Change in perimeter Increase Decrease Transfer Exchange difference Balance 31.12.03 Highway investment Tollgate machinery Land and natural resources 3,947,557 1,884,450 3,464 74,993 (1,654) 121,834 (13,858) 6,016,786 60,618 - - 7,557 - 4,154 2,355 7,130 55 (18) 83 - - - 68,258 13,676 Buildings and other constructions 280,789 5,052 135,068 4,653 (6,959) (33,330) - 385,273 Other fixed assets 254,000 11,826 630,218 23,366 (16,364) 8,802 (108) 911,740 Other fixed assets under construction 98,294 15,821 26,972 42,516 (27) (136,522) (147) 46,907 Total 4,645,412 1,919,504 802,852 153,140 (25,022) (39,133) (14,113) 7,442,640 The changes in accumulated depreciation for the year were: Balance 31.12.02 Incorporation due to merger Change in perimeter Increase Decrease Transfer Exchange difference Balance 31.12.03 Highway investment Tollgate machinery Buildings and other constructions 136,244 18,026 358 18,476 38,343 - - 9,647 - - (49) 36 173,091 - - 47,990 62,301 754 39,926 9,217 (1,783) (14,838) (1) 95,576 Other fixed assets Provision fixed assets 120,722 5,800 363,562 22,056 (8,327) (37) (46) 503,730 46 - - - (132) 86 - - Total 357,656 24,580 403,846 59,396 (10,242) (14,838) (11) 820,387 The most significant reductions recorded in “Buildings and other constructions” and “Other fixed assets” correspond to the sale of the former head office of abertis. Amongst the transfers in “Buildings and other constructions” the tacit capital gains made in the purchase of Saba are eliminated, having been recorded in this account at a gross amount of 39,133 thousand euros with an accumulated depreciation of 14,838 thousand (see note 7) and they have been transferred at the higher value to the consolidation goodwill fund. Investments in fixed assets outside of Spain rose to 222,837 thousand euros (254,111 thousand euros gross less 31,274 thousand euros recorded as depreciation). Annual report 69 Included under fixed assets are revertible assets of 6,623 million euros under the terms of the concession agreement in each case, principally highway investments, including revaluations and adjustments of 3,212 million euros. The majority of the buildings and other constructions are linked to the administrative concessions conceded by distinct public corporations, which must revert to them at the end of the concession period. The following assets are fully depreciated: Highway investment Tollgate machinery Buildings and other constructions Machinery and vehicles Tooling Other installations Furniture Computer equipment Other fixed assets Total gross book value Amount 14,038 24,374 2,615 50,714 2,196 228,382 3,079 8,987 2,759 337,144 It is the policy of Group companies to contract all the insurance policies considered necessary to cover any possible risks that could affect tangible fixed assets, with the exception of the buildings and installations of the service stations, where the concessionary is responsible for insurance. The Group companies have also taken out the necessary civil liability insurance policies covering their activities in general. 15 Cons olidated annual accounts and management repor t of the aber tis group for 2003 70 Annual report NOTE 6. INVESTMENTS The amount and changes in investments were: Balance 31.12.02 Incorporation due to merger Change in perimeter Increase Decrease Transfer Exchange difference Balance 31.12.03 Holdings consolidated by equity accounting 498,237 84,459 883 33,799 (18,201) (6,054) 593,123 Loans to companies consolidated by equity accounting Long-term share portfolio 6,000 - - - (6,000) - - 33,425 7,632 6,816 957 (171) (17) 48,642 Long-term deposits and guarantees Other credits Provisions 1,425 58,426 209 1,224 7,571 122,480 2,175 1,018 (536) (1,300) (14,952) (3,576) - (15,978) 133 - - - 4,497 188,195 (34,373) Total 582,561 96,295 131,403 21,971 (26,075) (6,071) 800,084 The changes and breakdown of the companies consolidated by equity accounting were: Annual report 71 Balance 31.12.02 Incorporation Change in perimeter due to merger Increases Result Dividend/ Exchange for year Decrease difference Balance 31.12.03 Acesa Italia 182,511 Brisa 129,286 Túnel del Cadí 41,587 Iberacesa 39,696 Aulesa Aurea Limited Elqui Coviandes Trados 45 Autema Cilsa Irasa Concema Henarsa - - 20,572 - - 19,721 - - - 4,628 Torre de Collserola P. Autop. Chile Ltda. Arasur PTY Gicsa Ibermadrid Proconex SGPS serviabertis Adesal - - - - - 347 - 50 - 3 abertis logística 56,816 3,020 - Spel APR Total (85) 200 22,281 - - - - - - - - - 36,554 31,487 - 20,414 16,835 - - 10,188 5,240 - - - - 102 193 - - - - - - - - - - - - - 13,074 - - - 4,426 3,498 1,185 - - - 398 - 226 - (56,816) (3,020) 1,358 - - - 5 - - - - - - - 656 2,625 609 - - - - - - - - - - - - - - (1,188) 15,000 (13,206) 810 (151) (208) 3,388 1,594 3,070 3,210 - - - - - - 1,529 (2,350) 314 103 801 - - 177 (21) 385 270 6 - - - - - - - - - - 1,204 (1,372) - (219) - - - (1,358) - - - - - - - 181,323 - 131,080 - - - 42,397 39,550 36,346 (2,481) 32,394 (2,449) 21,035 - - - - - - - (1,337) - 13 - - - - - - - - - 20,045 18,900 13,388 10,947 8,666 5,237 4,426 2,338 1,164 500 463 353 230 50 7 3 - - - 498,237 84,459 883 3,895 29,904 (18,201) (6,054) 593,123 15 Cons olidated annual accounts and management repor t of the aber tis group for 2003 72 Annual report The consolidated subgroup of abertis logística has changed from being consolidated by equity accounting to be fully consolidated, separating in this way the shareholding consolidated under equity accounting in Cilsa. During 2003, Abertis Logística, S.A. incorporated the company Arasur (39.5%) which is consolidated by equity accounting. During 2003 Saba acquired the 50% outstanding of Spel, so the company has changed from being consolidated by equity accounting to being fully consolidated. The long-term share portfolio is basically comprised of the shareholding in Xfera Móviles, S.A. of 28,727 thousand euros which is 100% provisioned and the shareholdings in Terra Mítica and Port Aventura. Under “Other credits”, in addition to the balance of 46,347 thousand euros to recover from the hedge mentioned in note 3. c), the sum of 122 million euros from Retevisión is included, which corresponds to the tax credit arising from losses and timing differences (see note 17). NOTE 7. CONSOLIDATION GOODWILL The movement during the year in consolidation goodwill was as follows: Balance 31.12.02 Incorporation due to merger Increase Amortisation Transfer Iberpistas Group Brisa Saba Group Gco Trados 45 Aucat Autema Concema Cilsa Tradia Aulesa Codad Coviandes APR Total 444,785 182,766 3,295 72,948 - - - - - 31,036 188,656 26,970 - - 5,086 - - - - - - 14,110 - - 6,277 4,099 157 4,232 82,438 12,554 1,485 (16,657) (6,092) (4,697) (653) (1,164) - - - - (811) (159,451) (817) (473) (438) (306) (118) (321) (16) (4,232) - - - - - - - - 24,295 105,331 Balance 31.12.03 428,128 176,674 72,295 29,872 28,394 26,153 13,637 12,116 6,265 6,159 3,778 141 - 924,506 59,911 96,477 (36,795) (135,156) 908,943 The additions to the consolidation goodwill are due to acquisitions or changes in the consolidation method detailed in note 2d). Annual report 73 The goodwill fund of Aucat has been transferred to intangible fixed assets following the merger with Holdaucat (see note 4). Similarly, the tacit capital gains of Saba recorded under “Buildings and other constructions” have been transferred to the consolidation goodwill, for a net amount of 24,295 thousand euros (see note 5). The possible effect of the exchange rate risk on the goodwill of Gco is covered by the exchange rate hedges detailed in note 21 d). NOTE 8. DEFERRED EXPENSES The movement in deferred expenses during the year was as follows: Expenses in raising finance Deferred expenses of financing highways Other deferred expenses Balance 31.12.02 Incorporation due to merger Change in perimeter Increase Decrease Exchange difference Balance 31.12.03 7,208 4,263 104 - (1,398) - 10,177 215,535 321,069 - 28,533 (15,496) (7,073) 542,568 51,541 1,555 36,153 730 (10,649) (227) 79,103 Total 274,284 326,887 36,257 29,263 (27,543) (7,300) 631,848 The deferred financial expenses correspond to the companies Aumar, Avasa, Aucat and Codad. “Other deferred expenses” include expenses incurred for the construction of new buildings and for carrying out works to adapt the land and buildings owned by the Consorci de la Zona Franca de Barcelona which are to be operated by Parc Logístic de la Zona Franca (34,215 thousand euros), the anticipated lease of part of the infrastructures of Tradia (19,069 thousand euros), the counterpart of the Acesa debt pending to the Ministry of Works which is being off- set by discounts payable by the Ministry (14,589 thousand euros) and the expenses derived from the hedging operations in the acquisition of 48.6% of Gco (see note 21 d) for an amount of 9,173 thousand euros. 15 Cons olidated annual accounts and management repor t of the aber tis group for 2003 74 Annual report NOTE 9. ACCOUNTS RECEIVABLE The breakdown of this account by types of activity is as follows: Highways Car Parks Telecommunications Logistics Airports Total Amount 163,241 21,164 88,546 1,059 4,138 278,148 NOTE 10. SHORT-TERM INVESTMENTS The average yield from deposits held by group companies during 2003 was 2.3% per annum. “Other credits” include 123 million euros from Retevisión that corresponds to deposits in two financial entities with the sole and irrevocable purpose of paying back the anticipated amortisation of certain loans. NOTE 11. EQUITY Annual report 75 The breakdown and movement in equity in the year ended 31 December 2003 was as follows: Balance 31.12.02 Distribution of results Incorporations due to merger Increase in capital Other Profit for the year movements Balance 31.12.03 Share capital Share premium 1,036,890 115,553 Parent company reserves Revaluation reserve RDL 7/1996 554,526 - - - 463,740 75,031 464,137 - (75,031) Legal reserve 140,387 18,281 - Distributable reserves Reserves in fully consolidated companies 44,490 54,136 153,864 25,152 (40,438) 9,994 Reserves in companies consolidated by equity accounting 5,047 7,274 (3,130) Conversion differences Profit for year Interim dividend (4,983) - (149,645) 195,329 (195,329) (79,001) 79,001 - - Total 2,033,390 (77,075) 938,960 - - - - - - - - - - - - - - - - - 1,575,661 - 579,690 - - 479,495 158,668 5,769 258,259 (19,064) (24,356) 1,009 10,200 (10,566) (165,194) 355,206 - 355,206 - (120,275) (120,275) 355,206 (143,127) 3,107,354 The amount “Other movements” under “Reserves in fully consolidated companies” corresponds, in part, to the amortisation of own shares of Iberpistas acquired through the compulsory Public Takeover Offer carried out in 2003 (approximately 10 million euros). a) Share capital The share capital of abertis is made up of 525,220,358 shares with a nominal value of 3 euros each, being those entered in the share register. The shares are fully subscribed and paid-up, of which 488,183,992 are class A shares and acciones 37,036,366 are class B preference shares that, in addition to having the same rights as the ordinary shares, have the right to a preferential dividend that will be paid once to holders of said shares in 2007. The maximum amount of the preferential dividend on each preference share will be the 15 Cons olidated annual accounts and management repor t of the aber tis group for 2003 76 Annual report difference at the time between the reference price of 14.87 euros per share and the weighted average price of the ordinary abertis shares in the quarter prior to the due date, with a maximum payment of 4.25 euros per share. At 31 December 2003 the most significant shareholdings were as follows: Caixa d’Estalvis i Pensions de Barcelona (”la Caixa”) (1) ACS, Actividades de Construcción y Servicios, S.A. (2) Caixa d’Estalvis de Catalunya Sitreba, S.L. (3) 21.05 % 11.82 % 5.69 % 5.50 % 44.06% (1) Shareholding through the companies Caixa Barcelona Vida, S.A., Seguros y Reaseguros (11.84%), VidaCaixa, S.A. de Seguros y Reaseguros (0.50%), Inversiones Autopistas, S.L. (7.75%) and CaixaHolding, S.A. (0.95%). (2) Shareholding through Dragados Concesiones Infraestructuras (4.33%) and the rest by Inversora de Infraestructuras, S.A. (3) Sitreba, S.L. is a company owned by Unicaja (34.38%), Cartera Participaciones Empresariales, S.L. (33.71 %), Banco de Valencia, S.A. (27.27%) and Caja de Ahorros del Mediterráneo (4.64%). All the shares of the Company are listed on the stock exchanges of Barcelona, Bilbao, Madrid and Valencia, being traded on the SIBE (electronic trading system) and form part of its Ibex 35 and Ibex Utilities indexes. At the same time, options on the shares of the company are traded on the options market of MEFF Renta Variable (Spanish Equities Futures Exchange). The Company’s Annual General Meeting on 8 April 2003 agreed to pay a final dividend for 2002 of 0.223 euros gross per share, representing the sum of 77,075 thousand euros. The general meeting also approved an increase in capital of a nominal amount of 463,740 thousand euros, by issuing 154,579,950 shares to cover the share exchange agreed in the merger with AUREA (see note 1 b). The share premium totalled 464,137 thousand euros. By agreement of the Extraordinary General Meeting held on 16 September 2003, the Company increased capital through a bonus share issue, charged against the Revaluation Reserve Account of Royal Decree law 7/1996, of 7 June, with one new share for every 20 existing shares, for an amount of 75,031 thousand euros. The Board of Directors was authorised by the Annual General Meeting of 8 April 2003 to increase share capital, through one or more capital issues, up to a maximum amount of 518,445 thousand euros, during the period up to 8 April 2008. This power remains fully operative. b) Revaluation Reserve of Royal Decree law 7/1996, of 7 June Annual report 77 This reserve originates from the revaluation of the tangible fixed tangible assets in the balance sheet of the Company, by virtue of Article 5 in the above legislation. With three years having passed since the balance date when the revaluation was made without an examination by the Tax Administration, the revaluation operations are deemed to be correct and the balance of the account accepted by the Tax Inspection, and accordingly the balance is available for distribution to: · Off-set book losses. · Increase share capital. · Create reserves freely available for distribution, ten years from the date of the balance sheet containing the revaluation operations. The balance of this account cannot be distributed, directly or indirectly, unless the capital gain has been realised, with the understanding that this is the case when the revalued assets have been fully amortised, transferred or written off in the books. Given the Activity Transferred of the subsidiary company ACESA in 2002, the requirement that the capital gain has been realised can only be understood as such when the company acquiring the revalued assets as part of the new activity has amortised those assets, transferred or written them off in the books. c) Legal reserve In accordance with the Revised Text of the Companies Law, 10% of the annual profits should go to the legal reserve so that this reserve reaches at least 20% of the capital. The legal reserve cannot be distributed to shareholders unless the Company is wound up. The legal reserve can be used for increases in capital, provided the funds used come from the balance exceeding 10% of the capital at the increased amount. Apart from the purpose mentioned above, whilst this reserve does not exceed 20% of the share capital, it can only be used to compensate losses when there are no other reserves available for this purpose. 15 Cons olidated annual accounts and management repor t of the aber tis group for 2003 78 Annual report d) Reserves in fully consolidated companies and companies consolidated under equity accounting The breakdown of these amounts by company is as follows: Iberpistas Group Saba Group Acesa Group abertis logística Group abertis telecom Group Codad Aumar Total reserves in fully consolidated companies abertis logística Group Acesa Group Iberpistas Group Coviandes Ausol Aurea Ltd GICSA IRASA Group PTY Total reserves in companies under equity accounting Amount (15,616) 14,088 (513) 2,233 (35,556) 10,970 38 (24,356) Amount 772 7,419 4,349 14,162 (25,333) 8,234 133 371 93 10,200 The negative reserves of the Iberpistas Group are due partly to the impact of the amortisation of own shares for 10 million euros in the year following the compulsory Public Takeover Offer (see beginning of this note) and partly because the amounts distributed as dividends by Group companies are adjusted in the consolidation process, increasing the reserves of the parent company and not those of the companies that have paid out. e) Exchange differences The breakdown by companies of this entry is as follows: Annual report 79 Saba Group Iberpistas Group Codad Coviandes Aurea Ltd Ausol PTY Total exchange differences Amount (80) (4,728) (20,509) (12,625) (5,058) (122,215) 21 (165,194) The exchange difference in Ausol reflects the effect of the devaluation of the Argentine peso. NOTE 12. MINORITY INTERESTS The balance of this entry at 31 December corresponds to the shareholding held by minority shareholders in the book value on that date of the fully consolidated companies, with the movement during the year as follows: Incorporation due to merger Increase holding Results Dividend Exchange difference (54,556) 1,162 Balance 31.12.02 54,486 1,089 859 31 Saba Satsa Rabat Spasa Saba Italia 14,383 Iberpistas Gesa Gco Tradia APR Codad Aulesa Sevisur Total 4,228 1,921 7,271 5,308 - - - - - - - - - - - - - (466) 6,800 8,108 - 88 (81) 13 (1,458) 92 - 1,746 (218) 317 - - - - - - (5,090) - - - - Other - (50) - - - (3,727) (1,921) - - 149 Balance 31.12.03 1,011 1,056 749 44 12,925 530 - 6,066 - - (81) (71) - - - (63) - - - - - - (29) - - - - (2,951) - - (1,385) (416) (712) - 4,287 (89) (24) 163 - - - - (8,019) - 1,200 1,176 (631) (3,692) (12,368) 27,844 89,576 14,442 (59,646) The amount “Other” mainly corresponds to changes in the consolidation perimeter or method of consolidation indicated in note 2.d). 15 Cons olidated annual accounts and management repor t of the aber tis group for 2003 80 Annual report NOTE 13. NEGATIVE CONSOLIDATION DIFFERENCES The movement in this entry during 2003 was as follows: Saba Italia Túnel del Cadí Aurea Ltd Retevisión Balance 31.12.02 8,507 13,980 - - Incorporation due to merger Increase Imputation in results - - 2,467 - - - - 16,835 (201) (699) - - Balance 31.12.03 8,306 13,281 2,467 16,835 Total 22,487 2,467 16,835 (900) 40,889 NOTE 14. DEFERRED INCOME The movement during the year was as follows: Subsidies Other deferred income Balance 31.12.02 2,704 Incorporation due to merger Change in perimeter Increase Decrease - 36,382 - (118) Balance 31.12.03 38,968 21,158 23,455 55 15,750 (3,813) 56,605 Total 23,862 23,455 36,437 15,750 (3,931) 95,573 The cash subsidies basically correspond to subsidies from the European Regional Development Fund (FEDER) received by Retevisión. “Other deferred income” at 31 December 2003 mainly includes: • Compensation to Aumar from the Public Administration for works carried out in Sagunto, for 23,139 thousand euros. • • Income from the sale of car parks under Saba concession. The Balance at 31 December 2003 totals 14,114 thousand euros. Income received by Acesa for the cession of the use of fibre optic cables, of 8,616 thousand euros. NOTE 15. PROVISIONS FOR LIABILITIES AND EXPENSES Annual report 81 The movements in this entry for the year ended 31 December 2003 were as follows: Balance 31.12.02 due to merger perimeter the year Incorporation Change in Charges for Application Other Exchange difference Balance 31.12.03 Reversion fund (see note 3 k) Other provisions (see note 3 l) 1,318,029 765,005 - 132,618 - (1,436) (1,104) 2,213,112 68,656 6,512 10,252 2,977 (16,102) - 7 72,302 Total 1,386,685 771,517 10,252 135,595 (16,102) (1,436) (1,097) 2,285,414 NOTE 16. BOND ISSUES AND LOANS WITH CREDIT INSTITUTIONS The table below shows the balance of outstanding credits at the end of 2003. 2004 2005 2006 2007 2008 Other maturities TOTAL - 178,529 10,143 11,065 11,065 445,626 656,428 401,766 132,019 127,100 65,335 157,312 97,707 981,239 192,364 85,460 123,041 166,198 152,688 685,606 1,405,357 374,527 24,687 - - - - 399,214 138,802 4,654 2,736 2,690 2,690 16,791 168,363 Bonds issued Syndicated loans Loans Credit policies Others Total 1,107,459 425,349 263,020 245,288 323,755 1,245,730 3,610,601 At 31 December, companies of the Group held debts in foreign currencies, principally held by Codad (US dollars) and Gco (Argentine pesos), for a sum of 73,604 and 46,758 thousand euros respectively. In the case of the Gco debt, toll income is pledged as guarantee against this debt. 82 Annual report 15 Cons olidated annual accounts and management repor t of the aber tis group for 2003 At 31 December companies of the Group have various financial transactions (swaps and collars) to hedge the financing costs of loans with a nominal value of 1,401,835 thousand euros. Of these operations, 540,506 thousand euros were arranged with related financial institutions (shareholders of the Company that hold 5% or more of the share capital). Part of the loan and credit operations included as debts with credit institutions at 31 December 2003 (225,524 thousand euros long-term and 143,533 thousand euros short- term) were arranged with credit institutions related to abertis, at market interest rates. The weighted average annual interest rate for bonds and long-term loans with credit institutions is approximately 4.05%. Short-term loans are expected to be refinanced in 2004. NOTE 17. TAX SITUATION abertis calculates tax in 2003 on a consolidated fiscal basis, as parent company of the fiscal group with the following subsidiary companies: abertis logística, abertis telecom, Acesa, serviabertis, Aucat, Tradia, Adesal, Iberacesa, Isgasa Iberpistas, Autopista A-6, Castellana, Iberavasa, Proconex, Ibermadrid, Aumar, Aulesa and Gicsa. The reconciliation of the difference between the reported profit before tax in the accounts and the profit subject to tax is detailed in the annual report of each company. The reconciliation of the consolidated results and the aggregate tax assessment base for all the consolidated companies, including consolidation adjustments, is as follows: Consolidated profit before tax Permanent differences (including consolidation adjustments) Timing differences - arising during the year - from previous periods Tax losses carried forward Tax assessment base Amount 541,836 3,633 10,284 (1,629) (35,674) 518,450 The tax effect of accrued Corporation tax expense during the year off-set against tax losses carried forward is 344 thousand euros. Annual report 83 In calculating the tax payable, the companies of the consolidated Group have applied deductions to avoid the double imposition internally on dividends received, as well as deductions on investments associated with the realisation of various activities, for a total amount of 4,103 thousand euros. The balance at 31 December 2003 of prepaid tax totalled 31,123 thousand euros, largely made up of valuation differences and timing differences between fiscal and accounting criteria for the recording income and expenses. The balance at 31 December 2003 of deferred tax totals 120,641 thousand euros, which largely corresponds to the following items : · Application of cash criteria for tax purposes with respect to income from operations with forward price, and similarly profit reinvestment for Spanish companies that set up internationally; both relate to previous years. · Deferred taxes recorded in Aumar and Avasa as the result of applying the sole transitory disposition of the Order of 10 December 1998 approving the Standards for the adaptation of the General Accounting Plan for concessionaire companies of highways, tunnels, bridges and other toll routes and in application of the fiscal legislation. The negative taxable amounts pending to be off-set for the companies of the consolidated Group at 31 December 2003 totalled 176,182 thousand euros, with due dates from 2004 to 2018. These negative taxable amounts include an amount of 4,029 thousand euros recorded as a tax credit under “Debtors-Public Treasury” and 110,111 thousand euros in “Other credits under investments” (see note 6). During 2003, companies in the abertis Group have been involved in various company operations in which they have opted for the application of the special fiscal regime of Chapter VIII and Title VIII of the Company Tax Law. These operations were as follows: · On 28 May 2003 the merger agreement of the abertis company through the absorption of Aurea and the consequent dissolution of the latter company without liquidation was made public (see note 1.b). · On 31 July 2003 the merger agreement of the Holdaucat company, through the absorption of Aucat, and the consequent dissolution of the latter company without liquidation, was made public. Subsequently, the absorbing Company changed its company name to Aucat. 15 Cons olidated annual accounts and management repor t of the aber tis group for 2003 84 Annual report · On 3 June 2003 the agreement to dissolve the company Iniciativa de Serveis Salou, S.L, without liquidation, by the complete cession of assets and liabilities of the company to the sole shareholder Parbla, S.L., was made public. As a consequence of these operations, the entire patrimony of the absorbed company was attributed to the absorbing company through universal title, assuming all tributary rights and obligations conveyed in the goods and rights transferred. In general, the companies that form the abertis Group have tax declarations of the last four years open to inspection, for all the taxes that they are subject to. abertis has been issued the corresponding assessments from the inspection based on examinations made between 1989 and 1993 and for 2000, of a partial nature and in a consolidated fiscal regime, which the company has signed in disagreement. These assessments have been appealed and are pending the decision of the authorities. The eventual impact on the Company’s capital that could result, once the outcome of the appeal is known, is adequately provisioned. Furthermore, due to different possible interpretations of tax legislation applicable to certain operations, there are specific fiscal liabilities of a contentious nature that are difficult to quantify. Nevertheless, the amount of tax that might be payable would not have a material impact on the Consolidated Annual Accounts. NOTE 18. INCOME AND EXPENSES a) Distribution of income The distribution of net business income by activities and markets for the ordinary activities of the Group was as follows: Highway operations National International Car park operations National International Telecommunication infrastructures National Logistic infrastructures – National Airport operations – International Total 1,019,192 24,733 62,942 18,415 Amount 1,043,925 81,357 67,043 12,861 21,113 1,226,299 b) Toll income Annual report 85 The highway concessionaire companies of the abertis group have not recorded income related to the review of toll rates on highways administered by the State for the year 2000 not authorised by the Minister of Works, corresponding to 2000, 2001, 2002, and 2003 for a sum of 80 million euros. In October 2003 the Supreme Court handed down a sentence making the decree denying the rate revision for 2000 null and void. The sentence did not establish a formula for compensation to concessionaires. The effect of freezing toll rates in 2000 on the rate revision in 2001, 2002 and 2003 is under appeal before the courts on behalf of the highway concessionaire companies. c) Personnel The average workforce of the Parent company and group companies is as follows: Permanent employees Temporary employees Total d) Extraordinary items 4,037 580 4,617 Extraordinary profits include the capital gain obtained by abertis in the sale of the former head office (15 million euros). 15 Cons olidated annual accounts and management repor t of the aber tis group for 2003 86 Annual report e) Contribution of each company to the consolidated result The contribution by companies of the results atributted to the Parent company is as follows: Consolidated result Minority interests Results atributted to parent Acesa Aumar Iberpistas Group Aucat Brisa Saba Group Aurea Ltd Trados 45 Coviandes abertis logística Group Gco Autema Túnel del Cadí Concema PTY Irasa Gicsa serviabertis APR Aulesa abertis telecom Tradia Codad abertis Total 181,360 129,092 45,766 18,489 15,000 10,780 3,388 3,210 3,069 1,059 3,397 1,529 810 801 386 103 270 7 (93) (635) (6,894) (7,747) (9,228) (38,550) 355,369 - - (92) - - 276 - - - 24 (1,746) - - - - - - - (316) 89 - 218 1,384 - (163) 181,360 129,092 45,674 18,489 15,000 11,056 3,388 3,210 3,069 1,083 1,651 1,529 810 801 386 103 270 7 (409) (546) (6,894) (7,529) (7,844) (38,550) 355,206 f) Foreign exchange transactions Foreign exchange transactions are primarily related to Gco (Argentine pesos) and Codad (US dollars and Colombian pesos), with the breakdown in thousands of euros as follows: Toll income Services provided Services received Annual report 87 Amount 24,733 21,938 9,294 NOTE 19. ENVIRONMENTAL INFORMATION The criteria of the Group is to give maximum importance to the activity of protecting and conserving the environment, with each subsidiary company adopting the necessary measures to minimise the environmental impact of the infrastructures managed, to achieve the maximum possible integration with their surroundings. The abertis group has invested the sum of 4,955 thousand euros on improving the environment in 2003, carrying out the following activities: · Cutting, fertilising, watering and phytosanitary treatment of green highway verges, on ramps and off-ramps. · Control dumping from contaminated waste pools and monitor re-vegetation. · Clearing, gardens and plantations along the highway. · Cleaning up and clearing of slopes with thick forestry vegetation and/or in semi-urban or urban zones to avoid the risk of fires on the one hand, and improve the visual appearance on the other. · Restoration and improvement of marginal areas destroyed by fires through replanting native trees. This will lead to an improved landscape, whilst also helping the forestry value of the highway to increase. · Installation of screens to reduce the visual impact and noise levels at certain points of the highway. · Studies and projects to evaluate the impact that the evolution of traffic has on areas surrounding the highway. 15 Cons olidated annual accounts and management repor t of the aber tis group for 2003 88 Annual report NOTE 20. OTHER INFORMATION ON BOARD MEMBERS In accordance with the provisions of article 127 ter. 4 of the Companies Law, included by Law 26/2003, of 17 July, which amended Law 24/1988, of 28 July, of the Securities Market, and the Revised Text of the Companies Law, aimed at increasing the transparency of listed companies, the companies with the same, similar or of a complementary nature to the defined business activity of the Company in which members of its Board of Directors have shareholdings, as well as the functions that they carry out, if applicable: Holder Company held Activity Shareholding Functions Caixa Catalunya Túnel del Cadí, S.A.C. Highway Concession 3.55 % Board member Retevisión Móvil, S.A. Telecommunications 2.10 % - Dragados Concesiones de Infraestructuras, S.A. Autovía de la Mancha, S.A. Bidelan Guipuzkoako Autobideak, S.A. Guadalquivir Sociedad Concesionaria de la Junta de Andalucía Guadalmetro, S.A. Infrastructure Concession Infrastructure Concession Infrastructure Concession SCL Terminal Aeropuerto Santiago, S.A. Infrastructure Concession Sociedad Concesionaria Autopista Central, S.A. Sociedad Concesionaria Vespucio Norte Express, S.A. Aerocali, S.A. Ferrocarriles del Norte de Colombia, S.A. Aeropuertos Mexicanos del Pacífico, S.A. de C.V. MBJ Airports LTD Road Management A13 PLC Road Management Services (Darrington) Holding Ltd. Batwena Platinum Corridor Concessionaire Ltd. Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession 66.67 % - 50.00 % - 27.83 % - 14.78 % - 48.00 % - 54.00 % - 33.33 % - 66.00 % - 28.16 % - 35.00 % - 25.00 % - 25.00 % - 25.00 % - Holder Company held Dragados Obras y Proyectos, S.A. Autopista del Henares, C.E.S.A. Ferrocarriles del Norte de Colombia, S.A. Scutvias-Autoestradas da Beira Interior, S.A. Aufe, S.A. Aunor, S.A. Concesionaria Vial del Sur, S.A. Semacar, S.A. Autopistas del Sol, S.A. Ángel García Altozano ACS, Actividades de Construcción y Servicios, S.A. Activity Shareholding Functions Annual report 89 Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Construction and services 2.00 % - 5.32 % - 6.65 % - 78.00 % - 85.00 % - 25.00 % - 55.00 % - 8.33 % - 0.0113% Executive Managing Director Saba Aparcamientos, S.A. Car Parks 0.0000055% Board member Grupo Dragados, S.A. / ACS Unicaja Accesos a Madrid C.E.S.A. Autopista Central Gallega C.E.S.A. Autopista del Henares, C.E.S.A. Ruta de los Pantanos, S.A. Autopistas del Sol, S.A. Carmelton Group Ltd. Concesionaria Vial de los Andes, S.A. Ferrocarriles del Norte de Colombia, S.A. Rutas del Pacífico, S.A. Scutvias-Autoestradas de Beira Interior, S.A. Ausur Servicios de la Autopista, S.A. Autopista del Sol Concesionaria Española, S.A. Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Logistics Infrastructure Concession 15.75 % - 13.32 % - 35.00 % - 25.00 % - 8.18 % - 40.00 % - 0.96 % - 5.32 % - 50.00 % - 26.65 % - 5.00 % Board member 15.00 % Board member 15 Cons olidated annual accounts and management repor t of the aber tis group for 2003 Activity Shareholding Functions 90 Annual report Holder Unicaja Company held Autopista del Sureste, Concesionaria Española de Autopistas, S.A. Inversora de Autopistas del Sur, S.L. Autopista Madrid Sur Concesionaria Española, S.A. Sociedad Unipersonal Infrastructure Concession Infrastructure Concession Infrastructure Concession 5.00 % Board member 10.00 % Board member 10.00 % Board (Indirect, member Inversora de Autopistas del Sur, S.L.) 24.50 % Board member 10.00 % Board member Sociedad Municipal de Aparcamientos y Servicios, S.A. Car Parks Sevisur Logística, S.A. Logistics Red de Banda Ancha de Andalucía, S.A. Auna Operadores de Telecomunicaciones, S.A. Telecommunications 10.00 % Board member Telecommunications 1.99 % Board member Islalink, S.A. Telecommunications 13.70 % Board member Val Telecomunicaciones, S.L. Telecommunications 4.46 % Board member With respect to positions or functions, excluding those held in companies in which abertis, has a direct or indirect investment, the Members of the Board of Directors are also board members or members of the management team of the following companies with activities that are the same, similar or of a complementary nature to the Company’s business: Board Member Company Isidro Fainé Casas Telefónica, S.A. Ángel García Altozano Broadnet Consorcio, S.A. Sonae Indústria SGPS Position or function Deputy Chairman Chairman Board member Pablo Vallbona Vadell ACS, Actividades de Construcción y Servicios, S.A. Deputy Chairman In addition, one of the principal activities of Grupo Dragados, S.A./ACS, Dragados Concesiones de Infraestructuras, S.A. and Dragados Obras y Proyectos, S.A. is the promotion, management and operation of transport infrastructures. NOTE 21. OTHER INFORMATION Annual report 91 a) Annual remuneration of the directors for their service as members of the Board of Directors of the Company is fixed as a share in the liquid profits. It can only be paid out once the payment of dividends and transfers to reserves that the Law establishes are covered, and it should not exceed, under any circumstances, two percent of the profits. The Board of Directors may distribute this sum amongst its members in the form and amount it decides. Overall remuneration paid to directors of abertis (formerly Acesa Infraestructuras, S.A.), as members of the Board of Directors, totalled 1,503 thousand euros in 2003, which is less than the statutory limit. As indicated in notes 1 b) and 13 of this annual report, the merger between Acesa Infraestructuras, S.A. and AUREA was made public on 28 May 2003, but was effective for accounting purposes from 1 January 2003. Consequently, during the year two Boards of Directors co-existed, the board of abertis (formerly Acesa Infraestructuras, S.A.) and the board of AUREA. Overall remuneration received by board members of abertis (formerly Acesa Infraestructuras, S.A.) totalled 2,950 thousand euros, which is broken down into board fees (475 thousand euros), expenses (1,503 thousand euros), contributions to cover pension plans (965 thousand euros) and life insurance (7 thousand euros). Overall remuneration received by board members of AUREA totalled 2,152 thousand euros, which is broken down into board fees (511 thousand euros), expenses (126 thousand euros), statutory obligations (430 thousand euros), life insurance (3 thousand euros) and other remuneration (1,082 thousand euros). The overall remuneration of board members of abertis and AUREA in the other subsidiary and associated companies of the Group totalled 866 thousand euros, which is broken down into board fees (76 thousand euros), expenses (471 thousand euros) and statutory obligations (319 thousand euros). abertis does not use any remuneration system linked to the evolution of the Company’s share price for any of its employees or any of the members of the Board of Directors. b) As at 31 December the group had guarantees to third parties given by financial entities, which are detailed below by company: Iberpistas abertis Saba Aucat Acesa Aumar Castellana Avasa Autopista A-6 Tradia PLZF Total Amount 118,920 129,690 36,180 15,371 19,994 18,624 17,157 7,865 5,831 2,385 5 372,022 92 Annual report 15 Cons olidated annual accounts and management repor t of the aber tis group for 2003 Of this total, 203,133 thousand euros correspond to guarantees contracted for operation agreements of the different companies. The remaining balance corresponds to certain commitments contracted by investee companies (investments, financing, etc.) and it is not considered that these guarantees will lead to unexpected material losses. c) Fees received during the year by PricewaterhouseCoopers Auditores, S.L. for auditing services and other services provided to the companies of the group totalled 378 thousand euros. The fees received during the year for other services provided to the Company for other companies trading under the name PricewaterhouseCoopers totalled 387 thousand euros. d) Gco. hedge. In the year 2000, abertis contracted exchange rate hedges on the investment made in the Argentine company Gco. The following financial instruments were contracted: · Transactions without the exchange of principal on expiry (Non Delivery Forward). The nominal value of all these transactions is USD 120.6 million. Acesa Infraestructuras sold 120.6 million Argentine pesos in exchange for USD 120.6 million, with expiry in October 2005, having fixed the exchange rate to buy Argentine pesos on expiry in 2002. · Cross-currency interest rate swap (Cross-Currency IRS) between USD and euros. The nominal value of these transactions is USD 100 million, with expiry in October 2005. The premiums paid up front for the hedging transactions are accounted for on a linear basis over the period of the transaction (see note 3 h). The interest payments of the cross currency interest rate swap are recorded as financial income or expense over the period of the operation. The exchange rate differences arising from the exchange of euros in these transactions will be recorded on the cancellation or settlement of the hedging transaction. NOTE 22. FINANCIAL PLAN In accordance with the provisions laid down in current legislation, the concessionary companies of Spanish highways have their respective financial plans approved by the corresponding Administration. NOTE 23. SUBSEQUENT EVENTS The Board of Directors of abertis approved, on 27 January 2004, the proposed merger through the absorption of Iberpistas, S.A. by the Company which will be submitted to the respective annual general meetings for shareholder approval in the first four months of 2004, effective from 1 January 2004 for accounting purposes. abertis holds 99.8% of the share capital of Iberpistas S.A.. In February 2004 the consortium made up of Aumar (25%), ACS/Dragados (50%) and Cajamadrid (25%) won the tender for the construction and operation of the toll highway of the second Alicante ring-road. ANNEX Subsidiary and associated companies (thousand euros) (*) Company Registered Office Activity Auditors Share %Shareholding capital direct indirect Company owning indirect shareholding Annual report 93 FULLY CONSOLIDATED COMPANIES Highways Autopistas, C.E.S.A. (Acesa) Av. Parc Logístic, 12-20. Barcelona Toll highway concessionaire Av. Parc Logístic, 12-20. Barcelona Toll highway concessionaire Ruta Nacional nº 7, km 25.92. Ituzaingó concessionaire Argentina Toll highway Autopistes de Catalunya, S.A. (Aucat) Grupo Concesionario del Oeste, S.A. (Gco) (1) Autopistas Aumar S.A.C.E. (Aumar) Iberpistas Autopista A-6, S.A. Paseo de la Alameda, 36. Valencia Pío Baroja, 6. Madrid Pío Baroja, 6. Madrid Iberavasa de inversiones, S.L. Pío Baroja, 6. Madrid Castellana de Autopistas, S.A. Concesionaria del Estado (Castellana) Pío Baroja, 6. Madrid Car Parks Saba Aparcamientos, S.A. (Saba) Parbla, S.A. Spel-Sociedade de Parques de Estacionamento, S.A. (Spel) Av. Parc Logístic, 12-20. Barcelona Sabino Arana, 38. Barcelona Lugar do Espino Vía Norte. Porto (Portugal) Societat Pirenaica d’Aparcaments, S.A. (Spasa) Pau Casals, 7 Andorra la Vella Principat d’Andorra Societat d’Aparcaments de Terrassa, S.A. (Satsa) Saba Italia, S.p.A. Pl. Vella, subsuelo. Terrassa Via delle Quattro Fontane, 15. Rome (Italy) PwC PwC 876,465 100.00 - - 96,160 100.00 Acesa PwC 22,070 48.60 Acesa Toll highway concessionaire Toll highway concessionaire Toll highway concessionaire Holding company Toll highway concessionaire PwC 419,643 100.00 Other auditors Other auditors Other auditors Other auditors 173,547 99.80 50,000 24,207 46,800 99.80 Iberpistas - - 99.80 Iberpistas 99.80 Iberpistas Car Parks PwC 18,243 99.24 Car Parks - 3 Car Parks PwC 6,000 Car Parks - 301 Car Parks PwC 7,746 Car Parks PwC 28,600 - - - - 99.24 Saba 99.24 Saba 89.64 Saba 87.37 Saba 59.54 Saba This annex forms an integral part of note 2 to the 2003 consolidated annual accounts and it should be read in conjuntion with the latter. 15 Cons olidated annual accounts and management repor t of the aber tis group for 2003 94 Annual report Subsidiary and associated companies (thousand euros) (*) Company Registered Office Activity Auditors Share %Shareholding capital direct indirect Company owning indirect shareholding FULLY CONSOLIDATED COMPANIES Rabat Parking, S.A. Rue de Larache, 8. Rabat (Morocco) Car Parks Logistic services Abertis Logística, S.A. Sevisur Logística, S.A. Av. Parc Logístic, 12-20. Barcelona Development, logistics and technical support Moratín, 1. Seville Construction and operation of logistic parks Telecommunications Abertis Telecom, S.A. Av. Parc Logístic, 12-20. Barcelona Telecommunication services Difusió Digital Societat de Telecomunicacions, Llobregat. Barcelona S.A. (TRADIA) Motors, 392. L’Hospitalet de Operator of telecommunication infrastructure - - - - 1,879 - 50.61 Saba 47,500 100.00 3,000 60.03 Abertis Logística 300,000 100.00 - - PwC 131,488 100.00 Abertis Telecom Retevisión I, S.A. Gran Via de les Corts Catalanes, 130-136. Barcelona Operator of telecommunication infrastructure Other auditors 81,270 (**) 100.00 Abertis Telecom Airports Compañía de Desarrollo Aeropuerto Eldorado, S.A. (CODAD) Carrera, 13 nº 93-40. Santafé de Bogotá (Colombia) Construction and maintenance of airports Other auditors 15,635 85.00 CONSOLIDATED ON PROPORTIONAL BASIS Highways Autopistas Iberavasa, S.L. Vasco-Aragonesa, C.E.S.A. (AVASA) Logistic services Parc Logístic de la Zona Franca, S.A. (PLZF) Barrio de Anuntzibai Toll highway Other 234,000 49.90 s/n. 48410 Orozco. Vizcaya concessionaire auditors Av. Parc Logístic, 2-10. Barcelona Development and operation of logistic parks Areamed 2000, S.A. Via Augusta, 21-23. Barcelona Operation of service areas Other auditors Other auditors 23,742 50.00 Abertis Logística 70 50.00 Abertis Logística This annex forms an integral part of note 2 to the 2003 consolidated annual accounts and it should be read in conjuntion with the latter. Subsidiary and associated companies (thousand euros) (*) Company Registered Office Activity Auditors Share %Shareholding capital direct indirect Company owning indirect shareholding CONSOLIDATED BY EQUITY ACCOUNTING Serviabertis, S.L. Av. Parc Logístic, 12-20. Barcelona Administrative services - 3 100.00 Annual report 95 180 Strand, London (United Kingdom) Holding company Montalbán, 5. Madrid Administration and management of infrastructures Toll highway Villadangos del Páramo. Ctra. Santa concessionaire María del Páramo. León Other auditors 14,188 100.00 - 60 99.98 Other auditors 34,642 79.20 Infrastructures concessionaire Other auditors 1,179 75.00 Highways Aurea Limited Gestión Integral de Concesiones, S.A. (GICSA) Autopistas de León, S.A.C.E. (AULESA) Autopistas de Puerto Rico y Compañía, S.E. (APR) Autopista Trados-45, S.A. (TRADOS-45) Autopistas del Sol, S.A. (AUSOL) Concesionaria Vial de los Andes, S.A. (COVIANDES) Montellano Sector embalse. San Juan (Puerto Rico) Ctra. M-203 PK 0,280 Madrid Leandro N. Alem 986, piso 4. Buenos Aires (Argentina) Carrera Novena, 126-91. Santafé (Colombia) Infrastructures concessionaire Toll highway concessionaire Infrastructures concessionaire de Bogotá Pt Operational Services Limited (PTY) 1 Lavender Road. Bon Accord 009 Pretoria (South Africa) Operation and maintenance Concesiones de Madrid, S.A. (CONCEMA) Infraestructuras y Radiales, S.A. (IRASA) Av. Europa, 18. Infrastructures Alcobendas, Madrid concessionaire Golfo de Salónica, 27. Madrid Administration and management of infrastructures Autopistas-Conces. Rua General Norton Holding company Espanhola, SGPS, S.A. de Matos 21-A. Arquiparque Algés Oeiras (Portugal) Acesa Italia, S.R.L. Via delle Quattro Fontane, 15. Rome (Italy) Holding company PwC 29,900 50.00 PwC 33,925 45.16 Other auditors Other auditors Other auditors Other auditors 7,872 39.04 0 33.30 28,798 25.00 7,092 22.49 (***) - 50 (2) 100.00 Acesa PwC 166,341 (2) 100.00 Acesa Schemaventotto, Calmaggiore, 23. Holding Other 445,536 (2) 12.83 Acesa Italia, S.R.L. S.p.A. Treviso (Italy) company auditors This annex forms an integral part of note 2 to the 2003 consolidated annual accounts and it should be read in conjuntion with the latter. 15 Cons olidated annual accounts and management repor t of the aber tis group for 2003 96 Annual report Subsidiary and associated companies (thousand euros) (*) Company Registered Office Activity Auditors Share %Shareholding capital direct indirect Company owning indirect shareholding CONSOLIDATED BY EQUITY ACCOUNTING Via A. Bergamini, 50. Toll highway Other 621,289 (4) 7.98 (5) Rome (Italy) concessionaire auditors S.p.A. - - Other auditors Other auditors Other auditors Other auditors Other auditors 32,229 99.90 Acesa/Iberpistas 61 - 99.90 Iberacesa, S.L. 190,500 23.32 Iberacesa, S.L. 190,500 - 23.32 Alazor inversiones 30,250 - 17.98 Iberacesa, S.L. 30,250 - 17.98 Tacel Inversiones 105,504 37.19 Acesa PwC 81,894 22.33 Acesa Autostrade, S.p.A. Schemaventotto, (3) Iberacesa, S.L. Pº Castellana, 51. Madrid Holding company Isgasa, S.A. Av. Parc Logístic, 12-20. Barcelona Engineering services Alazor Inversiones, S.A. Rozabella, 6. Las Rozas. Madrid Holding company Accesos de Madrid, C.E.S.A. Rozabella, 6. Las Rozas. Madrid Toll highway concessionaire Holding company Toll highway concessionaire Toll highway concessionaire Toll highway concessionaire Tacel Inversiones, S.A. Hórreo, 11. Santiago de Compostela Autopista Central Gallega, C.E.S.A. (ACEGA) Hórreo, 11. Santiago de Compostela Carretera de Vallvidrera a St. Cugat, km 5.3. Barcelona Gran Via de les Corts Catalanes, 680. Barcelona Túnel del Cadí, S.A.C. Autopista Terrassa-Manresa, Autema, Concessionària de la Generalitat de Catalunya, S.A. (AUTEMA) Brisa, Auto-estradas do Portugal, S.A. (6) Ibermadrid de Infraestructuras, S.A. Pío Baroja, 6. Madrid Proconex, S.A. Pío Baroja, 6. Madrid Quinta da Torre da Toll highway Aguilha Edificio Brisa 2785-589. Sao Domingos de Rana (Portugal) concessionaire Other auditors 600,000 (4) 10.00 Acesa Study, development and construction of civil works infrastructures Operation of sub-leased service areas Toll highway concessionaire - - Other auditors Other auditors 500 99.80 Iberpistas 100 99.80 Iberpistas 1,434 99.80 Iberpistas/Proconex 1,041 50.90 Promoción de Autopistas Santiago de Chile Promoción de Autopistas Chile Limitada Gestora de Autopistas, S.A. Santiago de Chile Toll highway concessionaire This annex forms an integral part of note 2 to the 2003 consolidated annual accounts and it should be read in conjuntion with the latter. Subsidiary and associated companies (thousand euros) (*) Company Registered Office Activity Auditors Share %Shareholding capital direct indirect Company owning indirect shareholding Annual report 97 Santiago de Chile Toll highway concessionaire PwC 71,186 24.95 Iberpistas Chile Limitada (GESA) Sociedad Concesionaria del Elqui, S.A. (ELQUI) Road Management Group (RMG) Autopista del Henares, S.A.C.E. (HENARSA) 130 High Street Old Woking. Surrey concessionaire (United Kingdom) Toll highway Golfo de Salónica, 27. Madrid Toll highway concessionaire Erredosa Infraestructuras, S.A. (ERREDOSA) Golfo de Salónica, Administration 27. Madrid and management of infrastructures Logistic services Araba Logística, S.A. (ARASUR) Olaguibel, 2. Vitoria Construction and operation of logistic parks Other auditors Other auditors Other auditors 35,946 25.00 Aurea Limited 96,700 61 Infraestructuras y radiales 22.49 Infraestructuras y radiales 22.49 - 3,000 39.50 Abertis Logística Centro Intermodal de Logística, S.A. (CILSA) Portal de la Pau, 6. Development and Barcelona operation of logistic parks Other auditors 15,467 32.00 Abertis Logística Telecommunications Adquisición de emplazamientos, S.L. (ADESAL) Motors, 392. L’Hospitalet de Llobregat. Barcelona Operator of telecommunication infrastructure Torre de Collserola, S.A. Ctra. de Vallvidrera Construction and al Tibidabo, s/n. Barcelona operation of telecommunication infrastructures - 3 100.00 Tradia PwC 12,020 36.00 Retevisión (*) Foreign currency amounts converted at official euro exchange rate at close. (**) Includes the increase in capital made pending registration in the Mercantile Register. (***) Direct shareholding of abertis: 15 %. Indirect holding through Iberpistas subsidiary Avasa: 7.4 %. (1) The shares of Gco are listed on the Argentina stock exchange. The weighted average trading price for the last quarter of 2003 was 1.26 euros. At the year end share price was 1.6 euros. The company holds 57.6 % of the voting rights. (2) Information at 31 December 2002. (3) The shares of Autostrade, S.p.A. are listed on the Milan stock exchange. The weighted average trading price for the last quarter of 2003 was 12.91 euros. The year end share price was 13.93 euros. (4) Information at 30 June 2003. (5) Shares pledged as guarantee for a loan granted to Schemaventotto, S.p.A. to buy the shareholding in this company. (6) The shares of Brisa, Auto-estradas do Portugal, S.A. are listed on the Lisbon stock exchange. The weighted average trading price for the last quarter of 2003 was 5.22 euros. The year end share price was 5.30 euros. This annex forms an integral part of note 2 to the 2003 consolidated annual accounts and it should be read in conjuntion with the latter. 98 Annual report 15 Cons olidated annual accounts and management repor t of the aber tis group for 2003 ABERTIS INFRAESTRUCTURAS, S.A. 2003 CONSOLIDATED MANAGEMENT REPORT In 2003 the Group has seen its size increase notably due to the merger of Acesa Infraestructuras and Aurea Concesiones de Infraestructuras, which gave rise to abertis, one of the leading European operators in the management of infrastructures serving mobility and communications. This year has been the first full year of activity for the new group that was formed after the merger (effective from 1 January 2003), which operates basically in the sectors of highways, car parks, logistic infrastructures and telecommunication infrastructures. The objective of abertis is to continue providing shareholders with a balanced portfolio of investments in the areas noted that ensure an adequate combination of low risk, growth and return. In this respect, the following events in 2003 can be highlighted: · · · · In the highways sector, the incorporation in abertis of all the Aurea concessions, which included Aumar (one of the main national concessions), as well as a series of shareholdings in other important national and international projects. During 2003 new toll highways have been opened in which abertis has participated: A-6 connection with Segovia (Castellana de Autopistas), Radial 2 Madrid-Guadalajara (Henarsa) and Silleda-Lalín stretch (Autopista Central Gallega). Also of note in the highway sector was the increase of the indirect shareholding in the Italian concessionaire Autostrade from 3.8% to 8.0%, and the merger of Holdaucat and Aucat (100% owned by Holdaucat) in the interests of optimising the Group structure. In the car park sector, abertis acquired 40% of Saba to gain control of 99.2% of the capital. Similarly, Saba acquired 50% of the Portuguese company Spel to gain 100% control of the company, and has continued its international expansion with new projects in Italy and Portugal. In the logistic infrastructures sector, highlights include two new logistic projects that began to be developed in Álava and Seville in which abertis is a shareholder, the full occupation and consolidation of the Parc Logístic de la Zona Franca, and the positive evolution of the associated company Cilsa which, having developed and occupied all of ZAL Barcelona, has started the development of ZAL Prat. Finally, in the telecommunications infrastructure sector the acquisition of Retevisión Audiovisual stands out, concluded at the end of the year, and the acquisition of 5 % of Tradia to gain 100 % control. All these transactions, linked to the good performance of the rest of the business and activities, have been reflected positively in the figures and results for the year, and in turn they establish the bases for growth in the years ahead. The 2003 consolidated profit and loss account for abertis is not comparable with the previous year due to the merger as noted and because the Iberpistas group has been fully consolidated for the entire year in 2003 (only from June in 2002). The profit for the year totalled 355 million euros, representing an increase of 82% on the previous year (or 11.2% if compared to the aggregate figures for Acesa and Aurea in 2002). Annual report 99 Operating income rose to 1,283 million euros (62% more compared to Acesa in 2002 and 13% more compared to the aggregate of Acesa and Aurea). The highway sector represented 85% of total income; car parks contributed 7%; telecommunication infrastructures, 5%, and infrastructures for logistics and other activities the remaining 3%. The evolution of the activity has been positive in the Group’s main concessions, as indicated by the evolution of the Average Daily Traffic (ADT) which rose 3.7% to 27,354 vehicles across the combined highway network of abertis in Spain. The balance sheet also clearly reflects the impact of the merger between Acesa and Aurea, as well as the effect of the new investments and the growth recorded by the companies that make up abertis. Total assets rose from 6,459 million euros at 31 December 2002 to 9,685 million euros at the end of 2003, whilst consolidated equity has increased by 1,074 million euros to 3,107 million euros at the end of 2003. Debt at 31 December 2003 (3,634 million euros) represents117% of equity and 37% of liabilities, with these percentages below those of other large European communication infrastructure operators. The financial equilibrium of abertis should enable it to face new investments to improve the infrastructures that it currently manages with guarantees, and continue with its selective policy of investments carried out in recent years without the need to seek additional capital. In the interests of optimising the corporate structure of the Group, the Board of Directors of abertis approved, on 27 January 2004, the merger by absorption of Iberpistas, S.A. (99.8 % shareholding), which will be submitted for the approval of the respective annual general meetings in the first four months of 2004, and if approved, will be effective for accounting purposes from 1 January 2004. All business units are expected to continue to make a positive contribution in 2004, accentuated by the progressive contribution of all the new projects and the latest incorporations in the Group. The dividend policy is also expected to be maintained. As a listed group, abertis will have to apply the international accounting standards from 2005. During 2003 the Company has already carried out an analysis of the implementation of these standards, both quantitatively as well as over the current systems and operational procedures, and during the course of 2004 it will continue the tasks prior to implementation. The Company will also continue to pay special attention to the study being done of the eventual interpretation of the application of these standards to concession businesses by the international regulatory authorities. The Company has not traded, directly or indirectly, its own shares. www.abertis.com 102 Annual report 5 2 2003 Annual report and management report Balance sheet at 31 December (thousand euros) A S S E T S Fixed assets Start-up costs Intangible fixed assets Computer software Goodwill Studies and projects Other intangible fixed assets Amortisation Tangible fixed assets Land and natural resources Buildings and other constructions Machinery and vehicles Installations, tooling and furniture Other fixed assets Depreciation Investments Holdings in subsidiary and associated companies Long-term loans to group companies Long-term share portfolio Long-term deposits and guarantees Other credits Provisions Deferred expenses Current assets Debtors Advance payments to creditors Group company debtors Sundry debtors Personnel Public Treasury Provisions Short-term investments Short-term loans to group companies Interest receivable Other credits Treasury Cash Banks and credit institutions Prepayments and accrued income 2003 4,777,874 26 5,828 218 7,823 770 3 (2,986) 15,299 3,038 8,311 492 4,167 3,197 (3,906) 4,756,721 4,264,271 700,802 7,513 65 6,616 (222,546) 9,173 587,854 9,219 12 4,703 5,528 4 1,662 (2,690) 575,346 575,346 - - 3,289 41 3,248 - 2002 3,232,768 - 703 36 - 668 - (1) 11,744 699 8,021 242 10,736 - (7,954) 3,220,321 2,732,060 530,354 - 2 - (42,095) 14,414 203,057 10,570 12 7,568 3,761 16 940 (1,727) 191,529 163,815 3 27,711 956 18 938 2 Total assets 5,374,901 3,450,239 Annual report 103 L I A B I L T I E S Equity Share capital Share premium Reserves Revaluation reserve RDL 7/1996 Legal reserve RD 1564/1989 Voluntary reserve Profit and loss account Interim dividend Provisions for liabilities and expenses Other provisions Long-term creditors Bond issues Loans with credit institutions Payment pending on shares of group companies Loans with subsidiary and associated companies Other creditors Short-term creditors Bond issues (interest) Due to credit institutions Loans Interest on loans Loans with group companies Trade creditors Trade creditors for traffic operations Other creditors Other non-trade creditors Public Treasury Accrued payroll expenses Other debts Deposits and guarantees received 2003 3,068,960 1,575,661 579,690 704,867 479,495 158,668 66,704 329,017 (120,275) 40,529 40,529 1,369,159 590,000 763,765 3,353 9,530 2,511 896,253 4,768 818,117 812,340 5,777 17,242 3,065 3,065 - 53,061 51,409 800 847 5 2002 2,009,416 1,036,890 115,553 753,157 554,526 140,387 58,244 182,817 (79,001) 42,419 42,419 606,354 60,000 546,354 - - - 792,050 553 749,979 737,632 12,347 16,452 9,442 7,306 2,136 15,624 14,226 1,088 279 31 Total liabilities 5,374,901 3,450,239 25 2003 Annual repor t and management repor t Profit and loss account at 31 December (thousand euros) 104 Annual report Expenses Personnel expenses Salaries and wages Social security Pension fund and other personnel-related expenses Amortisation and depreciation of fixed assets Movement in trading provisions Other operating expenses External services Taxes Allocation to reversion fund Total operating expenses Operating profit Financial costs, related expenses and variation in investment provision Total financial expenses 2003 13,638 12,414 929 295 2,826 454 15,634 14,997 637 - 2002 34,559 28,227 6,181 151 5,924 1,699 53,107 25,189 413 27,505 32,552 95,289 - 130,736 71,781 71,781 51,110 51,110 Positive financial results 332,128 106,815 Profit on ordinary activities Losses on disposal of fixed assets and extraordinary expenses 317,965 5 237,551 - Movement in fixed asset provisions 26,989 33,555 Profit before tax Corporation tax Profit for the year 309,715 (19,302) 217,565 34,748 329,017 182,817 Annual report 105 Income Operating revenue Toll income Discounts and rebates on tolls Provision of services Other operating income Sundry income and other management income Other operating income Total operating income Operating loss Income from investment in group companies Other interests and related income 2003 15,748 - - 15,748 2,641 - 2,641 2002 211,640 217,284 (5,644) - 14,385 14,385 - 18,389 226,025 14,163 368,837 - 142,243 35,072 15,682 Total financial income 403,909 157,925 Profit from the disposal of fixed assets and extraordinary income 18,744 13,569 Extraordinary loss 8,250 19,986 25 2003 Annual repor t and management repor t ABERTIS INFRAESTRUCTURAS, S.A. NOTES TO THE ANNUAL ACCOUNTS FOR 2003 106 Annual report NOTE 1. ACTIVITY a) Activity ABERTIS INFRAESTRUCTURAS, S.A. (hereinafter abertis or the Company) was incorporated in Barcelona on 24 February 1967. On 30 May 2003 (registration of date of merger document indicated in note 1. b) it changed its name from ACESA INFRAESTRUCTURAS, S.A. to its current name. Its registered office is Avenida del Parc Logístic, nº 12-20, Barcelona. On 29 June 2002, the general meeting of the Company agreed to make a non-monetary transfer of the concessionary activity, as well as various shareholdings in other highway concessionary companies, to Autopistas II (now Autopistas Concesionaria Española, S.A.). In accordance with the corresponding deed, 1 July 2002 was established as the date from which it would be understood that all operations of the transferred activity were made on account of Acesa. abertis is currently the parent of a group dedicated to the management of infrastructures serving mobility and communications that operates in four sectors of activity: highway concessions, car parks, logistics and services, and telecommunications. Its statutory purpose is defined as the construction, maintenance and operation of highways under concession; management of highway concessions in Spain and internationally; construction of road infrastructures; complementary activities to the construction, maintenance and operation of highways, such as service stations, integrated centres for logistics and/or transport and/or parking, as well as any other activity related with infrastructures for transport and communication and/or telecommunication serving the mobility and transportation of people, goods and information, with the necessary authorisation, when applicable. The Company can develop its statutory purpose, especially the concessionary activity, directly or indirectly through shareholdings in other companies, being subject at all times, in this respect, to the provisions of the law in force. b) Merger On 8 April 2003, the extraordinary general meetings of shareholders of ACESA Infraestructuras, S.A. and AUREA, Concesiones de Infraestructuras, S.A. (AUREA) approved the merger of both companies by absorption, where the former company was to absorb the latter company, effective for accounting purposes from 1 January 2003, the date from which it is understood that AUREA operations were conducted on account of the Company. The merger was effected through an exchange of AUREA shares for abertis shares (in the proportion of 43 shares of the former for 93 shares in the latter). To cover this share exchange the Company increased capital as detailed in note 9. The merger project approved by the respective general meetings of shareholders established that the difference between the nominal value of the new shares issued by the Company and the adjusted book value of AUREA will have the consideration of an issue premium (see note 9). The audited balance sheet of the Aurea company accounts at 31 December 2002 that was included in the Company is the following: Annual report 107 Assets Net fixed assets Start-up costs Intangible fixed assets Tangible fixed assets Investments Current assets Liabilities Equity Provisions for liabilities and expenses Long-term creditors Short-term creditors Thousand euros 105 5,294 11,236 1,407,852 Thousand euros 1,424,487 43,649 1,468,136 (*) 1,033,820 6,512 346,839 80,965 1,468,136 (*) Prior to incorporating the value of this company’s patrimony in the accounts of abertis, dividends from Aurea totalling 105,943 thousand euros were paid out. In the tables and movements shown in this annual report, the column “Incorporation due to merger” reflects the consolidated balances included as at 1 January 2003. 25 2003 Annual repor t and management repor t 108 Annual report NOTE 2. BASIS OF PRESENTATION a) Accounting principles The annual accounts are obtained from the accounting records of the Company and have been prepared according to the generally accepted accounting principles in Spain and established in the current legislation. The figures contained in the balance sheet, profit and loss account, source of financing statement and the notes to these accounts are expressed in thousand euros. The consolidated annual accounts for the abertis group for 2003 are presented separately from the parent company accounts. The main figures taken from the audited consolidated accounts are as follows: Total assets Equity Consolidated operating income Result for the year due to the Parent company - Profit 9,684,659 3,107,354 1,283,149 355,206 b) Comparison of the information The annual accounts for 2003 are not comparable with the 2002 accounts for the following reasons: • The 2002 accounts reflect six-months of concessionary activity until the transfer of that branch of activity to Autopistas II, Concesionaria Española, S.A. (see note 1 a). • The 2003 accounts reflect greater activity due to the merger indicated in note 1 b). NOTE 3. PROPOSED DISTRIBUTION OF RESULTS The following distribution of results will be submitted to the annual general meeting for approval: Basis of distribution Profit for the year Distribution Dividends Legal reserve Voluntary reserve Amount 329,017 237,399 32,902 58,716 329,017 During 2003 an interim dividend of 120,275 thousand euros was paid. This interim dividend represents a payment of 0.229 euros gross per share on all issued shares. Annual report 109 The table below shows that there was sufficient profit in the period to cover the interim dividend (which was made on 12 November 2003), with the accounting statement verifying sufficient liquidity to make the payment of this interim dividend. Net profit from 1 January to 31 July 2003 Less: Legal reserve Maximum amount available for distribution Amount proposed and distributed Cash funds available prior to payment Gross amount of interim dividend Cash funds available after payment Amount 137,390 (13,739) 123,651 120,275 Amount 827,470 (120,275) 707,195 NOTE 4. ACCOUNTING POLICIES The most significant accounting policies used in the preparation of the annual accounts are described below: a) Start-up costs The expenses incurred on incorporation and in share capital increases are recorded at cost, shown net of accumulated amortisation, which is calculated using the straight line method over a period of five years. b) Intangible fixed assets The items included in this chapter are valued at acquisition price or the cost of production and amortised as follows: • Computer applications are amortised at 33% per year. • The goodwill fund is amortised on a straight line basis over the estimated period in which said funds will contribute to profit generation, with a maximum period of 20 years. • Studies and projects are amortised on a straight line basis over a maximum period of ten years from the date on which the project is considered to be viable. 25 2003 Annual repor t and management repor t 110 Annual report c) Tangible fixed assets Tangible fixed assets are valued at acquisition cost, revalued in accordance with various legal measures. Costs of refurbishment, enlargement or improving tangible fixed assets are capitalised only when they increase capacity, productivity or extend the useful life of the asset, provided that it is possible to know or estimate the net book value of the assets which are removed from the list, having been replaced. The costs of repair and maintenance are charged to the profit and loss account in the year in which they are incurred. The amortisation of tangible fixed assets is calculated systematically using the straight line method, based on the estimated useful life of the assets, taking into consideration wear and tear derived from normal use. The depreciation rates used to calculate the decline in the value of the fixed assets are as follows: Buildings and other constructions Machinery and vehicles Tooling Other installations Furniture Computer equipment Other fixed assets Rate 2 - 8 % 6 - 30 % 7 - 37.5 % 7 - 20 % 10 - 20 % 20 - 37.5 % 3 - 30 % d) Financial assets and investments Investments in group and associated companies and long-term securities are shown in the balance sheet at the lower of acquisition cost or market value. The market price for investments in group or associated companies, or other traded securities that are not publicly listed is calculated as the theoretical book value, plus the acquisition goodwill remaining at balance date. The difference between the acquisition cost and the net book value of the subsidiary and associated companies at the time of acquisition is recorded as goodwill, which is amortised over a maximum period of twenty years, or in the case of highways or other types of concessions, over the remaining life of the concession, given that this is the most appropriate period for generating the resources required to recover the goodwill, to the extent that the recovery is not realised through increases in the theoretical book value of the subsidiary and associated companies. Annual report 111 The allocation of provisions is made considering the evolution of the shareholders’ funds of the associated company and in accordance with the General Accounting Plan and the rules for the adaptation of the General Accounting Plan for highways, tunnels and other toll routes for those highway concessionaire companies. The Company undertakes currency hedges against exchange rate risks on investments to significantly reduce or eliminate these risks, using the necessary financial instruments (see note 4 e). e) Deferred expenses The amount shown in this entry corresponds to expenses arising from the operations contracted in 2000 related to the acquisition of 48.6% of Grupo Concesionario del Oeste, S.A. for a hedged amount of 120.6 million dollars (exchange rate hedge contracts on the Argentine peso/US dollar and US dollar/Euro). These expenses are recorded monthly over the 60 month period of the hedge. The exchange rate differences that arise in the conversion of said operations to euros will be recorded on the cancellation or final settlement of the hedge contracts. With the decision to transfer the investment in Grupo Concesionario del Oeste, S.A. to the subsidiary company ACESA, abertis has agreed to transfer the hedges detailed. f) Other provisions Pursuant to the prudence principle, the Company makes the provisions which it considers necessary in relation to the inherent risks in the business (see note 10) which could affect the company. g) Provision for retirement and other personnel related liabilities The Company has externalised, through an insurance policy, the fund which represents the current value of its future payment obligations to employees, in respect of retirement payments. h) Trade and non-trade debtors and creditors The debits and credits incurred in operations, whether or not produced in the ordinary course of business, are recorded at nominal value, making the necessary valuation adjustments to cover bad debt provisions. Amounts due within one year of balance date are classified as short-term and amounts due after this date are considered long-term. i) Corporation tax The profit and loss account includes the charge for corporation tax, the calculation of which incorporates the full amount of tax accrued for the year, the effect of timing differences between the corporation tax assessment basis and book profit, and all credits or allowances 25 2003 Annual repor t and management repor t 112 Annual report to which the Company is entitled. The corporation tax charge is calculated in accordance with Note 13. The Company pays tax on a consolidated basis together with other companies of the group, in accordance with the legislation in force. j) Foreign exchange differences Transactions in currencies other than the euro are recorded at the exchange rate on the transaction date. At the close of the financial year the company restates all foreign exchange credits and debits using the official exchange rate at that date. Exchange rate differences generated at close on transactions are recorded as a loss in the profit and loss account if negative, or deferred till maturity in the case of profits. See the exchange rate hedging transactions in note 4 e). k) Accounting for income and expenses Income and expenses are recorded on the accruals basis. That is, at the time the activity occurs, irrespective of when the financial effect is realised. l) Actions affecting the environment Annually amounts outlaid in meeting legal requirements related to the environment are recorded either as an expense or investment, depending on their nature. Amounts recorded as an investment are amortised over their useful life. No provision has been made for liabilities and expenses related to the environment, given that no contingencies exist with respect to environmental protection. m) Joint ventures To account for operations undertaken as Joint Ventures, both in the balance sheet and the profit and loss account, the method of proportional integration has been used, in accordance with the General Accounting Plan. NOTE 5. INTANGIBLE FIXED ASSETS Annual report 113 The movement and balances of the accounts that make up intangible fixed assets during 2003 was as follows: Computer software Goodwill Studies and projects Other intangible assets Balance 31.12.02 Incorporation due to merger Increase Decrease Balance 31.12.03 36 - 668 - 8 7,823 - 3 229 - 157 - (55) 218 - 7,823 (55) - 770 3 Total cost 704 7,834 386 (110) 8,814 The changes in accumulated depreciation during the year were: Computer software Goodwill Studies and projects Other intangible assets Total amortisation 1 - - - 1 Balance 31.12.02 Incorporation due to merger Increase Decrease 2 2,537 - 1 18 426 55 1 - - (55) - Balance 31.12.03 21 2,963 - 2 2,540 500 (55) 2,986 25 2003 Annual repor t and management repor t 114 Annual report NOTE 6. TANGIBLE FIXED ASSETS The movement in the balances that make up tangible fixed assets during 2003 were as follows: Land and natural resources Buildings and other constructions Machinery and vehicles Tooling Other installations Furniture Computer equipment Other fixed assets Balance 31.12.02 Incorporation due to merger Increase Decrease Balance 31.12.03 699 8,021 242 32 7,687 3,017 - - 2,355 4,988 175 - 2,355 316 273 2,950 - 182 75 - 258 93 11 - (16) 3,038 (4,880) 8,311 - 492 (21) (7,005) (2,565) (37) 11 3,295 861 247 - 2,950 Total 19,698 13,412 619 (14,524) 19,205 The changes in accumulated depreciation during the year are: Buildings and other constructions Machinery and vehicles Tooling Other installations Furniture Computer equipment Balance 31.12.02 1,848 89 25 4,910 1,082 - Incorporation due to merger Increase Decrease Balance 31.12.03 754 121 - 1,042 132 127 169 64 3 607 250 50 (1,715) 1,056 - 274 (18) 10 (4,645) 1,914 (956) (33) 508 144 Total 7,954 2,176 1,143 (7,367) 3,906 The most important reductions during the year correspond to the sale of the former head office of abertis (see note 14 c). The following assets are fully depreciated: Annual report 115 Machinery and vehicles Other installations Furniture Computer equipment Other fixed assets Total gross book value Amount 34 6 532 311 2 885 It is company policy to contract all the insurance policies considered necessary to cover all possible risks that could affect tangible fixed assets. NOTE 7. INVESTMENTS The movements registered in the different entries under investments were: Shareholdings in subsidiary and associated companies Long-term loans to group companies Long-term share portfolio Long-term deposits and guarantees Other credits Less: Provisions Balance 31.12.02 Incorporation due to merger Increase Decrease Balance 31.12.03 2,732,060 1,369,506 326,274 (163,569) 4,264,271 530,354 180,000 11,483 (21,035) 700,802 - 2 - 7,513 58 - 5 - - 7,513 65 6,252 378 (14) 6,616 (42,095) (155,477) (28,475) 3,501 (222,546) Total 3,220,321 1,407,852 309,665 (181,117) 4,756,721 a) Shareholdings in subsidiary and associated companies The detail of direct and indirect shareholdings in subsidiary and associated companies of the group, together with the breakdown of their equity at 31 December 2003 or the latest public information available, is provided in the Annex. The main movements recorded are the following: • Incorporation, due to the merger with AUREA, of the companies Aumar, S.A.U.C.E. (Aumar), Autopistas de Puerto Rico, S.A. (APR), Compañía de Desarrollo Aeropuerto El Dorado, S.A. (Codad), Gestión Integral de Concesiones, S.A. (Gicsa), Aurea Limited, Autopistas del Sol, S.A. 116 Annual report 25 2003 Annual repor t and management repor t (Ausol), Concesionaria Vial de los Andes, S.A. (Coviandes), Infraestructuras y Radiales, S.A. (Irasa), Concesiones de Madrid, S.A. (Concema), Autopista Trados-45, S.A., Autopistas de León, S.A.C.E (Aulesa) and Pt Operational Services Limited (PTY), for a total amount of 1,369,506 thousand euros. • Increase of the shareholding in Saba Aparcamientos, S.A. (hereinafter Saba) by 39.91% for the amount of 134,377 thousand euros. With this acquisition abertis gained control of 99.24% of the share capital, taking into account the effect of the amortisation of the portfolio of own shares generated by the compulsory Public Takeover Offer made in 2003. • Increase of capital of Abertis Telecom, S.A. for an amount of 180,917 thousand euros for the acquisition of Retevisión I, S.A.U. and the subsequent capital increase. • Three increases of capital for Abertis Logística, S.A. of 1,200 thousand, 660 thousand and 1,329 thousand euros, respectively. These increases were basically destined to the incorporation and subsequent increases of capital of 60.03% in Sevisur Logística, S.A. and 39.5% in Araba Logística, S.A. • Increases of capital in Aulesa, Irasa and Concema for an amount of 6,019 thousand, 1,200 thousand and 483 thousand euros, respectively. • Transfer to Acesa of the shareholding in Grupo Concesionario del Oeste, S.A. (Gco) in the context of the transfer of this activity made in 2002 (140,589 thousand euros). • Decrease in the value of the shareholding in Aumar as a consequence of refunding the share premium for an amount of 22,980 thousand euros. The provisions basically correspond to Autopistas del Sol, S.A. (147,549 thousand euros, which represents 100% of the investment in the company), incorporated due to the merger with Abertis Telecom, S.A. (50,594 thousand euros) and Codad (10,349 thousand euros). b) Long-term loans to group companies The long-term loans to group companies correspond to Acesa, Aumar and Iberacesa, with all interest accrued at market rates (see note 12). These loans expire in 2015, 2009 and 2005, respectively. NOTE 8. SHORT-TERM INVESTMENTS The Company has credit lines with group companies for an amount of 1,044,100 thousand euros with interest at market rates. The outstanding balance at 31 December 2003 was 575,346 thousand euros (see details in note 12). NOTE 9. EQUITY Annual report 117 The amount and movements in equity during 2003 were as follows: Balance 31.12.02 1,036,890 115,553 554,526 Distribution of result for year Increase Other in capital movements Balance 31.12.03 - - - 538,771 464,137 (75,031) 140,387 18,281 58,244 8,460 182,817 (182,817) (79,001) 79,001 - - - - - - - - - 1,575,661 579,690 479,495 158,668 66,704 329,017 329,017 (120,275) (120,275) Share capital Share premium Revaluation reserve RDL 7/1996, of 7 June Legal reserve RD 1564/1989 Voluntary reserve Profit for the year Interim dividend Total 2,009,416 (77,075) 927,877 208,742 3,068,960 a) Share capital The share capital of abertis is made up of 525,220,358 shares that are entered in the share register, each with a nominal value of 3 euros, being fully subscribed and paid up. Of these, 488,183,992 are class A shares and 37,036,366 are class B preference shares that have the same rights as ordinary shares and the right to a preference dividend to be paid once to holders of those shares in 2007. The maximum amount of the preference dividend corresponding to each preference share will be determined by the difference between the reference price of 14.87 euros per share and the weighted average price of the ordinary abertis shares in the quarter prior to the due date, with a maximum payment of 4.25 euros per share. At 31 December 2003 the most important shareholdings were the following: Caixa d’Estalvis i Pensions de Barcelona (”la Caixa”) (1) ACS, Actividades de Construcción y Servicios, S.A. (2) Caixa d’Estalvis de Catalunya Sitreba, S.L. (3) 21.05 % 11.82 % 5.69 % 5.50 % 44.06% (1) Shareholding through the companies Caixa Barcelona Vida, S.A., Seguros y Reaseguros (11.84%), VidaCaixa, S.A. de Seguros y Reaseguros (0.50%), Inversiones Autopistas, S.L. (7.75%) and CaixaHolding, S.A. (0.95%). (2) Shareholding through Dragados Concesiones Infraestructuras (4.33%) and the rest by Inversora de Infraestructuras, S.A. (3) Sitreba, S.L. is a company owned by Unicaja (34.38 %), Cartera Participaciones Empresariales, S.L. (33.71 %), Banco de Valencia, S.A. (27.27%) and Caja de Ahorros del Mediterráneo (4.64%). 118 Annual report 25 2003 Annual repor t and management repor t All the shares of the Company are listed on the stock exchanges of Barcelona, Bilbao, Madrid and Valencia, being traded on the Spanish electronic share trading platform (SIBE) and form part of its Ibex 35 and Ibex Utilities indexes. At the same time, options on the shares of the Company are traded on the options market of MEFF Renta Variable (Spanish Equities Futures Exchange). The Annual General Meeting on 8 April 2003 agreed to pay a final dividend for 2002 of 0.223 euros gross per share, representing a sum of 77,075 thousand euros. The general meeting also approved an increase in capital of a nominal amount of 463,740 thousand euros, by issuing 154,579,950 shares to cover the share exchange agreed in the merger with AUREA (see note 1 b). The share premium totalled 464,137 thousand euros. By agreement of the Extraordinary General Meeting held on 16 September 2003, the Company increased capital through a bonus share issue, charged against the Revaluation Reserve Account of Royal Decree law 7/1996, of 7 June, with one new share for every 20 existing shares, for an amount of 75,031 thousand euros. The Board of Directors was authorised by the Annual General Meeting of 8 April 2003 to increase share capital, through one or more capital issues, up to a maximum amount of 518,445 thousand euros, during the period up to 8 April 2008. This power remains fully operative. b) Revaluation Reserve of Royal Decree law 7/1996, of 7 June This reserve originates from the revaluation of the tangible fixed tangible assets in the balance sheet of the Company, by virtue of Article 5 in the above legislation. With three years having passed since the balance date when the revaluation was made without an examination by the Tax Administration, the revaluation operations are deemed to be correct and the balance of the account accepted by the Tax Inspection, and accordingly the balance is available for distribution to: • Off-set book losses. • Increase share capital. • Create reserves freely available for distribution, ten years from the date of the balance sheet containing the revaluation operations. The balance of this account cannot be distributed, directly or indirectly, unless the capital gain has been realised, with the understanding that this is the case when the revalued assets have been fully amortised, transferred or written off the books. Given the Activity Transferred from the subsidiary company ACESA in 2002, the requirement that the capital gain has been realised can only be understood as such when the company acquiring the revalued assets as part of the new activity has amortised those assets, transferred or written them off the books. c) Legal reserve Annual report 119 In accordance with the Revised Text of the Companies Law, 10% of the annual profits should go to the legal reserve so that this reserve reaches at least 20% of the capital. The legal reserve cannot be distributed to shareholders unless the Company is wound up. The legal reserve can be used for increases in capital, provided the funds used come from the balance exceeding 10% of the capital at the increased amount. Apart from the purpose mentioned above, if this reserve does not exceed 20% of the share capital, it can only be used to compensate losses when there are no other reserves available for this purpose. NOTE 10. PROVISIONS FOR LIABILITIES AND EXPENSES The movements of this balance during the year ended 31 December 2003 are as follows: Other provisions (see notes 4 f and 13) Balance 31.12.02 42,419 Incorporated due to merger 6,512 Allocations (8,402) Balance 31.12.03 40,529 NOTE 11. ISSUE OF BONDS AND LOANS WITH CREDIT INSTITUTIONS The table below provides details of the position at the end of 2003. 2004 2005 2006 2007 2008 Bonds issued Syndicated loans Loans Credit policies - 63,107 - - 170,000 94,658 - 45,000 110,000 151,000 150,000 - - - - - - 394,554 55,076 362,710 Other expiries 420,000 - 150,000 - TOTAL 590,000 552,319 661,076 362,710 Total 812,340 309,658 173,107 151,000 150,000 570,000 2,166,105 Part of the loan and credit operations included as debts with credit institutions at 31 December 2003 (187,212 thousand euros long-term and 77,267 thousand euros short-term) were arranged with associated credit institutions (shareholders of the Company that hold 5% or more of the capital). Financial charges accrued on these operations with associated financial entities during the year totalled 7,391 thousand euros. 25 2003 Annual repor t and management repor t 120 Annual report The bond issues consist of 60 million euros at EURIBOR plus a margin of between 0.40 and 0.50, 180,000 thousand euros at 3.53%, 200,000 at 4.95% and 150,000 at EURIBOR plus 0.22. The Company has contracted interest rate hedges for a total amount of 615,000 thousand euros, of which 375,000 thousand euros are held with credit institutions associated to the Company. In 2004 the Company plans to refinance short-term loans. NOTE 12. TRANSACTIONS AND BALANCES HELD WITH SUBSIDIARY AND ASSOCIATED COMPANIES The credit and debit balances that abertis had with subsidiary and associated companies at 31 December 2003 are the following: Thousand euros Investments Long-term Debtors Short-term 509,319 180,000 - - - - - - - 11,483 - - - - - 700,802 193,796 24,352 123,068 702 32,261 2,787 - - - 41 13,466 184,614 13 - 246 575,346 Other debts 355 45 - - - 3,201 - 988 33 - 2 - 71 - 8 4,703 Creditors Long-term Short-tem - - - - - - - - - - - - - 9,530 - 9,530 119 - - 333 1,107 116 - - 2,822 132 12,242 - - - 371 17,242 Acesa Aumar Aucat abertis logística abertis telecom serviabertis Holdaucat Gco Tradia Iberacesa Iberpistas Retevisión Saba APR Others Total As indicated in note 7 b), the Company has conceded a long-term loan to Acesa for an amount of 509,319 thousand euros. At the same time, as indicated in note 8, the Company has credit lines arranged with group companies with a limit of 1,044,100 thousand euros, at market interest rates. At 31 December 2003 an amount of 575,346 thousand euros had been drawn down. The provision of services by abertis to group companies basically corresponds to corporate and management services, for the following amounts: Annual report 121 Thousand euros Income Interest received 22,553 6,354 1,148 3,448 - 7 32 67 102 - - - 501 - - Share capital 212,964 - 112,383 - - - - - 9,960 - 31,176 - 2,354 - - - Expenses Services contracted 89 - - - - - - 1,139 - - - - - - - - Services provided 6,994 343 3,492 - 458 30 260 80 321 - 767 160 726 - 16 149 Acesa Tradia Aumar abertis telecom Aucat Parc Logístic de la Zona Franca abertis logística serviabertis Saba Iberacesa Iberpistas APR Codad Retevisión Aurea Ltd Others Total 13,796 34,212 368,837 1,228 NOTE 13. TAX POSITION The Company calculates Corporation Tax on a consolidated basis, under Group No. 142/99, as parent company, together with those subsidiary companies that meet the requirements established in the tax regulations in force. The reconciliation of the difference between the reported pre-tax profit in the accounts and the profit subject to corporation tax for 2003 is the following: Profit before tax Permanent differences Timing differences Arising during the year From previous years Tax assessment base Amount 309,715 (355,878) 1,358 (599) (45,404) 122 Annual report 25 2003 Annual repor t and management repor t The accrued corporation tax expense that appears in the profit and loss account of the Company is calculated taking into account the following factors, in addition to the parameters to be considered in the case of calculating tax for an individual company: • Dividends from subsidiary companies that are consolidated, the adjustment in values and the elimination of results for transactions between group companies that have been eliminated to determine the consolidated tax assessment base are considered as permanent differences. • The consolidated tax group has assumed the right to compensation for the negative tax base generated by the Company in 2003, as well as the application of the deductions generated, with the corresponding inter-group compensation having being recorded in the balance sheet. The balance at 31 December 2003 of prepaid tax was 1,600 thousand euros, which corresponds to the valuation differences between the tax criteria and accounting criteria for social security contributions. The deferred tax balance at 31 December 2003 was 5,789 thousand euros, which arises from applying the cash criteria for tax purposes on income from operations with a forward price, and the reinvestment of profit for Spanish companies that set up internationally, both arising in previous years. The amount of the deductions applied in 2003 is 3,357 thousand euros, for deductions associated to dividends of subsidiaries, deductions for the reinvestment of extraordinary profits obtained in the transfer of patrimony and deductions for donations made to approved entities under Law 49/2002. The amount of income covered by the deduction for reinvestment was 13,805 thousand euros, with the entire amount having been reinvested in different patrimony during 2003. On 28 May 2003, the merger agreement was made public with the company abertis absorbing Aurea, with the company consequently being dissolved without liquidation (see note 1 b). This operation was made under the special tax regime of Chapter VIII of Title VIII of the Corporation Tax Law. Due to the merger by absorption, the absorbing company is attributed the entire patrimony of the absorbed company under sole title, in line with the information and details provided in note 1 b) to this annual report, incorporating the assets and liabilities for the same book values as listed in the absorbed company and subrogating all tax rights and obligations related to the goods and rights transferred. During 2002, the Company was involved in various company transactions where it opted for the application of the special tax regime of Chapter VIII of Title VIII of the Law of Corporation Tax. The information on these transactions is provided in the annual report for 2002. These operations were as follows: • The non-monetary transfer of the branch of activity to Acesa (see note 1 a). • The increase of the Company share capital, to cover the share exchange established in the Public Takeover Offer made by the Company for the shares in the company Ibérica de Autopistas, S.A. • The increase in share capital of the subsidiary company Abertis Logística, S.A. (previously Annual report 123 called Acesa Promotora Logística, S.A.), subscribed by the Company through the non-monetary transfer of shares in distinct subsidiary and associated companies. The Company has tax inspections open for the last four years for each of the taxes that it is subject to. The Company has been issued the corresponding assessments from the inspection based on examinations made between 1989 and 1993 and for 2000, of a partial nature and in a consolidated fiscal regime, which the Company has signed in disagreement. These assessments have been appealed and are pending the decision of the authorities. The eventual impact on the Company’s capital that could result, once the outcome of the appeal is known, is adequately provisioned. Furthermore, due to possible differences of interpretation of the tax rules applicable in some operations, there could be tax liabilities of a contingent nature that are difficult to quantify. Nevertheless, the amount of tax that might be payable would not have a material impact on the Company’s Annual Accounts. NOTE 14. INCOME AND EXPENSES a) Net income abertis operates in four sectors of activity: highway concessions, car parks, logistics and services, and telecommunications, indirectly through its shareholdings in other companies, whereby its income corresponds basically to dividends and the provision of services to group companies. b) Personnel The size of the average workforce during 2003 was as follows: Permanent staff Temporary positions Total c) Extraordinary results 100 1 101 The extraordinary income basically corresponds to capital gains on the sale of the former head office (15 million euros). The extraordinary expenses basically correspond to portfolio allocations (see note 7). NOTE 15. ENVIRONMENTAL INFORMATION At 31 December 2003, abertis, as the parent company of the Group, did not have significant assets dedicated to the protection and improvement of the environment, nor had it incurred expenses of this nature during the year. At the same time, it has not received any subsidies of an environmental nature during the year to 31 December 2003. 25 2003 Annual repor t and management repor t 124 Annual report NOTE 16. OTHER INFORMATION ON BOARD MEMBERS In accordance with the provisions of article 127 ter. 4 of the Companies Law, included by Law 26/2003, of 17 July, which amended Law 24/1988, of 28 July, of the Securities Market, and the Revised Text of the Companies Law, aimed at increasing the transparency of listed companies, the companies with the same, similar or of a complementary nature to the defined business activity of the Company in which members of its Board of Directors have shareholdings, as well as the functions that they carry out, if applicable: Holder Company held Activity Shareholding Functions Caixa Catalunya Túnel del Cadí, S.A.C. Highway concession 3.55 % Board member Retevisión Móvil, S.A. Telecommunications 2.10 % - Dragados Concesiones de Infraestructuras, S.A. Autovía de la Mancha, S.A. Bidelan Guipuzkoako Autobideak, S.A. Guadalquivir Sociedad Concesionaria de la Junta de Andalucía Guadalmetro, S.A. Infrastructure Concession Infrastructure Concession Infrastructure Concession SCL Terminal Aeropuerto Santiago, S.A. Infrastructure Concession Sociedad Concesionaria Autopista Central, S.A. Sociedad Concesionaria Vespucio Norte Express, S.A. Aerocali, S.A. Ferrocarriles del Norte de Colombia, S.A. Aeropuertos Mexicanos del Pacífico, S.A. de C.V. MBJ Airports LTD Road Management A13 PLC Road Management Services (Darrington) Holding Ltd. Batwena Platinum Corridor Concesionaire Ltd. Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession 66.67 % - 50.00 % - 27.83 % - 14.78 % - 48.00 % - 54.00 % - 33.33 % - 66.00 % - 28.16 % - 35.00 % - 25.00 % - 25.00 % - 25.00 % - Activity Shareholding Functions Annual report 125 Holder Company held Dragados Obras y Proyectos, S.A. Autopista del Henares, C.E.S.A. Ferrocarriles del Norte de Colombia, S.A. Scutvias-Autoestradas da Beira Interior, S.A. Aufe, S.A. Aunor, S.A. Concesionaria Vial del Sur, S.A. Semacar, S.A. Autopistas del Sol, S.A. Ángel García Altozano ACS, Actividades de Construcción y Servicios, S.A. Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Construction and services 2.00 % - 5.32 % - 6.65 % - 78.00 % - 85.00 % - 25.00 % - 55.00 % - 8.33 % - 0.0113 % Executive Managing Director Board member Saba Aparcamientos. S.A. Car Parks 0.0000055 % Grupo Dragados, S.A. / ACS Unicaja Accesos a Madrid C.E.S.A. Autopista Central Gallega C.E.S.A. Autopista del Henares, C.E.S.A. Ruta de los Pantanos, S.A. Autopistas del Sol, S.A. Carmelton Group Ltd. Concesionaria Vial de los Andes, S.A. Ferrocarriles del Norte de Colombia, S.A. Rutas del Pacífico, S.A. Scutvias-Autoestradas de Beira Interior, S.A. Ausur Servicios de la Autopista, S.A. Autopista del Sol Concesionaria Española, S.A. Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Infrastructure Concession Logistics Infrastructure Concession 15.75 % - 13.32 % - 35.00 % - 25.00 % - 8.18 % - 40.00 % - 0.96 % - 5.32 % - 50.00 % - 26.65 % - 5.00 % 15.00 % Board member Board member 25 2003 Annual repor t and management repor t 126 Annual report Holder Unicaja Company held Autopista del Sureste, Concesionaria Española de Autopistas, S.A. Inversora de Autopistas del Sur, S.L. Autopista Madrid Sur Concesionaria Española, S.A. Sociedad Unipersonal Infrastructure Concession Infrastructure Concession Infrastructure Concession Activity Shareholding Functions 5.00 % 10.00 % 10.00 % (Indirecta, Inversora de Autopistas del Sur, S.L.) 24.50 % Board member Board member Board member Board member Board member Board member Board member Board member Board member Sociedad Municipal de Aparcamientos y Servicios, S.A. Car Parks Sevisur Logística, S.A. Logistics 10.00 % Red de Banda Ancha de Andalucía, S.A. Auna Operadores de Telecomunicaciones, S.A. Telecommunications 10.00 % Telecommunications 1.99 % Islalink, S.A. Telecommunications 13.70 % Val Telecomunicaciones, S.L. Telecommunications 4.46 % With respect to positions or functions, excluding those held in companies in which abertis, has a direct or indirect investment, the Members of the Board of Directors are also Board Members or members of the management team of the following companies with activities that are the same, similar or of a complementary nature to the Company’s business: Board Member Company Isidro Fainé Casas Telefónica, S.A. Ángel García Altozano Broadnet Consorcio, S.A. Sonae Indústria SGPS Position or function Deputy Chairman Chairman Board member Pablo Vallbona Vadell ACS, Actividades de Construcción y Servicios, S.A. Deputy Chairman In addition, one of the principal activities of Grupo Dragados, S.A./ACS, Dragados Concesiones de Infraestructuras, S.A. and Dragados Obras y Proyectos, S.A. is the promotion, management and operation of transport infrastructures. NOTE 17. OTHER INFORMATION Annual report 127 a) Annual remuneration of the directors for their service as members of the Board of Directors of the Company is fixed as a share in the liquid profits. It can only be paid out once the payment of dividends and transfers to reserves that the Law establishes are covered, and it should not exceed, under any circumstances, two percent of the profits. The Board of Directors may distribute this sum amongst its members in the form and amount it decides. Overall remuneration paid to directors of abertis (formerly Acesa Infraestructuras, S.A.), as members of the Board of Directors, totalled 1,503 thousand euros in 2003, which is less than the statutory limit. As indicated in notes 1 b) and 13 of this annual report, the merger between Acesa Infraestructuras, S.A. and AUREA was made public on 28 May 2003, but was effective for accounting purposes from 1 January 2003. Consequently, during the year two Boards of Directors co-existed, the board of abertis (formerly Acesa Infraestructuras, S.A.) and the board of AUREA. Overall remuneration received by board members of abertis (formerly Acesa Infraestructuras, S.A.) totalled 2,950 thousand euros, which is broken down into board fees (475 thousand euros), expenses (1,503 thousand euros), contributions to cover pension plans (965 thousand euros) and life insurance (7 thousand euros). Overall remuneration received by board members of AUREA totalled 2,152 thousand euros, which is broken down into board fees (511 thousand euros), expenses (126 thousand euros), statutory obligations (430 thousand euros), life insurance (3 thousand euros) and other remuneration (1,082 thousand euros). b) At 31 December the Company has guarantees with third parties for a total amount of 129,690 thousand euros, which principally correspond to guarantees given by financial institutions to Public Administrations for certain commitments (investments, operation of services, etc.) contracted by subsidiary and associated companies. It is not considered that these guarantees can lead to unexpected material liabilities. c) Fees received during the year by PricewaterhouseCoopers Auditores, S.L. for auditing services and other services provided to the companies of the group totalled 167 thousand euros. The fees received during the year for other services provided to the company for other companies trading under the name PricewaterhouseCoopers totalled 170 thousand euros. NOTE 18. SUBSEQUENT EVENTS The Board of Directors of abertis approved, on 27 January 2004, the proposed merger through the absorption of Iberpistas, S.A. by the Company which will be submitted to the respective annual general meetings for shareholder approval in the first four months of 2004, effective from 1 January 2004 for accounting purposes. abertis holds 99.8% of the share capital of Iberpistas S.A. 25 2003 Annual repor t and management repor t 128 Annual report NOTE 19. SOURCE AND APPLICATION OF FUNDS (thousand euros) Source Resources from operations Net profit for the year Charge for depreciation of fixed assets Charge to investment provision Charge for amortisation of deferred expenses Charge to reversion fund Losses on intangible assets Losses on fixed assets Pension fund and other personnel liabilities Charge to provision for expenses and liabilities Deferred income Profit from investments Profit from fixed assets Capital increase for merger Provision for liabilities and expenses due to merger Increase in long-term creditors due to merger Long-term debt Bonds Loans Transfer of assets Intangible fixed assets Fixed assets Investments Other creditors Net reduction of long-term assets due to transfer of activity 2003 2002 329,017 2,826 28,475 5,241 0 0 5 0 0 0 (3,501) (15,243) 346,820 927,877 6,512 346,839 350,000 60,102 50 22,400 184,618 2,511 182,817 5,134 34,222 6,032 27,505 0 0 0 151 334 (13,041) (80) 243,074 226,662 0 0 0 696,354 0 117 37,253 0 0 3,047,185 Total sources 2,247,729 4,250,645 Annual report 129 Application Acquisition of fixed assets Start-up costs Intangible fixed assets Tangible fixed assets Investments Group companies Other financial investments Long-term loans to group companies Increase in assets due to merger Increase in investments due to transfer of activity Dividends Provision for liabilities and expenses Net reduction of long-term assets due to transfer of activity 2003 2002 1,104 386 619 322,921 383 11,483 1,424,487 0 197,350 8,402 0 170 1,261 18,230 968,886 285 530,354 0 1,647,127 144,147 2,519 1,375,868 Total applications 1,967,135 4,688,847 Excess sources over applications /(Applications over sources) Increase/(Decrease) of working capital 280,594 (438,202) Change in working capital Increase/(Decrease) current assets Inventories Receivables Short-term investments Treasury Payments and accruals (Increase)/Decrease current liabilities Short-term creditors Change in working capital 0 (1,351) 383,817 2,333 (2) 384,797 (2,372) (74,743) 109,706 (1,514) (47) 31,030 (104,203) (469,232) 280,594 (438,202) 25 2003 Annual repor t and management repor t ANNEX 130 Annual report Direct shareholdings (thousand euros) Company Registered Office Activity Share Auditors holding capital % Reserves (less Result for Value of interim dividend) year Dividends shareholding received Serviabertis, S.L. Av. Parc Logístic, Management 12-20. Barcelona services - 100.00 3 - 7 3 - Highway operations Av. Parc Logístic, Autopistas, C.E.S.A. (ACESA) 12-20. Barcelona Toll highway concessionaire PwC Autopistas Aumar S.A.U.C.E. (AUMAR) Aurea Limited Paseo de la Alameda, 36. Valencia Toll highway concessionaire PwC 180 Strand, London (United Kingdom) concessionaire Holding company in Other auditors Iberpistas, S.A. Pío Baroja, 6. Madrid Toll highway Other concessionaire auditors Gestión Integral Montalbán, 5. de Concesiones, Madrid S.A. (GICSA) Infrastructures - admin. and management Autopistas de León, S.A.C.E. (AULESA) Villadangos del Páramo. Ctra. Santa María del Páramo. León Autopistas de Puerto Rico y Compañía, S.E. (APR) Montellano Sector embalse. San Juan (Puerto Rico) Autopista Trados-45, S.A. (TRADOS-45) Ctra. M-203, PK 0,280. Madrid Toll highway Other concessionaire auditors Infrastructures Other concessionaire auditors Infrastructures PwC concessionaire 100.00 876,465 578,572 215,381 1,647,187 212,963 100.00 419,643 460,410 129,092 991,587 112,383 100.00 14,188 173 1,842 23,363 - 99.80 173,547 37,311 38,112 648,227 31,176 99.98 60 133 271 60 79.20 34,642 11,940 (690) 43,168 75.00 1,179 (570) 642 4,640 50.00 29,900 3,770 6,419 47,872 Autopista del Sol, S.A. (AUSOL) Concesionaria Vial de los Andes, S.A. (COVIANDES) Leonardo N Alem. Toll highway 986, piso 4. Buenos Aires (Argentina) concessionaire PwC 45.16 33,925 (51,265) (14,696) 147,548 (**) Infrastructures Other concessionaire auditors 39.04 7,872 38,631 7,373 17,789 Carrera Novena, 126-91. Santafé de Bogotá (Colombia) Pt Operational Services Limited (PTY) 1 Lavender Road. Operation and Other Bon Accord 009. maintenance auditors Pretoria (South Africa) Concesiones de Av. Europa, 18. Madrid, S.A. (CONCEMA) Alcobendas. Madrid Infrastructures Other concessionaire auditors Infraestructuras Golfo de y Radiales, S.A. (IRASA) Salónica, 27. Madrid Infrastructures Other admin. and auditors management 33.30 0 332 1,170 - 25.00 28,798 2,663 3,203 21,977 22.49 (*) 7,092 58,468 (11,432) 10,473 This Annex forms an integral part of note 7 to the 2003 annual accounts, and it should be read in conjuntion with the latter. - - - - - - - - - Direct shareholdings (thousand euros) Registered Office Activity Auditors holding % Share capital Reserves (less Result for Value of interim dividend) year Dividends shareholding received Company Car Parks Annual report 131 PwC 99.24 18,243 98,474 13,065 231,199 9,960 Av. Parc Logístic, Car parks Saba Aparcamientos, 12-20. Barcelona S.A. (SABA) Logistic Services Abertis Logística, S.A. Av. Parc Logístic, Development, 12-20. Barcelona logistics and technical support Telecommunications Abertis Telecom, S.A. Av. Parc Logístic, Telecommunication - 12-20. Barcelona services Airports Compañía de Desarrollo Aeropuerto Eldorado, S.A. (CODAD) Carrera, 13 nº 93-40. Santafé de Bogotá (Colombia) Construction and Other maintenance of airports auditors - 100.00 47,500 10,117 (554) 56,995 - - 100.00 300,000 23,798 (14,638) 326,432 85.00 15,635 21,578 (8,655) 45,751 2,355 Foreign currency amounts converted at official euro exchange rate at close. (*) abertis direct shareholding: 15%. Indirect through Iberpistas and Avasa: 7.4%. (**) abertis does not have additional commitments with respect to Ausol apart from the investment. 4,264,271 368,837 This Annex forms an integral part of note 7 to the 2003 annual accounts, and it should be read in conjuntion with the latter. 25 2003 Annual repor t and management repor t 132 Annual report Indirect shareholdings (thousand euros) Company Registered Office Activity Auditors holding indirect holding % indirect Company that owns Share capital Reserves (less interim dividend) Result for year Through AUTOPISTAS, C.E.S.A. Acesa Italia, S.R.L. Via delle Quattro Fontane,15. Rome (Italy) Holding company in concessionaire Schemaventotto, Calmaggiore, 23. Holding S.p.A. Treviso (Italy) company in concessionaire PwC 100.00 Acesa 166,341(3) 4,080 (3) 1,190 (3) Other auditors 12.83 Acesa Italia, S.R.L. 445,536 (3) 902,730 (3) 45,209 (3) Autostrade, S.p.A. (1) Via A. Bergamini, Toll highway 50. Rome concessionaire (Italy) Other auditors (6) 7.98 Schemaventotto, S.p.A. 621,289 (4) 1,502,947 (4) 345,482 (4) Av. Parc Logístic, Toll highway 12-20. Barcelona concessionaire PwC 100.00 Acesa 96,160 19,925 18,490 Autopistes de Catalunya, S.A. (AUCAT) Autopistas- Conces. Espanhola, SGPS, S.A. Iberacesa, S.L. Rua General Norton de Matos 21-A. Arquiparque Algés Oeiras (Portugal) Pº Castellana, 51. Madrid Alazor Inversiones, S.A. Accesos de Madrid, C.E.S.A. Rozabella, 6. Las Rozas. Madrid Rozabella, 6. Las Rozas. Madrid Holding company in concessionaire Holding company in concessionaire Holding company in concessionaire - - 100.00 Acesa 50 (3) - (37) (3) 99.90 Acesa / Iberpistas 32,229 6,898 313 Other auditors 23.32 Iberacesa, S.L. 190,500 Toll highway concessionaire Other auditors 23.32 Alazor Inversiones 190,500 Isgasa, S.A. Av. Parc Logístic,12-20. Barcelona Technical engineering services - 99.90 Iberacesa, S.L. 61 853 229 Tacel Inversiones, S.A. Hórreo, 11. Santiago de Compostela Holding company in concessionaire Other auditors 17.98 Iberacesa, S.L. 30,250 Toll highway concessionaire Other auditors 17.98 Tacel Inversiones 30,250 Toll highway concessionaire PwC Toll highway concessionaire Other auditors 48.60 Acesa 22,070 (13,347) 3,080 37.19 Acesa 105,504 6,320 2,086 Autopista Central Gallega, C.E.S.A. Hórreo, 11. Santiago de Compostela Grupo Concesionario del Oeste, S.A. (GCO) (5) Ruta Nacional, nº7, km 25.92. Ituzaingó (Argentina) Túnel del Cadí, S.A.C. Carretera de Vallvidrera a St. Cugat, km 5.3. Barcelona - - - - - - (552) (557) This Annex forms an integral part of note 7 to the 2003 annual accounts, and it should be read in conjuntion with the latter. Indirect shareholdings (thousand euros) Annual report 133 Company Autopista Terrassa- Manresa, Autema, Concessionària de la Generalitat de Catalunya, S.A. (AUTEMA) Brisa, Auto-estradas do Portugal, S.A. (2) Activity Auditors holding indirect holding % indirect Company that owns Toll highway concessionaire PwC 22.33 Acesa Share capital 81,894 Reserves (less interim dividend) Result for year (3,170) 6,848 Registered Office Gran Via de les Corts Catalanes, 680. Barcelona Other 10.00 Acesa 600,000 (4) 588,754 (4) 62,827 (4) concessionaire auditors Quinta da Torre Toll highway da Águila, Edificio Brisa, 2785-589. Sao Domingos de Rana (Portugal) Through IBERPISTAS, S.A. Autopista A-6, S.A. Pío Baroja, 6. Madrid Toll highway concessionaire Other auditors 99.80 Iberpistas 50,000 108,000 42,705 Pío Baroja, 6. Ibermadrid de Infraestructuras, Madrid S.A. Study, promotion and construction of civil work infrastructures - 99.80 Iberpistas 500 (154) 6 Iberavasa de inversiones, S.L. Madrid Pío Baroja, 6. Holding company Other auditors 99.80 Iberpistas 24,207 12,342 10,226 Pío Baroja, 6. Castellana de Autopistas, S.A. Madrid Concesionaria del Estado Proconex, S.A. Pío Baroja, 6. Madrid Promoción de Autopistas Chile Limitada Gestora de Autopistas, S.A. (GESA) Santiago de Chile Santiago de Chile Toll highway concessionaire Other auditors 99.80 Iberpistas 46,800 187,248 343 - 99.80 Iberpistas 100 (1,074) 1,204 Operation of subleased service areas Toll highway Other concessionaire auditors 99.80 Iberpistas/ Proconex 1,434 1,172 186 Toll highway concessionaire Other auditors 50.90 Promoción de Autopistas Chile Limitada 1,041 646 354 Barrio de Autopistas Vasco-Aragonesa, Anuntzibai, s/n C.E.S.A. (AVASA) 48410. Orozco. Vizcaya Toll highway concessionaire Other auditors Áreas de servicio y mantenimiento, S.A. Autopista A 68, Management and operation km 6. Vizcaya of infrastructure concessions - 49.90 Iberavasa, S.L. 234,000 10,361 40,088 49.90 Avasa 600 643 (3) This Annex forms an integral part of note 7 to the 2003 annual accounts, and it should be read in conjuntion with the latter. 25 2003 Annual repor t and management repor t 134 Annual report Indirect shareholdings (thousand euros) Company Registered Office Vasco-Aragonesa Barrio de de Servicios y Concesiones, S.A. Anuntzibai, s/n. Vizcaya Activity Auditors holding indirect holding % indirect Company that owns Share capital Reserves (less interim dividend) Result for year Inactive - 49.90 Avasa 110 4 1 Santiago de Chile Toll highway concessionaire PwC 24.95 Iberpistas 71,186 11,270 6,674 Sociedad Concesionaria del Elqui, S.A. (ELQUI) Through AUREA LIMITED Road Management Group (RMG) 130 High Street Toll highway Old Woking. Surrey (United Kingdom) concessionaire Other auditors Through INFRAESTRUCTURAS Y RADIALES, S.A. 25.00 Aurea Limited 35,946 53,910 10,797 Autopista del Henares, S.A.C.E. (HENARSA) Golfo de Salónica, 27. Madrid Toll highway concessionaire Other auditors 22.49 Infraestructuras y Radiales 96,700 329,850 (961) Golfo de Erredosa Infraestructuras, Salónica, 27. S.A. (ERREDOSA) Madrid Through SABA Parbla, S.A. Sabino Arana, 38. Barcelona Spel-Sociedade Lugar do de Parques de Espino Via Estacionamento, Norte. Porto S.A. (SPEL) (Portugal) Societat Pirenaica d’Aparcaments, S.A. (SPASA) Pau Casals, 7. Andorra la Vella. Principat d’Andorra Societat d’Aparcaments de Terrassa, S.A. (SATSA) Saba Italia, S.p.A. Plaça Vella, subsuelo. Terrassa Via delle Quattro Fontane, 15. Rome (Italy) Administration Other and management auditors of infrastructures 22.49 Infraestructuras y Radiales 61 (2) (1) Car parks - 99.24 Saba 3 1,225 (53) Car parks PwC 99.24 Saba 6,000 102 (479) Car parks - 89.64 Saba 301 - 127 Car parks PwC 87.37 Saba 7,746 353 739 Car parks PwC 59.54 Saba 28,600 7,358 (3,645) Rabat Parking, S.A. Rue de Larache, 8 Car parks Rabat (Morocco) - 50.61 Saba 1,879 (162) (166) This Annex forms an integral part of note 7 to the 2003 annual accounts, and it should be read in conjuntion with the latter. Indirect shareholdings Annual report 135 (thousand euros) Company Registered Office Activity Auditors holding indirect holding % indirect Company that owns Share capital Reserves (less interim dividend) Result for year Through ABERTIS LOGÍSTICA Sevisur Logística, S.A. Moratín, 1. Sevilla Construction and operation of logistics parks Parc Logístic de la Zona Franca, S.A. (PLZF) Areamed 2000, S.A. Av. Parc Logístic, Promotion 2-10. Barcelona and operation of logistics parks Via Augusta, 21-23. Barcelona Operation of service areas Araba Logística, Olaguibel, 2. S.A. (ARASUR) Vitoria Construction and operation of logistics parks Centro Intermodal de Logística, S.A. (CILSA) Portal de la Pau, Promotion 6. Barcelona and operation of logistics parks - 60.03 Abertis Logística 3,000 - (59) Other auditors 50.00 Abertis Logística 23,742 (732) 1,151 Other auditors 50.00 Abertis Logística - 39.50 Abertis Logística 70 5,122 2,486 3,000 - (52) Other auditors 32.00 Abertis Logística 15,467 24,366 981 Through ABERTIS TELECOM Difusió Digital Motors, 392. L’Hospitalet Societat de de Llobregat. Telecomunica- cions, S.A. Barcelona (TRADIA) Retevisión I, S.A.U. Gran Via de les Corts Catalanes, 130-136. Barcelona Operator of telecommunications infrastructures PwC 100.00 Abertis Telecom 131,488 (25,283) (7,746) Other Operator of telecommunications auditors infrastructures 100.00 Abertis Telecom 81,270 (*) 123,003 (4,810) Adquisición de Motors, 392. emplazamientos, L’Hospitalet de Llobregat. S.L. (ADESAL) Barcelona - Operator of telecommunications infrastructures 100.00 Tradia 3 - Torre de Collserola, S.A. Ctra. de Vallvidrera al Tibidabo, s/n. Barcelona Construction and operation of telecommunications infrastructures PwC 36.00 Retevisión I 12,020 563 - - Foreign currency amounts converted at official euro exchange rate at close. (1) The shares of Autostrade, S.p.A. are listed on the Milan stock exchange. The weighted average price for the last quarter of 2003 was 12.91 euros. At the end of the year the price was 13.93 euros. (2) The shares of Brisa, Auto-estradas do Portugal, S.A. are listed on the Lisbon stock exchange. The weighted average price for the last quarter of 2003 was 5.22 euros. At the end of the year the price was 5.30 euros. (3) Information at 31 December 2002. (4) Information at 30 June 2003. (5) The shares of Gco are listed on the Argentina stock exchange. The weighted average price for the last quarter of 2003 was 1.26 euros. At the end of the year the price was 1.6 euros. The company holds 57.6% of the voting rights. (6) Shares pledged as guarantee for a loan granted to Schemaventotto, S.p.A. to buy the shareholding in this company. (*) Includes the increase in capital made pending inscription in the Mercantile Register. This Annex forms an integral part of note 7 to the 2003 annual accounts, and it should be read in conjuntion with the latter. 136 Annual report 25 2003 Annual repor t and management repor t ABERTIS INFRAESTRUCTURAS, S.A. MANAGEMENT REPORT FOR 2003 2003 has been especially marked by the merger of Acesa Infraestructuras and Aurea Concesiones de Infraestructuras, which gave rise to abertis, one of the leading European operators in the management of infrastructures serving mobility and communications. This year has been the Company’s first full year of activity as parent of an important group of business investments created by the merger, which basically operate in the sectors of highway concession, car parks, infrastructure for logistics and telecommunication infrastructures. The objective of the Group is to continue to provide shareholders a balanced portfolio of investments in the stated sectors, that ensures an adequate combination of low risk, growth and return. In this sense, the following events in 2003 can be highlighted: • • • In the highways sector, the incorporation of all the concessions from Aurea in abertis, which include Aumar (one of the main national concessions), as well as a series of shareholdings in other important projects nationally and internationally. During 2003 the following toll highways in which abertis participates were opened: A-6 connection with Segovia (Castellana de Autopistas), Radial 2 Madrid-Guadalajara (Henarsa) and Silleda- Lalín stretch (Autopista Central Gallega). Also of note in the highway sector was the increase of the indirect holding in the Italian concessionaire Autostrade from 3.8% to 8.0%. In the interests of optimising the Group structure, the shareholding in Grupo Concesionario del Oeste was transferred to Acesa and Holdaucat was merged with Aucat (100% owned by Holdaucat). In the car park sector, abertis has acquired 40% of Saba, raising its shareholding to 99.2% of the capital. Saba has acquired 50% of the Portuguese company Spel to gain 100% control of the company, and has continued its international expansion with new projects in Italy and Portugal. In the infrastructure for logistics sector, highlights include the development of two new logistics projects in which abertis participates in Álava and Seville, the full occupation and consolidation of the Parc Logístic de la Zona Franca and the positive evolution of the associated company Cilsa which, having developed and achieved full occupation in ZAL Barcelona, has begun to develop ZAL Prat. • Lastly, of note in the sector of telecommunication infrastructures was the acquisition of Retevisión Audiovisual concluded at the end of the year and the acquisition of 5% of Tradia to gain 100% control. All these transactions, linked to the good performance of the rest of the business and activities, have been reflected positively in the figures and results for the year, and in turn they establish the bases for growth in the years ahead. The balance sheet of abertis clearly reflects its position as parent of the Group, largely consisting of the portfolio of shareholdings on the assets side and financing of these investments through equity and debt on the liabilities side. Annual report 137 The profit and loss account of the parent company abertis in 2003 is not comparable with 2002, given that the 2002 figures include six months concessionary activity until this branch of activity was transferred to Acesa in June 2002 and the 2003 figures include greater activity due to the merger. In 2003 the profit and loss account basically shows the transfer of the results generated in the different companies of the Group, through the dividends’ policy, as well as the costs derived from the corporate structure and financing the investments in subsidiary and associated companies. The profit for the year rose to 329 million euros, representing an 80% increase on the previous year (up 8.3% compared to the aggregate figures of Acesa and Aurea in that year) and in turn, ensures the dividend yield policy of abertis. As in recent years, abertis has maintained its dividend policy, that combines the distribution of dividends with an annual increase of capital through a bonus share issue of one share for every 20 held, allowing it to offer one of the highest dividend yields in the market. The proposed distribution of the profit for 2003 to be put to the annual general meeting proposes a total dividend of 237,399 thousand euros, represented by the interim dividend already paid and the final dividend. In the interests of optimising the corporate structure of the Group, the Board of Directors of abertis approved, on 27 January 2004, the merger by absorption of Iberpistas, S.A. (99.8% shareholding), which will be submitted for the approval of the respective annual general meetings in the first four months of 2004, and if approved, will be effective for accounting purposes from 1 January 2004. The Company expects all business units to continue to make a positive contribution in 2004, accentuated by the progressive contribution of all the new projects and the latest incorporations in the Group. The dividend policy is also expected to be maintained. The Company has not traded, directly or indirectly, in its own shares. www.abertis.com 

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