Abertis Infraestructuras S.A.
Annual Report 2005

Plain-text annual report

& 2005 annualreport Key data (million euros) Consolidated Total assets Equity Provisions Debt Operating income EBITDA - Gross operating margin Operating profit Profit attributed to parent 2001 2002 2003 2004 4,267 1,765 897 1,227 710 476 359 172 6,459 2,033 1,402 2,521 794 534 402 195 9,685 3,107 2,320 3,611 1,283 915 695 355 9,940 3,318 2,493 3,516 1,534 1,043 743 467 IFRS 2004 7,095 2,904 104 3,490 1,549 1,050 740 489 IFRS 2005 8,447 3,036 114 4,256 1,906 1,204 833 511 Average number of employees 3,209 3,990 4,617 5,668 5,668 7,831 Parent Company Net profit Total dividends 2001 165 132 2002 183 156 2003 329 237 2004 361 264 2005 388 290 2004 and 2005 figures are prepared under the International Financial Reporting Standards (IFRS) which involves a series of reclassifications in the presentation of the financial statements. This has resulted in a decrease in assets and provisions, amongst other changes. The impact of the transition to IFRS is described in detail in the 2005 annual report. What resources are used? Resources abertis Group - Distribution of assets Human resources Average workforce 10,000 8,000 6,000 4,000 2,000 0 Fixed assets Other assets Current assets 8,000 6,000 4,000 2,000 0 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 Group assets exceed 8,000 million euros An workforce team of more than 7,800 people Increase due to inclusion of TBI. Fixed assets represent 94.3% of total assets, mainly consisting of concession assets and other assets associated with infrastructure businesses. The inclusion of TBI in the Group has caused the average workforce to increase to 7,831 employees in 2005. (Please turn over) Key data (million euros) What are the financial resources? What is obtained? abertis Group - Distribution of liabilities Profit attributed to parent company Equity Provisions for liabilities and expenses Debt Other liabilities 8,000 6,000 4,000 2,000 0 500 400 300 200 100 0 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 Balanced financial structure Profit of more than 500 million euros in 2005 Equity exceeds 3,000 million euros, representing 36% of total liabilities, with debt of 50 % due to the expansion of the Group. The provisions, mainly the reversion fund, have been reclassified as a reduction in assets (new IFRS rules). The profit of 511 million represents a 4.6% increase compared to 2004. Excluding the effect of a series of non recurrent items, the comparable profit rose by 12%. How are profits distributed? Total dividends How is the company valued? Evolution abertis vs Ibex 35 (Base 31/12/00 = 100) abertis share price IBEX 35 300 250 200 150 100 50 0 340 300 260 220 180 140 100 60 20 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 Policy of sustained, stable and increasing yield abertis: Excellent rate of growth Total dividends in 2005 rose to 290 million euros, up10% compared to 2004, with a payout of 0.5 euros per share. The policy of a sustained, stable and increasing dividend continues. The shares of abertis continued their excellent rate of growth, with a revaluation during 2005 of 37.8%, once again outperforming the return on the Ibex 35. This increase is added to the advances recorded in the previous four years, with an accumulated increase over the last five years of 191%. For the third consecutive year, the Spanish stock market concluded the year with a gain, with the Ibex 35 up 18.2 from January, with an increase of 77.8% over the last three years. abertis: The best performance in terms of return In 2005 abertis has had the best performance in terms of return (+41%), based on the revaluation in the share price and the dividend yield, compared against the return obtained on the ten leading companies of the Ibex by market capitalisation. Significant events of the year 1st quarter 2005 3rd quarter 2005 _ ACDL (90% held by abertis and 10% by Aena Internacional) acquired 29% of TBI in December 2004 and made a public takeover offer for 100% of the capital. TBI is a British operator of airports under concession and ownership, with 8 international airports (including London Luton, Cardiff and Belfast) and it fully or partially manages another 5 airports. In January 2005 the public takeover was successfully concluded, with ACDL controlling 100% of the capital. _ The Council of Ministers of 30 December agreed to modify before summer 2005 the National Technical Plan for Digital Television, to assign frequencies that are currently free as soon as possible for new programmes, to start broadcasting of new programmes with country wide coverage in October 2005 and bring forward the switch off date for the period of transition to Digital Terresterial Television (from 2012 to 2010). _ saba acquired from Autostrade a 40% share of its Italian subsidiary Saba Italia, gaining 100% control of the company. _ The main Spanish toll highway concessions of abertis were paid compensation for the rate freeze in 2000. _ Schemaventotto (in which abertis holds 13.33%) sold 2.053% of Autostrade reducing its shareholding from 52.2% to 50.1%, generating a capital gain for abertis of 22 million euros. The indirect shareholding of abertis in Autostrade was reduced from 6.95% to 6.68%. _ The financial ratings agency Standard & Poor’s held its “AA” rating for abertis, noting that the financial structure of the company was one of the key reasons for maintaining the rating. _ abertis completed a 700 million euros bond issue placed with institutional investors. 2nd quarter 2005 _ The General Shareholders’ Meeting of abertis approved the parent company and consolidated annual accounts for 2004, a final dividend of 0.25 euros per share and the bonus share issue to be charged against reserves of one new share for every 20 shares held. _ Saba Italia acquired a car park in Mestre with a total of 1,418 parking spaces. _ On 20 April the final dividend of 0.25 euros per share for 2004 was paid, with a total sum of 138 million euros. _ Saba Chile acquired two companies in Chile, giving it a total of seven car parks under management with 3,156 spaces. _ abertis made the bonus share issue approved in April for an amount of 82.7 million euros. _ The Aragonese Radio y Television Corporation awarded abertis telecom the contract to provide audiovisual services for the autonomous radio and television channels. _ abertis consolidated its presence in the international sustainability indexes on being included in the pan-European Dow Jones Stoxx Sustainability Index for two consecutive years. _ abertis increased its shareholding in Accesos de Madrid (R- 3 and R-5 in Madrid) from 23.3% to 31.2% and sold its 25% shareholding in Concesiones de Madrid and 18% holding in Autopista Central Gallega. 4th quarter 2005 _ TBI opened a new terminal in Luton, with an area of more than 7,400 square metres, to meet the demands of the forecast growth in passengars in the medium term. _ Payment of an interim dividend for 2005 for an amount of 0.25 euros per share, representing a total sum of 145 million euros. _ saba opened the Vignola car park (Módena), which will be managed under concession over a 90 year term. _ abertis telecom was awarded the audiovisual service contract for the autonomous radio and television channels of Extremadura. _ saba opened two car parks in Portugal, Leiria and Portimao (Algarve), which will be managed under concession over 50 years. _ abertis telecom, Nokia and Telefónica carried out pilot testing of mobile digital TV in Spain. _ abertis telecom commenced the transmission of Digital Terresterial Television (DTT), with a national coverage of more than 80%. _ The consortium led by abertis was selected to purchase 75.7% of Sanef, the French highway concessionaire that manages 1,771 kilometres of toll highways in the north- west of France and Normandy until 2028. The operation was carried out through Holding d’Infraestructures de Transport SAS (HIT), comprised of abertis (with a majority position) and a group of leading French investors. The acquisition was completed at the beginning of February 2006, which was followed by a public takeover offer for the outstanding 24.3% of the share capital. As at 24 March 2006 the HIT consortium controlled 96% of Sanef. _ abertis acquired 8,685,832 of its own shares at a unit price of 21.40 euros of which 1,000,000 were sold. At the end of the year 7,685,832 shares were held, representing 1.33% of the capital. 2005 annual report index1_ Governing bodies page 08 1_1 Board of Directors 1_2 Board Committees 1_3 Senior Management 1_4 Business Units 2_ Strategy page 14 3_ Activities of abertis group page 18 3_1 Highways 3_2 Telecommunication infrastructures 3_3 Airports 3_4 Car Parks 3_5 Logistics Services 4_ Financial information page 48 4_1 Business performance Consolidated figures Parent company figures 4_2 Shareholders and stock market 5_ Statutory financial statements page 74 5_1 Consolidated annual accounts Consolidated management report Consolidated auditor’s report 5_2 Parent company accounts Parent company management report Parent company auditor’s report Chairman’s letter Dear shareholders, Once again the contents of the Annual Report give me the opportunity to share with you and comment on the most relevant issues for abertis in 2005. It has been a particularly significant year in terms of the internationalisation and diversification of the Group’s activities. In January the integration of the TBI airports was completed and the year concluded with the successful tender for the French highway network of Sanef by the business consortium Holding d’Infrastructures de Transport led by our company. Today our Group is more of a global leader in infrastructures than ever before. The geographical origin of the income from the businesses of abertis is more diverse and qualitatively better. In 2006 practically 50% of our business will be generated outside of Spain, with almost 40% coming from the highway business in France, which has one of the most coherent and reliable models in terms of planning and rates criteria on its high capacity road network. The economic situation Overall, the dynamism of the world economy has remained positive throughout 2005. In this sense, the disequilibrium of the US balance of trade, the increase in oil prices and the level of geopolitical uncertainty present, did not affect the relative strength shown by the leading indicators of the world economy. The US continued to have growth rates well above 3% and Japan saw its GDP grow, after ten years of stagnation or negative growth. This trend coincides, in the case of EU countries, with still modest GDP growth rates, with the exception of Spain, Ireland and the newly admitted countries, but a certain improvement in the outlook due fundamentally to the impulse, and broad political consensus surrounding the structural reforms in Germany following the formation of the new coalition government. This relatively optimistic context has influenced recent movements by the US Federal Reserve, the Bank of Japan and the European Central Bank, modifying the loose interest rate policy, with the start of a scaled and sustained increase in rates. In fact, the consistency and moderation in the policy of rate increases by the three monetary authorities, depends, to a large extent, on current growth rates being maintained. In the case of the Spanish economy this gradual increase in interest rates could contribute to moderate consumption, a necessary reduction of the inflation differential with respect to the rest of the EU, and a slowdown in housing prices. We can expect the economy to moderate some of its main imbalances, with the conditions that favour continuity of growth remaining through 2006 and 2007. 05 5 0 0 2 T R O P E R L A U N N A The attraction of abertis In this environment abertis has continued consolidating on the stock market the growth potential and confidence that investors have shown in our Group. The combination of our investment policy based on selectiveness and stability of cash flows and returns, the solid organic growth of our businesses and historically low interest rates, which I referred to above, have been decisive in significant revaluation of our shares on the market. With a market capitalisation above 12 billion euros, abertis is a leading European infrastructure concessions group. Our shares continue to be of interest to investors, offering a potential for solid growth. The full consolidation of Sanef’s figures into our balance sheet, which will increase our EBITDA to more than 2,000 million euros, the significant improvement in the mix of income of our telecommunications sector with the roll-out of digital terrestrial television (DTT) in Spain, or the stability of our policy on shareholder return – dividend plus bonus shares, are just some examples that support the perspectives for our shares. This outlook is set in a context where the increase in interest rates will represent a moderation in the rates of revaluation. Reflecting our commitment to stability in the return for shareholders is the Board of Directors’ proposal to pay a final dividend for 2005 of 0.25 gross euros per share, in addition to the interim dividend paid in October of the same amount. This raised the total dividend for 2005 to 0.50 euros, compared to 0.479 euros in 2004. A bonus share issue of one new share for every 20 shares held was also made. The total amount allocated to dividend payments in the 2005 financial year was 289.5 million euros, which represents a 9.6% increase on the previous year. Keys to business in 2005 abertis has taken important steps which, as I mentioned earlier, have served to strengthen almost all business areas. The Holding d’Infraestructures de Transport SAS (HIT), led by abertis (57.5%) and its French partners Caisse de Dépôts (10%), the insurance companies CNP Assurance (5%), Predica (12.4%), Groupe Axa (9%) and Foncière Financière et de Participaçons FPF (5.10%) completed in April 2006 the Sanef acquisition process that commenced in December, after being awarded the tender by the French State. The acquisition of Sanef has the characteristics that abertis demands of it strategic investment projects (soundness and return) and strengthens its international position as one of the world leaders in infrastructure management. With this investment, abertis more than doubles its current network in kilometres (Sanef manages 1,771 km) and increases the average remaining life of its concessions (Sanef’s concession ends in 2028) and brings a management team of great quality and experience into the Group. The financial soundness of abertis has enabled this acquisition to be financed with external funding, which represents an optimisation of financial leverage, leading to a review of its rating. Nevertheless, the Company has maintained its highest quality rating (A from Standard & Poor’s and Fitch Ratings). In Spain, at the beginning of 2006, following a process which first began in 2000, we were able to announce the agreement with the Ministry of Works to widen the AP-7 to three lanes over 123 km, on the northern stretches to La Jonquera and in the south from El Vendrell to Salou. Given the social and economic impact that this work will have on the territory, it extends beyond the terms of the agreement. An innovative formula is established that is able to combine the execution of necessary projects for widening highways that are relatively close to termination – 2021 in the case of the AP-7 –, with the interest of shareholders in obtaining sufficiently attractive rates of return to justify an interest in the operation. chairman’s letter 06 5 0 0 2 T R O P E R L A U N N A 2005 was also a key year for our airport sector (abertis airports) which, thanks to the full integration of TBI in the consolidation scope of the Group, with its income of 282 million euros it has established itself as an important business of abertis. Our telecommunications business (abertis telecom), with an income of 282 million euros, saw two processes in 2005 that are going to be decisive in its immediate development: the launch of DTT in Spain with a plan to be rolled out from the end of 2005 through 2010, and the start of pilot tests, together with the leading mobile telephone operators, for the distribution of TV signals to mobile telephones. Both processes, especially the launch of DTT, are going to have a very positive impact on quantitative improvement or income, and qualitative improvement or operating margin in the business mix of abertis telecom. saba, our car park operator, without forgetting its growth in Spain, continued its international expansion with new projects in Italy, Portugal and, of particular note, Chile. The income derived from international operations increased to 30%. The investments on the improvement of access, safety, signage and user information, and the implementation of the pilot phase of dynamic payment systems based on the “Via T” system, also marked the year for saba. In our logistics platforms business (abertis logística), 2005 saw the real extension of our activities beyond Catalonia. The commercialisation of the first phase of Sevisur in the ZAL of the Port of Seville was successfully completed and work also concluded on the first phase of the Arasur platform, located in an inter-modal communications node in the south of the Basque Country which was inaugurated this February. Whilst modest in relative terms, our activity in the sector of logistics infrastructure is of key importance given that it complements and generates synergies with the infrastructures and transport networks for goods and people. Key figures During the year, operating income of abertis rose to 1,906 million euros, a 23% increase on the previous year. Of total income, 63% was generated by the highway activity, 15% by the airport sector and 15% from telecommunication infrastructures. The car park sector contributed 6% and logistics infrastructures and services provided 1%. Of total income, 18% was generated outside of Spain. Following the acquisition of Sanef, the highway business will strengthen its leadership with 77% of the Group’s total income. Gross operating earnings (EBITDA) rose 15% in 2005 to 1,204 million euros, whilst cash flow reached 822 million euros, an increase of 16% respect to the previous year. The investments of abertis in this twelve month period totalled 942 million euros, of which 770 million (82%) went to growth projects and the balance of 172 million was on operational investment. 07 5 0 0 2 T R O P E R L A U N N A The main activity indicators confirmed this positive evolution in all the sectors. Highways recorded a 2.3% increase in daily average traffic (ADT) on the highway network of abertis in Spain. This increase has accelerated in the first quarter of 2006, with an increase in traffic ahead of our forecasts. In airports there was an 11% increase in the number of passengers. Also of note was the positive evolution of abertis telecom with an income of 282 million euros. The car parks business recorded a 2.6% increase in vehicle rotation. Finally, the income of abertis logística rose by 8%. In 2005 the number of employees rose to 7,800 with the inclusion of the TBI workforce. In 2006, abertis will have more than 11,000 employees, with the inclusion of Sanef, with 56% working outside of Spain. Vision, mission and values of abertis 2005 has been a critical year in stating and defining the vision, mission and values that should pervade in the daily activity of abertis in its various facets. These will apply equally to relations with direct employees, and in the service provided to clients, through transparency in information to shareholders, analysts and the media, in the coherency of our strategy on relations with the areas and the communities where we carry out our activity. In short, in all aspects that the model of governance and management of a complex multinational corporation like abertis should inspire. The corporate social responsibility and corporate governance reports that complement this annual report confirm and inform on the inclusion of the concepts of economic, social and environmental balance in our model of governance. These factors are intrinsic in the management of a corporation which, like abertis, has made the global markets its internal market. In this sense, I want to highlight the goals that the process of internationalising our business presents for the development of our vision, mission and values. Beyond the local circumstances of each of our companies, we must ensure that the culture and values of abertis are integrated and take root across all our businesses regardless of where they are developed and in the management teams responsible. Finally I wish to congratulate the professional team and management of our Group for their dedication, commitment and tenacity in the achievement of the objectives that we have set for them. To you, our shareholders, I wish to thank you for the confidence that you have entrusted in us and in the promising future of the abertis group. Isidre Fainé, Chairman of abertis 1Governing bodies 1_1 Board of Directors page 10 1_2 Board Committees page 11 1_3 Senior Management page 12 1_4 Business units page 13 1_1 board of directors 10 5 0 0 2 T R O P E R L A U N N A The members of the Board of Directors of abertis, at the time of preparing the 2005 annual accounts are: Isidro Fainé Casas (Chairman) Pablo Vallbona Vadell (1st Deputy Chairman) G3T, S.L represented by Carmen Godia Bull (2nd Deputy Chairman) Angel García Altozano (3rd Deputy Chairman) Salvador Alemany Mas (Chief Executive Officer) Caixa d’Estalvis de Catalunya represented by Josep Maria Loza Xuriach Comunidades Gestionadas, S.A. represented by Antonio García Ferrer Enrique Corominas Vila Dragados, S.A. represented by Demetrio Ullastres Llorente Carlos Godó Valls Miguel Ángel Gutiérrez Méndez Ernesto Mata López Enric Mata Tarragó Braulio Medel Cámara Vasco de Mello Jorge Mercader Miró José Luis Olivas Martínez Ramón Pascual Fontana Leopoldo Rodés Castañé Miquel Roca Junyent (Secretary, Non-Board Member) Juan A. Margenat Padrós (Deputy Secretary, Non-Board Member) During 2005 the following have ceased to act as board members: María Isabel Gabarró Miquel (replaced by Leopoldo Rodés Castañé), Carmen Godia Bull (replaced by G3T, S.L.) and Montes de Piedad y Caja de Ahorros de Ronda, Cádiz, Almería, Málaga y Antequera - Unicaja (replaced by Braulio Medel Cámara). 11 5 0 0 2 T R O P E R L A U N N A 1_2 board committees Executive Committee Isidro Fainé Casas (Chairman) Pablo Vallbona Vadell (1st Deputy Chairman) G3T, S.L. represented by Carmen Godia Bull (2nd Deputy Chairman) Angel García Altozano (3rd Deputy Chairman) Salvador Alemany Mas (Chief Executive Officer) Caixa d’Estalvis de Catalunya, represented by Josep Maria Loza Xuriach José Luis Olivas Martínez Miquel Roca Junyent (Secretary, Non-Board Member) Juan A. Margenat Padrós (Deputy Secretary, Non-Board Member) During 2005 Carmen Godia Bull ceased to be member of the committee (being replaced by G3T, S.L.). Audit and Control Committee Ernesto Mata López (Chairman) Caixa d’Estalvis de Catalunya, represented by Josep Maria Loza Xuriach Enrique Corominas Vila Juan A. Margenat Padrós (Secretary) Nomination and Remuneration Committee Jorge Mercader Miró (Chairman) Angel García Altozano Miguel Angel Gutiérrez Méndez Juan A. Margenat Padrós (Secretary) In 2005 Maria Isabel Gabarró Miquel ceased to be member of the committee (being replaced by Miguel Angel Gutiérrez Méndez). 1_3 senior management 12 5 0 0 2 T R O P E R L A U N N A Chief Executive Officer: Salvador Alemany Mas Company Secretary: Director of Legal Services: Juan A. Margenat Padrós Marta Casas Caba Managing Director of Corporate Management: Josep Martínez Vila Director of Operational Development: Manuel Cruzado de la Hera Director of Investment Analysis: David Díaz Almazán Director of Tax Planning: Director of Corporate Security: Director of Planning and Control: Director of Organisational Development: Director of Construction: Chief Financial Officer: Director of Finance: José María García Martín Luis Jiménez Arrebola Jordi Lagares Puig Joan Rafel Herrero Rodolfo Vicente Bach Francisco José Aljaro Navarro Lluís Subirà Laborda Director of Institutional Relations and Quality: Ricard Maxenchs Roca Director of Studies and Corporate Communication: Antoni Brunet Mauri Shared Services Managing Director of serviabertis: Manuel Cruces Socasau Deputy Managing Director of Infrastructures and Technical Services: Juan Rodríguez de la Rubia Director of Administration and Purchasing: Francesc Sánchez Farré Director of Corporate Organisation and Systems: Jordi Pujol-Xicoy Gimferrer 13 5 0 0 2 T R O P E R L A U N N A 1_4 business units Highways Managing Director Catalonia-Aragon (acesa and aucat): Lluís Serra Serra Managing Director Centre-North (iberpistas): José Mª Morera Bosch Managing Director East-South (aumar): Américo Jiménez Rodríguez Director of International Highways: Jordi Graells Ferrández Car Parks Managing Director of saba: Joan Font Alegret Telecommunication infrastructures Managing Director of abertis telecom: Tobías Martínez Gimeno Logistics services Managing Director of abertis logística: Josep Canós Ciurana Airports Managing Director of abertis airports: Miquel Puig Raposo 2Strategy 15 5 0 0 2 T R O P E R L A U N N A The development of abertis (to become a leading corporation in Europe in the management of infrastructures serving mobility and communications) makes it essential to define and clearly communicate the elements by which the company wishes to be identified in its relationship with clients, society, shareholders and employees. The vision, mission and values of abertis reflect all these concepts that aspire to add value and are the base on which abertis builds its project. Our vision “To provide responses to the infrastructure requirements to serve mobility and telecommunications harmonising the satisfaction of our clients, shareholders and employees with the development of society.” Our mission “To be a leading global operator in our infrastructure businesses through: _ continuous and selective growth, with a long- term commitment; _ excellence in service quality; _ dialogue and compromise; _ initiative in the search for solutions to provide the required infrastructures.” 1_ strategy 17 5 0 0 2 T R O P E R L A U N N A Our values Client service We focus on proposing, designing and providing our clients with top quality services that offer them added value compared to alternatives in the market. Proactiveness and responsibility We make a personal commitment to achieve our objectives through perseverance, energy and illusion. Efficiency Each of our activities is focused on efficiently achieving a specific tangible objective that has a clear value to the organisation and its shareholders. Dialogue and collaboration We believe in dialogue as the main method of understanding the needs of our setting and internal collaboration as the means of building solutions that integrate all the knowledge and specific experience of abertis. Credibility We transmit credibility to those around us (shareholders, employees, clients, institutions, etc.) meeting our commitments in a serious and thorough manner. We work in a way that is open, transparent and responsible, respecting ethical principles and values. Confidence in personnel We trust the capacity of our personnel to meet challenges and we encourage their professional development based on their achievements and potential. Our strategy In practice, all these concepts are reflected by: _ the search for a balanced combination of investments that meet strict risk and yield requirements, enabling the steady sustainable dividend yield policy for shareholders to be maintained; _ active involvement in management and use of all management knowledge, as well as a long-term commitment to all the projects in which the company is involved; _ the development of an organisational model centred on the quality of client service, the generation of wealth and welfare in its vicinity and the surrounding area, and the integration and promotion of employees within the organisation. abertis group 3Activities of the 3_1 Highways page 23 3_2 Telecommunication infrastructures page 33 3_3 Airports page 37 3_4 Car parks page 41 3_5 Logistics services page 45 1_ Activities of the abertis group 20 5 0 0 2 T R O P E R L A U N N A abertis operates in five business areas: highways, telecommunication infrastructures, airports, car parks and logistics services. Corporate services Highways Telecoms Airports Car parks Logistics Catalonia-Aragon Centre-North East-South Europe South America The abertis group has increased its presence in the world as shown in the following map: Canada USA Puerto Rico Costa Rica Colombia Bolivia Chile Argentina Spain Andorra Portugal Sweden United Kingdom France Italy Morocco South Africa 21 5 0 0 2 T R O P E R L A U N N A Share of operating income by sectors and geographical area: 2005 63%_ Highways 15%_ Telecoms 15%_ Airports 6%_ Car Parks 1%_ Logistics 2004 74%_ Highways 18%_ Telecoms 1%_ Airports 6%_ Car Parks 1%_ Logistics 2005 82%_ National 18%_ International 2004 95%_ National 5%_ International Average workforce by sectors and geographical area: 2005 40%_ Highways 16%_ Telecoms 29%_ Airports 12%_ Car Parks 3%_ Corporation 0.2%_ Logistics 2004 56%_ Highways 23%_ Telecoms 1%_ Airports 16%_ Car Parks 4%_ Corporation 0.2%_ Logistics 2005 64%_ National 36%_ International 2004 90%_ National 10%_ International The inclusion of TBI at the end of 2004 has significantly increased the relative weight of the contribution from the airport sector and in turn it has increased the weight of international business. The inclusion of Sanef operations (and the resulting impact on the current contributions) will not occur until the 2006 financial year. 000 5 0 0 2 T R O P E R L A U N N A 3_1 highways 23 5 0 0 2 T R O P E R L A U N N A The toll highway concessionaire business unit continues to be the main activity of abertis, although its relative weight in the consolidated figures has decreased in recent years following large investment in telecommunication infrastructures and airports. This sector represents 63% of income and 81% of EBITDA, compared to 74% and 85% respectively in 2004. abertis holds important concessions in Spain and internationally. The current portfolio of concessions provides an excellent combination both geographically and in the level of maturity of the projects (from established concessions to projects under construction or in the initial phase of their activity) which ensures a balanced combination of future cash flows for shareholders. In Spain, the highways business unit is structured in three geographic areas, whose parent companies have been the leading operators historically in Spain: Catalonia-Aragon Area through acesa, Centre-North Area through iberpistas and East-South Area through aumar. Internationally abertis has shareholdings in highways in Europe and South America. Spain Europe South America Catalonia - Aragon Centre - North East - South Direct or shared management acesa aucat iberpistas castellana Avasa Aulesa Trados 45 aumar HIT (*) GCO APR Gesa Other shareholdings Túnel del Cadí Autema Accesos de Madrid Henarsa Ciralsa Autostrade Brisa RMG Coviandes Ausol Elqui (*) At the end of the year, the French Government awarded the HIT consortium, led by abertis, 75.65% of the capital of Société des Autoroutes du Nord et de la France (Sanef). The acquisition of the French concessionaire was completed in February 2006, so consequently the figures of Sanef have not been included in the consolidated accounts at the end of the year. 25 5 0 0 2 T R O P E R L A U N N A 3_1 highways_ spain Spain abertis directly manages more than 1,500 km of highways in Spain, representing 58% of the toll highways in the country. Direct management Catalonia – Aragon Area Montgat-Palafolls (C-31 / C-32) Barcelona-La Jonquera (AP-7) Barcelona-Tarragona (AP-7) Montmeló-El Papiol (AP-7) Zaragoza-Mediterráneo (AP-2) Castelldefels-El Vendrell (C-32) Centre-North Area Villalba-Adanero (AP-6) Villacastín-Ávila (AP-51) San Rafael-Segovia (AP-61) León-Astorga (AP-71) Bilbao-Zaragoza (AP-68) Tramo II (M-45) East-South Area Tarragona-Alicante (AP-7) Sevilla-Cádiz (AP-4) Km Concessionaire % holding Concession end acesa 100% 2021 aucat 100% iberpistas castellana Aulesa Avasa Trados 45 100% 100% 79.2% 50.0% 50.0% aumar 100% 2039 2031 2031 2055 2026 2029 2019 49 150 100 27 216 58 70 23 28 38 294 15 374 94 1,534 abertis also has a minority holding in a series of concessions with a total of 293 km, representing 11% of the toll highways in Spain. Other shareholdings Túnel del Cadí (C-16) Madrid-Arganda del Rey (R-3) Madrid-Navalcarnero (R-5) Circunvalación Alicante Sant Cugat-Manresa (C-16) Madrid-Guadalajara (R-2) Km Concessionaire % holding Concession end 30 33 53 48 48 81 Túnel del Cadí 37.2% Accesos de Madrid 31.2% Ciralsa Autema Henarsa 25.0% 23.7% 22.5% 2023 2049 2040 2037 2024 3_1 highways_ spain 26 5 0 0 2 T R O P E R L A U N N A Financial and business results The Spanish highway concessions under direct management represent 61% of the total operating income of abertis increasing to 1,180 million euros, up 6% on the previous year. The contribution to EBITDA is 953 million, representing a 7% increase and 78% of total consolidated EBITDA. Direct management Cons. Results*PGC (Mn€) Concessionaire ADT 2005 Var % Operating income Var % EBITDA Var % EBIT Var % acesa aumar iberpistas castellana aucat Aulesa Avasa 40,639 24,648 30,776 5,526 30,120 3,944 13,542 2.7% 2.1% 1.6% 3.7% 4.1% 5.2% 0.3% Trados 45 73,204 (1.0%) * Spanish GAAP 556 338 109 8 88 4 132 23 3% 4% 7% 9% 11% 7% 3% 6% 427 287 83 4 74 2 107 22 3% 4% 4% 13% 12% 6% 3% 5% 335 234 70 1% 3% 3% 0 175% 54 (1) 86 15 16% 7% 5% 6% In general the performance of the Group’s main concessions has been very good, with traffic increasing on almost all the highways. Of note within “Other shareholdings” are the Madrid Radial Highways (R3, R5 and R2) with significant percentage increases, at more than 24%, as they are in the initial phase of activity. Significant events During 2005 work on increasing the number of lanes on the AP-6 highway and the construction of the third tunnel at Guadarrama by castellana have continued, as have the works on the Guadarrama road by iberpistas. These works will increase the capacity of the AP-6 highway and the access route from the centre of the Peninsula to the north-east of Spain (Castilla León, Asturias and Galicia). During the year, as part of an operation in which iberpistas increased its shareholding in Accesos de Madrid (R3 and R5) to 31.2%, the company sold its shareholdings of 25% in Concesiones de Madrid and 18% in Autopista Central Gallega. The toll highway concessionaires under State title received compensation in 2005 for the rate freeze in 2000, which totalled 10 million euros. 27 5 0 0 2 L A U N A E M R O F N I Aulesa Avasa acesa aucat Túnel del Cadí Autema Bilbao León Astorga Adanero Ávila Navalcarnero Zaragoza La Jonquera Segovia Guadalajara Madrid Arganda del Rey Palafolls Barcelona Tarragona iberpistas castellana Trados 45 Accesos de Madrid Henarsa Seville Cadiz aumar Valencia Alicante aumar Ciralsa direct or shared management other shareholdings resulting from the extra traffic associated with the new lanes will be considered. If the income obtained is insufficient the concessionaire will be compensated by the Ministry at the end of the concession period. During this year the automatic toll payment system Via T has consolidated its position, with the tele-toll being successfully introduced for heavy vehicles, and the number of transits by light vehicles using this payment method increased with respect to the previous year. In 2006, the Ministry of Works and acesa have reached an agreement to widen the AP-7. The agreement, authorised by the Council of Ministers in April 2006 will represent a substantial improvement of the Mediterranean corridor. The project involves widening to 3 lanes over a 123 kilometre stretch, from the Mediterranean toll gate to Vila-seca Salou in Tarragona, and on the Maçanet – La Jonquera stretch in Girona. It also covers the widening to 4 lanes between Fornells de la Selva and Medinyà (Girona ring-road) and the replacement of 3 toll gates on the main highway with toll gates on the on and off-ramps. The agreement requires acesa to make an investment of 500 million euros without any increase in the toll rates or concession periods. To recover the investment, the increased income 3_1 highways_ europe 28 5 0 0 2 T R O P E R L A U N N A Europe abertis has minority holdings in two of the leading European highway operators. To these, the French concessionaire Sanef will be added in 2006, operating a network of 1,771 km. Other shareholdings Country Italy Portugal Autostrade Brisa United Kingdom RMG A 417/419 i A1(M) Concessionaire % holding 6.68% 10.00% 25.00% Km 3,408 1,106 74 Concession end 2038 2032 2026 United Kingdom RMG Peterborough Gloucester Sawtry Alconbury Cirencester Swindon Portugal Brisa Lisbon London Calais France Sanef Paris Strasbourg Genoa Rome Naples other shareholdings acquired in 2006 Italy Autostrade 29 5 0 0 2 T R O P E R L A U N N A In December 2005 HIT, consortium led by abertis, was awarded 75.7% of Sanef, “Société des Autoroutes du Nord et de l’Est de la France”. The acquisition was finalised at the beginning of 2006 and a takeover offer was made for the outstanding 24.3% of the shares. At 24 March 2006 the HIT consortium controlled 96% of Sanef. In April 2006 the compulsary public takeover offer has been completed, which will give HIT 100% control of Sanef. The acquisition of Sanef involves the incorporation into the highway network managed by abertis of 1,771 kilometres of toll highways operating in the North of France, an area with a very dynamic economy and a high population density. Sanef manages four of the seven highway access routes to the Ile de France (Paris region) and also the traffic that connects Germany, Belgium and Luxembourg with the North of France and the United Kingdom. Financial and business results Given the percentage shareholding, the investments in the United Kingdom and Italy (there is a significant influence in its management even though the holding is less than 20%) are consolidated by equity accounting. The shareholding in Brisa has been classified in accounting terms as an investment. Significant events During the year, Schemaventotto (company that groups together the core shareholders of Autostrade) sold 2.05% of Autostrade reducing its holding from 52.2% to 50.1%, with the final indirect shareholding of abertis in the Italian concessionaire being 6.7%. The share of the capital gain generated in Schemaventotto on the operation corresponding to abertis is approximately 22 million euros. The shareholders of Schemaventotto, including abertis, have renewed for three years the agreements existing between them, whereby they agreed to keep their holdings in Schemaventotto for three years, the governing bodies are regulated and a higher quorum is established for taking significant decisions. 3_1 highways_ south america 30 5 0 0 2 T R O P E R L A U N N A South America abertis has holdings in a series of projects in Argentina, Puerto Rico, Colombia and Chile: Direct management Country Puerto Rico Argentina (*) 57.6% of voting rights Other shareholdings Country Colombia Argentina Chile Concessionaire APR GCO % holding 75% 48.6% (*) Concessionaire % holding Coviandes Ausol Elqui 39.0% 31.6% 25.0% Km 2 56 Km 86 119 229 Concession end 2027 2018 Concession end 2020 2020 2022 Financial and business results In general the performance of the international activity has been very positive, with significant increases in traffic and income. The recovery of the Argentine economy is of particular note, which commenced in 2003 and has consolidated in the last couple of years, leading to an 11% rise in trips of GCO with the resulting increase in income. Other shareholdings Activity GCO (million trips) APR (ADT) Cons. results IFRS (Mn€) Operating income EBITDA EBIT Km 56 2 2005 75 22,434 2005 30 18 12 Var% 11.1% 3.5% Var% 13% 16% 15% 31 5 0 0 2 T R O P E R L A U N N A San Juan Puerto Rico APR Teodoro Moscoso Bridge Bogotá Chile Elqui La Serena Los Vilos Ovalle Santiago Bogotá Villavicencio Colombia Coviandes San Fernando San Isidro Buenos Aires Buenos Aires Luján Buenos Aires Argentina Ausol GCO other shareholdings direct management Significant events In Argentina, the process of renegotiating the concession contracts with the conceding authorities has commenced, which allows an optimistic outlook for the highway concessions that abertis has in this country. In March 2006 the first stage of this negotiation process concluded with the approval of a rate rise for GCO and Ausol of more than 13%. Growth strategy for highway sector The growth strategy of abertis in this sector involves the search for new business opportunities in Europe, consolidating its position in Spain and France and paying special attention to possible tenders for new infrastructures and privatisations in Eastern Europe. In South America abertis seeks to strengthen its position in some countries where it is already present: Chile and Argentina. 3_2 telecommunication infrastructures 33 5 0 0 2 T R O P E R L A U N N A abertis telecom is the parent company of the telecommunication infrastructures business, leader in Spain in this sector of activity. In addition to holding the shareholdings of abertis in this sector, it also carries out technical assistance and operates fibre optic cabling. Company abertis telecom tradia retevisión Alella Torre de Collserola % holding No. sites 100.0% 100.0% 100.0% 100.0% 41.8% - 693 2,524 - - The subsidiary companies of abertis telecom have an extensive distribution and transportation network, offering the following services: • Mobile radio communications for public security and emergency networks • Telecommunication services for telephone • Analogue and digital transmission for television operators and radio • Transporting signals • Transmission of special events • Operation and maintenance of networks abertis telecom has a nationwide analogue and digital network, which includes landmark sites such as Torrespaña in Madrid and Torre de Collserola in Barcelona. 3_2 telecommunication infrastructures 34 5 0 0 2 T R O P E R L A U N N A Financial and business results The telecommunications infrastructure business is the second sector by income, at 282 million euros (15% of the abertis total) and EBIT, 99 million euros (8%). Both figures have increased with respect to the previous year, thanks to the positive performance of the activity which saw both tradia and retevisión record a positive EBITDA and net profit. No. of sites Cons. result IFRS (Mn€) Operating income EBITDA EBIT 2005 3,217 2005 282 99 24 Var % 0.4% Var % 3% 7% 27% Significant events abertis telecom is the leading operator in Spain in the development of Digital Terrestrial Television (DTT) participating actively in this project from the outset. In November 2005 digital broadcasting commenced, with current national coverage exceeding 80%. The company forms part of the new Association for the Implementation and Development of DTT in Spain, which has been set up to promote DTT and develop its transition process, in direct collaboration with the administrations. In addition during 2005 planning and implementation of Local DTT has continued. During the year, abertis telecom was successful in tendering for various contracts for the transmission of TV and radio signals in Aragon, Asturias and Extremadura. In addition it was selected to supply, install and operate the security and emergency networks in Murcia and Jerez. abertis telecom, with a majority shareholding, Mediasat and Globecast reached an agreement to integrate their respective transmission services and mobile television links in Spain in a new company, Alella (currently called Overon). At 31 December 2005 Alella was 100% owned by abertis telecom. abertis telecom, together with Nokia, Telefónica Móviles and Vodafone, has been involved in a pilot test for receiving television on mobile phones, based on DVB-H technology. 35 5 0 0 2 T R O P E R L A U N N A Growth strategy The growth strategy of abertis in this sector is based on expanding DTT coverage, which is currently at 80%, as well as obtaining new audiovisual, regional and local DTT clients, and the provision of new Digital TV services, such as TV on mobile phones. There is also great potential for growth in private communication networks. This will be done without ignoring the possibility of making the first moves towards internationalisation, once the business has consolidated in Spain. 3_3 airports 37 5 0 0 2 T R O P E R L A U N N A abertis operates under ownership or concession eight international airports in Europe, US and South America through the British group TBI, including London Luton, one of the main airports in London. It also fully or partially manages 5 airports on behalf of governments or local authorities. Through Codad, it operates two runways under concession at the Eldorado airport, in Bogotá. Airport London Luton Belfast International Cardiff International Stockholm Skavsta Orlando Sanford El Alto (La Paz) Viru Viru (Santa Cruz) Jorge Wilstermann (Cochabamba) Eldorado Atlanta Burbank Toronto San José Miami International Country U. Kingdom U. Kingdom U. Kingdom Sweden Florida (U.S.) Bolivia Bolivia Bolivia Colombia Atlanta (U.S.) Los Angeles (U.S.) Canada Costa Rica Miami (U.S.) Control Concession Owned Owned Owned Concession Concession Concession Concession Concession Mgmt. Contract Mgmt. Contract Mgmt. Contract Mgmt. Contract Mgmt. Contract Financial and business results With the acquisition of TBI, the weight of the airport sector has increased significantly compared to 2004, rising from 1% of abertis income in 2004 to 15% in 2005. Income totalled 282 million euros, a figure that is not comparable with 2004, as the previous year did not include TBI as the acquisition was concluded in 2005. Activity No. passengers (thous) TBI No. flights CODAD Cons. Result IFRS (Mn€) Operating income EBITDA EBIT 2005 21,368 98,655 2005 282 98 33 Var % 11.1% 2.1% Var % n.a n.a n.a Overall the activity in this sector has performed well with increases in both the number of passengers (in the case of TBI up by 11% to 21 million) and the number of flights (up by 2.1% for Codad). Codad operates under a guaranteed minimum income agreement and the real income for this year represented 92% of the level guaranteed. Sweden Belfast International United Kingdom Cardiff International London Luton Canada U.S. Burbank Atlanta Costa Rica Colombia Bolivia Toronto Orlando Sanford Miami San José Eldorado El Alto (La Paz) Jorge Wilstermann (Cochabamba) Viru Viru (Santa Cruz) 3_3 airports Stockholm Skavsta 39 5 0 0 2 T R O P E R L A U N N A Significant events In December 2004 ACDL, held by abertis (90%) and Aena Internacional (10%), presented a takeover offer for all the shares of the British airport operator TBI. At 31 December 2004 it had acquired 29.2%. On 4 January 2005 ACDL completed the takeover offer, gaining 100% control of TBI. The British Government, in its White Paper on “The future of air transport in the United Kingdom”, has estimated significant increases in traffic over the next 25 years. As a consequence the airports of Luton, Belfast and Cardiff presented the Master Plan 2030, which outlines the needs to expand these airports up to 2030. In the case of Luton, the Plan includes the construction of a new runway for landing, a new terminal and a control tower, amongst other installations. During the year a new Terminal has been constructed at Luton airport to offer a better service to clients and provide the airport with the necessary installations to absorb the increase in passengers forecast in the medium term. This new terminal consists of new commercial area and food outlets, as well as a new arrivals area. Growth strategy The growth strategy of abertis in this sector is based firstly on making operative improvements in the current units, in line with the growth forecasts for the airport sector. In addition abertis pays special attention to the possibility of acquiring private airports, as well as the processes of privatisation both in Spain and Eastern Europe. concession or owned management contract 3_4 car parks 41 5 0 0 2 T R O P E R L A U N N A Saba Aparcamientos S.A. (saba) is the parent company of the business unit in the car park sector and one of the leading operators in Spain and in Europe. saba manages 83,532 spaces, up 6 % on 2004, located in a total of 154 operating units found in more 60 cities in Spain, Italy, Portugal, Chile, Morocco and Andorra. Country Spain Portugal Italy Chile Andorra Morocco % holding 99.3% (*) 100% 100% 100% 90% 51% No. of spaces No. cities present 45,391 16,251 14,398 3,804 295 3,393 83,532 42 6 13 3 1 1 66 (*) abertis holds 99.3% of saba, which holds the shares in the other companies Financial and business performance The car park sector represents 6% of the operating income of abertis and totalled 111 million euros, 13% more than the previous year. The contribution to consolidated EBITDA was 42 million euros, representing 3% of the abertis total, with an increase of 12% on the previous year. Activity No. car parks No. spaces Vehicle rotation (million) No. pass holders Cons. results IFRS (Mn€) Operating income EBITDA EBIT 2005 154 83,532 47.2 26,785 2005 111 42 26 Var % 6.2% 5.7% 2.6% 14.5% Var % 13% 12% 13% During this year the vehicle rotation through the car parks managed by saba totalled 47.2 million, up 2.6% on the previous year. This increase is mainly due to the growth in the international market, in Chile and Italy. increase is due both to the contribution of the new Chilean and Italian centres, as well as the policy implemented by saba to capture pass holders in those centres that have more moderate growth rates in hourly rotation. The number of pass holders increased by 14.5% in 2005 to a total of 26,785. This significant Spain Portugal Madrid Barcelona Rome Andorra Lisbon Seville Rabat Morocco Italy Santiago Concepción Chile 3_4 car parks 43 5 0 0 2 T R O P E R L A U N N A Significant events In Spain, the City Councils in Sabadell and Terrassa have approved a change in the rate system for the car parks managed under concession in those cities, where billing is calculated by 5 and 15 minute intervals respectively. In compensation, the concession period for some car parks has been extended. acquired ownership of a parking building in Mestre (continental area of Venice) with a total of 1,350 spaces. It was also awarded a further 1,690 spaces in this country and opened a new car park with 293 spaces in the city of Vignola (Modena). In Portugal, Spel (100% owned by saba) opened two new car parks in Leiria and Portimao (Algarve region) with 309 and 335 spaces respectively. During the year saba was awarded 1,031 new spaces in the provinces of Barcelona and Girona. Growth strategy The growth strategy of abertis in Spain for the car park sector is based on tendering for new car parks and on the search for acquisitions or agreements with other companies. Internationally, it involves consolidating the Company’s presence in Chile and Italy, as these are countries with greater potential than Spain. Additionally special attention will be given to the French market, a natural market for growth in the car park sector. Internationally, saba has taken a new step in its growth strategy in Chile with the acquisition from the French company Vinci of Saba Park Chile and Saba Park Servicios. This operation involved the incorporation of 1,340 new spaces under concession, in four car parks, together with another two car parks under management with a further 1,458 spaces. Of the six car parks, five are located in Santiago de Chile and one in the city of Valparaiso. With this operation, saba has 5,262 parking spaces in Chile, distributed in 12 centres, which makes it the clear leader in this country. In Europe the Group has consolidated its presence in Italy with the acquisition from Autostrade of 40% of Saba Italia, gaining 100% control over its Italian subsidiary. During the year Saba Italia 3_5 logistic services 45 5 0 0 2 T R O P E R L A U N N A abertis logística is the subsidiary of abertis that holds its investments in the promotion and development of logistics spaces, equipment areas and services for logistics operators. This business unit is made up of a combination of projects at various stages of maturity located in the area of Barcelona, Alava and Seville. The activities in which it has invested are situated in strategic locations for the transportation of goods, being close to land (highways and railways), sea and air infrastructure networks. Company City % holding abertis logística / CIM Vallès Barcelona 100.0% Sevisur Seville Parc Logístic Zona Franca Barcelona Arasur Cilsa Alava Barcelona 60.0% 50.0% 42.6% 32.0% Total area of site (m2) 70,000 250,000 408,897 Current status Operational Under construction Operational / Under construction 1,900,000 Operational (*) / Under construction 2,270,000 Operational / Under construction (*) Opened in January 2006 Financial and business results The logistics services business unit contributes operating income of 18 million euros and EBITDA of 6 million euros to the consolidated accounts of abertis, representing 1% and 0.5% of the Group total. The positive evolution of the activity in all the businesses as well as the start of operations in Sevisur has resulted in an 8% increase in income and a 7% increase in EBITDA compared to 2004. Cons. result IFRS (Mn€) Operating income EBITDA EBIT 2005 18 6 3 Var % 8% 7% 6% Alava Barcelona Seville 3_5 logistic services 47 5 0 0 2 T R O P E R L A U N N A Significant events Growth strategy The growth strategy of abertis in this sector is based on consolidating the full operation of the platforms that are under construction or just beginning to operate, as well as seeking new business opportunities on the main axis in Spain, without ignoring possible internationalisation. Of special note during 2005 was the significant investment made by abertis in this sector of activity and the start of operations for some businesses. During the year the Zona Franca Logistics Park commenced a process of expansion with the construction of two new warehouses (21,369 m2), a building (11,171 m2) and an underground car park (8,330 m2). In the case of CILSA, now that the promotion of the logistics area ZAL Barcelona has been completed and is fully occupied, work has continued on the development of ZAL Prat. Sevisur has completed the first phase of expansion of the Logistics Activities Zone (ZAL) in Seville and is in the midst of its commercialisation, with an average occupation of 32% and forecast occupation at the end of the first quarter of 2006 of 94%. During 2006 construction will accelerate to bring new areas for leasing to the market. Arasur has completed the construction of the first four warehouses (opened in January 2006) and started their commercialisation. information 4Financial 4_1 Business performance Consolidated figures page 50 Parent company figures page 58 4_2 Shareholders and the stock market page 60 4_1 business performance_ consolidated figures 50 5 0 0 2 T R O P E R L A U N N A Consolidated figures Profit and Loss Account The results of abertis for 2005 are prepared under IFRS (International Financial Reporting Standards) accounting criteria for the first time. For comparative purposes, the 2004 results under IFRS are also provided. (million euros) Operating income Operating expenses EBITDA Amortisation and depreciation Impairment of assets Operating profit Financial result Companies under equity accounting Profit before tax Corporate income tax Profit for the year Minority interest Profit due to shareholders Consolidated 2005 1,906 (702) 2004 1,549 (499) 1,204 1,050 (371) 0 833 (159) 65 739 (224) 515 (4) 511 (302) (8) 740 (147) 93 686 (194) 492 (3) 489 VAR 23% 41% 15% 13% 8% 5% 4.6% Result For the first time the profit of abertis has exceeded 500 million euros in 2005, at 511 million, with a 4.6% increase on the previous year. In making comparisons with 2004, the impact of the following non-recurring items recorded in 2004 and 2005 should be taken into consideration: _ The 2004 profit included a capital gain of 70 million euros generated by Schemaventotto on the sale of 10% of Autostrade and on the sale made by Autostrade of a 5% holding that it had in abertis. _ The 2005 profit includes a capital gain of 22 million on the sale by Schemaventotto of 2.05% in Autostrade. _ In 2005 a net amount of 10 million euros is recorded as compensation for the rate freeze in 2000 on toll highway concessions of the Spanish State. _ During 2005 capital gains of 10 million net were recorded on the sale of shareholdings in Concesiones de Madrid and Autopista Central Gallega. 51 5 0 0 2 T R O P E R L A U N N A If we exclude the impact of the extraordinary or non-recurring items, the consolidated profit for the year due to shareholders has increased by 12.1% on a comparative basis. Profit and loss account (Mn€) Operating income EBITDA EBIT Profit due to shareholders Capital gain S28/ Autostrade Compensation 2000 rates Capital gain sale Concema / Central gallega Comparable profit 2005 1,906 1,204 833 511 -22 -10 -10 469 2004 1,549 1,050 740 489 -70 Var % 23% 15% 13% 4.6% 419 12.1% The main items in the profit and loss account show significant growth due to the expansion of the Group’s activities and the positive performance in all lines of business. +23% 6 0 9 1 . 9 4 5 1 . 2004 2005 +15% 4 0 2 1 . 0 5 0 1 . +13% 3 3 0 8 4 7 +4.6% 1 1 9 5 8 4 +12.1% 9 6 4 9 1 4 Operating income EBITDA EBIT Profit due to shareholders Comparable profit 2,000 1,500 1,000 500 0 4_1 business performance_ consolidated figures 52 5 0 0 2 T R O P E R L A U N N A Income Operating income rose to 1,906 million euros (23% increase compared to 2004), propelled by the positive performance of all the Group’s activities and reflecting the incorporation of TBI in the consolidation scope from January 2005 (contribution of 258 million euros), as well as the non-recurring income due to capital gains made on the sale of holdings in Concesiones de Madrid and Autopista Central Gallega and the extraordinary receipt of compensation for the rate freeze in 2000 on the Spanish State concessions. Excluding these items, recurring income rose by 5%. The inclusion of TBI has altered the relative weight of the different business units in terms of income and has implied an increase in the income generated outside of Spain. 2005 63%_ Highways 15%_ Telecoms 15%_ Airports 6%_ Car Parks 1%_ Logistics 2004 74%_ Highways 18%_ Telecoms 1%_ Airports 6%_ Car Parks 1%_ Logistics 2005 82%_ National 18%_ International 2004 95%_ National 5%_ International Gross operating income (EBITDA) Operating expenses are concentrated in personnel expenses and the maintenance of infrastructures. The 41% increase in total expenses is basically due to the incorporation of TBI, which has seen the average workforce increase from 5,668 employees in 2004 to 7,831 employees. Excluding the impact of TBI, expenses rose by 5%. This change was achieved through containing expenses in the main companies of the Group and particularly in the telecommunications business. EBITDA rose to 1,204 million euros, an increase of 15% on 2004. 53 5 0 0 2 T R O P E R L A U N N A 2005 81%_ Highways 8%_ Telecoms 8%_ Airports 3%_ Car Parks 0%_ Logistics 2004 85%_ Highways 9%_ Telecoms 2%_ Airports 3%_ Car Parks 1%_ Logistics 2005 89%_ National 11%_ International 2004 94%_ National 6%_ International Amortisation and impairment of assets Companies under equity accounting The allocations to amortisation increased by 23%. Excluding the impact of the incorporation of TBI, the increase was 3%. Goodwill, under IFRS, is not amortised systematically, but is reduced on the basis of impairment testing of assets. On subjecting the existing goodwill in the abertis group to these tests no adjustments were required to be made. Financial result The negative financial result has increased due to the acquisition of TBI, which increased the financial load because of the financing associated with the acquisition and the existing debt held by TBI. Excluding the impact of TBI, there was a significant improvement in the financial result due to the negative impact of non-recurring items in 2004 related to the restructuring of hedges and the decline of the average debt. The contribution from companies consolidated by equity accounting reflects a positive impact of 22 million euros due to the sale of 2.05% of Autostrade made in February 2005 by Schemaventotto (in which abertis holds 13.3%). The same account entry in 2004 included a gain of 70 million euros for capital gains generated on the sale of 10% of Autostrade by Schemaventotto and the sale by Autostrade of the 5% interest that it held in abertis. Cash flow During 2005 abertis has generated net cash flow (before investments and dividends) of 822 million euros, up 16% on 2004, thanks to the incorporation of TBI and the positive impacts of the increase in activity and the other items commented above. 2005 2004 Var % Net cash flow (Mn€) 822 706 16% 4_1 business performance_ consolidated figures 54 5 0 0 2 T R O P E R L A U N N A Balance sheet (million euros) ASSETS Non-current assets Fixed assets Goodwill and other intangibles Investments in associated companies Other non-current assets Consolidated 2004 2005 LIABILITIES Consolidated 2004 2005 7,969 4,597 1,790 660 922 6,650 4,074 892 832 852 Equity Capital and premium Reserves Profit Minority interest Non-current liabilities Debt Other long-term liabilities 3,036 1,572 877 511 76 3,836 3,227 609 1,575 1,029 546 2,904 1,654 719 489 42 3,110 2,801 309 1,081 689 392 Current assets 478 445 Current liabilities Debt Other current liabilities Total assets 8,447 7,095 Total liabilities 8,447 7,095 ASSETS 6%_ Current assets 94%_Non-current assets 14%_ Other liabilities LIABILITIES 36%_ Equity 50%_ Loans and bonds The balance sheet reflects the impact of including the newly acquired companies and the expansion of existing businesses. Total assets rose to 8,447 million euros, an increase of 19% with respect to December 2004. There has been an increase in both the fixed assets, due to the assets of the TBI airports, and the intangibles, related to concessions and licenses and the increased goodwill following the acquisition of TBI. Investment in associated companies has declined following the change in the consolidation scope where the TBI group is now fully consolidated and in December 2004 the 29% shareholding that had just been acquired was consolidated by equity accounting. 55 5 0 0 2 T R O P E R L A U N N A Equity has increased to 3,036 million euros, 5% more than in 2004. This equity includes the negative impact of 164 million euros, being a charge made against treasury stock acquired by abertis in December. The increase in debt amongst the liabilities is of note following the acquisition of the outstanding 71% of TBI and the inclusion of the existing debt of TBI on becoming fully consolidated. Investments Investments of the Group in 2005 totalled 941 million euros, of which 770 million, or 82%, related to growth projects and the balance of 172 million euros was in operational investments. Investments (Mn€) Operational Highways Car Parks Logistics Telecommunication infrastructures Airports Total % 50% 3% 6% 24% 17% Growth % 124 16% 65 18 1 8% 2% 0% 562 73% 86 5 10 41 30 172 100% 770 100% The most significant operational investments were made in highways, telecommunication infrastructures and the airports sectors. In the highways sector operational investments of note were made on safety, improvements and m a i n t e n a n c e o f t h e n e t w o r k s . I n telecommunications the operational investments corresponded to improvements and developments of the network whilst in airports they mainly related to repaving runways and improvements in runways and installations. The most significant investment in growth was in the airport sector, with the funds provided by abertis in 2005 to the company ACDL (90% held by abertis), which acquired 100% of the British airport operator TBI. The total investment made up ACDL in the acquisition of TBI was 788 million euros, 709 million corresponding to abertis of which 204 million were outlaid in December 2004 to purchase a 29% holding and 505 million euros was invested in 2005 to acquire the outstanding 71%. In turn, TBI has invested 56 million in the construction of the new Terminal of the London Luton airport. In the highways sector, 124 million euros were invested on growth, highlighting the investments made by castellana, of more than 90 million euros on construction work for the third Guadarrama tunnel and the widening of lanes on the AP-6, and by iberpistas, with 10 million on the construction of the Guadarrama access highway. 4_1 business performance_ consolidated figures 56 5 0 0 2 T R O P E R L A U N N A In the car parks sector investment in growth totalled 65 million euros. Of note is the 30 million euros in the acquisition of a car park in Mestre (Venice), 11 million in the acquisition of 40% of Saba Italia, 11 million in the acquisition of various car parks in Italy and Portugal and 4 million for the acquisition of two companies in Chile that manage seven car parks. Financial management abertis displayed balanced growth in 2005 between its business and financial figures, with group debt totalling 4,256 million euros, compared to 3,490 million in 2004. The 22% increase in debt is in line with the 23% increase in income shown by the activity. The acquisition of 90% of TBI during the year has been the main investment made in 2005. This is reflected in the 745 million euro increase in net debt. This balanced financial structure enables the selective policy of investments in growth of abertis, investments in the improvement of infrastructures managed and the shareholder return policy to be undertaken with guarantees. Net debt Net debt/EBITDA Debt / Equity Interest cover (Free Cash Flow+ Int) / Int 2005 4,211 3.5 1.4 6.2 2004 3,466 3.4 1.2 5.6 Financial structure / Financing policy The financial structure of the Group has been consolidated during 2005. abertis continues to enjoy the support of capital markets and this has enabled the Company to continue increasing the percentage of financing raised on the market (58%). During 2005 financing through bonds has increased from 46% to 51% and the issuing of commercial notes was begun, representing 7% of debt at the end of 2005. Financing instruments 2005 Financing instruments 2004 51%_ Bonds 9%_ Syndicated loans 19%_ Long-term loans 14%_ Short-term loans 7%_ Commercial notes 46%_ Bonds 8%_ Short-term loans 23%_ Long-term loans 23%_ Syndicated loan 57 5 0 0 2 T R O P E R L A U N N A In line with the policy on treasury management and hedging risks, the financing of the acquisition of TBI has been predominantly covered by making two bond placements of 15 and 20 years for an amount of 700 million euros. The terms of these debt issues have increased the average maturity of outstanding debt to 7 years. Maturity of debt Proportion fixed / floating Average maturity of debt: 7 years 37%_ Over 10 years 23%_ 5 to 10 years 24%_ Less than 1 year 11%_ 3 to 5 years 5%_ 1 to 3 years 49%_ Floating 51%_ Fixed Hedging of financial risks Credit Rating The activities of abertis are subjected to various financial risks: exchange rate risk, credit risk, liquidity risk and interest rate risk on cash flow. The management program for the Group’s overall risk considers the uncertainty of the financial markets and aims to minimise the potential adverse affects on the financial return of the Group, using derivatives to hedge both the exchange rate and interest rate risks. abertis has a credit rating awarded by the agencies Standard & Poor’s and Fitch Ratings: _ abertis has an AA- rating (Investment grade- high credit quality) for long term debt ratified in December 2005, awarded by the international credit rating agency Standard & Poor’s. _ abertis has an “A+” rating (Investment grade- high credit quality), for long term debt, ratified in December 2005, and “F1” rating (highest credit quality), for short term debt, awarded and ratified on the same dates by the international credit rating agency Fitch Ratings. 4_1 business performance_ parent company figures 58 5 0 0 2 T R O P E R L A U N N A Parent company figures Profit and Loss Account 2005 and 2004 figures under PGC (million euros) Operating income Operating expenses EBITDA - Result Amortisation and depreciation Operating profit Financial result Result ordinary activities Extraordinary result Corporation income tax Profit for the year The main entries correspond basically to the financial result which reflects the dividends received from the subsidiary companies of the Group and the financial expenses and income arising from the activity of financing. The negative operating result corresponds to the expenses derived from the structure of the Corporation that are partially allocated to subsidiary companies. The charges for amortisation and depreciation include the amortisation of the goodwill as the main item generated as an intangible asset in the merger of abertis and iberpistas in 2004. The financial result totalled 391 million euros, of which the positive amount of 438 million corresponds to financial income in the form of dividend payments from subsidiary 2005 2004 18 (29) (11) (19) (30) 391 361 (7) 34 388 15 (29) (14) (20) (34) 417 383 (42) 20 361 Var 21% 1% -21% -12% -6% 7% companies and a negative amount of 47 million corresponding to the net expense of the financial load arising from the expansion of the Group and financing raised and ceded as part of the process of centralising the Group debt in abertis who is responsible for covering the funding requirements of the subsidiary companies. The negative extraordinary result for 2004 corresponds to non-recurring adjustments in the valuation of the investment portfolio. Net profit rose by more than 7% to a total of 388 million euros. 59 5 0 0 2 T R O P E R L A U N N A Balance sheet 2005 and 2004 figures under PGC ASSETS (million euros) Net fixed assets Intangible assets Fixed assets Investments Treasury stock Deferred expenses Parent 2005 2004 LIABILITIES (million euros) 6,298 5,584 Equity 331 14 349 14 Share capital Share premium 5,906 5,221 Reserves 47 8 0 7 Profit Interim dividend Deferred income Current assets 543 415 Long-term creditors Short-term creditors Provisions for liabilities and expenses Parent 2005 2004 3,175 1,737 580 615 388 3,187 1,654 580 718 361 (145) (126) 4 37 2,545 1,088 0 41 2,158 620 Total assets 6,849 6,006 Total liabilities 6,849 6,006 The balance sheet is mainly comprised of the investment portfolio, which represents 86% of the total, and the financing required for the acquisition of these shareholdings through equity (46%) and debt (51%). It also includes the financing raised and ceded to subsidiary companies as a consequence of centralising the Group’s debt in abertis which is responsible for covering the funding requirements of the subsidiary companies. During 2005 bonds for a total amount of 700 million euros have been placed with institutional investors and long-term financing operations have been negotiated to cover the new funding requirements of the Group. 4_2 shareholders and the stock market 60 5 0 0 2 T R O P E R L A U N N A Stock market performance For the third consecutive year, the Spanish stock exchange has risen, with the IBEX gaining 18.2%, being up 77.8% over the three year period. The good performance of the stock market is even more remarkable if the complex circumstances surrounding the markets are considered with expectations of inflation driven by the rise in oil prices and a tightening of monetary policy in the USA and Europe. Imbalances between supply and demand together with an increasing speculative movement drove the price of crude to historical maximums in September, with an annual increase of around 40%. This situation has brought risk of inflationary pressure, which has obliged central banks to respond with rate rises. The Federal Reserve raised interest rates eight times, increasing rates in the USA from 2.25% to 4.25%, during the last year in which Alan Greenspan headed the Federal Reserve. The ECB raised interest rates in December, for the first time in five years, by 25 basis points to 2.25%. Not only did oil hit record highs, but the euro also rose to 1.36 dollars in January and an ounce of gold reached its highest price in 25 years. In this situation, other factors of note were the weak economic growth in Europe, the natural disasters in the Gulf of Mexico and the reappearance of international terrorism in London. Nevertheless, the stock market has risen above these circumstances, doing so especially thanks to the excellent results and strength of company balance sheets, also stimulated by numerous corporate operations. The rise in equities in 2005 was supported by a high trading volume, which increased by 33% on the previous year, marking a record for the Spanish market. This is due to high liquidity in the market in spite of the rise in interest rates as in many countries the real interest rates, calculated by subtracting inflation, are still close to zero. At the European level, the overall situation for the main European exchanges is very satisfactory. The Spanish market, however, has performed slightly below the Dutch, French or German market, which recorded more bullish performances due to their sector composition. The USA concluded the year with a flat performance, following a year of steep rate rises. 2005 was the year that Japan saw the end of a terrible economic recession for the first time in 12 years. 61 5 0 0 2 T R O P E R L A U N N A abertis shares The abertis share continued its excellent rhythm during the year, with a 37.8% rise over the last twelve months, once again outperforming the IBEX 35. Until mid April the share price fluctuated in a narrow range. From this moment on, the market commenced a recovery prompted by the decline in oil prices, company results, the delay of interest rate hikes in Europe and the moderation of the outlook for inflation, with the market peaking in October. This recovery was also enjoyed by the abertis share in parallel with the market, and supported by speculation about the privatisation of the French highways. In five months, from May to October, the market rose more than 22% and the abertis share climbed 42%. In the last quarter there was a slight correction, falling back to September levels, following the presentation of a firm offer to acquire Sanef and confirmation that the consortium led by abertis ended up being selected by the French government to acquire 75.7% of the capital of the concessionaire company Société des Autoroutes du Nord et de l’Est de la France (Sanef). In 2005, abertis recorded the best performance in terms of return (+41%), based on the market revaluation and the dividend yield, when compared with the return obtained by the ten leading companies of the IBEX in terms of market capitalisation. The performance of the abertis share continues to be the most positive amongst the main European highway companies that it is usually compared with, except for Sanef. This company, which the consortium led by abertis won the right to acquire in December, had a revaluation of 42.6% in 2005. Ordinary Class A abertis shares - 2005 Close (euros) 5,353 6,754 25 24 23 22 21 20 19 18 17 16 15 Volume Unadjusted price Price adjusted for capital issue Volume (thousand shares) 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 January February March April May June July August September October November December Note regarding the adjustment of the share price for bonus share issues: The allocation of new bonus shares does not change the Company’s equity, even though the number of shares increases. All shareholders that have invested prior to the share issue receive bonus shares without making any payment, so the investment of their portfolio does not change, although they hold more shares. Consequently, the historical prices prior to the share increase have to be adjusted to compare pre-issue and post-issue prices. 4_2 shareholders and the stock market 63 5 0 0 2 T R O P E R L A U N N A 26,00 24,00 22,00 20,00 18,00 16,00 14,00 12,00 10,00 8,00 6,00 The rise of 37.8% is added to the increases recorded in the previous four years, with a cumulative increase of 191% in the last five years. Last June marked the second anniversary of the merger between Acesa Infraestructuras and Aurea Concesiones de Infraestructuras which led to the birth of abertis. Since this merger shares have risen by 99% taking into account the adjustments for capital issues. abertis is one of the three companies out of the 35 companies in the IBEX index that have shown an annual increase over these five years. Accumulated increase: +191% Sanef TBI iberpistas Start of abertis (merger Acesa+Aurea) retevisión 2001 +26% 2002 +1% 2003 +17% 2004 +42% 2005 +38% Market capitalisation abertis Evolution abertis share Evolution IBEX 35 (1) Cumulative Annual Growth to close of 2005 This increase in the share price saw the market capitalisation of abertis at the close of the year reach 12,331 million euros, of which 11,523 million correspond to class “A” shares and 808 million to class “B” shares. With respect to the market evolution of the preferential B class shares, they have had low liquidity and limited trading since they were first listed for trading on 29 July 2002. This is explained by the fact that their right to a preferential multiplied by 5 +24% per year accumulated (1) +3% per year accumulated (1) dividend is based on how long the shares have been held and the price of the ordinary class A shares, making it less attractive to trade them. Due to this limited trading the 37,036,366 class B shares have since January 2004 been traded using the price fixing model, where a price is set at two daily auctions. 4_2 shareholders and the stock market 64 5 0 0 2 T R O P E R L A U N N A 320 280 240 200 160 120 80 40 0 Comparison of the evolution of abertis and the main indices 5 year evolution (2001-2005) (Base 31/12/00 = 100) 2000 abertis A Adjusted close: € 7.29 Change in last 5 years: abertis A: +191% abertis B: +94% IBEX 35: +18% Eurotop 300: -17% 2005 abertis A Close: € 21.26 abertis A (*) abertis B (*) IBEX 35 Eurofirst 300 (*) Adjusted for share issues 2001 2002 2003 2004 2005 All the Company’s shares are listed on the stock exchanges of Barcelona, Bilbao, Madrid and Valencia, being traded on the Spanish interconnected electronic market. The ordinary class A share has formed part of the selective IBEX 35 index continuously since 1992. The shares are also included in other important international indices such as the Standard & Poor’s Europe 350 and the FTSE Eurofirst 300. In 2005 abertis maintained its position in the selective Dow Jones Sustainability World index for the second year running. This index groups together 10% of the companies in the world with the best sustainability criteria, representing 20% of the market capitalisation of its sector. In this way, abertis has consolidated its presence in the international sustainability indices. abertis has obtained an above average score in the three dimensions analysed by the Dow Jones Sustainability World index: financial, social and environmental management. In the financial area, the highest score that abertis received in this world index was for investor relations. 65 5 0 0 2 T R O P E R L A U N N A Shareholder return Dividend Evolution of share capital - Increases At the end of 2005 the share capital of abertis rose to 1,737 million euros, with 579,055,443 shares entered into the share register, of a nominal value of 3 euros each, being fully subscribed and paid up. Of these, 542,019,077 shares are ordinary class A shares and 37,036,366 are class B preference shares. In the course of the 2005 the usual bonus share issue was made. The Shareholders’ General Meeting held on 12 April agreed to increase capital with a charge against reserves by an amount of 82.7 million euros, through the issue of 27,574,068 class A ordinary shares. The shares were issued to all holders of class A and class B shares, with one new share for every 20 shares held. Between 4 and 18 July 54.2 million rights were traded, with a high price of 1.08 euros and a low of 1.00 euros. The theoretical value of the rights was 1.03 euros. The new shares were listed on 5 August, having the same voting and dividend rights as the other shares of its class, with holders having dividend rights from 1 January 2005. From 1993, abertis has based its shareholder yield policy on the payment of a steady annual dividend, in two payments, which increases through the annual bonus share issue. abertis paid a final dividend for 2004 of 0.25 euros per share in April, and an interim dividend for 2005 of a gross amount of 0.25 euros per share was paid in October. The Board of Directors of abertis has agreed to propose to the 2006 Shareholders’ General Meeting a final dividend for 2005 of 0.25 euros gross per share, as well as the 1x20 bonus share issue. This amount, together with the interim dividend paid in October, represents a total dividend per share of 0.50 euros gross charged against earnings for 2005, an increase of 4.4% on 2004. The total dividend payout has increased by 9.6%, given the greater number of shares following the bonus share issue. The total allocated to dividend payments in 2005 by abertis is 289.5 million euros. 2004 € 0.479 +4.4 % 2005 Forecast € 0.50 (1) +1/20 annual bonus share issue EPS = +9.6% (1) Includes an interim dividend paid in October 2005 4_2 shareholders and the stock market 66 5 0 0 2 T R O P E R L A U N N A Return over a decade The following table shows the stock market return on the abertis share over the last ten years, with shares being bought and sold at different intervals. The return on the abertis share is compared with the IBEX 35. The intersection indicates the return on the abertis share and the market, respectively, for the period selected (year of entry and year of exit). Year of entry (1) 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 abertis IBEX-35 abertis IBEX-35 abertis IBEX-35 abertis IBEX-35 abertis IBEX-35 abertis IBEX-35 abertis IBEX-35 abertis IBEX-35 abertis IBEX-35 abertis IBEX-35 Year of exit (1) 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 -41.77% 74.80% 115.54% 65.44% 74.05% 118.71% 128.61% 166.83% 264.51% 388.62% 41.97% 99.83% 170.92% 220.63% 150.91% 131.29% 66.27% 113.10% 150.11% 195.64% 24.25% 54.16% 17.38% 23.71% 56.49% 63.76% 91.83% 163.55% 254.68% 40.75% 90.83% 125.84% 76.73% 62.91% 17.11% 50.10% 76.16% 108.23% 24.93% -5.73% -0.46% 26.87% 32.94% 56.33% 116.12% 192.08% 35.58% 60.45% 25.56% 15.74% -16.79% 6.64% 25.16% 47.94% -25.30% -20.95% 1.60% 6.60% 25.91% 75.25% 137.94% 18.35% -7.39% -14.63% -38.63% -21.34% -7.68% 9.12% 6.09% 37.66% 44.67% 71.69% 140.76% 228.52% -21.75% -27.86% -48.14% -33.54% -22.00% -7.80% 31.17% 38.08% 64.76% 132.94% 219.58% -7.82% -33.73% -15.07% -0.32% 17.83% 5.48% 26.62% 80.64% 149.29% -28.11% -7.86% 8.14% 27.82% 20.86% 74.17% 141.91% 28.17% 50.42% 77.80% 45.73% 103.84% 17.37% 38.73% 40.96% 18.20% (1) Entry and exit on the last day of the year indicated. The revaluation on the stock market, bonus share issues and dividend yield are all taken into account. The possibility that the shareholder could have outlaid additional cash amounts apart from the day on which the shares were purchased is not considered. If we consider the last decade on a cumulative basis, an investor who acquired shares of abertis at the end of 1995 and held onto the successive bonus share issues, would have obtained an annual yield of 17.2% (accumulated annual return) taking into account the dividends received. 67 5 0 0 2 T R O P E R L A U N N A Shareholders and investors abertis, close to shareholders and investors abertis endeavours to provide information that is clear, regular, complete, homogeneous and transparent to all its shareholders, to individual or institutional investors, stock market analysts and the investment community in general. To meet this objective the Company has an Investor Relations / Shareholders’ Office area which acts on the principles of transparency and active ongoing communication with shareholders and investors, responding to all the queries and doubts that are raised about the performance of the Company in all areas. As a result of the Company’s desire to get closer to shareholders and be more aware of their concerns the Dealing with Shareholders Program was launched in 2005. Launch of the PRÓXIMO Program Pioneer initiative amongst IBEX companies other than banks Keep their shareholders and investors informed more frequently and better. This is the main objective of the PRÓXIMO Program, an initiative that abertis launched in 2005, which brings it closer to the investment community through informative sessions. The PRÓXIMO Program falls within the recommendations of good governance put forward by the Olivencia Code, as it represents the opening of new communication channels with shareholders of the company, in addition to the Shareholders general meetings. Nevertheless, given its characteristics, the way in which the PRÓXIMO Program is presented proves to be much more flexible and accessible. The PRÓXIMO Program is a pioneer initiative based on the willingness of abertis to take the Company to the location of our shareholders and investors, to listen to their concerns, respond to their questions and to be open to their suggestions. The objective is present the Company’s current reality and situation, explaining the characteristics of the abertis project, its path, the outlook and its attractiveness as a method of saving-investment on the stock market. Through the PRÓXIMO Program, abertis has established and wishes to continue creating permanent communication channels with the shareholder, that complement existing channels, so that the required information can be obtained at any time. The meetings The Program commenced in June and July with a series of presentations for shareholders and investors in the Community of Valencia (Valencia, Castellon, Elche and Alicante). Salvador Alemany, chief executive officer of abertis, Juan Arturo Margenat, general secretary, and representatives of the Shareholders’ Office participated in the different sessions. After the holiday period a second phase of the Program got underway, with a presentation in the Bilbao Stock Exchange, and in October meetings were held in the Oviedo Chamber of Commerce and the Zaragoza Chamber of Commerce. In November the PRÓXIMO Program moved to the Financial Club of Vigo and the Atlantic Financial Club of A Coruña, concluding the year with a presentation in Barcelona in December. 4_2 shareholders and the stock market 68 5 0 0 2 T R O P E R L A U N N A In the course of 2005, abertis has met with shareholders/investors in 10 Spanish cities, attracting a total audience of 820 people. The PRÓXIMO program has travelled to the Autonomous Communities of Valencia, Basque Country, Asturias, Aragon, Galicia and Catalonia with visits to the following cities: Valencia, Castellón, Elche, Alicante, Bilbao, Oviedo, Zaragoza, Vigo, A Coruña and Barcelona. Meetings of the PRÓXIMO Program are not just held in cities that have a stock exchange. The aim is to reach all shareholders of abertis that are interested, as well as the investor community in general. abertis also offers the possibility of arranging “customised” meetings for specific groups. If a shareholders club or a group of investors in a city are interested in getting to know the company, they only need to contact the Shareholders’ Office to arrange a meeting. At the Shareholders’ Office we are convinced that this is the best method to gain creditability in the market and win the confidence of shareholders. Our shareholders have been the first ones to thank us for this effort, something which they have done throughout the course of the Program. Transparency and communication with shareholders that is active and fluid are key principles of the abertis approach. A Coruña Vigo Oviedo Bilbao Barcelona Zaragoza Castellón Valencia Alicante Elche Events in 2005 69 5 0 0 2 T R O P E R L A U N N A Information policy recognized and awarded “Llotja” award for the best company information for shareholders and the market the stock market, financial information, corporate governance and all matters related to the Shareholders’ General Meeting. The “Llotja” awards are given to distinguish those listed companies that carry out good information policies for shareholders and the market in general. Both the information systems and contents are considered, with special importance given to the information available on the company websites and the annual reports. On previous occasions this prize was awarded to different companies within the IBEX 35 index. This year the jury, made up of 14 members who are chairman and members of leading companies, awarded the prize to abertis, in recognition of the preparation of information that is increasingly transparent, complete and structured for our shareholders and the public in general. In addition to these two significant events in 2005, abertis provides shareholders and the investment community different channels to contact the Company: www.abertis.com. In 2005 abertis published its new corporate portal in internet, www.abertis.com, with a fresh image and new contents. The new website has been designed to be user friendly following strict criteria of functionality. Contents are organised into five main sections: Corporate information, Business areas, Shareholders and investors, Press room and Social responsibility. The new abertis.com has a complete section dedicated to shareholders and investors which is given greater importance. This section has been completely renovated, with more contents, services and interesting features such as the “Shareholders’ Corner”. It includes information about abertis on This is a new section for shareholders and investors that is more complete, simpler and easier. This was the most visited section of the abertis website in 2005. The new website of abertis includes other improvements, such as a search engine, an attractive system of highlighting contents, as well as interesting improvements in functionality, allowing the text size to be changed as the user requires, or any page to be printed quickly and easily. Participation in trade shows for shareholders and investors On 24, 25 and 26 February abertis participated in Bolsalia 2005, the trade show of the Stock Exchange and other financial markets held in Madrid. In addition, on 1, 2 and 3 of December, abertis participated in Borsadiner, the same trade fair held in Barcelona. abertis participates in these trade shows for shareholders and investors as a further step to get closer to our shareholders. These trade shows together with the PRÓXIMO Program allow us to have a two way communication channel for abertis. We can explain the most significant features of the company, whilst shareholders and investors can also voice their concerns, express their doubts and we are able to identify areas for improvement to keep them better informed. This mutual knowledge allows us to constantly improve. 4_2 shareholders and the stock market 70 5 0 0 2 T R O P E R L A U N N A abertis magazine Mail A corporate publication that provides the latest news about abertis, with a more in-depth view than the news reports covered by the media. It contains a specific section for shareholders and investors with contents related to financial performance and the stock market, which has become a strong link with the investment community. During 2005 more than 12,000 copies were sent to shareholders, institutional investors and analysts. Shareholders’ Telephone Service: 902 30 10 15 24 hour a day service, 365 days a year to respond to any doubt or suggestion of shareholders. The queries are especially related to matters such as increases in capital, the Shareholders’ General Meeting and dividends. Breakdown of queries received through the Shareholders’ Telephone Service (Percentage) 27%_ Shareholders’ meeting 22%_ Dividends 31%_ Others 20%_ Share issues The 31% classified as “Others” are questions about the PRÓXIMO program, results, evolution of the share price, significant events, new investments and requests for documents. E-mail, relaciones.inversores@abertis.com Postal address, Av. del Parc Logístic, 12-20, 08040 Barcelona Direct channels with the Company that allow an open dialogue with shareholders, so that they can raise their specific concerns and the Company can provide whatever information or clarification that might be required. In 2005 some 5,000 information requests and invitations have been handled and over 1,400 e-mails managed. Shareholders’ General Meeting The Shareholders’ Office provides support on questions related to the organisation and attendance at the Shareholders’ General Meeting, in response to the shareholders’ right to information under articles 212 and 144 of the Companies Act and article 7 of the Regulations of the Shareholders’ General Meeting. All the information referring to the Shareholders’ General Meeting is available on the corporate website from the day the meeting is called. Requests can also be made from the website for information to be sent to shareholder’s residence. The Shareholders’ General Meeting was retransmitted by live webcast in video format in three different languages. After the meeting was held the webcast could also be viewed. The Shareholders’ General Meeting held in 2005 was held with the representation of 391,703,238 shares, 155,615,973 present and 236,087,265 by proxy, with a quorum of 71.02% of the share capital (28.21% present and 42.81% represented by proxy). 71 5 0 0 2 T R O P E R L A U N N A The shareholders’ telephone service responded to more than 600 calls related to the Shareholders’ General Meeting, 27% of all the calls received. The Shareholders’ Office also received more than 300 requests for information. Analysts and investors abertis responds to queries from analysts and investors on a daily basis, providing them with information on a continuous basis on the significant events affecting the Company. In addition, meetings are held regularly in different countries. The most intense periods for informing analysts and investors revolve around the publication of results for abertis, which is done quarterly. In 2005 they were sent all the necessary documentation to interpret the results. This information was also made available on the abertis website, with a quarterly conference call being held to resolve any doubts. In addition to the publication of results, presentations were made in live in Madrid and Barcelona, attracting more than 180 analysts and investors who were invited to raise questions directly. More than 82 meetings were held in Europe during 2005 and 26 notifications were sent to analysts and investors regarding significant events affecting the Company. The Investor Relations / Shareholders’ Office area has made a series of commitments to its shareholders, private and institutional investors, stock market analysts and the investment community in general: Commitment to proximity PRÓXIMO Program Commitment to accessibility New abertis website, with an extensive section for shareholders and investors, meetings with analysts. Commitment to availability Shareholders’ Telephone Service 24h, 365 days a year. Direct e-mail to the department. IN SHORT, COMMITMENT TO DIALOGUE 4_2 shareholders and the stock market 72 5 0 0 2 T R O P E R L A U N N A Significant shareholders Shareholder structure of abertis The significant shareholders in the Company are those listed in the Corporate Governance Report that is provided as an annex to this annual report. Market information 2005 and 2004 data: Trading frequency Trading days The structure of the share capital of abertis, based on the information provided by Iberclear at 22 March 2005, prepared for the last Shareholders’ General Meeting, showed the following distribution: 87.7% of the shares are held by people resident in Spain and 12.3% by non-residents. In turn, 16.1% of the shares held by residents are in the hands of individual investors and 83.9% are held by institutional investors. Class A shares Class B shares 2005 100% 256 2004 100% 251 2005 54% 138 2004 60% 150 Traded volume adjusted for share issues (no shares) 269,001,790 309,826,837 159,315 372,503 Equivalent percentage of total adjusted shares Cash value traded (Mn€) Market capitalisation (at 30/12) (Mn€) Options on abertis shares 50% 5,440,23 11,523,33 29,194 60% 4,210,55 8.334,01 37.140 0.4% 3.13 808.13 n.a 1.0% 5.45 562.95 n.a Total number of shares (A+B, at 30/12) 579,055,443 551,481.375 Consolidated equity attributable to shareholders (Mn€) Capitalisation / Book value 2,960 4.2 2,862 3.1 73 5 0 0 2 T R O P E R L A U N N A Evolution of the last five years: 2005 2004 2003 2002 2001 IBEX 35 Close Annual change 10,733.9 18.2% 9,080.8 17.4% 7,737.2 28.2% 6,036.9 -28.1% 8,397.6 -7.8% High / low 10,919.2 8,945.7 9,100.7 7,578.3 7,760.4 5,452.4 8,554.7 5,364.5 10,132.0 6,498.4 Eurofirst 300 Close Annual change 1,275.5 22.4% 1,041,8 8.8% High / low 1,284.7 1,038.6 1,042.2 940.9 957.9 11.8% 957.9 682.7 857.0 -32.2% 1,279.7 797.2 1,264,9 -17,5% 1,545.5 998.9 Class A shares Close / Adjusted close (1) Annual change / Adjusted annual change (1) High / low High / low (adjusted) (1) 21.26 21.26 16.20 15.43 11.99 10.88 10.80 9.33 11.19 9.21 31.2% 37.8% 35.1% 41.9% 11.0% 16.6% -3.5% 1.3% 20.2% 14.5% 25.30 25.30 16.18 15.41 12.03 10.91 16.26 15.49 2.42 12.90 11.14 2.14 10.80 9.33 10.28 8.46 11.99 9.86 1.55 11.89 9.32 1.12 9.26 7.26 Weight in IBEX 35 2.80 Class B shares Close / Adjusted close (1) Annual change / Adjusted annual change (1) (2) High / low High / low (adjusted) (1) 21.82 21.82 15.20 14.42 11.95 10.78 12.19 10.53 43.6% 51.3% 27.2% 33.7% -2.0% 2.4% -10.7% -6.4% 24.50 24.50 15.20 14.42 15.42 14.63 11.97 10.80 14.00 12.09 11.05 9.55 13.65 11.25 11.77 9.70 Note: high and low at close. (1) Adjustment for bonus share issues. (2) In 2002, the annual change for Class B shares is calculated using the closing price on the first day of admission (29/07/02). statements 5statutory financial Consolidated balance sheet at 31 December page 76 15_ Trade creditors and sundry creditors page 122 Consolidated profit and loss account at 31 December page 78 16_ Corporation income tax page 122 Consolidated statement of recognised income and expense page 79 Consolidated cash flow statement page 80 Notes to the 2005 Consolidated Annual Accounts page 82 01_ General information page 82 02_ Basis of presentation page 82 03_ Accounting policies page 89 04_ Management of financial risk page 98 05_ Fixed assets and revertible assets page 99 06_ Goodwill and other intangible assets page 101 07_ Investment in associated companies page 104 08_ Available-for-sale financial assets page 106 09_ Derivative financial instruments page 107 10_ Debtors and other accounts receivable page 109 11_ Cash and cash equivalents pág.109 12_ Net equity page 110 13_ Financial debt page 119 14_ Deferred income page 121 17_ Liabilities for employee benefits page 125 18_ Provisions and other liabilities page 128 19_ Income and expenses page 129 20_ Contingencies and commitments page 131 21_ Business combinations page 131 22_ Shareholdings in multigroup companies page 132 23_ Information on the environment page 133 24_ Segment reporting page 134 25_ Related parties page 139 26_ Other information page 145 27_ Subsequent events page 147 28_ Transition to the International Financial Reporting Standards (IFRS) page 147 Annex I. Subsidiary companies included in the consolidation scope page 154 Annex II. Multigroup companies included in consolidation scope page 162 Annex III. Associate companies included in the consolidation scope page 164 Consolidated Management Report for 2005 page 168 76 5 0 0 2 T R O P E R L A U N N A 5_1 consolidated annual accounts and management report Consolidated balance sheet at 31 December (thousand euros) A S S E T S Non-current assets Fixed assets and revertible assets Goodwill Other intangible assets Investment in associated companies Deferred tax Available-for-sale investments Derivative financial instruments Debtors and other accounts receivable Non-current assets Current assets Inventories Debtors and other accounts receivable Derivative financial instruments Cash and cash equivalents Current assets Notes 2005 2004 5 6 6 7 16 8 9 10 — 10 9 11 4,596,431 1,082,456 707,909 660,338 391,033 438,905 61,369 29,896 7,968,337 10,106 379,637 — 88,592 478,335 4,074,445 769,019 123,409 831,767 403,428 414,726 14,219 18,936 6,649,949 5,393 295,655 120,649 23,537 445,234 Assets 8,446,672 7,095,183 This consolidated balance sheet should be read together with the Notes to the accounts on pages 82 to 153. 77 5 0 0 2 T R O P E R L A U N N A Consolidated balance sheet at 31 December (thousand euros) N E T E Q U I T Y Notes 2005 2004 Capital and reserves attributable to Company shareholders Capital Reserves Retained earnings and other reserves Minority interest Net equity L I A B I L I T I E S Non-current liabilities Financial debt Derivative financial instruments Deferred income Deferred tax liabilities Obligations for employee benefits Provisions and other liabilities Non-current liabilities Current liabilities Financial debt Derivative financial instruments Trade creditors and sundry creditors Current tax liabilities Provisions and other liabilities Current liabilities Liabilities Net equity and liabilities 12 12 12 12 13 9 14 16 17 18 13 9 15 16 18 2,152,379 117,383 690,226 2,959,988 2,234,134 71,512 556,133 2,861,779 76,145 42,473 3,036,133 2,904,252 3,227,323 46,550 86,096 264,986 32,488 178,815 3,836,258 1,089,196 14,385 262,287 113,114 95,299 1,574,281 2,801,297 52,651 87,302 31,267 8,661 128,832 3,110,010 721,824 46,382 192,482 93,693 26,540 1,080,921 5,410,539 4,190,931 8,446,672 7,095,183 This consolidated balance sheet should be read together with the Notes to the accounts on pages 82 to 153. 5_1 consolidated annual accounts and management report 78 5 0 0 2 T R O P E R L A U N N A Consolidated profit and loss account at 31 December (thousand euros) Rendering of services Other operating income Work on fixed assets Other income Operating income Personnel expenses Other operating expenses Variation in trading provisions Variation in impairment provision Amortisation and depreciation of fixed assets Other expenses Operating expenses Operating profit Variation in valuation of financial instruments Financial income Financial expenses Net financial result Result for companies under equity accounting Profit before tax Corporation income tax Profit for the year Due to minority interest Due to company shareholders Earnings per share (expressed in € per share) Basic Diluted Notes 2005 2004 19 19 — 19 19 — — — — — — 19 19 12 16 12 12 12 1,824,240 57,470 4,382 19,788 1,905,880 (313,521) (382,793) 158 — (371,500) (5,555) (1,073,211) 1,490,491 51,585 3,296 3,375 1,548,747 (241,704) (252,082) (2,299) (7,665) (302,390) (2,479) (808,619) 832,669 740,128 5,091 54,460 (218,809) (159,258) 65,095 738,506 (223,638) 514,868 3,635 511,233 (22,973) 22,969 (147,631) (147,635) 93,699 686,192 (194,516) 491,676 2,908 488,768 0.905 0.905 0.906 0.906 This consolidated profit and loss account should be read together with the Notes to the accounts on pages 82 to 153. 79 5 0 0 2 T R O P E R L A U N N A Consolidated statement of recognised income and expense (thousand euros) Net fair value gains, gross of tax: Available-for-sale financial assets Cash flow hedges Exchange differences Other Actuarial profit and loss Tax on items taken directly to or transferred from equity Net income recognised directly in equity Profit for the year Total recognised income for the year Attributable to: - Shareholders of the Company - Minority interest Notes 2005 2004 8 12 12 12 12 — 24,600 714 23,094 (57) (5,943) (250) 42,158 514,868 557,026 549,746 7,280 557,026 55,890 (6,149) (23,627) 14,769 — 2,152 43,035 491,676 534,711 533,774 937 534,711 This consolidated statement of recognised income and expense should be read together with the Notes to the accounts on pages 82 to 153. 80 5 0 0 2 T R O P E R L A U N N A 5_1 consolidated annual accounts and management report Consolidated cash flow statement (thousand euros) Net cash flow from operating activities Notes 2005 2004 Profit for the year 514,868 491,676 Adjustments in: Taxes Depreciation and amortisation for the year Change in asset impairment provision (Profit)/loss on sale of fixed assets and intangible assets (Profit)/loss on financial instruments Change in pension provision Change in other provisions Dividend income Interest income Interest expense Deferred income released to results Share in results of associated companies under equity accounting Changes in current assets/liabilities: Inventories Receivables and sundry debtors Derivative financial instruments Accounts payable and sundry creditors Other current liabilities 16 — — — — 17 18 19 19 19 14 7 223,638 371,500 — 5,555 (5,091) 5,663 11,990 (17,026) (37,434) 218,809 (11,833) 194,516 302,390 7,665 (896) 22,973 1,659 2,708 (13,885) (9,084) 147,631 (8,469) (65,095) 1,215,544 (93,699) 1,045,185 (4,713) (83,982) 120,649 69,805 68,759 170,518 1,703 99,672 — (8,276) (41,239) 51,860 Cash flow generated by operations 1,386,062 1,097,045 Income tax paid Interest paid Non-current receivables and sundry debtors (197,287) (218,809) 874 (189,676) (147,631) 89,843 (A) Total Net Cash Flow from Operating Activities 970,840 849,581 This consolidated net cash flow statement should be read together with the Notes to the accounts on pages 82 to 153. 81 5 0 0 2 T R O P E R L A U N N A Consolidated cash flow statement (thousand euros) Net cash flow from investing activities Notes 2005 2004 Business combinations and changes in consolidation scope Acquisition of shareholdings in associated companies Proceeds from sale of fixed assets Purchases of fixed assets and intangibles Purchases of available-for-sale financial assets Application pension provision Application other provisions Interest received Dividends received from associated companies Sundry creditors Other 7 5/6 8 17 18 19 7/19 18 — (719,220) (20,448) 47,249 (589,992) (1,038) (6,855) (13,910) 37,434 41,915 38,827 4,397 20,240 (265,578) 11,691 (251,509) (5,715) (1,969) (7,053) 9,084 34,171 501 11,402 (B) Total Net Cash Flow from Investing Activities (1,181,641) (444,735) Net cash flow from financing activities: Receipt / (Payment) of financial debt Dividends paid to shareholders of Parent Company Receipt / Refund of subsidies and other deferred income Treasury shares 12 14 12 718,349 (282,634) 4,618 (164,477) (162,162) (243,414) (2,026) — (C) Total Net Cash Flow from Financing Activities 275,856 (407,602) Net (decrease) / increase in cash and cash equivalents (A)+(B)+(C) 65,055 (2,756) Opening balance of cash and cash equivalents 23,537 26,293 Closing balance of cash and cash equivalents 88,592 23,537 This consolidated net cash flow statement should be read together with the Notes to the accounts on pages 82 to 153. 82 5 0 0 2 T R O P E R L A U N N A 5_1 consolidated annual accounts and management report ABERTIS INFRAESTRUCTURAS, S.A. NOTES TO THE 2005 CONSOLIDATED ANNUAL ACCOUNTS NOTE 1_ GENERAL INFORMATION Abertis Infraestructuras, S.A. (hereinafter abertis or the Company) was incorporated in Barcelona on 24 February 1967. The registered office of the company is Avenida del Parc Logistic nº 12-20, Barcelona. On 30 May 2003 the company name was changed from Acesa Infraestructuras, S.A. to its current name. abertis is the parent company of a group engaged in to the management of transport and communications infrastructures that operates in five sectors of activity: highway concessions, car parks, logistics services, telecommunications and airports. Its objects consist of the construction, maintenance and operation of highways under concession; the management of highway concessions in Spain and internationally; the construction of roads; the complementary construction activity, 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 communications and/or telecommunications required for the transport and movement of people, goods and information, with the necessary authorisation, as the case may be. The Company can undertake its objects, especially its concessionary activity, directly or indirectly through its shareholding in other companies, being subject, in this respect, to the legal provision in force. Note 26 includes information on the concession contracts entered into by the Group. The list of subsidiary companies of abertis, which, together with the parent company, make up the consolidated group (hereinafter, the Group) at 31 December 2005 is set out in Annex 1. The figures contained in all the financial statements that form part of the Consolidated Annual Accounts (consolidated balance sheet, consolidated profit and loss account, consolidated statement of recognised income and expense, consolidated cash flow statement and the notes to the Consolidated Annual Accounts) are expressed in thousand euros. NOTE 2_ BASIS OF PRESENTATION a) Basis of presentation These Consolidated Annual Accounts have been prepared in accordance with the International Financial Accounting Standards adopted by the European Union under Regulation (EC) No. 1606/2002 of the European Parliament of the Council on 19 July 2002 (hereinafter, IFRS). In addition, the obligation to present Consolidated Annual Accounts under IFRS approved by the European Union is regulated by the final eleventh provision of the Law 62/2003, of 30 December (BOE of 31 December 2004). 83 5 0 0 2 T R O P E R L A U N N A These Consolidated Annual Accounts prepared under IFRS, have been prepared by the Administrators of abertis with the objective of providing a true and fair view of its equity and financial position for the year ended 31 December 2005, the consolidated profit and loss account for its operations, the changes in the consolidated, equity and cash flow in accordance with the above-mentioned legislation in force. In compliance with current legislation in force, these Consolidated Annual Accounts are the first accounts presented under IFRS. Due to this obligation, IFRS-1 “First-time Adoption of the International Financial Reporting Standards” has been applied at the changeover date (1 January 2004). In accordance with IFRS-1, the application of IFRS for the first-time must be made to for each and every IFRS, and the interpretations in force at the time of first adoption, requiring a retrospective application. However, IFRS-1 also allows for certain exceptions to the retrospective application of the Standards for practical reasons or when the costs incurred in compliance would in all likelihood exceed the benefits provided to users of the financial statements. On the date of preparing these Consolidated Annual Accounts, there are standards and interpretations (especially those for concession contracts) that are under review and being studied by the corresponding international regulatory bodies. The application of these will be considered by the Group once they are approved by the European Union, should this occur. Up until and including the year ended 31 December 2004, the Consolidated Annual Accounts of the Group have been prepared in accordance with mercantile legislation in force, the standards established in the General Accounting Plan (Spanish GAAP-PGC) and Royal Decree 1815/1991, which approved the standards for the preparation of Consolidated Annual Accounts. In application of IFRS-1, the consolidated balance sheet, the consolidated profit and loss account, the consolidated statement of recognised income and expense, the consolidated cash flow statement and the notes to the Consolidated Annual Accounts corresponding to 2005, include the figures for the previous year obtained from the 2004 consolidated accounts adjusted to the IFRS, except in the cases expressly mentioned in the accounting policies (see Note 28), for comparative purposes with the current year’s figures. The reconciliation and description of the effect of the changeover from Spanish GAAP-PGC to IFRS on the equity of the Group at 1 January 2004 and on the profit for that year is set out in Note 28. 5_1 consolidated annual accounts and management report 84 5 0 0 2 T R O P E R L A U N N A The preparation of the Consolidated Annual Accounts under IFRS requires Management to make certain accounting estimates and certain judgements. These are continuously evaluated and are based on the historical experience and other factors, including the expectations of future events, which are considered reasonable under the circumstances. Whilst the estimations have been made based on the best information available at the time of preparing these Consolidated Annual Accounts, in accordance with IAS-8, any modification in the future of these estimations would be applied from that point on, recognising the impact of the change in the estimation made in the consolidated profit and loss account of the year in question. The main estimates and judgements considered in preparing the Consolidated Annual Accounts are the following: • Estimated loss for impairment of goodwill (see Notes 3.c and 6). • Fair value of derivatives and other financial instruments (see Notes 3.e and 9). • Fair value of assets and liabilities in business combinations (see Note 21). • Useful life of fixed assets and intangible assets (see Notes 3.a and 3.b). • Actuarial hypotheses used in determining the liabilities for pension obligations (see Notes 3.k and 17). • Deferred taxes (see Notes 3.j and 16). The Consolidated Annual Accounts have been prepared on the basis of historical cost, except in the cases specifically mentioned in this annual report. The Consolidated Annual Accounts, as well as the notes to the accounts and the breakdowns in the annual report, have been prepared on the basis of uniformity in recognition and valuation. The changes in the valuation principles are shown in the consolidated financial statements and the comparative figures have been adjusted accordingly. Some amounts in the consolidated profit and loss account and the consolidated balance sheet have been grouped together for the purpose of clarity, with their breakdown being shown in the Notes to the Consolidated Annual Accounts. The distinction presented in the balance sheet between current and non-current entries has been made on the basis of collection or maturity of assets and liabilities within one year or in more than one year. Additionally, the Consolidated Annual Accounts include all the information that is considered necessary for their correct presentation under mercantile law in force in Spain. The Consolidated Annual Accounts of Abertis Infraestructuras, S.A. together with the parent company annual accounts and the accounts of subsidiary companies will be presented at their respective Shareholders’ General Meetings in the established periods. The Administrators of the Group expect these accounts to be approved without significant changes. 85 5 0 0 2 T R O P E R L A U N N A b) Consolidation principles i) Consolidation methods Subsidiary Companies Subsidiary Companies are all those entities in which abertis directly or indirectly controls the financial and operational policies. This normally occurs with a holding of more than half of the voting rights. Additionally, to evaluate whether abertis controls another entity, we also take into account the existence and effect of potential voting rights that can be currently exercised or convertible. Subsidiary companies are consolidated as from the date on which control passes to abertis, and they are no longer consolidated on the date that control ceases to exist. Subsidiary companies are fully consolidated, except in the case of those companies that do not represent a significant interest in the context of the Consolidated Annual Accounts. These companies are consolidated by equity accounting or the shareholding method (see Annex I). Annex I to these Notes gives a breakdown of key data for all the subsidiary companies included in the consolidation scope as fully consolidated companies at 31 December 2005. Multigroup Companies (Joint businesses) Corresponds to the companies that have a contractual agreement with a third party to share the control of its activity and the strategic decisions related to the activity, both financial and operational, require the unanimous agreement of all the parties that share control. The interests of the Group in jointly controlled companies are accounted for under the method of proportional consolidation, except those companies that do not represent a significant interest in the context of the Consolidated Annual Accounts, which are consolidated by equity accounting or the shareholding method (see Annex II). Annex II to these Notes gives information on the companies consolidated by the method of proportional consolidation at 31 December 2005. Associated Companies Those companies in which abertis has significant influence and maintains long-term link that favours and influences the activity but with a less significant representation in the management and control mechanisms, generally accompanied by a shareholding of between 20% and 50% of the voting rights. Investments in associated entities and those excluded from the above two categories are accounted for by the shareholding method (equity accounting) and initially recorded at cost. The shareholding of abertis in associated companies includes goodwill (net of any loss or accumulated impairment) recorded at acquisition. 5_1 consolidated annual accounts and management report 86 5 0 0 2 T R O P E R L A U N N A Subsequent to the acquisition, the share of abertis in the result and reserves of the associated companies is recognised in the consolidated profit and loss account and as consolidation reserves, respectively, with the value of the shareholding as the balancing entry in both cases. Dividend payments after acquisition are adjusted against the amount of the shareholding. In the event that the Group’s share in the losses of an associated company is equal or greater than the financial value of its shareholding, including any other unsecured account pending, additional losses will not be recognised unless it has incurred obligations or made payments in name of the associated company. Annex III to these Notes gives details of the associated companies included in the consolidation scope by the method of equity accounting at 31 December 2005. ii) Standardisation of timing and valuation All the companies included in the consolidation scope close their financial year on 31 December and, for the purposes of the consolidation process, the respective financial statements prepared under IFRS principles have been used. However, in accordance with current legislation, these companies present individual annual accounts in accordance with the standards applicable in their country of origin. The standards of valuation applied by the Group companies largely coincide. However, whenever necessary the corresponding adjustments are made to standardise valuation to ensure uniformity of the accounting policies of the companies included in the consolidation scope with the policies adopted by the Group. iii) Differences on first consolidation The Group uses the acquisition method to account for the acquisition of subsidiary companies. The acquisition cost is the reasonable value of the assets, the equity and the liabilities on acquisition date, plus the costs directly attributed to the acquisition itself. The assets acquired and the liabilities and contingencies assumed are initially valued by their reasonable value on acquisition date, including the corresponding minority interest. The excess of the acquisition cost over the reasonable value of the shareholding is accounted for as goodwill on consolidation. On the other hand, if the acquisition cost is less than the reasonable value of the equity (net assets) of the company acquired, the difference is immediately recognised directly in the consolidated profit and loss account for the year. In accordance with the provisions of IFRS-1 “First-time adoption of the International Financial Reporting Standards” goodwill funds resulting from business combinations prior to 1 January 2004 (transition date) have not been re-estimated based on the criteria described above. Furthermore, in accordance with IFRS-3, consolidation goodwill ceased to be systematically amortised as from 1 January 2004 (transition date). 87 5 0 0 2 T R O P E R L A U N N A The possible impairment of this type of asset is reviewed annually by an impairment test to determine if its value has declined to an amount below the net cost existing at the transition date, recording, if necessary, the necessary charge against the consolidated profit and loss account for the year (see Note 3.c). Losses for impairment of consolidation goodwill cannot be subsequently reviewed. Goodwill related to acquisitions of associated entities is included as higher value of the corresponding shareholding, and is valued in accordance with the procedures set out in Note 3.b.iv. iv) Elimination of internal operations The balances and intercompany transactions between companies of the Group are eliminated, as are the unrealised profits from third parties due to transactions between Group companies. Unrealised losses are also eliminated, unless the transaction provides evidence of a loss due to the impairment of the transferred asset. In transactions with jointly controlled entities (multigroup companies) the share in the profit or loss from operations with Group companies is only recorded for the part corresponding to other participants. v) Conversion of financial statements in foreign currencies The financial statements of foreign companies, none of which operate in hyperinflation economies, prepared in a currency (that of the main economic area in which the entity operates) other than the currency used for presentation of the Consolidated Annual Accounts (euros) are converted to euros using the year-end exchange rate, whereby: • Capital and reserves are converted at historical exchange rates. • Entries in the profit and loss account are converted using the average exchange rate for the period as an approximation for the exchange rate at the transaction date. • The other balance sheet entries are converted at the year-end exchange rate. As a result of applying the aforementioned method, the exchange differences generated are included under “Reserves – Exchange differences” in net equity of the consolidated balance sheet. The Group has availed itself of the exemption included in IFRS-1 referring to the exchange differences existing at 1 January 2004 (transition date), transferring the accumulated balance at said date to Accumulated Profits. vi) Others Those exchange differences that arise from the conversion of a net investment in foreign companies, and from loans and other instruments in foreign currencies designated as hedges on these investments, are recorded against net equity. When they are sold, said exchange differences are recognised in the profit and loss account as part of the gain or loss on sale. 5_1 consolidated annual accounts and management report 88 5 0 0 2 T R O P E R L A U N N A The adjustments to goodwill and the fair value that arise from the acquisition of a foreign entity are considered as assets and liabilities of the foreign entity and are converted using the year-end exchange rate. For acquisitions prior to 1 January 2004, said amounts are considered to correspond to assets and liabilities in the acquiring entity rather than assets and liabilities of the foreign entity, in application of IFRS-1. vii) Changes in the consolidation scope The most significant changes in the consolidation scope and in the companies included therein during 2005 were the following: • On 24 November 2004 the company Airport Concessions Development Limited (ACDL), in which abertis holds 90%, launched a Public Takeover Bid for all the shares of TBI, with ACDL having a 29% holding at the end of 2004. At the start of 2005 the Public Takeover Bid was completed, with ACDL obtaining all the shares of TBI. As a result ACDL/TBI has been fully consolidated in 2005 (equity accounting in 2004). • Transfer from abertis to iberpistas (100% owned by abertis) of the shareholdings in Aulesa, Trados 45, Concesiones de Madrid (Concema) and Infraestructuras y Radiales (shareholding in Henarsa and Radial 2 of Madrid). • Increase of the shareholding of iberpistas in Alazor (shareholder of Accesos de Madrid Concesionaria Española, S.A., Radiales 3 and 5 of Madrid) from 23.3% to 31.2% and sale of its shareholding of 25% in Concema and 18% in Autopista Central Gallega. • Acquisition of 99.40% and 100% of the companies Saba Park Chile and Saba Park Servicios respectively, owned by saba through its sub-group Saba Estacionamientos de Chile, S.A. • Merger of iberpistas with Iberacesa, Iberavasa, Proconex and Isgasa with retroactive effect from 1 January 2004. • Schemaventotto, in which abertis holds 13.33%, sold 2.053% of its shareholding in Autostrade reducing it to 50.08%. As a result the indirect shareholding of abertis in Autostrade was reduced from 6.95% to 6.68%. • Increase of the shareholding of abertis logística in Araba Logística from 39.77% to 42.61%. • Incorporation of abertis airports, fully owned by abertis. • Acquisition of 40% of saba Italia, giving Saba full control over the company. • Incorporation of Servicios Audiovisuales Alella (Servicios Audiovisuales Overon at the time of preparing these Consolidated Annual Accounts) in which retevisión holds 78.37% and tradia holds 21.63%, giving abertis a 100% indirect shareholding in Alella through these companies. 89 5 0 0 2 T R O P E R L A U N N A • Incorporation of Consorcio de Telecomunicaciones Avanzadas (Cota), in which tradia holds 25%. • Incorporation of Holding d’Infrastructures de Transport S.A.S (HIT), fully owned by abertis. NOTE 3_ ACCOUNTING POLICIES The most significant Accounting Policies applied in the preparation of these Consolidated Annual Accounts are as follows: a) Fixed assets and revertible assets Fixed assets are accounted for at cost of acquisition less depreciation and the accumulated amount of any loss in value. The fixed assets include legal revaluations applied in years prior to 1 January 2004 allowed under local accounting standards, which value has been taken as cost of acquisition as permitted under IFRS-1, “Adoption of International Financial Reporting Standards for the first time”. Personnel costs and other expenses, as well as net financing costs directly imputable to fixed assets, are capitalised as part of the investment until brought into use. Costs of refurbishment, enlargement or improving 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 repairs and maintenance are charged to the profit and loss account in the year in which they are incurred. The investment in highways recorded by the concessionaire companies mainly includes the following: acquisition of land, studies and construction permits, financial costs, investment in tunnels, signage, installations and toll machinery, etc. These investments are refunded to the awarding Administration at the end of the concession. In the case of highway concessionaire companies, the future investments in replacement or substitution that can be reasonably estimated and which estimated useful life exceeds the date when the concession ends, are provided for the projected net book value (based on their useful life) at that date, recorded against fixed assets for the present value calculated to the beginning of the concession, with a charge to results for each year related to the present value of said provision using the real interest rate. 5_1 consolidated annual accounts and management report 90 5 0 0 2 T R O P E R L A U N N A The depreciation of 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. For those assets assigned to the investment in highways, if their useful life exceeds the outstanding term of the concession, they are depreciated over the useful life of the concession. The depreciation rates used to calculate the decline in value of the fixed assets are as follows: Asset Buildings and other constructions Machinery Tooling Other installations Furniture Computer equipment Other fixed assets Investment in highways Rate 2-14 % 6-30 % 7-30 % 7-20 % 10-20 % 20-33 % 8-25 % (*) (*) The main investment in highways (land acquisitions, studies and construction permits, etc) are depreciated over the period of the concession, whilst the depreciation rates for the most significant components that additionally make up the investment in highways are as follows: Asset Pavement Tunnels Signage Toll installations Toll machinery Rate 2.5-6.25 % 2-2.5 % 2.5-12 % 2.5-12 % 2.5-12 % When the net book value of an asset exceeds the estimated sale price, its value is immediately reduced to represent the market value. b) Goodwill and other intangible assets The intangible assets indicated below are recorded at acquisition cost less the accumulated amortisation and any loss due to impairment of their value, with the useful life evaluated on the basis of a prudent estimate. The net book value of intangible assets is reviewed for the possible impairment of their value when certain events or changes indicate that the net book value may not be recoverable. 91 5 0 0 2 T R O P E R L A U N N A i) Development expenses Research expenses are expensed as they are incurred, whilst the expenses on development incurred in a project are capitalised if this is viable from a technical and commercial perspective if there are sufficient technical and financial resources to complete it, and if the costs incurred can be determined in a reliable manner as established by international standards and if the generation of future profits is probable. The amortisation is made on the basis of the estimated useful life of each project (between 3 and 5 years). ii) Computer applications Refers principally to the amounts paid for access to ownership or for the right to use computer programs, only in the cases where it is foreseen that usage will cover several years. The computer applications are stated at acquisition cost and amortised over their useful life (between 3 and 5 years). Maintenance expenses for these computer applications are charged to the profit and loss account in the year in which they are incurred. iii) Administrative concessions Administrative concessions are stated as assets at the total amount of the payments made to obtain them. These have a finite useful life and their cost is charged to results. They are amortised over the period of the concession by the straight line method. Administrative concessions acquired through business combinations after 1 January 2004 (transition date) are stated at their fair value (in accordance with IFRS-3) and amortised over the concession period. iv) Goodwill Goodwill generated in different business combinations represents the surplus of the acquisition cost over the fair or market value of the identifiable net assets of the company acquired at acquisition date. However, under the provisions of IFRS-1 “First-time adoption of International Financial Reporting Standards” those goodwill resulting due to business combinations prior to 1 January 2004 (transition date) have not been re-estimated based on the criteria described above, with the net amounts that come from the application of the criteria established in the 2004 annual accounts and previously maintained at the cited transition. In accordance with international standards (IFRS-3), the goodwill is no longer amortised on a straight-line basis as from 1 January 2004 (transition date). The possible impairment of this asset is reviewed annually using an impairment test to determine whether its value has declined to a level below the existing net cost at the aforementioned transition date, recording if necessary the required charge against the profit and loss account for the year (see Notes 3.c and 6). The losses for goodwill impairment cannot be subsequently revised. 5_1 consolidated annual accounts and management report 92 5 0 0 2 T R O P E R L A U N N A The loss or profit obtained by the sale of an entity includes the book value of the goodwill related to the entity sold. v) Other intangible assets Primarily includes licences for the management of airport infrastructures, which are stated as assets in the consolidated balance sheet at fair value, having being acquired in business combinations after 1 January 2004. These are charged to results and amortised on a straight-line basis. c) Losses on asset impairment The Group evaluates, at each balance date, whether there is any indication of impairment in the value of any asset. Should such an indication exist, or when an annual impairment test is required (goodwill), the Group will estimate the recoverable value of the assets, which is the higher of the fair value of an asset less its cost of sale and the value in use. To determine the value in use of an asset, the future cash income that it is expected to generate is discounted from its net present value using an interest rate that reflects the current value of money at long-term rates and the specific risks of the assets (risk premium). In the event that the asset analysed does not generate cash flow independently of other assets, the fair value or value in use of the cash generating unit that includes the asset (smallest identifiable group of assets separate from other assets or groups of assets) will be estimated. Losses for impairment (surplus of the asset’s book value over its recoverable value) are recognised in the profit and loss account for the year. With the exception of goodwill where the losses for impairment are irreversible, if the Group has recognised losses for impairment of assets at the end of each financial year, an evaluation will be made to determine whether the indications of impairment have disappeared or lessened, estimating the recoverable value of the impaired asset if applicable. A loss due to impairment recognised in earlier years will only be reversed if there is a change in the estimations used to determine the recovery value of the asset since the last loss due to depreciation was recognised. If this is the case, the book value of the asset will increase to its recoverable value, which cannot exceed the book value that would have been recorded, net of amortisation, if the loss for impairment of the asset in previous years had not been recorded. This reversion is recorded in the profit and loss account for the year. d) Investments and other financial assets (excluding derivative financial instruments) The Group determines the classification of its financial assets after initial recognition and, when it is permitted and appropriate, said classification is revalued at the close of each financial year. At the close of 31 December 2005 the financial assets have been classified under the following categories: 93 5 0 0 2 T R O P E R L A U N N A i) Shareholdings in associated companies Corresponds to shareholdings valued under the equity accounting method and recorded in accordance with the criteria described in Note 2.b.i. ii) Available-for-sale financial assets This entry in the consolidated balance sheet includes those investments in companies in which the Group does not exert any significant influence or control (see Note 8). These are classified as non- current assets unless there is an intention to dispose of the investment in the twelve months as from the consolidated balance sheet date, in which case they will be classified as current assets. These investments are valued at fair value, recording profits or losses arising from changes in the value against net equity until the investment is sold or suffers losses due to impairment, at which point the accumulated profit or loss presented previously in the net equity under “Reserves – Available- for-sale financial assets” is transferred to results as a loss or profit on the corresponding investments. The fair value of the investments that are actively traded in official financial markets is taken as the trading price at the close of the market at year end. In the case of investments where there is an active market, the fair value is determined using valuation methods. If their market value cannot be determined in a reliable manner, they will be valued at cost or at a lower amount if there is evidence of impairment. iii) Trade debtors and other accounts receivable This entry corresponds primarily to: • Loans granted to associated or related entities which are valued at their nominal amount (this does not differ significantly from their valuation at amortised cost using the real interest rate method). • Deposits and bonds made in accordance with the legislation in force. • Accounts receivable for commercial trade, which are valued at the nominal value of the debt, which is similar to their original fair value. Said value is decreased, if necessary, by the corresponding provision for bad debts (loss for asset impairment) when there is objective evidence that the total amount owed will not be collected, and is charged against the consolidated profit and loss account for the year. e) Derivative financial instruments The Group uses derivative financial instruments to manage its financial risk arising principally from fluctuations in interest rates and exchange rates (see Note 4). These derivative financial instruments, whether or not they have been classified as hedges, have been recorded at fair value, which is the market value at the year-end for listed instruments, or valuations based on the analysis of discounted cash flows considering hypotheses that are principally based on market conditions existing at close in the case of unlisted derivative instruments. 5_1 consolidated annual accounts and management report 94 5 0 0 2 T R O P E R L A U N N A The fair value of derivative financial instruments used for hedging purposes is detailed in Note 9, and the change in the hedging reserve recorded under consolidated net equity is shown in Note 12. The criteria used to account for these instruments are as follows: i) Fair value hedges The changes in the fair value of the derivatives designated, which meet the conditions to be classified as hedges of the fair value of assets or liabilities, are recorded in the profit and loss account for the year, together with any change in the fair value of the asset or liability covered by the hedge that is attributable to the risk hedged. This corresponds principally to those derivative financial instruments contracted by the Group companies to convert fixed interest debt into floating rate debt. ii) Cash flow hedges The positive or negative changes in the valuation of the derivatives classified as cash flow hedges are carried, in the cash component, net of any tax impact, under consolidated equity in “Reserves – Hedge reserve”, until the hedge instrument matures, is sold, ceases to meet the requirements to be classified as a hedge or when it is no longer probable that the transaction will take place, at which point the accumulated profits or losses in net equity are transferred to the consolidated profit and loss account for the year. The positive or negative differences in the valuation of the derivatives corresponding to the non- cash component, should there be any, are recorded directly in the profit and loss account for the year. This type of hedge corresponds primarily to those derivatives contracted by the Group companies that convert floating rate debt to fixed rate debt. iii) Hedge of net investment In some cases, abertis finances its activities in the same currency in which the international investments are held so as to reduce the exchange rate risk. This is done by raising finance in the corresponding currency or by contracting currency swaps. The hedge of net investments in international operations is accounted for in a way that is similar to the cash flow hedge. The profits or losses on the hedging instrument for the cash component are recorded in the net equity and the profits or losses related to the non-cash component are recognised immediately in the consolidated profit and loss account for the year. The accumulated profit or loss in net equity is included in the profit and loss account when the international operation is disposed of. 95 5 0 0 2 T R O P E R L A U N N A iv) Derivatives not qualified as hedges in accounting terms At year end there are certain derivatives that do not meet the criteria established to be classified as hedges. In this case the positive or negative variation arising from recalculating the fair value of these derivatives is recorded directly in the consolidated profit and loss account for the year. f) Inventories Inventories consist primarily of spare parts for fixed assets and are valued at cost, calculated using the weighted average price method, making the necessary valuation adjustments and raising the corresponding provisions. g) Cash and cash equivalents Cash and cash equivalents include cash on hand, demand deposits in credit entities and short-term investments in highly liquid instruments with a term of three months or less. h) Treasury shares In the event that any entity of the Group of the Parent Company itself acquires shares of abertis, these are recorded in the entry “Capital – Treasury shares”, reducing consolidated net equity, and are valued at acquisition cost, without making any valuation adjustments. When these shares are sold, any amount received, net of any directly attributable additional transaction costs and the corresponding effect of the tax on the profit, are included in the same account entry of net equity attributable to the shareholders of the Parent Company. i) Debt The financial debt is initially recorded at its fair value, also including the costs incurred in raising the debt. In subsequent periods the difference between the funds obtained (net of the costs involved in raising the funds) and the reimbursement value, should it exist and if it is significant, are recorded in the profit and loss account over the life of the debt based on the real interest rate. Financial debt at a fixed interest rate hedged using derivatives that change the fixed rate to a floating rate is valued at fair value, where changes in the value are recorded in the profit and loss account, offsetting the impact on results of the variation in the fair value of the derivative instrument. j) Corporation income tax The tax expense on profits is the total amount accrued for this purpose during the year, representing both current and deferred tax. The tax effect is recorded in the net equity related to the entries that are taken directly to net equity. 5_1 consolidated annual accounts and management report 96 5 0 0 2 T R O P E R L A U N N A Deferred tax is calculated, in accordance with the liabilities method based on the balance sheet, for the timing differences that arise between the tax assessment base for assets and liabilities and their book profit in the Consolidated Annual Accounts, applying the regulations and tax rates in force, or pending approval, on balance sheet dates that are expected to be applied when the corresponding deferred tax asset is realised or the deferred tax liability is settled. Deferred tax assets are recorded to the extent that it is probable that there will be future tax benefits against which the deductible timing differences, losses or unused tax credits can be offset. k) Employee benefits Meeting the corresponding labour agreements, various companies in the Group have the following commitments with their employees: a) Post-employment obligations: • Defined contribution to welfare instruments (employee pension plans). • Defined payments, in the form of bonuses or payments for retirement from the company. b) Other long-term benefits, related to length of service of an employee in the company. In the welfare instruments with defined contribution, the company makes defined contributions to an external entity and does not have a legal or real obligation to make additional contributions in the event that this entity should not have sufficient assets to cover the employee payments that are related to the services provided in the current year and previous years. The annual expense recorded is the corresponding contribution made in the year. In the defined contribution commitments, where the company assumes certain actuarial and investment risks, the liability recorded in the balance sheet is the present value of the obligations at the balance sheet date less the fair value of the possible assets for this commitment on this date, plus or minus any unrealised actuarial profit or loss, less any amount arising from the cost of past services not yet recognised. The projected credit unit method is used to determine both the current value of the defined benefit obligations and the cost of the services provided in the current and previous years. The actuarial profits and losses arising from changes in the actuarial hypotheses are recognised in the year in which they occur. They are not included in the profit and loss account, but presented in the statement of income and expenses recognised in net equity. Costs for past services are recognised as an expense and allocated on a straight-line basis over the average period remaining until the right to receive the benefits is finally consolidated. Nevertheless, when the benefits are immediately irrevocable on the introduction of a defined benefits plan, or following any change in the plan, the costs for past services are recognised immediately. The hedging of commitments by making contributions to an insurance policy, where the legal or implied obligation to meet the agreed benefits remains, is always treated as a defined benefit. 97 5 0 0 2 T R O P E R L A U N N A l) Transactions in foreign currencies Transactions in foreign currencies are converted to the reporting currency of the Group (euro) using the exchange rates applicable on the transaction date. The profits and losses on foreign currencies that arise from the settlement of these transactions and from the conversion of monetary assets and liabilities held in foreign currency to the year end exchange rates are recorded in the profit and loss account, unless they are deferred in net equity such as the cash flow hedges and the hedges on net investments, as noted in section e) of this note. m) Provisions The provisions are recorded when the Group has a present obligation, be it legal or implied, as the result of past events where it is probable that it will be necessary to make a disbursement to settle the obligation and its amount can be estimated in a reliable manner. In the cases in which the effect of the time value of money is significant, the amount of the provision is calculated as the present value of the future cash flows that are estimated to be required to settle the existing obligation. n) Recognition of income and expenses Income and expenses are recorded on an accruals basis. Income for the provision of services is recognised when it is probable that the benefits corresponding to the transaction will be received by the Group and can be reliably quantified. Interest income is recognised on an accruals basis and does not vary significantly from having applied the real interest rate method. Dividend income is recognised when the right to receive payment is established. o) Actions with impact on environment Amounts allocated annually 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 nature, given that there are no contingencies related to the protection of the environment. p) New IFRS standards and IFRIC interpretations At the time of preparing these Consolidated Annual Accounts, new accounting standards (IFRS) and interpretations (IFRIC) have been approved and published and have come into force for the accounting years commencing 1 January 2006 or subsequent to this date. The Group has not considered their early application, as they are not expected to have a significant impact on the Consolidated Annual Accounts. 5_1 consolidated annual accounts and management report 98 5 0 0 2 T R O P E R L A U N N A NOTE 4_ MANAGEMENT OF FINANCIAL RISK The activities of the Group are exposed to various financial risks: exchange rate risk, credit risk, liquidity risk and interest rate risk on cash flow. The overall risk management program of the Group contemplates the uncertainty of the financial markets and endeavours to minimise the potential adverse affects on the Group’s financial return. The Group uses derivatives to hedge certain risks. The management of financial risk is controlled by Corporate Financial Management under authorisation of the Board of Directors / Executive Committee. This Corporate Management unit identifies, evaluates and hedges the financial risks, working closely with the operating units of the Group. i) Exchange rate risk The Group operates internationally and holds assets in the United Kingdom, the United States and South America, and is exposed to exchange rate risks on currency operations, particularly in the pound sterling, the US dollar and the Argentine peso. The exchange rate risk on net assets of Group operations in the United Kingdom, United States and South America are managed, mainly, by raising debt in the corresponding currencies and through the use of currency swaps and exchange rate insurance. ii) Credit risk The Group does not have significant concentrations of credit risk. The derivative operations and the spot operations are only made with financial institutions with strong credit ratings. iii) Liquidity risk The Group carries out prudent management of the liquidity risk, which involves maintaining cash and having access to a sufficient amount of finance through established credit lines. iv) Interest rate risk The changes in the interest rates alter the fair value of those assets and liabilities that have a fixed interest rate and the future cash flows of those assets and liabilities referenced to floating interest rates. The purpose of managing interest rate risk is to reach equilibrium in the debt structure that enables the cost of debt to be minimised over a period of years with reduced volatility in the profit and loss account. Depending on the estimates and objectives of the structure of the debt, hedging operations are undertaken by contracting derivatives that mitigate these risks. The policy of the Group is to hold approximately 60% of its debt in instruments with fixed interest rates. At the close of the year 44% of the debt was at fixed interest rates or fixed through hedges. 99 5 0 0 2 T R O P E R L A U N N A NOTE 5_ FIXED ASSETS AND REVERTIBLE ASSETS The movements in the main entries that make up fixed assets were as follows: Investment in highways Land and buildings Technical installations and machinery Other installations, tooling and furniture Others Total At 1 January 2005 Cost 6,142,156 Accumulated depreciation (2,813,943) Net Book Value 3,328,213 56,404 (6,719) 49,685 768,949 145,511 468,899 7,581,919 (466,315) (65,964) (154,533) (3,507,474) 302,634 79,547 314,366 4,074,445 2005 Opening net book value Exchange difference Increase Decrease Transfer Change in scope Depreciation charge Other Closing net book value At 31 December 2005 3,328,213 — 71,900 — 3,503 12,823 (212,719) (11,185) 49,685 (886) 21,924 (7,941) 944 119,671 (2,379) — 302,634 79,547 314,366 4,074,445 458 50,600 (5,878) 26,876 144,785 (85,640) 236 157 246 (25) 5,874 226,415 376,713 (2,088) (34,451) (50,358) 13,813 (48,861) (3,725) 23,325 252,301 552,905 (15,429) (25,317) (341,484) (18) (1,073) (12,040) 3,192,535 181,018 434,071 105,181 683,626 4,596,431 Cost 6,231,292 190,116 1,031,844 198,622 850,816 8,502,690 Accumulated depreciation (3,038,757) (9,098) (597,773) (93,441) (167,190) (3,906,259) Net Book Value 3,192,535 181,018 434,071 105,181 683,626 4,596,431 5_1 consolidated annual accounts and management report 100 5 0 0 2 T R O P E R L A U N N A Investment in highways Technical installations Land and buildings and machinery Other installations, tooling and furniture Other Total At 1 January 2004 Cost 6,048,085 Accumulated depreciation (2,612,646) Net Book Value 3,435,439 54,597 (4,728) 49,869 751,354 136,170 421,664 7,411,870 (422,280) (59,209) (132,854) (3,231,717) 329,074 76,961 288,810 4,180,153 2004 Opening net book value Exchange difference Increase Decrease Transfer Change in scope 3,435,439 49,869 329,074 76,961 288,810 4,180,153 — 78,883 (100) 15,287 — — 1,425 (1,120) 560 471 — 11,402 (675) 12,009 31 — — — 6,217 62,773 160,700 (2,460) (2,685) (7,040) 8,963 (34,288) 20 41 2,531 563 Depreciation charge (201,296) (1,991) (49,207) (10,407) (18,841) (281,742) Other Closing net book value — 471 — 253 18,556 19,280 3,328,213 49,685 302,634 79,547 314,366 4,074,445 At 31 December de 2004 Cost 6,142,156 Accumulated depreciation (2,813,943) Net Book Value 3,328,213 56,404 (6,719) 49,685 768,949 145,511 468,899 7,581,919 (466,315) (65,964) (154,533) (3,507,474) 302,634 79,547 314,366 4,074,445 The incorporations in 2005 due to changes in the consolidation scope correspond primarily to ACDL/TBI, which has been fully consolidated for the first time in 2005 (equity accounting in 2004) after gaining full control of its share capital (see Note 21). The entry “Other” at 31 December 2005 principally includes assets of ACDL/TBI (gross amount of 374 million euros) mainly corresponding to investments in airport runways. It is Group policy to contract the insurance policies considered necessary to cover possible risks that might affect the fixed assets. The fixed assets include 6,943 million euros (6,464 million euros in 2004) of revertible assets under the concessions obtained. These are mainly investments in highways and, to a lesser extent, car park concessions and airport installations. Additionally, 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. 101 5 0 0 2 T R O P E R L A U N N A NOTE 6_ GOODWILL AND OTHER INTANGIBLE ASSETS The movements in the main entries under this account heading were as follows: Administrative concessions, patents and trademarks Goodwill Computer applications Other Total 769,019 — 94,724 36,393 67,954 968,090 (26,018) (24,590) (25,054) (75,662) At 1 January 2005 Cost Accumulated amortisation and loss in value (impairment) Net accounting value 769,019 68,706 11,803 42,900 892,428 2005 Opening net book value Exchange difference Increase Decrease Transfer Changes in scope Amortisation charge Loss in value Reversal of loss in value Other 769,019 8,685 206,355 — — 98,397 — — — — 68,706 11,803 42,900 892,428 — 5,245 (1,057) — 322,380 (19,486) — — 1,444 — 2,647 (820) 2,237 1,404 10,089 13,035 227,282 (569) (2,446) (2,237) — 4 280,197 700,978 (5,197) (15,045) (39,728) — — 66 — — 252 — — 1,762 Closing net book value 1,082,456 377,232 10,740 319,937 1,790,365 At 31 Decembre 2005 Cost Accumulated amortisation and loss of value (impairment) 1,082,456 — 422,989 (45,757) 32,479 359,420 1,897,344 (21,739) (39,483) (106,979) Net accounting value 1,082,456 377,232 10,740 319,937 1,790,365 5_1 consolidated annual accounts and management report 102 5 0 0 2 T R O P E R L A U N N A Administrative concessions, patents and trademarks Goodwill Computer applications Other Total At 1 January 2004 Cost Accumulated amortisation and loss in value (impairment) Net book value 767,265 48,508 34,046 81,301 931,120 — 767,265 (19,966) (18,785) (23,311) 28,542 15,261 57,990 (62,062) 869,058 2004 Opening net book value Exchange difference Increase Decrease Transfer Change in scope Amortisation charge Loss in value Reversal of loss in value Other 767,265 28,542 15,261 57,990 869,058 — 1,899 (145) — — — — — — — 3,484 (1,620) 9,475 32,589 (4,644) — — 880 — 3,276 (577) 3 46 — 248 (256) (9,478) — 8,907 (2,598) — 35 32,670 (5,460) (4,348) (14,452) — — — — — — (746) (1,291) (1,157) Closing net book value 769,019 68,706 11,803 42,900 892,428 At 31 December 2004 Cost Accumulated amortisation and loss in value (impairment) Net book value 769,019 94,724 36,393 67,954 968,090 — 769,019 (26,018) (24,590) (25,054) 68,706 11,803 42,900 (75,662) 892,428 The increases in the year corresponding to goodwill are mainly due to the acquisition of TBI to gain full control completed at the beginning of 2005 (see Note 21), and the resulting transfer of goodwill recorded at the end of 2004 in which the company held 29%, which was included as the higher value of the shareholding under equity accounting in 2004 (98,397 thousand euros). The additions in 2005 due to changes in the consolidation scope in other intangible assets correspond mainly to TBI, which has been fully consolidated for the first time in 2005 (equity accounting in 2004) on acquisition of all its capital. The entry “Others” mainly includes the intangible assets of ACDL/TBI (280 million euros) primarily corresponding to operating licences for certain airports, recorded at fair value following the acquisition at the beginning of the year of ACDL/TBI. 103 5 0 0 2 T R O P E R L A U N N A The breakdown of goodwill in subsidiary companies assigned to each of the different cash generating units defined by Group Management, in accordance with their respective business segment and the concession where the goodwill was recorded, is as follows: Highways iberpistas aucat Avasa Other Car Parks saba Telecommunications tradia Airports ACDL/TBI Other Goodwill 2005 2004 362,615 178,447 65,445 9,635 616,142 362,615 178,447 65,445 9,635 616,142 111,247 107,085 42,014 42,014 309,275 3,778 313,053 — 3,778 3,778 1,082,456 769,019 As indicated in Note 3.b., at the close of the year an evaluation is made to determine if any of the goodwill recorded has suffered losses due to impairment based on the calculation of value in use of its corresponding cash generating unit. Said value in use has been calculated using estimates and forecasts of available cash flow for the Group, and as applicable, for the periods established for the concession (see Note 26.c), which present increases coherent with the business and past experience. The net present value of these projections has been calculated using a discount rate equal to the sum of the long-term interest rate and the risk premium assigned by the market to the business. As a result of the impairment test made, the different cash generating units to which the various goodwill funds are assigned are deemed capable of recovering the net value of each goodwill fund recorded at 31 December 2005. Consequently, there is no need to make any provision for impairment. 5_1 consolidated annual accounts and management report 104 5 0 0 2 T R O P E R L A U N N A NOTE 7_ INVESTMENT IN ASSOCIATED COMPANIES The movement recorded in this entry on the consolidated balance sheet was as follows: At 1 January Increase and business combinations Changes in scope Share in (loss)/profit (1) Exchange differences Dividends received Other At 31 December (1) The share in (loss)/profit is after tax and minority interest of associates. 2005 831,767 29,466 (235,720) 65,095 3,637 (24,889) (9,018) 660,338 2004 489,545 265,578 — 93,699 3,231 (20,286) — 831,767 The changes in scope during the year mainly correspond to ACDL/TBI (220,653 thousand euros), which has been fully consolidated for the first time in 2005 (equity accounting in 2004) after the shareholding increased to 100% of the capital (see Note 21). The breakdown of the shareholdings in associated companies and/or companies consolidated by equity accounting at 31 December is as follows: Acesa Italia (Schemaventotto/Autostrade) Trados 45 Alazor Aulesa Cilsa Elqui Ciralsa Coviandes Autema Túnel del Cadí Aurea Limited Arasur Torre de Collserola Iberpistas Chile 2005 422,045 43,913 43,590 37,797 25,541 17,990 12,542 11,942 11,637 10,001 9,172 6,475 3,494 1,248 2004 369,132 45,379 (3,344) 39,630 25,026 19,603 12,542 11,603 11,268 7,035 7,221 2,209 5,153 1,166 105 5 0 0 2 T R O P E R L A U N N A Parcheggi Biocca PTY Gicsa Cota La Mercedes Centro Ippico serviabertis Port Mobility Adesal Irasa ACDL/TBI Iberacesa Concema Proconex Autopista Central Gallega Holdings in associated companies 2005 1,175 583 502 250 389 389 184 150 3 (674) — — — — — 660,338 2004 825 512 358 — 189 — 19 150 3 6,353 220,653 32,269 17,313 547 (1,047) 831,767 See information on the associated companies in Annex III. The investment in Schemaventotto Group, a holding company in which the subsidiary Acesa Italia has a 13.33% share, which in turn owns 50.08% of the Italian highway concessionaire company Autostrade, is considered as an associated company due to the notable influence that the Group exercises in these companies mainly through the agreements that exist between shareholders and representation on their Boards of Directors. The shares of Autostrade are listed on the Milan Stock Exchange. The share price at year end was 20.26 euros, giving a fair value of the indirect shareholding that abertis has on that date in Autostrade (6.68%) of 774 million euros. The shareholdings in associated companies at 31 December 2005 include goodwill of 76,149 thousand euros (188,183 thousand euros in 2004), principally corresponding to Trados (29,876 thousand euros), Autema (27,861 thousand euros) and Cilsa (12,116 thousand euros). 5_1 consolidated annual accounts and management report 106 5 0 0 2 T R O P E R L A U N N A NOTE 8_ AVAILABLE-FOR-SALE FINANCIAL ASSETS The movement in this entry during the year was as follows: At 1 January Increase Change in the provision for losses due to impairment Capital gains for revaluations transferred to net equity Other At 31 December 2005 414,726 1,038 — 24,600 (1,459) 2004 360,786 5,715 (7,665) 55,890 — 438,905 414,726 The investments available for future sale at 31 December 2005 mainly correspond to the shareholding in Brisa of 429,600 thousand euros (405,000 thousand euros at 31 December 2004). The increase during the year corresponds to the increase in the shareholding in Xfera Móviles, with the holding rising to 8.70% of the company's capital. The investment in this company has been fully provided for. The revaluations during the year correspond entirely to the listed company Brisa. The shares held by abertis have increased in value by 24,600 thousand euros during the year (55,890 thousand euros in 2004). 107 5 0 0 2 T R O P E R L A U N N A NOTE 9_ FINANCIAL DERIVATIVE INSTRUMENTS The detail of the fair value of the financial derivative instruments at year end is as follows: 2005 2004 Assets Liabilities Assets Liabilities Interest rate swaps: Cash flow hedges Fair value hedges Not classified as hedges Cross currency interest rate swaps: Cash flow hedges Fair value hedges Not classified as hedges 171 41,280 — — 19,918 — 40,142 — 14,385 6,408 — — 108 14,551 209 — — 120,000 23,892 — 46,330 28,811 — — Financial derivative instruments 61,369 60,935 134,868 99,033 Cross currency interest rate swaps: Cash flow hedges Fair value hedges 171 61,198 46,550 — 108 14,111 23,840 28,811 Non-current portion 61,369 46,550 14,219 52,651 Current portion — 14,385 120,649 46,382 The Group has contracted interest rate swaps and cross currency swaps, in accordance with the financial risk management policy outlined in Note 4. The following tables show the derivative financial instruments existing at 31 December 2005 classified by swap type, with their notional or contractual values, maturities and fair values: 5_1 consolidated annual accounts and management report 108 5 0 0 2 T R O P E R L A U N N A Interest rate swaps: Cash flow hedges Fair value hedges Not classified as hedges Notional value 2006 2007 2008 2009 2010 After 2010 Fair value 961,362 120,000 121,000 192,500 54,000 420,362 53,500 (39,971) 1,090,000 300,000 150,000 — — — 640,000 41,280 426,478 30,051 — 150,253 73,121 60,101 112,952 (14,385) 2,477,840 Cross currency and/or interest rate swaps: Cash flow hedges Fair value hedges Not classified as hedges 682,882 — — — — — 682,882 (6,408) 378,436 — — — — — 378,436 19,918 — — — — — — — — 1,061,318 a) Interest rate swaps The notional principal amount of the interest rate swaps outstanding at 31 December 2005 total 2,477,840 thousand euros (2,047,752 thousand euros in 2004). At 31 December 2005 the fixed interest rates were between 3.16% and 5.73% and the floating interest rates were Euribor and Libor. b) Cross currency interest rate swaps The part of the Group’s financial debt denominated in euros (682,882 thousand euros) and translated into Pound sterling (and floating interest rate indexed to Libor) by a cross currency interest rate swap is designed as a hedge on the net investment in ACDL/TBI. The fair value of these financial instruments for hedging at 31 December 2005 has a credit balance of 6,408 thousand euros. In addition, the subsidiary company Abertis Finance has contracted derivative financial instruments (cross currency interest rate swaps) for a nominal value of 371,463 thousand euros, whereby a bond issue in US dollars at a fixed interest rate is transformed into Euro-denominated debt with a floating interest rate indexed to Euribor (fair value hedge). 109 5 0 0 2 T R O P E R L A U N N A NOTE 10_ DEBTORS AND OTHER ACCOUNTS RECEIVABLE The breakdown of this entry at year end was as follows: Trade debtors Bad debt provision (impairment of value) Trade debtors – net Accounts receivable – related companies Loans granted – related companies Debtors for compensation from Public Administration Current tax assets Other accounts receivable Debtors and other accounts receivable Non-current debtors and other accounts receivable Loans granted – related companies Other accounts receivable Non-current debtors and other accounts receivable 2005 148,266 (9,117) 139,149 449 — 141,764 17,680 110,491 409,533 — 29,896 29,896 2004 118,307 (7,781) 110,526 6,443 27,630 116,882 21,689 31,421 314,591 13,274 5,662 18,936 Current debtors and other accounts receivable 379,637 295,655 The entry “Debtors for compensation from Public Administration” includes the amounts pending to be received from the Public Administrations granting concessions related to various agreements reached (rate rebates, free-transit and others). These debtor balances accrue interest in favour of the Group once the agreed expiry date has passed. The debtor balances are shown at their nominal value and there are no significant differences with respect to their fair value. NOTE 11_ CASH AND CASH EQUIVALENTS The breakdown of the cash balance and other equivalent assets at 31 December was as follows: Cash and banks Term deposits in credit institutions of less than 3 months Cash and cash equivalents 2005 42,728 45,864 88,592 2004 23,537 — 23,537 5_1 consolidated annual accounts and management report 110 5 0 0 2 T R O P E R L A U N N A NOTE 12_ NET EQUITY The movement in consolidated net equity during the year was as follows: Reserves (b) Available- for-sale financial Exchange assets differences Accumulated profit and other Minority interest reserves (c) Total Net Equity Capital (a) Hedge Reserve At 1 January 2005 2,234,134 (3,997) 99,136 (23,627) 71,512 556,133 42,473 2,904,252 Income (expenses) carried to equity: Available- for-sale financial assets Cash flow hedges Exchange differences Actuarial profits and losses Other Profit for the year 2004 final dividend 2005 interim dividend Changes in scope Treasury shares Increase in capital At 31 December 2005 — — 24,600 — 24,600 — — 24,600 — 464 — — 464 — — 464 — — — — — 20,807 20,807 — 2,287 23,094 — — — (5,442) (501) (5,943) — — — — — (1,916) 1,859 (57) — — — — (164,477) 82,722 — — — — — — — — — — — — — — 511,233 3,635 514,868 — — (137,870) — (137,870) — — (144,764) — (144,764) — — (4,426) 26,392 21,966 — — — — (164,477) — — (82,722) — — 2,152,379 (3,533) 123,736 (2,820) 117,383 690,226 76,145 3,036,133 Note: Income and expenses recorded in net equity are shown net of any tax. 111 5 0 0 2 T R O P E R L A U N N A Reserves (b) Available- for-sale financial Exchange assets differences Accumulated profit and other Minority interest reserves (c) Total Net Equity Capital (a) Hedge Reserve At 1 January 2,155,351 2004 — 43,246 — 43,246 372,822 19,325 2,590,744 Income (expenses) carried to equity: Available- for-sale financial assets Cash flow hedges Exchange differences Pension differences Other Profit for the year 2003 final dividend 2004 interim dividend Change in scope Increase in capital At 31 December 2004 — — 55,890 — 55,890 — — 55,890 — (3,997) — — (3,997) — — (3,997) — — — — — — — 78,783 — — (23,627) (23,627) — — (23,627) — — — — — — — — — — — — — — — — — — — — — 16,740 (1,971) 14,769 — — 488,768 2,908 491,676 — — (117,125) — (117,125) — — (126,289) — (126,289) — — — 22,211 22,211 — — (78,783) — — 2,234,134 (3,997) 99,136 (23,627) 71,512 556,133 42,473 2,904,252 Note: Income and expenses recorded in net equity are shown net of any tax. 5_1 consolidated annual accounts and management report 112 5 0 0 2 T R O P E R L A U N N A a) Capital The amount and movement in the entry “Capital” during the year was as follows: Share capital Share premium Treasury shares Total At 1 January 2005 1,654,444 579,690 — 2,234,134 Net change in treasury shares Increase — 82,722 — — (164,477) (164,477) — 82,722 At 31 December 2005 1,737,166 579,690 (164,477) 2,152,379 At 1 January 2004 1,575,661 579,690 Net change in treasury shares Increase — 78,783 — — At 31 December 2004 1,654,444 579,690 — — — — 2,155,351 — 78,783 2,234,134 At 31 December 2005, the share capital of abertis was made up of 579,055,443 shares with a nominal value of 3 euros per share, fully subscribed and paid up and represented in the share register, of which 542,019,077 shares are class A and 37,036,366 are Class B preference shares that have the same rights as the ordinary shares and additionally will 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 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. Therefore, if the weighted average trade price in the last quarter prior to payment date (2007) were greater than or equal to 14.87 euros per share, no preferential dividend would be paid. At the close of 2004 the trading price of the shares was 21.82 euros per share. On 12 April 2005, the Annual Shareholders’ Meeting of abertis approved a bonus share issue to be charged against the Revaluation Reserve Account of Royal Decree-law 7/1996, dated 7 June, with one new share for every 20 shares held, representing a sum of 82,722 thousand euros. The movement in the number of abertis shares during the year was as follows: At 1 January Bonus share issue At 31 December Number of ordinary shares 2004 2005 551,481,375 27,574,068 579,055,443 525,220,358 26,261,017 551,481,375 113 5 0 0 2 T R O P E R L A U N N A As the shares of abertis are bearer shares, the exact interest of shareholders in the share capital is not known. However, based on the information available, the most significant holdings at 31 December 2005 are the following: ACS, Actividades de Construcción y Servicios, S.A. Caixa d’Estalvis i Pensions de Barcelona (“la Caixa”) (1) Caixa d’Estalvis de Catalunya Sitreba, S.L. 24.83% 23.28% 5.69% 5.50% 59.30% (1) Caixa Barcelona Seguros de Vida, S.A. de Seguros y Reaseguros (11.66%), VidaCaixa, S.A. de Seguros y Reaseguros (0.50%), Inversiones Autopistas, S.L. (7.75%) and CaixaHolding, S.A., Sociedad Unipersonal (3.35%). All the shares of abertis are listed on the stock exchanges of Barcelona, Bilbao, Madrid and Valencia, being traded on the Spanish electronic trading system. The ordinary Class A shares are traded on the main board and also form part of the Ibex 35 index. The Class B preference shares are traded under the Fixing mode, where unique prices are set. 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. Using the powers delegated by the Annual Shareholders’ Meeting during 2005 abertis has acquired and sold its own shares on various occasions. The movement recorded in the treasury shares portfolio during 2005 was as follows: At 1 January 2005 Bought Sold At 31 December 2005 Number Nominal value Acquisition cost — 8,685,832 (1,000,000) 7,685,832 — 26,057 (3,000) 23,057 — 185,877 (21,400) 164,477 On 16 December 2005, abertis acquired 8,685,832 of its own shares at a price of 21.40 euros each; of these it sold 1,000,000 on 22 December 2005 at a price of 21.75 euros each. Consequently, on 31 December 2005 abertis held 7,685,832 of its own shares. In accordance with the mercantile law in force, abertis has raised the corresponding unavailable reserve, which must be held until the shares are disposed of or amortised. 5_1 consolidated annual accounts and management report 114 5 0 0 2 T R O P E R L A U N N A b) Reserves i) Hedge reserve Corresponds to the reserve generated by the cash component of changes in the fair value of the derivative financial instruments designed and classified as cash flow hedges. ii) Available-for-sale financial assets Corresponds to the unrealised profits and losses that arise from changes in the fair value of investments classified as available for future sale. The increase during the year corresponds to the revaluation of shares held in the company Brisa (see Note 8). iii) Exchange difference The breakdown of this entry at 31 December was as follows: Group Associates 2005 (8,201) 5,381 (2,820) 2004 (19,789) (3,838) (23,627) c) Accumulated profit and other reserves The breakdown and movement in this entry at 31 December is as follows: Actuarial 1 January profits and Distribution of result losses 2005 Profit Interim dividend Change in scope Capital increase Other 31 December 2005 31 December 2005 Revaluation reserve of Royal Decree Law 7/1996, of 7 June 400,712 — — — — — (82,722) — 317,990 Legal reserve 191,570 — 36,108 (5,442) 188,501 Accumulated (398,628) profits (excluding results for the year) — — — — — — — 227,678 (4,426) — (1,916) (221,911) Results for the year Interim dividend Reserves 488,768 — (488,768) 511,233 — — — — 511,233 (126,289) — 126,289 — (144,764) — — — (144,764) 556,133 (5,442) (137,870) 511,233 (144,764) (4,426) (82,722) (1,916) 690,226 115 5 0 0 2 T R O P E R L A U N N A Actuarial 1 January profits and Distribution of result losses 2004 Profit Interim dividend Change in scope Capital increase Other 31 December de 2005 479,495 — — — — — (78,783) — 400,712 31 December 2004 Revaluation reserve of Royal Decree Law 7/1996, of 7 June — — 32,902 72,415 — — — — — — — — 191,570 — 16,740 (398,628) Legal reserve 158,668 Accumulated (487,783) profits (excluding results for the year) Results for the year Interim dividend 342,717 — (342,717) 488,768 — — — — 488,768 (120,275) — 120,275 — (126,289) — — — (126,289) Reserves 372,822 — (117,125) 488,768 (126,289) — (78,783) 16,740 556,133 On 12 April 2005, the Annual Shareholders’ Meeting of abertis approved payment of a final dividend for 2004 of 0.25 euros gross per share, which represents 137,870 thousand euros. i) Revaluation Reserve of Royal Decree law 7/1996, of 7 June This reserve originates from the revaluation of the fixed assets in the balance sheet of the Company, by virtue of Article 5 in the above legislation. If three years have passed since the balance sheet date when the revaluation was made without an audit by the Tax Authorities, 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: • Offset book losses. • Increase share capital. • Create reserves freely available for distribution, ten years from the balance sheet date, containing the revaluation operations. The balance in 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 depreciated, transferred or written off the books. Given the line of business transferred to the subsidiary company acesa in 2002, the requirement that the capital gain has been realised can only be understood to be met when the company acquiring the revalued assets as part of the new activity has depreciated those assets, or transferred or written them off the books. 5_1 consolidated annual accounts and management report 116 5 0 0 2 T R O P E R L A U N N A ii) Legal reserve In accordance with the Spanish Companies Act, 10% of the annual profits must be allocated to the legal reserve until this reserve reaches at least 20% of share capital. The legal reserve cannot be distributed to shareholders unless the Company is wound up. The legal reserve can be used to increase capital, in the part that exceeds 10% of the capital increased. Apart from the purpose mentioned above, so long as this reserve does not exceed 20% of share capital, it can only be used to offset losses in the event of no other reserves being available. iii) Profit for the year The contribution from each company within the consolidation scope to consolidated profit is set out below, with the minority interest shown separately: Consolidated result Result due to minority interest Consolidated profit due to parent company acesa aumar iberpistas aucat saba Acesa SGPS Avasa retevisión Codad GCO tradia Areamed Parc Logístic de la Zona Franca Alella Abertis Finance BV Sevisur abertis logística abertis airports castellana abertis telecom ACDL/TBI abertis Group 213,612 145,362 41,612 27,508 16,094 16,046 12,626 8,386 8,009 6,077 2,245 1,097 943 172 165 (330) (354) (507) (2,507) (3,411) (7,541) (35,531) 449,773 — — — — (196) — — — (1,201) (3,124) — — — — — 132 — — — — 754 — (3,635) 213,612 145,362 41,612 27,508 15,898 16,046 12,626 8,386 6,808 2,953 2,245 1,097 943 172 165 (198) (354) (507) (2,507) (3,411) (6,787) (35,531) 446,138 117 5 0 0 2 T R O P E R L A U N N A Consolidated result Profit due to minority interest Consolidated profit due to parent company Acesa Italia Coviandes Trados 45 Autema Túnel del Cadí Elqui PTY Cilsa Gicsa Aurea Ltd serviabertis Torre de Collserola Iberpistas Chile Arasur saba associated companies Aulesa Irasa Alazor Equity Accounting Results for the year 70,000 5,654 3,255 2,295 2,185 989 574 433 264 243 165 113 88 (174) (557) (1,744) (7,077) (11,611) 65,095 514,868 — — — — — — — — — — — — — — — — — — — (3,635) 70,000 5,654 3,255 2,295 2,185 989 574 433 264 243 165 113 88 (174) (557) (1,744) (7,077) (11,611) 65,095 511,233 d) Interim dividend and proposed dividends The decision on the distribution of dividends is made on the basis of the parent company accounts of Abertis Infraestructuras, S.A., under the mercantile legislation in force in Spain. The dividends to be distributed to shareholders are recorded as liabilities in the Consolidated Annual Accounts as soon as the dividends are approved by the Annual Shareholders’ Meeting (or by the Board of Directors in the case of interim dividends) until their payment. In 2005 an interim dividend totalling 144,764 thousand euros was paid, equivalent to 0.25 euros gross per share, payable on all the shares that make up the share capital of Abertis Infraestructuras, S.A. The following provisional accounting statement was prepared by Abertis Infraestructuras, S.A., in accordance with the legal requirements, demonstrating that there was sufficient profit in the period to enable the distribution of the interim dividend, and justifying the existence of sufficient liquidity to make the payment: 5_1 consolidated annual accounts and management report 118 5 0 0 2 T R O P E R L A U N N A Net profit for the period from 1 January to 31 August 2005 Less: Legal reserve Maximum amount available for distribution Amount proposed and distributed Liquidity available prior to payment Gross amount of interim dividend Liquidity available after payment 173,793 (17,379) 156,414 144,764 1,011,226 (144,764) 866,462 The Administrators of Abertis Infraestructuras, S.A. will also submit the following proposed distribution of results of abertis for 2005 to the Shareholders’ Meeting for approval: Available for distribution Distribution: Dividends Legal reserve Voluntary reserves 387,551 289,528 38,755 59,268 387,551 In the event that on the dividend distribution date abertis were to hold treasury shares, these shares would have the right to the final dividend and the corresponding amount would be transferred to voluntary reserves. e) Earnings per share As shown below, the earnings per share are calculated by dividing the net profit for the year due to the shareholders of abertis, by the weighted average number of shares in circulation during the year, excluding the average number of treasury shares held by the Group. 119 5 0 0 2 T R O P E R L A U N N A Net profit due to shareholders Weighted average number of ordinary shares in circulation (thousand) Basic earnings per share (€/share) Diluted earnings per share (€/share) 2005 511,233 565,125 0.905 0.905 2004 488,768 539,250 0.906 0.906 The increase in the weighted average number of ordinary shares is due to the bonus share issue of one share for every 20 existing shares, approved by the Shareholders’ Meeting on 12 April 2005, During the year, abertis has not carried out any operations that would make the basic earnings per share different from the diluted earnings per share (which is obtained by making the above-mentioned calculation on including the effect of potential shares that might exist – options, convertible bonds – as if they were ordinary shares of abertis). NOTE 13_FINANCIAL DEBT The financial debt is comprised as follows: Non-current Loans from credit institutions Bonds and other loans Non-current financial debt Current Loans from credit institutions Debts with companies under equity accounting Bonds and other loans Interest on loans and bonds Current financial debt 2005 2004 988,867 2,238,456 3,227,323 1,014,917 3,114 10,773 1,028,804 60,392 1,089,196 1,405,439 1,395,858 2,801,297 492,960 17,891 178,050 688,901 32,923 721,824 Financial debt 4,316,519 3,523,121 5_1 consolidated annual accounts and management report 120 5 0 0 2 T R O P E R L A U N N A The maturity of the non-current financial debt breaks down as follows: Between 1 and 2 years Between 2 and 5 years More than 5 years Non-current financial debt 2005 211,261 336,398 2,679,664 3,227,323 2004 261,710 618,362 1,921,225 2,801,297 The weighted average interest rate in 2005 of the bond issues and debt with credit institutions was approximately 3.8%, and there were no significant fluctuations between currencies. The book value and fair value of the non-current financial debt at the close of the year was as follows: Loans from credit institutions Bonds Non-current financial debt 2005 2004 Book value Fair value Book value Fair value 988,867 988,867 1,405,439 1,405,439 2,238,456 2,268,542 1,395,858 1,443,802 3,227,323 3,257,409 2,801,297 2,849,241 The book value of the current financial debt is similar to its fair value. Group’s financial debt (without taking into account the currency swaps mentioned in Note 9) is denominated in the following currencies: Euro US Dollar Pound Sterling Other currencies Financial debt 2005 3,060,437 889,433 230,422 136,227 4,316,519 2004 2,747,170 534,538 204,224 37,189 3,523.121 121 5 0 0 2 T R O P E R L A U N N A The Group has the following credit lines available and unused: Floating rate: Maturity in less than one year Maturity in more than one year Fixed rate: Maturity in less than one year Maturity in more than one year Unused credit lines 2005 2,010,278 86,750 2,097,028 6,062 — 6,062 2,103,090 2004 40,347 4,412 44,759 516 29,289 29,805 74,564 The unused credit lines correspond primarily to a credit facility contracted at the end of the year in relation to the acquisition of the concessionaire company Société des Autoroutes du Nord et de l’Est de la France (Sanef) made at the beginning of 2006 (see Note 27). NOTE 14_DEFERRED INCOME The movement recorded during the year was as follows: At 1 January 2005 Change in scope Increase Decrease Exchange difference At 31 December 2005 At 1 January 2004 Increase Decrease Exchange difference At 31 December 2004 Capital subsidies Other deferred income Total 31,163 888 4,472 (4,953) — 31,570 35,506 1,684 (6,027) — 31,163 56,139 5,329 146 (6,880) (208) 54,526 58,239 342 (2,442) — 56,139 87,302 6,217 4,618 (11,833) (208) 86,096 93,745 2,026 (8,469) — 87,302 5_1 consolidated annual accounts and management report 122 5 0 0 2 T R O P E R L A U N N A The capital grants basically correspond to retevisión and they have been granted by the European Regional Development Fund (FEDER). These are recorded when the requirements for payment are met and are released to results on a straight-line basis over the useful life of the asset financed. “Other deferred income” at 31 December 2005, mainly includes: • Compensation to aumar from the Public Administration for works carried out in Sagunto of 18,248 thousand euros (19,277 thousand euros in 2004). This is released to results over the life of the concession (until 2019). • Income for the cession of the use of assets (parking spaces of saba and fibre optic channels of acesa) which are released to results on a straight-line basis over the life of the concession of the assets subject to reversion. At year end the balance to be transferred to the profit and loss account totalled 13,324 thousand euros and 8,001 thousand euros, respectively (13,871 thousand euros and 10,603 thousand euros in 2004). NOTE 15_TRADE CREDITORS AND SUNDRY CREDITORS The breakdown of this account entry at 31 December was as follows: 2005 203,114 33,629 16,443 9,101 262,287 2004 148,174 22,074 14,971 7,263 192,482 Trade creditors Debts with associated companies Remuneration pending Sundry creditors Trade creditors and sundry creditors NOTE 16_CORPORATION INCOME TAX a) Fiscal information Within the Group, abertis pays tax on a consolidated basis, as parent company of the tax group that includes all subsidiary companies in which it holds at least a 75% interest and with tax residence in Spain. The companies with tax residence in the United Kingdom pay tax on a combined basis in the income-tax applied there. The other companies included in the consolidation scope are taxed individually. 123 5 0 0 2 T R O P E R L A U N N A In general, the tax returns of companies with tax residence in Spain that form part of the Group are open to inspection for the last four years for all the applicable taxes. The Tax Authorities have raised tax assessments based on audits made between 1990 and 1993 for Corporation Tax and Payroll Tax, and for 2000 and 2001 for Corporation Tax, of a general character for all companies in a tax consolidation regime. These assessments, which have all been signed in disagreement, have been appealed and are pending the decision of the Authorities. The impact that may arise from these assessments, or other existing fiscal litigation, on the Group’s equity is duly provided for. Additionally, due to possible differences in the interpretation of the tax legislation applicable to certain operations, there are specific tax liabilities of a contentious nature that are difficult to quantify. Nevertheless, the tax that may be payable would not have a material impact on these Consolidated Annual Accounts. b) Tax expense on profit The general Corporate Tax rate applicable in Spain is 35%. The reconciliation of the difference between the reported profit before tax in the accounts and taxable profit is broken down in the annual report of each company. The reconciliation of the theoretical tax imposed and the tax expense recorded is as follows: Profit before tax Theoretical tax (35%) Non-taxable income Not deductible expenses Offset of tax losses and tax credits Other tax effects Income tax expense 2005 738,506 258,477 (28,473) 21,771 (20,771) (7,366) 223,638 2004 686,192 240,167 (8,882) 23,018 (8,014) (51,773) 194,516 5_1 consolidated annual accounts and management report 124 5 0 0 2 T R O P E R L A U N N A The main components of the Corporation Tax expense for the year are as follows: Current tax Deferred tax Other Tax expense 2005 210,533 6,930 6,175 223,638 2004 188,140 6,376 — 194,516 The tax expense reflected in the 2005 profit and loss account includes an additional net amount of 6,175 thousand euros corresponding to taxes paid in other countries by Group companies of a similar nature to Corporation Tax and regularisation in the calculation of the expense accrued in 2004, once the corresponding final returns were filed. c) Deferred taxes The balance of the deferred tax assets and liabilities and their movements during the year are as follows: 2005 2004 Deferred tax asset 408,322 (1,213) — 106 Deferred tax liability (31,606) (5,717) (241,443) 1,967 Deferred tax asset 408,197 (2,027) — 2,152 Deferred tax liability (27,257) (4,349) — — 407,215 (276,799) 408,322 (31,606) At 1 January Charges/(credits) in profit and loss account Charges/(credits) for inclusion in consolidation scope Charges/(credits) to net equity At 31 December The balances of the deferred taxes shown in the balance sheet are as follows: Non-current 2005 Current Total Non-current 2004 Current Total Deferred tax assets 391,033 16,182 407,215 Deferred tax liabilities (264,986) (11,813) (276,799) 403,428 (31,267) 4,894 (339) 408,322 (31,606) Net deferred taxes 126,047 4,369 130,416 372,161 4,555 376,716 125 5 0 0 2 T R O P E R L A U N N A The inclusion of deferred tax liabilities due to changes in the consolidation scope correspond to TBI (see Note 21), and relate mainly to the tax effect associated with recording the net assets and liabilities acquired in the business combination at fair value. The deferred tax assets recorded at the close of 2005 mainly correspond to the tax effects of the IFRS adjustments made by the subsidiary companies in relation to the reversion of the financial debt and the reversion fund recorded under the principles of the Spanish General Accounting Plan (PGC). Current deferred taxes are recorded under “Current tax liabilities” which also includes the net debt held with the Public Administration in relation to the various taxes that Group companies are subject to pay. The recoverability of the deferred tax assets is evaluated when they are generated on the basis of the evolution of the companies’ expected results in the respective business plans. The tax losses available for offset at 31 December 2005 total 140,331 thousand euros (161,102 thousand euros in 2004), with periods of maturity mainly between 2006 and 2018. Of these tax losses, an amount of 38,835 thousand euros is included amongst deferred tax assets. NOTE 17_LIABILITIES FOR EMPLOYEE BENEFITS Amongst the liabilities with its employees, abertis, abertis logística, acesa, aucat, saba and retevisión have commitments for defined pension plans on behalf of their employees, acting as sponsors of Employment Pension Plans. The different companies of the Group in Spain have defined benefit or defined contribution pension liabilities, managed through insurance policies, as established in the legislation regarding the outsourcing of pension commitments. In the international operations, these commitments are managed through separate entities, except in those countries where the legislation allows internal funds to be maintained. Together with the above-mentioned liabilities, an amount of 4,909 thousand euros is included as a liability in the balance sheet corresponding to this account entry, relating to the valuation of the commitments of retevisión with its employees arising from various long-term liabilities for the employees’ length of service in the company. The economic-actuarial information of the existing liability related to pension commitments of the Group’s various companies with their employees is as follows: 5_1 consolidated annual accounts and management report 126 5 0 0 2 T R O P E R L A U N N A a) Defined contribution commitments The amount recorded for the year as personnel expense in the profit and loss account due to defined contribution commitments totals 3,459 thousand euros (2,483 thousand euros in 2004). b) Defined benefit commitments Except in those countries where the legislation allows internal funds to be maintained, pension commitments are covered using insurance policies or separate entities, in accordance with the applicable legislation in each country, with the amounts taken off the balance sheet. Nevertheless, this account entry includes the hedging instruments (liabilities and assets affected) where the legal obligation or implied obligation to meet the agreed benefits remains. In relation to the defined benefit commitments maintained by different companies of the Group with their employees, the reconciliation between the opening and closing balances of the actuarial value of these liabilities is as follows: At 1 January Included in scope (*) New commitments Service costs for the year Interest costs Actuarial losses/(profits) Benefit payments Exchange difference At 31 December (*) Corresponds to ACDL/ TBI 2005 14,454 96,295 92 5,358 6,230 15,557 (2,357) 3,190 138,819 2004 12,433 — — 1,319 546 807 (651) — 14,454 127 5 0 0 2 T R O P E R L A U N N A The reconciliation between opening and closing balances of the actuarial fair value of the assets for these liabilities is as follows: At 1 January Included in scope (*) New commitments Expected yield on assets Actuarial (losses)/profits Contributions from Promoter Benefits payments Expenses Exchange differences At 31 December (*) Corresponds to ACDL/ TBI 2005 13,412 75,365 5 6,061 9,614 6,855 (2,357) (49) 2,334 111,240 2004 11,081 — — 455 558 1,969 (651) — — 13,412 Amongst the affected assets linked to insurance policies, an amount of 15,616 thousand euros is held with related entities. The annual movement in the liability recorded on the balance sheet was as follows: At 1 January Included in scope (*) Increase charged to: Profit and loss account Net equity Contributions from Sponsor Exchange difference At 31 December (*) Corresponds to ACDL/ TBI 2005 1,042 20,930 5,663 5,943 (6,855) 856 27,579 2004 1,352 — 1,659 — (1,969) — 1,042 5_1 consolidated annual accounts and management report 128 5 0 0 2 T R O P E R L A U N N A The expected overall yield on the assets has been calculated in the following manner: • For the commitments of Spanish companies, by the discount rate used in determining the liability. • For the commitments of international companies, market yield expectations for assets with similar characteristics (money market, fixed income or equity) over the entire life of the liabilities related to the assets in question. The main actuarial hypotheses used at the balance sheet date are as follows: Discount rate (based on type of commitment and country) Rate of salary increase (based on type of commitment and country) Pension commitments in Spain: Mortality tables Disability tables 2005 2.88% - 4.85% 2004 3.92% 3% - 4% 3% anual PERMF200p InvAbs_SS90 PERMF200p InvAbs_SS90 NOTE 18_ PROVISIONS AND OTHER LIABILITIES The balance of provisions and other liabilities is as follows: Provisions Other creditors Provisions and other liabilities 2005 70,246 108,569 178,815 The breakdown and movement of the provisions is as follows: At 1 January Included in scope (*) Charge in consolidated profit and loss account Amounts not applied and reversed Applications for the year Exchange difference At 31 December (*) Corresponds to ACDL/ TBI 2005 59,090 13,031 17,014 (5,024) (13,910) 45 70,246 2004 59,090 69,742 128,832 2004 63,435 — 6,554 (3,846) (7,053) — 59,090 129 5 0 0 2 T R O P E R L A U N N A The provisions at close on 31 December 2005 include a tax provision of 5,418 thousand euros (11,402 thousand euros in 2004) corresponding mainly to the settlement of Taxes on Real Estate claimed by certain City Councils, which have been appealed in the courts. Furthermore, the provision for tax assessments that have been appealed has been included. These appeals are pending resolution by the authorised judicial bodies. “Other creditors” includes the balance due to the Public Treasury by the subsidiary company acesa following the commitment assumed in the merger agreement of the company that previously held the concession on the Montmeló-El Papiol stretch (20,973 thousand euros). This amount will be reimbursed during the last five years of the concession period (2017-2021). Similarly, provisions are included for future investments in replacement and substitution as described in Note 3.a. NOTE 19_INCOME AND EXPENSES a) Rendering of services Details of the rendering of services by category are as follows: Toll income Discounts and rebates on tolls Other services rendered Other Rendering of services 2005 1,191,931 (37,852) 668,224 1,937 1,824,240 2004 1,136,285 (35,757) 388,612 1,351 1,490,491 The other services rendered include income from car park operations, income from the management of telecommunication infrastructures and in 2005, income for management of airports. b) Other operating income and other income These account entries include income for rate compensation, disposal of assets, etc. During 2005 the compensation for rate revisions not authorised by the Ministry of Public Works from the year 2000 corresponding to the concessionaire companies of Spanish highways under state title were received and recorded as “Other operating income”. The amounts had been claimed in the corresponding tribunals. “Other income” principally includes the profit obtained from the disposal of fixed assets and investments in companies. 5_1 consolidated annual accounts and management report 130 5 0 0 2 T R O P E R L A U N N A c) Personnel expenses The breakdown of personnel expenses by item is as follows: Wages and salaries Social Security levies Pension costs, defined contribution plan Pension costs, defined benefits plan Cost of other long-term commitments Other social expenses Personnel expenses 2005 240,719 51,161 3,459 5,663 516 12,003 313,521 2004 185,649 47,049 2,483 1,232 632 4,659 241,704 The average number of employees in abertis and its subsidiary companies during the year, broken down by category, is as follows: Permanent: Management Middle management Other employees Temporary employees Average number of employees d) Financial results 2005 185 1,410 5,286 950 7,831 The breakdown of financial income and expenses by item is as follows: Interest and other income Dividends Financial income Interest on loans from credit institutions and other loans Financial expenses 2005 37,434 17,026 54,460 (218,809) (218,809) 2004 174 1,287 3,363 844 5,668 2004 9,084 13,885 22,969 (147,631) (147,631) 131 5 0 0 2 T R O P E R L A U N N A NOTE 20_CONTINGENCIES AND COMMITMENTS At 31 December 2005 the Group had guarantees to third parties provided by financial institutions for an amount of 371,147 thousand euros (337,501 thousand euros in 2004). Of this amount, 111,863 thousand euros (92,098 thousand euros in 2004) corresponds to guarantees related to operating commitments of the different companies of the Group. The rest corresponds to certain commitments assumed by investee companies (investments, financing, etc). These commitments are not expected to generate significant costs. At the end of the financial year there are no significant investments committed that have not been explained in these Consolidated Annual Accounts. The subsidiary company acesa, has set up guarantees in certain situations on bank loans granted to its subsidiary company GCO, with the outstanding balance of these loans of 33, 819 thousand euros (121,325 thousand Argentine pesos) at 31 December 2005. The toll income is pledged as guarantee of the repayment of this debt. NOTE 21_BUSINESS COMBINATIONS The fair value at acquisition date of the assets and liabilities acquired is basically determined using valuation techniques. The most significant acquisition made in 2005 was of the company TBI, Plc. as explained below, consisting mainly of net assets acquired in tangible and intangible assets (concessions and licences to operate in certain airports, commercial agreements with certain airports and airlines, etc). The main valuation method used has been the analysis of discounted cash flows that the identified intangible assets generate. At the beginning of 2005 the abertis Group completed the acquisition of all the share capital of TBI, Plc. through its subsidiary Airport Concessions Development Limited (ACDL) in which abertis holds 90 %, following a Public Takeover Bid for the shares made at the end of the previous year. The TBI Group, which is basically engaged in the management of airport services under various companies in different countries, operates (under concession or through ownership) eight international airports (Europe, the United States and South America) and fully or partially manages, on behalf of governments or local authorities, another six airports. The business acquired in ACDL/TBI generated income for the Group of 252,626 thousand euros in 2005 and a net loss of 6,787 thousand euros. The net assets acquired and the goodwill generated on acquisition of the TBI group by ACDL breaks down as follows: Acquisition price (*): Total acquisition price Fair value of net assets acquired Goodwill on acquisition (*) Information expressed in thousand euros using the exchange rate applicable at time of acquisition 795,126 491,841 303,285 5_1 consolidated annual accounts and management report 132 5 0 0 2 T R O P E R L A U N N A The fair value of the net assets acquired includes the valuation of some identified intangible assets, consisting mainly of a concession contract on an airport, licences to operate in the other airports, commercial agreements with airlines, etc. The goodwill on acquisition, which is generated mainly as the balancing entry for the recognition of deferred taxes corresponding to the higher fair value attributed to the net assets acquired compared to the tax value, is justified by the profitability of the business acquired and the synergies that are expected to be generated following the acquisition by the Group. The assets and liabilities resulting from the acquisition are as follows: Cash and cash equivalents Fixed assets Concessions and licences (Intangible assets) Inventories Accounts receivable Accounts payable Retirement obligations Debt Net deferred tax liabilities Net assets Minority interest Net assets acquired Total acquisition price Cash and cash equivalents Cash outgoings in acquisition Fair value Debit/(Credit) 52,377 528,892 569,003 1,593 46,294 (127,192) (19,169) (324,020) (234,081) 493,697 1,856 491,841 795,126 (52,377) 742,749 Book value 52,377 528,892 279,671 1,593 28,723 (121,760) (19,169) (317,878) (22,491) 409,958 1,856 408,102 795,126 (52,377) 742,749 NOTE 22_ SHAREHOLDINGS IN MULTIGROUP COMPANIES The Group has shareholdings in the following multigroup companies consolidated by proportional integration: Company Avasa Areamed PLZF Activity % Shareholding Highway concessionaire Operation of service areas Logistic services 50% 50% 50% 133 5 0 0 2 T R O P E R L A U N N A The effect of the proportional integration of multigroup companies on the annual consolidated accounts of the Group is as follows: 2005 2004 ASSETS Non-current assets Current assets LIABILITIES Non-current liabilities Current liabilities NET ASSETS RESULTS Income Expenses Profit attributed to shareholders of the Company 381,155 9,832 390,987 315,325 19,716 335,041 55,946 81,304 (66,634) 14,670 404,725 12,134 416,859 320,661 28,817 349,478 67,381 79,848 (63,127) 16,721 Note: These amounts have been included in the consolidated balance sheet and the consolidated profit and loss account NOTE 23_INFORMATION ON THE ENVIRONMENT The criteria of the Group is to give maximum attention to environmental protection and conservation activities, with each subsidiary company adopting the necessary measures to minimise the environmental impact of the infrastructures managed in order to achieve the maximum possible integration with their respective surroundings. The Group has invested the amount of 4,282 thousand euros in 2005 on improving the environment through the following activities: • Cleaning, landscaping, planting and clearing along the highways, as well as improvement in services and rest areas, and carrying out work to reduce the visual impact and noise levels. • Collection and removal of dangerous urban waste. • Implementation of measures to reduce noise pollution in airports, optimisation of water management and energy consumption, and the promotion of various recycling systems for the waste generated by aircraft. 5_1 consolidated annual accounts and management report 134 5 0 0 2 T R O P E R L A U N N A NOTE 24_ SEGMENT REPORTING The different activities of the Group are organised and administrated separately according to the nature of the infrastructures managed, with each segment forming a strategic business unit that manages different types of infrastructures in different markets. The business segments have been defined as primary segments with secondary segments based on geographical area, in accordance with the origin and predominant nature of the risks and rewards, growth opportunities and expectations of the Group, which are much more closely linked to the different activities undertaken than to the geographic areas where the operations occur. The business segments have been defined as the combination of assets and operations allocated to the management of infrastructures subject to risks and rewards that are distinct from other business segments. The main factors considered in the identification of business segments has been the nature of the infrastructures managed and the operations carried out. The Group has decided to provide the results of each of these segments, including the profit on operations, as this is the level at which the entries for ordinary operating income and expenses can be directly attributed or reasonably allocated to the segments, coinciding with the management information used by the administrators to control the results of each segment. a) Business segments Management of the Group is organised by the following business segments: • Highways: construction, conservation and operation of highways under concession; management of highway concessions in Spain and internationally; construction of highway infrastructures and complementary activities to construction, conservation and operation of highways. • Car parks: construction and/or operation or sale or car parks, garages, service stations, commercial premises and other services directly related with these activities. • Telecommunications: establishment of all types of infrastructures and/or communication networks, as well as the supply, management, commercialisation and distribution of all types of related services, including the establishment and operation of fixed and mobile telecommunication networks and the supply of any type of service for these networks. • Airports: construction and management of airports that are owned or under concession. • Logistic services: protection, promotion, management, maintenance and operation of all types of infrastructures for logistics of every aspect. 135 5 0 0 2 T R O P E R L A U N N A Others: corresponds mainly to the activity carried out by the Parent Company (holding company, leadership and management of the Group companies) and other companies that provide services and financing to Group companies, The operating result for each segment in the financial year and the share of the associated companies in the results are broken down as follows: 31 December 2005 Highways Car Parks Telecom Airports Logistics Other Eliminated Total 1,155,465 100,008 273,712 275,432 16,921 2,702 — 1,824,240 — — — — — 14,937 (14,937) — 757,545 26,751 25,400 32,704 2,896 (12,627) — 832,669 65,115 (557) 113 — 259 165 — 65,095 Rendering of services to third parties Rendering of services between segments Profit on operations of segment Share in result of associated companies 31 December 2004 Highways Car Parks Telecom Airports Logistics Other Eliminated Total 1,104,066 88,046 260,489 20,692 15,588 1,610 — 1,490,491 — — — — — 14,165 (14,165) — 702,556 23,168 15,813 14,951 1,963 (18,323) — 740,128 94,106 (342) — — (118) 53 — 93,699 Rendering of services to third parties Rendering of services between segments Profit on operations of segment Share in result of associated companies 5_1 consolidated annual accounts and management report 136 5 0 0 2 T R O P E R L A U N N A Other items, which do not generate cash flows, included in the operating profit of the segments are: 31 December 2005 Allocation to amortisation Trading provisions Highways Car Parks Telecom Airports Logistics Other Total (213,492) (15,310) (73,675) (64,955) (3,058) (1,010) (371,500) (927) (70) (678) 689 (7) 1,151 158 (214,419) (15,380) (74,353) (64,266) (3,065) 141 (371,342) 31 December 2004 Allocation to amortisation Provision for asset impairment Trading provisions Highways Car Parks Telecom Airports Logistics Other Total (208,091) (14,042) (71,380) (3,411) (2,700) (2,766) (302,390) — — (4,451) — (3,214) — (7,665) (489) (78) (1,586) — — (146) (2,299) (208,580) (14,120) (77,417) (3,411) (5,914) (2,912) (312,354) 137 5 0 0 2 T R O P E R L A U N N A The assets and liabilities of the segments at 31 December, as well as the investment in assets made during the year are as follows: 31 December 2005 Highways Car Parks Telecom Airports Logistics Other Eliminated (*) Total Assets 3,982,119 470,236 717,202 1,579,213 89,645 4,927,899 (3,979,980) 7,786,334 Associated Co’s 621,963 2,103 3,747 — 32,525 — — 660,338 Total assets 4,604,082 472,339 720,949 1,579,213 122,170 4,927,899 (3,979,980) 8,446,672 Total liabilities 2,322,810 224,263 406,591 980,636 39,500 3,765,514 (2,328,775) 5,410,539 183,637 58,033 57,151 85,553 11,670 1,596 — 397,640 Investment in fixed and intangible assets (*) Corresponds only to the elimination of assets and liabilities of the Group assigned to different segments 31 December 2004 Highways Car Parks Telecom Airports Logistics Other Eliminated (*) Total Assets 4,204,414 296,745 762,210 62,508 82,321 6,805,995 (5,950,777) 6,263,416 Associated Co’s 577,031 1,164 5,156 220,653 27,744 19 — 831,767 Total assets 4,781,445 297,909 767,366 283,161 110,065 6,806,014 (5,950,777) 7,095,183 Total liabilities 2,431,534 142,284 449,893 69,169 45,287 3,493,483 (2,440,719) 4,190,931 105,280 49,556 34,104 104 13,513 282 — 202,839 Investment in fixed and intangible assets (*) Corresponds only to the elimination of assets and liabilities of the Group assigned to different segments The assets of the segments mainly include the tangible fixed assets, intangible assets, inventories, accounts receivable, operating cash and deferred taxes. The liabilities of the segments are operating liabilities, which include the debt raised to finance the activity. Investment in fixed and intangible assets represents the addition of tangible fixed assets and intangible assets. 5_1 consolidated annual accounts and management report 138 5 0 0 2 T R O P E R L A U N N A b) Geographic segments Income from the rendering of services, assets and investment in assets by geographical segment is shown below, based on their location. 31 December 2005 Spain Rest of Europe Latin America and USA Other countries Associated companies Eliminated (*) Rendering of services Assets Investment in assets 1,490,796 234,530 95,665 3,249 — — 6,542,120 2,051,556 504,978 11,779 660,338 (1,324,099) 308,825 80,586 8,229 — — — Total 1,824,240 8,446,672 397,640 (*) Corresponds only to the elimination of Group assets assigned to different segments 31 December 2004 Spain Rest of Europe Latin America and USA Other countries Associated companies Eliminated (*) Rendering of services Assets Investment in assets 1,421,870 18,463 49,201 957 — — 5,697,364 483,930 223,499 414 831,767 (141,791) 198,161 104 4,574 — — — Total 1,490,491 7,095,183 202,839 (*) Corresponds only to the elimination of Group assets assigned to different segments 139 5 0 0 2 T R O P E R L A U N N A NOTE 25_RELATED PARTIES a) Administrators and Senior Management Annual remuneration of the Board Members for their services to 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 obligatory transfers to reserves are covered, and it can 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 Infraestructuras, S.A., as members of the Board of Directors, totalled 1,562 thousand euros in 2005, which is less than the statutory limit Total remuneration received by the Board Members of Abertis Infraestructuras, S.A. was 2,096 thousand euros, in fixed remuneration. In addition, other benefits that Board Members of Abertis Infraestructuras, S.A. have received are contributions made to cover pension liabilities and life insurance, totalling 1,713 thousand and 34 thousand euros, respectively. The total remuneration to Board Members of Abertis Infraestructuras, S.A. in the other companies of the group was 674 thousand euros and in associated companies it was 150 thousand euros. Remuneration, corresponding to 2005, of the members of Senior Management, (managing directors and senior personnel of the abertis Group that carry out their management functions under direct control of the Board of Directors, Executive Committee or Chief Executive Officer of Abertis Infraestructuras, S.A.), totalled 3,780 thousand euros. In addition, members of Senior Management have received, as other benefits, contributions related to pension and life insurance obligations of an amount of 112 thousand and 18 thousand euros, respectively. The retirement benefits received by former members of Senior Management totalled 629 thousand euros in 2005. Abertis Infraestructuras, S.A. does not use any remuneration systems 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) Significant shareholders A shareholder with a significant influence in the Parent Company is defined as having the right to propose a board member for appointment or having an interest of more than 5% (see Note 12.a). The breakdown of balances and transactions with significant shareholders is as follows: 5_1 consolidated annual accounts and management report 140 5 0 0 2 T R O P E R L A U N N A i) Bond issues, loans and credit lines received At 1 January Loans/bonds received during the year Amortisations made of loans/bonds Credit lines drawn down (annual net) Accrued interest Interest paid At 31 December ii) Swaps contracted 2005 304,269 90,000 (76,800) (7,672) 35,306 (35,306) 309,797 2004 369,057 100,000 (85,406) (79,382) 27,890 (27,890) 304,269 The swaps contracted with related entities as exchange rate and/or interest rate hedges total 1,024,831 thousand euros (780,910 thousand euros in 2004). iii) Financing retirement obligations Contributions of an amount of 3,734 thousand euros have been made to an insurance policy taken out with a related company to cover the obligations for benefits to Group employees. iv) Purchase of goods and services Purchase of goods: Acquisition of fixed assets Construction permits Financial leases Services purchased: Reception services Credit card commissions Purchase of goods and services v) Obligations and contingencies 2005 8,946 83,083 2,893 7,287 4,629 106,838 2004 22,010 5,225 3,012 9,310 4,081 43,638 There are obligations for the purchase of goods and services in the amount of 57 million euros related to successful tenders for works pending certification. The limit conceded by related entities and not drawn down on the credit lines at the end of the year totalled 480,000 thousand euros. 141 5 0 0 2 T R O P E R L A U N N A There are lines of guarantees in place with related entities with a limit of 108,000 thousand euros. At the end of the year of 75,339 thousand euros has been used up. c) Other information on the Board of Directors In accordance with the provisions of article 127. 4 of the Spanish Public Companies Act, introduced by Law 26/2003, of 17 July, which amended the Securities Market Act, Law 24 of 28 July 1988, and the Spanish Companies Act, aimed at increasing the transparency of listed companies, the companies with the same, similar or complementary nature as the activity of the Company in which members of the Board of Directors have shareholdings, as well as the functions that they carry out, if applicable, are shown below: Shareholder Company held Activity Shareholding % capital Functions Isidro Fainé Casas Telefónica, S.A. Telecommunications 0.003 Deputy Chairman Pablo Vallbona Vadell ACS, Actividades de Construcción y Servicios, S.A. Ángel García Altozano ACS, Actividades de Construcción y Servicios, S.A. Construction and services Construction and services Saba Aparcamientos, S.A. Car Parks 0.0160 — 0.0113 Corporate General Manager 0.0000055 Board Member Telecommunications 2.10 Caixa d’Estalvis de Catalunya Dragados, S.A. Retevisión Móvil, S.A. Ferrocarriles del Norte de Colombia, S.A. Aufe, S.A. Aunor, S.A. Infrastructure concessionaire Infrastructure concessionaire Infrastructure concessionaire Concesionaria Vial del Sur, S.A. Infrastructure concessionaire Autopistas del Sol, S.A. Infrastructure concessionaire ACS, Actividades de Construcción y Servicios, S.A. Construction and services Antonio García Ferrer, representing Comunidades Gestionadas, S.A. — — — — — 5.32 78.00 85.00 25.00 6.40 0.002 Deputy Chairman 5_1 consolidated annual accounts and management report 142 5 0 0 2 T R O P E R L A U N N A Shareholder Company held José Luis Olivas Martínez Fomento de Construcciones y Contratas, S.A. Activity Construction and services Telefónica, S.A. Telecommunications 0.00039 Logistics Infrastructure concessionaire Infrastructure concessionaire Infrastructure concessionaire Infrastructure concessionaire Ausur Servicios de la Autopista, S.A. Autopista del Sol Concesionaria Española, S.A. Autopista del Sureste, Concesionaria Española de Autopistas, S.A. Inversora de Autopistas del Sur, S.L. Autopista de la Costa Cálida, Concesionaria Española de Autopistas, S.A. Sociedad Municipal de Aparcamientos y Servicios, S.A. Sevisur Logística, S.A. Centro Integral de Mercancías, S.A. Red de Banda Ancha de Andalucía, S.A. Montes de Piedad y Caja de Ahorros de Ronda, Cádiz, Almería, Málaga y Antequera (Unicaja) (until 29/11/2005) Car Parks 24.50 Logistics Logistics 10.00 10.28 Telecommunications 5.83 Islalink, S.A. Telecommunications 13.70 Val Telecomunicaciones, S.L. Telecommunications 7.77 Shareholding Functions % capital 0.00004 5.00 20.00 5.00 10.00 — 4.50 Board member — — — — — — — — — — — 143 5 0 0 2 T R O P E R L A U N N A With respect to positions or functions, in accordance with the abovementioned text, a list is provided below of the Board Members that hold positions in companies with activities that are the same, similar or of a complementary nature to the business purpose of Abertis Infraestructuras, S.A. Board Member Company Position Isidro Fainé Casas Brisa Auto-Estradas de Portugal, S.A. Board Member Pablo Vallbona Vadell ACS, Actividades de Construcción y Servicios, S.A. Deputy Chairman Iberpistas, Sociedad Anónima Concesionaria del Estado Chairman G3T, S.L. Iberpistas, Sociedad Anónima Concesionaria del Estado Board Member Ángel García Altozano ACS, Servicios, Comunicaciones y Energía, S.L. Board Member ACS, Servicios y Concesiones, S.L. Board Member Dragados Concesiones de Infraestructuras, S.A. Board Member Dragados, S.A. ACS Telefonía Móvil, S.L. Xfera Móviles, S.A. Abertis Telecom, S.A. Saba Aparcamientos, S.A. Inversora de Infraestructuras, S.L. Salvador Alemany Mas Autopistas Concesionaria Española, S.A. TBI plc Board Member Personal representative of the Sole Administrator of ACS, Actividades de Construcción y Servicios, S.A. Chairman Board Member Board Member Personal representative of the Sole Administrator of ACS, Actividades de Construcción y Servicios, S.A. Board Member Chairman and Chief Executive Officer Iberpistas, S.A. Concesionaria del Estado Board Member Autopistes de Catalunya, S.A. Concessionària de la Generalitat de Catalunya Aucat, S.A. Acesa Italia, S.R.L. Castellana de Autopistas, S.A. Concesionaria del Estado Sole Administrator Chairman Sole Administrator 5_1 consolidated annual accounts and management report 144 5 0 0 2 T R O P E R L A U N N A Board Member Company Salvador Alemany Mas Autostrade S.p.A. Saba Aparcamientos, S.A. Position Board Member Sole Administrator Societat Pirenaica d’Aparcaments, S.A. Board Member Areamed 2000, S.A. Parc Logístic de la Zona Franca, S.A. Centro Intermodal de Logística, S.A. Abertis Telecom, S.A. Retevisión I, S.A. Tradia Telecom, S.A. Abertis Aeroports, S.A. Abertis Logística, S.A. Abertis Logística, S.A. ACS, Servicios y Concesiones, S.L. Deputy Chairman Deputy Chairman Deputy Chairman Chairman and Chief Executive Officer Sole Administrator Sole Administrator Sole Administrator Deputy Chairman Board Member Board Member Caixa d’Estalvis de Catalunya Dragados, S.A. Antonio García Ferrer, representing Comunidades Gestionadas, S.A. Vasco de Mello Brisa Auto-estradas de Portugal, S.A. Miguel Ángel Telefónica Internacional Gutiérrez Méndez Telesp – Brasil Chairman Board Member Board Member Ernesto Mata López Autopistas Aumar, S.A. Concesionaria del Estado Board Member Finally, the Company is not aware that any of the above-mentioned Board members carry out on their own account or on behalf of others the same, similar or complementary activity as that which constitutes the business purpose of Abertis Infraestructuras, S.A. 145 5 0 0 2 T R O P E R L A U N N A NOTE 26_OTHER INFORMATION a) Remuneration of auditors During 2005 the fees invoiced by PricewaterhouseCoopers Auditores, S.L. and other companies trading under the PricewaterhouseCoopers mark for auditing the annual accounts of the Group totalled 495 thousand and 635 thousand euros, respectively. In addition, the fees received during the year by other companies trading under the name PricewaterhouseCoopers for other services provided totalled 946 thousand euros. Additionally, the fees invoiced during 2005 by other auditors for auditing the annual accounts of Group companies and other services provided totalled 158 thousand and 196 thousand euros, respectively. b) 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. c) Concession contracts The main concession contracts held by the subsidiary Companies of the abertis Group are as follows: • Concession contract for the construction, maintenance and operation of highways signed between the Government of Catalonia (Generalitat de Catalunya) and the Ministry of Public Works (Ministerio de Fomento) with acesa of the C-32 and C-33 highways of the Catalan Government and the AP- 7 and AP-2 highways of the Central Government, with the contract ending on 31 August 2021. • Concession contract for the construction, maintenance and operation of the C-32 Pau Casals highway, between the Catalan Government and aucat, with the contract ending on 26 January 2039. • Concession contract for the construction, maintenance and operation of the toll Highways AP-7 (Tarragona-Valencia and Valencia-Alicante) and AP-4 (Seville-Cadiz) entered into by the Ministry of Public Works and aumar, which terminates on 31 October 2019. aumar, in turn, has contracted with the Ministry of Public Works the provision of maintenance services and the operation of the bridge over the Bay of Cadiz, which is toll free, for extendible four year periods, which was extended in 2004 until 31 December 2008. 5_1 consolidated annual accounts and management report 146 5 0 0 2 T R O P E R L A U N N A • Concession contract for the construction, maintenance and operation of the Villalba-Adanero Highway, entered into by the Ministry of Public Works and iberpistas (AP-6), which terminates on 29 January 2018. • Concession contract for the construction, maintenance and operation of the stretches of the AP- 6 toll highway connection with Segovia (AP-61) and AP-6 connection with Ávila (AP-51) entered into by the Ministry of Public Works and castellana, which terminates in November 2031. • Concession contract for the construction, maintenance and operation of the Bilbao-Zaragoza section of the Ebro Highway, now known as the AP-68 highway, entered into by the Ministry of Public Works and avasa, which terminates on 11 November 2026. • Concession contract for the construction, maintenance and operation of the Autopista del Oeste, entered into by the Argentine Government and GCO, which terminates on 31 December 2018. • Concession contract for the construction, maintenance and operation of the second runway of the El Dorado Airport in the city of Bogota, Colombia, entered into by the Unidad Administrativa Especial de la Aeronáutica Civil (Special Civil Aeronautic Administrative Unit) and Codad, which terminates on 8 June 2025. saba operates various car parks under concession (contracts signed with local Administrations in the different countries where it operates): • Spain: 66 operating centres (car parks and metered street parking areas) with a total of 25,388 spaces. The average time to maturity of all the concessions is 24 years. • Italy: 33 operating centres with 13,952 spaces and an average time to maturity of all the concessions of 27 years. • Portugal: 16 car parks providing 6,034 spaces under various concessions, with an average time to maturity of 21 years. • Chile: 3,804 spaces in 10 operating centres with an average time to maturity of the concessions of 27 years. • Morocco: 5 operating centres with a total of 3,393 parking spaces and an average time to maturity of 11 years. Sevisur is located on land owned by the Seville Port Authority released under an administrative concession for a period of 30 years. TBI operates five airports under concession: • London Luton, with 9.1 million passengers in 2005, whose concession runs to August 2028. • Orlando Sandford, with 1.6 million passengers in 2005. • La Paz, Santa Cruz and Cochabamba, Bolivian airports with 2.2 million passengers in 2005, whose concessions conclude in March 2022. 147 5 0 0 2 T R O P E R L A U N N A NOTE 27_SUBSEQUENT EVENTS In February 2006, Holding d’Infrastructures de Transport SAS (HIT), a company in which abertis holds a majority shareholding together with other shareholders (Caisse des Dépôts, Predica, Axa, and the Société Foncière, Financière et des Participations), acquired from the French State 75.65% of the toll highway concessionaire Société des Autoroutes du Nord et de l’Est de la France (Sanef). This operation was duly authorised by the French Government through the signing of a ministerial decree, with the acquisition being completed by the transfer of its shareholding in Sanef to the consortium HIT for an amount of 4,028 million euros. In addition, HIT has presented a Public Takeover Bid to the French Financial Markets Authority for the outstanding 24.35% that is traded on the Paris Stock Exchange. In February 2006, the Ministry of Public Works (Ministerio de Fomento) and acesa reached an agreement to widen the AP-7. The agreement (pending authorisation of the Ministerial Council) will represent a substantial improvement of the Mediterranean corridor (widening to 3 lanes for a stretch of 123 kilometres, to 4 lanes on the Girona ring-road and the replacement of 3 trunk road tollgates with on and off-ramp tollgates), whereby the increased capacity will lead to a better service for clients. NOTE 28_TRANSITION TO THE INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) As indicated in Note 2.a) these Consolidated Annual Accounts for the year ended 31 December 2005 are the first accounts prepared in accordance with the International Financial Reporting Standards (IFRS). Accordingly, the IFRS-1 “First time adoption of the International Financial Reporting Standards” has been applied at the transition date (1 January 2004), with the corresponding opening balance sheet having been prepared under IFRS at that date to provide comparative consolidated accounts for 2004. The date of adopting the IFRS by the Group is from 1 January 2005. The conversion of the consolidated financial statements prepared under Spanish GAAP to the IFRS requires the use of these accounting policies backdated to the transition date, except in those cases established by IFRS-1, be they of an obligatory or voluntary nature. The exemptions adopted by the Group are detailed below: a) Business combinations It has been decided not to restate the business combinations which took place prior to the transition date (1 January 2004), maintaining the existing net goodwill in the consolidated annual accounts of 31 December 2003 prepared under Spanish GAAP. 5_1 consolidated annual accounts and management report 148 5 0 0 2 T R O P E R L A U N N A b) Fair value as attributed cost Fixed assets have been valued at the book value on the transition date recorded under local accounting standards, which in some cases include revaluations permitted under legislation in force at that date. No asset has been revalued to its fair value at the transition date of 1 January 2004. c) Employee remuneration In application of IAS-19, all accumulated actuarial profits and losses at 1 January 2004 have been recognised, with an impact on net equity of very little significance given that under Spanish GAAP actuarial profits and losses were recognised practically in full. d) Accumulated exchange differences The accumulated exchange differences at 1 January 2004 have been valued at zero (with the existing balance on that date transferred to accumulated Profits). e) Retrospective application of IAS-32 and IAS-39 (Financial Instruments) IAS-32 and IAS-39 on derivative financial instruments and financial assets and liabilities have been applied retrospectively, as well as the hedges existing in the 2004 comparative information. Consequently, accounting of hedges has been practiced since 1 January 2004, only if the hedge relationship meets the requirements of efficiency established in IAS-39 (Financial instruments: recognition and valuation). f) Designation of financial assets and liabilities The Group has reclassified various assets as available-for-sale investments at 1 January 2004. g) Accounting estimates The accounting estimates made under IFRS at 1 January 2004 are coherent with those made on the same date under Spanish GAAP, given that there is no evidence that these estimates were erroneous. h) Assets held for sale and discontinued activities Management of the Group has decided to apply IFRS 5 prospectively from 1 January 2005, whereby any asset held for sale or any discontinued activity is only recognised from 1 January 2005. 149 5 0 0 2 T R O P E R L A U N N A In the preparation of the consolidated balance sheet at 1 January 2004 (transition date) and at 31 December 2004 under IFRS, the Group has made certain adjustments and reclassifications with respect to figures included in the 2004 consolidated accounts under Spanish GAAP. The reconciliation between the consolidated net equity of the Group at 1 January 2004 and 31 December 2004 and the consolidated profit for 2004 obtained under Spanish GAAP and IFRS is detailed as follows: Note 1 January 2004 2004 profit attributed to shareholders of abertis Reserves, accumulated profit and other reserves Minority interest 31 December 2004 Net equity under Spanish GAAP Fixed assets Goodwill Reversal of financial debt recorded Changes in consolidation scope Minority interest Derivative financial instruments Deferred taxes Intangible assets Negative consolidation differences Other Net equity under IFRS 3,107,354 (178,333) — (440,467) 467,291 (26,934) 54,727 (18,327) (256,951) (2,435) — 6,955 — — — — 3,317,694 (207,702) 54,727 (451,839) 43,246 — 55,890 — 99,136 19,325 (38,350) 80,923 (12,001) 40,889 — (14,950) (3,567) 1,190 (1,474) — (2,600) (1,847) 1,145 — 23,148 — 42,473 (55,900) — — — 75,509 (9,666) 39,415 a) b) c) d) e) f) g) h) i) j) (31,842) 2,590,744 30,812 488,768 1,435 — 405 (198,408) 23,148 2,904,252 The equity adjustments are shown net of the corresponding tax impacts that may exist, including for each item the amounts for fully and proportionally consolidated companies, as well as companies consolidated under equity accounting. The main differences in net equity at 1 January and 31 December 2004 and in 2004 profit between Spanish GAAP and IFRS are as follows: 5_1 consolidated annual accounts and management report 150 5 0 0 2 T R O P E R L A U N N A a) Fixed assets Under the sector adaptation of Spanish GAAP, concession assets are depreciated on a straight line basis over their useful life and, in addition, allocations are made to a reversion fund so that the asset to be returned is fully depreciated at the end of the concession. The annual allocation to the reversion fund is calculated in line with income (generally increasing) from the concession, where the resulting depreciation of the assets increases. Under IFRS the fixed assets should be depreciated on a straight-line basis over their useful life or the concession period, whichever is less. This adjustment has been recorded against reserves at 1 January 2004, net of its corresponding tax impact. The breakdown of the net impact on the main entries affected in the balance sheet is as follows: Debit / (Credit) 1 January 2004 31 December 2004 Cancellation reversion fund Accumulated depreciation of fixed assets Provision for replacement of investments Tax impact of previous adjustments Impact on companies consolidated by equity accounting Other adjustments 2,212,528 (2,414,629) (48,045) 87,551 (19,096) 3,358 (178,333) 2,382,664 (2,617,747) (50,680) 100,017 (25,429) 3,473 (207,702) b) Goodwill Under IFRS-3 goodwill is no longer amortised on a straight-line basis as it was under the Spanish GAAP. Instead it is subject to an annual impairment test. The adjustment recorded corresponds to the reversal of the allocation made for the amortisation of goodwill under Spanish GAAP in 2004. c) Reversal of the financial debt recorded Under the sector adaptation of Spanish GAAP, once operations have commenced the financial charge generated from financing investments in the construction of highways under concession must deferred over the life of the concession, based on the income forecast over the concession period. Independently of the financial charge accrued, each year a financial expense is charged to results, which is calculated in line with the income for the year and the total income forecast over the concession period. If the difference between the financial charge accrued and that charged to results is positive, it is recorded as a deferred expense in the balance sheet, whereas the amount recorded is reduced when the accrued expense is less than that charged to results. 151 5 0 0 2 T R O P E R L A U N N A Under IFRS, in general, financial expenses cannot be recognised once an investment in assets has become operative. The adjustment of the interest recognised has been recorded against accumulated profits, under IFRS, net of their corresponding tax impact. The breakdown of the net impact on the main balance sheet entries affected is as follows: Debit / (Credit) 1 January 2004 31 December 2004 Reversal of financial charge recorded Tax impact of previous adjustments Impact on companies consolidated by equity accounting Other adjustments (542,568) 189,899 (91,324) 3,526 (440,467) (534,048) 186,917 (101,409) (3,299) (451,839) d) Changes in consolidation scope Under Spanish GAAP it is assumed that a company exercises significant influence in the company in which it has invested (and therefore it is an associated company and can be consolidated by equity accounting) if its shareholding is more than 20%, or 3% in the case of listed companies. Under IFRS, the shareholdings in listed companies that do not meet with the definition of associated companies outlined in Note 2.b) (under Spanish GAAP shareholdings of more than 3% in listed companies is not contemplated) are classified as available-for-sale investments and recorded at fair value. The impact recorded due to changes in the consolidation scope corresponds to the Brisa shareholding (a listed Portuguese highway concessionaire in which abertis holds 10%), which is not consolidated by equity accounting because it is considered that abertis does not exert significant influence, and consequently, is recorded at market value (listed price). Debit / (Credit) 1 January 2004 31 December 2004 Goodwill Brisa as per Spanish GAAP Investment in associated companies as per Spanish GAAP Value of Brisa shares (176,674) (131,080) 351,000 43,246 (170,578) (135,286) 405,000 99,136 5_1 consolidated annual accounts and management report 152 5 0 0 2 T R O P E R L A U N N A e) Minority interest In accordance with IFRS, minority interest should be presented as part of net equity, separated from the equity attributed to the shareholders of abertis. The amount of the adjustment includes the incorporation of the balance recognised under Spanish GAAP at 1 January 2004 of 27,844 thousand euros (46,187 thousand euros at 31 December 2004), and the negative effect of the minority interest of the other IFRS adjustments, of 8,519 thousand euros at 1 January 2004 and 3,714 thousand euros at 31 December 2004, generated mainly in relation to the entries for tangible and intangible fixed assets and the reversal of financial debt recorded. f) Derivative financial instruments As indicated in Note 3.e, under IFRS the derivative financial instruments must be recorded at fair value, with an impact on reserves or profit and loss depending on their nature and whether they are classified as hedges, and the type of hedge. At 1 January 2004 the impact of all the derivative financial instruments existing on that date was recorded against reserves on first-time adoption of IFRS, net of their corresponding tax impact. The amounts in the balance sheet at 31 December 2004 are those shown in Note 9. g) Deferred taxes This corresponds mainly to the accounting treatment under IAS 12 (Corporation Tax) of certain deferred taxes not considered under Spanish GAAP. The effect recorded includes an amount of 68,993 thousand euros corresponding to the amount of a deferred tax recognised under IAS in the company Autostrade (included in the consolidated accounts of the associated company Schemaventotto). h) Intangible assets Under Spanish GAAP criteria, the intangible assets that are expected to generate profits in future years are recognised at cost, adjusted for the accumulated amortisation calculated on a straight- line basis over the period in which they are expected to generate said profits. These intangible assets do not meet the conditions which define an asset under IFRS and have been eliminated from the balance sheet with a charge against accumulated profits, net of their tax effect. 153 5 0 0 2 T R O P E R L A U N N A i) Negative consolidation differences Under Spanish GAAP, the negative consolidation differences (negative goodwill) arising from the elimination of investments against the net equity of the investment on the date of acquisition that were not included in the value of the assets and liabilities of the entity being consolidated, were recorded as a liability as “Negative consolidation differences”, which was reversed annually against the profit and loss account. In accordance with IFRS-3, the negative consolidation difference pending reversal has been adjusted against accumulated profits. j) Others Under this entry different items are included that were accounted for under Spanish GAAP in 2004 whilst under IFRS they are recorded against first-time adoption reserves. In addition to the impacts on the consolidated balance sheet indicated above as counterpart to the IFRS equity adjustments, the following significant reclassifications have made in the balance sheet at 31 December 2004 under IFRS compared to the balance sheet under Spanish GAAP at the same date: • Under IFRS the goodwill corresponding to associated companies of a value of 188,183 thousand euros is shown as a higher amount of the shareholdings in associated companies instead of under the Goodwill entry. • Those deferred tax assets classified as “Other long-term credits” under Spanish GAAP for an amount of 151,038 thousand euros, are shown as “Deferred tax assets” in the assets of the consolidated balance sheet under IFRS. • As mentioned above, the total amount of the accumulated exchange differences at 1 January 2004 recorded under Spanish GAAP of 165,194 thousand euros has been transferred to accumulated profits under IFRS. As a result of the transition to IFRS, there have not been significant reclassifications in the profit and loss account for 2004, other than those arising due to the impacts on the profit and loss account detailed above. 5_1 consolidated annual accounts and management report 154 5 0 0 2 T R O P E R L A U N N A ANNEX I Subsidiary companies included in the consolidation scope Company Registered office DIRECT SHAREHOLDINGS Abertis Infraestructuras Finance, B.V. Rokin, 55 1012KK. Amsterdam. Netherlands Serviabertis, S.L. Highway operations Autopistas, C.E.S.A. (acesa) Av. del Parc Logístic, 12-20. Barcelona Av. del Parc Logístic, 12-20. Barcelona Autopistas Aumar, S.A.C.E. (aumar) Paseo de la Alameda, 36. Valencia Iberpistas, S.A.C.E. Aurea Limited Pío Baroja, 6. Madrid 180 Strand. London. United Kingdom Holding d’Infraestructures de Transport 105 Rue de l'Abbe Groult 75015. Paris 15. France Promoción de Autopistas de Chile Limitada (Iberpistas Chile) Gertrudis Echenique, 30. Las Condes-Santiago. Chile Gestión Integral de Concesiones S.A. (GICSA) Montalbán, 5. Madrid Autopistas de Puerto Rico y Compañía, S.E. (APR) Montellano Sector Embalse San José. San Juan de Puerto Rico 00923. Puerto Rico Car Parks Saba Aparcamientos, S.A. (saba) Av. del Parc Logístic, 12-20. Barcelona Logistics Abertis Logística, S.A. Telecommunications Abertis Telecom, S.A. Airports Abertis Aeroports, S.A. Av. del Parc Logístic, 12-20. Barcelona Av. del Parc Logístic, 12-20. Barcelona Av. del Parc Logístic, 12-20. Barcelona Airport Concession and Development Limited (ACDL) 159, New Bond Street. London W1S 2UD. United Kingdom Compañía de Desarrollo Aeropuerto Eldorado, S.A. (CODAD) Aeropuerto Eldorado, Muelle Internacional, piso 2, Costados Sur. Bogotá D.C. Colombia (*) Corresponds to % shareholding of Abertis Infraestructuras, S.A. (direct or indirect) with respect to each of the companies held. This annex forms part of Note 2.b of the notes to the 2005 annual accounts with which it should be read. 155 5 0 0 2 T R O P E R L A U N N A Shareholding Cost (thousand euros) % (*) Company owning shareholding Consolidation method Activity Auditor abertis abertis abertis abertis abertis abertis abertis 2,000 100,00% 3 100.00% 1,647,187 100.00% 991,587 100.00% 223,560 100.00% 23,363 100.00% 42 805 60 4,640 Fully consolidated Financial services Equity accounting Administrative management services Fully consolidated Toll highway concessionaire Fully consolidated Toll highway concessionaire Fully consolidated Toll highway concessionaire PwC PwC PwC PwC PwC Equity accounting Holding company Other auditors 100.00% Fully consolidated Holding company 100% (1) abertis / Gicsa Equity accounting Toll highway concessionaire PwC PwC 99.80% 75.00% abertis abertis Equity accounting Infrastructure administration and management N/A Equity accounting Infrastructure concessionaire Other auditors 231,296 99.28% abertis Fully consolidated Car park operator PwC 72,993 100.00% abertis Fully consolidated Logistics promotion and technical assistance PwC 326,433 100.00% abertis Fully consolidated Telecommunication services Other auditors 2,256 100.00% abertis Fully consolidated Promotion, construction, management and operation of airports 531,314 45,751 90.00% 85.00% abertis abertis Fully consolidated Holding company Fully consolidated Construction and maintenance of airports PwC PwC Other auditors 5_1 consolidated annual accounts and management report 156 5 0 0 2 T R O P E R L A U N N A Subsidiary companies included in the consolidation scope Company Registered office INDIRECT SHAREHOLDINGS Through Autopistas, C.E.S.A. Autopistas-Conces. Espanhola, SGPS, S.A. Rua General Norton de Matos, 21-A. Arquiparque Algés Oeiras. Portugal Acesa Italia, S.R.L. Via delle Quatro Fontane, 15. Rome. Italy Autopistes de Catalunya, S.A. (aucat) Av. del Parc Logístic, 12-20. Barcelona Grupo Concesionario del Oeste, S.A. (GCO) (2) Ruta Nacional nº 7, km 25,92. Ituzaingó. Argentina Through Iberpistas, S.A.C.E. Castellana de Autopistas, S.A.C.E. Pío Baroja, 6. Madrid Autopistas de León, S.A.C.E. (AULESA) Villadangos del Páramo. Ctra. Santa María del Páramo. León Ibermadrid de Infraestructuras, S.A. Pío Baroja, 6. Madrid Through Iberpistas Chile Gestora de Autopistas, S.A. (GESA) Through Saba Aparcamientos, S.A. Andrés Bello, 2777. Las Condes. Santiago. Chile Spel-Sociedade de Parques de Estacionamiento, S.A. (SPEL) Guedes de Azevedo, 148-180. Porto. Portugal Saba Italia, S.p.A. Parbla, S.A. Via delle Quatro Fontane, 15. Rome. Italy Sabino Arana, 38. Barcelona Saba Estacionamientos de Chile, S.A. Andrés Bello, 2777. Las Condes. Santiago. Chile Societat Pirenaica d’Aparcaments, S.A. (SPASA) Pau Casals, 7. Escaldes-Engordany. Principality of Andorra Societat d’Aparcaments de Terrassa, S.A. (SATSA) Plaça Vella, subsuelo. Terrassa Rabat Parking S.A. Liz Estacionamientos Saba Campo San Giacomo Parcheggi Pisa Saba Park Chile, S.A. Rue de Larache, 8. Rabat. Morocco Guedes de Azevedo, 148-180. Oporto. Portugal Via delle Quatro Fontane, 15. Rome. Italy Via delle Quatro Fontane, 15. Rome. Italy Andrés Bello, 2777. Las Condes. Santiago. Chile Concesionaria Subterra Andrés Bello, 2777. Las Condes. Santiago. Chile Concesionaria Subterra Dos Andrés Bello, 2777. Las Condes. Santiago. Chile Saba Park Chile Servicios, S.A. Andrés Bello, 2777. Las Condes. Santiago. Chile Concesionaria Estacionamientos Paseo Bulnes, S.A. Andrés Bello, 2777. Las Condes. Santiago. Chile (*) Corresponds to % shareholding of Abertis Infraestructuras, S.A. (direct or indirect) with respect to each of the companies held. This annex forms part of Note 2.b of the notes to the 2005 consolidated annual accounts with which it should be read. 157 5 0 0 2 T R O P E R L A U N N A Shareholding Cost (thousand euros) % (*) Company owning shareholding Consolidation method Activity Auditor 309,353 100.00% acesa Fully consolidated Holding company Other auditors 194,291 100.00% acesa Equity accounting Holding company 162,352 100.00% acesa Fully consolidated Toll highway concessionaire 24,498 48.60% acesa Fully consolidated Toll highway concessionaire 234,000 100.00% iberpistas Fully consolidated Toll highway concessionaire 43,168 79.20% iberpistas Equity accounting Toll highway concessionaire 352 100.00% iberpistas Equity accounting Dormant 1,041 51.00% Iberpistas Chile Equity accounting Toll highway concessionaire 38,418 99.28% 23,326 99.28% 1,880 99.28% 11,500 99.27% 100 89.35% 5,874 87.41% 1,138 50.63% 250 50.63% saba saba saba saba saba saba saba Spel Fully consolidated Car park operator Fully consolidated Car park operator Fully consolidated Car park operator Fully consolidated Car park operator Fully consolidated Car park operator Fully consolidated Car park operator Fully consolidated Car park operator Other auditors Fully consolidated Car park operator 100 98.29% Saba Italia Fully consolidated Car park operator 35 69.50% Saba Italia Fully consolidated Car park operator 1,606 98.68% 1,248 99.26% 805 99.26% 52 99.26% Saba Estacionamientos de Chile, S.A. Saba Estacionamientos de Chile, S.A. Saba Estacionamientos de Chile, S.A. Saba Estacionamientos de Chile, S.A. Fully consolidated Car park operator Fully consolidated Car park operator Fully consolidated Car park operator Fully consolidated Car park operator 312 98.68% Saba Park Chile, S.A. Fully consolidated Car park operator PwC PwC PwC PwC PwC N/A PwC PwC PwC N/A PwC N/A PwC PwC PwC PwC PwC PwC PwC PwC PwC 5_1 consolidated annual accounts and management report 158 5 0 0 2 T R O P E R L A U N N A Subsidiary companies included in the consolidation scope Company Registered office Through abertis logística Sevisur Logística, S.A. Through abertis telecom Retevisión I, S.A. Moratín, 1. Seville Gran Via de les Corts Catalanes, 130-136. Barcelona Tradia Telecom, S.A. Motors, 392. L'Hospitalet de Llobregat. Barcelona Servicios Audiovisuales Alella, S.L. Gran Via de les Corts Catalanes, 130-136. Barcelona Adquisición de Emplazamientos, S.L. (ADESAL) Motors, 392. L'Hospitalet de Llobregat. Barcelona Through ACDL TBI plc TBI Finance Ltd Airport Group International Holdings LLC 159, New Bond Street. London W1S 2UD. United Kingdom 159, New Bond Street. London W1S 2UD. United Kingdom c/o Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. USA TBI International Airports Limited 159, New Bond Street. London W1S 2UD. United Kingdom TBI Global Limited TBI Aiviation Limited TBI Financial Investments Limited TBI (US) Holdings Limited 159, New Bond Street. London W1S 2UD. United Kingdom 159, New Bond Street. London W1S 2UD. United Kingdom c/o PricewaterhouseCoopers LLP, 68-73 Queen Street. Edinburgh UK 159, New Bond Street. London W1S 2UD. United Kingdom TBI Airport Holdings Limited 159, New Bond Street. London W1S 2UD. United Kingdom TBI Costa Rica SRL Forum Business Park, Building G, Fourth Floor. Santa Ana. Costa Rica Stockholm Skavsta Flygplats AB Box 44, 611 22 Nyköping. Sweden TBI Global (Business Travel) Limited 159, New Bond Street. London W1S 2UD. United Kingdom TBI US Operations Inc c/o Corporation Service Company, 2711 Centreville Road, Suite 400, Wilmington, Delaware, 19808. USA Belfast International Airport Holdings Limited 159, New Bond Street. London W1S 2UD. United Kingdom LLAG Investors (UK) Limited London Luton Airport Group Limited Cardiff International Airport Limited 159, New Bond Street. London W1S 2UD. United Kingdom 159, New Bond Street. London W1S 2UD. United Kingdom 159, New Bond Street. London W1S 2UD. United Kingdom (*) Corresponds to % shareholding of Abertis Infraestructuras, S.A. (direct or indirect) with respect to each of the companies held. This annex forms part of Note 2.b of the notes to the 2005 consolidated annual accounts with which it should be read. 159 5 0 0 2 T R O P E R L A U N N A Auditor PwC Other auditors Other auditors Other auditors N/A PwC PwC PwC PwC PwC PwC PwC PwC PwC PwC Shareholding Cost (thousand euros) % (*) Company owning shareholding Consolidation method Activity 5,402 60.00% abertis logística Fully consolidated 181,152 100.00% abertis telecom Fully consolidated 134,497 100.00% abertis telecom Fully consolidated 4,968 100% (3) retevisión / tradia Fully consolidated Construction and operation of logistic parks Telecommunications infrastructure operator Telecommunications infrastructure operator Audiovisual and telecommunication services 3 100.00% tradia Equity accounting Dormant 810,803 90.00% ACDL Fully consolidated Holding company 132,278 90.00% TBI plc Fully consolidated Financial services 125,141 90.00% TBI plc Fully consolidated Holding company 59,003 90.00% TBI plc Fully consolidated Holding company - - 90.00% TBI plc 90.00% TBI plc Fully consolidated Dormant Fully consolidated Aircraft leasing 102 90.00% TBI Finance Ltd Fully consolidated Finance company 38,452 90.00% 12,916 90.00% - 90.00% 27,166 81.09% TBI International Airports Limited TBI International Airports Limited TBI International Airports Limited TBI International Airports Limited Fully consolidated Holding company Fully consolidated Holding company Fully consolidated Technical consulting services Fully consolidated Airport management and operation PwC - 90.00% TBI Global Limited Fully consolidated Dormant 56,609 90.00% TBI (US) Holdings Limited Fully consolidated Holding company 105,647 90.00% TBI Airport Holdings Limited Fully consolidated Holding company 88,148 90.00% TBI Airport Holdings Limited Fully consolidated Holding company 76,143 90.00% TBI Airport Holdings Limited Fully consolidated Holding company 56,037 90.00% TBI Airport Holdings Limited Fully consolidated Airport management and operation PwC PwC PwC PwC PwC PwC 5_1 consolidated annual accounts and management report 160 5 0 0 2 T R O P E R L A U N N A Subsidiary companies included in the consolidation scope Company Registered office TBI Overseas Holdings Inc c/o Corporation Service Company, 2711 Centreville Road, Suite 400, Wilmington, Delaware, 19808. USA Orlando Sanford International Inc 2 Red Cleveland Boulevard, Suite 210, Sanford, Florida, FL32773. USA TBI Real Estate Holdings LLC TBI Airport Management Inc Orlando Sanford Domestic Inc TBI Cargo Inc 2711 Centreville Road, Suite 400, Wilmington, Delaware 19808. USA PO Box 6041, Toronto AMF, Toronto, Ontario, L5P 1B2. Canada 2711 Centreville Road, Suite 400, Wilmington, Delaware 19808. USA 2711 Centreville Road, Suite 400, Wilmington, Delaware 19808. USA Belfast International Airport Limited Belfast International Airport, Aldergrove, BT29 4AB. Ireland Aldergrove Airports Limited 159 New Bond Street. London W1S 2UD. United Kingdom Aldergrove International Airports Limited Belfast International Airport, Aldergrove, BT29 4AB. Ireland London Luton Airport Operations Limited 159 New Bond Street. London W1S 2UD. United Kingdom MB 121 Limited TBI Overseas (UK) LLC TBI (US) LLC TBI Toronto Inc 159 New Bond Street. London W1S 2UD. United Kingdom c/o Corporation Service Company, 2711 Centreville Road, Suite 400, Wilmington, Delaware, 19808. USA 2711 Centreville Road, Suite 400, Wilmington, Delaware 19808. USA PO Box 6041, Toronto AMF, Toronto, Ontario, L5P 1B2. Canada Airport Group New York Inc c/o CT Corporation System, 818 West 7th Street, Los Ángeles, CA 90017. USA TBI Airport Management Canada Inc 66 Wellington Street West, Suite 3600, Toronto, Ontario. Canada Aldergrove Car Parks Limited Belfast International Airport, Aldergrove, BT29 4AB. Ireland TBI Overseas (Bolivia) LLC c/o Corporation Service Company, 2711 Centreville Road, Suite 400, Wilmington, Delaware, 19808. USA TBI Partnership PO Box 6041, Toronto AMF, Toronto, Ontario, L5P 1B2. Canada Servicios de Aeropuertos Bolivianos, S.A. Santa Cruz de la Sierra. Santa Cruz, Bolivia (*) Corresponds to % shareholding of Abertis Infraestructuras, S.A. (direct or indirect) with respect to each of the companies held. This annex forms part of Note 2.b of the notes to the 2005 consolidated annual accounts with which it should be read. 161 5 0 0 2 T R O P E R L A U N N A Shareholding Cost (thousand euros) % (*) Company owning shareholding Consolidation method Activity Auditor 120,594 90.00% TBI US Operations Inc Fully consolidated Holding company 6,616 90.00% TBI US Operations Inc Fully consolidated Airport management and operation 2,667 90.00% TBI US Operations Inc Fully consolidated Real estate 781 90.00% TBI US Operations Inc Fully consolidated Airport management and operation - 90.00% TBI US Operations Inc Fully consolidated Airport management and operation - 90.00% TBI US Operations Inc Fully consolidated Air cargo 486,695 90.00% - 90.00% - 90.00% 7,696 90.00% - 90.00% Belfast International Airport Holdings Limited Belfast International Airport Holdings Limited Belfast International Airport Holdings Limited London Luton Airport Group Limited Cardiff International Airport Limited Fully consolidated Airport management and operation Fully consolidated Dormant Fully consolidated Dormant Fully consolidated Airport management and operation PwC Fully consolidated Dormant 25,452 90.00% TBI Overseas Holdings Inc Fully consolidated Technical consulting services 17,597 90.00% TBI Overseas Holdings Inc Fully consolidated Holding company 779 90.00% TBI Airport Management Inc Fully consolidated Airport management and operation 1 90.00% TBI Airport Management Inc Fully consolidated Dormant - 90.00% TBI Airport Management Inc Fully consolidated Airport management and operation - 90.00% Belfast International Airport Limited Fully consolidated Car park operator 17,597 90.00% TBI (US) LLC Fully consolidated Holding company - 90.00% TBI Toronto Inc Fully consolidated Airport management and operation 3,225 90.00% TBI Overseas (Bolivia) LLC Fully consolidated Airport management and operation PwC PwC PwC PwC PwC PwC PwC PwC PwC PwC PwC PwC PwC PwC PwC PwC PwC PwC PwC 5_1 consolidated annual accounts and management report 162 5 0 0 2 T R O P E R L A U N N A ANNEX II Multigroup companies included in the consolidation scope Company Registered office Through Iberpistas S.A.C.E. Autopistas Vasco-Aragonesa, C.E.S.A. (AVASA) Barrio de Anuntzibai, s/n 48410. Orozco. Vizcaya Through abertis logísitica Areamed 2000, S.A. Vía Augusta, 21-23. Barcelona Parc Logístic de la Zona Franca, S.A. (PLZF) Av. del Parc Logístic, 2-10. Barcelona (*) Corresponds to % shareholding of Abertis Infraestructuras, S.A. (direct or indirect) with respect to each of the companies held. This annex forms part of Note 2.b of the notes to the 2005 consolidated annual accounts with which it should be read. 163 5 0 0 2 T R O P E R L A U N N A Shareholding Cost (thousand euros) % (*) Company owning shareholding Consolidation method Activity Auditor 219,996 35 11,871 50 50 50 iberpistas Proportional integration Toll highway concessionaire PwC abertis logística Proportional integration Operation of service areas abertis logística Proportional integration Promotion and operation of logistic parks Other auditors Other auditors 5_1 consolidated annual accounts and management report 164 5 0 0 2 T R O P E R L A U N N A ANNEX III Associate companies included in the consolidation scope Company Registered office Shareholding Cost (thousand euros) % (*) Assets DIRECT SHAREHOLDINGS Concesionaria Vial de los Andes, S.A. (COVIANDES) Pt Operational Services Limited (PTY) Autopistas del Sol, S.A. (AUSOL) Sociedad Concesionaria del Equi, S.A. (ELQUI) INDIRECT SHAREHOLDINGS Through Autopistas C.E.S.A. Túnel del Cadí, S.A.C. Autopista Terrassa-Manresa, Autema, Concessionària de la Generalitat de Catalunya, S.A. (AUTEMA) Schemaventotto, S.p.A. Carretera novena, 126-91. Santafé Bogotá. Colombia 1, Lavender Road. Bon Accord 009. Pretoria. South Africa Leandro N. Alem, 986, piso 4. Buenos Aires. Argentina Av. Andrés Bello, 2777. Las Condes. Santiago. Chile 17,789 39.04 131,618 0 33.30 4,890 147,548 31.59 203,543 22,748 25.00 461,092 Carretera de Vallvidrera a St. Cugat, km 5,3. Barcelona 26,205 37.19 124,012 Autopista C-16, km 41. Barcelona 46,292 23.72 238,402 Corso Trieste. 170. 10024 Moncalieri (Italy) 194,107 13.33 2,329,850 Autostrade, S.p.A. (4)/(5) Via Bergamini, 50. Rome. Italy 2,044,204 6.68 16,142,250 Through Aumar, S.A.C.E Ciralsa, S.A.C.E. Av. Maisonnave, 41. Alicante 12,542 25.00 162,574 Through Iberpistas, S.A.C.E. Autopista Trados-45, S.A. (TRADOS-45) Ctra. M-203 P.K. 0,280. Madrid Alazor Inversiones, S.A. Carretera M-50, km. 67,5. Área de Servicio la Atalaya Villaviciosa de Odón. Madrid 46,150 66,460 50.00 31.22 193,873 745,754 Infraestructuras y Radiales, S.A. (IRASA) Golfo de Salónica, 27. Madrid 20,032 22.5 (6) 473,280 M-45 Conservación, S.A. Ctra. M-203 P.K. 0,280. Madrid 277 25.00 761 Accesos de Madrid, C.E.S.A. Carretera M-50, km. 67,5 Área de Servicio la Atalaya Villaviciosa de Odón. Madrid 212,205 31.22 1,043,799 (*) Corresponds to % shareholding of Abertis Infraestructuras, S.A. (direct or indirect) with respect to each of the companies held. This annex forms part of Note 2.b of the notes to the 2005 consolidated annual accounts with which it should be read. 165 5 0 0 2 T R O P E R L A U N N A Liabilities Income Profit/ (Loss) Company owning shareholding Consolidation method Activity Auditor 101,391 31,773 22,761 abertis Equity accounting Infrastructure concessionaire Other auditors 3,055 8,961 1,724 abertis Equity accounting Operation and maintenance Other auditors 332,132 43,166 (4,052) abertis Equity accounting Toll highway concessionaire PwC/Other auditors 362,180 23,885 15,403 abertis Equity accounting Toll highway concessionaire Other auditors 96,823 20,082 6,555 acesa Equity accounting Toll highway concessionaire Other auditors 306,986 35,619 9,677 acesa Equity accounting Toll highway concessionaire PwC 270,609 - 394,606 Acesa Italia Equity accounting Holding company Other auditors 12,777,877 2,223,279 662,376 Schemaventotto Equity accounting Toll highway concessionaire Other auditors 112,407 9,360 - aumar Equity accounting Constrution, maintenance and operation of toll highways Other auditors 165,792 22,482 6,510 iberpistas Equity accounting Infrastructure concessionaire PwC 550,418 178 (6,886) iberpistas Equity accounting Holding company Other auditors 468,945 - (15,479) iberpistas / Avasa Equity accounting 208 1,291 - Trados-45 Equity accounting Administration and management of infrastructures Other auditors Conservation and maintanence of highways Other auditors 898,808 16,981 (37,143) Alazor Inversiones Equity accounting Toll highway concessionaire Other auditors 5_1 consolidated annual accounts and management report 166 5 0 0 2 T R O P E R L A U N N A Associate companies included in the consolidation scope Company Registered office Shareholding Cost (thousand euros) % (*) Assets Autopista del Henares, S.A.C.E. (HENARSA) Golfo de Salónica, 27. Madrid 426,550 22.50 451,002 Erredosa Infraestructuras,S.A. (ERREDOSA) Golfo de Salónica, 27. Madrid 61 22.50 55 Through Aurea Ltd. Road Management Group (RMG) Through saba 130, High Street Old. Woking Surrey. United Kingdom 9,242 25.00 454,729 Las Mercedes Sociedad Concesionaria, S.L. Las Mercedes, s/n. Las Arenas-Getxo. Vizcaya Parcheggi Bicocca Port Mobility Through abertis logística Via delle Quatro Fontane, 15, Rome. Italy Via delle Quatro Fontane, 15. Rome. Italy 539 44 150 33.09 24.82 9.93 10,134 21,541 2,040 Araba Logística, S.A. (ARASUR) Fueros, 15. Vitoria 7,469 42.61 58,348 Centro Intermodal de Logística, S.A. (CILSA) Av. Ports d’Europa, 100. Barcelona 25,429 32.00 131,561 Through abertis telecom Torre de Collserola, S.A. Consorcio de Telecomunicaciones Avanzadas Ctra. de Vallvidrera al Tibidabo, s/n. Barcelona Av. Juan Carlos I, 59. Espinardo. Murcia 3,483 41.75 22,511 250 25.00 989 Emissions Digitals de Catalunya, S.A. Av. Diagonal, 477, planta 1ª. Barcelona 300 10.00 3,078 (*) Corresponds to % shareholding of Abertis Infraestructuras, S.A. (direct or indirect) with respect to each of the companies held. This annex forms part of Note 2.b of the notes to the 2005 consolidated annual accounts with which it should be read. (1) abertis shareholding: 100%. Direct 99.75%; indirect through Gicsa 0.25%. (2) The shares of GCO are traded on the Argentina Stock Exchange. The average share price of the last quarter of 2005 was 1.91 Argentine pesos. At the end of the year, the share price was 1.85 Argentine pesos. The company holds 57.6% of the voting rights. (3) Indirect shareholding of abertis: 100%. Indirect through retevisión: 78.37% and tradia: 21.63%. 167 5 0 0 2 T R O P E R L A U N N A Liabilities Income Profit/ (Loss) Company owning shareholding Consolidation method Activity Auditor 54,513 16,232 (11,493) 1 - (2) Infraestructuras y Radiales Infraestructuras y Radiales Equity accounting Toll highway concessionaire Other auditors Equity accounting Administration and management Other auditors of infrastructures 441,342 59,035 971 Aurea Limited Equity accounting Toll highway concessionaire Other auditors - saba Equity accounting Car park operator (1,426) Saba Italia Equity accounting Car park operator PwC PwC - Saba Italia Equity accounting Car park operator Other auditors 9,859 21,467 540 41,955 180 254 - - (387) abertis logística Equity accounting 89,605 13,144 1,352 abertis logística Equity accounting 13,684 3,976 173 retevisión Equity accounting - (27) tradia Equity accounting Construction and operation of logistic parks Construction and operation of logistic parks PwC Other auditors Construction and operation of telecommunication infrastructures Other auditors Provision of services for operators and telecommunication concessions N/A 53 16 tradia Equity accounting Radio and TV signal transmission N/A 17 32 (4) The shares of Autostrade, S.p.A. are traded on the Milan Stock Exchange. The average share price of the last quarter of 2005 was 19.45 euros. At the end of the year, the share price was 20.26 euros. (5) Consolidated information at 30 September 2005. (6) Indirect shareholding of abertis: 22,5%. Indirect through iberpistas, S.A.C.E.:15% and Avasa: 7,5%. 168 5 0 0 2 T R O P E R L A U N N A 5_1 consolidated annual accounts and management report ABERTIS INFRAESTRUCTURAS, S.A. CONSOLIDATED MANAGEMENT REPORT FOR 2005 The abertis Group provides its services in the area of infrastructure management serving mobility and communications. It operates in the sectors of highways, car parks, logistics infrastructure, telecommunication infrastructure and airports. Significant events There have been a number of significant events in the Group during 2005: • In the highways sector, the sale by Schemaventotto (the company that groups the core shareholders of Autostrade) of 2.053% of Autostrade, reducing the indirect shareholding of abertis to 6.68%, the sale of shareholdings in Concesiones de Madrid (25%) and Autopista Central Gallega (18%) and the increase in the shareholding in Accesos de Madrid (to 31.2%). In December 2005, a consortium led by abertis was selected by the French Government to acquire the highway concessionaire Sanef. The effective acquisition of 75.7% of this company took place at the beginning of February 2006, and the Public Takeover Bid for the outstanding 24.3% commenced. • In the car park sector, saba acquired 40% of Saba Italia (raising its shareholding to 100%) during the year and has continued its expansion in Chile (acquisition of companies that manage 7 car parks), Italy (acquisition in Venice and opening in Modena) and Portugal (opening of two car parks). • In the logistics infrastructure sector the development of the logistics projects in Álava, Seville and ZAL Prat continues, in which abertis is participating and the Parc Logístic de la Zona Franca and ZAL Barcelona remain fully occupied. • In the telecommunication infrastructures sector the initiation of Digital Terrestrial Television is of particular note, with significant involvement of subsidiary companies of abertis telecom as sole providers of the distribution of this new type of signal, as well as the award of two tenders for the transmission of autonomous TV and radio signals. • Finally, in the airports sector the company ACDL, in which abertis holds 90%, took full control of the company TBI, having launched a Public Takeover Bid in 2004, giving it a 29% stake at the end of 2004. Also of note was the inauguration of the expansion of the London-Luton airport terminal managed by TBI. New financial standards This is the first year the annual financial statements of the Group have been prepared under International Financial Reporting Standards (IFRS). These standards promoted by the European Union and applicable to listed companies from 1 January 2005 have led to a series of changes that are summarised as follows: • Changes in presentation with new financial statements (statement of income and expenses affecting equity and cash flow statement) and changes in the structure, quantity and type of information provided compared to the local Spanish accounting standards in force up until this date. 169 5 0 0 2 T R O P E R L A U N N A • Changes in the accounting principles whose impact on the abertis Group is mainly concentrated on the derivatives, whereby the current Spanish accounting standard for the sector covering toll highway concessionaire companies is no longer applicable. This sector adaptation of the Spanish accounting standards (Spanish GAAP) allowed, amongst other things, the deferral of certain costs over the life of the concession (financial charges and amortisation/reversion fund). In the Consolidated Annual Accounts the full impact arising from these new financial reporting standards is shown. As the Group’s activity is diversified across different sectors and a significant part of the highway concessions are in a mature phase, the effects on the consolidated results and equity have not been significant. For comparative purposes, the figures for 2004 have also been converted to IFRS and consequently these figures do not coincide with the 2004 Consolidated Annual Accounts presented. Activity and results 2005 has been a good year for abertis, with all business units reporting an increase in their activity. In the case of the highways, which represents the main sector of activity in terms of consolidated income, average daily traffic (the main indicator for measuring activity) on the combined Spanish network rose 2.3% to 28,993 vehicles. The other sectors have also increased their recurring income, with the increase in the number of passengers registered by the airport operator TBI (more than 11% up on the previous year) of special note. In the analysis of the evolution of the profit and loss account for 2005, the following two factors make comparability difficult: • The inclusion of TBI from January has represented an increase across the board in income and expenses for the year. • Extraordinary or non-recurrent items in 2005 and in the previous year also affect comparability. The result for 2004 included a capital gain of 70 million euros generated from the sale by Schemaventotto of 10% of Autostrade and the sale by Autostrade of a 5% holding that it had in abertis. The result for 2005, in contrast, includes 42 million euros corresponding to capital gains from the sale by Schemaventotto of 2% of Autostrade, capital gains from the sale of holdings in Concesiones de Madrid and Autopista Central Gallega and compensation for the rate freeze in previous years. Taking this into account, the consolidated profit for the year attributed to shareholders was 511 million euros, which represents a 4.6% increase on the previous year (or 12.1% on a comparable basis, excluding the impact of extraordinary items and non-recurring items). 5_1 consolidated annual accounts and management report 170 5 0 0 2 T R O P E R L A U N N A Operating income reached 1,906 million euros (up 23% on 2004). The inclusion of TBI has altered the relative weight of the various business units in terms of income. The highway sector has gone from 74% to 63% of total income, car parks continue to contribute 6%, telecommunication infrastructures have dropped from 17% to 15%, airports have increased from 2% to 15% and logistic infrastructures remain at around 1%. Balance Sheet The balance sheet reflects the effect of the inclusion of the new companies acquired and the expansion of existing businesses. Total assets have increased from 7,095 million euros at 31 December 2004 to 8,447 million euros at the end of 2005. Of total assets, more than 50% correspond to fixed assets in accordance with the nature of the Group’s businesses related to infrastructure management. Total investment of the Group in 2005 was more than 900 million euros, with the majority related to investment in expansion (close to 80% of the total). Consolidated shareholders’ funds increased to 3,036 million euros, 5% more than the previous year. Debt at 31 December 2005 (4,256 million euros) represented 140% of the shareholders’ funds and 50% of liabilities, percentages that are lower than the other large European infrastructure operators. As part of the continuous process of optimising the financial structure of the Group (increasing the period of maturity and diversifying the different financial instruments), a long term bond issue of 700 million euros was placed with institutional investors during the year. The financial equilibrium of abertis must allow it to undertake with guarantees new investments in improving infrastructures already under management and to continue the policy of selective investments carried out in recent years without the need for additional capital contributions from the shareholders. Shareholder return As in previous years, abertis has maintained its policy of shareholder return that combines the dividend payout with a bonus share issue of one share for every 20 shares held. The Board of Directors of abertis has agreed to propose to the Ordinary Shareholders’ Meeting a final dividend for 2005 of 0.25 euros gross per share. The total dividend to be charged against profit for 2005 will be 289.5 million euros, rising to 0.5 euros gross per share with the interim dividend already paid, an increase of 9.6% on the dividend distributed and charged against results in the previous year. The willingness to set an annual dividend at this new level is an indication of the confidence in the consolidation of the return on investments made in recent years and their growing contribution to profits. 171 5 0 0 2 T R O P E R L A U N N A Outlook In 2006 a significant change in the key figures is expected as a result of the inclusion of the shareholding in the French group Sanef (which holds a concession until 31 December 2018 of 1,771 kilometres of highways in the north and east of France) and the financing associated with its acquisition, whilst trusting that the positive contribution of all the business units will continue, accentuated by the progressive contribution of all new projects and the most recent incorporations in the Group, with the policy on shareholder return being maintained. Furthermore, those investment opportunities that meet the strict requirements of soundness and return demanded by the Group will continue to be analysed, in order to continue providing shareholders with a balanced combination of investments in sectors related with transport and communication infrastructures. Treasury shares Under the authorisation approved by the Shareholders’ Meeting and in response to the offer from a core shareholder interested in selling its shareholding, in December 2005 the Company acquired own shares for the sum of 185.9 million euros (1.5% of the capital). During the month of December part of these shares (0.173% of the capital) were sold, generating a capital gain of 0.35 million euros. At the close of the financial year the Company held 7,685,832 own shares (1.33% of the capital). In accordance with the regulations in force, it has raised a provision up to the book value as indicated in the notes to the annual accounts. It is the Company’s intention to continue placing this packet of shares in the market during 2006. 174 5 0 0 2 T R O P E R L A U N N A 5_2 annual accounts and management report Balance sheet at 31 December (thousand euros) A S S E T S Fixed assets Intangible assets Computer software Goodwill Studies and projects Other intangible assets Amortisation Tangible assets Land and natural resources Buildings and other constructions Machinery and vehicles Installations, tooling and furniture Other fixed assets Depreciation Investments Shareholdings in subsidiary and associated companies Long-term loans to group companies Long-term share portfolio Long-term deposits and guarantees Other loans Provisions Treasury shares Treasury shares in special circumstances Provisions for treasury shares in special circumstances 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 Short-term share portfolio Other loans Cash and cash equivalents Cash Banks and credit institutions Prepayments and accrued income 2005 2004 6,297,888 330,615 361 368,488 87 3 (38,324) 13,980 4,407 6,117 349 3,552 3,438 (3,883) 5,906,179 4,291,375 1,858,875 7,513 66 5,397 (257,047) 47,114 164,477 (117,363) 5,583,787 349,121 296 370,438 947 3 (22,563) 14,033 3,015 7,511 349 3,405 3,197 (3,444) 5,220,633 4,080,016 1,376,804 7,513 62 6,613 (250,375) — — — 7,654 7,286 543,081 8,101 686 4,397 3,891 27 827 (1,727) 528,511 515,968 3,563 8,980 5,284 43 5,241 1,185 414,529 11,448 23 2,192 10,342 10 1,632 (2,751) 399,226 372,127 1,325 25,774 3,855 39 3,816 — Total assets 6,848,623 6,005,602 175 5 0 0 2 T R O P E R L A U N N A 2005 2004 3,175,252 1,737,166 579,690 615,609 317,990 227,678 47,114 22,827 387,551 (144,764) 3,793 3,793 36,926 36,926 2,545,065 1,570,000 491,000 — 484,065 — 1,087,587 41,634 — 41,634 953,831 939,827 14,004 31,686 3,066 3,066 57,370 55,391 1,089 888 2 3,186,622 1,654,444 579,690 717,701 400,712 191,570 — 125,419 361,076 (126,289) — — 41,397 41,397 2,157,993 870,000 801,000 2,227 482,255 2,511 619,590 193,685 170,000 23,685 323,933 318,600 5,333 42,205 4,203 4,203 55,564 53,790 1,253 509 12 Balance sheet at 31 December (thousand euros) L I A B I L I T I E S Equity Share capital Share premium Reserves Revaluation reserve RDL 7/1996 Legal reserve RD 1564/1989 Treasury shares reserve Voluntary reserve Profit and loss account Interim dividend Deferred income Positive exchange differences Provisions for liabilities and charges Other provisions Long-term creditors Bond issues Bank loans Payment pending on shares in group companies Amounts owed to subsidiary and associated companies Other creditors Short-term creditors Bond issues Bonds Interest on bonds Bank loans Loans Interest on loans Loans with group companies Trade creditors Trade creditors Other non-trade creditors Public Treasury Accrued wages and salaries Other debts Deposits and guarantees received Total liabilities 6,848,623 6,005,602 176 5 0 0 2 T R O P E R L A U N N A 5_2 annual accounts and management report Profit and loss account for the year ended 31 December (thousand euros) E X P E N S E S Personnel expenses Salaries and wages Social security Pension fund and other personnel related expenses 2005 2004 12,127 10,901 973 253 12,157 11,055 870 232 Amortisation and depreciation of fixed asset 19,139 20,274 Variation in trade provisions Other operating expenses External services Taxes Total operating expenses Financial costs, related expenses and change in investment provision Total financial expenses Net financial results Profit on ordinary activities Losses on disposal of fixed assets and extraordinary expenses Movement in fixed asset provisions Extraordinary profit Profit before tax Corporation income tax Profit for the year (1,150) 18,178 18,048 130 48,294 128,230 128,230 146 16,898 16,814 84 49,475 92,529 92,529 391,033 416,872 360,860 382,645 2,778 6,672 — 25,996 31,765 — 353,664 340,419 (33,887) (20,657) 387,551 361,076 177 5 0 0 2 T R O P E R L A U N N A 2005 2004 17,456 17,456 665 665 14,704 14,704 544 544 18,121 15,248 30,173 34,227 437,861 464,702 81,402 519,263 44,699 509,401 I N C O M E Net revenue Rendering of services Other operating income Other operating income Total operating income Operating loss Income from investment in Group and associated companies Other interests and related income Total financial income Profits from disposal of fixed assets and extraordinary income Extraordinary loss 2,254 7,196 15,535 42,226 178 5 0 0 2 T R O P E R L A U N N A 5_2 annual accounts and management report ABERTIS INFRAESTRUCTURAS, S.A. NOTES TO THE 2005 ANNUAL ACCOUNTS NOTE 1_ ACTIVITY ABERTIS INFRAESTRUCTURAS, S.A. (hereinafter abertis or the Company) was incorporated in Barcelona on 24 February 1967 and its registered office is at Avenida del Parc Logistic nº 12-20, Barcelona. On 27 April 2004 and 26 April 2004, the Shareholders’ Meetings of Abertis Infraestructuras, S.A. (absorbing company) and Ibérica de Autopistas, S.A. (company absorbed) respectively approved the merger by absorption of both companies, effective for accounting purposes from 1 January 2004. abertis is currently the parent of a group engaged in to the management of transport and communications infrastructures that operates in five sectors of activity: highway concessions, car parks, logistics services, telecommunications and airports. Its objects consist of the construction, maintenance and operation of highways under concession; management of highway concessions in Spain and internationally; construction of road infrastructures; complementary construction activity, 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 communications and/or telecommunications required for the transport and movement of people, goods and information, with the necessary authorisation, as the case may be. The Company can undertake its objects, especially its concessionary activity, directly or indirectly through shareholdings in other companies, subject, in this respect, to the legal provisions in force. NOTE 2_BASIS OF PRESENTATION OF THE ANNUAL ACCOUNTS 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 and the notes to these accounts are expressed in thousand euros. The 2005 Consolidated Annual Accounts of the abertis Group are presented separately from the parent company accounts. The key figures in the 2005 Consolidated Annual Accounts, prepared in accordance under the requirements of the eleventh final provision of law 62/2003 30 of December applying the International Financial Reporting Standards approved by the European Union Regulations, are as follows: 179 5 0 0 2 T R O P E R L A U N N A 8,446,672 2,959,988 76,145 1,905,880 511,233 3,635 Total assets Net equity (of parent company) Net equity (of minority interest) Income from consolidated operations Result for the year due to Parent company – Profit Result for the year due to Minority interest – Profit NOTE 3_PROPOSED DISTRIBUTION OF RESULTS The following distribution of results will be submitted to the Shareholders’ Meeting for approval: Basis of distribution Profit Distribution Dividends Legal reserve Voluntary reserve Amount 387,551 289,528 38,755 59,268 387,551 In the event that the Company holds treasury shares on the date for distribution of dividends, those shares will not be entitled to the final dividend and the corresponding amount due will be transferred to the voluntary reserve. During 2005 an interim dividend of 144,764 thousand euros was paid. This interim dividend represented a gross amount of 0.25 euros per share on all issued shares. In accordance with the requirements of article 216 of the Revised Text of the Companies Act, the table showing sufficient profit for the period to allow the distribution of the interim dividend is included, as well as the liquidity statement that establishes the existence of sufficient cash funds to make the interim dividend payment as indicated. 5_2 annual accounts and management report 180 5 0 0 2 T R O P E R L A U N N A Net profit from 1 January to 31 August 2005 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 173,793 (17,379) 156,414 144,764 Amount 1,011,226 (144,764) 866,462 NOTE 4_ACCOUNTING POLICIES The most significant accounting policies used in the preparation of the 2005 Annual Accounts, in accordance with the General Accounting Plan, are as follows: a) Intangible fixed assets The items included under this heading are valued at acquisition price or the cost of production and amortised as follows: • Goodwill fund is amortised on a straight line basis over the estimated period in which it will contribute to profit generation, with a maximum period of 20 years. • Computer applications are amortised at a rate of between 25% and 33% per year. b) 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 written off or 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. 181 5 0 0 2 T R O P E R L A U N N A 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% c) 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. The Company undertakes currency hedges against exchange rate risks on investments using the necessary financial instruments (see note 4.l). d) Treasury shares In the event that there is no plan for their redemption, own shares are valued at acquisition cost or theoretical book value, if this was lower, creating an unavailable reserve for this purpose (see Note 11). If the market value of these shares (being the lower of the closing price at the end of the financial year and the average price for the last quarter) is lower than the acquisition cost, the necessary provision to cover this difference will be charged against extraordinary results in the profit and loss account. If in the above situation the theoretical book value of these shares were lower than the market value, a provision would be made to cover this difference with a charge against unrestricted reserves. 5_2 annual accounts and management report 182 5 0 0 2 T R O P E R L A U N N A e) Deferred expenses Loan origination fees are amortised on a straight line basis over the period of the loans (see note 9). 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 that could affect the company (see note 12). g) Pension commitments and other personnel related liabilities Meeting the corresponding employment agreements, the Company has commitments to contribute to a Pension Plan within the employment system (defined Contribution Plan) and, in respect of some employees, the obligation to pay a retirement bonus or lump sum, under certain conditions. These commitments are externalised through an insurance policy. 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 the balance-sheet date are classified as short-term and amounts due after this date are considered long-term. i) Corporation income tax The profit and loss account includes the charge for corporation income tax, the calculation of which incorporates the full amount of tax accrued for the year, the effect of timing differences between the corporation income tax assessment basis and book profit, and all credits or allowances to which the Company is entitled. The corporation income tax charge is calculated as explained in Note 15. The Company pays tax on a consolidated basis together with other companies of the Group, of which abertis is the parent company, in accordance with current legislation. Prepaid taxes are only recognised as assets so long as their future realisation is reasonably certain, or whenever there are deferred taxes that offset them. j) Foreign currency transactions 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 until maturity in the case of profits. These unrealised positive differences are shown in the liabilities of the balance sheet as “Deferred income” until they are realised. 183 5 0 0 2 T R O P E R L A U N N A Exchange differences generated by debts in foreign currency to finance investments in foreign companies in the same currency, where there is consequently an exchange rate hedge associated with said debt, are recorded if they are significant either as “Positive exchange differences” or “Deferred expenses” and can be taken to profit and loss as the associated debt is settled and when the hedge of said risk disappears. k) Accounting for income and expenses Income and expenses are recorded on an accruals basis. That is, at the time the transaction occurs, irrespective of when payment is made or received. l) Financial derivatives and hedging instruments abertis uses financial derivative instruments to manage its financial risk arising from fluctuations in interest rates and exchange rates. In certain cases the Company finances activities in the same currency in which the foreign investments are held in order to reduce the exchange rate risk. This is done by raising finance in the corresponding currency or through the use of currency swaps (see note 13.c). At the close of each year, as indicated in note 4.j. both the loans and the contracts that act as exchange rate hedges are adjusted to the exchange rate at this date and the resulting exchange differences are recorded in the balance sheet if significant, as deferred income or expense, as applicable, with a corresponding increase or decrease in the amount of the debt. m) 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. n) 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 consolidation has been used, in accordance with the General Accounting Plan. 5_2 annual accounts and management report 184 5 0 0 2 T R O P E R L A U N N A NOTE 5_INTANGIBLE FIXED ASSETS The movement during 2005 and balances in the accounts that make up intangible fixed assets were as follows: Increase Transfer Decrease Computer applications Goodwill Studies and projects Other intangible assets Total cost 65 – 87 – – (1,950) (947) – 371,684 152 (2,897) The goodwill mainly corresponds to that generated in the merger by absorption with iberpistas in 2004. The movements in the accumulated amortisation during the year were as follows: Increase Transfer Decrease Computer applications Goodwill Studies and projects Other intangible assets Total amortisation 100 18,556 – (1,950) 2 – (947) – 22,563 18,658 (2,897) Balance at 31.12.05 361 368,488 87 3 368,939 Balance at 31.12.05 193 38,126 2 3 38,324 – – – – – – – – – – Balance at 31.12.04 296 370,438 947 3 Balance at 31.12.04 93 21,520 947 3 NOTE 6_TANGIBLE FIXED ASSETS The movements in the entries under tangible fixed assets in 2005 were as follows: Land and natural resources Buildings and other constructions Machinery and vehicles Tooling Other installations Furniture Computer equipment Other fixed assets Total Balance at 31.12.04 3,015 7,511 349 1 2,621 783 247 2,950 17,477 Increase Transfer Decrease Balance at 31.12.05 - - - - 3 270 - 121 394 1,392 (1,392) - - (175) 55 120 - - - (2) - - (6) - - - 4,407 6,117 349 1 2,443 1,108 367 3,071 (8) 17,863 185 5 0 0 2 T R O P E R L A U N N A Balance at 31.12.05 1,174 276 1 - - - (8) 1,490 - - 601 341 (8) 3,883 Amount 28 585 307 244 1,164 Increase Transfer Decrease 134 54 - 140 64 55 447 - - - (117) 24 93 - The changes in accumulated depreciation during the year were: Buildings and other constructions Machinery and vehicles Tooling Other installations Furniture Computer equipment Total Balance at 31.12.04 1,040 222 1 1,475 513 193 3,444 The following items are fully depreciated: Machinery and vehicles Furniture Computer equipment Other fixed assets Total gross book value It is Company policy to arrange all the insurance policies considered necessary to cover all possible risks that could affect tangible fixed assets. NOTE 7_INVESTMENTS The movements recorded 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 Total Balance at 31.12.04 Increase Transfer Decrease Balance at 31.12.05 4,080,016 335,873 - (124,514) 4,291,375 1,376,804 778,699 (149,866) (146,762) 1,858,875 7,513 62 6,613 - 6 - (250,375) (17,695) - - - - - 7,513 (2) (1,216) 66 5,397 11,023 (257,047) 5,220,633 1,096,883 (149,866) (261,471) 5,906,179 5_2 annual accounts and management report 186 5 0 0 2 T R O P E R L A U N N A a) Shareholdings in subsidiary and associated companies The detail of direct and indirect shareholdings in subsidiary and associated companies, together with the breakdown of their shareholders’ funds at 31 December 2005 or of the latest public information available, is shown in the Annex. The main movements recorded were: • At the beginning of 2005, Airport Concessions and Development Limited (ACDL) completed the Public Takeover Offer for the TBI group, obtaining 100% of the capital (29.2% at 31 December 2004). The investment made in this financial year in ACDL totalled 327,091 thousand euros. • Increase in capital of abertis logística in the amount of 6,000 thousand euros fully, subscribed by abertis; at 31 December 50% of this amount was still pending payment. • In the context of the corporate reorganisation and simplification of the highway businesses of abertis in the centre/north zone, the following companies were transferred at book value from abertis to Iberpistas: Infraestructuras y Radiales (22.5%) for 12,191 thousand euros; Aulesa (79.2%) for 43,168 thousand euros; Trados (50%) for 46,746 thousand euros and Concesiones de Madrid (25%) for 21,977 thousand euros. • On 21 March 2005 abertis airports was incorporated, a company formed to become the future controlling entity for the shareholdings that the abertis Group has in the airport sector, with a share capital of 60.11 thousand euros, made up of 6,011 shares with a par value of 10 euros each. In December 2005, it increased capital by 181,499 shares with a par value of 10 euros and a share premium of €2.10/share. abertis is the sole shareholder of the company. • Incorporation of Holding d’Infrastructures de Transport SAS (HIT), 100% owned by abertis, for an amount of 42 thousand euros to participate in the acquisition of Société des Autoroutes du Nord et de l’ Est de la France (Sanef) (see note 20). The provisions correspond, basically, to the Argentine company Ausol and the Columbian company Codad (147,548 and 45,751 thousand euros respectively, with 100% of the value of the shareholdings in both companies having been provisioned in previous years) and abertis telecom (33,184 thousand euros, during 2005 part of the existing provision for abertis telecom has been reversed). The appropriation made in the year corresponds basically to the subsidiaries ACDL and Coviandes. abertis does not have any commitments with the subsidiary and associated companies apart from the investment made, with the exception as indicated in note 19.b. 187 5 0 0 2 T R O P E R L A U N N A b) Long-term loans to Group companies The long-term loans with Group companies have the following maturities: 2007 2008 2009 2010 Other TOTAL Group company loans 420,155 310,400 274,885 256,245 597,190 1,858,875 All of them accrue interest at market rates, based on Euribor or Libor plus a spread (see note 14). NOTE 8_TREASURY SHARES Under the protection of the authorisations given by the Shareholders’ Meeting, abertis has bought and sold its own shares during 2005. On 16 December 2005, abertis acquired 8,685,832 own shares at a price of 21.40 euros per share; of those 1,000,000 were disposed of on 22 December 2005 at a price of 21.75 euros per share, generating a profit of 350 thousand euros, which is included in the extraordinary results (see note 16). At 31 December 2005, the Company held 7,685,832 treasury shares, with a market value (the lower of the year end closing price of 21.26 euros for class “A” shares and the average price for the last quarter of 22.55 euros) is 21.26 euros per share. As this is less than acquisition cost a provision has been made charged against results of an amount of 1,076 thousand euros to cover it. As the book value of these shares is lower than the market value, an additional provision has been made to cover this with a charge against freely available reserves of an amount of 116,287 thousand euros (see note 11). It is not the intention of the Company to amortise these shares. NOTE 9_DEFERRED EXPENSES The changes in the entries that make up the deferred expenses were as follows: Balance at 31.12.04 Increase Decrease Loan origination fees Other deferred expenses Total 3,355 3,931 7,286 4,941 - 4,941 (642) (3,931) (4,573) Balance at 31.12.05 7,654 - 7,654 5_2 annual accounts and management report 188 5 0 0 2 T R O P E R L A U N N A The loan origination fees correspond to premiums on bond issues by the Company. The increases in this entry correspond to the premiums on two issues made during the year for 160,000 and 540,000 thousand euros (see note 13). “Other deferred expenses” include the appropriation of the expenses incurred in hedging operations contracted in 2000 in relation to the acquisition of 48.6% of Grupo Concesionario del Oeste, S.A. (GCO) which expired in October 2005. NOTE 10_ SHORT-TERM INVESTMENTS The Company has credit lines with group companies of 1,089,747 thousand euros with interest at market rates. The outstanding balance at 31 December 2005 was 515,968 thousand euros (see details in note 14). The amount of “Other credits” includes accrued interest pending payment on interest rate hedges that the Company has contracted with different financial institutions. NOTE 11_ EQUITY The amount and movements in equity during 2005 were as follows: Share capital Share premium Revaluation reserve Balance 31.12.04 1,654,444 579,690 400,712 Distribution of result for year - - - Increase in capital 82,722 - (82,722) Legal reserve RD 1564/1989 191,570 36,108 Treasury shares reserve Voluntary reserve Result for the year Interim dividend Total - 125,419 361,076 (126,289) - 60,809 (361,076) 126,289 3,186,622 (137,870) - - - - - - Other movements - - - - 47,114 (163,401) 387,551 Balance 31.12.05 1,737,166 579,690 317,990 227,678 47,114 22,827 387,551 (144,764) (144,764) 126,500 3,175,252 189 5 0 0 2 T R O P E R L A U N N A a) Share capital The share capital of abertis is made up of 579,055,443 shares that are entered in the share register, with a nominal value of 3 euros each, fully subscribed and paid up. Of these, 542,019,077 shares are Class A and 37,036,366 are Class B preference shares that have the same rights as the 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. Therefore, if the weighted average share price in the last quarter prior to the reconciliation date (2007) were equal or greater than 14.87 euros per share, no preferential dividend would be payable. At the close of 2005 the share price was 21.82 euros. As the shares of abertis are bearer shares, the exact interest of shareholders in the share capital is not known. However, based on the information available, the most significant holdings at 31 December 2005 are the following: ACS, Actividades de Construcción y Servicios, S.A. Caixa d’Estalvis i Pensions de Barcelona (“la Caixa”) (1) Caixa d’Estalvis de Catalunya Sitreba, S.L. 24.83% 23.28% 5.69% 5.50% 59.30% (1) Caixa Barcelona Seguros de Vida, S.A. de Seguros y Reaseguros (11.66%), VidaCaixa, S.A. de Seguros y Reaseguros (0.50%), Inversiones Autopistas, S.L. (7.75%) and CaixaHolding, S.A., Sociedad Unipersonal (3.35%). All the shares of the Company are listed on the stock exchanges of Barcelona, Bilbao, Madrid and Valencia, and are traded on the Spanish electronic trading system. The ordinary Class A shares are traded on the main board and also form part of the Ibex 35 index. The Class B preference shares are traded under the Fixing mode, where unique prices are set. The Company’s Annual Shareholders’ Meeting on 12 April 2005, agreed to pay a final dividend for 2004 of 0.25 euros gross per share, which represents 137,870 thousand euros. In said Shareholders’ Meeting a bonus share issue was also approved, to be charged against the Revaluation Reserve Account of Royal Decree-Law 7/1996, dated 7 June, with one new share for every 20 shares held, representing a sum of 82,722 thousand euros. 5_2 annual accounts and management report 190 5 0 0 2 T R O P E R L A U N N A On 27 September 2005 payment of an interim dividend of 0.25 euros per share against the profit for the year was agreed, representing a total sum of 144,764 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) Share premium The Spanish Companies Act expressly allows the use of the balance in the share premium reserve to increase capital and does not lay down any specific requirements with respect to the availability of said balance. c) Revaluation Reserve Royal Decree-Law 7/1996, of 7 June This reserve originates from the revaluation of the fixed assets in the balance sheet, by virtue of Article 5 of said Royal Decree, which the Company adopted. Since three years have elapsed since the balance-sheet date when the revaluation was made without an audit by the Tax Authorities, the revaluation operations are deemed to be correct and the balance of the account accepted by the Tax Authorities, and accordingly, the balance is available for distribution to: • Offset book losses. • Increase share capital. • Create reserves freely available for distribution, ten years from the balance sheet-date, containing the revaluation operations. The balance in 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 depreciated, transferred or written off the books. Given the line of business transferred of the subsidiary company acesa in 2002, the requirement that the capital gain has been realised can only be understood to be met when the company acquiring the revalued assets as part of the new activity has depreciated those assets, or transferred or written them off in the books. d) Legal reserve In accordance with the Spanish Companies Act, 10% of the annual profits must be transferred to the legal reserve until this reserve reaches at least 20% of the capital. The legal reserve cannot be distributed to shareholders unless the Company is wound up. 191 5 0 0 2 T R O P E R L A U N N A The legal reserve can be used to increase in capital, in the part that exceeds 10% of the capital increased. With the exception of the purpose mentioned above, as along as this reserve does not exceed 20% of share capital, it can only be used to offset losses in the event of no other reserves being available. e) Treasury shares reserve The reserve for own shares set aside this financial year (see note 8) cannot be freely distributed and must be maintained until the stock is sold or amortised. NOTE 12_PROVISIONS FOR LIABILITIES AND CHARGES The movements in this account during the year ended 31 December 2005 were as follows: Other provisions (see notes 4f and 15) Balance 31.12.04 41,397 Increase Applications Balance 31.12.05 - (4,471) 36,926 NOTE 13_ BOND ISSUES AND LOANS WITH CREDIT INSTITUTIONS The table below details the situation at the close of 2005: 2006 2007 2008 2009 2010 Other exp. TOTAL Bonds issued Syndicated loans Loans - - - Credit lines/bills 939,827 - 103,500 50,000 - - 180,000 20,000 1,370,000 1,570,000 17,500 25,000 - 10,000 65,000 - 10,000 50,000 - 50,000 191,000 110,000 300,000 - 939,827 Total 939,827 153,500 42,500 255,000 80,000 1,530,000 3,000,827 Part of the loan and credit operations shown as loans with credit institutions at 31 December 2005 (70,000 thousand euros on long-term) were signed with related credit institutions (shareholders of the Company that held 5% or more of the capital). Financial charges accrued on operations with related financial entities during the year totalled 39,676 thousand euros. 5_2 annual accounts and management report 192 5 0 0 2 T R O P E R L A U N N A a) Bond issues: Of the bond issues, 40,000 thousand euros are at an annual interest rate of Euribor plus 0.45%, 180,000 thousand euros at 3.53%, 200,000 at 4.95%, 450,000 at 4.75%, 540,000 at 4.375% and 160,000 at Euribor plus 0.44%. 583 million euros of the bonds issued correspond to debt translated into Pound sterling by creating cross currency interest and exchange rate swaps. b) Other debts with credit institutions The credit lines have a limit of 2,509,000 thousand euros of which 2,229,000 accrued an interest rate of Euribor plus a spread and 280,000 thousand euros at Libor plus a spread. At 31 December 2005 the amount drawn down totalled 664,827 thousand euros. The Company had contracted promissory notes for an amount of 275,000 thousand euros at 31 December 2005 with short-term maturities, which accrue interest at an interest rate calculated on the basis of Euribor. In addition there are loans in Pound sterling for an amount of 205,520 thousand euros. c) Hedging operations The operations in place at 31 December 2005 are: • Cross currency interest rate swaps. The Company holds cross currency interest rate swaps with a nominal value of 583 million euros maturing in 2015, whereby debt denominated in euros has been transformed into pound sterling (see note 4.l). • Interest rate swaps, both floating rate to fixed and fixed to floating. At the end of the financial year the Company had contracted interest rate hedges for the total sum of 1,675 million euros. Of these hedging operations, a total of 668 million euros has been contracted with credit institutions related to the Company. On 7 November 2005 the Company signed a syndicated loan with various credit institutions, with a total limit of 1,500,000 thousand euros and maturity on 6 November 2006. This loan, which has not been drawn down at the close of the financial year, accrues interest calculated on the basis of Euribor. A related company has contributed 400 million euros of this loan. 193 5 0 0 2 T R O P E R L A U N N A NOTE 14_TRANSACTIONS AND BALANCES WITH SUBSIDIARY AND ASSOCIATED COMPANIES The creditor and debtor balances recorded by abertis with subsidiary and associated companies at 31 December 2005, in thousand euros, were as follows: Debtors Financial investments Creditors Long-term Short-term Other debt Long-term Short-term acesa aumar aucat iberpistas castellana Sucursal Puerto Rico saba abertis logística abertis telecom retevisión tradia serviabertis Abertis Finance BV ACDL (*) TBI (*) abertis airports Saba Italia GICSA Alella Satsa GCO Accesos de Madrid Alazor Autopistas del Sol Aurea Elqui Codad Parc Logístic Total 301,798 180,000 424,508 446,144 - - 35,250 - - 163,000 94,885 - - 102,145 102,145 - 9,000 - - - - - - - - - - - 187,348 27,171 17,710 6,271 40,255 400 13,396 - 17,347 1,390 807 12,481 - 190,621 395 - 55 65 76 180 - - - - - - - - 551 78 - 165 - - 131 12 1 82 - 10 - - - 6 55 - - - 988 370 114 1,234 2 22 573 3 - - - - - 12,665 - - - - - - 471,400 - - - - - - - - - - - - - - - 16 19,551 - 2,369 - - - 5,295 552 234 87 1,098 435 - - 2,027 22 - - - - - - - - - - - 1,858,875 515,968 4,397 484,065 31,686 (*) Balances in pound sterling converted to euros at year end exchange rate. 5_2 annual accounts and management report 194 5 0 0 2 T R O P E R L A U N N A The long-term balances payable to Abertis Infraestructuras Finance BV have the same maturities (between 2011 and 2024) and amounts as the bonds issued in foreign currencies made by this subsidiary company. These amounts have market interest rates. The operations of abertis for services provided to Group companies basically corresponds to corporate and management services, for the following amounts: acesa aumar aucat iberpistas Iberacesa Alazor Accesos de Madrid Central Gallega Autostrade castellana P.T. Operational GICSA Aurea Limited Services provided 5,687 3,833 629 1,695 - 99 319 8 1 - - - - Sucursal Puerto Rico Autopista del Sol 243 1,234 Coviandes saba abertis logística Sevisur Parc Logístic abertis telecom retevisión tradia serviabertis Codad Abertis Finance BV ACDL TBI abertis airports Saba Italia Total - 679 123 - 30 2 852 359 85 869 - - - 78 - Income Interest received 18,099 6,368 11,440 11,610 276 - - - - 183 - - 22 - - - 1,370 - 258 - 401 5,846 3,333 222 - - 9,238 4,058 2 134 Shareholdings 230,000 134,748 - 50,000 - - - - - - 523 120 - - - 9,108 12,677 - - - - - - - 685 - - - - - Expenses Services received 32 - - - - - - - - - - - - - - - - 62 - - - - 36 4,290 - - - - - - Interest paid - 723 - 247 - - - - - 166 - - - - - - - 60 - - - - - - - 12,350 - - - - 16,825 72,860 437,861 4,420 13,546 195 5 0 0 2 T R O P E R L A U N N A NOTE 15_TAX SITUATION The Company calculates Corporation Income 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 Income Tax for 2005 is as follows: (thousand euros) Profit before tax Permanent differences Timing differences Arising during the year From previous years Tax assessment base 353,664 (423,315) 222 5,178 (64,251) The accrued Corporation Income 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 consolidated subsidiary companies, value adjustments 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 exercised its right to offset the negative tax base generated by the Company in 2005, and apply the deductions generated. The corresponding inter-group offset has been recorded in the balance sheet. • Taxes paid outside of Spain of a similar nature to Corporation Tax have been recorded as well as the adjustments in the calculation of the expense accrued in 2004, together representing income of 8,634 thousand euros. The balance at 31 December 2005 of prepaid tax totalled 6,126 thousand euros (8,171 thousand euros to 31 December 2004), which corresponds to the valuation differences between the tax criteria and accounting criteria relating to the Company’s assets. The deferred tax balance at 31 December 2005 was 576 thousand euros (3,183 thousand euros at 31 December 2004), which arises from applying the cash method for tax purposes to income from deferred payment operations. The amount of the deductions applied in 2005 is 875 thousand euros, for deductions for the reinvestment of extraordinary profits obtained in transfers of assets, training expenses, contributions to pension plans, and deductions for donations made to entities under Law 49/2002. 5_2 annual accounts and management report 196 5 0 0 2 T R O P E R L A U N N A The amount of income covered by the deduction for reinvestment was 787 thousand euros. The entire amount obtained from asset transfers was reinvested during 2005. During 2002, 2003 and 2004 the Company was involved in various company transactions where it opted for the application of the special tax regime under Chapter VIII of Title VIII of the Law of Corporation Tax, now Chapter VIII of Title VII of the Royal Decree legislation 4/2004. The information on these transactions is provided in the annual reports for 2002, 2003 and 2004. These operations were as follows: • The non-monetary transfer of the branch of concession activity which the Company held for highway operations to the company Autopistas Concesionaria Española, S.A, Sociedad Unipersonal (2002), and the increase in share capital of the subsidiary company Abertis Logística, S.A., subscribed by the Company through the non-monetary transfer of shares in various subsidiary and associated companies (2002). • 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. (2002). • The merger of the company Acesa Infraestructuras, S.A. through the complete absorption of Aurea, Concesiones de Infraestructuras, S.A. (2003) and Ibérica de Autopistas, S.A. (2004), and the resulting dissolution without liquidation of these two companies. Assessments have been raised against the Company from inspections made between 1990 and 1993 for corporation income tax and personel income tax; and for 2000 and 2001 for corporation income tax, of a general nature. These assessments have all been signed in disagreement and appealed, and are currently pending the decision of the authorities. The potential impact on the Company’s capital that could result, once the outcome of the appeal is known, is adequately provisioned. Nevertheless, the amount of tax that might be payable would not have a material impact on the Company’s Annual Accounts. NOTE 16_ INCOME AND EXPENSES a) Income abertis operates in five sectors of activity: highway concessions, car parks, logistics and services, telecommunications and airports, indirectly through its shareholdings in other companies, whereby its income corresponds basically to dividends and the rendering of services to Group companies. 197 5 0 0 2 T R O P E R L A U N N A 99 99 b) Personnel The average number of employees during 2005 was as follows: Permanent employees Total c) Extraordinary results Includes extraordinary expenses and extraordinary income related to the changes in provisions for shareholdings in Group companies (see note 7). In addition, the capital gains generated on the disposal of treasury shares is recorded under this entry, representing 350 thousand euros (see note 8). NOTE 17_INFORMATION ON THE ENVIRONMENT At 31 December 2005, 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. Furthermore, it has not received any subsidies of an environmental nature during the year ended 31 December 2005. NOTE 18_OTHER INFORMATION ON BOARD MEMBERS In accordance with the provisions of article 127 ter. 4 of the Spanish Public Companies Act, introduced by Law 26/2003, of 17 July, which amended the Securities Market Act, Law 24 of 28 July 1988, and the Spanish Companies Act, aimed at increasing the transparency of listed companies, the companies with the same, similar or complementary nature as the activity of the Company in which members of the Board of Directors have shareholdings, as well as the functions that they carry out, if applicable, are shown below: 5_2 annual accounts and management report 198 5 0 0 2 T R O P E R L A U N N A Shareholder Company held Activity Shareholding % s/capital Functions Isidro Fainé Casas Telefónica, S.A. Telecommunications 0.003 Deputy Chairman Pablo Vallbona Vadell Ángel García Altozano Caixa d’Estalvis de Catalunya Dragados, S.A. Antonio García Ferrer, representing Comunidades Gestionadas, S.A. José Luis Olivas Martínez Montes de Piedad y Caja de Ahorros de Ronda, Cádiz, Almería, Málaga y Antequera (Unicaja) (until 29/11/2005) ACS, Actividades de Construcción y Servicios, S.A. ACS, Actividades de Construcción y Servicios, S.A. Saba Aparcamientos, S.A. Retevisión Móvil, S.A. Ferrocarriles del Norte de Colombia, S.A. Aufe, S.A. Aunor, S.A. Concesionaria Vial del Sur, S.A. Autopistas del Sol, S.A. ACS, Actividades de Construcción y Servicios, S.A. Construction and services Construction and services 0.0160 … 0.0113 Corporate General Manager Car Parks 0.0000055 Board Member Telecommunications Infrastructure concessionaire Infrastructure concessionaire Infrastructure concessionaire Infrastructure concessionaire Infrastructure concessionaire Construction and services 2.10 5.32 … … 78.00 … 85.00 25.00 6.40 0.002 … … … Deputy Chairman Fomento de Construcciones y Contratas, S.A. Construction and infrastructure concessionaire 0.00004 … Telefónica, S.A. Telecommunications 0.00039 Ausur Servicios de la Autopista, S.A. Autopista del Sol Concesionaria Española, S.A. Autopista del Sureste, Concesionaria Española de Autopistas, S.A. Logistics Infrastructure concessionaire Infrastructure concessionaire … … … 5.00 20.00 5.00 … 199 5 0 0 2 T R O P E R L A U N N A Shareholding % s/capital Functions 10.00 … 4.50 Board Member Shareholder Company held Activity Infrastructure concessionaire Infrastructure concessionaire Montes de Piedad y Caja de Ahorros de Ronda, Cádiz, Almería, Málaga y Antequera (Unicaja) (until 29/11/2005) Inversora de Autopistas del Sur, S.L. Autopista de la Costa Cálida, Concesionaria Española de Autopistas, S.A. Sociedad Municipal de Aparcamientos y Servicios, S.A. Car Parks 24.50 … Sevisur Logística, S.A. Logistics Logistics Centro Integral de Mercancías, S.A. Red de Banda Ancha de Andalucía, S.A. Telecommunications 5.83 Islalink, S.A. Telecommunications 13.70 Val Teleconicaciones, S.L. Telecommunications 7.77 10.00 10.28 … … … … … 5_2 annual accounts and management report 200 5 0 0 2 T R O P E R L A U N N A With respect to positions or functions, in accordance with the abovementioned text, a list is provided below of the Board Members that hold positions in companies with activities that are the same, similar or of a complementary nature to the business purpose of the Company Abertis Infraestructuras, S.A., Board Member Company Position Isidro Fainé Casas Brisa Auto-Estradas de Portugal, S.A. Board Member Pablo Vallbona Vadell ACS, Actividades de Construcción y Servicios, S.A. Deputy Chairman Iberpistas, Sociedad Anónima Concesionaria del Estado Chairman G3T, S.L. Iberpistas, Sociedad Anónima Concesionaria del Estado Board Member Ángel García Altozano ACS, Servicios, Comunicaciones y Energía, S.L. Board Member ACS, Servicios y Concesiones, S.L. Board Member Dragados Concesiones de Infraestructuras, S.A. Board Member Dragados, S.A. ACS Telefonía Móvil, S.L. Xfera Móviles, S.A. Abertis Telecom, S.A. Saba Aparcamientos, S.A. Inversora de Infraestructuras, S.L. TBI plc Board Member Personal representative of the Sole Administrator of ACS, Actividades de Construcción y Servicios, S.A. Chairman Board Member Board Member Personal representative of the Sole Administrator of ACS, Actividades de Construcción y Servicios, S.A. Board Member 201 5 0 0 2 T R O P E R L A U N N A Board Member Company Salvador Alemany Mas Autopistas Concesionaria Española, S.A. Position Chairman and Chief Executive Officer Iberpistas, S.A. Concesionaria del Estado Board Member Autopistes de Catalunya, S.A. Concessionària de la Generalitat de Catalunya Aucat, S.A. Castellana de Autopistas, S.A. Concesionaria del Estado Autostrade S.p.A. Saba Aparcamientos, S.A. Sole Administrator Sole Administrator Board Member Chief Executive Officer Societat Pirenaica d’Aparcaments, S.A. Board Member Areamed 2000, S.A. Parc Logístic de la Zona Franca, S.A. Centro Intermodal de Logística, S.A. Abertis Telecom, S.A. Retevisión I, S.A. Deputy Chairman Deputy Chairman Deputy Chairman Chairman and Chief Executive Officer Sole Administrator Tradia Telecom, S.A. Sole Administrator Abertis Aeropuertos, S.A. Sole Administrator Acesa Italia S.R.L Abertis Logística, S.A. Abertis Logística, S.A. ACS, Servicios y Concesiones, S.L. Chairman Deputy Chairman Board Member Board Member Caixa d’Estalvis de Catalunya Dragados, S.A. Antonio García Ferrer, representing Comunidades Gestionadas, S.A. Vasco de Mello Brisa Auto-estradas de Portugal, S.A. Miguel Ángel Gutiérrez Méndez Telefónica Internacional Telesp – Brasil Chairman Board Member Board Member Ernesto Mata López Autopistas Aumar S.A. Concesionaria del Estado Board Member Finally, the Company is not aware that any of the above-mentioned Board Members carry out on their own account or on behalf of others the same, similar or complementary activity as that which constitutes the business purpose of Abertis Infraestructuras, S.A. 5_2 annual accounts and management report 202 5 0 0 2 T R O P E R L A U N N A NOTE 19_ OTHER INFORMATION 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 net profits. It can only be paid out once the payment of dividends and transfers to reserves required by law 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 Infraestructuras, S.A., as members of the Board of Directors, totalled 1,562 thousand euros in 2005, which is less than the statutory limit. Total remuneration received by the Board Members of Abertis Infraestructuras, S.A. was 2,096 thousand euros, which corresponds to fixed remuneration. In addition, other benefits that Board Members of Abertis Infraestructuras, S.A. have received are contributions made to cover pension liabilities (1,713 thousand euros) and life insurance (34 thousand euros). Abertis Infraestructuras, S.A. does not use any remuneration system linked to the Company’s share price for any of its employees or any of the members of the Board of Directors. b) At 31 December the Company had guarantees with third parties for a total amount of 110,811 thousand euros, which principally correspond to guarantees given by financial institutions to Public Administrations for certain commitments (investments, rendering of services, financing, etc.) contracted by investee companies. These guarantees are not expected to lead to material liabilities. c) Fees received by PricewaterhouseCoopers Auditores, S.L. for statutory auditing services corresponding to the 2005 financial year totalled 158 thousand euros. In addition, the fees received by other companies trading under the name PricewaterhouseCoopers for other services provided totalled 227 thousand euros. NOTE 20_ SUBSEQUENT EVENTS In February 2006, Holding d’Infraestructures de Transport SAS (HIT), a company in which abertis holds a majority shareholding together with other shareholders (Caisse des Dépôts, Predica, Axa, and the Société Foncière, Financière et des Participations), acquired from the French State 75.65% of the toll highway concessionaire Société des Autoroutes du Nord et de l’Est de la France (Sanef). This operation was duly authorised by the French Government through the signing of a ministerial decree, with the acquisition being completed by the transfer of its shareholding in Sanef to the HIT consortium for an amount of 4,028 million euros. 203 5 0 0 2 T R O P E R L A U N N A In addition, HIT has presented a Public Takeover Offer to the French Financial Markets Authority for the outstanding 24.35% that is traded on the Paris Stock Exchange. In February 2006, the Ministry of Works (Ministerio de Fomento) and acesa reached an agreement to widen the AP-7. The agreement (pending authorisation of the Ministerial Council) will represent a substantial improvement of the Mediterranean corridor (widening to 3 lanes for a stretch of 123 kilometres, to 4 lanes in the Girona ring-road and the replacement of 3 trunk road tollgates with on and off-ramp tollgates), whereby the increased capacity will lead to a better service for customers. 204 5 0 0 2 T R O P E R L A U N N A 5_2 annual accounts and management report NOTE 21_STATEMENT OF SOURCE AND APPLICATION OF FUNDS (thousand euros) S O U R C E 2005 2004 Resources from operations Net profit for the year Charge for depreciation of fixed assets Charge to investment provision Charge for amortisation of deferred expenses Losses on fixed assets Charge to provision for expenses and liabilities Profit from financial investments Profit from fixed assets Profit from treasury shares Provision treasury shares Increase in long-term creditors due to merger Long-term debt Bonds Loans Loans with group companies Deferred income Disposal of assets Intangible assets Fixed assets Investments Sale treasury shares Early cancellation and transfer to short-term investments Long-term credits to group companies Other financial investments 387,551 19,105 6,672 4,573 — (1,721) — — (350) 1,076 416,906 361,076 20,274 20,098 6,514 — 2,627 — (850) — — 409,739 — 234,118 700,000 — 1,810 3,793 — — 124,514 21,750 296,628 1,218 450,000 37,235 472,725 53 3,548 638,373 — — — Total sources 1,566,619 2,245,791 205 5 0 0 2 T R O P E R L A U N N A A P P L I C A T I O N S Acquisition of assets Start-up costs Intangible assets Fixed assets Investments Group companies Other financial investments Long-term loans to group companies Acquisition treasury shares Increase fixed assets and deferred expenses due to merger Increase deferred expenses Cancellation long-term debt Dividends Provision for liabilities and expenses Reduction payments pending Transfer long-term debt to short term Total applications Excess of sources over applications / (Applications over sources) Increase / (Decrease) in working capital Change in working capital Increase / (Decrease) current assets Receivables Short-term investments Treasury Prepayments and accruals (Increase) / Decrease current liabilities Short-term creditors Change in working capital 2005 2004 — 152 394 335,873 6 778,699 185,877 — 4,941 162,511 282,634 2,750 2,227 150,000 1,906,064 197 255 21 217,991 — 1,030,904 — 239,313 3,355 234,118 243,414 1,759 1,126 170,000 2,142,453 (339,445) 103,338 (3,347) 129,285 1,429 1,185 128,552 (467,997) (339,445) 2,229 (176,120) 566 — (173,325) 276,663 103,338 5_2 annual accounts and management report 206 5 0 0 2 T R O P E R L A U N N A ANNEX DIRECT SHAREHOLDINGS (thousand euros) Company Address Activity Abertis Infraestructuras Finance, B.V. Rokin, 55 1012KK. Amsterdam (Netherlands) Financial services Serviabertis, S.L. Highways Av. Parc Logístic ,12-20. Barcelona Administrative management services Autopistas, C.E.S.A. (acesa) Av. Parc Logístic, 12-20. Barcelona Toll highway concessionaire Autopistas Aumar S.A.U.C.E. (aumar) Paseo de la Alameda, 36. Valencia Toll highway concessionaire Iberpistas, S.A.U.C.E. Pío Baroja, 6. Madrid Toll highway concessionaire Holding d'Infraestructures de Transport 105 Rue de l'Abbe Groult. 75015 Paris 15 (France) Holding company Aurea Limited 180 Strand. London (United Kingdom) Holding company Promoción de Autopistas Chile Limitada (Iberpistas Chile) Gertrudis Echenique, 30. Las Condes-Santiago (Chile) Toll highway concessionaire Gestión Integral de Concesiones, S.A. (GICSA) Montalbán, 5. Madrid Infrastructure administration & management Autopistas de Puerto Rico y Compañía, S.E. (APR) Montellano, sector embalse. San José (Puerto Rico) Infrastructures concessionaire Concesionaria Vial de los Andes, S.A. (COVIANDES) (2) Carrera novena, 126-91. Santafé de Bogotá (Colombia) Infrastructures concessionaire Pt Operational Services Limited (PTY) 1, Lavender Road. Bon Accord 009 Pretoria (S. Africa) Operation and maintenance Autopistas del Sol, S.A. (AUSOL) Leandro N.Alem, 986 piso 4. Buenos Aires (Argentina) Toll highway concessionaire Sociedad Concesionaria del Elqui, S.A. (ELQUI) Av. Andrés Bello. 2777- Las Condes Santiago (Chile) Toll highway concessionaire Car Parks Saba Aparcamientos, S.A. (saba) Av. Parc Logístic, 12-20. Barcelona Car parks Logistic Services Abertis Logística, S.A. Telecommunication Abertis Telecom, S.A. Airports Av. Parc Logístic, 12-20. Barcelona Logistic promotion and technical support Av. Parc Logístic, 12-20. Barcelona Telecommunication services Abertis Aeropuertos, S.A.U. Av. Parc Logístic, 12-20. Barcelona Airport Concession and Development Limited (ACDL) Compañía de Desarrollo Aeropuerto Eldorado, S.A. (CODAD) (2) 159, New Bond Street. London W1S 2UD (United Kingdom) Aeropuerto El Dorado, Muelle Internacional, piso 2. Costados Sur Bogotá D.C. (Colombia) Airport construction and maintenance Promotion, construction, operation and management of airports Holding company This annex is an integral part of note 7 to the 2005 annual accounts with which it should be read Currencies other than the euro are converted using the year end exchange rate 207 5 0 0 2 T R O P E R L A U N N A Auditors % Holding Share capital Reserves (less interim div.) Result for year Net value of shreholding Dividends received PwC PwC PwC PwC PwC PwC Other auditors PwC — Other auditors Other auditors Other auditors PwC/Other auditors Other auditors PwC PwC 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100 (1) 99.80 75.00 39.04 33.30 31.59 25.00 18 3 876,465 436,295 50,000 42 14,592 652 60 1,262 10,128 0 48,891 72,293 1,959 16 559,481 430,304 127,777 — 2,086 1,732 178 (54,717) (7,924) 6 (155,590) 49,569 165 165 262,433 146,710 60,758 — 1,555 59 264 (1,084) 21,987 1,829 (4,434) 18,929 2.000 3 1,647,187 991,587 223,560 42 23,363 805 60 0 10,221 — 0 22,748 — — 230,000 134,747 50,000 — — — 120 — 9,109 523 — — 99.28 18,243 101,736 14,433 231,296 12,677 100.00 60,832 11,606 (123) 72,993 Other auditors 100.00 300,000 3,212 (2,777) 293,249 PwC PwC Other auditors 90.00 85.00 100.00 1,875 381 (507) 1,749 40,973 (3) 366,619 (3) (5,158) (3) 520,978 13,486 (23,666) 3,910 0 685 4,041,841 437,861 — — — — 5_2 annual accounts and management report 208 5 0 0 2 T R O P E R L A U N N A INDIRECT SHAREHOLDINGS (thousand euros) Company Address Activity Through AUTOPISTAS, C.E.S.A. Autopistas-Conces. Espanhola, SGPS, S.A. Rua General Norton de Matos, 21-A. Arquiparque Algés Oeiras. (Portugal) Holding company Brisa, Auto-estradas de Portugal, S.A. (4) Quinta da Torre da Aguilha, Edificio Brisa, 2785- 589. São Domingos de Rana (Portugal) Toll highway concessionaire Acesa Italia, S.R.L. Schemaventotto, S.p.A. Autostrade, S.p.A. (6) Via delle Quattro Fontane, 15. Roma (Italy) Holding company Corso Trieste, 170. 10024 Moncalieri (Italy) Holding company Via A. Bergamini, 50. Roma (Italy) Toll highway concessionaire Autopistes de Catalunya, S.A. (aucat) Av. Parc Logístic, 12-20. Barcelona Toll highway concessionaire Grupo Concesionario del Oeste, S.A. (GCO) (2 and 8) Ruta Nacional nº 7, km 25,92. Ituzaingó (Argentina) Toll highway concessionaire Túnel del Cadí, S.A.C. Carretera de Vallvidrera a St. Cugat, km 5,3. Barcelona Toll highway concessionaire Autopista Terrassa-Manresa, Autema, Concessionària de la Generalitat de Catalunya, S.A. (AUTEMA) Through AUMAR, S.A Ciralsa, S.A.C.E. Through IBERPISTAS, S.A.C.E. Autopista C-16, km 41. Barcelona Toll highway concessionaire Av. Maisonnave, 41. Alicante Constructions, maintenance and operation of toll highway Castellana de Autopistas, S.A.U.C.E. Pío Baroja, 6. Madrid Autopistas de León, S.A.C.E. (AULESA) Villadangos del Páramo. Ctra. Santa María del Páramo. León Toll highway concessionaire Toll highway concessionaire Autopistas Vasco-Aragonesa, C.E.S.A. (AVASA) Barrio de Anuntzibai, s/n. 48410 Orozco. Vizcaya Toll highway concessionaire Áreas de servicio y mantenimiento, S.A. Autopista A68, km. 6. Vizcaya Vasco-Aragonesa de Servicios y Concesiones, S.A. Barrio de Anuntzibai, s/n. Vizcaya Restoration Dormant Autopista Trados-45, S.A. (TRADOS-45) Ctra.M-203 P.K. 0,280. Madrid Toll highway concessionaire M-45 Conservación, S.A Ctra.M-203 P.K. 0,280. Madrid Infraestructuras y Radiales, S.A. (IRASA) Golfo de Salónica, 27. Madrid Autopista del Henares, S.A.C.E. (HENARSA) Golfo de Salónica, 27. Madrid Erredosa Infraestructuras, S.A. (ERREDOSA) Golfo de Salónica, 27. Madrid This annex is an integral part of note 7 to the 2005 annual accounts with which it should be read Currencies other than the euro are converted using the year end exchange rate Highway conservation and maintenance Infrastructure administration and management Toll highway concessionaire Infrastructure administration and management 209 5 0 0 2 T R O P E R L A U N N A Auditors % Indirect holding Company owning indirect holding Share capital Reserves (excl. interim div.) Result for year Other auditors 100.00 acesa 1,000 300,400 16,046 Other auditors 10.00 PwC Other auditors Other auditors PwC PwC Other auditors PwC 100.00 13.33 6.68 100.00 48.60 37.19 23.72 Autopistas-Conces. Espanhola, SGPS acesa Acesa Italia Schemaventotto acesa acesa acesa acesa 600,000 (3) 1,138,295 (3) 163,400 (3) 20,400 (5) 445,536 571,712 (7) 96,160 22,300 105,504 69,411 173,871 (5) 29,596 (5) 1,219,099 394,606 1,856,641 (7) 662,376 (7) 10,253 (10,829) 10,776 (3,082) 26,678 6,421 5,024 16,143 Other auditors 25.00 aumar 50,167 — — PwC PwC PwC — — PwC Other auditors 100.00 79.20 50.00 50.00 50.00 50.00 25.00 iberpistas iberpistas iberpistas Avasa Avasa iberpistas Trados 45 Other auditors 22.5 (9) iberpistas/Avasa Other auditors Other auditors 22.50 22.50 Infraestructuras y Radiales Infraestructuras y Radiales 46,800 34,642 234,395 600 110 26,457 553 8,746 96,700 61 187,500 10,517 8,044 637 6 2,293 — 298 (722) 42,158 (2) 1 8,533 0 81,147 (3,545) 327,522 (5) (888) (2) 5_2 annual accounts and management report 210 5 0 0 2 T R O P E R L A U N N A INDIRECT SHAREHOLDINGS (thousand euros) Company Address Activity Through IBERPISTAS, S.A.C.E. Alazor Inversiones, S.A. Accesos de Madrid, C.E.S.A. Carretera M-50, km 67,5. Área de Servicio la Atalaya Villaviciosa de Odón (Madrid) Holding company Carretera M-50, km 67,5. Área de Servicio la Atalaya Villaviciosa de Odón (Madrid) Toll highway concessionaire Ibermadrid de Infraestructuras, S.A. Pío Baroja, 6. Madrid Dormant Through Aurea Ltd. Road Management Group (RMG) 130, High Street Old Woking. Surrey (U. Kingdom) Toll highway concessionaire Through Iberpistas Chile Gestora de Autopistas, S.A. (GESA) Andrés Bello, 2777. Las Condes - Santiago (Chile) Toll highway concessionaire Through SABA Saba Estacionamientos de Chile, S.A. Andrés Bello, 2777. Las Condes - Santiago (Chile) Car park operator Concesionaria Subterra Andrés Bello, 2777. Las Condes - Santiago (Chile) Car park operator Concesionaria Subterra Dos Andrés Bello, 2777. Las Condes - Santiago (Chile) Car park operator Saba Park Chile, S.A. Andrés Bello, 2777. Las Condes - Santiago (Chile) Car park operator Saba Park Chile Servicios, S.A. Andrés Bello, 2777. Las Condes - Santiago (Chile) Car park operator Concesionaria Estacionamientos Paseo de Bulnes, S.A. Spel-Sociedade de Parques de Estacionamento, S.A. (SPEL) Liz Estacionamientos Parbla, S.A. Andrés Bello, 2777. Las Condes - Santiago (Chile) Car park operator Guedes de Azevedo, 148-180. Oporto (Portugal) Car park operator Guedes de Azevedo, 148-180. Oporto (Portugal) Car park operator Sabino Arana, 38. Barcelona Car park operator Societat Pirenaica d’Aparcaments, S.A. (SPASA) Pau Casals, 7. Escaldes-Engordany (Principality of Andorra) Car park operator Societat d’Aparcaments de Terrassa, S.A. (SATSA) Plaça Vella, subsuelo. Terrassa Rabat Parking, S.A. Rue de Larache, 8. Rabat (Morocco) Car park operator Car park operator Las Mercedes Sociedad Concesionaria, S.L. Las Mercedes, s/n. Las Arenas-Getxo. Vizcaya Car park operator Saba Italia, S.p.A. Via delle Quattro Fontane, 15. Rome (Italy) Saba Campo San Giacomo Via delle Quattro Fontane, 15. Rome (Italy) Parcheggi Pisa Parcheggi Bicocca Port Mobility Via delle Quattro Fontane, 15. Rome (Italy) Via delle Quattro Fontane, 15. Rome (Italy) Via delle Quattro Fontane, 15. Rome (Italy) Car park operator Car park operator Car park operator Car park operator Car park operator This annex is an integral part of note 7 to the 2005 annual accounts with which it should be read Currencies other than the euro are converted using the year end exchange rate 211 5 0 0 2 T R O P E R L A U N N A Auditors % Indirect holding Company holding indirect share Share capital Reserves (excl. interim div.) Result for year Other auditors Other auditors 31.22 31.22 iberpistas Alazor Inversiones 212,200 212,200 (6,073) (6,885) (6,073) (6,885) — 100.00 iberpistas 500 (143) 6 Other auditors 25.00 Aurea Limited 36,969 69,419 9,939 PwC PwC PwC PwC PwC PwC Pwc PwC PwC - - PwC Other auditors PwC PwC PwC PwC PwC Other auditors 51.00 Iberpistas Chile 1,267 1,086 99.27 99.26 99.26 98.68 99.26 98.68 99.28 50.63 99.28 89.35 87.41 50.63 33.09 99.28 98.29 69.50 24.82 9.93 saba Saba Estacionamientos de Chile, S.A. Saba Estacionamientos de Chile, S.A. Saba Estacionamientos de Chile, S.A. Saba Estacionamientos de Chile, S.A. Saba Park Chile, S.A. saba Spel saba saba saba saba saba saba Saba Italia Saba Italia Saba Italia Saba Italia 11,500 1,248 805 1,606 52 312 6,000 500 3 301 7,163 1,879 611 28,600 100 50 1,500 1,500 (342) (102) (158) (690) 73 4 25,869 69 1,199 172 549 (362) (38) 1,009 - - - - 137 511 91 642 483 6 96 272 (150) (3) 153 929 59 (298) (1,280) (16) (17) (1,426) - 5_2 annual accounts and management report 212 5 0 0 2 T R O P E R L A U N N A INDIRECT SHAREHOLDINGS (thousand euros) Company Address Activity Through ABERTIS LOGÍSTICA, S.A. Sevisur Logística, S.A. Moratín, 1. Seville Construction and operation of logistics parks Parc Logístic de la Zona Franca, S.A. (PLZF) Av. Parc Logístic, 2-10. Barcelona Promotion and operation of logistics parks Areamed 2000, S.A. Vía Augusta, 21-23. Barcelona Operation of service areas Araba Logística, S.A. (ARASUR) Fueros, 15. Vitoria Construction and operation of logistics parks Centro Intermodal de Logística, S.A. (CILSA) Av. Ports d’Europa, 100. Barcelona Promotion and operation of logistics parks Through ABERTIS TELECOM, S.A. Tradia Telecom, S.A. Motors, 392. L’Hospitalet de Llobregat (Barcelona) Retevisión I, S.A. Gran Via de les Corts Catalanes, 130-136. Barcelona Consorcio de Telecomunicaciones Avanzadas, S.A. Av. Juan Carlos I, 59. Espinardo (Murcia) Telecommunications infrastructure operator Telecommunications infrastructure operator Provision of services related to Telecommunication operators and concessions Emissions Digitals de Catalunya, S.A. Diagonal, 477, 1ª planta. Barcelona Radio and TV signal distribution Adquisición de emplazamientos, S.L. (ADESAL) Motors, 392. L’Hospitalet de Llobregat (Barcelona) Dormant Torre de Collserola, S.A. Ctra. de Vallvidrera al Tibidabo, s/n. Barcelona Construction and operation of telecommunication infrastructures Servicios audiovisuales Alella, S.L. Gran Via de les Corts Catalanes, 130-136. Barcelona Telecommunication and audiovisual services Through ACDL TBI, plc TBI Finance Ltd 159 New Bond Street, London W1S 2UD. (U. Kingdom) Holding company 159 New Bond Street, London W1S 2UD. (U. Kingdom) Financial services TBI International Airports Limited 159 New Bond Street, London W1S 2UD. (U. Kingdom) Holding company TBI Global Limited TBI Aiviation Limited Airport Group International Holdings LLC 159 New Bond Street, London W1S 2UD. (U. Kingdom) Dormant 159 New Bond Street, London W1S 2UD. (U. Kingdom) Aircraft leasing c/o Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. USA Holding company Stockholm Skavsta Flygplats AB Box 44, 611 22 Nyköping. Sweden Airport management and operations TBI Airport Holdings Limited 159 New Bond Street, London W1S 2UD. (U. Kingdom) Holding company TBI Costa Rica SRL Forum Business Park, Building G, Fourth Floor Santa Ana. Costa Rica Technical consulting services LLAG Investors (UK) Limited 159 New Bond Street, London W1S 2UD. (U. Kingdom) Holding company London Luton Airport Group Limited 159 New Bond Street, London W1S 2UD. (U. Kingdom) Holding company This annex is an integral part of note 7 to the 2005 annual accounts with which it should be read Currencies other than the euro are converted using the year end exchange rate 213 5 0 0 2 T R O P E R L A U N N A Auditors % Indirect holding Company holding indirect share Share capital Reserves (excl. interim div.) Result for year PwC Other auditors Other auditors PwC Other auditors 60.00 50.00 50.00 42.61 32.00 abertis logística abertis logística abertis logística abertis logística abertis logística Other auditors 100.00 abertis telecom Other auditors 100.00 abertis telecom - - - Other auditors 25.00 tradia 10.00 100.00 41.75 tradia tradia retevisión Other auditors 100.00 (10) retevisión/tradia ACDL TBI plc TBI plc TBI plc TBI plc TBI plc PwC PwC PwC PwC PwC PwC PwC PwC PwC PwC PwC 90.00 90.00 90.00 90.00 90.00 90.00 81.09 90.00 90.00 90.00 90.00 TBI International Airports Limited 1,093 TBI International Airports Limited TBI International Airports Limited TBI Airport Holdings Limited 73 0 0 TBI Airport Holdings Limited 7,696 7,500 23,742 70 14,016 15,467 131,488 81,270 1,000 3,000 3 8,020 1,247 86,448 131,402 59,003 0 0 80,250 1,271 (139) 9,490 3,233 26,348 (311) 1,884 2,196 (367) 1,596 (32,804) 1,538 123,703 10,907 - 29 - 670 3,720 457,054 10,102 0 (115) (3,137) 2,609 11,529 1,230 (406) 473 (884) (27) 16 - 137 172 (15,856) 12,941 1,138 0 (646) 9,994 1,369 (20,547) 323 472 0 5_2 annual accounts and management report 214 5 0 0 2 T R O P E R L A U N N A INDIRECT SHAREHOLDINGS (thousand euros) Company Through ACDL Address Activity Cardiff International Airport Limited 159 New Bond Street, London W1S 2UD. (U. Kingdom) Airport management and operation Belfast International Airport Holdings Limited 159 New Bond Street, London W1S 2UD. (U. Kingdom) Holding company London Luton Airport Operations Limited 159 New Bond Street, London W1S 2UD. (U. Kingdom) Airport management and operation MB 121 Limited 159 New Bond Street, London W1S 2UD. (U. Kingdom) Dormant Belfast International Airport Limited Belfast International Airport., Aldergrove, BT29 4AB. (Ireland) Airport management and operation Aldergrove Airports Limited 159 New Bond Street, London W1S 2UD. (U. Kingdom) Dormant Aldergrove International Airports Limited Belfast International Airport., Aldergrove, BT29 4AB. (Ireland) Dormant Aldergrove Car Parks Limited Belfast International Airport., Aldergrove, BT29 4AB. (Ireland) Car park operator TBI Global (Business Travel) Limited 159 New Bond Street, London W1S 2UD. (U. Kingdom) Dormant TBI Financial Investments Limited c/o PricewaterhouseCoopers LLP, 68-73 Queen Street, Edinburgh. (Scotland) Financing vehicle TBI (US) Holdings Limited 159 New Bond Street, London W1S 2UD. (U. Kingdom) Holding company TBI US Operations Inc TBI Airport Management Inc Orlando Sanford International Inc Orlando Sanford Domestic Inc TBI Cargo Inc TBI Overseas Holdings Inc TBI Real Estate Holdings LLC TBI Toronto Inc TBI Airport Management Canada Inc Airport Group New York Inc c/o Corporation Service Company, 2711 Centreville Road, Suite 400, Wilmington. Delaware, 19808. USA Holding company PO Box 6041, Toronto AMF, Toronto, Ontario, L5P 1B2. Canada Airport management and operation 2 Red Cleveland Boulevard, Suite 210, Sanford, Florida, FL32773. USA 2711 Centreville Road, Suite 400, Wilmington. Delaware, 19808. USA 2711 Centreville Road, Suite 400, Wilmington. Delaware 19808. USA c/o Corporation Service Company, 2711 Centreville Road, Suite 400, Wilmington. Delaware, 19808. USA Airport management and operation Airport management and operation Air freight transport Holding company 2711 Centreville Road, Suite 400, Wilmington. Delaware 19808. USA Property PO Box 6041, Toronto AMF, Toronto, Ontario, L5P 1B2. Canada 66 Wellington Street West, Suite 3600, Toronto, Ontario, Canada c/o CT Corporation System, 818 West 7th Street, Los Ángeles, CA 90017. USA Airport management and operation Airport management and operation Dormant This annex is an integral part of note 7 to the 2005 annual accounts with which it should be read Currencies other than the euro are converted using the year end exchange rate 215 5 0 0 2 T R O P E R L A U N N A Auditors % Indirect holding Company holding indirect shares Share capital Reserves (excl. interim div.) Result for year PwC PwC PwC PwC PwC PwC PwC PwC PwC PwC PwC PwC PwC PwC PwC PwC PwC PwC PwC PwC PwC 90.00 90.00 90.00 90.00 90.00 90.00 90.00 90.00 90.00 90.00 90.00 90.00 90.00 90.00 90.00 90.00 90.00 90.00 90.00 90.00 90.00 TBI Airport Holdings Limited TBI Airport Holdings Limited London Luton Airport Group Limited Cardiff International Airport Limited Belfast International Airport Holdings Limited Belfast International Airport Holdings Limited Belfast International Airport Holdings Limited Belfast International Airport Limited TBI Global Limited TBI Finance Ltd TBI International Airports Limited TBI (US) Holdings Limited TBI US Operations Inc TBI US Operations Inc TBI US Operations Inc TBI US Operations Inc 36,135 219 7,696 0 0 0 0 0 73 15 51,488 98,419 0 2,108 1 0 TBI US Operations Inc TBI Airport Management Inc TBI Airport Management Inc TBI Airport Management Inc 2,665 1,157 0 0 33,549 1,154 (15,860) 0 101,875 0 0 107 (29) (317) 3,941 0 114 (6,611) (6,642) 8,235 0 (396) 0 0 6,828 0 (1) 649 (144) 192 (11,555) (1,284) (4,003) (1,341) 109 (830) (257) 2 (30) 6,250 1,759 3 0 0 0 TBI US Operations Inc 73,469 (10,376) 5_2 annual accounts and management report 216 5 0 0 2 T R O P E R L A U N N A INDIRECT SHAREHOLDINGS (thousand euros) Company Through ACDL TBI Partnership TBI (US) LLC TBI Overseas (Bolivia) LLC Address Activity PO Box 6041, Toronto AMF, Toronto, Ontario, L5P 1B2. Canada 2711 Centreville Road, Suite 400, Wilmington, Delaware, 19808. USA c/o Corporation Service Company, 2711 Centreville Road, Suite 400, Wilmington. Delaware, 19808. USA Airport management & operation Holding company Holding company Servicios de Aeropuertos Bolivianos, S.A. Santa Cruz de la Sierra, Santa Cruz. Bolivia Airport management & operation TBI Overseas (UK) LLC c/o Corporation Service Company, 2711 Centreville Road, Suite 400, Wilmington. Delaware, 19808. USA Technical consulting services This annex is an integral part of note 7 to the 2005 annual accounts with which it should be read Currencies other than the euro are converted using the year end exchange rate (1) Holding of abertis: 100 %. Direct 99.75 %; indirect through Gicsa: 0.25 %. (2) Financial statements at 31 December 2005, excluding the effect of inflaction considered in local criteria. (3) Consolidated information (IFRS criteria). The amount of minority interest is included in reserves. (4) Shares of Brisa, Auto-estradas do Portugal, S.A. are traded on the Lisbon Stock Exchange. The average price for the last quarter 2005 was 6.84 euros. At the close of the year the price was 7.16 euros. (5) Information at 30 November 2005. (6) The shares of Autostrade, S.p.A. are traded on the Milan Stock Exchange. The average price for the last quarter of 2005 was 19.45 euros. At the close of the year the price was 20.26 euros. (7) Information consolidated at 30 September 2005 (IFRS criteria). (8) The shares of GCO trade on the Argentine Stock Exchange. The average price for the last quarter of 2005 was 1.91 Argentine pesos. At the close of the year the price was 1.85 Argentine pesos. 57,6% of the voting rights are held. (9) Indirect shareholding abertis: 22.5 %. Indirect through Iberpistas, S.A.C.E. : 15 % and AVASA: 7.5 %. (10) Indirect shareholding abertis: 100 %. Indirect through retevisión 78.37 % and Tradia: 21.63 %. 217 5 0 0 2 T R O P E R L A U N N A Auditors % Indirect holding Company holding indirect shares Share capital Reserves (excl. interim div.) Result for year PwC PwC PwC PwC PwC 90.00 90.00 90.00 90.00 90.00 TBI Toronto Inc TBI Overseas Holdings Inc TBI (US) LLC TBI Overseas (Bolivia) LLC TBI Overseas Holdings Inc (208) 23,037 4,861 3,282 2,509 23 (6,277) 0 5,291 1,054 0 0 (128) 1,017 1,697 218 5 0 0 2 T R O P E R L A U N N A 5_2 annual accounts and management report ABERTIS INFRAESTRUCTURAS, S.A. MANAGEMENT REPORT FOR 2005 Abertis Infraestructuras, S.A. (abertis) is parent of a business group that provides its services in the areas of infrastructure management serving mobility and communications. It operates in the sectors of highways, car parks, logistics infrastructure, telecommunication infrastructure and airports. During 2005 the following significant events have occurred in the Group that it leads: • In the highways sector, the sale by Schemaventotto (the company that groups the core shareholders of Autostrade) of 2.053% of Autostrade, reducing the indirect shareholding of abertis to 6.68%, the sale of shareholdings in Concesiones de Madrid (25%) and Autopista Central Gallega (18%) and the increase in the shareholding in Accesos de Madrid (to 31.2%). In December 2005, a consortium led by abertis was selected by the French Government to acquire the highway concessionaire Sanef. The effective acquisition of 75.7% of this company took place at the beginning of February 2006, and the Public Takeover Offer for the outstanding 24.3% commenced. • In the car park sector, Saba acquired 40% of Saba Italia (raising its shareholding to 100%) during the year and has continued its expansion in Chile (acquisition of companies that manage 7 car parks), Italy (acquisition in Venice and opening in Modena) and Portugal (opening of two car parks). • In the logistics infrastructure sector the development of the logistics projects in Álava, Seville and ZAL Prat continues, in which abertis participates and the Parc Logístic de la Zona Franca and ZAL Barcelona remain fully occupied. • In the telecommunication infrastructures sector the initiation of Digital Terrestrial Television is of particular note, with significant involvement of subsidiary companies of abertis telecom as sole providers of the distribution of this new type of signal, as well as the award of two tenders for the transmission of autonomous TV and radio signals. • Finally, in the airports sector the company ACDL, in which abertis holds 90%, took 100% control of the company TBI, having launched a Public Takeover Offer in 2004, giving it a 29% stake at the end of 2004. Also of note was the inauguration of the expansion of the London-Luton airport terminal managed by TBI. All these actions, combined with the positive performance of the other businesses and activities, have had a positive impact on the key figures and results for the year. The financial statements of abertis reflect the consequences of this investment activity and role as parent of the Group. The balance sheet is mainly comprised of the portfolio of shareholdings and the financing of these holdings through equity and debt. It also includes the financing obtained and ceded as a result of the centralisation of the Group’s debt in abertis which is responsible for covering the funding requirements of its subsidiaries. 219 5 0 0 2 T R O P E R L A U N N A During 2005, and as part of the ongoing process of optimising the Group’s financial structure, bonds were issued for the amount of 700 million euros amongst institutional investors for terms of between 15 and 20 years, and long-term financial operations have been arranged to cover the new funding requirements of the Group. The balance of the financial structure of abertis is illustrated by maintaining one of the highest debt ratings awarded to private companies in Spain. The profit and loss account basically reflects the transfer of the results generated in the different companies of the Group through the dividend policy, the financial expenses and income related to the financing activity, as well as the costs derived from the corporation structure. The profit for the year rose to 387.5 million euros, which represents an increase of 7.3% on the previous year and allows abertis to ensure, in turn, its policy of shareholder return. As in previous years, abertis has maintained its policy of shareholder return that combines the dividend payout with a bonus share issue of one share for every 20 shares held. The Board of Directors of abertis has agreed to propose to the Ordinary Shareholders’ Meeting a final dividend for 2005 of 0.25 euros gross per share. The total dividend to be charged against profit for 2005 will be 289.5 million euros, rising to 0.5 euros gross per share with the interim dividend already paid, an increase of 9.6% on the dividend distributed and charged against results in the previous year. The willingness to set an annual dividend at this new level is an indication of the confidence in the consolidation of the return on investments made in recent years and their growing contribution to profits. In 2006 a significant change in the key figures is expected as a result of the inclusion of the shareholding in the French group Sanef and the financing associated with its acquisition, whilst trusting that the positive contribution of all the business units will continue, accentuated by the progressive contribution of all new projects and the most recent incorporations in the Group, with the policy on shareholder return being maintained. Furthermore, those investment opportunities that meet the strict requirements of soundness and return demanded by the Group will continue to be analysed, in order to continue providing shareholders with a balanced combination of investments in sectors related with transport and communication infrastructures. 5_2 annual accounts and management report 220 5 0 0 2 T R O P E R L A U N N A Under the authorisation approved by the Shareholders’ Meeting and in response to the offer from a core shareholder interested in selling its shareholding, in December 2005 the Company acquired own shares for the sum of 185.9 million euros (1.5% of the capital). During the month of December part of these shares (0.173% of the capital) were sold, generating a capital gain of 0.35 million euros. At the close of the financial year the Company held 7,685,832 own shares (1.33% of the capital). In accordance with the regulations in force, it has raised a provision up to the book value as indicated in the notes to the annual accounts. It is the Company’s intention to continue placing this packet of shares in the market during 2006. 221 5 0 0 2 T R O P E R L A U N N A www.abertis.com 

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