2004 - Sacyr · held and the party in power changed. As you well know, any change in Government, and especially if ... Business year 2004 was the first full year for Sacyr ... •

Annual Report 2004

20,000

40,000

60,000

80,000

100,000

Imp

ort

ant

figure

s a

nd

info

rma

tion

2002 2003 2004 % CAGR 04/02

FINANCIAL FIGURES (Euros’000)

Net revenues

EBITDA

Income before tax

Attributable net income

Net cash-flow

Assets

Shareholders’ equity

2,064,152 3,333,748 3,703,323 33.9%

453,921 576,882 747,309 28.3%

406,592 468,702 507,738 11.7%

331,084 334,349 376,332 6.6%

396,618 465,218 536,411 16.3%

6,116,969 11,345,379 13,717,110 49.7%

1,080,078 1,312,055 1,980,497 35.4%

STOCK MARKET FIGURES

Market capitalization (Euros’000)

Ordinary dividend per share (Euros)

Total gross ordinary dividend (Euros’000)

Closing price at year end (Euros)

Annual appreciation

No. shares at year end

1,532,164 2,949,730 3,233,763 45.3%

0.30 0.30 0.36 9.5%

46,035 73,527 95,288 43.9%

9.90 12.00 12.15 10.8%

41.6% 21.2% 1.3% n/a

154,764,041 245,810,851 266,153,343 31.1%

PERFORMANCE IN THE LAST THREE YEARS (PRO FORMA FIGURES FOR 2002)MAIN FIGURES

Net revenues

0

1,000,000

2,000,000

3,000,000

4,000,000

2002 2003 2004

CAGR=33.9%

Assets

2002 2003 2004

4,000,000

8,000,000

12,000,000

16,000,000

0

CAGR=49.7%

Total gross ordinary dividend

2002 2003 2004

Euros’000

Closing price at year-end (euros)

2002 2003 2004

Euros’000

0

CAGR=43.9%

0

CAGR=10.8%

Euros’000 Euros’000

40

80

120

* Not corrected for the effect of the bonus rights issue.

Main Financial Figures for the Group Sacyr Vallehermoso

Imp

ort

ant

figure

s a

nd

info

rma

tion

2002 2003 2004

OPERATING FIGURES

Construction

Backlog orders (Euros’000)

Contracts won (Euros’000)

Real Estate Development

Land bank (m2)

Contracted sales (Euros’000)

Asset value (Euros’000)

Property

Area for lease (m2)

% Occupancy

Asset value (Euros’000)

Contracts Concessions

Km motorways in operation

Gross investment in tang. assets (Euros’000)

Services

Desalination (m3/day)

Population serviced

Service stations

1,932,258 3,200,926 3,732,032 39.0%

895,241 2,079,675 2,676,407 72.9%

2,660,225 3,213,174 4,031,670 23.1%

877,600 943,052 1,111,850 12.6%

1,776,047 2,317,611 3,339,700 37.1%

1,293,803 1,429,177 1,371,642 3.0%

94.7 96.5 95.6 0.5%

2,436,719 2,737,200 3,099,921 12.8%

1,832 2,403 2,648 20.2%

4,201,564 4,742,433 4,783,101 6.7%

PERFORMANCE IN THE LAST THREE YEARS (PRO FORMA FIGURES FOR 2002)MAIN FIGURES

% CAGR 04/02

Backlog orders

2002 2003 2004

Committed housing sales

2002 2003 2004

Km motorways in operation

2002 2003 2004

Valuation of real estate property assets

2002 2003 2004

Euros’000

Euros’000 Euros’000

0

1,000,000

2,000,000

3,000,000

4,000,000

0

400.000

800.000

1.200.000

CAGR=39.0%CAGR=12.6%

0

1,000,000

2,000,000

3,000,000

0

1,000

2,000

3,000

CAGR=18.8%CAGR=12.8%

103,640 137,840 330,000 78.4%

705,000 1,191,000 1,341,200 37.9%

5 7 20 100.0%

Main Financial Figures for the Group Sacyr Vallehermoso

Annual Report2004

IndexAnnual Report 2004

01. Letter from the Chairman 4

02. Governing Bodies 10

• Board of Directors 12• Good Corporate Governance 20

03. Sacyr Vallehermoso Group 22

• Origins and background 24• Construction. Sacyr and Somague 26• Real estate development. Vallehermoso 38• Property. Testa 52• Infraestructure contracts. Itinere 66• Services. Valoriza 74

04. Stock market performance and the financial community 82

• Stock market performance 84• Investor relations 90

05. Corporate responsibility 92

• Corporate responsibility 94• Quality, prevention and environment 98• Organization and systems 102• Human resources 104

06. Business performance 108

• Income statement 110• Balance sheet 114

07. Consolidated financial statements 128

• Auditor’s report 130• Balance sheet 132• Statement of income 134• Notes to the consolidated financial statements for 2004 136• Appendices 193

Annual Report 2004

Dear Shareholders:

It is a great pleasure and satisfaction for me toaddress you for the first time as Chairman of SacyrVallehermoso and to present the results for businessyear 2004.

First and foremost, I must insist that for over tenmonths last year the company was presided over byJosé Manuel Loureda Mantiñán, who has played adecisive role in all the achievements that has put itwhere it is today.

In 2004, the company basically worked in threecountries -Spain, Portugal and Chile- and the generalevents in their economies had a logical influence oncompany performance.

In Spain, on 11 March there was a terrible attackwhich caused 192 deaths and shocked the wholecountry. Shortly afterwards, general elections wereheld and the party in power changed. As you wellknow, any change in Government, and especially ifthe ruling party changes, initially tends to hold backpublic investment, especially in this case, when thetwo investor Ministries brought the NationalHydrological Plan to a standstill. At the same time,messages were coming from different sectors ofsociety suggesting that the so-called real estatebubble would shortly burst and this led to a significantslowdown in housing sales between May andSeptember, although they were later to pick up that sothat, in the end, 2004 was another record year for realestate development.

Moreover, the fact that Spain is divided into Self-governing Regions means that only a third of tenders

Letter from

theChairman

1

are State bids, while another third are Regional andthe remainder local. However, it must be said thatthese administrations made extraordinary efforts in thisrespect, especially Madrid Regional Government andMadrid City Council, and brought public tendering ingeneral up to an acceptable level.

Construction grew by 4%, 1.4% more than theeconomy in general. For the first time ever, jobs in thesector hit the 2,000,000 mark and the sector itselfaccounted for 18% of Spain’s G.D.P., with 630,000housing starts.

In Portugal too, the Government -but not thepolitical party- changed and public investmentsslowed as a result. The situation was worsened by thefact that the construction of the football stadiums builtfor the 2004 European Cup had been completed. Thecountry failed to reach the average European growthrate.

Lastly, Chile went through a stage of strongeconomic recovery, with copper prices hitting all-timehighs, and all of this led to an improvement in thecompany’s tolls on the highways in operation.

Business year 2004 was the first full year for SacyrVallehermoso and a lot of hard work –with verypositive results- went into unifying the management ofthe different companies in the Group and really largefigures were achieved. Notable amongst these are:• Total assets:

Euros 13,717.11 million(2nd company in the sector in Spain).

• EBITDA/revenues ratio:20.2% (1st company in the sector in Spain)

• EBIT/revenues ratio:15,7% (1st company in the sector in Spain)

• Cash flow/revenues ratio:14,4% (1st company in the sector in Spain)

• I.B.T./revenues ratio::10,2% (1st company in the sector in Spain)

• Total order bookEuros 59,708.0 million. (1st in the sector in Spain)

• Shareholders’ equity:Euros 1,980.5 million. (5th in the sector in Spain)

• Revenues:Euros 3,703.3 million. (5th in the sector in Spain)

• Income:Euros 376.3 million. (4th in the sector in Spain)

• Unrealized capital gains on real estate assets:Euros 2,145.5 million(According to C.B. Richard Ellis appraisal)Within the efforts to unify the Group, the

implementation of the SAP Platform was consolidatedat Vallehermoso and Testa, as was the PLIDOIntegrated Works Management Platform at Sacyr.Equally, a system of management by objectives,affecting 500 managers, was introduced throughoutthe entire company.

Given the extremely heavy weight of infrastructurecontracts, property and real estate development in theGroup, major financing and refinancing operationswere conducted. Notable amongst these are:• The issuance of AUDASA and AUCALSA

debentures for Euros 364 million.• The formalization of 94 developer loans

(transferable mortgages) for the same number ofVallehermoso developments, for a total of Euros1,144 million.

• Project financing, notable amongst which was theUSD 551 million for AUTOPISTASMETROPOLITANAS (Santiago de Chile). This wonthe “Deal of the Year” award, granted by thejournal “Project Finance”, for its structure, makingit the third year in succession that the Grupo SyVhas won the prize. In 2003, it won the award forfinancing in the purchase of ENA and, in 2002, forthe financing of the Rutas del Pacífico (Santiagode Chile – Valparaíso) contract.Now let us quickly take a look at the most

outstanding events in each of the Group’s businessdivisions, i.e., construction with SACYR and SOMAGUE;real estate development with VALLEHERMOSO;infrastructure contracting with ITINERE as the head ofthe group, which includes the ENA holdings andChilean contracts, and in 2005 the contracts in Portugaland Brazil; property with TESTA; and, lastly, the servicesbusiness conducted by VALORIZA.

Last year, SACYR moved into the Italian marketthrough SIS, a company which is 60%-owned by

In short, the Group increased its revenues by a total of 11.1%, with EBITDA growing by 29.5%and income before tax by 12,6%

“Annual Report 2004

6 “

Let ter f rom the Chai rman

7SACYR, while the other 40% belongs to the Grupo INC(an Italian construction firm). In 2004, the companywon the contracts for two works, one for roads(Cesare Torinese – Claviere) with a value of Euros 99.9million (VAT included) and the Palermo-Carini rail linkfor Euros 665 million (VAT included). Other majorcontracts were also won, such as:

• San José – San Ramón motorway in CostaRica, for Euros 212.7 million (VAT included).

• M-30 motorway connection with the A-III dualcarriageway (Madrid City Council) for Euros147.2 million.

• Connection between lines 1 and 4 of theMadrid Metro (Madrid Regional Government)for Euros 135.8 million.

• Carballino–Lalín AVE high-speed rail link (GIF)for Euros 115.8 million.

In addition, Vallehermoso adjudicated different buildingcontracts to Sacyr for a value of Euros 142.4 million.

The following civil works were completed: • Barajas Airport Terminal.• Barajas Airport runway 15-33.• Barajas connecting tunnel.• R-3 and R-5 radial roads and a stretch of the

M-50 motorway.• Santiago-Dozón motorway.And the following buildings:• Barcelona Cosmocaixa Science Museum.• The AC Forum hotel in Barcelona.SOMAGUE, for its part, in a very complicated year,

managed to maintain the revenue figure of theprevious year at around Euros 875 million.

Amongst the contracts won were:• Coimbra Pediatric Hospital for Euros 30.0 million.• New basilica in Fatima for Euros 16.1 million.Amongst others, the works below had been

completed by the year end:• Oporto Concert Hall, designed by Dutch

architect Rem Koolhaas.• Sintra Palace of Justice, the largest court

complex in Portugal (33,000 sq. metres).• Plaza de España Business Centre in Lisbon, of

67,000 sq. metres.An agreement was also reached with BRISA to bid

together in the Grande Lisboa – IC 16/30 tender andto build the Litoral Centro highway.

The Grupo SOMAGUE’s services businesses willbe explained with the description of VALORIZA.

In a different field, SOMAGUE is bidding in tendersfor ports in Spain in conjunction with SACYR, becauseof its wider experience, and some major Spanish portis expected to be obtained in 2005.

As to VALLEHERMOSO, yet another year it wasthe out-and-out leader in housing development inSpain, with revenues of Euros 1,069.3 million, a 10.3%increase on the preceding year, and income before taxof Euros 116.8 million.

VALLEHERMOSO has a total of 519 developments,of which 230 are being marketed, built or delivered, whilethe remainder are at different stages of planning. A totalof 4,368 homes were contracted, 4,222 were deliveredand 4,584 were started.

As of 31 December 2004, the value of its realestate assets, according to C.B. Richard Ellis, wasEuros 3,339.7 million, a figure that discloses Euros1,319.9 million in unrealized capital gains and is a44.1% increase on the figure a year earlier. There are4,031,670 sq. metres in the building land bank,equivalent to some 24,000 homes.

In infrastructure contracts, ITINERE obtained alarge volume of net revenues, Euros 322.9 million, withEBITDA of Euros 247.9 million, respective increases of103% and 113,7% on the 2003 figures, and Euros 13.0million in income before tax.

It won the contract for the Palma – Manacorshadow toll in Mallorca and the San José – SanRamón toll road in Costa Rica. It also reached anagreement with OHL in respect of companyreorganization, so that ITINERE now owns 100% ofAUNOR, is the largest minority shareholder inACCESOS DE MADRID (R-3 and R-5 radial roads) andACEGA, and sold its holdings in the M-45 and theAirport Hub. In addition, it now owns 70% of ENA, afteracquiring the 20% that was in the hands ofCAIXANOVA and CAIXA GALICIA.

As occurred throughout the Group, work was doneon the functional and operational integration of ENAand ITINERE’s organization structures.

TESTA, the company which runs the real estatebusiness, obtained net revenues of Euros 192.0million, as compared to Euros 181.6 million in 2003.EBITDA amounted to Euros 146.2 million, as againstEuros 140.1 million the previous year, and incomebefore tax totalled Euros 155.1 million.

As of 31 December 2004, according to C.B.Richard Ellis’ appraisal, the value of its real estateassets amounted to Euros 3,099.9 million, withunrealized capital gains of Euros 825.6 million. Thiswas an increase of Euros 362.7 million on the 2003valuation and of Euros 66.5 million in terms ofunrealized capital gains.

The following investments were made: • The purchase of the plot for the SyV Tower for

Euros 140 million, from Madrid City Council.

Annual Report 2004

8• The purchase of the building at calle Alcalá 45

for Euros 99.8 million from Madrid CityCouncil, with a 10-year lease to the InlandRevenue.

• The purchase of 50% of the AC Forum hotel inBarcelona, inaugurated in May.

• The purchase of 153,000 sq. metres ofundeveloped land in Valdebebas for Euros 33.1million, from Madrid City Council.

• The purchase of premises in the Porto Pí andCentro Oeste shopping centres for Euros 25.7million.

• The additions of the Rodríguez Marín and Farode Hércules homes for the elderly, in Madridand La Coruña respectively, for Euros 19.1million.

Other notable events were the adjudication of theoperation of the hotel in the SyV Tower to Hotusa, theten-year extension of the lease for CEPSA’s headoffice in Parque de las Naciones, and the 10%increase in the occupancy rate of the 86,000 sq. metreMellon Centre building in Miami (including the areabelow grade) taking it up to 93.3%.

The most important asset disposals were:• The sale of the Capitán Haya building to Madrid

City Council for Euros 132.9 million. • The sale of the company RENLOVI to

RESTAURA for Euros 47.7 million.• Land at Meco (Madrid) for Euros 36.2 million.• The sale of the 20.25% holding in the capital of

the Swiss company MAAG to SPS for Euros25.4 million.

The services businesses under VALORIZAgenerated Euros 90.1 million in revenues, as againstEuros 48.3 million the previous year, and made slightlosses of Euros 0.02 million.

In 2004 the ground started to be prepared todevelop this activity in the short term, and the first stepthat was taken was to hire an excellent experiencedservices management team, which will be the basis forthe future growth of activity in this sector.

In addition, these services will be unified withthose of SOMAGUE, which is certain to produce asignificant revenue figure for the company in 2005.

In 2004 the ground started to be prepared todevelop this activity in the short term, and the first stepthat was taken was to hire an excellent experiencedservices management team, which will be the basis forthe future growth of activity in this sector.

However, in 2004 some very interesting transactionswere conducted, notable amongst which were:

• SADYT’s contract for the Skida and Benisafdesalination plants in Algeria, with capacities of100,000 m3/day and 150,000 m3/dayrespectively.

• Taking control of IBERESE up to 74%.• Contract with the Government of Macao for a

new solid waste treatment line of 300,000Tn/year, for Euros 20 million.

• Increase in the holding in FINERGE, whichengages in wind power production, from 50%to 100%.

• Preparing for the consolidation of A.G.S. as theleading private water operator in Portugal tosupply water to 1.3 million inhabitants.

In short, the Group increased its revenues by10.3% in construction, 10.3% in development, 103.1%in infrastructure contracting, 5.7% in rentals from realestate and 86.5% in services. This gives a totalincrease of 11.1% for the Group, with a 29.5% rise inEBIDTA and 12.6% growth in income before tax. Inaddition, it contracted Euros 2,676.4 million in works,up 28.7% with respect to 2003.

Lastly, in the second half of the year 2004, SyVtook 90 million BBVA shares through an equity swapand acquired another 16 million shares of the samebank, making SyV its major shareholder. SyV appliedto the Bank of Spain for it to authorize and considerthis shareholding as significant (it was much largerthan the stake of the next shareholder in the rankingand much, much larger than all the others). As theBank of Spain failed to confirm SyV’s request and,thus, SyV could not consolidate results according toIAS, on 16 February 2005 the Group decided to sellits rights over BBVA, obtaining Euros 148.6 million incapital gains. However, the operation was criticized byanalysts and some of the Press. SyV was trading atEuros 12.79 on 29 November when the news filteredthrough to the Press but, because of this, it ended theyear at Euros 12.15, while other companies in thesector on the Ibex-35 appreciated by an average of35% towards the end of the year. This prevented theGroup from maintaining the stock market gains ofprevious years (41% in 2002 and 21% in 2003) and itended the year with market capitalization of Euros3,233.7 million as of 31 December 2004, ascompared to Euros 2,949.7 million a year earlier. This meant that SyV’s P/E ratio was of 8.59 as of 31December 2004, as compared to the average ratio of14.78 for the rest of the sector on the Ibex-35.However, because of all this, the stock shouldperform well in 2005.

Let ter f rom the Chai rman

9

It should also be noted that the share came off theselective Ibex-35 index in the June revision, but wentback on again when the index was next reviewed inDecember 2004.

As 2004 is considered to have been a brilliantbusiness year, the Board of Directors is proposing tothe Meeting an ordinary dividend of Euros 0.36 pershare, charged to results for 2004. This is a 20%increase on the ordinary dividend paid in 2003.

We view 2005 with optimism as regards all theGroup’s businesses. In construction, the consolidationwhich always occurs a year after a change inGovernment has already had its effects and theStrategic Infrastructure and Transport Plan (SITP), ahuge investment plan for Euros 240,000 million -a 25%increase on the investments foreseen in the previousplan- has been presented. Equally, the Ministry of theEnvironment has future investments as alternatives tothe National Hydrological Plan pretty well earmarked.

The new change in Government in Portugal lookspromising for the moment in respect of public biddingand we believe we have taken up a very interestingposition in Italy, which we hope to extend to Irelandand Greece. Lastly, in Chile the economy is growing atrates of 5% and we will also be bidding for contracts inMexico, Brazil and Costa Rica.

As regards development, a series of factors (longmortgage maturities, low interest rates in Europe, thenumber of workers per household, a market of 300million people for housing on the coast, immigrants inthe process of integration, divorces stabilized at100,000/year) suggests that the Group will continue fora (short) time at 630,000 homes but, onceaccumulated demand has been satisfied, the figureswill fall to 350,000-400,000 homes. VALLEHERMOSOaims to increase its market share from 0.7% to 1.5%and it is definitely in a position to do so, as it hasdelegations nationwide and it expects that whendemand shrinks, the weakest developers will move outof the market. The margin will narrow, logicallyenough, so it already has a land management policythat will enable it to undertake new developments withmanaged land rather than land with planning

permission, as occurred in business year 2002 andbefore.

In respect of infrastructure contracts, as one of thethree sources of funding (Europe) will be missing inthe coming years, the SITP itself will have to developprivate contributions so as not to fall into a deficit orput a brake on the economy. ITINERE, as the secondinfrastructure contractor in Spain, is well-prepared forthis. This approach is applicable to Portugal and SyV’starget countries, which will gradually lose aid fromEurope.

The Group’s plans for TESTA are for it to focus onprime locations, where demand is high and supplyshort, as can be seen in the lack of major buildingsinside Madrid’s M-30 ring road.

VALORIZA’s activity is to be developed as from2005, in accordance with SyV’s 2004-2007 strategicplan, which contemplates major efforts in this sector. In2004 the foundations were laid with what is mostimportant in any human enterprise, i.e. humanresources and, as was mentioned earlier, the Group hashighly experienced teams prepared to perform the task.

Finally, I would like to thank everyone who works atthe Group for their efforts and dedicated work. Withouttheir contribution it could never have arrived where ithas nor reach the goals it has set itself for the future.Equally, I would like to mention our clients andsuppliers, without whom the success of the enterprisewould not be possible, and of course, the confidenceplaced in us by the Group´s shareholders, for whomwe works.

Luis del RiveroChairman of Sacyr Vallehermoso

We view 2005 with optimism as regards all the Group´s businesses.

“

“

Annual Report 2004

2Governing Bodies

• Board of Directors

• Good Corporate Governance

Annual Report 2004

12COMPOSITION

CHAIRMAN

Mr. Luis Fernando del Rivero Asensio

Born in 1949, he has a degree in Civil

Engineering from the Escuela Técnica

Superior in Santander. Executive company director.

He owns 102 shares directly and 33,944,531

shares indirectly through Actividades

Inmobiliarias y Agrícolas, S.A. (13,487,468

shares) and Rimefor Milenio Nuevo, S.L.

(20,457,063 shares), representing 12.75% of

share capital.

1ST DEPUTY CHAIRMAN AND CHIEF

EXECUTIVE OFFICER

Mr. Manuel Manrique Cecilia

Executive director. He was born in 1954 and

obtained his degree in Civil Engineering from the

Escuela Técnica Superior in Madrid.

He has a direct holding of 100 shares and

indirectly owns another 18,631,463 shares,

representing 7.00% of capital, through

Cymofag, S.L.

2ND DEPUTY CHAIRMAN

Nueva Compañía de Inversiones, S.A.

Represented by Mr. Juan Abelló Gallo, in his

capacity as proprietary director. He was born in

1941. He has a degree in Pharmacy and a PhD

and is a member of the Real Academia de

Farmacia. He is also a Company Director of

Aguas de Barcelona, a shareholder of Compañía

Vinícola del Norte de España, S.A. and the

Chairman of Torreal, S.A.

Nueva Compañía de Inversiones, S.A. owns

an indirect equity holding of 23,524,382 shares

Board of Directors

Govern ing Bodies

13

through Torreal, S.A. and Torreal Sociedad de

Capital Riesgo, S.A., plus 5 direct shares,

representing 8.84% of the Company’s share

capital.

3RD DEPUTY CHAIRMAN

Mr. Diogo Alves Diniz Vaz Guedes

Born in 1963, he has a degree in Business

Organization and Management from Lisbon’s

Universidad Católica, he is the Chairman of the

Board of Directors of Somague - Engenharia,

S.A., Chairman of Esquilo, SGPS, S.A. and

Aquapura Hotels & Resorts, S.A, Director of

Banco Privado Portugués, of the Business

Managers’ Forum, and a member of the Higher

Council of Portugal’s Universidad Católica.

He is an executive director in his capacity as

Chairman of Somague - Engenharia, S.A.

BOARD MEMBERS

Almarfe, S.L.

It has a direct holding of 15,863,325 shares,

representing 5.96% of capital. Represented by

Mr. Fernando Martín Álvarez, who was born in

1947 and is a graduate in Chemical Sciences.

He is the Chairman and founder of Grupo

Martinsa.

Mr. Vicente Benedito Francés

Executive company director, in his capacity

as Sacyr Vallehermoso’s General Manager of

Internal Resources. He was born in 1948 and

has a degree in Law from the University of

Valencia, a Diploma in Agricultural Law and in

Real Property Law. He has a Master’s degree in

Foreign Trade. He is on several Advisory Boards

of educational institutions.

With 55,866 shares, he owns 0.02% of share capital.

Mr. Demetrio Carceller Arce

Born in 1962, he has a degree in Economic

Science and Business Studies from CUNEF. He

is a proprietary director in representation of Disa

Corporación Petrolífera, S.A., of which he is

Chairman, of Atlántica Petrogás, S.A. and Renta

Insular Canaria. He is also the Executive

Chairman of Sociedad Anónima Damm and of

Corporación Económica Damm, S.A.

He holds a direct and indirect equity holding

of 18,450 shares, representing 0.01% of share

capital.

Members of the Board of Directors.

Annual Report 2004

14

Corporación Caixa Galicia, S.A.

Represented by Mr. José Luis Méndez López,

born in 1945. He has a degree in Economic Science

and Business Studies from Madrid’s Universidad

Complutense, is General Manager of Caixa Galicia

and the Chairman of Corporación Caixa Galicia in his

capacity as proprietary director. José Luis Méndez is

also the Chairman of Ence and of Ahorro Corporación

Financiera and Deputy Chairman of Unión Fenosa

and Caser, S.A. and a Director of other companies,

including Pescanova, Prosegur and CECA.

As of 31 December 2004, Corporación Caixa

Galicia, S.A. had 7,558,684 direct shares,

representing 2.84% of share capital.

Mr. Matías Cortés Domínguez

An independent company director, born in 1938,

he has a degree in Law from Granada University

and a PhD in Law from the University of Bologna

(Italy). He is Professor of Financial and Fiscal Law at

Madrid’s Universidad Complutense and at the

Universidad Autónoma de Madrid, Professor of

Economics and Finance at the Granada Faculty of

Law. Chairman of the law firm Cortés Abogados and

a Company Director of Prisa, S.A.

Participaciones Agrupadas, S.R.L.

Represented by Mr. Angel López-Corona

Dávila. Born in 1949, he has a degree in Economic

Science, is the Assistant General Manager and the

SharesName Representative Nature In representation Direct Indirect Total %

Almarfe, S.L. Fernando Martín Álvarez Propietary 15,863,325 15,863,325 5.96%

Diogo Alves Diniz Vaz Guedes Executive 13,992,222 (5) 13,992,222 5.26%

Vicente Benedito Francés Executive 55,866 55,866 0.02%

Demetrio Carceller Arce Propietary Disa Corporación Petrolífera, S.A., Atlántica 3,075 15,375 18,450 0.01%

Petrogas, S.A. y Renta Insular Canaria, S.A.

Corporación Caixa Galicia, S.A. José Luis Méndez López Propietary 7,558,684 7,558,684 2.84%

Matías Cortés Domínguez Independient 100 100 0.00%

Luis Fernando del Rivero Asensio Executive 102 33,944,531 (2) 33,944,633 12.75%

Manuel Manrique Cecilia Executive 100 18,631,463 (3) 18,631,563 7.00%

Nueva Compañía de Inversiones, S.A. Juan Abelló Gallo Propietary 5 (1) 5 0.00%

Participaciones Agrupadas, S.R.L. Ángel López-Corona Dávila Propietary 16,295,815 16,295,815 6.12%

Prilou, S.L. José Manuel Loureda Mantiñán Propietary 19,821,318 13,307,668 (4) 33,128,986 12.45%

Juan Miguel Sanjuán Jover Propietary S.G.T., S.A. 9,272,262 9,272,262 3.48%

José Seixas de Queiroz Vaz Guedes Executive

Torreal, S.A. Pedro del Corro García-Lomas Propietary 18,602,176 4,922,206 (1) 23,524,382 8.84%

TOTAL 78,200,566 94,085,727 172,286,293 64.73%

(1) Nueva Compañía de Inversiones, S.A. has an indirect stake of 23,524,382 shares through Torreal, S.A. and Torreal Sociedad de Capital Riesgo, S.A.(2) Mr. Luis del Rivero Asensio has an indirect holding of 33,944,531 shares through Actividades Inmobiliarias y Agrícolas, S.A. (13,487,468 shares) and Rimefor Milenio Nuevo, S.L. (20,457,063 shares).(3) Mr. Manuel Manrique Cecilia has an indirect holding of 18,631,463 shares through Cymofag, S.L.(4) Prilou, S.L. has a direct holding of 19,821,318 shares and an indirect stake de 13,307,668 shares through Prilomi, S.L(5) Mr. Diogo Alves Diniz Vaz Guedes has an indirect holding of 13.992.222 shares through Finavague, S.L.

COMPOSITION OF THE BOARD OF DIRECTORS AS OF 31 DECEMBER 2004

Govern ing Bodies

15

Manager of the Financial Division of Caixanova,

and a member of the Management Committee. He

is a member of the Board of Directors of Banco

Gallego, Tavex Algodonera, S.A., Analistas

Financieros Internacionales, S.A., Monbus, S.L.,

"R" Cable y Telecomunicaciones Galicia, S.A. and

Vigo-Activo, S.A.

Participaciones Agrupadas S.L. directly owns

16,295,815 shares, representing 6.12% of share

capital and is the company through which Caixa

de Aforros de Vigo, Ourense e Pontevedra

(Caixa Nova), Montes de Piedad y Caja de

Ahorros de Ronda, Cádiz, Almería, Málaga and

Antequera (Unicaja), Caja de Ahorros de Murcia

and Caja de Ahorros de Ávila have channelled

their equity holding in Sacyr Vallehermoso, S.A.

Prilou, S.L.

Represented by Mr. José Manuel Loureda

Mantiñán, who was born in 1939 and has a

degree in Civil Engineering from the Escuela

Técnica Superior in Madrid. Proprietary director.

Prilou, S.L. owns 19,821,318 shares directly.

Prilomi, S.L., in which Prilou S.L. holds 81.71%,

owns 13,307,668, which implies that the joint

shareholding is equivalent to 12.45% of the

share capital of Sacyr Vallehermoso, S.A.

Mr. Juan Miguel Sanjuán Jover

Born in 1945, he has a degree in Civil

Engineering from the Madrid Escuela Técnica

Superior de Ingenieros and has a Diploma in

Economic Science from the UNED. He is the

Executive Chairman of the Grupo Satocan, a

construction company based in the Canary

Islands, Deputy Chairman of Alenda, S.A.,

Chairman of Pas Jandia, S.A. and of the Círculo

de Empresarios de Gran Canaria and is a

Company Director of the Fundación Universitaria

de Las Palmas. With an indirect holding of

9,272,262 shares (3.48% of capital) through

S.G.T., S.A., he is a proprietary director.

Mr. José Seixas de Queiroz Vaz Guedes

Born in 1963, he has a degree in Business

Organization and Management from the

Lausanne Business School in Switzerland. He is

Deputy Chairman of Triángulo do Sol- Auto-

Estradas, S.A. (Brazil) and is an Executive Director

in his capacity as Deputy Chairman of Somague.

Torreal, S.A.

Represented by Mr. Pedro del Corro García-

Lomas, who was born in 1957 and has a degree in

Economic Science and Business Studies from ICADE

and a degree in Law from the Universidad de Deusto.

He is a Company Director and General Manager of

Torreal, S.A., Chairman of the Instituto Sectorial de

SharesDirect Indirect Total %

15,863,325 15,863,325 5.96%

13,992,222 (5) 13,992,222 5.26%

55,866 55,866 0.02%

3,075 15,375 18,450 0.01%

7,558,684 7,558,684 2.84%

100 100 0.00%

102 33,944,531 (2) 33,944,633 12.75%

100 18,631,463 (3) 18,631,563 7.00%

5 (1) 5 0.00%

16,295,815 16,295,815 6.12%

19,821,318 13,307,668 (4) 33,128,986 12.45%

9,272,262 9,272,262 3.48%

18,602,176 4,922,206 (1) 23,524,382 8.84%

78,200,566 94,085,727 172,286,293 64.73%

Capital Riesgo, S.A.(13,487,468 shares) and Rimefor Milenio Nuevo, S.L. (20,457,063 shares).

Annual Report 2004

16Promoción y Gestión de Empresas (INSSEC),

Chairman of Dominion, S.A., Deputy Chairman of

Sufi, S.A. and a Company Director of Inova, VEO TV,

Worldbest Cigars, Lanetro and Arbarín SIMC.

SECRETARY (NON-DIRECTOR)

Ms. Marta Silva de Lapuerta

Born in 1969, she has a degree in Law and is

a public prosecutor. She has worked as a public

prosecutor in the High Court of Catalunya, the

Court of Auditors, the Ministry of Finance and the

Ministry of Economy.

VICE-SECRETARY AND CONSULTANT

SOLICITOR (NON-DIRECTOR)

Mr. Gerardo Manso Martínez de Bedoya.

BOARD COMMITTEES

In compliance with its regulations, the Board

also has the following committees:

Appointments and Executive Committee Remuneration Committee Audit Committee

Luis Fernando del Rivero Asensio Chairman

Diogo Alves Diniz Vaz Guedes Member

Demetrio Carceller Arce Member Member

Corporación Caixa Galicia, S.A. Member

Matías Cortés Domínguez Chairman

Manuel Manrique Cecilia Member

Nueva Compañía de Inversiones, S.A. Member

Participaciones Agrupadas, S.R.L. Member Member

Prilou, S.L. Member

Juan Miguel Sanjuán Jover Member

Torreal, S.A. Chairman

Marta Silva de Lapuerta Non-member secretary Non-member secretary Non-member secretary

BOARD COMMITTEES

Viaduct over the Guadiana N-430. Stretch: Presa de García Sola-Puerto de Los Carneros N-502.

Govern ing Bodies

17

REMUNERATIONThe amount paid in respect of salaries, per

diem or remuneration of any kind to the

members of the Board of Directors in 2004,

including those who came off the Board during

the year, aggregated globally by payment item,

is as follows:

The remuneration to be paid to the Board of

Sacyr Vallehermoso, S.A. was approved at its

meeting on 5 June 2003 and was based on the

recommendations of the Appointments and

Remuneration Committee. The amounts to be

paid to Company Directors as of that date are:

• For performing the functions of Company

Director: Euros 5,000 per meeting.

• For performing the functions of member of the

Executive Committee: Euros 3,333 per meeting.

• For performing the functions of member of the Audit

Committee or the Appointments and Remuneration

Committee: Euros 1,667 per meeting.

DIRECTORS´FEES

Attendance Fees

Board of Directors

Executive Committee

Audit Committee

Appointments and Remuneration Committee

TOTAL

REMUNERATION TO DIRECTORS IN RESPONSABILITY POSTS AT ANY GROUP COMPANY

Salaries

Fixed Remuneration

Variable Remuneration

TOTAL

TOTAL

REMUNERATION (Euros)

905,000.00

213,333.12

55,000.11

33,333.40

1,206,666.63

2,544,058.66

1,406,188.96

3,950,247.62

5,156,914.25

de Los Carneros N-502.

In 2004, the Board and its committees met on

the following occasions: The Board of Directors

on 14 occasions; the Executive Committee on 10;

the Audit Committee on 12 and the Appointments

and Remuneration Committee on 8.

The annual remuneration paid to the

Executive Directors of Sacyr Vallehermoso, S.A.

for the part corresponding to their executive

function was as follows:

Annual Report 2004

18The remuneration paid to members of the Board

and its respective Committees was as shown below:

Comm Appointments and Board Exec. Comm. Audit Remuneration Committee Total

Luis Fernando del Rivero Asensio

Manuel Manrique Cecilia (Cymofag, S.L.)

Nueva Compañía de Inversiones, S.A.

Diogo Alves Diniz Vaz Guedes

Almarfe, S.L. (Fernando Martín)

Vicente Benedito Francés

Demetrio Carceller Arce

Corporación Caixa Galicia, S.A.

Matías Cortés Domínguez

Participaciones Agrupadas, S.R.L.

Prilou, S.L. (José Manuel Loureda)

Juan Miguel Sanjuán Jover

José Seixas de Queiroz Vaz Guedes

Torreal, S.A.

José Ramón Calderón Ramos (Left)

Francisco Javier Gayo Pozo (Left)

Pedro Gamero del Castillo y Bayo (Left)

Antonio Basagoiti García-Tuñón (Left)

TOTAL

60,000 33,333 93,333

60,000 33,333 93,333

60,000 33,333 93,333

30,000 13,333 43,333

25,000 25,000

60,000 60,000

60,000 33,333 11,667 105,000

55,000 55,000

60,000 11,667 71,667

60,000 33,333 18,333 111,667

60,000 33,333 93,333

60,000 18,333 78,333

25,000 25,000

60,000 18,333 78,333

5,000 5,000

55,000 55,000

55,000 55,000

55,000 10,000 65,000

905,000 213,333 55,000 33,333 1,206,667

GROSS REMUNERATION PAID TO MEMBERS OF THE BOARD OF DIRECTORS (Euros)

Fixed Variable Total

Luis Fernando del Rivero Asensio

Manuel Manrique Cecilia

Vicente Benedito Francés

Diogo Alves Diniz Vaz Guedes

José Seixas de Queiroz Vaz Guedes

Directors who resigned in 2004

TOTAL

507,208 353,545 860,753

423,183 295,000 718,183

225,804 94,503 320,307

179,140 179,140

130,193 130,193

1,078,531 663,141 1,741,671

2,544,059 1,406,189 3,950,248

ANNUAL REMUNERATION OF EXECUTIVE DIRECTORS (Euros)

Apart from those mentioned above, no other

payments are made to Company Directors and

the Company has no obligations in respect of

pensions or life assurance, with the exception of

those deriving from the Company’s Collective

Agreement for those who are also employees.

No credits or loans have been extended to

members of the Board. Lastly, there are currently

no plans for stock options for Board members.

MANAGEMENT COMMITTEE

The decisions taken by the Board of

Directors and, in the event, by the Executive

Committee, are enforced by the Management

Committee. This committee includes the

business units, represented by the Chairmen

and CEOs of the companies that effectively run

the business, and central services, represented

by the General Offices and the Secretariat

General, all of whom report to the CEO and the

Chairman of Sacyr Vallehermoso.

Govern ing Bodies

19

Post Mission

Luis Fernando del Rivero Asensio Chairman of Sacyr Vallehermoso

Manuel Manrique Cecilia Chief Executive Officer Sacyr Vallehermoso

Diogo Alves Diniz Vaz Guedes Chairman of Somague For business in Portugal

Francisco Javier Gayo Pozo Chairman of Sacyr For the construction business

Rafael del Pozo García Chief Executive Officer Vallehermoso For residential development

Gonzalo Ferre Moltó Chief Executive Officer Itinere For the management of the motorway contract

portfolio and its development

Luis Janini Tatay Chief Executive Officer Valoriza For the development of services complementary

to the core businesses

Fernando Rodríguez-Avial Llardent Chief Executive Officer Testa For the management of property for lease and the

development of new products

Vicente Benedito Francés General Manager of Resources He brings together the legal activity of the businesses,

technological and organizational support and

Human Resources

Francisco Javier Pérez Gracia Corporate General Manager To develop and plan financial policy and

administrative support

Ana de Pro Gonzalo General Manager of Communication To develop communication and

and Institutional Relations investor relations

Marta Silva de la Puerta Secretary to the Board She manages corporate legal activity and

foments Good Governance practices

José Antonio Guio de Prada Contracting Manager Preparation and control of bidding and

works contracting

MANAGEMENT COMMITTEE

Annual Report 2004

20INFORMATION ON THE RULES OF GOVERNANCE APPLIED BYTHE COMPANY

At Sacyr Vallehermoso’s General Meeting

held on 25 June 2004, new Company By-laws

were approved. The Amendment of the By-laws

had three basic aims:

• To adapt the Company By-laws to the

changes made to the Equity Market Act and

the Company Act by the Transparency Act

(Act 26/2003, of 17 July), adapting the

By-laws to the best practices in respect of

Corporate Governance.

• To add to the By-laws the necessary

instruments so that the organization and

management of the Company would be more

flexible, and to include technological

innovations.

• To update and introduce technical

improvements in the wording of the previous

By-laws, completing and clarifying the

regulation of some matters.

The General Meeting held on 25 June 2004

passed the Regulations for the General Meeting,

thus complying with the obligation imposed by

the so-called Transparency Act (Act 26/2003 of

17 July). The Regulations for Sacyr

Vallhermoso’s General Meeting aim to increase

the transparency which should prevail in the

preparation and functioning of the Meeting, to

specify the ways in which shareholders may

exercise their voting rights at the Meeting, and

unify in a single text all the rules regarding the

General Meeting, thus providing greater

knowledge of the Company’s Board of Directors.

The Regulations for the Board of Directors dated

26 March 2003 were amended at the Board meeting

held on 3 June 2004 and the General Meeting held

on 25 June 2004 was informed of the same.

Good CorporateGovernance

Govern ing Bodies

21The object of the amendment was to adapt the

text to the latest obligations introduced by the

Transparency Act in respect of Corporate

Governance, and to the new Company By-laws.

The Regulations for the Board set out the

principles for the conduct of the Company’s

governing body, the basic rules for its organization

and functioning and the rules of conduct for its

members and the Company’s Senior Management.

Lastly, at its meeting on 25 June 2004, Sacyr

Vallehermoso’s Board of Directors passed a new

text for the Internal Rules of Conduct, applicable to

members of the Board of Directors and Company

management who for reasons of their work, post or

functions, have access to facts, decisions and

information that could influence the price of Sacyr

Vallehermoso shares.

OTHER ACTIONS IN RESPECT OFCORPORATE GOVERNANCE

In business year 2004, Sacyr Vallehermoso

updated the contents of its website to comply

with the Transparency Act 26/2003, of 17 July.

Additionally, applying the mandates of the

said regulation, the Annual Corporate

Governance Report was put at shareholders’

disposal as from the day the General Meeting

was announced.

Lastly, it should be added that, following the

most stringent principles of Corporate

Governance, the remunerations of both External

and Executive Directors were published in the

Annual Report, with a breakdown of the different

items of the remuneration.

A-67 dual carriageway. Los Corrales de Buelna-Molledo. Cantabria-Meseta.

Annual Report 2004Sacyr Vallehermoso

Group

3

• Origins and background

• Construction. Sacyr and Somague

• Real estate development.Vallehermoso

• Property. Testa

• Infraestructure contracts. Itinere

• Services. Valoriza

Sacyr VallehermosoGroup

Annual Report 2004

24 Sacyr Vallehermoso is a diversified business

group and one of the top fifteen Spanish

companies in terms of the volume of

assets and one of the top twenty-five in terms of

net income. The definitive boost to its growth

and its consolidation as one of Spain’s “giant”

business groups, with a leading position in Chile

and Portugal as well, came in recent years.

However, its history goes back over fifty years

and is based on soundness, professionalism

and a successful combination of prudence and

controlled business risk. The business acumen

of all the managers and administrators who have

worked at the company in the course of its

history is behind what is today a strong

balanced group with future projection.

In 1921, the oldest of the companies in the

group today, Vallehermoso, was constituted

under the initial name of Compañía Madrileña de

Contratación y Transportes. In 1953 it took on its

current name and started its core business of

housing construction, sales and rental.

In Portugal a few years earlier, specifically in

1947, José Vaz Guedes founded Empreitadas

Moniz da Maia, Duarte & Vaz Guedes, the origin

of the Somague group and a company engaging

in the construction of infrastructure projects.

In 1974 Coslada Edificios Comerciales, later

to become Prima Inmobiliaria, was born with the

exploitation of leased property as its mission, and

in 1984 the Empresa Nacional de Autopistas

(ENA) was founded, with State holdings in

motorway contractors.

Lastly, in 1986 Sociedad Anónima de

Caminos y Regadíos, a construction firm

focusing on civil works, was born. In 1991 it

changed its name to Sacyr, in 1996 it diversified

into the business of constructing and running toll

motorways and in 2002 it became a holding and

bought 24.5% of Vallehermoso.

Origins andbackground

Sacyr Val lehermoso Group

25The year 2003 saw the genesis of a group

where the success stories and profits of all these

companies were compounded. On 3 April of the

same year, Sacyr and Vallehermoso’s General

Shareholders’ Meetings (the latter had absorbed

Prima Inmobiliaria two years earlier, giving rise to

Testa) approved the merger of the two companies;

in October the same year, the purchase of ENA

from the State was signed and in December the

agreement with the majority shareholders for the

total integration of Somague was sealed.

Thus, 2004 was the first full year for the Sacyr

Vallehermoso group as we know it today. Sacyr

Vallehermoso is structured as a holding and

owns majority shareholdings in the different

companies which specialize in running each of

the businesses. This organization maximizes the

efficiency of the human teams, the technical

equipment and economic and material

resources. The businesses are:

Construction

This business is run by Sacyr, which is

positioned as a construction firm of recognized

prestige in Spain, Sacyr Chile in Chile, Sis in Italy

and Somague in Portugal and Brazil. It carries

out all types of public and private civil works and

building projects in an integrated manner, with a

structure that enables it to optimize the

execution of works, through on-going customer

service, by meeting the deadlines foreseen,

through its desire to do a job well-done, and by

always keeping to the amount budgeted.

Real estate development

The Group conducts its development

business through Vallehermoso in Spain –with

7 regional offices and over 30 delegations–

and Somague Inmobiliaria in Portugal.

Vallehermoso is the leading developer in Spain

with 4,368 homes sold in 2004 and a large

supply of quality housing in towns inland, on

the coast and in the most exclusive leisure

and tourist areas. At the end of 2004 the value

of its assets was in excess of Euros 3,300

million.

Property

Testa Inmuebles en Renta is the leading

Spanish firm engaging exclusively in leasing its

buildings. It is a listed company, with an asset

value of Euros 3,100 million. It has a wide-ranging

supply of quality properties located in strategic

areas, including offices, hotels, shopping centres,

commercial and industrial premises, open-market

and subsidized housing, and homes for the

elderly.

Infrastructure contracts

Itinere groups together all the Group’s

holdings in motorway and railway (Seville Metro)

contracts. It is the second operator in Spain in

terms of the number of kilometres managed and

the first in terms of volume of investment.

Services

Valoriza is at the head of a group of

companies which engage in activities that

complement those described above and also in

high value-added businesses such as

integrated cycle water management, the

development of alternative energies,

environmental (waste collection and treatment,

etc.) and multi-service activities (facilities

management, service areas, etc.).

Annual Report 2004

26ACTIVITY

Sacyr is one of the world leaders in the

construction sector in terms of profitability. This

leadership is achieved by the Group’s strategy

of combining strict cost control –with maximum

quality and punctuality in the provision of

services– with a selective international presence,

always constituting local companies in foreign

markets. Selectively opening up new markets

and, in this way, moving into them as a local

company distinguishes it from other construction

firms and has not only been a growth formula for

both revenues and profitability, but has also

strengthened the internal structure and has given

it unquestionable competitive advantages,

besides boosting its prestige in the market.

Thus, the Group’s business is conducted by

Sacyr in Spain, by Somague in Portugal and by

Sacyr Chile in Chile, while Sis is the firm

responsible for the business in Italy, a market the

Group has just moved into.

In terms of work executed, Sacyr ranks fifth in

Spain, while Sacyr Chile is the second

construction group in the Chilean Public Works

Ministry’s Contracts Programme. In Portugal

Somague is the leading construction firm and, in

Italy, Sis was one of the most successful bidders

in 2004, with over Euros 600 million in contracts.

In the Group, the aim is to put the experience

accumulated into every project. To apply the

latest technological advances. To provide more

efficacious and efficient innovative solutions,

always adopting the prevention and protection

measures necessary to avoid and reduce all the

risks which might arise when the work is being

done.

In 2004 revenues grew by 10.3% to reach

Euros 2,138.2 million, and were broken down as

follows:

ConstructionSacyr & Somague


27

In 2004, the contracts won reached a record

figure, Euros 2,676.4 million, a 28.7% increase

on the Euros 2,079.7 million won in 2003.

This strong growth is due to several factors,

such as moving into new markets in civil works

–mainly Italy, and the higher share achieved in

Public Administrations’ contracts in Spain.

Another factor contributing to growth in domestic

building is the policy whereby Sacyr executes

around 60% of the work on the residential

developments sold by Vallehermoso, both

through the direct contracting Vallehermoso

assigns to it and because this has enabled it to

establish itself in new geographical areas where

it previously did not have a presence.

The only market which performed negatively

was Portugal, since the country is going through

difficult times in this respect. However, Somague

has managed to diversify outside Portugal and

has boosted its building division. The division

was particularly important in 2003 with the work

on the football stadiums for the 2004 World Cup

and thus its performance will be more positive in

coming years.

2002 2003 2004 % 04/03

Civil works

Building

TOTAL

780.2 1,233.8 1,525.3 23.6%

238.3 704.9 612.9 –13.1%

1,018.4 1,938.7 2,138.2 10.3%

REVENUES BY TYPE OF BUSINESS (Millions of Euros)

2002 2003 2004 % 04/03

Civil works Spain

Civil works Portugal

Civil worksl Italy

Civil works Chile

Civil works Costa Rica

Civil works other countries

Civil works

Building Spain

Building Portugal

Building other countries

Building

TOTAL

476.8 777.0 854.3 10.0%

77.6 707.6 447.9 –36.7%

0.0 0.0 637.4

11.7 108.8 60.2 –44.6%

0.0 0.0 51.5

2.7 1.6 4.8 190.9%

568.7 1,595.0 2,056.1 28.9%

303.8 288.2 419.5 45.5%

12.4 145.1 160.9 10.9%

10.3 51.4 39.9 –22.3%

326.5 484.7 620.3 28.0%

895.2 2,079.7 2,676.4 28.7%

CONTRACTS WON (Millions of Euros)

Annual Report 2004

28CIVIL WORKS

This division engages in highway infrastructure

works (roads, dual carriageways and motorways),

work on railways and track renovation, hydraulic

works (dams, canals, conduits, pipes, etc.),

subterranean works (tunnels and sewers) and

airport works, amongst others.

In 2004, revenues amounted to Euros 1,525.3

million, a 23.6% increase on 2003. Road and

railway works were of notable importance and

accounted for 56% of total revenues.

TYPES OF WORK

Road infrastructure works

In 2004 construction work was done on the

following:

• Los Corrales de Buelna-Molledo stretch of

the Cantabria-Meseta dual carriageway, in

Santander, with two double tunnels with a

total of 7.2 kilometres and some emblematic

structures, such as the Cieza and Pedredo

viaducts. The latter viaduct is 960 metres in

length. It was completed at the end of the

year and its inauguration is foreseen for the

beginning of 2005.

Civil works accounts for 71.3% of the total

construction business conducted by the Group.

In Spain, it represents 71.9% of the total work

executed in the country, in Portugal 71.5% and in

Chile 100%.

2002 2003 2004 % 04/03

Spain

Portugal

Chile

Other

TOTAL

534.1 778.8 841.5 8.1%

149.6 377.9 551.6 46.0%

87.6 55.9 116.5 108.3%

8.9 21.2 15.7 –26.0%

780.2 1,233.8 1,525.3 23.6%

CIVIL WORKS BY GEOGRAPHICAL MARKET (Millions of Euros)

4% Airports 33% Roads and highways

10% Hydraulic

23% Railways 30% Other

REVENUES BY TYPE OF WORK


29• Los Carneros bypass on the N-430 in

Badajoz, which includes a 560-metres long

singular structure for crossing the Guadiana

river. The work is expected to be completed

at the beginning of 2005.

• The shadow toll motorway between Palma de

Mallorca and Manacor. It is 41 kilometres

long and the work is expected to be

completed in a total of 27 months.

• The work on improving the link road between

Madrid’s M-30 motorway and the A-3 dual

carriageway (Autovía del Mediterráneo) will

be completed in a period of 24 months and

includes the construction of two tunnels to

avoid going down calle Conde de Casal to

get from the M-30 to the A-3.

• Argamasilla de Calatrava-Puertollano stretch

of the Badajoz-Valencia (N-430) road.

• Plasencia-Navalmoral de la Mata dual

carriageway: the 25 km Rio Tietar-Plasencia

stretch. This is the first dual carriageway built

by the Extremadura Regional Government

and it links the Vía de la Plata with the A-5.

In Chile, the following works are in progress:

• The Vespucio Sur motorway, a 24 km

contract in the centre of the capital of Chile,

which forms a ring in the south from the

Avenida de Grecia to Ruta 78. It will come on

stream in 2005.

• The Northeast Access to Santiago. This is a

contract for a road of approximately 22

kilometres in length which runs through the

outskirts of Santiago de Chile, from the

Enlace Centenario, connecting with the

Costanera Norte road and with Américo

Vespucio. The project is for 16.2 km of

Pedredo Viaduct. Cantabria-Meseta Dual Carriageway. Stretch: Los Corrales de Buelna-Molledo.

Annual Report 2004

30

motorway with two lanes in each direction,

four double tunnels in both directions with a

total length of 3.6 km and viaducts and

bridges with a length of 1.7 km.

In Italy the following is to be constructed:

• The road between Cesana and Claviere, in

the province of Turin. The project consists of

building the 6.2 km bypass on the State

highway, including the two tunnels which are

to be built, of 1.75 km and 1.25 km in length.

The period for executing the work is 1 year

and 4 months.

In Costa Rica, construction has started on

the following:

• The toll motorway for the San José-San

Ramón strip, which has the most traffic in the

country and gives access to San José

International Airport, and the Santa Ana-Río

Segundo radial road. The motorway is 60 km

long and the radial road is 5.8 km.

In Portugal, the following are being built:

• A1 motorway, prolongation between Averías

and Santarem, the construction of a third

lane on a 22 km stretch of the Lisbon-Oporto

motorway.

• Puente Europa in Coimbra, a very beautiful

emblematic bridge, with a single mast. The

largest arch is 180 m. and the total length

including the viaducts leading to the bridge is

of 1,506 metres.

Railway works

HIGH SPEED

Stretches currently under construction:

• On the Galicia high-speed network, the

13.3 km Carballiño-Lalín strech between the

provinces of Orense and Pontevedra. Sacyr

bid in the tender in conjunction with its

recently created subsidiary Osega, in what is

the first contract for this firm.

Rail link to the North and Northwest. Guadarrama Tunnel. Stretch: Soto del Real-Segovia.


31

• The Cordoba-Malaga line, with the

construction of the 7.1 km Abdalajís tunnel.

To execute this work, a tunnel-borer with a

double shield 10 metres in diameter, the first

fully manufactured in Spain, was acquired

and put to work.

• The 4.5 km Martorell-Barcelona stretch in

Santa Coloma del Cervelló on the Madrid-

Barcelona-French Border line is also in

progress, as is the 7.9 km Sils-Riudellots

stretch on the same line.

• On the Madrid-Barcelona-French Border line,

in 2004 the 4.76 km Llinars-Sant Celoni stretch

in the province of Barcelona was also started,

together with the 5.184 km Massanes-

Maçanet stretch in the province of Gerona.

• On the route of the new high-speed rail link

to Levante, work is being executed on

sub-stretch III of the 8 km Alcira-Algemessí

stretch and in 2004 the Sax-Elda stretch was

started in the province of Alicante.

• On the new rail link to the North and

Northwest, work on one of the Guadarrama

tunnels on the Soto del Real-Segovia stretch

continues. The tunnel is 14 km long and is

being made with a tunnel-borer with a double

shield 9.51 metres in diameter.

• On the León-Asturias line, work is being done

on the construction of the 10.2 km Pajares

tunnel. A tunnel-borer 9.88 metres in

diameter is being used in this work.

METRO

The following work was started in Madrid in

2004:

• Line 1 and Line 4 of the Madrid Metro.

Charmartin-Parque Santa María bus and

Metro station.

• Line 7 of the Madrid Metro (Eastbound Metro

to Coslada and San Fernando de Henares).

Las Musas-M-40 stretch.

• Widening of the platforms in Lavapiés station

on Line 3 of the Metro.

In Barcelona, different work is being executed

on Line 9:

• Line 9 of the Barcelona Metro on the 1r,

Aeroport-Parc Logístic stretch. The sub-stretch

is 4,500 metres in length. Three stations are to

be built, two of which will be at Barcelona

Airport, one in the present terminal and another

in the new terminal which is being built.

• The Sagrera Meridiana Metro station on Line 9

of Barcelona Metro. The work is on one of the

main roads into Barcelona (Avenida Meridiana)

and consists of the construction of a station for

changing between two existing Metro lines

(Line 1 and Line 5) and the new Line 9

(currently under construction).

Annual Report 2004

32In Seville, Sacyr is taking part in the contract

and construction of the Seville Metro. Both the

project for this and the work started in 2003.

There are 18.9 kilometres of line, 51% of which is

above ground and 49% in tunnels, connecting

Aljarafe Sur and Dos Hermanas, with 23 stations

on the line. It should come on stream in the

summer of 2006.

In Portugal work is being done on the

following:

• Oporto Metro, light Metro network with 4 lines

and 63 km in total. It has 63 stations above

ground and 11 underground. Seven kilometres

of tunnel were built using a tunnel-borer.

• Modernization of the Vila Franca de Xira

Azambuja Northern Line, a new 14 km

double-track line for the National Railway

Network.

RAILWAYS

In Italy, Sis has won the contract to duplicate

the rail line on the Palermo-Orleáns-Carini stretch,

a project that will bring a notable improvement in

the service. In addition, the stations on the line

are to be improved and one of them is to be put

underground. The stretch is 19 km long; 8 km are

underground and the rest in false tunnels. The

period of execution is 5 years and 2 months.

Hydraulic works

In 2004 the following works were under way:

• In the Júcar basin work is being done on the

Júcar-Vinalopó conduit, corresponding to

Stretch VII of the San Diego Reservoir.

• Modernization of the irrigable area of

Guadalcacín in Cádiz, with an area of 12,000

hectares. Oporto Metro. Portugal.

• Right bank of the Bembézar in Hornachuelos

and Lora del Río, with an irrigable area of

12,000 hectares.

• Irrigation works at La Herrera and Los Llanos

in Albacete, to take advantage of the

resources from the Tajo-Segura transfer.

• In the summer the work on the second

conduit for Barrio Jarana-Ramal Norte water

supply, in Puerto de Santa María and Puerto

Real, in Cadiz was completed.

• Aguas de Sora-La Loteta water supply works

in the province of Zaragoza.

• Works on the Navarre Canal.

• Pumping from the Carboneras desalination

plant to the Almanzora-Poniente Almeriense

conduit.

• Integrated drainage of the Aljarafe, main

sewers on the right bank of the Guadalquivir


33Madrid-Barajas airport. The tunnel is 600 metres

long and is formed by six conduits 10 metres

wide and 4 metres high. The train taking

passengers to the Satellite runs through one of

them, conveyor belts through three and internal

airport traffic through the last two.

In addition, the new Ciudad Real Airport is

under construction. The service gallery and the

earthworks have already been completed and

paving is expected to start very shortly.

This is a significant increase of 28.9% in

contracts won with respect to 2003, reaching a

record figure in this very important field.

2004

Palermo-Orleáns duplication (Italy)

M-30 connection with A-III

Lines 1 and 4 of Madrid Metro

Carballino-O Rixo Lalín high-speed link

Cesana-Claviere road (Italy)

Américo Vespucio contract (Chile)

Line 7 Madrid Metro

San José strip (Costa Rica)

Line 9 Barcelona Metro

Madrid-Levante high-speed link, Sax-Elda

Extension C-715 Manacor

Madrid-Barna high-speed link, Llinars-S. Celoni

Argamasilla de Calatrava dual carriageway

Madrid-Barna high-speed link, Massanet-Maçanet

S. Vicente-Porto Moniz

Júcar-Vinalopó conduit

A-8 Abeledo-Regovide stretch

Dev. Sector H-12 Reus

Other

CIVIL WORKS

554.2

147.2

135.8

115.8

83.2

60.3

60.2

51.5

37.6

36.3

35.8

31.6

30.3

26.7

24.5

22.4

18.1

15.2

569.4

2,056.1

MAIN CONTRACTS WON(Millions of Euros)

river, stretch III, consisting of a polyester

drainpipe 1,000 millimetres in diameter to

collect wastewaters from the villages in the

Aljarafe and take them to the future

purification plant.

Airport works

In the extension of Barcelona Airport, the

work on lengthening runway 07L-25R and the

related taxiways is very advanced.

In the Extension of Madrid Barajas Airport,

different projects have already been completed

on the new 15R/33L runway, 3,500 metres in

length and with earthworks of 29 million cubic

metres.

Also at Madrid-Barajas, work is in progress

on the platforms for Iberia’s container yard and

for fire-fighter training next to the Fire Service for

runway 15/33, and on the airport service tunnel

connecting Terminal 4 and the Satellite of

Annual Report 2004

34 BUILDINGIn the building sphere, the Group engages in

non-residential building work (hotels, business

service centres, museums, shopping and leisure

centres, restoration of buildings, offices, prisons,

etc.) and residential building.

2002 2003 2004 % 04/03

Residential

Non-residential

TOTAL

109.3 159.9 207.8 29.9%

128.9 545.0 405.1 –25.7%

238.2 704.9 612.9 –13.0%

BUILDING BY TYPE OF WORK (Millions of Euros)

Hotel residence and training centre. Grupo Santander.


35

The downturn in Portugal, after the football

stadiums built in 2004 were completed, means

that the total figure for building fell by 13% to

Euros 612.9 million.

Some of the most significant works which

were in progress in 2004 were as follows:

• The contract for the extension of the School

of Engineering at Barcelona’s Universidad

Autónoma. A project from Fabre i Torras

architect’s studio for three buildings, one of

which will be for a laboratory, another for

teaching and the third for research for a

European Space Agency project.

• The contract for a high-resolution hospital in

Utrera, Seville, with an area of 9,244 square metres

and a foreseen period of execution of 23 months.

• The hotel residence and training centre for

the Grupo Santander, designed by the

architects Kevin and John Dinkeloo. The work

consists of the construction of a training

centre, with lecture theatre, and a building to

be used as a hotel for short stays. It was

completed in September 2004.

• In December 2004, the Xeresa Golf hotel was

finished in Alicante, it is the work of the

2004

Housing adjudicated Vallehermoso

Subsidized housing Parla

Con. 2* F.Inf +290 rooms

Coimbra Pediatric Hospital

Construction of 290 homes

Extension of Menorca airport terminal

New basilica in Fatima

Lucrecia Paim Maternity Hospital

Housing in Almeria

Library Universidad A. Neto

Refurbishment Puerto de Praia Terceira

Riu Funana hotel

Refurbishmnet 137 homes

Estaçao de Trinidade

Utrera high-resolution hospital

Miramar housing estate

Auchan Puazn Amadora

Technical school Barcelona Universidad Autónoma

Saude S. Vicente centre

Other building

BUILDING

142.4

40.4

33.7

30.0

27.6

26.0

16.1

15.6

14.2

14.1

13.8

11.8

11.0

8.4

7.7

7.5

7.0

7.0

5.9

180.2

620.3

MAIN CONTRACTS WON(Millions of Euros)

32 homes Isla de la Vela. Cádiz.

Annual Report 2004

36

architects Piñiero, with a total of 460 rooms,

distributed on the luxury complex formed by

a four-star hotel and luxury five-star hotel.

• The terminal of the new Cuidad Real airport

has been started.

• Worth highlighting because of its importance

is the work on the New Terminal Area at

Madrid’s Barajas Airport and its roof. The

project was designed by the architects

Lamela and Rogers and has an area built of

495,000 square metres. The aluminium roof

has a double curvature, of the kalzip type.

• The new church of the Santísima Trinidad de

Nuestra Sra. del Rosario in Fatima is under

construction. It is an emblematic work, in the

form of a circle with a 125-metre diameter,

conceived by the Dutch architect Alexandro

Tombasis. It will have an area of 35,673

square metres, which will give a new

dimension to the present church, with an

austere monumental space that enhances

the religious nature of the area.

• Construction of the Casa da Música do Porto, an

emblematic building in white concrete designed

by the Dutch architect Rem Colas; the structure of

the façade is unusual in that it is the construction

of the ceiling slabs that makes it stable.

• Palacio da Justicia da Sintra: this work on the

different courts in the Portuguese legal

system –Administrative, Fiscal, Civil and

Family– with its 33,000 square metres, is the

largest judicial complex built in Portugal and,

because of its architecture, has features

unique to construction today. The period of

execution should be highlighted: it was built

in only 20 months.

• In April the Hotel Corintia Alfa in Lisbon (31,900

sq. metres) was completely refurbished.

Airport Terminal at Barajas. Madrid.


37

• A business centre in Lisbon’s Plaza de

España, comprising two office buildings

for the Banco Nacional de Crédito and

Banco Totta, with an area of 67,000 sq.

metres.

BACKLOG ORDERS IN HAND

The performance of the backlog orders in hand

in the past few years is as shown below:

2002 2003 2004

Spain

Portugal

Italy

Chile

Costa Rica

Other countries

TOTAL

1,496.3 1,839.2 1,970.5

267.3 968.8 784.0

0.0 0.0 637.4

139.0 285.4 198.7

0.0 0.0 51.5

29.7 107.6 89.9

1,932.3 3,200.9 3,732.0

BACKLOG ORDERS IN HAND BY GEOGRAPHICAL MARKET (Millions of Euros)

Annual Report 2004

38ACTIVITY

Vallehermoso is the company in the Group which

specializes in the housing development

business, a sector which showed in 2004 that it

continues to be one of the drivers of the Spanish

economy.

Its business is based on a determined policy

to acquire land –after an in-depth viability study–

and its subsequent development, exhaustive

control of the technical and economic projects

for the work and an appropriate marketing

process.

For over fifty years now, Vallehermoso has

been a symbol of quality. Since 1953, over

100,000 families have placed their confidence in

Vallehermoso and have set up home in modern

functional dwellings, which guarantee the best

quality of life.

Homes like the 4,584 started in 2004, in 51

developments where quality is controlled in an

exhaustive manner, starting from the acquisition

of the land, through the technical development

of the project to the use of top brand materials.

Real estatedevelopmentVallehermoso

The company mainly engages in the

development of permanent homes in towns but

in 2004, Vallehermoso took further steps to

participate in the second-home or seaside home

business and acquired different plots of land for

developing major projects associated with golf

courses and leisure activities for their

subsequent sale.

Vallehermoso is present nationwide through

its seven regional offices and nearly thirty

delegations and this is another factor that gives

it competitive edge in the market.

LAND BANK

In order to guarantee growing activity with high

profitability margins, in 2004 Vallehermoso

earmarked investments of over Euros 600 million

for land at different stages of development. At the

end of business year 2004, there was 4,031,670

sq .metres of building land above grade in the

land bank, 91% of which was for residential use.

Some 24,000 homes can be built on this land

which would guarantee the company 5 years of

activity in optimum conditions.

1% > 9 years

72% 0-2 years

3-5 years 25%

6-9 years 2%

LAND: AGE

9% With a permit Applied for 17%

16% Not applied for

In process 58%

LAND: SITUATION OF DEVELOPMENT WITHRESPECT TO BUILDING PERMITS


39

Annual Report 2004

40

COMMERCIAL ACTIVITY

The economic circuit of the development

business can be summarized in the following

steps:

• Study of the land purchase, based on

technical, financial and commercial studies.

• Management of formalities in an appropriate

period of time.

• Technical development, projects, tender and

adjudication of works.

• Execution of the development and marketing.

• Delivery of homes.

The business conducted by each of

Vallehermoso’s Regional Offices in 2004 is

described below:

ANDALUSIA

This Regional Office is responsible for business

in the Self-governing Region of Andalusia and

has delegations in Granada, Malaga and Seville.

Galicia 7%

Andalusia 18%25% North

12% Levante

Catalunya 13%

Canaries 7%

18% Centre

LAND: GEOGRAPHICAL REGION

2002 2003 2004

Amount (Millions of Euros)

m2

Years

759.3 1,102.5 1,495.5

2,660,225 3,213,174 4,031,670

4.0 4.6 5.4

LAND BANK

Started Finished Sold ReportedDevelopment Location Units m2 Units m2 Units € Mill. Units € Mill.

Verazul

Mirador de San Cayetano

Atalaya de San Lázaro

Campo de la Salud I y II

Bahía Litoral

Fórum Housing I

Los Monteros Coast

Vallesol Housing

Torres de San Andrés

Alameda de San Francisco

Bulevar Housing

Contadores Building

El Olivar de Aljamar

Salado Housing

Land

Premises and other

TOTAL ANDALUSIA 2004

Almeria 86 7,985 60 9.3 82 12.2

Cordoba 35 7,654 16 4.4

Granada 22 7.4

Granada 152 26,394 50 10,534 95 19.7 49 9.7

Malaga 90 15,583 70 11,211 90 20.9 69 13.2

Malaga 94 18,972 77 16.4

Malaga 9 2,690 7 8.7

Malaga 110 18,495 35 7.8 110 22.2

Malaga 92 19,362 37 15.5 89 34.2

Seville 72 10,769 70 5.8

Seville 60 10,353 8 1.7

Seville 46 6,092 80 12,156 41 3.0 80 8.8

Seville 210 40,662 226 43,389 258 51.2 226 42.1

Seville 46 8,174 46 13.4

2.7

0.7 26 9.6

687 125,710 841 144,765 739 160.7 854 179.9

ANDALUSIA

El Salado Housing. Seville.


41

Annual Report 2004

42

CANARY ISLANDS

This Regional Office conducts its business on

the Canary Islands, where it has delegations in

Las Palmas de Gran Canaria and Santa Cruz de

Tenerife.


Las Palmeras Housing

Las Ramblas Golf Housing

Balcón del Teide

Jardines del Teide

Bellamar Housing

Castellano Housing

IV Torres Housing

Los Eres Housing

Land

Premises and other

TOTAL CANARY ISLANDS 2004

Gran Canaria 68 13.8 73 15.1

Gran Canaria 63 8,167 27 5.9 23 3.6

Tenerife 32 3,589 4 0.7

Tenerife 103 16.7

Tenerife 19 4.3 19 4.3

Tenerife 182 22,446 43 4.5

Tenerife 54 8,831 54 9.9

Tenerife 1 0.1

43 5.5 8 3.0

214 26,035 117 16,998 308 51.5 177 35.9

CANARY ISLANDS

Balcón del Teide. Tenerife.

CATALUNYA

Present throughout Catalunya and the Balearic

Islands, this Regional Office has delegations in

Tarragona, Barcelona and Palma de Mallorca.


Castellar

Golf del Maresme

La Guinardera

Mediterrania Housing

Miradors de Gelida

Mollet Estación

Montcada

Nou Sant Andreu

Torre Nova Diagonal Poble Nou

Carretera Barcelona

Pardinyes

Príncipe de Viana

El Molinar

Las Brisas de Son Verí

Son Xigala Housing

Abat Oliva

Nou Salou

Land

Premises and other

TOTAL CATALUNYA 2004

Barcelona 49 6,950 32 7.3 39 7.5

Barcelona 8 4.7

Barcelona 60 7,880 34 9.3

Barcelona 120 18,749 52 18.6

Barcelona 58 4.8

Barcelona 180 42,789 92 24.9 180 43.9

Barcelona 82 15,420 20 4.1

Barcelona 95 12,956 3 0.4 95 13.8

Barcelona 84 31.0

Gerona 80 11,875 54 10.7 77 15.8

Lérida 34 7.1 34 7.1

Lérida 49 5,920 31 4.6

Majorca 64 9,411 48 9.8

Majorca 18 4.5 18 4.5

Majorca 17 5.5 17 5.5

Tarragona 34 5.9 34 5.9

Tarragona 60 9,603 25 5.7

13.3 12.8

2 1.6 6 5.8

435 66,983 404 74,570 646 173.8 500 122.6

CATALUNYA


43

Son Xigala Housing. Majorca.

Annual Report 2004

44CENTRE

The Centre Regional Office manages the

business conducted in the Self-governing

Region of Madrid, Ciudad Real, Salamanca,

Avila and Guadalajara and has delegations in

Madrid and Ciudad Real.


Atalaya Housing

Don Ramón de la Cruz 105

Condes del Val

El Mirador de la Dehesa

El Mirador de Palacio

El Mirador del Encinar

Las Lomas de Montecarmelo

Los Altos de la Villa

Monte Hermoso

Parque Golf

Paseo del Molino

Valcasa de Valdemoro Housing

El Capricho Housing

Enebro Housing

Valderrivas Housing

Rivas Vaciamadrid

Señorío del Pinar

Valdelasfuentes

Villacisneros

Vega Real

Land

Premises and other

TOTAL CENTRE 2004

Ciudad Real 38 5,302 33 5.2 44 7.0

Madrid 46 13,486 46 33.7

Madrid 1 1.9 1 1.9

Madrid 96 19,780 68 30.3

Madrid 70 15,259 125 27,009 70 29.5 114 48.3

Madrid 121 20,913 34 16.3 105 45.5

Madrid 98 17,748 21 10.0

Madrid 122 15,826 102 39.2

Madrid 105 13,793 287 41,111 123 37.8 284 81.4

Madrid 200 34,096 1 0,3 200 46.7

Madrid 22 6.6

Madrid 105 15,421 92 16.3

Madrid 48 8,755 48 17.6

Madrid 25 9.7 25 9.7

Madrid 43 5,681 8 2.3 43 10.7

Madrid 11 1.9

Madrid 143 35,606 53 31.0 63 36.7

Madrid 48 4,334 3 0.2 48 3.9

Madrid 296 51,833 173 49.9

Salamanca 22 3.1 22 3.1

0.5

1 10.6 5.0

892 149,660 1,099 196,293 863 302.6 1,043 351.2

CENTRE

GALICIA

This Regional Office is responsible for business

in the Region of Galicia, specifically in A Coruña

and Vigo.


Parque Ronda

San Amaro Housing

Pintor José Frau 4

Augusta Housing

Land

Premises and other

TOTAL GALICIA 2004

A Coruña 135 23,261 53 15,838 39 9.2 9 5.9

A Coruña 81 12,616 28 5.9 71 14.0

Pontevedra 33 6.2

Pontevedra 37 7,126 5 0.9

0.3 0.2

172 30,387 134 28,454 105 22.5 80 20.1

GALICIA

Don Ramón de la Cruz 105. Madrid.


45

Annual Report 2004

46LEVANTE

The Self-governing Region of Valencia, together

with Murcia and Albacete are the areas covered

by this Regional Office. There are delegations in

Valencia, Murcia, Castellón, Albacete and

Alicante.


Hoya de San Ginés

Pº de la Cuba

Córcega Housing

Porto Fino Housing

Maisonave

Mare Nostrum

Puerta Mítica

Puerto Pesquero Housing

Avda. Valencia

Miramar Building

Els Lledoners

Puerta de las Artes

Las Azaleas Housing

Ribalta Park

San Jaume

Los Arrayanes

Juan Carlos I Housing

Villamagna

Almirante Cruilles

Campos Elíseos

Perival Building

Nova Benicalap

Porta de Picassent

Vera II

Land

Premises and other

TOTAL LEVANTE 2004

Albacete 18 1.8

Albacete 21 6,516 21 6.0

Albacete 39 10,406 11 3.0

Albacete 132 19,690 47 8.8

Alicante 39 6,095 7 1.6

Alicante 96 14,942 57 11.8

Alicante 47 9.0

Alicante 99 18,228 6 1.4 99 21.7

Castellón 76 7.0

Castellón 53 9,917 26 6.7

Castellón 16 6,534 2 1.2

Castellón 45 10,537 3 0.8 42 12.0

Castellón 6 1.7

Castellón 35 6.0

Castellón 108 18,493 60 9,026 18 4.2 54 11.7

Murcia 42 7,734 20 5.0

Murcia 82 17,136 8 2.4 76 18.1

Murcia 37 11,693 14 4.6

Valencia 96 11,640 94 12.9

Valencia 53 18.3

Valencia 77 19.3

Valencia 46 6,334 161 22,743 146 27.4 159 28.0

Valencia 36 4.5

Valencia 55 5.5

5 4.9 8 4.6

592 105,304 580 102,360 771 155.7 555 116.2

LEVANTE

NORTH

With registered offices in Bilbao and delegations

en Oviedo, Santander, Burgos, San Sebastián,

Valladolid, Logroño, Zaragoza, León and

Pamplona, this Regional Office is responsible for

business in the north of Spain, covering the

Self-governing Regions of Cantabria, Asturias,

the Basque Country, Rioja, Castilla León,

Navarre and Aragón.


Zabalgana

Avenida Pumarín Building

El Prado Building

Jardines de Vinjoy

Murano Parque

Ribera de la Florida

El Alto de Fuentecillas

El Mirador del Parral

Granja Avícola

Aureola Housing

Bellavista

Herrera Oria

Peñacastillo

San Martín

Torrelavega

Ategorrieta

El Arco de Logroño

Ridruejo Building

La Torre

Nuevo Artica Residencial

Parque Fluvial S. Jorge

Arco del Ladrillo

Pinar del Jalón

La Solana Housing

Los Retamares Housing

Panamá Housing

Villa del Prado

Álava 52 9,480 38 11.9

Asturias 80 10,136 18 3.1 80 11.4

Asturias 2 0.4 2 0.4

Asturias 3 0.6 3 0.6

Asturias 142 18,338 58 11.9

Asturias 138 19,181 92 12,212 69 10.0 92 11.4

Burgos 5 1.0 5 1.0

Burgos 3 0.7 3 0.7

Burgos 59 8,850 26 4.7

Cantabria 60 9,618 18 3.6 57 10.0

Cantabria 59 10,537 24 6.8

Cantabria 88 11,880 12 1.9 88 12.4

Cantabria 24 5,124 20 4,002 13 3.0 14 3.0

Cantabria 58 8,533 58 7.9

Cantabria 88 15,488 8 1.6

Guipúzcoa 36 6,779 16 7.7

La Rioja 40 5,512 40 5,512 32 6.6 32 6.6

León 7 9.2 7 9.2

León 77 15,271 36 6.0

Navarre 95 15,320 43 8.2

Navarre 36 5,708 22 5.3

Valladolid 34 5,125 6 2.1

Valladolid 52 9,673 32 5.8

Valladolid 3 1.2 3 1.2

Valladolid 5 1.4 5 1.4

Valladolid 71 12,109 18 4.4 79 14.3

Valladolid 138 20,271 4 1.0

(continues overlaf)

NORTH


47

Annual Report 2004

48


Abandoibarra

Bentazarra

Mirivilla

Padre Larramendi

Torre Zuloko

Árbol del Paraíso

Plaza Mozart

Azucarera Housing

Land

Premises and other

TOTAL NORTH 2004

Vizcaya 165 35,656 8 4.6

Vizcaya 27 6.4 27 6.4

Vizcaya 126 18,273 63 15.7 117 23.9

Vizcaya 126 24,398 48 15.3 78 24.7

Vizcaya 112 18,570 66 16.4 79 19.7

Zaragoza 94 23,462 18 4.6

Zaragoza 87 15,615 27 7.5 84 20.0

Zaragoza 263 45,443 181 26,072 148 38.5 175 37.3

14.1 12.8

10 1.9 30 4.6

1,592 275,218 1,141 176,930 936 245.1 1,118 240.9

NORTH

Bentazarra Housing. Vizcaya.

In 2004, the Group’s total volume of

committed pre-sales (regardless of the time

these sales are reported) amounted to Euros

1,111.9 million, an increase of 17.9% on the

preceding year. A total of 4,368 homes were sold

during the year, 14% more than in 2003, with an

average increase in the sales price of around

10%. It should be noted that, because of their

excellent location and quality, Vallehermoso’s

homes are already towards the top of the price

range for medium-high level homes. In 2004

revenues from land sales fell to Euros 30.6

million from the Euros 41.5 million of the

previous year. In addition, the revenues from

Somague´s real estate business in Portugal

amounted to Euros 11.2 million and a further

Euros 2.5 million was obtained from services.

Sales contracted pending reporting on the

income statement amounted to Euros 772.8

million as of 31 December 2004 in Spain, 7.4%

more than on the same date in 2003, and to

Euros 22.0 million in Portugal

Started Finished Sold ReportedUnits m2 Units m2 Units € Mill. Units € Mill.

Total Centre

Total Andalusia

Total Catalunya

Total Galicia

Total Levante

Total North

Total Canary Islands

TOTAL 2004

892 149,660 1,099 196,293 863 302.6 1,043 351.2

687 125,710 841 144,765 739 160.7 854 179.9

435 66,983 404 74,570 646 173.8 500 122.6

172 30,387 134 28,454 105 22.5 80 20.1

592 105,304 580 102,360 771 155.7 555 116.2

1,592 275,218 1,141 176,930 936 245.1 1,118 240.9

214 26,035 111 16,998 308 51.5 177 35.9

4,584 779,297 4,316 740,370 4,368 1,111.9 4,327 1,066.8

SUMMARY OF REGIONAL OFFICES

2002 2003 2004 % 04/03

Housing starts (m2)

Housing starts (Units)

Housing finished (m2)

Housing finished (Units))

Committed sales (€ Mill.)

Reported sales (€ Mill.)

610,661 722,720 779,297 7.8%

3,686 4,101 4,584 11.8%

525,917 760,331 740,370 –2.6%

3,085 4,373 4,316 –1.3%

877.6 943.1 1,111.9 17.9%

654.2 969.5 1,066.8 10.0%

ACTIVIDAD INMOBILIARIA


49To summarize, the business conducted by the

seven Regional Offices was as follows:

Annual Report 2004

50The performance of “committed” pre-sales and

the operating margin for the residential product

and land is as show below:

To complete its product range, Vallehermoso

is making an effort to increase its presence in all

Spanish cities with over 100,000 inhabitants, with

its usual medium-high product and with other

lower-priced products which are accessible to a

larger number of potential clients, in order to

increase its market share. Moreover, its projects

on the coast, with the development of large

resort complexes with attractive leisure facilities,

such as golf courses, will start to bear their fruit

in the medium term.

2002 2003 2004 %04/03Sales Margin (1) Sales Margin (1) Sales Margin (1) Sales Margin (1)

Land and other products

Development

TOTAL

(1) Direct margin (only incluiding direct operating costs).

42.2 14.0 41.5 2.8 30.6 4.3 –26.2% 55.2%

835.4 205.0 901.6 218.7 1,081.3 273.0 19.9% 24.8%

877.6 219.0 943.1 221.5 1,111.9 277.3 17.9% 25.2%

COMMITTED SALES

La Florida Building. Oviedo.

VALUATION OF REAL ESTATEASSETS

According to the appraisal conducted by C.B.

Richard Ellis, the value of the real estate assets

belonging to Vallehermoso and its subsidiaries

as of 31 December 2004 amounted to Euros

3,339.7 million, a 44.1% increase on 2003.

The unrealized capital gains amount to Euros

1,319.9 million.

The breakdown of the value of the real estate

assets is as shown below:

2002 2003 2004 % 04/03

Land

Other assets

TOTAL

1,069.3 1,646.7 2,480.7 50.6%

706.7 670.9 859.0 28.0%

1,776.0 2,317.6 3,339.7 44.1%

VALUATION OF REAL ESTATE ASSETS (Millions of Euros)

Paseo de La Habana. Madrid.


51

Annual Report 2004

52 ACTIVITY

The Sacyr Vallehermoso group runs this

business through its subsidiary Testa Inmuebles

en Renta, a listed company 99.33% owned by

the Group.

Testa has a notable capacity for generating

recurrent revenues, thanks to the long lifespan

of its assets for lease and its customer portfolio,

which puts it in a position to create value in a

sustained manner over time. In turn, the

appreciation potential of its property assets

adds capital gains to the revenues from rentals

generated.

In this context, Testa maintains continuous

growth, supported by its development profile,

which enables it to develop the product to be

leased and to obtain yields higher than those

registered in the market.

The portfolio focuses on tertiary uses, offices

and shopping centres, although it maintains a

selective position in other sectors, such as

hotels, homes for the elderly, logistics, etc., in

different localities and in assets which are in

strong demand.

Moreover, the turnover of mature assets is

also contemplated, provided that their sale

generates funds for new, more profitable

investments and they have no significant

appreciation potential in the future if they

remain the portfolio.

PROPERTY FOR LEASE

Testa has 1,371,642 sq. metres of property for

lease, of which 1,032,670 sq. metres are

above grade and 338,972 sq. metres below

grade.

PropertyTesta

Revenues from rentals are broken down below,

by product:

In addition, Euros 3.8 million was obtained in

revenues from service related to the

management of properties, an increase of

22.6% on the Euros 3.1 million reported in

2003.

GEOGRAPHICAL BREAKDOWN

The Self-governing Region of Madrid

accounts for approximately 60% of the rental

business. The table below shows the

geographical breakdown of the group’s rental

business:

2002 % 2003 % 2004 %

Ofices

Commercial Premises

Hotels

Industrial Premises

Housing

Homes for the Elderly

Car Parks

TOTAL

83.8 58.25% 115.6 64.77% 115.1 61.20%

30.1 20.92% 30.8 17.26% 34.6 18.43%

7.3 5.08% 9.8 5.52% 15.7 8.33%

7.0 4.89% 8.8 4.91% 9.6 5.11%

14.1 9.78% 10.9 6.12% 9.5 5.04%

0.1 0.08% 1.2 0.66% 2.7 1.46%

1.5 1.01% 1.4 0.76% 0.8 0.44%

143.9 100.0% 178.5 100.0% 188.0 100.0%

REVENUES FROM RENTALS (Millions of Euros)

2002 % 2003 % 2004 %

Madrid

Catalunya

Miami (USA)

Andalusia

Balearic Islands

Asturias

Remainder

TOTAL

90.5 62.89% 104.8 58.73% 106.0 56.4%

23.2 16.16% 28.5 15.99% 33.2 17.63%

5.8 4.03% 13.0 7.29% 12.8 6.82%

7.7 5.32% 11.6 6.48% 12.4 6.60%

4.5 3.13% 4.9 2.73% 5.8 3.08%

3.5 2.44% 3.2 1.77% 3.5 1.87%

8.7 6.02% 12.5 7.01% 14.3 7.61%

143.9 100.0% 178.5 100.0% 188.0 100.0%

REVENUES FROM RENTALS (Millions of Euros)


53

Annual Report 2004

54The evolution of the factors behind the

variation in revenues from rentals is shown

below:

and long duration, together with the

customization of the properties, in many cases

have created a strong bond with customers and

have brought notable strength and stability to

the revenue portfolio and to occupancy levels.

As regards their quality and solvency, it

should be noted that the top ten customers

account for 38.9% of revenues from rentals, as is

shown below:

TENANTS AND OCCUPANCY

Testa’s position in high-quality assets, their

prime locations and an extremely solvent type of

client meant that the occupancy rate was of

95.3% last year, way above the average level

registered in the Group’s main markets in Madrid

and Barcelona.

In this respect, it is worth highlighting the

importance of the customer portfolio. Its quality

2002 2003 2004 % 04/03

Revenues (€ Mill.)

Average Occupied Area (m2)

Average Unit Revenue (€/m2/year)

Average Leasable Area (m2)

Average Occupancy Rate (%)

143.8 178.5 188.0 5.3%

1,134,358 1,315,350 1,311,936 –0.3%

126.8 135.7 141.0 3.9%

1,216,270 1,401,771 1,376,927 –1.8%

93.3% 93.8% 95.3% 1.6%

VALUATION OF REVENUES FROM RENTALS

Endesa 14,7%

59,2% Other

Grupo Inditex 3,4%

Cepsa 3,2%

Indra 2,9%

Madrid Regional Goverment 2,9%

Hotusa 2,7%2,6% Madrid City Council

2,2% Uni 2

2,2% El Corte Inglés

2,1% Sol Meliá

2,1% Amena

TENANTS AND OCCUPANCY

As of 31 December 2004, the occupancy rate

was satisfactory: 96.7% in housing, 94.5% in

offices and 97.1% in shopping centres. Industrial

premises were 98.5% occupied, while all the

hotels and homes for the elderly were leased to

their managers.

The occupancy rate of the Mellon Financial

Center, Testa’s office block in Miami (United

States) has risen to 93.3% after the latest lease

contracts which have just been formalized with

American Express, Telefónica USA Data and the

practices of the lawyers Hogan & Hartson and

Wallace Bauman. Testa has signed new lease

contracts for a total of 7,036 sq. metres, thus

pushing the office occupancy rate up from

92.1% in 2003 to 94.5% in 2004.

PRODUCTS

Office lease

The business world requires working

environments conceived to save energy and to

optimize performance at work. Offices which are

located in the main business districts and in

representative and emblematic buildings like

those Testa leases out.

The table below shows the main properties

owned by Testa as of 31 December 2004:

Property Area in m2 Parking Spaces

Endesa Building

Campo de las Naciones

Indra Building

Princesa Complex

O'Donnell Building

Ática 7

Alcalá 45

Amena Building

Raqueta

Castellana 83-85

Los Jacintos

Príncipe de Vergara 187

Pedro Valdivia 10

Juan de Mariana 17

Madrid

Muntadas I

Endesa Building

Sant Cugat

Diagonal 605

Diagonal 514

Paseo Gracia 56

Muntadas II

Paseo Gracia 28

Barcelona

Rest of Spain

Mellon Financial Center

Miami (USA)

TOTAL

54,849 1,253

37,692 663

33,718 853

33,668

27,679 436

23,395 502

18,655 40

18,058 457

16,000 335

14,633 271

14,553 256

10,732 165

6,568 89

3,366 60

313,566 5,380

24,406 640

16,494 94

15,374 219

14,795 217

9,721 76

8,212 32

3,783 82

3,212 37

95,997 1,397

39,148 229

48,378 1,105

48,378 1,105

497,089 8,111

PORTFOLIO OF PROPERTY OWNED(as of 31 December 2004)

Sant Cugat 10. Barcelona.


55

Annual Report 2004

56Lease of shopping centres

Shopping centres attract a greater number of

consumers every day. In 2004 over 1,100 million

people visited shopping centres in Spain.

Testa, aware of this reality, responds to the

needs of high-consumption retail trade with

seven shopping centres which are amongst the

most innovative in Spain and offer a notably

wide range of shops, leisure facilities,

restaurants and services.

As of 31 December 2004, Testa’s shopping

centre portfolio comprised:

Locality Area m2 No Premises

Parque Corredor

Larios

Porto Pi

Los Fresnos

Princesa

Lakua

Centro Oeste

TOTAL

Madrid 37,703 140

Malaga 21,530 125

Palma de Mallorca 19,400 124

Gijón 17,332 90

Madrid 13,202 21

Vitoria 12,966 38

Madrid 10,893 113

133,026 651

SHOPPING CENTRE PORTFOLIO (as of 31 December 2004)

Porto Pi Shopping Centre. Palma de Mallorca.

In 2004 Los Fresnos shopping centre in Gijón

was awarded the Diploma as a Finalist in the

“2004 European Shopping Centre Awards” in the

category of conversion and extension of

shopping centres. This award was granted by

the European International Council of Shopping

Centres and pays tribute to the best shopping

centres in Europe.

Also in 2004 Testa acquired 40 commercial

premises (2,688 sq. metres of Gross Leasable

Area) in the Centro Oeste shopping centre in

Majadahonda (Madrid).

Lease of industrial premises

Industrial and logistics businesses do not

only require large spaces for their work. Today,

proximity to cities and to fast roads is also a

requirement when choosing a location for their

business installations.

Testa, which is very much aware of this, owns

industrial premises on the Madrid-Barcelona

dual carriageway and major companies in the

logistics sector are amongst its clients.

The table below shows the main industrial

complexes owned by Testa as of 31 December 2004:

Premises Location Area m2

Logistics centre

Logistics centre

Logistics centre

Logistics centre

Logistics centre

Logistics centre

TOTAL

Cabanillas del Campo (Guadalajara) 70,134

Alovera (Guadalajara) 39,879

Coslada (Madrid) 35,934

Azuqueca de Henares (Guadalajara) 27,995

Pedrola (Zaragoza) 21,579

Lliça de Vall (Barcelona) 14,909

210,430

PORTFOLIO OF INDUSTRIAL COMPLEXES(as of 31 December 2004)

Los Fresnos Shopping Centre. Gijón.


57

Annual Report 2004

58Housing rental

Housing prices hold back the early

emancipation of young people in Spain and also

reduce geographical mobility in terms of work.

Testa responds to this problem with open-market

and subsidized housing for rental.

The main properties for housing rental owned

by Testa as of 31 December 2004 are shown

below:

Area m2 Parking spaces Homes

Plaza de Castilla

Conde Xiquena 17

Madrid open market

Alcorcón

Pavones Este

Valdebernardo

Madrid subsidized

Usera

Leganés

Madrid concessions

Sundry

Madrid for sale

Santa María Benquerencia

Toledo subsidized

Benta Berri

San Sebastián concessions

TOTAL

20,609 302

1,664 14 15

22,273 14 317

10,750 182 159

7,574 115 104

7,030 100 94

25,354 397 357

11,958 148 148

6,864 103 80

18,822 251 228

228 1 2

228 1 2

10,327 103 103

10,327 103 103

18,744 277 255

18,744 277 255

95,748 1,043 1,262

PORTFOLIO OF PROPERTY FOR RENTAL (as of 31 December 2004)

Chain Area m2 Rooms Category

Puerta Castilla

Eurostars Gran Madrid

MADRID

Eurostars Grand Marina

Tryp Barcelona Aeropuerto

BARCELONA

Tryp Oceanic

VALENCIA

Tryp Alameda

Tryp Jerez

ANDALUSIA

TOTAL

Silken 13,180 262 * * * *

Hotusa 3,581 100 * * * *

16,761 362

Hotusa 20,030 278 * * * * *

Sol Meliá 10,125 205 * * * *

30,155 483

Sol Meliá 9,308 197 * * * *

9,308 197

Sol Meliá 6,000 136 * * * *

Sol Meliá 4,637 98 * * * *

10,637 234

66,861 1,140

PORTFOLIO OF HOTELS OWNED (as of 31 December 2004)

Tryp Jerez. Cádiz.


59Hotel lease

Testa’s hotels are leased to top hotel chains,

which are offered spacious carefully-decorated

buildings where no detail is overlooked. All the

rooms are equipped for comfort and the hotels

are in prime well-served locations.

The main hotels owned by Testa as of 31

December 2004 are listed below:

Annual Report 2004

60Lease of homes for the elderly

All the Centres are modern buildings,

designed exclusively for older people, with

magnificent installations that allow for temporary

or more definitive all-round care for able and

physically or mentally disabled people. The

Centres offer an all-round personalized service

and programmes for the care of older people,

short-term stays, daytime or overnight stays,

post-operation and convalescence facilities, etc.,

so that the family or normal carers can have a

rest.

As part of its diversification policy, Testa has

made a bid for a new product line: homes for

the elderly, amongst which are the following:

Area m2 Rooms Beds

Getafe

La Moraleja

El Viso

Madrid

Puente de Piedra

Zaragoza

Faro de Hércules

A Coruña

TOTAL

8,377 196 196

4,829 96 140

3,600 95 119

16,806 387 455

6,881 153 221

6,881 153 221

5,829 117 134

5,829 117 134

29,516 657 810

PORTFOLIO OF HOMES FOR THE ELDERLY(as of 31 December 2004)

Housing Offices (tenants) Commercial (tenants) Industrial Garage Spaces Hotels Homes for Elderly TOTALLocation m2 Units m2 Units m2 Units m2 Units m2 Units m2 Units m2 Units m2 Units

Madrid

Catalunya

Andalusia

Valencia

Balearic Islands

Asturias

Zaragoza

Toledo

San Sebastián

Vitoria

Guadalajara

Galicia

Miami

TOTAL

% AREA

Housing Offices Commercial Industrial Garage Spaces Hotels Homes for Elderly TOTALOccupancy m2 Units m2 Units m2 Units m2 Units m2 Units m2 Units m2 Units m2 Units

Area

Leased

Vacant

BREAKDOWN OF PROPERTY FOR LEASE (as of 31 December 2004)

66,677 904 313,566 86 61,798 200 35,934 11 239,408 8,134 16,761 2 16,806 3 750,950 9,099

99,225 109 14,909 1 46,097 1,397 30,155 2 190,386 1,509

25,124 7 21,530 116 7,424 160 10,637 2 64,715 285

597 26 9,308 1 9,905 27

19,400 105 19,400 105

17,332 68 17,332 68

10,796 2 21,579 1 1,884 70 6,881 1 41,140 74

10,327 103 2,864 103 13,191 206

18,744 255 7,938 277 26,682 554

12,966 33 12,966 33

138,008 9 138,008 9

5,829 1 5,829 1

48,378 28 32,760 1,105 81,138 1,133

95,748 1,262 497,089 232 133,026 522 210,430 22 338,972 11,272 66,861 7 29,516 5 1,371,642 13,103

7.0% 36.2% 9.7% 15.3% 24.7% 4.9% 2.2% 100.0%

95,748 7.0% 497,089 36.2% 133,026 9.7% 210,430 15.3% 338,972 24.7% 66,861 4.9% 29,516 2.2% 1,371,642 100.0%

92,605 96.7% 469,564 94.5% 129,123 97.1% 207,217 98.5% 315,809 93.2% 66,861 100.0% 29,516 100.0% 1,310,695 95.6%

3,143 3.3% 27,525 5.5% 3,903 2.9% 3,213 1.5% 23,169 6.8% 60,947 4.4%

Endesa Building. Madrid.

As of 31 December 2004, the breakdown of

Testa’s property for rental by sector was as set

out below:


61

Commercial (tenants) Industrial Garage Spaces Hotels Homes for Elderly TOTALm2 Units m2 Units m2 Units m2 Units m2 Units m2 Units

Commercial Industrial Garage Spaces Hotels Homes for Elderly TOTALm2 Units m2 Units m2 Units m2 Units m2 Units m2 Units

cember 2004)

61,798 200 35,934 11 239,408 8,134 16,761 2 16,806 3 750,950 9,099

14,909 1 46,097 1,397 30,155 2 190,386 1,509

21,530 116 7,424 160 10,637 2 64,715 285

597 26 9,308 1 9,905 27

19,400 105 19,400 105

17,332 68 17,332 68

21,579 1 1,884 70 6,881 1 41,140 74

2,864 103 13,191 206

7,938 277 26,682 554

12,966 33 12,966 33

138,008 9 138,008 9

5,829 1 5,829 1

32,760 1,105 81,138 1,133

133,026 522 210,430 22 338,972 11,272 66,861 7 29,516 5 1,371,642 13,103

9.7% 15.3% 24.7% 4.9% 2.2% 100.0%

133,026 9.7% 210,430 15.3% 338,972 24.7% 66,861 4.9% 29,516 2.2% 1,371,642 100.0%

129,123 97.1% 207,217 98.5% 315,809 93.2% 66,861 100.0% 29,516 100.0% 1,310,695 95.6%

3,903 2.9% 3,213 1.5% 23,169 6.8% 60,947 4.4%

Annual Report 2004

62WORK IN PROGRESS

Testa also has work in progress which will

gradually be added to property for rental as it is

completed. The investments earmarked are as

follows:

m2 A/G Total Inv. Rents Expected Yield

Offices

Hotels

Homes for the Elderly

Shopping Centres

Housing

TOTAL

49,051 239.1 16.8 7.0%

33,200 190.3 9.3 4.9%

52,777 90.8 5.6 6.2%

44,776 86.3 8.5 9.9%

9,318 17.0 0.8 4.9%

189,122 623.5 41.0 6.6%

PROJECTED WORK (Millions of Euros)

Eurostars Grand Marina. Barcelona.

VALUATION OF REAL ESTATEASSETS

The value of the Testa group’s real estate assets

as of December 2004, according to the

appraisal conducted by C.B. Richard Ellis,

amounted to Euros 3,099.9 million in December

PROPERTY FOR RENTAL

As of 31 December 2004, the assets for

rental were valued at Euros 2,678.9 million,

which is a 4.6% increase on the 2003 appraisal.

The like-for-like valuation of the area of

properties for rental was 6.7% higher and the

decrease corresponds to the difference between

2004. This is a 13.3% increase on the 2003

figure. The breakdown of the value of the real

estate assets by type is as follows:

the new assets put out for lease and those sold

during the year.

The breakdown of the valuation by product is

as shown below:

2002 2003 2004 % 04/03

Property for lease

Other fixed assets

TOTAL

2,248.1 2,561.7 2,678.9 4.6%

188.6 175.5 421.1 139.9%

2,436.7 2,737.2 3,099.9 13.3%

VALUATION OF REAL ESTATE ASSETS (Millions of Euros)

2002 2003 2004 % 04/03

Offices

Commercial premises

Housing

Hotels

Industrial

Other

TOTAL

1,341.8 1,653.8 1,723.9 4.2%

347.9 373.7 413.9 10.8%

303.4 227.3 196.9 –13.4%

108.0 145.4 153.6 5.6%

108.3 105.4 112.3 6.5%

38.8 56.1 78.3 39.5%

2,248.1 2,561.7 2,678.9 4.6%

PROPERTY FOR LEASE BY PRODUCTS (Millions of Euros)


63

Annual Report 2004

64The valuation method used by C.B. Richard

Ellis for the assets for lease is discounted cash

flows, based on the following assumptions:

• Period of discounted cash flows = 10 years.

• Forecast annual net revenues and residual

value at the end of the period.

• Internal Rate of Return.

• Net revenues according to contracts and rent

growth expectations.

• Residual value according to expectations of

the exit yield specific to each type of asset.

OTHER FIXED ASSETS

The value of the Land, Inventories, Affiliates

and Work in Progress for projects for lease

amounts to Euros 421.1 million, 139.9% more

than the preceding year even though the

properties which were finished during the year

(two homes for the elderly) were moved to

property for lease. This increase was largely the

result of:

• The purchase in 2004 of land for the future

SyV Tower on Madrid’s Paseo de la

Castellana. The SyV Tower is currently at the

stage of drawing up the definitive project

and the building permits are still to be

obtained. The building is expected to be

completed in the year 2008. It will be 250

metres in height, with 52,672 square metres

on 55 floors above grade and another

45,000 square metres below grade. A hotel

from the Hotusa chain will occupy the first 33

storeys, with an area of some 33,200 square

metres. The remaining 19,500 square metres

will be used as offices for lease. The building

was designed by the architects Carlos Rubio

Carvajal and Enrique Álvarez-Sala WalterSyV Tower. Madrid.

TURNOVER OF REAL ESTATEASSETS

The most important sales of real estate assets

were:

• The office block in calle Capitán Haya 41 in

Madrid for Euros 132.9 million, with a margin

of Euros 51.8 million.

• A plot for Euros 36.2 million. Because of the

time it had been amongst the group’s assets,

it brought a high margin of Euros 29.3 million.

and will be one of the most emblematic

buildings in Madrid’s new business district at

the northern end of the Paseo de la

Castellana.

• The acquisition of land in Valdebebas from

Madrid City Council. It also sold the City

Council the building in calle Capitán Haya 41

and bought from it the office block at calle

Alcalá 45, Madrid.

2002 2003 2004 %04/03Sales Margin Sales Margin Sales Margin Sales Margin

Capitán Haya 41

Solar Meco

Philips Building

Princesa 3

Emilio Jiménez Millas 2

Others

TOTAL

132.9 51.8

36.2 29.3

79.0 40.5

58.2 46.0

12.7 10.0

191.5 76.8 33.1 27.2 4.9 3.6

191.5 76.8 183.0 123.7 173.9 84.4 –5.0% –31.8%

TURNOVER OF REAL ESTATE ASSETS (Millions of Euros)


65

Annual Report 2004

66 ACTIVITY

Sacyr Vallehermoso’s contracting business is

conducted through Itinere, the head of a large

group of infrastructure contractors mainly

involved with toll motorways, in Spain and Chile.

The group also has a presence in Portugal and

Brazil, through the position held by the Somague

group, Sacyr Vallehermoso’s leading company in

Portuguese-speaking markets, and in Costa Rica

where Itinere won the first contract for a toll

motorway.

In 2004, Itinere consolidated its position as

the second motorway operator in Spain, with

1,149.3 kilometres of motorways in operation.

This position has been further reinforced by the

acquisition of another 20% of the ENA group’s

capital, taking its stake up to 70%.

Moreover, the pace of new contracts won

remained much as it had been the previous

year. During the year, two new contracts were

obtained: the Palma-Manacor motorway on the

island of Mallorca and the first contract in Costa

Rica, with the San José-San Ramón stretch.

With these, Itinere has a stake in a total of 24

concessions, 19 of which are in operation

and 5 at different stages of development.

This evidences the group’s marked nature

as a developer, in addition to Itinere’s notable

experience as the operator of a large portfolio of

contracts in operation.

Future strategy focuses on continuing to

expand in new geographical markets with sound

fundamentals and strong growth potential in

terms of demand and use of infrastructures. This

is the case of Greece, Ireland, Mexico and, in

the medium term, within the EU, moving towards

Eastern European countries.

Infrastructure contractsItinere


67

Company Motorway Stretch % Stake Cons. Method Total km.AvasaAudasaAudenasaAccesos de MadridAucalsaHenarsa

AunorAcegaAutopistas Madrid Sur

Autoestradas

SPAINS.C. Del ElquiS.C. De Los LagosS.C. Rutas del PacíficoS.C. Red Vial Litoral Central

CHILELusoponte

Autoestradas del Atlántico

Via LitoralPORTUGALTriangulo do Sol

Via Norte

BRAZIL

TOTAL IN OPERATIONS.C. PamasaMetro Sevilla S.C.J.A.SPAINAutopistas MetropolitanasAcceso NororienteCHILES.C. Autopistas del Valle,S.A.COSTA RICA

TOTAL UNDER CONSTRUCTION

TOTAL

AP-68 Bilbao-Zaragoza 50.00% Prop 294.4AP-9 Ferrol-Tuy 70.00% Global 215.1AP-15 Irurzun-Tudela 35.00% Global 112.6R-3. R-5. M-50 M-40-Arganda/Navalcarnero 21.66% Equity 90.3AP-66 León-Campomanes 70.00% Global 86.8R-2 M-40-Guadalajara 7.50% Equity 61.3M-50 M-50 (N-I. N-II y M-40) 7.50% Equity 19.0C-415 Alcantarilla-Caravaca 100.00% Global 62.0AP-53 Santiago de Compostela-Alto de Sto. Domingo 15.66% Equity 56.7R-4 M-40-Ocaña 7.00% Equity 52.6M-50 M-50 (N-II-N-IV) 7.00% Equity 40.9AG-55 A Coruña-Carballo 70.00% Global 32.6AG-57 Puxeiros-Val Minor 70.00% Global 25.0

1,149.3R-5 Norte Los Vilos-La Serena 72.66% Global 228.7R-5 Sur Río Bueno-Puerto Montt 96.43% Global 135.2R-68 Santiago-Valparaíso 50.00% Prop 141.6F-90 Algarrobo-Casablanca 50.00% Prop 33.4NCC Cartagena-Algarrobo 50.00% Prop 24.1F-962-G Variante las Pataguas 50.00% Prop 22.4

585.4Puente Vasco de Gama 17.21% Equity 17.2Puente 25 de Abril 17.21% Equity 3.3

A-8 Sur Cril-Caldas da Rainha 20.00% Equity 81.0A-8 Norte Caldas da Rainha-Leira 20.00% Equity 49.0A-15 Caldas da Rainha-Santarém 20.00% Equity 40.0ER-101 Ribeira Brava-Machico-Caniçal 12.00% F.I. 44.2

234.6SP-326 Matao-Bebedouro 50.00% Equity 86.3SP-333 Sertãozinho-Borborema 50.00% Equity 129.4SP-310 Sao Carlos-Mirasol 50.00% Equity 226.5SP-330 Ribeirão Preto-Igarapara 12.36% F.I. 131.2SP-325 Ribeirão Preto-Anel Viário Sur 12.36% F.I. 8.0SP-328 Avda Bandeirantes-Via Anhanguera 12.36% F.I. 13.9SP-322 Ribeirão Preto-Bebedouro 12.36% F.I. 83.0

678.3

2,647.6C-715 Palma-Manacor 40.00% Equity 41.7

Línea 1 Metro Sevilla-23 estaciones 27.83% Equity 19.060.7

Américo Vespucio-Avda. Grecia 50.00% Prop 24.0Acceso Nororiente 100.00% Global 21.5

45.5San José/Aeropuerto-San Ramón 35.00% Equity 65.8

65.8

172.0

2,819.6

INFRASTRUCTURE CONTRACTS-ITINERE

Annual Report 2004

68

The Spanish market warrants a separate

mention. The new Strategic Infrastructure and

Transport Plan (SITP) contemplates a total

investment of over Euros 241,000 million. Of this

amount, nearly 20% or some Euros 45,000

million, will largely come from private

contributions from contract developers. The wide

scope of the plan, which is expected to be

implemented in the period 2006-2020, suggests

that Itinere will have great growth potential, in

view of its leading position and its proven

capacity as a developer.

Moreover, the group’s target of increasing its

position in contracts where there is high added

value potential remains intact. In 2004 this was

crystallized in the acquisition of another 20% of

the capital of the subgroup ENA.

In this way, Itinere underscores its target of

combining a sound portfolio in the coming years

with the long period of remaining life of its

contracts, with an average of 40 years in 2004

for Spain, 24 years for Portugal, 22 years for

Chile and 13 for Brazil, together with new

contracts won. This enables it to continue with

its policy of investing the surplus funds

generated by an already consolidated portfolio

in new projects.

MOTORWAYS IN OPERATION

Itinere’s roads in operation are located in Spain

and Chile. Moreover, through the Somague

group, which is being integrated into Itinere,

different concessions are in operation in Portugal

and Brazil. In December 2004, the group’s

concessions in operation totalled 2,647.6

kilometres. Thus, of a total of 2,819.6 kilometres

under concession, 93.9% were open at the end

of 2004.

During the year, 189.4 kilometres were

inaugurated: 52.6 kilometres corresponding to

Autopistas Madrid Sur R-4 (M-40 Ocaña) and

another 90.3 kilometres corresponding to

Accesos de Madrid R-3, R-5 (M-40

Arganda/Navalcarnero). In addition, the 46.5

kilometre Chilena Red Vial Litoral Central, which

links the capital of Chile with San Antonio, the

country’s main port, has come on stream.

0

10

20

30

40

50

60

70

80

Num

ber o

f yea

rs

Tota

l Sp

ain

Tota

l in

op

erat

ion

Tota

l Po

rtug

al

Tota

l Ch

ile

Tota

l Bra

zil

In bold print, the average by category.

REMAINING LIFE

In 2004 the group continued to direct its

efforts at maintaining a high level of service for

its customers, based on the modern

maintenance and communication systems set up

on all the stretches in operation. Thanks to this

joint effort, the number of accidents registered

on the group’s roads fell over the year.

TRAFFIC

The volume of traffic on the group’s motorways

performed very positively, increasing by 3.8%

with respect to the previous year.

2002 2003 2004 % 04/03

Avasa

Aunor

Aucalsa

Audasa

Audenasa

Autoestradas (AG-55)

Autoestradas (AG-57)

SPAIN

R-5 Norte El Elqui

R-5 Sur Los Lagos

Rutas del Pacífico

Red Vial Litoral Central

CHILE

TOTAL

12,358 12,843 13,499 5.1%

8,408 9,881 10,455 5.8%

7,696 8,049 8,736 8.5%

20,787 21,958 22,565 2.8%

14,194 14,883 15,803 6.2%

10,885 11,554 12,262 6.1%

6,426 6,887 7,435 8.0%

13,434 14,162 14,826 4.7%

3,090 3,045 3,139 3.1%

6,576 6,290 6,539 4.0%

14,031 15,968 15,752 –1.4%

0 0 2,064

6,858 7,586 7,694 1.4%

10,985 11,575 12,019 3.8%

YEAR-ON-YEAR AVERAGE DAILY TRAFFIC


69

Annual Report 2004

70The opening in December 2003 of the last

stretch of the road adjudicated to Audasa, the

northern access to Ferrol and the Tuy-Rebullón

stretch with another 24.7 km in operation, puts

ADT growth at 3.8%. Excluding the effect of this

opening, traffic grew by 12.7%. The Red Litoral

Central figure is not comparable either, since the

2004 figure includes new stretches (F-962-G Las

Pataguas and NCC

by-pass).

In Spain, after adjusting for the effect of the

opening of new stretches at Audasa in 2003,

traffic grew by more than 5%, amply outstripping

average economic growth.

TOLL REVENUES

Revenues from tolls increased by 103.2% in

2004 to reach Euros 322.9 million.

This increase is due to several factors:

• First, the organic growth of the business,

stemming from both the increase in user

traffic and the effect of the annual tariff

revision. In 2004, contractors increased tariffs

by around 3.5% to offset the effect of

inflation.

• Second, the contribution of the ENA group’s

motorways for a full year, as against the three

months of the previous year.

• And, lastly, the fact that two new stretches

came on stream - the Cartagena-Algarrobo

and Las Pataguas ring road in the Red Vial

Litoral Central contract in Chile.

Revenues in Spain accounted for 82.7% of

the total, up 147.9% on the preceding year.

2002 2003 2004 % 04/03

Avasa

Aunor

Aucalsa

Audasa

Audenasa

Autoestradas

Otras

SPAIN

R-5 Norte El Elqui

R-5 Sur Los Lagos

Rutas del Pacífico


Others

CHILE

TOTAL

54.0 57.8 62.7 8.6%

0.0 4.7 10.0 113.6%

0.0 6.5 30.7 375.3%

0.0 25.3 117.1 363.6%

0.0 8.0 34.0 323.9%

0.0 2.3 10.7 369.1%

0.0 3.3 1.9 –42.7%

54.0 107.7 267.1 147.9%

24.3 17.2 18.9 9.5%

26.2 19.0 16.9 –11.1%

23.3 14.5 15.4 6.3%

0.0 0.5 1.5 205.7%

1.0 3.1 200.0%

73.7 51.2 55.8 9.0%

127.7 158.9 322.9 103.2%

TOLL REVENUES (Millions of Euros)


71Revenues in Chile increased by 4.7% during

the year.

INVESTMENTS

Itinere’s investments in motorways and other

transport infrastructures in operation amounted

to Euros 4,696.0 million at the end of business

year 2004.

On 30 November 2004, a rights issue was

approved at Itinere for Euros 24.3 million,

disbursed in the following manner:

• Through the contribution by Caixa Nova and

Caixa Galicia of a further 20% of capital of

The portfolio of recurrent revenues from the

business amounted to Euros 49,369.6 million in

December, 50.6% more than in 2003.

the subgroup ENA, taking the Group’s

holding in ENA up to 70%.

• Through the contribution from BBVA of a

further 10% of the capital of Aunor, putting

the Group’s stake in the contractor at 55%.

As a result of this operation, Caixa Nova and

Caixa Galicia will each have an 8.62% stake in

the share capital of Itinere infraestructuras, S.A.,

while BBVA will own 0.07%. In addition, Itinere’s

shareholderséquity has increased by Euros 373

million.

2002 2003 2004 % 04/03

Spain

Chile and Costa Rica

TOTAL

6,569.0 30,036.0 45,001.0 49.8%

4,745.1 2,753.2 4,369.0 58.7%

11,314.1 32,789.2 49,370.0 50.6%

REVENUE PORTFOLIO (Millions of Euros)

Annual Report 2004

72The investments made in improvement work,

maintenance and extraordinary conservation

amounted to Euros 4.9 million. Notable amongst

these were the execution of the new link roads

on Avasa and Audenasa’s motorways and the

start-up of the teletoll system on the first of the

two. Thanks to these investments, traffic will be

more fluid and the roads will have greater

capacity for absorption, so that they will be able

to cope with future demand.

The total amount reported under the heading

“Motorways and other toll roads” includes the

cost of construction and the start-up of the

concessions in operation developed by Itinere,

together with the investment for adding the

2002 2003 2004Operation Progress Operation Progress Operation Progress

Avasa

Aunor

Aucalsa

Audasa

Audenasa

Autoestradas

SPAIN

R-5 El Elqui

R-5 Los Lagos

Rutas del Pacífico


Americo Vespucio

Nororiente

CHILE

Autopistas del Valle

COSTA RICA

TOTAL

659.8 662.7

43.6 97.0

727.6 739.3

1,641.0 2,031.3

340.3 390.2

141.3 155.8

0.0 0.0 3,553.6 0.0 4,076.3 0.0

206.5 205.5 205.0

210.3 215.1 214.6

98.0 53.5 167.4 167.2

0 10.4 13.9 15.5 32.9

0 19.1 30.9 62.8

24.4

514.8 83.0 601.5 46.5 619.6 87.1

0.0 0.0 0.0 0.0 0.0 0.0

514.8 83.0 4,155.1 46.5 4,696.0 87.1

INVESTMENTS MADE (Millions of Euros)

contracts in operation, such as Avasa and the

contractors in the ENA subgroup.

Moreover, in 2004 an agreement was

reached with OHL, whereby Itinere acquired the

following stakes from OHL:

• 45% of Autopista del Noroeste

Concesionaria de la Comunidad Autónoma

de Murcia (Aunor), thus giving it full

ownership of the company.

• 6.75% of Alazor Inversiones (the owner of the

R-3 and R-5 toll roads in the Self-governing

Region of Madrid), which implies that it now

owns 25.16% (the major shareholder).

• 5.9% of Tacel Inversiones (the owner of Autopista

Central Gallega, Acega) so the group has a total

stake of 18.35% through Itinere and ENA.

For its part, OHL acquired the following

holdings from SyV:

• 33% of Euroglosa 45 Concesionaria de la

Comunidad de Madrid (the owner of stretch

3 of the M-45 motorway);

• 20% of Aeropistas (the owner of

Concesionaria Eje Aeropuerto which links the

M-40 with Barajas airport).

MOTORWAYS UNDERCONSTRUCTION

At the end of 2004 Itinere had five contracts at

different stages of development. A total of 172

kilometres of motorways are under construction,

35% of which corresponds to projects in Spain;

amongst these is the 19-kilometre Line 1 of

Seville Metro, Itinere’s first contract for an

underground. Worth highlighting in the foreign

markets because of its importance is the

progress made on the Vespucio Sur contract, the


73

main ring road in the capital of Chile, which is

expected to come on stream at the end of 2005.

In business year 2004 two new concessions

were contracted. Thus, the consortium in which

Itinere has a 35% stake won the tender for the

development and management of a motorway in

Costa Rica, specifically the San José-San

Ramón strip, which is the busiest in the country

and gives access to San José International

Airport. The Santa Ana-Río Segundo radial road

has been added to this contract. The motorway

is 60 kilometres long and the radial road 5.8

kilometres. The period of operation is 25 years

and it involves duplicating and improving the

existing road, mobilizing a total investment of

USD 266 million.

In addition, in April Majorca’s Island Council

adjudicated the development and running of the

shadow toll motorway which links Palma de

Mallorca with Manacor to the consortium in

which Sacyr Vallehermoso has a 40% stake. The

project has a length of 41.7 kilometres and the

investment foreseen is of Euros 116 million. The

contract is for 33 years and the estimated

construction time 27 months. Besides the fee for

demand according to the number of vehicles

using the motorway, the contractor will receive

fixed payments from the Regional Government

for the first seven years of the contract

amounting to Euros 37 million. Estimated traffic

for the first year the motorway is in operation is

16,000 vehicles a day.

Total investments earmarked for these

stretches pending completion amount to Euros

428.5 million.

Annual Report 2004

74ACTIVITY

One of Sacyr Vallehermoso’s strategic areas for

growth is the wide field of services, where it is

extremely interested in expanding, in both the

activities in which it already has a presence and

in new lines of business.

The target in Services is to develop them as

a component which should bring growth and

stability to the Group’s revenues, while enabling

it to boost and capitalize on the synergies

existing with the other divisions.

In this context, 2004 was of key importance

in defining the business, and four broad areas of

action were established:

• Water

This comprises the development of treatment

activities (drinking water treatment,

purification and desalination) and its

integrated cycle: harnessing at source,

supply and subsequent return to the network.

• Alternative energies

This involves the promotion, execution,

maintenance and management of different

systems for generating clean energy, which

help to reduce the emission of contaminating

gases. The types foreseen are: the

generation of biomass and wind power and

cogeneration (from agricultural/cattle-

breeding and industrial waste).

• Multiservices

This brings together a set of different services

which are labour-intensive and where the

capacity to access and organize networks is

of prime importance for providing the

services. Thus, it includes businesses such

as service areas on highways, integrated

maintenance of buildings, cleaning of buildings

and premises, handling, socio-sanitary

ServicesValoriza

services, gardening, environmental recovery,

road maintenance and other activities with a

similar profile which are being studied. These

activities have been restructured using the

affiliates Valoriza Facilities and Microtec as

the basis.

• Environment

The business consists of the integrated

management of different types of waste,

including collection at source of both

selected and separated waste, transport,

treatment through different processes for its

recycling and evaluation with a view to

reducing its impact on the environment. This

field also includes street-cleaning, providing

sweeping and swilling services and other

special services such as the cleaning of

beaches and waste paper bins.

Apart from restructuring the fields of action,

during the year the staff assigned to this

business within the Valoriza group increased.

The addition of staff took place in record time

and has brought in professionals with extensive

experience so that an ambitious growth strategy

can be developed.

WATERThe business comprises two fields of action: on

the one hand, engineering, development,

execution, maintenance and operation of all

types of treatment (industrial, agricultural and

drinking water) and, on the other, water supply

systems for large groups of clients, through

construction and operating systems under public

contracts.

WATER TREATMENT

Sadyt engages in a wide range of activities and

is at the head of the Grupo Valoriza’s water

treatment businesses. Sadyt is one of the

leading companies in its field and has won some

of the most important contracts tendered in the

sector during the year:

• Within the Temporary Joint Venture GEIDA,

two projects to develop and operate two


75

Desalination plant at Cuevas de Almanzora. Almería.

Annual Report 2004

76sea-water desalination plants in Algeria for a

period of 25 years. The first of these plants,

located in Skikda, was adjudicated in March

and has a desalination capacity of 100,000

cubic metres per day. The second project

was won in May and is located in the region

of Beni-Saf; it has a desalination capacity of

150,000 cubic metres of sea water a day.

• Sedebisa effluent treatment plant, Puente Genil.

• A chemical dosification plant for the Arcos III

thermal station.

With these plants, Sadyt will have installed a

desalination capacity of over 330,000 m3/day at

the forty-eight plants it has developed, besides

other installations for purification and other types

of water treatment.

The operation business has gradually been

consolidated, supported by the growing portfolio

of projects executed. At the end of 2004, 26.7%

of production was operated by Sadyt. Today,

nearly 36.4% of Sadyt’s revenues comes from

services (operation and maintenance and

supplies), thus lending stability to the business.

In 2004 the construction work on the drinking

water treatment plants in Calpe, with production

of 3,500 m3/day, and in Jaca (26.000 m3/day)

was completed. The extension of the

desalination plant at Cuevas de Almanzora

(30.000 m3/day) and the first stage (2,500

m3/day) of the tertiary treatment plant for the

Xeresa Golf hotel in Benidorm (Alicante) were

also completed. The second stage of the latter is

currently in progress. The ultra pure water

treatment Plants in Villanueva de Algaidas and

Puente Genil were also finished, as was the

Algueña wastewater purification plant in Alicante.

Technological development, which is

essential for remaining competitive and

maintaining a leading position, meant that in 2004

conventional treatments (obtaining ultra-pure

water through electrodeionization- EDI) were

joined by ultrafiltration and inverse osmosis,

together with the biological reactor with

membranes. Sadyt has its own desalination

technology and currently has over 155,000 m3/

day installed or under construction at plants with

inverse osmosis technology.

Sadyt maintains its quality system (ISO 9001-

2000) that was introduced in 2001 and in 2004 it

obtained the environmental management

certification according the standard UNE-EN ISO

14000:1996.

Lastly, desalination is increasingly important

–both in Spain and abroad– as an alternative

means of supply to terrestrial harnessing and is

another of the future keys for the group. Sadyt’s

international presence is growing constantly and

national plans to increase desalination capacity

in the Mediterranean in the coming years will

mobilize Euros 3,900 million in investment in the

period 2004-08. For these Sadyt boasts proven

experience and technical solutions.

INTEGRATED SUPPLY CYCLE

The water supply business is conducted

through the subsidiary AGS. In 2004 it reinforced

its position in the Portuguese market and, at the

year end, it had a 40% share in the privatized

market and revenues from its total contracts of

Euros 21.6 million. The population served had

increased by 16% at the end of 2004 to reach

1.35 million inhabitants. Moreover, AGS has a

presence in Brazil, through a water supply

contract.

At the end of 2004 a total of 10 contractors

were operating, nine in Portugal and one in

Brazil. They were:

• Aguas de Alenquer, a contractor operating

and managing public water supply and

wastewater drainage services in Alenquer,

where 40,000 inhabitants are serviced.

• Aguas de Sado, a contractor responsible for

the water supply and drainage system for the

Council of Setúbal. The population serviced

totals 114,000 inhabitants.

• TRATAVE – Tratamiento de Aguas Residuales

de Ave, the contractor operating and managing

the integrated decontamination system for the

Vale do Ave (the municipalities of Guimarães,

Santo Tirso and Vila Nova de Famalicão), with

a population of 392,000 inhabitants.

• Aguas de Figueira, the concessionaire

company operating the water harnessing,

treatment and supply system and the

collection, treatment and recycling of

affluents for the Council of Figueira da Foz, a

town with a population of 75,500 inhabitants.

• Aguas de Cascais, a contractor operating the

municipal water supply and wastewater

drainage system in Cascais (a population of

191,000 inhabitants).

• Aguas de Carrazeda, a contractor operating

and managing the municipal water supply

and drainage services for Carrazeda de

Ansiães Council. It services a population of

7,700 inhabitants.

• Aguas de Gondomar, a concessionaire

company which operates and manages

the municipal water supply and drainage

services for the Municipality of Gondomar

with 170,000 inhabitants.

• Aguas de Barcelos, the contractor

responsible for operating the muncipal

water supply and drainage services for the

Council of Barcelos, which has 125,000

inhabitants. The tender was won in 2003

and it started its activities in 2004.

Aguas de Barcelos. Portugal.


77

Annual Report 2004

78• Aguas de Paços de Ferreira, which runs the

drinking water supply and drainage systems

for Paços de Ferreira Council. It started its

business during the year and services a

population of 54,000 inhabitants.

• Aguas de Mandaguahy, the company

contracted for the municipal water production

services for the partial supply of the

Municipality of Jaú in Brazil. It services a


During the year three new contracts were

added in Portugal and will start operations in

2005:

• Aguas de Marco, a contractor responsible for

the operation and management of municipal

water supply and drainage services for

Marco de Canaveses Council. It serves a


• Aguas de Penafiel, a contractor which will

run and manage municipal water supply and

drainage services for the Municipality of

Penafiel, with 75,000 inhabitants.

• Aguas de Covilha, which is the contractor

operating municipal water supply and

drainage services for the Council of Covilha,

with 55,000 inhabitants.

Moreover, in 2004 AGS was selected for the

contract of public-private association with the

Council of Faro (61,000 inhabitants) for the

integrated development of water supply, solid

waste collection and street-cleaning services for

a period of 35 years.

Presence in Spain, with a view to future

expansion, is centred on the water contract for

Toledo and some neighbouring towns, run by the

company Aguas de Toledo. In 2004 a population

of 70,000 inhabitants was serviced.

ALTERNATIVE ENERGIES

The businesses conducted fall within the Special

Regulation on Renewable Energies which enjoy

special consideration and are grouped in two

fields of action. On the one hand, the generation

of energy through the use of waste produced by

different types of human activity, biomass, such

as sludge from purification plants or sub-

products from the farming and cattle-breeding

sector. And, on the other, the generation of

energy based on cogeneration and wind-power

stations.

All of these sources of energy have

significant future growth potential, in view of the

sustained boost they will be given with the Kyoto

Protocol coming into force in the EU. When the

Protocol is implemented in 2005, both Spain and

Portugal will have to significantly reduce

contaminating gas levels to comply with the

emission rights assigned to them.

BIOMASS AND COGENERATION

Iberese leads the business of treating waste

from olives, other slurry from agriculture and of

urban origin, and also the market for executing

small and medium-power cogeneration plants in

Spain. It is important to note the acquisition in

2004 of a further 24% of the company, thus

pushing the total holding up to 74% of capital

and consolidating management control in a field

that has strong growth potential.

In biomass, the following plants were in

operation in 2004:

Olextra, for drying and treating slurry from

olive oil industries (16 MW); Extragol, in Malaga,

which generates electricity (9.5 MW) from olive

pulp (orujillo); Compañía Energética de la Roda


79(8.2 MW), which dries sludge; and, lastly,

Compañía Energética de Pata de Mulo, with a

plant for treating and reducing sludge through a

combined cycle plant in Cordoba, with 16 MW of

power installed, which started its activities in

January 2005.

In 2004 the following biomass projects were

still in progress:

A new plant, Compañía Energética

Jabalquinto (18 MW), was adjudicated in 2004,

located in the province of Jaen and based on

electricity cogeneration through the drying of

agricultural slurry. This is in addition to the

Biomasas de Puente Genil (9.5 MW) plant in

progress in Cordoba, which will come on stream

in 2006. Thus, at the end of the year there were

a total of six plants in portfolio. When all of them

are operating, the total installed capacity will be

in excess of 77 MW.

In cogeneration projects, Iberese runs the

cogeneration plant for the paper company

Echazarreta (10 MW). In 2004, the construction

of two plants, with 11 MW of power installed for

industrial clients (turn-key projects) continued

and, in addition, seven new projects –also

turnkey– were won, with 61.6 MW of power:

Location Industry Power installed-MW

Moyresa

Moyresa

Cottocer II

Ceranor

Euroatomizado II

Pamesa

Reyenvas

CONTRACT WON 2004

Europac

Aspla II

IN PROGRESS

Echezarreta

IN OPERATION

TOTAL

Vizcaya Food 20.0

Barcelona Food 10.0

Castellón Tile manufacturing 10.0

León Brick-making 10.0

Castellón Tile manufacturing 5.0

Brazil Tile manufacturing 5.0

Seville Plastics 1.6

61.6

Huesca Paper 10.0

Cantabria Plastics 1.0

11.0

Guipúzcoa Paper 10.0

10.0

82.6

COGENERATION PROJECTS

Annual Report 2004

80WIND POWER

Finerge, a company which belongs to Somague,

is at the head of the wind power business. It

runs its business in an integrated manner, going

from development to the management of wind

farms, and also has a smaller portfolio of

cogeneration plants. It is currently participating

in several consortia for the development of 587

MW in renewable energies, of which 320.4 MW

can be attributed to Finerge’s stake. The degree

of development of this is as follows: 59.9 MW

(32.9 MW in cogeneration and 27 MW wind

power) are up and running, 51 MW are under

construction and 209.5 MW are at the

development stage.

MULTI-SERVICES

This heading comprises the provision of different

labour-intensive services. Some were already

functioning in 2004, others may be developed,

depending on market opportunities and the

degree of profitability they offer. Examples of

these services are airport handling, cleaning of

interiors and socio-sanitary services.

The performance of the activities in operation

was as follows:

• Integrated property maintenance - Valoriza

Facilities. Its services are broken down into

management and documentary and legal

technical assistance, integrated

maintenance of facilities and ancillary

services such as gardening, security,

reception, internal mail, etc.

At the end of 2004, its customer portfolio

included such major clients as SCH-Banif

Fondo de Inversión Inmobiliario, Procter &

Gamble, Testa and Gestalia (Grupo Lar),

enabling it to post a sales figure of Euros

25,7 million for the year. In February 2005 it

won maintenance contracts for Madrid

Regional Government’s Consejería de

Justicia, for the Ministry of Economy and

Finance and for the Ministry of Labour.

• Service areas – Cafestore. This operator of

service areas aims to achieve nationwide

presence. At the end of 2004 it had 21

establishments on different high-capacity

highways in Spain, as compared to the 7

existing at the beginning of the year. In 2004

another a area was under construction. This

year Cafestore has completed a strategic

plan for the next three years with a view to

becoming one of the leaders in catering on

motorways and dual carriageways. In 2004 it

obtained Euros 12.1 million in revenues.

• Gardening and landscaping - Viveiros do

Falcao. It is based in Portugal and engages

in the design, construction and maintenance

of parks and gardens and sports areas, but

also does landscaping work for road and

railway works. Amongst the most important

contracts won in 2004 is the maintenance of

Benfica´s stadium in Lisbon, which enabled

it to report revenues of Euros 5.2 million

during the year.

• Environmental engineering – Microtec. From

its activity of assessing and correcting

environmental impacts it obtained a total of

Euros 8.4 million in total revenues in 2004.

Notable amongst the contracts won during

the year was the adjudication of the

installation work on the official network for

controlling subterranean waters from the

Ebro for the Confederación Hidrográfica del

Ebro, the construction of the semi-link road

between the NA-123 highway and the AP-68

motorway, the treatment of woodland to

prevent fires for the Castilla León Regional

Government in the Villadiego area, etc.

• Lastly, this division also includes the

operation of a car park in the city of Toledo,

which has been fully consolidated since it

was opened in the year 2000.

In respect of the activities to be developed in

the future, worth highlighting is the agreement

reached at the beginning of this year, 2005, with

the multinational group Servisair to present joint

handling bids in Spain. This agreement with one of

the world’s leading airport service providers is an

excellent springboard for developing the business.

Moreover, different projects in cleaning and

socio-sanitary services where Sacyr Vallehermoso

can offer a large number of jobs and great

opportunities are currently being analyzed.

ENVIRONMENT

This division covers the full waste management

cycle, from the different formulae for collection

(solid urban waste and street-cleaning) to waste

treatment, landfill, recycling/composting and

energy valuation.

Amongst the businesses in operation, it is

present in the foreign markets through different

companies:

• Hidurbe Gestión de Residuos, S.A., which is

fully-owned by Somague Ambiente and

engages in industrial and solid urban waste

(S.U.W.) management in Portugal. In 2004 it

managed the Meia Serra S.U.W. Treatment

Centre for waste on the island of Madeira,

with an incinerator plant that processes

150,000 tonnes of urban waste a year,

obtaining 10 MW/h of electricity production;

in addition, the Lipor Organic Waste

Treatment Plant came on stream, with 15

automatic composting tunnels where the

solid urban waste from the region of Oporto

is treated, with a capacity of 60,000

tonnes/year. It uses the latest technologies

for composting and odour treatment,

obtaining high quality compost which is

bagged or pelletized for later sale.

• Procesl Ingeniería Hidráulica y Ambiental,

Ltda., an environmental consultancy firm in

which Somague Ambiente has a 70%

holding and which is the leader in the

Portuguese market in environmental fields,

hydric resources, solid waste, submarine

emissaries and supply and drainage

infrastructures.

• CESL Asia, a company 51%-owned by

Somague Ambiente and based in Macao,

with clear potential as a springboard to the

rest of the local market. It engages in the

following activities:

– AGS-Macau, a company which runs public

and private installation and engages in

solid waste management, purification

plants and drinking water. Notable amongst

its contracts is the operation of the Macao

Incinerator Plant for the treatment of all the

solid urban waste from Macao. The

extension of this plant is currently being

studied. The plant has a nominal capacity

of 315,000 tonnes p.a. and generates 12

MW/h of electricity.

– Focus, which provides operation and

maintenance services for installations,

including those at the International Airport,

which is currently being refurbished, and

Macao Cultural Centre.

– MPS (Macao Servicios Profesionales,

Ltda.), which provides a wide range of

consultancy services related to design and

engineering in environmental projects.


81

Annual Report 2004

4

• Stock market performance

• Investor relations

Stock marketperformance and the

financial community

Annual Report 2004

84CAPITAL

As of 31 December 2004, Sacyr Vallehermoso’s

capital stock was fully subscribed and paid up. It

comprises 266,153,343 shares, each with a par

value of Euros 1, of the same type and series,

and with the same rights.

During the year two rights issues were

conducted. Sacyr Vallehermoso’s General

Shareholders’ Meeting held on 25 June 2004

adopted the following resolutions:

• To increase share capital by 13,850,948 shares,

each with a par value of Euros 1, with an issue

premium of 10.5 and with economic rights as

from 1 January 2004, to cover the operation of

integrating Somague in the Group.

• To increase share capital by 6,491,544 shares,

each with a par value of Euros 1, charged to

unrestricted reserves and in the proportion of

one new share for every forty old ones.

These shares were admitted to trading on 30

September on the Madrid, Barcelona, Bilbao and

Valencia stock exchanges.

Moreover, after the required formalities, Sacyr

Vallehermoso extended base its trading base, as

its shares started trading on Lisbon’s Euronext

market in September 2004.

The table below shows the company’s share

capital at the end of the past three years:

Stock market performance

Year Share capital No. of shares

2004

2003

2002

266,153,343 266,153,343

245,810,851 245,810,851

154,764,041 154,764,041

CAPITAL (Euros)

Stock market per formance and the f inancia l communi ty

85

A rights issue is to be presented for

approval at the General Shareholders’ Meeting,

with the issue of 8,317,291 shares, each with a

par value of Euros 1, equivalent to one new

share for every 32 previously issued shares, fully

paid-up for shareholders.

After this issue, share capital will comprise

274,470,634 shares.

DIVIDENDS

In business year 2004, the total amount received

by shareholders in dividends was as follows:

• As of 9 January 2004 the third interim

dividend charged to 2003 was paid and

amounted to Euros 0.075 per share.

• On 29 June 2004 the final dividend for 2003,

amounting to Euros 0.075 per share, was paid.

• On 28 July the first interim dividend of Euros

0.077 per share, charged to business year

2004, was paid. The 2.5% increase in this

first dividend was to offset the fact that on the

date of payment, the shares corresponding

to the bonus rights issue conducted in

September 2004 in the proportion of 1x40

had not yet been issued.

2002 2003 (1) 2004 % 04/03

Interim

Final

No. Shares

No. Shares in treasury stock

TOTAL CASH

(1) Excluding the extra dividend of Euros 0.12 per share paid for the merger.

0.225 0.225 0.225

0.075 0.075 0.135

154,764,041 245,810,851 266,153,343

1,221,337 221,337 2,228,583

46,035,027 73,526,854 95,288,007 29.6%

DIVIDENDS PER SHARE (Euros)

Annual Report 2004

86• On 15 October the second interim divided of

Euros 0.075 per share, charged to 2004

results, was paid.

The following dividends have already been

paid this year 2005:

• A third interim divided, agreed by the

company’s Board of Directors at their

meeting held on 15 December 2004. This

dividend of Euros 0.075 per share was paid

on 14 January 2005.

• A final dividend of Euros 0.135 per share

agreed by the company’s Board of Directors

on 29 March 2005, payable on 15 April 2005.

These dividends of Euros 0.36 paid and

charged to business year 2004 are submitted to

the General Shareholders’ Meeting for its

approval

Sacyr Vallehermoso remains firm as regards its

policy of maximizing the return on its shares.

Thus, if the final dividend proposed is approved,

the total amount to be paid to shareholders and

charged to business year 2004, is Euros 95.3

million, 29.6% more than the ordinary dividend

paid last year.

STOCK MARKET PERFORMANCE

The stock market performance of the Sacyr

Vallehermoso share continued on the upward

trend of previous years. Thus, annual appreciation

was of 3.8% (not counting dividends and

corrected for the effect of the bonus rights issue).


87

Although the share appreciated below the

market in general during the year, its cumulative

performance in the past few years shows total

appreciation of 78.3% (2002-2004), which is a

wide positive spread with the scant increase

observed on all the international and domestic

stock market indices in the same period.

It is worth noting the reincorporation of the

Sacyr Vallehermoso share on the selective

IBEX-35 index as of 2 January 2005, thanks to

the good performance of its trading volume

throughout the second half of 2004. This was

beneficial to its liquidity and served to support

the performance of the share price.

The trading volume for the year amounted to

a total of Euros 2,176.2 million, equivalent to

68% of market cap. as of 31 December last year.

This high turnover evidences the company’s

soundness, circulation and liquidity in the stock

market.

At the end of 2004, Sacyr Vallehermoso’s

market capitalization amounted to Euros

3,233,763 thousand, a 9.63% increase on the end

of 2003.

This variation was due to the combination of

two factors:

• The positive performance of the share, which

appreciated by 1.3% during the year.

Number of shares

Trading volume (Euros ‘000)

Trading days

Closing price 2003 (Euros)

Closing price 2004 (Euros)

High (on 01/03/04) (Euros)

Low (on 26/08/04) (Euros)

Weighted average price (Euros)

Average daily volume (No. shares)

Liquidity (shares traded/ capital)

266,153,343

2,176,254

251

12.00

12.15

14.06

11.04

12.01

721,902

0.68

SHARE PERFORMANCE IN 2004

J

10.5

11.0

11.5

12.0

12.5

13.0

13.5

F M A M J JL A S O N D

SHARE PERFORMANCE 2004 (Euros)

0

500.000

1.000.000

1.500.000

2.000.000

2.500.000

3.000.000

3.500.000

2000 2001 2002

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

2003 2004

914,042760,218

1,357,058

3,228,721

2,176,254

TRADING VOLUME (Thousands of Euros)

Annual Report 2004

88• The rights issue, with a non-monetary

contribution, for a total of 13,850,948 shares,

conducted as a result of the agreement to

integrate Somague, together with the bonus

rights issue charged to reserves for a total of

6,491,544 shares.

The performance of Sacyr Vallehermoso

shares on the Computer-Assisted Trading

System in 2004 was as shown below:

405060708090

100110120130

40

50

60

70

80

90

100

110

120

130General SyV Ibex Construction

Inde

x %

STOCK MARKET PERFORMANCE 2004 (Euros)

Science Museum. Barcelona.


89

2002 2003 2004

Share price (Euros)

High

Low

Average

Year-end

No. of shares at year end

Average daily volume (No. of shares)

Annual volume (Euros ‘000)

Market capitalization (Euros ‘000)

Weighting on MSE (%)

Earnings per share (Euros/share)

Cash flow per share (Euros/share)

Dividend per share (Euros/share)

Price/Book value (No. of times)

Payout (of attributed income) (%)

Dividend yield (%)

P/E ratio

P/Cash-flow

11.59 12.28 14.06

6.67 8.35 11.04

8.73 9.62 12.01

9.90 12.00 12.15

154,764,041 245,810,851 266,153,343

548,293 1,751,767 721,902

1,357,058 3,228,721 2,176,254

1,532,164 2,949,730 3,233,763

0.81 0.95 0.95

1.34 1.36 1.41

1.33 1.89 2.02

0.30 0.42 0.36

1.45 2.25 1.63

22.39 30.88 25.46

3.03 3.50 2.96

7.39 8.82 8.59

7.44 6.35 6.03

STOCK MARKET INFORMATION

Annual Report 2004

90 I n business year 2004 Sacyr Vallehermoso

implemented an active communication policy

increasing the number of presentations,

meetings and contacts with the financial market

and minority shareholders through different

means. The Group, through the Institutional

Relations department, has a direct relationship

with analysts and investors and strives to

continuously assist shareholders through the

minority shareholder care office.

The objects of this active policy of

communication with the financial market are:

• To explain the enormous changes which the

company has gone through in the past two

years and major events such as the Sacyr

Vallehermoso merger, the purchase of ENA,

the share swap agreement with Somague,

the change in Chairman, the move into the

Italian market, etc.

• To contact the main institutional investors,

Group shareholders and analysts, so that they

have a view of the Group as a point of

reference in the diversified landscape of the

listed construction sector in Spain and Europe.

Over the year this policy has led to an

increase of over 60% in coverage from merchant

banks and stockbroker firms, reaching 15

entities at the end of 2004. Apart from the

different presentations given in major cities in

Europe and North America, a total of 194

meetings were held with different investors,

shareholders and analysts, almost doubling the

figure of the previous year.

The company made notable efforts to

continue to make information about the Group

as accessible as possible, in compliance with

Investor relations


91

what is set out in the Financial Transparency Act.

In this respect, all the important information

about the Group’s results, corporate governance

and communications is available in the

“shareholder and investor information” section

on the website (www.gruposyv.com). Sacyr

Vallehermoso reiterates its undertaking to ensure

that the information about its activities is issued

simultaneously and with the same transparency

to all its shareholders and investors.

Minority shareholders have contacted Sacyr

Vallehermoso by telephone (shareholder care

line 902196360), through the web page and

e-mail ([email protected]).

As a result of all of these actions and the

capital movements that occurred during the year,

the following ownership can be estimated as of

December 2004:

• Around 83% of Sacyr Vallehermoso’s

shareholders are Spanish, while the

remaining 17% are foreign, a percentage

slightly below the average for the whole

group of listed companies in Spain.

• As of December 2004, free float was of 35.3%

while 64.7% was in the hands of shareholders

on the Board of Directors. This implies that

the company’s senior governing body is

highly represented in the ownership structure.

At the end of 2004, the estimated breakdown of

the free float by type of shareholder and

geographical region was as shown below:

In % millions shares In % of total capital

Domestic institutional

Foreign institutional

Retail

Total Free Float

24.40% 8.6%

37.53% 13.2%

38.14% 13.5%

100.00% 35.3%

BREAKDOWN OF FREE FLOAT

Jan.

0

20

40

60

80

100

120

140

160

0

5

10

15

20

25

30

35

Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec.

E-mails + Telephone calls Meetings

SHAREHOLDER CARE 2004

Annual Report 2004

5

• Corporate responsibility

• Quality, prevention and environment

• Organization and systems

• Human resources

Corporate Responsibility

Annual Report 2004

94 S acyr Vallehermoso has an unquestionable

commitment to its shareholders and

clients, but an equally binding

commitment to the more than ten thousand

people who work for the Company and those it

has decided to take on to help in developing

cultural activities and actions of solidarity.

The group considers that its prime

commitment to society is to generate good jobs

and the proof of this is the large number of posts

that have been created in the past few years. In

addition, the principles behind all Sacyr

Vallehermoso’s actions are the conservation of

the environment, conduct which follows the most

stringent rules of transparency in the markets

where it operates, compliance with the

legislation in force and offering quality services

and products.

This Annual Report gives detailed information

about the Group’s activity, Good Governance

and everything related to human resources,

quality, the environment, etc.

As far as corporate social responsibility is

concerned, in 2004 Sacyr Vallehermoso passed a

Corporate Social Responsibility Plan, approved by

its Management Committee. This plan establishes

the objectives and criteria that govern action as

regards the societies and groups it is related to.

The main action being taken by Sacyr

Vallehermoso as regards corporate social

responsibility is in connection with the following

projects:

Fundación Juan XXIII

Sacyr Vallehermoso is financing different

equipment for the new building in Madrid which

will house the occupational centre, a special job

centre and a day centre for mentally-disabled

people which is being managed by the

Foundation.

Corporate responsibility

Corporate Responsib i l i ty

95

This project is called “10,000 square metres

of solidarity” because of the area the

Foundation’s building will have. It will have a

capacity for some 400 people.

The centre has two main functions: the

occupational centre of the Fundación Juan XXIII

and the special Ibermail job centre. The latter is

one of the Foundation’s companies where the

majority of staff is mentally handicapped and

from which Sacyr Vallehermoso hires people for

different posts.

Amongst the activities that will be run in the

occupational centre is a goods handling

workshop, integration in society and the labour

market, psycho-social care, leisure and free time

activities, psychomotor activities, sports,

computer skills, handicrafts and drama.

The Fundación Juan XXIII was created in

1986 but its history dates from 1966 and the

Centro de Discapacitados Juan XXIII (Centre for

the Disabled). Its object is to foment the

integration and the quality of life of the mentally

handicapped. To this end, the Foundation works

on programmes adapted to the levels and

needs of these people, providing occupational

therapy activities, workshops, psychological

assistance, physical rehabilitation and leisure

activities.

Ibermail, which was born in 1990 and

belongs to the Foundation, is a special job

centre with 100 workers (the majority of them

disabled) which provides direct publicity

services, printing, storage and logistics and

promotional elements.

The two organizations work together to

achieve the integration of the mentally disabled.

Constructoras Andaluzas

por Centroamérica

Prinur, Sacyr Vallehermosos’s construction firm

which operates in Andalusia, is doing a magnificent

social job in conjunction with Andalusia’s Regional

Government through the association Constructoras

Fundación Juan XXIII.

Annual Report 2004

96Andaluzas por Centroamérica (Andalusian

Construction Firms for Central America). Through

this association, a whole village was built for the

victims of Hurricane Mitch in El Cuco (El Salvador).

The project consists of 278 homes, street paving,

drainage and water purification, a school and other

buildings and common areas. In February 2005 the

building work was completed with the construction

of a new community centre, a school and a health

centre and the President of Andalusia, Manuel

Chaves, has been to El Salvador to visit El Cuco.

Sacyr Vallehermoso’s work does not stop here but

it will continue to collaborate in educational tasks

and in improving the living conditions of the people

from this area destroyed by Hurricane Mitch in a

long-term commitment, in which everyone in the

Group is involved.

Madrid 2012 - Olympic Candidature

Sacyr Vallehermoso is sponsoring Madrid’s

candidature for the 2012 Olympics in the

Platinum category, the highest existing, as it is

convinced that this event could significantly

boost the economy of both Madrid and Spain as

a whole and would also be an incentive for

youngsters doing soport ≠ in Spain. By offering

its support, Sacyr Vallehermoso would like to

promote Madrid as a venue for a greater number

of top-level sporting events and encourage

children and young people to do sport.

Escuela de Música Reina Sofía

Sacyr Vallehermos sponsors a chamber

music group formed by young Europeans who

are doing their musical training at the Escuela de

Constructoras Andaluzas por Centroamérica.


97Música Reina Sofía (Queen Sofia School of

Music). The Escuela Superior de Música Reina

Sofía forms part of the Fundación Albñeniz and

is currently one of the institutions most highly

recognized in the international arena for its

excellent staff of renowned teachers.

Fundación de Apoyo a la Historia del

Arte Hispánico

Sacyr Vallehermos is sponsoring the most

important study that has been conducted in

Spain on the 17th century Cordoba painter,

Antonio del Castillo. His work is on exhibition at

the most important museums in the world but

there had been no exhaustive study of his

paintings. The books resulting from the study are

published by the Fundación de Apoyo a la

Historia del Arte Hispánico, with which Sacyr

Vallehermoso collaborates directly.

Refurbishment and equipping of a school

in Angola

Somague is thoroughly refurbishing and

equipping primary school 205 in the municipality

of Maianga in Luanda (Angola).

Collaboration in the integration of

immigrants

Between 10 and 20 June 2004, Somague

sponsored the Lisbon-Funchal-Lisbon trip for 90

young people from nearly 70 immigrants’

associations recognized by Portugal’s High

Commission for Immigrants and Ethnic

Minorities, organized by the Presidency of

Portugal’s Council of Ministers.

Donation of machinery for the work on

clearing and rebuilding the areas

affected by the Tsunami in south-east

Asia

Apart from these actions which could be

viewed as the most important in the field of

social and cultural activity, Sacyr Vallehermoso

has collaborated with other foundations,

associations and institutions:

• NGO Entreculturas and the Spanish Red

Cross with the campaign “Pon tu móvil

donde más se necesita” (“Put your cell

phone where it is most needed”);

• Ayuda en Acción and Nuevo Futuro, with which

Sacyr Vallehermoso make Christmas cards;

• Instituto Galego de Cooperación

Iberoamericana, sponsorship of the “Dia de

Chile-Xacobeo 2004” with the presence of

different political and ecclesiastic personalities

from Chile and Santiago de Compostela;

• Adena, a competition at Sacyr

Vallehermoso’s shopping centres aimed at

fomenting children’s love of nature and

respect for the environment;

• Cooperación Internacional;

• Liga Portuguesa contra

el Cáncer;

• Fundaçao do Gil, for

young people with

problems of social

integration;

• UNICEF;

• SOS Solidaridade;

• Natal dos

Hospitais;

• Ponto de Apoio à vida, for older people in

difficulty;

• Forum Portugal Global;

• Instituto Portugués do Sangue;

• Fundaçao Luso-espanhola;

• Lisbon Cultural Centre;

• Instituto das Artes;

• Museo da Presidência da República de

Portugal.

Annual Report 2004

98 QUALITY AND ENVIRONMENT

The Sacyr Vallehermoso group has chosen to

make a commitment to quality and the

environment in all the activities conducted by the

companies in the group, following the general

strategy defined for the Organization.

To this end, one of the main challenges of the

Quality and Environment Department is to

standardize management systems, integrating

criteria and conduct and introducing them where

they do not yet exist, in order to integrate

processes, define responsibilities and establish

the necessary resources, and all of this in a

coherent and coordinated manner throughout

the Organization.

In 2004, in the context of certifications, the

necessary steps were taken to obtain

certification for Sacyr Chile and this is the first

Spanish construction firm in Chile to receive

certification according to the ISO 9001 and ISO

14001 standards, thus clearly distinguishing it

from other companies operating there.

But our action did not stop at that. The

group’s commitment was evident as all the

activities conducted by Sacyr were certified and

the building division and the road conservation

and maintenance division were included in the

environment certification. The same things

occurred with Scrinser, whose certificates were

extended to include road conservation and

maintenance, both in terms of quality and the

environment. All the businesses of the two

companies are now certified.

Other companies in the Group which

obtained certification during the year were:

• According to the ISO 9001 requirements:

PRINUR, VALORIZA

Quality, preventionand environment

Cos

moC

aixa

Mus

eum

. Bar

celo

na.


99• According to the ISO 14001 requirements:

Prinur and Sadyt.

One of the cornerstones of the actions

fomented by Quality and Environment

Department is to contribute to achieving a high

degree of environmental protection day by day.

For this reason, training and informing workers

and heightening their awareness led us to

prepare a “Manual of Good Environmental

Practices”. This manual explains and transmits

ideas clearly and simply, in language that

everyone can understand, and comes as close

as possible to everyday reality. Its contents are

general but its targets are specific and it aims to

increase workers’ awareness of the environment

and encourage a change in their attitude

towards it which should lead to more correct

behaviour, with activities being carried out in a

more respectful manner and enhancing the

quality of life for everyone, thus contributing to

sustainable development.

Moreover, a computer application has been

developed which makes it possible to manage

all environmental matters globally. This software

Plant for obtaining ultra-pure water. Biomass thermal station. Malaga.

Annual Report 2004

100

was fully developed by Sacyr Vallehermoso and

brings a series of improvements such as:

• Integration of the different work centres, by

relating the data generated at each centre

with the others.

• Information for the entire organization in real

time.

• Multi-company and multi-country information.

The Group’s commitment to the environment

will be clear in 2005, as the necessary steps are

already being taken to offer all investors, and

anyone else who might be interested,

information about its environmental conduct, and

to establish a system of environmental

indicators, which will enable the Group to clearly

present the environmental behaviour of the entire

organization, with its commitment to

transparency in information.

Sacyr Vallehermoso is aware of the need to

show quality in the businesses it conducts and

this is one of its main strategic targets, since it

enables it to be competitive and stand apart

from other companies, thus guaranteeing its

success in business. To this end, the Group has

developed its own method for analyzing

customer satisfaction and for objectively

evaluating the expectations placed upon it. This

enables the Group to put in place the necessary

mechanisms for achieving their maximum

satisfaction, with the ultimate object of making

them faithful to Sacyr Vallehermoso.

Palace of Justice. Sintra. Portugal.


101

PREVENTION

Once the merger between Sacyr and

Vallerhermoso –creating a holding of companies

which operate in different business sectors– was

consolidated, the Group opted to choose a

preventive model of organization in accordance

with its size. Sacyr’s former Prevention Service was

reorganized and the Sacyr Vallehermoso’s Joint

Prevention Service was implemented. This serves

the different companies in the Group, mainly in

Construction (with special attention being given to

this sector) and Development (under the tutorage

of the Health and Safety Coordinators). The growth

in the Services sectors, through Valoriza, and in

Concessions, through ENA-Itinere, is a new

challenge for the Prevention Service; by means of

its main tool, the Labour Risk Prevention

Management System, the service is extended to

new contracts, in accordance with the guidelines

issued by the Chairman based on the Prevention

Policy.

As part of the company’s policy on

innovation and improving information, an on-line

Management, Control and Monitoring

programme is being developed. This will

constantly improve the working conditions of

employees and collaborators at Sacyr

Vallehermoso’s work centres.

Aware that training is essential to

management systems in general and to

prevention in particular, work is being centred on

an on-going training scheme for all levels of the

organization.

Annual Report 2004

102ORGANIZATION

As a result of the merger conducted in business

year 2003 and the effective addition to the Group

in 2004 of companies as important as ENA and

Somague, activity has been intense in terms of

analyzing and designing organizational

structures, describing and updating posts, and

monitoring and controlling the coverage of

vacancies and the creation of new posts within

the organization. The issue, control and update

of circulars and operational procedures in line

with the needs to optimize the management and

operation of the different businesses were also

coordinated.

SYSTEMS

The activities in which the Information Systems

department were most involved in 2004 were:

• Making major progress in extending the SAP

Management System to the Sacyr

Vallehermoso Group’s new companies, so

that it has now been introduced at all the

companies in the different business lines:

Real Estate, Property, Concessions and

Services. Productivity improved across the

board, as greater, more detailed information

was provided and this was also of higher

quality and greater reliability which facilitates

decision-making.

• Completing the design of the Computer

Planning and Management System for Work

Projects (PLIDO) and adapting it to the

management needs of the Group companies

involved in the Construction business. As a

result of this, it was introduced at a faster

pace and the majority of construction

projects in progress in Spain were put into

the system. Thanks to this, work project

managers now have a very powerful tool for

Organization and systems


103

their tasks which will help them to plan and

manage their activities and will also mean

that the Central Structure will be able to share

this same updated on-line information.

• Progress has been made in implementing

the Centralized Personnel Management and

Administration System (LOGA) at the majority

of Group companies, including companies

abroad under different labour legislation and

agreements, such as Chile and Portugal.

Moreover, a Human Resources System is

also being implemented; this comprises

modules for training, internal and external

selection, evaluation, preparation of budgets

and management of payments for the entire

Sacyr Vallehermoso Group.

• The rapid evolution of the business, its

diversification (construction, real estate

development, contracting, property

management, services…), and the variety of

markets (Spain, Portugal, Chile…) have

brought new requirements as regards

information systems and the need for

solutions which simplify monitoring key

business indicators and make it possible to

establish common calculation criteria.

Because of this, during the year an

instrument panel system was introduced

which brings together the main corporate

indicators for each of the Group’s divisions,

together with a specific instrument panel for

the contracting business. The next stages will

include extending the experience of the

contractors to the other businesses.

• During the year, work continued on

standardizing, unifying and optimizing

computer infrastructures, such as network

architectures, servers, communications, etc.,

and on systems infrastructure –intranet, web,

e-mail, management and department

applications, etc. All of this was necessary

because of the merger between Sacyr and

Vallehermoso, a situation that was resolved in

2004, as the technological environment was

unified for all the companies in the Group

and appropriate levels of availability and

security were guaranteed, both in their

physical and logical aspects. Moreover,

during the year the Data Processing Centre

was moved to a new building, with more

modern facilities and equipped with

specialized security systems and devices,

such as areas of restricted and controlled

access, systems for detecting and

extinguishing fires, emergency and

evacuation, an electricity supply system with

a backup generator set and uninterrupted

supply, air-conditioning, etc. Security

measures and policies to protect the whole

of the Group’s technological environment

were also put in place.

Annual Report 2004

104 Aware that human capital is one of the

bases of a good part of the Group’s

development expectations and the

successful fulfilment of its goals, the Sacyr

Vallehermoso’s Human Resources Department,

through its Personnel Administration,

Management and Development, Selection and

Training and Labour Relations departments,

helps to integrate and optimize the

organizational structure and to develop dynamic

policies on innovation, training, development and

communication, aimed at motivating the people

in the Group and achieving maximum efficiency.

PERSONNEL MANAGEMENT

DEPARTAMENT

Business year 2004 was a year of changes in

the Department, in terms of structure and

resources.

In order to follow the strategy defined,

technical administrative personnel were

specialized by business areas, to make them

more familiar with the different collective

agreements and to make them work more

closely with them.

In addition, during the year a new personnel

management system was implemented, in line

with both the Group’s current requirements and

future needs.

Amongst the priorities of the Human

Resources Department is the commitment to

seek social improvements for employees and, to

this end, health insurance was taken out for

1,400 families.

MANAGEMENT AND DEVELOPMENT

DEPARTAMENT

In 2004, the Management and Development

Department worked on setting up different

programmes, tools and policies for managing

Human resources


105

Human Resources, in order to be able to

develop, evaluate, recognize, remunerate and

reward the talent of its employees.

Amongst them, the evaluation programmes

were consolidated. Examples of these are

Management by Objectives, a tool which

transmits the strategic objectives of the Group

and each of its Business Divisions to the people

involved in fulfilling them, evaluates their

performance and rewards them for their results;

and Performance Evaluation, a tool for

management and evaluation by competencies,

which makes it possible to detect employees with

potential and identifies the strengths of the staff

evaluated and the area for improvement. Thanks

to the collaboration and implication of senior

management, managers, middle management

and collaborators, the number of managers in

the different evaluation programmes rose from 93

managers in 2003 to 470 managers and middle

managers in 2004. This programme is to be

introduced in Chile and Portugal in 2005.

Apart from laying the foundations for staff

evaluation, a Job Description Project was also

set up as the basis for developing appropriate

policies for the valuation and remuneration of

jobs, management by competencies, definition

of development paths, etc.

Sacyr Vallehermoso believes in the potential

of the workers in the Organization, it has

furthered internal selection to enable the people

in the Group to change jobs and to be

promoted, together with a common

remuneration policy which establishes salaries

that are competitive in the market. This policy

promotes internal equity and fair payment,

recognizing, valuing and rewarding excellence.

In addition, development paths aimed at new

graduates, were introduced. These enable the

Group to guide their professional development

from the time they enter the Organization, with a

view to training future professionals within the

Company.

In 2005 the Management and Development

team committed itself to continuing to develop

new policies for personnel management. These

aim to respond to the needs of a Group like

Sacyr Vallehermoso which is in the process of

expansion and diversification.

Annual Report 2004

106


107SELECTION AND TRAINING DEPARTAMENT

Appropriate staff training and good

qualifications are essential to business capacity

and competence.

Prices are not the only source of competition,

but quality and flexibility are becoming

increasingly important for adapting products to

the exacting new demands.

For this reason, the Training Department has

taken different measures that have brought it

optimum results in quantitative terms and, thus,

have increased the level of competitiveness in

the new markets: A 442.7% increase in hours of

training, with:

• 138 training actions

• 41,320 hours of training

• 671 workers trained.

• Average score: 3.4 (between 1 and 4)

• Triplication of the number of workers trained.

Moreover, amongst the different training

subjects –Administration, Legal Affairs, Auditing,

Quality, Accounting, Studies, Offers, Installations,

Finance, Hostelry, Languages, Computers, Office

Computers, Real Estate, Labour Relations,

Marketing, Environment, Risk Prevention,

Topography, Building Technology, etc.– strong

emphasis was laid on the use of applications from

information technology and communications.

In respect of Selection, last year there was a

291.8% increase in processes, with quality levels

of over 92%, with:

• 5,271 interviews held.

• 251 posts filled.

• 93,2% probation periods passed.

It should be noted that in both the Selection

and Training areas, the Department managed to

service all the Group’s divisions and business

lines, while also reorganizing itself.

However, despite these positive results, a

qualitative analysis of areas for improvement is

being conducted, in order to continue to

optimize its work.

LABOUR RELATIONS DEPARTAMENT

In December 2004, in view of the evolution of

the Group and its present size, the Labour

Relations Department was created.

The object of this Department is simply to

offer the Company legal advice on labour issues,

ensuring that all legal obligations are fulfilled,

and to deal with social requests, thus ensuring

that everyone at Sacyr Vallehermoso is totally

satisfied.

Another of this Department’s tasks is to

manage expatriates and to help all the

collaborators who go to work abroad

–something more and more frequent because of

the Group’s new international successes- to feel

at home.

Annual Report 2004Business

performance

6

• Income statement

• Balance sheet

Business performance

Annual Report 2004

110 In 2004 sales, operating income and ordinary

income grew sharply and this explains the

12.6% increase in attributable net income to


REVENUES

Revenue performance by business is

described below.

Net revenues rose by a sharp 11.1% to Euros

3,703.3 million. This was due to the growth in all

the business divisions.

• In the contracting division, sales rose by

103.2% to reach Euros 322.9 million, partly

due to the fact that in 2004 ENA’s contribution

was for a full year, whereas only three months

were reported on the 2003 income statement,

as the infrastructure group was purchased in

October that year. The other reason for the

increase was the good performance of traffic

and the higher motorway tariffs.

• The construction business conducted by

Sacyr-Somague reported revenues of Euros

2,138.2 million, 10.3% more than in the

preceding year. Construction sales

accounted for 57.7% of the Group total.

Sacyr posted Euros 1,304.3 million in

revenues, with a notable increase of 17.6% with

respect to the previous year. Despite the

temporary situation of slack activity in the

Portuguese market, Somague reported Euros

874.8 million in revenues, of which Euros 833.9

million corresponded to construction.

• Real estate development, for its part,

obtained Euros 1,069.3 million in revenues,

accounting for 28.8% of consolidated

revenues and its net revenues grew by a

sharp 10.3% with respect to the same period

Income Statement

Business per formance

111

the previous year. Contracted sales, which

reflect the performance of the commercial

activity during the period, rose by 17.9% to

reach Euros 1,111.9 million, with a total of

4,368 homes sold as of 31 December 2004.

• The services business registered a notable

86.3% increase, with revenues reaching

Euros 90.1 million, as a result of the start-up

of different alternative energy projects and

the start of new contracts for highway service

areas in recent months.

• In property, Testa’s revenues grew by 5.7% to

reach Euros 191.9 million. This performance

comes from a combination of the growth in

the degree of occupancy and the 4%

increase in the average prices of the rent

portfolio, which completely offset the slight

0.3% reduction in the area leased.

Of total revenues, 71% are generated in

Spain. Also worth highlighting because of their

importance are Portugal, thanks to Somague’s

construction business, and Chile which reflects

December

2004 2003 Variation 04/03

Net revenues

Other revenues

Total operating revenues

Operating and external expenses

Gross operating income

Allocation to fixed asset depreciation and amortization

Allocation to reversion fund

Provisions for working capital

Net operating income

Financial results

Results from equity-accounted companies

Provisions for financial investments

Allocation to goodwill amortization

Ordinary income

Ordinary income

TOTAL INCOME (A.D.I.)

Corporate tax

TOTAL INCOME

Attributable to minorities

ATTRIBUTABLE NET INCOME

3,703,323 3,333,748 11.1%

459,000 444,271 3.3%

4,162,323 3,778,019 10.2%

–3,415,014 –3,201,137 6.7%

747,309 576,882 29.5%

–117,394 –92,446 27.0%

–39,664 –16,961 133.9%

–10,614 –16,297 –34.9%

579,637 451,177 28.5%

–189,399 –106,217 78.3%

9,925 –2,665 –472.4%

–1,132 –2,896 –60.9%

–11,715 7,752 –251.1%

387,316 347,151 11.6%

120,422 121,551 –0.9%

507,738 468,702 8.3%

–99,448 –111,245 –10.6%

408,290 357,457 14.2%

–31,958 –23,108 38.3%

376,332 334,349 12.6%

CONSOLIDATED INCOME STATEMENT (Euros ‘000)

Annual Report 2004

112the revenues from the highways in operation in

the country and the work done on these.

Revenue performance by business was as

shown below:

December

2004 2003 Variation 04/03

Sacyr/Somague

Vallehermoso

Itinere

Testa

Valoriza

Adjustments and others

TOTAL

2,179,106 1,985,522 9.7%

1,069,278 969,463 10.3%

322,916 158,943 103.2%

191,983 181,604 5.7%

90,083 48,343 86.3%

–150,043 –10,127 1,381.7%

3,703,323 3,333,748 11.1%

REVENUES (Thousands of Euros)

The contribution of the infrastructure contracting,

property rental and services businesses accounts

for 53.1% of the total, at Euros 397.1 million, with an

increase of 54.1% during the year. Infrastructure

contracts made a notable contribution after the

acquisition of ENA, since Itinere already accounted

for 33.2% of gross operating income as of 31

GROSS OPERATING INCOME(EBITDA)

The Group’s gross operating income was up

29.5% with respect to the previous year and

amounted to Euros 747.3 million. All the

business divisions registered positive growth.

December

2004 2003 Variation 04/03

Spain

Chile

Portugal

Other countries

TOTAL

2,645,572 2,350,993 12.5%

170,143 106,237 60.2%

792,090 815,162 –2.8%

95,518 61,356 55.7%

3,703,323 3,333,748 11.1%

REVENUES (Thousands of Euros)


113December 2004, at Euros 247.9 million –up by

113.7% on the 2003 figure.

The growth businesses (construction and

housing development) and the holding

contributed 46.9%, or Euros 350.2 million, to

consolidated operating income. These activities

grew by 9.7% with respect to 2003 due to the

organic growth achieved and the reduction in

operating expenses.

PROVISIONS, DEPRECIATIONAND AMORTIZACION

The increase in the allocation to depreciation

and amortization and the reversion fund, to

Euros 167.7 million, is largely due to the

infrastructure business, both because of the

acquisition of ENA and the opening of new

stretches of motorways.

FINANCIAL RESULTS

The 78.3% increase in net financial expenses in

2004, to Euros 189.4 million, can be explained

by the following factors:

• An increase in the average volume of debt,

as a result of the investments made during

the period, especially in concessions

because of the acquisition of another 20% in

ENA in December 2004, the purchase of land

for new developments and the acquisition of

different property assets, amongst which is a

plot for Euros 140 million for Testa to develop

an emblematic building for tertiary use in the

centre of Madrid.

• The positive effect of Euros 41.2 million,

produced on the sale of 100% of a property

company which owned a set of old rent

properties and which was sold last March.

The application of deferred financial

expenses related to infrastructure contracts

brought revenues of Euros 49.3 million.

ORDINARY INCOME

Results from equity accounting rose sharply

to reach Euros 9.9 million, as against the Euros

2.7 million in losses reported the previous year.

The reason for this is the increasing contribution

from services in the Somague group.

Moreover, the allocation to goodwill

increased in 2004 and stood at Euros 11.7

million. This corresponded to the Somague

group’s holdings.

Thus, ordinary income increased by 11.6% to

reach Euros 387.3 million.

EXTRAORDINARY RESULTS

At Euros 120.4 million, the extraordinary

result was down 0.9% on the preceding year’s

figure and the bulk of it stemmed from the sale

of an office building and a plot of land in Madrid,

both from the Testa group and both forming part

of the asset turnover process typical of the

business.

NET INCOME

Total income before tax amounted to Euros

507.7 million, up 8.3% on the same period in

2003.

In 2004 the lower tax rate than in the

preceding year, together with the increase in

minorities’ share in infrastructure contracting gave

attributable net income of Euros 376.3 million,

12.6% more than in 2003.

Annual Report 2004

114

The Euros 2,371.7 million increase on the

balance sheet, 20.9% growth, is largely due to:

• The investments in infrastructure contracting,

with the acquisition of a further 20% in the

ENA group and in motorways in progress,

which involved Euros 1,063 million in new

assets/liabilities.

Balance sheet

December

2004 2003 Variation 04/03

ASSETS

Fixed assets

Net intangible fixed assets

Net tangible fixed assets

Financial investments and other

Goodwill in consolidation

Deferred charges

Current assets

Inventories

Accounts receivable

Cash and short-term financial investments

Other current assets

TOTAL ASSETS/LIABILITIES

SHAREHOLDERS’ EQUITY AND LIABILITIES


Minority interests

Losses in consolidation

Deferred revenues

Provisions for contingencies and expenses

Long-term accounts payable

Short-term accounts payable

CONSOLIDATED BALANCE SHEET(Thousands of Euros)


115

• Vallehermoso’s investments in land and products

in progress, with an increase of Euros 389.1

million in inventories and of Euros 135.6 million in

accounts receivable, due to foreseen business

growth and housing delivery in the future.

• The Euros 309.5 million increase in property

assets, notable amongst which is the

purchase of a plot for tertiary use for Euros

140 million.

December

2004 2003 Variation 04/03

8,364,410 6,719,119 1,645,291

514,258 449,628 64,630

6,823,553 5,958,560 864,993

1,026,599 310,931 715,668

103,028 79,917 23,111

609,648 589,873 19,775

4,640,024 3,956,470 683,554

2,288,824 1,844,644 444,180

2,136,313 1,844,106 292,207

214,887 260,971 –46,084

0 6,749 –6,749

13,717,110 11,345,379 2,371,731

1,980,497 1,312,055 668,442

546,686 736,239 –189,553

11,799 613 11,186

419,830 140,354 279,476

607,497 572,231 35,266

6,755,716 4,991,187 1,764,529

3,395,085 3,592,700 –197,615

Annual Report 2004

116FIXED ASSETS

The balance as of 31 December 2004 is broken

down as follows:

Intangible assets include, amongst other

items, Euros 330 million corresponding to the

lease of 12 properties to the Endesa group, and

other assets for lease under a long-term

contract, for an additional amount of Euros 120.5

million.

The most significant tangible fixed assets

are the land and properties for lease, at Euros

1,705.0 million, and the motorways and other

toll roads in operation, at Euros 4,696.0 million.

During the period, the existing investments in

progress, in both properties for rental and

motorway concessions, continued and these

amounted to Euros 280.6 million and Euros

87.1 million respectively. Notable amongst these

are the addition of a plot of land for the

construction of a tower for tertiary use in Madrid

for Euros 140 million last June and an office

building for Euros 99.8 million. The remainder

corresponds to machinery, technical

installations and other fixed assets. Total

accumulated depreciation amounted to Euros

465.4 million.

Financial investments include, amongst other

items, equity-accounted holdings amounting to

Euros 217.9 million, amongst which are

Somague’s investment in services and contracts

for Euros 82.8 million, Itinere’s stake in Alazor

(Madrid radial roads 3 and 5) at Euros 41.8 million

and the addition of the Palma-Manacor contractor

December

2004 2003 Variation 04/03

Start-up expenses

Net intangible fixed assets

Net tangible fixed assets

Financial investments and long-term accounts receivable

Controlling company treasury stock

TOTAL

16,676 14,627 2,050

514,258 449,628 64,630

6,823,553 5,958,560 864,993

1,003,040 294,599 708,441

6,883 1,705 5,178

8,364,410 6,719,119 1,645,291

FIXED ASSETS (Thousands of Euros)

Puente Reina Santa Isabel. Portugal.


117with Euros 7 million. Moreover, this chapter also

includes Euros 405 million largely corresponding

to capital grants for the operation of different

concessions of Itinere’s which have these

guarantees and other holdings in the securities

portfolio amounting to Euros 255.7 million.

CURRENT ASSETS

The performance of current assets was as

shown below:

Overall, current assets increased by Euros

683.6 million, up 17.3% on the same period in

2003. This is largely due to:

• An increase in inventories, largely as a result

of the growth of stocks corresponding to the

housing development business amounting to

Euros 389.1 million, due to land purchases

and work in progress on new developments.

• The Euros 135.6 million increase in accounts

receivable in development, as a result of the

10.3% increase in reported sales.

SHAREHOLDERS’ EQUITY

During the period shareholders’ equity

increased by Euros 668.4 million. Of this

increase, Euros 159.2 million comes from the

rights issue conducted in July to acquire

Somague, which boosted share capital by

Euros 13.8 million and implied an issue

premium of Euros 145.4 million. It also reflects

the increase in reserves at Group companies

stemming from the capital increase at Itinere in

order to buy 20% of ENA. The rest of the

increase comes from accumulated attributable

income of Euros 376.3 million and the dividends

paid in the same period for a total amount of


December

2004 2003 Variation 04/03

Inventories

Accounts receivable

Cash and short-term financial investments

Other current assets

TOTAL

2,288,824 1,844,644 444,180

2,136,313 1,844,106 292,207

214,887 260,971 –46,084

0 6,749 –6,749

4,640,026 3,956,470 683,554

CURRENT ASSETS (Thousands of Euros)

Annual Report 2004

118

In September, a bonus rights issue of

6,491,544 shares, each with a par value of Euro

1, was conducted and charged to reserves.

Thus, as of 31 December 2004, share capital

was represented by 266.15 shares, each with a

par value of Euro 1.

FINANCIAL DEBT

The greater part of the Group’s financial

debt is to be found on the balance sheet of

each of the five main business subsidiaries.

Thus, the structure, type of financing, maturities

and financial instruments most appropriate to

each of them can be identified, according to the

nature of the different businesses, which is the

case of Testa’s property business, Itinere’s

infrastructure contracts and Vallehermoso’s

housing development projects.

By type of instrument, bank debt

predominated, with 77.7%, and by maturity,

long-term debt accounted for 81.0% of the total.

At the end of 2004, the amount of debt at a

guaranteed rate accounted for 46.7% of the total

and was concentrated in the most recurrent

businesses where the assets remain longest on

the balance sheet (contracting and property for

rental).

As of 31 December 2004, the Group’s net

debt was broken down as follows:

Iberese. Puente Genil.


119

The amount of the gross debt in capital-

intensive activities (contracting, property and

housing development) amounted to Euros

6,426.1 million, 83.3% of the total.

Amongst these activities, it is important to

highlight the weight of the debt related to the

funding of transport concession projects, which

amounted to Euros 3,087.8 million last

December, accounting for 40% of the Group total

and 64.6% of the book value of the investment in

motorways, which amounted to Euros 4,783.1

million at the end of the period. This financing is

linked to specific public service contracting

activities, toll motorways; it gives great stability

and visibility to revenues and to the cash flow

generated by their operation. It is worth

highlighting the successful refinancing carried out

at two major motorway contractors, Audasa and

Aucalsa, for Euros 364 million last June and

which was closed at a fixed rate of only 4%, for a

period of 10 years.

In the property division, the debt is in the

form of mortgages and leasing contracts and

amounts to Euros 1,454.9 million to finance

assets in operation. Thus, in accordance with the

last appraisal conducted by an independent

expert, as of December 2004, its real estate

assets had a market value of Euros 3,100

million. Thus, the debt only represented 46.9% of

the said value.

Lastly, in the development business, the Euros

1,884.2 million in debt finances the inventories on

Vallehermoso’s balance sheet with a book value

of Euros 2,084.5 million. As of the same date, the

market value of these stocks amounted to Euros

3,339.7 million, 177.2% more than the debt

financing them. Moreover, contracted sales

pending delivery to clients amounted to Euros

772.8 million, while the number of homes sold

increased by 14.0% to 4,368 units.

Structured debt in other businesses,

amongst them works financing by the German

method at Sacyr, with Euros 94.7 million, and the

funding of environmental projects at Valoriza,

with a further Euros 18.2 million, amounted to a

total of Euros 139.3 million. Moreover, Sacyr did

not effect any factoring operations and paid its

suppliers a total of Euros 81 million in advance.

Finally, the Group’s corporate net debt,

13.6% of the total existing as of 31 December

2004, amounted to Euros 1,018.7 million, as

against shareholders’ equity of Euros 1,980.5

million as of the same date.

SyV Group Capital-intensiveCorporate Assoc. Projects businesses Total

Long-term

Short-term

TOTAL

Cash and ST fin. inv.

TOTAL NET DEBT

636,025 35,681 5,578,576 6,250,283

510,687 103,585 847,487 1,461,758

1,146,712 139,266 6,426,062 7,712,041

–127,993 0 –86,894 –214,887

1,018,719 139,266 6,339,168 7,497,154

FINANCIAL DEBT (Thousands of Euros)

Annual Report 2004

120

Sacyr Itinere Vallehermoso Testa Valoriza Somague Holding Adjustments TOTAL

Net revenues

Other revenues








Financial results




Ordinary income

Net extraordinary income


Corporate tax

TOTAL INCOME



1,304,311 322,916 1,069,278 191,983 90,083 874,795 355 –150,398 3,703,323

47,003 24,988 348,119 264 1,702 14,053 28,534 –5,663 459,000

1,351,314 347,904 1,417,397 192,247 91,786 888,847 28,889 –156,061 4,162,323

–1,241,882 –100,012 –1,205,981 –46,054 –88,773 –849,845 –38,568 156,100 –3,415,014

109,432 247,893 211,415 146,193 3,013 39,003 –9,678 38 747,309

–15,447 –42,449 –367 –31,033 –3,133 –17,113 –6,094 –1,760 –117,394

0 –39,664 0 0 0 0 0 0 –39,664

–12,153 –78 1,447 –564 8 –3,115 3,841 0 –10,614

81,832 165,701 212,496 114,596 –112 18,775 –11,931 –1,722 579,637

14,528 –107,492 –33,106 –11,826 –1,153 –17,446 126,548 –159,452 –189,399

20 –1,760 147 775 0 10,744 0 0 9,925

0 0 0 0 0 –98 –1,033 0 –1,132

–148 0 0 0 –294 –5,367 0 –5,905 –11,715

96,232 56,449 179,537 103,545 –1,560 6,608 113,584 –167,079 387,316

–1,534 4,066 123 97,343 –608 6,789 2,555 11,688 120,422

94,698 60,515 179,660 200,888 –2,168 13,397 116,139 –155,391 507,738

–31,684 –20,008 –63,013 –45,790 2,669 –3,849 62,201 26 –99,448

63,014 40,507 116,647 155,099 500 9,548 178,340 –155,365 408,290

79 –27,510 125 0 –516 –816 0 –3,321 –31,958

63,094 12,997 116,772 155,099 –16 8,732 178,340 –158,686 376,332

CONSOLIDATED INCOME STATEMENT AS OF 31 DECEMBER 2004 (Thousands of Euros)


121

Testa Valoriza Somague Holding Adjustments TOTAL

191,983 90,083 874,795 355 –150,398 3,703,323

264 1,702 14,053 28,534 –5,663 459,000

192,247 91,786 888,847 28,889 –156,061 4,162,323

–46,054 –88,773 –849,845 –38,568 156,100 –3,415,014

146,193 3,013 39,003 –9,678 38 747,309

–31,033 –3,133 –17,113 –6,094 –1,760 –117,394

0 0 0 0 0 –39,664

–564 8 –3,115 3,841 0 –10,614

114,596 –112 18,775 –11,931 –1,722 579,637

–11,826 –1,153 –17,446 126,548 –159,452 –189,399

775 0 10,744 0 0 9,925

0 0 –98 –1,033 0 –1,132

0 –294 –5,367 0 –5,905 –11,715

103,545 –1,560 6,608 113,584 –167,079 387,316

97,343 –608 6,789 2,555 11,688 120,422

200,888 –2,168 13,397 116,139 –155,391 507,738

–45,790 2,669 –3,849 62,201 26 –99,448

155,099 500 9,548 178,340 –155,365 408,290

0 –516 –816 0 –3,321 –31,958

155,099 –16 8,732 178,340 –158,686 376,332

Annual Report 2004

122


Net revenues

Other revenues








Financial results




Ordinary income

Net extraordinary income


Corporate tax

TOTAL INCOME



1,109,004 158,943 969,463 181,604 48,343 876,518 25,566 –35,693 3,333,748

31,105 48,233 354,361 5,563 534 15,453 85 –11,063 444,271

1,140,110 207,175 1,323,824 187,167 48,877 891,971 25,651 –46,756 3,778,019

–1,046,390 –91,196 –1,121,909 –47,039 –47,373 –845,771 –48,214 46,755 –3,201,137

93,719 115,979 201,915 140,128 1,504 46,200 –22,563 0 576,882

–11,988 –24,735 –328 –28,442 –1,494 –18,627 –5,282 –1,549 –92,446

0 –16,961 0 0 0 0 0 0 –16,961

–4,787 –78 –5,045 –247 91 –795 –5,436 0 –16,297

76,943 74,204 196,543 111,439 101 26,779 –33,281 –1,550 451,177

10,212 –4,382 –24,915 –46,385 –377 –7,552 125,775 –158,594 –106,217

27 385 292 –3,364 –432 427 0 0 –2,665

61 0 0 –991 –701 –1,336 71 0 –2,896

13,102 –258 –13 0 –790 –3,233 0 –1,057 7,752

100,345 69,950 171,907 60,699 –2,198 15,084 92,565 –161,201 347,151

4,652 2,852 –41 118,962 –259 3,475 –1,312 –6,778 121,551

104,997 72,802 171,866 179,662 –2,458 18,559 91,253 –167,979 468,702

–32,963 –15,804 –60,462 –17,936 933 –8,629 23,584 32 –111,245

72,034 56,998 111,404 161,726 –1,524 9,930 114,836 –167,947 357,457

–427 –14,610 141 0 162 –1,058 0 –7,315 –23,108

71,607 42,388 111,545 161,726 –1,363 8,871 114,836 –175,262 334,349

CONSOLIDATED INCOME STATEMENT AS OF 31 DECEMBER 2003 (Thousands of Euros)


123


181,604 48,343 876,518 25,566 –35,693 3,333,748

5,563 534 15,453 85 –11,063 444,271

187,167 48,877 891,971 25,651 –46,756 3,778,019

–47,039 –47,373 –845,771 –48,214 46,755 –3,201,137

140,128 1,504 46,200 –22,563 0 576,882

–28,442 –1,494 –18,627 –5,282 –1,549 –92,446

0 0 0 0 0 –16,961

–247 91 –795 –5,436 0 –16,297

111,439 101 26,779 –33,281 –1,550 451,177

–46,385 –377 –7,552 125,775 –158,594 –106,217

–3,364 –432 427 0 0 –2,665

–991 –701 –1,336 71 0 –2,896

0 –790 –3,233 0 –1,057 7,752

60,699 –2,198 15,084 92,565 –161,201 347,151

118,962 –259 3,475 –1,312 –6,778 121,551

179,662 –2,458 18,559 91,253 –167,979 468,702

–17,936 933 –8,629 23,584 32 –111,245

161,726 –1,524 9,930 114,836 –167,947 357,457

0 162 –1,058 0 –7,315 –23,108

161,726 –1,363 8,871 114,836 –175,262 334,349

Annual Report 2004

124


FIXED ASSETS

Tangible fixed assets

Intangible fixed assets


Goodwill

Deferred charges

CURRENT ASSETS

Inventories

Accounts receivable

Other

ASSETS = LIABIILITIES

SHAREHOLDERS’ EQUITY AND LONG-TERM LIABILITIES


Minority interests


Deferred revenues


Other cost-free long-term debt

Long-term financial debt

CURRENT LIABILITIES

Trade accounts payable

Operating provisions

Other cost-free short-term debt

Short-term financial debt

416,704 5,695,738 420,907 2,543,167 87,756 315,281 1,900,260 –2,302,725 9,077,086

26,750 4,662,890 3,591 1,844,118 64,136 105,829 3,368 112,871 6,823,553

59,946 775 672 439,379 8,545 1,666 3,277 0 514,258

327,584 514,979 412,068 181,343 9,035 157,520 1,891,611 –2,467,541 1,026,599

259 0 0 0 558 50,267 0 51,944 103,028

2,165 517,095 4,576 78,327 5,482 0 2,004 0 609,648

914,840 170,607 2,994,747 45,801 47,654 608,634 59,038 –201,299 4,640,024

120,226 2,888 2,084,547 56 4,545 77,087 1,073 –1,598 2,288,824

715,123 97,533 906,511 32,727 35,874 489,631 55,306 –196,392 2,136,313

79,491 70,186 3,689 13,019 7,235 41,916 2,660 –3,309 214,887

1,331,544 5,866,345 3,415,654 2,588,968 135,410 923,915 1,959,298 –2,504,023 13,717,110

486,718 5,511,564 2,024,874 2,483,621 79,708 417,636 1,619,500 –2,301,595 10,322,025

376,451 637,134 382,653 1,061,500 26,246 169,193 884,551 –1,557,229 1,980,497

1,327 411,683 3,170 0 3,479 8,922 0 118,106 546,686

0 1,115 6 325 0 10,350 0 3 11,799

74 410,523 6 6,308 2,918 0 2 0 419,830

139 579,110 14,602 3,716 121 5,899 3,909 0 607,497

6,917 608,462 294,680 26,491 2,960 18,630 409,770 –862,474 505,432

101,810 2,863,539 1,329,758 1,385,280 43,984 204,643 321,269 0 6,250,284

844,826 354,781 1,390,781 105,347 55,703 506,279 339,798 –2,133,753 3,395,085

578,653 15,097 615,862 17,463 41,694 238,087 3,228 –33 1,510,117

30,537 0 104,454 1,054 449 22,357 10,447 0 169,297

116,998 115,372 116,005 18,116 5,983 76,852 7,050 –202,461 253,915

118,638 224,312 554,461 68,715 7,575 168,984 319,073 0 1,461,756

CONSOLIDATED BALANCE SHEET AS OF 31 DECEMBER 2004 (Thousands of Euros)


125


2,543,167 87,756 315,281 1,900,260 –2,302,725 9,077,086

1,844,118 64,136 105,829 3,368 112,871 6,823,553

439,379 8,545 1,666 3,277 0 514,258

181,343 9,035 157,520 1,891,611 –2,467,541 1,026,599

0 558 50,267 0 51,944 103,028

78,327 5,482 0 2,004 0 609,648

45,801 47,654 608,634 59,038 –201,299 4,640,024

56 4,545 77,087 1,073 –1,598 2,288,824

32,727 35,874 489,631 55,306 –196,392 2,136,313

13,019 7,235 41,916 2,660 –3,309 214,887

2,588,968 135,410 923,915 1,959,298 –2,504,023 13,717,110

2,483,621 79,708 417,636 1,619,500 –2,301,595 10,322,025

1,061,500 26,246 169,193 884,551 –1,557,229 1,980,497

0 3,479 8,922 0 118,106 546,686

325 0 10,350 0 3 11,799

6,308 2,918 0 2 0 419,830

3,716 121 5,899 3,909 0 607,497

26,491 2,960 18,630 409,770 –862,474 505,432

1,385,280 43,984 204,643 321,269 0 6,250,284

105,347 55,703 506,279 339,798 –2,133,753 3,395,085

17,463 41,694 238,087 3,228 –33 1,510,117

1,054 449 22,357 10,447 0 169,297

18,116 5,983 76,852 7,050 –202,461 253,915

68,715 7,575 168,984 319,073 0 1,461,756

Annual Report 2004

126


FIXED ASSETS

Tangible fixed assets

Intangible fixed assets


Goodwill

Deferred charges

CURRENT ASSETS

Inventories

Accounts receivable

Other

ASSETS = LIABIILITIES

SHAREHOLDERS’ EQUITY AND LONG-TERM LIABILITIES


Minority interests


Deferred revenues


Other cost-free long-term debt

Long-term financial debt

CURRENT LIABILITIES

Trade accounts payable

Operating provisions

Other cost-free short-term debt

Short-term financial debt

130,053 4,618,640 239,209 2,215,718 58,586 298,352 1,454,713 –1,626,360 7,388,910

38,533 4,107,232 2,900 1,573,990 36,835 99,346 3,992 95,732 5,958,560

34,476 820 2,165 399,912 6,559 498 5,200 0 449,628

28,461 268,324 225,869 158,176 14,454 123,763 1,439,701 –1,947,818 310,931

520 742 0 0 738 74,744 0 3,172 79,917

28,063 241,522 8,275 83,640 0 0 5,820 222,554 589,873

976,990 184,476 2,471,768 51,753 41,931 517,498 181,676 –469,622 3,956,469

73,151 2,039 1,695,492 862 3,599 51,402 843 17,257 1,844,645

536,267 66,894 770,880 37,382 29,432 431,406 67,497 –95,652 1,844,107

367,571 115,543 5,396 13,509 8,899 34,690 113,337 –391,228 267,718

1,107,043 4,803,115 2,710,977 2,267,470 100,516 815,850 1,636,390 –2,095,982 11,345,379

486,581 4,083,258 1,023,224 2,179,501 69,636 403,730 1,111,270 –1,604,522 7,752,676

334,423 245,760 391,869 921,139 25,703 159,434 661,942 –1,428,217 1,312,055

1,173 599,486 3,295 0 3,009 10,641 0 118,635 736,239

0 0 6 604 0 0 0 3 613

4,331 80,158 94 9,895 2,280 43,597 0 0 140,354

293 536,657 14,698 4,392 619 6,686 8,885 0 572,231

19,108 195,947 130,970 25,248 3,928 43,656 188,469 –294,942 312,383

127,252 2,425,250 482,292 1,218,222 34,097 139,716 251,974 0 4,678,804

620,462 719,858 1,687,753 87,969 30,880 412,120 525,120 –491,460 3,592,700

499,690 34,995 651,610 19,372 19,536 265,411 3,197 602 1,494,413

20,771 0 72,891 2,328 335 0 10,066 0 106,391

88,861 371,109 49,595 7,401 3,368 63,090 211,476 –492,062 302,838

11,141 313,754 913,658 58,869 7,641 83,618 300,380 0 1,689,061

CONSOLIDATED BALANCE SHEET AS OF 31 DECEMBER 2003 (Thousands of Euros)


127


2,215,718 58,586 298,352 1,454,713 –1,626,360 7,388,910

1,573,990 36,835 99,346 3,992 95,732 5,958,560

399,912 6,559 498 5,200 0 449,628

158,176 14,454 123,763 1,439,701 –1,947,818 310,931

0 738 74,744 0 3,172 79,917

83,640 0 0 5,820 222,554 589,873

51,753 41,931 517,498 181,676 –469,622 3,956,469

862 3,599 51,402 843 17,257 1,844,645

37,382 29,432 431,406 67,497 –95,652 1,844,107

13,509 8,899 34,690 113,337 –391,228 267,718

2,267,470 100,516 815,850 1,636,390 –2,095,982 11,345,379

2,179,501 69,636 403,730 1,111,270 –1,604,522 7,752,676

921,139 25,703 159,434 661,942 –1,428,217 1,312,055

0 3,009 10,641 0 118,635 736,239

604 0 0 0 3 613

9,895 2,280 43,597 0 0 140,354

4,392 619 6,686 8,885 0 572,231

25,248 3,928 43,656 188,469 –294,942 312,383

1,218,222 34,097 139,716 251,974 0 4,678,804

87,969 30,880 412,120 525,120 –491,460 3,592,700

19,372 19,536 265,411 3,197 602 1,494,413

2,328 335 0 10,066 0 106,391

7,401 3,368 63,090 211,476 –492,062 302,838

58,869 7,641 83,618 300,380 0 1,689,061

Annual Report 2004

7

Grupo Sacyr Vallehermoso(Sacyr Vallehermoso, S.A. and dependent companies)

31 December 2004

• Auditor's report

• Balance sheet

• Statement of income

• Notes to the financial statements

• Consolidated management report

Consolidated annualfinancial statements

Translation of a report originally issued in Spanish based on our work performed in accordance with generally

accepted auditing standards in Spain. In the even of a discrepancy, the Spanish-language version prevails.

AUDITOR’S REPORT ON CONSOLIDATED FINANCIAL STATEMENTS

To the Shareholders of SACYR VALLEHERMOSO, S.A.

1. We have audited the consolidated annual financial statements of Sacyr VallehermosoS.A. and Dependent Companies, comprising the consolidated balance sheet as of 31 December2004, the consolidated statement of income and the notes to the consolidated financialstatements for the year ended on that date. The preparation of these financial statements is theresponsibility of the controlling Company’s Directors. Our responsibility is to express anopinion on the consolidated financial statements taken as a whole, based on our audit workperformed in accordance with generally accepted auditing standards, which require theexamination, by means of selective tests, of the documentation supporting the consolidatedfinancial statements and the evaluation of their presentation, the accounting principles appliedand the estimates made. Our work did not include the audit of the financial statements ofcertain dependent companies whose assets and results represented as of 31 December 2004,Euros 4,840 and 18 million respectively of the consolidated aggregate figures. The financialstatements of these companies were examined by other auditors and our opinion as expressedin this report on the consolidated financial statements of Sacyr Vallehermoso, S.A. andDependent Companies is based, with respect to holding in these companies, solely on thereports of the other auditors. These companies and their respective auditors are listed in Note2 to the notes to the consolidated financial statements.

2. As required by Spanish corporate law, for comparison purposes, in addition to the 2004figures for each item on the balance sheet and statements of income and of changes in financialposition, the Directors of the controlling Company present the figures for 2003. Our opinionrefers only to the 2004 consolidated financial statements. Our auditor’s report dated 15 March2004, on the 2003 consolidated financial statements, contained an unqualified opinion.

3. In our opinion, based on our audit and on the reports of the other auditors (see Note 2),the accompanying consolidated financial statements for business year 2004 present, in allmaterial respects, a true and fair view of the net worth and financial position of SacyrVallhermoso S.A. and Dependent Companies as of 31 December 2004, and of the results of itsoperations and of the funds obtained and applied by it in the year then ended, and contain therequired information, sufficient for their proper interpretation and comprehension, inconformity with generally accepted accounting principles and standards, which wereconsistent with those applied the preceding year.

4. The accompanying consolidated management report for 2004 contains theexplanations which the controlling Company Directors consider appropriate about thesituation of Sacyr Vallehermoso, S.A and Dependent Companies, the evolution of its businessand other matters, but is not an integral part of the consolidated annual financial statements.We have checked that the accounting information in the consolidated management report isconsistent with that contained in the consolidated financial statements for 2004. Our work asauditors is confined to checking the consolidated management report with the aforementionedscope, and does not include a review of any information other than that drawn from theaccounting records of the consolidated companies.

ERNST & YOUNG, S.L.(Registered in the Registro Oficial de Auditores de Cuentas, under No. S0530)

29 March 2006

Annual Report 2004

132 CONSOLIDATED BALANCE SHEETS AS OF 31 DECEMBER 2003 AND 2004

Thousands of Euros

ASSETS Business Year 2004 Business Year 2003A) SHAREHOLDERS' DEBT 0 0B) FIXED ASSETS 8,364,410 6,719,119

I. Start-up expenses 16,676 14,627II. Intangible fixed assets (Note 5) 514,258 449,628

1. Research and development expenses 2,994 1,8542. Concession, patents, brands and similar 154,933 83,3333. Goodwill 0 04. Transfer fees 2,794 4175. Computer software 15,453 12,6926. Leasing 376,010 375,6537. Advances 0 08. Provisions 0 09. Depreciation and amortization –37,926 –24,321

III. Tangible fixed assets (Note 6) 6,823,553 5,958,5601. Land and buildings 166,413 125,6232. Buildings for lease 1,705,004 1,653,3203. Technical installations and machinery 185,886 186,3524. Other installations, tools and furniture 56,684 31,9585. Investment in motorways and other toll roads 4,695,959 4,155,0906. Investment in motorways and other toll roads under construction 87,142 46,4747. Advances and tangible fixed assets in progress 340,895 105,5828. Other fixed assets 55,287 65,0119. Provisions –4,287 –13,78310. Depreciation and amortization –465,430 –397,067

IV. Financial investments (Note 7) 973,469 294,5991. Equity-accounted holdings 217,877 134,7912. Loans to equity-accounted companies 67,851 8,0553. Long-term securities portfolio 255,748 84,2004. Other loans 418,082 73,5135. Long-term deposits and guarantees 20,562 17,2476. Provisions –6,651 –23,207

V. Controlling company treasury stock (Note 8) 6,883 1,705VI. Long-term accounts receivable 29,571 0

C) GOODWILL IN CONSOLIDATION (Note 9) 103,028 79,9171. From globally or proportionally consolidated companies 81,966 79,1752. From equity-accounted companies 21,062 742

D) DEFERRED EXPENSES 609,648 589,873E) CURRENT ASSETS 4,640,024 3,956,470

I. Shareholders' debt 0 0II. Inventories (Note10) 2,288,824 1,844,644

1. Properties 157,884 114,0912. Developments in progress 332,316 371,8103. Land 1,493,880 1,174,7754. Adaptation of land 34,279 31,4895. Commercial 11,895 5,5146. Building materials and other supplies 36,566 30,0157. Work in progress and semi-completed, auxiliary work and initial expenses 124,837 60,8718. Finished products 3,285 1,7849. Subproducts, waste and materials incorporated 0 210. Advances 93,949 53,71511. Provisions –67 578

III. Accounts receivable 2,136,313 1,844,1061. Customers for sales and services (Note11) 1,789,889 1,490,4762. Receivable from equity-accounted companies 2,820 263. Sundry accounts receivable 163,787 149,5664. Personnel 432 8645. Tax accounts receivable 200,358 220,7966. Provisions (Note11) –20,973 –17,622

IV. Short-term financial investments (Note12) 100,338 123,5211. Short-term securities portfolio 63,905 113,7262. Loans to equity accounted companies 108 2653. Other loans 19,539 6,5664. Short-term deposits and guarantees 17,454 3,6325. Provisions –668 –668V. Short-term treasury stock 0 0

VI. Cash accounts 114,549 137,450VII. Accruals 0 6,749

TOTAL ASSETS 13,717,110 11,345,379

Accompanying Notes 1 to 27 of the Notes to the Financial Statements and Annex I form an integral part of this consolidated Balance Sheet.

Consol idated annual f inancia l s ta tements

133

Thousands of Euros

SHAREHOLDERS' EQUITY AND LIABILITIES Business Year 2004 Business Year 2003A) SHAREHOLDERS' EQUITY (Note 13) 1,980,497 1,312,055

I. Share capital 266,153 245,811II. Addiitional paid-in capital 145,435 0III. Revaluation reserve 12,901 12,901IV. Other controlling company reserves 341,366 354,433

1. Legal reserve 42,436 30,9532. Reserve for treasury stock 6,883 5963. Other reserves 292,047 322,884

V. Income/loss from previous years 0 01. Retained income 0 02. Losses from previous years 0 03. Shareholders' contribution to offset losses 0 0

VI. Reserves at globally or proportionally consolidated companies 1,062,005 603,240VII. Reserves at equity-accounted companies –14,410 3,010VIII. Translation differences –149,640 –175,250

1. From globally or proportionally consolidated companies –149,447 –175,2502. From equity-accounted companies –193 0

IX. Controlling company losses and gains 376,332 334,3491. Consolidated losses and gains 408,290 357,4572. Losses and gains attributed to minorities –31,958 –23,108

X. Interim dividend paid during the year –59,645 –66,439B) MINORITY INTERESTS (Note 14) 546,686 736,239C) LOSSES IN CONSOLIDATION (Note 9) 11,799 613

1. From globally or proportionally consolidated companies 1,449 3342. From equity-accounted companies 10,350 279

D) DEFERRED REVENUES 419,830 140,3541. Capital grants 379,414 82,3212. Foreign exchange gains 1 03. Other deferred revenues 40,415 58,033

E) PROVISIONS FOR CONTINGENCIES AND EXPENSES (Note 16) 607,497 572,2311. Provision for pensions and similar obligations 921 1,3632. Provision for tax 3,375 4,6523. Other provisions 24,965 30,5214. Reversion fund 578,236 535,695

F) LONG-TERM ACCOUNTS PAYABLE 6,755,716 4,991,187I. Issuance of bonds and other marketable securities (Note 22) 1,349,380 1,024,543

1. Non-convertible bonds 1,349,380 892,6742. Convertible bonds 0 03. Other debt represented by marketable securities 0 131,869

II. Due to banks (Note 22) 4,900,903 3,654,261III. Due to equity-accounted companies 1,593 1,615IV. Other accounts payable 487,919 283,168

1. Debt represented by notes payable 111,686 1012. Other accounts payable 351,212 258,2523. Long-term deposits and guarantees 25,021 24,815

V. Shareholders' debt 15,921 27,600G) SHORT-TERM ACCOUNTS PAYABLE 3,395,085 3,592,700

I. Issuance of bonds and other marketable securities (Note 22) 372,678 448,5941. Non-convertible bonds 362,302 258,0592. Convertible bonds 5,191 03. Other debt represented by marketable securities 0 186,0004. Interest on bonds and other securities 5,185 4,535

II. Due to banks (Note 22) 1,089,080 1,240,4671. Loans and other debt 1,055,632 1,213,0112. Due in interest 33,448 27,456

III. Due to equity-accounted companies 42 88IV. Trade accounts payable 1,510,117 1,494,412

1. Advances received for orders 312,588 300,4332. Payable for purchases or services 727,613 552,3993. Debt represented by notes payable 469,916 641,580

V. Other non-trade accounts payable 252,621 302,7491. Tax accounts payable 120,379 212,8412. Debt represented by notes payable 615 1,3263. Other accounts payable 122,887 80,9744. Remunerations pending payment 3,163 2,1535. Short-term deposits and guarantees 5,577 5,455

VI. Operating provisions 169,297 106,390VII. Accruals 1,250 0

TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 13,717,110 11,345,379

Accompanying Notes 1 to 27 of the Notes to the Financial Statements and Annex I form an integral part of this consolidated Balance Sheet.

Annual Report 2004

134 CONSOLIDATED STATEMENTS OF INCOME AS OF 31 DECEMBER 2004 AND 2003

Thousands of Euros

DEBIT Business Year 2004 Business Year 2003

1. Reduction in inventories of finished products 0 0

2. Supplies (Note 17) 2,165,862 2,039,428a) Cost of commercial inventories 708,557 1,076,104b) Cost of materials and other consumables 905,777 405,637c) Other external expenses 551,528 557,687

3. Personnel expenses (Note 18) 355,840 274,780a) Wages, salaries and similar 276,735 215,887b) Social charges 79,105 58,893

4. Allocations to fixed asset depreciation and amortization 117,394 92,446

5. Variation in operating provisions 10,614 16,297a) Variation in provisions for inventories 0 –7b) Variation in prov, and losses from unrecoverable debts 2,932 84c) Variation in other operating provisions 7,682 16,220

6. Other operating expenses 932,976 903,891a) External services 824,181 831,438b) Rates and levies 42,913 30,092c) Other ordinary management expenses 26,218 25,400d) Allocation to the reversion fund 39,664 16,961

TOTAL OPERATING EXPENSES 3,582,686 3,326,842

I. OPERATING INCOME 579,637 451,177

7. Financial and similar expenses 321,175 202,9688. Variation in provisions for financial investments 1,132 2,8969. Diff,/Applic, deferred financial expenses motorway financing –49,340 –20,19410. Foreign exchange losses 0 51,209

II. FINANCIAL INCOME 0 011. Share in losses of equity-accounted companies 4,089 4,46912. Amortization of goodwill in consolidation 11,715 5,526

III. INCOME FROM ORDINARY ACTIVITIES 387,316 347,15113. Variation in intangible and tangible asset and portfolio provisions –20,440 6,28214. Losses from intangible and tangible assets and portfolio 5,316 4,78015. Losses from transactions with treasury stock and own bonds 384 016. Extraordinary expenses 7,160 12,91617. Expenses and losses from previous years 4,497 596

IV. EXTRAORDINARY INCOME (Note 17) 120,422 121,551

V. CONSOLIDATED INCOME BEFORE TAX 507,738 468,70218. Corporate tax 99,448 111,24519. Other taxes 0 0

VI. CONSOLIDATED INCOME FOR THE YEAR 408,290 357,45720. Income attributed to minorities (Note14) 31,958 23,108

VII. INCOME FOR THE YEAR ATTRIBUTED TO THE CONTROLLING COMPANY 376,332 334,349

Accompanying Notes 1 to 27 of the Notes to the Financial Statements and Annex I form an integral part of this consolidated Statement of Income.


135

Thousands of Euros

CREDIT Business Year 2004 Business Year 2003

1. Net revenues (Note 17) 3,703,323 3,333,748a) Sales 3,291,614 2,228,184b) Services 411,709 1,105,564c) Returned sales 0 0

2. Increase in inventories of products finished and in progress 378,049 365,079

3. Work done by the company on fixed assets 64,307 55,056

4. Other operating revenues 16,644 24,136a) Ancillary and other ordinary management revenues 14,546 18,643b) Subsidies 132 42c) Surplus provisions for contingencies and expenses 1,966 5,451

TOTAL OPERATING REVENUES 4,162,323 3,778,019

I. OPERATING LOSS 0 0

5. Revenues from shareholdings 14 406. Revenues from other marketable securities and credit from fixed assets 3,419 2,2157. Other interest and similar revenues 71,851 31,6688. Net financial expenses imputed to investment 3,791 3,2569. Foreign exchange gains 3,361 90,587

II. FINANCIAL LOSS 190,531 109,113

10. Share in equity-accounted companies 14,014 1,80411. Reversion of losses in consolidation 0 13,278

III. LOSS FROM ORDINARY ACTIVITIES 0 0

12. Gains on disposals of intangible and tangible assets and portfolio 91,546 127,54813. Gains on transactions with controlling company treasury stock 2,303 3,73314. Capital grants transferred to income for the year 1,375 28115. Extraordinary revenues 17,344 14,59716. Revenues and income from previous years 4,771 - 34

IV. EXTRAORDINARY LOSS (Note 17) 0 0

V. CONSOLIDATED LOSS BEFORE TAX 0 0

VI. CONSOLIDATED LOSS FOR THE YEAR 0 0

17. Loss attributed to minorities 0 0

VII. LOSS ATTRIBUTABLE TO THE CONTROLLING COMPANY 0 0

Accompanying Notes 1 to 27 of the Notes to the Financial Statements and Annex I form an integral part of this consolidated Statement of Income.

Annual Report 2004

136

1. ACTIVITY OF SACYR VALLEHERMOSO

The Grupo Sacyr Vallehermoso consists of the Controlling

Company Sacyr Vallehermoso, S.A. and its dependent

companies and associates, which are listed in Annex I. The

Company Sacyr Vallehermoso, S.A. was born of the take-over

merger of Grupo Sacyr, S.A. (absorbed company) by

Vallehermoso, S.A. (absorbing company) in business year

2003, as was explained in the annual financial statements at

the end of the said year.

The Controlling Company’s corporate mission comprises:

a. The acquisition and construction of urban properties for

subsequent lease or sale.

b. The refurbishment of buildings for their subsequent lease

or sale.

c. The purchase and sale of land, building rights and urban

development units, together with their organization,

transformation, development, division into plots, re-division

into plots, compensation, etc. and subsequent building,

where relevant, taking part in the entire development process

until it culminates with building.

d. The management, conservation, maintenance and, in

general, everything related to the installations and amenities

of urban properties, together with the land, infrastructure,

works and development installations corresponding to the

same by virtue of town planning, whether it be on the

company’s own account or on behalf of third parties, and

providing architectural, engineering and planning services

related to the said urban properties, or to its own property.

e. Providing and marketing all types of services and

supplies related to communications, information technology

and energy supply networks, together with collaboration in

the marketing and brokering of insurance, security and

transport services, both on the company’s own account and

on behalf of third parties.

f. The management and administration of commercial space,

residences and centres for senior citizens, hotels and

holiday and student residences.

g. Contracting, managing and executing all types of public

and private works and constructions in the broadest sense,

such as roads, hydraulic works, railways, marine works,

building, environmental works and, in general, all those

related to construction.

h. The acquisition, administration, management,

development, exploitation under lease or in any other

manner, construction, purchase and sale of all types of real

estate, together with advisory services in respect of these

operations.

i. The preparation of all types of engineering and

architectural projects, together with management,

supervision and advisory services in the execution of all

types of works and constructions.

j. The acquisition, possession, use, management and sale of

all types of stocks and shares on its own account, excluding

the activities that special legislation, basically the Equity

Market Act, attributes exclusively to other entities.

k. Managing water supply, sewerage and purification

services for Public Administrations.

l. The management of all types of contracts, subsidies and

administrative permits for works and services, of which it is

the holder, for the State, Self-governing Regions, Provinces

and Municipalities, or a mixture of these bodies, and owning

stakes in companies belonging to them.

m. The exploitation of mines and quarries and the sale of

their products.

n. The manufacture, purchase, sale, import, export and

distribution of equipment, installation of elements and

materials for building or aimed at the same.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR 2004


137o. The acquisition, exploitation in any form, sale, transfer

and disposal of all types of intellectual property and patents

and other kinds of industrial property.

p. The manufacture and marketing of prefabricated products

and other products related to construction.

q. The management of Spanish and foreign subsidiaries and

affiliated companies, by means of its participation on the

governing bodies. The strategic and administrative

management of its subsidiaries in Spain and abroad,

together with advice on legal, economic, accounting, labour,

budgetary, financial, fiscal, commercial and computer-

related issues of the said companies.

The activities included in the corporate mission described in

the previous paragraphs may also be performed indirectly,

through holdings in other entities or in companies with

identical or similar purposes.

The details of the dependent companies that form the Grupo

Sacyr Vallehermoso, together with their activities, registered

offices and percentage holdings are to be found in Annex I of

this annual report.

All of the dependent companies included in the consolidated

annual financial statements end their business years as of 31

December of each year.

2. CONSOLIDATION PERIMETER ANDDEPENDENT COMPANIES

For the purpose of preparing the accompanying consolidated

annual financial statements, the companies in the Group are

classified into the following categories:

a) Dependent companies: Legally independent companies

which constitute an economic unit subject to single

management on a strategic level and which are effectively

directly or indirectly controlled.

b) Multi-group companies: Companies managed by one or

several Group companies, which have a stake in their share

capital, in conjunction with third parties.

c) Associate companies: Companies not included in

consolidation, where one or several Group companies have a

notable influence on their management.

a) Companies forming the consolidation perimeter

The subsidiary companies, considered as forming the Group’s

consolidation perimeter, are regarded as such in accordance

with R.D. 1.815/1991, of 20 December.

The companies included in the consolidation perimeter in the

accompanying annual financial statements are presented in

Annex I, with details of the percentage stake owned, the

category to which they belong, the business they engage in

and their registered offices.

All the dependent companies were consolidated through the

global integration method, which consists of including all the

assets, rights and obligations comprising the net worth of the

dependent companies on Sacyr Vallehermoso S.A.’s balance

sheet, and all the revenues and expenses involved in

determining the result of the said companies on its statement

of income.

The multi-group companies, Bardiomar, S.L., Provitae, S.L., PK

Inversiones, S.L., Constructora Sacyr-Necso S.A., Constructora

Necso-Sacyr S.A., Constructora ACS-Sacyr S.A., Gestora de

Autopistas, S.A., Operadora del Pacífico, S.A., Sociedad

Concesionaria Rutas del Pacífico S.A., Sociedad Concesionaria

Litoral Central S.A., Sociedad Concesionaria Autopistas

Metropolitanas S.A., Rutas II, Autopista Vasco Aragonesa

Concesionaria Española, S.A., Autovía del Noroeste

Concesionaria de la CARM, Aguas de Toledo AIE and

Aparcamiento Recaredo AIE, were consolidated by the

proportional integration method. This involves including the

multi-group company’s assets, rights and obligations on Sacyr

Vallehermoso, S.A.’s balance sheet and the revenues and

expenses involved in determining the result of the multi-group

company, on the Group’s statement of income, in the

proportion represented by Group companies’ stakes in the

capital of the multi-group company.

The associate companies were consolidated through equity

accounting, whereby the book value at which each investment

Annual Report 2004

138appears is replaced by the amount corresponding to the

percentage of equity of the corresponding associate company.

The annual financial statements of the most important

companies are audited by the following external auditors:

• ERNST & YOUNG: Sacyr Vallehermoso, S.A., Sacyr,

S.A.U., Scrinser, S.A., Cavosa Obras y Proyectos, S.A.,

Autovía del Noroeste Concesionaria de la Comunidad

Autónoma de la Región de Murcia, S.A., Autovía Vasco

Aragonesa (AVASA), S.A., Avasacyr, S.L.U., Itinere

Infraestructuras, S.A.U., Valoriza Gestión, S.A.U., Valoriza

Energía, S.L.U., Microtec Ambiente, S.A., Cafestore, S.A.U.,

Iberese, S.A., Olextra, S.A., Extragol, S.L., Compañía

Energética de la Roda, S.L., Sacyr Chile, S.A., Constructora

ACS-Sacyr, S.A., Cavosa Chile, S.A., Gestora de

Autopistas, S.A., Gesvial, S.A., Operadora del Pacífico, S.A.,

Itinere Chile, S.A., Sociedad Concesionaria del Elqui, S.A.,

Sociedad Concesionaria de Los Lagos, S.A., Sociedad

Concesionaria de Rutas del Pacífico, S.A., Sociedad

Concesionaria de Autopista Nororiente, S.A., Vallehermoso

División de Promoción, S.A.U., Tricéfalo, S.A., Vallehermoso

Patrimonio, S.A.U., Trade Center Hotel, S.L.U., Valoriza

Facilities, S.A.U., Sociedad Concesionaria de Palma

Manacore, S.A. and Testa, S.A.

• PRICE WATERHOUSE COOPERS: Sociedad Concesionaria

de Litoral Central, S.A., Sociedad Concesionaria de

Vespucio Sur, S.A., Constructora Sacyr-Necso, S.A. and

Constructora Necso-Sacyr, S.A., Gestora de Autopistas, S.A.

• ECT AUDITORES: Ideyco, S.A.U., Prinur, S.A.U., Sadyt,

S.A.U., Febide, S.A. and Prosacyr Ocio, S.L.

• KPMG PEAT MARWICK LTDA.: ENA, S.A., Autopistas del

Atlántico, S.A. (AUDASA), Autopista Astur Leonesa

(AUCALSA), Autopistas de Navarra (AUDENASA),

Autoestradas de Galicia, Accesos de Madrid Concesionaria

Española, S.A., Autopista Central Gallega Concesionaria

Española S.A., Guadalquivir, Sociedad Concesionaria de la

Junta de Andalucía – Guadalmetro, S.A. and Enaitinere,

S.A.U.

• DELOITTE & TOUCHE: Build2Edifica, S.A.

• FREIRE LOUREIRO E ASSOCIADOS (asociados a DELOITTE

& TOUCHE): Grupo Somague.

• ACR: Aeropuertos de la Región de Murcia, S.A.

• KAUFMAN ROSSIN & CO.: Brickell Office and Testa

American Corporation.

• ATTEST CONSULTING, S.L.: Nova Cala Villajoyosa, S.A.

The remaining consolidated Companies did not submit their

financial statements for external auditing in 2004.

The companies Castellana Norte, S.A., Claudia Zahara 22, S.L.,

M Captal, S.A., Habitat Baix, S.L., Habitat Network, S.A.,

Fortuna Golf, S.L., Nova Icaria, S.A., Constructoras Andaluzas

con Centroamérica, S.A., Constructora del Magdalena

Medio, S.A., Tecnológica Lena, S.L., Sacyr Colombia, S.A.,

Operalia, S.A., Itinere Costa Rica, S.A., Autopista del Valle, S.A.,

Autopista Madrid-Sur, S.A., Jabalquinto, S.L., Dareling, S.A.,

Echezarreta, AIE, Millinium Energía, S.A., Geida Skikda, S.L.

and Geida Beni Saf, S.L. were excluded from the consolidation

perimeter since, overall, they are of scant interest.

The most important financial information for the dependent

companies included in the consolidation perimeter is as shown

below:


139Income/Loss Interim EquityThousands of Euros Type Capital Reserves 04 Dividend 04

SACYR VALLEHERMOSO (Holding) Controlling 266,153 499,702 178,340 –59,645 884,550Group CompaniesInchisacyr, S.A. Group 2,400 –392 –48 0 1,960Sacyr S.A.U. Group 52,320 216,512 47,090 0 315,922Aurentia S.A. Group 304 10 –10 0 304Prinur S.A.U. Group 3,185 1,558 832 0 5,575Cavosa Obras y Proyectos, S.A. Group 5,151 3,530 2,315 0 10,996Febide S.A. Group 601 1,127 38 0 1,766Ideyco S.A.U. Group 301 471 54 0 826Scrinser S.A. Group 601 7,219 2,365 0 10,185SIS S.C.P.A. Group 300 0 –279 0 21Obras y Serv. de Galicia y Asturias S.A.U. Group 1,000 –55 –110 0 835Sacyr Chile, S.A. Group 14,278 18,730 8,165 0 41,173Cavosa Chile, S.A. Group 2,583 –356 –232 0 1,995C.Cavosa Agecoment, S.A. Group 37 245 –806 0 –524Autovía del Noroeste,

C.C.A.R.M., S.A. (Aunor) Group 14,460 2,028 569 0 17,057Neopistas, S.A.U. Group 9,038 –98 –57 0 8,883Avasacyr, S.L.U. Group 31,715 21,832 14,790 0 68,337Itinere Infraestructuras, S.A. Group 140,473 339,548 –5,198 0 474,823Soc. Conc. Aut.Nororiente, S.A. Group 25,655 –1,288 0 0 24,367Soc. Concesionaria de los Lagos, S.A. Group 75,626 3,424 4,584 0 83,634Gesvial, S.A. Group 560 644 613 0 1,817Sociedad Concesionaria del Elqui, S.A. Group 89,491 –6,247 6,479 0 89,723Itinere Chile, S.A. Group 40,302 147,717 –1,821 0 186,198Enaitinere, S.A.U. Group 33,363 50,203 758 0 84,324Autopistas de Galicia, S.A. Group 26,703 790 2,080 0 29,573Autopista Astur-Leonesa, S.A. Group 326,248 12,237 2,197 0 340,682Autopistas del Atlántico, S.A. Group 195,918 206,539 37,330 –4,360 435,427Ena Infraestructuras, S.A. Group 425,120 44,230 48,558 –43,388 474,520Autopistas de Navarra, S.A. Group 170,435 8,104 19,817 0 198,356Burosoft Sistemas de Información, S.L. Group 259 –948 –267 0 –956Valoriza Facilites, S.A.U. Group 1,181 –391 662 0 1,452Iberese, S.A. Group 1,387 4,545 668 0 6,600Microtec Ambiente, S.A. Group 745 491 114 0 1,350S.A.U. Depuración y Tratamientos (Sadyt) Group 301 1,110 138 0 1,549Tratamientos y Recup. Ecosistemas S.A.U. Group 60 9 0 0 69Cafestore, S.A.U. Group 2,050 1,197 –1,544 0 1,703Olextra, S.A. Group 4,600 63 –475 0 4,188Extragol, S.L. Group 2,404 12 1,107 0 3,523Valoriza Gestión, S.A.U. Group 22,133 –158 –2,722 0 19,253Secadores de Biomasa, S.L. (Sedebisa) Group 2,900 213 0 0 3,113Biomasas de Puente Genil, S.L. Group 2,600 211 1 0 2,812Compañía Energ. Pata de Mulo, S.L. Group 2,600 212 1 0 2,813Compañía Energ. La Roda, S.L. Group 1,300 –1 477 0 1,776Valoriza Energía, S.L.U. Group 4,547 12,235 1,077 0 17,859Vallehermoso Telecom, S.A. Group 301 124 1 0 426Spica Siglo 21, S.L. Group 600 –7 –2 0 591Prosacyr Ocio, S.L. Group 4 1,057 93 0 1,154Vallehermoso Div. Prom. S.A.U. Group 97,343 248,028 110,850 –77,875 378,346Erantos, S.A. Group 150 138 –193 0 95Tricéfalo, S.A. Group 9,015 –778 –313 0 7,924

Annual Report 2004

140 Income/Loss Interim EquityThousands of Euros Type Capital Reserves 04 Dividend 04

Capace, S.L. Group 153 –29 1,674 0 1,798Tradirmi, S.L. Group 153 –23 –30 0 100Iparan Promociones Inmobiliarias, S.L. Group 845 0 5,249 0 6,094Navinca, S.A. Group 1,839 –72 10 0 1,777Testa Inmuebles en Renta, S.A. Group 692,855 211,210 134,698 –15,012 1,023,751Itaceco, S.L. Group 6 0 0 0 6Trade Center Hotel S.L. Group 12,020 1,549 1,452 0 15,021Prosacyr Hoteles, S.L. Group 180 4,107 4 0 4,291V. Patrimonio S. Inmob. Inversión, S.A. Group 18,607 791 60 0 19,458Gesfontesta, S.A. Group 571 31 7 0 609Brickell Office, L.L.C. Group 67,900 14,949 4,062 0 86,911Nisa V.H., S.A. Group 1,134 256 0 0 1,390Gescentesta, S.L. Group 3 0 0 0 3Grupo Somague Group 130,500 29,960 8,732 0 169,192Multi-group CompaniesConstructora Necso-Sacyr, S.A. Multi-group 17 295 21,934 0 22,246Constructora Sacyr-Necso, S.A. Multi-group 17 –209 8,533 –7,267 1,074Constructora ACS-Sacyr, S.A. Multi-group 185 11,835 357 0 12,377Autop. Vasco-Aragonesa, S.A. (Avasa) Multi-group 234,000 47,282 45,631 –42,042 284,871Operadora del Pacífico, S.A. Multi-group 170 743 456 0 1,369Rutas II, S.A. Multi-group 130 2 6 0 138Soc. Conc. Litoral Central, S.A. Multi-group 28,011 –8,445 –87 0 19,479Soc. Conc. Vespucio Sur, S.A. Multi-group 71,052 –14,586 0 0 56,466Soc. Conc. Rutas del Pacífico, S.A. Multi-group 92,236 1,208 2,957 0 96,401Gestora de Autopistas, S.A. Multi-group 1,505 500 204 0 2,209Aguas de Toledo, A.I.E. Multi-group 60 0 1,351 0 1,411Aparcamiento Recadero, A.I.E. Multi-group 7 –92 56 0 –29PK Inversiones, S.L. Multi-group 60 13 7 0 80Provitae Centros Asistencia, S.L. Multi-group 6,314 –68 –69 0 6,177Bardiomar, S.L. Multi-group 10,000 0 –2,035 0 7,965Associate CompaniesBuild2Edifica S.A. Associate 6,644 –1,690 322 0 5,276Metro de Sevilla, Soc.Conc.

Junta Andaluc.S.A. Associate 86,000 –10 0 0 85,990Infraestructuras y Radiales, S.A. (Irasa) Associate 8,228 79,841 –3,352 0 84,717Ctra. Palma-Manacor, S.A. Associate 17,500 0 0 0 17,500Aeropuertos Región Murcia, S.A. Associate 1,360 –126 –117 0 1,117Tacel Inversiones, S.A. Associate 32,250 –852 –1,137 0 30,261Alazor Inversiones, S.A. Associate 199,000 5 –6,077 0 192,928Camarate Golf, S.A. Associate 18,000 0 –29 0 17,971La Vivienda Económica, S.A. Associate 60 806 0 0 866Mola 15, S.L. Associate 3,100 0 0 0 3,100Nova Cala Villajoyosa, S.A. Associate 2,524 182 –876 0 1,830Barajas Tercer Milenio, S.A. Associate 15,030 –195 0 0 14,835Aplicaçao Urbana II, S.A. Associate 50 17 257 0 324Club de Campo As Mariñas, S.A. Associate 271 –42 0 0 229Sofetral Promociones, S.A. Associate 3,497 802 18 0 4,317Nova Benicalap, S.A. Associate 361 –124 1,351 0 1,588PK Hoteles, S.L. Associate 4,061 –1 0 0 4,060Centre D-Oci Les Gavarres, S.L. Associate 2,524 –287 3,171 –2,377 3,031Parking Palau, S.A. Associate 3,420 373 282 0 4,075

b) Changes in the consolidation perimeter

In business year 2004, the main changes in the consolidation

perimeter were as follows:

1) Additions to the consolidation perimeter:

– Sociedad Concesionaria de la Autopista Nororiente, S.A.:

with the mission of running the Chilean public work on the

northeast access to Santiago. Itinere Chile, S.A. is the

majority shareholder, with 99.9% of capital and an

investment of Pesos 9,191 million; Sacyr Chile, S.A. owns

the remaining 0.1%, with an investment of Pesos 9 million.

– Sociedad Concesionaria de Palma Manacor, S.A.: with the

purpose of operating the toll road between Palma de

Mallorca and Manacor. Its main shareholders are Itinere

Infraestructuras, S.A.U. (35%) and Sacyr, S.A.U. (5%) with a

joint investment of Euros 7 million.

– Itaceco, S.L., a company that exploits assets for lease,

with a 100% holding.

– Spica Siglo 21, S.L., a fully-owned real estate

development company.

– La Vivienda Económica, S.A., a real estate development

company, with a 9.505% stake.


141The items on the balance sheets and income statements of the

most significant foreign companies included in consolidation

are translated into euros by applying the year-end exchange

rate, according to the following rates:

– Camarate Golf, S.A., a real estate development company,

with a 26% stake.

– SIS, S.C.P.A., an Italian construction company, with a 60%

of capital.

2) Removals from the consolidation perimeter:

– Euroglosa 45, Concesionaria de la Comunidad

de Madrid, S.A.

3) Changes in percentage holdings:

– Somague, SGPS: In July 2004, Sacyr Vallehermoso

increased capital through the issuance of 13,850,948 shares,

each with a par value of one euro, with an issue premium of

Euros145,434,954. This issue was fully paid up through the

transfer of 16,776,607 Somague shares to Sacyr

Vallehermoso, increasing its percentage holding to 93.97% of

the Portuguese group. At the end of the year, after acquiring

new Somague shares, Sacyr Vallehermoso owned 99.58% of

its capital, with a total investment of Euros 228,310,391.33.

– In November 2004, Itinere Infraestructuras, the head

company in the infrastructure contracting division,

conducted a Euros 24,322,137 rights issue, with an issue

premium of Euros 348,536,223.21. This issue was fully

subscribed and paid up by the companies Corporación

Caixa Galicia, S.A., Caixa de Ahorros de Vigo, Ourense e

Pontevedra and BBVA through the contribution respectively

of 100% of the companies Pistas de Galicia and Autopistas

Participadas and 10% of the company Autovía del Noroeste.

– The two new companies –Pistas de Galicia y Autopistas

Participadas– which each own 10% of the ENA group, were

merged with Enaitnere, the 50% owner of the said group.

Thus, at the end of the year, Itinere Infraestructuras’ share in

ENA was of 70%. In December 2004, Itinere Infraestructuras

acquired the remaining 45% of the concession-holder

Autovía del Noreste, to give it full ownership.

– Valoriza Gestión increased its percentage in Iberese from

50% to 74%.

Exchange rates Average Close

Chile peso / euro 756.83 759.23

Brazil real / euro 3.63 3.60

Mozambique metical / euro 25,028.00 27,507.00

Angola kwanza / euro 103.85 116.52

Cape Verde escudo / euro 124.64 110.12

Macao pataca / euro 9.97 10.88

Annual Report 2004

1423. BASES OF PRESENTATION ANDCONSOLIDATION

The presentation of the consolidated annual financial

statements was prepared on the basis of Royal Decree

1.815/1991 of 20 December, which establishes the

regulations for preparing consolidated annual financial

statements, and in compliance with Royal Decree

1.643/1990, of 20 December, which approves the General

Accounting Charter.

a) Bases of presentation

The accompanying consolidated annual financial statements

were prepared on the basis of the accounting records for

business year 2004 of Sacyr Vallehermoso, S.A. and its

dependent companies, whose respective annual financial

statements were drawn up by the directors of each company,

so as to show a true image of the Group’s net worth, financial

position and results.

The accompanying consolidated annual financial

statements, which were prepared by the Directors of Sacyr

Vallehermoso, S.A. and the dependent companies included

in consolidation, will be submitted to the corresponding

Ordinary General Meetings before 30 June 2005 and are

expected to be approved without any modification

whatsoever.

b) Consolidation principles

Consolidation was through the global integration method for

dependent companies, through proportional integration for

multi-group companies and through the equity method for

associate companies. All of them are described in Note 2 a).

In every case, the accounting date of the financial statements

of the Group’s different subsidiaries used in the consolidation

process is December 2004.

The value of the share of minority shareholders in the net worth

and results of the consolidated dependent companies is

presented in the “Minority interests” chapter on the liability

side of the consolidated balance sheet and under “Income

attributable to minorities” on the consolidated income

statement respectively.

In compliance with the regulations for the preparation of

consolidated annual financial statements, these do not include

the tax effect corresponding to the incorporation of the reserves

of dependent companies in the accounts of the controlling

company, as transfers of reserves not subject to tax at source

are not expected, since it is considered that these reserves will

be used as a source of self-financing at each consolidated

subsidiary.

Any significant accounts and transactions between

consolidated companies were eliminated in the consolidation

process.

c) Accounting principles

The consolidated balance sheet and the consolidated

statement of income were drawn up following accounting

principles of prudence, company in operation, registry,

acquisition price, accrual, correlation of revenues and

expenses, no compensation, uniformity and relative importance

as determined in current company legislation, and all the items

which, because of their nature and relative importance, warrant

further explanation are clarified in these Notes to the Financial

Statements.

4. VALUATION PRINCIPLES

In accordance with what is established in the General

Accounting Charter, the main valuation principles used in the

preparation of the accompanying consolidated annual financial

statements were as follows:

a) Goodwill in consolidation and losses inconsolidation

The accompanying consolidated balance sheet includes Euros

103,028 thousand in “Goodwill in consolidation” net of

amortization, resulting from the gains in consolidation arising

between the amounts paid for the (direct or indirect)

acquisitions of shares of consolidated dependent companies


143and the net book value of the same at the date of acquisition

(Note 9).

The goodwill in consolidation is amortized with a maximum

limit of twenty years, in a systematic manner, based on the

period for recovering the investment, according to the

individualized study of the dependent companies.

Where the goodwill in consolidation is attributable to fixed

assets or inventories, the goodwill is capitalized as the

higher value of the assets and amortized at the same rate as

the elements that were capitalized and/or at the moment of

sale.

b) Standardization of items

In order to present the different items which comprise the

accompanying consolidated financial statements in a

homogeneous manner, the valuation principles and standards

followed by the Controlling Company were applied to all the

companies included in consolidation, so that valuation

principles were standardized.

c) Start-up expenses

These consist of rights issue expenses and are recorded at the

costs incurred. Start-up expenses are amortized by the straight

line method over a period of five years.

d) Intangible fixed assets

This chapter reflects the rights on assets acquired through

financial leasing, administrative concessions, computer

software, R&D expense and transfer rights.

The assets acquired by means of financial leasing were

posted as intangible fixed assets at the cash value of the

asset at the time of the transaction. These rights are

amortized over their useful life according to the nature of the

asset. The total debt corresponding to the leasing charges

plus the amount of the purchase option are shown under

Liabilities. The initial difference between total debt and the

cash value of the asset, equivalent to the financial costs of

the transaction, is reported as deferred expenses and is

carried to results during the duration of the contract following

a financial principle.

Administrative concessions are posted at the amount the Group

paid in operating fees and are amortized by the straight line

method during the years of operation.

The “Computer software” account presents the amount

corresponding to computer programmes acquired from third

parties but exclusively in those cases where they are expected

to be used for several years. They are amortized at a rate of

25% per annum.

R&D expenses and transfer rights are posted at cost and are

amortized lineally over five years.

e) Tangible fixed assets

Tangible fixed assets are recorded at their acquisition price,

which includes all the costs and expenses directly related to

the fixed assets acquired until these elements can be used.

Sacyr, S.A., Prinur, S.A., Cavosa, Obras y Proyectos, S.A.,

Autopista Vasco Aragonesa, S.A. (AVASA) and Iberese, S.A.

chose to voluntarily restate their balance sheets as

contemplated in R.D.L. 7/1996 and R.D. 2.607/1996, which

allowed companies to restate certain assets which were

recorded on the balance sheet for business year 1996. This is

an exception to the acquisition price accounting principle.

Availing themselves of what is permitted in accounting

legislation, as of 31 December 1979, 1981 and 1983,

Audasa, Aucalsa, Audenasa and Autoestradas restated the

value of their tangible fixed assets by applying the

coefficients approved in the said legislation, through the

application of the historical costs of the investment,

excluding intercalary financial expenses. The bulk of the

resulting capital gains were capitalized through the issuance

of totally paid-up shares. Availing itself of Royal Decree Law

7/1996, Audasa proceeded to carry out the restatement

operations regulated in the same.

The costs of extension, modernization or improvements which

represent an increase in productivity, capacity or efficiency, or

Annual Report 2004

144lengthen the useful life of the assets are capitalized as the

higher cost of the corresponding assets.

Repair and maintenance costs incurred during the year are

carried to the consolidated income statement.

The captions of “Investment in motorways”, both in operation

and under construction, include the technical and economic

studies, projects, expropriation, compensation and

replacement of services and rights of way, construction of

works and installations, works management and

administration expenses, financial expenses accrued during

the construction period from sources of investment which are

effectively financing investment in the motorway and all the

costs necessary for construction accrued before the

motorway is ready for use.

Property for rental includes the financial expenses on the debt

directly related to construction until the property for rental

comes on stream.

Depreciation is calculated degressively for machinery in almost

all cases and by the straight line method for other elements,

spreading the cost of the assets over their years of useful life,

as is shown below:

In respect of investment in motorways, the positive difference

in valuation resulting from comparing the theoretical value of

shareholders’ equity on the date of the purchase of certain

dependent companies with the value the investment made was

reported under the heading of “Investment in motorways in

operation” and it is amortized systematically over the period of

the contract, according to forecast revenues, as it is

understood that during the said period this difference will be

adequately recovered. The calculation principle applied

is equivalent to that used to calculate the Reversion Fund

(Note 4 (x)).

Some of the consolidated companies made allocations to

amortize certain elements of revertible fixed assets with an

expected life which is shorter than the period of the contract.

These elements are amortized during the period of useful life

expected.

The Chilean contractors depreciate their assets

systematically, according to the revenue method, in a similar

manner to the method used in the calculation of the Reversion

Fund (Note 4 (x)).

Improvement costs which imply an increase in the profitability

of property for rental are included each year as the higher value

of the same. In contrast, maintenance and repair costs for

tangible fixed assets which do not improve their use or prolong

their useful life are charged to the consolidated income

statement at the moment they are incurred.

The Group allocates the opportune provisions for the

depreciation of its tangible fixed assets when there are doubts

about whether the book value can be recuperated.

f) Financial investments

In accounting for its investments in financial securities,

whether they be fixed income securities or equities, and long

or short-term, the Group follows the principles described

below:

Years of estimateduseful life

Property for rental and own use 50 to 68

Machinery 5 to 10

Elements for works installations 2 to 4

Equipment, tools and auxiliary elements 4 to 8

Transport elements 5 to 8

Furniture and fixtures 9 to12

Computer processing equipment 3 to 4

Special complex installations 2 to 4

Other fixed assets 5


1451. Securities which are not group companies and which

have an official price: at the acquisition price (restated, in

accordance with Act 9/1983 of 13 July) or market price,

whichever is lower. The market value is considered to be

the average official price for the last quarter of the year or

the price at the end of the last trading day of the year,

whichever is lower.

2. Securities with no official price: at the acquisition or

constitution price, less, where relevant, the necessary

provisions for depreciation, deriving from the excess of

the said cost with respect to the net book value of the

holding at year end.

Any capital losses disclosed between the cost and the market

value or net asset value at the end of the year are recorded

under the “Provisions” headings in the chapter of “Financial

investments”.

g) Short and long-term

On the accompanying consolidated balance sheet, credit and

debt maturing within twelve months or less is classified as

short-term, while maturities occurring after this period are

classified as long-term.

h) Inventories

Land, developments in progress and finished property, all of

them to be sold, are valued at their acquisition price or

construction cost, as described below:

• Property: this is valued according to the cost system

described below for developments in progress or at cost

price in the case of the acquisition of property already

built, including the costs directly related to the

purchase.

• Developments in progress: these include the costs

incurred in real estate developments where construction is

not yet completed. These costs include the expenses

directly applicable to construction which have been

approved by the technical personnel responsible for works

management, the costs corresponding to the development

and the interest expense incurred during the construction

period. Once construction has started, the cost price of the

land on which it is built is included in the value of the

buildings and other constructions.

• Land and adaptation of land: this is valued at its

acquisition price, including the costs directly related to the

purchase. In addition, development, project and planning

costs are included as the higher value of the un-built land

and plots until the work is completed.

The chapter of inventories includes the financial expenses

accrued in relation to the acquisition of land and the

construction of housing. Capitalization of financial expenses as

inventories only occurs during the construction period.

Stocks of raw and auxiliary materials, materials for

consumption are valued at their acquisition cost.

Products and work in progress are valued at the production

cost, which includes the cost of the materials used, labour

and any direct production expenses that may have been

incurred.

The valuation of obsolete, defective or show-moving products

was reduced to their estimated selling value, if this was

estimated to be lower.

The Group allocates the opportune provisions for depreciation

of inventories when the book cost exceeds their market value.

Work start-up expenses include the costs incurred until work is

started and are carried to results according to the degree of

progress of the work throughout the period of execution.

i) Provisions for contingencies and expenses

The policy followed in respect of accounting for provisions and

expenses consists of reporting the amount estimated to cover

probable or certain liabilities arising from litigation in progress

or compensation or obligations pending of an undetermined

Annual Report 2004

146amount, guarantees and other similar items. They are allocated

at the time the liability or obligation which determines the

compensation or payment arises.

j) Recognition of Results

1.-Construction companies

The difference between production (value at sales price of the

work executed each year, which is covered in the main contract

signed with the client or in amendments or additions to the

same approved by the client) and the costs incurred during the

year is recognized each year as the result of its works. The

reason for this is that, on occasion in the construction sector,

the revenues and expenses corresponding to works may

undergo significant changes during the period of execution,

which are difficult to anticipate and objectively quantify.

The difference between the amount of production at source of

each work and the amount certified for each work, up until the

date of the annual financial statements, are posted under the

caption “Clients for work done pending certification”, in the

chapter of “Accounts receivable”.

The costs incurred for the execution of works are attributed to

these as they occur.

Auxiliary tasks involved in the execution of works, which

include general and specific works installations and the

expenses corresponding to studies and projects, are

proportionally imputed to the relation between the costs

incurred and total costs and the part pending amortization is

recorded in the “Inventories” chapter on the consolidated

balance sheet.

The estimated costs for the removal of work or contract are

provisioned for by accruing them over the period of execution

of the same and attributing them to the cost proportionally to

the relation between estimated costs and production

completed; the expenses which arise between the completion

of the work and the definitive settlement of the same are

charged against the provision allocated and the remaining

balance is posted under the heading “Operating provisions” on

the consolidated balance sheet.

For those works where losses are estimated, provisions are

allocated to cover them in their entirety when this circumstance

is known.

2.-Contractors

Recognition of the result is based on the Order of 10

December 1998 which approves sector adaptation of income

statements to motorway contractors. According to this Order,

financial expenses to be attributed to each year will be the

result of applying to total financial expenses for financing

the motorways foreseen in the concession period,

the proportion which the toll revenues for each year

represent in total revenues during the contract period, on the

basis of the figures in the Economic-Financial Plan for each

contract.

Excess interest accrued with respect to what is attributable to

the result is posted under the heading “Deferred charges” on

the balance sheet.

3.-Real estate companies

Results are recognized each year and sales are attributed to

Revenues, when the properties developed for sale are

substantially completed, with construction costs incurred in

excess of 80% of the total foreseen and provided there is a

sales contract with a third party. At that moment the company

records all the pending costs necessary for delivering the

properties in perfect conditions of use.

The properties sold at a later date than that described in the

previous paragraph are recorded under Total Sales and the

results are recognized at the moment of sale.

The amounts received from clients prior to the delivery of the

property are posted under “Advances from clients” in the

chapter of “Short-term accounts payable” on the liability side

of the balance sheet.

For developments where losses are anticipated, provisions are

allocated to cover them in their entirety when this circumstance

is known.


147Other revenues and expenses are imputed using the accrual

principle, i.e. when the real flow of goods and service they

represent occurs, regardless of the moment when the monetary

or financial flow related to them occurs.

However, following the principle of prudence, the Group only

records the profits made at the year end, whilst foreseeable

risks and losses, even if they are only possible, are posted as

soon as they are known.

k) Temporary Joint Ventures

Temporary joint ventures in which Group companies are

involved were included on the accompanying consolidated

financial statements by proportionally integrating their

respective financial statements.

In accordance with what is established in the General

Accounting Charter for Construction and Real Estate

companies, Temporary Joint Ventures which are inactive or are

of scant interest in respect of the true image of the

consolidated financial statements overall were excluded from

proportional integration.

l) Bad debt provision

Group companies follow the principle of provisioning for

debtors if it is considered there are problems of collections as

they have exceeded the periods established in the contracts.

As of 31 December 2004, the provisions for this amounted to

Euros 20,973 thousand.

m) Works completion provision

This provision, which appears on the liability side of the

balance sheet, corresponds to the estimated amount of

possible obligations for works completion when the exact

amount to be paid cannot yet be determined or when the date

on which this will occur is uncertain and depends on certain

conditions being fulfilled. The allocations are made according

to the best estimates of annual accrual.

Provisions for the completion of work under construction are

allocated with between 0.5% and 1.5% of the work executed in

order to meet all the expenses that may be incurred between

the time the work is completed and its definitive delivery.

In the real estate business, a provision is recorded for those

developments where losses are expected; these losses are

covered in their entirety.

As of 31 December 2004, the provisions under “Short-term

accounts payable” on the liability side of the balance sheet

amounted to Euros 169,297 thousand.

n) Transferable mortgages

Transferable mortgages are included under the “Due to banks”

caption on the consolidated balance sheets.

ñ) Short-term financial investments

Short-term financial investments are valued at their acquisition

price.

The accrual principle is applied to account for financial

revenues deriving from short-term financial investments.

Unrealized losses in value are valued by the difference between

the acquisition price and the selling price and are recorded under

“Provisions” in the “Short-term financial investments” chapter.

o) Advances received for orders

This account in the chapter of “Short-term accounts payable”

on the liability side of the accompanying consolidated balance

sheet reflects the bills charged to clients for work pending

execution and for properties pending delivery.

In addition, the balance of the account “Clients, work certified

in advance” is included, which arises from the difference

between the amount certified for each work and the amount of

the production at source for each one.

Annual Report 2004

148p) Severance payments

Except in the case of fair dismissal, companies are obliged to

pay compensation to the employees contracted for a specific

job or service when the works for which they were hired come

to an end. The Group records these expenses when they

occur.

As there is no foreseeable need for any unusual termination of

employment and employees who retire or voluntarily give up

their posts do not receive compensation, any possible

severance payments are charged to expenses at the time they

occur. There are no plans to dismiss any permanent staff in the

near future and, consequently, no provision was made for this

in 2004.

q) Corporate tax

The expense of Corporate tax for each year is calculated on the

basis of book profit, corrected for permanent differences

according to tax principles and taking into account the tax

benefits and deductions applicable. The tax effect of timing

differences is included, where relevant, under the corresponding

items of prepaid or deferred tax on the balance sheet.

By agreement of the respective Governing Bodies of each

company, Sacyr Vallehermoso, S.A. and the dependent

companies which fulfil what is set out in the Royal Decree

4/2004, of 5 March, which approves the amended text of the

Corporate Tax Act chose to follow the Tax Consolidation

Regime for business year 2004 and made the mandatory

communication to the A.E.A.T (Tax Authority), which notified

the head company of the fiscal group of its tax identification

number 20/02.

The expense of each year’s Corporate Tax is calculated by

aggregating the taxable income of all the companies and

correcting the total obtained with the permanent differences

arising at the consolidated level and the timing differences

arising at the local level.

For the other companies, each company calculates the

corporate tax expense according to book income before tax,

increasing or decreasing it, where relevant, by the permanent

differences to obtain taxable income (understood as the taxable

base of the said tax), and considering the tax deductions in the

tax liability applicable to them.

r) Revenues and expenses

The costs incurred in the execution of works are attributed to

them as they occur and the opportune provisions are allocated

to cover the expenses that might arise during the guarantee

period for the orders.

In general, revenues and expenses are imputed according to

the accrual principle, i.e. when the real flow of goods and

services they represent occurs, regardless of the moment when

the monetary or financial flow corresponding to them occurs.

However, following the principle of prudence, the Company

only records profits made at the year end, while foreseeable

risks and losses, even if they are only possible, are posted as

soon as they are known.

s) Foreign currency transactions

The translation into national currency of the balances in foreign

currency is effected by applying the exchange rate in force at

the time the corresponding transaction is conducted. At the

end of the year, it is valued at the exchange rate in force at the

time.

The translation differences which occur at the end of the year

in relation to the valuation of the Company’s balances in

foreign currency are carried to results in accordance with

generally accepted accounting principles.

t) Translation of annual financial statements inforeign currency

The items on the balance sheet and income statement

corresponding to the main foreign companies included in the

consolidation are translated by applying the year-end exchange

rate method, which implies the following:


149• All goods, rights and obligations are translated using the

exchange rate in force on the accounting date of the foreign

companies’ financial statements.

• The items on the income statement are translated using

an average exchange rate.

• The difference between the amount of foreign companies’

shareholders’ equity including the balance on the income

statement in accordance with the previous point translated at

the historical rate and the net worth resulting from the

translation of the assets, rights and obligations as described

above, is posted, with the corresponding positive or negative

sign, under shareholders’ equity on the consolidated

balance sheet under the heading “Translation differences”.

u) Transactions between the companiesconsolidated

The transactions conducted between the companies which are

consolidated were eliminated in accordance with article 36 of

Royal Decree 1815/1991 of 20 December, which approves the

regulations for the formulation of consolidated annual financial

statements.

v) Treasury stock

Treasury stock is valued at its acquisition cost and the

corresponding restricted reserve is allocated to the same

amount. The company allocates the corresponding provision

for the difference between the average acquisition price and the

equity value, and a provision carried to the income statement if

the average acquisition price is higher than the average price

of the last quarter or the last day of the business year, for the

greater of the differences.

w) Environment

The costs incurred in the acquisition of systems, equipment

and installations for eliminating, limiting or controlling the

possible impacts the company’s day-to-day business might

have on the environment are regarded as investments in fixed

assets.

Other costs related to the environment, other than those

corresponding to the acquisition of fixed assets, are regarded

as expenses for the business year.

As regards possible contingencies that might occur in

environmental terms, the directors consider that these are

amply covered by the civil liability insurance policies to which

they have subscribed.

x) Reversion fund

In accordance with the Special Plan passed by the Concession

Decree and included in the contract and in the Economic-

Financial Plan in force, the Group makes an annual allocation

to the reversion fund in order to reconstitute the value of the

investment in the motorway at the time when it is reverted to

the State, according to the revenues foreseen in the Economic-

Financial Plans drawn up by each concessionaire company.

y) Subsidies

Subsidies are valued at the amount received. Those granted

and collected as capital grants are carried to the result of each

year in proportion to the depreciation of the assets financed by

the said subsidies.

Annual Report 2004

150

5. INTANGIBLE FIXED ASSETS

In business year 2004 the movements in the different

intangible fixed assets accounts and their corresponding

accumulated depreciation were as follows:

Balance at Exchange Balance atThousands of Euros 31/12/03 Additions Removals Reclassif. Rate 31/12/04

R&D expense 1,854 1,105 0 37 –2 2,994

Concessions, patents, brands 83,333 229 –56 71,427 0 154,933

Transfer fees 417 2,377 0 0 0 2,794

Computer software 12,692 909 –71 1,924 –1 15,453

Leasing 375,653 2,891 –243 –2,288 –3 376,010

Cost 473,949 7,511 –370 71,100 –6 552,184

R&D expense –1,346 –358 15 –16 9 –1,696

Concessions, patents, brands –6,526 –2,972 0 6 0 –9,492

Transfer fees –76 –110 7 –39 0 –218

Computer software –5,867 –3,295 85 –1,127 1 –10,203

Leasing –10,506 –6,775 74 890 0 –16,317

Accumulated Amortization –24,321 –13,510 181 –286 10 –37,926

INTANGIBLE FIXED ASSETS 449,628 –5,999 –189 70,814 4 514,258

period of 50 years, expiring in 2052; and the payments fro

assets and rights used at the Chilean contractors.

In 2004 no financial expenses were capitalized in the

construction costs of property. The interest expenses

capitalized in previous years amount to Euros 1,394

thousand.

Rights over assets under financing leasing mainly reflects the

acquisition price of the new properties in different Spanish

provinces and leased to companies in the Endesa group. The

cost of the assets at source is Euros 330,000 thousand.

The leasing payments made prior to business year 2004

amounted to Euros 96,361 thousand. During the said year

Euros 23,309 thousand was paid and a total of Euros

261,087 thousand remains pending payment in subsequent

As of 31 December 2004 administrative concessions

included: a contract in Benta Berri with the Basque Country’s

Regional Government for a period of 75 years, maturing in

the year 2074, to run properties under lease; a contract

granted by the IVIMA to run housing in Usera (Madrid) for a

period of 20 years, which expires in 2019; a concession at

the development called “Campo de Tiro de Leganés” for a

period of 20 years, maturing in the year 2018; an

administrative concession with Barcelona Port Authority

which matures in 2022, when it will be automatically

extended until 2052. It also includes the amount paid for the

operating fee, at A.I.E., for water supply to the city of Toledo

up until the year 2023, which will be amortized over the 25

years the said contract lasts. As reclassifications are the

residence in calle Rodríguez Marín (Madrid) which came on

stream according to a 98-year contract which expires in

2099; a hotel in calle Passeig Taulat 278 (Barcelona) for a


151years. The purchase options amount to Euros 118,454

thousand.

6. TANGIBLE FIXED ASSETS

The changes in the different tangible fixed asset accounts in

2004 and the corresponding accumulated depreciation were as

follows:

The net book value of the properties related to the mortgage

collateral mentioned amounts to Euros 1,477,596 thousand,

while their market value is Euros 2,179,838 thousand. It is the

Group’s policy to contract the insurance policies deemed

necessary to cover the possible risks which might affect

tangible fixed assets.

Notable in the chapter “Buildings for lease” is the

acquisition of an office building in calle Alcalá 45 (Madrid)

and the purchase of 41 commercial premises in Centre

Oeste (Madrid) and 5 in Porto Pí (Mallorca). The most

significant removal was the sale of an office block in calle

Capitán Haya 41 (Madrid). The office block in calle Josefa

Balance at Reclassi- Variations Exchange Balance at Thousands of Euros 31/12/03 Additions Removals fications in perimeter rate 31/12/04

Land and buildings 125,623 51,804 –9,856 –1,153 0 –5 166,413

Buildings for lease 1,653,320 166,981 –80,061 –35,236 0 0 1,705,004

Tech. installations and machinery 186,352 20,507 –25,274 4,402 52 –153 185,886

Other install., tools and furniture 31,958 7,682 –1,707 18,778 75 –102 56,684

Invest.motorways in operation 4,155,090 472,853 –3,907 20,309 53,325 –1,711 4,695,959

Invest. motorways under construction 46,474 57,671 0 –16,871 0 –132 87,142

Adv. and tang. fixed assets in progress 105,582 255,969 –19,461 –1,195 0 0 340,895

Other tangible fixed assets 65,011 11,915 –6,567 –15,250 200 –22 55,287

Provisions –13,783 0 9,496 0 0 0 –4,287

Cost 6,355,627 1,045,382 –137,337 –26,216 53,652 –2,125 7,288,983

Land and buildings –16,767 –2,865 701 273 0 22 –18,636

Buildings for lease –86,252 –34,109 5,645 643 –37 26 –114,084

Tech. installations and machinery –123,543 –12,633 19,181 –280 –35 125 –117,185

Other install., tools and furniture –19,581 –3,274 411 –297 –9 90 –22,660

Invest.motorways in operation –113,053 –39,349 2,900 –35 –2,312 153 –151,696

Invest. motorways under construction 0 0 0 0 0 0 0

Adv. and tang. fixed assets in progress –7,966 –2,087 792 –764 0 5 –10,020

Other tangible fixed assets –29,905 –5,403 5,684 30 –1,638 83 –31,149

Accumulated Depreciation –397,067 –99,720 35,314 –430 –4,031 504 –465,430

TANGIBLE FIXED ASSETS 5,958,560 945,662 –102,023 –26,646 49,621 –1,621 6,823,553

Annual Report 2004

152Varcárcel 48 was transferred to “Fixed assets in progress” as

it was being refurbished.

Worth highlighting under the “Fixed Assets in progress”

caption is the acquisition of land for building a tertiary building

on the former land of Real Madrid’s “Sports City”.

The changes in the perimeter under the heading “Investment in

motorways” correspond to the increase in the percentage

holding in Sociedad Concesionaria de Autovía del Noroeste.

The stake rose from 45% to 100% and the company is now

fully consolidated.

As of 31 December 2004, the Group’s contractors were

building and running the following motorways:

In 2004 no financial expenses on the costs of constructing

buildings were capitalized. Capitalized interest expenses from

previous years amounted to Euros 2,187 thousand. The

contractors of motorways under construction capitalized the

interest on debt which effectively finances the investment in

the motorway. These financial expenses were capitalized under

the heading “Investment in motorways under construction”. As

of 31 December 2004, the amount of the capitalized financial

expenses during the year, by company, was as follows:

Depreciation of tangible fixed assets is calculated using

degressive methods for specialized works machinery and the

straight line method for the other assets. Some tangible fixed

assets, mainly technical installations and machinery, are totally

depreciated, for an amount of Euros 100,536 miles de euros.

There are no tangible fixed assets unrelated to operations.

Motorways Motorways in under

Thousands of Euros in operation construction

S.C. Lagos 214,569 0

S.C. Litoral Central 32,863 0

S.C. Vespucio Sur 0 62,772

SC Autopista Nororiente 0 24,370

S.C. Rutas del Pacífico 167,228 0

Autoestradas de Galicia 155,818 0

Autopistas del Atlántico (AUDASA) 2,031,323 0

Autopista Astur-Leonesa (AUCALSA) 739,314 0

Autopistas de Navarra (AUDENASA) 390,204 0

Autopista Vasco Aragonesa (AVASA) 662,728 0

S.C. Elqui 204,958 0

Autovía del Noroeste 96,954 0

INVESTMENT IN MOTORWAYS (*) 4,695,959 87,142

(*) The "Motorways in operation" caption includes the goodwill in consolida-tion capitalized as the higher value of the motorways.

UntilThousands of Euros 2004 31/12/2004

S.C. Vespucio Sur 3,681 5,551

Autopistas de Navarra (AUDENASA) 0 17,685

Autopistas del Atlántico(AUDASA) 0 105,825

Autopista Astur-Leonesa(AUCALSA) 0 92,027

Autoestradas de Galicia 0 225

Autopista Vasco Aragonesa(AVASA) 0 17,050

Autovía del Noroeste 0 4,303

S.C. Elqui 0 10,705

S.C. Lagos 0 16,470

S.C. Rutas del Pacífico 0 11,004

S.C. Litoral Central 0 1,390

CAPITALIZED FINANCIALEXPENSES 3,681 282,235


153As of 31 December 2004, the Group had Euros 893,269

thousand in tangible fixed assets abroad. These are broken

down as follows:

7. FINANCIAL INVESTMENTS

The movement in the different financial investment accounts in

business year 2004 was as follows:

Sacyr Itinere Testa SomagueThousands of Euros Group Group Group Group TOTAL

Land and buildings 1,414 938 0 56,258 58,610

Buildings for lease 0 0 136,275 0 136,275

Technical installations and machinery 9,204 81 0 101,868 111,153

Other installations, tools and furniture 2,902 938 0 24,626 28,466

Invest. in motorways in operation 0 619,618 0 0 619,618

Invest. in motorways under construction 0 87,142 0 0 87,142

Advances and tangible fixed assets in progress 0 0 0 6,859 6,859

Other tangible fixed assets 1,524 1,635 0 34,497 37,656

Cost 15,044 710,352 136,275 224,108 1,085,779

Accumulated Depreciation –11,454 –54,028 –8,749 –118,279 –192,510

TANGIBLE FIXED ASSETS 3,590 656,324 127,526 105,829 893,269

Balances at Variations Balance at Thousands of Euros 31/12/03 Additions Removals Reclassif. in Perimeter 31/12/04

Equity-accounted holdings 134,791 54,674 –7,597 0 36,009 217,877

Loans to equity-accounted companies 8,055 19,054 –6,025 46,767 0 67,851

Long-term securities portfolio 84,200 245,558 –69,977 –4,033 0 255,748

Other long-term loans 73,513 425,713 –54,720 –26,424 0 418,082

Long-term deposits and guarantees 17,247 3,378 –53 –10 0 20,562

Cost 317,806 748,377 –138,372 16,300 36,009 980,120

Provisions –23,207 –2,279 17,634 1,201 0 –6,651

Provisions –23,207 –2,279 17,634 1,201 0 –6,651

FINANCIAL INVESTMENTS 294,599 746,098 –120,738 17,501 36,009 973,469

Annual Report 2004

154In accordance with the requirements of article 86 of the

Amended Text of the Corporation Act, the companies in the

Group complied with the requisite of informing of the

companies in which they had acquired a stake of over 10%; if

they already owned this stake, they informed of additional

acquisitions or sales of over 10%.

The increase in the long-term securities portfolio is due to the

purchase of 0.47% of the BBVA group.

This investment forms part of a plan agreed upon at the

meeting of the Board of Directors held on 24 November 2004

to acquire a significant holding of around 3.1% of the capital of

the BBVA group. The remainder up to the 3.1% would have

been acquired by contracting hedging instruments, which

would be financed through a Euros 1,100 million rights issue.

The breakdown of the securities portfolio is as follows:

Thousands of Euros 2004

Sacyr Vallehermoso, S.A. 199,473

Sacyr, S.A.U. 2,434

Cavosa Obras y Proyectos, S.A. 444

Prinur, S.A.U. 12

Constructora ACS-Sacyr, S.A. 329

Sacyr Group 3,219

Ena Infraestructuras, S.A. 21,974

Autopista Vasco Aragonesa (AVASA), S.A. 655

Itinere Infraestructuras, S.A. 294

Autopistas de Navarra (AUDENASA), S.A. 90

Autopistas del Atlántico (AUDASA), S.A. 12

Itinere Chile, S.A. 6

Itinere Group 23,031

Iberese, S.A. 2,887

Sociedad Anónima de Depuración y Tratamientos (SADYT), S.A. 149

Valoriza Group 3,036

Vallehermoso División Promoción, S.A.U. 17,719

Capace, S.L. 3

Vallehermoso Group 17,722

Testa Inmuebles en Renta, S.A. 182

Testa Group 182

Somague Group 9,085

LONG-TERM SECURITIES PORTFOLIO 255,748

The movement in treasury stock in business year 2004 was as

follows:


155The changes in the chapter of “Equity accounting” during the

year are as follows:

8. CONTROLLING COMPANY TREASURYSTOCK

As of 31 December 2004, the Controlling Company had

2,228,583 shares in treasury stock, representing 0.84% of

share capital. The average acquisition price of these shares is

Euros 12.39 per share.

Balance at 31/12/03 221,337

Shares purchased 7,351,803

Shares sold –5,360,902

Bonus rights issue 16,345

Balance at 31/12/04 2,228,583

Balance at Variations in Share Balance atThousands of Euros 31/12/03 perimeter in result Additions Removals 31/12/04

Build2Edifica, S.A. 321 0 20 0 –16 325

Euroglosa 45, CCAM, S.A. 7,357 –7,357 0 0 0 0

Alazor Inversiones, S.A. 23,965 17,871 –1,316 1,268 0 41,788

Tacel Inversiones, S.A. 2,337 2,329 –178 251 0 4,739

Aeropuertos Región de Murcia, S.A. 104 0 –15 50 0 139

IRASA 5,746 0 –251 860 0 6,355

S.C. Palma Manacor 0 7,000 0 0 0 7,000

Guadalmetro, S.A. 23,973 0 0 0 –42 23,931

Parking Palau, S.A. 1,250 0 95 0 0 1,345

Lusivial Prom. e Gestao Inmob., S.A. 5,087 –5,087 0 0 0 0

Centro DÓci Les Garverres, S.L. 481 0 171 0 0 652

PK Hoteles, S.L. 3,823 0 0 1,300 0 5,123

Camarate Golf, S.A. 0 4,680 –8 0 0 4,672

Promociones Residenciales Sofetral, S.A. 3,513 0 5 0 –2,224 1,294

Nova Benicalap, S.A. 80 0 303 0 0 383

Aplicaçao Urbana II, S.A. 12,162 0 62 175 0 12,399

Novacala Villajoyosa, S.A. 1,699 0 –219 0 –142 1,338

Club de Campo as Mariñas, S.A. 176 0 0 0 0 176

Barajas 3º Milenio, S.A. 6,179 0 0 0 0 6,179

Mola 15, S.L. 620 0 0 0 0 620

La Vivienda Económica, S.A. 0 16,583 0 0 0 16,583

Filiales de Somague 35,918 –10 11,256 37,213 –1,541 82,836

EQUITY-ACCOUNTED HOLDINGS 134,791 36,009 9,925 41,117 –3,965 217,877

Annual Report 2004

156The Ordinary General Shareholders’ Meeting on 25 June 2004

approved a rights issue for Euros 6,491,544 through the issue

of 6,491,544 shares, each with a par value of one euro,

charged to unrestricted voluntary reserves and in the proportion

of one new share for every forty already issued. As a result of

this operation, a total of 16,345 shares corresponds to the

Controlling Company.

At the end of the year, the price was of Euros 12.15 per share.

In compliance with accounting regulations, there is a provision

of Euros 20,735 thousand.

9. GOODWILL IN CONSOLIDATION ANDLOSSES IN CONSOLIDATION

In business year 2004 the changes in Goodwill in

Consolidation and in Losses in Consolidation were as follows:

Balance at Additions or Removals or Balance atThousands of Euros 31/12/03 allocations reductions Reclassific. 31/12/04

Somague, SGPS 10,096 54,678 0 0 64,774

Avasacyr, S.A. 1 0 0 0 1

Euroglosa 45, CCAM, S.A. 1,237 0 –1,237 0 0

Pack Team Racer, S.A. 2 0 –2 0 0

Gestora de Autopistas, S.A. 41 0 0 0 41

Microtec, S.A. 142 0 0 0 142

Febide, S.A.U. 50 0 0 0 50

Aurentia, S.A. 49 0 0 0 49

Cavosa Obras y Proyectos, S.A. 638 0 0 0 638

Constructora Sacyr-Necso, S.A. 153 0 0 0 153

Erantos, S.A. 12 0 0 0 12

Lusivial Prom. e Gestao Inmob., S.A. 266 0 –266 0 0

Filiales de Somague 77,976 6,365 –8,168 –4,975 71,198

Secaderos de Biomasa, S.L. 29 0 0 0 29

Biomasas de Puente Genil, S.L. 47 0 0 0 47

Compañía Energética Pata de Mulo, S.L. 61 0 0 0 61

Iberese, S.A. 98 0 0 0 98

Cafestore, S.A. 1,259 0 0 0 1,259

Olextra, S.A. 1 0 0 0 1

Vallehermoso Telecom, S.A. 70 0 0 0 70

Burosoft, S.L. 392 0 0 0 392

GROSS GOODWILL 92,620 61,043 –9,673 –4,975 139,015

Cont.


157Balance at Additions or Removals or Balance atThousands of Euros 31/12/03 allocations reductions Reclassific. 31/12/04

Somague, SGPS –6,921 –5,907 0 0 –12,828

Avasacyr, S.A. –1 0 0 0 –1

Euroglosa 45, CCAM, S.A. –496 0 496 0 0

Pack Team Racer, S.A. –2 0 2 0 0

Gestora de Autopistas, S.A. –40 0 0 0 –40

Microtec, S.A. –28 –28 0 0 –56

Febide, S.A.U. –10 –10 0 0 –20

Aurentia, S.A. –30 –10 0 0 –40

Cavosa Obras y Proyectos, S.A. –292 –127 0 0 –419

Constructora Sacyr-Necso, S.A. –153 0 0 0 –153

Erantos, S.A. –12 0 0 0 –12

Filiales de Somague –3,232 –5,367 0 –12,333 –20,932

Lusivial Prom. e Gestao Inmob., S.A. –266 0 266 0 0

Secaderos de Biomasa, S.L. –29 0 0 0 –29

Biomasas de Puente Genil, S.L. –47 0 0 0 –47

Compañía Energética Pata de Mulo, S.L. –61 0 0 0 –61

Iberese, S.A. –98 0 0 0 –98

Cafestore, S.A. –581 –252 0 0 –833

Olextra, S.A. –1 0 0 0 –1

Vallehermoso Telecom, S.A. –11 –14 0 0 –25

Burosoft, S.L. –392 0 0 0 –392

Accumulated amortization of goodwill –12,703 –11,715 764 –12,333 –35,987

Net goodwill 79,917 49,328 –8,909 –17,308 103,028

Autovía del Noroeste, CCARM, S.A. 0 –1,115 0 0 –1,115

Nisa VH, S.A. –319 0 0 0 –319

PK Inversiones, S.L. –9 0 0 0 –9

Filiales de Somague 0 936 0 –11,286 –10,350

Lusivial Prom. e Gestao Inmob., S.A –279 0 279 0 0

Navinca, S.A. –6 0 0 0 –6

Losses in consolidation –613 –179 279 –11,286 –11,799

GOODWILL AND LOSSES IN CONSOLIDATION 79,304 49,149 –8,630 –28,594 91,229

Annual Report 2004

15810. INVENTORIES

The breakdown of the Group’s Inventories as of 31 December

2004 was as shown below:

As of 31 December 2004, some of the properties and

developments in progress were mortgaged to guarantee the

repayment of transferable bank loans obtained to finance the

development business. Of the “Developments in progress”,

Euros 108,807 thousand is short cycle and Euros 223,509

thousand long cycle.

11. CUSTOMER ACCOUNTS RECEIVABLE FORSALES AND SERVICES

The breakdown of Customer Accounts Receivable in this

chapter on the asset side of the consolidated balance sheet as

of 31 December 2004 is as follows:

The value of the Group’s inventories as of 31 December 2004

includes financial expenses and other expenses and an amount

of Euros 4,823 thousand was added during business year 2004.

In 2003 Euros 4,880 thousand in financial expenses was added.


Commercial 11,895

Building materials and other supplies 36,566

Products in progress and semi-completed 121,430

Auxiliary work and initial expenses 3,407

Finished products 3,285

Land and plots 1,493,880

Adaptation of land 34,279

Developments in progress 332,316

Properties 157,884

Advances 93,949

Provisions –67

TOTAL INVENTORIES 2,288,824


Customers 1,558,683

Notes receivable 86,303

Withholdings in guarantee 26,618

Doubtful customer accounts 14,716

Work executed pending certification 103,569

Total customers 1,789,889

BAD DEBT PROVISIONS –20,973

Fixed income securities accrue market interest rates and their

maturities are short-term.13. SHAREHOLDERS’ EQUITY

The movement in consolidated shareholders’ equity was as

follows:


15912. SHORT-TERM FINANCIAL INVESTMENTS

The changes that took place in 2004 in the different accounts

in this chapter on the asset side of the accompanying

consolidated balance sheet were as follows:

Balance at Reclassi- Exchange Balance atThousands of Euros 31/12/03 Additions Removals fication rate 31/12/04

Loans to equity-accounted companies 265 0 –157 0 0 108

Fixed income securities 89,137 2,340,614 –2,385,217 –2,815 –28 41,691

Equities 24,589 702,192 –707,341 2,789 –15 22,214

Term deposits 1,958 38,934 –37,476 0 0 3,416

Short-term loans 4,608 74,302 –62,818 31 0 16,123

Short-term deposits and guarantees 3,632 55,678 –41,844 –5 –7 17,454

Cost 124,189 3,211,720 –3,234,853 0 –50 101,006

Provision for depreciation –668 0 0 0 0 –668

SHORT-TERM FINANCIAL INVESTMENTS 123,521 3,211,720 –3,234,853 0 –50 100,338

Balance at Distribution of 2004 Interim Rights Var. in ex- Others Balance atThousands of Euros 31/12/03 income income dividend issue Transfers change rate adjustments 31/12/04

Share capital 245,811 0 0 0 20,342 0 0 0 266,153

Additional paid-in capital 0 0 0 0 145,435 0 0 0 145,435

Revaluation reserve 12,901 0 0 0 0 0 0 0 12,901

Legal reserve 30,953 11,483 0 0 0 0 0 0 42,436

Reserve for treasury stock 596 0 0 0 0 6,287 0 0 6,883

Voluntary reserve 322,884 475 0 0 0 –31,312 0 0 292,047

Consolidation reserve 606,250 219,513 0 0 0 0 19,446 202,386 1,047,595

Translation differences –175,250 0 0 0 0 0 25,610 0 –149,640

Income for the year 334,349 –334,349 376,332 0 0 0 0 0 376,332

Interim dividend –66,439 66,439 0 –59,645 0 0 0 0 –59,645

Dividends 0 36,439 0 0 0 0 0 0 0

SHAREHOLDERS' EQUITY 1,312,055 0 376,332 –59,645 165,777 –25,025 45,056 202,386 1,980,497

Annual Report 2004

160The balance of Euros 25,025 thousand in the “Transfers”

column corresponds to the following two operations:

i. Euros 6,491 thousand corresponds to the rights issue

charged to reserves described in Note a) i.

ii. Euros 18,534 thousand corresponds to the transfer to the

treasury stock provision.

a) Distribution of income of Sacyr Vallehermoso, S.A. (Controlling Company)

The proposal for the distribution of income of the controlling

company Sacyr Vallehermoso, S.A. corresponding to business

year 2004, formulated by the Directors and pending approval at

the General Shareholders’ Meeting, is as follows:

The amount paid in business year 2004 is posted under the

heading “Interim dividend paid during the year” on the liability

side of the balance sheet and reduces shareholders’ equity by

the same amount. The amount agreed upon in business year

2004 and pending payment as of 31 December 2004 is

reported under the caption “Other debts” on the liability side of

the balance sheet.

b) Share Capital

As of 31 December 2004, the Company’s share capital was

represented by 266,153,343 bearer shares, each with a par

value of one euro, totally subscribed and paid up, which have

the same economic and voting rights.

Share capital increased in business year 2004 by Euros 20,342

thousand, as was agreed at the General Shareholders’ Meeting

held on 25 June 2004 and is broken down in the following

manner:

i. Euros 6,491 thousand, rights issue charged to voluntary

reserves, of 6,491,544 shares, each with a par value of one

euro, in a proportion of 1 x 40 old shares.

ii. Euros 13,851 thousand, through the issue of 13,850,948

shares with a par value of one euro, together with an issue

premium of Euros 145,435 thousand (Euros 10.5 per share)

for the acquisition of 64.28% of the company Somague

S.G.P.S., S.A.

As of 31 December 2004, all of the shares issued and in

circulation were admitted to trading on the Computer-Assisted

Trading System. Up until 30 June 2004, the Controlling Company

was on the selective Ibex-35 index and on 3 January 2005 it was

once again included on the index. Since 30 September 2004,

the 266,153,343 shares of Sacyr Vallehermoso, S.A. have been

trading on the Portuguese equity market and as of 31 December

2004, their price was Euros 12.06 per share.

According to the records of the Comisión Nacional del

Mercado de Valores (C.N.M.V.), as of 31 December 2004 the

Company’s ownership structure was as follows:

Of the Euros 95,288,007.10 corresponding to dividends,

equivalent to Euros 0.36 per share, the following interim

payments were agreed on:

• Euros 19,976,915.57 on 25 June 2004 (Euros 0.077 per

share), paid on 28 July 2004.

• Euros 19,873,391.93 on 6 October 2004 (Euros 0.075

per share), paid on 15 October 2004.

• Euros 19,794,357.00 on 15 December 2004 (Euros 0.075

per share), paid on 14 January 2005.

• Euros 35,643,342.60 on 29 March 2005 (Euros 0.135 per

share) payable on 15 April 2005.

Euros 2004

Base of Distribution 178,340,228.21

Income 2004 178,340,228.21

Distribution 178,340,228.21

To Dividends 95,288,007.10

To Legal Reserve 10,794,224.92

To Voluntary Reserves 72,257,996.19


161amount of treasury stock, by transferring funds from

unrestricted reserves.

f) Other reserves

- Reserve corresponding to Ministry of Finance Order of 25

June 1958

This reserve, which was constituted in compliance with the

said Ministerial Order until Royal Decree Law 15/1977 came

into force, is unrestricted.

- Investment Provision Fund

In 1987 and 1988 Vallehermoso, S.A. (now Sacyr

Vallehermoso, S.A.) took advantage of the tax benefits of the

Investment Provision Fund established for real estate

companies protected by Royal Decree 2631/1982, of 15

October. This fund was materialized in fixed assets directly

related to the Company’s activity.

The balance on this account may be used to offset losses or to

increase capital and, where relevant, allocations may

simultaneously be made to the legal reserve. The balance in

the account may be distributed, without tax being payable, as

the assets in which the fund invested are sold or as these

assets amortized.

- Voluntary reserves

Voluntary reserves were unrestricted as of 31 December

2004.

- Merger reserve from restatement Act 76/1980

As a result of the merger passed at the Extraordinary General

Shareholders’ Meeting of Vallehermoso, S.A. (now Sacyr

Vallehermoso, S.A.) held on 22 December 1988 and following

the tax regime established in Act 76/1980, of 26 December, on

the Tax Regime for Company Mergers, the Company and the

absorbed companies restated certain assets for a global

amount of Euros 12,901 thousand and Euros 8,366 thousand,

c) Additional paid-in capital

In business year 2004 a rights issue was conducted for

13,850,948 shares, each with a par value of one euro. In turn,

an additional paid-in capital reserve was allocated at Euros

10.5 per share, in order to avoid the dilution effect, which is

equivalent to a total of 145,435 thousand.

This reserve has the same restrictions and may be used for the

same ends as voluntary reserves, including converting it into

share capital.

d) Legal reserve

In accordance with the Amended Text of the Corporation Act, a

figure equal to 10% of income for the year must be put into the

legal reserve until this reserve is equivalent to at least 20% of

share capital. The legal reserve cannot be distributed to

shareholders and may only be used to offset losses on the

income statement, when no other reserves are available.

With the distribution of income corresponding to business year

2004, the legal reserve has reached 20% of share capital.

e) Reserve for treasury stock

By virtue of what is established in article 79.3 of the

Corporation Act, this restricted reserve was created for the

%Holding

Prilou, S.L. 11.542%

Rimefor Nuevo Milenio, S.L. 7.686%

Cymofag, S.L. 7.000%

Torreal, S.A. 6.989%

Participaciones Agrupadas, S.R.L. 6.123%

Almarfe, S.L. 5.960%

Finavague, S.L. 5.257%

Actividades Inmobiliarias y Agrícolas, S.A. 5.068%

Other holdings of less than 5% 44.375%

TOTAL 100.00%

Annual Report 2004

162respectively. The second amount was eliminated in the merger

process.

Act 78/80 establishes that the assets enjoying these tax

benefits may not be sold for a minimum period of five years

from the date of restatement, but imposes no other restriction

to the free use of the “Reserve from restatement Act 76/80”.

g) Breakdown of translation differencescorresponding to companies consolidated throughglobal or proportional integration


Sacyr Chile –20,049

Cavosa Chile –1,563

Constructora ACS-Sacyr –2,446

Constructora Necso-Sacyr –91

Consorcio Cavosa Agecomet 9

Constructora Sacyr-Necso 27

Itinere Chile –52,070

S.C. Elqui –27,142

S.C. Lagos –33,564

S.C. Rutas del Pacífico –14,327

S.C. Red Vía Litoral Central –4,029

S.C. Autopistas Metropolitanas –6,872

S.C. Autopista Nororiente –1

S.C. Rutas II 1

Gestora de Autopistas –391

Operadora de los Lagos –354

Operadora del Pacífico –111

Somague 13,334

TOTAL TRANSLATION DIFFERENCES –149,640


163h) Dividends

On 25 June 2004, the Company’s Board of Directors agreed to

pay shareholders an interim dividend charged to business year

2004, equivalent to 7.7% of the par value of the share, which

implied a total payment of Euros 19,977 thousand. The

following table shows that there was sufficient liquidity to make

this payment:

SACYR VALLEHERMOSO, S.A.

STATEMENT OF LIQUIDITY FORESEEN FOR THE PURPOSES OF THE DISTRIBUTION OF THE INTERIM DIVIDEND CHARGED TO BUSINESS YEAR 2004, AGREED BY THE BOARD OF DIRECTORS AS OF 25 JUNE 2004

Cash and investment as of 30 May 2004 25,219,832.74

Credit disposable as of 30 May 2004 90,798,119.63

Collections and payments foreseen until the day of the agreement –21,573,119.63

DISPOSABLE CASH BALANCE 94,444,832.74

JUSTIFICATION OF THE EXISTENCE OF INCOME FOR THE DISTRIBUTION OF THE INTERIM DIVIDEND CHARGED TO BUSINESS YEAR 2004,

AGREED BY THE BOARD OF DIRECTORS AS OF 25 JUNE 2004

Income after tax as of 30 May 2004 55,271,214.25

Allocation to the Legal Reserve 5,527,121.43

INCOME AFTER TAX LESS ALLOCATION TO RESERVES 49,744,092.82

INTERIM DIVIDEND ALREADY PAID 0.00

MAXIMUM AMOUNT DISTRIBUTABLE 49,744,092.82

DISTRIBUTION OF THE INTERIM DIVIDEND CHARGED TO BUSINESS YEAR 2004, AGREED BY THE BOARD OF DIRECTORS AS OF 25 JUNE 2004

Shares issued by SACYR VALLEHERMOSO, S.A. 259,661,799

Shares in treasury stock 221,337

Shares with the right to dividend 259,440,462

Proposed dividend per share (in Euros) 0.0770

INTERIM DIVIDEND AGREED(*)

19,976,915.57

(*) The dividend will be due and payable as of 28 July 2004.

Annual Report 2004

164On 6 October 2004, the Company’s Board of Directors agreed

to pay shareholders an interim dividend charged to business

year 2004, equivalent to 7.5% of the par value of the share,

which implied a total payment of Euros 19,873 thousand. The


this payment:


STATEMENT OF LIQUIDITY FORESEEN FOR THE PURPOSES OF THE DISTRIBUTION OF THE INTERIM DIVIDEND CHARGED TO BUSINESS

YEAR 2004, AGREED BY THE BOARD OF DIRECTORS AS OF 6 OCTOBER 2004

Cash and investment as of 31 August 2004 25,341,519.15

Credit disposable as of 31 August 2004 41,275,386.00

Collections and payments foreseen until the day of the agreement 26,031,872.00


JUSTIFICATION OF THE EXISTENCE OF INCOME FOR THE DISTRIBUTION OF THE INTERIM DIVIDEND CHARGED TO BUSINESS YEAR 2004, AGREED BY THE BOARD OF DIRECTORS AS OF 6 OCTOBER 2004

Income after tax as of 31 August 2004 48,188,431.40



INTERIM DIVIDEND ALREADY PAID 19,976,915.57


DISTRIBUTION OF THE INTERIM DIVIDEND CHARGED TO BUSINESS YEAR 2004, AGREED BY THE BOARD OF DIRECTORS AS OF 6 OCTOBER 2004


Shares in treasury stock 1,174,784




19,873,391.93

(*) The dividend will be due and payable as of 15 October 2004.


165On 15 December 2004, the Company’s Board of Directors

agreed to pay shareholders an interim dividend charged to

business year 2004, equivalent to 7.5% of the par value of the

share, which implied a total payment of Euros 19,794 thousand.

The following table shows that there was sufficient liquidity to

make this payment:


STATEMENT OF LIQUIDITY FORESEEN FOR THE PURPOSES OF THE DISTRIBUTION OF THE INTERIM DIVIDEND CHARGED TO BUSINESS

YEAR 2004, AGREED BY THE BOARD OF DIRECTORS AS OF 15 DECEMBER 2004

Cash and investment as of 31 October 2004 37,629,349.44

Credit disposable as of 31 October 2004 57,230,349.00

Collections and payments foreseen until the day of the agreement –10,964,349.00


JUSTIFICATION OF THE EXISTENCE OF INCOME FOR THE DISTRIBUTION OF THE INTERIM DIVIDEND CHARGED TO BUSINESS YEAR 2004,

AGREED BY THE BOARD OF DIRECTORS AS OF 15 DECEMBER 2004

Income after tax as of 31 October 2004 84,538,746.95





DISTRIBUTION OF THE INTERIM DIVIDEND CHARGED TO BUSINESS YEAR 2004, AGREED BY THE BOARD OF DIRECTORS AS OF 15 DECEMBER 2004






19,794,357.00

(*) The dividend will be due and payable as of 14 January 2005.

Annual Report 2004

166On 29 March 2005, the Company’s Board of Directors agreed

to pay shareholders an interim dividend charged to business

year 2004, equivalent to 13.5% of the par value of the share,

which implied a total payment of Euros 35,643 thousand. The


this payment:


STATEMENT OF LIQUIDITY FORESEEN FOR THE PURPOSES OF THE DISTRIBUTION OF THE INTERIM DIVIDEND CHARGED TO BUSINESS YEAR 2004, AGREED BY THE BOARD OF DIRECTORS AS OF 29 MARCH 2005

Cash and investment as of 31 December 2004 2,659,601.14

Credit disposable as of 31 December 2004 102,679,548.00

Collections and payments foreseen until the day of the agreement 82,800,452.00


JUSTIFICATION OF THE EXISTENCE OF INCOME FOR THE DISTRIBUTION OF THE INTERIM DIVIDEND CHARGED TO BUSINESS YEAR 2004, AGREED BY THE BOARD OF DIRECTORS AS OF 29 MARCH 2005

Income after tax as of 31 December 2004 178,340,228.21





DISTRIBUTION OF THE INTERIM DIVIDEND CHARGED TO BUSINESS YEAR 2004, AGREED BY THE BOARD OF DIRECTORS AS OF 29 MARCH 2005






35,643,342.60

(*) The dividend will be due and payable as of 15 April 2005.


167i) Breakdown of reserves at companies consolidated globally or proportionally or through equityaccounting

Thousands of Euros 31/12/04Sacyr, S.A.U. 118,451

Itinere Infraestructuras, S.A. 277,249

Valoriza Gestión, S.A.U. –1,785

Vallehermoso División de Promoción, S.A.U. 113,395

Testa Inmuebles en Renta, S.A. 231,527

Somague S.G.P.S. –18,390

Inchisacyr, S.A. –2,804

Itinere Chile, S.A. 118,187

Sacyr Chile, S.A. 44,770

Cavosa Obras y Proyectos, S.A. 4,124

Febide, S.A. 1,022

Ideyco, S.A.U. 471

Prinur, S.A.U. 1,844

Scrinser, S.A. 6,136

Aurentia, S.A. –266

Cavosa Chile, S.A. 2,807

Constructora ACS-SACYR, S.A. 8,373

Constructora NECSO-SACYR, S.A. 241

Constructora SACYR-NECSO, S.A. –130

Consorcio Cavosa Agecomet, S.A. 137

Autopista Vasco Aragonesa, (AVASA), S.A. –8,972

Autovía del Noroeste, CCARM, S.A. 754

Avasacyr, S.L.U. 19,361

Enaitinere, S.A.U. –126

Autoestradas de Galicia, S.A. –9,935

Autopista Astur-Leonesa (AUCALSA), S.A. 38,835

Autopistas del Atlántico (AUDASA), S.A. –19,674

Autopistas de Navarra (AUDENASA), S.A. 136

Ena Infraestructuras, S.A. –305

S.C. Del Elqui, S.A. 33,944

S.C. De los Lagos, S.A. 49,428

Gesvial, S.A. 908

Operadora del Pacífico, S.A. 430

Rutas II, S.A. –1

S.C. Litoral Central, S.A. 4,021

S.C. Vespucio Sur, S.A. 7,865

S.C. Rutas del Pacífico, S.A. 20,639

Gestora de Autopistas, S.A. 822

S.C. Autopista Nororiente, S.A. 22

Iberese, S.A. 1,026

Microtec Ambiente, S.A. 609

Sociedad Anónima de Depuración y Tratamiento, S.A. (SADYT) 1,140

Aparcamiento Recaredo A I E –46

Thousands of Euros 31/12/04Tratamientos y Recuperación del Ecosistema,

S.A.U. (TYRESA) 5

Cafestore, S.A.U. 678

Olextra, S.A. 53

Extragol, S.L. 7

Secaderos de Biomasa, S.L. 13

Biomasa de Puente Genil, S.L. 8

Compañía Energética de Pata Mulo, S.L. 9

Valoriza Energia, S.L.U. 3,476

Vallehermoso Telecom, S.A. –1,518

Valoriza Facilities, S.A. –151

Burosoft, S.L. –1,022

Prosacyr Ocio, S.L. –2,752

Tricefalo, S.A. –1

Navinca, S.A. –436

PK Inversiones, S.L. –3

Provitae, S.L. –35

V. Patrimonio S. Inmob. Inversión, S.A. 931

Gesfontesta, S.A.U. –41

Brickell Office 15,049

Nisa Vallehermoso, S.A. –63

Trade Center, S.L. 1,558

Reserves of globally or proportionally consolidated companies 1,062,005

Thousands of Euros 31/12/04Build 2 Edifica, S.A. –16

Euroglosa 45, CCAM, S.A. 614

Aeropuertos Región de Murcia, S.A. 41

Tacel Inversiones, S.A. –109

Alazor Inversiones, S.A. –3

IRASA 421

S.C. Palma Manacor, S.A. –152

Guadalmetro, S.A. –2

Nova Cala Villajoyosa, S.L. 1,121

Barajas 3 Milenio, S.L. 108

Aplicaçao Urbana II, S.L. 111

Club de Campo as Mariñas, S.L. –4

Sofetral, S.A. 241

Nova Benicalap, S.A. –3

Centre d’Oci Les Gavarres, S.A. –61

Parking Palau, S.A. 122

Filiales Somague –16,839

Reserves of equity-accounted companies –14,410

Annual Report 2004

16814. MINORITY INTERESTS

The balance under this caption on the liability side

of the consolidated balance sheet reflects the value of

the share of minority shareholders in the equity of the

consolidated dependent companies. Moreover, the

balance shown on the consolidated income statement

under “Income attributable to minorities” represents the

value of the share of these minority shareholders in income

for the year.

In business year 2004 the balance of this item on the

consolidated balance sheet and consolidated income

statement is as shown below:

Capital and Income/ TranslationThousands of Euros Reserves Loss differences TOTAL

HOLDING 143,805 3,320 –29,021 118,104

Grupo Itinere 137,143 2,250 –29,078 110,315

Grupo Testa 6,039 1,033 0 7,072

Grupo Somague 623 37 57 717

CONSTRUCTION 1,399 –79 7 1,327

Scrinser, S.A. 1,173 355 0 1,528

Consorcio Cavosa Agecomet, S.A. 106 –322 7 –209

SIS S.C.P.A. 120 –112 0 8

INFRASTRUCTURE CONTRACTS 398,152 27,510 –13,978 411,684

Ena Infraestructuras, S.A. 142,002 118 0 142,120

Autoestradas de Galicia, S.A. 237 624 0 861

Autopista Astur-Leonesa (AUCALSA), S.A. 37,158 659 0 37,817

Autopistas del Atlántico (AUDASA), S.A. 86,268 11,199 0 97,467

Autopistas de Navarra (AUDENASA), S.A. 103,955 12,881 0 116,836

Tacel Inversiones, S.A. –871 0 0 –871

Alazor Inversiones, S.A. –6,961 0 0 –6,961

S.C. De los Lagos, S.A. 1,035 164 –1,507 –308

S.C. Del Elqui, S.A. 35,153 1,771 –12,394 24,530

Gesvial, S.A. 176 94 –77 193

SERVICES 2,962 517 0 3,479

Burosoft, S.L. –207 –80 0 –287

Iberese, S.A. 1,542 190 0 1,732

Olextra, S.A. 581 –77 0 504

Extragol, S.L. 755 418 0 1,173

Secaderos de Biomasa, S.L. 54 0 0 54

Biomasas de Puente Genil, S.L. 53 0 0 53

Compañía Energética Pata de Mulo, S.L. 54 0 0 54

Compañía Energética La Roda, S.L. 130 66 0 196

DEVELOPMENT 3,295 –125 0 3,170

Tricéfalo, S.A. 3,295 –125 0 3,170

SOMAGUE 8,107 815 0 8,922

Sdades. filiales de Somague 8,107 815 0 8,922

MINORITIES 557,720 31,958 –42,992 546,686


16915. TAX ACCOUNTS

As was already indicated in Note 4(q), the company Sacyr

Vallehermoso, S.A., together with certain companies that meet

the tax regulation requirements, present consolidated tax

returns.

Some Group companies reported tax losses which may be

carried forward individually for offset in years subsequent to

the year when they occurred.

The breakdown of the tax losses pending application in future

years is as follows:

The period for offsetting these tax losses is fifteen years as

from the date they occurred.

The reconciliation of book income for the year with taxable

income for Corporate Tax purposes is as follows:

In addition, the Group has a tax credit of Euros 9,295 thousand,

from deductions on investments abroad in 2004, pending

application, which are reported as prepaid tax.

Thousands YearCOMPANY of Euros generated

Vallehermoso Telecom –462 2000

Vallehermoso Telecom –1,044 2001

Cafestore –11 1996





Compañía Energética La Roda –2 2003

Consolidated Tax Group –2,478

Bardiomar –2 2004

Spica –7 2003

Spica –2 2004

Provitae –69 2003

Provitae –69 2004

Tricefalo –7 1998

Tricefalo –31 1999






Other companies –1,239

NEGATIVE T.B. PENDING OFFSET –3,717


Consolidated income before tax 507,738

Permanent differences –48,790

–From individual companies –204,181

–From adjustments in consolidation 155,391

Adjusted book income 458,948

Timing differences –101,659

–From the year –97,222

–From previous years –4,437

Offset negat. T.B. prev. years 0

Tax base 357,289

Annual Report 2004

17016. PROVISIONS FOR CONTINGENCIES ANDEXPENSES

The breakdown by company of the different items under

“Provisions for contingencies and expenses” as of 31

December 2004 is as follows:

The Reversion Fund, which accounts for 95% of total

provisions for contingencies and expenses, basically

corresponds to the concessionaire company Autopista Vasco

Aragonesa, S.A. (AVASA), Autopistas del Atlántico

Concesionaria Española, S.A. (AUDASA), Autopista

Concesionaria Astur Leonesa, S.A. (AUCALSA) and Autopistas

de Navarra, S.A. (AUDENASA). The allocation to the Reversion

Fund is made by applying to the total Reversion Fund foreseen

the proportion the forecast toll revenues for the year represent

with respect to the total revenues forecast for the whole of the

concession period.

17. REVENUES AND EXPENSES

The breakdown of net revenues corresponding to the group’s

ordinary business in 2004, by activity and geographical

market, was as shown below:

Rest of Thousands of Euros AVASA AUDASA AUCALSA AUDENASA group TOTAL

Pension provision 0 0 0 0 921 921

Tax provision 0 0 0 0 3,375 3,375

Other provisions 0 0 0 0 24,965 24,965

Reversion fund 292,802 164,037 55,425 40,357 25,615 578,236

PROV. CONTING. AND EXP. 292,802 164,037 55,425 40,357 54,876 607,497

REVENUES BY BUSINESS

Thousands of Euros 2004 %

Construction 1,988,919 53.70

Domestic 1,052,607 28.42

Foreign 936,312 25.28

Infra. Contracts 323,694 8.74

Domestic 266,972 7.21

Foreign 56,722 1.53

Development 1,079,655 29.15

Domestic 1,068,440 28.85

Foreign 11,215 0.30

Services 122,162 3.30

Domestic 81,473 2.20

Foreign 40,689 1.10

Property 188,893 5.11

Domestic 176,080 4.75

Foreign 12,813 0.36

REVENUES 3,703,323 100.00

REVENUES BY COUNTRY

Thousands of Euros 2004 %

Spain 2,645,572 71.44

Portugal 792,089 21.39

Chile 170,143 4.59

Other countries 95,519 2.58

REVENUES 3,703,323 100.00


171In 2004 no transactions were effected with group or multi-

group companies excluded from the consolidation perimeter.

The transactions with associate companies correspond to the

revenues made by Vallehermoso División de Promoción,

S.A.U., Itinere Infraestructuras, S.A.U. and Sacyr, S.A.U. in

operations with the following companies:

The contribution of each of the Group’s companies to

consolidated income for business year 2004 was as follows:


S.C. Palma Manacor 39

Transactions of Sacyr, S.A.U. 39

S.C. Metro de Sevilla - Guadalmetro, S.A. 43

S.C. Palma Manacor, S.A. 54

Transactions of Itinere Infraestructuras, S.A. 97

Mola 15, S.L. 582

Aplicaçao Urbana, S.A. 7,826

Transactions of Vallehermoso Div. Promoción, S.A.U. 8,408

Thousands of Euros Contrib. to Income Minorities Income/Loss

Sacyr Vallehermoso, S.A. 19,256 0 19,256

Sacyr, S.A.U. 47,175 0 47,175

Build 2 Edifica, S.A. 20 0 20

SIS S.C.P.A. –167 –113 –280

Obras y Servicio de Galicia y Asturias, S.A. –110 0 –110

Cavosa Obras y Proyectos, S.A. 2,188 0 2,188

Febide, S.A. 28 0 28

Ideyco, S.A.U. 54 0 54

Prinur, S.A.U. 839 0 839

Scrinser, S.A. 2,010 355 2,365

Aurentia, S.A. –20 0 –20

C. Cavosa Agecomet, S.A. –484 –322 –806

Constructor ACS-SACYR, S.A. 179 0 179

Constructor NECSO-SACYR, S.A. 10,967 0 10,967

Constructor SACYR-NECSO, S.A. 4,266 0 4,266

Sacyr Chile, S.A. –3,732 0 –3,732

Cavosa Chile, S.A. –233 0 –233

Sacyr Group 62,980 –80 62,900

Cont.

Annual Report 2004

172 Thousands of Euros Contrib. to Income Minorities Income/Loss

Itinere Infraestructuras, S.A. –8,841 2,250 –6,591

IRASA –251 0 –251

Enaitinere, S.A.U. –32,213 0 –32,213

Ena Infraestructuras, S.A. 275 118 393

Autoestradas de Galicia, S.A. 1,169 624 1,793

Autopistas del Atlántico (AUDASA), S.A. 21,066 11,199 32,265

Autopista Astur-Leonesa (AUCALSA), S.A. 823 659 1,482

Autopistas de Navarra (AUDENASA), S.A. 5,392 12,880 18,272

Autopista Vasco Aragonesa (AVASA), S.A. 20,720 0 20,720

Euroglosa 45, CCAM, S.A. –742 0 –742

Autovía del Noroeste, CCARM, S.A. 569 0 569

Aeropuertos Región de Murcia, S.A. –15 0 –15

Neopista S.A.U. –57 0 –57

Avasacyr, S.L.U. –5,803 0 –5,803

Tacel Inversiones, S.A. –178 0 –178

Alazor Inversiones, S.A. –1,316 0 –1,316

S.C. de Los Lagos, S.A. 4,420 164 4,584

Gesvial, S.A. 519 94 613

Operadora del Pacífico, S.A. 228 0 228

Rutas II, S.A. 3 0 3

S.C. Litoral Central, S.A. –44 0 –44

S.C. Rutas del Pacífico, S.A. 1,479 0 1,479

Gestora de Autopistas, S.A. 100 0 100

S.C. Del Elqui, S.A. 4,708 1,771 6,479

Itinere Chile, S.A. –1,821 0 –1,821

Itinere Group 10,190 29,759 39,949

Valoriza Gestión, S.A.U. –1,278 0 –1,278

Burosoft, S.I., SL –187 –80 –267

Valoriza Facilities, S.A. 662 0 662

Aguas de Toledo, A I E 675 0 675

Iberese, S.A. 540 190 730

Microtec Ambiente, S.A. 85 0 85

Sociedad Anonima de Depuración y Tratamiento, S.A. (SADYT) 138 0 138

Aparcamiento Recaredo A I E 28 0 28

Tratamientos y Recuperación del Ecosistema, S.A.U. (TYRESA) 0 0 0

Cafestore, S.A.U. –1,796 0 –1,796

Olextra, S.A. –398 –77 –475

Extragol, S.L. 689 418 1,107

Cont.

Cont.


173Thousands of Euros Contrib. to Income Minorities Income/Loss

Secaderos de Biomasa, S.L. 0 0 0

Biomasa de Puente Genil, S.L. 1 0 1

Compañía Energetica de Pata Mulo, S.L. 1 0 1

Compañía Energetica La Roda, S.L. 411 66 477

Valoriza Energia, S.L.U. 426 0 426

Vallehermoso Telecom, S.A. –13 0 –13

Valoriza Group –16 517 501

Vallehermoso División de Promoción, S.A.U. 110,139 0 110,139

Camarate Golf, S.A. –8 0 –8

Spica Siglo 21, S.L. –2 0 –2

La Vivienda Económica, S.A. 0 0 0

Mola 15, S.L. 0 0 0

Nova Cala Villajoyosa, S.L. –219 0 –219

Prosacyr Ocio, S.L. 93 0 93

Barajas 3 Milenio, S.L. 0 0 0

Aplicaçao Urbana II, S.L. 64 0 64

Club de Campo as Mariñas, S.L. 0 0 0

Erantos, S.A. –193 0 –193

Tricefalo, S.A. –188 –125 –313

Capace, S.L. 1,674 0 1,674

Tradirmi S.L. –30 0 –30

Iparan Promociones Inmobiliarias, S.L. 5,249 0 5,249

Promociones Residenciales Sofetral, S.A. 5 0 5

Navinca, S.A. 10 0 10

Nova Benicalap, S.A. 304 0 304

Vallehermoso Group 116,898 –125 116,773

Testa Inmuebles en Renta, S.A. 159,195 1,033 160,228

Itaceco, S.L. 0 0 0

Trade Center, S.L. 1,452 0 1,452

Prosacyr Hoteles, S.L. 4 0 4

PK Hoteles 22, S.L. 0 0 0

PK Inversiones, S.L. 3 0 3

Provitae, S.L. –35 0 –35

Bardiomar, S.L. –1,239 0 –1,239

Vallehermoso Patrimonio S. Inmob. Inversión, S.A. 60 0 60

Gesfontesta, S.A.U. 7 0 7

Centro D’Oci les Garverres, S.L. 682 0 682

Brickell Office 4,062 0 4,062

Cont.

Cont.

Annual Report 2004

174

The breakdown of purchases and sales made in 2004 by

domestic and foreign market is shown below:

Thousands of Euros Contrib. to Income Minorities Income/Loss

Nisa Vallehermoso, S.A. 0 0 0

Parking Palau, S.A. 93 0 93

Gescentesta, S.L.U. 0 0 0

Testa Group 164,284 1,033 165,317

Somague Group 2,790 854 3,644

Inchisacyr –49 0 –49

INCOME FOR THE YEAR 376,332 31,958 408,290

Cont.


Domestic supplies 1,957,668

Foreign supplies 208,194

Total supplies 2,165,862

Domestic revenues 2,645,572

Foreign revenues 1,057,751

Total revenues 3,703,323


175The breakdown of extraordinary results by company in 2004 is

shown in the table below:


Sacyr Vallehermoso S.A. 2,555

HOLDING 2,555

Sacyr S.A.U. –1,697

Cavosa Obras y Proyectos, S.A. 21

Prinur, S.A. –26

Scrinser, S.A. –21

Sacyr Chile, S.A. 7

Constructora ACS-Sacyr, S.A. 3

Constructora Sacyr-Necso, S.A. 152

Constructora Necso-Sacyr, S.A. –19

Cavosa Chile, S.A. 11

Consorcio Cavosa Agecomet, S.A. –79

SACYR Group –1,648

Itinere Infraestructuras, S.A. –778

Enaitinere, S.A.U. –2

Autoestradas de Galicia, S.A. 1,599

Autopistas del Atlántico (AUDASA), S.A. 2,669

Autopista Astur-Leonesa (AUCALSA), S.A. –2,982

Autopistas de Navarra (AUDENASA), S.A. 1,490

Avasacyr, S.L.U. –2

Autopista Vasco Aragonesa (AVASA), S.A. 1,377

Autovía del Noroeste, S.A. 254

Neopista, S.A.U. 201

Itinere Chile, S.A. –1

S.C. Elqui, S.A. 32

S.C. Lagos, S.A. 59

S.C. Litoral Central, S.A. 37

S.C. Rutas del Pacífico, S.A. 29

Gestora de Autopistas, S.A. 15

Gesvial, S.A. 20

Operadora del Pacífico, S.A. 56

ITINERE Group 4,073


Valoriza Gestión, S.A.U. –12

Valoriza Facilities, S.A.U. –609

Aguas de Toledo, AIE –6

Iberese, S.A. –82

Microtec Ambiente, S.A. –68

Aparcamiento Recaredo, AIE 17

Tratamiento y Recuperación del Ecosistema, S.A.U.(Tyresa) –2

Cafestore, S.A.U. –89

Olextra, S.A. 5

Extragol, S.L. 64

Compañía Energética La Roda, S.L. 12

Valoriza Energía, S.L.U. 174

Vallehermoso Telecom, S.A. –12

VALORIZA Group –608

Testa Inmuebles en Renta, S.A. 110,103

Prosacyr Hoteles, S.L. 10

Bardiomar, S.L. –1,088

Brickell 141

Nisa Vallehermoso, S.A. –27

TESTA Group 109,139

Vallehermoso División Promoción, S.A.U. –173

Prosacyr Ocio, S.L. –18

Iparan Promociones Inmobilizarias, S.L. 314

VALLEHERMOSO Group 123

SOMAGUE Group 6,788

SACYR VALLEHERMOSO Group 120,422

Annual Report 2004

176The extraordinary items generated during the year were as

follows:

19. BACKLOG

At the end of 2004 the Group’s orders in hand was as shown

below:

The extraordinary results of the Grupo Testa, which account for

90% of the total, largely come from the capital gains obtained

on the sale of property.

18. AVERAGE WORKFORCE

The average number of people employed in business year

2004 at Group companies, broken down by category, was as

follows:

Sacyr Itinere Vallehermoso Testa Valoriza SomagueThousands of Euros Holding Group Group Group Group Group Group TOTAL

Var. intang, tang. and portf. prov. 0 1,393 2 0 –21,908 73 0 –20,440

Losses intang, tang. and portfolio 68 347 823 33 8 28 4,009 5,316

Losses on treasury stock transactions 384 0 0 0 0 0 0 384

Extraordinary expenses 137 790 2,121 161 1,965 861 1,125 7,160

Expenses and losses from prev. years 0 0 3,822 0 79 23 573 4,497

EXTRAORDINARY EXPENSES 589 2,530 6,768 194 –19,856 985 5,707 –3,083

Gains on asset disposals 841 331 57 314 87,944 174 1,885 91,546

Gains on treasury stock transactions 2,303 0 0 0 0 0 0 2,303

Cap. grants transf.to income for year 0 20 1,198 0 0 157 0 1,375

Extraordinary revenues 0 531 5,020 3 1,193 41 10,556 17,344

Rev. and income from prev. years 0 0 4,566 0 146 5 54 4,771

EXTRAORDINARY REVENUES 3,144 882 10,841 317 89,283 377 12,495 117,339

EXTRAORDINARY INCOME 2,555 –1,648 4,073 123 109,139 –608 6,788 120,422

2004

Higher graduates (5-year courses) 1,386

Lower graduates (3-year courses) 693

Non-graduate technicians 1,820

Clerical staff 1,338

Others 4,916

AVERAGE WORKFORCE 10,153

Millions of Euros 2004

Domestic construction 1,970

Foreign construction 888

Somague construction 874

Construction 3,732

Domestic contracts 45,001

Foreign contracts 4,369

Infrastructure contracts 49,370

Domestic development 773

Somague development 22

Development 795

Domestic property 2,301

Somague property 111

Property 2,412

Domestic services 1,007

Somague services 2,392

Services 3,399

TOTAL ORDER BOOK 59,708


177The Property division has 1,371,642 sq. metres, which

generate gross annual revenues of Euros 192 million. The

occupancy rate was 96.3% at the end of 2004. The works

orders (Euros 3,732 million) is equivalent to 20.6 months

of activity, with heavy weight in Spain (52.7%), followed

by Portugal (23.4%) and Chile (23.8%). The contracting

business accounts for 82% of the total order book.

The Development division has a land and product bank of

4,032,000 sq. metres, of which 91% corresponds to housing

to be sold in the coming years, while Euros 772 million

corresponds to housing sold pending delivery to customers.

20. GUARANTEES

As of 31 December 2004, the total amount of the guarantees

committed to third parties by the Group was Euros 2,023,597

thousand. A total of Euros 865,416 thousand (Euros 258,661

thousand abroad and Euros 606,755 thousand in Spain) were

financial guarantees, while Euros 1,158,181 thousand were

technical guarantees (Euros 464,161 thousand abroad and

Euros 694,020 thousand in Spain).

21. BOARD OF DIRECTORS’ REMUNERATIONAND OTHER BENEFITS

In business year 2004, the following movements occurred on

the Board of Directors of the Controlling Company:

i. The Chairman of the Board of Directors, Mr José Manuel

Loureda Mantiñán, presented his resignation as Chairman of

the Board and of its Executive Committee as he had reached

the age limit foreseen in the Company By-laws for

performing executive tasks. He also presented his

resignation as a member of the Board and of its Executive

Committee. The company PRILOU, S.L. (whose

representative is Mr Loureda) was appointed member of the

Board and its Executve Committee.

ii. After a favourable report from the Appointments and

Remuneration Committee, the Board appointed Mr Luis del

Rivero Asensio as Chairman of the Board and the Executive

Committee. He duly gave up his post as Chief Executive Officer.

iii. The company Cymofag S.L., which was represented on

the Board of SyV by Mr Manuel Manrique Cecilia, presented

its resignation as the latter was appointed Chief Executive

Officer and a member of the Executive Committee.

iv. Mr Antonio Basagoiti García-Tuñón, who was

proprietary Director representing Banco Santander Central

Hispano, S.A., presented his resignation as a Director

of SyV, as the bank sold its holding in SyV.

v. Moreover, Mr Pedro Gamero del Castillo y Bayo

(Chairman of Testa) and Mr Javier Gayo Pozo (Chairman of

Sacyr) resigned from the Board of SyV in order to devote all

their time to managing their respective companies.

vi. Mr José Ramón Calderón Ramos presented his resignation

from his post as a member of the Board of Directors.

vii. Almarfe S.L. joined the Board of Directors of SyV.

Almarfe S.L. owns a significant holding in the company and

will be represented by Mr Fernando Martín Álvarez.

The Company has not contracted any pension or life assurance

commitments for the members of the Board of Directors.

Neither are there any agreements by virtue of which the

members of the Board of Directors have the right to receive

compensation from the Company upon termination of their

posts as Company Directors.

Since June 2003, the members of the Board of Directors

receive Euros 5,000 for each Board meeting and Euros 3,333,

1,667 and 1,667 respectively for each meeting of the

Executive, Audit and Appointments and Remuneration

Committees.

Annual Report 2004

178The table below gives the individualized breakdown of the

directors’ fees received in 2004 by Company Directors who

still occupied their posts at the year end:

Euros Executive Audit App. and Rem. Directors’ Fees Board Committee Committee Committee Total

José Manuel Loureda Mantiñán 55,000.00 33,333.30 83,333.30

Luis Fernando del Rivero Asensio 60,000.00 33,333.30 93,333.30

Pedro Gamero del Castillo y Bayo 55,000.00 55,000.00

Antonio Basagoiti García-Tuñón 55,000.00 10,000.02 65,000.02

Cymofag, S.L. 55,000.00 29,999.97 84,999.97

Demetrio Carceller Arce 60,000.00 33,333.30 11,666.69 104,999.99

Matías Cortés Domínguez 60,000.00 11,666.69 71,666.69

José Ramón Calderón Ramos 5,000.00 5,000.00

Francisco Javier Gayo Pozo 55,000.00 55,000.00

Juan Miguel Sanjuán Jover 60,000.00 18,333.37 78,333.37

Vicente Benedito Francés 60,000.00 60,000.00

Participaciones Agrupadas, S.R.L. 60,000.00 33,333.30 18,333.37 111,666.67

José Seixas Queiroz Vaz Guedes 25,000.00 25,000.00

Diogo Alves Diniz Vaz Guedes 30,000.00 13,333.32 43,333.32

Manuel Manrique Cecilia 5,000.00 3,333.33 8,333.33

Corporación Caixa Galicia, S.A. 55,000.00 55,000.00

Nueva Compañía de Inversiones, S.A. 60,000.00 33,333.30 93,333.30

Almarfe, S.L. 25,000.00 25,000.00

Prilou, S.L. 5,000.00 5,000.00

Torreal, S.A. 60,000.00 18,333.37 78,333.37

TOTAL 905,000.00 213,333.12 55,000.11 33,333.40 1,206,666.63


179

For the purposes of what is foreseen in Article 127.ter of the

Corporation Act, it is hereby communicated that the Directors

of Sacyr Vallehermoso who occupy posts or have a significant

holding in any company that occasionally, and in specific

limited geographical areas, engages in activities which are

partly similar to those constituting the corporate purpose of

Sacyr Vallehermoso are as follows:

• Mr Juan Miguel Sanjuán y Jover is the Chairman of the

construction firm Satocan.

• Torreal, S.A., a subsidiary of Nueva Compañía de

Inversiones, S.A., is the direct owner of 9,688,556 shares in

the company Sociedad General de Aguas de Barcelona, S.A.,

which represent 6.642% of share capital. In addition,

Torreal, S.A. directly and indirectly owns 32,159,567 shares

in Miralver Spi, S.L., equivalent to 100% of its share capital.

Lastly, Torreal, S.A. is the indirect holder of 2,130 shares in

the company Promociones inmobiliarias El Molinar, S.A.,

which represents 50% of its share capital.

Torreal SCR, S.A., a subsidiary of Torreal, S.A., owns

1,094,160 shares in the company Sufi, S.A. It is Board

member of this company and its shareholding represents

31.94% of its capital. In addition, Torreal SCR, S.A. holds

811,500 shares in the company SAR Residencial y

Asistencial, S.A., equivalent to 26.13% of its share

capital.

Pedro del Corro García-Lomas owns 19,536 shares in the

company Sufi, S.A., which represents 0.570% of its share

capital. He is a Director of the said company. He also has

40,000 shares in the company SAR Residencial y

Asistencial, S.A., equivalent to 1.29% of its share capital.

• Nueva Compañía de Inversiones, S.A., is the direct

shareholder of 100 shares in the company Sociedad General de

Aguas de Barcelona, S.A., equivalent to 0.014% its share capital.

• Corporación Caixa Galicia S.A. owns the following stakes

in companies involved in the real estate business: 100% of

the capital of Home Galicia, S.L., 6.54% of the capital of

Lazora, S.A., 100% of Torre de Hércules S.L., 25% of the

capital of Deteinsa, S.A., 50% of Galeras Entrerios, S.L.,

15% of Geinsa, S.A., and 50% of Sociedad Gestora de

Promociones Inmobiliarias y Desarrollo Empresarial, S.L.,

20% of Borreal Desarrollo Inmobiliario, S.A., 25% of

Sociedad de Fomento y Desarrollo Turístico, S.A. and 100%

of Tasa Galicia Consult, S.A. Moreover, Corporación Caixa

Galicia, S.A. is a member of the Board of Directors of the

following listed companies: Transportes Azkar, S.A.,

Pescanova, S.A., Abengoa, S.A. and Ebro Puleva, S.A. In

respect of unlisted companies, Corporación Caixa Galicia is

a member of the Board of Directors of the following: Gestión

e investigación de Activos, S.A. Desarrollos Territoriales

Inmobiliarios, S.A., Gas Galicia SDG, S.A., Islalink, S.A. and

Intelsis Sistemas Inteligentes, S.A.

The table below shows the individualized breakdown of the

salaries received in 2003 by Company Directors who still

occupied their posts at the year end:

EurosSalaries paid to Directors FIXED VARIABLE TOTAL

José Manuel Loureda Mantinán 566,919.70 394,998.80 961,918.50

Luis Fernando del Rivero Asensio 507,208.30 353,544.80 860,753.10

Manuel Manrique Cecilia 423,182.99 295,000.00 718,183.00

Francisco Javier Gayo Pozo 314,768.99 222,229.00 536,998.00

Vicente Benedito Francés 225,803.72 94,503.36 320,307.00

Pedro Gamero del Castillo y Bayo 196,841.96 45,913.00 242,755.00

Diogo Alves Diniz Vaz Guedes 179,142.00 179,142.00

José Seixas Queiroz Vaz Guedes 130,193.00 130,193.00

TOTAL 2,544,060.66 1,406,188.96 3,950,249.60

Annual Report 2004

180• Mr Fernando Martín Álvarez, as an individual designated

by Femaral, S.L., is the sole manager of the company

Almarfe, S.L., and is the direct and indirect owner of the

whole of the share capital of the company Promociones y

Urbanizaciones Martín, S.A.

Art. 127.ter of the Corporation Act was interpreted in relation to

Art. 132 of the same text, understanding that holdings or posts

in companies whose real business coincides with the activity

of Sacyr Vallehermoso and, thus, could lead to a conflict of

interests between the two, must be reported.

For this reason, companies whose corporate purpose as

established in the Company By-laws may partially coincide

with that of Sacyr Vallehermoso but which, in practice, do not

engage in the same or a similar kind of activity, and so there

could not be any conflict of interests with SyV, are not stated.

Consequently, the posts held by some of Sacyr Vallehermoso’s

Directors on other Boards of Directors in the Group are not

mentioned.

In compliance with what is set out in Art. 114.2 of the Equity

Market Act, in business year 2004 the Directors of Sacyr

Vallehermoso, S.A. did not conduct, personally or through any

persons acting on their behalf, any transactions with Sacyr

Vallehermoso, S.A.

22. NON-TRADE ACCOUNTS PAYABLE

The breakdown of the balance as of 31 December 2004 of long

and short-term non-trade accounts payable is as follows:

Long-term Long-term Short-term Short-term TOTAL Thousands of Euros bonds bank debt bonds bank debt DEBT

Sacyr Vallehermoso, S.A. 99,415 221,854 250,952 68,121 640,342

Sacyr, S.A.U. 0 31,583 0 88,542 120,125

Cavosa Obras y Proyectos, S.A. 0 3,602 0 26,027 29,629

Ideyco, S.A.U. 0 0 0 178 178

Scrinser, S.A. 0 627 0 55 682

Sacyr Chile, S.A. 0 65,941 0 3,319 69,260

Consorcio Cavosa Agecomet, S.A. 0 0 0 490 490

Constructora Necso-Sacyr, S.A. 0 57 0 27 84

Sacyr Group 0 101,810 0 118,638 220,448

Itinere Infraestructuras, S.A. 0 45,498 0 46,495 91,993

Autopista Vasco Aragonesa (AVASA), S.A. 0 277,688 0 19,771 297,459

Autovía del Noroeste, CCARM, S.A. 0 58,609 0 3,056 61,665

Avasacyr, S.L.U. 0 150,151 0 359 150,510

Enaitinere, S.A.U. 0 860,539 0 1,929 862,468

Autopista Astur-Leonesa (AUCALSA), S.A. 280,043 2,372 402 75 282,892

Autopistas del Atlántico (AUDASA), S.A. 732,507 6,783 62,804 4,064 806,158

Autopistas de Navarra (AUDENASA), S.A. 22,584 795 53,329 9 76,717

Autoestradas de Galicia, S.A. 0 13,900 0 1,392 15,292

Itinere Chile, S.A. 0 16 0 16 32

S.C. De los Lagos, S.A. 0 110,279 0 8,521 118,800

S.C. Litoral Central, S.A. 0 32,587 0 607 33,194

Cont.


181Long-term Long-term Short-term Short-term TOTAL Thousands of Euros bonds bank debt bonds bank debt DEBT

S.C. Vespucio Sur, S.A. 56,747 1 0 10,942 67,690

S.C. Rutas del Pacífico, S.A. 128,084 0 0 0 128,084

Gestora de Autopistas, S.A. 0 73 0 0 73

S.C. Del Elqui, S.A. 0 84,283 0 10,541 94,824

Itinere Group 1,219,965 1,643,574 116,535 107,777 3,087,851

Valoriza Facilities, S.A. 0 0 0 1,065 1,065

Iberese, S.A. 0 5,083 0 2,841 7,924

Microtec Ambiente, S.A. 0 0 0 18 18

Sociedad Anónima de Depuración y Tratamientos (SADYT), S.A. 0 1 0 0 1

Cafestore, S.A.U. 0 0 0 1,213 1,213

Olextra, S.A. 0 5,232 0 821 6,053

Extragol, S.L. 0 6,471 0 1,085 7,556

Valoriza Gestión, S.A.U. 0 23,031 0 32 23,063

Compañía Energética La Roda, S.L. 0 4,136 0 500 4,636

Valoriza Energía, S.L.U. 0 30 0 0 30

Valoriza Gestión Group 0 43,984 0 7,575 51,559

Prosacyr Ocio, S.L. 0 11,651 0 1,606 13,257

Vallehermoso División de Promoción, S.A.U. 0 1,302,529 0 552,726 1,855,255

Erantos, S.A. 0 5,104 0 11 5,115

Tricéfalo, S.A. 0 5,147 0 31 5,178

Capace, S.L. 0 286 0 87 373

Iparan Promociones Inmobiliarias, S.L. 0 5,041 0 0 5,041

Vallehermoso Group 0 1,329,758 0 554,461 1,884,219

Testa Inmuebles en Renta, S.A. 0 1,368,764 0 65,169 1,433,933

Trade Center Hotel, S.L. 0 439 0 3 442

Bardiomar, S.L. 0 16,077 0 3,543 19,620

Testa Group 0 1,385,280 0 68,715 1,453,995

Somague SGPS 0 78,050 5,191 10,620 93,861

Somague Engenharia 30,000 81,150 0 106,257 217,407

Somague Ambiente 0 7,245 0 12,982 20,227

Somague Itinere 0 6,826 0 7,663 14,489

PEVR 0 1,372 0 140 1,512

Somague Inmobiliaria 0 0 0 26,131 26,131

Somague Group 30,000 174,643 5,191 163,793 373,627

CONSOLIDATED SACYR VALLEHERMOSO Group 1,349,380 4,900,903 372,678 1,089,080 7,712,041

Cont.

Annual Report 2004

18223. EVENTS SUBSEQUENT TO THE YEAR END

The most important events that have taken place subsequent to

the end of business year 2004 were as described below:

• On 3 January 2005, Sacyr Vallehermoso started trading

on the Ibex-35 again after six months’ absence. That

particular day it closed at Euros 12.38 per share, after

trading over Euros 12.03 million and gaining 1.89%. The

appreciation of the shares put the company in 24th position

on the index in terms of market capitalization. Sacyr

Vallehermoso was selected by the technical advisory

committee of the Ibex index at its ordinary meeting on 13

December 2004.

• On 14 January 2005, Sacyr Vallehermoso paid its

shareholders a gross dividend of Euros 0.075 per share,

charged to business year 2004.

• On 25 January 2005, in order to integrate Somague’s

different business units into the different head

companies in Grupo Sacyr Vallehermoso’s business

divisions, with a view to optimizing the Group’s

management and company structure, the companies

belonging to Somague SGPS (Holding) were acquired by

Sacyr Vallehermoso’s head companies. The operation

was as described below:

– In the infrastructure contracting division, Somague

SGPS sold Itinere Infraestructuras, S.A. all the shares of

Somague Itinere-Concessoes de Infraestructuras, S.A. for

Euros 41,040,000.

– In the services division, Somague SGPS sold Valoriza

Gestión, S.A. all the shares of Somague Ambiente, SGPS,

S.A., for Euros 15,300,000.

– In real estate development, Somague SGPS sold

Vallehermoso División Promoción, S.A.U., all the shares

in Somague Imobiliaria, S.A., for Euros 15,000,000.

• On 15 February 2005, the Board of Directors of Sacyr

Vallehermoso met and unanimously agreed to cancel the

hedging instruments previously contracted to implement a

possible decision to acquire a significant stake in Banco

Bilbao Vizcaya Argentaria (BBVA), and also to settle the

financial investment in shares of the said bank (representing

0.4718% of its share capital) related to the above, the

purpose of which was to complement the hedging by

acquiring up to a maximum of 3.1% of the financial

institution.

Sacyr Vallehermoso obtained Euros 148.63 million in capital

gains on the sale of these hedging instruments and BBVA

shares.

• Since February, Sacyr Vallehermoso already controls

100% of the capital of its Portuguese subsidiary Somague,

after acquiring the block it did not have. These shares were

gradually acquired through an ongoing purchase order

placed on Lisbon Stock Exchange between October 2004

and January this year. In this bid, Sacyr Vallehermoso

offered Euros 9.80 for each of the Portuguese construction

company’s shares.

• With a view to continuing with the Group’s policy of

paying the shareholder on a quarterly basis, at its meeting

on 29 March, the Board of Directors of the Controlling

Company approved a gross dividend, charged to 2004, of

Euros 0.135 per share, payable as of 15 April 2005.

With this last payment, the total payment charged to business

year 2004 amounted to gross Euros 0.36 per share, which is a

20% increase of 2003.

The Company’s payout, i.e. the percentage of income the

Company puts into dividend payment, was of 25.46%, as

against 22.05% in 2003.

In the Group’s Construction division, the head company, Sacyr,

S.A.U., has won the contracts for the following works since the

end of 2004:

• Construction of the new Hospital Universitario Central de

Asturias, in a Temporary Joint Venture with the Constructora

San José y Sánchez Lago, with a total budget of Euros

205.36 million (VAT included).

• In a Temporary Joint Venture with Necso, Sacyr has won

the construction project for the “Mularroya” dam (Zaragoza),

for a total amount of Euros 128.97 million. The contract

includes drawing up the project, building the dam (with a


183height of 90 metres), laying the necessary conduits from the

reservoir to the towns of La Almunia de Doña Godina,

Chodes and Ricla (Zaragoza), making the transfer from the

River Jalón to the River Grío, and the corresponding road

by-passes.

• Construction of the civil works, architecture and

development of pavilions 12 and 14 of extension II of the

“Juan Carlos I” trade fair ground in Madrid, with a budget of

Euros 56.44 million (before VAT).

• Development work in the PAU.-4 in Móstoles (Madrid),

with a total budget of Euros 54.59 million.

• Project and execution of the general infrastructure works

for drainage and purification of the basin of “La Reguera”

stream in Móstoles, Madrid. In a 50% Temporary Joint

Venture with Sadyt, with a budget of Euros 37.33 million

(VAT included).

• Development of the “Tenería II” S-8 in the municipality of

Pinto, for the Junta de Compensación S-8 Tenería II, for a

total of Euros 21 million (before VAT).

• Construction of 182 homes in Tenerife, for a total amount

of Euros 12.2 million (before VAT).

• Construction of the “Lobete” Sports Complex in the city of

Logroño, in a Temporary Joint Venture with Contratación y

Ejecución de Obras, with a total budget of Euros 11.69

million (including VAT).

• Construction of 72 homes in Seville, for a total amount of

Euros 6.39 million.

• Building 60 homes, also in Seville, for Euros 5.55 million

(before VAT).

• Refurbishment of the building at Orense 46 street

(Madrid), for a total amount of Euros 4.57 million (before

VAT).

• Construction of a maintenance building, in Madrid, for

Centros de Equipamiento Zona Oeste, S.A. (CEZOSA), with a

total budget of Euros 2.76 million.

• Urgent work on protection against flooding in the “Las

Norias de Daza” district in El Ejido (Almería), for a total

amount of Euros 2.2 million.

On 14 February, Sacyr, S.A.U., in conjunction with the Galician

bus group Mombús, presented its bids for the construction and

operation of the future bus, underground and/or railway stations

at Príncipe Pío and Plaza Elíptica (both in Madrid). The first

involves an investment of Euros 50 million and the second

Euros 40 million.

The construction firm Prinur, S.A.U. has been adjudicated the

work for improving the Ugíjar-Cherín sub-stretch (Granada) of

the A-348, with a budget of Euros 11.91 million (VAT

included).

In the Services segment, led by Valoriza Gestión, S.A., the

following events subsequent to the year end should be

highlighted:

• In January 2005, Valoriza Gestión, signed a strategic

agreement with the British company Servisair/GlobeGround

which contemplates the creation of a joint venture to provide

airport handling services. The new company, owned 50%,

will initially bid in tenders held in Spain for services at the

airports in AENA’s network, but could extend its business to

other countries where Servisair is already present. Servisair

is one of the world leaders in the handling sector and

operates nearly 150 airports in 31 countries. In 2004 it

serviced 1.4 million aeroplanes and 86 million passengers.

• On 8 February 2005, Sadyt signed an agreement with the

State-owned company Aguas de la Cuenca del Sur (Acusur)

to run and maintain the pumping and transport works for

desalinated water from Carboneras to Níjar, in Almería. The

agreement is for two years, extendible for another two, and

implies annual revenues of Euros 761,000, for managing a

system with 53 km of pipes.

• On 8 February, Valoriza Facilities, a Group company which

specializes in property maintenance, won the following

contracts:

– The maintenance service for Madrid Regional

Government’s Consejería de Justicia of the facilities in

Annual Report 2004

184different judicial properties in Madrid for a period of two

years and an amount of Euros 590,203.

– The cleaning services for the Madrid headquarters of

the Instituto de Estudios Fiscales for the Ministry of

Finance, for Euros 384,334.

– The maintenance of the installations of Malaga’s Centro

Eurolatino de la Juventud for the Ministry of Labour, for

Euros 93,000 a year.

• On 8 February, Valoriza Facilities obtained the AENOR

certificate, according to the UNE-EN ISO 9001:2000

standard, for building maintenance and conservation

activities, providing related ancillary services (cleaning,

gardening, janitor and reception services) and work on

buildings and refurbishment.

• As from March, Cafestore, a Group company which

specializes in running service areas on motorways and dual

carriageways, will manage the Miravalle area at kilometre

217 on the Rías Bajas dual carriageway (A-52). This area

has facilities on both sides of the road, with two petrol

stations and a hotel in the Madrid-Vigo direction. Cafestore

will manage the café, restaurant and shop for 12 years, with

the possibility of a five-year extension. The investment made

totals Euros 75 thousand.

• On 15 March, Cafestore opened the other side of the

service area it has at kilometre 750 of the A-7 in the

municipality of Orihuela (Alicante). The first side was

inaugurated in 2004.

In the infrastructure contracting business, headed by Itinere

Infraestructuras, S.A., the following significant events have

occurred.

• In January 2005, through its afíliate Itinere Chile, Itinere

Infraestructuras won the project to build a toll road between

Puerto Montt and Pargua (Chile), which the Chilean

Government declared was of public interest. The contract

will involve an investment of Euros 78 million, the road will

be 48.2 kilometres in length and the duration of the contract

is 40 years. This road is the natural extension of the toll

motorway Itinere Chile has between Río Bueno and Puerto

Montt.

In the real estate development division, headed by

Vallehermoso División Promoción, the following events have

take place since the year end:

• On 11 January 2005, Vallehermoso División Promoción

acquired 10,630 sq. metres of land from Boadilla del Monte

Council, for Euros 22.4 million, for the development of 96 homes.

• On 14 January, Vallehermoso acquired Euros 62,000

square metres of land in Zaragoza for Euros 29.7 million, for

the development of 550 homes.

• On 17 January, it bought 21,000 square metres in

Santander for Euros 11.97 million, for the development of

196 new homes.

• On 31 January, an 11.000 square metres plot was

acquired in Valencia for the development of 103 homes,

for Euros 3.54 million.

• In February 2005, Vallehermoso was adjudicated the

13,445 square metres plot in Méndez Álvaro (Madrid) for

Euros 39 million (VAT included). It will go to the

construction of 150 homes.

• On 1 February, land was acquired for Euros 4.86 million

in Bilbao.

• On 3 February 20,000 metres of land was purchased in

León, for Euros 6.03 million, to develop 145 homes.

• On 8 February, 38,000 square metres of land was

acquired in Zaragoza, for Euros 31.86 million, to develop

324 homes.

• On 17 February, a plot was acquired in Burgos for Euros

18.3 million. It has a total area of 12,052 square metres and

the plans are to build 155 homes on it.

• On 28 February an 8,160 square metre plot of land was

purchased in Valencia for Euros 18.12 million, for the

development of 68 homes.

• On the same date, 28 February, a plot of land was also

acquired in Murcia for Euros 15.64 million. It has an area of

21,600 square metres for the development of 180 homes.


18524. ENVIRONMENT

In line with its environmental policy the Company has been

undertaking different activities and projects related to the

legislation in force in this field. In respect of possible

contingencies that might occur as regards the environment, the

Company believes that it is adequately covered by its

insurance policies and, consequently, it had not constituted

any provision for this on the balance sheet as of 31 December

2004.

25. AUDIT FEES

The fees for all the audit companies which served the

Controlling Company and dependent companies consolidated

in business year 2004 amounted to Euros 1,019,982.

26. INFORMATION ON THE TRANSITION TOTHE INTERNATIONAL ACCOUNTINGSTANDARDS

In compliance with company legislation, particularly (EC)

Regulation no. 1606/2002 of the European Parliament and

Council, of 19 July 2002, on the application of the

international accounting standards, and final Clause eleven of

Act 62/2003, of 30 December, on tax, administrative and

company measures, Sacyr Vallehermoso, S.A. will have to

draw up its consolidated annual financial statements for the

business years which start as from 1 January 2005, inclusive,

using the International Accounting Standards which have been

adopted by the European Union (adopted IAS).

Consequently, the consolidated annual financial statements for

business year 2005 will be the first that the Grupo Sacyr

Vallehermoso will prepare using the adopted IAS.

The adopted IAS require that, with the exceptions contemplated

in IAS 1, the comparative information for business year 2004

included in the Group’s consolidated annual financial

statements for 2005 be drawn up in accordance with the same

standards. This will imply changes in the valuation,

classification and presentation of certain items on the balance

sheet and the income statement at the end of 2004, presented

in accordance with the accounting principles and standards

generally accepted in Spain. Moreover, the adopted IAS

required that the Group include in the consolidated annual

financial statements for 2005 certain reconciliations to reflect

the accounting effects of the conversion on consolidated

shareholders’ equity at the beginning and end of business year

2004 and on consolidated income for the said year.

The Group is developing the process for converting to the

adopted IAS, analyzing the effects on the accounts of their

application and the impacts related to the different processes,

amongst them those connected with information systems. The

final effects on the accounts, which will depend -amongst

others- on the options chosen by management and on the new

standards or interpretations finally adopted by the European

Union, will be described in the consolidated annual financial

statements for business year 2005.

Annual Report 2004

18627. CONSOLIDATED STATEMENT OF CHANGESIN FINANCIAL POSITION

2004 2003Thousands of Euros Increases Decreases Increases Decreases

Inventories 444,179 0 511,116 0

Accounts receivable 304,667 0 1,519,139 0

Short-term financial investments 0 23,183 99,827 0

Cash 0 22,901 127,423 0

Accruals 0 6,747 6,184 0

Accounts payable 197,616 0 0 2,554,256

TOTAL 946,462 52,831 2,263,689 2,554,256

CHANGES IN WORKING CAPITAL 0 893,631 290,567 0

APPLICATIONS 2004 2003

Increase in start-up expenses 6,247 9,834

Increase in intangible fixed assets 78,510 359,800

Increase in tangible fixed assets 1,111,544 841,627

Increase in financial investments 756,645 97,404

Increase in goodwill 34,825 52,962

Deferred charges 138,647 181,328

Decrease in minorities 221,511 0

Interim dividends 59,645 66,439

Dividends 36,838 23,031

Long-term accounts receivable 1,106,190 1,255,835

Increase in treasury stock 106,504 904

Decrease in working capital from integration in the consolidation perimeter and mergers 0 837,843

Total applications 3,657,106 3,727,007

Excess sources over applications (Increase in working capital) 893,631

SOURCES 2004 2003

Funds from operations 578,795 392,238

Rights issue and issue premium 159,286 368,014

Other movements in shareholders’ equity 247,843 –6,542

Decrease in start-up expenses 31 510,008

Disposal of fixed assets 362,307 510,008

–Intangible 369 0

–Tangible 223,567 441,615

–Financial 138,371 68,393

Minorities 0 0

Sale of controlling company treasury stock 63,976 10,071

Increase in negative differences 11,186 12

Deferred revenues 278,102 2,746

Provisions for contingencies and expenses –4,399 0

Long-term accounts payable 2,853,610 2,159,893

Total sources 4,550,737 3,436,440

Excess applications over sources (Decrease in working capital) 290,567


187The reconciliation of the balance on the consolidated income

statement and the funds from operations are as follows:

Thousands of Euros 2004 2003

Income for the year 376,332 334,349

Corrections to income 202,463 57,889

Amortization of goodwill 11,715 5,526

Reversion of negative differences 0 –13,278

Allocation to fixed asset depreciation 117,394 92,446

Share in losses of equity-accounted companies 4,089 4,469

Share in income of equity-accounted companies –14,014 –1,804

Variation in tangible fixed asset provisions 9,496 –38

Variations in financial investment provisions –29,936 8,045

Losses from fixed assets 5,316 4,780

Gains on fixed asset disposals –91,546 –124,307

Gains on the sale of holdings 0 –3,241

Income attributed to minorities 31,958 23,108

Income from transactions with controlling company treasury stock –1,919 –3,733

Allocation to provision for contingencies and expenses 39,664 16,961

Prepaid and deferred tax 0 1,547

Subsidies 1,375 –281

Transfer to deferred charges 118,871 47,689

Funds from Operations 578,795 392,238

DECREASE IN WORKING CAPITAL FROM INTEGRATION

IN THE CONSOLIDATION PERIMETER AND MERGERS

Thousands of Euros 2004 2003

Decrease

Start-up expenses 0 4,375

Intangible fixed assets 0 29,344

Tangible fixed assets 0 3,772,883

Financial investments 0 162,606

Goodwill in consolidation 0 102,325

Deferred charges 0 445,842

0 4,517,375

Increase

Difference in consolidation 0 –13,278

Shareholders’ equity 0 347,442

Minorities 0 –707,201

Deferred revenues 0 –127,078

Provisions for contingencies and expenses 0 –519,975

Long-term loans 0 –2,659,442

0 –3,679,532

TOTAL (Decrease) 0 837,843

Annual Report 2004

188

ANNEX ICOMPANIES CONSOLIDATED

N.B.: Indirect percentages are calculated according to the holder of the stake.

Percentage Investment Consolidation BusinessCompany and Domicile holding Shareholder (Euros Mn) method conducted

Corporations and Holdings

Grupo Sacyr Vallehermoso, S.A. Grupo Sacyr VallehermosoPº Castellana, 83. Madrid. España Holding

Sacyr, S.A.U. 100.00% Sacyr Vallehermoso, S.A. 167.56 Global ConstructionPº Castellana, 83. Madrid. España integration holding

Itinere Infraestructuras, S.A. 82.69% Sacyr Vallehermoso, S.A. 116.15 Global Infrastructure contractingPº Castellana, 83. Madrid. España integration holding

Valoriza Gestión, S.A.U. 100.00% Sacyr Vallehermoso, S.A. 23.76 Global ServicesC/ Padilla, 17. Madrid. España integration holding

Vallehermoso División de Promoción, S.A.U. 100.00% Sacyr Vallehermoso, S.A. 271.89 Global DevelopmentPº Castellana, 83. Madrid. España integration holding

Testa, S.A. 99.33% Sacyr Vallehermoso, S.A. 791.59 Global Property Pº Castellana, 83. Madrid. España integration holding

Somague, S.G.P.S. 99.576% Sacyr Vallehermoso, S.A. 228.31 Global Grupo SomagueRua Dr. Antonio Loureiro Borges. Lisboa. Portugal integration holding

Inchisacyr 90.25% Sacyr Vallehermoso, S.A. 4.54 Global Holder of stakes inPº Castellana, 83. Madrid. España 9.75% Sacyr, S.A.U. 0.27 integration Sacyr Chile

Sacyr Chile, S.A. 91.75% Sacyr, S.A.U. 13.13 Global Holder of stakes inSan Sebastián 2750. Las Condes-Santiago. Chile 8.25% Inchisacyr 1.24 integration Chilean construction firms

Itinere Chile, S.A. 91.75% Itinere Infraestructuras, S.A.U. 37.06 Global Holder of stakes inAv. Andrés Bello, 2777. Las Condes-Santiago. Chile 8.25% Inchisacyr 3.51 integration Chilean contractors

Enaitinere, S.A.U. 100.00% Itinere Infraestructuras, S.A.U. 404.93 Global Holder of stakes inC/ Padilla, 17. Madrid. España integration ENA, S.A.

Avasacyr, S.L.U. 100.00% Itinere Infraestructuras, S.A.U. 31.72 Global Holder of stakes inC/ Padilla, 17. Madrid. España integration AVASA

ENA Infraestructuras, S.A. 70.00% Enaitinere, S.A. 1,135.21 Global Holding of thePº Castellana, 83. Madrid. España integration Grupo ENA

Valoriza Energía, S.L.U. 100.00% Valoriza Gestión, S.A.U. 15.53 Global ServicesPº Castellana, 83. Madrid. España integration sub-holding

Construction

Cavosa, Obras y Proyectos, S.A. 91.00% Prinur, S.A.U. 4.12 Global Blasting, explosivesC/ Ayala, 10. Madrid. España 9.00% Sacyr, S.A.U. 0.85 integration and boring

Scrinser, S.A. 85.00% Sacyr, S.A.U. 0.51 Global Civil worksAvda. Corts Catalanes, 2. Barcelona integration construction

Prinur, S.A.U. 100.00% Sacyr, S.A.U. 3.18 Global Civil worksC/ Luis Montoto, 104-113. Sevilla. España integration construction

Ideyco, S.A.U. 100.00% Prinur, S.A.U. 0.30 Global Technical tests andC/ Jarama. Toledo. España integration quality control

Cavosa Chile, S.A. 100.00% Cavosa, S.A. 0.98 Global Blasting, explosivesC/ San Sebastián, 2750. Santiago de Chile. Chile integration and boring

Febide, S.A.U. 100.00% Sacyr, S.A.U. 0.75 Global Civil worksC/ Navarra 6. Bilbao. España integration construction

Somague Engenharia 100.00% Somague, SGPS 58.45 Global Civil worksRua Dr. Antonio Loureiro Borges. Lisboa. Portugal integration construction and building

Constructora ACS-Sacyr, S.A. 50.00% Sacyr Chile, S.A. 0.08 Proportional ConstructionC/ Colinas de Oro, 1804. Troncal Sur. Chile. integration in Chile


189Percentage Investment Consolidation BusinessCompany and Domicile holding Shareholder (Euros Mn) method conducted

Constructora Sacyr-Necso, S.A. 50.00% Sacyr Chile, S.A. 0.01 Proportional ConstructionKm.14 Ruta F-90. Casablanca. Chile integration in Chile

Constructora Necso-Sacyr, S.A. 50.00% Sacyr Chile, S.A. 0.01 Proportional ConstructionC/ Manuel Rodríguez 0301. Chile integration in Chile

Obras y Servicios de Galicia y Asturias S.A.U. 100.00% Sacyr, S.A.U. 1.00 Global ConstructionC/ Alfredo Brañas, 15. Santiago de Compostela. España integration in Chile

Consorcio Cavosa Agecomet 60.00% Cavosa Chile, S.A. 0.02 Global ConstructionC/ San Sebastián, 2750. Santiago de Chile. Chile integration in Chile

SIS, S.C.P.A. 60.00% Sacyr, S.A.U. 0.18 Global ConstructionVía Invorio, 24/A. Turín. Italia integration in Italy

Infrastructure Contracting

Autopistas del Atlántico, C.E.S.A. (AUDASA) 100.00% Empresa Nacional de Autopistas 114.90 Global El Ferrol - TuyC/ Alfredo Vicenti, 13. A Coruña integration motorway contract

Autopista Concesionaria Astur-Leonesa, S.A. (AUCALSA) 100.00% Empresa Nacional de Autopistas 214.63 Global Campomanes - LeónC/ Gil de Jaz, 10. Oviedo integration motorway contract

Autopista de Navarra, S.A. (AUDENASA) 50.00% Empresa Nacional de Autopistas 40.31 Global Irurzun - Autop. EbroPlz. Conde Rodezno, 8. Pamplona integration motorway contract

Autoestradas de Galicia, S.A. 100.00% Empresa Nacional de Autopistas 26.70 Global A Coruña - CarballoC/ Alfredo Vicenti, 13. A Coruña integration motorway contract

Neopistas, S.A.U. 100.00% Itinere Infraestructuras, S.A.U 9.04 Global Construction and operationC/ Padilla, 17 - 2ª planta. 28006 - Madrid integration of service areas

Autopista Vasco Aragonesa C.E., S.A. (AVASA) 50.00% Avasacyr, S.A.U. 220.71 Proportional A-68 motorwayBarrio de Anuntzibai. Vizcaya. España integration contract

Irasa 15.00% Autopista Vasco 12.19 Equity R-2 motorwayMadrid Aragonesa C.E., S.A. (AVASA) accounting contract

Aeropuertos de la Rg. de Murcia, S.A. 12.50% Itinere Infraestructuras, S.A.U 0.17 Equity Construction and operationAvda. de la Fama, 3. Murcia accounting of airports

Autovía del Noroeste Concesionaria de la CARM, S.A. 100.00% Itinere Infraestructuras, S.A.U 14.46 Global Autovía del NoroesteC/ Platería, 6. Murcia. España integration contract

Guadalquivir S.C. de la Junta de Andalucia - Guadalmetro, S.A. 27.83% Itinere Infraestructuras, S.A.U 23.93 Equity Seville Metro

Avenida de Andalucía, s/n. Sevilla. España accounting contract

Alazor Inversiones, S.A. 13.50% Itinere Infraestructuras, S.A.U 26.87 Equity R-3 and R-5Madrid. España 11.66% Empresa Nacional de Autopistas 23.20 accounting motorway contracts

Tacel Inversiones, S.A. 9.36% Itinere Infraestructuras, S.A.U 3.02 Equity Stgo.Compostela-Sto.DºMadrid. España 9.00% Empresa Nacional de Autopistas 2.90 accounting motorway contract

Sociedad Concesionaria del Elqui, S.A. 56.33% Itinere Chile, S.A. 39.31 Global Ruta 5 Chile contractRuta 5 Norte. Coquimbo. Chile 16.33% Itinere Infraestructuras, S.A.U 14.61 integration (Los Vilos-La Serena)

Sociedad Concesionaria de Los Lagos, S.A. 76.67% Itinere Chile, S.A. 43.49 Global integration Ruta 5 Chile contract Cruce Totoral Fresia. 11.43% Itinere Infraestructuras, S.A.U 8.64 (Río Bueno-Pto.Montt)Puerto Varas. Chile 11.90% Empresa Nacional de Autopistas 10.98

Sociedad Concesionaria Rutas del Pacífico, S.A. 50.00% Itinere Chile, S.A. 39.09 Proportional Ruta 68 Chile contractAvda. Vitacura, 2771. Las Condes-Santiago. Chile integration (Santiago-Valparaíso)

Sociedad Concesionaria Litoral Central, S.A. 50.00% Itinere Chile, S.A. 9.79 Proportional Chile motorway contractSerafín Zamora, 190. La Florida-Santiago. Chile integration (Algarrobo - Casablanca)

Sociedad Concesionaria de Vespucio Sur, S.A. 48.00% Itinere Chile, S.A. 27.07 Proportional Ring road contractSerafín Zamora, 190. La Florida-Santiago. Chile 2.00% Sacyr Chile, S.A. 1.09 integration (Américo Vespucio - Chile)

Annual Report 2004

190 Percentage Investment Consolidation BusinessCompany and Domicile holding Shareholder (Euros Mn) method conducted

Sociedad Concesionaria de Rutas II, S.A. 50.00% Itinere Chile, S.A. 0.07 Proportional Ring road contractAv. Andrés Bello, 2777. Las Condes-Santiago. Chile integration (Américo Vespucio - Chile)

Sociedad Concesionaria de Autopista Nororiente, S.A. 99.90% Itinere Chile, S.A. 24.34 Proportional Ring road contractAv. Andrés Bello, 2777. Vitacura-Santiago. Chile. 0.10% Sacyr Chile, S.A. 0.03 integration (Américo Vespucio - Chile)

Sociedad Concesionaria de Palma-Manacor, S.A. 35.00% Itinere Infraestructuras, S.A.U. 6.13 Proportional Palma - ManacorC/ Ter, 12. Polígono Son Fuster. Palma de Mallorca 5.00% Sacyr, S.A.U. 0.88 integration C-715 highway contract

Gestora de Autopistas, S.A. (Gesa) 49.00% Itinere Chile, S.A. 0.46 Proportional Operation ofAv. Andrés Bello, 2777. Vitacura-Santiago. Chile integration contracts in Chile

Gestión Vial, S.A. (Gesvial) 49.00% Itinere Chile, S.A. 0.21 Global Operation ofAv. Andrés Bello, 2777. Vitacura-Santiago. Chile 51.00% Empresa Nacional de Autopistas 0.29 integration contracts in Chile

Operadora del Pacífico, S.A. 50.00% Itinere Chile, S.A. 0.07 Proportional Operation ofAv. Andrés Bello, 2777. Los Condes-Santiago. Chile integration contracts in Chile

Somague Itinere - Concessoes de Infraestruturas, S.A. 80.00% Somague SGPS 36.65 Global Operation ofRua Dr. Antonio Loureiro Borges. Lisboa. Portugal 20.00% Somague Ambiente, S.A. 5.09 integration contracts

Real Estate Development

Erantos, S.A. 100.00% Vall. Div. Promoción, S.A.U. 0.47 Global Real estatePza. Conde Valle Suchill, 19. Madrid. España integration development

Navinca, S.A. 100.00% Vall. Div. Promoción, S.A.U. 1.84 Global Real estateAvda. Diagonal, 490. Barcelona. España integration development

Iparan Promociones Inmobiliarias, S.L. 100.00% Vall. Div. Promoción, S.A.U. 0.84 Global Real estateC/ El Cano, 19, Bilbao. España integration development

Prosacyr Ocio, S.L. 100.00% Vall. Div. Promoción, S.A.U. 20.99 Global Real estatePº Castellana, 83/85. Madrid. España integration development

Tradirmi, S.L. 100.00% Vall. Div. Promoción, S.A.U. 0.20 Global Real estatePº Castellana, 83/85. Madrid. España integration development

Capace, S.L. 100.00% Vall. Div. Promoción, S.A.U. 0.20 Global Real estatePº Castellana, 83/85. Madrid. España integration development

Tricéfalo, S.A. 60.00% Vall. Div. Promoción, S.A.U. 9.37 Global Real estatePº Castellana, 83/85. Madrid. España integration development

Somague Imobiliara 100.00% Somague, SGPS 0.002 Global Real estateRua Dr. Antonio Loureiro Borges. Lisboa. Portugal integration development

Nova Benicalap, S.A. 22.50% Vall. Div. Promoción, S.A.U. 0.08 Equity Real estateC/ Guillén de Castro, 46. Valencia. España accounting development

Spica Siglo 21, S.L. 99.97% Vall. Div. Promoción, S.A.U. 16.64 Global Real estatePº Castellana, 83/85. Madrid. España 0.03% Tradirmi, S.L. 0.01 integration development

Aplicaçao Urbana, S.A. 25.00% Vall. Div. Promoción, S.A.U. 12.31 Equity Real estateRua Martir S.Sebastiao, 251. Nova de Gaia, Portugal accounting development

Nova C. Villajoyosa, S.A. 25.00% Vall. Div. Promoción, S.A.U. 0.44 Equity Real estatePza. Carlos Trías Bertan, 7. Madrid. España accounting development

Promociones Residenciales Sofetral, S.A. 30.00% Vall. Div. Promoción, S.A.U. 1.05 Equity Real estatePza. Carlos Trías Bertan, 7. Madrid. España accounting development

Barajas Tercer Milenio, S.A. 41.00% Vall. Div. Promoción, S.A.U. 6.16 Equity Real estateMª de Molina, 37. Madrid. España accounting development

Club de Campo As Mariñas, S.A. 19.99% Vall. Div. Promoción, S.A.U. 0.18 Equity Real estateC/ Tarrio, Culleredo. A Coruña. España accounting development

Mola 15, S.L. 20.00% Vall. Div. Promoción, S.A.U. 0.62 Equity Real estateC/ Juan Bravo 3. Madrid. España accounting development


191Percentage Investment Consolidation BusinessCompany and Domicile holding Shareholder (Euros Mn) method conducted

Camarate Golf, S.A. 26.00% Vall. Div. Promoción, S.A.U. 4.68 Equity Real estatePº Castellana, 83-85. Madrid. España accounting development

La Vivienda Económica, S.A. 9.51% Spica Siglo 21, S.L. 0.53 Equity Real estateC/ Comandante Zorita, 7. Madrid. España accounting development

Property for Lease

Nisa, V.H., S.A.U. 100.00% Testa, Patrimonio en Renta, S.A. 1.13 Global Property for leaseAvda. Diagonal, 405. Barcelona. España integration

Trade Center Hotel, S.L.U. 100.00% Testa, Patrimonio en Renta, S.A. 12.02 Global Property for leaseAvda. Diagonal, 405. Barcelona. España integration

Vall. Patrimonio, S.I.I., S.A. 100.00% Testa, Patrimonio en Renta, S.A. 17.64 Global Property for leasePº Castellana, 83/85. Madrid. España integration

Testa American Real State Corporation 100.00% Testa, Patrimonio en Renta, S.A. 68.19 Global Property for leaseMiami integration

Gesfontesta, S.A. 100.00% Testa, Patrimonio en Renta, S.A. 0.64 Global Property for leaseC/ Pedro Valdivia, 1. Madrid. España integration

Prosacyr Hoteles, S.A. 100.00% Testa, Patrimonio en Renta, S.A. 4.29 Global Property for leasePº Castellana, 83/85. Madrid. España integration

Gescentesta, S.A. 100.00% Testa, Patrimonio en Renta, S.A. 0.003 Global Property for leasePº Castellana, 83/85. Madrid. España integration

Itaceco, S.L. 100.00% Testa, Patrimonio en Renta, S.A. 0.006 Global Property for leasePº Castellana, 83/85. Madrid. España integration

Bardiomar, S.L. 50.00% Testa, Patrimonio en Renta, S.A. 20.90 Proportional Property for leasePasseig Taulat, 218. Barcelona. España integration

Provitae Centros Asistenciales, S.L. 50.00% Testa, Patrimonio en Renta, S.A. 11.57 Proportional Property for leaseC/ Fuencarral, 123. Madrid. España integration

PK Inversiones, S.L. 50.00% Testa, Patrimonio en Renta, S.A. 0.03 Proportional Property for leaseC/ Juan Bravo, 3. Madrid. España integration

PK Hoteles, S.L. 32.50% Testa, Patrimonio en Renta, S.A. 4.96 Equity Property for leaseC/ Juan Bravo, 3. Madrid. España accounting

Parking Palau, S.A. 33.00% Testa, Patrimonio en Renta, S.A. 1.13 Equity Property for leasePlaza América, 3. Valencia. España accounting

Centre dÓci Les Gavarres, S.L. 21.50% Testa, Patrimonio en Renta, S.A. 0.54 Equity Property for leaseC/ Viriato, 47. Barcelona. España accounting

Environment

Somague Ambiente, S.A. 100.00% Somague, SGPS 6.57 Global Environmental consul-Rua Dr. Antonio Loureiro Borges. Lisboa. Portugal integration tancy and management

Tratamiento y Recuperación Ecosistemas, S.A. 100.00% Valoriza Gestión, S.A.U. 0.06 Global Environmental consul-C/ Anás, 13. Mérida. España integration tancy and management

Microtec Ambiente, S.A. 100.00% Valoriza Gestión, S.A.U. 0.74 Global Environmental consul-Pº de las Delicias, 20. Madrid. España integration tancy and management

Sociedad Anónima Depuración y Tratamientos (SADYT) 100.00% Valoriza Gestión, S.A.U. 0.27 Global WaterC/ Platería, 6. Murcia. España integration purification and treatment

Energy

Iberese, S.A. 74.00% Valoriza Gestión, S.A.U. 3.39 Global Energy-generation Ribera de Axpe, 28. Vizcaya. España integration projects

Annual Report 2004

192 Percentage Investment Consolidation BusinessCompany and Domicile holding Shareholder (Euros Mn) method conducted

Olextra, S.A. 72.59% Valoriza Gestión, S.A.U. 3.34 Global Energy-generation Ribera de Axpe, 28. Vizcaya. España 15.00% Iberese, S.A. 0.69 integration projects

Extragol, S.L. 43.76% Valoriza Gestión, S.A.U. 1.05 Global Energy-generation Ribera de Axpe, 28. Vizcaya. España 25.00% Iberese, S.A. 0.60 integration projects

Secaderos de Biomasa, S.A. (SEDEBISA) 83.28% Valoriza Gestión, S.A.U. 2.59 Global Olive pulp oilRibera de Axpe, 28. Vizcaya. España 15.00% Iberese, S.A. 0.46 integration extraction project

Biomasas de Puente Genil, S.L. 83.08% Valoriza Gestión, S.A.U. 2.32 Global Energy-generation Ribera de Axpe, 28. Vizcaya. España 15.00% Iberese, S.A. 0.43 integration projects

Compañía Energética de Pata de Mulo, S.L. 83.08% Valoriza Gestión, S.A.U. 2.33 Global Energy-generation Ribera de Axpe, 28. Vizcaya. España 15.00% Iberese, S.A. 0.43 integration projects

Compañía Energética de La Roda, S.L. 75.00% Valoriza Gestión, S.A.U. 0.97 Global Energy-generation Ribera de Axpe, 28. Vizcaya. España 15.00% Iberese, S.A. 0.19 integration projects

Services

Cafestore, S.A. 100.00% Valoriza Gestión, S.A.U. 5.76 Global Catering services andC/ Padilla, 17. Madrid. España integration operation of shop

Aguas de Toledo, AIE 50.00% Valoriza Gestión, S.A.U. 0.03 Proportional Water supply C/ Sixto Ramón Parro, 7. 45001 Toledo integration in Toledo

Aparcamiento Recaredo, AIE 50.00% Valoriza Gestión, S.A.U. 0.003 Proportional Operation of RecaredoC/ Orense, 68. Madrid. España. integration car park in Toledo

Valoriza Facilities, S.A.U. 100.00% Valoriza Energía, S.L.U. 1.48 Global Integrated propertyPº Castellana, 83. Madrid. España integration management

New Technologies

Aurentia, S.A. 74.95% Prinur, S.A.U. 0.52 Global Integrated InternetPº Castellana, 83. Madrid. España 25.05% Sacyr, S.A.U. 0.17 integration services

Build2Edifica, S.A. 6.16% Sacyr, S.A.U. 0.82 Equity Construction portal Avenida del Partenón, 4. Madrid. España accounting on the Internet

Vallehermoso Telecom, S.A. 100.00% Valoriza Energía, S.L.U. 2.00 Global TelecommunicationsPº Castellana, 83. Madrid. España integration services

Burosoft, Sistemas de Información, S.L. 70.00% Valoriza Facilities, S.A.U. 0.54 Global Development ofCª Coruña, Km. 23,2. Las Rozas. Madrid. España integration information systems


193

1. GENERAL ECONOMIC PERFORMANCE AND SACYR VALLEHERMOSO’S BUSINESS SECTORS IN 2004

1.1. International economic environment

Economic year 2004 ended on quite a satisfactory note for the

world economy, with the GDP growing by around 5% and

commercial transactions by around 10%. And this, despite the

latest oil crisis, the strong volatility in the financial markets

and the conflictive situation in Iraq. According to the European

Central Bank, the forecast for 2005 is economic growth of 4%,

thanks to the contributions of emerging countries and the low

real interest rates, and an 8% increase in world trade.

In 2004 the United States economy registered the fastest

expansion in five years, with the GDP growing by 4.4%. This

growth rate was 0.1 p.p. below the previous great year for the

American economy, 1999, when it grew by 4.5%. In addition,

it was over one point higher than in 2003, when the increase

was of 3%. The reason for this large increase resides, firstly,

in private consumption (which rose by 3.8%, the sharpest

rise since 2000) and in company investment (which grew by

13.4%, the best since 1997). The economy is expected to

slow in 2005 as a result of the interest rate hike, which

started last June, and the end of the tax drive; consequently,

estimates put GDP growth at 3%.

The main problem with the US economy was the strong

imbalance in its balance of trade, even though the dollar was

very weak throughout the year. Imports grew by 9.1% in the

fourth quarter, while exports fell by 3.9%. Another negative

feature in the world’s leading economy was inflation, which

hit 3.3% in 2004, the highest rate since 2000. The strong

GDP growth, more moderate productivity, higher oil prices

and the weak dollar are the reasons for this increase. The

Federal Reserve, the United States’ Central Bank, will have to

apply a diligent increase in interest rates in 2005 so that the

year can end with more balanced inflation rates.

In respect of employment, in 2004 the United States

registered the best figure of the last five years, with a total of

2.3 million jobs created and an unemployment rate of 5.4%,

the same as in 2003, but with 625,000 jobless fewer than in

the previous year. Despite the spectacular improvement in

these figures, unemployment continues to be the black sheep

of the North American economy, since forecasts were

pointing to the creation of 5.5 million jobs. In 2004 a total of

8.14 million Americans were seeking work, as many people

who had not been looking started to do so, due to the

creation of an average of 186,000 new jobs a month during

the year. The sector to create the most employment was

services to professionals and companies, with an increase of

546,000 jobs. In the sector of healthcare and social

assistance, 342,000 jobs were generated, in trade 97,000, in

the financial sector 140,000 and the State itself created

42,000 new jobs. Construction is going through a good

period, thanks to the housing market, and the sector

generated a total of 64,000 jobs. For 2005, Government

forecasts are to reach 2.1 million more jobs, a target which is

attainable according to analysts.

Industrial production increased by 0.8% in December, a

higher figure than expected, and grew by 4.1% in 2004 as a

whole, the best performance in four years.

In respect of interest rates, the Federal Reserve has put them

up by 0.25 p.p. at each of its last five meetings, to reach

2.25% from the 1% they had been at, the lowest level since

1958.

The year 2004 was a key year for the European Union, since

on 1 May ten new member states joined –Estonia, Latvia,

Lithuania, Poland, the Czech Republic, Slovakia, Slovenia,

Hungary, Malta and Cyprus– and the Europe of 15 became

the Europe of 25. These new countries together have a total

population of 75 million inhabitants, from Poland’s 38.6

million to Malta’s barely 400,000. In respect of their

economies, there is a bit of everything, from the Euros

18,500 and 16,000 per capita GDP of Cyprus and Slovenia

respectively, to the Euros 8,700 and 7,700 of Lithuania and

Latvia. From economies with a GDP growth rate of 7.7% and

5.9% in 2001, like Latvia and Lithuania, to others with

growth rates of just 1.1% or 3%, like Poland and Slovenia.

From economies with inflation rates –also in 2001– of

CONSOLIDATED MANAGEMENT REPORT AS OF 31 DECEMBER 2004

Annual Report 2004

19410.8% and 9.1%, such as Slovakia and Hungary, to rates of

1.3% and 2% in countries like Lithuania and Cyprus. A

process is just starting which will take quite a few years and

will culminate in the European Union of all its member

states.

Back in the euro zone, expansion remained moderate, with

GDP growth of 2% in 2004. Last year Germany grew at its

fastest rate in four years, on the back of strong exports. Its

GDP increased by 1.7%, the highest rate since the year

2000. However, the labour market and sluggish domestic

demand continue to cause problems for the driver of

Europe. Net exports (the difference between exports and

imports) contributed 1.2 percentage points to general

growth. In contrast, private consumption (which represents

60% of the economy) contracted for the second time in

three years. In its forecasts for 2005, the German

Government estimates the same growth rate as in 2004,

1.7%. In France, the business climate indicator fell by one

point in December, while the outlook for production

remained favourable, albeit to a lesser extent than in

previous months. In the fourth quarter, French growth was of

0.7% (non-annualized quarter-on-quarter rate), 0.1 p.p. less

than initially estimated, so that the growth rate will be of

2.2% for the year as a whole. In Italy, activity indicators

continue weak. In November, industrial production fell at a

monthly rate of 0.7%, which implies that Italian industrial

output dropped at a year-on-year rate of 0.1% in the first

eleven months of 2004.

Annual inflation in the euro zone was of 2.4% in 2004, higher

than it was in 2003 when it remained at 2%. Healthcare and

alcohol drinks were the components that pushed prices up

the most during the year. Spain, with the second highest

inflation rate in the euro zone after Luxembourg, maintained a

0.9 p.p. spread with the average. In December, it amply

surpassed initial estimates, with inflation increasing by

0.2 p.p. with respect to the preceding month. According to

Eurostat, Europe’s statistics centre, alcohol, tobacco and

culture and leisure were the main causes of December’s

inflationary pressures. As was mentioned above, Luxembourg

(3.5%) and Spain (3.2%) registered the highest annual

inflation rates and Finland (0.1%) and Holland (1.2%) the

lowest. Outside the euro zone, the United Kingdom had

inflation of 1.9%, while prices soared in Latvia (7.4%),

Slovakia (5.8%) and Hungary (5.5%).

In respect of interest rates, the European Central Bank kept

them at all-time lows of 2% for the whole of the year,

alleging that low interest rates give the euro zone a positive

financial environment. Outside the euro zone, the Bank of

England kept U.K. interest rates at 4.75% as from the month

of August.

As regards Japan, the latest OECD report stresses that today

its economy is better than it has been for a decade, thanks to

buoyant foreign demand, progress in company restructuring

and and economic reform. This growth rate permitted GDP

growth of 4% in 2004. Employment, corporate income and

the climate of confidence in the economy are at their highest

levels since the beginning of the nineties. However, very

serious problems still persist, such as deflation, the downturn

in bank lending, the hefty fiscal deficit, high debt, weak

competition in some sectors and problems of efficiency and

equity which are leading to a substantial increase in

temporary and part-time employment. Industrial output

slowed due to adjustments to stocks in the technological

sector, while construction has virtually come to a standstill.

Private consumption was boosted by the improvement in

employment, while household income stopped falling.

Investment in fixed assets is still undergoing considerable

improvement, especially orders for machinery.

The Chinese economy grew by 9.5% in 2004, outstripping

analysts’ expectations and increasing the risk of further

increases in interest rates to prevent overheating. Such high

figures had not been seen since 1996, when the GDP grew by

9.6%. The Chinese Government adopted a set of measures to

cool down the economy, amongst which are restrictions to

credit and investment in some “overheated” sectors. Interest

rates also rose slightly, for the first time in nine years, rising

from 5.31% to 5.58%. The cooling of Asia’s giant would have

a negative effect on neighbouring economies whose growth

depends on China’s huge appetite for raw materials. Growth

for 2005 is estimated at 8.5%, with inflation of around 3.3%.

Latin America gave the markets a big surprise in 2004 when

it grew by 5.5% overall, outstripping the forecasts made a

year earlier by one percentage point. Growth is expected to

be slower in 2005, at around 4%, and the International

Monetary Fund suggests the usual recipe: reducing public

debt in order to maintain the year’s good results and achieve

sustainable long-term growth.


195Growth in Latin America was the direct result of the good

performance of the international economy and the prices of

basic products, especially oil and metals. As occurred in

2003, last year the balance of payments ended with a

surplus, specifically 1.1% of the GDP. At 4.8%, consumption

was still below GDP growth, which made a positive

contribution to saving. Employment also grew throughout the

region, as did wages, which led to a slight reduction in

poverty levels. In respect of prices, inflation reached an

average of 7.7%, as against 8.5% in 2003 and 12.1% in

2002. An endemic problem is the poor distribution of wealth.

A summary of the economies of the main countries in the

region is given below. China was once again the most

advanced economy in the region with its highest growth rate

since 1997. Its GDP grew by 5.8%, mainly on the back of

exports, especially copper, and the growing recovery of

household consumption and investment. China’s Central

Bank estimates growth of between 5.25% and 6.25% for

2005, thanks to extremely buoyant demand and, once again,

to exports. Inflation is in check at 2.5%, real wages have

increased by 2% and early repayment of debts contracted at

higher rates than now continues. All of this suggests that the

economic boom will continue. There is particular room for

improvement in unemployment, which stands at 8.8%, and

there is a need for greater competitiveness in the financial

sector. Brazil ended 2004 with 5.2% growth, its best result in

the last ten years. It also presented a surplus on current

account, thanks to the fiscal austerity plans and control of

inflation implemented by the Lula Government. The price

index stood at 7.2%, real wages rose slightly and

unemployment affected 11.5% of the population. Exports

soared by 30%, as a result of sales to new markets, such as

China and East European countries. Mexico was another

country that beat growth records, outstripping the figure for

2000, with an increase of 4.1%, due to the stronger foreign

and domestic demand registered during the year. The

recovery of employment and, above all, the workers working

abroad, have boosted consumption and investment. On the

negative side, inflation reached 5.4% when the Government

had been forecasting 3%. Growth is estimated at 3.6% in

2005. Argentina, together with Uruguay and Venezuela,

managed to get over the crisis and register spectacular

growth rates. Argentina grew by 8.2% in terms of the GDP,

9.1% in wages, 13% in exports and 60% in imports. The

issue of public debt restructuring remains pending.

1.2. The Spanish economy

In 2004 the Spanish economy grew by 2.6%, as against the

2.5% of the preceding year, due to a significant increase in

domestic demand, accompanied by a high rate of job

creation, contrasting with the sluggish foreign sector. In the

fourth quarter of the year, the GDP remained flat with respect

to the previous quarter, with a year-on-year rate of 2.7%. In

quarter-on-quarter terms, the GDP grew by 0.8%. This

growth was the result of the improvement in tourism in the

latter months of the year and a certain reduction in the

notable increase in imports, making the negative

contribution of foreign demand more moderate. Economic

growth in Spain still has a significant spread with the euro

zone as a whole, which –as mentioned earlier– grew at an

overall rate of 2%. This 0.6 p.p. enables Spain to continue to

move towards real convergence with the most developed

economies.

Domestic demand was the star of the economic year, since it

grew by over 4%. Notable amongst its components are the

increase in public consumption and a very significant rise in

fixed capital investment, largely due to the good performance

of capital goods. Private consumption also continued to grow

at a good pace, while the variation in stocks made a smaller

contribution, although it was still positive.

Household consumption ended the year with a growth rate of

around 3.3%, as a result of the increase in real disposable

income, the good financing conditions existing in the market

and an important increase in both financial and non-financial

wealth, based on the appreciation of housing and the

recovery in the Stock Market.

Investment registered very expansive performance during the

year, both because of the sustained rate of growth in

construction and the rapid recovery of investment in capital

goods, which was registering year-on-year growth rates of

nearly 10%, rates unheard of for five years. The rising trend in

investment in capital goods is expected to continue, as

corporate results and company profitability indices performed

well in 2004, accompanied by faster activity, more moderate

labour costs and the reduction in financial costs. In respect of

investment in construction, housing demand is still extremely

strong, largely thanks to the favourable monetary conditions,

job creation and expectations of property appreciation.

Average housing prices and mortgages maintain very high

growth rates, with year-on-year rates of over 17%.

From the supply standpoint, in the third quarter all the major

branches of activity made a positive contribution to GDP

growth.

Foreign demand contributed negatively to GDP growth,

detracting 1.6 percentage points in the last quarter. This can

largely be explained by the losses in competitiveness

stemming from the cumulative appreciation of the euro in the

last two years and the maintenance of positive spreads in the

variation of prices and costs with the leading competitors of

Spanish products. Up until November, Spanish trade

generated a negative balance of Euros 54,474 million, more

than the whole of the deficit in 2003 and 29.8% more than up

until November that year. In the last twelve months, the

amount was of nearly Euros 60,000 million, 7.47% of the

GDP, a much higher ratio than in the United States, which has

made the trade deficit almost certainly Spain’s main

economic problem. Spain only financed 71.1% of its

purchases with its sales, almost four points less than in

2003. It has a deficit of Euros 14,989 million with Germany,

Euros 6,656 million with China and Euros 8,420 million with

OPEC countries, as a result of the massive imports of oil at

high prices. By sector, in 2004, sales of capital goods grew

by 8.9%, semi-manufacturing by 7.5% and autos by 6.4%. In

respect of imports, energy products grew by 21.3%, due to

the increase in crude oil prices; car purchases rose by 24.4%

and other consumer durables by 15.8%.

In the labour market, unemployment in Spain fell by 120,000

people, 5.64% with respect to 2003, which meant that the

total number of jobless stood at 2,007,100 people and the

unemployment rate fell to 10.38%, according to the Labour

Force Survey. Over the year as a whole, 461,300 jobs were

created and the year-on-year growth rate rose to 2.74%. Thus,

the total number of employed stood at 17,323,300 people.

All the sectors performed positively except for farming, where

41,900 jobs were destroyed, –4.4%. The bulk of the jobs

created were in services, with 352,400 new jobs, +3.25%.

This was followed by construction, which gained 102,200

jobs, +5.13%, and industry which employed another 48,600

people, +1.58%. Unemployment decreased in all sectors,

especially in that of people looking for their first job, with

58,000 unemployed people fewer than a year ago, –17.24%.

Construction came next with 22,900 fewer people out of

work, –11.42%, and then the long-term unemployed group,

with 16,300 jobless fewer, –5.96%. Industry had 8,600 fewer

unemployed, –3.48%, services 7,600, –0.84%, and farming

6,600 jobless fewer, –4.15%.

The Social Security ended 2004 with 536,510 new

subscribers, putting the average number of subscribers at

17,345,755 employed. This increase was the largest since

2000. In December the average year-on-year growth rate was

of 3.19%, as compared to 2.73% in 2003. Construction led

growth with 10.95% and, by regime, the General and the

Self-employed increased by around 4%. In addition, for the

first time ever, female subscribers accounted for 40% of the

total employed. Foreign workers once again led subscriptions

to the Social Security, with a year-on-year increase of

16.42%, which means that they account for 6.26% of total

subscribers.

In respect of prices in 2004, Spanish inflation reached 3.2%,

as against 2.6% in 2003, and overshot Government forecasts

by 1.2 points. During the year, the most inflationary

components were transport, with a 6% increase in prices,

alcohol beverages and tobacco, with a 5.5% rise, education

and hotels, cafés and restaurants, with 4.2%, housing with

4.1%, followed by food and soft drinks, at 3%, other goods

and services, 2.8%, and clothing and footwear, with 2.1%. In

contrast, leisure and culture fell by –0.1% and

communications by –0.7%. Within the special groups, fuels

and energy products rose by 9.8%. The only positive figure

was for core inflation, which excludes fresh food and energy

products; it remained at an annual rate of 2.9% in December

for the fifth month in succession, which suggests that if

crude oil prices return to normal, so will inflation.

As regards the State’s economic activity, up until November a

Euros 1,982 million surplus was registered in terms of

national accounting, equivalent to 0.25% of the GDP, as

against Euros 5,108 million the preceding year. This

reduction is due to the fact that on 1 November the State

decided to take on RENFE’s so-called “historic debt”,

amounting to Euros 3,659 million. If the effect of this non-

recurrent operation is excluded, the State would have

registered a surplus of Euros 5,641 million in the first eleven

months of the year, 10.4% more than in the same period the

previous year. The Euros 1,982 million surplus is the result of

Annual Report 2004

196


197State non-financial resources amounting to Euros 105,997

million to November and non-financial applications

amounting to Euros 104,015 million. Up to November,

revenues from tax and social contributions remained very

positive, with net revenues of Euros 143,271 million, 8.2%

more than in 2003. Direct taxes amounted to Euros 69,822

million, up 9.3%, although Personal Income Tax increased by

only 2.7% to Euros 44,275 million, as a result of the change

in calendar for returns for withholdings on labour in 2003,

which meant that in 2004 there were two settlements fewer in

the first eleven months of the year. Corporate Tax revenues

totalled Euros 23,350 million, 21.4% more than the figures

registered in the same period the preceding year. Indirect

taxes amounted to Euros 61,449 million in the first eleven

months of 2004, an increase of 8.9%. Revenues from VAT

totalled Euros 43,142 million, up 10.7% with respect to the

same period in 2003. Lastly, special taxes amounted to Euros

16,023 million until November, an increase of 3.4%. Tax on

Hydrocarbons and on Tobacco deserve a special mention,

with revenues of Euros 9,247 million and Euros 5,021 million

respectively. In the first eleven months of the year, non-

financial payments amounted to Euros 102,762 million, with

a year-on-year increase of 0.7%. Financial expenditure

totalled Euros 16,335 million, down 15.3%, due to the

downturn in interest accrued and the change in the maturities

calendar. Payments for personnel expenses totalled Euros

16,865 million, 4.9% more than in the same period the

previous year. Capital operations amounted to Euros 11,343

million to October, down 5% on the previous year. Real

investments stood at Euros 5,737 million, 8.6% less. In

addition, capital transfers decreased by 1%, with payments

amounting to Euros 5,606 million.

In the Spanish Stock Market, its main stock market index, the

selective Ibex-35, gained 17.37% in 2004. If this is added to

the 28% appreciation of 2003, the index has gained 50.4% in

the past two years, recovering the greater part of what was lost

in the crisis in 2000-2002. The last session of the year closed

at 9,080.8 points, thus returning to the levels registered in

July 2001, although this is still way below the record high of

12,968.5 points hit at the beginning of April 2000, just before

the stock market crash. For the second year in succession, the

Spanish Bourse was one of the most profitable equity markets

in the developed world, with much higher returns than in the

leading markets such as London, Frankfurt and Paris, with

appreciations of around 7.5%. Spain also outstripped the main

US indices. The Dow Jones for Industrials gained 3.7%, while

the Standard&Poor’s 500 appreciated by just under 10% and

the Nasdaq Composite, the index for technological stocks, by

8.7%. The better performance of the Ibex-35 stemmed from

the fact that Spain presented growth above the average for the

euro zone and also because corporate income increased by

14% up until the end of the third quarter of the year. The

Spanish equity market obtained over Euros 100,000 million in

2004 and registered record capitalization of nearly Euros

700,000 million, as against Euros 419,000 million in 2002.

The Spanish Stock Market is trading at a very attractive P/E

ratio (price in relation to earnings) and, thus, still has upside

potential. Analysts are expecting rises of around 10% on the

Ibex-35 in 2005.

Finally, the performance of the euro against the dollar in

2004 deserves a special mention. The European currency

appreciated by 8.4% during the year, ending its third year

running on a rising trend and trading at record highs of

around USD 1.36/euro. The record level of 1.3666 was hit on

Thursday 30 December. In the last three years, it has

appreciated by more than 50% against the dollar. When the

euro came into circulation on 1 January 2002, it could be

bought for a mere USD 0.89. The greenback has not been

through such a negative phase since the mid-eighties.

1.3. Sacyr Vallehermoso’s business sectors

1.3.1. The construction sector

In 2004, the construction sector continued to grow, with a 4%

increase on the preceding year and 1.4 percentage points

more than the Spanish economy. Production reached Euros

144,700 million, which means that this business already

contributes more than 18% to the Spanish economy’s total

GDP, as against the 14% it generated a decade ago. In the

period 1995-2004, Spain’s GDP grew by 34%, while

production in construction increased by 49%. It also

generated a total of 106,500 new jobs, 23% of the total of

new Social Security subscriptions, and already employs a

2,014,000 people. In the past ten years, the sector has

created 20% of all the new jobs.

From the supply standpoint, for every euro invested in

construction another Euros 0.77 are induced in other sectors

and, for every direct job generated in this sector, another

0.57 are created in others. From the point of view of demand,

in the last four years investment in construction has

accounted for over 25% of the growth of the Spanish GDP.

In 2004 cement consumption grew again for the eighth year

in succession. Consumption hit a record figure of 47.83

million tonnes, up 3.49% on the 2003 figure. However, this

increase was slower in comparison with the preceding year,

when the quantity of cement absorbed by the construction

business was 4.42% higher than in 2002. In 2004 as a

whole, production of cement and clinker (the material from

which cement is obtained) totalled 46.28 million tonnes,

after increasing by 3.7% on 2003, when it grew by 6%.

Exports grew by 21.2% to 1.5 million tonnes, in contrast with

the 14.8% downturn registered in 2003. Import performance

was just the opposite; in 2004 imports fell by 7.16% to 7.57

million tonnes, while they had increased by 6.6% in 2003.

The number of new homes endorsed totalled 675,000, 7%

more than in 2003 and new all-time record.

For the seventh year in succession, production performed

well in all the sub-sectors: building accounted for 76% of

total production (+3.2% on 2003), with residential building

contributing 33% (5% more than in 2003), non-residential

building 18% (+1%) and refurbishment and maintenance

25% (+2.5%); civil works accounted for 24% of sector

production (6% more than in 2003).

In respect of production by client, the public sector, including

public entities and companies, represented 23% of total

production, an increase of more than 6% with respect to

2003. The remaining 77% of production went to the private

sector, up 4%.

By Self-governing Region, production performed above the

average in Andalusia, Castilla La Mancha, Extremadura and

Murcia and was around the average in Catalunya, the Region

of Valencia, Galicia and Navarre. Growth was positive, but

below the average, in the Balearic Islands, Canaries and

Castilla y León.

Public tendering ended 2004 with Euros 31,778 million

contracted, which was an 18.5% increase on 2003. By type of

work, roads and highways came first, with 22% of the total,

followed by railways with 18%, social equipping with 14%,

hydraulic works with 8% and housing with 4%. By organism,

the Regional Governments and Local Administrations each

accounted for 33%, the bulk of the works tendered, followed

by the Ministry of Public Works with 27% and the Ministry of

the Environment, with 3%.

Within the General Administration, where work tendered fell

overall by 5.3% with respect to 2003, the Ministry of Public

Works increased its calls for bids by 2.2%, although the

variation for the Directorates General and Public Bodies and

Entities which comprise it was very uneven.

The Directorate General for Highways, with a total of Euros

1,861,190 thousand tendered, was down by 10.9% with

respect to the previous year, as occurred at the Directorate

General for Railways, with Euros 324,926 tendered, a

reduction of 5.6%. In contrast, AENA and the Port Authorities

tendered works amounting to Euros 1,676,696 and 2,101,227

thousand, which were increases of 17.7% and 291%

respectively on 2003. RENFE and FEVE, together with the

GIF, registered downturns of 67.8% and 30.9% with respect

to 2003, with a total of Euros 200,231 y 2,229,270 thousand

tendered.

The Ministry of the Environment was the worst hit, in respect

of calls for bids, which amounted to Euros 894,378

thousand, 53.7% less than in 2003, when they totalled Euros

1,930,534 thousand. Hydraulic works fell by 76.4% in 2004

to Euros 134,477 thousand, from the Euros 569,183

thousand tendered in 2003. Works tendered by the

Confederaciones Hidrográficas also decreased by 34.5%,

down to Euros 313,177 thousand, from Euros 477,917

thousand. All of these downturns are partly offset by calls for

bids from the other Ministries, which grew by 25.6% with

respect to 2003, rising from Euros 973,791 thousand to

Euros 1,222,625 thousand.

Tenders from Regional and Local Governments increased by

18.7% and 59.9% respectively, in comparison with 2003. By

Regional Government, tenders increased in the Principality of

Asturias by 183%, with a total of Euros 603,944 thousand, in

the Basque Country by 158.9% and Euros 373,940 thousand,

in the Balearic Islands, by 114.6% and Euros 474,511

thousand, in La Rioja by 111% and Euros 55,005 thousand,

and Madrid with Euros 3,157,858 tendered, 108.6% more

Annual Report 2004

198


199than 2003. As regards Local Governments, the City Councils

of provincial capitals tendered work for Euros 4,424,366

thousand, 160.7% more than in 2003, the Provincial Councils

for Euros 1,638,728 thousand, 32.2% more and, lastly, other

City Councils for Euros 4,321,407 thousand, a 21.5%

increase.

Forecasts for the sector for 2005 are quite promising, with

activity expected to grow at between 3.5% and 4.5% and with

the generation of 100,000 jobs. Once again residential

building will be the sub-sector to grow the fastest, by

between 5.5% and 6.5%, accompanied by civil works, with

increases of around 4.5% and 5.5%, and refurbishment of

buildings, between 2.5% and 3.5%. Moreover, the future of

the sector is clearly guaranteed since the Spanish

Government presented its Strategic Infrastructure and

Transport Plan (SITP) at the beginning of January 2005. This

contemplates projects amounting to Euros 241,392 million

between 2005 and 2020 and will be updated every four

years. It involves an average investment of Euros 15,087

million and, according to the present Government, its

implementation will imply: in 15 years the high-speed rail

network will increase from the current 1,031 kilometres to

10,000, multiplying the existing network by 10. This will

mean that 90% of the population will have a high-speed

station less than 50 kilometres from their house; the network

of high-capacity highways, dual carriageways and motorways

will be almost doubled, rising from 9,000 kilometres today to

15,000; the high-capacity transport network of railways and

roads will provide direct access to all the capitals;

investments will be made in conservation and maintenance of

all the transport infrastructures and services to enhance their

safety and quality; the Logistic Action Zones (LAZ) at ports

will be promoted, etc. This Strategic Plan will be 60%

financed by the Budget, while the remaining 40% will be

funded by mixed private-public financing formulae, to a large

extent using the contracting model.

In the Europe of 15, the Spanish construction sector is the

fourth market in terms of distribution of investment with

13.1%, after Germany, with 21.1% and France and the United

Kingdom, each with 15%. In relative terms, the weight of

investment in construction in the GDP puts Spain in second

place in Europe, after Ireland, and ahead of countries like

Greece, Luxembourg, Portugal, Austria, the Netherlands and

Finland, all of them above the European average of 10%

contribution. Below these contributions are Germany,

Denmark, France, Italy and the United Kingdom.

The large Spanish construction firms, amongst them Sacyr

Vallehermoso, have defended their position in Europe and

have managed to narrow the gaps with the giants in the

sector in Europe, the French companies Bouygues and Vinci,

thanks to the ambitious processes of diversification into more

profitable businesses such as services and infrastructure

contracting, as Sacyr Vallehermoso has done. This

diversification prevents over-dependence on the cyclical

construction business. The top five construction companies

in Spain are amongst the top eight in Europe in terms of

market capitalization, which is in excess of Euros 3,000

million in all five cases.

1.3.2. The motorway contracting sector

In business year 2004, the network of toll motorways in

operation in Spain totalled 2,777.44 kilometres, a 36%

increase on 2003, while there were 577.80 kilometres under

construction. Another 662 kilometres are being studied.

The contracting companies obtained total revenues of Euros

1,754.5 from tolls on Spanish motorways in 2004. The

volume increased by 12% with respect to 2003 and was

mainly due to the 3% increase in tariffs and the large volume

of traffic using the motorways.

Last year Average Daily Traffic was 24,875 vehicles, 3.22%

more than in 2003.

In 2004, a total of 172.01 kilometres of new toll motorways

was opened to traffic. Itinere Infraestructuras, S.A., a

subsidiary of the Grupo Sacyr Vallehermoso which operates

motorway contracts, had a stake in all of these. These new

stretches are specifically:

– Radial 3, (R-3) (Madrid M-40-Arganda): On 16 February

2004, Spanish Premier Mr José María Aznar, the President

of Madrid Regional Government, Ms Esperanza Aguirre,

and Public Works Minister, Mr Francisco Álvarez-Cascos,

inaugurated this new road, together with the Radial 5

(Madrid M-40-Navalcarnero). The R-3 is 33.9 kilometres

in length and is a continuation of the O’Donnell hub,

creating a new access to Madrid from Levante and thus

decongesting current traffic on the A-3 (Valencia road), as

it absorbs between 30% and 40% of vehicles. Through new

junctions, it also links up with the capital’s ring roads.

The new motorway is managed by the contractor Accesos

de Madrid, C.E.S.A., a company in which Grupo Sacyr

Vallehermoso has a 21.66% holding through Itinere

Infraestructuras S.A. Over Euros 295 million was invested

in building the road and it is an important communication

hub for the developments in the area, for the future

Olympic Village and the future Campo Real airport.

The use of this new road saves users time and money. If

they use the entire road, they will save 45 minutes’

travelling time a day at rush hour and will reduce spending

on petrol by up to two euros a day on the round trip.

In this motorway one million euros was invested in the

“teletoll” or “dynamic toll” system in order to guarantee

payment without drivers having to stop the vehicle. By

means of a small transmitter in the vehicle the toll can be

charged directly to the user’s bank account.

– Radial 5, (R-5) (Madrid M-40-Navalcarnero): This road

was also inaugurated on 16 February 2004 and is 28.3

kilometres long. Over Euros 246 million was invested in its

construction.

This motorway, also managed by the Group’s contractor,

Accesos de Madrid, C.E.S.A., will attract 35% of the traffic

which circulates on the most congested stretches of the

Extremadura road (A-5) and will serve as a communication

hub for future developments in its catchment area,

especially in the towns of Alcorcón, Leganés, Fuenlabrada

and Móstoles. It will save users just over 40 minutes a

day, besides the fuel saving this implies.

This road also has the “teletoll” system, in which over

Euros 700,000 was invested.

– M-50 (Western stretch): The inauguration of the R-3 and

R-5 radial roads on 16 February 2004 was complemented

by the opening of the western stretch of another of the

roads crucial to the distribution and flow of traffic in the

capital: the M-50 motorway. This a ring road outside

Madrid’s M-45 and M-40 ring roads, which links up with

the radial toll motorways, with the M-40 and with different

regional roads.

The western arch of the M-50 gives the towns of Leganés,

Fuenlabrada, Alcorcón, Móstoles, Villaviciosa de Odón,

Boadilla del Monte, Majadahonda and Las Rozas a new

distributor road. It has a total length of 29.3 kilometres, of

which 22.2 are newly built and 7.1 are based on the former

Pinar hub.

This road is totally free of charge and will be managed and

maintained by Accesos de Madrid, C.E.S.A.

– Radial 4, (R-4) (Madrid-Ocaña): On 7 April 2004 the

radial toll motorway R-4, which links Madrid with Ocaña,

was opened to the public. With a total length of 52.6

kilometres, it serves to decongest the regularly heavy

traffic on the A-4 Andalusia dual carriageway, which

comes from the large towns to the south of Madrid such as

Getafe, Pinto, Leganés, Parla, Valdemoro, Ciempozuelos,

Aranjuez, etc., apart from the traffic from the south of

Spain. It will attract around 25% of traffic from the A-4 and

will save users time and fuel.

This motorway is managed by the contractor Autopista

Madrid Sur, C.E.S.A., a company in which Itinere

Infraestructuras, S.A. also has a 7% stake.

– M-50 (Southeast hub) and M-50 (M-31 link dual

carriageway): The same day the R-4 was inaugurated,

another 14 kilometres of toll-free roads were opened to the

public: the 9-kilometre stretch of the M-50 ring road

between the A-4 and the Southeast hub and the 4.9

kilometre M-31 link road, which joins the M-40 with the

M-50 and the M-45. Another stretch of the M-50

corresponds to the R-4, the so-called Eje Culebro, between

the M-409. The A-4 dual carriageway (8.8 kilometres in

length, with three junctions) was also improved and is in

operation.

This road is also totally free of charge and is maintained by

the contractor Autopista Madrid Sur, C.E.S.A.

– Santiago de Compostela-Alto de Santo Domingo

(Mozón) AP-53 toll motorway: On 3 June 2004 the last

Annual Report 2004

200


201stretch of the AP-53, corresponding to Lalín Centro-Alto de

Santo Domingo, was opened to the public. The stretch is

9.85 kilometres long and involved an investment of Euros

59.3 million.

With this opening, the whole of the AP-53, which has a

total length of 56.6 kilometres, is now open to the public.

This new motorway is managed and maintained by the

company Autopista Central Gallega, C.E.S.A. (ACEGA),

which is 15.66% owned by the Grupo Sacyr Vallehermoso

through Itinere Infraestructuras, S.A.

Of the 1,027.8 kilometres of motorways projected, as

foreseen by the previous Government for the period 2000-

2007, on 22 January 2004 the following contracts were

adjudicated (toll-free stretches included): Ocaña-La Roda

motorway, 177.3 kilometres in length; the 81-kilometre

Madrid-Toledo motorway; the 114-kilometre Cartagena-Vera

motorway and the Alicante ring road, 142.5 kilometres in

length. The 22-kilometre Parbayón-Zurita stretch (Cantabria),

which was tendered on 8 August 2003, was void as none of

the bids followed the conditions established in the

specifications. This project has been included in the new

Strategic Infrastructure and Transport Plan (SITP) as a dual

carriageway.

The contracts for the 24.5-kilometre Alto de las Pedrizas-

Torremolinos motorway (Malaga); the 63.4-kilometre Soria-

Tudela motorway (Navarre), and the 235.3-kilometre

Toledo-Ciudad Real-A-4 motorway, which the Ministry of

Public Works had planned to tender in 2004, were finally

not tendered, but calls for bids is expected for them in

2005.

In the early months of 2005, several Regional Governments

are to announce tenders for road contracts through the

“shadow toll” system; i.e. the Government will pay

contractors a fee according to the number of vehicles which

use the road every month. Notable amongst these are:

– Galicia Regional Government: On 20 January 2005, the

specifications for the 16-kilometre Santiago-Brión and

Corredor Pardiñas-As Galanas dual carriageway were

presented. The estimated investment is Euros 118 million.

On 24 January, bids were presented for the extension of

the 17-kilometre Salnés fast road (Pontevedra). The

investment amounts to Euros 54 million.

– Principality of Asturias: On 28 February 2005, bids were

presented for the extension of the AS-18 Pando-Porceyo

and the AS-17 Lugones-Bobes. This project has a length

of 26 kilometres and involves an estimated investment of

Euros 136 million.

– Madrid Regional Government: On 11 March, the new

M-407 dual carriageway was put out for bids. The road is

between the Toledo and Extremadura roads and is included

in the REDSUR project. It is 11.5 kilometres in length and

involves an investment of Euros 100 million. Traffic of

40,000 vehicles a day is foreseen.

– Valencia Regional Government: On 11 March, bids were

presented for the conversion, extension and new

construction of the CV-35 Valencia-Losa del Obispo and

the CV-50 Benaguasil north by-pass. The project has a

length of 43 kilometres and involves an estimated

investment of Euros 200 million.

All of these Regional Governments and some others, such as

Murcia Regional Government, intend to continue with the

Plan for Shadow Toll Road Contracts –apparently

immediately. Some projects have already been made public,

such as those for the M-503, M-410 and M-203 roads in the

Region of Madrid, with an overall investment of nearly Euros

200 million, and there are other projects in the pipeline,

currently at the stage of the administrative formalities.

Through its public company GISA, the Catalunya Regional

Government could call for bids for three projects for the

Catalunya basic road network in 2005 and for another six in

2006, with an investment related to the works of some Euros

2,000 million.

In addition, Murcia Regional Government is completing the

specifications for the tender of the region’s new airport and

the call for bids is imminent. Itinere forms part of the

development company which prepared the Viability and

Master Plan for the airport, through private initiative.

The outlook for motorway contracts in the international arena

is also quite promising. In the coming years, many countries

will put many projects out for bids. The projects in

which the Grupo Sacyr Vallehermoso, through Itinere

Infraestructuras, S.A., is already involved or is studying

participation in the future, are as follows:

– Chile: The country has published the bidding conditions

for the new contract for the La Serena-Caldera stretch of

Ruta 5 Norte. This 411-kilometre road already exists and

the tender is for the execution of 98 kilometres of second

lanes, 26 kilometres of slow lanes, 40 kilometres of

refurbishment of the existing road and other improvements,

with an estimated investment for the works of Unidades de

Fomento 3,542,000 (some Euros 156 million). Itinere

Infraestructuras, through Itinere Chile is currently the

contractor for the previous stretch, the 240-kilometre Los

Vilos-La Serena, which is already in operation.

In compliance with Chilean legislation, Itinere is also

taking part in three private initiatives for prolongations or

annexes to three of its contracts; Ruta 5 Norte: Coquimbo-

La Serena; Ruta 5 Sur: Puerto Mont-Chacao and Américo

Vespucio Sur: Plaza Grecia-Tobalada. If these are adopted

by the Government, they will be tendered.

– Costa Rica: The 23-kilometre San José-Cartago contract

is expected to be put out for bids in 2005, with an

estimated investment of Euros 190 million.

In 2004 Itinere Infraestructuras, S.A., through its subsidiary

Itinere Costa Rica, S.A., won the contract for the Autopista

del Valle (San José-San Ramón stretch). It has recently

started negotiations with Chile’s Ministry of Infrastructures

with a view to possibly participating in the San José-

Caldera contract.

– Others: In 2005 numerous infrastructure contracts will be

tendered in countries like Mexico (where the Federal

Government has implemented a New Highway Contract

Plan), Portugal, Ireland, Greece, the new countries in the

European Union, Russia and China.

1.3.3. The housing market

The market for housing in Spain in 2004 was once again

spectacular. A total of 650,000 homes were developed and

another 490,000 were completed, with the number of

projects endorsed reaching 675,000.

The price of new housing continued to rise, although at a

slightly slower rate than in the previous year, when it

increased by 15.8%, the highest rise in 14 years. In 2004

new apartments in provincial capitals grew by 12.5%, putting

the square metre at Euros 2,286. In other cities, the growth

rate was also of 15.8%, with the square metre at Euros 1,631

per square metre. This puts the average for the country at

14%, with Euros 1,992 per square metre. Housing prices in

Spain have risen at a compound annual rate of 10.8% since

December 1985.

The most expensive cities for buying a new home were

Barcelona, where the square metre costs Euros 3,442 on

average, Madrid at Euros 3,379 and San Sebastián, at Euros

3,358. At the other extreme, Badajoz is the city with the

lowest prices, Euros 1,103 per square metre, followed by

Lugo, at Euros 1,106 and Pontevedra at Euros 1,158. The

sharpest rises corresponded to Girona, where buying an

apartment costs 21.8% more than in 2003, Huesca, with a

21.5% increase and Malaga, with a rise of 20.3%. In contrast,

housing prices remained practically flat in Oviedo, only 1.7%

more than in 2003, Santa Cruz de Tenerife, up 2%, and

Pontevedra, with a rise of 3.6%.

By Self-governing Region, Andalusia leads the rises with

16.3%, followed by Aragon, with 15.5%, the Valencia region,

with 14.6%, and La Rioja, with 14.3%. The regions with the

smallest increases were Asturias, with 1.7%, the Canaries,

with 3.2%, Galicia, with 6% and Cantabria, with 8.2%.

By province, and still with reference to new housing, the most

expensive is in Vizcaya, Madrid and Barcelona, where average

prices were of Euros 2,205, 2,123 and 2,086 per square

metre respectively. The cheapest housing was in Lugo,

Orense and Badajoz, at Euros 712, 785, and 814 per square

metre. The sharpest increases occurred in Almería, Huesca

and Madrid, with rises of 18.3%, 18.1% and 17.9%,

respectively. In contrast, Orense, Palencia and Segovia,

increased to the least extent, at rates of 6.4%, 8% and 8.5%.

The prices of second-hand housing reached an average of

Euros 3,905 per square metre in Barcelona in 2004, an

increase of 18.3% on the 2003 figure. This rise is more than

Annual Report 2004

202


203double the 7.5% of Madrid, where the square metre of

second-hand housing cost Euros 3,787. Buying a second-

hand home in Madrid is 3.1% cheaper than in Barcelona,

which is becoming the Spanish city with the most expensive

housing. The positive note for the buyer comes from Madrid,

since for the first time in at least four years, second-hand

housing did not go up by more than 10% (it rose by 26.2% in

2001, by 28.7% in 2002 and by 17.3% in 2003).

In the forecasts for the housing market in 2005, nobody is

now talking about plummeting prices or an abrupt slowdown

in the construction business in 2005. That is how it has been

seen in the stock market, where the prices of construction

and real estate companies continue to appreciate sharply in

view of the positive outlook for the sector in the medium

term. Another strong reason for market optimism is the delay

in the expected interest rate hike, a crucial factor in terms of

putting the damper on demand. All the analysts agree that the

European Central Bank will keep rates at around 2% this year,

the lowest level in over fifty years for the twelve countries

which have been in the euro since 2002. Strong demand for

housing on the Mediterranean coast from European holiday-

makers is also important as is the demographic boost

produced by the phenomenon of immigration, since Spain

could receive over fifteen million immigrants in the next

twenty years. With an outlook such as this, housing will once

again be the driver of the Spanish economy in 2005, with

prices growing by up to 10%. New housing supply, with over

400,000 homes developed in 2005, will continue to be

plentiful, although increasingly less in the central districts of

cities, due to the shortage of land and its expense.

1.3.4. The property sector

The Madrid office market ended 2004 with the construction

of over 600,000 square metres, although nearly 40% of the

area was already committed, pre-leased or for own use. The

forecasts are a little lower for 2005 and 2006, with nearly

391,000 and 310,000 square metres respectively. The global

vacancy rate was of 9.3%, even though the M-40 area

reached 20.9%.

In respect of demand, the absorption figure rose to 750,000

square metres, 32% more than in 2003 and only lower than in

2000, which was an all-time record year. Net annual

absorption was of 75,000 square metres, the first time this

has happened at the end of a year since 2000, which paints a

bright picture for the future. In the business district, the

equivalent of 18% of the area which came onto the market was

absorbed, despite strong competition in prices and new

supply in other districts. In the north, noted for its emblematic

buildings with above average qualities, the area leased

outstripped the 2003 area by 2%. In the city centre, small and

medium-sized enterprises were the ones negotiating instead

of public institutions, as had occurred in previous years.

The forecasts for 2005 and subsequent years suggest that

office demand will come from major transactions to set up

head offices, from the public administrations which will

continue to rent properties (in 2004 they accounted for 24%

of the total area), from medium-sized companies with

expansion plans and small national or local businesses,

demanding specific areas.

As regards prices, the highs of the business district

increased, as did those of the secondary area, in buildings

with the best features and location. They grew by 4% and

2.8% respectively. The top price was of nearly Euros

25.75/sq. metre/month. On the inner and outer peripheries

prices remained flat in 2004, largely as a result of high

vacancy rates (14.2% and 30.4% respectively). The forecasts

for 2005 suggest that there will be a two-speed market where

performance will vary for the areas with less supply (inside

and around the M-30 ring road) and those of greater supply

(on the periphery).

From the supply standpoint, nearly all the new supply,

210,000 square metres foreseen for 2005, is being developed

on the periphery, since it is very scant in the centre. Vacant

space has continued to fall in the main districts in the centre,

from 8% to 4.5% in the business district, from 3.6% to 2.9%

in the north and from 3.3% to 3.1% in town. In contrast, it is

rising from 10.3% to 11.2% on the M-30 ring road, and from

19.6% to 20.9% on the M-40.

Offices are renewed at an annual rate of 6% and new space is

preferred, leaving less recent buildings vacant. In first

contracts, the initial duration agreed upon is short, a

compulsory two to three years, with the possibility of

extensions, as small and medium-sized enterprise has a

tendency to move.

The short-term forecast for between 2005 and 2006 is that

global supply should fall, largely as a result of the slower

addition of new buildings, 345,000 square metres as

compared to the 536,000 square metres than were added

between 2003 and 2004. Saturation is also expected in

supply on the periphery, where it is also difficult to let

vacant properties. For 2005 and 2006, the most important

works in the speculative sense are located on the

junctions of the N-1, next to Manoteras and Fuencarral,

together with the completion of some stages of the N-II,

next to the airport, or on the Coruña road. Non-speculative

projects include the Telefónica “City” or the delivery of

other pre-leased properties. Work is also to start on the

Madrid Arena towers, one of which belongs to Sacyr

Vallehermoso, and initial steps are being taken to rent out

this large complex.

In 2004, the volume of investment in buildings for lease was

25% higher than the previous year. In total, Euros 1,437

million was spent, 34% more than the average for the last

five years. Last year was marked by short, quality supply,

which led to a decrease in yields –the minimum was 5%–

due to competition from buyers. The average price per

square metre for the transactions was Euros 3,400. Spanish

purchasers spent the equivalent of 71% of the total capital,

although foreigners have also made significant deals; a

notable role was played by German funds, which moved

back to centre stage accompanied by other European

entities.

To complete the analysis of the Madrid market, office

buildings were sold to be used for other purposes. In 2004,

buildings were sold for some Euros 725 million, taking

150,000 square metres from total office space.

The office market in Barcelona and its periphery was of

375,000 square metres sold in 2004, a 39% increase on the

previous year and a record figure for the capital of Catalunya,

as it outstripped the all-time record of 310,000 square metres,

hit in 2000. The large number of transactions, the area

contracted and the significant figure for pre-lease contracts

paint a very bright picture of the Catalan market, which allows

for some optimism as regards the coming years.

The year 2004 ended for Barcelona with an increase of

28,000 square metres of office space with respect to

2003, which is a growth rate of 2.97%. This growth rate

was lower than the previous year, when there was an

increase of 119,000 square metres on the 2002 figure,

largely because of the tendency to convert offices into

residential space, especially in the business district and

city centre.

The total area available reached 332,000 square metres, a

27.20% increase on 2003, which ended with 261,000 square

metres. Of this space available, 70% is in new business

districts and on the periphery, which are also the areas where

nearly all the demand is located.

The overall vacancy rate was of 7.48%, up 1.3% on the

6.18% registered in 2003. It is important to highlight the rate

of 30.63% in the new business districts and the 136,000

square metres which will come into the market in these areas

in 2005. In the area on the periphery, the vacancy rate is of

14.7% and a further 23,000 square metres of new supply is

expected to come into the market in 2005.

In 2005 and 2006, projects with a total of 159,000 and

207,000 square metres are planned respectively, with 73% of

this in the new business districts and the remaining 27% on

the periphery. A large percentage of this new supply has

already been contracted, through pre-lease contracts.

Demand rose sharply in 2004. More than 500 transactions

took place and 375,000 square metres were contracted, as

compared to 270,000 square metres in 2003 (up 39%). The

average space leased was 656 square metres, as against the

535 square metres of 2003.

The absorption corresponding to the fourth quarter reached

125,000 square metres, 31% more than in the same quarter

of 2003.

In respect of prices, the top prices rose by 5.3% to reach

around Euros 24/square metre. This was the result of the

short supply available in the business district and city centre.

On the periphery and in the new business areas, prices

remained stable.

Forecasts for 2005 suggest that prices will remain stable and

even rise, due to increasingly buoyant demand and the short

supply.

Annual Report 2004

204


205Investment in office properties in Barcelona amounted to

Euros 1,000 million in 2004, up 23% on the 2003 figure of

Euros 822 million. This consolidates the city as a very

attractive destination for investment, because of its stability

and dynamism. National and local investors were particularly

interested in properties in the business district and city

centre to refurbish them and then use them for residential

purposes. These transactions accounted for 25% of total

investments in 2004, involved a total of 45,000 square

metres and were mainly conducted in the Paseo de Gracia

area.

To round off the analysis of the situation in Barcelona, it

should be noted that the new business areas were of interest

to international and Spanish investment funds, which were

prepared to make acquisitions with rent guarantees of

between 6% and 7%. These transactions amounted to Euros

175 million.

In 2004 as a whole, the shopping centre sector in Spain

attracted total investments of Euros 1,500 million. A total of

29 new centres were inaugurated, with only two of them

aimed at leisure activities, and four existing centres were

extended, giving 799,183 square metres of commercial

space. Amongst the new centres, seven are regional and

added over 329,365 square metres, with an investment in

excess of Euros 640 million. The remaining 22 serve new

urban developments under expansion in the residential areas

where they are located. These centres contributed 446,422

square metres and involved an investment of Euros 870

million. The four converted centres required an investment of

Euros 45 million and created 23,396 square metres of new

space.

In respect of the developers of these new shopping centres,

fifteen of the twenty which came into the market in 2004 were

Spanish investors and only five were international developers,

which implies that national developers are leading a sector

previously led by foreign firms. Another four centres were

developed jointly.

Spain ended 2004 with a total of 447 shopping centres and a

total area of 9.6 million square metres, channelling an

investment of nearly Euros 7,000 million since the year 2000

and creating over 150,000 new jobs. For the coming years,

there is a total of 149 new projects under management which

will imply a further 4.3 million square metres. Madrid,

Andalusia and Valencia are the regions with the highest

volume of commercial space. Moreover, they attract the

majority of the new projects, together with Catalunya. In

Andalusia specifically, 28 new centres are being studied, with

a gross leasable area of 700,000 square metres, followed by

the Region of Valencia, with 22 projects and 600,000 square

metres and Madrid, which will have 16 new centres and

660,000 square metres.

Commercial space in Spain is concentrated in the most

densely-populated regions (Andalusia, Catalunya, Madrid and

the Region of Valencia), which account for 61.9% of the

existing total. Galicia, Castilla y León, the Basque Country

and Canaries account for 20.8%.

1.3.5. The environment and services sector

Cogeneration is an efficient system of energy production and

enables companies that use it to improve their economic

and energy balance, due to the high energy output it

provides, and the possibility of selling the surplus electricity

generated.

The main advantages of cogeneration are as follows. It

reduces primary energy consumption and fuel imports

(saving in the country’s balance of payments). It reduces

emissions of greenhouse-effect gases (and is thus a basic

tool for fulfilling the Kyoto agreements). It decreases

losses in the electricity system and reduces investments in

transmission and supply. It increases the guarantee of

power and quality in the electricity service. It encourages

the creation of small and medium-sized construction

companies and cogeneration plant operators. It stimulates

research into efficient energy systems and their

development.

In 1997 the European Commission announced that

cogeneration is one of the electricity and thermal generation

systems to be promoted throughout its territory and

established the goal of 18% of European electricity

production being from cogeneration plants by the year 2010.

This is one of the actions aimed at complying with the Kyoto

protocol and modernizing the European production system.

The level of implantation in Europe is of 8%, with top figures

of 40% in Denmark, thanks to the inclusion of community

heating stations. In Spain, electricity production through

cogeneration and waste treatment reached 34,023 million

kilowatts/hour in 2004 and accounted for 12.22% of total

gross production.

The growth of the cogeneration sector in Spain is leading to

the creation of jobs in different energy sectors, such as

engineering, capital goods manufacturers, construction firms

and developers.

In May 2004 the Ministry of the Environment announced that

part of the National Hydrological Plan was to be replaced by

seawater desalination projects and the reutilization of

wastewaters.

The investment foreseen by the Government amounts to Euros

3,747 million, largely financed by the European Union, and

has specific projects for each hydrographical basin. Overall,

the Mediterranean basins with a deficit will receive a total of

1,058 cubic hectometres of water; the inland basins in

Catalunya will increase their resources by 145 cubic

hectometres; the Júcar basin will have 265 cubic

hectometres, the Confederación Hidrográfica del Segura will

have 336 cubic hectometres and the southern basin will

receive a total of 312 cubic hectometres. The distribution of

the investment will be as follows: Euros 1,110 million will go

to Catalunya, Euros 1,262 million to the Region of Valencia,

Euros 807 million to the Self-governing Region of Murcia and

Euros 568 million to Andalusia.

Initially, eleven desalination plants will be built and another

two existing plants will be extended, which will involve an

investment (included in the investment foreseen) of Euros

632 million. There are currently 3,000 desalination plants in

Spain and they process 1.2 million cubic metres a day, which

is equivalent to the plants which annually come on stream

throughout the world.

Today, the Spanish desalination market moves between Euros

270 and 340 million a year and revenues are expected to

double in two to three years.

Between 90% and 95% of the desalinated water in Spain is

produced by inverse osmosis, i.e. the salt is separated from

the water through membranes and high pressure.

2. PERFORMANCE OF THE GRUPO SACYR VALLEHERMOSO

2.1. The consolidation of a great group

For the Grupo Sacyr Vallehermoso, 2004 was a year when a

great project was consolidated after the merger between

Grupo Sacyr, S.A. and Vallehermoso, S.A., which took place

in 2003. This second year required a great deal of hard work

from everybody in the company in order to unify teams and

work towards a common project, and the outcome has been

very positive. Sacyr Vallehermoso is a sound company and a

point of reference in all the activities it conducts:

construction, infrastructure contracts, development, property

and services. It has a great desire to do better and is a

responsible, professional, highly profitable company in

permanent expansion.

In 2004, the Group’s growth and strength was reflected in its

consolidated financial statements. Sacyr Vallehermoso

obtained total revenues of Euros 3,703.32 million, 11.1%

more than in 2003. Attributed income amounted to Euros

376.33 million, up 12.6% on 2003, which again makes the

Group one of the most profitable in the sector. The gross

margin, measured as the ratio between operating income and

revenues, was of 15.7%, confirming the high profitability

achieved.

The Group obtained Euros 747,308.52 thousand in EBITDA,

29.5% more than in 2003, which puts the EBITDA to revenue

ratio at 20.2%.

The total balance sheet for 2004 amounted to Euros

13,717.11 million, a 20.9% increase on 2003 and

shareholders’ equity totalled Euros 1,980.5 million, 50.9%

more than the previous year.

All of these levels of growth and profitability obtained in 2004

are guaranteed by the Group’s order book for construction,

infrastructure contracts, services, development and property,

which amounted to Euros 59,708.07 million as of 31

December 2004.

Some of the most significant events that occurred in 2004

are described below and are followed by an explanation of

what happened in each business division.

Annual Report 2004

206


207On 25 June 2004, the first of the Group’s Shareholders

Meetings was held in Madrid. The meeting went in a

completely normal manner and 80% of the company’s capital

was present or represented. At the event, apart from

examining and approving the financial statements for 2003,

important measures for the company were agreed upon.

Amongst these were the following:

• It was agreed to increase Sacyr Vallehermoso’s capital

by Euros 13,850,948, through the issuance of 13,850,948

shares, each with a par value of one euro, with an issue

premium of Euros 145,434,954, to cover the agreement

with the Vaz Guedes family to integrate Somague SGPS

into the Grupo Sacyr Vallehermoso. As is indicated in the

next point of this Management Report, this issue was fully

paid up through the transfer of 16,776,607 Somague

shares. This operation took place on 19 July 2004.

• A rights issue was approved, and conducted on 13

September, for Euros 6,491,544, through the issue of

6,491,544 shares, each with a par value of one euro,

charged to unrestricted voluntary reserves and in the

proportion of one new share for every forty shares

previously issued. This operation was effected to

compensate -in payment to the shareholder- for the loss of

purchasing power stemming from the increase in the CPI.

The Chairman of Sacyr Vallehermoso, Mr José Manuel

Loureda, took advantage of his intervention at the Meeting to

say farewell to shareholders in his capacity as Chairman, as

he left his executive post on 10 November because he had

reached the age limit of 65 established in the Company By-

laws. Since then Mr José Manuel Loureda, has continued to

occupy the post of Company Director.

At the meeting held on 3 June, the Group’s Board of

Directors thanked José Manuel Loureda for his services and

his dedication to the company, of which he had been the

main driver for 18 years. Loureda, a civil engineer, founded

Sacyr in 1986, and was Chief Executive Officer and

Chairman. Later, after the merger with Vallehermoso, S.A., he

was Chairman of the Sacyr Vallehermoso Group as from June

2003.

On 11 November 2004, the new Board of Directors was

structured in the following manner: Mr Luis del Rivero

Asensio became the Chairman of the company and

Mr Manuel Manrique Cecilia the First Deputy Chairman

and Chief Executive Officer. Rivero, a civil engineer, was

co-founder of Sacyr in 1986 and occupied different executive

posts. As from June 2003, he was the Group’s First Deputy

Chairman and Chief Executive Officer. Manuel Manrique is

also a civil engineer and was one of the first shareholders of

Sacyr, which he joined in 1987. Prior to the new

appointment, he was the Chairman and Chief Executive

Officer in the construction division and a Director at

Vallehermoso.

The value of the real estate assets belonging to the Grupo

Sacyr Vallehermoso (Testa group and Vallehermoso group)

amounted to Euros 6,500 million as of 31 December 2004,

which puts the company in seventh position in terms of asset

value in the sector in Europe, and in fourth place if the United

Kingdom is excluded. This figure is a 29% increase on the

2003 appraisal.

At its ordinary meeting on 13 December 2004, the technical

advisory committee of the Spanish Stock Market’s selective

Ibex-35 chose Sacyr Vallehermoso, S.A., together with the TV

company Telecinco, S.A., to move onto the index formed by

the 35 most important listed companies in Spain.

Thus, on 3 January 2005, Sacyr Vallehermoso went back onto

the Ibex-35 after six months’ absence. Since 30 September

last, the Group has also been trading in the Portuguese

market (Euronext Lisbon).

Sacyr Vallehermoso’s shares ended 2004 at Euros 12.15 per

share, which gives market capitalization of Euros 3,233.76

million.

In 2004, the Grupo Sacyr Vallehermoso continued to grow in

all its business sectors.

2.1.1. The construction business

In the construction division, the Group won works contracts

both in Spain and abroad, for a total of Euros 2,676.4 million,

a 28.7% increase on the Euros 2,079.7 million adjudicated in

2003. This strong growth stemmed from opening up new

markets in civil works, especially in Italy, and from achieving

a larger share in adjudications from the Public Administration

in Spain. Civil works account for 76.1% of the total

construction business.

Amongst the contracts won in Spain in 2004 are:

• “Projects to improve the connection between the M-30

and the N-III (Madrid)”, with a total budget of Euros

170.73 million (including VAT).

• “Prolongations of Lines 1, 4 and 7 of the Madrid Metro”,

with a total budget of Euros 227.4 millions (including

VAT).

• Contracts for the high-speed rail link in Galicia (Orense-

Santiago), in Levante (Alicante) and Barcelona-French

border (Girona) for a total amount of Euros 246.15 million

(including VAT).

In the international arena, Sacyr Vallehermoso won two major

contracts in Italy, through its affiliate SIS, S.C.P.A.:

• The duplication of the “Palermo-Orleans-Carini” stretch

of railway, with a length of 19 kilometres and a budget of

Euros 665 million (including VAT).

• The construction of the 6.62 kilometre road between

Cesana and Claviere (Turin), with a budget of Euros 99.86

million (including VAT).

In Costa Rica, it won the construction and operation of the

“San José-San Ramón” toll motorway, the area with the

heaviest traffic in Central America. It is 60 kilometres long

and involves an investment of USD 266 million.

Construction obtained Euros 1,304.31 million in revenues in

2004, with attributed income of Euros 63,093.65 thousand.

The gross margin, measured as the ratio between operating

income and revenues, was of 6.3%, proof of the good

profitability achieved.

EBITDA (calculated as operating income, plus amortizations,

plus allocations to the reversion fund, plus the variation in

operating provisions) amounted to Euros

109,431.71 thousand, which puts the EBITDA to revenues

ratio at 8.4%.

In 2004, the total balance sheet amounted to Euros 1,331.54

million and shareholders’ equity totalled Euros 376.45 million.

The high growth and profitability achieved are guaranteed by

the order book for construction, which amounted to Euros

2,858.17 million as of 31 December 2004.

2.1.2. The infrastructure contracting business

In 2004, Itinere Infraestructuras, S.A., the head of the

infrastructure contracts business at the Grupo Sacyr

Vallehermoso, ranked as the second motorway operator in

Spain, with a total of 1,097.4 kilometres of motorways in

operation.

Two new contracts were won during the year: on 27 April

2004 the Council of Majorca adjudicated the construction

and operation of the shadow toll motorway which links Palma

de Majorca with Manacor to the consortium formed by Sacyr

Vallehermoso, through its subsidiaries Itinere Infraestructuras

(35%) and Sacyr (40% in construction and 5% in the

contracting business), and the Majorcan companies Melchor

Mascaró, Aglomsa, Matías Arrom Biblioini, Electro Hidráulica

y Obras, and Pavimentos Man. The project has a total length

of 41 kilometres and involves an investment of Euros 116

million. The contract runs for 33 years and the period for

construction is 27 months. It also won the first contract in

Costa Rica, namely the “San José-San Ramón” toll motorway

which is 60 kilometres long and will involve an estimated

investment of USD 266 million. The contract runs for 25

years and the construction period is 30 months.

Itinere has a stake in 24 contracts, of which 19 are in

operation and 5 are at different stages of development.

At the corporate level, the Itinere group conducted two major

operations in 2004:

• On 30 November 2004 Itinere Infraestructuras, S. A.

obtained 70% control of the group Ena Infraestructuras,

S.A. (of which it already owned 50%). To do this, Itinere

conducted a rights issue for Euros 24,322,137, through

the issuance of 24,322,137 shares, each with a par value

of one euro, all of which were subscribed and paid up in

the following manner:

Annual Report 2004

208


209– Caixa Galicia subscribed to 12,113,908 Itinere shares,

paid for through the contribution of 100% of the share

capital of the company Pistas de Galicia, S.L.U. (Pistas

de Galicia owned 10% of the Ena Infraestructuras group).

– Caixa Nova subscribed to 12,113,908 Itinere shares,

paid for through the contribution of 100% of the share

capital of the company Autopistas Participadas, S.L.U.

(Autopistas Participadas owned 10% of the Ena

Infraestructuras group).

– BBVA subscribed to 94,321 Itinere shares, paid for

through the contribution of 1,446 shares in the company

Autovía del Noroeste Concesionaria de la Comunidad

Autónoma de la Región de Murcia, S.A., representing

10% of the capital of this company of which the Grupo

Sacyr Vallehermoso already had control of 45%. Its

holding in the company thus rose to 55%.

As a result of this operation, Caixa Nova and Caixa Galicia now

each have a stake of 8.62% in the share capital of Itinere

Infraestructuras, S.A., while BBVA obtained 0.06714% de Itinere,

a stake it was to sell to Sacyr Vallehermoso on 8 February 2005.

On 27 December, the take-over merger of the companies

Pistas de Galicia, S.L.U. and Autopistas Participidas, S.L.U.

was conducted by Enaitinere, S.A.U., a subsidiary of Sacyr

Vallehermoso, which holds the financial stake in the Ena

infraestructuras group.

• On 13 December 2004 Sacyr Vallehermoso performed a

share swap with the construction company Obrascón

Huarte Lain (OHL), through which Itinere Infraestructuras

acquired the following stakes:

– 45% of Autopista del Noroeste Concesionaria de la

Comunidad Autónoma de la Región de Murcia (Aunor),

giving Itinere 100% of the company.

– 6.75% of Alazor Inversiones (the company owning the

R-3 and R-5 toll motorways of the Self-governing

Regions of Madrid), givng Itinere a total holding in the

company of 21.66%.

– 5.99% of Tacel Inversiones (the owner of the Autopista

Central Gallega, the contractor for the “Santiago de

Compostela-Alto de Santo Domingo” AP-53 toll

motorway in Galicia), whereby Itinere obtained a total

stake of 15.66%.

For its part, OHL acquired the following stakes in Itinere

Infraestructuras:

• 33% of the company Euroglosa 45 Concesionaria de la

Comunidad de Madrid (the holder of stretch 3 of Madrid’s

M-45 motorway), which meant that Itinere totally divested

of this company.

• 20% of Aeropistas (the holder of Concesionaria Eje

Aeropuerto, which links the M-40 motorway with Madrid’s

Barajas Airport), which meant that Itinere also disposed of

the whole of this company.

The Infrastructure Contracting Group obtained a total of Euros

322.92 million in revenues in 2004, with attributed income of

Euros 12,997.41 thousand. The gross margin stood at 51.3%,

which is proof of the division’s profitability.

EBITDA amounted to Euros 247,892.72 thousand, which put

EBITDA to revenues at 76.8%.

The total balance sheet amounted to Euros 5,866.35 million,

with investments in motorways and other toll roads totalling

Euros 4,695.96 million and Euros 87,142.33 million for

roads under construction. As of 31 December 2004,

shareholders’ equity amounted to Euros 637.13 million.

The growth and high profitability of this division is assured by

the large volume of backlog orders in hand, which amounted

to Euros 49,369.61 million as of 31 December 2004.

2.1.3. The services business

In the service segment, Cafestore, S.A.U., a Group company

which specializes in operating service areas, opened a total

of 13 areas in 2004, which were distributed as described

below. On 7 February, both sides of the area were opened in

Guitiriz (Lugo), at kilometre 538 of the A-6 dual carriageway.

On 17 February and 6 March, the service areas on the R-5

radial toll road were opened (both of them with areas on

either side of the road), one at kilometre 24.5 as the road

goes through Navalcarnero (Madrid) and the other at

kilometre 6.5, as it goes through Leganés (Madrid). On 17

February the service area at Arganda del Rey on the R-3

radial road was also opened. Shortly afterwards, on 29

March, the area on Madrid’s M-50 ring road was opened at

Villaviciosa de Odón (Madrid). On 3 August, the areas on

either side of the N-340, where it goes through Alberique

(Valencia), were opened and, lastly, on 6 November, the

Santomera Norte area in Orihuela (Alicante) was inaugurated.

In 2005, three new sides are to be opened, two in the Miravalle

services areas, at kilometre 217 of the A-52 “Autovía de las Rías

Bajas” and the second side of Santomera Norte, at kilometre

750 of the A-7 as its goes through Oriheula (Alicante).

The Grupo Sacyr Vallehermoso, through its subsidiary

Valoriza Gestión, builds and runs the following electricity

cogeneration plants:

– Olextra, S.A.: A plant located in Malaga for the treatment

and reduction of slurry through cogeneration. It has 18.7 MW

of power installed, with one natural gas turbine and one

steam turbine. It has been operating at full tilt since 2003.

– Extragol, S.L.: Like Olextra, it is located in Malaga on the

premises of an olive pulp oil extractor and generates

electricity by burning olive pulp (orujillo). This plant will

be working at full capacity in 2005 and has 8.5 MW of

power installed.

– Compañía Energética de La Roda, S.L.: This company is

located at an oil mill in the province of Seville and

engages in the treatment and reduction of slurry. It has

installed power of 8 MW and does the drying through

natural gas engines. It came on stream in 2004.

– Biomasas de Puente Genil, S.L.: A company located in

Puente Genil (Cordoba) engaging in electricity production

by burning biomass, olive pulp. It has 9.8 MW of power

installed. It is currently being built and is expected to

come on stream in 2006.

– Compañía Energética Pata de Mulo, S.L.: This company is

also located in Puente Genil (Cordoba) and engages in the

drying of slurry through a combined cycle. It has installed

power of 17.5 MW and will start production in 2005.

In the water desalination business, Sadyt continued to expand

in the field of desalination plants in Spain and abroad. In

Spain it won the contract for the construction and operation

of a plant in the Bay of Alcudía (Majorca). The plant will have

a desalination capacity of 14,000 cubic metres a day, with

the possibility of increasing this to 21,000 cubic metres. The

contract for the plant is for 15 years and the investment is of

Euros 61.9 million.

In the foreign markets, it was adjudicated, through the

Spanish consortium Geida, the project to build a seawater

desalination plant in Skikda (Algeria), with an investment of

USD 120 million. The plant, which will have a capacity to

desalinate 100,000 cubic metres a day, will serve a

population of some 500,000 people and will come on stream

in 2007. The contract is for 25 years and, during that time, it

is expected to contribute USD 650 million in revenues.

Sadyt is the out-and-out leader in the system of desalination

by inverse osmosis (the method by which between 90% and

95% of water is desalinated in Spain), and has built a total of

45 plants since 1995, largely in the southeast of Spain.

Services ended business year 2004 with revenues of Euros

90.08 million and losses of Euros –15.66 thousand.

EBITDA amounted to Euros 3,012.79 thousand, putting the

EBITDA to revenue ratio at 3.3%.

The balance sheet amounted to Euros 135.41 million and

shareholders’ equity to Euros 26.25 million.

The targets for 2005 and subsequent years in this division are

to fully develop the water, energy, solid waste treatment,

handling and catering businesses. This is the area of the

Grupo Sacyr Vallehermoso which will receive the most

support from everyone, as it is the division that needs to grow

to the greatest extent.

2.1.4. The real estate development business

In 2004 the Development business had an excellent year,

selling a total of 4,368 homes (14% more than in 2003, with

an average increase in the sales price of around 10%). It has a

land bank of 4,031,670 square metres of building land above

Annual Report 2004

210


211grade, which will allow for the construction of 24,142 homes

in the future and guarantee activity for the next 5.4 years.

Last year a total of 4,584 homes were started in 51

developments and 895,414 square metres of building land

above grade were acquired, involving an investment of Euros

616.8 million.

Firm housing sales commitments (regardless of the time they

are reported) amounted to Euros 1,111.9 million, 17.9%

more than in 2003.

According to the appraisal firm CB Richard Ellis, as of 31

December 2004, the value of the real estate assets in

development amounted to Euros 3,339.7 million, a 44.1%

increase on the 2003 figure, with unrealized capital gains of

Euros 1,319.9 million.

In 2004, the Development division obtained Euros 1,069.28

million in revenues, with attributed income of Euros

116,772.11 thousand. The gross margin rose to 19.9%, proof

of the high profitability of this division.

Its EBITDA amounted to Euros 211,415.5 thousand and the

EBITDA to revenue ratio was of 19.8%.

Last year the total balance sheet amounted to Euros 3,415.65

million and shareholders’ equity totalled Euros 382.65

million.

Contracted sales, pending reporting on the income statement

as of 31 December, amounted to Euros 772.8 million, a 7.4%

increase on the figure on the same date in 2003.

2.1.5. The property business

The property division, with Testa Inmuebles en Renta, S.A. at

the head, also had a very good business year. The highlights

of the year were:

• Testa presented its most ambitious project to date: the

“Sacyr Vallehermoso Tower”, which is being built in Real

Madrid’s former Sports “City”, next to the “Repsol Tower”,

the “Mutua Madrileña Tower” and the “Space Tower”. With

a useful height of 215 metres, it will be one of the most

emblematic buildings in the capital of Spain. The ground

plan of the building will be in the form of a curvilinear

triangle and it will be covered with a double layer of glass

to optimize energy saving. It will have 55 storeys,

including the technical floors, and a buildable area of

52,672 square metres, of which 33,184 will be used as a

hotel, while the remaining 19,488 metres will be office

space. The entrances to the tower will be along large

walkways which will run above the garden and lead to the

different lobbies of the hotel and the offices. It is expected

to be inaugurated in 2008 and will become one of the

jewels in the Group’s crown.

• In relation to the above, it should be noted that Testa has

reached an agreement with the Hotusa hotel chain whereby

the hotel operator will move into the future “Sacyr

Vallehermoso Tower”. The agreement is expected to be in

force for thirty years. Hotusa’s bid was chosen because of

its high levels of quality, service and professionalism

which will guarantee the success of the establishment. The

hotel will be five-star and will have 500 rooms.

• In 2004, Testa signed new lease agreements for a total

of 7,036 square metres, corresponding to its “Mellon

Financial Center” building in Miami (United States). This

high-level office centre is located in Brickell Avenue and

has 48,378 square metres of total leasable area for offices

and 1,105 garage spaces.

• Testa sold a building situated at number 41 of Calle

Capitán Haya to Madrid City Council for Euros 132.85

million, obtaining Euros 51.82 million in capital gains.

• Testa bought a building at number 45 of Calle Alcalá

from Madrid City Council for Euros 99.78 million. This will

be leased and occupied by the local administration for a

period of ten years.

• Testa also bought from Madrid City Council 152,791

square metres of building land in the Valdebebas Plan de

Actuación Urbanística (Planning Project Programme) in

Madrid, for Euros 33 million.

• Testa sold all of its shares in the Swiss company Maag

Holding Ltd., of which it owned 20.25%, to Swiss Prime

Site (SPS), for a total of Euros 24.44 million, which

brought it Euros 3.54 million in capital gains.

• In 2004 Testa acquired a total of 40 commercial

premises in the “Centro Oeste” shopping centre in

Majadahonda (Madrid), with 2,688 square metres of gross

leasable area.

Testa has 1,371,642 square metres of property for lease

which brought it a total of Euros 185.1 million in 2004. Of

these total revenues from rentals, 60.59% corresponds to

offices (Euros 112.1 million), 18.72% to shopping centres

(Euros 34.6 million), 8.47% to hotels (Euros 15.7 million)

and 12.22% (Euros 22.7 million) to rentals from industrial

premises, housing, homes for the elderly and car parks.

The average occupancy rate was of 95.3%, a 1.6% increase

on the 2003 figure, and the average unit revenue per

square metre and year was of Euros 141, 3.9% more than

in 2003.

In the office market, Testa has 497,089 square metres and

8,111 garage spaces, mainly in Madrid (313,566 square

metres and 5,380 parking spaces) and Barcelona (95,997

square metres and 1,397 parking spaces). Worth highlighting

are the 48,378 square metres available at the “Mellon

Financial Center” in Miami (USA).

Testa also has seven shopping centres nationwide, three of

them in Madrid, with a total of 133,026 square metres and

651 premises, and a wide range of retail, leisure and catering

facilities.

In respect of housing rentals, Testa manages a total of 1,261

properties and 1,043 parking spaces, giving a total of 95,748

square metres, largely concentrated in the city of Madrid and

its surrounding area.

The seven hotels owned by Testa have a total of 66,861

square metres and 1,071 rooms. All of them are leased out to

the best hotel chains and are four or five-star.

The Property group ended 2004 with revenues of Euros

191.98 million and attributed income of Euros 155,098.64

thousand. The gross margin was of 59.7%, which shows the

high profitability obtained.

EBITDA amounted to Euros 146,192.93 thousand, putting the

EBITDA to revenue ratio at an excellent 76.1%.

In 2004 the total balance sheet amounted to Euros 2,588.97

million and shareholders’ equity totalled Euros 1,061.50

million.

The appraisal firm CB Richard Ellis valued the property assets

of the Test group at Euros 3,099.9 million, 13,3% more than

in 2003, with unrealized capital gains of Euros 825.6 million.

2.2. Diversification and internationalization of the Grupo Sacyr Vallehermoso

In 2004 the Grupo Sacyr Vallehermoso continued to pursue

the policy of internationalization and diversification it had

started in previous years.

One of the most significant events of the year was the

execution of the agreement, approved by Sacyr

Vallehermoso’s Board of Directors on 14 December 2003,

whereby the Portuguese construction company Somague

SGPS joined the Grupo SyV.

The Ordinary General Shareholders’ Meeting, held on 25 June

2004, unanimously agreed to increase Sacyr Vallehermoso’s

capital by Euros 13,850,948, through the issuance of

13,850,948 shares, each with a par value of one euro, with

the suppression of the preferential subscription right. These

shares were subscribed in their entirety by the Vaz Guedes

family, the majority shareholders of Somague SGPS. The

shares were disbursed through the contribution of

16,776,607 shares of Somague SGPS, each with a par value

of Euros 5, and representing 64.28% of the Portuguese

company’s share capital and voting rights. Somague’s

shares, which were contributed by the Vaz Guedes family, are

equivalent to a 5.334% stake in SyV’s capital after the rights

issue, giving the right to occupy two posts on the Group’s

Board of Directors. At the same meeting, Mr Diogo Alves

Diniz Vaz Guedes was appointed Third Deputy Chairman of

the Board of Directors and a member of the Executive

Committee.

Subsequently, between 23 July and 12 August 2004, a take-

over bid was launched in the Portuguese market for the

Annual Report 2004

212


213remaining 6%, giving minority shareholders the opportunity

to obtain cash on the transaction. Shareholders representing

5.22% of Somague’s share capital subscribed to the take-

over bid. To acquire the remaining 0.8% of the Portuguese

company, a permanent purchase order was placed at Euros

9.80 per share and this was successfully completed at the

beginning of 2005, which enabled Sacyr Vallehermoso to

take full control of the company.

Through this operation, Sacyr Vallehermoso has enhanced its

competitive position in countries like Portugal and Brazil,

where major infrastructure projects are being developed. The

operation has also served to substantially boost the works

and services order book on an international scale.

Somague, the leading construction and services company in

Portugal, ended 2004 with revenues of Euros 874.79 million

and income after tax of Euros 8.73 million. It obtained Euros

39,002.8 thousand in EBITDA, which put the EBITDA to

revenue ratio at 4.5%.

In 2004 the total balance sheet amounted to Euros

923,915.03 thousand, with shareholders’ equity of Euros

169,192.67 thousand.

Its main fields of business are:

– Construction: It mainly operates in Portugal, including

Madeira and the Azores, besides Brazil, Cape Verde and

Angola.

– Motorway contracts: It takes part in contracts in Portugal

and Brazil.

– Services: It provides maintenance services for gas,

telecommunications and electricity infrastructures in

Portugal, Brazil and Ireland and environmental advisory

services, besides work on creating and maintaining parks

and gardens. It operates in infrastructures and services in

Macao (Popular Republic of China) and is present in urban

waste treatment and railway contracts.

– Water management: It is the largest private water

management operator in Portugal, supplying over a million

people in cities such as Setubal, Guimaraes and Cascais,

amongst others. It also operates in Brazil.

– Energy: Somague operates in the renewable energy

market (mainly wind power), through its affiliate Finerge.

– Real estate development: It participates in major projects

in Lisbon and Oporto.

In January 2004, Itinere Chile, a company belonging to

Itinere Infraestructuras, won the contract “Acceso Nor-Oriente

a Santiago de Chile” (Northeast access to Santiago de Chile).

This new 21.5 kilometre ring road starts at the Centenario

junction (Centenario Bridge), links up with the Costanera

Norte and Avenida Américo Vespucio roads and will continue

northwards through a system of tunnels and viaducts to cross

the mountain chain of the La Pirámide, Manquehue and

Montegordo hills to the Colina valley. Here the motorway will

cross the Ruta de los Libertadores to end at the intersection

with Ruta 5 Norte.

The total investment will amount to Unidades de Fomento

7,110,600 (nearly Euros 163 million) and the contract will

run for forty years.

Itinere Chile is the leading infrastructure contractor in Chile,

with holdings in six contractor companies. Together they have

a total of 620 kilometres of motorways and a global

investment of around two billion euros. The contracts which

are already in operation are Concesiones del Elqui (between

“Los Vilos” and “La Serena”, with 228.65 kilometres);

Concesión de Los Lagos (betwen “Río Bueno” and “Puerto

Montt”, with 136 kilometres); “Ruta 68” motorway (between

“Santiago” and “Valparaíso”, with 109 kilometres) and Red

Vial Litoral Central (between “Cartagena” and “Algarrobo”,

with 72 kilometres). Another two projects are also under way:

the “Vespucio Sur” motorway, the 24 kilometres south ring

road in Santiago de Chile, which will come on stream in

2005, and the “Acceso Nor-Oriente a Santiago” mentioned

above.

Sacyr Chile is the Group’s construction subsidiary in Chile

and builds all the work for which Itinere is the contractor. It

also does other types of civil works projects, particularly for

the Santiago Metro and for the Ministry of Public Works in

respect of roads.

Another step taken by the Grupo Sacyr Vallehermoso in its

internationalization process was to move into Italy through its

affiliate SIS, S.C.P.A. The company is making a decided bid

for this country and it has been short-listed for works worth

Euros 9,400 million, of the Euros 120,000 million

contemplated in the Italian Government’s 2001-2010

Infrastructure Plan.

In 2004, SIS, S.C.P.A. won the contracts for two major works:

– The duplication of the rail line on the “Palermo-Orleans-

Carini” stretch. With a total budget of Euros 665 million,

this project consists of duplicating the “Palermo Central-

Bracaccio-Orleans-Palermo Notarbartolo-Cardillo-Isola

delle Femmine-Carini” line on the island of Sicily and of

improving the stations on the line. In addition, one of them

is to be put underground. The stretch is 19 kilometres

long; with 8 kilometres of this underground, as the line

goes through the city of Palermo.

– The construction of the road between the towns of

Cesana and Claviere, in the province of Turin. The project

which has a budget of Euros 99.86 million consists of

building the by-pass on the Monginevro State highway 24,

to prevent it passing through the towns mentioned above. It

has a length of 6.62 kilometres and is located in a very

mountainous area, which will make it necessary to build

two tunnels, 1,750 and 1,246 metres in length. This road

will be vital for the next “Turin 2006” Winter Olympics.

As was mentioned earlier, SIS S.C.P.A. has been short-listed

in other important tenders in Italy such as: contract for the

“Asti-Cuneo” motorway, with a budget of Euros 1,715

million; “Fiumetorto-Cefalu-Ogliastrillo” rail link, with a

budget of Euros 307 million; the extension of the railway in

the Turin streets “Vittorio Emmanuelle II” and “Grosetto”,

for Euros 617 million; construction of the SS106 Jonica

stretch of the E90 highway and the prolongation of the

SS280 for Euros 552 million; the execution of lots 6,7 and

8 of the SS106 Jonica for Euros 326 million; the N212

Benevento by-pass for Euros 178 million and stretches 6

and 7 of the “Salerno-Reggio-Calabria” motorway for Euros

337 million.

Worth a special mention is the agreement reached by Sacyr

Vallehermoso with the Italian construction companies

Impregilo, Condotte, CMC Ravenna and Grassetto, the French

firm Vinci, the Japanese firm IHI, the US company Parsons

and the Danish firm Cowi to present a bid to build the largest

suspension bridge in the world, the “Messina Bridge”, which

will join the Italian mainland with Sicily and will have a

budget of between Euros 5,000 and 6,000 million. The bridge

will be for both rail and road, with a 3,300 metre span and

it will be capable of standing wind speeds of 216 kilometres

per hour and earthquakes of 7.1 on the Richter scale. This

makes it the biggest engineering challenge in terms of

bridges in the world.

Another country where the Grupo Sacyr Vallehermoso

disembarked in 2004 was Costa Rica. There, in conjunction

with FCC, the Portuguese firm Soares da Costa and the local

Corporación M&S, it has won the tender for the construction

and operation of the “San José-San Ramón” toll motorway,

which is the busiest stretch in the country and gives access

to San José International Airport (San José is the State

capital), together with the “Santa Ana-Río Segundo” radial

road. The motorway is 60 kilometres long and the radial road

7.5. The investment will amount to USD 266 million. The

contract will run for 25 years and the construction period is

of 30 months starting in September 2005.

In 2004, Sacyr Vallehermoso reached an agreement with the

Mexican firm ICA, the country’s leading construction

company, to present their bids jointly in the tenders for

motorway contracts contemplated in the New Highway

Contracts Plan which the Federal Government has set up in

Mexico.

On 11 February 2005, Sacyr presented its bid for the “Tepic-

Villa Unión” motorway, a project with 238 kilometres of in

operation and 132 to be newly built, and a budget of Euros

230 million. On 30 April 2005, the 220-kilometre

“Libramiento Norte de la Ciudad de México” will be put out

for bids, with an estimated investment of Euros 600 million.

With a view to intensifying its internationalization policy, the

Grupo Sacyr Vallehermoso is conducting studies, particularly

in the growing sector of motorway contracts, in Portugal,

Ireland and Greece.

Lastly, the Group is studying the business opportunities

which are arising after the extension of the European Union to

the East of the Continent (Poland, the Czech Republic,

Slovakia, Hungary, Slovenia, etc.) and the Contracting Plans

Annual Report 2004

214


215which are being passed by the Governments of Russia and

China (the country that will register the highest world growth

rates in the field of infrastructures).

3. TREASURY STOCK

As of 31 December 2004, the controlling company Sacyr

Vallehermoso, S.A. had a total of 2,228,583 shares in

treasury stock, representing 0.8373% of its share capital, at

an average acquisition price of Euros 12.3927 per share.

Starting from an initial balance of 221,337 shares, in 2004

7,351,803 Sacyr Vallehermoso shares were purchased and

5,360,902 shares were sold, with capital gains of Euros

1,919.48 thousand.

As a result of Sacyr Vallehermoso’s rights issue, approved at

the General Shareholders’ Meeting, for Euros 6,491,544

charged to unrestricted reserves in the proportion of one new

share for every forty already issued, a total of 16,345 new

shares corresponded to the company.

By virtue of Article 79.3 of the Corporation Act, the company

constituted the corresponding “reserve for treasury stock” for

the amount of the treasury stock, by transferring unrestricted

reserves.

4. RESEARCH AND DEVELOPMENT (R&D)

In 2004 the Grupo Sacyr Vallehermoso continued to back

Research and Development. Notable amongst work in this

field was the PISTA project to develop the so-called

“interoperable dynamic toll”. Through this, with just one

device installed in the user’s vehicle, s/he will be able to pay

the tolls on all the new roads contracted which operate with

the “teletoll” and the service will be charged directly to

her/his bank account.

Design: Grupo Elba, S.A.

Photographs: Sacyr Vallehermoso Archive

Published by: Grupo Elba, S.A.

Legal deposit: X-00000-0000

SACYR VALLEHERMOSO, S.A.Pº de la Castellana, 83-85 • 28046 MADRID

Tel.: (34) 91 545 50 00 • Fax: (34) 91 556 75 76www.gruposyv.com

Developing constructive ideas

Documents

2004 - Sacyr · held and the party in power changed. As you well know, any change in Government, and especially if ... Business year 2004 was the first full year for Sacyr ... •