Ferrovial estimates the integration cost savings between 1% and 1.25% of construction turnover during the next two years

Ferrovial estimates the integration cost savings between 1% and 1.25% of construction turnover during the next two years

The primary objectives of the integration of the Ferrovial and Agromán construction activities into a single structure are greater profitability, verification of synergies in the Group, reduction of ordinary costs (both direct and indirect), and management capacity improvement.

Ferrovial has informed the National Stock Exchange Commission (CMNV) that the total savings in indirect and direct costs would be between 1% and 1.25% of the construction businesss turnover, and that it is foreseeable that the savings would be made during the second year immediately following the integration. Sixty percent of the savings would be produced in the area of personnel and the rest in general expenses.

In return, the additional costs needed to propel these improvements have been calculated to be between four and five billion pesetas.

Agrománs tax credit

Ferrovial has also informed the National Stock Exchange Commission (CNMV) that Agromán, at the end of the 1998 business year, had accumulated negative tax bases, due to the losses incurred in previous years and pending tax deductions, which together total 18,282 million pesetas. The resulting tax savings may be estimated to be of the order of 6,700 million pesetas. The integration of the businesses, because of the increased company revenues and the possible improvement of the cumulative business results, will allow the complete use of this tax credit during a shorter period than that which would have been necessary if the its construction activity had not been integrated into Ferrovial.

Construction business organisation

The ordered configuration of the Groups construction business will be carried out, as already been said, within Agromán, the beneficiary firm of the division project. Once the division has been definitively approved, Agromán will be called Ferrovial Agromán. The final approval of this project is planned to take place at the end of next May, which will allow the operation to be finalised by the end of June or the beginning of July.

From that point on, Cadagua, a subsidiary of the Group that deals with engineering, construction and water treatment plant operation, will become a subsidiary of Ferrovial Agromán.

In turn, and as has been communicated to the National Stock Exchange Commission (CNMV), Agrománs current holdings in Cintra will be taken over by the Ferrovial Group. This holding transfer, whose date has yet to be determined, in any case will be carried out after the verification of the Public Exchange Offer of Agromán shares for Grupo Ferrovial shares, once the latter are listed on the securities market.