Ferrovial Group completes the process of integration of its construction activities in Ferrovial Agroman


Ferrovial Group completes the process of integration of its construction activities in Ferrovial Agromán

Ferrovial Agromán has taken the definitive step in its integration process, after the National Stock Exchange Commission verified and approved the partial demerger operation and integration of Agromán in the construction activity at Ferrovial. Thus, Ferrovial Agromán forms a sole head of the construction division in the Ferrovial Group. However, the integration is backdated o last 1st January and this has made Ferrovial Agromán the leading Spanish building company, which along with its subsidiaries obtained a proforma turnover in the construction activity of 358,000 million pesetas in 1998.

Integration operation

To materialise the demerger process and in consideration for the demerged assets and liabilities of Ferrovial, Agromán has performed a capital increase amounting to 16,125,433,000 pesetas (96,915,804.21 euros), by issuing 161,254,330 new shares with a face value of 100 pesetas each and an issue premium of 5,505,812,074 pesetas. The new shares will be delivered to the Ferrovial Group, which will then hold 93.55% of the new Ferrovial Agromán.

Ferrovial Agromán is still listed on the Stock Exchange, under the name AGR. After the capital increase, the number of shares listed will be 238,042,106, representing a stock exchange capitalization, at the present price, of 8.17 euros, approximately 320,000 million positive. Moreover, the Ferrovial Group which, apart from construction, also operates in the fields of infrastructure concessions, real estate promotion, services and telecommunications, has been stock exchange listed since last 5th May.

"Swift, efficient merger"

"The integration - Santiago Bergareche, the Managing Director of the Ferrovial Group, remarks - has formed a new, larger company, due to the volume of its equity, revenue, portfolio and profits, which place Ferrovial Agromán in the leading position among national construction companies".

After the operation, the equity of the new Ferrovial Agromán will be increased up to a total of 31,810 million pesetas: the turnover in the field of construction rose to 358,000 million pesetas in 1998, and the portfolio, in July 1999, exceeds 655,000 pesetas.

"The unification of both structures - remarks Joaquín Ayuso, Managing Director of Ferrovial Agromán - is being materialised in a swift, efficient merger process, in which 80% of the final objectives have been fulfilled, so the process will be practically completed this year and a major part of the savings foreseen may be generated in the year 2000, estimated at about 5,000 million pesetas".

The integration will allow an operating cost reduction, arising from the fact of sharing the best practice in key processes, such as contract arrangement and management of the technical know-how; reduction of operating costs, by having a more efficient structure, and achievement of scale economies. "This direct and indirect cost saving - remarks Joaquín Ayuso - represents 1.25% of the global turnover of the construction business".

The non recurring cost of restructuring, arising from integration, is estimated at about 5,000 million pesetas. Agromán also had accumulated tax losses at 31st December 1998 exceeding 18,000 million pesetas, so the tax savings in favour of Ferrovial Agromán that could be anticipated as a result of the corporate integration could amount to 6,700 million pesetas.

More dimension, greater profitability

At Ferrovial Agromán, the civil engineering production represents more than 55% of the total and the public sector is its main customer: in 1998, the share of civil engineering awards from the central government amounted to 15.9%, the highest in the sector. The evolution of the revenue in recent years - from 94 to 98 - provided a growth ratio of 30%, the growth of the operating results in the period 96/98 was 40% and the works portfolio 33% of the accumulated rate.

The potential of the rest of the divisions at the Ferrovial Group - the infrastructure concessions through Cintra; the real estate promotions, through Ferrovial Inmobiliaria; the services, through Ferroser and the telecommunications area, - provide an important additional assured portfolio, on the domestic and overseas market. Moreover, an improvement is expected in international activity, based on three decades of experience, the volume and quality achieved in the overseas portfolio - that exceeded 175,000 million pesetas in June 1999 -, due to selective orientation toward strategic countries and markets.


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