Rafael del Pino, the company´s Chairman, highlighted that "Ferrovial has transformed from a construction company to a group with balanced interests in construction, infrastructure development, services and real estate" "Steadily recurring cash flow has enabled us to maintain the pace of investment in recent years. In 2004, 50% of operating cash flow came from the infrastructure and services divisions" EBIT increased nearly four-fold between 1999 and 2004; at present, 43% of EBIT comes from other countries and 60% from less cyclical activities (infrastructure and services) Joaquín Ayuso, CEO: "Our strong backlog, sustained investment in the domestic market, and a growing, but selective and profitable, presence in the international arena are the keys to future growth in construction" Ferrovial is one of the world´s largest transport infrastructure developers, with committed investment of over 2.2 billion euro In real estate, "we continue to apply an industrial approach and expand our sales channels" "During 2004" - added Ayuso - "we worked on integrating and consolidating Cespa and Amey, which were acquired in the second half of 2003, and the results exceeded initial expectations" At the Shareholders´ Meeting today, Ferrovial´s shareholders approved the results and strategy of a company which, in recent years, has progressed towards a new business profile with more stable earnings and a greater international presence. As Ferrovial Chairman Rafael del Pino told shareholders, "the main development in recent years is that the Group has changed from being primarily a constructor to having a suitable balance between construction, infrastructure development, services and real estate. This was made possible by strong cash flow from construction and services in 2004 and an appropriate policy of investing the surplus cash." In the last six years, Ferrovial has invested a total of 3.1 billion euro, 80% of which was allocated to infrastructure development and services. As a result of this investment policy, EBIT multiplied almost four-fold between 1999 and 2004; moreover, 60% of EBIT is now from less cyclical businesses. The same trend was observed in the geographical breakdown of revenues and EBIT. "In 2004, 37% of revenues were from other countries and no less than 43% of EBIT was obtained outside Spain. Canada (407ETR) and the United Kingdom (Amey) are the main countries, having contributed 19% and 12%, respectively." Key events in the year Del Pino highlighted the following events of 2004: "growth in the foreign backlog to 25% of the total; the increase (to 66%) of our stake in Tube Lines, which manages the maintenance and renovation of three lines of London Underground under a 30-year concession; the first full year of consolidating Amey and Cespa, which were both acquired in 2003; the flotation of Cintra, our toll road and car park subsidiary, in an operation that raised 500 million euro from the issuance of new shares; and the twin successes in the US due to obtaining the Chicago Skyway and Trans-Texas Corridor projects." 2004 was another record year for Ferrovial; net profit totalled 556 million euro, 63% more than in 2003. Excluding the extraordinary result on the Cintra IPO and the release of provisions in 2003, profit rose by 16%. EBIT amounted to 766 million euro, a 24.5% increase, while revenues totalled 7.2 billion euro, up 20.6%. Steady growth and progress in the Group´s transformation to a more stable, international profile have also had their reward in the stock market: the share appreciated by close to 42% in 2004. Since it was floated in 1999, Ferrovial´s value on the stock market has almost doubled, while the Ibex-35 index has fallen by 8%. These results enable us to ask this Shareholders´ Meeting to approve a gross dividend of 0.82 euro per share: an interim dividend of 0.25 euro and a supplementary dividend of 0.57 euro. "Since Ferrovial was floated in 1999, the gross dividend per share has quadrupled," stated the Chairman. Key figures 1999-2004 In the last six years, net revenues have risen from 2.645 billion euro in 1999 to 7.268 billion euro in 2004; that is 22% compound annual growth. EBIT totalled 766 million euro, four times the 1999 figure of 195 million euro, representing 32% compound annual growth. Net profit has increased five-fold in this period: it has risen from 111 million euro in 1999 to 557 million euro in 2004; i.e. 38% compound annual growth. Excluding the extraordinary gain on the Cintra IPO, net profit has increased three-fold in the period, that is to say 25% compound annual growth. Cash flow and investments In 2004, Ferrovial invested 389 million euro gross yet managed to end the year with 139 million euro in net cash. This was made possible by sizeable cash flow, 650 million euro in 2004, with a notable contribution from all business areas. "This capacity to generate recurring cash flow is what has enabled us to maintain the pace of investment in recent years. In 2004, for the first time in its history, the company obtain less than 50% of operating cash flow from cyclical activities. Construction contributed 270 million euro." "So far in 2005," continued the Chairman, "we have exceeded 500 million euro in investments due to the acquisition of Chicago Skyway (370 million euro in equity) and 33% of Tube Lines (150 million euro, via Amey)." 60% of EBIT came from non-cyclical activities Ferrovial CEO Joaquín Ayuso told shareholders that, out of revenues totalling 7.268 billion euro, construction is still the main contributor, accounting for nearly 50% of that figure. Following the acquisitions in 2003, Services is now the second-largest contributor to revenues, with 33%." "However, Infrastructure is the main contributor to EBIT, with 38%, and Services makes a sizeable 21% contribution. I would highlight the fact that these two less cyclical areas accounted for nearly 60% of the company´s EBIT." Moreover, Ferrovial has maintained its presence in telecommunications via a 9.6% stake in cable operator ONO, though our approach is more financial rather than seeking to participate in management. Key figures in 2004 Eliminating the extraordinary results on the Cintra IPO, net profit increased by 16.1% on 2003. All areas contributed positively to this growth; Construction reported 145.7 million euro in net profit, i.e. 5.2% more than in 2003. Real Estate increased net profit by 7.6% to 66.7 million euro. Infrastructure profit increased from 71.4 million euro to 75.9 million euro, a 6.3% increase. Services increased net profit by 511% to 58.7 million euro, mainly due to the full-year consolidation of Amey and Cespa. Construction: domestic market and strong in other countries Construction revenues in 2004 were similar to 2003, at 3.583 billion euro. International activity increased by 7%, offsetting a 3% decline in activity in Spain. EBIT increased by 1% on 2003, to 169.5 million euro and the EBIT margin was stable at 4.7%. If we exclude the figures for Budimex, our Polish subsidiary, EBIT increased by 4.6% and the margin was 5.6%, compared with 5.3% in 2003. Operating cash flow was again sizeable, at 270 million euro. Work executed pending certification, which reflects sales recognised as revenues but not yet billed to customers, is still under one month´s production, reflecting our conservative approach to recognising profit. The backlog, one of the main indicators of future activity in this business, totalled 6.721 billion euro, 10% more than at 2003 year-end, and represents 23 months" production. Poland: one of the areas with most potential Budimex consolidated its leading position in the Polish market in 2004 by presenting a large number of bids and increasing its construction backlog by close to 52%, from 407 million euro to 617 million euro. Budimex attained 489 million euro in revenues, a 2.3% increase. "Though later than expected," said Ayuso, "all the economic and investment indicators for Eastern Europe, and Poland in particular, point to strong growth in 2005 and 2006; with the arrival of European Cohesion and Development funding, this will be one of the areas with the greatest potential. We expect this boom to be reflected in Group earnings from 2006 onwards." "In the construction market," continued Ayuso, "our strong backlog, sustained investment in Spain due to the ambitious new Strategic Transport Investment Plan, which envisages investing 241 billion euro between 2005 and 2020, plus a growing, but selective and profitable, international presence give reason to look to the future of this business with optimism." Infrastructure: growth and a stronger leading position Ferrovial is one of the world´s largest infrastructure developers in the private sector, with committed investment of over 2.2 billion euro. With over 35 years" experience in this area, Ferrovial currently manages 17 toll roads measuring over 1,700 kilometres in 6 countries; 4 airports, which together handle 35 million passengers each year; and over 200,000 parking spaces. 78% of the business is concentrated in toll roads: 40% in Europe, 20% in Canada, 17% in the United States, 16% in Chile and 8% in Australia. In addition to the Cintra IPO, there were other major events in this Division´s development. - we entered the US market by landing two important contracts: the Chicago Skyway toll road and our election as strategic partner for the State of Texas in the development, over the next 50 years, of one of the largest infrastructure projects ever undertaken there: the Trans-Texas Corridor project; - award of the Ocaña-La Roda toll road; - the opening of two new toll roads: the R-4 in Spain and Scut Algarve in Portugal; - and the increase in our stake in Ausol to 85%. Airports performed positively in terms of traffic, which was reflected in revenues reaching 60 million euro, 30.2% more than in 2003. EBITDA amounted to 22.8 million euro, i.e. 28.2% more than in 2003. Sydney airport, whose figures are not included as it is equity-accounted, obtained 338 million euro in revenues, a 14% increase, with EBITDA of 273 million euro, 20% more than in 2003. Ferrovial owns 20% of Sydney airport. "The number of passengers using our airports increased by 12% at Sydney, 20% at Bristol and 6% at Belfast. These investments made a notable contribution to Group cash flow: 39 million euro. In just 2 years, Sydney has repaid 21% of the initial investment, while Bristol has already repaid 30%." The car park area increased revenues by 14.1% in 2004, to 101.4 million euro. EBITDA increased by 26% to 33 million euro. The EBITDA margin increased considerably, to 32.6%. "Our growth strategy in this market has been very successful, and we now manage over 207,000 parking spaces in 128 cities in Spain." The acquisition of another 57% of Eguisa, one of Spain´s main car park operators, added 4,000 spaces. Real estate development: activity assured in the coming months In 2004, Ferrovial´s Real Estate division continued along the lines of previous years, based essentially on controlling risks. Revenues increased by 5.4% to 768 million euro, and EBIT increased 10% to 151 million euro. The EBIT margin rose to 19%, from 18.2% in 2003, as a result of cost controls. At 2004 year-end, we had 999 million euro in pre-sales, assuring a large proportion of the revenues in 2005 and subsequent years. The land bank amounted to 1.3 million m2 of potential building, assuring activity until 2008. In 2004, land worth 213 million euro was acquired. During the year, the Real Estate area sold 2,408 homes and delivered 3,873 homes. The realty brokerage business, conducted through Don Piso, continued to expand, opening new company-owned and franchised outlets to make a total of 314. This unit brokered the sale of 3,243 homes. "First home development is still our main product in the property market," stated Ayuso," and we maintain our industrial approach to the business and our plan to expand marketing channels so as to achieve rapid turnover." Services: stability and a greater international presence In 2003 Ferrovial undertook a sweeping transformation of the Services division through the acquisition of two companies: urban and industrial waste management company Cespa, and UK infrastructure maintenance and facility management company Amey. "In 2004," he added, "we worked to consolidate and integrate these two companies, with results that exceeded our expectations: revenues in this areas increased by 81%, with EBIT up 126.7%, and the EBIT margin increased notably to 6.6%, from 5.2% in 2003. In just 2 years, Ferrovial has multiplied revenues seven-fold and EBIT nine-fold, creating a business profile with a more stable bottom line and a greater international footprint." At year-end, the backlog amounted to 4.973 billion euro. This figure does not include the backlog in the London Underground maintenance contract, which represents more than 15 billion euro over the next 28 years. Of the total Services backlog, 57% is in contracts in other countries, principally the United Kingdom. Amey: strengthening our hold in the UK services market Full-year consolidation of Amey greatly improved all line items. Amey´s revenues totalled 1.383 billion euro, 73% more than in 2003. EBIT increased by 113.7% to 75 million euro, and the EBIT margin increased substantially, from 4.4% to 5.4%. The backlog amounts to 2.822 billion euro. In December, Amey reached an agreement with Jarvis to acquire its 33% stake in Tube Lines, the company that manages and renovates three lines of London Underground: a total of 100 stations and 335 km of track which carry over 1.75 million passengers every day. This acquisition, which was completed in February 2005, strengthened Amey"s position in this contract to 66%. Cespa: expanding in urban services Because of integrating Cespa, services revenues in Spain reached 1.076 billion euro, a 93% increase, and EBIT increased by 139% to 87 million euro. The margin also increased significantly, to 8% (from 6.5% in 2003). "Adding Cespa expanded and consolidated our presence in the urban services market in Spain. This area serves close to 800 municipalities with over 5 million inhabitants; it maintains 29 million square metres of garden; and it manages over 2 million tonnes of waste." Ferrovial is now one of the leading players in the facility management market: in Spain alone it manages 2,700 buildings with over 4.4 million square metres, including hospitals, museums, universities, prisons, and shopping centres. The infrastructure maintenance area maintained over 7,500 kilometres of road in 2004. Corporate governance and Agenda The Chairman highlighted the following developments in the area of corporate governance: - The meeting was held under the Shareholders´ Meeting Regulation approved in 2004, which, among other features, regulates shareholders´ right to information and to participate in the meeting; - The Board of Directors approved a Code of Business Ethics which establishes the basic principles and commitments in this area which all Group companies, employees and executives must adhere to and comply with in their work; - A suitable framework has been established to guarantee transparency in business and commercial relations between Grupo Ferrovial and Cintra; - The Board of Directors approved and published an Annual Report on Corporate Governance in which it provides full details of all aspects of this area; - Finally, the Board of Directors Regulation was amended in order to grant the Audit and Control Committee full powers in the area of corporate governance, apart from the matter of appointments and remuneration. Since the terms of some members of the Board of Directors are close to expiration, in line with the Board of Directors Regulations, item six of the agenda proposed the re-appointment of Santiago Bergareche, Jaime Carvajal, Joaquín Ayuso, Fernando del Pino and Gabriele Burgio as members of the Board. Item seven proposes the approval of a remuneration system for senior management and Directors with executive functions, which consists of paying part of their variable remuneration in the form of company shares. This system has already been implemented for other executive levels of the group companies. This proposal seeks to extend it to the aforementioned group. "The Board of Directors considers that this form of remuneration will enable beneficiaries to increase their ownership interest in the company and tie their remuneration to the share performance," said Del Pino. "The proposal also attempts to enhance human resources management in this area."