NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR 2005

1. THE COMPANY'S BUSINESS AND SCOPE OF CONSOLIDATION

1.1 Companies comprising the Group and their business operations

The Ferrovial Group, hereinafter the Ferrovial Group or Ferrovial, comprises Grupo Ferrovial, S.A., which is the Parent Company, and its subsidiaries and associated companies, which are detailed in Exhibit I.

Through these companies the Group carries out its business in the following areas of activity which, in turn, constitute the primary information segments in accordance with IAS 14.

a. Construction and execution of all types of public and private works in Spain and abroad, operating mainly through Ferrovial Agromán, S.A., the company that heads this business division. The international business carried out through Budimex, S.A. and subsidiaries, the leading construction company in that market listed on the Warsaw stock market, and in which the Group holds a 59.06% interest, is notable as is the business carried out in the United States (Texas) through the Webber Group, which is wholly owned by Ferrovial due to the acquisition finalised this year.


b. Infrastructure.
This business consists of the development, financing and execution of toll highway concessions, parking lots and airports in Spain and abroad, mainly through concession agreements.

The lead infrastructure company is Ferrovial Infraestructuras, S.A. which, in turn, holds a 62.03% interest in Cintra, S.A. The latter company is listed on the Madrid stock market and builds highways and parking garages and also wholly owns Ferrovial Aeropuertos, S.A., a leading company in airport construction. Europistas, S.A., another company involved in this business, is also listed on the Madrid stock market.


c. Real estate in Spain and abroad, condominium management and real estate brokerage. These activities are performed through Ferrovial Inmobiliaria, S.A. and its investees.


d. Services. This division is divided into the following areas:
• Infrastructure maintenance. Carried out through Grupisa, S.A. in Spain and Amey, Plc. in the UK.
• Building and facility maintenance and integral management. Carried out mainly through Ferrovial Services, S.A. in Spain and Amey, Plc. in the UK.
• Urban services, particularly waste collection and treatment. This business is mainly carried out through Cespa, S.A.
• One of the most notable businesses carried out by Amey, Plc, is its shareholding in Tube Lines, Ltd, which holds a 30-year administrative concession for maintaining, repairing and renovating three lines of the underground network in London. This shareholding is consolidated on a proportional basis. All the points in these notes to the financial statements making reference to this shareholding therefore cover 66% of the company's balances.
• Airport handling, a business started in 2005 due to the full acquisition of Swissport Group by Ferrovial Servicios, S.A.

Further to the description of the Group's business, it is important to note, for the purpose of understanding these financial statements, that a significant part of the business carried out by the Infrastructure and Service divisions is obtained through administrative concessions. The agreements are established under long-term contracts in which the concession-holder, in which the Group normally participates together with other partners, finances the construction or rehabilitation of public infrastructure and subsequently operates and maintains the infrastructure, recovering the investment by collecting a toll regulated by the granting authority (Infrastructure division) or maintains the structure and renders related services, in accordance with the requirements of the granting authority, and recovers the investment through fixed and variable payments based on the services rendered, the quality of these services and the availability of the asset for use (Service division).

This projects are principally financed through loans secured by the flows generated by the projects themselves (thereby separated from the financial structure of the rest of the Group) and, to a lesser extent, by share capital increases that must be financed using the Group's financial structure.

Based on the above, and in order to permit a greater understanding of the Group's financial development, the accompanying financial statements separately break out the impact of these types of contracts in non-current assets, borrowings and cash flows generated.

1.2 Changes in the scope of consolidation

2004

The main changes in the scope of consolidation in 2004 were as follows:

a. Infrastructure
On 27 October 2004 the Company Cintra, Concesiones de Infraestructuras de Transporte, S.A. started to be traded on the Madrid Stock Market and up until that time Ferrovial Group held a 60% stake in the Company through its subsidiary Ferrovial Infraestructuras, S.A.

Within the framework of this operation the following corporate transactions took place, which gave rise to modifications in the scope of consolidation applied by Ferrovial Group:

Prior to the above-mentioned entry into the stock market, Cintra, S.A. concluded a swap with Macquarie Group concerning a 13.87% shareholding in the company 407 ETR International, Inc., in which Cintra, S.A. received 11.99% of its own shares in compensation and therefore the interest held by Cintra, S.A. in this company fell from 67.10% to 53.23%.

In addition, Cintra, S.A. reached an agreement with Ferrovial Infraestructuras, S.A. concerning a swap of 7.72% and 0.15% of its own shares, receiving as compensation 99.92% of Cintra Aparcamientos, S.A. and subsidiaries (Cintra Aparcamientos Group) and 50% of the company Inversora de Autopistas del Levante, S.L. (Autopista Oca_a- La Roda), respectively.

Cintra, S.A. sold the remaining 4.12% of its own shares deriving from the above-mentioned transactions through a Public Offering, as well as a Public Share Subscription Offering equivalent to 8.60% of its share capital.

In conclusion, the entry of Cintra into the stock market, gave rise to the following changes in the scope of consolidation for Ferrovial Group:
• Ferrovial Group increased its shareholding in Cintra, S.A. from 60% to 62.03%.
• The interest held by Ferrovial Group in Cintra Aparcamientos, S.A. changed from 100% of 99.92% through Ferrovial Infraestructuras, S.A. to 62.03% of 99.92% through Cintra, S.A.
• The percentage interest in the company 407 Internacional, Inc. decreased as the percentage controlled by Cintra, S.A. fell from 67.10% to 52.23%.

In addition, the following changes in the scope of consolidation took place in this division:
The Company Autopista Madrid Levante, C.E.S.A., to which the concession for the toll highway between Ocaña-La Roda was granted, was consolidated for the first time. Through Cintra, S.A. Ferrovial Group controls 63.70% of this company.

In April of this year, the shareholding in the Sydney airport was increased by 0.22% for 3,026 thousand euro, thereby raising the Group's total shareholding in the airport to 20.89%.

In that same month, the 24.5% shareholding held by Ferrovial Group, S.A. in the company Inversiones Técnicas Aeroportuarias, S.A., the concession holder for the airports in Southeast Mexico, was sold for 23,660 thousand euro.

In July 2004 Cintra Concesiones de Infraestructuras de Transporte, S.A. acquired a 10% interest in Autopista del Sol, C.E.S.A. from Europistas, S.A.. The purchase price amounted to 50,000 thousand euro, plus the 30% interest that Cintra, S.A. held in Túneles de Artxanda, S.A.

In September 2004 Cintra, Concesiones de Infraestructuras de Transporte, S.A. increased its interest in the company Estacionamientos Guipuzcoanos from 42.96% to 100%. This change in shareholdings, as well as the change in the consolidation method from the equity method to the full consolidation method took effect in October 2004.

b. Services
In January 2004, the acquisition of the Company Trasa, S.A. for 14,561 thousand euro was concluded as a continuation of the process of acquiring Cespa Group. This company holds 25% of the company Ecocat, S.L., which engages in the treatment of special industrial waste. The direct and indirect shareholding held by Ferrovial Group therefore rises to 50% and for this reason the method used to consolidate this subsidiary changed from the equity method to the proportional method.

In July 2004 the sale of the water supply and distribution business ((Helguina, S.A. and Aguanorbe, S.L.) was concluded with Grupo Aguas de Barcelona, S.A. for 43,303 thousand euro. The sale was definitively closed in September 2004 and these companies were consequently excluded from the scope of consolidation and therefore this is considered to be a discontinued business in 2004.

In 2004 this division underwent a corporate restructuring, whereby the historic urban services rendered by Ferrovial Servicios, S.A. became part of Cespa's structure as a result of the merger carried out in 22 June 2004 of Marliara, S.A. into Cespa Group.

2005

The main changes in the scope of consolidation in 2005 were as follows:

a. Infrastructure
On 15 October 2004 Cintra was awarded the concession for the toll highway “Chicago Skyway Toll Bridge System”. As a result the following companies entered into the scope of consolidation: Cintra US Corp. and Cintra Skyway LLC, which are wholly owned and Skyway Concession Company Holdings and Skyway Concession Company, in which a 55% interest is held. The concession was formalised on 24 January 2006, as from which time these companies entered into the scope of consolidation of Ferrovial Group.

In June 2005, Cintra Concesiones de Infraestructura de Transporte, S.A. sold 5% of the interest it held in Autopista del Sol to Unicaja, S.A., thereby reducing its shareholding to 80%.

In 11 March 2005 an agreement was concluded to develop the TTC-35 High Priority Trans Texas Corridor project over the coming fifty years. The scope of consolidation has expanded to include Cintra Texas Corp. and Cintra Developments, LLC, which are wholly owned by Cintra and Cintra Zachry GP, LLC and Cintra Zachry, LP in which an 85% interest is held.

In July Cintra was awarded with a concession for the M-203 toll highway through the wholly owned subsidiary Autopista Alcalá-O´Donnell, which entered into consolidation in September.


b. Services
In January 2005, Amey Plc, acquired an additional 33% in Tube Lines Limited, which holds a 30-year administrative concession regarding the maintenance, repair and renovation of three underground lines in London, thereby raising its stake to 66%. This shareholding is consolidated using the proportional method as the consideration is that there is joint control together with another consortium partner, the US Group Bechtel.

On 20 August a 100% stake was acquired in Swissport Group, which is the largest airport handling company in the world with a presence at more than 170 airports in 40 countries. This Company entered into consolidation on 1 October as this was the date on which control was exercised.

Ferrovial Servicios acquired 10% of Madrid Calle 30, which manages the services relating to the maintenance, repair and operation of the M-30 urban highway in Madrid. This shareholding is consolidated using the equity method since October.


c. Construction
In September 2005 the Company acquired 100% of the Texas-based Webber Group, which is specialised in completing civil works projects and the recycling of soils and the extraction and supply of sand in the State of Texas. This company entered into consolidation on 1 October.

Note 10.2 of these Notes to the Financial Statements provides detailed accounting information relating to the above-mentioned acquisitions, which are considered to be business combinations in accordance with IFRS 3.

2. SUMMARY OF THE MAIN ACCOUNTING POLICIES

2.1 General principles

The consolidated information presented in these consolidated financial statements prepared under International Financial Reporting Standards (hereinafter IFRS) approved by the European Union at the year end, have been prepared mainly bearing in mind the following policies:

• The Company has made the following choices in cases in which IFRS allows for alternatives:

a. IAS 32 and 39 and IFRS 2 are applied as from the date of transition to IFRS (1 January 2004).

b. The draft interpretations issued by the IFRIC (D12, D13 and D14) regarding concession businesses that are pending approval at the year end have not been applied. However, the toll highway concession business has taken into consideration the impact of not capitalising financial costs relating to toll highways after the construction period and the straight-line application of amortisation, despite there not being a final interpretation resolution. This matter has been analysed in further detail in Note 2.4 of these notes to the Financial Statements, as it relates to the accounting policies applied by the infrastructure area.

c. Measurement of Property, plant and equipment and intangible assets at cost.

d. Existing companies under joint control and joint ventures are consolidated using the proportional method.

e. As permitted by Law, business combinations have not been reconstructed after 1 January 2004.

f. Currency translation differences accumulated at the transition date have been attributed to reserves.

g. Non-current assets restated in accordance with local legislation, as is mentioned in the accounting policies, maintain the restatements as is permitted by IFRS 1.

h. The Group has taken into consideration, with respect to the application of IAS 19, actuarial losses and/or gains existing at the transition date and the application of the “corridor method” within the alternative procedures existing for the treatment of Pension Funds, as is mentioned in Note 2.4.17 of these Notes to the Financial Statements.


• The consolidated financial statements for 2004 presented in these consolidated financial statements have been restated in accordance with these standards in order to make both years comparable.

These financial statements were approved by the Board of Directors on 22 February 2006 and it is considered that they will be approved by the Shareholders’ Meeting on 31 March 2006 without any changes.

New accounting standards (IFRS) and interpretations (IFRIC) have been approved and published and are expected to enter into force in the financial years commencing 1 January 2006 or after that date. Ferrovial Group is evaluating the potential impact of these items.

(a) IFRS 6, Exploration for and Evaluation of Mineral Resources
(b) IFRS7, Financial Instruments: Disclosures
(c) Amendment to IAS 39 - Cash flow hedges of forecast intragroup transactions
(d) Amendment to IAS 39 – Fair value option
(e) IAS 39 and amendment to IFRS 4—Financial guarantee contracts
(f) IFRIC 4, Determining whether an Arrangement contains a Lease
(g) IFRIC 5, Decommissioning, Restoration and Environmental Rehabilitation Funds
(h) IFRIC 6, Liabilities Arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment
(i) IFRIC 7, Applying the Restatement Approach under IAS 29
(j) Clarification and amendments to IAS 21 - The Effects of Changes in Foreign Exchange Rates

The 2005 individual financial statements of the consolidated companies and the accompanying consolidated financial statements have not yet been approved by the respective Shareholders' Meetings. However, the companies' Directors expect them to be approved without any changes.

2.2 Consolidation policies

During 2005 and 2004 the closing date for the individual financial statements of all the companies included in the scope of consolidation is the same or have been temporarily aligned to coincide with the closing date applied by the parent company.

The consolidated financial statements have been prepared on the following policies:

a. Subsidiarie
Subsidiaries are all those companies in which Ferrovial Group, S.A. holds a direct or indirect shareholding exceeding 50% of share capital and/or exercises effective control over management. When evaluating whether or not the Group controls another company, the existence and the effect of potential voting rights that may be exercised or are convertible are taken into effect.

When accounting for the acquisition of these companies, the following method is used:
• The acquisition cost is the fair value of the assets transferred, equity instruments issued and any liabilities incurred or assumed at the transaction date.
• Identifiable assets acquired and identifiable contingencies assumed in a business combination is initially valued at their fair value at the acquisition date.
• Excess acquisition cost over the fair value of the Group’s shareholding in the identifiable net assets acquired is recognised as goodwill.
• If the fair value of the net identifiable assets of the acquired subsidiary exceeds the acquisition cost, the difference is recognised directly in the consolidated income statement.

Exhibit I to these Notes to the financial statements breaks out the information identifying the subsidiaries included in the scope of consolidation using the full consolidation method. These companies are included in the scope of the Group’s consolidation as from the time at which effective control of the subsidiary is formally acquired.

The equity of minority interests in the net worth and results for the year of the fully consolidated subsidiaries is presented under the "Minority Interest" caption in the consolidated balance sheet and the "Income Attributed to Minority Interests" caption in the consolidated statement of income, respectively.

The financial statements of subsidiaries, whose accounting records are denominated in a currency other than the euro, included in the consolidation, are translated to euros by applying the year- end exchange rates to the assets and liabilities, except for the equity of and investments in Group and associated companies, which are stated at the exchange rate prevailing when they joined the Group . Income is translated at the average exchange rate for the year. The difference resulting from the translation process as described above is recorded under Shareholders’ Equity as " Currency translation differences ".


b. Associates
Associates are considered to be all those companies in which the direct or indirect shareholding is equal to or less than 50% and when significant management influence is exercised.

These companies are presented in the consolidated balance sheet in accordance with the Shareholding method, whereby the percentage interest in the equity of the company is recorded as “Reserves in associates” and the share in profit for the year that appears in the income statement under “Interest in equity-consolidated companies”.

Exhibit I to these Notes to the financial statements breaks out the identification of the associates included within the scope of consolidation.


c. Jointly controlled entities
Jointly controlled entities are considered to be those in which the management of investee companies is carried out by both the parent company and unassociated third parties, without any having higher control than the others. The financial statements for jointly controlled entities are consolidated using the proportional method.

The assets and liabilities assigned to jointly controlled entities, or those that are controlled jointly together with other partners are presented in the consolidated balance sheet classified in accordance with the specific nature of the existing shareholding. Similarly, income and expenses originating from jointly controlled entities are presented in the consolidated income statement in accordance with the nature of the interest held.

Exhibit I to these Notes to the financial statements breaks out the identification of the jointly controlled entities included within the scope of consolidation.

The most representative companies consolidated using the proportional method are Tube Lines, Boremer, S.A., Delta Ferrovial, Autopista Trados 45, S.A., Bristol Internacional Airport y Cintra Airports Ltd.

The main amounts contributed by jointly controlled entities to the consolidated balance sheet and income statement are as follows:

d. Joint Ventures
A joint venture is considered to be any entity without a separate legal personality which establishes a business co-operation mechanism between different companies (partners) during a period of time to develop or execute a project, service or supply, in which the understanding is that there is joint control of the entity together with the partners concerned.

The financial statements of the parent company and its subsidiaries include the effect of the proportional inclusion of the joint ventures in which they participate.

The joint ventures were included proportionally in each Group company's relevant balance sheet and income statement captions, based on each company's percentage of ownership therein.

The main amounts contributed by the joint ventures to the consolidated balance sheet and statement of income were as follows:

Exhibit I to these Notes to the financial statements breaks out the identification of the joint ventures included within the scope of consolidation.

e. Balances and transactions with Group companies
Balances and transactions between Group companies are eliminated during the consolidation process.
However, the balances and transactions relating to construction projects carried out by the construction division for infrastructure companies holding concessions are not eliminated during the consolidation process since the consideration is that these transactions have involved third parties, to the extent that the work is being executed.

This consideration is based on the fact that on the consolidated level, as is indicated in Note 2.4.2 of these Notes to the financial statements, these contracts are classified as construction contracts in which the Group carries out work for the granting authority and receives in exchange the right to operate the infrastructure in accordance with the conditions established by the granting authority. The granting authority thus has control over the asset from the start and grants the above-mentioned right in exchange for the work performed, such that the conclusion may be reached that at the Group level the work was performed for the authority and therefore for third parties.

This is the policy currently defended by the IFRIC (International Financial Reporting Interpretation Committee), which is the interpretation body of the IASB, in a draft interpretation regarding concession businesses that is currently being debated.
As regards the transactions mentioned above with respect to 2005, the Ferrovial Group’s construction segment billed 520,395 thousand euro (465,970 thousand euro in 2004) to the infrastructure division for work carried out, prepayments for this work and recognised sales relating to this work totalling 470,398 thousand euro (444,774 thousand euro in 2004).

The profit obtained from these operations, which is assigned to the shareholding that Ferrovial Group maintains in the companies holding concessions that have received the services, net of taxes and minority interests, totalled 14,947 thousand euro (13,982 thousand euro in 2004).


f. Uniformity of items
In order to uniformly present the items included in the accompanying consolidated financial statements, uniform accounting policies were applied to the individual financial statements of the consolidated companies.

2.3 Comparability

In accordance with the requirements of IFRS 1, the information contained in these Notes to the consolidated financial statements concerning 2004 is presented for the purposes of comparison with the 2005 figures and, therefore, does not constitute the Group’s consolidated financial statements for 2004.

The consolidated financial statements presented in these consolidated financial statements relating to 2004 have been restated in accordance with these standards in order to make both years comparable.

In addition, all necessary reclassifications have been recorded to adapt these figures and make them comparable to those for this year.

2.4 Accounting policies applied to the consolidated balance sheet and income statement

2.4.1 Intangible assets

The items included in the heading “intangible assets” in the accompanying consolidated balance sheet are stated at their acquisition or production cost. The Group does not apply the alternative adjustment to fair value permitted by IAS 38.

Research and development expenses
The costs deriving from research projects are expensed in the year they are incurred.
The heading “Development expenses” records all expenses incurred for specific individual projects the financing for which is reasonably ensured, the attribution of associated costs clearly established, have a high probability of technical success and offer commercial profitability. These conditions are reviewed annually during the life of the project. If these conditions are not met these items are recognised as an expense for the year they are incurred and are not subsequently capitalised.

Amortisation
Assets with an indefinite useful life are considered to be those that are expected to indefinitely contribute to the generation of profits. All other intangible assets are considered to have a finite useful life.
Intangible assets with an indefinite useful life are not amortised and therefore are subjected to an impairment test on at least an annual basis in accordance with the same policies established for goodwill (see Note 10).
Intangible assets with a finite useful life are amortised on a straight-line basis, concessions are amortised over the term of the concession concerned and all other assets are amortised over their useful lives, up to a maximum of five years.

2.4.2 Investments in concession assets

This heading includes the investments made by concession holders for infrastructure being operated (mainly toll highways and airports) increasing their value by both the construction and associated costs (technical studies, expropriations and finance costs accrued during the construction period).

These investments are classified in the accompanying balance sheet separately as they have special characteristics that differentiate them from other types of non-current assets:
• These assets are mostly owned by the granting authority from the time of construction.
• In principle it is the granting authority that controls or regulates which service must be rendered by the concession holder with respect to the infrastructure, to whom the service may be rendered and under what conditions (mainly price) the service must be rendered.
• The assets are operated by the concession holder in accordance with the policies established by the granting authority during the operation period and, once this period has ended, the assets continue to have significant value which is controlled by the granting authority without the concession holder retaining any rights whatsoever regarding the assets.

Based on these characteristics, it may often be considered that under these types of contracts the concession holder carries out work for the granting authority and receives in exchange a right to operate the asset concerned in accordance with pre-established conditions set by the granting authority.

This consideration is leading the IFRIC (International Financial Reporting Interpretation Committee), the interpretation body of the IASB, to classify these types of assets as intangible assets in the draft interpretation of concession businesses currently being debated.

Another issue to be taken into consideration when identifying these assets separately in the balance sheet is that they are a source of cash flows supporting the debt associated with the projects identified separately in the balance sheet (See note 19 relating to the cash position).

The amortisation of these items is recorded based on the term of the concession. The main toll highway concession contracts and their terms are indicated below:

2.4.3 Property, plant and equipment

The items included under the heading “Property, plant and equipment” in the accompanying consolidated balance sheet are stated at their acquisition or production cost, less any existing provisions and depreciation for these items. The Group does not apply the alternative adjustment to fair value permitted by IAS 16.

Some Group assets may be restated, if appropriate, under the provisions of Royal Decree – Law 7/1996 and Vizcaya Regional Law 3/1991 (21 March) which adapts the Vizcaya tax system to the New Financial Treaty between the National Government and the Basque Country and Vizcaya Regional Law 6/96 (21 November) regarding the restatement of balance sheets. IFRS 1 allows these restatements to be maintained in accordance with the previous legislation in force.

The net increase in value resulting from the 1996 revaluation is being depreciated over the tax periods remaining in the useful lives of the revalued assets. The effect on depreciation in each year is not material.

Regular upkeep, maintenance and repair expenses are expensed currently. The costs of property, plant and equipment renewals, expansion or improvements are capitalized only if they lead to increased capacity or productivity or to a lengthening of the useful lives of the assets.

In-house work on property, plant and equipment is valued, for each investment, by adding to the price of the materials used the direct or indirect costs allocable to the investment.

Finance costs incurred during the construction or production period prior to the time the assets enter into service are capitalised as an increase in their value.

The finance costs capitalised originate from specific financing expressly obtained to acquire the non-current assets, and sources of general financing with the limit that capitalised expenses may not exceed those incurred during the year by each company.
The gain or loss obtained on divestments or adjustments to the value of assets included under “Property, plant and equipment” are recorded in the consolidated income statement under “ordinary profit/(loss).

When calculating the depreciation of assets recorded under property, plant and equipment, Group companies use the most adequate system to reflect the effective technical depreciation of each asset and their estimated useful lives.
The consolidated companies depreciate their property, plant and equipment basically over the following years of useful life:

2.4.4 Impairment losses

In the case of assets with an indefinite useful lives, or those that are not in operation for some reason, the Group applies annual impairment tests. In the case of assets subject to depreciation, at each financial year end the Group evaluates the possible existence of permanent impairments to value that would require a reduction in the carrying amount in the event that their recoverable value is less than the carrying amount.

The recoverable value is the larger of fair value (arm’s length basis between independent parties less the associated costs) and the value in use. Value in use is calculated based on future estimated cash flows, less a percentage that reflects the present market value compared with the cash value and the specific risks associated with the asset.

If it is deemed that the recoverable value of an asset is less than its carrying amount, the latter is reduced to the recoverable value and the relevant write-off is recognised.

If an impairment loss is subsequently recovered, the carrying amount of the asset is increased up to the limit of the original value at which the asset was stated prior to recognising the value impairment.

Impairments are calculated for each individual asset. If this is not possible, the impairment is determined for the smallest identifiable group of assets that give rise to the collection of cash independent of such payments received from other assets (cash generating units).

2.4.5 Leases

Leases are classified as finance leases provided their conditions substantially transfer the risks and benefits deriving from ownership to the Group and which habitually offer the option of acquiring the asset at the end of the lease in accordance with the terms agreed when the contract is concluded. All other leases are classified as operating leases.

Finance leases
The Group recognises finance leases as assets and liabilities in the balance sheet at the start of the lease at the lower of market value of the leased asset or the present value of the minimum lease instalments. To calculate the present value of lease instalments the interest rate agreed in the lease agreement is applied.
The cost of the assets acquired under finance leases is presented in the accompanying balance sheet in accordance with the nature of the asset covered by the lease.
Finance costs are distributed over the lease period in accordance with financial criteria.

Operating leases
In operating lease arrangements, ownership of the leased asset and all substantial risks and benefits deriving from the asset remain with the lessor.
When the Group is the lessee, lease costs are taken to the income statement on a straight-line basis. In the event that the lessor has established incentives in the lease consisting of payments corresponding to the lessee but fulfilled by the lessor, the income deriving from these incentives is taken to the income statement by reducing the cost of the lease on a straight-line basis, as is the case for the lease costs.

2.4.6 Financial investments

a. Financial investments at fair value through profit and loss
This heading includes all assets that were acquired with the main aim of obtaining a profit from changes in their value.
They are stated at their fair value and any fluctuations directly affecting the consolidated income statement are recorded.
The assets in this category are classified as current assets if expected to be realised within 12 months after the balance sheet date.


b. Available-for-sale financial assets
This heading records acquired securities that will not be immediately traded and relate mainly to shareholdings in companies not included in Group consolidation.
The assets are stated at their fair value and any fluctuations directly affecting equity until the asset is sold are recorded, provided that it is possible to determine the fair value.
The assets in this category are classified as ordinary assets if expected to be realised within 12 months after the balance sheet date.


c. Investments held to maturity
This category includes all items recorded under financial investments under “Accounts receivable from concession holders” and “Other Financial assets” relating to investments providing fixed payments or those that mature on a set date, for which the Group companies have the intention and capacity to hold until maturity.

Both investments held to maturity and loans granted are initially stated at their acquisition value and subsequently stated at their amortised cost in accordance with the effective interest method. This effective interest is the rate that exactly equals the flows expected from future receivables up until the asset matures based on the asset’s present value.
Deposits and guarantees are stated at the amounts paid.

The assets in this category are classified as current assets if expected to be realised within 12 months after the balance sheet date.

The heading “Other financial assets” include an account called “Investments in Economic Interest Groups” which relates to assets giving rise to receivables of a certain amount that are not traded on an active market and relate to certain tax advantages obtained as a result of investments in economic interest groups that lease assets under the direction of another company not associated with Ferrovial Group and retains most earnings and is exposed to the risks associated with the activity. This transaction has been carried out by Ferrovial Group, which obtains the tax benefits in accordance with the special system established by additional provision fifteen of the Spanish Corporate Income Tax Act.

The results obtained from these transactions, in accordance with their nature described above, have been recorded under the heading Income tax in the profit and loss account on a straight-line basis over the period in which profits were obtained and under no circumstances was income recorded in advance of the time the funds deriving from the investment were received.

2.4.7 Derivados financieros a valor razonable

The financial derivative transactions carried out by Ferrovial Group are in line with the risk management policy described in Note 3 of these financial statements.

The financial information relating to financial derivatives is presented in accordance with IAS 32 and 39, and the relevant accounting treatment is as follows

• Transaction costs: They are recognised in the consolidated income statement at the time they are incurred.

• Derivative hedges are stated at their market value at the contract date. Any subsequent fluctuations in market value are recorded as follows:

  1. Cash flow hedges:
    The hedged risk is exposure to highly likely changes in the value of transactions to be carried out such that there is a reasonable expectation of these changes that are attributable to a specific risk.
    The gain or loss obtained on the hedging instrument is, with respect to the inefficient portion, recorded in the consolidated profit and loss account while the efficient portion is recognised directly in ShareholdersÕ equity in the consolidated balance sheet. The deferred amount in equity is not recognised in the income statement until the gain or loss on hedged transactions is recorded in the income statement or until the transaction concerned matures.

  2. Hedging of the fair value of assets or liabilities recognised in the consolidated balance sheet:
    The hedged risk is exposure to changes in the value of an asset or liabilities recognised in the balance sheet, a part of which is attributable to a specific risk or firm commitment regarding transactions yet to be carried out.
    The loss or gain on the hedging instrument, as well as the loss or gain affecting the hedged asset or liability, is recorded in the consolidated income statement.

  3. Hedging of risks relating to investments in consolidated foreign companies.
    The hedged risk is exposure to changes in the value of consolidated foreign investments, flows or dividends deriving from such investments.
    Gains or losses are taken to equity.

• Speculative transactions: losses or gains are recorded in the consolidated income statement.

2.4.8 Goodwill on consolidation

Goodwill is defined as the positive difference between the cost of an investment and the underlying book value at the date of the investee's inclusion in the Group, net of the amount of asset revaluations or liability value adjustments and/or the generation of liabilities directly allocated to the subsidiaries or associated company’s assets and liabilities.

Goodwill generated on the acquisition of associated companies taking place after the entry into force of the IFRS is considered to be an increase in the value of the shareholding. Goodwill generated before 1 January 2004 is also considered to be an increase in the value of the shareholding.

In accordance with IFRS 3, goodwill on consolidation is not amortised. In this connection, at the end of each year, or whenever there are any indications of a loss in value, the Group applies an impairment test to estimate any permanent losses in value that reduce the recoverable value of goodwill to an amount less than the net cost recorded. If this is the case a write-off is applied. Recorded write-offs are not subsequently reversed.

To perform the impairment test all goodwill is assigned to one or more cash generating units. The recoverable value of each cash generating unit is the higher of the value in use and the selling price that would be obtained from a transaction.

2.4.9 Inventories

The cost of raw and other materials acquired from third parties are valued at the lower of their average acquisition cost and net realisable value.

In the case of assets whose acquisition price or production cost cannot be identified on an individual basis the average weighted price method is applied in general.

The net realisable value is an estimate of the selling price less all estimated sale and distribution costs.
The Group determines the net realizable value of inventories and records all necessary provisions in those cases in which their cost exceeds the net realisable value.

The main investment under the “Inventories” caption relates to real estate developments. Below is a detailed description of the methods followed for the inclusion of the main cost items in the value of real estate inventories.

Land
The acquisition price includes, in addition to the amount paid for the land, all costs incurred on the sale (notary, registry, taxes, etc.), conditioning expenses such as fences, excavation, utilities work and demolition of buildings when necessary for new construction.

Construction
Production cost includes certificates and invoices relating to the construction work (including all permanent fixtures and elements), rates inherent in construction work, design and site management fees and settlement of expenses required for the declaration of new construction work and horizontal division.

Finance costs
The capitalization of interest costs accrued in relation to the acquisition of land and the construction of housing is permitted provided that the following conditions are met:
• Capitalisation may only take place during the construction period. Thus capitalisation may only start at the time the building permit is requested (which requires prior approval of the building plan) and must end when the construction work is completed. In no case may interest expenses on land not incurred during the construction period be capitalized.
• The capitalised finance costs may originate from specific financing and sources of general financing with the limit that capitalised costs may not exceed those incurred during the year by each company.

Sales costs
As a general rule, any sales costs, including advertising expenses or those relating to sales management, are recorded in the income statement on an accruals basis and, accordingly, are not treated as an increase in the value of inventories.
The recognition of sales fees in the income statement may only be deferred at the time of delivery of the housing unit, provided that these fees consist of a fixed sum per unit sold and that there are sufficient guarantees as to their recovery should the asset not be delivered.

2.4.10 Trade and other receivables

These financial assets are recorded initially at their fair value and subsequently at their amortised cost in accordance with the effective interest rate method, as is described in Note 2.4.19, less the provision for impairment losses.
The amount of the provision is the difference between the carrying amount of the asset and the present value of estimated future cash flows, discounted to the effective interest rate.

2.4.11 Cash and cash equivalents

Cash and cash equivalents include cash, demand deposits at credit institutions and other highly liquid short-term investments maturing within three months or less and not subject to relevant exchange risks.

2.4.12 Non-current assets classified as held for sale and discontinued business

a. Non-current assets classified as held for sale
Non-current assets are classified as being held for sale when it is considered that their carrying amount will be recovered through a sale instead of through continuous use. This condition is only met when the sale is highly probable, the asset is available for immediate sale in its current condition and the sale is expected to be completed within one year after the classification date.
Non-current assets classified as being held for sale are stated at the lower of their carrying amount and their fair value less the cost of sale. At the time the assets in this heading are classified, the Group ceases to record depreciation for them.

b. Discontinued operations
Discontinued operations are those that the Group has sold or is considering selling and represent a line of business or geographical area of operations, form part of a single plan or is a subsidiary acquired exclusively for resale.
Discontinued operations are recorded at their fair value less the cost of sale.

2.4.13 Equity attributed to the Company’s equity holders

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are presented under equity as a deduction, net of taxes.

When any Group company acquires shares in the parent company (treasury shares), the compensation paid, including any incremental cost directly attributable (net of income tax) is deducted from equity attributable to the Company’s equity holders. When these shares are sold or are subsequently issued, any amount received net of any incremental costs arising in the transaction that is directly attributable, and income tax effect, is included under equity attributable to the parent company’s equity holders.

Currency translation differences deriving from investments in foreign companies are classified under equity and taken to the income statement when the investment is sold.

2.4.14 Deferred subsidies and income

Subsidies are recognised at their fair value when the Company is reasonably sure they will be received and the Group will comply with all conditions established. Official subsidies relating to costs are deferred and are recognised in the consolidated income statement during the period necessary to match them with the costs they are intended to offset. Official subsidies related to the acquisition of non-current assets are recorded under non-current liabilities as deferred official subsidies and taken to the consolidated income statement on a straight-line basis over the expected useful lives of the assets concerned.

In addition, the deferred income heading in the accompanying consolidated balance sheet records all income received that is taken to the income statement over several financial years in accordance with the nature of the income.

2.4.15 Provisions for liabilities and charges

The Group records a provision for liabilities and charges when there is a commitment or obligation to a third party to comply with the following requirements: a present obligation that arises as a result of past events, the settlement of which is expected to require the application of resources and whose amount or timing is not known with certainty but may be reasonably estimated.

2.4.16 Obligations to employees

Under current labour regulations and certain employment contracts, Group companies are required to pay severance to employees terminated under certain conditions.

The Group follows the policy of recording, at the time a restructuring plan is approved by management, made public and reported to employees, all necessary provisions for future payments deriving from the application of these plans in accordance with the best cost estimates available in accordance with the relevant actuarial studies.

2.4.17 Pension obligations

For the purposes of their accounting treatment, defined contribution plans under which the company’s obligation consists solely of contributing an annual amount must be differentiated from defined benefit plans under which employees are entitled to a specific benefit on the accrual of their pensions

a. Defined contribution plans
The accrued amounts relating to defined contribution plans are recognised on an annual basis as an expense.


b. Defined benefit plans
Consolidated balance sheet
The liability recorded in the balance sheet with respect to defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date, less the fair value of the assets covered by the plan and any cost for past services that are not recognised, as adjusted for unrecognised actuarial gains and losses.

Defined benefit obligations are calculated on an annual basis by independent actuaries using the projected credit unit method.
The present value of the obligation is calculated by discounting the outgoing effective future cash flows estimated at interest rates applied to government bonds in the currency in which the benefits will be paid and applying maturity dates similar to those of the relevant bonds.

Actuarial gains and losses
Actuarial gains and losses that arise from adjustments deriving from experience and changes in the actuarial assumptions are charged or credited to the income statement by applying the so-called “corridor method”, under which the consolidated income statement recognises the actuarial differences that exceed the higher of the following amounts:
• 10% of the present value of pension obligations.
• 10% of the fair value of the assets linked to the plan.
The excess is taken to the income statement systematically over the average residual employment period.

Modifications to the characteristics of the Plan
In the case of modifications to the characteristics of the plan, if as a result of the changes to commitments the relevant rights are automatically vested, the cost of past services are recognised immediately in the consolidated income statement. If, to the contrary, they may be revoked or are not vested, the cost is recognised on a straight-line basis over the average period remaining until finally vested.

Plan reductions and liquidation
If there is any reduction or liquidation of the plan any gains or losses deriving from the plan for the following are recorded at that time: changes in the actuarial value of the fund (bonds and assets linked to the plan) and the costs of past services if they have not been previously recognised and vested at that time.

2.4.18 Share-based compensation

a. Share-based compensation systems settled in cash
When these systems are implemented they are initially stated using a financial method based on a binomial model adjusted by taking into account the exercise price, volatility, the term during which the benefits may be exercised, expected dividends, a risk-free interest rate and the realised assumptions concerning the expected early exercise of the benefits.

The above-mentioned value is taken to the income statement in accordance with IFRS 2 and recorded under Staff costs during the period established as the vesting requirement for the employee to exercise these benefits on a proportional basis over the period concerned. The balancing entry is a liability to the employee. In addition, each year the initial value is re-estimated and the portion relating to that year and the portion relating to prior years is recognised under profit for the year.

Subsequently, once the above-mentioned vesting period for the employee to exercise rights granted under these systems has elapsed, the income statement records the difference between the liquidation value and the liability recognised in accordance with the above description for settled transactions. For active operations at the year end, the income statement includes the difference between the liability recognised at that date and the relevant value restatement.

Finally, and as is described in further detail in Note 41 of the Notes to the Financial Statements, to cover these compensation systems the company has obtained several financial swap contracts that may only be liquidated in cash, are considered to be derivatives and are intended to cover future cash flows necessary to liquidate these compensation systems. These derivatives are treated for accounting purposes in accordance with the general rules applicable to such instruments (Note 2.4.7).


b. Stock option based compensation systems
As is the case with the systems described above, at the time these are implemented they are stated initially using the above-mentioned financial method applied to share-based compensation systems.

These systems are also recorded under Staff costs when their value is taken to the income statement on a proportional basis over the vesting period established for employees to exercise their rights. The balancing entry in this case is recorded under equity and no re-estimate of the initial value is made in accordance with the provisions of IFRS 2.

Finally, and as is described in further detail in Note 41 of the Notes to the Financial Statements, to cover these compensation systems the company has obtained several financial swap contracts that may only be liquidated in cash, are considered to be derivatives and are intended to cover future cash flows necessary to liquidate these compensation systems. These derivatives are treated for accounting purposes in accordance with the general rules applicable to such instruments (Note 2.4.7).

2.4.19 Financial liabilities

These debts are initially recorded at the fair value of the consideration received and are subsequently recorded at their amortised cost in accordance with the effective interest method. This effective interest is the rate that exactly equals the flows expected from future payments up until the liability matures based on the liability’s present value.

In the event that existing debt is renegotiated, no substantial modifications to financial liabilities are deemed to exist if the following condition is met:

• The present cash value, including the cost of issue and associated formalities, in accordance with the effective interest method does not differ by more than 10% of the present value of the cash flows pending payment with respect to the original liability calculated using this same method.

2.4.20 Current assets and liabilities

In general, assets and liabilities are classified as current or non-current based on their operation cycle. However, given the diversity of businesses carried out by the Group, in which the operating cycle varies from one to another, in general current assets and liabilities are considered to be all those that mature in twelve months or less as from their date, and all items maturing after that time are deemed to be non-current.

However, in the real estate business segment the operating cycle exceeds 12 months and therefore the Inventory heading relating to this segment includes amounts relating to assets that will be completed and delivered in more than one year after the balance sheet date. Similarly, the heading also includes mortgage loans associated with these assets even if they mature in more than one year.

2.4.21 Corporate income tax and deferred tax liabilities

The Ferrovial Group has been filing consolidated tax returns since 1993.

The accrued corporate income tax expense for companies included in the scope of consolidation on an individual basis is calculated based on book profits before taxes, adjusted to reflect any permanent differences that arise from the application of tax policies and the elimination, if appropriate, of any tax consolidation adjustments, bearing in mind any applicable tax credits and deductions.

Accrued corporate income tax expense reflected in the consolidated accounts is calculated by aggregating the expense recorded by each company included in the scope of consolidation, modified, as appropriate, by the elimination of consolidation accounting adjustments.

Deferred tax assets and liabilities are calculated in accordance with the liability method based on timing differences that arise between the tax bases for the assets and liabilities and their carrying amount in the consolidated financial statements. However, deferred tax liabilities are not recorded with respect to any transaction not involving a business combination that has no effect at the time of occurrence on accounting results or the tax base.

Deferred tax assets and liabilities are calculated using the tax rates in force at the balance sheet date that are expected to be applicable during the period in which the asset is realised or the liability settled. Deferred tax assets and liabilities are charged or credited to the income statement, unless they relate to items that are taken directly to equity, in which case the deferred tax assets and liabilities are charged or credited to the equity accounts.

No tax liability is recognised for subsidiary profits not distributed when the Group controls the reversal of timing differences and it is not likely that they will reverse in the foreseeable future.

Deferred tax assets and tax credits deriving from tax-loss carryforwards are recognised when it is likely that the Company may recover them in the future, regardless of the time they will be recovered and when the recovery is expected within the period established by law. Deferred tax assets and liabilities are not discounted and are classified as a non-current asset (liability) in the balance sheet.

At the time each financial year is closed, the deferred tax assets and liabilities are reviewed in order to verify that they remain in force and all necessary adjustments are made in accordance with the results of the analyses performed.

2.4.22 Recognition of revenues and expenses

Revenues and expenses are recognized on an accruals basis, i.e. when the actual flow of the related goods and services occurs, regardless of when the resulting monetary or financial flow arises. Specifically, the income is calculated at the fair value of the consideration to be received and represents the income receivable for the assets delivered and the services rendered in accordance with the framework of the ordinary activity, less discounts, returns, value added tax and other taxes levied on sales.
Below is a specific breakdown of the policy followed for the recognition of results in each segment in which Ferrovial Group operates.

2.4.22.1 Construction business

When recognising the results obtained from the construction business, the Company follows the criteria established by IAS 11.
In accordance with IAS 11, paragraph 22, when the results from a construction contract may be reliably estimated, ordinary income and associated costs from the contract concerned must be recorded in the income statement as such, making reference to the percentage of completion.

Of the methods established by IAS 11, paragraph 30 to determine the percentage of completion of a contract, the Company normally follows the policy of examining the completed work (paragraph 30b).

This method may be used since all contracts generally include:
• a definition of each project unit that must be executed to complete the whole project;
• measurement of each of these project units and
• the price at which each unit is certified.

In order to put this method into practice at the end of each month, a measurement of completed units is measured for each project. The resulting total is the amount of the construction work performed at the contractual price that should be recognized as project revenue from the inception. The difference with respect to the corresponding figure a month earlier gives the production for the month, which is the figure that is recorded as income.

Construction work costs are recognized for accounting purposes on an accruals basis, and the expenses actually incurred in the execution of the project units completed and those that, although they may be incurred in the future, have to be allocated to the project units now completed, are recognized as expense.

As is indicated in IAS 11, paragraph 29, the application of this income recognition method is combined with the preparation of a budget made for each construction work contract by project unit. This budget is used as a key management tool in order to maintain detailed monitoring, project unit by project unit, of fluctuations between actual and budgeted figures.

In those exceptional cases in which it is not possible to estimate the margin for the entire contract, the total costs incurred are recognised and the income is deemed to be sales that are reasonably ensured with respect to the completed work (IAS 11, p.32).

Recognition of changes to the main contract
During performance of construction work unforeseen events not envisaged in the primary contract may occur that increase the volume of work to be performed.
These changes to the contract initially entered into require the customer’s technical approval and subsequent financial approval. This approval permits, from that moment, the issuance of certificates for and collection on this additional work.
The policy followed by Ferrovial Group in this respect is in line with the matters indicated in IAS 11, paragraph 14, and the income for this additional work is not recognised until approved is reasonably ensured by the customer (paragraph 13 (a)) and the amount that is likely to be accepted by the customer may be measured with sufficient reliability (paragraph 13 (b)).
However, the costs associated with these project units are recognized when they arise regardless of the degree of customer approval of the work.

Late-payment interest
The recognition of late-payment interest deriving from delays in collecting for certificates is carried out in accordance with the provisions of IAS 18, p.29, when it is likely the late-payment interest will be received and, in addition, their amount may be reliably measured.

Depreciation of machinery
As regards the depreciation of site machinery, the Ferrovial Group distinguishes between the following:
• Machinery and other non-current assets acquired for a construction project whose useful life only covers the duration of the project. These assets are depreciated over the life of the project in accordance with the expected consumption of the financial benefits of the asset, where the degree of completion of the project is considered to be the most correct usage criteria. This section includes mainly light construction machinery, tooling and tools, as well as permanent construction structures. In those cases where the contract ensures the repurchase of the asset at a certain price, that amount is considered to be the residual value of the asset concerned.
• Machinery acquired for central management from the machinery pool. This heading includes mainly large-scale civil engineering machinery. These assets are depreciated in accordance with technical criteria based mainly on the nature of the machinery using the accelerated declining-balance method and, accordingly, the depreciation is greater in the initial years of asset life.

Prepaid expenses
This heading includes the initial construction expenses deriving from the following:
• Obtaining of the primary contract (bidding expenses)
• Machinery relocation expenses (when owned by the Company)
• Acquisition of third-party projects
• Third-party services and studies
• Construction insurance
• Fencing
• Other initial construction expenses (not general)
In accordance with IAS 11, paragraph 27, these expenses are recorded as assets provided that they are likely to be recovered in the future and are recognised as an expense in accordance with the development of actual progress planned in each contract.
Prepaid expenses relating to concluding or obtaining a certain contract that has not been awarded at the year end are taken to the income statement unless there is an express possibility of billing them to the granting authority, in which case they are recognised as a receivable from that authority. (IAS 11, p. 21).

Other provisions
These include most notably:


a. Provisions for deferred charges
Provisions for deferred charges cover the payments that will arise for such items as guarantees for the primary contract, the removal of construction machinery, removal of installations, expenses arising between the end of construction and settlement and repairs falling within warranty periods. These provisions relate to an existing obligation stated in the contract (IAS 37 14a)), on the basis of which it is likely that the company will apply resources to fulfil the obligation (IAS 37 14 (b)), and which may be reliably estimated (IAS 37 14 (c)).

These payments normally take place once the construction work has been completed and the relevant income has been recorded. For this reason provisions are recorded in accordance with the best possible estimates and the characteristics of the project, based on initial estimated work according to the budget, which in general cannot be modified until the contract is fulfilled.
Notwithstanding the above, the initial percentage mentioned above may be modified in the event that the initial estimate is inappropriate based on the fulfilment of the contract. In this case the provision is adjusted as soon as the situation becomes known, and the adjustment is considered to be a change in the original estimate.

When the project covered by the contract is handed over and, based on the updated estimate the excess provision, if any, is reversed into the relevant income accounts these provisions may only be subsequently used for the intended purpose and remain on the liability side of the balance sheet while risks relating to the construction project persist.


b. Provisions for budgeted losses
In accordance with the content of IAS 11, paragraph 26, when it is likely that the final result of a project will be the recognition of a loss, it must be immediately recorded in the financial statements.

In order to determine this probability, uniform criteria established by type of customer or project are followed, based on accumulated historic experience and project budget management policies.


c. Provisions for doubtful trade receivables
Trade receivables with an estimated due date exceeding one year are stated in accordance with the amortised cost method.
In addition at each balance sheet closing date, an evaluation is carried out on whether or not there is objective evidence that a trade receivable is impaired (IAS 39, p. 58).

In general, a full loss of a trade receivable is deemed to exist in cases of suspension of payments, bankruptcy, court claim or any failure to pay trade bills, promissory notes or cheques.

In cases in which the above conditions are not met but there is a delay in payment exceeding 6 months, a detailed study is carried out and a provision is recorded based on the estimated risk deriving from this analysis.

2.4.22.2 Infrastructure business

The three industries in which Ferrovial’s Infrastructure Division operates are toll highways, airports and car parks.

a. Toll highways
The IFRIC (IASB interpretation body) is currently debating an interpretation of the accounting treatment to be afforded concession agreements. The IFRIC has issued draft interpretation documents called D-12, D-13 and D-14, which have yet to be approved and are subject to change.

The toll highway contracts managed by Ferrovial Group fall within the scope of application of this legislation.
The key point considered by IFRIC to determine the accounting treatment of this type of contract is the nature of the assets under management. Further details of the nature of these assets are set out in Note 2.4.3 of these Notes to the Financial Statements.

In accordance with the content of these drafts, the assets may be classified as intangible assets (D-14) or receivables from the granting authority (D-13).

The separation between both models lies, in the current drafts, in who pays the tolls deriving from the concession (intangible if paid by users and receivable if paid by the granting authority).

The accounting treatment for the purposes of the income statement is totally different in each model.

While waiting for the final interpretation decision from the IFRIC and subsequent approval by the European Union, the policy followed by the Company when preparing these financial statements is as follows:
• The non-current assets linked to the long-term investment in these contracts is classified under a separate balance sheet heading called “Concession assets” (see Note 5).
As there is no definitive policy regarding the separation between the intangible model and the receivable model, the Company has decided to apply, in general, the policy of recognising the results of the intangible model, which basically means:
• The concession assets are depreciated over the term of the concession on a straight-line basis, except for concession assets in Chile, for which an agreement has been concluded with the Chilean authorities whereby the concession term is variable and ends at the time a certain amount of income has been obtained. For these toll highways a depreciation policy based on projected income volume over the term of the concession, which is based on the volume of income in each year, is being applied.
• Accrued finance costs are capitalised during the construction period.
• The finance costs accruing after the asset enters into use are recognised directly in the profit and loss account.
• Toll income received is recognised based on accrual, which is normally linked to the use of the infrastructure by drivers.
• Operating costs are also recognised in accordance with the accruals principle.

b. Airports
The accounting treatment applied to these types of assets is similar to that applied to toll highways. However, contrary to the case of toll highways, many times the assets are owned by the Company and there is no obligation for reversal at the end of the concession period. Accordingly, the main matters to note with respect to the accounting treatment are:
• Finance costs are charged to the income statement based on their accrual by the interest method, except for those costs accrued during the construction period, which are capitalized.
• Non-current assets are depreciated on a straight-line basis over the useful life of the asset concerned.


c. Car parks
The parking business covers three areas of activity:
• Car parks for local residents
• On-street car parks
• Off-street car parks

Car parks for local residents
Results are recognised in the same manner as for the real estate development business.

On-street car parks
This is a public service rendered to local authorities, which mainly concerns the management of public parking and the collection of the fees charged by municipalities for these services.
The income is normally a price for the public service payable by the Municipality and therefore the accounting treatment is similar to that applied to service businesses.

Off-street car parks
In this case revenues arise from the use of parking garage spaces owned by the company or held under an administrative concession for the term of the concession.
The accounting treatment applied in this case is similar to that applied to the toll highway business.

2.4.22.3 Real Estate business

The main activity carried out by the Real Estate Division consists of the sale of homes and land to individuals. This activity is considered to be the sale of assets in accordance with the provisions of IAS 18.

The recognition of results obtained on the sale of assets must take place when the significant risks and rewards deriving from ownership of the assets have been transferred to the buyer (IAS 18 p.14).

As is indicated in paragraph 15 of IAS 18, in most cases the transfer of the risks and rewards of ownership coincide with the transfer of legal title or the transfer of possession to the buyer. Specifically, in the Spanish real estate market the transfer of risks and rewards relating to the asset is understood to take place when the property is delivered to the buyer which, in most cases, coincides with the execution of the public deed and, therefore, this is the time at which the income relating to the sales is recognized.

As a balancing entry to the recognition of the sale, at this time the expense is recognized through the reduction in value of inventories being sold. The accounting measurement of these inventories is carried out in accordance with the provisions of IAS 2, including the capitalization of finance costs during the construction period (see Note 2.4.9 of these Notes to the Financial Statements).

Finally, at the time housing is delivered, a provision to cover the expenses that may arise from repairs relating to the delivered housing is recorded as soon as an actual obligation is assumed by the Company under which it is likely that a future financial payment may arise and provided that a reliable estimate of this payment can be prepared. (IAS 37 p (14)).

2.4.22.4 Service business

Recognition of income
Urban and Maintenance Services and Integral Management
In general, these consist of service contracts that may last for more than one year but, contrary to construction contract, do not cover the execution of a project but rather the continuous rendering of repetitive services at prices established in the contracts. The relevant income is therefore recognized on a monthly basis in accordance with the work carried out during the month at the agreed prices, simultaneously recognizing the associated costs without any need to apply a degree of advancement policy.
In the event of additional services that are not included in the primary contract, a policy similar to that followed for construction contracts is applied to recognize income.

Infrastructure Maintenance Business
In this business there are certain contracts covering the execution of projects to which the same treatment followed for construction contracts is applied.

Provisions
The following paragraph describes the main provisions recorded for this type of business which, in accordance with the provisions of IAS 37 paragraph 14, relate to contractual obligations that have been assumed, will likely generate a application of resources in the future and may be reliably estimated.


a. Provision for warranties
In the specific case of maintenance and integral management contracts including full warranties of a building’s fixtures, an estimate of the potential risk is made at the beginning of the contract and a monthly warranty provision is recorded in order to cover the total estimated amount by the end of the contract. These estimates are reviewed periodically and the monthly provision is adjusted accordingly.


b. Provision covering the closing and post-closing of landfills
One of the activities carried out in the Urban Services area is the construction and management of landfills, which involves the construction of landfills under permit and subsequent management of them by collecting certain amounts based on the number of tonnes deposited. In accordance with the permit granted, when the landfill’s capacity has been reached it must be closed in order to prevent future environmental risks.

The provisions covering the closing and post-closing of landfills therefore include the estimates made for the costs that will be incurred to close the landfill and treat the waste during the post-closing period for the landfills that are owned by the Company, or are managed by the Company under contracts stating this obligation.

Allocations to the provision for the closing and post-closing of landfills are made in accordance with the estimates prepared by the company's technical personnel regarding the final cost of closing and the cost of maintaining the land that must be incurred once the landfills are closed.

The sufficiency of the provisions are reviewed and evaluated every year based on the measurements taken and reported by the Technical Department regarding the total volume capacity of the landfill, its average density and an estimate of the cost to be incurred when closing the landfill and performing and post-closing services.


c. Provisions for trade receivables
The criteria for allocating provisions for trade receivables are the same as those indicated above for the construction business.


d. Depreciation
The machine relating to these types of contracts is depreciated over the life of the equipment based on technical criteria calculated in accordance with the consumption of the financial benefits obtained from the asset.


e. Refurbishment, construction and subsequent maintenance of infrastructure in the United Kingdom.
Among the activities carried out by the UK subsidiary Amey, it participates in certain contracts covering the construction or rehabilitation of certain public infrastructure, as well as subsequent maintenance.

Due to their characteristics, these contracts fall within the scope of application of the draft interpretation documents regarding concessions issued by IFRIC. Contrary to the case with other concessions, in these cases the concession holders recover the investments made by collecting set amounts that do not vary based on the use of the asset but are affected by certain peculiarities or awards linked to the availability of the asset or the quality of the service rendered.

Under UK accounting standards these investments are treated as trade receivables. Although, as was indicated at the start of these Notes to the financial statements, the IFRIC draft interpretations have not been applied to the preparation of these financial statements, these investments are carried on the balance sheet as trade receivables due to their characteristics.

Income from construction or maintenance services rendered under these contracts is calculated in accordance with the general rules established for construction and service businesses (IAS 11 and IAS 18) and trade receivables are stated using the amortised cost method.

2.5 Reconciliation of opening and closing balances for 2004 and between local standards and IFRS

International Financial Reporting Standard 1 (IFRS 1) requires that the first consolidated financial statements prepared under IFRS include reconciliation between local Spanish accounting standards and IFRS relating to the equity and the income statement at the start and end of the immediately preceding year to which these financial statements refer.

In addition, IFRS 1 requires the reconciliation of 2004 results with the results for the same period prepared in accordance with local principles and standards.

2005 is the first year that the Group has prepared its financial statements in accordance with IFRS. The last financial statements presented in accordance with Spanish accounting principles and standards were those for the year ended 31 December 2004 and date of transition to IFRS is therefore 1 January 2004.

The reconciliation between the accounting principles applied in Spain and IFRS of the figures of consolidated equity at 1 January 2004 and consolidated equity and the consolidated income statement at 31 December 2004 is set out below, together with the figures relating to:

a. Equity at 1 January 2004

b. Profit and loss account for 2004
The main differences in the profit and loss account for 2004 deriving from the application of international financial reporting standards are summarised below:

c. Equity at 31 December 2004

d. Breakdown of adjustments deriving from the conversion from the Spanish General Accounting Standards to IFRS recorded in the 2004 Balance sheet

e. Breakdown of adjustments deriving from the conversion from the Spanish General Accounting Standards to IFRS recorded in the 2004 Income Statement

f. Description of the main impacts deriving from the transition to IFRS

The description of the main impacts to Equity at 1 January 2004 and 31 December 2004, as well as to profit and loss for 2004 is as follows:

Capitalisation of finance costs relating to toll highways
According to Spanish legislation, finance costs may be capitalised during the operating period and are recognised as an expense in line with the revenues obtained during the year as a percentage of the total revenues projected in the contract.
In accordance with IFRS, finance costs may be capitalised during the construction period but not once the asset enters into service.
The Group recorded a decrease in shareholder’s equity in the balance sheet totalling 282,937 thousand euro in this respect and an expense for 2004 in the profit and loss account totalling 78,932 thousand euro.

Goodwill
In accordance with Spanish legislation, goodwill on consolidation is amortised over a maximum of twenty years.
According to IFRS goodwill is not amortised, although an annual impairment test must be performed. In the case of foreign companies, goodwill is denominated in the currency used by the acquired company.
The Group has therefore reversed the allocation totalling 57,421 thousand euro in the profit and loss account for 2004.

Depreciation of toll highways
According to Spanish legislation, concession asset depreciation was fundamentally recorded on an increasing scale basis, in line with the projected revenue during the operating period.
According to IFRS there is no final policy in this respect and the final outcome of the draft interpretation documents from the IFRIC mentioned above is pending. This treatment will depend on the classification provided by the IFRIC interpretation regarding the asset to be recognised (PROPERTY, PLANT AND EQUIPMENT, intangible or trade receivable) which will determine the amortisation/depreciation policy to be applied.
While waiting for a final decision the Group has applied a straight-line depreciation policy in accordance with the comments made in the accounting policy, section 2.4 of these Notes to the Financial Statements, which has resulted in Shareholders’ equity declining by 62,214 thousand euro and an expense being recorded in the 2004 profit and loss account totalling 13,253 thousand euro.

Capital gain obtained on listing of Cintra, S.A. on stock market
The difference between Spanish legislation and IFRS arises due to the fact that the carrying amount of the assets pertaining to Cintra, S.A. was reduced due to the application of IFRS, which affects the company’s equity. The capital gain generated on the listing of this company on the stock market therefore exceeds 26,207 thousand euro as the carrying amount of the assets is reduced.

Gain deriving from disposal of treasury shares
In accordance with Spanish legislation, the result generated from transactions involving treasury shares is recorded as an extraordinary profit/(loss).
According to IFRS, the result generated by treasury shares is recorded as equity.
The effect on the consolidated income statement is a reduction to consolidated profit totalling 9,615 thousand euro.

Derivatives
According to Spanish legislation derivatives are not recognised until realised.
According to IFRS these items are stated in the balance sheet at their fair value. Changes in the latter are recognised, in the case of non-effective hedges or speculative derivatives, in consolidated profit and loss while efficient cash flow risk hedges are recorded against equity until the hedged transaction takes place.
The Group recorded a decrease in shareholder’s equity in the balance sheet totalling 14,111 thousand euro in this respect and an expense for 2004 in the profit and loss account totalling 3,517 thousand euro.

Exchange differences
Spanish legislation stipulates that gains on currency translation are taken to profit and loss when realised in cash while under IFRS they are taken to profit and loss when it is independently revealed that they are not realised.
The effect on the consolidated income statement is a reduction to consolidated profit totalling 8,621 thousand euro.
Reclassification of treasury shares
In accordance with Spanish legislation, treasury shares are recognised as an asset on the consolidated balance sheet whereas under IFRS they are recorded as a reduction of equity.

Other
Finally, the above breakdown includes other less significant information regarding the conversion of the balance sheet and income statement from Spanish standards to IFRS under the column Other, the most notable of which is as follows:

Share-price based compensation systems
The accounting treatment of this type of compensation was not regulated by Spanish legislation. According to IFRS, these compensation systems must be stated in accordance with a financial method and recognised as staff costs over the period during which they accrue.
The Group recorded an increase in shareholder’s equity in the balance sheet totalling 19,206 thousand euro in this respect and an expense for 2004 in the profit and loss account totalling 1,721 thousand euro.

Reversal of provisions for changes in carrying amounts
Shareholders’ equity decreases with the application of the new standards, which causes a lower carrying amount for the Chilean companies and, consequently, the reversal of the existing provision that had been recorded under national legislation as the fair value of these companies was lower than their carrying amount in accordance with this legislation.

Provision for pensions
In this respect the Group recorded a decrease in Shareholders’ equity in the Transition balance sheet totalling 25,085 thousand euro. This reduction relates to the actuarial shortfall existing in the Group’s pension funds at the transition date and in accordance with the treatment described in the accounting policies presented in these Notes to the Financial Statements.

2.6 Segment information

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments.
A geographic segment is a group of assets and operations engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other economic environments.
On the basis of the Ferrovial Group’s primary management parameter, the primary reporting format consists of business segments, as indicated in Note 1 and therefore the geographical segments form the secondary reporting format.

a. Basis and methodology of segment information
Segment income consists of amounts directly attributable to the segment and the relevant proportional part of income from joint ventures and/or temporary consortia consolidated by the proportionate method.
Segment expenses are the amounts arising from operating activities and directly attributable to the segment plus the relevant proportional part of costs that may be allocated to the segment using a reasonable allocation method. Segment expenditure the relevant proportional part of costs from joint ventures and/or temporary consortia consolidated by the proportional method.
Shares in the results of associates consolidated by the equity method are allocated to each segment.
The segment results show the proportional part attributable to minority interest.
The segment assets and liabilities are directly related to segment operations and include the proportional part pertaining to joint ventures and/or temporary consortia.
Segment information is set out below.

b. Business segments
At 31 December 2005, the Group is organised on a worldwide basis into four main business segments:
• Construction
• Infrastructure
• Real Estate
• Services
Note 1 on the business and consolidation scope contains a description of the activities carried out in each segment.
The results by business segment are presented distinguishing between results of continuing operations and results of discontinued operations.
Transfers of transactions between segments are formalised on the normal terms and conditions also available to unrelated third parties.
Throughout these notes, the “Rest” column relates to assets and/or liabilities, income and/or expenses of the corporate entities and any adjustments between segments.
The main information on these segments for 2004 and 2005 is presented in the following notes to these consolidated financial statements:
• The most representative accounting policies applied to each business segment are described in note 2.4 on accounting standards.
• Note 29 on Operating revenue contains a breakdown of revenue by business segment, distinguishing between income from sales to external customers and income from sales to other segments.
• Income is presented by business segment, distinguishing between income from continuing activities and income from discontinued activities, in notes 36 and 37.
• The notes on non-current assets (intangible assets, concession assets and property, plant and equipment) indicate additions or investments in non-current assets by business segment.
• Note 19 contains a breakdown of the net cash position by business segment
• Note 34 contains a breakdown of cash flows by business segment, excluding the concession holder companies.

Set out below are the balance sheets and income statements by segment for 2005 and 2004:

Balance sheet by business segment: 2004

Balance sheet by business segment: 2005

Income statement by business segment: 2004

Income statement by business segment: 2005

c. Geographical segments
The parent company’s home country is Spain.
The Group’s business segments operate mainly in the following geographic areas:
• Spain
• United Kingdom
• USA
• Canada
• Poland
• Chile
• Portugal
• Rest of Europe
• Rest

Note 24 on Operating revenue contains a breakdown of sales to foreign customers by geographical segment.

2.7 Foreign currency

a. Functional and presentation currency
The items included in the financial statements of each of the Group’s entities are measured using the currency of the economic environment in which the entity operates, i.e. in its functional currency.
The consolidated financial statements are presented in euros, which is the parent company’s functional and presentation currency.

b. Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency.
To this end, a distinction is made between foreign entity and foreign establishment and the figures are translated into the presentation currency using different methods depending on the case:

Foreing entity:
A foreing entity is any establishment whose operations do not form an integral part of the reporting entity’s operations, i. e it accumulates cash and other monetary items, incurs cost, generates revenues and may agree on loans principally in its local currency.
For such cases, the closing rate translation method is applied, as follows:
• All asset items, except for those referred to below, are translated at the closing rate at the date of the balance sheet.
• Investments and other contributions in foreign entities and long-term loans granted to them by the parent company are translated at the historical exchange rate.
• Goodwill generated on the acquisition of companies is translated at the closing rate for each period and currency translation differences are stated in the amount of the difference between the closing rate and the historical exchange rate at which they were carried.
• All due liabilities are translated at the closing rate on the balance sheet date.
• Equity is translated at the historical exchange rate.
• Income and expenses are translated at average exchange rates.
• All resulting exchange differences are recognised as a separate component of equity.

Foreign establishment:
Foreign establishments form an integral part of the reporting entity’s operations such that their business is run as if it were an extension of the reporting entity’s operations and therefore used the same functional currency.

In this regard, the companies that contribute assets and liabilities denominated in currencies other than the euro are analysed in the following table:

Set out below is a breakdown of exchange rate fluctuations between the GroupÕs main currencies and the euro:

The fluctuations reflected above have increased the Group’s asset and liability balances, particularly in the companies resident in Canada, Chile, Poland, United Kingdom, United States and Australia, while balances relating to the Ferrovial Group’s activities in Switzerland have decreased. The tables included in the following notes explaining movements in assets and liabilities contain a column showing the effect of the exchange rate where significant.
The net impact of the fluctuations on assets and liabilities, less the impact on minority interest, is recognised in equity, in the item “Currency translation differences” (see note 15.c). As a result of the exchange rate fluctuations, equity for the year increased by 1,439 thousand euro (-1,759 thousand euro in 2004).

c. Transactions and balances in foreign currency
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in the consolidated income statement when they arise.
Monetary assets and liabilities denominated in foreign currencies are translated at year-end exchange rates. Gains and losses are recognised in the income statement.

2.8 Accounting estimates and judgements

The information contained in the financial statements is the responsibility of the Group’s directors.
In the consolidated financial statements for 2005 and 2004, estimates made by the Group’s directors have been used to measure certain assets, liabilities, income, expenses and commitments. The following estimates have been used:
• Evaluation of potential losses due to the impairment of certain assets
• Assumptions employed in the actuarial calculation of pension liabilities and other commitments with employees
• Useful lives of property, plant and equipment and intangible assets
• Measurement of goodwill
• Budget-related estimates taken into consideration when recognising the results of contracts on a percentage-of-completion basis in the construction and services segments.
These estimates were made using the best information available at 31 December 2005 and 2004 in relation to the facts analysed. However, future events could force the Group to modify its estimates. If applicable, estimates will be modified in accordance with IAS 8.

2.9 Changes in estimates and accounting policies, and correction of fundamental errors

a. Changes in accounting estimates
The effect of any change in accounting estimates is recorded on the same line in the income statement as the expense or income recognised using the previous estimate.

b. Changes in accounting policies and correction of fundamental errors
The effect of any change in accounting policies and any correction of fundamental errors is accounted for as follows: the accumulated effect at the beginning of the year is adjusted in Reserves and the effect on the current year is taken to the income statement. In such cases, the financial data for the comparative year presented together with the current year are adjusted accordingly.

3. FINANCIAL RISK MANAGEMENT

The Group’s activities expose it to a variety of financial risks, particularly interest rate risk, foreign exchange risk, credit risk and liquidity risk.

3.1 Interest rate risk

The Group’s main interest rate risk arises from the financing of infrastructure projects.
Financing for this type of projects is linked to the project flows. In this connection, when the project enters the operation phase the objective is to attempt to establish as far as possible a fixed interest rate or assure such a rate through hedging against possible interest rate fluctuations, thereby avoiding possible subsequent changes to the project’s profitability as a result of such fluctuations. These hedging activities form part of the obligations frequently imposed by financial institutions. A breakdown is presented in Note 9 on Derivative financial instruments at fair value.

3.2 Foreign exchange risk

Ferrovial manages its foreign exchange risk through three types of hedges:

a. Hedge of the Company’s assets
The Group seeks to obtain financing for its long-term assets denominated in currencies other than the euro in the same currency as the one in which the asset is denominated. This is particularly true in the case of the concession holder companies and of acquisitions of companies whose assets are denominated in currencies other than the euro.

Note 9 on Derivate financial instruments at fair value contains an analysis of the hedges contracted on the Company’s assets.
b. Hedge of future cash flows from transactions to be effected based on binding or highly probable commitments:
This foreign exchange risk relates basically to the execution of construction contracts in which collections and/or payments are made in a currency other than the functional currency. The Group seeks to hedge this risk using foreign exchange derivatives.
In such cases, the risk to be hedged is exposure to changes in the value of transactions to be effected based on binding or highly probable commitments such that there is reasonable evidence of future completion, attributable to a specific risk. Note 9 on Derivative financial instruments at fair value contains an analysis of the relevant contracts concluded by the Group.

c. Hedge of flows from investments in consolidated foreign entities
The risk consists of exposure to changes in the value of forecast dividend flows from investments in consolidated foreign entities, attributable to foreign exchange fluctuations affecting the currency in which the investments are denominated. This risk is also hedge using foreign exchange derivatives, an analysis of which is set out in Note 9 on Derivative financial instruments at fair value.

3.3 Credit risk

The Group’s main financial assets are cash and cash equivalents, trade and other receivables, and investments, which represent the Group’s maximum exposure to credit risk in connection with its financial assets.
The Group’s credit risk is mainly attributable to its trade receivables. The amounts are carried on the balance sheet net of bad debt provisions estimated by Group management based on prior-year experience and an evaluation of prevailing economic circumstances.
Credit risk relating to investments in financial products is concentrated mainly on short-term financial investments (“repos” of sovereign debt and/or highly-liquid deposits in both cases) and derivative financial instruments that hedge foreign exchange, interest rate and equity securities price risks. Counterparties are always financial institutions and a strict diversification policy is applied on the basis of international credit ratings, maximum credit limits and regular reviews. For example, in the specific case of transactions in countries whose economic and socio-political circumstances preclude high credit quality, the Group mainly selects branches and subsidiaries of foreign financial institutions, or the largest local institutions, that fulfil or nearly fulfil stipulated credit policy.
The Group has no significant concentrations of credit risk and exposure is distributed among a large number of counterparties and customers.

3.4. Liquidity risk

Although the general situation in financial markets, particularly the banking market, has been highly favourable for credit seekers in recent years, the Ferrovial Group constantly monitors factors that could help to resolve liquidity crises, particularly sources of financing and their characteristics.
Special attention is paid to the following factors:
• Liquidity of monetary assets: cash surpluses are always placed in very-short-term assets. Specific authorisation is required for placements in assets having a term of more than three months.
• Diversification of credit line maturities and control over financing and refinancing: following the latest acquisitions of Webber and Swissport, financed using the Group’s own funds and a bridge loan, two long-term financing operations have been concluded, the first directly by Swissport in December and the second by the Ferrovial Group in January 2006. Consequently, there is no relevant refinancing operation pending.
• Control over the residual terms of credit lines. Following the last refinancing operation, the maturities of existing credit lines are as follows:

LIMIT REDUCTION SCHEDULE

* Assuming current operations are not renewed and including the operation formalised by the Ferrovial Group in January 2006.
• Diversification of sources of financing: on a corporate level, bank financing is essential due to ease of access and cost, with which alternative sources of financing are often unable to complete.
However, in many cases, financing without recourse for concessions is often obtained using various types of bonds as the principal source of financing, since such operations could exhaust the habitual source of financing in view of their size. The resulting combination of longer terms, price and diversification is considered to be beneficial.
The Group does not rule out the use of other sources of financing in the future.
Note 19 on the Group’s net cash position contains an analysis of bank financing obtained by the concession holder companies and the rest of the companies (without recourse and with resource from the shareholder, respectively).

4. INTANGIBLE ASSETS


El movimiento de los saldos que componen el epígrafe del balance de situación consolidado por segmentos durante los ejercicios 2004 y 2005 ha sido el siguiente:

Changes in scope of consolidation
Changes in the scope of consolidation are explained partly by the exit of the water supply and distribution business (Helguina, S.A. and Aguanorbe, S.L.) for a total of 22,942 thousand euro net of amortisation, due to the sale of the two companies in July 2004 to Grupo Aguas de Barcelona, S.A. This sale was completed in September 2004. Conversely, the change of consolidation method applied to the company Estacionamientos Guipuzcoanos, S.A., from the equity method in 2003 to the full consolidation method in 2004, caused an increase of 31,866 thousand euro.

Additions
Intangible asset additions in the companies Cintra Aparcamientos, S.A. and Estacionamientos Alhóndiga, S.A. amounted to 1,160 thousand euro as a result of payments made by those companies in return for certain administrative concession contracts.
In the services segment, the main addition of Administrative concessions relates to the company Helguina, S.A. in the amount of 4,352 thousand euro. This increase took place in the first nine months of the year, before this company’s exit from the consolidation scope.

Changes in scope of consolidation
In the services segment, the variance relates to the inclusion of the company Swissport, entailing a net increase of 60,651 thousand euro in the amortisation balance. In the infrastructure segment, administrative concessions rose by 9,452 thousand euro due to the company Aparcamientos de Bilbao

Additions
In 2005 the main additions took place in the services segment and the largest increase relates to Cespa (7,782 thousand euro).

5. INVESTMENTS IN CONCESSION ASSETS

This caption relates to the investments in assets owned by the companies holding transport infrastructure concessions (basically highways and airports) and concessions for services (public infrastructure maintenance). These assets are used directly in operations. Related risks are adequately covered by insurance policies.
The majority of concession assets relate to administrative concession contracts. In most cases, the assets are owned by the granting government body from inception and the concession holder has a right to exploit them in order to recover the investment over the concession term in accordance with the terms and conditions laid down by the granting government body. Under the concession contract, these assets must revert to the granting government body at the end of the concession period.
Set out below is an analysis of investments in concession holder companies showing movements during 2004 and 2005:

The main additions for the period relate to toll highways under construction in 2004. In the case of the Madrid-Levante highway company, incorporated in 2004, additions for the year relate basically to expropriated land.
In 2004, fluctuations in the euro exchange rate with respect to the currencies of the countries in respect of which the Group records significant highways and airports in non-current assets (mainly Canada, Chile and the United Kingdom) have caused reductions in the relevant balance sheet asset accounts.

The variances relate to the inclusion in the consolidation scope of the companies Skyway Concession Co, in January 2005, M-203 Alcalá O`Donnell, in September 2005 and the infrastructure maintenance concession holder in other Amey contracts.
The most relevant additions for the period relate to toll highways under construction in 2005, mainly the Madrid-Levante highway and Euroscut Norte Litoral.
In 2005, fluctuations in the euro exchange rate with respect to the currencies of the countries in respect of which the Group records significant highways in non-current assets (mainly Canada, Chile and the United States) have caused an increase in the relevant balance sheet asset accounts.
The following table shows the closing balance for investments in concession assets broken down by company and an analysis of interest capitalised at source during the construction period and during 2004 and 2005. The table also shows the percentage of completion of the projects at 31 December 2004 and 2005.

Los intereses activados corresponden a la financiación específica de cada una de las autopistas. El movimiento en los años 2004 y
2005 de intereses activados de las autopistas 407ETR, Temuco Río Bueno y Collipulli Temuco se debe en su totalidad a variación de
tipo de cambio. En la autopista Santiago Talca, aunque el principal efecto es tipo de cambio, se están activando financieros al no
haberse terminado aún la obra en su totalidad.
Los activos concesionales situados fuera del territorio español al 31 de diciembre de 2005 y 2004 ascienden, neto de amortización, a
6.607.969 miles de euros y 4.160.615 miles de euros respectivamente.


6. PROPERTY, PLANT AND EQUIPMENT

Set out below is an analysis of Property, plant and equipment on the consolidated balance sheet showing movements by segment during 2004 and 2005:

Changes in scope of consolidation
In 2004, changes in the consolidation scope relate to assets from Estacionamientos Guipuzcoanos, S.A., which was consolidated by the equity method to September, when Cintra, S.A. acquired an additional 57.1% of the company, which was then fully consolidated.

Additions
Infrastructure additions relate basically to new investments in off-street car parks and machinery for on-street car parks.
Additions in the services segment relate basically to the Cespa Group’s investments in waste treatment plants, landfills and machinery used in its activities.
Finally, additions in the construction segment are due to the acquisition during the year of site machinery used in the activities.

Disposals
The main disposals in the construction segment relate to fully-depreciated site equipment written off in 2004 in the amount of 30,690 thousand euro and to the classification of plants built for the account of government bodies as financial investments totalling 9,682 thousand euro.

Changes in scope of consolidation
In 2005, the consolidation scope changes relate basically to the addition of assets from Webber and Swissport totalling 86,615 thousand euro and 66,900 thousand euro respectively.

Additions
Construction segment additions are due mainly to specialised machinery acquired. Five new tunnelling machines were acquired, significantly increasing the fleet of construction machinery, which previously included two tunnelling machines.
In the services segment, additions relate mainly to the investments in waste treatment plants, landfills and machinery used in the Cespa Group’s business, as in the previous year.
Finally, infrastructure additions relate basically to investments in rotating parking lots and machinery for surface parking lots.

Disposals
Construction segment disposals are due basically to the write-off of construction site equipment in 2005.
Other information
• No property, plant and equipment is subject to restrictions on ownership or pledged as security for liabilities.
• Property, plant and equipment not used in operations is insignificant with respect to closing consolidated balances.
• Property, plant and equipment located outside Spain totals 60,116 thousand euro in 2004 and 213,268 thousand euro in 2005, net of depreciation.
• There are no binding commitments to purchase or sell property, plant and equipment.
• The Group has taken out insurance to cover possible risks affecting its property, plant and equipment and possible claims that could be brought in the normal course of business. The Group considers that the insurance policies provide adequate coverage for such risks.

 

7. EQUITY-CONSOLIDATED COMPANIES

This caption relates to the companies in which the Group has significant influence, i.e. the power to participate in decisions concerning financial policy and operations, but does not have control over the companies.
Shareholdings in equity-consolidated companies are analysed below at 31 December 2004 and 2005:

The main variances during the year are described below:

a. Infrastructure:
Increase of 3,026 thousand euro in the equity-consolidated shareholding in Sydney Airport Corporation, Ltd from 20.68% to 20.90%. This company also paid out dividends totalling 33,641 thousand euro.
Decrease of 4,244 thousand euro in the equity-consolidated shareholding in Túneles de Artxanda, S.A. from 21.90% to 10.08%.
Dividend pay-out of 17,982 thousand euro by Europistas, Concesionaria Española, S.A.
Exit from Inversiones Técnicas Aeroportuarias, S.A. in the amount of 30,892 thousand euro, this company having been sold for 23,660 thousand euro.
Change of consolidation method applied to Estacionamientos Guipuzcoanos, S.A., from equity to full consolidation, as the shareholding rose from 42.86% to 61.98%, resulting in a reduction of 8,908 thousand euro in this item, including results for the year.

b. Real Estate:
Sale of Lusivial Promoçao e Gestao Inmobiliaria, S.A. for 5,256 thousand euro.

c. Construction:
Change in the consolidation scope relating to the shareholding in the subsidiaries of Grupo Budimex S.A., amounting to 4,632 thousand euro.

The main variances during the year are described below:

a. Infrastructure:
Dividend pay-out of 41,821 thousand euro by Sydney Airport Corporation, Ltd.
Dividend pay-out of 7,269 thousand euro by Europistas, Concesionaria Española, S.A.

b. Services:
Inclusion in the consolidation scope of the company Concesionaria Madrid Calle 30 for a total of 22,572 thousand euro, including results for the year.

Other information

• The share in results shown in these tables is net of taxes. Corporate income tax for 2004 and 2005 totals 1,252 thousand euro in tax payable and 4,014 thousand euro in tax refundable, respectively, and is recorded in “Income tax” in the accompanying consolidated income statements for 2004 and 2005.

• Investments in associates at 31 December 2004 and 2005 include goodwill of 11,310 thousand euro.

• Europistas is listed on the Spanish Stock Exchange and at 31 December 2005 showed a value of 677,005 thousand euro.

• There are no reasons to draw the conclusion that the Group has significant influence in companies in which its interest is less than 20% or does not have significant influence in companies in which its interest exceeds 20%.

• There are no significant restrictions on the capacity of associates to transfer funds to the Parent company in the form of dividends, debt repayments or advance payments.

• Appendix I contains a list of the main shareholdings in associates, including their name, country of origin, business segment, the Group’s interest and financial highlights, such as aggregate assets and liabilities, net sales and profit or loss for the year.

8. FINANCIAL INVESTMENTS

8.1. Accounts receivable from concession holder companies

This item amounts to 824,120 thousand euro (270,646 thousand euro in 2004) and relates to the company Tube Lines. The balance is formed by amounts to be recovered in the long term from the concession holder in exchange for services rendered or investments made under the concession contract.
The maturities of accounts receivable from concession holders in 2004 and 2005 are shown below (thousand euro):

 

8.2. Shareholdings in available-for-sale companies

These investments are measured at cost as reliable values cannot be calculated.
Movements in this item in 2004 and 2005 are as follows:

The movement relates to the sale by Ferrovial Telecomunicaciones of its entire 9.59% interest in Grupo Corporativo ONO, S.A. This transaction generated a gain of 46,654 thousand euro, as described in note 34 on other profits and losses.

8.3. Other financial assets

Movements in this item in 2004 and 2005 are as follows:

The most significant balance in the item Deposits securing bond issues relates to the company 407 ETR International Inc, amounting to 250,759 thousand euro. It should be noted that the balances relating to concession holder companies are mainly restricted and must remain in the companiesí assets as security for bond and debenture issues by the concession holders. The main addition in the item Deposits securing bond issues relates to the long-term deposits provided by the company 407 ETR International Inc to secure bond issues, amounting to 71,733 thousand euro. The average interest rate on deposits furnished by the company 407 ETR International Inc is 2.5% on amounts maturing within one year.

Economic interest groupings
This item relates basically to financial assets in respect of which collections may be determined and which are not negotiated in an active market, related to certain tax benefits obtained by investing in economic interest groupings engaged in an asset leasing activity managed by an entity unrelated to the Ferrovial Group, which retains the majority of the profits and assumes the risks of the activity. In short, this is a closed operation for the Ferrovial Group, which enjoys the tax benefits under the special regime provided by Additional Provision Fifteen of the Spanish Corporate Income Tax Act. The results of these operations are recognised in income tax in the accompanying income statement. Ferrovial has a 49% interest in the groupings. Additions during the year relate to the investment of 40,530 thousand euro in a further three economic interest groupings, in addition to the five recorded in the previous year

The most significant balances in the item Deposits security bond issues relates to the companies 407 ETR International Inc and Skyway Concesión Co LLc, amounting to 277,815 thousand euro and 103,893 thousand euro respectively.
The average interest rate on the deposits provided by the companies 407 ETR International Inc and Skyway Concesión Co LLc is 2.91% for amounts maturing within two years and 3.13% for amounts maturing in less than one year.
The main balance in the item Other relates to Long-term time deposits, most of which relate to the company 407 ETR International Inc.
The results of these operations are recognised in income tax in the accompanying income statement.
Ferrovial has a 49% interest in the groupings.

9. DERIVATIVE FINANCIAL INSTRUMENTS AT FAIR VALUE

As indicated in Note 3 on Financial Risk Management, the Group’s activities are exposed to a variety of financial risks including interest rate and foreign exchange risks.
In order to hedge these risks, the Ferrovial contracts derivative financial instruments, the accounting treatment of which is described in Note 2.4.7.
As commented in Note 3 on Financial Risk Management, the derivative financial instruments contracted by the Ferrovial Group are mostly intended to hedge foreign exchange or interest rate risks affecting long-term investments or contracts and the majority have long-term maturities.
Set out below is an analysis of the hedges and their fair values at 31 December 2005 and 2004, by nature of contracts in force:

a. Interest-rate hedges of future cash flows
The main hedge transactions of this kind in force at 31 December 2004 and 2005 relate to financing for concession holder projects, mainly in the infrastructure and services segments, where the purpose once the project is in progress is to obtain, as far a possible, a fixed rate of interest or to ensure a fixed rate by means of interest-rate hedges.

Set out below are details of these hedges:

• Autopista Terrasa-Manresa, S.A. records interest-rate swaps hedging 44.72% of its debt at a fixed interest rate of between 2.94% and 5%, in both 2004 and 2005.

• Autopista del Sol, C.E.S.A records interest-rate swaps hedging 35.95% of its total debt at a fixed interest rate of between 3.04% and 5.1%, in both 2004 and 2005.

• In 2004, Norte Litoral contracted an interest-rate hedge for up to 228,700 thousand euro of its debt at a fixed interest rate of 3.65%, which is in force at 31 December 2005.

• In 2004 and 2005, Inversora del Sur records interest-rate swaps hedging all its Tranche A and Tranche BEI debts (456,600 thousand euro) at a rate of 3.83% and all its Tranche B debt (100,000 thousand euro) at a rate of 4.18%.

• In 2004 and 2005, Inversora Autopistas de Levante records interest-rate swaps hedging its entire debt at a rate of 4.39%.

• Eurolink records interest-rate swaps hedging a part of its debt subject to different terms at a rate of between 3.44% and 5.39% in 2004 and 2005.

• Chicago Skyway has hedged its entire debt by means of interest-rate swaps of fixed and variable rates in order to fully eliminate interest-rate risk.

• In 2004 and 2005, Aeropuerto de Tidefast records a hedge transaction for GBP120 million that matures in 2006.
Finally, the subsidiaries of the Amey Group record the following interest-rate hedges:
- Tube Lines Holdings Ltd, a company 66.6% owned by the Amey Group, has contracted hedges to obtain a fixed interest rate of 7.25% on a total of GBP134,999,000 (196,077 thousand euro), maturing between 2010 and 2029.
- AHL Holdings (Wakefield) Ltd, a company 50% owned by the Amey Group, has contracted hedges to obtain a fixed interest rate of 5.19 % on a total of GBP10,923,000 (15,864 thousand euro), maturing in 2026.
- AHL Holdings (Manchester) Ltd, a company owned by the Amey Group, has contracted hedges to obtain a fixed interest rate of 5.22% on a total of GBP15,351,000 (22,296 thousand euro), maturing in 2027.
- RSP (Holdings) Ltd, a company 35% owned by the Amey Group, has contracted hedges to obtain a fixed interest rate of 5.16% on a total of GBP58,568,000 (85,066 thousand euro), maturing in 2035.
- ALC (Superholdco) Ltd, a company 50% owned by the Amey Group, has contracted hedges to obtain a fixed interest rate of 4.73% on the sum of GBP14,227,000 (20,663 thousand euro) and a fixed interest rate of 4.70% on the sum of GBP658,000 (956 thousand euro), maturing in 2020 and 2021, respectively.

b. Foreign exchange hedges of future cash flows
The Group seeks to hedge foreign exchange risk, which basically affects construction contracts in which collections and/or payments are made in a currency other than the functional currency, by means of foreign exchange hedges. A list of contracts in force is set out below:

• In November 2004, Cintra, S.A. contracted a number of hedges in the form of forwards and collars for USD475 million in relation to the investment made in January 2005 in the purchase of the Skyway highway in Chicago (United States).

• Cadagua, S.A., in a joint venture with Budimex (shares of 60% and 40%, respectively), records a number of forward contracts to hedge euro-US dollar fluctuations, as the collection and payment flows under a contract to build a desalination plant in Saudi Arabia (Jelenia Gora) are denominated in euros and US dollars. The hedges amount to 3,491 thousand euro and 7,636 thousand euro for 2004 and 2005, respectively, and mature in January 2005 and January and October 2007.

• At 31 December 2005, Cadagua, S.A. records a forward contract hedging US-dollar exposure under a contract for the sum of USD700,000.

• Cadagua has a joint venture with Budimex for the Cos Poznan thermal drying plant (50% Cadagua, 50% Budimex). Contracted collections in euros are hedged by a number of forward contracts for a total of 13,483 thousand euro, maturing in March, June and December 2006 and March 2007.

• Finally, Cadagua has hedged US-dollar payments to suppliers by means of a forward contract for USD6,200,000 (4,637 thousand euro) dated December 2004 and maturing in September 2006.

• The joint venture formed by Ferrovial Agromán and Budimex has also contracted forwards to hedge forecast collections (denominated in euros) under the Expressway S1 highway concession in Poland for a total of 8,634 thousand euro at 31 December 2004 and 2,889 thousand euro at 31 December 2005, against the Polish zlotys, maturing in 2006.

• In addition to the above-mentioned hedges contracted by the joint ventures, the Budimex Group has hedged zloty-euro and zloty-US dollar fluctuations for certain contracts denominated in the Polish currency. Euro-zloty contracts have been arranged for 166,798 thousand euro at 31 December 2004 and 131,301 thousand euro at 31 December 2005, the majority of which mature in 2006 in the latter case.

• Ferrovial Agromán, S.A. and Budimex, S.A. have contracted forwards for a total of 35,746 thousand euro and 122,635,000 Polish zlotys, against the US dollar, in proportion to their shares in the Warsaw Airport project (60% and 40%, respectively), to hedge exposures under the airport contract at 31 December 2005. At 31 December 2005 the forward contracts amount to 51,771,000 thousand euro and 182,123,000 Polish zlotys, respectively, against the US dollar. The related collection and payment flows are denominated in US dollars, euros and zlotys, respectively. These hedges mature in March and September 2006.

c. Foreign exchange hedges of the company’s assets and liabilities
As indicated in note 3 above, the Group seeks to obtain financing for long-term assets denominated in currencies other than the euro in the same currency as the one in which the assets are denominated. This item relates to the following transactions:

• In 2004, Cintra S.A. contracted a number of hedges for euro-zloty fluctuations totalling 8,995,000 Polish zlotys (2,167 thousand euro). The contract was renewed in 2000 for 9,719,000 zlotys (2,152 thousand euro). The purpose is to hedge the exchange rate for the loan received from its subsidiary Autoestrada Poludnie.

• In 2005, Cintra, S.A. contracted hedges covering fluctuations in the US dollar and Chilean UF (inflation-indexed development units) exchange rate for payments in respect of financing totalling USD421 million for the Maipo Highway project. The hedges and the financing mature in June 2022.

d. Foreign exchange hedges of flows from investments in consolidated foreign entities
The Group records forward sale contracts to partially hedge the amount of the dividends it expects to receive in coming years from the companies 407 ETR International and Sydney Airport Corporation Ltd, against fluctuations affecting the relevant currencies. The following contracts are in force:

• Through forward sale contracts, the company Cintra, Concesiones de Infraestructuras de Transporte, S.A. has hedged against the Canadian dollar the amount of the transfers it expects to receive to 2006 from the concession holder company 407 ETR International Inc for the reimbursement of equity. At 31 December 2004 and 2005, the hedges amount to 60,744,000 Canadian dollars (38,180 thousand euro) and 60 million Canadian dollars (39,701 thousand euro), respectively. Of this amount, hedges totalling 48 million Canadian dollars (31,065 thousand euro) and 12 million Canadian dollars (8,636 thousand euro) mature in 2006 and 2007, respectively.

• Ferrovial Infraestructuras, S.A. has implemented a hedging policy for exchange rates on future dividends receivable from Sydney Airport Corporation Ltd. At December 2004 and 2005, contracts in force amount to 7,582,000 Australian dollars and 43,300,000 Australian dollars, respectively, as partial hedges for the expected dividends. Hedges totalling 32,300,000 Australian dollars and 11 million Australian dollars mature in 2006 and 2007, respectively.

e. Hedges for risks arising from share-based or share option-based compensation systems
As indicated in notes 41 and 42, the Ferrovial Group hedges for possible losses resulting from the exercise of rights under share-based or share option-based compensation systems by contracting swaps at the grant date that may only be settled in cash. Such transactions are treated as future cash flow hedges. The main features of the contracts are explained in detail in note 41 and 42.

10. GOODWILL ON CONSOLIDATION

10.1. Movements

Movements in Goodwill on consolidation in 2004 and 2005 are set out below by segment and cash-generating unit:

The main variances are explained below:
Services

• The variance in the Novipav Group relates basically to adjustments to goodwill charged to extraordinary results following the latest valuation of that group of companies.

• Following the acquisition of Cespa, the Ferrovial Group has acquired Trasa, which holds a 25% interest in Ecocat, a company engaged in special industrial waste treatment, generating goodwill of 10,991 thousand euro.

• The goodwill from the initial acquisition of Cespa was recalculated in 2004 when the definitive price was known, resulting in a downward adjustment of 6,850 thousand euro.

• The goodwill generated in 1999 when Cespa acquired GTR, the owner of the Pierola landfill, increased by 18,841 thousand euro due to a review of the acquisition agreement.

The main variances are explained below:
Construction

• The acquisition of the Webber Group generated goodwill on consolidation of 114,744 thousand euro. The section on business combinations contains a breakdown of this movement.
Real Estate

• The goodwill relating to Lar 2000, S.A. has decreased by 6,283 thousand euro as a result of impairment.
Services

• The acquisition of the Swissport Group generated goodwill on consolidation of 563,693 thousand euro. The section on business combinations contains a breakdown of this movement.

10.2 Impairment tests for consolidated goodwill

Group management has implemented an annual procedure to identify any impairment of the cost recognised with respect to the recoverable amount of goodwill. This procedure is applied to each cash-generating unit to which goodwill has been allocated.
Impairment is calculated by comparing the company’s carrying amount (equity plus net goodwill) with its fair value, which is the price at which it could be sold to an independent party, less possible transaction costs, provided the fair value may be reliably estimated, i.e. the company is quoted in an active organised market or a transaction between independent parties may serve as a reference.
The value of the goodwill allocated to Budimex, which is quoted in the Warsaw Stock Market, has been measured by verifying that the company’s closing share price is higher than its carrying amount plus the goodwill allocated.
Where fair value cannot be reliably estimated (generally the case when the company is not quoted) or a potential impairment loss has been identified, the company’s carrying amount is compared with its value in use obtained by discounting cash flows, distinguishing between two possibilities:

• Goodwill allocated to concession holder companies whose financial structure is independent from the Group’s overall structure and whose duration is limited:
- In such cases, the company is measured by discounting future flows expected by the shareholder to the expiry of the concession, in accordance with the relevant economic and financial plan.
- Future flows are discounted at an estimated cost of capital based on a risk-free rate referenced to 30-year bonds, a beta coefficient reflecting the company’s leverage and asset risk, and an estimated market premium
The goodwill in Autopista 407 and Autopista del Sol has been valued using this method.

• Rest of goodwill:
- In this case, the Group employs project flow projections for a five-year period, calculating the residual value based on the flow for the last year projected, provided this represents a normalised flow, and applies a growth rate that never exceeds the estimated long-term growth rate for the market in which the company operates.
- As the financial structure of the consolidated companies is linked to the Group’s overall structure in most cases, cash flows are discounted using a discount rate based on the Group’s weighted average cost of capital, as adjusted to account for the added risk of certain types of activities, where applicable.
- Sensitivity analyses are also performed in any event, particularly in relation to the discount rate and residual growth rate employed, so as to ensure that potential changes in the estimated rates have no impact on the possible recovery of goodwill recognised.

The above-mentioned measurement methods have been applied to value the most significant goodwill balances relating to the Webber Group, Amey, Cespa and Swissport.
With the exception of the goodwill allocated to the company Lar 2000, which is engaged in managing owners’ associations, for which a provision of 6,283 thousand euro has been recorded for impairment loss, the parent company’s directors consider, on the basis of available estimates and projections, that the carrying amount of the goodwill recognised is justified by the forecast revenues from these companies attributable to the Group.

10.3 Business combinations

Set out below are details of the net assets acquired and goodwill recognised as a result of the main business combinations completed by the Ferrovial Group during the year, as well as the contributions by the acquired businesses to the Group’s revenues and net results.
Goodwill generated by a business combination is attributable to the profitability of the acquired business and the synergies expected to arise following the acquisition. The purchase consideration for the acquisition has been settled in cash in all cases and therefore the relevant amount matches the net cash outflow from the Group.
The business combinations are described in detail in note 1 on business activities and scope of consolidation.

10.3.1. Acquisition of the company “Chicago Skyway Toll Bridge System”


The acquired business contributed revenues of 40,735 thousand euro and a net loss of 10,889 thousand euro for the period 24 January 2005 to 31 December 2005. If the acquisition had taken place on 1 January 2005, Group revenues would have amounted to 41,243 thousand euro and the net loss for the year would have totalled 11,089 thousand euro.

The following table contains an analysis of the net assets acquired, goodwill recognised and related fair value adjustments:

10.3.2. Acquisition of additional shares in Tube Lines Limited

The acquired business contributed revenues of 396,087 thousand euro and a net profit of 20,309 thousand euro for the period February 2005 to 31 December 2005. If the acquisition had taken place on 1 January 2005, Group revenues would have amounted to 453,506 thousand euro and the net profit for the year would have totalled 25,588 thousand euro.

The following table contains an analysis of the net assets acquired, goodwill recognised and related fair value adjustments:

10.3.3. Acquisition of the Swissport Group

The acquired business contributed revenues of 261,226 thousand euro and a net profit of 1,261 thousand euro for the period 1 October 2005 to 31 December 2005.

The following table contains an analysis of the net assets acquired, goodwill recognised and related fair value adjustments:

10.3.4. Acquisition of the company Webber (Webber Group)

The acquired business contributed revenues of 89,223 thousand euro and a net profit of 2,709 thousand euro for the period 15 September 2005 to 31 December 2005. If the acquisition had taken place on 1 January 2005, Group revenues would have amounted to 292,502 thousand euro and the net profit for the year would have totalled 13,029 thousand euro.

The following table contains an analysis of the net assets acquired, goodwill recognised and related fair value adjustments:

 

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