a acs, actividades de construcción y servicios, s.a. n ... · annual report acs group 2003 1. ......

Annual

Report

ACS

Group

2003

A N N U A L R E P O R T A C S G R O U P 2 0 0 31. Approval of the Annual Report, Balance Sheets, Statements of Income and Management

Reports for 2003 of ACS and the consolidated group of companies of which ACS,

Actividades de Construcción y Servicios, S.A., is Parent Company. Profit distribution.

Annual Report on Corporate Governance.

2. Approval of the management of the Board of Directors during 2003.

3. Ratification, dismissal and appointment, where applicable, of Directors.

4. Authorization for the derivative acquisition of treasury stock.

5. Appointment of Company and Group auditors.

6. Reduction of the share capital by redeeming 902,453 shares of the Company’s treasury

stock with the resulting modification of Article 6 of the Company’s Bylaws.

7. Reduction of the nominal value of shares from 1.50 euros to 0.50 euros and the consequent

increase in the number of outstanding shares by three, with the resulting modification of

Article 6 of the Company’s Bylaws and delegation of authority to execute this.

8. Modification of articles 13, 15, 20 bis), 22, 26 and 28 of the Company Bylaws.

9. Authorization to the Board of Directors for the establishment of a Stock Options Plan.

10. Approval of the Rules governing the General Shareholders’ Meetings and report on the

Rules of the Board of Directors.

11. Delegation of powers to execute and sign agreements.

12. Reading and approval, if applicable, of the minutes of the General Meeting.

Agenda

Turnover 2,699.7 3,410.4 3,921.4 4,420.2 10,733.6Operating Profit 141.3 214.3 267.8 305.3 649.0Profit Before Tax 115.0 176.6 222.3 250.4 498.8Attributable Net Profit 85.1 120.8 149.2 181.4 380.3

FINANCIALAND OPERATING DATA

Earnings 1.55 1.89 2.33 2.83 3.21Gross Dividend 0.39 0.50 0.60 0.72 0.82Cash-Flow 2.26 2.96 3.72 4.88 6.11Shareholders’ Equity 11.91 12.72 14.22 15.30 15.16

DATA PER SHARE

Listed Shares 54,965,098 64,061,816 64,061,816 64,061,816 118,526,831Market Capitalization* 1,294.3 1,608.0 1,755.3 1,963.5 4,587.0Year-End Closing Price** 23.55 25.10 27.40 30.65 38.70Annual Revaluation (30.04%) 6.59% 9.16% 11.86% 26.26%

STOCK MARKET DATA

Operating Margin 5.2% 6.3% 6.8% 6.9% 6.0%Net Margin 3.2% 3.5% 3.8% 4.1% 3.5%ROE 13.0% 16.4% 17.1% 19.2% 21.1%Net Debt/Shareholders’ Equity 49.3% 26.1% 13.7% 60.6% 68.5%

Dividend Yield 1.7% 2.0% 2.2% 2.3% 2.1%

SIGNIFICANT RATIOS

M A I N F I G U R E S O F T H E A C S G R O U P

* Million Euros

** Euros

ACS, Actividades de Construcción y Servicios, S.A.

Shareholders’ Ordinary General MeetingThis Report is presented to the Ordinary Shareholders’ Meeting called on

first and second call for May 19 and 20, 2004, respectively, with the following:

(Million Euros)

(Euros)

2003 Pf2002200120001999

2003 Pf2002200120001999

20032002200120001999

2003 Pf2002200120001999

Cash-flow* 124.3 189.4 238.4 312.8 724.0Dividends Paid 17.2 25.0 32.0 38.4 46.1Total Investments 376.2 307.6 201.7 1,050.7 657.5Total Assets 2,847.1 3,338.7 3,880.6 4,914.5 11,226.3

Shareholders’ Equity 654.7 814.9 910.8 980.4 1,796.4Net Debt 322.6 212.6 124.7 594.5 1,230.6Order Book 4,552.6 6,191.5 6,809.9 7,422.5 23,327.1Number of Employees 22,561 28,910 30,804 32,555 99,323

* Net Profit+Depreciation+Change in Provisions

ACS, Actividades de Construcción y Servicios, S.A.

Avda. Pío XII, 10228036 MadridTel: +34 91 343 92 00Fax: +34 91 343 94 56www.grupoacs.com

Head offices of the ACS Group's main companies

I N T E R N AT I O N A L P R E S E N C ECountries in which the ACS Group is present

D I R E C T O R Y

2003 OPERATING PROFITBY BUSINESS

2003 TURNOVERBY BUSINESS

TURNOVER

Mil

lio

n E

uro

s

OPERATING PROFIT

Mil

lio

n E

uro

s

ATTRIBUTABLE NET PROFIT

EARNINGS PER SHARE

Euro

s

DIVIDEND PER SHARE MARKET CAPITALIZATION

Mil

lio

n E

uro

s

A l g e r i aA n d o r r aA n g o l aA r g e n t i n aA u s t r i aB a h a m a sB e l i z eB o l i v i aB r a z i lC a n a d aC h i l eC h i n aC o l o m b i aC z e c h i aD e n m a r kD o m i n i c a n R e p u b l i cE c u a d o rE g y p tF i n l a n dF r a n c eG h a n aG e r m a n yG re e c eG u a t e m a l aH o l l a n dH o n d u r a sH u n g a r yI n d i aI r a n

I s r a e lI t a l yJ a m a i c aL e b a n o nL i b y aM a d a g a s c a rM a l a y s i aM a u r i t a n i aM e x i c oM o ro c c oM o z a m b i q u eN i c a r a g u aN o r w a yP a n a m aP e r uP o l l a n dP o r t u g a lS a u d i A r a b i aS e n e g a lS i n g a p o reS o u t h A f r i c aS p a i nS w e d e nS w i t z e r l a n dU g a n d aU n i t e d K i n g d o mU r u g u a yVe n e z u e l aV i e t n a m

1999 2000 2001 2002 2003 Pf

85

121

149150

100

50

0

200

300

400

350

250

181

1999 2000 2001 2002 2003 Pf

141

214

300

200

100

0

400

500

700

600

268

305

649

10,000

8,000

6,000

4,000

2,000

0

12,000

1999 2000 2001 2002 2003 Pf

1.5

1.0

0.5

0.0

2.0

3.5

1999 2000 2001 2002 2003 Pf

2.5 2.33

1.55

Euro

s

1999 2000 2001 2002 2003

0.5

0.4

0.3

0.2

0.1

0.0

0.6

0.9

1999 2000 2001 2002 2003

0.7

0.39

0.50

0.60

2,6993,410

3,921

4,420

10,734

3.0

3.21

CONSTRUCTION

DRAGADOS, S.A.

Avda. de Tenerife, 4 – 628700 San Sebastián de los Reyes(Madrid)Tel: +34 91 583 30 00Fax: +34 91 583 38 32www.grupoacs.com

VÍAS Y CONSTRUCCIONES, S.A.

Orense, 11 – 2º y 4º28020 MadridTel: +34 91 417 98 00Fax: +34 91 417 98 30www.vycsa.es

DRACE

Avda. de Tenerife, 4 – 628700 San Sebastián de los Reyes(Madrid)Tel: +34 91 583 30 00Fax: +34 91 583 34 19www.drace.com

DRAVO, S.A.

Plaza de Castilla, 328046 MadridTel: +34 91 323 02 07Fax: +34 91 323 06 87

TECSA EMPRESA CONSTRUCTORA, S.A.

Avda. Madariaga, 1 – 4ª planta48014 BilbaoTel: +34 94 448 86 00Fax: +34 94 476 22 84www.tecsa-constructora.com

GEOCISA

Llanos de Jerez, 10 – 1228820 Coslada(Madrid)Tel: +34 91 660 30 00Fax: +34 91 671 64 60www.geocisa.com

COMUNIDADES GESTIONADAS, S.A. (COGESA)

Orense, 34 – 1º 28020 MadridTel: +34 91 417 96 50Fax: +34 91 597 04 67

DYCVENSA

Veracruz – Edificio Torreón 3º - Esq.La Guarita (Venezuela)Tel: (58212) 992 31 11Fax: (58212) 992 77 24

DYCASA

Avda. Leandro N. Alem, 9861001 – Buenos Aires(Argentina)Tel: (54114) 318 02 00Fax: (54114) 318 02 30www.dycasa.net

SOPOL, S.A.

Quinta Do Ouiteiro – Apdo. 72840 Seixal(Portugal)Tel: (351) 212 22 51 02Fax: (351) 212 21 57 38

VÍA DRAGADOS

Sector de Industria, Trecho 3, Nº 1705/15Brasilia- DF- CEP71200-030(Brazil)Tel: (55) 613 61 13 15Fax: (55) 612 33 01 34

INDUSTRIAL SERVICES

COBRA INSTALACIONES Y SERVICIOS, S.A.(GRUPO COBRA)

Cardenal Marcelo Spínola, 1028016 MadridTel: +34 91 456 95 00Fax: +34 91 456 94 50www.grupocobra.com

ENERGÍAS Y RECURSOS AMBIENTALES, S.A. (EYRA)

Cardenal Marcelo Spínola, 1028016 MadridTel: +34 91 456 95 00Fax: +34 91 456 94 72

ELECTRONIC TRAFFIC, S.A. (ETRA)

Tres Forques, 147Polígono Industrial Vara de Quart46014 ValenciaTel: +34 96 313 40 82Fax: +34 96 350 32 34www.etra.es

SOCIEDAD ESPAÑOLA DE MONTAJES INDUSTRIALES, S.A.(SEMI)

Barquillo, 1928014 MadridTel: +34 91 701 77 00Fax: +34 91 521 85 97www.semisa.com

MANTENIMIENTOS, AYUDA A LA EXPLOTACIÓN Y SERVICIOS, S.A.(MAESSA)

Gran Vía, 67 – 2ª planta28013 MadridTel: +34 91 436 04 80Fax: +34 91 576 75 66www.maessa.com

APLICACIÓN DE PINTURAS, API, S.A.

General Moscardó, 27 – 1º28020 MadridTel: +34 91 598 90 60Fax: +34 91 598 90 66www.apisa.net

INSTALACIONES Y MONTAJES ELÉCTRICOS, S.A. (IMES)

Ramón y Cajal, 10728043 MadridTel: +34 91 744 39 00Fax: +34 91 744.39.01www.imes.es

DRAGADOS INDUSTRIAL, S.A. (DINSA)

Avda. de Tenerife, 4 – 628700 San Sebastián de los Reyes(Madrid)Tel: +34 91 583 30 00Fax: +34 91 583 78 91

CONTROL Y MONTAJES INDUSTRIALES (CYMI)

Teide, 4 – Edificio F-728709 San Sebastián de los Reyes(Madrid)Tel: +34 91 659 33 60Fax: +34 91 659 33 80www.cymisa.com

DRAGADOS OFF SHORE

Bajo de la Cabezuela, s/n11510 Puerto Real(Cádiz)Tel: +34 956 47 07 00Fax: +34 956 47 07 27

MANTENIMIENTO Y MONTAJES INDUSTRIAL (MASA)

Teide, 5 – 1ºEdificio Milenio28709 San Sebastián de los Reyes (Madrid)Tel: +34 91 484 30 30Fax: +34 91 484 31 25www.masagrupo.com

INTECSA-UHDE INDUSTRIAL, S.A.

Vía de los Poblados, 11Edificio Trianon28033 MadridTel: +34 91 749 70 00Fax: +34 91 749 70 01www.intecsauhde.com

INITEC ENERGÍA

Príncipe de Vergara, 12028006 MadridTel: +34 91 252 73 00Fax: +34 91 563 01 15www.initec.es

SOCIEDAD IBERICA DE CONSTRUCCIÓN ELÉCTRICA (SICE)

Pol. Ind. Alcobendasc/ Sepúlveda, 628108 Alcobendas (Madrid)Tel: +34 91 623 22 00Fax: +34 91 623 22 03

SERVICES AND CONCESSIONS

URBASER

Avda. Tenerife, 4-628700 San Sebastián de los ReyesMadridTel: +34 91 583 30 00Fax: +34 91 583 37 04www.urbaser.com

TÉCNICAS MEDIOAMBIENTALES, TECMED, S.A.

c/ Albasanz, 16 - 1º28037 MadridTel: +34 91 121 80 00Fax: +34 91 304 15 22www.tecmed.es

DRAGADOS S.P.L.

Lagasca, 88 – 2ª28001 MadridTel: +34 91 436 27 00Fax: +34 91 578 28 46

CONTINENTAL AUTO, S.L.

Avda. de América, 9 – AIntercambiador de Transportes28002 MadridTel: +34 91 745 63 10Fax: +34 91 563 39 59www.continental-auto.net

CLECE, S.A.

Pradillo, 5 (Local comercial)28002 MadridTel: +34 91 745 91 10Fax: +34 91 745 91 20

PUBLIMEDIA, SISTEMAS PUBLICITARIOS

Fernando Rey, 3Ciudad de la Imagen28220 Pozuelo de Alarcón (Madrid)Tel: +34 91 512 03 33Fax: +34 91 512 04 73www.publimedia-sp.com

DRAGADOS CONCESIONES DE INFRAESTRUCTURAS, S.A.

Avda. de Tenerife, 4 – 628700 San Sebastián de los Reyes(Madrid)Tel.: +34 91 583 30 00Fax: +34 91 583 37 89

INVERSORA DE INFRAESTRUCTURAS, S.A. (INVINSA)

Avda. de Tenerife, 4 – 628700 San Sebastián de los Reyes(Madrid)Tel.: +34 91 583 30 00Fax: +34 91 583 37 89

Informe Anual 2002

2.830.8

0.72

0.82

3,000

1,500

0

4,000

4,500

5,000

500

1,294

1,608

1,9631,755

4,587

3,500

2,500

2,000

1,000

INTERNATIONALIZATION

% over total salesSales

Mil

lio

n E

uro

s

408498

610

520

2,000

1,500

1,000

500

0

1999 2000 2001 2002 2003 Pf

0%

4%

8%

12%

20%

16%

24%

13%

12%

16%15%

1,583

15%

Mil

lio

n E

uro

s

Construction

Services and Concessions

Industrial Services

19.9%

51.7%

28.4%

Construction


Industrial Services

19.7%

47.6%

32.7%

380

1.89

ECONOMIC AND FINANCIALINFORMATION

3.1. Management Report of the Consolidated Group 3.2. Annual Consolidated Financial Statements for 2003

3.3. Auditors’ Report on Consolidated Financial Statements

3.4. Historical Evolution

3.5. Stock Market Information

44

46

64

142

144

3 4.1. Human Resources

4.2. Research and Technological Innovation

4.3. Quality

4.4. Environmental Strategy 4.5. The ACS Foundation

4 148

150

154

159

SOCIAL RESPONSIBILITY

160

162

5.1. Ownership Structure 5.2. Management Structure

5.3. Risk Management

5.4. General Shareholders’ Meetings

5.5. Information and Transparency

5 166

168

171

183

186

190

CORPORATE GOVERNANCE IN THE ACS GROUP

4 5

ACS GROUP

ANNUAL REPORT

2003C O N T E N T S

Grases Viaduct (Asturias)

LETTER

FROM THE CHAIRMAN1 6 THE ACS GROUP

2.1. Management Bodies

2.2. Corporate Strategy

2.3. Activity Report

2.3.1. Construction

2.3.2. Industrial Services

2.3.3. Services and Concessions

2 8

10

16

19

19

26

36

146

6 7

ACS GROUP

ANNUAL REPORT

2003L E T T E R F R O M T H E C H A I R M A N

Florentino Pérez RodríguezACS Group Chairman

1

The year 2003 was highlighted by two extraordinary events: the merger of ACS, Actividades de Construcción y Servicios,

S.A., with Grupo Dragados, S.A., which has strengthened our position as a world reference in the infrastructure and services

sector, and the outstanding operative and financial performance of all the areas of the Group.

As you already know, the final merger of the parent companies of both groups took place on December 15. The merger

gave rise to the foremost Spanish Group dedicated to the development, construction, maintenance and operation of

infrastructures which is now among the European leaders in the sector. This merger was the culmination of a process

that started in April of 2002 through the acquisition of 23.5% of Dragados Group, and, after increasing our shareholding

by 10% through a take-over-bid in March of 2003, the merger received practically unanimous support from the respective

Extraordinary General Shareholders’ Meetings, both of which took place on October 14, 2003.

The advantages resulting from this merger are now beginning to materialize. Our leadership and competitiveness within

the sector have allowed us to increase our order book to historic levels. As a direct consequence of the integration of

both companies, we are working towards obtaining important cost savings and rationalizing our structure, which, in turn,

is contributing to the increase in profits. It is worth emphasizing the significant revaluation of our shares on the stock

exchange in the last months which is due, in part, to the elevated liquidity of our company with a capitalization of 4,586

million euros at the end of 2003.

More specifically, between April 18, 2002, when we acquired the 23.5% stake in Dragados and the end of 2003, the

share price of ACS showed an increase of 26.8%, versus the negative performance of the principal indexes of reference,

both domestic and international, over the past twenty months.

Without doubt the Group’s economic results for 2003 have contributed to this excellent trend: the figure for consolidated

pro-forma turnover surpassed 10,700 million euros which implies an increase of 7.7% against the previous year, and the

pro-forma net profit grew by 16.5% accounting for 380 million euros. In addition, the Group obtained a pro-forma gross

profit figure of 932 million euros, 16% more than last year, confirming the Group’s great capacity to create cash flows.

This noteworthy capacity is what has allowed us to continue an active strategy on investments that involved 543 million

euros during 2003. It has also allowed us to maintain the Group’s solid financial base showing a net debt with recourse

with a balance of 914 million euros as of December 31, 2003. This balance was presented after the redemption of 35%

of Dragados capital share, equivalent to more than 1,300 million euros.

The performance of the different business areas was also very positive. Thus, the Construction activity, headed by the

company born from the imminent merger of the subsidiary construction companies of both groups, reached an aggregated

sales figure of 5,595 million euros in 2003, 5% more than that of the previous period. This merger has placed us in the

indisputable position of market leader in Spain, not only due to the revenues, but also because of the volume of our order

book which guarantees activity for 18 months in the Spanish market.

The Industrial Services area, formed by Cobra Group and Dragados Industrial, presented an increase in its aggregated sales

of close to 9%, thanks to the performance of both the national market and the international activities, the latter representing

31% of the total. The pro-forma turnover figure, of 3,069 million euros, led to the consolidation of our position as the

outstanding leader in the development and maintenance of energy, telecommunications and industrial infrastructures in

the Iberian and Latin American markets.

With regards to sales in the Services and Concessions area, through which the Group carries out its environmental activities,

passenger transport, port and logistic services, integrated maintenance and the promotion of concessions for infrastructure

in transport, growth reached nearly 14%, the equivalent of 2,160 million euros. Subsequently, this area strengthened its

position as a field undergoing major development, representing the greatest growth prospects for the Group.

These results are a good starting point that will enable us to face our future; an attractive future in the infrastructure

sector, thanks to the opportunities that are arising both in Spain and on the international markets in which we are active.

Our wide range of products and services that are supported by excellent technical and human resources, our reinforced

competitive position, the solid financial base of our balance sheet, and in particular, our corporate culture based on

leadership, operational efficiency and client service, are sufficient qualities to take on, with guaranteed success, the new

opportunities that will be generated through the consolidation of our merger process.

Special mention needs to be made of the outstanding measures adopted in relation to the corporate governance of the

company, reflected in the transparency, ethical behaviour and rigorous professionalism that have always characterized all the

actions of the ACS Group. Among these measures are the approval of the Rules regarding the Stock Market, the Rules of

the Board of Directors and the proposal of the Rules for the General Shareholders Meeting, all of which are included in the

Annual Report of Corporate Governance recently published, the main contents of which are summarized in this Report.

Before finishing, I would like to mention the recent and dramatic terrorist attacks of March 11 in Madrid which caused such

a great impact in our country, and which our organization suffered directly through the loss of four employees: Cipriano Castillo

Muñoz, Juan Miguel Gracia García, Mª del Carmen López Pardo and Jesús Utrilla Escribano. On behalf of the Board of Directors

and myself, I would like to express our solidarity with, and heartfelt condolences to all their families, relatives and close friends.

Finally, once again, I want to reiterate my most sincere gratitude to our shareholders, clients and employees for the

confidence shown in our Group which we hope to continue to deserve in this new and exciting project.

8 9

ACS GROUP

ANNUAL REPORT

2003T H E A C S G R O U P 2

Nuevos Ministerios subway station, Madrid

THE ACS GROUP22.1. Management Bodies

2.1.1. Board of Directors

2.1.2. Management Committee

2.1.3. Management Team



2.3.1. Construction



10 11

THE ACS GROUP

2

ACS GROUP

ANNUAL REPORT

2003

Mr. Florentino Pérez RodríguezChairman and CEO Civil Engineer

Chairman and CEO of ACS Group since 1992

Member of the Board of Directors of ACS Group since 1989

Mr. Antonio García FerrerExecutive Vice Chairman Civil Engineer


Member of the Board of Directors of Abertis Infraestructuras

Member of the Board of Directors of Inmobiliaria Urbis

Mr. Pablo Vallbona Vadell Vice Chairman Naval Engineer and MBA from the IESE


Executive Vice Chairman of Banca March

Vice Chairman of Corporación Financiera Alba

Vice Chairman of Abertis Infraestructuras

Member of the Executive Committee

Member of the Audit Committee

Member of the Compensation Committee

Mr. José María Loizaga ViguriMember of the Board of Directors Economist


Chairman of Mercapital Servicios Financieros

Chairman of Cartera Hotelera

Vice Chairman of Zardoya Otis

Vice Chairman of Banco Urquijo

Dr. José María Aguirre GonzálezMember of the Board of DirectorsDoctorate in Civil Engineering


Chairman of Banco Guipuzcoano

Member of the Board of Directors of Acerinox

Member of the Board of Directors of Siemens España

Mr. Agustín Batuecas BorregoMember of the Board of DirectorsCivil Engineer


Chairman and CEO of Continental Auto

Mr. Miguel Blesa de la ParraMember of the Board of Directors Lawyer. Tax Inspector


Chairman of Caja de Ahorros de Madrid

Vice Chairman of Iberia Lineas Aéreas España

Member of the Board of Directors of Endesa

Chairman of the Fundación General de la Universidad Complutense de Madrid

Dr. Álvaro Cuervo GarcíaMember of the Board of DirectorsDoctorate in Economics. Professor of Business Economics

Head of the Department of Business Organization of the Universidad Complutense de Madrid

Member of the Advisory Board of Privatizations


Member of the Board of Directors of Krupp Thyssen Industrie Group

Member of the Board of Directors of SONAE Industria

2.1 MANAGEMENT BODIES

2.1.1. Board of Directors


Mr. Isidro Fernández BarreiroMember of the Board of Directors Industrial Engineer


CEO of Corporación Financiera Alba

Member of the Board of Directors of Banca March

Member of the Board of Directors of Prosegur

Dr. Joan-David Grimà i TerréMember of the Board of DirectorsDoctorate in Economics and Business Studies


General Manager of Santander Central Hispano

Vice Chairman and CEO of Auna

Member of the Board of Directors of Antena 3, TV

Mr. Pedro López JiménezMember of the Board of DirectorsCivil Engineer


Chairman of Terratest

Member of the Board of Directors of Lingotes Especiales

Mr. Santos Martínez-Conde Gutiérrez-BarquínMember of the Board of DirectorsCivil Engineer


General Manager of Corporación Financiera Alba

Member of the Board of Directors of Acerinox

Mr. Miquel Roca i JunyentMember of the Board of Directors Lawyer


Secretary of the Board of Directors of Abertis Infraestructuras

Secretary of the Board of Directors of Banco de Sabadell

Mr. Julio Sacristán Fidalgo Member of the Board of DirectorsB.S. in Chemistry


Mr. Javier Monzón de CáceresMember of the Board of Directors in representation of Comercio y Finanzas, S.A. B.A. in Economics


Chairman of Indra

Mr. Javier Echenique LandiríbarMember of the Board of Directors in representation of Imvernelin Patrimonio, S.L. B.A. in Economics


Member of the Board of Directors of Telefónica Móviles

Member of the Board of Directors of Uralita

Mr. Manuel Delgado Solís Member of the Board of Directors in representation of Percacer S.AB.S. in Pharmacy. Lawyer


Mr. José Luis del Valle PérezSecretary General and Member of the Board of Directors Lawyer and State Attorney


Chairman of Continental Industrial del Caucho

12 13

THE ACS GROUP

2

ACS GROUP

ANNUAL REPORT

2003

Mr. Florentino Pérez RodríguezChairman and CEO Born in 1947. Civil Engineer.

Although Mr. Pérez started his career in the private sector, he held different posts in the Public Administration between

1976 and 1982 when he was General Manager of Transport Infrastructures in the Ministry of Transport, as well as

Chairman of IRYDA in the Ministry of Agriculture. In 1983, he returned to the private sector as top executive of

Construcciones Padrós, S.A., of which he was one of the main shareholders. In 1992 Mr. Pérez was appointed as

the Chairman of OCP Construcciones, S.A., which was the company that resulted from the merger of Construcciones

Padrós, S.A. and OCISA. Therefore he has been the Chairman and CEO of the ACS Group since 1992.

Mr. Antonio García FerrerExecutive Vice Chairman Born in 1945. Civil Engineer.

Mr. García started his career in Dragados y Construcciones, S.A. in 1970. After assuming various positions of

responsibility in the construction company, in 1989 he was appointed Regional Manager for Madrid. Then in

1998 he was placed at the head of the building Business and in 2001 he took over the Industrial and Services

Divisions. In 2002 Mr. García was appointed as the Chairman of Grupo Dragados, S.A., and in December 2003

he became the Executive Vice Chairman of the ACS Group.

Mr. Ángel García AltozanoCorporate General ManagerBorn in 1949. Civil Engineer and MBA, University of Dayton.

Mr. García started his professional career in the construction sector. He was General Manager of the Instituto

Nacional de Industria (INI) and President of Bankers Trust for Spain and Portugal. In 1997 he joined the ACS

Group as Corporate General Manager, with responsibility over the economic-financial areas, corporate

development and financial shareholdings.

Mr. José Luis del Valle PérezSecretary General Born in 1950. Lawyer and State Attorney.

From 1974 until 1983 Mr. del Valle held various positions in the Public Administration and was a member of

the Parliament from 1979 to 1982 and Deputy Secretary of the Ministry of Territorial Administration. He has

been a member of the Board of Directors of the ACS Group since 1989 and has been the Secretary General

to the Board of Directors since 1997.

Mr. Marcelino Fernández VerdesHead of the Construction Area Born in 1955. Civil Engineer.

Mr. Fernández joined the Group in 1987 and was appointed General Manager in 1994. In 1998 he took on

the role of Managing Director of ACS Proyectos, Obras y Construcciones, S.A., and in 2001 was appointed

Chairman of the company. From 2002 he took on the responsibility of the Construction Area of the ACS

Group.

Mr. Ignacio Pérez RodríguezHead of the Industrial Services Area Born in 1952. Civil Engineer.

After initiating his professional career in the construction sector, Mr. Pérez held several relevant management

posts in Control Presupuestario and Bancoval, until 1991, when he joined the ACS Group as Chairman of

Semi. He was named Managing Director of Grupo Cobra in 1997. At present he is directing the Industrial

Services Area of the ACS Group.

Mr. Demetrio Ullastres LlorenteHead of the Services and Concessions Area Born in 1945. Civil Engineer.

Mr. Ullastres joined Grupo Dragados in 1969, and has carried out his entire professional career within the

company where he has been head of the building activity, Manager of Civil Engineering, International Director,

Chairman of Dragados Industrial, Chairman of Dragados Construcción and General Manager of Grupo Dragados

in charge of Concessions and Construction. He is currently responsible for the Services and Concessions Division

of the ACS Group.


SecretaryGeneral

ChairmanVice Chairman

Corporate General Manager

Industrial ServicesConstruction


2.1.2. Management Committee

14 15

THE ACS GROUP

2

ACS GROUP

ANNUAL REPORT

2003

2.1.3. Management Team

ACS, Actividades de Construcción y Servicios

Mr. Florentino Pérez Rodríguez

Chairman and CEO

Mr. Antonio García Ferrer

Executive Vice Chairman

Mr. Ángel García Altozano

Corporate General Manager

Mr. José Luis del Valle Pérez

Secretary General

Dragados

Mr. Marcelino Fernández Verdes

Chairman and CEO

Mr. Juan Ernesto Pérez Moreno

Executive Assistant to the Chairman

Mr. Luis Nogueira Miguelsanz

Secretary General

Mr. José María López Piñol

Civil Engineering Manager

Mr. Ricardo Martín de Bustamante

Civil Engineering Manager

Mr. Gonzalo Gómez Zamalloa

Building Manager

Mr. Antonio Cortés Sánchez

International Manager

Mr. Octavio del Real Sánchez

Subsidiary Companies Manager

Mr. Maximiliano Navascués Redondo

Contracting Manager

Mr. Alfonso Costa Cuadrench

Technical Services Manager

Mr. Manuel Pérez Beato

Chairman and CEO of Vías y Construcciones

Mr. Antonio Alfonso Sánchez

General Manager of Vías y Construcciones

Mr. Rafael Valero Sin

CEO of Tecsa

Mr. Enrique Pérez Rodríguez

CEO of Cogesa

ACS Industrial Services

Mr. Ignacio Pérez Rodríguez

Chairman and CEO

Mr. José Alfonso Nebrera García

General Manager

Mr. José Romero de Ávila González-Albo

Secretary General

Cobra Group

Mr. Eugenio Llorente Gómez

CEO of Cobra

Mr. Daniel Vega Baladrón

CEO of SEMI and MAESSA

Mr. Juan Agustín Sánchez Bernal

Chairman and CEO of ETRA, API and IMES

Mr. José Reis Costa

Chairman and CEO of CME

Dragados Industrial

Mr. Lorenzo Díaz Revenga

Chairman and CEO

Mr. Alberto Sicre Díaz

General Manager of CYMI

Mr. Mateo Rodríguez Sánchez

General Manager of Ingeniería Industrial y Plantas

Mr. Pedro Ascorbe Trian

General Manager of Dragados Off-Shore

Mr. Juan Enrique Ruiz

General Manager of Sistemas

Mr. Antonio Benítez Vilches

General Manager of Masa

ACS Services and Concessions

Mr. Demetrio Ullastres Llorente

Chairman and CEO

Mr. Juan Galvañ Morante

Secretary General

Services

Mr. Luis Janini Tatay

Vice Chairman

Mr. José Naranjo Hiraldo

CEO of Urbaser

Mr. Javier Polanco Gómez-Lavín

CEO of Tecmed

Mr. Juan Carlos Pery Paredes

CEO of Dragados SPL

Mr. Agustín Batuecas Torrego

Chairman and CEO of Continental Auto

Mr. Cristóbal Valderas Alvarado

CEO of Clece

Concessions

Mr. Jaime Álvarez López

Chairman

Mr. Víctor Revuelta García

General Manager

Mr. Manuel García Buey

General Manager

Mr. Francisco Fernández Lafuente

General Manager


Francia Tower, Valencia

Strategic Objectives

The strategic vision of the ACS Group is backed by the following clearly defined objectives that pursue sustainable growth:

To reinforce leadership in the development of infrastructures in the markets in which we are active

- Through the culture of a contractor focused on serving our clients with whom we share a mutual trust acquired over the

years and resulting in the capacity to quickly adapt to their current needs and future requirements.

- As a result of competitive advantages due to our outstanding human resources that guarantee the quality of our work,

to the excellent techniques of our processes and to our continued training policies. All this makes it possible to offer the

greatest innovation for each project that we carry out or service that we provide.

To satisfy our clients needs

- Maintaining our high standards of quality, safety and reliability in the numerous products and services that we provide

with the objective of promoting stability and guaranteeing the recurrence of revenues.

- Increasing the number of products and services we offer in order to further diversify our order book while reducing

exposure to the economic cycles of some markets.

- Expanding our client base through continued commercial effort in new markets.

To optimise the profitability of the resources that we manage

- Through the improvement of operational and financial efficiency, offering attractive profitability on capital invested.

- Applying rigorous investment criteria in accordance with our expansion and growth strategies.

- Maintaining a solid financial structure that helps to obtain resources at a low cost.

- Offering an attractive dividends policy which is sustainable over long term.

Barajas Airport, Madrid

16 17

THE ACS GROUP

2

ACS GROUP

ANNUAL REPORT

2003

The year 2003 has been decisive for the ACS Group. The merger with Grupo Dragados has created a national leader of

European dimensions, positioning the Company as a world reference in the promotion, development, construction and

management of infrastructures and services of all types. Our success is based on an efficient organization and a dynamic,

enterpreneur management team following a strategy focused on maximizing profits for our shareholders.

The management of the new Group maintains the course that both Groups shared:

- A corporate culture centered on satisfying the needs of the client.

- Competitive advantages based on the high quality of our human resources, excellent technology and constant innovation

in each project.

- A permanent effort to increase profitability for the shareholder.

Strategic Vision

The ACS Group is leader in the business of promoting, building and managing infrastructures and services. This vision is

based on the vocation for developing the societies where the Group is present and strives to increase their well-being and

sustainable growth through new projects, by means of:

- The development of infrastructures which includes a wide range of activities such as civil works, industrial

installations, energy plants, telecommunication systems, treatment and purification plants, etc.

- Services offered in the fields of integral management of urban and industrial infrastructures and logistics.

This wide range of products developed by the ACS Group in the construction, applied engineering, services and concessions

markets share the same vocation of client service and strategic values, which are summarized by the solid management

of know-how that we have obtained through experience, the mutual trust achieved with our clients and the constant quest

for profitability of the resources managed.

2.2 CORPORATE STRATEGY


18 19

THE ACS GROUP

2

ACS GROUP

ANNUAL REPORT

2003

To improve the society in which we live

- Contributing to its economic growth, whether directly through the wealth generated by our activities and the promotion

of investment and employment, or indirectly through the improvements provided by the infrastructures that we develop.

- Improving social well-being through the creation of dignified work that is compensated fairly.

- Respecting the environment and culture in each of the activities carried out by the Group following the recommendations

of the main national and international institutions.

Strategic Values

Experience

Over the past 60 years the companies of the ACS Group have developed and incorporated the technical and human capacities

necessary to maintain and increase competitive advantages in markets that have become more and more specialized.

This permanent knowledge management is a sample of the commitment acquired with our clients so that we can offer them

a quality service that incorporates the newest techniques in the different activities carried out by the Group.

The combination of mature businesses that require experienced management and new businesses in which new technologies

are applied in the design, construction and execution of projects, gives shape to the base of the accumulated experience of

our professionals and management that makes up one of the most valuable assets of our Group.

As a result, the ACS Group has a greater capacity for offering integral solutions in Spain and in those international markets

where our clients are present.

Trust

The long term relationships that we maintain with our clients, based on the trust acquired over the years and on the mutual

knowledge, facilitate our ability to quickly adapt to their needs and requirements.

Without a doubt, the reason for this mutual trust is the dynamism and flexibility offered by our organization that makes it

possible to increase the efficiency of our operations while taking maximum advantage of the commercial potential and

productivity of each division. This reality, together with an appropriate cost structure, increases the competitiveness of our

companies and guarantees our clients a result that fully satisfies their requirements.

Profitability

From the industrial point of view of each line of business as well as from a corporative perspective, our future is based on

the profitability that we are capable of generating from the resources that we manage while applying an active risk control

policy.

This concept is established throughout the organization and forms part of our corporate culture guaranteeing a strategic coherence

in all the Group’s activities while permitting an objective and reliable evaluation of the management activities carried out.

2.3 ACTIVITY REPORT

2.3.1. Construction

The ACS Group has been consolidated as the indisputable leader in the construction business in Spain, having invoiced 5,595

million euros in 2003. This leadership is clearly shown in the civil works field where it maintains a privileged position and which

represents over half of the Group’s construction activity.

Turnover by activities:

8%

53%

13%

26%

It is precisely in the civil works area where we offer the best added value to our clients, mainly to the Spanish Government,

and where our size gives us a differentiating advantage.


Tunnel under the Villaviciosa Estuary (Asturias)

Residential building

Non-Residential building

Civil works

International

20 21

THE ACS GROUP

2

ACS GROUP

ANNUAL REPORT

2003

Breakdown of Domestic Civil Works Turnover:

36%

39%

Central Administration

Private Clients

Local Administration

Regional Administration

8%

Organization Structure

The companies ACS Proyectos, Obras y Construcciones, S.A. and Dragados Obras y Proyectos, S.A. (DOPSA) are in a merger

process that will give way to a new leader in the construction industry under the name of Dragados, S.A. This new company

will be formed of various companies that develop specialized activities and products:

Construction is a key business for the ACS Group, as much for its influence on the positive projection of our organization in

Spain and abroad as for its capacity to generate financial resources.

The Group’s construction activity maintains high levels of profitability as a result of a focused strategy regarding cost controls

and the application of a commercial policy focused on large construction projects with high added value and specialization

requirements.

One of the keys to this achievement is the close relationship that the Group maintains with its clients. This is demonstrated

through the quality of the services provided and long term commitment which make it possible to constantly offer efficient

services and anticipate future needs with the intention of covering all the areas of activity that the client is interested in

developing.

25%

42%

Highways and roads

Other civil works

Railways

Hydraulic works

21%

12%

National Highway N-I in Condado de Treviño (Burgos)

17%


Breakdown of Domestic Turnover by Client Profile:

(100%)

General contractor, leader in railway works

(100%)

Specialist in projects that require specific technology: bridges, marine works, special structures, water and waste treatment plants

(50%)

Specialist in dredging projects, beach regeneration, etc.

(100%)

A leading specialist in railway works. TECSA also works as a general contractor in the Basque region where the company has its roots

Construction

Dragados

(100%)

Special foundations, earth moving, engineering, inspection and structural diagnosis and restoration of buildings and monuments

(100%)

Property management and development

(98%)

(63%)

(50%)

(50%)

Construction in Brazil, mainly civil works

Civil works and building construction in Portugal

Construction and operation of road concessions in Argentina

Civil Works and building construction in Venezuela

High speed train between Madrid and BarcelonaHigh speed lanes in Cambados (Pontevedra)

22 23

THE ACS GROUP

2

ACS GROUP

ANNUAL REPORT

2003


The objectives of the construction activity are aimed towards maximizing the profits of our projects. In this sense, and thanks

to our competitive advantages, the following are our basic strategic targets:

- To maintain a growth rate that permits a sustained increase in profits, directed towards seeking profitability from large projects

with a high value added concept due to the specialization that is entailed.

- Selective international expansion, through concessionary projects or in countries where we have a stable presence.

Activity in 2003

Civil Works

Dragados, S.A., as the Group’s head company in the construction sector, participates in all the infrastructure plans carried out

in Spain. Its presence is noteworthy in the construction of important highway projects, motorways, roads, marine works,

hydraulic works, metropolitan infrastructures, airports, ports, etc.

The magnitude of these civil engineering projects demands a solid structure of resources and technology. Dragados, S.A. offers

this structure, in addition to a demanding subcontracting policy that results in a more integrated production. As a result, the

meeting of deadlines is guaranteed, as are the maximum levels of quality and safety.

In the past year there have been very relevant projects in motorways and roads, of which the following stand out:

- Toll trunk motorways R-2, R-3 and R-5 as well as the M-50 ring road in Madrid.

- Toll road from Santiago to Alto Santo Domingo in La Coruña.

- Highway from Levante to France via Aragón.

- Ring road in Las Palmas de Gran Canaria.

- Highway from Cantabria to Meseta.

- Sax-Castalla highway in Alicante.

- Montagut-Olot highway in Gerona.

- Betxi-Borriol highway in Castellón.

- Navalmoral highway in Cáceres.

- Highway between Ciudad Real and Atalaya del Cañavate.

- Highway between Santa Cruz Tenerife and San Cristóbal.

- North access to Ferrol through the prolongation of the A-9 motorway.

- Fourth lane on the Montmeló-Papiol highway in Barcelona.

- Vigo by-pass.

- Tunnel on María de Molina Street in Madrid.

The most relevant projects carried out on international markets were:

- Santiago-Valparaíso toll road in Chile.

- North-south motorway in Santiago de Chile.

- A-13 Thames Gateway motorway in England.

- A-1 Darrington-Dishford motorway in England.

- Platinum Corridor toll road in South Africa.

In the railroad sector, which includes high speed, interurban and metropolitan projects, the following merit mention:

- Construction of various sections between Madrid and Valladolid of the AVE high-speed line to north and northeast Spain,

including the construction of the double tunnel in Guadarrama, Madrid.

- Construction of various sections of the AVE high-speed line between Córdoba and Málaga.

- Building of various sections between Lérida and Barcelona of the AVE line joining Madrid, Barcelona and the French Border.

- New high speed line from Madrid to Toledo.

- Construction of various sections of subway of Metrosur in Madrid.

- Building of two sections of the new Line 9 of the Barcelona subway.

- Local train between Vélez and Málaga.


24 25

THE ACS GROUP

2

ACS GROUP

ANNUAL REPORT

2003

Within the group of hydraulic infrastructures, coasts and ports, the most significant works carried out are:

- Yesa Resevoir, Navarra.

- Lodosa Canal, Navarra.

- Water Treatment Plant in Baix Llobregat, Barcelona.

- Montijo Canal, Badajoz.

- Wharves at Aviles Port, Asturias.

- Water storage facilities for Canal de Isabel II on Avenida de Filipinas, Madrid.

- Construction of Hayovel Port in Tel Aviv (Israel).

The most significant airport works include:

- New terminal, satellite building, car park and accesses to Barajas Airport, Madrid.

- Runway 15L-33R in Barajas Airport, Madrid.

- New runway 07R-25L and taxiways for the El Prat Airport, Barcelona.

Building

This activity involves the construction of non-residential, commercial, health, educational, administrative, cultural and sports

buildings, as well as dwellings and the restoration of unique buildings.

In non-residential buildings, the ACS Group participates in numerous public and private projects, of which the following stand out:

- In the construction of cultural buildings and sports complexes:

- Enlargement of the National Museum Centre of Art Reina Sofía, Madrid.

- Enlargement of the Prado Museum, Madrid.

- Theatres of Canal de Isabel II, Madrid.

- Villa Cultural de Prado, Valladolid.

- Finishing works at the Gran Canaria Stadium.

- Sports complex in Alcobendas, Madrid.

The Guitiriz Hotel after restoration (Lugo) Court House, Valencia

- Regarding health centers and hospitals:

- New La Fe Hospital in Valencia.

- Renovation work on the San Pedro Hospital in La Rioja.

- New hospital in Lugo.

- O’Donnell Maternity Hospital in Madrid.

- Maternity-Infants Hospital in Las Palmas Gran Canaria.

- Juan Canalejo Hospital in La Coruña.

- Renovation work on the María Ana Hospital in Madrid.

- Rehabilitation and construction of health centers in Uganda.

In administrative buildings for offices and industries:

- Trade fair, Valencia.

- Court houses in Valencia and Castellón.

- El Corte Ingles shopping centre in Sanchinarro, Madrid.

- New head offices of the Santander Central Hispano Bank in Boadilla, Madrid.

- Biomedical Park in the duty-free zone of Barcelona.

- The Repsol Centre in Móstoles, Madrid.

- Centre of Biomedicine for the Biomedicine Research Foundation of Valencia.

- “Rockodromo” multi-purpose pavilion, Madrid.

The ACS Group continues to carry out residential building construction projects for public clients, most of which are

state subsidized, and for private clients located in larger cities, residential zones and tourist destinations throughout Spain.


26 27

THE ACS GROUP

2

ACS GROUP

ANNUAL REPORT

2003

The high level of competitiveness of the Group’s Industrial Services area is based on the quality of the many services offered

and the in-depth knowledge of the needs of our clients, who are mainly governmental entities and industrial companies. Thanks,

Traffic control room in Valladolid


- Main supplier of the energy operators for the development and maintenance of installations to generate and distribute

electric power.

- World reference in the construction of offshore platforms.

- Significant agent in the development and maintenance of technological systems related to telecommunications, road

and rail traffic and industrial control.

- Leader in various other fields related to engineering, installing and maintaining industrial infrastructures such as

thermodynamic and mechanical installations, road maintenance, hospital installations, etc.

These services fall into five areas: distribution networks, energy projects, telecommunications, control systems and industrial

systems.

Turnover by activity:

27% 25%

Distribution Networks

Control Systems

Telecommunications

Energy Projects

14%

10%

Industrial Services

24%


The ACS Group participates throughout the entire value chain of Industrial Services in the areas of energy, communications

and control systems, offering promotion, engineering and installation services in addition to maintenance. Our extensive

experience places us in a leading position within the sector in Spain, Portugal and Latin America, reaching a turnover of

3,069 million euros in 2003 and outstanding out as:

therefore, to our high technical qualifications and capacity for integrating processes, as well as our business diversification and

extensive geographical coverage, the Group offers integral solutions, anticipating the future services that might be required

by our clients.

Organizational Structure

The activities in this area are carried out through two parent companies, Cobra Group and Dragados Industrial:

Industrial Services

Cobra Group Dragados Ind.

Engineering, installation and maintenance of traffic systems, instrumentation, public street lighting and toll systems

Industrial maintenance, mechanical assembly and gas pipelines

Building of offshore platforms, modular plants, large equipment parts and metal structures

Electrical installations and instrumentation, air conditioning, energy transmission lines, railroad electrification, airport installations, electrical substations, design and construction

of electrical control panels, booths and motor control centers and security installations

Design, installation and maintenance of urban and interurban traffic control systems and public street lighting

Maintenance and installation of electrical networks, particularly in the railroad sector

Maintenance, assembly, installations and services in the mechanical, electrical, instrumentation and system control specialties

Public street lighting services, building maintenance, booths, fountains, electrical installations and works (landfills, sewage pipes)

Road safety: integral road signaling, conservation and maintenance of roads and consultancy and technical assistance

Promotion, construction, exploitation and maintenance of wind plants

Engineering and execution of projects in fields related to energy

Engineering and construction of industrial plants

Auxiliary Services to electricity, gas, and water, communications and railroad distribution companies; installations and assemblies in the specialized areas of mechanical, electrical,

air conditioning, instrumentation and security control systems; studies in and projects related to these areas

28 29

THE ACS GROUP

2

ACS GROUP

ANNUAL REPORT

2003

networks. Additionally, supply and waste collection systems have been built and maintained as well as pumping and treatment

stations and facilities. Of these activities, the following projects are noteworthy:

- The Seville-Córdoba gas pipeline, consisting of duplicating the part of the natural gas supply line between Huelva and

Madrid.

- Renovation of the natural gas distribution network in Seville using new polythene piping.

- Framework construction contract for medium pressure, natural gas networks throughout Spain.

- Commercialization and construction of gas and heating installations in areas under expansion and saturation throughout

Spain.

- Assembly and maintenance of LP gas installations, handling emergencies and client service in Lima, Peru.

- Emergency works and breakdowns of the Canal de Isabel II water distribution network in Fuenlabrada, Madrid.

In the electric power field, the Group maintains its leadership by performing jobs such as engineering, supplying, installing,

putting into service and maintaining power lines, distribution networks, substations and public street lighting systems. Furthermore,

the Group is pioneer and leader in integrated electrical maintenance and conveyance lines, distribution and voltage substations,

as well as substations at all voltage transformation points.

In the domestic market, the following projects should be pointed out:

- 27 kilometres of overhead lines for 400kv in Olmedilla-Romica, 12.3 kilometres for 220kv in Vimianzo-Mazaricos and

17.3 kilometres for 220kv in Ameizeiras-Cando, all in the Galicia region.

- 400 kilometres of high voltage 400/20/132 and 66kv optical fiber overhead lines located throughout Spain.

- The burial of high voltage lines in various cities, of which 12.1 kilometres of double circuit 400kv line in the Barajas Airport

expansion project in Madrid and 220kv and 132kv lines in Mazarredo de Basauri-Asúa, Tomeza-Lourizan Substation, and

in the Substation Grela-Port are noteworthy.

In the international market, high voltage line installation projects performed in Mexico, Brazil, Mauritania and the Dominican

Republic should be mentioned. In addition, maintenance contracts were signed for lines in Chile and Abu Dhabi.

Desalination plant


The solid basis for growth with which we face the future will allow us to optimize our profitability by applying a strict criterion

for selecting new projects based on their potential for creating added value. For this reason, we have established the following

well defined objectives:

- To continue leading the growth of the sector during the next years.

- To improve productivity through growth in those services that offer higher added value, maintaining a strict cost control

policy.

- To apply a policy of geographical expansion with a strict profitability criterion.

- To invest in the promotion of new technology intensive businesses, such as renewable energies.

Our leadership position, the result of our elevated technical qualifications, our extensive geographic presence and the business

dynamism of our Group, gives us the competitive advantages necessary to face these challenges successfully.

Activity in 2003

Distribution Networks

This activity is backed by more than 50 years of experience and guaranteed by the know-how developed over these years and

the high quality service provided. This has placed the Group in the indisputable position of leader in this business based on a

strong specialization in products and geographical areas. One of the most important competitive advantages is the constant

innovation in assembly techniques and the incorporation of specialized machinery, which, in many cases is of in-house design

and construction.

In the distribution of gas, the Group offers a wide range of services, the most outstanding being the commercialization and

installation of gas networks in cities and towns, the construction and maintenance of all types of networks, the construction

of receiving installations, the reading of meters, the building of control and measuring stations and the digitalization of

Electrical substation


Somozas wind farm, La Coruña

30 31

THE ACS GROUP

2

ACS GROUP

ANNUAL REPORT

2003

Energy Projects

Through this division, the Group offers a variety of products under turnkey contract that include electrical installations such

as substations and transformation centers for generating, conveying and distributing power and solutions for large consumers,

as well as the execution of important projects like combined cycle power plants, desalinization plants, crude oil extraction

platforms, thermal power stations, co-generation plants, etc. The following projects that were developed in 2003 are noteworthy:

- Combined cycle power plants in Castejón (Navarra), Santurce (Bilbao), Amorebieta (Bilbao), Cartagena (Murcia), Castellón

(Valencia), Castelnou (Teruel) and Aceca (Toledo).

- Refrigeration for the general project of the combined cycle power plant in Campo de Gibraltar in San Roque (Cádiz).

- Regasifying Plant in Sagunto (Valencia).

- AKAL L compression and production platform in the Gulf of Mexico.

- Natural gas liquidizing plant for the complex on the Melkoya Island in Barents Sea, 140 kilometres northwest of Hammerfest,

Norway.

It is worth noting our growing presence in the renewable energy field through the promotion of the construction and

operation of wind farms under turnkey contract. The following are of interest:

- Requeixo in As Somozas, La Coruña.

- Serra de Outes in Mazaricos, La Coruña.

- Raposeras in Calahorra, Logroño.

- El Perul in Villadiego, Burgos.

- El Perul in Urbel del Castillo, Burgos.

- La Lastra in Huérmeces, Burgos.

- Ecovent II in Tortosa, Tarragona.

- Ortiga in Castanheira de Pera, Portugal.

Additionally, 149 wind turbines have been installed and commissioned at various wind farms in Spain and abroad on behalf

of third parties.

Telecommunications

This area includes all the works related to engineering, developing, installing and maintaining networks and technical equipment

of landline, mobile and wireless telephony for the subscribers’ local loop and optical fiber, as well as radio link-up, microwave

systems and made-to-measure telecommunication systems, among others.

Over the past years, the Group has worked with the most important agents in the industry, the national telecommunication operators

and many of their subsidiaries in Latin America, as well as the technical suppliers of the sector. These relations have created a high

level of specialization, allowing us to offer a growing range of more advanced services with an increasing added value.

The following are the most outstanding projects carried out in 2003:

- Maintenance contract for the global client loop with Telefónica.

- First deployment of mobile telephony antennae for Amena, acting as one of the two approved suppliers.

- Projects and works on DCS 1800 and UMTS network at a national level for different operators.

- Supply and installation of open frame towers for different operators, being noteworthy GIF’s project for sharing mobile

telephony infrastructures between the different operators within the range of the high speed lines.

- The standardization for the deployment of the PLC (Power Line Communications) technology for electric companies.

- Implementation of the optical fiber network in El Prat de Llobregat.

- Installation of the first 300kw patch panel in FM in Spain for split antennae.

- Radio stations for the Consorcio Nacional de Canales Privados in Colombia.

Control Systems

The Group has become the main supplier of engineering, installation and operation of control systems for the industry and

urban services. These include traffic services, public street lighting and other signaling and control systems requiring high levels

of maintenance. This guarantees a high visibility of revenues and margin stability.

The most outstanding traffic related activities include integral urban and interurban traffic regulation and control solutions,

the control of fleets of vehicles through localization systems (GPS) and the control of operations assistance resources (SAE).

Of the most important contracts carried out in 2003, the following should be mentioned:

- Dynamic signaling and traffic control system on N-323 highway between Bailén and Granada, M-607 road in Madrid and

the toll trunk motorways R-2, R-3 and R-5, as well as the M-50 ring road in Madrid.

Telecommunications system


Toll system equipment. R-3 and R-5 motorways (Madrid)

32 33

THE ACS GROUP

2

ACS GROUP

ANNUAL REPORT

2003

- Installation of SOS posts on A-231 highway from Carrion de los Condes to Osorno and between Mérida and Almendralejo

on the La Plata highway.

- Indirect management of the conservation and maintenance service for traffic lights and traffic control in Vigo and Orense.

- Construction project for the traffic light system of the trolley cars in Baix Llobregat (Barcelona).

- Maintenance of the installations and equipping of the fleet of the Municipal Transport Company of Madrid (EMT) with

SAE.

The installation and maintenance of public and private street lighting systems include intelligent control systems and

automatic centers as well as electronic and fluid technology for ornamental fountains. Outstanding projects last year included:

- Conservation and maintenance services for public street lighting in various cities: Madrid, Barcelona, Valencia, Seville,

Málaga, Las Palmas de Gran Canaria, Santa Cruz de Tenerife, Gijón, Jerez de la Frontera, Cádiz, Vigo, Jaén, Ceuta, Telde,

Granollers, Montcada i Reixac, Coslada, Montornès del Vallès, Vall de Uixó and Valencia.

- Public street lighting on the TF-5 motorway in Tenerife and the M-50 ring road in Madrid.

- Construction and conservation of ornamental fountains of which the following stand out as emblematic symbols: the

cybernetic fountain of the Palau de la Música in Valencia and the fountain of the National Congress in Madrid.

In the services associated with hydraulic infrastructures, the following should be mentioned with respect to distribution,

cleaning, purification and information systems:

- Restoration of the Torrox Lagoon in Jerez (Cádiz).

- Water storm retention tank in Pozuelo (Madrid).

- Maintenance and operation of the “La China” water waste treatment plant and of one of the conservation zones of

the Madrid sewer system.

- Maintenance and operation of the Automatic Hydraulic Information System (SAIH) of the Tajo and Segura Hydrographic

Basins, as well as maintenance and operation of the network of automatic warning stations pertaining to the SAICA

system in the Hydrographic Basin of the North.

Lighting system for Turia River Park, Valencia

Regarding electronic signaling and access control for transportation systems and buildings as well as control and regulation

systems of various production industries, the following projects are noteworthy:

- Toll collection and control system for the R-2, R-3 and R-5 trunk motorways and their accesses to the M-50 in Madrid,

the N-1 and N-4 highways in South Africa and the North-South artery in Santiago de Chile.

- Electronic installations of medium and low voltage, special security installations in the tunnels on Maria de Molina Street

in Madrid and Monrepos in Huesca.

- Tele-control of the municipal cleaning network for La Coruña Town Council.

- Updating of the control panel of the boosting plant for marine deposits in the Gulf of Mexico.

In security and assistance systems, the special security installations at the Puerta de Atocha Train Station, the National Museum

Center of Art Reina Sofía in Madrid, and the City of the Arts and Sciences of Valencia, are particularly outstanding.

In the area of railroads, the Group carried out the design, engineering, construction, start up and maintenance of railway

systems, including high speed lines and urban transport (subways, light trains, trolley buses and streetcars), in specialties such

as electrification, signaling, rail security installations, communications, auxiliary services relevant to access controls, automatic

ticketing, mechanical stairs, street lighting, ventilation and air conditioning. In this field the following projects are noteworthy:

- Project, construction, installation and maintenance of the overhead contact line and its associated systems for the Madrid-

Zaragoza-Barcelona AVE high-speed railroad line.

- Project, supply, installation and maintenance of the installations for the security systems to detect fallen obstacles on the

tracks and interlockings and the train protection system for the Madrid-Zaragoza-Barcelona AVE high-speed line.

- Installation of last generation S3e electronic interlockings at various stations in Spain.

- Installation of the security system on the Oroso-Ordes section of the Zamora-La Coruña line.

- Control equipment for several stations of the Madrid subway system.


Underground high voltage lines

34 35

THE ACS GROUP

2

ACS GROUP

ANNUAL REPORT

2003

Industrial Systems

The Group offers integral control of auxiliary services for industrial and production processes in a wide range of fields in Spain

and other countries.

This activity includes applied engineering services such as installations and transformations in industrial, petrochemical and

cement plants, ships, refineries and other singular projects that need specific specialization such as cooling systems and industrial

air conditioning, mechanical and structural systems, etc.

One of the characteristics of this type of activity is the predominance of maintenance contracts which are generally medium

term and renewable. In general, installation services involve contracts of this type, which ensure recurring revenue.

Among our industrial projects, the following should be pointed out:

- Terefthalic acid and paraffin plant in San Roque (Cádiz).

- “Novolen III” polypropylene plant in Tarragona.

- Integration of lines to interconnect the heat exchangers at the refinery in Hidalgo, Mexico.

- Visbreaking and vacuum units for the La Pampilla Plant in Lima, Peru.

- Contract to update the fuel storage park in Madeira, Portugal.

- Electrical installations and air conditioning for several buildings of which the following should be mentioned: the BSCH

Financial City in Madrid, the satellite building at Barajas Airport in Madrid, the National Museum Center of Art Reina

Sofía in Madrid, an office building on Diagonal del Mar Street in Barcelona, the Ferrara Hotel Complex in Torrox (Málaga),

a hotel in Macao (Dominican Republic), the trade fair facilities in Baracaldo, Bilbao, the Maternity Hospital on O’Donnell

Street in Madrid, the Gran Hospital of Lanzarote in Las Palmas de Gran Canaria, the shopping centers Xanadú in

Arroyomolinos (Madrid), Ociópolis in Valencia, and Ikea in Seville, respectively.

- Supply, design and mechanical assembly of new pharmaceutical product plants in Alhama (Murcia) and León.

Maintenance of health facilities

- Installation of the new cement plan in Zafra (Badajoz).

- Assembly of equipment and pipelines at the pilot plants for obtaining tar in Trubia (Asturias) and at the detergent plant

in Las Torres de Cotillas (Murcia).

- Manufacture and assembly of blocks for ships in the shipyards of Seville, Gijón (Pontevedra), Sestao (Bilbao) and Fene

(La Coruña).

In the area of industrial maintenance, of the new contracts signed in 2003, the following merit mentioning:

- Annual maintenance contracts for an important part of the production units of various refineries in Gibraltar (Cádiz), La

Rábida (Huelva) and Tenerife (Canary Islands).

- Maintenance contract for mining equipment used to exploit the open pit mines of Puentes de García Rodriguez (La Coruña).

- Maintenance contract for Ford’s plant in Almusafes (Valencia).

- Integral building maintenance contracts for Grupo Auna’s head office, the head office and network of the Social Security

Administration in Barcelona, the network of branch offices of the Herrero Bank in Asturias, the University of Zaragoza

(campuses in Zaragoza, Huesca and Teruel), and various municipal buildings in Barcelona.

- Integral maintenance of the Zaragoza-Delicias AVE Train Station.

Additionally, activities have been carried out regarding vertical and horizontal signaling and restraint systems for different

Autonomous Regional Governments, the Ministry of Civil Works and the Department of Traffic to adjust vertical signaling and

repaint road markings on highways and main roads in different provinces of Spain.


Integral MaintenanceEnvironmental Services

Services

Company dedicated basically to scheduled passenger road transportation with a long tradition in the field, offering regular long distance and commuter services

as well as public transportation

Integral operator of the logistic chain including all of the following activities: port handling activities, shipping agency, land, air and sea forwarding, auxiliary port

services, international multimodal combine-and-split shipping and specialized logistics. Leader in Spain in the field of handling containers

Companies specialized in managing and treating wastes. Their activities include street cleaning, municipal solid waste collection and treatment by building and operating

plants, handling the biogas generated, building and operating clean points and controlled landfills, managing the integral water cycle and the integral control

of special industrial and hospital wastes

Company specialized in integral maintenance and facility management activities, the preservation of natural resources, integral control of indoor

cleaning and multiple services

Static and dynamic advertising in large transportation centers and public buildings

Meruelo 3 USW treatment plant (Cantabria)

36 37

THE ACS GROUP

2

ACS GROUP

ANNUAL REPORT

2003


There are ambitious objectives for these activities in which we maintain a clear commitment to profitable growth:

- To continue as leader of the municipal solid waste treatment sector.

- To promote the expansion of our port, logistics and passenger transportation services.

- To consolidate international activity with criteria focused on profitability.

- To stimulate new complementary business areas such as the treatment of special wastes or social health services.

Activity in 2003

Environmental Services

The Group handles the control and treatment of urban wastes as a specialty. Its activities include street cleaning, the collection

and treatment of urban solid waste through the construction and operation of treatment plants, the integral management

of special, industrial and hospital wastes, the handling of the biogas produced, the construction and operation of clean

points and controlled landfills and the management of the integral water cycle, all of which are carried out in Spain and

abroad. The following projects performed in 2003 are noteworthy:

In landfills:

- The exploitation of biogas from the controlled landfill at Pinto in the larger Madrid Community has reached a continuous

production of 11 Mw and will reach 13 Mw when the biogas from the methane conversion plant is incorporated. Likewise,

we are starting to exploit the biogas from the Bens Landfill in La Coruña.

- The design, carrying out and operation of the project to degasify municipal waste to recover energy and the sealing and

subsequent control and maintenance of the Valdemingómez Landfill 2000 in Madrid.

- Sealing and landscaping of the landfill in Vall d’en Joan en Garraf (Barcelona).

- Sealing and recovery of the landfill sites in Porto do Son (La Coruña) and Alcalá de Henares (Madrid).

- Construction of the Besós and Mediterráneo Ecoparks for Entidad Metropolitana de Barcelona.

- Construction of various clean points (Lloret del Mar), transfer stations (Tragacete, Cañaveras, Almodóvar, Málaga, Las Palmas,

etc) and leach treatment plants (Mérida) that complement the corresponding existing installations.



The Services and Concessions area covers environmental services, port services and logistics, passenger and merchandise

transport, integral maintenance and facility management, advertising in transport infrastructures and concessions. Each

of these activities is a reference in the Spanish sector and, combined, they represent a diversified offer of high quality.

The Concessions area has more than 30 years of reliable experience with a solid history of creating value in the concessions

handled. This, together with our financial strength, has made our Group the first international reference in promoting, financing

and building new transport infrastructures.

2.3.3.1. Services

The Services activity of the ACS Group reached a turnover of 2,157 million euros in 2003. In this sector, the Group presents

a multiple service offer that the new organization divides into four areas of activity: Environmental Services, Port and Logistic

Services, Integral Maintenance and Scheduled Transport by Road.

Turnover by activity:

Organizational Structure

21%

48%

Environmental Services

Integral Maintenance

Passenger Transport

Port Services and Logistics

7%

24%

Restoration of the wharves at Puerto de Avilés (Asturias)

38 39

THE ACS GROUP

2

ACS GROUP

ANNUAL REPORT

2003

- Start-up of the environmental technologies park on the island of Mallorca for treating package and wrapper waste,

obtaining the biogas resulting from the organic components of municipal solid waste.

- Controlled landfill to eliminate inert waste in Madrid.

In urban solid waste treatment:

- Construction of the USW treatment plants in Cuenca, Ibiza, Lugo, and Palencia.

- Waste treatment and elimination contracts in Madrid, La Coruña and Tenerife.

- First phase of sorting and recycling materials and composting the organic portion at full capacity in the integral plant

in Cantabria.

- USW management contract in León.

- Operation of the urban waste transfer and elimination facilities in Madrid.

- Integral USW thermal treatment plants in Madrid and Mallorca.

The most important street cleaning and USW collection contracts signed in 2003 were:

- Esplugues de Llobregat, Villassar de Mar, and Sant Andreu de la Barca in Barcelona.

- Paracuellos del Jarama, Alpedrete, Arganzuela, Puente de Vallecas and Las Rozas in Madrid.

- Port of Seville, Santa Cruz de Tenerife, León and Logroño in the rest of Spain.

- Construction of underground container system in Móstoles.

- Cleaning services for the 2004 Olympic Games in Athens.

With regards to the management of other waste products, the contract involving agricultural solid waste in Almería and

the collection of Marpol waste in 15 ports in the autonomous regions of Valencia, Murcia and Andalusia are of great

interest.

Port Services and Logistics:

The Group acts as a global operator of the entire logistic chain including all the activities involved: port handling activities,

shipping agent, land, air and sea forwarding, auxiliary port services, combined transport, international fractionized transport

and specialized logistics.

In 2003 the Group consolidated its leadership as operator of container terminals in Spain, moving more than 2.5 million TEUs

(standard 20ft. containers), and continued its expansion abroad. In this sense the following activities are worth mentioning:

- In Spain, the company Terminales del Sudeste was founded to operate the multi-purpose terminal in Málaga and

reached an agreement with the shipping company Maersk to handle 150,000 TEUs during 2004.

- The new container terminal in Bilbao’s Port was put into service, substantially increasing the port’s activity by including

traffic from Eurofeeders and the shipping consortium Eurosal.

- Internationally, Jintang International Container Terminal Co, Ltd., was established to operate the container terminal

at Jing-Tang Port in China for 50 years.

Concerning activities involving conventional terminals, the Group was awarded terminal C at the port in Castellón.

With respect to the combined shipping of containers, the growth in rail traffic from the dry port in Madrid-Coslada is

noteworthy. This is the first inland maritime customs operation that has been set up in Europe.

Other outstanding events of last year were:

- Construction was started on the solid bulk minerals terminal in the Port of Santander that the Group will operate for

25 years.

- Autoterminal, the automobile logistics terminal in the Port of Barcelona, was granted the European Transport Award

for Logistics for its contribution to the improvement of transport competitiveness.

- As for shipping agencies, of note is the acquisition of Olsen and Cía., a shipping agent in the Canary Islands currently

acting as agent there for Maersk and Saffmarine, as well as the agency contract for the APL shipping traffic that offers

import-export services between Barcelona and the Far East.

Equipping and street cleaning in San Andrés del Rabanedo (León)


Map of the routes of Continental Auto

40 41

THE ACS GROUP

2

ACS GROUP

ANNUAL REPORT

2003

Integral Maintenance

The Group carries out indoor cleaning activities, integral building maintenance, gardening, forestry activities and landscape

restoration, multiple services at airports and social health services.

- Indoor cleaning:

The Group is currently one of the first references in the field with outstanding clients such as the Ministry of the

Interior, the Madrid subway, RENFE (National Railroad Co. of Spain), the City Councils of Madrid and Barcelona and

the majority of the large hospitals of the public health system.

- Multiple services for airports:

The Group offers all types of services linked to airport management: internal and external cleaning of aircraft, airports,

collection and maintenance of luggage carts, management of conference rooms and business centers at airports, attention

to passengers and authorities, airport security, etc.

- Maintenance of the installations:

Through this activity, the Group offers all the management and operational services necessary for optimum operability

of property and installations, from the maintenance of the technical installations to the offering of auxiliary services

such as cleaning, security, gardening and facility management. Throughout Spain, the Group also adjusts and remodels

spaces and offices for different uses.

- Gardening, reforestation and landscape restoration:

The Group maintains an outstanding position in the gardening sector by maintaining public gardens in numerous cities.

Furthermore, we have consolidated our position as leader in reforestation, silviculture treatments and the conservation

and improvement of natural surroundings.

- Social health services:

This activity is directed to population groups with possible social risk and to whom the following services are offered:

domestic help, integral management of centers for the elderly, phone-assistance, nursery schools and child care centers,

among others. The contracts managed are preferably public and all require a specific technical component.

- Advertising:

Management of advertising spaces in large transport facilities and centers such as airports, subways, railroad terminals

(static as well as in the rolling stock) and trade fair grounds, in addition to the production and operation of closed circuit

television channels.

Scheduled Road Transport

Continental Auto operates a scheduled passenger service as a long distance, interurban and urban road transport company

with a long tradition in the field. The company covers four major geographical zones on the peninsula: the Madrid Area,

Northern Spain, Catalonia and Andalusia. By managing 42 public concessions, it offers services in 11 autonomous regions,

26 provincial capitals and more than 2,600 towns, maintaining its position as leader among the Spanish companies of the

sector.

With respect to merchandise transport, Continental Auto distributes petroleum derivatives for Repsol in Burgos, Tarragona,

Málaga, Granada, Motril, Córdoba, Seville, Cádiz and Almería.


Garden maintenance in Santander

42 43

THE ACS GROUP

2

ACS GROUP

ANNUAL REPORT

2003

In addition, its subsidiary Continental Rail holds a concessionary contract with GIF to ship materials by rail to build the AVE

high-speed railroad line between Madrid, Barcelona and the French border. This is a strategic step in positioning the Group

in the Spanish railroad transport field.

Continental Auto has obtained extensive experience through its participation in more than 15 bus stations. Outstanding in this

area is its 25 year concession to operate the bus terminal at Avenida de América in Madrid.

The following are the most representative figures for 2003 showing the Continental Auto Group’s leadership within its field:

- Turnover: 157 million euros.

- Passengers carried: approximately 56 million.

- Tons transported: 1,900,000.

- Fleet: 945 vehicles.

- Distance travelled: 107 million kilometres.

- Number of employees: over 1,700 people.

2.3.3.2. Concessions

In the Concessions area, the new company is the major transportation developer in the world, having developed more than

50 projects. This experience, our first line technical and human resources and our financial strength, contribute to making the

Group the first international reference point for promoting, financing and building new transport infrastructures. For the 10th

year running, ACS leads the world ranking in transportation concessions issued by the prestigious magazine Public World

Financing.


Our strategic positioning and our competitive advantages allow us to be selective in our investments and to face ambitious

goals that can be summarized as follows:

- To continue leading the world market in the promotion of concessions.

- To continue developing a diversified project portfolio.

- To introduce a long term international expansion policy in stable countries.

- To obtain attractive profitability, taking advantage of the Group’s capacity and experience in all development phases.

Activity in 2003

The year 2003 represented a relaunching of concessions in Spain as the regional and central governments released more

new tenders for bid than in previous years. The Group was awarded the following:

- Thirty-year concession to operate the A-8 toll road in Guipúzcoa, granted on June 6 when this section of the motorway

was transferred to the local authority. The operation of the highway started that same day, assuming the complexity

and problems resulting from a fixed expiry date after over 30 years of exclusive concession.

- Construction and operation of the Seville subway, the first infrastructure concession released for bid by the Andalusian

Regional Government and the first subway under a concessionary regime in Spain.

- Construction and operation of the “shadow-toll” type highway between Toledo and Consuegra in the region of

Castilla-La Mancha.

- Fifty year concession awarded to the TP Ferro consortium, in which ACS has a 50% stake, to building and operating

the cross border AVE high-speed railroad connection between Figueres (Spain) and Perpignan (France).

- Forty-year concession for the construction and operation of the Alicante by-pass.

The following new contracts abroad are noteworty:

- The Darrington-Dishford section of the A-1 motorway in England. This is the fourth concession contracted in this country

and consolidates the strength of the alliance maintained with important local companies.

- The Dundalk by-pass in Ireland, an important project developed to solve the problems of communication between Dublin

and Belfast. This is the first concession that we have been awarded in this country.

During 2003 the construction work for the following concessions was completed and they are now in the operation phase:

- Motorway between Santiago de Chile and Valparaíso-Viña del Mar, where the last 21 kilometres were finished connecting

Viña del Mar and Villa Alemana.

- The Scut Veira Interior motorway, concluding all of the construction works awarded and permitting the start of “shadow-toll”

operation.

- Inauguration of the R-2 trunk road and its corresponding section of the M-50.

- In the first months of 2004, the R-3 and R-5 trunk roads in Madrid were inaugurated as was the section corresponding

to the M-50 included in the concession.

In 2004 all of the works corresponding to the Platinum Corridor Toll Road Concession in South Africa were completed.

Railroad project crossing the French/Spanish border between Figueras and Perpignan


44 45

ACS GROUP

ANNUAL REPORT

2003E C O N O M I C A N D F I N A N C I A L I N F O R M A T I O N 3

Santiago-Orense motorway

ECONOMIC AND FINANCIALINFORMATION3

3.1. Management Report of the Consolidated Group

3.2. Annual Consolidated Financial Statements for 2003




46 47

Í N D I C E

ECONOMIC AND FINANCIAL

INFORMATION

3

1.1. MAIN EVENTS

On October 14, 2003, the Special Shareholders’ Meetings of the ACS Group and the Dragados Group resolved to approve

the merger of the two companies. Once the legally-stipulated periods had elapsed and the required procedural formalities

had been complied with, the new ACS share was admitted to listing on the stock exchange on December 15, 2003.

In order to analyze the Group’s performance in 2003 and to ensure greater uniformity in the year-on-year comparison of

information, this report contains pro forma consolidated figures which were obtained considering the merger to have been

effective since January 1, 2002. In addition, the extraordinary provision of E111.5 million after taxes recorded in December

2003 for extraordinary merger expenses was excluded from the analysis. The Exhibit on page 62 includes a detail of the

reconciliation of the 2002 and 2003 statements of income per books to the related pro forma statements of income.

The variations in 2003 in the consolidated Group’s main pro forma financial aggregates were as follows:

Main financial aggregatesPro forma figures

ACS GROUP

ANNUAL REPORT

2003

(Millions of Euros)2002 2003 Var. 03/02

Net sales 9,962.1 10,733.6 +7.7%

Gross operating income 803.1 931.8 +16.0%

Margin 8.1% 8.7%

Net operating income 576.6 649.0 +12.5%

Margin 5.8% 6.0%

Ordinary income 443.4 537.3 +21.2%

Income before taxes 392.3 498.8 +27.1%

Attributable net income 326.4 380.3 +16.5%

EPS 2.75E 3.21E +16.5%

Total net debt 978.6 1,230.6 +25.7%

Net debt with recourse 673.3 914.4 +35.8%

Long-term bank financing 630.0 611.8 -2.9%

Short-term net debt/(Cash) 43.3 302.6 +598.2%

Project financing 305.5 316.2 +3.6%

Shareholders’ equity 1,805.5 1,796.4 -0.5%

Gearing* 37.3% 50.9%

1.2. PRO FORMA CONSOLIDATED STATEMENT OF INCOME

Pro forma figures

* Net debt with recourse / Shareholders’ equity

(Millions of Euros)

Net sales 9,962.1 100.0% 10,733.6 100.0% +7.7%

Other revenues 338.1 3.4% 376.3 3.5% +11.3%

Total revenues 10,300.2 103.4% 11,109.9 103.5% +7.9%

Operating expenses (7,146.8) (71.7%) (7,695.3) (71.7%) +7.7%

Personnel expenses (2,350.4) (23.6%) (2,482.8) (23.1%) +5.6%

Gross operating income 803.1 8.1% 931.8 8.7% +16.0%

Depreciation and amortization expense (189.9) (1.9%) (233.5) (2.2%) +22.9%

Provision to the reversion reserve (5.0) (0.1%) (5.1) (0.0%) +2.9%

Variation in operating allowances (31.5) (0.3%) (44.2) (0.4%) +40.1%

Net operating income 576.6 5.8% 649.0 6.0% +12.5%

Net financial loss (128.6) (1.3%) (118.5) (1.1%) -7.9%

Companies accounted for by the equity method 55.3 0.6% 67.8 0.6% +22.5%

Amortization of goodwill (59.9) (0.6%) (61.0) (0.6%) +1.8%

Income from ordinary activities 443.4 4.5% 537.3 5.0% +21.2%

Extraordinary loss (51.1) (0.5%) (38.5) (0.4%) -24.8%

Income before taxes 392.3 3.9% 498.8 4.6% +27.1%

Corporate income tax (62.1) (0.6%) (109.7) (1.0%) +76.7%

Consolidated income for the year 330.2 3.3% 389.1 3.6% +17.8%

Loss attributable to minority interests (3.8) (0.0%) (8.9) (0.1%) +132.6%

Net income attributable to the Parent Company 326.4 3.3% 380.3 3.5% +16.5%

2002 % 2003 % Var.03/02

1.2.1 Net sales

Net sales amounted to E10,734 million in 2003, nearly 8% higher than the aggregate sales of the two groups in 2002.

The detail, by market, is as follows:

Breakdown of Sales by MarketPro forma figures

(Millions of Euros)

Spain 8,233.9 82.7% 9,151.1 85.3% +11.1%

Abroad 1,728.3 17.3% 1,582.5 14.7% -8.4%

Total 9,962.1 10,733.6 +7.7%

2002 % 2003 % Var.03/02

The decrease in sales abroad was due mainly to the substantial reduction in international construction activity following the

sale of Obrecol, ACS’s Portuguese subsidiary, at the end of 2002, to the repercussions of the Latin-American crisis and to

the impact of the appreciation of the euro in 2003.

BUSINESS PERFORMANCE OF THE ACS GROUP IN 20031


Translation of financial statements originally issued in Spanish and prepared in accordance with generally accepted accounting principles in Spain (see Note 25). In the event of a discrepancy, the Spanish-language version prevails.

48 49

Í N D I C E


INFORMATION

3

The detail, by business line, of total net sales is as follows:

Net salesPro forma figures

ACS GROUP

ANNUAL REPORT

2003

Net operating incomePro forma figures

(Millions of Euros)

Construction 5,329.7 53.0% 5,594.9 51.7% +5.0%

Industrial services 2,826.9 28.1% 3,069.2 28.4% +8.6%

Services and concessions 1,906.5 18.9% 2,160.6 20.0% +13.3%

Parent Company/Adjustments (100.9) (91.1) -9.8%

Total 9,962.1 10,733.6 +7.7%

2002 %* 2003 %* Var.03/02

1.2.2 Gross operating income

Gross operating income amounted to E932 million in 2003, up 16% on 2002, boosted by the sound performance

of the Construction and Industrial Services business, which reported growth of over 10%, the excellent trend in the

Services business, which grew by 19%, and the significant reduction of corporate general expenses, as shown in the

table below:

* Percentages calculated based on total sales for all business lines

Gross operating incomePro forma figures

(Millions of Euros)

Construction 385.4 45.0% 424.3 43.7% +10.1%

Industrial services 245.7 28.7% 277.6 28.6% +13.0%

Services and concessions 224.7 26.3% 268.1 27.6% +19.3%


Total 803.1 931.8 +16.0%

2002 %* 2003 %* Var.03/02

The ratio of gross operating income to sales was 8.7%, 60 basis points more than in 2002. This substantial improvement

was due in part to the trend in personnel expenses, which rose by only 5.6% and enabled the Group to increase total

productivity. More specifically, and since the average headcount in 2003 was approximately 97,900 employees, up 7%

on the aggregate figure for 2002, the average cost per employee was E25,360, down 1% on the pro forma figure for

the previous year.

1.2.3 Net operating income

Net operating income amounted to E649 million, up 12.5% on 2002, following a 40% increase in operating allowances,

mainly in the construction business, and a 23% rise in the depreciation and amortization expense as a result of the increase

in investments in more capital-intensive projects, in particular in the Services business.

* Percentages calculated based on total gross operating income for all business lines

(Millions of Euros)

Construction 312.2 48.8% 330.9 47.6% +6.0%

Industrial services 202.5 31.6% 227.3 32.7% +12.3%

Services and concessions 125.3 19.6% 137.0 19.7% +9.3%


Total 576.6 649.0 +12.5%

2002 %* 2003 %* Var.03/02

The ratio of net operating income to sales was 6.0%, 20 basis points more than in 2002.

1.2.4 Net financial loss

The net financial loss in 2003, which amounted to E118.5 million (8% less than in 2002), includes net exchange gains of

E25.3 million, the detail being as follows:

* Percentages calculated based on total net operating income for all business lines

Financial expenses totaled E195.1 million in 2003, of which E154.7 million related to interest on loans from credit

institutions and E35.7 million to exchange losses. The remaining E4.7 million arose from the variation in investment

valuation allowances.

Total financial revenues in 2003 exceeded E76.6 million, of which E10.4 million related to exchange gains.


Interest paid (218.2) (154.7) -29.1%

Financial allowances (1.5) (4.7) +215.2%

Exchange losses (39.9) (35.7) -10.5%

Financial expenses (259.6) (195.1) -24.8%

Interest received 99.8 66.2 -33.6%

Exchange losses 31.2 10.4 -66.7%

Financial revenues 130.9 76.6 -41.5%

Net interest accrued (118.4) (88.5) -25.3%

Financial allowances (1.5) (4.7) +215.2%

Exchange losses (8.7) (25.3) +190.7%

Total (128.6) (118.5) -7.9%

Financial lossPro forma figures


The detail, by business line, is as follows:

December 31

(Millions of Euros)

Due from shareholders for uncalled capital 24.6 0.2% 8.9 0.1% -63.6%

Start-up expenses 20.0 0.2% 15.9 0.1% -20.8%

Intangible assets 361.7 3.6% 421.3 3.8% +16.5%

Tangible fixed assets 1,402.0 13.9% 1,533.8 13.7% +9.4%

Long-term investments 1,199.1 11.9% 1,383.6 12.3% +15.4%

Total fixed and other noncurrent assets 2,982.8 29.5% 3,354.6 29.9% +12.5%

Goodwill 828.5 8.2% 1,039.9 9.3% +25.5%

Deferred Charges 41.8 0.4% 43.4 0.4% +4.0%

Inventories 414.5 4.1% 424.9 3.8% +2.5%

Accounts receivable 4,788.9 47.4% 5,159.2 46.0% +7.7%

Short-term investments 610.4 6.0% 744.4 6.6% +22.0%

Treasury stock 26.9 0.3% 26.9 0.2% +0.0%

Cash 344.9 3.4% 383.1 3.4% +11.1%

Accrual accounts 35.6 0.4% 40.9 0.4% +14.9%

Current Assets 6,221.1 61.6% 6,779.4 60.4% +9.0%

TOTAL ASSETS 10,098.7 100.0% 11,226.3 100.0% +11.2%

2002 Pf % 2003 % Var.03/02

Shareholders’ Equity 1,805.5 17.9% 1,796.4 16.0% -0.5%

Minority Interests 103.1 1.0% 99.3 0.9% -3.7%

Exchange losses 5.2 0.1% 3.6 0.0% -31.3%

Deferred revenues 118.4 1.2% 135.6 1.2% +14.6%

Project financing 305.3 3.0% 316.2 2.8% +3.6%

Provisions for contingencies and expenses 192.1 1.9% 405.7 3.6% +111.2%

Payable to credit institutions 630.0 6.2% 611.8 5.4% -2.9%

Other long-term payables 90.6 0.9% 116.9 1.0% +29.0%

Total long-term debt 720.6 7.1% 728.7 6.5% +1.1%

Payable to credit institutions 1,025.4 10.2% 1,456.9 13.0% +42.1%

Trade accounts payable 4,695.8 46.5% 5,059.2 45.1% +7.7%

Other payables 1,127.3 11.2% 1,224.6 10.9% +8.6%

Total current liabilities 6,848.5 67.8% 7,740.8 69.0% +13.0%

TOTAL SHAREHOLDERS’ EQUITY & LIABILITIES 10,098.7 100.0% 11.226,3 100.0% +11.2%

1.3. CONSOLIDATED BALANCE SHEET

50 51

Í N D I C E


INFORMATION

3

ACS GROUP

ANNUAL REPORT

2003

1.2.5 Income from ordinary activities

Income from ordinary activities rose 21% to E537.3 million, which represented 5% of sales. The net income contributed

by investees accounted for by the equity method amounted to E67.8 million, an increase of 22.5%, and included most

notably the contributions of Abertis (E38.8 million) and Urbis (E17.4 million).

The amortization of the goodwill arising on the acquisitions made in recent years amounted to E61 million, up 2% on the

pro forma figure for 2002. Of this amount, E42 million relate to the goodwill which arose on the purchase of a 33.5%

holding in the Dragados Group.

1.2.6 Extraordinary loss

The balance of this caption, which amounted to -E38.5 million, relates mainly to provisions for exceptional contingencies,

of which approximately E18 million arose in connection with investments in telecommunications. The 25% decrease

with respect to 2002 is due largely to the fact that the figure for 2002 included the loss on the sale of HBG (E71 million).

1.2.7 Net income attributable to the Parent Company

The net income attributable to the Parent Company exceeded E380 million (up 16.5%) despite the rise of over 75% in

the tax charge with respect to the pro forma figure for 2002. This rise was the result of an increase of 9 percentage points

in the effective tax rate due to the tax credits recorded exceptionally in 2002 to capitalize on the changes in tax legislation.

1.3.1 Long-term assets

Long-term assets, which are taken to be the sum of the fixed and other noncurrent assets plus the balance due from

shareholders, goodwill and deferred charges, increased by 15% from E3,878 million at 2002 year-end to over E4,400 as

of December 31, 2003. The balance of the “Consolidation Goodwill” caption, which resulted from the acquisitions made

in recent years, amounted to E1,040 million, up 25% on the pro forma figure for 2002, as a result of the purchase of a

10% holding in Grupo Dragados in March 2003. Of the aforementioned amount, E781 million arose from this transaction.


52 53

Í N D I C E


INFORMATION

3

ACS GROUP

ANNUAL REPORT

2003


Project financing (305.3) (316.2) +3.6%

Net debt with recourse (673.3) (914.4) +35.8%

Long-term bank debt (630.0) (611.8) -2.9%

Short-term bank debt (1,025.4) (1,456.9) +42.1%

Cash + IFT + treasury stock 982.1 1,154.4 +17.5%

Total Net Debt (978.6) (1,230.6) +25.7%

Gearing* 38% 51%

Breakdown of Net DebtPro forma figures

*Net debt with recourse / shareholders’ equity

This amount, which is equivalent to 27% of the Group’s stock market capitalization at 2003 year-end (down 3% on the

same ratio at 2002 year-end), is less than the acquisition cost (E1,318 million) of the shares retired in the merger process.

Of the total net debt, E316 million relate to project financing without recourse for the shareholder and, accordingly,

the ratio of net debt with recourse to consolidated shareholders’ equity at 2003 year-end was 50.8%.

Long-term payables to credit institutions amounted to E612 million, virtually the same as the balance drawn down at

2002 year-end. Short-term payables to credit institutions at 2003 year-end totaled E1,457 million, E431.5 million more

than in 2002. This figure includes the financing of the tender offer launched in March 2003 for 10% of Dragados Group.

The aggregate balance of the “Cash” and “Short-Term Investments” captions amounted to E1,127 million, up 18%

on December 2002, and the balance of treasury stock as of December 31, 2003, was E27 million, relating to the indirect

holding of 902,453 shares owned by Dragados Group at the date of the merger.

1.3.4 Shareholders’ equity

Shareholders’ equity amounted to E1,796 million, virtually the same as the pro forma balance at 2002 year-end.

This figure includes the extraordinary provision for merger expenses, which amounted to E111.5 million after taxes, and

the adjustment for the retirement of shares in the merger.

Variations in Shareholders’ Equity

(Millions of Euros)

ACS Shareholders’ Equity at 12/31/2002 980.4

DRC Shareholders’ Equity at 12/31/2002 1,122.0

Retirement of 25% of DRC goodwill (1) (296.9)

Pro forma Shareholders’ Equity at 12/31/2002 1,805.5

Retirement of 10% of DRC goodwill (2) (112.2)

Pro forma 2003 net attributable income 380.3

2002 ACS dividend (46.1)

2002 DRC final dividend (15.3)

2003 interim dividend (42.7)

Translation differences and other (61.6)

Extraordinary provision for merger expenses (111.5)

Shareholders’ Equity at 12/31/2003 1,796.4

(1) 23.5% acquired from SCH on April 18, 2002, plus 1.5% of treasury stock (2) 10% acquired in the tender offer

On December 18, the Board of Directors declared an interim dividend of E0.36 per share, which was paid on January 15, 2004,

giving rise to a reduction of E42.7 million in shareholders’ equity as of December 31, 2003.


1.3.2 Working capital

At 2003 year-end the net working capital deficiency amounted to -E660 million, a year-on-year improvement of 13%.

The 7.7% increase in accounts receivable was offset by a proportional rise in trade accounts payable. Furthermore,

the balance of the “Other Payables” caption rose by 8.6%, which favored the upward trend in working capital.

1.3.3 Net debt

The net on-balance-sheet debt totaled E1,230 million, up 25.7% on the figure at 2002 year-end, the detail being as

follows:

The variations in shareholders’ equity in 2003 were as follows:

54 55

Í N D I C E


INFORMATION

3

ACS GROUP

ANNUAL REPORT

2003

1.4.1 Net cash flows from operations

The funds obtained from operations amounted to E743.8 million in 2003, up 29% on the pro forma figure for 2002.

A further E74.6 million were generated through the management of working capital, bringing the net cash flow from

operations up to E818.5 million.

Net cash flows from investment activities (457.3) (543.0) +18.8%

Inc/(Dec) Short-term loans from banks 671.7 431.5

Inc/(Dec) Project financing 3.7 10.9

Inc/(Dec) Long-term loans from banks (168.9) (18.2)

Bank financing 506.5 424.2 -16.2%

less: Dividends paid (62.0) (56.3)

less: Acquisition of treasury stock(1) (957.7) (384.5)

Own financing (1,019.6) (440.8) -56.8%

Other sources of financing 16.9 (86.6) n.a.

Net cash flows from financing activities (496.2) (103.2) -79.2%

Inc/(Dec) Cash & short-term investments (36.7) 172.3

Cash and short-term investments at the beginning of the year 991.9 955.2 -3.7%

Short-term investments at year-end 955.2 1,127.5 +18.0%

(1) Includes the amount paid for the purchase of 33.5% of Dragados: 23.5% in 2002 and a further 10% through the tender offer

launched in the first quarter of 2003. The balance for 2002 also includes the shares of treasury stock acquired by Dragados (E58

million)




add: Dividends received from subsidiaries 38.3 57.3

add: Interest received 98.7 66.2

less: Interest paid (195.5) (154.7)

less: Extraordinary operating loss (82.8) (47.1)

less: Corporate income tax (83.8) (109.7)

Funds obtained from operations 578.1 743.8 +28.7%

Dec/(Inc) Trade receivables, cons. work pend. cert. and other accounts receivable (317.3) (370.4)

Dec/(Inc) Inventories 23.3 (10.4)

Inc/(Dec) Trade accounts payable 643.1 363.4

Inc/(Dec) Others payables and provisions (10.5) 92.0

Variation in net working capital 338.7 74.6 n.a.

Net cash flows from operating activities 916.7 818.5 -10.7%

less: Intangible asset and tangible fixed asset additions (547.4) (381.2)

less: Investments in concession projects (136.3) (175.2)

less: Long-term investment additions (159.9) (101.1)

Fixed assets additions (843.6) (657.5) -22.1%

Fixed assets disposals 386.3 114.5 -70.4%

Cash Flow StatementPro forma figures

1.4. CONSOLIDATED CASH FLOW STATEMENT

Net investments amounted to E543 million, 18.8% more than the aggregate net figure for the two companies in 2002.

1.5.1. CONSTRUCTION

Main aggregatesPro forma figures

1.5. EARNINGS BY BUSINESS LINE


Sales 5,329.7 5,594.9 +5.0%


Margin 7.2% 7.6%


Margin 5.9% 5.9%

Ordinary income 320.3 341.3 +6.6%

Margin 6.0% 6.1%

Net income 224.5 214.8 -4.3%

Margin 4.2% 3.8%

Breakdown of InvestmentPro forma figures

(Millions of Euros)

Construction 83 83 (20) 63

Industrial services 75 41 116 (21) 95

Services and concessions 294 134 428 (74) 354

Parent Company 31 31 31

Total 483 175 658 (115) 543

Projects Investments Investments

The main regular investment items related to construction machinery and industrial facilities, equipment for environmental

and port services, and the renewal of the bus fleet.

Also, E175 million were invested in projects, mainly for transport infrastructure concessions, processing and recycling

plants and wind-powered facilities.

Fixed asset disposals, which totaled E115 million in 2003, related basically to the renewal of the machinery used in the

Construction business and of the bus fleet at Continental Auto.

Concession Total NetFixed Assets Divestments

1.4.2 Investments and divestments

Total Group investments in 2003 amounted to E658 million, disregarding the purchase of Dragados, the detail being

as follows:

56 57

Í N D I C E


INFORMATION

3

ACS GROUP

ANNUAL REPORT


At 2003 year-end the construction backlog amounted to over E7.9 billion, a year-on-year increase of 4.3%, equivalent

to approximately 17 months of production. The order book for Spain, which accounts for nearly 89% of the total, grew

by almost 7%, whereas the international order book fell by 11%, due mainly to the appreciation of the euro against the

U.S. dollar.

1.5.2. INDUSTRIAL SERVICES

Main aggregatesPro forma figures


Sales 2,826.9 3,069.2 +8.6%

Gross operating income 245.7 277.6 +13.0% Margin 8.7% 9.0%


Margin 7.2% 7.4%

Income from ordinary activities 157.1 199.0 +26.7%

Margin 5.6% 6.5%

Net income 99.5 132.0 +32.6%

Margin 3.5% 4.3%

Total growth in construction sales was underpinned by the Group’s sound performance in the Spanish market, which increased

by 10.7%, including most notably the 16.5% rise in building construction (both residential, institutional and commercial),

as shown in the table below:


Spanish 4,645.3 5,144.0 +10.7%

Civil engineering work 2,764.3 2,952.1 +6.8%

Non-residential building construction 1,242.6 1,430.8 +15.1%

Residential building construction 638.4 761.1 +19.2%

Foreign 684.4 450.9 -34.1%

Total 5,329.7 5,594.9 +5.0%

Breakdown by Line of BusinessPro forma figures

Construction activity abroad fell sharply as a result of the downturn in the Latin-American market, the depreciation of the

U.S. dollar and the sale of Obrecol, the ACS Group’s Portuguese subsidiary, at the end of 2002.

Gross operating income rose by 10.1%, bringing the sales margin to 7.6%. As a result of the increase in the depreciation

and amortization expense and in operating allowances, net operating income rose by 6% and the sales margin remained

stable at 5.9%.

The extraordinary provisions recorded for the construction activity abroad and the increase of over 4 percentage points in

the tax rate prompted net income to fall by 4.3% to E215 million.

Sales, both in Spain and abroad, performed well, with growth of around 9%. Sales abroad in 2003 totaled E937 million,

which represented 31% of consolidated industrial services sales.


Distribution networks 692.0 780.6 +12.8%

Energy projects 569.0 728.4 +28.0%

Telecommunications 367.6 301.2 -18.1%

Control systems 441.7 445.9 +1.0%

Industrials systems 756.6 813.2 +7.5%

Total 2,826.9 3,069.2 +8.6%

Breakdown by Line of Business Pro forma figures

The table above shows the breakdown of sales by activity. The most notable developments in 2003 were as follows:

- The excellent growth (+28%) achieved in energy projects, due to the installation of new electricity generation plants,

mainly combined-cycle and renewable energy plants, and to the development and construction of off-shore plants, amply

offset the reduced activity, for the third consecutive year, in the telecommunications business (-18%). Once again in 2003,

the telecommunications industry was hit by the low level of investment from domestic and international operators.

- The energy distribution network activity experienced sound growth (+13%) owing to the increasing demand from electric

utilities for network maintenance and extension services. The electric utilities are attempting to increase the quality of

their services in an environment of rising consumption and, at the same time, to improve the efficiency of their operations.

- Control systems achieved only very moderate growth (+1%), since the good performance of traffic control, which reported

a two-digit increase, was mitigated by a reduced contribution of the railroad systems business, which was affected by

the completion of several projects for the installation of high-speed railroad systems.

- The industrial systems area grew at a rate slightly above that of the economy as a whole, albeit with greater consistency

in the Spanish market, which accounts for over 66% of its business.

As regards the ACS Group’s operating results, gross operating income increased by 13%, triggering a 30-basis point rise

in the sales margin to 9.0%. Net operating income also performed well (+12.3%), prompting the sales margin to rise to

7.4%. The sharp rise in net income, with a year-on-year increase of 32.6%, was due mainly to the substantial decrease

in financial expenses.

With a backlog of over E3.0 billion (up 10% on 2002) and a sound base of maintenance contracts not included in this

figure, the outlook for the industrial services business line in the coming years is very promising.

No significant assets were sold in 2003, whereas in 2002 gains of around E43 million were obtained on the sale of

concessions such as the M-45 sections and Aulesa, which explains the variation in the net income figure.

1.5.4. OTHER

The contribution of Inmobiliaria Urbis to the ACS Group’s income amounted to E17.4 million, 25% more than in 2002.

Corporate general expenses totaled E38 million, down 27.5% on the figure for 2002. This reduction was the result of the

increased coordination between ACS and Dragados prior to the merger, which aimed at improving management efficiency

through an exhaustive cost control.

Prior to the merger, Grupo Dragados S.A. held, both directly and indirectly, 4,255,850 shares of treasury stock amounting to

E60.1 million. On the date of the merger, the 2,396,253 shares owned directly by it, representing 1.39% of the capital stock

and with an acquisition cost of E33.3 million, were retired.

The remaining 1,859,597 indirectly-owned shares of treasury stock were exchanged in the merger for 902,453 new shares

of ACS, Actividades de Construcción y Servicios, S.A., which represent the balance of indirectly-owned treasury stock at

2003 year-end.

TREASURY STOCK2

The ACS Group’s strategy focuses on achieving the highest possible degree of customer satisfaction. Technological

innovation in the development of new products and services is one of the cornerstones of our commitment to provide

RESEARCH AND DEVELOPMENT ACTIVITIES3

58 59

Í N D I C E


INFORMATION

3

ACS GROUP

ANNUAL REPORT


SERVICES

Main aggregates Pro forma figures

1.5.3 SERVICES AND CONCESSIONS


Sales 1,899.3 2,157.1 +13.6%


Margin 12.1% 12.8%


Margin 6.5% 6.6%

Income from ordinary activities 79.8 90.5 +13.4%

Margin 4.2% 4.2%

Net profit 101.0 63.7 -36.9%

Margin 5.3% 3.0%

All areas of the services business line performed excellently in 2003, in particular port and logistics services, which reported

growth of over 21%, as shown in the table below:


Environment 903.2 985.5 +9.1%

Port and logistics 454.4 552.1 +21.5%

Passenger transport 142.1 157.4 +10.8%

Integral maintenance 399.6 462.1 +15.6%

Total 1,899.3 2,157.1 +13.6%

Breakdown by Line of Business Pro forma figures

Services provided abroad, which accounted for 9% of total services, contributed 7.5% to this growth, whereas sales

in the Spanish market increased by over 14%.

Also worthy of note was the substantial improvement in gross operating income, which grew by 19.2%, bringing the

sales margin to 12.8%, a 70-basis point increase with respect to 2002. All services activities recorded improved margins

in 2003. Net operating income rose by 16.4%, leading to a 10-basis point improvement in the sales margin to 6.6%.

The extraordinary gain of approximately E24 million obtained on the sale in 2002 of Redal, the Rabat water and urban

services company, and the 30% increase in the tax rate applicable to Urbaser were the main reasons underlying the

37% fall in net income to E64 million in 2003.

At 2003 year-end the environmental services backlog amounted to E7.8 billion, guaranteeing over 6 years of activity.

The backlog for the other activities, mainly port, logistics and transport services, which totaled E4.6 billion, related to

the long-term contracts or concessions that were in force at year-end.

TRANSPORT INFRASTRUCTURE CONCESSIONS

Main aggregates Pro forma figures


Sales 7.1 3.4 -51.7%

Gross operating income -6.1 -7.1 +16.5%

Net operating income 2.7 -5.7 -306.6%

Companies accounted for by the equity method 45.0 44.8 -0.6%

Net gains 42.7 10.4 -75.7%

Attributable net income 103.7 55.2 -46.7%

The contribution of Abertis to the ACS Group’s income was E38.8 million, 15.4% less than the contribution made in

2002 by Aurea, which in that year benefited from an exceptionally low tax rate.

The remaining balance (E6 million) of the income from companies accounted for by the equity method was contributed

by various concessions that have already commenced operations, including Ruta de los Pantanos in Madrid, Rutas del

Pacífico in Chile, Platinum Corridor in South Africa and the airport concessions.

60 61

Í N D I C E


INFORMATION

3

ACS GROUP

ANNUAL REPORT


an integrated service capable of catering for our customers’ needs. Through the various committees established for this

purpose, the ACS Group performs, at each of the Group companies, an exhaustive quality control of the products,

processes and services it offers.

- On January 15, 2004, pursuant to the resolution adopted by the Company’s Board of Directors on December 18, 2003,

the ACS Group paid its shareholders a gross dividend out of 2003 income of E0.36 per share, equal to 50% of the total

dividend paid in 2002.

- In connection with the acquisition of a 33.5% holding in Dragados Group, the Company obtained an E832.7 million loan

granted on a 50/50 basis by Caja Madrid and La Caixa. In order to restructure this debt, on March 9, 2004, the Company

arranged a long-term syndicated loan of E900 million with several credit institutions. This loan, which matures in 2008

and 2009, bears interest at a rate tied to Euribor plus a variable spread based on compliance with certain ratios.

SIGNIFICANT EVENTS SUBSEQUENT TO YEAR-END4

The future prospects for the construction industry continue to be very good, despite the fact that certain signs can be detected

in the data for the last few months that point to a slowdown in the activity of the residential market.

One of the most significant growth factors is the Spanish Government’s National Infrastructures Plan which is valued at

over E100 billion and aims to improve Spain’s infrastructures over the period from 2000 to 2010. This Plan envisages the

development of new road networks and the improvement of those already in service, the expansion of the railroad network,

in particular for high-speed trains, the improvement of the major airports, the modernization of the ports and the performance

of other projects relating to the communication networks in Spain. The Plan will be backed by private-sector players through

the promotion of new financing formulas designed to actively involve them in the management of the projects.

Significant headway is once again being made in the Industrial Services industry in Spain. Particularly worthy of note is the

stability of the more traditional businesses, such as distribution network management or industrial systems, in which the

large energy utilities are outsourcing an increasing number of high value-added services, enabling them to adjust their costs

to an improved service offering. Furthermore, an increasingly important role is being played by certain other activities with

enormous growth potential, such as energy projects and the development of control systems, whereas investments in the

telecommunications industry remain sluggish, despite certain signs of an upswing.

Within the Services area, the Group has numerous opportunities for expansion:

- The Environment industry has enormous growth potential for new businesses as a result of increasingly stringent legislation

and the greater level of concern shown by society. Current industry trends signal an increasing use of technology in waste

treatment and recycling processes, the development of green business activities, an improved management of water

resources and the optimization of industrial processes. In the environmental area, the Group has its own highly-competitive

technology, placing it among the market leaders in the development and management of urban solid waste treatment

and recycling plants, which currently are the most dynamic business areas.

OUTLOOK FOR 20045

- The ACS Group’s Port and Logistics Services activity is experiencing substantial growth, in particular in container terminals

abroad and in automobile logistics, areas in which the Group has the leading Mediterranean container company.

- The prospects for Passenger Transport Services (including urban bus transport and urban and suburban light railroad

networks) are particularly encouraging, all the more so as a result of the current consolidation of road passenger transport

services.

- The Integral Maintenance area also has a very bright future owing to the increasing outsourcing of services of this kind

by large companies and the Group’s entry into new areas of activity.

Lastly, in the Concessions area, the ACS Group will continue to carry out the projects already under way and will continue to

expand, provided its criteria regarding prudence and profitability are strictly adhered to. The areas showing greatest potential

for expansion are tollroads, transport interchanges, light railways and airports.

62 63

Í N D I C E


INFORMATION

3

ACS GROUP

ANNUAL REPORT

2003

(Millions of Euros)

Net sales 8,825.1 1,908.5 10,733.6

Operating expenses (8,030.3) (1,771.5) (9,801.8)

Gross operating income 794.8 137.0 931,8

Depreciation and amortization expense (221.2) (61,6) (282.8)

Net operating income 573.5 75.4 649.0

Financial income (106.3) (9.2) (3.0) (118.5)

Companies accounted for by the equity method 60.8 22.4 (15.4) 67.8

Amortization of goodwill (54.7) (3.3) (3.0) (60.9)

Income from ordinary activities 473.4 85.4 (15.4) (6.0) 537.3

Extraordinary income (190.0) (7.4) 159.0 (38.5)

Income before taxes 283.4 77.9 (15.4) (6.0) 159.0 498.9

Corporate income tax (48.3) (14.9) 1.0 (47.5) (109.7)

Minority interests (5.6) (3.3) (8.9)

Net Income 229.5 59.7 (15.4) (5.0) 111.5 380.3

EXHIBIT: RECONCILIATION OF THE STATEMENTS OF INCOME PER BOOKS TO THE PRO FORMA STATEMENTS OF INCOME

(1) Addition of DRC in the operating accounts for the period from January 1 to April 30, 2003(2) Elimination of income from companies accounted for by the equity method relating to the DRC holding owned by ACS in the period from January 1-April 30, 2003(3) Adjustment of financial expenses, goodwill and taxes assuming that ACS owned 33.5% of DRC from January 1, 2003(4) Elimination of the extraordinary provision for merger expenses

Pro forma Adjustments

2003 DRC Elim. EqA. DRC Fin. Exp.+ Elim. Prov. for 2003 Account Jan.-April(1) Jan.-April(2) Goodwill(3) Ext. Merger(4) Pro forma2003

(Millions of Euros)

Net sales 4,420.2 5,541.9 9,962.1

Operating expenses (4,009.2) (5,149.8) (9,159.1)

Gross operating income 410.9 392.1 803.1

Depreciation and amortization expense (105.6) (120.8) (226.4)

Net operating income 305.3 271.3 576.6

Financial income (64.1) (43.9) (20.6) (128.6)

Companies accounted for by the equity method 47.0 66.1 (15.3) (42.5) 55.3

Amortization of goodwill (29.2) (11.1) (19.6) (59.9)

Income from ordinary activities 259.0 282.4 (42.5) (40.2) 443.4

Extraordinary income (8.6) (42.6) (51.1)

Income before taxes 250.4 239.9 (42.5) (40.2) 392.3

Corporate income tax (68.4) (16.2) 15.3 7.2 (62.1)

Minority interests (0.7) (3.2) (3.8)

Net Income 181.4 220.5 (42.5) (33,0) 326.4

(1) 2002 ACS operating account(2) 2002 DRC operating account(3) Adjustments to standardize income from companies accounted for the equity method relating to DRC and record this income net of taxes(4) Elimination of income from companies accounted for by the equity method relating to DRC holdings owned by ACS in 2002(5) Adjusments of financial expenses, goodwill and taxes assuming that ACS owned 33.5% of DRC from January 1, 2002

Pro forma Adjustments

2002 DRC Tax adjust. Elimination Fin. Exp. + 2002Account(1) Jan.-Dec.(2) DRC(3) EqA. DRC(4) Goodwill(5) Pro forma2002


64 65

Í N D I C E


INFORMATION

3

3.2.1. Balance Sheet


Consolidated Balance Sheets as of December 31, 2003 and 2002

ACS GROUP

ANNUAL REPORT

2003

(Thousands of Euros)

DUE FROM SHAREHOLDERS FOR UNCALLED CAPITAL 8,940 --

FIXED AND OTHER NONCURRENT ASSETS Start-up expenses (Note 8) 15,525 3,578 Intangible assets (Note 9) 239,640 67,560

Cost 336,965 112,848 Accumulated amortization -97,325 -45,288

Long-term assets in projects (Note 10) 641,922 238,987 Tangible fixed assets (Note 11) 1,073,899 363,126

Land and structures 345,004 127,114 Plant and machinery 876,815 272,258 Other tangible fixed assets 560,300 301,639 Advances and construction in progress 140,799 17,317 Accumulated depreciation -849,019 -355,202

Long-term investments 1,383,603 586,176 Investments accounted for by the equity method (Note 7) 1,081,186 364,071Loans to companies accounted for by the equity method 30,519 -- Long-term investment securities (Note 12) 152,584 193,171 Other receivables 181,951 68,239 Allowances (Note 12) -62,637 -39,305

TOTAL FIXED AND OTHER NONCURRENT ASSETS 3,354,589 1,259,427

CONSOLIDATION GOODWILL (Note 6) Fully consolidated companies 1,007,325 88,123 Companies accounted for by the equity method 32,569 578,690

TOTAL GOODWILL 1,039,894 666,813

DEFERRED CHARGES 43,440 13,704

CURRENT ASSETS Inventories (Note 13) 424,894 181,384 Accounts receivable (Note 14) 5,159,247 2,239,397

Trade receivables for sales and services 4,301,859 2,000,489Companies accounted for by the equity method 35,346 -- Other accounts receivable 914,489 264,500 Allowances -92,447 -25,592

Short-term investments 744,362 375,885 Short-term investments securities (Note 12) 410,375 245,391 Other loans 335,655 131,026 Allowances -1,668 -532

Short-term Parent Company shares 26,875 --Cash 383,140 164,863 Accrual accounts 40,910 13,054 TOTAL CURRENT ASSETS 6,779,428 2,974,583

TOTAL ASSETS 11,226,291 4,914,527

ASSETS 12/31/03 12/31/02


SHAREHOLDERS' EQUITY (Note 15) Capital stock 177,791 96,093 Additional paid-in capital 897,294 477,216 Revaluation reserve 2,122 2,122 Other reserves of the Parent Company 236,182 207,302

Unrestricted reserves 216,769 187,889 Restricted reserves 19,413 19,413

Reserves at fully or proportionally consolidated companies 429,384 79,743 Reserves at companies accounted for by the equity method 76,403 -2,833Translation differences -209,575 -60,617

At fully or proportionally consolidated companies -204,006 -28,266At companies accounted for by the equity method -5,569 -32,351

Income attributable to the Parent Company 229,508 181,411 Consolidated income 235,081 182,062 Income attributed to minority interests -5,573 -651

Interim dividend paid during the year -42,670 --

TOTAL SHAREHOLDERS' EQUITY 1,796,439 980,437

MINORITY INTERESTS (Note 16) 99,269 23,419

NEGATIVE CONSOLIDATION DIFFERENCE 3,588 34

DEFERRED REVENUES (Note 17) 135,599 29,038

PROJECT FINANCING (Note 10) 316,207 210,959

PROVISIONS FOR CONTINGENCIES AND EXPENSES (Note 18) 405,729 54,023

LONG-TERM DEBT (Note 19) Payable to credit institutions 611,791 212,090Payable to companies accounted for by the equity method 32,004 -- Other payables 84,182 13,658 Other long-term payables 698 -- TOTAL LONG-TERM DEBT 728,675 225,748

CURRENT LIABILITIES Payable to credit institutions (Note 19) 1,456,943 712,137Payable to companies accounted for by the equity method 5,568 -- Trade accounts payables 5,053,659 2,208,384 Other nontrade payables (Note 19) 1,008,592 410,576 Operating allowances 192,256 49,036 Accrual accounts 23,767 10,736 TOTAL CURRENT LIABILITIES 7,740,785 3,390,869

TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 11,226,291 4,914,527

SHAREHOLDERS' EQUITY AND LIABILITIES 12/31/03 12/31/02

The accompanying Notes 1 to 25 are an integral part of the consolidated balance sheet as of December 31, 2003


66 67

Í N D I C E


INFORMATION

3

3.2.2. Statement of Income


Consolidated Statements of Income for the years ended December 31, 2003 and 2002

ACS GROUP

ANNUAL REPORT

2003


EXPENSES: Cost of materials used and other external expenses 5,332,730 2,643,519 Decrease in finished goods and work-in-process inventories 1,837 15,873 Personnel expenses 1,975,527 919,564

Wages, salaries and similar expenses 1,516,870 721,022 Employee welfare expenses 458,657 198,542

Depreciation and amortization expense 192,094 82,472 Variation in operating allowances 29,129 19,680Other operating expenses 1,005,865 546,534Operating income 573,547 305,331 Financial expenses 125,275 92,720 Losses on short-term investments 159 -- Variation in investment valuation allowances 4,965 -- Exchange losses 23,935 2,450 Translation losses 387 251Financial income -- --Share in losses of companies accounted for by the equity method 1,629 --Amortization of goodwill (Note 6) 55,010 29,231 Income from ordinary activities 473,372 258,988 Losses on fixed assets 7,195 5,455 Variation in intangible asset, tangible fixed asset and control portfolio allowances (Note 22) 10,787 27,217

Losses on disposals of investments accounted for by the equity method -- 811

Extraordinary expenses (Note 22) 229,282 21,346 Prior years' expenses and losses 6,163 1,686

Extraordinary income -- -- Consolidated income before taxes 283,370 250,437 Corporate income tax (Note 20) 48,289 68,375 Consolidated income for the year 235,081 182,062 Income attributed to minority interests (Note 22) -5,573 -651Income for the year attributed to the Parent Company (Note 22) 229,508 181,411

DEBIT 12/31/03 12/31/02


REVENUES: Net sales (Note 22) 8,825,118 4,420,187 Increase in finished goods and work-in-process inventories -- 15,273 Capitalized expenses of Group work on fixed assets 48,558 11,732 Other operating revenues 237,053 85,781

Operating loss -- --Revenues from shareholdings 11 Other financial revenues 46,605 28,101 Income from short-term investments 1,790 234 Exchange gains -- 2,961

Financial loss 106,326 64,114 Share in the income of companies accounted for by the equity method 62,451 47,002 Reversal of negative consolidation differences 339 --Loss on ordinary activities -- --Gains on fixed assets (Note 22) 25,300 7,944 Gain on disposals of investments in fully or proportionally consolidated companies 7,225 --

Gains on disposal of investments in companies accounted for by the equity method (Note 22) 7,399 28,850 Capital subsidies transferred to income for the year 2,100 521

Extraordinary revenues 18,571 10,030Prior years' revenues and income 2,830 619

Extraordinary loss 190,002 8,551

CREDIT 12/31/03 12/31/02

The accompanying Notes 1 to 25 are an integral part of the 2003 consolidated statement of income


68 69

Í N D I C E


INFORMATION

3

9. Development, installation and maintenance of projects and construction work relating to traffic and lighting and

research and development of related software and hardware.

10. Environmental activities which range from consulting and engineering and the operation of water treatment facilities

to the management of industrial, urban, agricultural and hospital waste.

11. Construction, maintenance, operation and sale of electricity obtained through the use of wind power and other forms

of renewable energy.

12. Regular road passenger transportation, distribution of oil products by road, operation and management of bus stations

and the transportation of urgent packages.

13. Provision of lighting, urban maintenance, electrical installation, industrial cleaning and integral building maintenance

services.

14. Performance of all manner of telecommunications activities.

15. The provision of all manner of services, integral computer support, lease of goods and equipment and provision of

supplies to surgical, sanitary and hospital establishments.

16. Other supplementary activities encompassing the business activities not included in the foregoing categories.

3.2.3. Consolidated Report

Notes to Consolidated Financial Statements for the year ended December 31, 2003

On July 2, 2003, the Boards of Directors of ACS, Actividades de Construcción y Servicios, S.A. and Grupo Dragados, S.A.

approved the plan for the merger by absorption of Grupo Dragados, S.A. into ACS, Actividades de Construcción y

Servicios, S.A. This merger plan was approved by the respective Special Shareholders’ Meetings on October 14, 2003.

The merger balance sheets as of April 30, 2003 of the merged companies were prepared using the same presentation

methods as those used for the annual financial statements.

The share exchange ratio used for the merger was 33 shares of ACS, Actividades de Construcción y Servicios, S.A. of E1.5

par value each for 68 shares of Grupo Dragados, S.A. of E1 par value each.

From May 1, 2003, the transactions performed by the absorbed company are deemed to be performed by the absorbing

company.

Once the merger proceedings had been completed, the merger deed was executed on December 12, 2003, and registered

at the Mercantile Registry on the same day.

MERGER OF ACS, ACTIVIDADES DE CONSTRUCCIÓN Y SERVICIOS, S.A. AND GRUPO DRAGADOS, S.A.

1

ACS GROUP

ANNUAL REPORT

2003

The main activities of the ACS Actividades de Construcción y Servicios, S.A. Group and Subsidiaries are as follows:

1. Performance of all manner of private -or public- sector construction projects, performance of studies and provision

of counseling and technical assistance and, in general, of all manner of construction-related services.

2. Transport infrastructure concessions.

3. Management of services, mainly relating to urban cleaning, waste treatment, cleaning of interiors and integral building

maintenance.

4. Management of logistics and port services.

5. Industrial plant engineering and construction, performance of studies, projects and execution of all manner of

construction installation and erection work in relation to energy production and distribution.

6. Vertical and horizontal signposting of public roads, industrial paint and coatings, maintenance of installations and

buildings and integral road maintenance.

7. Undertaking and marketing of real estate developments.

8. Activities relating to change of image and the re-launch of companies or trade names, and all aspects relating to the

manufacture and installation of advertising items.

ACTIVITIES OF THE CONSOLIDATED GROUP2 The ACS Group is formed by the Parent Company ACS, Actividades de Construcción y Servicios, S.A. and the subsidiaries

and associated companies detailed in Exhibits I, II and III.

Under Royal Decree 1815/1991 regulating the rules for the preparation of the consolidated financial statements, the

subsidiaries detailed in Exhibit III were excluded from consolidation since they are presently inactive or are of scant interest

with respect to the true and fair view given by the consolidated financial statements as a whole.

The associated and multigroup companies included in the scope of consolidation of the ACS, Actividades de Construcción

y Servicios, S.A. Group are listed in Exhibit II.

COMPANIES COMPOSING THE ACS GROUP3

a) Consolidation principles

The accompanying consolidated financial statements were prepared from the 2003 accounting records of ACS, Actividades

de Construcción y Servicios, S.A. and of its subsidiaries whose respective individual financial statements were prepared

by their respective directors in accordance with the Spanish National Chart of Accounts. All the amounts in these

consolidated financial statements are expressed in thousands of euros.

As required by Spanish corporate law, the financial statements must show, in addition to the 2003 figures for each

item in the balance sheet and statement of income, the figures for 2002.

BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS4



70 71

Í N D I C E

3

COMPANY OWNERSHIP INTEREST REASON FOR INCLUSION

Dragados Proyectos Industriales de Méjico, S.A. de C.V. 95.00% Incorporation

Empresa Navarro, S.L. 100.00% Acquisition

Energías Ambientales de Outes, S.A. 60.00% Increase in ownership interest

Entabant Biocombustibles del Guadalquivir, S.A. 25.00% Acquisition

Entabant Biocombustibles del Pirineo, S.A. 30.00% Acquisition

Estación de Autobuses de Aguilar de Campoo, S.L. 33.33%

Ferrocarriles del Norte de Colombia, S.A. 4.32% Increase in ownership interest

Guadalquivir Sociedad Concesionaria de la Junta de Andalucía, Guadalmetro, S.A. 27.83% Incorporation

Hijos de Simon Maestra, S.A. 64.76% Acquisition

Integra MGSI, S.A. 32.25% Increase in ownership interest

Limpiezas La Guía, S.L. 49.00% Increase in ownership interest

Loma del Capón, S.L. 50.00% Formation

Masa Portugal, S.A. 25.00% Increase in ownership interest

Munirah Transmissora de Energia Ltda. 95.00% Formation

New And Publicity, S.A. 13.36% Increase in ownership interest

Nuevas Energías Valencianas, S.A. 100.00% Increase in ownership interest

Parque Eólico Valcaire, S.L. 55.00% Formation

Rashid Dragados Industrial, Ltd. 40.00% Formation

Remolcadores de Barcelona, S.A. 13.33% Increase in ownership interest

Road Management Services (Darrington) Holdings Ltd. 25.00% Formation

Senaxsa 100.00% Increase in ownership interest

Serra do Moncoso Cambas, S.L. 45.00% Formation

Servicios y Proyectos Industriales de Méjico, S.A. de C.V. 25.00% Increase in ownership interest

Setec Solucoes Energeticas de Transmissao e Controle Ltda. 100.00% Formation

Sociedad Industrial de Construcciones Eléctricas, S.A. 100.00% Incorporation

SP Cobra Instalaçoes e Serviços, Ltda. 100.00% Increase in ownership interest

STE-Sul Transmissora de Energia, Ltda. 49.90% Formation

Tag Red, S.A. 50.00% Incorporation

Tecnologías Medioambientales del Golfo, S.A. de C.V. 50.00% Incorporation

Tracemar Inversiones, S.L. 100.00% Formation

Trasinal, S.A. 100.00% Acquisition

Tratamiento de Aceites y Marpoles, S.L. 50.00% Increase in ownership interest

Valorga Internacional, S.A.S. 40.00% Incorporation

Vent, Sol y Energía, S.A. 100.00% Increase in ownership interest

ACS GROUP

ANNUAL REPORT

2003

The financial statements of ACS, Actividades de Construcción y Servicios, S.A. and its subsidiaries, which were

prepared by its directors, will be submitted for approval by the respective Shareholders' Meetings and it is considered

that they will be approved without any changes.

The companies detailed in Exhibit I in which a majority of the voting rights in their representation and decision-

making bodies is held or in which, although there is not such a majority, effective management is exercised, were

fully consolidated. The multigroup companies which are managed jointly with third parties were proportionally

consolidated.

The companies in which significant influence is exercised but a majority of the voting rights is not held or effective

management is not exercised were accounted for by the equity method.

The proportionally consolidated companies and the companies accounted for by the equity method are detailed in Exhibit II.

The equity of minority interests in the net worth in and results of the consolidated subsidiaries is presented under

the "Minority Interests" caption on the liability side in the consolidated balance sheet and under the "Income

Attributed to Minority Interests" caption in the consolidated statement of income.

b) Comparative information

As required by Spanish corporate law, the financial statements must show, in addition to the 2003 figures for each

item in the balance sheet and statement of income, the figures for 2002.

In view of the merger performed in the year, the figures in the financial statements for 2003 are not comparable

with those for 2002:

- The Group’s balance sheet includes the assets and liabilities as of December 31, 2003.

- The statement of income includes through April 30 the holding in Dragados Group accounted for by the equity method.

From May 1 through December 31, 2003, it includes the results for this period of all the companies belonging to the

former Dragados Group.

In order to facilitate comparison between the 2003 and 2002 figures a supplementary explanation is provided in each

of the notes to consolidated financial statements when the effect of the merger is significant.

c) Variations in the scope of consolidation

The most significant variations in the scope of consolidation in 2003 were as follows:

Inclusions and increases in ownership interest

Inclusions due to merger: As a result of the merger with Grupo Dragados, S.A., its investees as of April 30, 2003

that are detailed in Exhibit V were included in the scope of consolidation.

COMPANY OWNERSHIP INTEREST REASON FOR INCLUSION

Artemis Transmissora de Energia Ltda. 51.00% Formation

Autobuses García, S.A. 100.00% Acquisition

Autovía de la Mancha, S.A.C.J.CC. Castilla La Mancha 66.66% Incorporation

Construrail, S.A. 60.00% Incorporation

Cuerda de Rodaderos, S.L. 60.00% Formation

Dragados A1, Ltd. 100.00% Formation

In addition to the inclusions due to merger, the inclusions in the scope of consolidation in 2003 were as follows COMPANY OWNERSHIP INTEREST REASON FOR EXCLUSION

Dragados FCC Internacional de Construcción, S.A. 100.00%Merger by absorption with

Dragados Obras y Proyectos, S.A.

Cevasa & Roura Brasil, Ltda. 100.00% Inactive

Cevasa & Roura Venezuela, Ltda. 100.00% Inactive

Cevasa Perú, S.A. 100.00% Inactive

Cevasa & Roura Chile, Ltda. 100.00% Inactive

Roura Cevasa Argentina, S.A. 100.00% Inactive

Covaersa, S.A. 50.00% Sale

MPC Engenheria Brasil 87.00% Sale

Dinec 1, S.A. de C.V. 3.44% Sale

Exclusions from the scope of consolidation


INFORMATION



72 73

Í N D I C E

3

c) Standardization of items

In order to uniformly present the items included in the accompanying consolidated financial statements, the valuation

principles and standards adopted by the Parent Company, regulated in the Commercial Code, the Corporations Law

and related enacting regulations and in the Spanish National Chart of Accounts and the adaptations thereof for the

related industries were applied at all the consolidated companies.

The main uniformity adjustments relate to foreign toll-road concession-holders in accordance with the Ministerial

Order dated December 30, 1998, enacting the standards for adaptation of the Spanish National Chart of Accounts

for toll-road, tunnel, bridge and other tollway concession-holders, and to water supply and treatment companies in

accordance with the Ministerial Order dated December 10, 1998, enacting the standards for adaptation of the Spanish

National Chart of Accounts for water supply and treatment companies.

d) Translation of financial statements denominated in foreign currencies of companies abroad

The assets and liabilities in the financial statements of the foreign subsidiaries included in consolidation were translated

to euros at the year-end exchange rate, capital and reserves were translated at historical exchange rates, and income

statement accounts were translated by applying the average exchange rates for the year. The resulting translation

difference is recorded under the “Shareholders’ Equity-Translation Differences” caption, net of the portion relating

to minority shareholders, which is included under the “Minority Interests” caption on the liability side of the consolidated

balance sheet.

The translation differences arising at foreign companies which are indirect investees of Grupo Dragados, S.A. were

included under the "Shareholders' Equity-Reserves at Fully and Proportionally Consolidated Companies”, and

"Shareholders' Equity-Reserves at Companies Accounted for by the Equity Method" captions. These balances were

reclassified to the “Translation Differences” caption as of December 31, 2003.

The financial statements of Group companies in certain South American countries were adjusted for the effect of inflation,

in accordance with the legislation in force in the countries concerned and with generally accepted accounting principles.

This adjustment gave rise to a nonmaterial variation in consolidated reserves and income.

e) Start-up expenses

Start-up expenses, which comprise capital increase and preopening expenses, are recorded at cost and relate to public

deed and registration expenses and taxes. These costs are recorded net of amortization, which is taken over a maximum

period of five years.

f) Intangible assets

This caption comprises:

1. Rights on assets leased under financial lease contracts, which are recorded as intangible assets at the cash cost

of the leased assets and the lease payments payable plus the amount of the purchase option are recorded as a

liability. The difference between the lease liability and the net value of the assets is recorded as deferred charges.

ACS GROUP

ANNUAL REPORT

2003

Satel Telecomunicación, S.L. 100.00% Merger by absorption of Telsa Instalaciones

de Telecomunicaciones y Electricidad, S.A.

Telsa Sistemas, S.A. 100.00% Merger by absorption of Telsa Instalaciones

de Telecomunicaciones y Electricidad, S.A.

Servicios Off Shore, S.A. de C.V. 5.00% Sale

Infotransit, S.A. 55.00% Dissolution

The changes in the scope of consolidation that had a significant impact were explained in the related notes to financial

statements.

d) Joint ventures

The various captions in the balance sheets and income statements of the joint ventures in which the Group companies

have an ownership interest are included in proportion to the holding owned therein. The main joint ventures operating

in the year ended December 31, 2003, are detailed in Exhibit IV.

The main valuation methods applied in preparing the accompanying consolidated financial statements were as follows:

a) Goodwill and negative consolidation difference

Goodwill was calculated as the positive difference between the cost of the investment in each of the consolidated

companies at the date of consolidation and the underlying book values of these holdings per the available balance

sheets prepared closest to the acquisition date.

Goodwill arising from the acquisition of a foreign company is treated as an asset in the country in which the investment

is made and, accordingly, is translated at the year-end exchange rate.

If the positive difference relates to unrealized gains on the subsidiary’s asset items, it is recorded as an increase in

the value of these assets.

Goodwill is systematically amortized over the estimated period during which it will contribute to the generation of

income for the Group (up to 20 years).

The negative consolidation difference was calculated as the negative difference between the cost of the investment

and the underlying book value of the holding at the date of its inclusion in the Group.

If the negative difference relates to contingent or undervalued liabilities, it is recorded as an increase in the amount of

these liabilities.

This negative difference is recorded in the statement of income at the date on which the gain that generated this difference

is realized, be it due to the distribution of the subsidiary’s shareholders’ equity or to the disposal of the holding.

b) Transactions between consolidated companies

In the preparation of the consolidated financial statements, all material balances and revenue and expense transactions

between consolidated companies were eliminated in consolidation.

VALUATION STANDARDS5


INFORMATION


COMPANY OWNERSHIP INTEREST REASON FOR EXCLUSION


Annual Consolidated Financial Statements for 2003

74 75

Í N D I C E

3

h) Tangible fixed assets

Tangible fixed assets are valued at cost, revalued pursuant to the applicable enabling legislation which, in the case

of certain Group companies, includes Royal Decree-Law 7/1996.

The costs of expansion, modernization or improvements leading to increased productivity, capacity or efficiency or to

a lengthening of the useful lives of the assets are capitalized.

The replacement and maintenance expenses which do not lead to a lengthening of the useful lives or to increased

production capacity of the related assets are expensed currently.

Group work on its own fixed assets is valued at construction cost.

The Group companies depreciate their tangible fixed assets by the straight-line method at annual rates based on the

following years of estimated useful life:

Concession-related tangible fixed assets are depreciated over their years of useful life. When the term of the concession

contracts is shorter than the years of useful life, the depreciation expense is supplemented by the reversion reserve (see

Note 5-p-3).

i) Short-term and long-term marketable securities

Short- and long-term marketable securities include the cost of holdings in nonconsolidated companies, that of companies

excluded from the scope of consolidation (see Exhibit III) and the short-term investments in government debt securities.

The holdings in nonconsolidated companies are valued at cost, net, where appropriate, of the required allowances for

decline in value, in order to reflect the lower of acquisition cost or underlying book value of the holding, adjusted by

the amount of the unrealized gains disclosed at the time of acquisition and still existing at the date of subsequent

valuation.

Short-term investments in government debt securities are valued at cost plus accrued interest at year-end.

The valuation methods are as follows:

1. Listed securities: At the lower of cost or market. The market value was taken to be the lower of average market

price in the last quarter or closing market price on the last trading day of the year.

2. Unlisted securities: At acquisition or formation cost, net, where appropriate, of the necessary allowances for decline

in value, if cost was higher than the underlying book value of the holding at year-end, adjusted by the amount of

the unrealized gains disclosed at the time of acquisition and still existing at the date of subsequent valuation.

ACS GROUP

ANNUAL REPORT

2003

The assets under the financial lease contracts are amortized in accordance with the years of estimate useful life

thereof at the date of their original acquisition.

The related interest is recorded as an expense on an accrual basis by the interest method.

2. Administrative concessions are recorded at the amount paid by the companies as the operating fee, plus the

amount of the costs of the construction and assembly of facilities used in administrative concessions. The

administrative concessions are amortized on a straight-line basis over the concession term.

3. The expenses incurred in research and development projects whose technical results are satisfactory are capitalized

and amortized over a maximum period of five years once the project is considered to be commercially and

economically viable. If the results are not favorable, or the circumstances enabling the expenses to be capitalized

vary, the unamortized portion is taken to income in the same period in which these circumstances become known.

4. Patents, licenses and similar rights are recorded at cost and amortized over a five-year period.

g) Long-term assets in projects

This caption includes the amount of the investments in transport, energy and environmental infrastructures which

are operated by ACS Group subsidiaries and which are financed by the Project Finance method (financing without

recourse applied to projects).

These financing structures are applied to projects capable in their own right of providing sufficient guarantee to the

participating financial institutions with regard to the repayment of the funds borrowed to finance them. Each project is

performed through specific companies in which the project’s assets are financed, on the one hand, through a contribution

of funds by the developers, which is limited to a determined amount, and on the other, generally of a larger amount, through

borrowed funds in the form of long-term debt. The debt servicing of these credit facilities or loans is mainly supported by

the cash flows generated by the project in the future.

These assets are valued at the costs directly allocable to construction incurred through their entry into operation

(studies and designs, expropriations, reinstatement of services, project execution, project management and administration

expenses, installations and building construction and similar items) and the portion relating to other indirectly allocable

costs, to the extent that they relate to the construction period.

Also included in this caption are the financial expenses incurred prior to the entry into operation of the assets arising

from external financing thereof.

Repair and maintenance expenses which do not lead to a lengthening of the useful life of the assets or an extension

of their production capacity are expensed currently.

Concession-holders cover all the investment made on completion of the concession term by way of amortization.

Accordingly, amortization is calculated by applying the proportion of toll road/landing fee revenues for each year with

respect to total projected toll road/landing fee revenues for the full concession term to total projected investment on

completion of the concession term, in accordance with the economic and financial plans of the various concessions.

In view of the nature of this amortization it is recorded as a reversion reserve on the liability side of the consolidated

balance sheet.


INFORMATION

Structures 33-50

Plant and machinery 3-20

Other fixtures, tools and furniture 3-14

Other tangible fixed assets 4-12

Years of estimated useful life



76 77

Í N D I C E

3

As of December 31, 2003, the Group owned 902,453 Parent Company shares.

n) Subsidies

The ACS Group was granted subsidies by various public agencies mainly to finance environmental tangible fixed assets.

Evidence of compliance with the conditions in the relevant decisions granting the subsidies was provided to the relevant

competent agencies.

These subsidies are included under the “Deferred Revenues” caption in the accompanying consolidated balance sheet

and are charged to income each year in proportion to the depreciation on the subsidized assets.

o) Provisions for pensions and similar obligations

ACS, Actividades de Construcción y Servicios, S.A. and, to an insignificant extent, three subsidiaries are required,

under certain conditions, to make monthly payments to their employees to supplement the mandatory standard social

security benefits for retirement, disability, death of spouse and death of parent.

In 2000 Grupo Dragados, S.A. (absorbed by ACS, Actividades de Construcción y Servicios, S.A.) partially externalized

the aforementioned commitments of the Parent Company and of one of the subsidiaries based on the information

available at 2000 year-end. In 2001 more accurate information became available relating to certain variables and

assumptions used in determining the pension supplements (mainly data on definitive groups, pensionable salaries

and estimated retirement ages). The actuarial valuation of the commitments assumed was performed on the basis

of the adjustment mechanism provided for in the insurance contract.

Pursuant to Law 8/1987 regulating pension plans and funds and Royal Decree 1588/1999 governing the instrumentation

of these commitments, in 2002 the remaining commitments were externalized, by taking out the related insurance

policies at the other two subsidiaries. The retirement bonus commitments pursuant to collective labor agreements

were also externalized at eight other subsidiaries.

Based on the valuation made, E101.9 million and E152 million were required to meet the commitments to serving

and retired employees, respectively, as of December 31, 2003. The actuarial assumptions used are those indicated

below, with the exception of the assumed interest rate applied, which fell as a result of the interest rate cut and

ranged from 5.93% to 4.32%.

Of the total amount of ¤253.9 million, a definitive funding plan was formalized through 2004 for E42.9 million, of

which E14.6 million were outstanding as of December 31, 2003, and were provisioned in full. The funding term through

2004 established in the provisional plan has been maintained. In addition, in 2003 the Company made prepayments

ACS GROUP

ANNUAL REPORT

2003

j) Nontrade loans

Nontrade loans are recorded at face value. Loans repayable in under 12 months from year-end are classified as short-

term loans and those repayable at over 12 months as long-term loans.

These loans earn interest at market rates. Interest is recorded on an accrual basis, and the uncollected portion is

recorded under this caption at long or short term, as appropriate.

k) Deferred charges

This caption includes the financial expenses relating to the financing of fully consolidated concessions for transport

infrastructure and services, and other unaccrued financial expenses. Since there is reasonable evidence for the recovery

through future year rates of the concession-related financial expenses incurred from when each infrastructure section

enters into operation, these expenses are allocated to income as follows:

1. Financial expenses are charged to income each year based on the proportion of fee revenues for the year with

respect to total projected fee revenues for the concession period, applied to the total projected financial expenses,

in accordance with the economic and financial plans of the concession.

2. The positive difference between the projected financial expense and the expense to be charged to income as

described in paragraph 1) above is capitalized to the “Deferred Charges” caption; if the difference is negative, it

will be charged to income by the method described above.

l) Inventories

The Group values its inventories as follows:

1.Assets received in settlement of receivables are recorded at the amount due, plus the necessary expenses arising

from the transaction. Should the realizable value be lower, the related allowance for decline in value is recorded

to adjust the net book value.

2.The Group’s building lots and real estate developments are valued at cost increased, where appropriate, by development

and construction costs and other acquisition-related costs, and reduced, where appropriate, by the allowance required to

reduce these inventories to their estimated realizable value.

3.Raw materials and supplies, consumables and replacement materials are valued at the lower of cost or net realizable

value.

4.Ancillary work and initial project expenses include mainly work on site facilities, both specific and general, valued at

acquisition or production cost, and the costs incurred before the contract date. These expenses are allocated to the cost

of the project on the basis of the completed construction work. Should the project finally not be awarded, these costs

are allocated to income for the year.

5. Work-in-process includes the cost of the work performed and materials used at the end of each year for corporate image

and traffic regulation activities and other fixtures.

m) Parent Company shares held by the Group

The shares are valued at the lower of average acquisition cost or consolidated underlying book value, adjusted by the amount

of the unrealized gains still existing at the date of valuation.

The related restricted reserve was included under the “Shareholders’ Equity” caption.


INFORMATION

Annual rate of increase of maximum social security pension benefit 2.00%

Annual wage increase 2.35%

Annual growth rate of the Consumer Price Index (CPI) 2.00%

Mortality table * PERMF-2000 P

* Guaranteed assumptions which will not vary



78 79

Í N D I C E

3

2. Provision for contingencies: this relates to the estimated amount of possible obligations whose exact amount cannot

yet be determined or whose date of payment is uncertain, since they depend on the fulfillment of certain conditions.

This provision is recorded on the basis of the best estimates of the annual accrual.

3. Reversion reserve. A reversion reserve is recorded for the assets used in administrative concessions that are reverted

to public agencies on completion of the concession terms. The reserve is calculated with the aim of supplementing

the depreciation of the related assets, so that their net book value is zero on completion of the concession term.

The companies consider that the periodic maintenance plans, whose cost is allocated to expenses in the year they

are incurred, are sufficient to ensure that the assets used are reverted in good working condition on completion

of the concession terms and, accordingly, no significant expenses will arise as a result of the reversion.

4.Severance costs. Under current labor legislation, the consolidated companies are required to pay severance to

employees terminated under certain conditions.

Management of the companies consider that, on the basis of estimates of the severance pay payable for possible

terminations of permanent employees, the accrued liability for severance costs is reasonably covered by the provision

for restructuring due to merger.

Also, pursuant to current legislation, the companies recorded an allowance under the “Operating Allowances”

caption on the liability side of the balance sheet to meet the cost of temporary employee terminations.

5. Provision for restructuring due to merger. A provision was recorded to meet the expenses arising from restructuring

due to the merger by absorption of Grupo Dragados, S.A.

q) Classification of debt

Short and long-term debts are recorded at face value. Debts maturing in under 12 months from year-end are classified

as current liabilities and those maturing at over 12 months as long-term debt.

These debts are increased by the unmatured accrued interest thereon, and are recorded by the same method as the

principal amount. Interest is recorded in the year in which it accrues

r) Corporate income tax

The corporate income tax expense for the year at each company is calculated on the basis of book income before

taxes, increased or decreased, as appropriate, by the permanent differences from taxable income, net of tax relief

and tax credits.

The Spanish companies in which the Parent Company has more than a 75% ownership interest file consolidated tax returns

pursuant to current regulations, as part of Tax Group 30/99.

As a result of the merger by absorption of the Dragados Group, the companies comprising its Tax Group were included

in Tax Group 30/99 from the date the merger was registered at the Mercantile Registry. These companies were

previously included in Tax Group 24/97.

ACS GROUP

ANNUAL REPORT

2003

amounting to E13.7 million to insurance companies in relation to commitments to its management team and Board

members, effective from January 1, 2004. These commitments were formalized through defined contribution Group

savings insurance policies via capital contributions.

In accordance with the Spanish National Chart of Accounts, and with the authorization granted by the Shareholders’

Meeting of Grupo Dragados, S.A. on May 7, 1992, the Group will charge E5.4 million to reserves through 2004

(E3.6 million relate to the period from May 1 through December 31, 2003), for the initial shortfall existing in

1990. A provision was recorded for the amount relating to 2004, as described in the preceding paragraph.

The amounts recorded under the “Extraordinary Expenses” caption in the accompanying 2003 statement of income

in connection with pension commitments are as follows:

1.E5.5 million recorded under the “Personnel Expenses” caption relating to the principal of the portion financed in

2000 and which fell due in 2003.

2. E1.1 million recorded under the “Financial Expenses” caption relating to the interest on the portion that was

financed in 2000 and fell due in 2003.

3. E2.4 million recorded under the “Personnel Expenses” caption relating to the net premium accrued by the Parent

Company in 2003.

4. E0.2 million recorded under the “Personnel Expenses” caption for premiums paid by other Group companies.

The amount included in Note 3 includes the contributions of E0.1 million to the pension plan for the Parent Company’s

directors who performed executive duties in 2003.

Also, under Law 8/1987 regulating pension plans and funds, in 2002 the Group externalized the commitment to certain

senior executives of Ginés Navarro Construcciones, S.A. (company absorbed by ACS, Actividades de Construcción y

Servicios, S.A.).

As a result of the merger, all commitments acquired as of December 31, 2003, had been provisioned in full and allocated

to the 2003 statements of income. The amount charged to the “Extraordinary Expenses” caption in this connection totaled

E28.3 million.

p) Other provisions for contingencies and expenses

The Group records “Other Provisions for Contingencies and Expenses” as follows:

1. Provision for third-party liability: this relates to the estimated amount required for probable or certain third-party

liability arising from litigation in progress and from indemnity payments and obligations outstanding or that may

arise, of undetermined amount. This provision is recorded when the liability or obligation giving rise to the indemnity

or payment arises.

In this connection and in accordance with the opinion of the external lawyers dealing with the legal aspects of

this matter, the Group considers that no economic risk exists in relation to the claim filed by Boliden-Apirsa in

2004.


INFORMATION



80 81

Í N D I C E

3

The real estate companies record sales and the cost of sales on delivery of keys or on transfer of the ownership of the

land. In the case of sale contracts entered into with customers, if units for sale are substantially completed (i.e. at least

80%), a provision is recorded for the estimated future costs to be incurred in completing the buildings.

Revenues on turnkey industrial construction and engineering projects are generally recognized by applying the expected

percentage margin on total estimated costs (which are updated constantly) to the costs actually incurred.

u) Activities with an impact on the environment

Any operation, the main aim of which is to prevent, reduce or repair environmental damage is considered to be an

environmental activity.

However, the business activities carried on by the Group include street cleaning, collection of solid urban waste, water

treatment and quality control and other activities involving the provision of environmental services to third parties. Also,

most of the construction contracts include a study of environmental impact and the performance of work to preserve,

maintain and restore the environment.

The Group does not treat as environmental assets and expenses those relating to the provision of the aforementioned

services since they are performed for third parties. Notwithstanding this, the environmental claims and obligations are

included regardless of whether they involve in-house operations or operations performed for third parties.

Investments arising from environmental activities are valued at cost and capitalized as an addition to fixed assets in the

year in which they are incurred in accordance with the methods described in Note 5-h.

Expenses arising from environmental protection and improvement are charged to income in the year in which they are

incurred, regardless of when the resulting monetary or financial flow arises.

The provisions for probable or certain third-party liability, litigation in progress or outstanding indemnity payments or obligations

of undetermined amount of an environmental nature, which are not covered by the insurance policies taken out by the Group,

are recorded when the liability or obligation giving rise to the indemnity or payment arises.

ACS GROUP

ANNUAL REPORT

2003

s) Foreign currency transactions

Foreign currency transactions are translated to euros at the exchange rates ruling at the transaction date. The balances

of foreign currency accounts are adjusted at year-end to the year-end exchange rates. The net translation losses are

charged to the statement of income and the net translation gains are deferred until they are realized.

t) Revenues and expenses

Revenues and expenses are generally recognized on an accrual basis, i.e. when the actual flow of the related goods

and services occurs, regardless of when the resulting monetary or financial flow arises.

However, in accordance with the accounting principle of prudence, the Group only records realized income at year-

end, whereas foreseeable contingencies and losses, including possible losses, are recorded as soon as they become

known.

In the construction business, the Group recognizes each year as the period result on construction projects the difference

between production and the costs incurred in the year.

Since in the construction industry estimated revenues and costs of construction projects are susceptible to variations

during the performance period which cannot be readily foreseen or objectively quantified, the consolidated companies

that engage in construction activities recognize as the period result on their construction projects the difference between

production each year and the actual costs incurred during the projects. Production each year is valued at certification

price of the units completed in the period that, since they are covered in the contract entered into with the owners,

or in approved addenda or amendments thereto, do not give rise to any doubts regarding their certification. In addition,

production is valued at certification price of other project units that have already been completed for which management

of the consolidated companies consider there is reasonable assurance of recovery.

On the basis of the latest cost and revenue projections prepared by the consolidated companies for the projects in

progress, the result recognized by them, under the above-mentioned method, does not significantly differ from that

that would have been obtained under the percentage-of-completion method. Under this method, the result from projects

with expected final income would be that arising from the application thereto of the percentage arising from comparison

between the actual costs incurred and total estimated costs; in the event of construction projects for which a final loss

is expected, the result would be the full amount of the loss from the moment in which it is determined.

Should the amount of production from inception, valued at certification price, of each project be greater than the

amount certified through the balance-sheet date, the difference between the two amounts is recorded under the

"Completed Production Pending Certification" caption on the asset side of the consolidated balance sheet. Should

the amount of production from inception be lower than the amount of the certificates issued, the difference is

recorded under the "Trade Accounts Payable-Customer Advances” caption on the liability side of the consolidated

balance sheet.

Inspection levy expenses, estimated costs for site clearance and other expenses that may be incurred from completion

of the project through final settlement thereof are accrued over the execution period on the basis of production volumes

and are recorded under the “Operating Allowances” caption on the liability side of the consolidated balance sheets.


INFORMATION

The variations in the balance of this caption in the consolidated balance sheet were as follows:

CONSOLIDATION GOODWILL6


Balance at December 31, 2002 666,813

Additions due to merger 160,917

Additions 276,288

Amortization (55,010)

Reductions and other (9,114)

Balance at December 31, 2003 1,039,894



82 83

Í N D I C E

3

The acquisitions and share subscriptions relate mainly to the acquisition of 9.992% of Grupo Dragados, S.A. through the

tender offer launched in the first quarter of 2003 and the acquisition of 0.51% of Abertis Infraestructuras, S.A.

The decreases relate to the elimination, as a result of the merger process, of the value of the holding in Grupo Dragados,

S.A. accounted for by the equity method.

The change in consolidation method arose mainly from the accounting for by the equity method of Xfera Móviles, S.A.

on acquisition of the 14.82% ownership interest held by Vivendi in this company.

The “Other Items” caption relates mainly to the differences arising from the translation of the Chilean and Mexican pesos

to the euro and to the distribution of dividends.

The detail, by company, of the balance of this caption as of December 31, 2003, is as follows:

ACS GROUP

ANNUAL REPORT

2003

The main addition to consolidation goodwill relates to the acquisition through a tender offer by ACS, Actividades de

Construcción y Servicios, S.A. of an additional 9.992% holding in Grupo Dragados, S.A. for E241,370 thousand in the

first quarter of the year.

The detail, by company, of goodwill as of December 31, 2003, is as follows:


INFORMATION


GoodwillAccumulated NetAmortization Amount

Parent Company

Grupo Dragados, S.A. merger 842,603 (61,664) 780,939

Concessions

Abertis Infraestructuras, S.A. 10,754 (1,076) 9,678

Construction

Vía Dragados, S.A. 16,837 (4,603) 12,234

Other subsidiaries 9,963 (8,926) 1,037

Industrial

Sistemas Radiantes F. Moyano, S.A. 6,180 (914) 5,266

S.I.C.E. 15,616 (3,908) 11,708


Services

Técnicas Medioambientales, TECMED, S.A. 51,377 (10,754) 40,623

Consenur, S.A. 6,014 (1,804) 4,210

Continental Auto 27,430 (4,987) 22,443

Empresa Navarro, S.L. 4,841 (282) 4,559

Autobuses García, S.L. 2,833 (184) 2,649

Hijos de Simón Maestra, S.A. 2,859 (134) 2,725

Aguas del Huesna, S.L. 2,924 (585) 2,339

New and Publicity, S.A. 6,312 (1,084) 5,228

CSX World T. Dominicana, Ltd. 7,073 (1) 7,072

Sintax Group 20,302 (2,029) 18,273

KDM, S.A. 6,044 (1,503) 4,541

Marítima del Mediterráneo, S.A. 15,772 (3,055) 12,717

Marítima Mallach, S.A. 2,481 (455) 2,026

Operaciones Portuarias Canarias, S.A. 11,192 (1,552) 9,640

Servicios Urbanos, S.L. 3,230 (323) 2,907

Transportes Los Olivos, S.A. 3,135 (1,112) 2,023

TV Transit, S.A. 8,204 (779) 7,425

Sintax Logística, S.A. 9,241 (925) 8,316

Ecolube, S.L. 9,647 (823) 8,824


Total 1,168,560 (128,666) 1,039,894




Change in consolidation method 134,507

Acquisitions and capital subscriptions 200,504

Income for the year 117,791

Sales (3,828)

Decreases (431,953)

Other items (29,055)

Balance at December 31, 2003 1,081,186


Company

Construction

Covisur, S.A. 4,296

Industrial

Nordeste Transmissora de Energia, Ltda. 14,408

Red Eléctrica del Sur, S.A. 4,624

Expansión de Transmissao Eléctrica Brasil, S.A. 5,563

Cygnus Air, S.A. 2,030

Services

Operaciones Portuarias Canarias, S.A. 14,100

CSXWT Dominicana, Ltd. 8,884

Remolcadores de Barcelona, S.A. 9,422

Aguas del Gran Buenos Aires, S.A. 3,688

Iquique Terminal Internacional, S.A. 3,574

A.T.M. Cartera, S.A. 3,310

Ecoparc, S.A. 3,064

Conda, S.A. 2,191

Centro Tecnológico Integrado de Residuos Industriales, S.A. 1,897


The variations in the balance of this caption in 2003 were as follows:

INVESTMENTS IN COMPANIES ACCOUNTED FOR BY THE EQUITY METHOD7



Company

(Thousands of Euros)Additions Variations in

Balance at Due the Scope of Additions or Retirements Balance at12/31/02 to Merger Consolidation Provisions or Reductions 12/31/03

Investment 112,848 159,043 11,406 87,869 (34,201) 336,965

Accumulated amortization (45,288) (35,023) (1,826) (23,405) 8,217 (97,325)

Total 67,560 124,020 9,580 64,464 (25,984) 239,640

84 85

Í N D I C E

3

ACS GROUP

ANNUAL REPORT

2003


INFORMATION




Variations in the scope of consolidation (274)

Additions 8,108

Amortization (10,100)

Reductions (1,409)


Concessions

Abertis Infraestructuras, S.A. 458,765

Rutas del Pacífico, S.A. 45,297

Aeropuertos Mejicanos del Pacífico, S.A. de C.V. 53,520

Autopista Central, S.A. 40,103

Autopista Vespucio Norte, S.A. 32,403

Infraestructuras y Radiales, S.A. 24,044

Guadalquivir, S.A.C.J.A. - Guadalmetro, S.A. 23,934

Scutvias-Autoestradas de Beira Interior, S.A. 16,402

Ruta de los Pantanos, S.A. 4,023

Bakwena Platinum Corridor Consortium, Ltd. 3,792

Other

Inmobiliaria Urbis, S.A. 157,631

Xfera Móviles, S.A. 106,406

Other companies 33,815

Total 1,081,186

As of December 31, 2003, the Company had an effective ownership interest of 29.34% in the capital stock of Xfera Móviles,

S.A. both directly and through ACS Sonera Telefonía Móvil, S.A. Xfera Móviles, S.A. is in the start-up phase of its business.

As a result of the current technological and regulatory framework, Xfera Móviles, S.A. has prepared a new business plan,

other than that prepared when the tender bid for the license was submitted, demonstrating its viability. In this business

plan, Xfera Móviles, S.A. modified certain trends and assumptions with respect to the preceding version, in order to reduce

the project’s financial risks, optimize resources and adapt the plan to the current market situation and climate. Xfera Móviles,

S.A. is negotiating various roaming agreements in Spain and agreements to share infrastructures with various wireless

operators, which would enable it to make maximum return on the investments performed.

As a result of the foregoing, the Company recorded an allowance for the losses incurred, adjusting the investment to the

underlying book value of its holding.

Lastly, and as a result of the acquisition from Vivendi of a 14.82% holding in Xfera Móviles, S.A., the Group recorded an

additional provision of E37,648 thousand as of December 31, 2003, which was recorded under the “Provisions for

Contingencies and Expenses” caption in the accompanying balance sheet.

In addition to the aforementioned allowances and provisions and, as a result of the general situation of uncertainty and

slowdown currently affecting the telecommunications industry, which will affect the recovery period of the investments

made, the Company, in accordance with the principle of prudence, recorded general-purpose provisions totaling E24,463

thousand (E13,429 thousand of which were recorded in the year) under the “Provisions for Contingencies and Expenses”

caption in the accompanying balance sheet.

In 2004 the Company acquired for E12,816 thousand, through an arbitral award, 9,674,513 shares of Xfera Móviles, S.A.

from Vodafone Holding Gmbh, and the related counter-guarantees were substituted (see Note 17).


START-UP EXPENSES8

The additions relate mainly to preopening expenses incurred at the new companies formed in the year.


INTANGIBLE ASSETS9

The main additions are leased assets relating to the fleet of Continental Auto buses and machinery for environmental

cleaning, and logistics and port services. Also noteworthy in the additions column are the administrative concessions relating

to Terminales del Sudeste.

The detail of intangible assets as of December 31, 2003, is as follows:

(Thousands of Euros)Accumulated

Cost Amortization Net Amount

Research and development expenses 19,528 (11,134) 8,394

Administrative concessions 64,809 (19,179) 45,630

Intellectual property 4,090 (2,680) 1,410

Goodwill 3,609 (292) 3,317

Leasehold assignment rights 52 (15) 37

Computer software 42,487 (25,556) 16,931

Rights on leased assets 172,294 (36,739) 135,555

Rights on licensed assets 14,825 (1,456) 13,369

Other 15,271 (274) 14,997

Total 336,965 (97,325) 239,640




Variations inBalance at Additions Due the Scope of Additions or Retirements Balance at12/31/02 to Merger Consolidation Provisions or Reductions 12/31/03

Investments 265,719 495,080 (29,471) 81,819 (13,920) 799,227

Accumulated depreciation (26,732) (122,088) 0 (19,065) 10,580 (157,305)

Total 238,987 372,992 (29,471) 62,754 (3,340) 641,922

86 87

Í N D I C E

3

ACS GROUP

ANNUAL REPORT

2003


INFORMATION

The main characteristics of the principal financial lease contracts are as follows: The variations in 2003 in the balance of this caption were as follows:

The “Project Financing” caption on the liability side of the balance sheet includes the amount of financing allocated to the

projects. The breakdown, by company, as of December 31, 2003, is as follows:

The detail, by maturity, of the portion maturing at long term is as follows:


Company Short Term Long Term Total

Intercambiador de Transportes Avda. de América, S.A. 1,139 12,585 13,724

Energías Ambientales de Somozas, S.A. 2,885 33,207 36,092

Societat Eólica de L´Enderrocada, S.A. 1,883 14,391 16,274

Energías Ambientales de Vimianzo, S.A. 2,515 37,309 39,824

Energías Ambientales de Novo, S.A. 1,082 11,179 12,261

Energías Ambientales de OUTES, S.A. 19,372 0 19,372

Somersa 7,804 0 7,804

Vertresa RWE Senda UTE Las Dehesas 2,912 32,673 35,585

Tecmed-BKU UTE Albada 2,179 29,895 32,074

Aufe, S.A. Concesionarias 523 516 1,039

Aunor, S.A. 563 2,431 2,994

Aguas del Huesna, S.L. 1,034 36,083 37,117

Soc. Aguas de Misiones 896 6,420 7,316

Tirmadrid, S.A. 6,080 48,651 54,731

Total 50,867 265,340 316,207


Original cost of leased assets 172,294

Lease payments payable (including purchase option) 125,442

The balance of the “Long-term Assets in Projects” caption on the asset side of the consolidated balance sheet as of December

31, 2003, includes the costs incurred by the fully consolidated companies in the construction of infrastructures whose

operation constitutes the corporate purpose of the respective companies, the detail being as follows:

LONG-TERM ASSETS IN PROJECTS10

(Thousands of Euros)Net value of

Type of Accumulated Long-Term AssetsCompany Infrastructure Investment Depreciation in Projects

Energías Ambientales de Somozas, S.A. Wind-farm facility 46,352 (8,140) 38,212

Societat Eólica de L´Enderrocada, S.A. Wind-farm facility 28,821 (6,810) 22,011

Energías Ambientales de Vimianzo, S.A. Wind-farm facility 49,271 (5,599) 43,672

Energías Ambientales de Novo, S.A. Wind-farm facility 17,825 (1,589) 16,236

Energías Ambientales de OUTES, S.A Wind-farm facility 26,024 0 26,024

Somersa Wind-farm facility 10,672 0 10,672

Vertresa RWE Senda UTE Las Dehesas* Urban solid waste treatment plant 53,093 (8,528) 44,565

Tecmed BKU UTE Albada Urban solid waste treatment plant 58,117 (3,248) 54,869

Servicios de Aguas de Misiones, S.A. Water supply 2,825 (477) 2,348

Tirmadrid, S.A. Waste treatment plant 127,007 (42,160) 84,847

Aguas del Huesna, S.L. Water supply 106,429 (14,159) 92,270

Artemis Transmissora de Energia, Ltda Electricity transmission 180 0 180

Munirah Transmissora de Energia, Ltda Electricity transmission 132 0 132

Intercambiador de Transportes Transfer Avda. de América, S.A. station 22,733 (5,327) 17,406

Autovía de La Mancha, S.A.C.J.CC.CLM Road 6,186 0 6,186

Aufe, S.A. Concesionaria (Dycasa) Road 11,881 (6,158) 5,723

Servicios de Mantenimiento de Carreteras, S.A. (Semacar) Road 54,208 (54,208) 0

Aunor, S.A. (Dycasa) Road 4,955 (902) 4,053

Ferrocarriles del Norte de Colombia, S.A. Railroad 83,478 0 83,478

Inversiones Nocedal, S.A. Road 43,234 0 43,234

Taurus Holdings Chile, S.A. Road 45,804 0 45,804

Total cost 799,227 (157,305) 641,922

* Includes E358 thousand of start-up expenses


Maturity in:

2008 and2005 2006 2007 Subsequent Years Total

Balance at December 31,2003 24,995 24,582 28,030 187,733 265,340

Noteworthy, due to its relative importance, is the financing relating to:

- Wind-powered facilities. These are loan agreements tied to variable Euribor based on certain ratios, maturing between

2013 and 2015.

- Integral urban solid waste treatment plants. The loans, maturing in 2016, bear interest tied to MIBOR or Euribor, which

varies depending on the debt ratios and the repayment percentage.



88 89

Í N D I C E

3

ACS GROUP

ANNUAL REPORT

2003


INFORMATION

The variations in tangible fixed asset accounts and in the related accumulated depreciation in 2003 were as follows:

TANGIBLE FIXED ASSETS11

(Thousands of Euros) Variations inBalance at Additions Due the Scope of Additions or Retirements Balance at12/31/02 to Merger Consolidation Provisions or Reductions Trasnfers 12/31/03

Land and structures 127,114 170,902 25,366 43,396 (23,115) 1,341 345,004

Plant and machinery 272,258 549,262 35,539 75,491 (58,136) 2,401 876,815

Other tangible fixed assets 301,639 240,676 17,200 56,541 (60,680) 4,924 560,300

Advances and construction in progress 17,317 64,107 1,226 100,751 (37,379) (5,223) 140,799

Total tangible fixed assets 718,328 1.024,947 79,331 276,179 (179,310) 3,4431,922,918

Accumulated depreciation (355,202) (420,935) (28,262) (134,594) 88,304 1,670 (849,019)

Total tangible fixed assets, net 363,126 604,012 51,069 141,585 (91,006) 5,1131,073,899

- Tirmadrid, S.A. Comprises the following loans:

- Loans for E54,091 thousand, with a fixed annual rate of 5.3%, systematically repayable in 10% annual installments

through 2011. At 2003 year-end the outstanding principal amounted to E43,272 thousand.

- Syndicated loan and subordinated loan from the shareholders, at interest rates tied to MIBOR, repayable in variable

installments through 2010. At year-end the outstanding amounts totaled E9,996 thousand and E1,463 thousand,

respectively.

- Aguas del Huesna, S.L. Outstanding loans amounting to E21,966 thousand and E15,151 thousand, with interest

tied to MIBOR and Euribor, repayable in annual installments. The last installment will be paid in 2009 and 2019,

respectively.

As indicated in Note 4-h, the consolidated companies revalued their tangible fixed assets in accordance with current

legislation.

There are mortgage loans on “Land and Structures” with an unmatured principal amount of E7,513 thousand.

Tangible fixed assets located abroad amounted to E208,165 thousand and the related accumulated depreciation to E93,787

thousand.

Of the Group’s tangible fixed assets as of December 31, 2003, assets with a historical cost of E202,497 thousand had been

depreciated in full and were in use.

The Group takes out the insurance policies it considers necessary to cover the possible risks to which its tangible fixed assets

are subject.

Certain of the tangible fixed assets relating to administrative concessions for services, additional to those indicated in Note 9,

must revert to public-sector agencies in good working condition on expiration of the concession period. The net book value of

these tangible fixed assets amounted to approximately E70.8 million.

a) Long-term marketable securities


MARKETABLE SECURITIES12

(Thousands of Euros)Cost Allowances

Balance at 12/31/02 193,171 (39,305)

Additions due to merger 35,526 (12,804)

Additions or provisions 36,831 (35,185)

Retirements or reductions (112,944) 27,171

Balance at 31/12/03 152,584 (60,123)

(Thousands of Euros)Cost Allowance Net Value

Parent Company

Broadnet Consorcio, S.A. 9,895 (9,895) 0

Parque Temático de Madrid, S.A. 5,924 (3,516) 2,408

World Trade Center Barcelona, S.A. 2,404 (518) 1,886

Construction

Build 2 Edifica, S.A. 3,113 (1,500) 1,613

Cleon, S.A. 25,337 (41) 25,296

Sacresa Belgique, S.A. 4,086 (12) 4,074

Transportes Ferroviarios de Madrid, S.A. 3,414 (1,442) 1,972

Compañía Nueva Plaza de Toros de Barcelona, S.A. 3,011 (50) 2,961

Parc Tecnología WTC Cornellé, S.A. 1,875 (38) 1,837

Juluna, S.A. 725 0 725

Terra Mítica, S.A. 4,358 (4,192) 166

Industrial

Saneamiento Norte, S.A. 3,667 (3,667) 0

Services

Terminal de Contenedores de Valencia, S.A. 1,261 (266) 995

Medwind Energy, S.L. 900 0 900

Muelles y Espacios Portuarios, S.A. 800 0 800

Ecoparque del Besós, S.A. 771 0 771

Concessions

Autopista Central Gallega, Concesionaria Española, S.A. 4,029 0 4,029

Accesos Madrid, Concesionaria Española, S.A. 30,004 0 30,004

Autopista del Sol, S.A. 8,889 (8,889) 0

Concesionaria DHM, S.A. 2,051 (2,051) 0

Other Investments 36,070 (24,046) 12,024

Total 152,584 (60,123) 92,461

The detail of the balance of this caption as of December 31, 2003, is as follows:




Property products for sale 14,822

Raw materials and other supplies 187,161

Ancillary work and other 99,350

Work-in-process 73,235

Advances 56,862

Allowances (6,536)

Total 424,894

Property products for sale relate to building lots, apartments, commercial premises and parking spaces belonging to Group

companies that are intended for sale.

As of December 31, 2003, the foreign currency inventory balance relates mainly to the Israeli shekel (E4,642 thousand)

and the Venezuelan bolivar (E2,254 thousand).

As of December 31, 2003, a mortgage had been arranged on a building lot for E2,000 thousand, maturing at short term.

90 91

Í N D I C E

3

ACS GROUP

ANNUAL REPORT

2003


INFORMATION

The detail of the “Inventories” caption as of December 31, 2003, is as follows:

INVENTORIES13

The "Other Investments" caption includes mainly the cost of holdings in companies excluded from the scope of consolidation

due to their scant materiality, and the cost of other investments that do not form part of the consolidated Group.

The allowances were recorded to adjust the cost of the holdings to their underlying book value.

b) Other loans

The main items recorded under the “Other Loans” caption relate to the Securitization Fund, as indicated in Note 14.

c) Short-term investment securities

The balance of this caption includes investments in government debt securities amounting to ¤410,375 thousand made

in order to place cash surpluses. These investments relate to high-liquidity and high-rotation assets that generate market

returns.

d) Marketable securities in foreign currencies

The marketable securities in foreign currencies as of December 31, 2003, amounting to E14,576 thousand, are mainly in

dollars and are recorded as long-term investment securities.


a) Trade receivables for sales and services


ACCOUNTS RECEIVABLE14

The detail of the net trade receivables balance, by activity, is as follows:


Trade receivables and notes receivable 3,250,088

Completed work pending certification 1,051,771

Total 4,301,859

Advances received on orders (991,007)

Allowances for bad debts (87,720)

Total net trade receivables balance 3,223,132


Construction 1,489,760

Services 1,733,372

Total 3,223,132

The detail, by customer type, of the net balance receivable for construction-related activities is as follows:


Public sector 933,330

Central government 297,177

Autonomous Community governments 267,222

Municipal Councils 178,382

Autonomous agencies and state-owned companies 190,549

Private sector 556,430

Total 1,489,760

The “Completed Work Pending Certification” caption reflects the difference at year-end between the amount of production from

inception on each of the projects and contracts in progress at December 31, 2003, and the amount certified for each of them.

Consequently, the amount of this caption relates to the valuation at certification price of the construction units completed and

of the services provided at year-end which have already been approved by the related customer or which, although pending

approval, do not give rise to any doubts regarding their immediate approval, and which, accordingly, will be subsequently certified.

The average age of the balances receivable from the public sector in connection with construction is three months.

The “Trade Receivables and Notes Receivable” balance as of December 31, 2003, was reduced by E48,047 thousand relating

to certificates receivable assigned through factoring without recourse in the construction area and E152,444 thousand in the

services area.

The “Trade Receivables and Notes Receivable” balance was also reduced by the amounts received from the CAP-TDA1 “Fondo

de Titulización de Activos“ a securitization fund which was set up on June 25, 2003.

Securitization involves the transformation of receivables on marketable bonds through the arrangement of the fund acquiring

the rights and issuing the securities. The bond issued by the securitization fund, based on the accounts receivable of the ACS

Group backlog, received the AAA rating from the rating agencies.


92 93

Í N D I C E

3

ACS GROUP

ANNUAL REPORT

2003


INFORMATION

value each of ACS, Actividades de Construcción y Servicios, S.A. for every 68 shares of E1 par value each of Grupo Dragados,

S.A. involving a total of 54,465,015 shares amounting to E81,698 thousand. The related capital increase was executed in a

public deed before the Notary Mr. Cruz Gonzalo López Muller on December 12, 2003, and registered at the Mercantile Registry

on the same date.

On the date of the share exchange the treasury stock that Grupo Dragados, S.A. had acquired from Urbaser, S.A. prior to the

merger, was retired. 2,396,253 Grupo Dragados, S.A. shares were retired, representing 1.39% of its capital stock at that date

and amounting to E33,261 thousand at the consolidated Group.

The shares of ACS, Actividades de Construcción y Servicios, S.A. are listed on the Madrid, Barcelona, Bilbao and Valencia Stock

Exchanges and traded through the Spanish computerized trading system.

Apart from the Parent Company, the companies included in the scope of consolidation whose shares are listed on securities

markets are Abertis Infraestructuras, S.A. and Inmobiliaria Urbis, S.A. (on the Spanish stock markets) and Dragados y Construcciones

Argentina, S.A.I.C.I. (on the Buenos Aires Stock Exchange).

As of December 31, 2003, the sole shareholder with a holding equal to or exceeding 10% of the capital stock of the Parent

Company was the Banca March Group with a holding of 13.3%.

As of December 31, 2003, the shareholders with a holding equal to or exceeding 10% of the capital stock of the Group’s main

investees were as follows:

(Thousands of Euros)Percentage of

Group Company Ownwership Shareholder

Sopol, S.A. 49.9% Silger Sgps, S.A.

Tirmadrid, S.A. 18.6% UNION FENOSA Energías Especiales, S.A.

15.0% Endesa Cogeneración y Renovables, S.A.

Procme, S.A. 25.0% José Reis Costa

Rutas del Pacífico 50.0% Sacyr Vallehermoso, S.A.

ACS, Sonera Telefonía Móvil, S.L. 41.6% Sonera Holding, B.V.

Abertis Infraestructuras, S.A. 20.26% Caja de Ahorros y Pensiones de Barcelona, S.A.

Inmobiliaria Urbis, S.A. 51.29% Banco Español de Crédito, S.A.

b) Additional paid-in capital

The capital increase performed as a result of the aforementioned merger was carried out with additional paid-in capital of

E420,078 thousand.

The revised Corporations Law expressly permits the use of the additional paid-in capital balance to increase capital and

establishes no specific restrictions as to its use for other purposes.

c) Revaluation reserve

Pursuant to Royal Decree Law 7/1996, the Parent Company availed itself of account revaluation and recorded a revaluation

reserve of E2,122 thousand, net of the single 3% tax.

From the date on which the tax authorities review and approve the balance of this account or the three-year period for its review

has expired, this balance may be used, free of taxes, to eliminate recorded losses, both accumulated losses and current losses, or

losses incurred in the future, and to increase capital. Once a ten-year period has elapsed, the balance may be taken to unrestricted

reserves, provided that the monetary surplus has been realized. The surplus will be deemed to have been realized in respect of



Nontrade loans in foreign currencies as of December 31, 2003, relate mainly to the Ecuadorian sucre, the Venezuelan bolivar,

the South African rand and the Moroccan dirham, with equivalent euro values of E14,418 thousand, E11,294 thousand, E10,527

thousand and E10,225 thousand, respectively.

The variations in consolidated equity accounts in 2003 were as follows:

SHAREHOLDERS’ EQUITY15

The amount of the receivables sold to the securization fund was to E403,644 thousand as of December 31, 2003, of which

E103,465 thousand were recorded as a current account with the securitization fund and included under the “Short-Term

Investments-Other Short-Term Receivables” caption in the accompanying balance sheet.

b) Nontrade loans

Other short-term accounts receivable



Employee receivables 6,175

Taxes receivable 495,030

Other 413,284

Total 914,489

Allowances (4,727)

Balance at 12/31/02 96,093 477,216 2,122 19,413 187,889 79,743 (2,833) (60,617) 181,411 -- 980,437

Effect of merger withGrupo Dragados, S.A. 81,698 420,078 -- -- 6,830 283,146 83,811 (128,644) -- -- 746,919Distribution of income: -- To reserves -- -- -- -- 28,880 87,209 19,197 -- (135,286) -- -- To dividends -- -- -- -- -- -- -- -- (46,125) -- (46,125)2003 interim dividend -- -- -- -- -- -- -- -- -- (42.670) (42,670)

Variations in the scopeof consolidation and others -- -- -- -- (6,830) (20,714) (23,772) 24,767 -- -- (26,549)Transladation differences -- -- -- -- -- -- -- (45,081) -- -- (45,081)Income for the year 229,508 229,508Balance at 12/31/03 177,791 897,294 2,122 19,413 216,769 429,384 76,403 (209,575) 229,508 (42,670) 1,796,439

Reserves of the Parent Reserves at Consolidated Company Companies

Additional Fully EquityCapital Paid-in Revaluation Restricted Other Consolidated Accounted Translation InterimStock Capital Reserve Reserves Reserves Companies Companies Difference Income Dividend Total

a) Capital stock

As of December 31, 2003, the capital stock consisted of 118,526,831 fully subscribed and paid bearer shares of E1.50 par

value each, all with the same voting and dividend rights, following the capital increase carried out to cater for the exchange

of Dragados Group shares in relation to the merger by absorption described in Note 1, at a ratio of 33 shares of E1.5 par


94 95

Í N D I C E

3

ACS GROUP

ANNUAL REPORT

2003


INFORMATION

the portion on which depreciation has been taken for accounting purposes or when the revalued assets have been transferred

or retired from the accounting records.

If this balance were used in a manner other than that provided for in Royal Decree-Law 7/1996, it would be subject to tax.

d) Other reserves of the Parent Company

Restricted reserves

Under the revised Corporations Law, 10% of income for each year must be transferred to the Legal Reserve until the balance

of this reserve reaches at least 20% of capital stock. The legal reserve may not be distributed to shareholders, except in

the event of liquidation of the Company.

The Legal Reserve can be used to increase capital provided that the remaining reserve balance does not fall below 10% of

the increased capital stock amount.

Except as mentioned above, until the legal reserve exceeds 20% of capital stock, it can only be used to offset losses, provided

that sufficient other reserves are not available for this purpose.

The legal reserve at the Parent Company amounted to E19,251 thousand.

This caption also includes the reserve for redenomination of capital stock to euros amounting to E162 thousand, which is restricted.

Unrestricted reserves

These reserves are voluntary and are not subject to any regulations restricting their use.

e) Reserves at fully consolidated companies and at companies accounted for by the equity method

The amounts contributed to reserves by the Group’s main Business Units, taking into account the net worth effect of the

companies included therein, are as follows:

f) Translation differences

Translation differences at fully consolidated companies:

Translation losses amounted to E204,006 thousand as of December 31, 2003, the detail being as follows:


Fully and proportionally consolidated companies:

Construction 101,468

Industrial 121,982

Services and concessions 291,336

Other (85,402)

Total 429,384

Companies accounted for by the equity method:

Construction (9,989)

Industrial 1,261

Services and concessions 41,234

Other 43,897

Total 76,403

Translation differences at companies accounted for by the equity method:

Translation losses amounted to E5,569 thousand as of December 31st, 2003, and related mainly to Abertis Infraestructuras, S.A.

g)Interim dividend paid during the year

At the meeting on December 18, 2003, the Parent Company’s Board of Directors resolved to distribute an interim dividend

of E0.36 per share, totaling E42,670 thousand, which was paid on January 15, 2004. On November 30, 2003, the

Company prepared the liquidity statement required under Article 216 of the revised Corporations Law in this connection.

This interim dividend paid is recorded under the "Interim Dividend Paid During the Year" caption as a reduction of

“Shareholders’ Equity”.


Construction (57,606)

Industrial services (16,347)

Services and concessions (130,029)

Other (24)

Total (204,006)


Balance at 12/31/02 23,419


Income for the year 5,573

Translation differences (1,578)

Variation in the scope of consolidation 16,307

Dividends received and other (1,646)

Balance at 12/31/03 99,269

The breakdown of the balance of this caption as of December 31, 2003, is as follows:

This caption in the accompanying consolidated balance sheet reflects the proportional amount of the equity of minority interests

in the Group companies. The variations in 2003, by item, were as follows:

MINORITY INTERESTS16

(Thousands of Euros)Capital Imcome (Loss)

Stock Reserves for the year Total

Construction 8,566 7,217 2,312 18,095

Industrial services 12,141 5,744 (316) 17,569

Services and concessions 37,572 19,160 6,873 63,605

Total 58,279 32,121 8,869 99,269

The reserves at fully consolidated companies included the restricted reserve for the Parent Company’s treasury stock, amounting

to E26,875 thousand.



96 97

Í N D I C E

3

ACS GROUP

ANNUAL REPORT

2003


INFORMATION

The detail of nontrade payables is as follows:

LONG- AND SHORT-TERM NONTRADE PAYABLES19

The variations in the “Deferred Revenues” caption in 2003 were as follows:

DEFERRED REVENUES17

(Thousands of Euros)Allocation

Balance at Additions dueto Income

Balance at12/31/02 to merger Additions Transfers

for the Year12/31/03

Subsidies 15,497 101,496 5,421 (636) (2,100) 119,678

Other deferred revenues 13,541 2,920 674 (719) (495) 15,921

Total 29,038 104,416 6,095 (1,355) (2,595) 135,599

The subsidies were granted by various public agencies mainly to finance investments in tangible fixed assets. Evidence of

compliance with the conditions established in the relevant decisions granting the subsidies was provided to the relevant

competent agencies.

Certain subsidies are assigned to various administrative concessions. The most significant subsidies were those granted to

Aguas del Huesna, S.L., Ferrocarriles del Norte de Colombia, S.A. and Tecmed BKU-UTE Albada. The Group allocates these

subsidies to income over the concessions term.


Balance at 31/12/02 54,023


Variations in the scope of consolidation 395

Period provisions 229,376

Releases or reductions (24,788)

Balance at 12/31/03 405,729

E22,496 thousand of the balance of this caption relate to the reversion reserves contributed by various Group companies.

The balance of this caption was recorded to meet probable third-party liability, as described in Notes 5-p and 7. Noteworthy

in this caption are the provisions to cover risks arising from investments in telecommunications.

In 2003 provisions were recorded to meet the restructuring expenses incurred as a result of the merger with Grupo Dragados, S.A.

The balance as of December 31, 2003, includes the provision of ¤9,000 thousand recorded in 2002 in accordance with the

principle of utmost prudence for possible contingencies relating to the Magdalena Medio concession in Colombia.

The variations in 2003 were as follows:

PROVISIONS FOR CONTINGENCIES AND EXPENSES18

The limit on the credit facilities granted to the Group is E3,543,424 thousand, of which E1,750,952 thousand had not been

drawn down as of December 31, 2003.

The “Current Liabilities”-“Payable to Credit Institutions” caption of ACS, Actividades de Construcción y Servicios, S.A. includes

mainly a syndicated loan of E832,664 thousand, granted on a 50/50 basis by Caja de Ahorros y Monte de Piedad de Madrid

and Caixa D’Estalvis i Pensions de Barcelona, for the acquisition of the holding in Grupo Dragados, S.A. This loan matures on

March 21, 2004.

As a result of the acquisition of the holding in Grupo Dragados, S.A. in 2002 and 2003 (see Note 7), the Company has a

working capital deficiency. Accordingly, in the first quarter of 2004, the Parent Company arranged a long-term loan (see

Note 24).

The most significant secured loan relates to the mortgage loan of E6,311 thousand to the subsidiary COGESA. This loan

matures in 2009 and is secured by the building at Avenida de Pío XII, 102, Madrid, the cost of which is recorded under the

“Tangible Fixed Assets”-“Land and Structures” caption in the accompanying consolidated balance sheet.

There is also a loan of E2,000 thousand secured by mortgage on a lot earmarked for sale, maturing at short term.

The “Payable to Credit Institutions” caption includes E214,286 thousand relating to a syndicated loan, with repayment of part of

the principal in 2004 and 2005 and with final maturity in 2006. This loan bears market interest tied to Euribor. The agent bank for

the loan is Santander Central Hispano and the grant conditions establish compliance with certain consolidated financial ratios that

the Group meets.

The interest accrued on financial indebtedness was tied to Mibor and Euribor, plus a spread based on market conditions.

The detail, by maturity, of “Long-term Debt”-“Payable to Credit Institutions” caption as of December 31st, 2003, is as follows:

(Thousands of Euros)Short-term Long-term Total

Secured loans 4,309 11,174 15,483

Drawdowns against credit facilities 1,368,143 424,329 1,792,472

Discounted note payable 28,963 0 28,963

Discounted construction certificates 8,222 0 8,222

Financial lease payments payable 23,550 101,892 125,442

Unmatured interest payable 5,035 0 5,035

Other payables 18,721 74,396 93,117

Total 1.456.943 611,791 2,068,734

2009 2005 2006 2007 2008 and following Total

Balance at December 31, 2003 228,312 147,773 59,841 49,474 126,391 611,791



98 99

Í N D I C E

3

ACS GROUP

ANNUAL REPORT

2003


INFORMATION

The foreign currency amount included in nontrade payables relates mainly to the Venezuelan bolivar (E14,852 thousand),

to the Algerian dinar, (E9,602 thousand) and to the South African rand (E8,043 thousand).

As of December 31, 2003, foreign currency amounts payable to credit institutions include, E5,903 thousand in Venezuelan

bolivars and E3,246 thousand in Colombian pesos.

The reconciliation of income for the year per books to the taxable income for corporate income tax purposes is as follows:

TAX MATTERS20

The Group companies resident in Spain which qualify for the consolidated tax regime file consolidated tax returns. The

“Corporate Income Tax” caption in the consolidated statement of income reflects the tax charge relating to the Tax Group,

plus the tax charges of companies which submit individual tax returns.

In the tax period ended on December 31, 2003, the companies included in the former Tax Group, headed by Grupo Dragados,

S.A., were included in the Tax Group.

E5,047 thousand of “Prior-Years’ Tax Losses” were offset in 2003. Under current tax legislation, the tax loss of a given year

can be carried forward to offset against the taxable income of the following fifteen years.

The 2003 tax losses available for carryforward, totaling E3,430 thousand, relate to losses at companies outside the Tax Group,

the tax effect of which has not been recorded.


Increases Decreases Amount

Income per books before taxes 283,369

Permanent differences:

Individual companies 61,067 (28,932) 32,135

Consolidation adjustments 29,477 (93,002) (63,525)

2003 tax losses available for carryforward 3,430

Offset of prior years’ tax losses (5,047)

Adjusted income 250,362

Tax charge (35% of adjusted income) 87,627

Tax credits and tax relief (35,794)

Differential due to effective taxation abroad (3,777)

Adjustments to corporate income tax 233

Corporate income tax expense 48,289

In accordance with the principle of prudence in valuation, the positive tax effect of these tax losses on the corporate income

tax for the coming years has not been recorded in the accompanying consolidated balance sheet, with the exception of non-

material amounts for which there are no doubts as to their future recoverability.

The Group companies and the related joint ventures generally have the last four years open for review by the tax inspection

authorities.

No material liabilities are expected to arise for the Group in the event of a tax audit.

As of December 31, 2003, the Group has received from financial institutions and insurance companies guarantees provided

to third parties for a total amount of E3,851,899 thousand, mainly in connection with the performance of projects.

Also, ACS, Actividades de Construcción y Servicios, S.A. has provided guarantees of E195,068 thousand to secure the

performance of commitments acquired to receive the telecommunications licenses (Xfera Móviles, S.A. and Broadnet

Consorcio, S.A.). Most of the related costs are borne by these companies.

Xfera Móviles, S.A. has sent various statements to the Secretariat of State for Telecommunications and the Information

Society requesting that the commitments undertaken as holder of the individual type license be modified. In this connection

it submitted a new technical and financial offer, substantially reducing its obligations and commitments and adapting them

to the new regulatory framework and the scenario resulting from the delays in making the UMTS technology available. The

administrative proceedings have not yet concluded, although the Secretariat of State for Telecommunications and the

Information Society has initially accepted the Company’s proposal, which has been approved by the State Council. Amending

the license would entail a reduction in the amount secured by a floating guarantee from the current E137,529 thousand,

to approximately E57,181 thousand.

Group management considers that any unforeseen liabilities at 2003 year-end which might arise from the guarantees

provided would not be material.

GUARANTEE COMMITMENTS TO THIRD PARTIES21


1994 131

1995 339

1996 724

1997 366

1998 580

1999 2,117

2000 4,918

2001 11,623

2002 40,052

2003 18,821


The tax losses available for carryforward at Group companies as of December 31, 2003, amount to E79,671 thousand, the

detail by tax years being as follows:


100 101

Í N D I C E

3

ACS GROUP

ANNUAL REPORT

2003


INFORMATION

a) Breakdown of net sales

The breakdown of the Group’s net ordinary sales is as follows:

REVENUES AND EXPENSES22 The detail of the construction backlog, by type of project, is as follows:


By business activity:


Civil engineering 2,711,335

Building construction 1,820,457

Industrial 2,725,724

Services and Concessions 1,645,994

Intercompany and Parent Company eliminations (78,392)

Total 8,825,118

By market:

Domestic market 7,627,498

Foreign market 1,197,620

Europe 456,096

America 606,114

Other 135,410

Total 8,825,118

The detail of net sales relating to the construction line of business, by type of customer, is as follows:


Central government 1,656,525

Autonomous community governments 681,129

Municipal councils 337,269

Private entities 1,539,055

Exports 317,814

Total construction 4,531,792

In 2003, foreign currency transactions relating to sales and services rendered amounted to E165,455 thousand and those

relating to purchases and services received amounted to E319,062 thousand.



Industrial 3,049,063

Environmental services 7,793,495

Port, logistics and transport services 4,596,539

Total 23,327,121

b) Backlog

The backlog by line of business as of December 31, 2003, was as follows:


Domestic market 6,988,512

Civil engineering 4,366,749

Building construction 2,621,763

Foreign market 899,512

Total 7,888,024

Number of Category Employees

University graduates 3,713

Junior college graduates 4,457

Non-graduate line employees 4,779

Clerical personnel 4,664

Other personnel 59,606

Total 77,219

c) Personnel

The average number of employees at the Group companies in 2003 was 77,219, of whom 109 were employees of the

Parent Company.

The detail of the average number of employees, by professional category, is as follows:

The distribution of employees in 2003, by line of business, was as follows:

Number of Employees

Parent and other companies 105

Construction 15,821

Industrial 24,127

Urban services 36,749

Concessions 417

Total 77,219

d) Extraordinary revenues and expenses

Extraordinary revenues and expenses were mainly as follows:

- The extraordinary expenses relate mainly to the provision recorded to meet the expenses of ¤159 million before taxes,

incurred in the restructuring resulting from the merger with Grupo Dragados, S.A., as described in Note 18.

- In addition to the above, provisions were recorded to cover telecommunications risks, as described in Note 18.

- The variation in the allowances for tangible fixed assets, intangible assets and control portfolio relates to the provision

recorded to reduce the value of shareholdings to their underlying book value.



102 103

Í N D I C E

3

ACS GROUP

ANNUAL REPORT

2003


INFORMATION

Environmental matters

Environmental activities

The main environmental assets are the purifying facilities, biofilters and other assets, the purpose of which is to minimize

damage to the environment. As of December 31, 2003, the value of these assets, net of depreciation, was E31,687 thousand.

Environmental expenses

The environmental expenses incurred in 2003 had no material impact on the statement of income.

Long-term obligations and contingent liabilities

The directors of the ACS Group consider that any environmental contingencies which might arise are sufficiently covered

by the third-party liability insurance policies that have been taken out. The amount of the provisions for probable or certain

third-party liability, litigation in progress and indemnity payments recorded under the “Provision for Contingencies and

Expenses” caption (see Note 18) is not material.

The guarantees provided to secure the implementation of the plans to restore the land on which the Group has set up plants or

carried on its production activity amount to E683 thousand.

Auditors’ fees

The fees for financial statement audit services provided to the various companies composing the Consolidated Group in

2003 amounted to E2,859 thousand. The fees charged by audit firms in 2003 for other services rendered amounted to

E1,724 thousand, of which E850 related to fees paid to the principal auditor for the audit of the merger balance sheets

as of April 30, 2003.

Detail of directors’ equity interests in companies engaging in similar business activities and performance by

directors for their own account or for the account of others, similar activities

Pursuant to Article 127 ter. of the Spanish Corporations Law, introduced by Law 26/2003, which amends Securities Market

Law 24/1988, and the revised Spanish Corporations Law, in order to reinforce the transparency of listed corporations, following

is a detail of the companies engaging in an activity that is identical, similar or complementary to the activity that constitutes

the corporate purpose of ACS, Actividades de Construcción y Servicios , S.A. in which the members of the Board of Directors

own equity interests, and of the functions, if any, that they discharge thereat:

- The gains on fixed assets relate mainly to the sale of vehicles belonging to the Continental Auto subgroup and other

assets that were not required for the Group’s business activity.

e) Contribution of each company to consolidated income

The detail of each consolidated company’s contribution to 2003 consolidated income, by line of business, was as follows:


Aggregate MinorityIncome

Income InterestAttributed to

the Parent Company

Construction 154,678 (1,853) 152,825

Industrial services 98,409 (524) 97,885

Services 76,613 (3,196) 73,417

Parent company, concessions and adjustments (94,619) 0 (94,619)

Total 235,081 (5,573) 229,508

Directors’ compensation

In 2003 the members of the Parent Company’s Board of Directors received compensation for wages and professional fees

(including those received as members of the Board of Directors of Grupo Dragados, S.A. in 2003) amounting to E5,550

thousand and bylaw-stipulated directors’ fees amounting to E1,745 thousand related to statutory attendance payments

from the Group companies of which they are directors or board members. These amounts do not include the Commitments

referred to in Note 5.o of these notes to consolidated financial statements.

At the meetings held on December 16, 1999, on June 13, 2000, and finally on March 21, 2002, and by virtue of the

authorization granted by the Shareholders’ Meeting on June 29, 1999, the Board of Directors of ACS, Actividades de

Construcción y Servicios, S.A. resolved to establish a Stock Option Plan on the shares of ACS, Actividades de Construcción

y Servicios, S.A. with the following salient features:

1. Number of shares covered by plan: initially 1,095,000 shares, later increased to 192,235 shares.

2. Beneficiaries: 24 managers in four categories: 1st category: 1 beneficiary with 302,118 shares; 2nd category: 5 beneficiaries

with options on between 147,670 and 70,000 shares each; 3rd. category: 13 beneficiaries with 28,000 shares each and

4th category: 5 beneficiaries with 15,000 shares each.

3. The acquisition price is E27.31 per share for a total of 1,095,000 shares and E30.57 per share for the remaining

192,235 shares.

4. The options will be exercisable in three equal parts and may be accumulated at the beneficiary’s option in the fourth, fifth

and sixth year after January 1, 2000, inclusively. As of December 31, 2003, 88,300 options had already been exercised.

5. The tax withholdings and applicable taxes will be borne by the beneficiaries.

6. The stock market price of ACS shares as of December 31, 2003, was E38.70 and, therefore, no allowance has been

recorded in this connection.

OTHER INFORMATION23

Director Company Line of Business Holding Function

Isidro Fernández Barreiro FCC Construction and services 0.001% --

Santos Martínez-Conde Gutiérrez-Barquín FCC Construction and services 0.003% --

Ferrovial Construction and services 0.001% --

Industrial services andAbengoa Assembly 0.002% --

Abertis Concessions 0.000% --

Antonio García Ferrer Inmobiliaria Urbis Real estate 0.000% Director

Pedro-José López Jiménez Terratest Técnicas Especiales, S.A. -- 45% Chairman (through Fapindus, S.L.)



104 105

Í N D I C E

3

ACS GROUP

ANNUAL REPORT

2003


INFORMATION

Also pursuant to the aforementioned law, following is a detail of the activities performed by the directors, for their own account

or for the account of others, that are identical, similar or complementary to the activity that constitutes the corporate purpose

of ACS, Actividades de Construcción y Servicios , S.A.

The Company arranged a loan of E832,664 thousand, which was granted on a 50/50 basis by Caja de Ahorros y Monte

de Piedad de Madrid and Caixa D’ Estalvis i Pensions de Barcelona in connection with the acquisition of a 33.5% holding

in Grupo Dragados, S.A.

To restructure this debt, on March 9, 2004, the Company signed a long-term syndicated loan with various credit institutions,

the main features of which are as follows:

- Agent banks and underwriters: Caja de Ahorros y Monte de Piedad de Madrid and Caixa D’Estalvis i Pensions de

Barcelona.

- Amount: E900,000 thousand.

- Maturity: 50% in 2008, 50% in 2009.

- Interest: Euribor plus a variable spread based on compliance with certain ratios.

SUBSEQUENT EVENTS24

Regime under Company through PositionActivity Performed which the activity which the activity or function

Director is performed is performed at the Company

Corporación Financiera Chairman ofMiguel Blesa de la Parra Holding of equity interests For account of others Caja Madrid, S.A. Board of Directors

Ghesa IngenieríaPedro José López Jiménez Engineering For own account y Tecnología, S.A. Director

Marketing of machinery For own account Atlas Copco, S.A. Director



These consolidated financial statements are presented on the basis of accounting principles generally accepted in Spain.

Certain accounting practices applied by the Group that conform with generally accepted accounting principles in Spain

may not conform with generally accepted accounting principles in other countries.

EXPLANATION ADDED FOR TRANSLATION TO ENGLISH25

106 107

Í N D I C E


INFORMATION

3

Exhibit IFully consolidated companies

ACS GROUP

ANNUAL REPORT

2003

PARENT COMPANY

ACS, Actividades de Construcción y Servicios, S.A.Avda. de Pío XII, 102, Madrid A Parent Company

ACS Chile, S.A. ACS, Proyectos, ObrasSantiago de Chile (Chile) C Construction 98.48 1.52 100.00 46,512 y Construcciones, S.A.

ACS Colombia, S.A. ACS, Proyectos, ObrasSanta Fe de Bogotá (Colombia) Construction 92.00 8.00 100.00 717 y Construcciones, S.A.

Sociedad Promotora de Proyectos Integrados, PR PISA, S.A. Concessions Studies Cobra InstalacionesAvda. de Burgos, 16-D, 3º dcha., Madrid and Promotions 66.67 33.33 100.00 270 y Servicios, S.A.

Nexo 50 Correduría de Seguros, S.A. Avda. de Tenerife, 4-6, 28700 San Sebastián de los Reyes (Madrid) Insurance Brokers 99.99 0.01 100.00 62 Villanova

Novovilla, S.A. Avda. de Tenerife, 4-6, Acquisition of Movable 28700 San Sebastián de los Reyes (Madrid) and Immovable Property 99.99 0.01 100.00 563 Villanova

Villanova, S.A. Avda. de Tenerife, 4-6, Acquisition of Movable 28700 San Sebastián de los Reyes (Madrid) and Immovable Property 99.99 0.01 100.00 343 Novovilla

CONSTRUCTION

ACS, Proyectos, Obras y Construcciones, S.A.Avda. de Pío XII, 102, Madrid A Construction 100.00 100.00 151,049

Acainsa, S.A. ACS, Proyectos, ObrasOrense, 34, Madrid Real Estate 99.99 99.99 2,984 y Construcciones, S.A.

Aparcamiento Tramo C. Rambla-Coslada, S.L. Parking Lot ACS, Proyectos, ObrasOrense, 34, Madrid Operation 99.99 99.99 2,299 y Construcciones, S.A.

Cariátide, S.A. Real Estate Holding ACS, Proyectos, ObrasOrense, 34, Madrid Company 99.99 99.99 1,786 y Construcciones, S.A.

Castellano Leonesa de Minas, S.A. ACS, Proyectos, ObrasPrado de la Guzpeña (León) Inactive, Mining 100.00 100.00 450 y Construcciones, S.A.

Comunidades Gestionadas, S.A. (COGESA) ACS,Proyectos,ObrasOrense, 34, Madrid A Real Estate 99.99 0.01 100.00 18,282 y Construcciones, S.A.

Construcciones Especiales y Dragados, S.A. (Drace)Avda. de Tenerife, 4-6, Dragados O.P. (99,99%), 28700 San Sebastián de los Reyes (Madrid) A Construction 100.00 100.00 16,612 Villanova (0,01%)

Constructora Dycven, S.A.Veracruz, Edificio Torreón, Piso 3 Urbanización Las Mercedes, Caracas (Venezuela) C Construction 100.00 100.00 2,460 Dragados O.P.

Constructora Vespucio Norte, S.A.Avda. Américo Vespucio, 1565 Qulicura, Santiago de Chile (Chile) C Construction 54.00 54.00 7 Dragados O.P.

Corporación Constructora ACS, Proyectos, Obras ydel Sur, S.A. de C.V. Construcciones, S.A., Ginés NavarroCuernavaca (Mexico) Construction 99.88 99.88 0 Construcciones, S.A. de C.V.

Dragados Maroc, S.A.C/63 Moulay Youssef, Residence Adriana Dragados O.P. (99.99%), Casablanca (Morocco) M Construction 100.00 100.00 (1,382) other (0.01%)

Dragados Obras y Proyectos, S.A.Avda. de Tenerife, 4-6, 28700 San Sebastián de los Reyes (Madrid) A Construction 99.99 0.01 100.00 180,366 Villanova

Dragados Roads, Ltd.Stonemason's Court. Cementery Pales Rookwood Woking GU24 OBI (United Kingdom) A Construction 100.00 100.00 (10,823) Dragados O.P.

Dragados y Construcciones Argentina, S.A.I.C.I. (Dycasa)Avda. Leandro N. Alem., 986. 1001 Buenos Aires (Argentina) L Construction 66.10 66.10 13,151 Dragados O.P.

Drasel, S.A. Route de Versonnex, 5 Cessy 7500 (France) Construction 60.00 60.00 5 Dragados O.P.

Electren, S.A. SpecializedRaimundo Fdez. Villaverde, 53, Madrid A Construction 99.99 99.99 1,503 Vías y Construcciones, S.A.

Gasoductos y Redes Gisca, S.A. Orense, 11, Madrid Construction 52.50 52.50 1,250 Vías y Construcciones, S.A.

Geotecnia y Cimientos, S.A.Los Llanos de Jerez, 10 y 12 Dragados O.P. (99.99%),28820 Coslada (Madrid) Construction 100.00 100.00 3,972 Villanova (0.01%)

Gestifisa, S.A. Aparcamiento Tr. C. Orense, 34, Madrid Real Estate 100.00 100.00 109 Rambla-Coslada, S.L.

Ginés Navarro Construcciones, S.A. de C.V. ACS, Proyectos, Obras(Mexico) Construction 100.00 100.00 0 y Construcciones, S.A.

Hullera Oeste de Sabero, S.A. ACS, Proyectos, ObrasRamiro Valbuena, 16, León Inactive Mining 100.00 100.00 304 y Construcciones, S.A.

Inmobiliaria Alabega, S.A. ACS, Proyectos, ObrasOrense, 34, Madrid Real Estate 99.99 99.99 5,993 y Construcciones, S.A.

Lucampa, S.A. ACS, Proyectos, ObrasOrense, 34, Madrid Real Estate 99.99 99.99 1,683 y Construcciones, S.A.

Promotora Inmobiliaria La Cima, C.V. ACS, Proyectos, Obras(Mexico) Real Estate 99.84 99.84 0 y Construcciones, S.A.

Protide, S.A. Aparcamiento Tr. C.Orense, 34, Madrid Real Estate 100.00 100.00 60 Rambla-Coslada, S.L.

Residencial Leonesa, S.A. Aparcamiento Tr. C.Ramiro Valbuena, 12, León Real Estate 100.00 100.00 60 Rambla-Coslada, S.L.

Residencial Montecarmelo, S.A. Orense, 34, Madrid Real Estate 100.00 100.00 481 Cogesa, Roperfeli, S.L.

Sopol, S.A.Rua de Sao Bento, 644, 6º Lisbon (Portugal) C Construction 50.36 50.36 9.397 Dragados O.P.

Exhibits


Direct Indirect TotalNet cost(Thousand

Euros)Company

with indirect holdingLine of businessCompany and registered office

Percentage of ownership


Euros)Company



108 109

Í N D I C E


INFORMATION

3


ACS GROUP

ANNUAL REPORT

2003

Técnicas e Imagen Corporativa, S.L.La Cañada, 53 28850 Torrejón de Ardoz (Madrid) A Construction 75.47 75.47 415 Drace

Tecsa, Empresa Constructora, S.A. Dragados O.P. (99.99%),Avda. Madariaga 1- 4º, 48014 Bilbao A Construction 100.00 100.00 18,509 Villanova (0.01%)

Vías y Construcciones Portugal, S.G.P.S., S.A. (Portugal) Holding Company 100.00 100.00 2,620 Vías y Construcciones, S.A.

Vías y Construcciones, S.A.Orense, 11, Madrid A Construction 99.99 99.99 47,567

INDUSTRIAL

ACS, Servicios, Comunicaciones y Energía, S.L.Avda. Pío XII, 102, Madrid A Services 99.67 0.33 100.00 141,382 Cogesa

Actividades de Instalaciones Cobra Sistemas y Redes, S.A.,y Servicios, Cobra, S.A. Atil Cobra, S. A., CobraCarrera 77 nº 76-64-A.A. Instalaciones y Servicios, S.A.,9050 Santa Fe de Bogotá D.C. (Colombia) Services 99.00 99.00 153 Hidrogestión, Moncobra, S.A.

Actividades de Montajes y Servicios, S.A. C/ Nuestra Señora de Fatima, 38 Cobra Instalaciones y 15007 La Coruña Services 100.00 100.00 60 Servicios, S.A., Moncobra, S.A.

Actividades de Montajes y Servicios, S.A. de C.V.Melchor Ocampo, 193 Torre C14 º D11300 Colonia Verónica Anzures Delegación Cobra Instalaciones yMiguel Hidalgo (Mexico) H Services 100.00 100.00 50 Servicios, S.A.

Actividades de Servicios e Instalaciones, Cobra, S.A. 43 Calle A, 5-01 - Zona 12 Guatemala City Cobra Instalaciones y(Guatemala) Services 98.00 98.00 12 Servicios, S.A.

Agrupación Offshore 60 S.A. de C.V.Presa de Tetuxtepec 32 5º Col. Irrigacion Industrial EngineeringMexico DF 11500 (Mexico) D and Construction 100.00 100.00 (1,720) SICE (50%), Dossa (50%)

Albatros Logistic Maroc, S.A. Storage and DistributionCasablanca of Telecommunication(Morocco) Equipment 75.00 75.00 303 Albatros Logistic, S.A.

Albatros Logistic, S.A.Doctor Franklin, 13-24 Instalaciones yPol. Indust. San Marcos, Getafe (Madrid) A Storage 100.00 100.00 2,892 Montajes Eléctricos, S.A. (IMES)

Apadil, Armaduras, Plásticos y Accesorios de Iluminación, S.A. (Portugal) Corporate Image 99.96 99.96 3,636 Roura Cevasa, S.A.

API Conservación,S.A. Roadsc/ General Moscardó, 27, Madrid A Maintenance 100.00 100.00 211 Aplicación de Pinturas, API, S.A.

API Fabricación,S.A.Raso de la Estrella s/n, Aranjuez (Madrid) A Manufacture 100.00 100.00 350 Aplicación de Pinturas, API, S.A.

Aplicación de Pinturas, API, S.A. ACS, Servicios, Comunicacionesc/ General Moscardó, 27, Madrid A Painting and Signposting 100.00 100.00 3,907 y Energía, S.L.

Argencobra, S.A.C/ Viamonte 1145 7º A Cobra Instalaciones y 1153 Buenos Aires (Argentina) E Services 100.00 100.00 2,389 Servicios, S.A.

Artemis Transmissora de Energia, Ltda. Avda. Marechal Camara 160 salas Industrial Control,1833/1834 Rio de Janeiro (Brazil) Installation and Assembly 51.00 51.00 0 Cymi

Atil Cobra, S. A. Cobra Inversiones y Gestión, S.L.,C/ Cardenal Marcelo Spínola, 10 Industrial Moncobra, S.A., Cobra28016 Madrid A Installation Work 100.00 100.00 473 Instalaciones y Servicios, S.A.

BTOB Construcción Ventures, S.L. AdministrativeC/ Sepúlveda, 6, 28100 Alcobendas (Madrid) A Management Services 100.00 100.00 56 Dragados Sistemas

Ca Group, S.A. C/ Viamonte, 1145 7º A1053 Buenos Aires (Argentina) Installation Work 60.00 60.00 1,072 Atil Cobra, S.A.

Cachoeira Montages e Serviços, Ltda. Rua Marechal Cámara, 160/1807 Cobra Internacional,Rio de Janeiro (Brazil) Services 100.00 100.00 0 Moncobra, S.A.

Catalana de Treballs Publics, S.A. Cobra Instalaciones yC/ Pi i Margall, 82-84, 08025 Barcelona A Services 100.00 100.00 88 Servicios, S.A., Moncobra, S.A.

Cil Montagens e Serviços, Ltda. Rua Marechal Cámara, 160/1807 Cobra Internacional, Rio de Janeiro (Brazil) Services 100.00 100.00 0 Moncobra, S.A.

Cobra Bahia Instalacoes e Servicios, Ltda. Loteamento Varandas Tropicais km 4.5 Rua B Cuardra 4 Lote 10, Cep 42.700-000 Cobra Instalacoes y Estrada do Coco Lauro de Freitas, Bahía (Brazil) Services 100.00 100.00 739 Servicios, Ltda., Other

Cobra Bolivia, S.A. Cobra Instalaciones yRosendo Gutiérrez, 686, Sopocachi, La Paz (Bolivia) Services 98.00 98.00 7 Servicios, S.A., Other

Cobra Chile, S.A.Avda. José Pedro Alesandri, Cobra Instalaciones y 2323, Macul Santiago de Chile (Chile) A Services 100.00 100.00 266 Servicios, S.A., Other

Cobra Ingeniería de Montajes, S.A. Cobra Instalaciones y C/ Fernando Villalón, 3, 41004 Sevilla Services 100.00 100.00 60 Servicios, S.A., Moncobra, S.A.

Cobra Inst. y Serv. India, Pvt. B-324-110065 New Friends colony New Delhi (India) Services 100.00 100.00 22 Cobra Internacional, Other

Cobra Instalaciones y Servicios, S.A. ACS, ServiciosC/ Cardenal Marcelo Spínola, 10 de Comunicación 28016 Madrid A Services 100.00 100.00 44,162 y Energía

Cobra Instalaciones y Servicios, S.A. (R.D.) Vereda Nº 6, Monoguayabo Cobra Instalaciones y Santo Domingo (Dominican R.) Services 100.00 100.00 266 Servicios, S.A.

Cobra Instalacoes e Servicios, Ltda. Rua Uruguai, 35 Conj. 133, Porto Alegre Cobra Instalaciones y Porto Alegre RS (Brazil) Services 100.00 100.00 3,229 Servicios, S.A., Other

Exhibits



Euros)Company




Euros)Company



110 111

Í N D I C E


INFORMATION

3


ACS GROUP

ANNUAL REPORT

2003

Cobra Internacional Cobra Inversiones yC/ Cardenal Marcelo Spínola, 10 Gestión, S.L., Cobra Instalaciones28016 Madrid Services 100.00 100.00 33 y Servicios, S.A.

Cobra Inversiones y Gestión, S.L. C/ Cardenal Marcelo Spínola, 10 Cobra Instalaciones y28016 Madrid Holding Company 100.00 100.00 393 Servicios, S.A., Pr Prisa

Cobra México Melchor Ocampo 193, Torre C, Cobra Instalaciones Piso 14, Letra D, 11300 Colonia Verónica y Servicios, S.A.,Anzures México DF (Mexico) Services 100.00 100.00 808 Cobra Internacional

Cobra Perú II, S.A. Abelardo Quiñones, 870 Iquitos Loreto (Peru) Services 100.00 100.00 27 Cobra Perú, S.A., Other

Cobra Perú, S.A. Cobra Instalaciones yC/ Jr. Salaberry, 300, Callao, Lima (Peru) D Services 100.00 100.00 6.661 Servicios, S.A.

Cobra Servicios Auxiliares, S.A. Cobra Instalaciones yC/ Cardenal Marcelo Spínola, 10 Servicios, S.A., Catalana28016 Madrid A Services 100.00 100.00 60 de Treballs Publics, S.A.

Cobra Sistemas de Seguridad, S.A. Moncobra, S.A., C/ Cardenal Marcelo Spínola, 10 Cobra Instalaciones y28016 Madrid Security Sistems 100.00 100.00 120 Servicios, S.A.

Cobra Sistemas y Redes, S.A. Cobra Inversiones yC/ Cardenal Marcelo Spínola, 10 Gestión, S.L., Cobra28016 Madrid Installation Work 100.00 100.00 177 Instalaciones y Servicios, S.A.

Codelan, S.A. C/ Quejio num. 45 Pol. Ind. Navisa All Manner ofSevilla 41006 Construction Work 100.00 100.00 1,457 SICE

Columar, S.A. C/ Florida, 1184, 11100 Montevideo, Montevideo (Uruguay) Services 60.00 60.00 0 Atil Cobra, S.A.

Construcciones Dorsa, S.A. Cristóbal Bordiu, 35, 5º Sociedad Española de oficina 515-517, Madrid Construction 99.99 99.99 90 Montajes Industriales, S.A.

Control and Applications Asia, Pte. Ltd.24 Woodlands Loop, #04-00, Industrial Control,Singapore 738285 (Singapore) A Installation and Assembly 100.00 100.00 809 Cymi

Control y Montajes Industriales de México, S.A. de C.V. Juan Racine nº 112, 6º piso, Col. Los Morales Industrial Control, Cymi (99.99%), Polanco. México 11510, D.F. (Mexico) Installation and Assembly 100.00 100.00 3,067 Villanova (0.01%)

Control y Montajes Industriales, Cymi, S.A.C/ Teide, 4, 28709 San Sebastián de los Reyes Industrial Control, Dragados Industrial (99.99%),(Madrid) A Installation and Assembly 100.00 100.00 6,922 Villanova (0.01%)

Cosersa, S.A. Instalaciones y MontajesAvda. Ramón y Cajal, 107, Madrid Industrial Cleaning 100.00 100.00 210 Eléctricos, S.A. (IMES)

Cymi do Brazil, Ltd. Ciudad de Rio de Janeiro, Estado do Rio de Janeiro, Industrial Control, na Marechal Cámara nº 160, salas 1833/1834 (Brazil) Installation and Assembly 100.00 100.00 468 Cymi

Cymi Seguridad, S.A. C/ Teide, 1, 1ª Planta Security Installations 28709 San Sebastián de los Reyes (Madrid) and Set-up 100.00 100.00 120 Cymi

Desarrollos Energéticos Riojanos, S.L. Pol. Ind. Las Merindades, C/ B nº 6, 9550 Energía y Recursos Villarcayo de Merindad de Castilla la Vieja (Burgos) Energy Production 80.00 80.00 926 Ambientales, Eyra, S.A.

Dimática, S.A. Marketing of Instalaciones y MontajesPradillo, 48 y 50, Madrid Computer Equipment 100.00 100.00 120 Eléctricos, S.A. (IMES)

Dragados Industrial Algerie, S.P.A. 141 BK Krim-Belkacem Gouver Norat Industrial Maintenancedu Grnd Alger (Argelia) and Assembly 97.00 97.00 397 Masa (93%), Otros (4%)

Dragados Sistemas, S.A. Avda. de Tenerife, 4-6, Administrative Management28700 San Sebastián de los Reyes (Madrid) Services 100.00 100.00 38,920 Dragados Industrial

Dragados Construc. Netherlands, S.A. Industrial Cymi (33.25%),Amsteldijk 166-6, 1079 LH Amsterdam Control, Installation Masa (33.25%),(Netherlands) and Assembly 83.25 83.25 126 Intecsa-Uhde (16.75%)

Dragados Industrial Canada Inc. Industrial620 Rene Levesque West Suite 1000, Control, Installation Dragados Construc.H3B 1N7 Montreal, Quebec (Canada) and Assembly 83.25 83.25 142 Netherlands

Dragados Industrial, S.A.Avda. de Tenerife, 4-6, Electrical 28700 San Sebastián de los Reyes (Madrid) A Installation Work 99.79 99.79 60,976

Dragados Offshore de México, S.A. de C.V.C/ Juan Racine, 112 8º Col. Los Morales Industrial EngineeringDel. Miguel Hidalgo México DF 11510 (Mexico) D and Construction 95.00 95.00 (1,181) Dossa

Dragados Offshore, S.A. (Dossa)Bajo de la Cabezuela s/n, Industrial Engineering Dragados Industrial11510 Puerto Real (Cádiz) A and Construction 100.00 100.00 7,156 (99.99%), Villanova (0.01%)

Dragados Proyectos Industriales de México, S.A. de C.V. Dragados Industrial Juan Racine nº 112, 7º piso Col. Los Morales Industrial Engineering (31.67%), Cymi (31.67%),Polanco. México D.F. (Mexico) and Construction 95.00 95.00 2,806 Masa (31.67%)

Dragados Telecomunicaciones Dyctel Brazil, Ltda. Rua Madre Cabrini 137 Barrio Vila Mariana Telecommunications04020000 Sao Paulo (Brazil) Installations 100.00 100.00 (838) Dyctel (99%), Enyse (1%)

Dragados Telecomunicaciones, S.A. Avda. Tenerife, 4-6, Telecommunications Dragados Industrial (99.99%),San Sebastian de los Reyes (Madrid) Services 100.00 100.00 10,791 Villanova (0.01%)

DYCTEL Infraestructuras de Telecomunicaciones, S.A. TelecommunicationsC/ La Granja, 29, Alcobendas (Madrid) A Services 100.00 100.00 (597) SICE

Exhibits



Euros)Company




Euros)Company



112 113

Í N D I C E


INFORMATION

3


ACS GROUP

ANNUAL REPORT

2003

Dyctel Puerto Rico, INC.Montellano Final sector embalse de San José, TelecommunicationsSan Juan (Puerto Rico) A Services 100.00 100.00 0 Dyctel

Easa Somozas, S.A. C/ Jose Luis Bugallal Marchesi, 10, Energías Ambientales, 15008 La Coruña Electricity Production 47.00 47.00 970 Easa, S.A.

Electronic Traffic, S.A. ACS, Servicios, ComunicacionesTres Forques, 147, Valencia A Traffic Regulation 100.00 100.00 22,298 y Energía, S.L.

Emplogest, S.A. Rua Alfredo Trinidade, 4/A-1649-027 Cobra Instalaciones y Lisbon (Portugal) Holding Company 98.00 98.00 1,283 Servicios, S.A.

Empresa Nacional de Ingeniería y Tecnología, S.A. -Gerencia de Energía Industrial Engineering Príncipe de Vergara, 120, 28002 Madrid and Construction 100.00 100.00 4,176 Dragados Industrial

Enclavamientos y Señalización Ferroviaria, S.A. (Enyse) Electrical Installations Dragados Sistemas (99.99%), C/ La Granja, 29, Alcobendas (Madrid) A Work 100.00 100.00 1,569 Villanova (0.01%)

Enelec - Proyectos e Montagens Electricos e de Instrumentos, S.A. IndustrialAvda. Marechal Gomes de Costa, nº 27, Control, Installations3º Esq., 1800-255 Lisbon (Portugal) and Assembly 100.00 100.00 1,409 Cymi

Energía y Recursos Ambientales, Eyra, S.A. ACS, Servicios deAvda. Pío XII, 102, 28016 Madrid D Renewable Energies 100.00 100.00 4,207 Comunicación y Energía

Energía y Recursos Ambientales, Outes, S.A. C/ Jose Luis Bugallal Marchesi, 10, Energía y Recursos 15008 La Coruña Electricity Production 60.00 60.00 1,170 Ambientales, Eyra, S.A.

Energías Ambientales de Novo, S.A.C/ Jose Luis Bugallal Marchesi, 10, Energías Ambientales, 15008 La Coruña D Electricity Production 60.00 60.00 1,480 Easa, S.A.

Energías Ambientales de Vimianzo, S.A.C/ Jose Luis Bugallal Marchesi, 10, Energías Ambientales, 15008 La Coruña D Electricity Production 60.00 60.00 5,240 Easa, S.A.

Energías Ambientales, Easa, S.A.C/ Jose Luis Bugallal Marchesi, 10, Energía y Recursos 15008 La Coruña D Electricity Production 60.00 60.00 9,306 Ambientales, Eyra, S.A.

Enq, S.L. Pol. Ind. C/F nº 13, Mutilua Baja, Pamplona Software 99.54 99.54 1,166 Electronic Traffic, S.A.

Equipos de Señalización y Control, S.A.Severino Cobas 100, Vigo A Traffic Regulation 100.00 100.00 571 Electronic Traffic, S.A.

Etra Cataluña, S.A.Mercuri, 30-32, Barcelona A Traffic Regulation 100.00 100.00 2,626 Electronic Traffic, S.A.

Etra Interandina, S.A. c/ 100 Nº 8a-51- Of. 610 "Torre B",Santa Fe de Bogotá (Colombia) Traffic Regulation 100.00 100.00 129 Electronic Traffic, S.A.

Etra Investigación y Desarrollo, S.A.Tres Forques, 147, Valencia A R&D 100.00 100.00 3,330 Electronic Traffic, S.A.

Etra Norte, S.A.Bizcargi, Bloque 2 nº 5, Bilbao A Traffic Regulation 100.00 100.00 601 Electronic Traffic, S.A.

Etralux, S.A.Tres Forques, 147, Valencia A Traffic Regulation 100.00 100.00 1,503 Electronic Traffic, S.A.

Hidra de Telecomunicaciones y Multimedia, S.A. Electricity OperationC/ Severo Ochoa 10, 29190 Campañillas (Málaga) Outsourcing 100.00 100.00 1,942 Dragados Sistemas

Hidrogestión, S.A.Avda. Manoteras, 28, Madrid A Water Management 100.00 100.00 7,314 Electronic Traffic, S.A.

Hidrolazan, S.L. Construction and Paseo de la Castellana, 167, Madrid Operation 100.00 100.00 3 Obras Hidráulicas y Viarias, S.A.

Informática y Telemática Portuaria, S.A. Electricity OperationC/ Sepúlveda 6, Alcobendas, (Madrid) Outsourcing 100.00 100.00 722 SICE

Injar, S.A.C/ León y Castillo, 42135005 Las Palmas de Gran Canaria A Services 100.00 100.00 4,808 Atil

Instalaciones y Montajes Eléctricos, S.A. (IMES) ACS, Servicios, ComunicacionesAvda. Ramón y Cajal, 107, Madrid A Services 0.33 99.67 100.00 57,367 y Energía, S.L.

Intebe Mantenimientos, Ayuda a laCtra. Comarcal 1411, PK 91, Cercs (Barcelona) A Maintenance 67.00 67.00 162 Explotación y Servicios, S.A. (MAESSA)

Iscobra Instalacoes e Servicios, Ltda. Rua Marechal Cámara, 160/1807 Cobra Instalacoes yRio de Janeiro (Brazil) Services 100.00 100.00 236 Servicios, Ltda., Other

Itumbiara Marimbondo (Cobra) Rua Marechal Cámara, 160/1807Rio de Janeiro (Brazil) Services 100.00 100.00 0 Cobra Internacional

Josébeso Venezolana de Limpiezas(Venezuela) Industrial Cleaning 100.00 100.00 78 Industriales, C.A. (Venelin)

Lumican, S.A.Arco, 40, Gran Canaria A Traffic Regulation 100.00 100.00 307 Electronic Traffic, S.A.

Maessa Telecomunicaciones, S.A. (Maetel) Plaza Antonio Beltrán Martínez, 1, 8º C, Mantenimientos, Ayuda a la Zaragoza A Assembly 99.40 99.40 180 Explotación y Servicios, S.A. (MAESSA)

Makiber, S.A. Merchandise Dragados Industrial (99.99%),Paseo Castellana, 182, 1º, 28046 Madrid A Export 100.00 100.00 5,710 Villanova (0.01%)

Mantenimiento y Montajes Industriales, S.A. (Masa)Edif. Milenium C/ Teide, 5, 1º Industrial Maintenance Dragados Industrial (99.99%),28709 San Sebastián de los Reyes (Madrid) A and Assembly 100.00 100.00 16,873 Villanova (0.01%)

Mantenimientos, Ayuda a la Explotación ACS, Servicios, Comunicaciones y Servicios, S.A.(MAESSA) Industrial y Energía, S.L., SociedadGran Vía, 67, Madrid A Maintenance 100.00 100.00 2.344 Española de Montajes, S.A.

Masa Algeciras, S.A.Avda. Virgen del Carmen, 89, Industrial Maintenance Masa (99.99%),11202 Algeciras (Cádiz) A and Assembly 100.00 100.00 523 Villanova (0.01%)

Exhibits



Euros)Company




Euros)Company



114 115

Í N D I C E


INFORMATION

3


ACS GROUP

ANNUAL REPORT

2003

Masa Argentina, S.A. C/ Donado 1090, Bahía Blanca Industrial Maintenance8000 (Argentina) and Assembly 90.00 90.00 (297) Masa

Masa Brasil, S.L. Rua Joaquin Eugenio de Lima, Industrial Maintenance Masa (50%),680, 01403-901 Sao Paulo (Brazil) and Assembly 100.00 100.00 (61) Masa Madrid (50%)

Masa Galicia, S.A.Pol. Ind. De la Grela c/ Guttemberg, 27 1º, Industrial Maintenance Masa (99.99%), 15008 La Coruña A and Assembly 100.00 100.00 100 Villanova (0.01%)

Masa Huelva, S.A. Industrial Maintenance Masa (99.99%),C/ Alonso de Ojeda, 1, 21002 Huelva A and Assembly 100.00 100.00 61 Villanova (0.01%)

Masa Madrid, S.A. Edif. Milenium C/ Teide, 5 1º, Industrial Maintenance Masa (99.99%),28709 San Sebastián de los Reyes (Madrid) and Assembly 100.00 100.00 192 Villanova (0.01%)

Masa México, S.A. de C.V. C/ Juan Racine, 112 8º Col. Los Morales Industrial MaintenanceDel. Miguel Hidalgo, México DF (Mexico) and Assembly 100.00 100.00 (506) Masa

Masa Norte, S.A. Industrial Maintenance Masa (99.99%),C/ Rivera de Axpe, 50 3º, Erandio (Vizcaya) A and Assembly 100.00 100.00 123 Villanova (0.01%)

Masa Puertollano, S.A.Ctra. Calzada de Calatrava, km 3,4 Industrial Maintenance Masa (99.99%),13500 Puertollano (Ciudad Real) A and Assembly 100.00 100.00 212 Villanova (0.01%)

Masa Servicios, S.A.Pol. Ind. Zona Franca Sector B Calle B, Industrial Maintenance Masa (99.99%), 08040 Barcelona A and Assembly 100.00 100.00 94 Villanova (0.01%)

Masa Tenerife, S.A. Industrial Maintenance Masa (99.99%),C/ Marina ,7, 38002 Santa Cruz de Tenerife and Assembly 100.00 100.00 187 Villanova (0.01%)

Mexsemi, S.A. de C.V. Avda. Dolores Hidalgo, 817 - C.D. Industrial - Sociedad Española36541 Irapuato, GTo. (Mexico) Services 100.00 100.00 5 de Montajes Industriales, S.A.

Mimeca Venezolana de Limpiezas (Venezuela) Industrial Cleaning 100.00 100.00 39 Industriales, C.A. (Venelin)

Moncobra Canarias Instalaciones, S.A. C/ León y Castillo, 238, Cobra Instalaciones y 35005 Las Palmas de G. Canaria Installations Work 100.00 100.00 60 Servicios, S.A., Moncobra, S.A.

Moncobra, S.A. Cobra Instalaciones yC/ Cardenal Marcelo Spínola, 10, 28016 Madrid A Installations Work 100.00 100.00 4,185 Servicios, S.A.

Monelec, S.A.Cerraristas, 14, Málaga A Traffic Regulation 100.00 100.00 2,284 Etralux, S.A.

Munirah Transmissora de Energia, Ltda. Ciudad de Rio de Janeiro, Estado do Rio de Janeiro, Industrial Control,na Marechal Cámara nº 160, salas 1833/1834 (Brazil) and Assembly 95.00 95.00 0 Cymi

Murciana de Tráfico, S.A. Carril Molino Nerva (Murcia) Traffic Regulation 100.00 100.00 565 Electronic Traffic, S.A.

Nuevas Energías Valencianas, S.A. Energía y Recursos Pedrapiquers, 2, 46014 Valencia Electricity Production 100.00 100.00 1,159 Ambientales, Eyra, S.A.

Obras Hidráulicas y Viarias, S.A. Cobra Instalaciones yPaseo de la Castellana, 167, 28046 Madrid A Construction 100.00 100.00 5,682 Servicios, S.A.

Parque Eólico de Valdecarro, S.L. Energía y RecursosC/ Cardenal Marcelo Spínola, 10, 28016 Madrid Electricity Production 100.00 100.00 3 Ambientales, Eyra, S.A.

Parque Eólico El Perú, S.L. Energía y Recursos C/ Cardenal Marcelo Spínola, 10, 28016 Madrid Electricity Production 51.00 51.00 561 Ambientales, Eyra, S.A.

Parque Eólico La Boga, S.L. Energía y Recursos C/ Cardenal Marcelo Spínola, 10, 28016 Madrid Electricity Production 100.00 100.00 3 Ambientales, Eyra, S.A.

Parque Eólico Marmellar, S.L. Energía y RecursosC/ Cardenal Marcelo Spínola, 10, 28016 Madrid Electricity Production 100.00 100.00 3 Ambientales, Eyra, S.A.

Percomex, S.A. Melchor Ocampo, 193, Torre C, Piso 14, Letra D Cobra Instalaciones y 11300 Colonia Verónica Anzures, México DF (Mexico) Services 100.00 100.00 5 Servicios, S.A.

Portumasa, S.A. Industrial Maintenance Avda. Nerchal Gomes da Costa, 27 3º, 1800 Lisbon (Portugal) and Assembly 100.00 100.00 204 Masa

Procme, Ltda. Rua a Prof de Cavaco Silva, 13 Ed. Ciencia II Cobra Instalaciones y Tagus Part 2780 -920 Oeiras (Portugal) Holding Company 75.00 75.00 703 Servicios, S.A., Emplogest, S.A.

Promservi, S.A. Instalaciones y MontajesAvda. Ramón y Cajal, 107, Madrid A Real Estate Eevelopment 100.00 100.00 1,501 Eléctricos, S.A. (IMES)

Roura Cevasa, S.A.Caracas, 5, Barcelona A Corporate Image 100.00 100.00 18,088 Vías y Construcciones, S.A.

Salmantina de Seguridad Vial, S.A. Construction andAmérica, 2, Los Villares de la Reina (Salamanca) Signposting 100.00 100.00 60 Aplicación de Pinturas, API, S.A.

Senaxsa Mantenimientos, Ayuda a la Políg. Ind. Baix Ebre - Parcela 89, Campredo (Tarragona) Assembly 100.00 100.00 31 Explotación y Servicios, S.A. (MAESSA)

Sermacon Venezolana de Limpiezas(Venezuela) Industrial Cleaning 100.00 100.00 55 Industriales, C.A. (Venelin)

Sermicro, S.A. Computer Instalaciones y MontajesPradillo, 48 y 50, Madrid A Maintenance 100.00 100.00 120 Eléctricos, S.A. (IMES)

Serveis Catalans Electrical Instalaciones yNtra. Sra. de Bellvitche, 238-244, Barcelona Installation Work 100.00 100.00 60 Montajes Eléctricos, S.A. (IMES)

Servicios Dinsa, S.A. de C.V.Juan Racine nº 112, 4º piso Col. Los Morales Industrial Engineering Dragados Proyectos Polanco, México D.F. (Mexico) A and Constructions 95.00 95.00 51 Industriales México

Servicios y Proyectos Industriales de México, S.A. de C.V. Juan Racine nº 112, 4º piso Col. Los Morales Industrial Engineering Dragados ProyectosPolanco. México D.F. (Mexico) and Constructions 95.00 95.00 4 Industriales México

Setec Solucoes Energeticas de Transmissao e Controle, Ltda. Industrial Ciudad de Rio de Janeiro, Estado do Rio de Janeiro, Control,Installationna Marechal Cámara nº 160, salas 1833/1834 (Brazil) and Assembly 100.00 100.00 352 Cymi

Exhibits



Euros)Company




Euros)Company



116 117

Í N D I C E


INFORMATION

3


ACS GROUP

ANNUAL REPORT

2003

Sice do Brasil, S.A. Avda. Eng. Luis Carlos Berrini, 1461 4º All Manner ofSao Paulo (Brazil) Construction Work 100.00 100.00 17 SICE

Sice Sudafrica Pty, Ltd. Building A First Floor east wing Montana Tark All Manner ofoficces, Calliandra Street, Pretoria (South Africa) Construction Work 100.00 100.00 5 SICE

Sidetel, S.A. Avda. Manoteras, 28, Madrid Traffic Regulation 100.00 100.00 385 Electronic Traffic, S.A.

Sistemas Radiantes F. Moyano, S.A. C/ La Granja, 72, Alcobendas (Madrid) Antenna Manufacturing 80.00 80.00 6,598 Dragados Sistemas

Sociedad Eólica D’Enderrocada, S.A.C/ Amistat, 23, 08005 Barcelona D Electricity Production 48.00 48.00 4,587 Energías Ambientales, Easa, S.A.

Sociedad Española de MontajesIndustriales, S.A. (SEMI) ACS, Servicios, ComunicacionesBarquillo, 19, Madrid A Services 99.73 99.73 7,092 y Energía, S.L.

Sociedad Ibérica de Construcciones Eléctricas, S.A. (SICE) All Manner ofC/ Sepúlveda, 6, Alcobendas (Madrid) A Construction Work 100.00 100.00 43,167 Dragados Sistemas

Sociedad Industrial de Construcciones Eléctricas, S.A. Juan Racine nº 112, 1º piso Col. Los Morales All Manner of Polanco, México D.F. (Mexico) Construction Work 100.00 100.00 10 SICE

Societe Espagnole de Montage Industriel du Maroc, S.A. 22, Rue Le Catelet, Appt. Nº 16 Sociedad Española Sémétage-Belvédére, Casablanca (Morocco) Services 99.99 99.99 210 de Montajes Industriales, S.A.

Somozas Energías Renovables Energía y RecursosC/ Amistat, 23, 08005 Barcelona Electricity Production 55.00 55.00 33 Ambientales, Eyra, S.A.

Spcobra Instalacoes e Servicios, Ltda. Av. Dom Pedro I, 790 - CEP 091100-000 Cobra Instalacoes y Vila Pires Santo André SP (Brazil) Services 56.00 56.00 1,738 Servicios, Ltda.

Sumipar, S.A. C/ B Sector B, Pol. Ind. Zona Franca, Barcelona Electrical Installation Work 100.00 100.00 739 SICE

Técnicas de Desalinización del Agua, S.A. (Tedagua) Pol. de Arinaga, II fase. Parc. 15 - 16 Cobra Instalaciones y 35119 Agüimes (Las Palmas de G. Canaria) Installation Work 100.00 100.00 5,606 Servicios, S.A.

Tecnología de Sistemas Electrónicos, S.A. (EYSSA-TESIS) Rua General Pimienta de Castro,11-1º 1740-018 Lisbon (Portugal) Traffic Regulation 100.00 100.00 7,878 Electronic Traffic, S.A.

Tecnologías Integrales de Telecomunicaciones, S.A. TelecommunicationsC/ La Granja, 29, Alcobendas (Madrid) Services 100.00 100.00 (1,515) Dragados Sistemas

Telcarrier, S.A. Other Telecommunications Dragados Sistemas (99.99%), C/ La Granja, 29, Alcobendas (Madrid) Services 100.00 100.00 (454) Novovilla (0.01%)

Telsa Instalaciones de Telecomunicaciones y Electricidad, S.A. TelecommunicationC/ La Granja, 29, Alcobendas (Madrid) Engineering 100.00 100.00 1,481 Dragados Sistemas

Trafiurbe Comercio e Industria Maquinas para Sinalizaço, S.A. Quinta das Mas Fetais Camarate, 2685-561Sacavem (Portugal) Painting and Signposting 60.00 60.00 575 Aplicación de Pinturas, API, S.A.

Trasimal, S.L. Qta. Das mos Lugar de Fetais2685 Camarate, Lisbon (Portugal) Traffic Regulation 100.00 100.00 155 Electronic Traffic, S.A.

Venezolana de Limpiezas Industriales, C.A. (Venelin)Caracas (Venezuela) R Cleaning 82.80 82.80 1,057

Vent, Sol y EnergíaSagrado Corazón de Jesús, 17 Energía y Recursos 00330 Crevillente (Alicante) A Energy 50.00 50.00 100 Ambientales, Eyra, S.A.

Weinfer Venezolana de Limpiezas(Venezuela) Industrial Cleaning 100.00 100.00 Industriales, C.A. (Venelin)

URBAN SERVICES

Aguas del Huesna, S.L.Avda. de la Innovación, s/n, Sevilla A Water Treatment 33.33 66.67 100.00 1,885 Urbaser

Alfa Servicios Medioambientales, S.L. Técnicas Medioambientales,C/ Albasanz, 16, Madrid Environment 51.00 51.00 2 TECMED, S.A.

Alsina Express, S.A. T. AlsinaAvda. de América, 9a, Madrid Packaging 100.00 100.00 53 Graells Sur, S.A., Jilosa

Anónima Alsina Graells de A.T., S.A. Regular Transport Continental Auto, S.L., Avda. Empresari Josep Segura i Farre (Lérida) of Passengers 100.00 100.00 94 T. Alsina Graells Sur, S.A.

Autedia, S.A. Avda. Ingeniero Gutiérrez Segura, 2 Regular Transport Baza (Granada) of Passengers 64.21 64.21 164 T. Alsina Graells Sur, S.A.

Autobuses Consol, S.A. Regular TransportC/ Puerta del Vado, 1, Alcalá de Henares (Madrid) of Passengers 51.00 51.00 34 Continental Auto, S.L.

Autobuses García, S.L. Regular TransportHermilio Alcalde del Río, 2, Torrelavega (Cantabria) of Passengers 100.00 100.00 2,556 Continental Auto, S.L.

Autocares Discrecionales del Norte, S.L. Private PassengerAlameda de Urquijo, 85, Bilbao Transport Service 100.00 100.00 132 Continental Auto, S.L.

Autocares Maestra, S.L. Avda. Ingeniero Gutiérrez Segura, 2 Regular Transport Baza (Granada) of Passengers 64.76 64.76 0 T. Alsina Graells Sur, S.A.

Blas Moreno, S.L. Técnicas Medioambientales,Avda. Mistral, 44, Barcelona Environment 60.00 60.00 (60) TECMED, S.A.

Caepark Tenerife 1, S.A. Urbaser (99.99%), Pol. Ind. Zona Franca C/B, 08040 Barcelona Parking Lot Operation 100.00 100.00 35 Villanova (0.01%)

Exhibits



Euros)Company



Direct Indirect Total

Net cost(Thousand

Euros)Company



118 119

Í N D I C E


INFORMATION

3


ACS GROUP

ANNUAL REPORT

2003

Canal Metro Madrid, S.A.C/ Fernando Rey nº 3, Pozuelo de Alarcón (Madrid) D Advertising Services 81.96 81.96 (1,182) TV Transit

Centro de Transferencias,S.A. Técnicas Medioambientales,Polígono Los Barriales, s/n, Valladolid A Environment 70.00 70.00 1,209 TECMED, S.A.

Claerh, S.A. Avda. del Descubrimiento, Alcantarilla (Murcia) Environment 51.00 51.00 230 Consenur

Clece, S.A. Urbaser (99.99%),C/ Bravo Murillo, 52 7º Planta, Madrid A Interior Cleaning 100.00 100.00 9,074 Villanova (0.01%)

Consenur, S.A.Polígono Industrial Finanzauto, Técnicas Medioambientales,c/ Ebro, Arganda del Rey, Madrid A Environment 100.00 100.00 1,863 TECMED, S.A. y SOCAMEX

Construrail, S.A. Provision and Avda. Ingeniero Gutiérrez Segura, 2, Marketing of Continental Rail, S.A., Baza (Granada) Logistics Services 60.00 60.00 72 Vías y Construcciones, S.A.

Container Train, S.A. Lg. Muelle Dársena Sur. Edificio Autoterminal, 08039 Barcelona Transport 57.14 57.14 580 Dragados SPL

Continental Auto, S.L. Regular TranspotAvda. de América 9a, Madrid A of Passengers 100.00 100.00 191,395

Continental Rail, S.A. Vías y Construcciones, S.A.,Avda. de América, 2-17 b, Madrid A Transport 100.00 100.00 62 Continental Auto, S.L.

Control de Estacionamientos Urbanos, S.A. Avda. de Tenerife, 4-6, Urbaser (99.99%),28700 San Sebastián de los Reyes (Madrid) Parking Lot Operation 100.00 100.00 1,722 Villanova (0.01%)

Cuerda de Rodaderos, S.L. C/ Loja 8, Local 27, 18220 Polig. Juncaril (Albacete) Wind-Power 60.00 60.00 7 Urbaenergía

Cytrar, S.A. de C.V. Tecmed Técnicas(Mexico) Environment 100.00 100.00 2,743 Medioambientales de México, S.A. de C.V.

Dragados Desarrollo y Gestión de Servicios, S.L. Avda. de Tenerife, 4-6, 28700 San Sebastián de los Reyes (Madrid) Holding of Shares 100.00 100.00 331,349 Villanova

Dragados Servicios Portuarios y Logísticos, S.L. (Dragados SPL) Port and Logistics DDGS (99.99%), C/ Lagasca, 88, Madrid Services 100.00 100.00 125,000 Villanova (0.01%)

Dragados SPL del Caribe, S.A. C.V. C/Juan Racine nº112 4º piso-Col.Los Morales Polanco, México DF (Mexico) Holding of Shares 100.00 100.00 16,025 Dragados SPL

Ejido Medioambiente, S.A. Técnicas Medioambientales,Paraje Chozas de Redondo, El Ejido (Almería) Environment 65.00 65.00 199 TECMED, S.A., Socamex, S.A.

Empordanesa de Neteja, S.A. Técnicas Medioambientales, Avda. Mistral, 44, Barcelona Environment 60.00 60.00 (277) TECMED, S.A.

Empresa Navarro, S.L. Regular TransportMéndez Álvaro, s/n, Madrid of Passengers 100.00 100.00 5,230 Continental Auto, S.L.

Enviromental Services Enser, S.A.E. Garb Gprage Cornish el Nil Boulac, Cairo (Egypt) Road Cleaning 95.00 95.00 945 Urbaser

Estación de Autobuses de Andorra, S.A. S.A. Anónima Alsina Avda. Josep Tarradellas, 42, Andorra La Vella Station Operation 76.99 76.99 23 Graells de A.T., S.A.

Estación de Servicio Alavesa, S.A. Gerezpea, 17, Vitoria Real Estate Rental 100.00 100.00 3,470 Continental Auto, S.L.

Explotación Comercial de Intercambiadores, S.A. Station Continental Auto, S.L.,Avda. de América, 9a, Madrid A Operation 100.00 100.00 240 Jiménez Lopera, S.A.

Galvagestió, S.A. C/ Industria s/n Nave 4 Técnicas Medioambientales,Pol. Ind. " El Sur", El Papiol (Barcelona) Environment 51.00 51.00 (215) TECMED, S.A.

Gestión Medioambiental de Torrelavega, S.A. (Gesmator) Boulevard Demetrio Herrero, 639300 Torrelavega (Cantabria) Waste 60.00 60.00 60 Urbaser

Gestión y Protección Ambiental, S.L. Condado de Treviño, 19, Burgos Environment 53.00 53.00 101 Cetransa

Hijos de Simón Maestra Garosa, S.L. Avda. Ingeniero Gutiérrez Segura, 2, Regular Transport Baza (Granada) of Passengers 64.76 64.76 4,320 T. Alsina Graells Sur, S.A.

Incentive Servicios Logísticos, S.A. (Grupo Sintax)C/ l'Atlantic, 112-120 Edif. Norai, 08040 Barcelona A Transport 100.00 100.00 22,254 Dragados SPL

Integra MGSI, S.A. Integral Clece (99.99%),C/ Pradillo, 5, Madrid A Maintenance 100.00 100.00 8,568 Villanova (0.01%)

Intercambiador de Tptes. de Avenida de América, S.A. Station Continental Auto, S.L.,Avda. de América, 9a, Madrid A Operation 100.00 100.00 4,710 Jiménez Lopera, S.A.

Investambiente, S.A. (Portugal) Environment 52.00 52.00 175 Novaflex, S.A.

Jiménez Lopera, S.A. Avda. de América, 9a, Madrid Goods Transport 100.00 100.00 1,568 Continental Auto, S.L.

Lafuente Alicante, S.L.C/ Guillén Jefer, s/nº, Valencia A Interior Cleaning 51.00 51.00 508 Clece

Lafuente Valencia, S.L.C/ Ingeniero Joaquín Benllot, 65, Valencia A Interior Cleaning 51.73 51.73 2,148 Clece

Limpiezas La Guía, S.L. C/ Uruguay, 8 5ª Planta, Vigo Interior Cleaning 100.00 100.00 1,589 Clece

Limpiezas y Reformas Baleares, S.L.C/ Pescadors, 1, Palma de Mallorca A Interior Cleaning 51.00 51.00 1,606 Clece

Marítima del Mediterráneo, S.A.C/ l'Atlantic, 112-120, Edif. Norai, 08040 Barcelona A Shipping Agency 90.00 90.00 39,293 Dragados SPL

Marítima Valenciana, S.A. Dragados SPL (99.99%), Muelle Príncipe Felipe, s/n, 46024 Valencia A Port Services 100.00 100.00 138,885 Villanova (0.01%)

Exhibits



Euros)Company




Euros)Company



120 121

Í N D I C E


INFORMATION

3


ACS GROUP

ANNUAL REPORT

2003

Nevada Bus, S.L. Avda. Ingeniero Gutiérrez Segura, 2, Regular TransportBaza (Granada) of Passengers 64.76 64.76 0 T. Alsina Graells Sur, S.A.

New And Publicity, S.A.C/ Vía Augusta, 13-15, Barcelona D Advertising Services 87.58 87.58 7,108 TV Transit

Novabeira, S.A. Investambiente, S.A.,(Portugal) Environment 50.16 50.16 33 Novaflex, S.A.

NOVAFLEX, Técnicas de Medio Ambiente, S.A. Técnicas Medioambientales,(Portugal) Environment 100.00 100.00 4,762 TECMED, S.A.

Orto, Parques y Jardines, S.L. Técnicas Medioambientales,Luçar Dòcean s/n, Parroquia de Orto (La Coruña) Environment 100.00 100.00 3,566 TECMED, S.A., Socamex, S.A.

Parques y Jardines Conservación, S.A. Técnicas Medioambientales, c/Albericia-nave C5, Santander Environment 60.00 60.00 36 TECMED, S.A.

Procesadora de Residuos Urbanos de Valencia, S.A. (PRUVALSA) Técnicas Medioambientales(Venezuela) Environment 82.00 82.00 98 Venezuela, S.A.

Publimedia Sistemas Publicitarios, S.L. Avda. de Tenerife, 4-6, DDGS (99.99%), 28700 San Sebastián de los Reyes (Madrid) Advertising Services 100.00 100.00 0 Villanova (0.01%)

Puerto Seco Santander-Ebro, S.A. C/ Ramón y Cajal, 17, 50640 Luceni (Zaragoza) Logistics Center 50.00 50.00 571 Dragados SPL

Real Verde, Lda. (Portugal) Environment 95.00 95.00 104 Novaflex, S.A.

Recuperación Integral de Residuos de Castilla y León, S.A. Pol. Ind. Ntra. Sra. de Los Ángeles, Parcela 10, Técnicas Medioambientales,nave 8 y 9, Palencia Environment 100.00 100.00 60 TECMED, S.A., Consenur, S.A.

Residuos de la Janda, S.A. C/ La Barca de Vejer s/n, Técnicas Medioambientales,Vejer de La Frontera (Cádiz) Environment 60.00 60.00 (15) TECMED, S.A.

Residuos Sólidos Urbanos de Jaen, S.A. Técnicas Medioambientales, Palacio de la Excma. Diputación de Jaén (Jaén) Environment 60.00 60.00 216 TECMED, S.A.

S.A.T. La Castellana, S.A. Avda. de América, 9a, Madrid Inactive 99.47 99.47 61 Continental Auto, S.L.

Sanypick Plastic, S.A. Técnicas Medioambientales, c/ Albasanz, 16, Madrid Environment 51.00 51.00 30 TECMED, S.A.

Sermed, S.A. Técnicas Medioambientales, c/ Albasanz, 16, Madrid Medical Services 100.00 100.00 1.202 TECMED, S.A., Socamex, S.A.

Servicios de Aguas de Misiones, S.A.Avda. López y Planes,2577, Misiones (Argentina) Ñ Water Treatment 45.00 45.00 (107) Urbaser

Servicios Generales de Automoción, S.A. Supplies andAlameda de Urquijo, 85, Bilbao Spare Parts 100.00 100.00 0 Continental Auto, S.L.

Servicios Sociosanitarios Grales., S.L. Clece (99.99%),C/ Bravo Murillo, 52 7º Planta, Madrid A Healthcare Transport 100.00 100.00 2,658 Villanova (0.01%)

Setra Ventas y Servicios, S.A. C/ Límite s/n, Torrejón de Ardoz (Madrid) Spare-Parts Sales 100.00 100.00 564 Continental Auto, S.L.

Servicios Corporativos TWC, S.A. de C.V. Tecmed Técnicas Medioambientales(Mexico) Environment 100.00 100.00 140 de México, S.A. de C.V.

Sicsa Rail Transport, S.A.Avda. del Puerto, 189-5, 46022 Valencia A Transport 50.50 50.50 214 Dragados SPL

Sistemas de Incineración y Depuración, S.L. (SINDE) Valenciana deCtra. San Vicente-Agost, km 10.2, Alicante N/A 99.55 99.55 19 Protección Ambiental,S.A.

Socamex, S.A. Técnicas Medioambientales, C/ Cabalto s/n Par. 213. Pol. San Cristóbal, Valladolid A Environment 100.00 100.00 986 TECMED, S.A., Consenur

Sociedad de Reciclaje Asturiana, Sorea, S.A. Técnicas Medioambientales,Pol. Ind. Granda II - Nave 1, Granda, Siero (Asturias) Environment 51.00 51.00 24 TECMED, S.A.

Somasur, S.A. 20, Rue Meliana Hai Ennahada, Rabat (Morocco) Water Treatment 100.00 100.00 10 Urbaser

Steam, S.A. (France) Environment 39.52 39.52 19 Tecmed Enviroment

Talher, S.A. Landscaping-C/ Bravo Murillo, 52 7º Planta, Madrid A Reforestation 100.00 100.00 7,813 Clece

Tecmed Environment, S.A. Técnicas Medioambientales,(France) Environment 77.50 77.50 (561) TECMED, S.A.

Tecmed Técnicas Medioambientales de México, S.A. de C.V. Técnicas Medioambientales, (Mexico) Environment 100.00 100.00 4,799 TECMED, S.A.

TECMED, Técnicas Medioambientales de Marruecos, S.R.L. (Morocco) Environment 100.00 100.00 96 TECMED, S.A.

Técnicas de Recuperación e Inertización, S.A. Técnicas Medioambientales, c/ Albasanz, 16, Madrid Environment 100.00 100.00 60 TECMED, S.A. y Consenur, S.A.

Técnicas Medioambientales Venezuela, S.A. Técnicas Medioambientales, (Venezuela) Environment 100.00 100.00 360 TECMED, S.A.

Técnicas Medioambientales, TECMED, S.A.c/ Albasanz, 16, Madrid A Environment 100.00 100.00 93,482

Terminales del Sudeste Avda. Pablo Ruiz Picasso, 1, 29001 Málaga Port Services 82.26 82.26 8,222 Dragados SPL

Terminales Rías Altas, S.A. Muelle Centenario, s/n, 15006 (La Coruña) Port Services 60.00 60.00 683 Dragados SPL

Tirmadrid, S.A. WasteCañada Real de las Merinas, Madrid A Treatment Plant 66.36 66.36 9,711 Urbaenergía

Tptes. Alsina Graells Sur, S.A. Regular Transport Continental Auto, S.L.,Avda. de América, 9a, Madrid A of Passengers 100.00 100.00 21,492 Jiménez Lopera, S.A.

Tracemar Inversiones, S.L. C/ Guzmán el Bueno, 133, Madrid Holding of Shares 100.00 100.00 6,305 Urbaenergía

Exhibits



Euros)Company




Euros)Company



122 123

Í N D I C E


INFORMATION

3


ACS GROUP

ANNUAL REPORT

2003

Transportes Ortega Ramírez, S.L. Avda. Ingeniero Gutiérrez Segura, 2, Regular TransportBaza (Granada) of Passengers 64.76 64.76 0 T. Alsina Graells Sur, S.A.

Transportes Sanitarios La Rioja, S.L. C/ Bravo Murillo, 52 7º Planta, Madrid Healthcare Transport 98.00 98.00 164 Clece

Tratamiento de Aceites y Marpoles, S.L. Collection andC/ Guzmán el Bueno, 133, Madrid A Treatment of oils 100.00 100.00 22,304 Tracemar Inversiones

Tratamiento de Residuos Sólidos Urbanos, S.A. Tecmed Técnicas (Mexico) Environment 100.00 100.00 4 Medioambientales de México, S.A. de C.V.

TV Transit, S.A.C/ Fernando Rey, nº 3, Pozuelo de Alarcón (Madrid) D Advertising Services 100.00 100.00 6,193 Publimedia

Urbaenergía, S.L.Avda. de Tenerife, 4-6, DDGS (99.99%),28700 San Sebastián de los Reyes (Madrid) A Renewable Energies 100.00 100.00 21,989 Villanova (0.01%)

Urbana de Servicios Ambientales, S.A. Avda. Ortega y Gasset, 194, 29006 Málaga Road Cleaning 75.00 75.00 1,365 Urbaser

Urbaser Argentina, S.A.Centro, 1294, Buenos Aires (Argentina) Ñ Road Cleaning 100.00 100.00 2,423 Urbaser

Urbaser Barquisimeto, C.A. Carrera,4 Zona Ind. Barquisimeto, Urbaser (99.99%),Lara (Venezuela) Waste 100.00 100.00 170 Villanova (0.01%)

Urbaser Bolívar, C.A. Vía Puente Angostura,Ciudad Bolívar (Venezuela) Waste 100.00 100.00 99 Urbaser

Urbaser de México, S.A. Juan Racine,112, 11510 México DF (Mexico) Road Cleaning 100.00 100.00 177 Urbaser

Urbaser Mérida, C.A. Avda. Los Próceres, Mérida (Venezuela) Road Cleaning 100.00 100.00 45 Urbaser

Urbaser Santo Domingo, S.A. Víctor Garrido Puello,147 (Dominican Republic) Waste 100.00 100.00 3,238 Urbaser

Urbaser Transportes, S.L. Urbaser (99.99%),Avda. Diagonal, 611-2-2, 08028 Barcelona Mixed Transport 100.00 100.00 17 Villanova (0.01%)

Urbaser United Kingdom, Ltd.103, High St. Evesham, Worcestershire, WR11 4EL (United Kingdom) Q Waste Treatment Plant 100.00 100.00 371 Urbaenergía

Urbaser Valencia, C.A. Urbaser (99.99%),Avda. Cedeño, Valencia (Venezuela) Road Cleaning 100.00 100.00 315 Villanova (0.01%)

Urbaser, S.A.Avda. de Tenerife, 4-6, DDGS (99.99%), 28700 San Sebastián de los Reyes (Madrid) A Urban Services 100.00 100.00 117,704 Villanova (0.01%)

Urbasisten Publicity, S.A. Aragoneses, 15, Alcobendas (Madrid) Advertising 100.00 100.00 32 Urbaser

Urbasisten, Asistencia Sanitaria, S.A. Avda. de Tenerife, 4-6, Urbaser (99.99%), 28700 San Sebastián de los Reyes (Madrid) Ambulances 100.00 100.00 204 Villanova (0.01%)

Valenciana de Eliminación de Residuos, S.L. Técnicas Medioambientales,Real de Montroi, Paraje Cabrera de Pino s/n (Valencia) Environment 85.00 85.00 1,300 TECMED, S.A.

Valenciana de Protección Ambiental, S.A.L' Alcudia de Crepins, Polig. El Caneri, Técnicas Medioambientales, Parcela 6 (Valencia) A Environment 99.55 99.55 1,622 TECMED, S.A.

Vertederos de Residuos, S.A. (VERTRESA) Técnicas Medioambientales,C/ Albasanz, 16, Madrid A Environment 83.96 83.96 11,533 TECMED, S.A.

Vicens Orts, S.L. Técnicas Medioambientales, Berenguer de Palou, 1, Salou (Tarragona) Environment 60.00 60.00 (315) TECMED, S.A.

Zenit Servicios Integrales, S.A.C/ Bravo Murillo, 52 7º Planta, Madrid A Airport Services 51.00 51.00 1,627 Clece

CONCESSIONS

Autovía de La Mancha, S.A. Concesionaria Junta Comunidades de Castilla-La Mancha DragadosPaseo de Bachilleres, 1-B, 45003 (Toledo) A Concessions 66.67 66.67 17,322 Conces. de Infraestruct.

Dragados A-1, Ltd. 180 Strand, London (United Kingdom) Concessions 100.00 100.00 0 Dragados Concessions

Dragados Concesiones de Infraestructuras, S.A.Avda. de Tenerife, 4-6, 28700 San Sebastián de los Reyes (Madrid) A Concessions 99.99 0.01 100.00 231,047 Novovilla

Dragados Concessions, Ltd. Dragados180 Strand, London (United Kingdom) A Concessions 100.00 100.00 2,073 Conces. de Infraestruct.

Fenoco, S.A. Dragados Conces. deC/ 94 A No 11 A 27, piso 3, Bogotá D.C (Colombia) Concessions 71.32 71.32 18,235 Infraestruct. (99.99%), Villanova (0.01%)

Inversiones Nocedal, S.A. Dragados Conces. deC/ Miraflores, nº222 piso 24, Santiago de Chile (Chile) J Concessions 100.00 100.00 62,908 Infraestruct. (99.99%), Villanova (0.01%)

Inversora de Infraestructuras, S.A. Avda. de Burgos, 16-D, 3º dcha., Madrid Concessions 100.00 100.00 40,434

Taurus Holdings Chile, S.A. DragadosC/ Alcántara, nº 271 piso 2º Las Condes, Santiago de Chile (Chile) J Concessions 100.00 100.00 78,295 Conces. de Infraestruct.

AUDITOR:(A) - DELOITTE & TOUCHE(B) - PRICE WATERHOUSE COOPERS(C) - ERNST & YOUNG(D) - KPMG(E) - OSVALDO JORGE PAULINO(F) - BSK CONSULTING(G) - CONSULTORES ASOCIADOS(H) - ROJAS Y NOVOA (I) - MADERA SORIANO Y ASOCIADOS(J) - QUESADA Y DÍAS AUDITORES(K) - SURLATINA & HOWARTH(L) - ESTUDIO TORRENT AUDITORES(M) - SECOFA(N) - RACC AUDITORES(Ñ) - RAZZETO, LÓPEZ & RODRÍGUEZ CÓRDOBA(O) - IRVIN CEDEÑO Y ASOCIADOS(P) - VIZOSO, CASTELLA & ASOCIADOS(Q) - DAVIES MYERS AND PARTNERS (R) - CAROLINA PUEYO

Exhibits



Euros)Company




Euros)Company



124 125

Í N D I C E


INFORMATION

3

Exhibit IIProportionally consolidated companies and companies accounted for by the equity method

ACS GROUP

ANNUAL REPORT

2003

PARENT COMPANY

Abertis Infraestructuras, S.A. DragadosAvinguda del Parc Logistic, 12, 08040 Barcelona B Concessions 6.98 4.84 11.82 315,573 Conces. de Infraestruct.

Inmobiliaria Urbis, S.A.General Pardiñas, 73, Madrid A Real Estate 20.00 20.00 157,631

ACS Sonera Telefonía Móvil, S.L. c/ Orense, 34, Madrid Telecommunications 58.39 58.39 21,646

Carmelton Group, Ltd. 57, Yigal Alon, Tel Aviv (Israel) Concessions 40.00 40.00 0

Marina del Portixol, S.A. C/ Padre Damián, 41, 28036 Madrid Real Estate 50.00 50.00 1,948

Xfera Móviles, S.A. ACS SoneraRibera del Sena, s/n, Madrid A Telecommunications 14.82 19.96 34.78 44,310 Telefonía Móvil, S.L.

CONSTRUCTION

ACS, Sacyr Chile, S.A. ACS, Proyectos, Santiago de Chile (Chile) C Construction 50.00 50.00 348 Obras y Construcciones, S.A.

Constructora Aeropuerto de Chile, S.A.C/Alfredo Barros Errazuriz, 1953,Santiago de Chile (Chile) J Construction 50.00 50.00 31 Dragados O.P.

Constructora Norte Sur, S.A.Panamericana Norte nº 5364 Conchalí,Santiago de Chile (Chile) C Construction 48.00 48.00 5 Dragados O.P.

Dragados Fomento Canadá, S.A.L. Queen Street, 570 Fredericton NB (Canada) Construction 50.00 50.00 (1,517) Dragados O.P.

Dravo, S.A.Plaza de Castilla, 3-5º CII, 28046 Madrid C Construction 50.00 50.00 541 Drace

Elaboración de Cajones Pretensados, S.L. C/ Marcelo Spínola, 42, 28016 Madrid Construction 50.00 50.00 2 Dragados O.P.

Gaviel, S.A. ACS, Proyectos, Paseo de Gracia, 29, Barcelona Real Estate 50.00 50.00 703 Obras y Construcciones, S.A.

Grupo Comercializador del Sur, S.A. ACS, Proyectos, (Mexico) Real Estate 50.00 50.00 Obras y Construcciones, S.A.

Nisa Gav, S.A. Paseo de Gracia, 29, Barcelona Real Estate 50.00 50.00 567 Gaviel, S.A.

Superco Orense, S.A. C/ Benito Blanco Rajoy, 9, 15006 La Coruña Construction 35.00 35.00 73 Dragados O.P.

Via Dragados, S.A.Sector SIA (Sector de Industria y Abastecimiento) Trecho 3-Lotes 1705/1715, Brasilia-DF-CEO 71200-030 (Brazil) D Construction 50.00 50.00 22,666 Dragados O.P.

INDUSTRIAL

Aldebaran S.M.E. S.A. Energía y RecursosC/ Amistat, 23, 08005 Barcelona Electricity Production 50.00 50.00 31 Ambientales, EYRA, S.A.

BK-DOSSA, S.A. IndustrialCentro de Neg. Miramar c/3 RA E/78 y 80 Engineering andEdificio Jerusalem, La Habana (Cuba) G Construction 50.00 50.00 (100) Dossa

Cobra Magreb Cobra InstalacionesCasablanca (Morocco) Inactive 35.00 35.00 28 y Servicios, S.A.

Cogeneración Alfacel A.I.E. Avda. de Tenerife, 4-6, Urbaser (62.5%),28700 San Sebastián de los Reyes (Madrid) Energy 78.75 78.75 (600) Intecsa-Uhde (16.25%)

Constructora de Equipos de Compresión, S.A. de C.V. IndustrialMiguel de Cervantes Saavedra, 157 4º Engineering and Col. AMP Granada, Mexico DF 11520 (Mexico) Construction 50.00 50.00 (189) Dossa

Constructora Gas del Bio Bio Limitada IndustrialPuerta del Sol 55 4º Las Condes Maintenance and Santiago (Chile) Assembly 40.00 40.00 17 Masa

Cygnus Instalaciones yAguehol, 7, Madrid Air Transport 40.00 40.00 503 Montajes Eléctricos, S.A. (IMES)

Dinec 1, S.A. de C.V.Juan Racine nº 112, 6º piso Control, Installation and Dragados Industrial (26.56%),Col. Los Morales Polanco, Mexico D.F. (Mexico) A Industrial Assembly 56.56 56.56 3 Cymi (30%)

Dinsa Eléctricas y Cymi, S.A. de C.V.Juan Racine nº 112, 6º piso Control, Installation and Col. Los Morales Polanco. Mexico D.F. (Mexico) A Industrial Assembly 60.00 60.00 2 Cymi

Dragados Offshore SLP S.A. de C.V. IndustrialC/ Juan Racine, 112 6º Col. Los Morales Engineering and Del. Miguel Hidalgo Mexico D.F. (Mexico) D Construction 50.00 50.00 (735) Dossa

Expansion Transmissao Avda. Marechal Camera, 160, Cobra Instalaciones yRio de Janeiro (Brazil) Energy Transport 25.00 25.00 5,563 Servicios, S.A.

Hospec, S.A.L. Tamer Bldg., Sin El Beirut (Lebano) Import and Export 50.00 50.00 0 Makiber

Incro, S.A. Serrano, 27, Madrid Engineering 25.00 25.00 7 Intecsa-Uhde

Intecsa Uhde Industrial, S.A.Vía de los Poblados,11 Madrid 28033 A Engineering 50.00 50.00 1,857 Dragados Industrial

JC Decaux Cevasa, S.A. Advertising Polígono Industrial "Las Mercedes", Madrid Operations 50.00 50.00 30 Roura Cevasa, S.A.

Nordeste Transmissora de Energia, Ltda. Avda. Marechal Camara 160 salas 1833/1834 Control, Installation and Rio de Janeiro (Brazil) Industrial Assembly 50.00 50.00 14,407 Dragados Industrial

Operadora del Pacífico , S.A. HighwaySan Sebastián, 2750 - Oficina 404 Upkeep andLas Condes, Santiago de Chile (Chile) Maintenance 50.00 50.00 84 Api Conservación, S.A.

Parque Eólico Lodoso, S.L. Energía y RecursosC/ Almirante Bonifaz, 3, 09003 Burgos Electricity Production 25.00 0.25 45 Ambientales, EYRA, S.A.

Exhibits



Net cost(Thousand

Euros)Company

with indirect holdingLine of BusinessCompany and registered office



Net cost(Thousand

Euros)Company



126 127

Í N D I C E


INFORMATION

3

ACS GROUP

ANNUAL REPORT

2003

Parque Eólico Santa Cruz del Tozo Energía y Recursos Almirante Bonifaz, 3, 09003 Burgos Electricity Production 25.00 0.25 45 Ambientales, EYRA, S.A.

Rashid Dragados Industrial, Ltd. IndustrialRoad 2808 area 428 Al Seef distric, Engineering and Bahrain (Saudi Arabia) Construction 40.00 40.00 633 Dragados Industrial

Red Eléctrica del Sur, S.A. Avda. San Felipe, 758, Lima (Peru) Energy Transport 20.00 20.00 4,624 Cobra Perú, S.A.

STE-Sul Transmisora de Energia, Ltda. Avda. Marechal Camara, 160 salas Control, Installation and 1833/1834 Rio de Janeiro (Brazil) Industrial Assembly 50.00 50.00 0 Cymi

Visadrag Gas, Ltda. Industrial MaintenanceAvda. Gago Coutnho, 147, Lisbon 1700 (Portugal) and Assembly 50.00 50.00 (1) Dyctel (30%), Masa (20%)

URBAN SERVICES

A.T.M. Cartera, S.A.C/ Muelle, 1 de la ampliación, Puerto de Bilbao, 48980 Santurce (Vizcaya) B Transport 48.74 48.74 3,310 Dragados SPL

ABG Técnicas Medioambientales,Colón de Larrategui, 26, Bilbao Environment 20.00 20.00 64 Tecmed, S.A.

Aguas del Gran Buenos Aires, S.A.Avda. Roque Saenz Peña, 832,Buenos Aires (Argentina) Ñ Water Management 26.34 26.34 (415) Urbaser

Alternativas Socio Sanitarias de Espiel, S.L. Avda. de Tenerife, 4-6, 28700 San Sebastián de los Reyes (Madrid) Geriatric Care 0.50 0.50 120 Urbaser

American Forestry Technology, Inc. 7852 West 200 South West Point in 47992 (USA) Wood 41.11 41.11 3.483 Urbaser

Citri, S.A. Técnicas Medioambientales,(Portugal) Environment 26.00 26.00 1,327 Tecmed, S.A., Novaflex

Compañia Navarra de Autobuses, S.A. Regular TransportCiudad del Transporte, Imarcain (Navarra) of Passengers 31.24 31.24 1,505 Continental Auto, S.L.

Conterail, S.A.Avda. Europa, s/n, 28820 Coslada (Madrid) A Transport 50.00 50.00 517 Dragados SPL

Demarco, S.A.Alcalde Guzmán,18, Quilicura (Chile) K Waste 50.00 50.00 2,796 Urbaser

Desarrollo y Gestión de Residuos, S.A. (Degersa) Técnicas Medioambientales, Avda. Barón de Carcer, 37, Valencia Environment 40.00 40.00 24 Tecmed, S.A.

Dyta Eólica de Castilla-La Mancha, S.A. C/ Río Ventalama, 4, 45007 Toledo Wind Power 40.00 40.00 1,940 Urbaenergía

E.M. de Aguas del Ferrol, S.A.C/ María, 38, 15402 Ferrol (La Coruña) A Water Management 49.00 49.00 2,795 Urbaser

Ecoparc del Mediterrani, S.A. Avda. Mariano Beristany Transferring Plant 32.00 32.00 1,533 Urbaser

Ecoparc, S.A. Industrial Treatment C/ A . Políg. Industrial Zona Franca Barcelona of Waste 44.00 44.00 3,064 Urbaser

Eix Bus Regular Transport S.A. Anónima Alsina Sardenya, 16, Gerona of Passengers 33.33 33.33 20 Graells de A.T., S.A.

Elecdey de Castilla-La Mancha, S.L. C/ Maudes, 51-1º, 28003 Madrid Wind Power 42.00 42.00 101 Urbaenergía

Energías Renovables de Ricobayo, S.A. C/ Romero Girón, 4, 28036 Madrid Wind Power 50.00 50.00 299 Urbaenergía

Energías y Tierras Fértiles, S.A. Pascual y Genís, 19, 46002 Valencia Waste 33.36 33.36 252 Urbaser

Entaban Biocombustibles del Guadalquivir Técnicas Medioambientales,Paseo Independencia, 28, Zaragoza Environment 25.00 25.00 91 Tecmed, S.A.

Entaban Biocombustibles del Pirineo Técnicas Medioambientales,Paseo Independencia, 28, Zaragoza Environment 30.00 30.00 267 Tecmed, S.A.

Estación de Autobuses Aguilar de Campoo, S.L. Calzada de Toro, 50, Villares de la Reina (Salamanca) Station Operation 33.00 33.00 6 Continental Auto, S.L.

Estación de Autobuses de Cartagena, S.A. Avda. Tovero Marín, 3, Cartagena (Murcia) Station Operation 27.50 27.50 6 T. Alsina Graells Sur, S.A.

Estación de Autobuses de Vitoria, S.A. Las Herran, 50, Vitoria Station Operation 25.00 25.00 23 Continental Auto, S.L.

Estacionamientos El Pilar, S.A.Avda de Tenerife, 4-6, 28700 San Sebastián de los Reyes (Madrid) A Parking Lots 50.00 50.00 4,790 Urbaser

Explotaciones Eólicas Sierra de Utrera, S.L.C/ Príncipe de Vergara, 125b, 28006 Madrid A Wind Power 25.00 25.00 902 Urbaser

Explotaciones Eólicas Vientos del Sur, S.L. C/ Serrano, 17, 28001 Madrid Wind Power 33.00 33.00 0 Urbaser

Foresta Capital, S.A. 7852 West 200 South West Point in 47992 (USA) Wood 50.00 50.00 1,505 Urbaser

Gestión Medioambiental de L'Anoia, S.L. EnvironmentalC/ Viriato, 47, 08000 Barcelona Management 50.00 50.00 238 Urbaser

Gizaintza, S.L. C/ Soraluce,13, Guipúzcoa Home Care 30.00 30.00 173 Clece

INTERENVASES, S.A. Técnicas Medioambientales,c/ Boriceta, 8, (Álava) Environment 50.00 50.00 480 Tecmed, S.A.

International City Cleaning Company Técnicas Medioambientales,(Egypto) Environment 30.00 30.00 140 Tecmed, S.A.

Iquique Terminal Internacional, S.A. C/San Martín, 255, Oficina 151, Iquique (Chile) Transport 40.00 40.00 3.574 Dragados SPL

KDM, S.A.Alcalde Guzmán,18, Quilicura (Chile) C Waste 50.00 50.00 10.212 Urbaser

La Unión Alavesa, S.A. Regular Transport Estación deGerezpea, 17, Vitoria of Passengers 50.00 50.00 229 Servicio Alavesa, S.A.

Laumar Cargo, S.L. Avda. Hoya del Buñoi, 37, 46215 Macastre (Valencia) Transport 50.00 50.00 803 Dragados SPL

Exhibits



Net cost(Thousand

Euros)Company




Net cost(Thousand

Euros)Company




128 129

Í N D I C E


INFORMATION

3

ACS GROUP

ANNUAL REPORT

2003

Loma del Capón, S.L. C/ Loja 8, Local 26, 18220 Polig. Juncaril (Albacete) Wind Power 50.00 50.00 6 Urbaenergía

Movelia Tecnologías, S.L. Continental Auto, S.L.,Avda. de América, 9a, Madrid Transport 28.72 28.72 205 Transportes Alsina Graells Sur, S.A.

Muelles y Espacios Portuarios, S.A. C/ Mallorca, 260 4º 2º, 08008 Barcelona Transport 35.00 35.00 1,120 Dragados SPL

Operaciones Portuarias Canarias, S.A.Avda. de los Cambulloneros, s/n, 35008 Las Palmas de Gran Canaria C Transport 45.00 45.00 14,100 Dragados SPL

Parque Eólico Valcaire, S.L. C/ Ayuntamiento, 7, 18640 Padul (Granada) Wind Power 55.00 55.00 168 Urbaenergía

Remolcadores de Barcelona, S.A. Muelle Evaristo Fernández, 28, Edificio Remolcadores 08039 Barcelona Transport 13.33 13.33 6,092 Dragados SPL

Resiges-Gestao de Residuos Hospitalares, Lda. Novaflex, Técnicas do(Portugal) Environment 50.00 50.00 12 Meio Ambiente

Sala, S.A. ESP. C/ 100, 19, Bogotá (Colombia) Road Cleaning 50.00 50.00 2,848 Urbaser

Salmedina Tratamiento de Residuos Inertes, S.L. Génova, 5, Madrid Environment 50.00 50.00 2,948 Vertedero de Residuos, S.A.

Serra do Moncoso Cambas, S.L. Rua da Constitución, 30, 15189 Culleredo (La Coruña) Wind Power 45.00 45.00 2,516 Urbaenergía

Servicios Urbanos y Medio Ambiente, S.A. (Suma)Avda. Julio Dinis,2, Lisbon (Portugal) A Road Cleaning 38.50 38.50 3,703 Urbaser

Servicios Urbanos, S.L. Avino do Mato, s/n, Braga (Portugal) Road Cleaning 38.50 38.50 3,896 Urbaser

Sistemas de Reducción, S.A. Técnicas Medioambientales,Pasaje Vicent Marri, 13, Barcelona Environment 40.00 40.00 237 Tecmed, S.A.

Sociedad Energías Renovables y Cogeneración, S.A. Avda. de Tenerife, 4-6, 28700 San Sebastián de los Reyes (Madrid) Wind Power 50.00 50.00 160 Urbaenergía

Sociedad General de Recursos Energéticos,S.A. Pº de la Castellana, 95, Madrid Wind Power 24.90 24.90 0 Urbaenergía

Soluciones Bema, S.L. Técnicas Medioambientales,C/ Somosierra, 24, San Sebastián de los Reyes (Madrid) Environment 20.00 20.00 8 Tecmed, S.A.

Starco, S.A.Alcalde Guzmán,18, Quilicura (Chile) K Waste 50.00 50.00 3,701 Urbaser

Tecnologías Medioambientales del Golfo, S.A. de C.V. Tecmed, Técnicas(Mexico) Environment 50.00 50.00 4 Medioambientales de México

Tirme, S.A.Ctra. de Sóller, km 8.207120 Son Reus (Palma de Mallorca) A Cogeneration 20.00 20.00 1,515 Urbaenergía

Transpisa Regular Transport S.A. Anónima AlsinaAvda. Josep Tarradellas, 42, Andorra La Vella (Andorra) of Passengers 33.00 33.00 10 Graells de A.T., S.A.

Tratamiento Industrial de Residuos Sólidos, S.A.Rambla Cataluña, 91, 08008 Barcelona P Waste 33.33 33.33 1,352 Urbaser

Urgeban Grupo Energético, S.A. C/ Gral. Elio, 4-1º-1ª, 46010 Valencia Wind Power 40.00 40.00 0 Urbaenergía

Valdemingómez 2000, S.A. c/ Albasanz, 16, Madrid Environment 33.58 33.58 1,202 Vertedero de Residuos, S.A.

Valorga International Técnicas Medioambientales,(France) Environment 40.00 40.00 250 Tecmed, S.A.

Zoreda Internacional, S.A. Técnicas Medioambientales,C/ Rodríguez San Pedro, 5, Gijón Environment 40.00 40.00 21 Tecmed, S.A.

CONCESSIONS

Rutas del Pacífico, S.A. Concession-Holder Santiago de Chile (Chile) C Company 50.00 50.00 45,297 ACS Chile, S.A.

Aerocali, S.A.Aeropuerto Alfonso Bonilla Aragón DragadosPiso 3º, Palmira (Colombia) A Concessions 33.33 33.33 325 Conces. de Infraestruct.

Aeropuertos Mexicanos del Pacífico, S.A. de C.V.Av. Mariano Otero, No 1249, ala B, piso 7Condomino Centro Torre Pacífico DragadosGuadalajara, Jalisco (Mexico) A Concessions 28.16 28.16 52,873 Conces. de Infraestruct.

Bakwena Platinum Corridor Concessionaire, Ltd.24 Sunninghill Office Park, Infraestructure Peltier Road Sunninghill-2157 A Concessions 25.00 25.00 155 Concessions South Africa

Bidelan Guipuzkoako Autobideak, S.A.Plaza de los Amezqueta, 10 Dragados20010 San Sebastián (Guipúzcoa) F Concessions 50.00 50.00 4,528 Conces. de Infraestruct.

Guadalquivir Sociedad Concesionaria de la Junta de Andalucía, Guadalmetro, S.A. DragadosAvda. San Francisco, 1, 41005 Sevilla D Concessions 27.83 27.83 23,934 Conces. de Infraestruct.

Infraestructuras y Radiales, S.A.C/ Golfo de Salónica, 27, Madrid D Concessions 33.00 2.00 35.00 24,044 Dragados O.P.

Infraestructure Concessions South Africa, Ltd.24 Sunninghill Office Park, DragadosPeltier Road Sunninghill-2157 (South Africa) D Concessions 50.00 50.00 14,131 Conces. de Infraestruct.

MBJ Airports, Ltd.Island Mailboxes Suit 4000 Montego Bay DragadosSt. James (Jamaica) A Concessions 35.00 35.00 488 Conces. de Infraestruct.

Pt Operational Services (PTY), Ltd. Dragados1 Lavender Road Bon Accord 009 (South Africa) B Concessions 33.40 33.40 0 Conces. de Infraestruct.

Exhibits



Net cost(Thousand

Euros)Company




Net cost(Thousand

Euros)Company




130 131

Í N D I C E


INFORMATION

3

ACS GROUP

ANNUAL REPORT

2003

Road Management (A13) Plc.Sandiway House, Littlelades Lane Hartford, Northwich Chesshire CW8 2YA D Concessions 25.00 25.00 119 Dragados Concessions

Road Management Services (Darrington) Holdings LimitedSandiway House, Littlelades Lane Hartford, Northwich Chesshire CW8 2YA D Concessions 25.00 25.00 18 Dragados A-1

Ruta de los Pantanos, S.A.Pza.Castilla , Nº 3, piso 22, 28046 Madrid A Concessions 25.00 25.00 3,546

SCL Terminal Aéreo Santiago, S.A., Sociedad ConcesionariaAeropuerto Arturo Merino Benítez DragadosPudajuel, Santiago de Chile (Chile) B Concessions 14.78 14.78 2,439 Conces. de Infraestruct.

Scutvias Autoestradas da Beira Interior, S.A.Praça de Alvalade, nº6 7º, Lisbon (Portugal) A Concessions 20.00 20.00 16,402

Sociedad Concesionaria Autopista Central, S.A. San José, 1145 Comuna de San Bernard Dragados Conces. deSantiago de Chile (Chile) Concessions 48.00 48.00 40,103 Infraestruct. (25%), Nocedal (23%)

Sociedad Concesionaria Vespucio Norte Express, S.A. C/ Alcántara, 200 Oficina 501 Las Condes, Santiago de Chile (Chile) Concessions 54.00 54.00 32,403 Taurus

Tag Red, S.A. Avda. Alonso de Córdova, nº5151 Oficina 501 Las Condes, Santiago de Chile (Chile) Concessions 50.00 50.00 8 Taurus (25%), Nocedal (25%)

AUDITOR:(A) - DELOITTE & TOUCHE(B) - PRICE WATERHOUSE COOPERS(C) - ERNST & YOUNG(D) - KPMG(E) - OSVALDO JORGE PAULINO(F) - BSK CONSULTING(G) - CONSULTORES ASOCIADOS(H) - ROJAS Y NOVOA (I) - MADERA SORIANO Y ASOCIADOS(J) - QUESADA Y DÍAS AUDITORES(K) - SURLATINA & HOWARTH(L) - ESTUDIO TORRENT AUDITORES(M) - SECOFA(N) - RACC AUDITORES(Ñ) - RAZZETO, LÓPEZ & RODRÍGUEZ CÓRDOBA(O) - IRVIN CEDEÑO Y ASOCIADOS(P) - VIZOSO, CASTELLA & ASOCIADOS(Q) - DAVIES MYERS AND PARTNERS (R) - CAROLINA PUEYO

PARENT COMPANY

Autopistas del Sol, S.A. (Ausol)Ruta Panamericzna (Acceso Norte), 2451 Boulogne (B1609JVF) Provincia Buenos Aires (Argentina) Concessionss 8.18 8.18 0

Broadnet Consorcio, S.A.San Rafael, 1, Alcobendas (Madrid) Telecommucations 20.67 20.67 0

DHM, S.A.Edificio World Trade Centre, Torre B, Piso 5º Of 516, Guayaquil (Ecuador) Concessions 84.94 84.94 0

CONSTRUCTION

ACS, Siglo XXI Promociones Castilla-La Mancha, S.A. ACS, Proyectos, ObrasAvda. Pío XII, 102, Madrid Real Estate 51.00 51.00 102 y Construcciones, S.A.

Build 2 Edifica, S.A. ACS, Proyectos, ObrasAvda. del Partenón, 4, Madrid Telecommucations 20.53 20.53 818 y Construcciones, S.A.

Cleón, S.A. ACS, Proyectos ObrasVillanueva, 2, Madrid Real Estate 25.00 25.00 25,296 y Construcciones, S.A.

Corfica, S.L. ACS, Proyectos, ObrasJosep Tarradellas,14, Barcelona Inactive 50.00 50.00 35 y Construcciones, S.A.

Grupo Comercializador del Sur, S.A. de C.V. ACS, Proyectos Obras(Mexico) Real Estate 50.00 50.00 0 y Construcciones, S.A.

Ingeniería y Construcciones Sala Amat, S.A. ACS, Proyectos, ObrasC/ Fontanella 12, bis, Barcelona Construction 50.00 50.00 3 y Construcciones, S.A.

Juluna, S.AC/ Sorni, 3, 46004 Valencia Construction 30.00 30.00 725 Dragados O.P.

Parc Tecnologic WTC Cornellá, S.A.C/ Moll de Barcelona, s/n ED0E, 08039 Barcelona Construction 12.50 12.50 1.837 Dragados O.P.

Roperfeli, S.L. Cogesa, ACS, Proyectos,Orense, 34, Madrid Real Estate 100.00 100.00 0 Obras y Construcciones, S.A.

Silger SGPS, S.A.C/ Quinta do Outeiro, 2840 Seixu (Portugal) Construction 10.30 10.30 515 Dragados O.P.

Urbanismo y Ciudad,S.A. ACS, Proyectos, ObrasAvda. Europa, 22, Alcobendas (Madrid) Real Estate 25.00 25.00 1.482 y Construcciones, S.A.

INDUSTRIAL

C.I.E.R., S.L. Electricity Production 50.00 50.00 361 Energía y Recursos Ambientales, EYRA, S.A.

Cevasa do Brasil, S.A.(Brazil) Inactive 100.00 100.00 0 Roura Cevasa, S.A.

Chipset Siotemas, S.L. Computer Mantenimientos, Ayuda a laMontezuma, 4-1º Of. 8, Santander Development 33.00 33.00 6 Explotación y Servicios, S.A.(MAESSA)

Disneon, S.A.Barcelona Inactive 100.00 100.00 0 Roura Cevasa, S.A.

Saneamiento NorteMunicipio Escobar, Buenos Aires (Argentina) Water Management 73.00 73.00 0 Hidrogestión, S.A.

Exhibit IIICompanies excluded from the scope of consolidation

Exhibits



Net cost(Thousand

Euros)Company




Net cost(Thousand

Euros)Company



Exhibit II

Proportionally consolidated companies and companies accounted for by the equity method

132 133

Í N D I C E


INFORMATION

3

Exhibit IIICompanies excluded from the scope of consolidation

ACS GROUP

ANNUAL REPORT

2003

URBAN SERVICES

Agencia RiomarAutonomía, 17, Bilbao Travel Agency 50.00 50.00 Continental Auto, S.L.

Autopulman Soltur Private PassengerAlameda Recalde, 72, Bilbao Transport Service 50.00 50.00 0 Continental Auto, S.L.

Cevasa & Roura Brasil, Ltda.(Brazil) Corporate Image 100.00 100.00 0 Roura Cevasa, S.A.

Cevasa & Roura Chile, S.A.(Chile) Corporate Image 100.00 100.00 0 Roura Cevasa, S.A.

Cevasa & Roura Venezuela, S.A.(Venezuela) Corporate Image 100.00 100.00 175 Roura Cevasa, S.A.

Cevasa Internacional, S.A.Paris (France) Corporate Image 100.00 100.00 227 Roura Cevasa, S.A.

Cevasa Perú, S.A.(Peru) Corporate Image 100.00 100.00 0 Roura Cevasa, S.A.

Roura Cevasa Argentina, S.A. (Argentina) Corporate Image 100.00 100.00 0 Roura Cevasa, S.A.

Roura Cevasa Publicidad, S.A. (Argentina) Corporate Image 100.00 100.00 0 Roura Cevasa, S.A.

Estacion de Autobuses de Almuñécar, S.A.Avda. Juan Carlos I, s/n Almuñécar (Granada) Station Operation 90.00 90.00 0 T. Alsina Graells Sur, S.A.

Promociones Bus Rental of Continental Auto, S.L., T. Alsina GraellsOrense, 20, Madrid Commercial Premises 12.13 12.13 14 Sur, S.A., La Unión Alavesa

REGASAGUNTO 80.00% 15,909 312,250

UTE METROLAM 90.00% 28,590 264,277

RADIALES DE MADRID 35.00% 437,543 611,335

TÚNELES DE PAJARES 2 UTE 42.00% 0 360,172

UTE TERMINAL BARAJAS 22.50% 283,818 633,515

CICLO COMBINADO BOROA 75% 16,842 175,000

UTE EDIFICIO SATÉLITE-LOTE 1 60.00% 182,647 360,413

PRESA DE RULES 50.00% 7,113 166,075

UTE RADIAL-2 50.00% 157,059 342,001

UTE METRO L-9 21.00% 60,382 357,612

UTE PISTA 15/33 33.34% 138,408 222,684

UTE OLOT MONTAGUT 55.00% 39,129 126,357

SANTIAGO-ALTO SANTO DOMINGO 29.60% 79,297 230,668

UTE GUADARRAMA IV 25.33% 72,343 258,669

NUEVO HOSPITAL LA FE UTE 35.00% 0 186,434

PARQUE OCEANOGRÁFICO 40.00% 12,857 162,254

AUTOVÍA LIERES 28.00% 124,474 217,463

AUTOPISTA TF-5 85.00% 11,965 71,306

UTE GUADARRAMA III 25.33% 68,043 223,415

UTE GIJÓN-VILLAVICIOSA 50.00% 111,851 133,398

ALGARROBO-FRIGILIANA 50.00% 1,023 110,001

ALTA VELOCIDAD 50.00% 42,865 110,000

FERIA MUESTRAS UTE 45.00% 70,985 121,287

CICLO COMBINADO CASTELLÓN 55.00% 6,089 93,091

PAU LAS TABLAS 50.00% 10,525 100,668

HOSPITAL LUGO 50.00% 4,422 93,897

CIUDAD JUSTICIA FASE II 40.00% 35,472 99,015

CICLO COMBINADO CASTEJÓN 55.00% 4,869 70,545

HOSPITAL FUENLABRADA UTE 50.00% 16,505 76,474

PAU MONTECARMELO 50.00% 6,684 72,959

UTE AUTOPISTA PLATINUM 40.00% 90,601 233,659

MATERNIDAD O’DONNELL 50.00% 21,114 70,930

CICLO COMBINADO SANTURCE 55.00% 40,594 64,091

Exhibit IVList of the most significant temporary consortiums in which the Company has a holding at 12/31/03

Exhibits


TotalNet Sales Backlog

OwnershipInterestJOINT VENTURE (UTE)

Thousand Euros


Net cost(Thousand

Euros)Company



134 135

Í N D I C E


INFORMATION

3

ACS GROUP

ANNUAL REPORT

2003

UTE CIRV.L.P. FASE 3 46.25% 35,974 133,076

UTE LAS DEHESAS 95.00% 386,943 17,473

UTE ROCKÓDROMO 2ª FASE 40.00% 19,337 41,045

UTE EDIFICI FÓRUM 33.34% 48,321 75,834

EMBAJADA BERLÍN 55.00% 965 29,280

CLIMATIZACIÓN BARAJAS 42.50% 10,645 35,353

UTE BEIRA INTERIOR 20.00% 71,017 582,062

UTE DEPURADORA BESÓS 33.75% 41,884 71,187

POOL PALACIO ARTES 50.00% 28,172 211,889

MAKIBER (UTE DOPSA MAKIBER HONDURAS) 90.00% 15,613 31,049

HOSPITAL JUAN CANALEJO 50.00% 7,252 28,075

VILLAMAÑÁN 50.00% 28,070 38,994

UTE AMP. DÁRSENA ESCOMBRERAS F. 35.00% 39,957 76,297

UTE AMP. PTO. FERROL (PTO. EXTERI.) 32.50% 42,865 98,384

UTE RED FÉRREA DEL ATLÁNTICO 35.00% 39,787 246,037

Exhibit IVList of the most significant temporary consortiums in which the Company has a holding at 12/31/03

UTE TERMINAL AEROPUERTO 35.00% 0 99,657

YESA UTE 33.33% 3,327 98,647

UTE TERCERA PISTA 75.00% 43,112 70,153

ALCORNOCALES UTE 50.00% 19,085 63,410

HOSPITAL SAN PEDRO UTE 45.00% 9,607 69,997

CIRCUNVALACIÓN VIGO 50.00% 11,967 61,572

AUTOVÍA NAVALMORAL UTE 50.00% 9,052 60,448

UTE TUNEL DE GUADARRAMA SUR 26.12% 115,482 484,643

CANAL DE NAVARRA T-3 72.00% 16,566 41,327

AMPLIACION REINA SOFÍA 50.00% 26,180 58,959

UTE PARLA-ESTE 50.00% 15,309 56,321

POOL P. CARUACHI (EDELCA) 50.00% 55,927 635,351

UTE AVE CASTELLBISBAL 70.00% 1,672 39,912

AVE PUENTE GENIL HERRERA 50.00% 23,607 54,343

UTE EL PRADO 50.00% 15,220 53,134

CENTRO SUP. BIOMEDICINA UTE 60.00% 25,975 42,746

TÚNEL MARÍA DE MOLINA 50.00% 17,510 47,530

CARRETERA VALVERDE-FRONTERA 67.00% 10,850 34,200

UTE AVE OLERDOLA 70.00% 4,482 32,293

UTE TEATROS CANAL 50.00% 5,420 43,030

CLECER 93.00% 23,056 23,056

P. RÍOS ROSAS 50.00% 11,374 42,884

UTE.TERMIN. ESTADIO GRAN CANARIA 80.00% 26,505 47,663

AUTOVIA BETXI-BORRIOL 70.00% 13,595 30,116

PARQUE BIOMÉDICA 50.00% 11,852 40,692

UTE AVE LA SAGRA-MOCEJÓN 75.00% 26,864 29,182

A-92 HUENEJA-LAS JUNTAS 51.00% 1,656 39,115

UTE EDAR BAIX LLOBREGAT 30.00% 5,428 61,833

EDAR PINEDO II 40.00% 7,921 44,634

UTE L-9 ESTACIONS 32.00% 0 54,676

UTE PUERTO HAYOVEL 50.00% 34,600 148,944

AMPL./TRAT. BIOLÓGICO DEPUR. BESÓS 41.25% 41,884 69,332

UHDE (ICM COLROSOSA ARGELIA) 99.00% 17,248 32,065

Exhibits




Thousand Euros



Thousand Euros

136 137

Í N D I C E


INFORMATION

3

ACS GROUP

ANNUAL REPORT

2003

Exhibit V

CONSTRUCTION

CONSTRUCCIONES ESPECIALES Y DRAGADOS, S.A. (DRACE) 100.00

CONSTRUCTORA DYCVEN, S.A. 100.00

DRAGADOS F.C.C. INTERNACIONAL DE CONSTRUCCIÓN, S.A. 100.00

DRAGADOS OBRAS Y PROYECTOS, S.A. 100.00

DRAGADOS MAROC, S.A. 100.00

DRAGADOS ROADS, LTD. 100.00

DRAGADOS Y CONSTRUCCIONES ARGENTINA, S.A.I.C.I. (DYCASA) 66.10

GEOTECNIA Y CIMIENTOS, S.A. 100.00

SOCIEDADE DE CONSTRUÇOES E OBRAS PUBLICAS, S.A. (SOPOL) 50.40

TÉCNICAS E IMAGEN CORPORATIVA, S.L. 75.47

TECSA, EMPRESA CONSTRUCTORA, S.A. 100.00

INDUSTRIAL

B TO B CONSTRUCTION VENTURES, S.L. 100.00

CODELAN, S.A. 100.00

CONTROL AND APPLICATIONS ASIA, PTE. LTD. 100.00

CONTROL Y MONTAJES INDUSTRIALES, S.A. (CYMI) 100.00

CYMI DO BRASIL, LTD. 100.00

CYMI SEGURIDAD, S.A. 100.00

DRAGADOS INDUSTRIAL, S.A. 100.00

DRAGADOS INDUSTRIAL ALGERIE, S.P.A. 97.00

DRAGADOS INDUSTRIAL CANADA, INC. 83.25

DRAGADOS OFF SHORE, S.A. 100.00

DRAGADOS OFF SHORE DE MÉXICO, S.A. DE C.V. 95.00

DYCTEL INFRAESTRUCTURAS DE TELECOMUNICACIONES, S.A. 100.00

DRAGADOS CONSTRUCCIONES NETHERLANDS, S.A. 83.25

DRAGADOS SISTEMAS, S.A. 100.00

DRAGADOS TELECOMUNICACIONES, S.A. 100.00

DRAGADOS TELECOMUNICACIONES DYCTEL BRASIL, LTDA. 100.00

DRAGADOS TELECOMUNICACIONES DYCTEL PUERTO RICO, INC. 100.00

EMPRESA NACIONAL DE INGENIERÍA Y TECNOLOGÍA, S.A. 100.00

ENCLAVAMIENTOS Y SEÑALIZACION FERROVIARIA, S.A. (ENYSE) 100.00

ENELEC-PROYECTOS E MONTAGENS ELECTRICOS E DE INSTRUMENTOS, S.A. 100.00

%Subsidiaries

GRUPO DRAGADOS MÉXICO, S.A. DE C.V. 100.00

HIDRA DE TELECOMUNICACIONES Y MULTIMEDIA, S.A. 100.00

ITP INFORMÁTICA Y TELEMÁTICA PORTUARIA, S.A. 100.00

MAKIBER, S.A. 100.00

MANTENIMIENTO Y MONTAJES INDUSTRIALES, S.A. (MASA) 100.00

MASA ALGECIRAS, S.A. 100.00

MASA ARGENTINA, S.A. 90.00

MASA BRASIL, S.L. 100.00

MASA GALICIA, S.A. 100.00

MASA HUELVA, S.A. 100.00

MASA MADRID, S.A. 100.00

MASA MÉXICO, S.A. DE C.V. 100.00

MASA NORTE, S.A. 100.00

MASA PUERTOLLANO, S.A. 100.00

MASA SERVICIOS, S.A. 100.00

MASA TENERIFE, S.A. 100.00

PORTUMASA, MANUTENÇAO E MONTAGENS, S.A. 75.00

SATEL TELECOMUNICACIÓN, S.L. 100.00

SERVICIOS DINSA, S.A. DE C.V. 100.00

SERVICIOS OFF SHORE, S.A. DE C.V. 70.00

SICE BRASIL, S.A. 100.00

SICE MÉXICO, S.A. 100.00

SICE SUDÁFRICA, S.A. 100.00

SISTEMAS RADIANTES F. MOYANO, S.A. 80.00

SOCIEDAD IBÉRICA DE CONSTRUCCIONES ELÉCTRICAS, S.A. (SICE) 100.00

SUMIPAR, S.A. 100.00

TECNOLOGÍAS INTEGRALES DE TELECOMUNICACIONES, S.A. 100.00

TELCARRIER, S.A. 100.00

TELSA INSTALACIONES DE TELECOMUNICACIONES Y ELECTRICIDAD, S.A. 100.00

TELSA SISTEMAS, S.A. 100.00

TRANSPORT INFRASTRUCTURE CONCESSIONS

DRAGADOS CONCESIONES DE INFRAESTRUCTURAS, S.A. 100.00

DRAGADOS CONCESSIONS, LTD. 100.00

%Subsidiaries

Exhibits


138 139

Í N D I C E


INFORMATION

3

ACS GROUP

ANNUAL REPORT

2003

Exhibit V

FERROCARRILES DEL NORTE DE COLOMBIA, S.A. 67.00

INVERSIONES NOCEDAL, S.A. 100.00

TAURUS HOLDINGS CHILE, S.A. 100.00

OTHER ACTIVITIES

INREV, S.A. 100.00

NEXO 50, CORREDURÍA DE SEGUROS, S.A. 100.00

NOVOVILLA, S.A. 100.00

VILLANOVA, S.A. 100.00

URBAN SERVICES

AGUAS DEL HUESNA, S.L. 100.00

CAEPARK TENERIFE 1, S.A. 100.00

CLECE, S.A. 100.00

COGENERACIÓN ALFACEL, A.I.E. 62.50

CONTROL DE ESTACIONAMIENTOS URBANOS, S.A. 100.00

DRAGADOS DESARROLLO Y GESTIÓN DE SERVICIOS, S.L. 100.00

DRAGADOS SERVICIOS PORTUARIOS Y LOGÍSTICOS, S.L. 100.00

ENVIROMENTAL SERVICES ENSER, S.A.E. 95.00

GESTIÓN MEDIOAMBIENTAL DE TORRELAVEGA, S.A. (GESMATOR) 60.00

INCENTIVE SERVICIOS LOGÍSTICOS, S.A. (GRUPO SINTAX) 100.00

INFOTRANSIT, S.A. 55.00

MARÍTIMA DEL MEDITERRÁNEO, S.A. 90.00

MARÍTIMA VALENCIANA, S.A. 100.00

PUBLIMEDIA SISTEMAS PUBLICITARIOS, S.L. 100.00

PUERTO SECO SANTANDER-EBRO, S.A. 50.00

SERVICIOS DE AGUAS DE MISIONES, S.A. 45.00

SOMASUR, S.A. 100.00

TERMINALES DEL SUDESTE, S.A. 51.00

TIRMADRID, S.A. 66.36

URBAENERGÍA, S.A. 100.00

URBANA DE SERVICIOS AMBIENTALES, S.L. 70.00

URBASER, S.A. 100.00

URBASER ARGENTINA, S.A. 100.00

%Subsidiaries

URBASER BARQUISIMETO, C.A. 100.00

URBASER BOLÍVAR, C.A. 55.00

URBASER DE MÉXICO, S.A. 100.00

URBASER MÉRIDA, C.A. 100.00

URBASER SANTO DOMINGO, S.A. 100.00

URBASER TRANSPORTES, S.L. 100.00

URBASER UNITED KINGDOM, LTD. 100.00

URBASER VALENCIA, C.A. 100.00

URBASISTEM, S.A. 100.00

URBASISTEN PUBLICITY, S.A. 100.00

%Subsidiaries

CONSTRUCTION

CONSTRUCTORA AEROPUERTO DE CHILE, S.A. 50.00

CONSTRUCTORA NORTE SUR, S.A. 48.00

CONSTRUCTORA VESPUCIO NORTE, S.A. 54.00

DRAGADOS FOMENTO CANADÁ, S.A.L. 50.00

DRAVO, S.A. 50.00

ELABORACIÓN DE CAJONES PRETENSADOS, S.L. 50.00

INFRAESTRUCTURAS Y RADIALES, S.A. 35.00

SUPERCO ORENSE, S.A. 35.00

VÍA DRAGADOS, S.A. 50.00

INDUSTRIAL

CONSTRUCTORA GAS DEL BÍO LIMITADA 40.00

INCRO, S.A. 25.00

NORDESTE TRANSMISSORA DE ENERGÍA, LTDA. 49.90

AGRUPACIÓN OFFSHORE 60, S.A. DE C.V. 50.00

BK-DOSSA, S.A. 50.00

CONSTRUCTORA DE EQUIPOS DE COMPRESIÓN, S.A. DE C.V. 50.00

DINEC 1, S.A. DE C.V. 60.00

%Multigroup and Associated Companies

Exhibits


140 141

Í N D I C E


INFORMATION

3

ACS GROUP

ANNUAL REPORT

2003

Exhibit V

DINSA ELÉCTRICAS Y CYMI, S.A. DE C.V. 60.00

DRAGADOS OFFSHORE SLP, S.A. DE C.V. 50.00

HOSPEC, S.A.L. 50.00

INTECSA UHDE INDUSTRIAL, S.A. 50.00

VISADRAG GAS, LTDA. 50.00

TRANSPORT INFRASTUCTURE CONCESSIONS

AEROCALI, S.A. 33.33

AEROPUERTOS MEXICANOS DEL PACÍFICO, S.A. DE C.V. 28.16

AUREA CONCESIONES DE INFRAESTRUCTURAS, S.A. CONCESIONARIA DEL ESTADO 36.60

AUTOPISTAS DEL SOL, S.A. (AUSOL) ( c ) 8.17

BAKWENA PLATINUM CORRIDOR CONCESSIONAIRE (PTY), LTD. 25.00

MBJ AIRPORT, LTD. 35.00

PT OPERATIONAL SERVICES (PTY) LTD. 33.40

RMS (A13) HOLDING, LTD. 25.00

RUTA DE LOS PANTANOS, S.A. 25.00

SCL TERMINAL AEROPUERTO SANTIAGO DE CHILE, S.A. 14.78

SOCIEDAD CONCESIONARIA AUTOPISTA CENTRAL, S.A. 48.00

SCUTVIAS AUTOESTRADAS DA BEIRA INTERIOR, S.A. 20.00

BIDELAN GUIPUZKOAKO AUTOBIDEAK, S.A. 50.00

INFRAESTRUCTURE CONCESSION SOUTH AFRICA (PTY), LTD. (ICSA) 50.00

SOCIEDAD CONCESIONARIA AUTOPISTA VESPUCIO NORTE EXPRESS, S.A. 54.00

REAL ESTATE

MARINA DEL PORTIXOL, S.A. 50.00

INMOBILIARIA URBIS, S.A. 20.00

URBAN SERVICES

AGUAS DEL GRAN BUENOS AIRES, S.A. 26.35

AMERICAN FORESTRY TECHNOLOGIES, INC. 41.11

A.T.M. CARTERA, S.A. 43.33

ECOPARC, S.A. 44.00

ECOPARC DEL BESÓS, S.A. 18.00

ECOPARC DEL MEDITERRANI, S.A. 32.00


EMPRESA MUNICIPAL DE AGUAS DEL FERROL, S.A. 49.00

ENERGÍAS Y TIERRAS FÉRTILES, S.A. 33.36

ESTACIONAMIENTOS EL PILAR, S.A. 50.00

EXPLOTACIONES EÓLICAS SIERRA DE UTRERA, S.L. 25.00

EXPLOTACIONES EÓLICAS VIENTOS DEL SUR, S.L. 33.00

IQUIQUE TERMINAL INTERNACIONAL, S.A. 40.00

MUELLES Y ESPACIOS PORTUARIOS, S.A. 35.00

OPERACIONES PORTUARIAS CANARIAS, S.A. 45.00

TIRME, S.A. 20.00

TRATAMIENTO INDUSTRIAL DE RESIDUOS SÓLIDOS, S.A. (TIRSSA) 33.33

CONTERAIL, S.A. 50.00

DEMARCO, S.A. 50.00

ESPIEL, S.L. 50.00

FORESTA CAPITAL, S.A. 50.00

GESTIÓN MEDIOAMBIENTAL DE L'ANOIA, S.A. 50.00

KDM, S.A. 50.00

MERCIA WASTE MANAGEMENT, S.A. 50.00

SERVICIOS URBANOS, S.L. 38.50

SERVICIOS URBANOS Y MEDIO AMBIENTE, S.A. (SUMA) 38.50

SEVERN WASTE SERVICES, SCL. 50.00

SOLUCIONES AMBIENTALES LATINOAMERICANA, S.A. ESP. 50,00

STARCO, S.A. 50.00

TRATAMIENTO DE ACEITES Y MARPOLES, S.L. (TRACEMAR) 50.00


Exhibits


142 143


INFORMATION

3

ACS GROUP

ANNUAL REPORT


144 145

Í N D I C E


INFORMATION

3

ACS GROUP

ANNUAL REPORT


HISTORICAL EVOLUTION3.4

(Millions of Euros)

Net sales 2,699.7 3,410.4 3,921.4 4,420.2 10,733.6 41.2%

Operating expenses (2,520.7) (3,130.3) (3,568.5) (4,009.2) (9,801.8)

Gross operating income 179.0 280.1 352.9 410.9 931.8 51.1%

Depreciations and provisions (37.7) (65.8) (85,1) (105.6) (282.8)

Net operating income 141.3 214.3 267.8 305.3 649.0 46.4%

Financial expenses (33.0) (58.4) (70.4) (95.4) (195.1)

Financial income 13.1 19.1 29.0 31.3 76.6

Goodwill amortization (1.3) (4.3) (6.2) (29.2) (61.0)

Companies accounted for by the equity method

1.7 2.1 0.5 47.0 67.8

Income from ordinary activities 121.8 172.8 220.7 259.0 537.3 44.9%

Extraordinary income (6.8) 3.8 1.6 (8.6) (38.5)

Income before taxes 115.0 176.6 222.3 250.4 498.8 44.3%

Corporate income tax (27.3) (53.3) (71.0) (68.3) (109.7)

Consolidated income for the year 87.7 123.3 151.3 182.1 389.1 45.1%

Minority interest (2.6) (2.5) (2.1) (0.7) (8.9)

Net income attributable to Parent Company 85.1 120.8 149.2 181.4 380.3 45.4%

* Compound Annual Growth Rate

1999 2000 2001 2002 2003 Pf CAGR*

Consolidated Statement of Income

(Millions of Euros)

ASSETS

Start-up expenses 12.0 9.6 6.6 3.6 15.9

Intangible assets 33.3 51.2 59.6 67.6 421.3

Tangible fixed assets 350.0 481.4 579.6 602.1 1,533.8

Long-term investments 181.9 264.6 274.6 586.1 1,392.5

Total Fixed and other noncurrent assets 577.2 806.9 920.4 1,259.4 3,363.5

Goodwill in consolidation 74.8 77.6 93.5 666.8 1,039.9

Deferred charges 10.1 18.7 13.3 13.7 43.4

Inventories 159.1 199.4 184.2 181.4 424.9

Accounts receivable 1,807.6 1,899.9 2,176.9 2,239.4 5,159.2

Short-term investments 124.3 230.0 352.1 375.9 720.2

Cash 89.5 95.6 124.3 164.9 434.1

Accrual accounts 4.6 10.7 15.9 13.0 40.9

Current Assets 2,185.0 2,435.6 2,853.4 2,974.6 6,779.4

TOTAL ASSETS 2,847.1 3,338.7 3,880.6 4,914.5 11,226.3

Capital stock 82.6 96.3 96.1 96.1 177.8

Reserves 487.0 597.8 665.5 702.9 1,389.1

Income attributable to the Parent Company 85.1 120.8 149.2 181.4 229.5

Shareholders' equity 654.7 814.9 910.8 980.4 1,796.4

Minority interests 17.8 22.0 26.0 23.4 99.3

Negative consolidation differences 0.2 0.1 0.0 0.0 3.6

Deferred revenues 18.0 17.0 18.7 29.0 135.6

Project financing 57.2 129.0 179.9 211.0 316.2

Provisions for contingencies and expenses 21.9 27.5 27.3 54.0 405.7

Payable to credit institutions 214.7 188.8 227.5 212.1 611.8

Other payables 28.4 17.5 14.7 13.7 116.9

Total long-term debt 243.1 206.3 242.2 225.8 728.7

Payable to credit institutions 264.5 220.4 193.7 712.2 1,456.9

Trade accounts payables 1,294.1 1,587.6 1,881.9 2,208.4 5,059.2

Other non-trade payables 242.1 280.9 363.8 421.3 1,032.4

Operating allowances 33.5 33.1 36.3 49.0 192.3

Total current liabilities 1,834.1 2,122.0 2,475.7 3,390.9 7,740.8

TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 2,847.1 3,338.7 3,880.6 4,914.5 11,226.3

1999 2000 2001 2002 2003

Consolidated Balance Sheet as of December, 31

146 147

Í N D I C E


INFORMATION

3

ACS GROUP

ANNUAL REPORT

2003

The period 2003 was a good year for the Spanish equity market in which the the Ibex 35 index registered an annual growth

of 32.98%, rising faster than the major international indexes, such as the EuroStoxx 50 and the Dow Jones Industrial that

increased 25.32% and 9.45%, respectively. Within this favourable context the share price of ACS rose 26.26%, slightly

above index for its industry, which registered a 25.44% growth.

This upward trend of the stock markets had a weak start due to geopolitical uncertainty and the concern about deflation.

The initial decline changed in March when investor confidence favoured the recovery of the world economy as positive

macroeconomic figures were published along with the earnings figures of listed companies that had, in prior periods,

taken strong restructuring actions to strengthen their balance sheets and improve their expectations for earnings.

STOCK MARKET INFORMATION3.5 2003 Share Price and Trading Volume Performance


The following table presents the main market indicators for the ACS shares in 2003:

Share price performance

Within the good situation of the Spanish equity market, the number of ACS shares traded was 22.3% more than in 2002.

The average monthly trading volume in 2003 stood at 7,456,549 shares versus 6,099,250 shares the year before.

The number of shares traded increased considerably in July, mainly because the proposals for the merger between ACS,

Actividades de Construcción y Servicios, S.A., and Grupo Dragados, S.A. were presented at the beginning of the month. The

high trading volume in this same period was also affected by the sale of 3,203,200 ACS shares by Banco Zaragozano to

Deutsche Bank that subsequently placed them along private investors. In December, there is another considerable increase in

trading volume in comparison to the same month of the previous year due to the increase in capital on December 12 when

ACS shares were exchanged for Grupo Dragados shares. These shares were first traded publicly on December 15.

-20%

10%

20%

30%

40%

ACS Ibex 35 Construction Industry Index Euro Stoxx 50 Dow Jones

2002 Closing

2003 Closing

-10%

-30%

2003

Jan-Mar Jan-Jun Jan-Sept Jan-Dec

Closing price 32.34E 37.15E 36.37E 38.70E

Revaluation 5.51% 21.21% 18.66% 26.26%

Maximum price 32.82E 37.49E 39.90E 39.90E

Maximum date 28-Mar 25-Jun 16-Jul 16-Jul

Minimum price 29.46E 29.46E 29.46E 29.46E

Minimum date 31-Jan 31-Jan 31-Jan 31-Jan

Average price 31.51E 33.38E 35.53E 35.92E

Total shares traded (thousands) 17,066 34,438 68,395 89,479

Total capital turnover 26.64% 53.76% 106.76% 135.53%

Daily average shares traded (thousands) 275.25 277.72 361.88 375.91

Daily average capital turnover 0.43% 0.43% 0.56% 0.54%

Total effective volume traded (E millions) 538 1,149 2,427 3,211

Daily average effective volume (E millions) 8.68 9.27 12.84 12.84

Market capitalization (E millions) 2,072 2,380 2,330 4,587

If the proposal made to the General Shareholders Meeting is approved, the total dividend paid to the shareholder corresponding

to the profits for 2003 will be of 0.82 euros per share and will be distributed in two payments: an interim payment for a gross

amount of 0.36 euros per share made on January 15, 2003, and a complementary dividend of 0.46 euros per share with

payment date on June 7, 2004.

The dividend yield for the shareholder over the price of year-end close for 2003 was 2.11%.

(Million Shares)

10

15

20

25

0

5

January February March April May June July August September October November December

30E

35E

40E

20E

25E

Shares Traded Closing Price

(Price)

148 149

ACS GROUP

ANNUAL REPORT

2003S O C I A L R E S P O N S I B I L I T Y 4

Loading tank for the Iñigo Tapias tanker

SOCIAL RESPONSIBILITY44.1. Human Resources


4.3. Quality

4.4. Environmental Strategy

4.5. The ACS Foundation

112 Emergency Center, Pozuelo de Alarcón (Madrid)

In this way, the ACS Group is particularly sensitive to innovation within human resources management, promoting the generation

of opportunities for its personnel while detecting and encouraging individual talent in order to keep the best professionals.

Thanks to applying the appropriate policies to three essential areas, which are hiring new personnel, training and developing

our workforce and preventing risks at the workplace, the ACS Group counts on a fine team of people who understand and

are fully identified with the Group’s strategic project.

4.1.1. Recruitment Policies

As a result of the merger of ACS, Actividades de Construcción y Servicios, S.A. with Grupo Dragados, S.A., the number of

employees at the end of the financial year 2003 rose to 99,323, the average during the year being 97,903. Of the total, 10%

are managers and university graduates, 11.7% are technical and clerical staff and the remaining 78.3% are specialists and

operatives.

Barcelona Forum

150 151


4

ACS GROUP

ANNUAL REPORT

2003

The development of a more dynamic, economically competitive and fair society is a strategic objective of the ACS Group that

has been present in all our activities since the company was founded. This principle has led to the application of certain policies

and management systems in the economic field and other areas related to human resources, the environment and the Group’s

overall social commitment. They are delivered through the following clear objectives that ensure we fulfill our commitments:

- To contribute to a sustainable economic growth in the societies that we serve in an efficient and ethically responsible

manner while continuously applying our values in the quest for excellence and respect for human rights.

- To improve social well-being through the creation of fairly compensated, respectable employment while abiding by

internationally recognized rights and labor laws.

- To respect the surrounding environment and culture as an integral part of all our activities, by applying the measures

and technology required.

- To communicate all our policies and activities in a rigorous, transparent way so that clear, consistent, reliable information

is available to all the agents related to our Group.

4.1. Human Resources

The ACS Group’s leadership requires a top quality team of people with a high level of knowledge and specialization, capable

of offering our clients the best service available while generating and managing business opportunities in a disciplined, efficient

way. To accomplish these objectives, the Group constantly develops its human resources strategy with five basic principles on

which our corporate culture is based:

- To employ, maintain and motivate talented people.

- To promote teamwork and quality control as tools to ensure excellence through work well done.

- To act quickly, with the capacity to make decisions, reducing bureaucracy to a minimum while promoting the assumption

of responsibilities.

- To support and increase training and internships.

- To innovate with new ideas that allow for improved procedures, products and services.


4.6% 5.4% Management and other senior professional staff

Specialists and operatives

Technical and clerical staff

Professional staff

STAFF BY QUALIFICATION

78.3%

11.7%

27.2%

Construction

Corporation

Services and concessions

Industrial services

STAFF BY AREAS

152 153

ACS GROUP

ANNUAL REPORT

2003

Wholesale market, Valencia

4.1.3. Prevention Policy

The effort made by the ACS Group in reaching the highest levels of health and safety at work for its employees has become

clear through the notable improvement of safety conditions in the work centers of the different activities. Our prevention policy

serves as a reference for this and is based on the following principles:

- Compliance with current legislation regarding the prevention of occupational hazards as well as other voluntary measures

that we take.

- The integration of preventive actions in the Group’s activities as a whole, working from all levels based on an adequate

planning and its application.

- Taking on all necessary measures to guarantee the protection and well-being of our employees.

- Development of our employees’ potential through adequate training and information on preventative measures, promoting

initiative and participation in order to improve the system continuously.

- Ensure the adequate control of our employees’ health and the quality of its supervision.

- The qualifications of our personnel and the application of technological innovations.

In addition to putting into practice the most adequate preventive management systems for each line of business, the Group

organizes activities and specific campaigns within each area with the objective of reducing the number and seriousness of

accidents. We are, therefore, constantly working towards optimizing work conditions and decreasing the accident reference

indexes with respect to the average for the industry.

21.0%

51.6%

0.1%

4.1.2. Training Policies

Another major challenge for the ACS Group is to take advantage of the personal and professional diversity of its employees

to improve their ability to respond to the growing needs of our clients. In this respect, it is our policy to continuously involve

all Group employees in issues, such as the targets and culture of the company, while allowing them to develop their full

potential as well as their professional qualifications.

To cater to this objective, we are committed to an ongoing global training program at the workplace, in the lecture hall or

by correspondence. The Annual Training Program involved more than 350,000 tuition hours in courses and seminars in all

the Group activities and particularly in areas related to the following:

- Training of our management staff.

- Technological specialization in management and production systems.

- Information about the products and services developed.

- Quality control and environmental policies.

- Safety at the workplace.

Training procedures undergo yearly internal and external audits that guarantee the highest standards and insure that the

training programs are improved continuously.


4


In our organization we set out to create an environment in which our staff is encouraged to fully develop their capabilities

and appreciate the resulting outcome as valuable and desirable. The employment of young technicians who see our company

as a possible opportunity to develop their careers is no less important within our strategy.

To this end, the recruitment policy used by the companies of the ACS Group for many years now is the basis of a strict hiring

process ensuring that we have the best professionals in each field. Furthermore, the Group has a scholarship program for

students in the last years of their studies with the most important universities in Spain as well as scholarships

channeled through other educational institutions such as the Fundación Universidad Empresa.

154 155

ACS GROUP

ANNUAL REPORT

2003


An intense and continuous effort in innovation is required in order to maintain the leadership in the markets in which the ACS

Group operates. To this end, the Group has made major investments in research and development over a number of years,

mainly directed towards creating new applications based on the extensive knowledge of the markets in which the Group is

present.

As a result of this policy, the ACS Group is in a position to offer its clients the most advanced products and services based on

applying the latest technologies to its production processes and supporting them with highly qualified personnel.

4.2.1. Construction

The Group’s innovative activities in the Construction area, and in particular research and technological development, are mainly

concerned with work areas related to structural behavior, the durability and safety of constructions, new construction materials,

building and project design processes and the development of software applications, environmental management and the quality

of life, the application of emerging technologies and the development and management of transportation systems.

In 2003 the Group worked on over 35 projects in the construction field, investing more than 10 million euros. These projects

are directly related to the development of new building techniques and work methods to improve efficiency and quality. The

following projects stand out among them:

- Early and intelligent analysis of conflictive situations in railway tunnels.

- Applications for reusing the outflows of municipal wastewater treatment plants.

- Reuse of concrete debris for construction.

- Automation of auscultation devises used in dams.

- Development of a computer system for maintaining tunnels.

- Design and development of new vertical wharves built with large caissons.

- Evaluation of information technologies.

Carme Hospital, Badalona (Barcelona)

- Tools for data analysis and technical management of tunnels.

- Structural mathematical modeling calculations for civil engineering.

- New “laser-scanner” technologies for the integral execution of works.

- New caissons with perforated cells for marine projects.

- New structural assessment methods for buildings and bridges of stone and brick masonry.

- Recovering contaminated soil.

- Work safety at the construction site.

- Management system for controlling civil engineering and building construction.

- Techniques for soil stabilization and reinforcement.

- Use of compounded materials in structures.

- Use of polyester as a building material.

- Light prefabricated beams for road and railroad bridge decks.

With regard to activities involving technological innovation aimed towards obtaining new products and production processes

and the technological improvement of existing products, the following projects developed during 2003 are noteworthy:

- Construction of underpasses using dome type structures.

- Industrialized forms for retaining walls.

- Stone fill levelling for the harbour floor.

- Modular exterior wall panels.

- Instrumentation for breakwaters.

- Improving the design of block yards.

- Planning for automatic toll systems.

- Incrementally launched bridges.

- Three-dimensional refinery system.

- Incremental launching system for building viaducts.

- Floors with flexible surface.

Tunnel under the Villaviciosa Estuary (Asturias)


4


156 157

ACS GROUP

ANNUAL REPORT

2003

In 2003 the ACS Group also participated in the most important national and international research forums, of which the

following must be mentioned:

- The Technical Commission of SEOPAN, the National Association of Spanish Construction Companies, where the company

actively participated in the analysis of the Technical Building Construction Code and on the AIPCR Bridge Committee.

- AENOR’s standardization committees and the work groups that develop the Eurocode-2 European standards.

- ENCORD, the European Association of Contractors for Research.

- The COTEC Foundation for Innovation on whose work committees some of the Group’s technical staff participate.

- The Association of Civil Engineers in whose conferences, courses and seminars ACS personnel traditionally collaborates.

- Various European forums that deal with advanced technological issues and on which technicians from our company have

been invited to collaborate. In this context forums that stand out are: GEOTECHNET, FUTURE HOME, DIFI and E-COR.

- The Permanent Concrete Committee and the technical committees of prestigious organizations like the Scientific-Technical

Association of Structural Concrete and the International Association for Bridge and Structural Engineering.


The work carried out in Industrial Services during 2003 was focused on three main axes:

- Consolidation of the Group in its main lines of business (energy, telecommunications, systems and industrial) through

the development of new products and services for our clients.

- Active participation in technological development projects of the European Union.

- Performance of projects sponsored by the Ministry of Science and Technology within the Program for Promoting Technical

Research (PROFIT).

Maintenance of industrial facilities

Development of new products and services

Among the main research and development activities within Industrial Services, the following should be mentioned:

- Study, characterization and analysis of the RFID technology for identifying cable installations in industrial plants.

- Development of a self-adjusting city traffic control system.

- Design and implementation of a new tunnel access and control system with the specifications for shadow toll systems

and that complement the free-flow toll system whereby vehicles can be charged without needing to slow down.

- Development of a control and monitor system for hydric resources.

- Design and installation of the overhead power cable for high speed trains that can operate at speeds above 350 km/h.

- Development of the S3e electronic interlocking and of new electronic protection systems for railroad crossings.

- In the telecommunications field, the Antennea project stands out. It is an intelligent antenna system for UMTS mobile

telephone networks that achieve a considerable saving on energy.

Participation in European Projects

A fundamental part of the Research and Development activities in the Industrial Services Area, involves the Research and

Development Framework Programs within the European Union, where the Group occupies a relevant position in project

management. This has meant that the ACS Group leads more projects than many universities or other research centers in Spain.

Of all the programs developed during 2003, there are various that stand out for their technical characteristics: the OSSA

program due to its ability to simulate traffic situations, the OMNI program that permits inter-operation between traffic control

applications and infrastructures and the WH@M program which provides the forecast, in real time, of traffic and transport

information and personalized services to mobile phone users.

We also continued to work on projects of the 5th Framework Program such as:

- EMIRES for the creation of a web portal that works as a unique access point to regional information about public transport

and mobility in general.

- SIRTAKI that is developing an expert system for managing safety in highway and railroad tunnels in real time.

- eEPOCH that facilitates the inter-operation of identification, authentication and digital signature systems.

- e-parking for reserving parking spaces in car parks using Bluetooth technology.

- ADA to create a technological platform for the integration of environmental sensors using Bluetooth and JINI standards.

PROFIT Projects

The projects financed under the PROFIT Program have permitted the development of new products that have reinforced

the Group’s leadership position in our traditional business and allowed us to diversify our activities to other new fields.

The PROFIT initiative in 2003 has made it possible to develop a number of projects of which the following stand out:

- ADAC, a data control and performance system supported by highway devices.

- SGPRL, software application focused on managing accident prevention at the workplace.

- PrefTran, software that brought a traffic light preference system into operation for the trolley in Barcelona.

- MIDI, a system to measure stray current in traffic regulators.


4



The Services area continues to promote research, development and innovation activities, the projects dedicated to the

environment and the management of inter-modal freight shipment being noteworthy. The projects carried out in 2003,

include:

- Research on the optimum usage of the biogas derived from the anaerobic fermentation of the organic segment of urban

solid waste (USW) in both energy cells and as fuel for public buses and the vehicles used to collect USW.

- Study on automating the recovery of used packaging and containers from USW.

- Study of the best technologies available for gasifying elements rejected from USW treatment plants and transforming them

into electricity. Basically, this project seeks to reach what is called “zero residue”.

- In-house design of tunnels and bio-filters for USW compost plants.

- Innovations in equipment for pneumatic waste collection systems.

- Projects to improve industrial waste treatment processes.

- Research of new formulas to convert used oils into bases and the design of new equipment for regenerating other oils.

- New systems for micro grafting the American walnut tree.

- Design of equipment for optimizing the management and transport of merchandise.

- Design and real tests on communications in the Madrid subway and equipment for optimizing the management and

shipment of freight.

The following are noteworthy projects in which we participated in collaboration with universities and research centers:

- Cooperation with the Gaiker Technological Center on the VERC project (Virtual European Recycling Center), the purpose

of which is to define and develop a European virtual center for recycling building and demolition residue.

- Joint participation with the Center for Energy and Environmental Research (CIEMAT) in the project for the use of biogas

as fuel in liquid carbonate cells.

- Active participation in the definition and development of criteria for drawing up new National Plan for I+D+i 2004-2007

in the area of technology for the environment and natural resources.

- Cooperation with the University of Valladolid in the study of new technologies for eliminating pollutants in biomethanization

process and in the design and start-up of equipment for USW treatment plants (tunnels and bio-filters).

- Cooperation with CSIC, the Board of Scientific Investigation, for characterizing high quality compost from the organic

fraction of USW.

158 159

ACS GROUP

ANNUAL REPORT

2003

Expansion of the wastewater treatment Plant, Valencia

4.3. Quality

The progress of society signifies a constant transformation of our general conditions of life and, in particular, those of the

business world. As a result, the increasing complexity in which production processes are developed requires that work methods

to be adjusted continuously.

The ACS Group is the only Spanish construction and services group that belongs to the European Foundation for Quality Management

(EFQM). This membership is a result of our quest for excellence and aim to be competitive within the European Union.

The contributions of our companies make them face challenges of great responsibility and high levels of quality requiring the

best professionals and technicians available. To manage this reality and satisfy our customers’ expectations, the ACS Group

considers the following principals as basic to developing our business:

- To maintain in-depth client relationships in order to understand their needs more fully.

- To promote the development of professional potential within the organization.

- To stimulate innovation.

- To work with other companies that wholly identify with our objectives.

- To attend to any incident quickly and efficiently.

Quality Management System

Given the decentralized structure of the Group, each business unit has its own internal quality management system that is

adjusted to the general policy on corporative quality control. These quality management systems are the basic tools that ensure

that what we deliver complies with the corresponding contract specifications, legal requirements, standards and any other

additional criteria determined by the organization with the purpose of achieving maximum client satisfaction.

Each system is based on adequately identifying and managing the relevant processes from a quality control perspective.

The activities carried out by each company of the Group are organized with the objective of reaching the targets set.

The quality control management systems of the ACS Group are based on the UNE-EN ISO 9001:2000 standards that mainly

focus on the creation of value in the activities carried out and to improve our performance. To meet this requirement, procedures

have been established to follow up on client satisfaction and to establish goals and actions taken with the objective of fulfilling

the commitments made.

The management team of each company within the Group is fully implicated in continuous improvement through the Quality

Committee that revises the system periodically to evaluate its efficiency and its compliance with the general policies of the

Group.


4

4.3. Quality

Negratín-Almanzora connection, Almería

160 161

ACS GROUP

ANNUAL REPORT

2003


The Nature and the Environment are a shared wealth that should be respected and safeguarded from the harmful influences

of mankind. This principle forms an integral part of all the actions carried out by the ACS Group. To ensure that it is adhered

to, the following environmental policies have been established and are known, shared and put into practice by all the companies

of the Group:

- Commitment to improve and prevent pollution, continuously establishing new procedures and measures to improve our

behavior with respect to the environment.

- To use and exploit raw material and natural resources rationally and to optimize these processes.

- To reduce the amount of waste produced by our activities and to handle what is produced correctly and in a way that

is environmentally respectful.

- To minimize environmental degradation by carefully choosing and managing our building procedures and cooperating

with Public Administrations as well as with our clients.

- To incorporate an environmentally friendly culture in our training programs.

- To propose technical improvements that will reduce the negative impacts on the environment caused by our activities.

- To involve our suppliers in our environment programs.

- To comply with the environmental legislation and any regulation that may affect our Group, as well as those criteria that

the organization subscribes to freely.

4.4.1. Environmental Management System

The Environment Control System used by the companies of the Group is consistent with the requirements laid out in the UNE-

EN ISO 14001 specifications that call for the development of an Environmental Plan for each work center, whether offices or

jobsites.

Each year environmental objectives and targets are established for the Group in general, taking into consideration global

environmental issues, new legal requirements, the annual revision of our system and the Group’s environmental policy.

These objectives and targets are developed under an Environmental Control Program that can be applied at all of our work

centers.

4.4.2. Involving our Suppliers

Suppliers represent an important group in the development of our activities. It is, therefore, essential that they actively support

ACS Group’s commitment to the environment.

To ensure that we reach this aim, we have included an environment criterion in the evaluation and selection of our suppliers.

There is also a specific clause in our standard contract detailing the supplier’s obligations regarding environmental issues.

Furthermore, these obligations are specified in the Supplier Requirements where issues such as waste control, warehousing

conditions for dangerous products and the handling of permits and authorizations are dealt with.

Finally, in the process of evaluating contracts when the work has been completed, the performance of the supplier regarding

the environment is determined by taking the following criteria into consideration:

- Fulfillment of the environmental practices established by the Group.

- Fulfillment of the environmental requirements set out in the contract.

- Absence of problems regarding required permits and authorizations that are the supplier’s responsibility.

- No record of non-conformities regarding the environment as a result of the suppliers’ actions.

4.4.3. Waste Management

We have continued to adequately manage the different types of waste generated at the work centers by adequately separating,

storing and transfering it to duly authorized waste management enterprises.

The actions taken regarding these issues have centered on decreasing the amount of waste generated and using treatment

methods that are more respectful of the environment. Following a hierarchical principle, we prioritize reusing and recycling

against the traditional method of elimination through landfills.

This policy has been relevant in the case of inert waste, especially from construction and demolition work. Procedures for

separating contents of value have been intensified in order to produce “clean rubble” that can be sent to treatment plants

for recycling. Elimination through landfills is only used in those cases where there is no suitable treatment and recycling

infrastructure in the vicinity of the jobsite.

4.4.4. Environment Indicators

The evaluation of environmental behavior is an internal control process which is applied through a series of indicators and offers

information that allows us to compare the evolution of the behavior of the company with respect to the criteria established.

These indicators summarize extensive environmental data into a limited amount of key information that offers a quick evaluation

of the main processes and areas of improvement in the environmental behavior of the Group companies. In this way, we can

make the necessary adjustments to improve our system.

The environmental indicators that will be used by the companies of the ACS Group were recently defined and put into use,

collecting all necessary data for calculation and standardization. The implementation will be applied on four organizational

levels: Group, company, branch office and work center. These indicators provide valuable information that will serve as a basis

for revising the system and for the annual review of our environmental goals.

Remodelling the Francolí River bed, Tarragona


4


162 163

ACS GROUP

ANNUAL REPORT

2003

4.5.2. Social Development

As part of our social awareness campaign to eliminate physical and architectural barriers to the disabled community, we carried

out the following activities in 2003:

- Awards for the best municipal solutions for eliminating physical and architectural barriers for the disabled were given to

the city councils of La Coruña, Terrassa and Almazán.

- Sponsorship of CERMI, the Spanish Committee of Representatives of the Disabled, for the State Plan of Accessibility

establishing the requirements of disabled people concerning accessibility and measures that should be taken by the

Government.

- The publication and distribution of the book “Eliminating physical and architectural barriers in cities, a social challenge

for the 21st century”, edited by the Association of European Journalists in the framework of the European Year of People

with Disabilities.

- Sponsorship of training programs regarding accessibility in the physical environment, avoiding architectural barriers in cities

and on means of transportation, and safety at the workplace for disabled employees through the agreement signed with

the Royal Association for the Disabled.

- Sponsorship of various programs organized for the participation of the handicapped in sports activities.

4.5.3. Cultural Promotion

Various actions were taken in 2003 in order to promote Spain’s artistic and historic heritage such as publishing the booklets

on the project to convert the old El Aguila Brewery into the Regional Library and Archives of the Madrid Community and on

the Collegiate-Church of Torrijos (Toledo).

With these publications, the ACS Foundation’s collection on rehabilitation projects now has 22 monographic volumes.

We have also continued to promote cultural seminars of which the following stand out:

- “Industrial Heritage and Journal of the Workplace: Recovery and Future”, offered at the Summer Course at El Escorial

through the General Foundation of the Universidad Complutense of Madrid.

- “Public and Private Initiatives to Promote Appreciation for Spain’s Cultural Heritage”, held in Aranjuez in association with

the Rey Juan Carlos University Foundation.

- “Restoration of our Industrial Architecture Heritage. Transformation instead of restoration”, held at the Menéndez Pelayo

International University of Santander.

We should also point out the sponsorship of artistic and cultural activities such as:

- Work on phases 8, 9 and 10 of the Episcopal Palace in Murcia that will complete the restoration of this building.

- Opera recital at Royal Theatre of Madrid on the occasion of which the Foundation’s book “Environmental Management,

an experience through Grupo Dragados” was presented.

- Concert of the Orfeón Donostiarra Choir at the National Auditorium of Music in Madrid as part of the XXX Cycle of Great

Authors and Interpreters of Music offered by the Autonomous University of Madrid.

- Cap Roig Garden Festival in the Botanical Gardens of Caixa Girona en Calella de Palafrugell in July and August.

- Exhibition on the works of the architect Teodoro Anasagasti organized by the Ministry of Civil Works.

- Exhibition “Hand in Hand” by the National Society of Cultural Commemorations to mark the 25th Anniversary of Spain’s

Constitution.

- Symphonic Orchestra of Galicia.

Muntanyeta Park, Barcelona


The ACS Group’s social activities are mainly carried out through our Foundation that is dedicated to the promotion and

development of:

a) All types of cultural and artistic activities, in the widest sense.

b) Programs related to science, training, education, research and the sharing of technology.

c) The conservation and restoration of Spain’s artistic and historical heritage, collaborating on measures to enhance the

public’s awareness of it.

d) Activities related to the defense and protection of the environment.

4.5.1. Cooperation with Universities

In 2003, the ACS Foundation continued to maintain its firm commitment to education through the promotion and recognition

of the best university projects in architecture and engineering. In this sense, we awarded the following prizes to the best final

projects:

- School of Civil Engineering, Barcelona.

- School of Civil Engineering, Castilla-La Mancha.

- School of Civil Engineering, La Coruña.

- School of Civil Engineering, Madrid.

- School of Civil Engineering, Cantabria.

- School of Civil Engineering, Valencia.

- School of Architecture, Barcelona.

- School of Architecture, Seville.

- “Tourism and Sustainable Development”, Antonio de Nebrija University, Madrid.


4


164 165

ACS GROUP

ANNUAL REPORT

2003

In addition, in 2003 the ACS Group signed sponsorship agreements with other organizations that meet the foundation’s social

objectives, such as the Spanish Association of Foundations, the Asociación Impulso Solidario, Cáritas, the National Museum

Center of Art Reina Sofia, Friends of the Prado Museum Foundation, Betesda Foundation, Carolina Foundation, FCOTEC

Foundation, Fundación Empresa y Crecimiento, Sociological Studies Foundation – FUNDES, Príncipe de Asturias Foundation,

Hispania Nostra, The Royal Theatre Foundation, The Complutense University of Madrid, Autonomous University of Madrid

Foundation, Rey Juan Carlos University Foundation, Antonio de Nebrija University in Madrid, San Pablo – CEU University

Foundation, and the School of Civil Engineering in Madrid.

4.5.4. Environment promotion

During 2003, the Foundation’s activities regarding the environment were:

- Publishing of the book “Environmental Management, an experience through Grupo Dragados” under the direction of

Dr. José María Baldasano, Head of Environmental Engineering at the Polytechnical University of Catalonia in Barcelona.

- Sponsorship of the seminar “Management of Solid Waste” at the School of the Environment and Technology, Complutense

University of Madrid.

- Sponsorship of the conference “Treatment and Management of Waste Water”, with the School of the Environment and

Technology, Complutense University of Madrid.

- Sponsorship of the summer course “A Company’s Social Responsibility for Sustainable Development”, organized by the

San Pablo – CEU University Foundation in Burgo de Osma, Soria.

- Sponsorship of the “Guide to Good Environmental Practices”, with the San Pablo – CEU University Foundation.

- “1st Award of Tourism and Sustainable Development” for research work carried out on this subject matter, in collaboration

with the Antonio de Nebrija University.


4


166 167

ACS GROUP

ANNUAL REPORT

2003C O R P O R A T E G O V E R N A N C E I N T H E A C S G R O U P 5

Headquarters of the ACS Group, Madrid

CORPORATE GOVERNANCE IN THE ACS GROUP5

5.1. Ownership Structure

5.2. Management Structure




168 169

CORPORATE GOVERNANCE

IN THE ACS GROUP

5

ACS GROUP

ANNUAL REPORT

2003

Over the past years the ACS Group has undertaken to improve the communication with its shareholders and investors as a

means of maintaining the policy on transparency which has always characterized it. The actions taken with respect to the

Corporate Governance of the Group are oriented in this direction and, to this end, the Board of Directors of ACS, Actividades

de Construcción y Servicios, S.A. has approved the Annual Report on Corporate Governance corresponding to 2003.

The mentioned Report follows the directives outlined by the Special Committee for the Promotion of Transparency and Security

within the Markets and Publicly Quoted Companies (“Aldama Report”) as recognised in the Law 26/2003 of July 17 and the

Ministerial Order 3722/2003 in which it is outlined. The ACS Group communicated this to the Stock Market Commission

(CNMV) and made it available to its shareholders through the corporate website (http://www.grupoacs.com) on April 30, 2004.

This report contains the information related to the ownership and management of the Company, to the risk management,

to the General Shareholders’ Meetings and to the capital markets, the most significant aspects of which are described below.

5.1. OWNERSHIP STRUCTURE

5.1.1. Share capital

The share capital of the ACS Group as of December 31, 2003, was 177,790,246.50 euros, represented by 118,526,831 ordinary

shares with a nominal value of 1.50 euros per share, all of which are of the same class and series.

The last change made in the share capital was the result of the share-for-share merger of ACS, Actividades de Construcción

y Servicios, S.A. and Grupo Dragados, S.A. This event resulted in a capital increase by issuing 54,465,015 new shares of ACS

of the same class and series, each with a nominal value of 1.50 euros, to compensate the exchange of shares with Dragados

Group. At the moment of the merger, ACS was owner of 57,724,169 shares of Dragados while Dragados owned 2,396,253

treasury shares, whereby the latter were redeemed and were not part of the swap.

The fixed conversion rate between the shares of ACS and those of Dragados was 33 ACS shares for 68 Dragados shares. This

conversion equation was established by the Boards of Directors of the two companies at their respective meetings on July 2,

2003, when the merger project was approved. The conversion was later approved at the Extraordinary General Shareholders’

Meeting of each company, both of which were held on October 14, 2003.

Once the new shares of ACS had been issued, a request was forwarded for them to be listed and traded on the Madrid,

Barcelona, Bilbao and Valencia stock exchanges. The first day of trading was December 15, 2003, the first working day

following the registration of the deed of merger in the Mercantile Registry.

5 CORPORATE GOVERNANCE IN THE ACS GROUP

5.1. Ownership Structure

Banca March, S.A. - - 14,419,014 12.165% 14,419,014 12.165%

Imvernelín Patrimonio, S.L. 10,389,264 8.765% 343,538 0.290% 10,732,802 9.055%

Mr. Florentino Pérez Rodríguez - - 5,950,363 5.020% 5,950,363 5.020%

The rest of the Board of Directors 673,085 0.568% 525,376 0.443% 1,198,461 1.011%

Subtotal controlled by the Board of Directors 11,062,349 9.333% 21,238,291 17.919% 32,300,640 27.252%

Fidelity International, Ltd. - - 3,608,380 3.044% 3,608,380 3.044%

Chase Nominees, Ltd. * 8,285,328 6.990% - - 8,285,328 6.990%

Treasury Stock - - 902,453 0.761% 902,453 0.761%

Total Significant Shareholdings 19,347,677 16.323% 25,749,124 21.724% 45,096,801 38.048%

Number of Numbers ofshares held shares held

directlyDirect

indirectlyIndirect Total number % of total

shareholding shareholding of shares shareholding

* Banco Santander Central Hispano, S.A., issued a notification of the significant participation as the deponent of Chase Nominees, Ltd., under obligation to declare because of their intervention as nominee company (article 3.1 of Royal Decree 377/1991 of March 15) acting on behalf of its clients, none of which are subject to issuing a notification of significant participation in ACS if attending solely to the shareholding position of which Chase Nominees, Ltd. is aware

There is no knowledge of family, commercial, contractual or corporate relationships of any nature, nor of the existence of

any quasi-corporate or concerted agreements between significant shareholders, there being no shareholder who can exert

a controlling influence on the Company.

5.1.3. Participation of the members of the Board in the share capital

As of December 31, 2003, the Company was informed that its members of the Board had the following shareholdings in

the Company:

Mr. Florentino Pérez Rodríguez 06/28/1989 10/14/2003 - - 5,950,363 5.020% 5,950,363 5.020%

Mr. Antonio García Ferrer 10/14/2003 10/14/2003 2,640 0.002% - - 2,640 0.002%

Mr. Pablo Vallbona Vadell 11/07/1997 10/14/2003 - - - - - -

Dr. José María Aguirre González 06/29/1995 10/12/2001 140,500 0.119% - - 140,500 0.119%

Mr. Agustín Batuecas Torrego 06/29/1999 10/14/2003 249,696 0.211% - - 249,696 0.211%

Mr. Miguel Blesa de la Parra 10/14/2003 10/14/2003 810 0.001% - - 810 0.001%

Dr. Álvaro Cuervo García 11/07/1997 06/19/2003 - - 14,000 0.012% 14,000 0.012%

Mr. Isidro Fernández Barreiro 10/14/2003 10/14/2003 4,682 0.004% - - 4,682 0.004%

Dr. Joan David Grimà i Terré 10/14/2003 10/14/2003 - - - - - -

Mr. José María Loizaga Viguri 06/28/1989 10/14/2003 42,771 0.036% 41,736 0.035% 84,507 0.071%

Mr. Pedro José López Jiménez 06/28/1989 10/14/2003 - - 470,000 0.397% 470,000 0.397%

Mr. Santos Martínez-Conde Gutiérrez-Barquín 09/27/2001 06/19/2003 1,126 0.001% - - 1,126 0.001%

Mr. Miquel Roca i Junyent 10/14/2003 10/14/2003 12 0.000% - - 12 0.000%

Mr. Julio Sacristán Fidalgo 06/24/1998 06/19/2003 452 0.000% - - 452 0.000%

Comercio y Finanzas, S.A. 10/14/2003 10/14/2003 30,198 0.025% - - 30,198 0.025%

Imvernelin Patrimonio, S.L. 10/14/2003 10/14/2003 10,389,264 8.765% 343,538 0.290% 10,732,802 9.055%

Percacer, S.A. 10/14/2003 10/14/2003 200,198 0.169% - - 200,198 0.169%

Mr. José Luis del Valle Pérez 06/28/1989 10/14/2003 - - - - - -

Number of Number ofshares held shares held TotalDate when first Date when

directlyDirect

indirectlyIndirect Number of

shareholdingappointed last appointed shareholding shareholding total sharesMembers of the Board

5.1.2. Significant shareholders

As of December 31, 2003, the Company has knowledge of the following significant shareholdings in its capital structure:

170 171

ACS GROUP

ANNUAL REPORT

2003

5.2 MANAGEMENT STRUCTURE

5.2.1. Responsibilities of the Board of Directors

The Board of Directors of the ACS Group has the responsibility of representing the Company and managing its business as

well as performing those operations that are part of or related to its purpose and to act in accordance with the interests of

the Company and of its shareholders.

In particular, the Board of Directors is responsible for the following:

- To accept the resignation of Board members.

- To appoint, revoke and accept the resignation of the Chairman, Vice Chairman and Secretary of the Board.

- To appoint, revoke and accept the resignation of the Board members who are to form part of the Commissions and

Committees of the Board.

- To delegate to any of its members, all or part of the powers that correspond to the Board, with the exception of those

that are non-transferable.

- To draw up the individual and consolidated annual accounts and management reports and submit them to the General

Shareholders’ Meeting for approval.

- To prepare the reports, including the Annual Report on Corporate Governance, and the proposals that, according to current

legislation and the Company’s Bylaws, are the responsibility of the Board of Directors.

- To approve the annual budgets.

- To approve the cession of rights on the commercial names, trademarks and industrial or intellectual property rights that

belong to the Company or companies of the Group, providing they are of economic relevance.

- To approve the Rules of the Board of Directors.

- In general, to carry out all the functions that correspond to the Board according to Law, the Bylaws and the Rules of the

Board of Directors, and to carry out all other functions that are delegated to the Board by the General Shareholders’

Meeting, assigning only those that are expressly permitted in the resolution on delegation reached at the General

Shareholders’ Meeting.

The annual accounts prepared by the Board of Directors are presented to the Board by the Chairman and CEO and the Corporate

General Manager who, in turn, is responsible for the economic-financial area of the Company.

5.2.2. Composition of the Board of Directors

In 2003, special relevance was given to the figure of the Independent External Board member, a person of recognized professional

status who can bring experience and knowledge to the corporate governance and who, being neither an executive nor an owner,

is elected as such and offers the characteristics that ensure a criterion which is both impartial and objective.

In this the respect, the General Extraordinary Shareholders’ Meeting, which took place on October 14, 2003, increased the

minimum (11) and maximum (21) number of member permitted on the Board of Directors, establishing a Board of Directors

formed of 18 members of which 2 are Propietary and Executive Directors, 2 are Executive Directors, 8 are Propietary and

External Directors and 6 are External and Independent Directors:

The members of the Board of Directors of the Company hold 27.25% of the share capital:

1. The significant shareholder Banca March, S.A. is represented in the Board of Directors by the executives of its associated

company Corporación Financiera Alba, S.A., Mr. Pablo Valbona Vadell, Mr. Isidro Fernández Barreiros and Mr. Santos Martínez-

Conde Gutiérrez-Barquín.

2. Imvernelin Patrimonio, S.L. is controlled by Financiera Alcor, S.A., which, in turn, has no controlling shareholder. It is understood

that a tacit agreement exists between these companies that share, through the concerted exercise of their voting rights, a

long-standing, common policy in the company:

- The following companies have the indicated shareholdings in Imvernelin Patrimonio, S.L.:

- Comercio y Finanzas, S.A. 15.734%

- Percacer, S.A. 15.734%

- Corporación Financiera Alcor, S.A. 68.532%

- Corporación Financiera Alcor, S.A, owns 310,960 shares of ACS which represents 0.262% of its share capital. The

following companies have the indicated shareholdings in Corporación Financiera Alcor, S.A.:

- Comercio y Finanzas, S.A. 44.10%

99.99% of the shares in this company are property of Mr. Alberto Alcocer Torra.

- Percacer, S.A. 44.10%

95% of the shares in this company are property of Mr. Alberto Cortina de Alcocer.

- Mr. Alberto Alcocer Torra 5.90%

Mr. Alberto Alcocer Torra directly owns 1,091 shares of ACS.

- Mr. Alberto Cortina de Alcocer 5.90%

Mr. Alberto Cortina de Alcocer directly owns 1,576 shares of ACS. 5.1.4. Treasury stock

Prior to the merger, Grupo Dragados, S.A., had directly and indirectly at their disposal 4,255,850 treasury shares with a total

value of 60.1 million euros.

At the moment of the merger, the process was started to redeem the treasury shares owned directly (2,396,253), representing

1.39% of the share capital of Grupo Dragados, S.A., the acquisition value of which was 33.3 million euros. Given that the

redemption of these shares was undertaken at the moment of the merger, no results were produced as a consequence of

their sale or transmission.

The remaining treasury stock with indirect ownership (1,859,597) was exchanged as part of the merger for 902,453 new shares

of ACS which represent a total indirect treasury stock of 0.76% of the share capital of ACS at the close of 2003.

Current authorization for the acquisition of treasury stock

At the General Shareholders’ Meeting held on June 19, 2003, the Board of Directors of the Company as well as the Boards

of the subsidiaries were authorised for the 18 month period following the date of the General Shareholders’ Meeting, and

under the conditions and requirements detailed in article 75 and related articles of the Corporations Law, to purchase treasury

stock, the nominal value of which when added to that already owned by the company and its subsidiaries, shall not exceed

5% of the issued share capital. The minimum and maximum price shall be, respectively, the nominal value and the price that

does not exceed that corresponding to the stock market session on the day of the purchase or those authorised by the

competent body of the Stock Exchange or the Stock Exchange Commission (CNMV).


IN THE ACS GROUP

5


172 173

ACS GROUP

ANNUAL REPORT

2003

The Board of Directors will elect a Secretary who may or may not be a Board member but who should be a practicing lawyer.

In addition to the functions attributed by current Law, the Company’s Bylaws and the Rules of the Board of Directors, the

Secretary of the Board of Directors will be responsible for scrutinizing the legality of the actions taken by the corporate bodies

of which he is a member, making notifications to the effect in the Minutes.

5.2.3. Duties and Obligations of the members of the Board of Directors

According to the Rules of the Board of Directors, the members have the obligation to:

- Attend the meetings of the Board and the Committees of which they form part, unless there is a reasonable cause to

delegate its representation and proxy to another Board member.

- To inform and prepare themselves adequately for Board meetings and to participate actively in the Board’s debates.

- To oppose the approval of any resolutions that are understood to be against the Law or the Company’s Bylaws or that are

contrary to the interests of the Company, and to ensure that this opposition is clearly reflected in the Minutes of the meeting.

- To not disclose any discussions of the Board or information that has been obtained while acting as Board member that

is not of general knowledge.

Additionally, the Board of Directors will be obliged to adopt or promote the adoption of as many measures as necessary or

convenient to ensure the transparency of the actions of the Company in the financial markets and to carry out all functions

that are necessary as a result of being a company quoted on the stock exchange.

To allow the General Shareholders’ Meeting to carry out its duties properly, the Board of Directors shall make available to

the shareholders before the General Meeting all the information legally required as well as any information that is of

reasonable social interest and from which they can form an opinion.

In order to attain the maximum transparency and disclosure of all relevant information, as well as guarantee the immediate access

to information by the shareholders and investors in general, the Board of Directors shall ensure that all information that is

understood to be of general interest will be available on the Group’s website. In particular, the Company’s Bylaws, the Rules of

the Board of Directors, the reports submitted to the stock exchanges, notification of the General Shareholders’ Meeting and

the proposals that are submitted for debate and approval at the General Shareholders’ Meeting, and the resolutions adopted

in the last General Shareholders’ Meetings as well as the current Annual Report.

5.2.4. Functioning of the Board of Directors

The Board of Directors will meet when the interests of the Company so require, by prior announcement from the Chairman,

or failing that, through a Vice Chairman, whether at their own initiative or upon request of at least two members of the Board.

In any case, the Board will meet at least four times a year in order to know how the Group is performing against budgets and

the previous financial period.

It is understood that the Board is convened when either through physical presence or representation by proxy, half of the members

plus one are in attendance. Without prejudice to their obligation to attend, any member that cannot be present at a meeting

personally may be represented and vote at the meeting by proxy of another member.

Unless otherwise provided for by current legislation, the Company’s Bylaws or the Rules of the Board of Directors, the agreements

of the Board of Directors will be reached through absolute majority of the members in attendance at the meeting whether

they are present or represented by proxy. The adoption of agreements in writing and without any meeting will only be acceptable

when no member of the Board opposes the agreement and everything else established in the current legislation is met.

In 2003 the Board of Directors met on six occasions, the Chairman being present on each one.

The Board members will hold the positions to which they are elected for a period not exceeding 5 years. They may be re-elected

one or more times for the same periods of maximum duration. Nevertheless, should the maximum period of a member of the

Board expire, he can continue to hold his position until the next General Shareholders’ Meeting.

The members elected by cooption will continue to exercise their duties until the next General Shareholders’ Meeting when

the final election will take place to fill the vacancy.

The Board will elect a Chairman from among its own members, as set out by the current legislation, the Company’s Bylaws

and the Rules of the Board of Directors. The Chairman will carry out all the responsibilities that correspond to the most important

executive position of the Company within the guidelines established by the General Shareholders’ Meeting, the Board of

Directors and the Executive Committee.

The Chairman will be granted the most extensive power of attorney in order to carry out his duties and, unless prohibited

by Law, may delegate his power of attorney, either totally or partially, to any fellow member of the Board and to any member

of the Company’s top management, and, in general, to anyone he may consider suitable or necessary.

The Board may also elect from its members, one or two Vice Chairmen who will substitute the Chairman in case of delegation,

absence or illness and, in general, will carry out all the functions that are attributed to them by the Chairman, the Executive

Committee and the Board of Directors.

The substitution of the Chairman by the Vice Chairmen will take place following the order of their election, or failing this, in

order of seniority, or, in the last case, in descending order of age.

The Board can designate a CEO in whom it will delegate all the faculties it requires, except for those that are considered non

transferable by Law or the Company’s Bylaws.


Chairman and CEO Mr. Florentino Pérez Rodríguez

Vice Chairmen Mr. Antonio García Ferrer

Mr. Pablo Vallbona Vadell

Members Dr. José María Aguirre González

Mr. Agustín Batuecas Torrego

Mr. Miguel Blesa de la Parra

Dr. Álvaro Cuervo García

Mr. Isidro Fernández Barreiro

Dr. Joan David Grimà i Terré

Mr. José María Loizaga Viguri

Mr. Pedro López Jiménez

Mr. Santos Martínez-Conde Gutiérrez-Barquín

Mr. Miquel Roca i Junyent

Mr. Julio Sacristán Fidalgo

Comercio y Finanzas, S.A.Represented by: Mr. Javier Monzón de Cáceres

Imvernelin Patrimonio, S.L.Represented by: Mr. Javier Echenique Landiríbar

Percacer, S.A.

Represented by: Mr. Manuel Delgado Solís

Secretary General & Board Member Mr. José Luis del Valle Pérez


IN THE ACS GROUP

5

Propietary and Executive Director

Propietary and Executive Director

Executive Director

Executive Director

Propietary and External Director








External and Independent Director






174 175

ACS GROUP

ANNUAL REPORT

2003

5.2.5. Committees of the Board of Directors

In the interest of obtaining greater efficiency while carrying out its functions, the Board of Directors can delegate its duties

to the Executive Committee, the Audit Committee and the Compensation Committee. These functions are foreseen in the

current legislation, the Company’s Bylaws and the Rules of the Board of Directors.

Executive Committee

The Executive Committee will exercise all the duties that are delegated to it by the Board of Directors, except for those that

by Law or the Corporate Bylaws are considered non transferable. Nevertheless, the Board of Directors may recover any matter

that it is responsible for knowing about or deciding upon. For its part, the Executive Committee may submit to the Board of

Directors any issue requiring a decision, even if it is of the Executive Committee’s responsibility, if this Committee understands

that the Board of Directors should decide on the aforementioned issue.

The current formation of the Executive Committee is as follows:

The Executive Committee will meet as many times as convened by its Chairman, either at his own initiative or at the request

of a minimum of two of its members. It is considered that the Committee is in session when the majority of its members, either

present or represented by proxy, are in attendance. An agreement will be reached by the majority of those in attendance,

whether actually present or represented by proxy.

Audit Committee

The Audit and Control Committee is currently made up as follows:

The Committee will be considered convened when the majority of its members are in attendance and will reach agreements by

the majority of votes. The Chairman will have the deciding vote in the case of a tie. The Audit Committee will be convened at

least twice a year or whenever it is called to session by the Chairman. It will convene at the initial and final stages of the process

of auditing the financial statements of the Company and the consolidated financial statements of the Group of Companies and

always prior to issuing the relevant audit reports.

The responsibilities of the Audit and Control Committee are as follows:

- To report to the General Shareholders’ Meeting on issues raised by the shareholders that fall under the Committee’s responsibility.

- To propose the appointment of external auditors to the Board of Directors of the Company in order for the Board to subsequently

propose the appointment at the General Shareholders’ Meeting as referred to in Article 204 of the Corporations Law.

- To revise and approve any significant changes in the accounting procedures of the Company and of the subsidiaries forming

its Group of Companies, as well as, in general, the relationship with the external auditors in order to receive information

on those matters that could put their independence in jeopardy, any other relations with the process of auditing the accounts

and those other foreseeable communications on the legislation regarding the auditing of accounts and the technical rules

applied to auditing.

- To supervise the internal auditing services within the Company’s structure.

- To be aware of the process of financial information and the Company’s internal control systems.

- To revise the estimates made by the management of the Company and of the companies forming its Group and inform on

any possible fiscal or legal eventualities of a significant nature.

- To know the results of inspections carried out by official institutions.

- To know the accounts information that the Company provides periodically to the stock exchanges.

- To know any other issue of a special nature entrusted to the Committee by the Board of Directors.

- As far as necessary and with due adjustment, the method of operation set forth in the Rules of the Board of Directors will

be applied to the Audit and Control Committee.

Compensation Committee

The Compensation Committee is formed of the following:

The committee shall be convened once the majority of its members are present and decisions will be made by majority vote.

In the case of a tie, the vote of the Chairman will determine the result. The committee will be called to meet by the Chairman

at least twice a year.

The Compensation Committee is responsible for informing the Board of Directors of the following:

- The remuneration scheme for the Chairman of the Board of Directors and other Top Management of the Company.

- The remuneration of the Board members.

- Long term plans based on share value, such as stock option plans.

5.2.6. Remuneration of the members of the Board and the Management Team

The members of the Board are remunerated according to current legislation and the Company’s Bylaws. To this effect, the Board

of Directors, subject to the report from the Compensation Committee, determines the final distribution of the global amount

to be paid as well as the periodicity of payment.


IN THE ACS GROUP

5


Significant shareholder Position

Chairman Mr. Florentino Pérez Rodríguez Propietary

and Executive Director

Vice Chairman Mr. José María Loizaga Viguri External and

Independent Director

Members Mr. Antonio García Ferrer Executive Director

Mr. Isidro Fernández Barreiro Propietary and External Director

Imvernelín Patrimonio, S.L. Propietary and External Director

Represented by: Mr. Javier Echenique Landiribar

Mr. Pablo Vallbona Vadell Propietary and External Director

Mr. Pedro López Jiménez Propietary and External Director

Secretary Mr. José Luis del Valle Pérez Executive Director


Chairman Mr. Santos Martínez-Conde Gutiérrez-Barquín Propietary and External Director

Members Dr. Álvaro Cuervo García External and Independent Director

Mr. Julio Sacristán Fidalgo Propietary and External Director



Chairman Mr. Pablo Vallbona Vadell Propietary and External Director

Members Mr. José María Aguirre González External and Independent Director

Mr. José María Loizaga Viguri External and Independent Director

Imvernelín Patrimonio, S.L. Propietary and External Director


176 177

ACS GROUP

ANNUAL REPORT

2003

In addition to certain expenses and allowances agreed upon at the General Shareholders’ Meeting, the Board of Directors will

receive as statutory participation, a remuneration that will not exceed ten percent of the net profit and will be payable only after

having made the required allocations to the legal reserve and, when applicable, to the statutory reserve, as well as the assignment

to the shareholders of a dividend of at least four percent of the paid up capital per share.

The Board of Directors will decide how the global amount of their fees will be distributed among its members, including in

different amounts.

The compensation to all or some of the members of the Board of Directors, as well as to the management of the Company

and the Group’s companies, may be in the form of company stock or stock options or may be fixed to the value of these stocks

in the form, terms and conditions defined at the General Shareholders’ Meeting.

The compensation for the Company’s Board members and the Group’s management team for the financial year 2003 was

broken down as follows:

Compensation of the Board of Directors

The remuneration accrued during the financial year 2003 by the members of the Board of Directors of the Company, including

that received by the members of the Board of Directors of Grupo Dragados, S.A., was 1,485 thousand euros for salaries and

professional fees and 1,535 thousand euros for statutory obligations, without receiving any other amounts for other concepts.

In addition to the amounts mentioned above, the remuneration accrued during the financial year 2003 by the members of

the Board of Directors of the Company, including that received by the members of the Board of Directors of Grupo Dragados,

S.A., from all of the companies of the Group was 4,065 thousand euros for salaries and professional fees and 210 thousand

euros for statutory obligations, without receiving any other amounts for other concepts.

This information does not include compensations in the form of pension plans which are covered in the corresponding section.

Management Team Compensation

a) Salaries

The compensation accrued in 2003 for the Group Management Team, excluding the members of the Board of Directors

which is detailed in the previous section, was as follows:

With regards to the Stock Option Plan, on December 10, 2002, a brochure was registered with Number 3,992, dealing

specifically with the compensation systems in conformance with amendment 16 of Law 24/1988 of July 28 on Stock

Markets which includes the main characteristics of our plan.

The characteristics of the Stock Option Plan are as follows:

- The number of shares subject to the Stock Option Plan was initially one million ninety-five thousand (1,095,000) and

subsequently was increased by one hundred and ninety-two thousand two hundred and thirty five (192,235) shares to

a maximum total of one million two hundred and eighty-seven thousand two hundred and thirty-five (1,287,235) shares.

- The acquisition price will be twenty-seven euros and thirty-one cents (E27.31) per share for the one million ninety-five

thousand (1,095,000) shares and thirty euros and fifty-seven cents (E30.57) for the remaining one hundred and ninety-

two thousand two hundred and thirty-five (192,235) shares.

- The options will be executable in three equal fractions, accumulative if so decided by the beneficiary during the fourth,

fifth and sixth years following January 1, 2000, inclusive. Nevertheless, if the employment relationship is terminated due

to reasons other than a legally legitimate dismissal or the voluntary resignation of the beneficiary, the options will be

exercisable six months after such event takes place in the case of death, retirement, pre-retirement or permanent disability

and within thirty (30) days for any other case.

- Tax retainments and taxes due, where applicable, as consequence of executing an option will be exclusively paid by the

exclusively paid beneficiary.

- The coverage will be through the Banco Bilbao Vizcaya Argentaria, S.A., or any other banking entity determined by the

Chairman and CEO who will sign whatever agreements or conditions deemed necessary to this effect. All expenses derived

from this coverage will be reimbursed by ACS.

- The options are not transferable, which denies the heirs the possibility of exercising them. In the case of death, the options

can be exercised by the beneficiaries (including, where applicable, the dower). The period in which they can be exercised

will be six months as of the date of death, the beneficiaries having the right to exercise all of the options awarded to

the deceased director. The options will be extinguished if they are not exercised before the mentioned period has expired.

- The settlement of the options will take place, where applicable, by means of one of the following methods:

- If the director has the intention of holding the stock for future sale, he will pay the option cost, and the financial entity

will deduct from the number of shares that it must give to the director, the number of shares, rounded upwards, whose

market value is equivalent to the amount that must be withheld for personal income taxes plus the expenses derived

from exercising the options (“cash for stock” method).

- Alternatively, the director can request the financial entity to deliver a number of ACS shares whose market value equals

the difference between the option cost and the market value of the shares at the date of exercise less in all cases the

amount to be withheld for personal income taxes plus the expenses derived from exercising the options (“cash less”

method).

- If the director does not have any interest in maintaining ownership of the shares acquired, he can request that he be

given an amount in cash equivalent to the difference between the exercise price and the market price of the shares

at the time of exercising the option, deducting in all cases the amount to be withheld for personal income taxes plus

the expenses derived from exercising the options (“exercise and sell” method).

As of December 31, 2003, this stock option plan had not been modified nor had any other stock option plan been approved

for the members of the Board of Directors.


IN THE ACS GROUP

5


b) Stock option plan

ACS has a stock option plan that was approved by its Board of Directors at their meeting held on December 16, 1999,

and amended at their meeting on June 13, 2000, making use of the authorization granted at the General Shareholders’

Meeting on June 29, 1999. The plan was reassigned with the consent of the Board of Directors at their meeting on March

12, 2002.


Fixed salary 8,988

Variable compensation 8,277

Attendance fee as members of the Board of Directors of other subsidiary companies 482

Total 17,747

178 179

ACS GROUP

ANNUAL REPORT

2003

There are no other securities that give direct or indirect rights to the Company’s share capital other than those

mentioned above.

As of the December 31, 2003, the following members of the Executive Team and members of the Board of Directors of

ACS held stock options in virtue of the plan described above:


IN THE ACS GROUP

5


Company Position(1) Number ofstock options

ACS, Actividades de Construcción y Servicios, S.A. Chairman and CEO(2) 302,118

Corporate General Manager 147,670

Secretary General(2) 128,447

ACS, Proyectos Obras y Construcciones, S.A. Chairman and CEO 90,000

Executive Assistant to the CEO 28,000

Executive Assistant to the CEO 28,000

Manager 15,000

Secretary General 18,700

Vías y Construcciones, S.A. Chairman and CEO 70,000

Comunidades Gestionadas, S.A. CEO 28,000

Cobra Instalaciones y Servicios, S.A. CEO 90,000

General Manager 28,000

General Manager 15,000


Procme, Ltd. CEO 28,000

Sociedad Española de Montajes Industriales, S.A. CEO 28,000


Aplicación de Pinturas API, S.A. Chairman 19,000

Técnicas Medioambientales TECMED, S.A. CEO 28,000

Continental Auto, S.A. Chairman and CEO(2) 28,000

Total 1,149,935

Note: Each one of these options gives the right to subscribe one ACS share(1) Corresponds to the positions held during 2003 prior to the merger(2) Members of the Board of Directors. These members have not called their option rights in advance

c) Pension Plans

As a result of the merger with Grupo Dragados, S.A., the Company assumed the obligation to pay to those employees who

meet certain conditions, a monthly monetary supplement to the obligatory payments made by the general Social Security

Administration for retirement, disability, widowhood and orphanage.

In 2000, the above obligations were externalised based on the available information at the end of that year. More specific

information regarding variables and hypothesis that are relevant in determining the levels of obligation regarding pensions

became available in 2001 (fundamentally definitive pension groupings, pensionable salaries and retirement age estimates).

Based on the regularization mechanism foreseen in the insurance contract signed on the December 21, 2000, the actuarial

valuation of our commitments was realized.

The actuarial hypotheses used are indicated below, with the exception of the applied technical interest rate that has decreased

as a consequence of the reduction in interest rates an it is now between 5.93% and 4.32%.

A definitive financing plan which has been totally provisioved for, was established until 2004, maintaining its financing period

up to 2004 as established in the provisional plan. Additionally, in 2003 the Company paid 13,714 thousand euros to insurance

companies to cover our commitments with the management team and the members of the Board of Directors due starting

on January 1, 2004. These commitments were arranged through collective insurance savings policies the contribution to which

is defined in relation to the benefits in the form of capital.

The net accrued premium in 2003 to cover our obligations to directors and members of the Board of Directors was 548

thousand euros.

d) Insurance

All members of the management team, including those who are members of the Board of Directors, are included in a collective

policy that covers the life and accident insurance commitments for the management staff in the socio-economic agreement.

The commitment acquired by the Group is to pay the annual premium that, in 2003, was 38 thousand euros.

5.2.7. Other information regarding the Board of Directors

Members with executive positions in the ACS Group

The following members hold the indicated executive positions in the Group:

- Mr. Florentino Pérez Rodríguez is Chairman and CEO and has been delegated all the faculties corresponding to the Board

of Directors excepting those that are non-transferable.

- Mr. Antonio García Ferrer is the Executive Vice Chairman and has been granted a general power of attorney by the Board

of Directors.

- Mr. José Luis del Valle Pérez, is the Secretary General of the ACS Group and member of the Boards of Directors of several

companies of the Group.

- Mr. Agustín Batuecas Borrego is Chairman and CEO of Continental Auto, S.L.

Annual growth rate of the maximum pension paid by the Social Security Administration 2.00%

Annual growth rate of salaries 2.35%

Annual growth rate of the Consumer Price Index (CPI) 2.00%

Mortality Table* PERMF-2000 P

* Guaranteed, hypothesis there will not be any change

According to the information made available, the following members of the Board of Directors are members and/or executives

of the following companies that are significant shareholders of ACS:


Mr. Florentino Pérez Rodríguez Inversiones Vesán, S.A. Administrator

Mr. Pablo Vallbona Vadell Corporación Financiera Alba, S.A. Vice Chairman and CEO

Mr. Isidro Fernández Barreiro Corporación Financiera Alba, S.A. CEO

Mr. Santos Martínez-Conde Gutiérrez-Barquín Corporación Financiera Alba, S.A. General Manager

Board members with executive positions in companies that are significant shareholders

180 181

ACS GROUP

ANNUAL REPORT

2003

Board members related to significant shareholders

According to the information made available, the following members of the Board of Directors represent or are related in

some way to significant shareholders of the Company:

Board members who are members of the Boards of Directors of other publicly quoted companies

According to the information made available, the following members of the Board of Directors are also members of the Boards

of Directors of publicly quoted companies in Spain other than the ACS Group:

Significant Shareholder Relationship Description

Mr. Julio Sacristán Fidalgo Mr. Florentino Pérez Rodríguez Family

Mr. Pablo Vallbona Vadell Banca March Executive Vice Chairman


IN THE ACS GROUP

5


Dr. José María Aguirre González Chairman of Banco Guipuzcoano, S.A. Board member of Acerinox, S.A.

Mr. Miguel Blesa Parra Vice Chairman of Iberia Líneas Aéreas de España, S.A. Board member of Endesa, S.A.

Dr. Álvaro Cuervo García Board member of Tafisa, Tableros de Fibras, S.A.

Mr. Isidro Fernández Barreiro Board member of Prosegur

Mr. Antonio García Ferrer Board member of Abertis Infraestructuras, S.A. Board member of Inmobiliaria Urbis, S.A.

Dr. Joan David Grimà i Terré Board member of Antena 3, TV General Manager of Santander Central Hispano

Mr. José María Loizaga Viguri Chairman of Cartera Hotelera, S.A.Vice Chairman of Zardoya Otis, S.A.

Mr. Pedro José López Jiménez Board member of Lingotes Especiales, S.A.

Mr. Santos Martínez-Conde Gutiérrez-Barquín Board member of Acerinox, S.A.

Mr. Miquel Roca i Junyent Non-member Secretary of Abertis Infraestructuras, S.A. Non-member Secretary of Banco Sabadell, S.A.

Mr. Pablo Vallbona Vadell Vice Chairman of Abertis Infraestructuras, S.A.

Mr. Isidro Fernández Barreiro Board member of Xfera Móviles, S.A.

Mr. Pedro José López Jiménez Board member of Continental Auto, S.L. Board member of Sociedad Española de Montajes Industriales, S.A. Board member of Vías y Construcciones, S.A.Vice Chairman of ACS, Proyectos Obras y Construcciones, S.A. Board member of Técnicas Medioambientales, S.A.Vice Chairman of Cobra, Instalaciones y Servicios, S.A.

Mr. Santos Martínez-Conde Gutiérrez-Barquín Board member of Consejero de Técnicas Medioambientales, S.A. Board member of Sociedad Española de Montajes Industriales, S.A. Board member of Vías y Construcciones, S.A.Board member of ACS, Proyectos Obras y Construcciones, S.A.Board member of Cobra, Instalaciones y Servicios, S.A.Board member of Continental Auto, S.L.

Board members who are also members of the Boards of Directors of other companies of the Group

The following members of the Board of Directors are members of the Board of Directors of other Group companies:

Dr. José María Aguirre González Chairman of Cobra, Instalaciones y Servicios, S.A.

Mr. Agustín Batuecas Torrego Chairman and CEO of Continental Auto, S.L.

Mr. José Luis del Valle Pérez Board member and Secretary of ACS, Proyectos Obras y Construcciones, S.A.Board member of ACS Sonera, Telefonía Móvil, S.L. Board member of Continental Auto, S.L. Board member and Secretary of Cobra, Instalaciones y Servicios, S.A.Board member and Secretary of Sociedad Española de Montajes Industriales, S.A.Board member and Secretary of Técnicas Medioambientales, S.A. Board member of Xfera Móviles, S.A.

Mechanisms established to detect and regulate possible conflicts of interest:

a) Rules of the Board of Directors

The Rules of the Board of Directors contain several of these mechanisms. Article 13 specifically regulates conflicts of interest,

whereby in virtue of their loyalty as representatives of the Company, the Board members shall avoid any conflict of interest

between themselves and their immediate relatives on the one hand, and the Company on the other and will inform the Board

of Directors of any possible conflict of interest whenever such a conflict cannot be avoided, and this conflict of interest shall be

recorded in the Minutes of the next Board Meeting. Furthermore, the Board members shall inform the Company as soon as

possible, or within the following five days, with regards to the shares, stock options or derivatives based on share value that are

held directly or indirectly by the members themselves, or by members of their immediate families.

The Board members shall notify the Company of any significant changes in their own professional situation, particularly any

change that affects the status or condition that was taken into account when they were appointed members of the Board. In

addition, they shall inform the Company of any legal or administrative procedure that may have a serious negative effect on

the Company’s reputation.

Board members shall abstain from intervening in deliberations and voting on issues in which they have a special interest. This

will be duly noted in the Minutes.

In addition, article 14 on non-competition and the use of information, establishes that Board members cannot hold, directly

or indirectly, any position in or provide representation for any company or firm that competes with the Company or with any

company within the Group.

Board members cannot use for private purposes in any way, non-public information to which they have had access as a result

of their role as member of the Board. In particular, Board members cannot use for their own personal benefit knowledge on

any commercial operation of which they may have become aware of while acting as Board member.

With the exception of a duly authorized payment in kind, Board members cannot make use of Company assets nor can they

use their position to obtain an increase in their net worth without making the corresponding compensation.

b) Rules of Conduct in the Stock Market

The Executive Committee of ACS, Actividades de Construcción y Servicios, S.A, used the duties delegated to it by the Board

of Directors to approve at its meeting held on July 17, 2003, the Rules of Conduct in the Stock Market and the document

was submitted to the Stock Exchange Commission (CNMV) on July 31, 2003, as Relevant Fact Nº 43782.

182 183

ACS GROUP

ANNUAL REPORT

2003

The Rules of Conduct in the Stock Market include measures to detect and control possible conflicts of interest between the

Company and/or its Group and its Board members, Directors and significant shareholders. Thus, it is generally applicable to

the members of the Board of Directors as well as to those representatives and employees of the Company who perform

activities that can have a fundamental influence on the price of the shares of the Company, as well as external advisors, who

for specific purposes dispose of privileged or reserved information regarding the shares of the Company.

The Rules will be applied to matters concerning shares, stock options and similar contracts that involve the right to subscribe

or acquire shares of the Company or whose underlying object involves the Company shares, convertible and non-convertible

bonds, debentures, promissory notes, subordinate debt and in general any type of financial instrument issued by the Company

or, if applicable, by companies of the Group.

During the analysis or negotiation phase of any type of legal or financial transaction that could significantly affect the stock

price as referred to in the Rules, those individuals of the Company who are responsible for such operations shall:

a) Limit the exposure of the transaction strictly to those people, within or outside the organization whose involvement is

indispensable.

b) Maintain, for each transaction, a register of the names of the people referred to paragraph a) as well as the date on

which each of them had access to the information.

c) Clearly inform the people included in the registry of the nature of the information they have received, their duty to keep

it confidential and the prohibition to use it.

d) Establish security measures for keeping, filing, accessing, copying and distributing the information.

e) Monitor the stock market performance of the negotiable securities or the financial instruments related to the transaction

in process as well as the information published by the media that could affect the process, whether specialised in

economic information or not.

f) If unusual trading volumes and transaction prices take place and there is a reasonable basis for believing that these

changes are the result of a premature, partial or distorted disclosure of information on an upcoming transaction, the

people in charge of such transaction shall immediately inform the Secretary to the Board of Directors so that he can

give clear and precise notice of a relevant event indicating the state of the transaction in progress or containing an

advance notice of the information to be made public.

The people subject to the Rules who carry out any type of transaction involving securities or financial instruments issued by

the Company have the following obligations:

a) To inform the Company in writing, through the Chairman of the Monitoring Unit, of the purchase or sale operations

or acquisition of stock options undertaken on behalf of their personal account in relation to the securities that are

covered by these Rules. Operations made by the spouse shall also be considered on equal terms as those undertaken

by the person subject to the Rules, unless they only affect the spouse’s personal wealth or are excluded from the

marital economic regime. Also included are operations made by children under age or disabled individuals under the

responsibility of the affected party or by legal entities controlled directly and indirectly or by third parties. Excluded

from this obligation to inform are those operations in which the affected party subject to these Rules has not

intervened, being operations undertaken by entities that manage his investment portfolio in a stable manner. In this

case, it will be sufficient to inform the Chairman of the Monitoring Unit of the existence of a portfolio management

contract and the name of the managing entity.

b) To provide detailed information on the personal transactions related to the securities within the scope of the application

of these Rules when requested by the Chairman of the Monitoring Unit.

c) A newly elected member of the Board of Directors, proxy representative or new employee of the Company subject

to these Rules shall inform the Chairman of the Monitoring Unit in writing of the detail of the stock of the Company

or companies of the Group that he owns, directly or indirectly through controlled companies or through third parties

who act in concert, as well as that owned by children under age or disabled who are economically dependent on

the person subject to the Rules or his/her spouse, except in the latter case when this ownership only affects the latter’s

patrimony or is not included in the marriage settlement. As well, they must inform in writing about the existence of

a stable contract for portfolio management and the name of the management entity.

d) To submit to the Monitoring Unit, through its Chairman, any doubts regarding the application of these Rules and

refrain from any action until a response is received referring to the consultation.

e) To inform the Monitoring Unit in writing, as foreseen in the Bylaws and these Rules, of any possible conflicts of interests

because of patrimony or family relations to the fourth degree by consanguinity or second degree by affinity, or for

any other reason. As well, it is considered that there is a possible conflict of interest derived from the personal patrimony

when a relationship exists in which the affected party directly or indirectly controls 25% of a company or in the case

when although the percentage is lower the person subject to the Rules exercises functions of authority or control.

Without prejudice to the above, when the transactions on securities or financial instruments issued by the Company are undertaken

by members of the Board, they must also inform the stock markets on which these issues are traded as well as the Stock Market

Commission (CNMV) in the terms foreseen by Law.

The Rules foresee a Monitoring Unit that will keep an updated list of the Board members, representatives and personnel of the

Company as well as external advisors who are subject to the Rules in a general or specific way and this list will be available to

the supervising authorities of the stock markets. This Unit will be formed of the Secretary to the Board of Directors, who will preside

over the Committee, the Corporate General Manager and the Administrative Director who will be its Secretary.


IN THE ACS GROUP

5


5.3 RISK MANAGEMENT

The diversity and complexity of the fields in which the Group carries out its activities imply a series of risks that can be categorized

as follows:

- Client Risk, derived from their credit levels, payment arrears, concentration of risks and work performed pending certification.

- Operational Risks, corresponding to the businesses carried out by the Group and that vary according to the area of activity.

These can be considered as risks due to differences in agreed completion dates, costs, risks due to deficiencies in quality,

labour risks, risks to the environment and risks regarding third parties.

- Financial Risks, as a result of levels of debt, tendencies in working capital, exposure to different currencies and interest

rates, guarantees and bonds. Intrinsic risks of new investments are also an area of analysis and risk control, as well as

risks derived from the deterioration of the Group’s assets.

- Market Risks, either regulatory or structural, these risks are inherent within the various markets that the Group operates

in, as well as the concentration of risk in a given country.

184 185

ACS GROUP

ANNUAL REPORT

2003

To manage these risks, specific procedures have been established at different organizational levels for each line of business in

order to guarantee that the risk profiles comply with the operational criteria established by the Board of Directors for each

activity. These procedures are established on the basis of the global risk policy that is structured as follows:

- The Management Committee determines the Group’s global risk policy and, where applicable, establishes the control

mechanisms that assure that risks are kept within approved levels.

- The Board of Directors has delegated to the Audit Committee the responsibility of supervising these risks to ensure that

the established procedures are followed as well as effectively controlling that the relevant risk levels for each activity are

not surpassed.

- The risk control mechanisms according to the established policies are developed in the corresponding management

systems.

Activities with risk levels that are greater than those established in the global risk policy must be approved by the Management

Committee in advance.

The Group’s risk control systems are based on a set of strategic and operative actions that are aimed towards compliance with

risk policies by each area of activity of the Group and they are organized in a decentralized model which, therefore, allows

each business unit to carry out its control policies and risk evaluation under certain basic principles. These principles are as

follows:

- Definition of the maximum risk limits acceptable for each business area according to the characteristics and expected

profitability.

- Establishment of procedures to identify, approve, analyse, control and inform about the different risks for each business

area.

- Coordination and communication so that the risk policies and procedures within the business areas are consistent with

the Group’s global strategy.

The systems provide the information necessary to supervise and evaluate the risk exposure of each business area as well as

to develop the resulting management information required for making decisions. The control systems developed in each

business area can be classified within the following categories:

5.3.1. Quality Control Systems

These make up the processes used to ensure that the work carried out and services provided meet the requirements specified

in the contract as well as the legal and standard requirements, in order to ensure client satisfaction.

The systems, according to the requirements of the ISO 9001 standards, are based on identifying the relevant processes in

advance from a quality control standpoint and organizing the activities developed by the different areas in order to adequately

plan them and following up on them.

The regular review of the systems by the Management and the establishment of targets allow the continued improvement

of such systems.

5.3.2. Environment Control Systems

The implementation of these systems in the different business areas of the Group allows the relevant areas to develop

their activity while guaranteeing maximum respect to the environment.

The systems, regulated by the international standard ISO 14001, are based on identifying and evaluating the environmental

aspects in which the business can have an impact, planning the necessary steps to take in order to avoid or minimize risks by

establishing adequate control measures in accordance with current legal requirements and the environmental code of conduct

corresponding to each business unit. The basic criteria is as follows:

- To incorporate the most advanced technological innovations regarding environmental matters, for example:

- Saving energy and raw materials.

- Using recyclable and biodegradable materials.

- Minimizing the production of waste and treating it in a way that respects the environment.

- Promoting reforestation and the landscaping of construction sites.

- To develop specific actions for the business activities that require them because of their impact on the environment.

- To provide continous information to the client regarding environmental risks and possible preventive measures.

5.3.3. Techno-Economic Control Systems

The Group has various economic and production control systems designed to give a reliable understanding of the economic

expectations and time allowances of a project from the phase of making the initial offer to while the project is under execution

and information on the real situation at any given moment.

These systems are integrated within a global economic and budgetary control system for each business area and are adjusted

to the characteristics of its activities in order to provide the information necessary for the people in charge of the area to

control the risks arising from any possible deviation and to make the appropriate decisions to optimise the management

process.

All the information is kept in a single Economic Information System which allows the consolidated parameters to be supervised

and controlled easily, dynamically and rigorously. By giving the Group’s Management organisms detailed knowledge of the

economic situation and potential and assumed risks, this system has become an essential element in the decision making

process.

5.3.4. Control systems for preventing accidents in the work place

The ACS Group has developed a work accident prevention policy that is in accordance with current legislation and on which the

control systems are based specifically for each line of business. The policy is based on the basic principals of training, involvement

individual responsibility and security control.

The systems are adapted to the individual features of each work site. Labour risk prevention plans are designed and introduced

based on identifying existing risks in order to eliminate them if possible, and if not, to minimize them and take the required

protective measures.

As with all of the Group’s management systems, an initial specific plan is developed for each business. This plan is followed and

updated throughout the progress of the project with the objective of continuously improving its efficiency.

5.3.5. Systems to control financial risks

Essentially directed at identifying, evaluating and covering the risks derived from:

a) Non-payment or delays in payment within certain types of clients, the procedures of which are based on:

- Analysis of the client’s financial solvency and the conditions of the contract proposed by the risks committee of each

business activity at their regular meetings.


IN THE ACS GROUP

5


186 187

ACS GROUP

ANNUAL REPORT

2003

- Decisions on whether or not to contract or, depending on the case, to include specific conditions within the contract

to guarantee payment.

- Individualized client negotiation with legal support.

- Centralized signing of contracts.

b) The variation in currency rates, which are covered through policies of financing in local currency and hedges for capital

intensive infrastructure projects which financing is arranged in a currency that is not the local one.

c) The variation in interest rates, whose follow ups fluctuations determine the financial leverage structure for each business

unit and the consolidated Group.

d) The write-down or restructuring of any asset whether financial or set aside for the productive activities of the Group.

e) New investments that require a rigorous analysis and evaluation of the inherent risks involved.

The Group follows a policy that covers accidental risks that can affect the assets and activities of the Group by contracting

insurance policies for those risks which can be covered. The risks are revised periodically in order to adapt the policies to the

current specific situation of the risk covered.

5.4.2. Ordinary General Shareholders’ Meeting of June, 19

The Ordinary General Shareholders’ Meeting called on May 29, 2003, was held on June 19 of the same year. All the points

on the Agenda were approved as detailed below:


IN THE ACS GROUP

5


5.4 GENERAL SHAREHOLDERS’ MEETINGS

The General Shareholders’ Meeting is formed of all the shareholders who hold at least one hundred shares, whether they are

physically present or represented by proxy. The owners or holders of less than one hundred shares can pool together to meet

the one hundred share minimum and be represented by one of their group of shareholders or by another shareholder who

individually has sufficient shares to attend the General Shareholders’ Meeting.

The resolutions will be reached by majority vote by the shareholders present or represented by proxy, except in those cases in

which the Law requires a qualified majority.

The Ordinary and Extraordinary General Shareholders’ Meetings shall be validly convened, on first call, when the shareholders

present or represented by proxy hold at least twenty-five percent of the subscribed capital with the right to vote; on second

call, constitution of the General Shareholders’ Meeting is considered valid regardless of the capital represented at the meeting.

However, if the Ordinary and Extraordinary General Shareholders’ Meeting is to agree on a debenture issue, the increase or

reduction of the company’s share capital, a transformation, merger or spin off of the company, or, in general any modification

to the Company’s Bylaws, the shareholders present or represented by proxy must hold at least fifty percent of the subscribed

capital with the right to vote for the meeting to be considered as convened on the first call. On second call, twenty-five percent

of the share capital will be sufficient.

When the shareholders present or represented by proxy hold less than fifty percent of the subscribed capital with the right to

vote, the resolutions referred to in the above paragraph shall only be valid when two thirds of the capital present or represented

at the General Shareholders’ Meeting vote for them.

The company does not follow a policy on the assignment of votes by proxy for the General Shareholders’ Meeting.

5.4.1. General Shareholders’ Meetings held in 2003

The following is a detail of the General Shareholders’ Meetings held in 2003:

Date of the General % physically present %represented %postal vote TotalShareholders’ Meeting by proxy

June 19, 2003 43.253% 18.946% 0% 62.199%

October 14, 2003 11.601% 59.785% 0% 71.386%

Point 1 Approval of the Annual Reports, Balance Sheets, Statementsof Income and Management Reports corresponding to the year 2002 for the Company and the consolidated Group of Companies of which ACS, Actividades de Construcción y Servicios, S.A., is the parent company. Application of results 39,454,328 99.02% 383,057 0.96% 8,785 0.02%

Point 2 Approval of the activities of the Board of Directors during 2002 39,837,539 99.98% 8,356 0.02% 275 0.00%

Point 3 Ratification, dismissal and appointment, as appropriate, of the following Members of the Board of Directors:Appointment of Mr. Santos Martínez-Conde y Gutiérrez-Barquín as Member of the Board of Directors 39,567,938 99.30% 50 0.00% 278,182 0.70%

Appointment of Dr. Álvaro Cuervo García and Mr. Julio Sacristán Fidalgo as Members of the Board of Directors 24,129,653 60.56% 15,438,335 38.74% 278,182 0.70%

Point 4 Authorization to derivatively acquire treasury stock 39,845,895 99.999% 0 0.000% 275 0.001%

Point 5 Designation of auditors of the Company and of the Group 39,845,118 99.997% 0 0.000% 1,052 0.003%

Point 6 Modification of the Bylaws by including a new article, that will be called article 20 bis, concerning the Audit Committee 39,838,695 99.98% 7,200 0.02% 275 0.00%

Point 7 Delegation of the powers to formally execute and sign agreements 39,845,895 99.999% 0 0.000% 275 0.001%

Point 8 Reading and approval, if appropriate, of the Minutes of the Meeting 39,845,845 100.00% 50 0.000% 275 0.00%

% of shares % of shares % of sharesVotes present or Abstensions present or Votes present or

in favor represented represented against represented

Point 1 Aproval of the balance sheet for the merger of the Companyas of April 30, 2003, and verified by the Company's Auditor 45,700,582 99.93% 10,552 0.02% 20,066 0.04%

Point 2 Aproval of the merger of ACS, Actividades de Construccióny Servicios, S.A., and Grupo Dragados, S.A., by the formercompany taking over the latter with dissolution withoutliquidation of the company that was taken over and transferin block of all its patrimony in accordance with the MergerProject in deposit with approval of said Project. Determinationof the rate of exchange between the company taken overwith respect to the company taking it over 45,716,326 99.97% 10,552 0.02% 4,322 0.01%

Point 3 Increase of the share capital as a consequence of the mergerand resulting modification of article 6 of the Company Bylaws.Modification of article 13 of the Company Bylaws 45,709,707 99.97% 11,292 0.02% 10,201 0.02%

Point 4 Resignation and appointment of Members of the Board of Directors:Appointment of Mr. Agustín Batuecas Torrego as Member of the Board of Directors 30,141,551 65.91% 15,497,983 33.89% 91,666 0.20%Appointment of Mr. José María Loizaga Viguri asMember of the Board of Directors 30,141,551 65.91% 15,498,003 33.89% 91,666 0.20%

Appointment of Mr. Pedro López Jiménez asMember of the Board of Directors 30,141,651 65.91% 15,497,883 33.89% 91,666 0.20%Appointment of Mr. Florentino Pérez Rodríguez asMember of the Board of Directors 30,005,060 65.61% 15,634,474 34.719% 91,666 0.20%Appointment of Mr. José Luis del Valle Pérez asMember of the Board of Directors 30,141,651 65.91% 15,497,883 33.89% 91,666 0.20%Appointment of Mr. Pablo Vallbona Vadell asMember of the Board of Directors 45,629,370 99.78% 10,164 0.02% 91,666 0.20%

Condition the merger by takeover of Grupo Dragados, S.A.,by ACS, Actividades de Construcción y Servicios, S.A., to therecording of this event in the Registry of Companies, thisevent and the establishment of eighteen for the number ofMembers of the Board of Directores being effective as of thdate of said entry 45,629,370 99.78% 10,164 0.02% 91,666 0.20%

Dismissal of Mr. Francisco Servando Verdú Pons as Memberof the Board of Directors when the merger by takeover ofGrupo Dragados, S.A., by ACS, Actividades de Construccióny Servicios, S.A., is recorded in the Registry of Companies andeffective as of the date of said entry 45,629,370 99.78% 10,164 0.02% 91,666 0.20%

Appointment of Mr. Isidro Fernández Barreiro as Member ofthe Board of Directors when the merger by takeover of GrupoDragados, S.A., by ACS, Actividades de Construcción yServicios, S.A., is recorded in the Registry of Companies andeffective as of the date of said entry 45,629,370 99.78% 10,164 0.02% 91,666 0.20%

Appointment of Mr. Antonio García Ferrer, Mr. Miguel Blesa de la Parra,Dr. Joan David Grimà i Terré, Mr. Miguel Roca Junyent,Imvernelin Patrimonio, S.L., Percacer, S.A., and Comercio yFinanzas, S.A., as Members of the Board of Directors whenthe merger by takeover of Grupo Dragados, S.A., by ACS,Actividades de Construcción y Servicios, S.A., and effectiveon the date of said registration 30,141,651 65.91% 15,497,883 33.89% 91,666 0.20%

Point 5 Delegation of the authority to execute and sign agreements. Delegation of faculties 45,727,332 99.99% 0 0.00% 3,868 0.01%Approval of the Minutes of the Meeting 45,730,060 99.998% 0 0.00% 740 0.00%

% of shares % of shares % of sharesVotes present or Abstensions present or Votes present or

in favor represented represented against represented

188 189

ACS GROUP

ANNUAL REPORT

2003


IN THE ACS GROUP

5


5.4.4. 2004 Ordinary General Shareholders’ Meeting

By resolution of the company’s Board of Directors at their meeting on March 25, 2004, the Ordinary General Shareholders’

Meeting will be held in Madrid at 12:30 on May 19 or 20, 2004, on first and second call respectively, at the Palacio Municipal

de Congresos, on Avenida de la Capital de España Madrid s/n, Campo de las Naciones with the following Agenda:

1. Approval of the Annual Report, Balance Sheets, Statements of Income and Management Reports for 2003 of ACS and

the consolidated group of companies of which ACS, Actividades de Construcción y Servicios, S.A., is parent company.

Profit distribution. Annual Report on Corporate Governance.

2. Approval of the management of the Board of Directors during 2003.

3. Ratification, dismissal and appointment, where applicable, of Directors.

4. Authorization for the derivative acquisition of treasury stock.

5. Appointment of Company and Group auditors.

6. Reduction of the share capital by redeeming 902,453 shares of the Company’s treasury stock with the resulting modification

of Article 6 of the Company’s Bylaws.

7. Reduction of the nominal value of shares from 1.50 euros to 0.50 euros and the consequent increase in the number

of outstanding shares by three, with the resulting modification of Article 6 of the Company’s Bylaws and delegation of

authority to execute this.

8. Modification of articles 13, 15, 20 bis), 22, 26 and 28 of the Company’s Bylaws.

9. Authorization to the Board of Directors for the establishment of a Stock Options Plan.

10. Approval of the Rules governing the General Shareholders’ Meeting and report on the Rules of the Board of Directors.

11. Delegation of powers to execute and sign agreements.

12. Reading and approval, if applicable, of the minutes of the General Meeting.

5.4.5. Rules on the General Shareholders’ Meeting

During the 2003 financial year, work was started to prepare the rules on the General Shareholders’ Meeting and the consequent

modifications to the Company’s Bylaws that the Board of Directors will propose at the General Shareholders’ Meeting to take

place on May 19 and 20, 2004 on first and second call, respectively and that is based on the following principles of the Code

of Good Governance:

- To introduce measures focused on building a more transparent system of delegation of votes and on highlighting the

communication between the Company and its shareholders.

- To explain in detail the voting proposals that are offered in the request form, in relation to adopting resolutions of certain

importance of delegation and reveal the existence of any possible conflicts of interest when the situation could arise.

- To establish channels and instruments that permit flexible communication. In Addition to the standard information that

the company supplies in the form of annual, half-year and quarterly reports, to favour meetings with financial analysts

so that this information can be made available to their investors. The objective that these measures pursue is to create

permanent channels of communication with the shareholders that are complimentary to those that satisfy the right

established by Law to question whenever a General Shareholders’ Meeting takes place. The objective is for shareholders

to be able to obtain the information they require at any given moment.

5.4.3. Extraordinary General Shareholders’ Meeting of October, 14

The Extraordinary General Shareholders’ Meeting called on September 10, 2003, was held on October 14 of the same year.

All the points on the Agenda were approved as detailed below:

190 191

ACS GROUP

ANNUAL REPORT

2003


IN THE ACS GROUP

5


- May 29 (Registry No. 42296): The Company submits the Agenda for the Ordinary General Shareholders’ Meeting to be

held on June 18, 2003, on first call, or June 19, 2003, on second call.

- June 20 (Registry No. 42770): The Company communicates that at its meeting on June 19, 2003, the Board of Directors

approved the Rules of the Board of Directors.

- June 20 (Registry No. 42769): ACS gives notification of the resolutions adopted at the Ordinary General Shareholders’

Meeting held, on second call, on June 19, 2003.

- June 20 (Registry No. 42771): ACS submits the agreements reached on the appointments of the new members of the

Company’s Board of Directors as well as of the Chairman and the members of the Audit and Compensation Committees.

- June 30 (Registry No. 43003): The Company submits information on its participation in Xfera Móviles, S.A. On June 23,

2003, several agreements were signed whereby shareholders of Xfera promise to purchase from Venditelecom España S.L.

and Vivendi Telecom International, S.A., both pertaining to Grupo Vivendi Universal, S.A, and the latter two promise to sell

and transfer, at the symbolic total price of 1 euro, all of the shareholdings that the latter two companies have in Xfera and

which represent 31.4% of the share capital. The fulfilment of these agreements was conditioned by compliance with the

regulatory and statutory requirements as well as the substitution of the bank guarantees. As a consequence of these promises,

ACS, Actividades de Construcción y Servicios, S.A., (ACS) would increase its direct and indirect shareholding in Xfera from

the current 19.9% to a maximum of 34.8%, although in virtue of the agreements with the shareholder Sonera Holding,

B.V. (Sonera) the commitments of financial assistance to Xfera from ACS is reduced to 29.4% with Sonera assuming the

difference.

- July 3 (Registry No. 43143): On July 2, 2003, the members of the Board of Directors of the ACS Group and Dragados Group

approve in an extraordinary meeting the start of the merger process between these companies in which the former will

absorb the latter. The share conversion rate proposed by the respective Boards will be 33 new shares of ACS for every 68

shares of Dragados.

- July 3 (Registry No. 43109): The Company submits the literal text of the agreements approved by the Board of Directors

regarding the merger with Grupo Dragados, S.A.

- July 25 (Registry No. 43599): Banco Zaragozano has agreed to sell to Deutsche Bank AG London 2,203,200 shares of ACS,

Actividades de Construcción y Servicios, S.A., representing 5% of the company’s share capital. On the same day it was

communicated as a Relevant Fact with Registry No. 43606, that the figure constituting 5% of the share capital of ACS,

Actividades de Construcción y Servicios, S.A., was 3,203,200 shares instead of the number of shares mentioned in the

previous Relevant Fact notification.

- July 25 (Registry No. 43604): Deutsche Bank AG London notifies that it has purchased 3,203,200 shares of ACS from

Banco Zaragozano, equivalent to 5% of its share capital. Subsequently, Deutsche Bank AG London sold the ACS shares

to a limited number of institutional clients at a price of 37.15 euros per share.

- July 31 (Registry No. 43782): The Company submits the Rules of Conduct regarding the Stock Market. In its meeting

held on July 17, the Executive Committee of ACS, Actividades de Construcción y Servicios, S.A., under the authority

vested in it by the Board of Directors, approves the Rules of Conduct regarding the Stock Market and these Rules are

submitted as a Relevant Fact for the purpose of making them public.

- September 11 (Registry No. 44466): The Board of Directors of ACS, Actividades de Construcción y Servicios, S.A., in its

meeting held on September 10, 2003, agrees to convene a Extraordinary General Shareholders’ Meeting on October 13,

2003, on first call or on the following day, October 14, 2003, on second call.

- September 17 (Registry No. 44530): The Company provides additional information regarding the Extraordinary General

Shareholders’ Meeting, reiterating the right of the shareholders to examine the legal Documentation made available to them

with regards to the merger by absorption of Grupo Dragados, S.A., by ACS, Actividades de Construcción y Servicios, S.A.,

either at the corporate headquarters or by sending it to them free of charge.

5.5. INFORMATION AND TRANSPARENCY

The shareholders right to information is covered in the precepts of the Rules of the General Shareholders’ Meeting that will

be presented for their approval at the Ordinary General Shareholders’ Meeting.

So that the General Shareholders’ Meeting of the Company can adequately carry out its functions, before each General Meeting

is held, the Board of Directors of the Company shall make available to the shareholders all the information that is legally required

or that, even if it is not, should reasonably be provided on its social interest and the interest of the shareholders, so that they

may form an opinion. Following this line, the Board of Directors will be obliged to handle with the maximum diligence any

requests made by the shareholders on the occasion of the General Meeting, whether prior to or after it, providing that they

do not prejudice the interests of the company.

In accordance with this firm commitment of the ACS Group to communicate the necessary information in a transparent, fair

and unbiased way so that the progress of the Company can be readily evaluated, the most efficient means have been used

so that the same information is immediately available to all shareholders, potential investors and the general public at the same

time.

5.5.1. Financial Information

The ACS Group has adopted the necessary measures to ensure that the information supplied by the Company in the form of

annual, half-year and quarterly reports is available to the shareholders in a clear, rigorous and timely way. To this end, the Audit

Committee will review this information before it is made public in order to verify that it has been obtained in accordance with

professional principles, criteria and practices with which the accounts are drawn up and that is as reliable as they are.

5.5.2. Information on ACS Stock

Pages 146 and 147 of this Annual Report contain detailed information on the performance of the ACS shares during 2003.

5.5.3. Information provided to the Stock Exchanges

The main channel used by the Group to transfer its evolution and main events to the stock market is through its communications

to the Stock Exchange Commission (CNMV). During 2003, 36 communications were made, of which 32 involved Relevant Facts

and the rest concerned corporate results and presentations.

The main Relevant Facts were:

- January 15 (Registry No. 39248): The Company communicates that, with the prior approval of its Executive Committee

in the session held on the day before, January 14, ACS, Actividades de Construcción y Servicios, S.A., presented a Public

Takeover Bid for 17,253,137 shares of Grupo Dragados, S.A., representing 10% of its share capital at the price of 22.22

euros per share and without requiring the acquisition of a minimum number of shares to make the offer effective.

- January 27 (Registry No. 39430): Banco Zaragozano communicates that the participation of Banco Zaragozano, S.A. in

the share capital of ACS, Actividades de Construcción y Servicios, S.A., as of January 27 was 5.00017%.

- February 18 (Registry No. 39854): The Company remits information on the Audit Committee titled “Audit and Control”

that was created as a result of the agreement reached at the Board of Directors meeting held on February 19, 1998, when

its duties and Regulations were defined.

- March 18 (Registry No. 40687): The Company communicates the resignation of Mr. Alberto Alcocer Torra.

192 193

ACS GROUP

ANNUAL REPORT

2003

- October 3 (Registry No. 44769): At the request of the Stock Exchange Commission (CNMV), ACS submits an Explanatory

Booklet by Price Waterhouse Coopers Auditores S.L., regarding the merger of ACS and Grupo Dragados.

- October 15 (Registry No. 44992): The Company gives notification regarding the re-election, discharge and election of

the Members of the Board of Directors, establishing a total number of eighteen members, plus the delegated Committees,

and informs of the re-election of the Chairman of the Board of Directors, Mr. Florentino Pérez Rodríguez, as CEO of

the Company.

- October 15 (Registry No. 44993): The Company submits the resolutions approved at the Extraordinary General Shareholders’

Meeting. On October 16 as a Relevant Fact with Registry No. 45013, the Company notified the quorums for the Meetings

and the results of the voting on the resolutions concerning the merger with Grupo Dragados, S.A.

- December 12 (Registry No. 46379): The Company submits the information regarding the inscription brochure, the merger deeds

and the trading of the shares newly issued for the conversion of the shares of Grupo Dragados, S.A.

- December 19 (Registry No. 46493): The Company notifies the appointment of Members of the Board of Directors of ACS,

Actividades de Construcción y Servicios, S.A.

In addition, seven company presentations were made throughout the year at special events held throughout Europe, featuring

the Presentation of Company Results for the financial year 2002, on February 26, 2003, at the Madrid Stock Exchange and

the Presentation of the Project of the Merger with Grupo Dragados that was held on July 3, 2003, at the Madrid Stock Exchange

and on July 7 in London. These presentations proved to be successful, each one being attended by more than 150 people.

Numerous meetings were also held with institutional investors and information requests from our shareholders were handled

through the Investor Relations telephone line.

5.5.4. Website

The Group has progressively updated the contents of its corporate website (http://www.grupoacs.com) throughout 2003.

Special emphasis was placed on those pages related to Investor Relations through which shareholders could be informed in a

timely manner about the performance of their stocks, the Company’s general economic and financial progress and all the

corporate actions, including all reports and documents of interest to the shareholders, with the object of accommodating

accessibility.

Other than this Annual Report, it is possible to consult the following documents from our website:

- Company’s Bylaws .

- Rules of the General Shareholders’ Meeting.

- Rules of the Board of Directors.

- Annual Report on Corporate Governance.

- Audit Committee Report.

- Rules of Conduct in the Stock Market.

- The notification of the Ordinary General Shareholders’ Meetings on May 19 or 20, along with the documents and information

for this meeting.

5.5.5. Degree of observance of the recommendations for good governance

The Annual Report on Corporate Governance is available on the Group’s Website and contains a detailed explanation regarding

the execution of the above recommendations.


IN THE ACS GROUP

5


Project Director and Editor:Investor Relations ACS Group

Creation and design:Atenea Comunicación, S.A.

Photos:ACS Group Archives

Printing:Raro Producciones, S.L.

a acs, actividades de construcción y servicios, s.a. n ... · annual report acs group 2003 1. ......

Documents