Professional Documents
Culture Documents
Martinsa Fadesa Annual Report 2006
Martinsa Fadesa Annual Report 2006
ECONOMIC SUMMARY ● 11
Introduction
Key Data Business
Development Analysis
Stock-market Development
LINES OF ACTIVITY ● 31
Real-estate Activity
Property Development in 2006
Asset Management Activity
Significant Events
ASSET VALUATION ● 71
FINANCIAL INFORMATION ● 79
FADESA INMOBILIARIA, S.A.
hotel and shopping centre sectors. By entering into partnership with com-
panies specialising in the management of this kind of asset, FADESA has
embarked upon a new route to growing its business which will steadily
consolidate itself in the years to come.
Mean net profit grew at a rate of 61% per year during the period
2001 – 2006.
Figures for 2001, 2002 and 2003 are based on General Spanish Accounting Standards
Balance Sheet
2006 was, from the point of view centage of units delivered in is therefore a key factor in gene-
of business activity in the pro- developments outside Spain, rating revenue and profits for
perty sector, one in which reve- which at the close of 2006 ac- the company not only at pre-
nue generated by dwellings and counted for 13% of the total sent, but also, we expect, in the
other residential units grew by number when only two years near future. In this regard, the
44 %, the gross operating margin ago it was less than 8% (it most significant steps forward
in this area increasing by 42%. should also be noted that the during the past twelve months
number of units delivered has have been our entry into three
With regard to the first of these risen by 74% over the same pe- new countries: Mexico, Rumania
points, we can attribute this po- riod), or in the fact that units ha- and Bulgaria; the acquisition of
sitive performance to our policy ve been delivered in over 30 dif- land in other cities in Poland in
of expansion both at home and ferent developments. This addition to Warsaw; the agree-
abroad, upon which we embar- process of diversification (or put ments reached with the local
ked several years ago with the another way, of reducing depen- district council of Csepel, in Bu-
intention of opening up new dence on a single business cen- dapest (Hungary); or the embar-
markets. This is a fundamental tre) is expected to intensify in king on our first major projects
priority in a sector such as real the future, since the trend is in France.
estate which has land as its raw even more visible in the number
material. The fruits of this pro- of units sold in advance. Consoli- In the case of the second as-
cess can be observed in the per- dation of our expansion abroad pect, it should be noted that
Other operating income 1.9 0.3 441% As can be seen from the above ta- financial year. Another item to no-
Total income 1,281.1 977.4 31% ble, in the financial year just en- te is the growth in income from
Overall gross margin 516.9 388.3 33%
overall gross margin % 40% 40%
ded the total income obtained by the sale of land, which rose signi-
Other operating expenses -156.5 -105.7 48% the FADESA Group reached ficantly to over 211 million euros,
1,281.1 million euros, 31% up on 27% up on the previous year.
EBITDA 360.4 282.6 28%
EBITDA margin% 28% 30%
the figure for the previous year.
Provision for fixed asset depreciation -17.9 -17.9 0% The overall gross margin of the
Variation in trading provisions 1.6 -0.8 -304% The company’s principal business company’s real estate activity re-
EBIT 344.1 263.9 %
activity, real estate, accounted for flects an extremely positive trend
Financial loss -8.6 -2.6 230% 94.6% of this total amount, a year- in both real and relative terms, in-
Financial income 3.1 8.4 -63% on-year improvement of 31%, creasing by 34% to reach almost
Financial costs -68.0 -44.4 53%
Capitalized interest costs 42.7 26.6 61%
with the gross margin rising to 504 million euros in the case of
Net translation differences 11.5 5.8 98% 42%. The most important item in the former, and representing 42%
Interest from companies consolidated in equity 2.2 1.0 112% this business line is the sale of of total income generated by this
Profit from variation in asset values 10.4 1.4 654%
Operating profit before taxation 345.9 262.7 32%
dwellings and other residential activity in the case of the latter,
Exceptional items 0.1 0.0 units, which represents 74% of one percentage point higher
Profits before taxation 345.9 262.7 32% the total and was 44% up on the than in 2005 in spite of the incre-
Tax on profits -115.2 -81.5 41%
Profit attributable to external partners -0.3 0.0 -836%
previous year, reaching the hig- ased proportion of turnover co-
hest ever gross margin posted by rresponding to the delivery of
Profit attributable to shareholders 230.4 181.2 27% the company at the close of the dwellings, traditionally the pro-
EBITDA for the financial year Annual financial expenditure in- Finally, the net profit recorded by
amounted to 360 million euros, creased as a result of the increase the FADESA Group grew 27% in
28% up on the figure for 2005. In in the amount of debt, of which comparison with the previous ye-
relative terms the EBITDA margin corporate debt (the rest is linked ar, standing at over 230 million
fell back by one percentage point to the company’s real estate busi- euros at the close of 2006.
As has been the case in previous at potential for growth. In this re-
years, the majority of this inves- gard it should be noted that 33%
tment is deferred and is depen- of the land portfolio is now held
dant on meeting certain urban outside Spain, compared with
planning targets. This is reflected 23% a year previously.
in accounting terms by an increa-
se in Trade creditors (which also
includes other concepts).
The most significant indicator of pitalet in 2005, advance sale re- types of product and geogra-
the company’s progress, advan- venue would be 15% up on the phical location.
ce sales made during the course previous year.
of the year, rose by 39% in terms In the first of these cases, it
of the number of units sold. Ta- In terms of the number of finis- should be noted that 30% of the
king only housing units, the ye- hed houses delivered to their units in stock correspond to se-
ar-on-year increase was 55% owners, revenue from residen- cond homes, a noticeably lower
over the 2005 figure, a signifi- tial properties alone was 44% percentage than in 2005 (34%),
cant percentage indeed, and un- higher than in 2005. A good but still well within the targets
doubtedly proof of the excellent example of the importance of for the company’s product dis-
positioning of FADESA’s pro- the company’s international ex- tribution policy.
duct, particularly if we bear in pansion is the increase in reve-
mind that the number of non- nue from units sold outside Secondly, there is also clear evi-
subsidised first homes grew by Spain, which was 132% up on dence of the ongoing process of
60% over the financial year. The- the same figure for 2005. geographical diversification un-
se brilliant results can be attri- dertaken by the company, with
buted to a variety of factors, but As a result, the stock of units 39% of the stock of units sold in
there can be no doubt that one sold in advance reached a new advance as of December 2006
of the most important reasons is historical high of 14,822 dwe- corresponding to dwellings in
the ongoing process of interna- llings, 27% more than in De- developments being built outsi-
tional expansion undertaken by cember 2005. These units, for de Spain, with Morocco to the
the company in recent years. In which private contracts of sale fore, representing 28% of the to-
this regard it should be noted have been signed, represent re- tal figure.
that the number of dwellings venue in excess of 2,333 million
sold outside Spain increased by euros, deferred pending their
107% in comparison with the completion.
previous year.
An analysis of the advance sale
Furthermore, with regard to the stock provides clear evidence of
growth of turnover in the past the process of diversification
financial year, if we exclude the which FADESA is currently un-
sale of two office blocks in Hos- dergoing, both with regard to
At 31 December 2006 FADESA’s ITS POSITION WITHIN THE URBAN cess. Throughout the year 2.0 mi-
land portfolio was 18% greater PLANNING PROCESS llion buildable square metres we-
than at the end of the previous The balance achieved depends to re consumed through delivery of
year (23.7 million buildable squa- a great extent on the applications completed dwellings and buil-
re metres as opposed to 20.1 mi- for planning permission made ding plots, as well as through the
llion sq. m. In 2005). during the year (5.1 million squa- direct sale of land to other pro-
re metres during 2006) and the perty developers.
This land portfolio is characteri- acquisition of new land, which
sed by its high degree of diversi- usually takes place at the begin-
fication in several respects: ning of the urban planning pro-
Land use
Land portfolio
Ongoing L a n d b a n k
developments Ready Urbanisable Pre-urbanisable Total
Market capitalisation
2006 Share price (000,000 euros) Date
IPO 12.40 1,381 30-Apr-04
Initial 27.84 3,124 30-Dec-05
Minimum 24.01 2,720 14-Jun-06
Maximum 35.40 4,011 05-Dec-06
Close 35.15 3,982 29-Dec-06
Share dealing
During 2006 in excess of 182 Similarly, the number of shares
million shares were traded for traded and the mean daily tra-
the total sum of 5,503 million ding value (excluding the elec-
euros, 134% up on the figure for tronic market) over the past ye-
the previous year. This volume ar, when compared to 2004 and
of dealing is equivalent to 138% 2005, is as follows:
of FADESA’s market capitalisa-
tion at year end.
Shareholders
There was no significant move- to be Mr Manuel Jove Capellán, nizaciones Martín, S.A. (Martinsa)
ment amongst the main sharehol- who held 54.6% of its share capital and Huson Big, S.L. filed a request
ders of the Group during the fi- indirectly, through his participa- for authorisation to launch a take-
nancial year 2006, and therefore tion in asset holding companies. over bid for 100% of FADESA’s
the main shareholder of the com- shares with the CNMV, at a price
pany, according to information However, on 2 November the of 35.7 euros per share. Mr Ma-
lodged with the CNMV, continued companies Promociones y Urba- nuel Jove, FADESA’s majority sha-
Analyst coverage
Geographic diversification,
thanks to its presence in all of
Spain and its international ex-
pansion plan, but also product
diversification, given its develop- ment and performs the appro-
ment of first and second homes priate market research studies.
for different kinds of target cus- Its Technical Office prepares ar-
tomers. A profile which has hel- chitectural projects, while its
ped it become one of the top Eu- own sales network markets its
ropean real-estate companies. different products; the building
and post-sales processes are al-
But much of FADESA’s success is so included in company activity,
the result of being a real-estate thus completing the business
company characterised by a circle. This comprehensive work
comprehensive work philo- philosophy enables FADESA to
sophy, by means of which it co- act quickly at each stage of the
vers the whole real-estate circle. process, to be aware of the ne-
Thus, the company itself looks eds of each location, and to of-
for ground on which to build, fer its customers excellent value
carries out its urban develop- for money.
Morocco
In 2000, FADESA became the first invest more than 470 million eu- tre in the Tangiers bay; and the
Spanish company to go to Mo- ros. In all, as part of these three luxury resort it is developing in
rocco and develop real-estate projects, the Group will develop the exclusive Palmeral area of
projects, and now, six years later, hotels, golf courses, leisure and Marrakech. The project, Palmerai
it is one of the main foreign in- sport areas and more than 4,000 Mall, has an investment of 300
vestors in this country, thanks to homes. To the resorts in Smir million euros, and will include
its activities in Casablanca, Sai- must also be added the Medite- more than 2,600 homes, three
dia, Marrakech, Rabat, Agadir rrania Saidia resort, which stands hotels, an 18-hole golf course
and the coast of Smir. Currently, next to a 7 kilometre long beach, and a shopping centre.
the company is playing a very and comprises approximately
active role in the Moroccan go- 3,000 homes and 16,000 hotel FADESA’s activity in Morocco is
vernment’s plan to turn the beds, as well as golf courses, leisu- completed with two promotional
country into an important holi- re and services areas, and a mari- residential developments in Ra-
day destination near Europe. na with 800 berths, which will be bat and Agadir, comprising more
in operation in the spring of 2007. than 2,600 homes, which are al-
For this purpose, the Group is de- most finished. To this must be ad-
veloping a series of tourist resorts In addition to the Mediterrane- ded the Barceló Casablanca hotel,
on the shores of the Mediterrane- an Sea area, FADESA is building with a 4-star Premium rating and
an Sea. This is the case of the two other large-scale resorts: 85 rooms, which has been in ope-
three tourist developments awar- the Tangiers City Centre, develo- ration since March, 2006.
ded to FADESA on the coast of ped in partnership with the An-
Smir, an exclusive area where the joca group, which will consist of
Moroccan royal family spends its 850 homes, two hotels, a large
summer holidays, in which it will office building and leisure cen-
HUNGARY
In the case of Hungary, FADESA
has continued with the construc-
tion of the Central Passage Buda-
pest development, which has be-
en very well received, and has
purchased other land for new
projects. At the same time, the
company is planning a resort on
the island of Csepel, south of Bu-
dapest. This real-estate operation
is unique in terms of its configu-
Europe ration and volume, and, in addi-
tion to homes, it will include com-
mercial areas, sports facilities,
Throughout 2006, FADESA has hotels and various public servi-
strengthened its presence in ces, making it the most important
Portugal, Hungary, Poland and urban development in the city.
France with the launching of
new projects, while continuing POLAND
its expansion plan with its acti- Meanwhile, in Poland, through
vity in Bulgaria. its subsidiary FADESA Prokom
Polska, the group has continued
PORTUGAL with the development of the
In 2006, FADESA, which has been Ostoja Wilanow project, a large
present in this country since the housing development compri-
late 1990s, boosted its activity in sing approximately 1,900 ho-
Portugal with its first develop- mes in Warsaw, and has also
ment in Porto: Allegro Design Ho- purchased more land, both in
mes, a state-of-the-art project di- the Polish capital and in other
rected at a young and up-market parts of the country, in order to
target audience. With this deve- carry out new projects.
lopment, the Group seeks to
strengthen its position in the re- FRANCE
al-estate market in Portugal, whe- For its part, France has become a
re it is also researching other pro- strategic market for FADESA.
jects, for both first- and Through its subsidiary in this
second-homes, and where it is country, Financiere Rive Gauche
currently promoting the Quinta FADESA, the group reached an
Residencial Mirador de
Almuñecar, in Granada
VALL FOSCA RESORT SKI & GOLF, town of Sitges, at the foot of the
IN LLEIDA Natural Part of Garraf.The develop-
Right in the Lleida Pyrenees, ment is surrounded by large green
FADESA has developed the Vall Fos- spaces and has common areas de-
ca Resort Ski & Golf, a mountain voted to children’s games and a
project which is centred around a private swimming pool.
ski resort. The residential section of
the project comprises 965 luxury URBANIZACIÓN EL MIRADOR DEL
apartments built in the Pyrenean EBRO, IN TARRAGONA
style, and located in the large pe- In the town of L’Aldea, next to the
destrian village, where hotels and delta of the river Ebro, set in beauti-
apart-hotels will also be built. The ful natural surroundings, FADESA
village is completed by commercial, has developed the El Mirador del
sports, restaurant and leisure areas, Ebro housing development, a pro-
as well as a golf course and a spa.All ject comprising more than 900 ho-
of this stands at the foot of the ski mes, including semi-detached hou-
Andalucía lifts of the resort, which will have 30 ses, Mediterranean-style homes,
kilometres devoted to Alpine skiing low-density collective homes and
Aragón and 5.7 kilometres to cross-country plots of land.
skiing, as well as ski-lifts and a state-
of-the-art three-cabled cable-car.
Islas Baleares
RESIDENCIAL TORRES EUROPA, IN
Cantabria BARCELONA
The Torres Europa housing deve-
Castilla La Mancha lopment is an innovative and
unusual project comprising five Residencial
Nou Alberic,
towers designed by the architects in Valencia
Castilla León Alonso & Balaguer, three of which
are devoted to luxury homes and
Cataluña the remaining two to offices. In all, RESIDENCIAL NOU ALBERIC, IN URBANIZACIÓN BELLAROTJA, IN
the residential section comprises VALENCIA ALICANTE
Comunidad Valenciana 291 homes featuring all the digi- Aimed at a young target audience The Bellarotja housing develop-
tal home technology, distributed seeking first homes, the Nou Albe- ment is situated in one of the
over three 19-storey towers. ric housing development covers most beautiful areas of the Costa
Galicia an area of 58,312 square metres of Blanca, in the town of Pego, 10 ki-
URBANIZACIÓN MIRABLAU PLAYA buildable land, 600 of which will lometres from Denia. The project
Islas Canarias & CASAS & MONTAÑA, IN be devoted to a commercial area. comprises plots of land for indivi-
BARCELONA The project, which comprises mo- dual construction, as well as mo-
La Rioja The Mirablau Playa & Casas & Mon- re than 500 homes, including flats re than 900 Mediterranean-style
taña housing development is an and apartments, has excellent homes of different types.
exclusive project comprising 34 lu- communications with the capital
Madrid xury homes, located in the coastal thanks to the motorway.
Castilla León
Cataluña
Urbanización Bellavista, Urbanización Costa
in Ourense Anácara, in La Coruña
Comunidad Valenciana
Galicia
Islas Canarias
La Rioja
Madrid
Residencial par-
que Colmenar,
in Madrid
Residencial Villanueva de la
Cañada, in Madrid
Andalucía
Aragón
URBANIZACIÓN
MONCALVILLOGREEN CASAS &
GOLF, IN LOGROÑO Islas Baleares
The MoncalvilloGreen Casas &
Golf housing development is one Cantabria
of the most important projects to
be carried out in Logroño up to Castilla La Mancha
now. It comprises more than
1,000 homes of different types:
flats, apartments, semi-detached Castilla León
houses and plots of land, surroun-
Residencial Rosavila, ding a golf course. Cataluña
in Fuerteventura
RESIDENCIAL VILLANUEVA DE LA RESIDENCIAL PARQUE COLMENAR, Comunidad Valenciana
CAÑADA, IN MADRID IN IN MADRID
The FADESA Group continues to The Parque Colmenar housing
strengthen its activities in the Au- development is situated in Col- Galicia
tonomous Community of Madrid menar Viejo, to the north of the
with a new housing project in the capital. It comprises 278 homes of Islas Canarias
town of Villanueva de la Cañada. different types, including collecti-
The development comprises 276 ve buildings, and semi-detached La Rioja
homes of different types and has and terraced houses, and will fea-
excellent communications with ture large green spaces, as well as
the Madrid city centre. commercial and leisure areas. Madrid
Porto
Allegro Homes
Desing, in Porto
Central Passage
Budapest
SOFIA (BULGARIA) BULGARIA
FADESA’s first project in the Bul-
garian market is a housing deve-
lopment in the south centre of
Sofia. It is aimed at a mid/upper
market target audience, and is
rounded off by commercial pre-
mises and offices. In all, the deve-
lopment will cover a surface of
36,800 square metres. Sofia
New initiatives
The year 2006 saw the beginning
of FADESA’s new line of business:
tourist apartments, also known as
condo-hotels, which are the re-
sult of the symbiosis of the real
estate and tourism sectors. These
homes are purchased by clients
who become the current owners,
with the difference that, when
they are not living there, they em- new kind of real estate product to
ploy an agency to rent it and use which FADESA has lent added
it as a tourist establishment, so value. Currently, the company is
that, at the end of the year, the building condo-hotels in Jaca,
owner makes a profit. This is a Illescas (Toledo) and Morocco.
FADESA currently has 16 esta- balia. This agreement includes med, of which FADESA holds
blishments in operation, which three projects in Saidia (Moroc- 83.5% of the capital, and Barce-
are managed by experts, thanks co), Ayamonte (Huelva) and ló the remaining 16.5%. It is also
to the agreements reached by Fuerteventura. worth noting the agreement
the Group. As a result of this po- signed in 2005 with the HUSA
licy, in 2006 FADESA signed an To this agreement must be ad- chain, whereby it will manage,
agreement with Globalia Corpo- ded the alliance between the under franchise, five hotels be-
ración Empresarial to create a company and the Barceló chain, longing to FADESA. This agree-
hotel management company in which has been in place since ment is yet another step in the
a 50:50 joint venture, while 90% 2004, for the exploitation of ho- business relation between the
of properties entering the port- tel assets developed by two companies, which began in
folio would belong to FADESA FADESA, for which a series of 2000 with the opening of the
and the remaining 10% to Glo- asset companies have been for- Barcelona Mar hotel.
IN SPAIN
HOTEL BARCELÓ CORUÑA of Isla Cristina. It has a 4-star ra- HOTEL GLOBALIA JANDIA GOLF
With a 4-star rating and 160 rooms, ting and 233 rooms, as well as 110 This hotel, which is also located in
the Hotel Barceló Coruña is a mo- apartments. the Fuerteventura resort, has a 4-
dern building located on the road star rating. Its 166 apartments are
into the city of La Coruña.The hotel HOTEL BARCELÓ MARBELLA GOLF next to an 18-hole golf course.
has a conference centre which is This hotel has a 4-star rating and
unparalleled in Galicia and rooms 206 rooms, and is surrounded by HOTEL BARCELÓ JANDIA MAR
equipped with the most advanced one of the best and most comple- With a 4-star rating and 485 ro-
audiovisual systems. te golf resorts in Europe, the Gua- oms, this establishment com-
dalmina Club de Golf, which has pletes FADESA’s resort in Fuer-
HOTEL BARCELÓ ARANJUEZ two 18-holes courses and one 9- teventura. It has swimming
This establishment is situated next hole course. pools, a crèche, a theatre, sports
to the Royal Casino of Aranjuez, the courts and a disco, among other
second in the Autonomous Com- HOTEL BARCELÓ JANDÍA PLAYA facilities.
munity of Madrid, and has a 4-star This is one of the three hotels
rating and 168 rooms,and is located comprising the resort FADESA is HOTEL BARCELÓ CABO DE GATA
next to a golf course. developing in the south of Fuer- This hotel is located in the town
teventura. It has a 4-star rating of El Toyo, the Village of the 2005
HOTEL BARCELÓ ISLA CRISTINA and 649 rooms, and is located on Mediterranean Games, and has a
This hotel is located on the sea- one of the island’s most spectacu- 4-star rating and 223 rooms, as
front in the Huelva fishing village lar beaches. well as a conference area and all
IN SPAIN
HOTEL HUSA SANT JOAN HOTEL GLOBALIA AYAMONTE
Near Barcelona, FADESA is buil- Also located in the Costa Esuri Ca-
ding a 3-star 96-bedroom hotel, sas & Golf complex, this 4-star ho-
which will open in 2007.This esta- tel has approximately 185 apart-
blishment will feature a car park, ments set around a golf course.
social hall and restaurant.
COMPLEJO TURÍSTICO DE
HOTEL AYAMONTE MONTAÑA JACA
Part of the Costa Esuri Casas & Situated in the Lomas de Bada-
Golf complex FADESA is develo- guas mountain resort, this esta-
ping in Ayamonte, this luxury ho- blishment comprises 190 apart-
tel has 206 rooms and is erected ments, which are distributed over
only a few metres from one of the 7 blocks and are built in the clas-
jetties of the river Guadiana and sic Pyrenean style.
from two 18-hole golf courses.
IN SPAIN
HOTEL CLT
This hotel, situated in the Logisti-
cal Transport Centre of Culleredo,
in A Coruña, will have a 3-star ra-
ting and 57 rooms.
MEXICO
The company is working on the
Nayarit resort, right on the Pacific
Coast, which will have hotels and
tourist apartments right beside
the beach.
MOROCCO
FADESA has other hotels in the
planning stage in the beautiful
city of Marrakech, in the Bay of
Tangiers, and on the shores of the
Mediterranean Sea, on the exclu-
sive coast of Smir and on the be-
ach of Saidia.
SHOPPING CENTRES
FADESA’s large-scale residential
projects all have an area devoted
to commercial use, to serve the
residents of the complex and its
surrounding areas.This is the case
of the Ventura Shopping Centre
(Fuerteventura), the El Toyo Shop-
ping Centre (Almeria), the Parking
Palma and the Dos Regos Shop-
ping Centre, as well as the forth-
coming commercial areas which
will serve other FADESA housing
projects, like the Costa Esuri
Shopping Centre (Ayamonte), the
Saidia Shopping Centre (Moroc-
co) and the Central Passage Shop-
ping Centre (Budapest). The first
will open in 2008 and the rest in
2007.
FEBRUARY MARCH
Through its subsidiary in France, On the 17th of March, the Barceló
Financiere Rive Gauche FADESA, Casablanca hotel, the first joint
the company signed an agree- FADESA and Barceló chain hotel
ment with the Town Council of in Morocco, was inaugurated. The
Levallois-Perret to develop, in event was presided over by the
the vicinity of Paris, two 42-sto- Moroccan Minister for Tourism,
rey skyscrapers, whose expected Adil DOUIRI, and the presidents of
total investment will be 500 mi- FADESA and BARCELÓ, Manuel
llion euros, and which will stand Jove and Simón Pedro Barceló,
out for their state-of-the-art ar- respectively, as well as other Mo-
chitecture. The Torres de Leva- roccan authorities and public fi-
llois will be 165 metres tall and gures, such as el Walli, Moham-
will comprise offices, a commer- med EL KABBAJ, and the Mayor of
cial area, and a hotel. Casablanca, Omar BAHRAOUI.
Centre. General
Meeting of
Shareholders
APRIL MAY JUNE Right. Residencial
FADESA and ANJOCA signed the On the 9th of May, FADESA cele- The Group, through its subsidiary Ostoja Wilanów
agreement for the development of brated in La Coruña its second in Poland, FADESA Prokom Pols- (Poland)
the Tanger City Centre. The event General Meeting of Shareholders, ka, officially presented in Warsaw
was presided over by the Moroccan after the company went public, to its first project in this country: the
Minister for Tourism,Adil DOUIRI,joi- examine and approve the annual Ostoja Wilanów housing develop-
ned by the presidents of FADESA accounts for 2005. In addition, the ment, a large-scale residential
and BARCELÓ, Manuel Jove and Si- Board agreed to appoint Antonio project comprising approxima-
món Pedro Barceló, respectively. de la Morena Pardo as Managing tely 1,900 homes. The presenta-
Director, and a subsequent mee- tion event was presided over by
The company was present at the ting of the Board of Directors for- the Polish Minister for Building,
Madrid Real Estate Show (SIMA) mally appointed him as the Group Antoni Jaszczak.
where it presented its products in Managing Director. The sharehol-
the Autonomous Community of ders approved a distribution of di- In addition, the company an-
Madrid and the rest of Spain, and its vidends of 0.41 euros per share, nounced the construction of a
products abroad. almost twice the amount of the luxury residential and tourist de-
previous year. velopment in the exclusive area
In addition, through its subsidiary of the Palmeral of Marrakech, a
in France, Financiere Rive Gauche, Also in May, FADESA and Globalia new project which establishes
FADESA closed a deal with the Corporación Empresarial signed a the company as one of the lea-
North American fund COLONY framework agreement for the cre- ding investors in the country,
CAPITAL to jointly develop over ation of a hotel management and which will have an inves-
the next five years a large-scale re- company in a 50:50 joint venture, tment of 300 million euros.
al estate project. This operation while the ownership of the hotels
will have an investment of more and tourist apartments included Also in June, FADESA and Telefo-
than 213 million euros, to build in the agreement will be divided nica signed a framework agree-
homes and offices in the town of as follows: 90% to FADESA and ment for the development and
Massy, very near Paris. the remaining 10% to Globalia. promotion of homes equipped
This agreement initially compri- with the latest communication
Lastly, FADESA announced the ses three projects in Saidia (Mo- services and solutions. Thanks to
construction of the Alcudia Smir, a rocco), Ayamonte (Huelva) and this project, FADESA’s forthco-
luxury complex on the Smir coast, Fuerteventura. ming developments can feature
one of the most exclusive tourist all of these services from the mo-
destinations in Morocco. With an ment the homes, offices or com-
investment of 150 million euros, mercial premises are delivered, if
the project will comprise more both companies so wish.
than 2,000 homes, a hotel and lei-
sure areas.
RESEARCH
In 2005 FADESA signed an agre- that from other leading Spanish
ement with the Fundación Pro- companies, has enabled,
CNIC in support of the scientific amongst other achievements,
research activities of the Spa- the appointment of eminent
nish National Cardiovascular Re- cardiologist Dr. Valentín Fuster
search Centre. This backing pro- as Chairman of the Scientific Ad-
vided by FADESA, together with visory Committee.
FA D E S A I N M O B I L I A R I A S . A .
Translation of a report and financial statements originally issued in Spanish and prepared in accordance with generally accepted accounting
principles in Spain (“Spanish GAAP”). In the event of a discrepancy, the Spanish language version prevails. Spanish GAAP may not conform to
generally accepted accounting principles in other countries.
FADESA INMOBILIARIA S.A.
Balance sheets at December 31, 2006 and 2005
Thousand E
Thousand E
On November 2, 2006, the companies Promocio- b) Fadesa Inmobiliaria, S.A. will sell certain as-
nes y Urbanizaciones Martín, S.A. and HUSON BIG, sets at a price of 20,177 thousand euros to en-
S. L. made a takeover bid for 113,312,799 shares, tities related to Mr. Manuel Jove Capellán.
representing 100% of Fadesa Inmobiliaria, S.A.’s
share capital, at a price of 35.70 euros per share. On the same date that these agreements were
The bid was authorized by the Board of the Spa- signed, Mr. Manuel Jove Capellán, Chairman of
nish Securities Commission (hereinafter CNMV) Fadesa Inmobiliaria, S. A., informed the Bidders of
on February 6, 2007, which signals the start of the his intention to propose to the Board of Directors
mandatory acceptance period during which time that a special remuneration or bonus be paid to
Fadesa Inmobiliaria, S. A.’s shareholders may ac- certain employees as a reward for work perfor-
cept the offer. All the information required by cu- med during a certain length of time in the Com-
rrent regulations regarding this bid is available in pany. The total amount, net of tax withholdings, is
the corresponding Explanatory Brochure on the to be 30 million euros. The gross amount of this
CNMV website. special remuneration, amounting to 46,154 thou-
sand euros, was recorded as an expense for 2006
Maintenance and repair expenses are charged to the In the case of shares in companies that are also
profit and loss account in the period incurred. parent companies of a subgroup, the theoretical
book value is calculated based on the consolida-
Depreciation of tangible assets is calculated based ted net equity of the subgroup.
on the straight-line method, according to the related
estimated useful lives as follows: The Company holds the majority of shares of cer-
tain companies and more than a 20% of others.
As explained in Note 2, the 2006 annual accounts
do not reflect increases or decreases in the value
of said shares, which would result from applying
consolidation criteria.
The Company carries out, as authorized by the stock This paragraph reflects the following items:
holders meetings, acquisition and disposal of trea-
sury shares to provide liquidity to market. These tre- 1. Guarantee provisions
asury shares are valued by the minor value between The balance shown under the heading “Trade pro-
acquisition cost, market value and net book value. visions” for 5,812 thousand euros reflects estima-
Market value should be considered the lower of the ted future costs for small repairs to be done in re-
market price at year-end or the average market pri- cently sold housing developments. This cost has
ce in the last quarter of the year. been calculated, using statistical data, as a percen-
tage of what was sold during the current and pre-
When net book value of shares is lower than market vious fiscal year. The net change in 2006 for this
value, a provision is recorded against equity. provision was 2,448 thousand euros. Balance at ye-
ar end amounts to 8,260 thousand euros.
I • Deferred income
The Company has also contracted all appropriate in-
1. Official grants. surance that will cover any contingencies that may
This heading includes grants received to acquire arise either during or after construction.
land to build government-subsidized housing.
They are recorded when authorized by the co- 2. Provisions for future expenses.
rresponding National or Autonomous Govern- This heading refers to expenses to be incurred in-
ment Agency. Related amounts are recorded as to for those real estate developments for which sa-
income based on a matching income and expen- le has been registered. Its value is the difference
se criteria whereby the balances corresponding between estimated and actual costs. The balance
to units sold are recorded as income for the year. shown at year en is of 69,751 thousand euros.
Other amounts relating to units still in stock are
recorded under “Other official grants”. 3. Provision for future losses.
The Company conducts an analysis of those cu-
2. Other deferred income. rrent housing developments which after deduc-
This heading relates mainly to amounts received ting marketing expenses, might throw a negative
for the company’s temporary user rights to shares margin. The provision will be done for the value
of Guadalmina Golf, S.A. These amounts are taken of future losses that might produce the afore-
to income on a straight-line basis depending on mentioned housing development once sold. At
the term of the agreement. the close of fiscal year 2006 there are no losses by
this concept.
5 • START UP EXPENSES
The activity in this heading for the year 2006 was the following:
The detail of assets under capital leases at December 31, 2006 is the following:
The main leasing agreement is for a 10 year period and at year end, there are still remaining 5.8 years.
Net book value of tangible fixed assets serving as mortgage guarantees at year-end is as follows:
At December 31, 2006 the detail of the plots and construction is the following:
Among loans receivable from Group Companies Long term securities portfolio.
there are two profit participative loans granted to
Eurogalia, S.L. for 30,000 and 20,000 thousand euros Mainly integrated by investments in non-quoted
each. In both instances, the loan bear interests are shares. The detail is the following:
based on:
Thematic Park of Madrid, S.A. shares are pledged to a loan granted by Caja Madrid bank to that company.
Other information.
• The amount shown in “Public bodies” corresponds to deferred tax assets, which will be recovered in the
long term.
• “Other receivables” corresponds mostly to two loans for 2,045 and 1,900 thousand euros each granted
to Parque Temático de Madrid. The maturity date for both is January 23, 2008.
10 • STOCKS
The detail of “Stocks” at December 31, 2006 was the following:
12 • TREASURY SHARES
During 2006 the Company handled the following transactions with its own shares:
The net profit obtained for transactions done with the Company’s treasury
shares was 4,969 thousand euros.
“Other deferred income” refers to income obtained from the right to use the shares the Company owns in
Gualdamina Golf, S.A.
The average interest rate on long-term liabilities was 3.51%. Advances from customers at year end amounted to
382,213 thousand euros, 172,175 thousand euros
At December 31, 2006, the Company had discount lines at were received in cash and the remaining in bills of
several banks for various amounts. Discounted bills at year commerce.
end amounted to 77,031 thousand euros and bills discoun-
ted during the year amounted to 148,326 thousand euros. Of the total balance of 1,302,093 thousand euros of
long and short term trade creditors, 247,990 thou-
sand euros are bills of exchange payables.
17 • TRADE CREDITORS
The 476,722 thousand euros balance of “Long-term tra- 18 • NON-TRADE CREDITORS
de payables” at year-end reflects amounts payable for
the acquisition of land with the following maturity dates: Other long-term debts correspond mainly to liabili-
ties for the acquisition of shares in other companies
and will mature in the year 2008.
Net turnover The detail of this profit and loss account heading is
the following:
Company activity is carried out throughout Spain in
the amount of 1,060,481 thousand. The breakdown
of net turnover by activity is as follows:
Consumption of goods
The composition and the activity during the year we- The most significant entries were the following:
re the following:
20 • TAX SITUATION
Since January 1, 1999, Fadesa Inmobiliaria, S.A. as a holding company of a Group of companies has filed in-
come tax under a consolidated tax scheme with group companies and is responsible for paying income tax
for the Group companies.
The following companies comprise the consolidated tax Group at year end:
The reconciliation of the profit before taxes and the In addition, due to the fact that it is liable to tax
tax basis, is as follows: under the consolidated tax system, the Company
and each of its subsidiaries have recorded
amounts payable and receivable in respect of in-
come tax. At December 31, 2006, there is a net
balance of 6,934 thousand euros receivable from
Group companies, which increases the debt with
public bodies referred to in the paragraph above
by the same amount. The most significant credit
balances are Obralar, S.L., and Urbanizadora Club
de Campo de Logroño, S.L. with 3,067 and 2,224
thousand euros respectively.
Remuneration and other benefits received As indicated in Note 2.1, within the framework of
by the Board of Directors. the takeover bid for Fadesa Inmobiliaria, S. A. by
Promociones y Urbanizaciones Martín, S. A and
In 2006, neither Board Members nor other senior Huson Big, S. L., Mr. Manuel Jove Capellán, presi-
management members of Fadesa Inmobiliaria, dent of Fadesa Inmobiliaria, S. A., notified the Bid-
S.A., nor any shareholders represented on the Bo- ders of his intention to propose to the Board of
ard of Directors, carried out significant transac- Directors the payment of an extraordinary remu-
tions with Group Companies. neration or bonus to certain employees as a re-
ward for their work during a certain length of time
Remunerations and other considerations received in the Company. The total amount involved, net of
by the Board of Directors members during the tax withholdings, is 30 million euros, while the es-
2006 amount to 3,677 thousand euros, of which timated gross amount is 46,154 thousand euros.
2,952 thousand euros correspond to Directors’ fe-
es and 725 thousand euros correspond to salaries. Board member participation in other
companies.
Board Members do not receive any other benefits
such as loans, pension plans, life insurance poli- Board Members holding stakes in other compa-
cies, or the like. nies with the same, similar or complementary ac-
tivity type to that one of the Company, and their
Board Members do not receive any other remune- position or duties are the following:
ration or consideration, neither do they sit on any
other boards of directors of other Group Compa-
nies. A list of positions held by Board Members in
other Group Companies is to be found in the An-
nual Corporate Governance Report.
Mr. Manuel Jove Capellán Ms. Felipa Jove Santos Iaga Gestión de Inversiones, S.L.
CHAIR 1 DEPUTY CHAIRPERSON
ST
2 DEPUTY CHAIRPERSON
ND
Mr. Antonio de la Morena Pardo Mr. José María Castellano Ríos Mr. Modesto Rodríguez Blanco
MANAGING DIRECTOR MEMBER MEMBER
Mr. José Luis Suárez Barragato Mr. Joaquín Mr. José Luis Macía Sarmiento
MEMBER Sánchez-Izquierdo Aguirre MEMBER
MEMBER
For the purpose of information, and with regard to the preparation and laying of the annual accounts and Ma-
nagement Report, at a Meeting of the Board of Directors held on 15 March 2007 Mr Fernando Martín Álvarez
was appointed Executive Chairman of the company, the Board of Directors being constituted as follows:
Mr. Fernando Martín Álvarez- Mr. Antonio Martín Criado Mr. Antonio de la Morena Pardo
CHAIRMAN DEPUTY CHAIRMAN MANAGING DIRECTOR
Mr. Fernando Martín del Agua Caja de Ahorros de Valencia, Mr. José Manuel Serra Peris
MEMBER Castellón y Alicante, BANCAJA MEMBER
representada por
Mr. José Luis Olivas Martínez
Mr. Jesús Ignacio Salazar Bello MEMBER Mr. José Luis Suárez Barragato
MEMBER MEMBER
Aguieira Inversiones, S.L.
Mr. Joaquín representada por
Sánchez-Izquierdo Aguirre Mr. Juan Carlos Rodríguez Cebrián Mr. Rafael Bravo Caro
MEMBER MEMBER MEMBER
Fadesa Inmobiliaria, S.A. is the parent company of Preformance of Fadesa Inmobiliaria. S.A.
the Fadesa Group, a group of companies mainly en- businesses.
gaged in the real estate and construction business.
Its corporate purpose and core activities consist of In the year 2006, Fadesa Inmobiliaria, S.A. has con-
real estate development and construction, together solidated the business growth of the past years
with all related activities (purchase and sale of plots, through its main magnitudes of profit and loss ac-
building, urban land use management, etc.). counts. Specifically, revenues of the year have rea-
ched 1,060.5 million euros, a growth of 19% with
For Fadesa the year 2006 was characterized by a respect to 2005.
number of significant events that occurred, which
marked a watershed in the history of the company: The sale of homes and plots is still the main source
of income and represents 86% of total revenues.
March saw a renewal of the senior management
with the appointment of a new CEO, the creation The net profit improved a 25% during 2006. Profit
of an Executive Committee, and the setting up of from ordinary activities showed a significant incre-
five new departments. The main purpose of the- ment (+30%) reaching a record amount for the Com-
se changes was to create an organizational struc- pany of 300 million euros.
ture that was more focused on where Company’s
main activity is carried out: the various local offi- The assets figure at year end also reflects the
ces or geographic business areas. Company’s progress reaching 3,812 million euros,
an 18% more than the year before. It is especially
In September, a number of holding companies of significant the increase in inventory, 417 million
which Mr. Manuel Jove Capellán is the majority euros (+22%), a balance that encompasses both,
shareholder reached an agreement with the land and work in progress.
companies of Grupo Martinsa and Mr. Antonio
Martín to launch a takeover bid for 100% of the On the liabilities side, the Company’s net equity
stock of Fadesa Inmobiliaria. Accordingly, on No- has increased a 24% and the net debt has reached
vember 2, Promociones y Urbanizaciones Martín, 1,628 million euros, a 40% increase with respect to
S.A. and Huson Big, S.L. requested authorization the previous year.
from the CNMV for a takeover bid for 100% of
Fadesa Inmobiliaria, S.A.’s stock at a price of 35.7 Performance of the Group’s businesses
euros per share.
Comparable net profit for 2006 amounts to 230.4
The year also saw the continuation of the Compan- million euros, 27% up on the same figure for 2005.
y’s international expansion process. This process has The Directors are satisfied with these figures and
led to the acquisition of more land in Poland, France, puts them down to the continuing success of the
and Morocco, while the Company has also started Company’s unique business model for its core bu-
operations in Mexico, Rumania, and Bulgaria. siness. This is evidenced by significant growth
Backlog
The number of private contracts signed during
2006 amounted to 10,055 units at a value of
1,472 million euros. This represents a very positi-
ve upward trend compared to the previous year
(+39% and +15%, respectively) if we exclude the
sale of Torres Europa de L’Hospitalet in 2005
which should be considered as a an extraordinary
transaction. Bearing in that mind in 2006 the
Group delivered 6,913 units of all types (1st and
2nd homes, social housing, and parcels) worth
1,192 million euros, the backlog at December 31
amounts to 14,822 units worth a little over 2,332
million euros, which will provide a solid basis for
future results in 2007 and 2008.
Mr. Manuel Jove Capellán Ms. Felipa Jove Santos Iaga Gestión de Inversiones, S.L.
CHAIR 1 DEPUTY CHAIRPERSON
ST
2 DEPUTY CHAIRPERSON
ND
Mr. Antonio de la Morena Pardo Mr. José María Castellano Ríos Mr. Modesto Rodríguez Blanco
MANAGING DIRECTOR MEMBER MEMBER
Mr. José Luis Suárez Barragato Mr. Joaquín Mr. José Luis Macía Sarmiento
MEMBER Sánchez-Izquierdo Aguirre MEMBER
MEMBER
For the purpose of information, and with regard to the preparation and laying of the annual accounts and Ma-
nagement Report, at a Meeting of the Board of Directors held on 15 March 2007 Mr Fernando Martín Álvarez
was appointed Executive Chairman of the company, the Board of Directors being constituted as follows:
Mr. Fernando Martín Álvarez- Mr. Antonio Martín Criado Mr. Antonio de la Morena Pardo
CHAIRMAN DEPUTY CHAIRMAN MANAGING DIRECTOR
Mr. Fernando Martín del Agua Caja de Ahorros de Valencia, Mr. José Manuel Serra Peris
MEMBER Castellón y Alicante, BANCAJA MEMBER
representada por
Mr. José Luis Olivas Martínez
Mr. Jesús Ignacio Salazar Bello MEMBER Mr. José Luis Suárez Barragato
MEMBER MEMBER
Aguieira Inversiones, S.L.
Mr. Joaquín representada por
Sánchez-Izquierdo Aguirre Mr. Juan Carlos Rodríguez Cebrián Mr. Rafael Bravo Caro
MEMBER MEMBER MEMBER
FA D E S A I N M O B I L I A R I A S . A . A N D S U B S I D I A R I E S
Consolidated Financial
Statements and Management
Report for the year ended
December 31, 2006
Translation of consolidated financial statements originally issued in Spanish and prepared in accordance with IFRS,
as adopted by the European Union. In the event of a discrepancy, the Spanish-language version prevails.
Table of CONSOLIDATED BALANCE SHEET
●
128
129
130
Table of contents
contents
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ● 131
Thousand E
The accompanying notes 1 to 31 are an integral part of the consolidated balance sheet at December 31, 2006
Thousand E
The accompanying notes 1 to 31 are an integral part of the consolidated balance sheet at December 31, 2006
Thousand E
The accompanying notes 1 to 31 are an integral part of the consolidated cash flow statement for the year ended December 31, 2006
Thousand E
1.2 • Takeover bid for Fadesa Inmobiliaria, S.A. b) Fadesa Inmobiliaria, S.A. will sell certain assets
at a price of 20,177 thousand euros to entities re-
On November 2, 2006, the companies Promocio- lated to Mr. Manuel Jove Capellán.
nes y Urbanizaciones Martín, S.A. and HUSON BIG,
S. L. made a takeover bid for 113,312,799 shares, On the same date that these agreements were
representing 100% of Fadesa Inmobiliaria, S.A.’s signed, Mr. Manuel Jove Capellán, Chairman of
share capital, at a price of 35.70 euros per share. Fadesa Inmobiliaria, S. A., informed the Bidders of
The bid was authorized by the Board of the Spa- his intention to propose to the Board of Directors
nish Securities Commission (hereinafter CNMV) that a special remuneration or bonus be paid to
on February 6, 2007, which signals the start of the certain employees as a reward for work perfor-
mandatory acceptance period during which time med during a certain length of time in the Com-
Fadesa Inmobiliaria, S. A.’s shareholders may ac- pany. The total amount, net of tax withholdings, is
• Cost of sales includes an estimate of the 1. The Group performs an impairment test on
outstanding costs to be incurred at that date, goodwill at least once a year. This requires an
based on the budgets corresponding to that estimate of the value in use of the cash gene-
development. rating units (CGUs) to which the goodwill is
allocated. To estimate the value in use, the
• A provision is recognized for after-sales wa- Group needs to make an estimate of future
rranty costs for completed developments, cal- expected cash flows from the CGUs, and to de-
culated on the basis of a percentage of sales cide on an appropriate discount rate to calcu-
for the year and for the previous year. This per- late the present value of those cash flows. The
centage is based on historical statistics. carrying amount of goodwill at December 31,
2006 was 9,245 thousand euros (10,480 thou-
• In the real estate business, some land acqui- sand euros in 2005). More details in Note 8.
sitions are made by means of land swaps in-
volving the future delivery of real estate de- 1. Impairment of tangible assets. The Group
pending on the urban development that is performs an impairment test of its tangible
finally approved. For this type of acquisitions assets once a year. Once the value in use of
the Group records the cost of acquisition and the industrial activity assets was analyzed, the
its corresponding consideration on the basis Group deemed it necessary to maintain the
of the most reliable information it has at the impairment provision of 20,100 thousand eu-
time. As a result of possible variations in the ros. This loss was estimated on the basis of ex-
parameters used to make the valuation, it may pected cash flows for the coming years, which
be necessary to make changes to the valua- could vary considerably due to the introduc-
tion in the future, in which case such changes tion of a new industrial plan that is currently
will only affect the value of the inventory and being designed for this business.
the debt recorded. At year end, the cost recor-
ded for all such transactions amounts to 222.2 2.4 • Summary of main accounting policies.
million euros (129.1 in 2005) of which 46.7 mi-
llion euros corresponds to acquisitions made a) Property, plant and equipment.
in 2006. Property, plant and equipment are stated at acqui-
sition or production cost, less accumulated depre-
• The Group set aside a provision for litigation ciation and accumulated impairment in value.
in progress which, in the opinion of the legal
department, will lead to future cash outlays An item of property, plant and equipment is dere-
for the Group. cognized upon disposal or when no future econo-
mic benefits are expected from its use or disposal.
b) Uncertainty in estimates. Any gain or loss arising on derecognition of the
Key assumptions concerning the future and asset (calculated as the difference between the
other key sources of estimation uncertainty at net disposal proceeds and the carrying amount of
balance sheet date for which there is a significant the asset) is included in the income statement in
risk of material adjustments to the carrying the year the asset is derecognized.
b) Investment properties.
Investment properties are properties held by the
Group to earn rentals or for capital appreciation
or both.
Financial assets available for sale are carried at their f) Investments accounted for the equity method.
fair value or, if fair value cannot be reliably measu- The Group’s investment in an associate is accoun-
red, at acquisition cost less impairment. ted for under the equity method of accounting. In
general terms, the Group has a significant influen-
Trade and other receivables. ce in an associate company when a participation
Long-term accounts receivable (over one year) are higher than 20% is held.
carried at fair value as indicated in Note 13 of this
report. Short-term accounts receivable (less than Under the equity method, the investment in the as-
one year) the Group’s Directors consider their sociate is carried in the balance sheet at cost plus
carrying amount to be a reasonable approxima- post acquisition changes in the Group’s share of net
tion of fair value. assets of the associate, including when applicable,
the elimination of transactions carried out with
Current financial assets Group’s companies, plus any unrealized gain related
For short-term loans granted there is no difference to goodwill paid on acquisition of the associate.
between fair value and carrying amount since all lo-
ans granted accrue interest at market rates. If the resulting amount were negative, the Group’s
participation in the associate is deemed recorded
For other current financial assets, the Group’s Direc- as nil in the consolidated balance sheet unless
tors consider their carrying amount to be a reasona- there is an obligation to make good the compan-
ble approximation of fair value. y’s asset position, in which case a provision for
risks and charges is recorded.
Debts with credit institutions
For short- and long-term debts with credit institu- Dividends received from an investee reduce the
tions there is no difference between fair value and carrying amount of the investment. The Group’s
carrying amount since all loans granted accrue inte- share of the profit or loss of the investee is recogni-
c) Participation increases.
In these notes to the financial statements, information has been included in the tables affected by the changes
to the scope of consolidation described above to show the effect of new companies entering the scope of con-
solidation,and the increases and decreases in interests held in consolidated companies.Where the increases and
decreases in the course of the year involved significant amounts, these amounts are identified separately.
The companies included in the scope of consolidation at December 31, 2006 were as follows:
Subsidiaries:
Associates:
The participations in dormant associates shown in Subsidiaries excluded from the scope of consolidation:
the table above were acquired on the basis of the es- The following dormant subsidiaries companies were
timated value of the real estate assets (land) they excluded from the scope of consolidation due to
own.This valuation is lower than the result of the va- their immateriality, individually or aggregated, in
luation performed by an independent expert at ye- terms of the fair presentation of Fadesa Group’s con-
ar end (CB Richard Ellis). solidated financial statements.
Subsidiaries:
Business combinations for 2006. Club de Campo de Logroño, S. L., of which it alre-
ady controlled 85%, giving rise to goodwill of
The acquisitions shown in Note 3 are not considered 3,084 thousand euros (Note 8).
as business combinations due to the fact that either
they are acquisitions of assets intended for real esta- Business combinations for 2005.
te development, or they correspond to companies
abroad acquired upon their initial incorporation. Acquisition of Group SA Financière Rive Gauche.
In June 2005, the Fadesa Group acquired a 70% sta-
In 2006 it was possible to determine the fair value of ke of voting shares in SA Financière Rive Gauche. Its
the assets, liabilities, and contingent liabilities of the shares are not listed on the stock market and it is lo-
business combination completed in 2005 of the cated in France. Its main activity is real estate deve-
French group SA Financière Rive Gauche. The good- lopment.
will initially recorded in 2005 was reassigned to “In-
ventories” due to the fact that its fair value was hig- The fair value of assets and liabilities of Group SA Fi-
her than its carrying amount (Note 8). nancière Rive Gauche at acquisition date were:
The total cost of the acquisition was 10,442 thou- would have increased by 14,841 thousand euros
sand euros, including related acquisition expenses. and consolidated profit would have fallen by 126
thousand euros.
Since its acquisition date, SA Financière Rive Gau-
che has contributed -375 thousand euros to the The difference between the fair value of the as-
Group’s net profit. If the combination had occu- sets, liabilities, and contingent liabilities was pro-
rred at the beginning of the year, Group sales visionally assigned to goodwill.
The primary reporting format of the Group’s fi- ness is carried out mainly in Spain, Portugal, Mo-
nancial information is by business segments. The rocco, France, Poland and Hungary.
secondary format is by geographical segments.
Operating businesses are organized and mana- b) The hotel services segment includes: revenue
ged separately according to the nature of the pro- from the operation of hotels. This business is ca-
ducts and services provided, and each segment rried out in Spain and Morocco.
represents a strategic business unit offering diffe-
rent products and servicing different markets. c) The industrial business segment includes: the
production, transformation, and marketing of
The business segments are as follows: construction sector products. These production
activities are mainly carried out in Romania.
a) Real estate: Includes the sale of housing, land
and plots; provision of real estate services; and
income from the leasing of property. This busi-
Business segments.
Thousand E
Thousand E
Geographical segment.
The following tables show information relating to revenues and certain assets of the Group’s geographical
segments for the years ended December 31, 2006 and 2005.
Thousand E
Transfers in “Land and buildings” and “Machinery, apartments on completion of the building phase.
plant and equipment” include the transfer of a Also included are transfers to “Non-current assets
hotel that was to be operated by the Group and held for sale” (see Note 17).
which in 2006 the Group decided to sell it as
The detail of the various items included in pro- The capitalization rate is based on the average
perty, plant and equipment is as follows, in thou- cost of debt (Note 20).
sands of euros:
Group assets subject to mortgage amounted to
Thousand E 133,651 thousand euros at December 31, 2006
(136,728 thousand euros in 2005).
7 • INVESTMENT PROPERTIES
The current year movements of this heading of the consolidated balance sheet are as follows:
Thousand E
Thousand E
Real estate investments are recorded at fair value, be exchanged in a current transaction between wi-
based on valuations made by CB Richard Ellis at De- lling independent parties, in an arm’s length transac-
cember 31, 2006 and December 31, 2005. CB Richard tion, in accordance with International Valuation
Ellis are specialists in appraising this type of proper- Standards. Leased Group properties at year end
ties. Fair value is the amount at which an asset could 2006 are as follows:
8 • GOODWILL
The balance recorded at December 31, 2006 corres- During 2006, goodwill amounting to 10,480 thou-
ponds to the acquisition of minority interests repre- sand euros arising in 2005 from the acquisition of
senting 30% of Financière Rive Gauche, S.A.’s share 70% of Financière Rive Gauche, S. A. was definitively
capital (6,061 thousand euros) and 15% of U.C.C. Lo- assigned to specific assets. See Note 4.
groño (3,184 thousand euros).These amounts repre-
sent the difference between the carrying amount of
the assets, liabilities, and contingent liabilities of the-
se companies and the acquisition amount.
9 • INTANGIBLE ASSETS
Movements of “Intangible assets” during 2006 and 2005 were as follows:
Thousand E
Fully depreciated assets still in use at December 31, Administrative temporary concessions are amortized
2006 amount to 629 thousand euros (642 thousand eu- using the straight-line method throughout the conces-
ros in 2005). sion period (18 years). The cost to be amortized
amounts to 2,254 thousand euros in 2006 and 2005.
Investment in unlisted
In 2006, on the basis of agreements reached between the parties involved in the acquisition of an interest in Casa-
sola Explotaciones Agropecuarias,S.A.,the acquisition price of that interest was reduced to 19,766 thousand euros.
Thousand E
At December 31, 2005 the balance of subsidiaries accounted for under the equity method was as follows:
Thousand E
Thousand E
12 • INVENTORIES
The detail of inventories at December 31, 2006
and 2005, broken down by activity, is as follows:
A provision for bad debts was made for those custo- Trade and other receivable balances whose realiza-
mers whose financial position showed evidence of tion period is deemed to be higher than twelve
impairment at year end. months from balance sheet date are as follows:
• Loans to companies consolidated by the equity method amounting to 5,100 thousand euros.
• Participations in FIM’s (Security Investment Funds) amounting to 2,017 thousand euros.
• Short-term deposits amounting to 1,400 thousand euros.
The breakdown of the heading “Other current assets” on the consolidated balance sheet at December 31,
2006 and 2005 is included in the following table:
The balance of “Public administrations” for 2006 includes, among others, the following items:
The composition and movements of net equity of On May 9, 2006 the Ordinary and Extraordinary Ge-
the Group is shown in the “Statement of changes in neral Meeting of Fadesa Inmobiliaria, S.A. agreed to
net equity”, which forms part of the consolidated fi- a capital increase through the issue of common
nancial statements. stock with a par value of 0.10 euros a share, of the sa-
me class and series as existing shares, and represen-
Equity. ted by book entries. The number of shares issued
was the result of dividing 39.108.853,31 euros (equi-
Share capital at December 31, 2006 is represented valent to 85% of the gross dividend amount) by the
by 113,312,799 fully subscribed and paid-up sha- issue price.The issue price was determined by avera-
res with a par value of 0.10 each, represented by ging the weighted average changes of the Compan-
book entries. These shares have been trading on y’s share on the continuous market (SIBE) for the five
the Madrid and Barcelona stock exchanges on the trading days immediately prior to the dividend pay-
continuous market since April 30, 2004. All shares ment date (May 31, 2006) and applying a 1% dis-
have equal rights and are freely negotiable. count.The difference between the abovementioned
issue price and the par value of the share represents
an issue premium of 26.75 euros per share.
The weighted average number of shares during According to Spanish Corporate Law, companies
2006 was 112,857,685 (111,854,503 in 2005). must transfer 10% of profits for the year to a legal re-
serve until this reserve is at least 20% of capital. At
In their ordinary and extraordinary general mee- year end, the Company is compliant with this requi-
ting held on May 6, 2005, the shareholders of rement.
Fadesa Inmobiliaria, S.A. resolved to increase share
capital through the issue of ordinary shares with a Legal reserves can be used to increase capital by
nominal value of 10 euros cents each of the same the amount exceeding 10% of the new capital af-
type and series as the existing shares. The new sha- ter the increase. With the exception already men-
res are recorded using the Bank of Spain’s book tioned and as far as the reserve does not exceed
entry system. The number of shares to be issued 20% of the share capital, this reserve can only be
would be the result of dividing 25,558,513 euros used to compensate losses only if there is no
(an amount equal to 85% of total gross dividends other reserves available.
distributed) by the rate of issue per share. The rate
of issue is determined as the simple average of the Other non-distributable reserves.
weighted average changes in the Company’s share
on the SIBE market (Spanish Stock Market Inter- The balance corresponds to the “Canary Island in-
connection System) for the last five days immedia- vestment reserve”. The Group’s companies availed
tely prior to the dividend payment date (May 27, themselves of the tax benefits offered under Law
2005), with a 1% discount, establishing a share pre- 19/94 relating to amounts allocated to provisions for
mium for the difference between the aforementio- investments in the Canary Islands. The companies
ned rate of issue and the nominal value of the sha- recorded a reserve of 20,493 thousand euros (18,483
re equivalent to 19.53 euros per share. thousand euros in 2005) which is non-distributable
until reinvestment takes place.
The capital increased as described above was not
fully subscribed and therefore capital was increa- Translation differences.
sed by the amount of the shares actually subscri-
bed (85,445.60 euros), issuing 854,456 ordinary, This reserve relates to the cumulative translation dif-
paid-in shares with a nominal value of 10 euro ference for the conversion of financial statements
cents each. denominated in foreign currencies not arising from
Parent Company transactions.
Own shares.
Thousand E
Thousand E
The average interest rate for long-term debt in 2006 ranges from 3.53% to 3.83% (2.6% - 3.6% in 2005)
21 • PROVISIONS
Non-current provisions.
The detail and movements of this heading of the consolidated balance sheet is as follows:
Thousand E
Thousand E
Current provisions.
The detail and movements of this heading of the consolidated balance sheet is as follows:
Thousand E
Thousand E
Provisions for warranty claims. ted as a percentage of current and previous year
A provision is recognized for expected warranty sales based on statistical data.
claims on products sold during the last two years,
according to the Directors’ best estimate of the The risk is expected to materialize or not within a pe-
future outcome for the Group. The cost is calcula- riod of two years following the balance sheet date.
The detail and movements of this heading of the consolidated balance sheet is as follows:
Thousand E
The balance of “Bills of exchange payable” mostly
corresponds to debt arising from the acquisition
of shares in companies accounted for by the
equity method.
The detail and movements of this heading of the consolidated balance sheet is as follows:
Thousand E
As described in Note 2.1., the Group classifies all re-
al estate segment related debts as current liabilities.
Recorded in “Trade and other payables” are debts
arising from the acquisition of land for development
totaling 688,643 thousand euros (631,110 thousand
euros in 2005) that do not bear interest. The matu-
rity date of 528,013 thousand euros (400,735 thou-
sand euros in 2005) of that debt depends on mee-
ting certain development milestones.
The Group has finance lease and hire purchase contracts on transport equipment assets and machinery.The
contracts include renewal options, but not call options or acceleration clauses. Renewal options are exerci-
sable at the option of the specific lessee. Future minimum payments relating to finance lease and hire pur-
chase, together with the present value of minimum net payments, are as follows:
Thousand E
Tax related litigation A provision for all tax liabilities arising from dis-
In 2003, the Oficina Nacional de Inspección (Natio- puted tax assessments, including their corres-
nal Inspection Office) of the AEAT (Spanish Tax Au- ponding penalties, was made in the accompan-
thorities) completed its inspection and investiga- ying consolidated income statements, as detailed
tion activities relating to the periods 1996 to 1998 in Note 21 “Provisions”, after having taken into ac-
for Corporate Income Tax and 1997 and 1998 for count any recoverable amounts from years not
VAT and Personal Income Tax withholdings. This affected by the statute of limitations.
tax audit also affects the 1997 and 1998 accounts
of Grupo Empresarial Fadesa, S.A., a company ab- Other litigations
sorbed by the Parent Company in 1999. • There are ten civil actions against FADESA
due to construction defects, brought by va-
Tax assessments amounting to 783 thousand eu- rious home owner associations in Malaga, Las
ros were accepted. The part that was signed un- Palmas de Gran Canaria, Sabadell, Madrid, Ovie-
26 • INCOME TAX
26.1 • Consolidated income tax group
As the parent company of a group of companies, since January 1, 1999 Fadesa Inmobiliaria, S.A. has filed
income tax under a consolidated tax scheme with group companies and is responsible for paying income
tax for the group companies.
Fadesa Inmobiliaria, S.A. as parent company and the following subsidiaries companies:
The remaining Group Companies each file indivi- 26.3 • Reconciliation of accounting and tax
dual income tax returns, in accordance with local tax income.
rules applicable in each country.
Set forth below is the reconciliation of the income
26.2 •Years open for review by the tax tax resulting from the application of the standard
inspection authorities. tax rate in force in Spain to the profit before inco-
me tax expense recognized in the consolidated in-
The accounts of Group Companies included in the come statement for the years ended December
consolidated income tax return may be inspected 31, 2006 and 2005.
by the tax authorities with regard to all applicable
taxes in the last four fiscal years, as well as 2000.
No additional material liabilities are expected to
be incurred by the Company as a result of any pos-
sible inspection.
The Group intends to apply 2,428 thousand euros pectively. These amounts were reinvested in
in deductions for reinvestment of extraordinary each of the aforementioned years.
profit from capital gains obtained in 2006 on its
2006 income tax return. The income to which the In the tax settlement for 2006, the Company
deductions were applied amounted to 12,136 plans to avail itself of Law 19/1994 (on the
thousand euros and the relevant amounts were amendment of the Fiscal and Economic Regime
reinvested in 2006. In addition, some subsidiaries of the Canary Islands) in respect of an allocation
are entitled to tax rebates of 5,997 thousand eu- to the “Reserve for investments in the Canary Is-
ros due to existing agreements with governmen- lands” amounting to 170 thousand euros. The
tal institutions. Company has up to December 31, 2010 to meet
its reinvestment obligations in connection with
In accordance with prevailing tax legislation, the the allocations made to this reserve. Reinves-
income to which the deductions for reinvestment tment deadlines at December 31, 2006 have been
were applied amounted to 603 thousand euros in fully met at that date.
2002, 34,538 thousand euros in 2003, 9,470 thou-
sand euros 2004 and 12,136 thousand euros in In 2006, Group companies adjusted deferred tax
2005; the related deductions amounted to balances to reflect the new rates in force as from
102,545 thousand euros, 6,907 thousand euros, January 1, 2007. An additional expense of 1,439
894 thousand euros and 411thousand euros, res- thousand euros was recorded.
Thousand E
Personnel expenses.
Thousand E
2005 Thousand E
Thousand E
• Significant shareholders:
• Associated and joint venture companies
• Board members and senior executives
31 • BUSINESS RISKS AND RISK The Group is also exposed to transaction exchan-
MANAGEMENT POLICIES ge rate risk. This risk stems from purchases and
sales made by operating units in currencies other
Risks derived from financial instruments. than the functional currency. Approximately 5.6%
of Group sales are made in currencies other than
The main risks arising from the Group’s financial the functional currency of the unit making the
instruments are interest rate cash flow risk, liqui- sale, while nearly 5.4% of expenses are in curren-
dity risk, exchange rate risk, and credit risk. The cies other than the functional currency of the
Board reviews and adopts policies to manage unit incurring them.
each risk, as described below.
Credit risk.
Interest rate cash flow risk. With regard to credit risk arising from other fi-
The Group’s policy consists of managing interest nancial assets of the Group such as cash and cash
rate costs by mostly opting for variable interest equivalents, financial assets available for sale, and
rates. Consequently, practically all Group Com- certain derivative instruments, the Group’s expo-
pany debt is based on variable interest rates. sure to credit risk arises from a possible default
by a counterpart, with a maximum risk equal to
As most of that debt corresponds to the real esta- the carrying amount of these instruments.
te business which, as a rule, is either amortized or
assumed by third parties in less than five years, With regard to the Group’s core activity, real esta-
up until now it has not been considered neces- te, since ownership of the property is not transfe-
sary to use interest rate hedges. However, given rred until the entire debt is collected, and given
the Group’s growth in the hotel segment, where a the current upward trend in the real estate mar-
certain degree of financial leverage is required ket and appraisal values, at year-end 2005 there
over periods longer than ten years, the manage- were no losses from credit risk.
Mr. Manuel Jove Capellán Ms. Felipa Jove Santos Iaga Gestión de Inversiones, S.L.
CHAIR 1 DEPUTY CHAIRPERSON
ST
2 DEPUTY CHAIRPERSON
ND
Mr. Antonio de la Morena Pardo Mr. José María Castellano Ríos Mr. Modesto Rodríguez Blanco
MANAGING DIRECTOR MEMBER MEMBER
Mr. José Luis Suárez Barragato Mr. Joaquín Mr. José Luis Macía Sarmiento
MEMBER Sánchez-Izquierdo Aguirre MEMBER
MEMBER
For the purpose of information, and with regard to the preparation and laying of the annual accounts and Ma-
nagement Report, at a Meeting of the Board of Directors held on 15 March 2007 Mr Fernando Martín Álvarez
was appointed Executive Chairman of the company, the Board of Directors being constituted as follows:
Mr. Fernando Martín Álvarez- Mr. Antonio Martín Criado Mr. Antonio de la Morena Pardo
CHAIRMAN DEPUTY CHAIRMAN MANAGING DIRECTOR
Mr. Fernando Martín del Agua Caja de Ahorros de Valencia, Mr. José Manuel Serra Peris
MEMBER Castellón y Alicante, BANCAJA MEMBER
representada por
Mr. José Luis Olivas Martínez
Mr. Jesús Ignacio Salazar Bello MEMBER Mr. José Luis Suárez Barragato
MEMBER MEMBER
Aguieira Inversiones, S.L.
Mr. Joaquín representada por
Sánchez-Izquierdo Aguirre Mr. Juan Carlos Rodríguez Cebrián Mr. Rafael Bravo Caro
MEMBER MEMBER MEMBER
Thousand E
• In Bulgaria, the first operation was finalized After taking into account general costs and the
with the purchase of a piece of land in the cen- margins generated by all the Group’s various ac-
ter of the capital city, Sofia, earmarked for the tivities, we can conclude that the Group’s EBITDA
construction of an initial development of high- has improved significantly in absolute terms,
rise housing, commercial units, and offices. +28% to 361 million euros while there has been a
slight drop in terms of profitability mainly due to
• In Romania the first land was acquired, the investment required by the international ex-
among which is a site for approximately pansion process that Fadesa is currently immer-
12,000 homes in Bucharest. sed in, which the Directors consider to be one of
The Group’s asset management business is centered on developing the hotel business which leverages de-
velopments for tourism on land in inventory zoned for such a purpose. In 2004 a framework management
Asset valuation Analyze the audit work performed on the 2005 ac-
The market value of the Fadesa Group’s real estate counts
assets at December 31, according to the valuation
made by CB Richard Ellis, amounts to 10,500 million Report on the audit plan for 2006
euros.
Report on the preliminary phase of the 2006 audit.
Research & Development
Due to the nature of the company, its activities, and In each of these meetings the Committee issued a fa-
its structure the Company does not normally carry vorable report on the quarterly accounts presented
out research and development activities. by the Company for the first quarter, first half year,
and first nine-months of 2006, and made progress in
Own shares setting up the internal audit department; a risk map
During 2006 Fadesa Inmobiliaria, S.A. performed the has been produced, risks have been classified, and
following transactions with own shares: the Internal Audit Plan for 2007 has been approved.
Thousand E
Mr. Manuel Jove Capellán Ms. Felipa Jove Santos Iaga Gestión de Inversiones, S.L.
CHAIR 1 DEPUTY CHAIRPERSON
ST
2 DEPUTY CHAIRPERSON
ND
Mr. Antonio de la Morena Pardo Mr. José María Castellano Ríos Mr. Modesto Rodríguez Blanco
MANAGING DIRECTOR MEMBER MEMBER
Mr. José Luis Suárez Barragato Mr. Joaquín Mr. José Luis Macía Sarmiento
MEMBER Sánchez-Izquierdo Aguirre MEMBER
MEMBER
For the purpose of information, and with regard to the preparation and laying of the annual accounts and Ma-
nagement Report, at a Meeting of the Board of Directors held on 15 March 2007 Mr Fernando Martín Álvarez
was appointed Executive Chairman of the company, the Board of Directors being constituted as follows:
Mr. Fernando Martín Álvarez- Mr. Antonio Martín Criado Mr. Antonio de la Morena Pardo
CHAIRMAN DEPUTY CHAIRMAN MANAGING DIRECTOR
Mr. Fernando Martín del Agua Caja de Ahorros de Valencia, Mr. José Manuel Serra Peris
MEMBER Castellón y Alicante, BANCAJA MEMBER
representada por
Mr. José Luis Olivas Martínez
Mr. Jesús Ignacio Salazar Bello MEMBER Mr. José Luis Suárez Barragato
MEMBER MEMBER
Aguieira Inversiones, S.L.
Mr. Joaquín representada por
Sánchez-Izquierdo Aguirre Mr. Juan Carlos Rodríguez Cebrián Mr. Rafael Bravo Caro
MEMBER MEMBER MEMBER