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Consolidated financial statements at 31 December 2011 Ferrovial S.A. and Subsidiaries As a result of the maturity date, the feasibility of the project is currently dependant on a possible agreement between all the parties involved which will make it possible to restore its economic and financial equilibrium. At 31 December 2011, Ferrovial had recognised a provision in full for the investment in the aforementioned project. As regards the M-203 toll road, operated by Sociedad Concesionaria de la Comunidad de Madrid, construction of which has been put on hold for several years, and which is also exposed to the risk of expropriation cost overruns, the Madrid Department of Transport and Infrastructure, through a Resolution of the Directorate-General of Roads of 9 July 2010, initiated proceedings to modify the concession arrangement and restore its economic and financial equilibrium. To this end, on 26 October 2010 the concession operator submitted a rebalancing application to the Department containing the technical design for the modification of the route required by the grantor. The Procurement Division of the Madrid Autonomous Community Government approved the change to the project and the restoration of the economic and financial balance of the concession on 25 October 2011. The change to the concession arrangement was formally executed on 16 December 2011. The construction work that will link the M-203 road to the R-3 road is not due to commence until the agreement with the Spanish Ministry of Public Works (currently in progress) is entered into. Claims of Promociones Habitat, S.A. in connection with the agreement for the purchase of Ferrovial Inmobiliaria, S.A. Certain claims have been filed by Promociones Habitat, S.A. in relation to the guarantees provided under the agreement for the purchase of Ferrovial Inmobiliaria, S.A., pending resolution or payment, a provision for which has been duly recognised in the financial statements. BAA In 2011 BAA Limited ("BAA") was notified of the decision handed down by the UK Competition Commission dated 19 July 2011, whereby it dismissed the arguments of the former relating to the substantial change in circumstances since the publication of the Commission's decision in March 2009 and obliged BAA to sell Stansted Airport and either Glasgow Airport or Edinburgh Airport. In February 2012, as discussed in Note 38 on events after the reporting period, the UK Competition Appeal Tribunal rejected the latest appeal filed by BAA in relation to the request by the Competition Commission to sell Stansted Airport. BAA is currently analysing other possible alternatives. Other litigation In addition to the above-mentioned litigation, various Group companies are involved in a number of lawsuits in the ordinary course of business, as listed below: - Claims relating to defects in construction projects performed or services rendered. - Claims for third-party liability in connection with the use of the Group’s assets or the actions of the Group’s employees, the most significant of which relate to road accidents on the toll roads managed by the Group. - Employment-related claims. - Environmental claims. - Tax claims. Certain of the above-mentioned risks are covered by insurance policies (third-party liability, construction defects, etc.), and based on the estimates of the Group's legal advisers, no contingent liabilities will arise which might have a significant impact on the consolidated financial statements. b) Bank guarantees At 31 December 2011, the Group companies had provided guarantees totalling EUR 4,240 million (EUR 4,334 million in 2010). Ferrovial, S.A. Consolidated financial statements at 31 December 2011 78
Consolidated financial statements at 31 December 2011 Ferrovial S.A. and Subsidiaries The following table contains a breakdown of guarantees by business area. The most significant item relates to the Construction Division (EUR 3,226 million), consisting basically of guarantees covering the liability of construction companies for the performance and completion of construction work required during the bidding processes: Financing guarantees Millions of euros 2011 2010 Construction 3,226 3,174 Toll roads and car parks 328 436 Services 543 625 Airports 7 7 Other 136 91 Total 4,240 4,334 The guarantees that Ferrovial and its subsidiaries provided in relation to the financing of certain projects in which it has ownership interests are listed below: - Norte Litoral.- Guarantee limited to the expropriation cost overruns during the expropriation period. - R-4 Madrid Sur.- There is a guarantee that covers EUR 13 million in the event the concession is terminated or any ratio is not achieved at the date of its expiry. - Ausol.- Guarantee limited to EUR 30 million for debt service and recognition of a debt service reserve fund in the event of a cash shortfall on the project. - Azores.- Guarantee limited to EUR 10 million until 2017 as required by Article 35 of the Portuguese Companies Law. - SH130.- Guarantee limited to USD 23 million for the expropriation cost overruns during the expropriation period and a guarantee limited to USD 20 million for debt service during the first five years of operations. - Serrano Park. Guarantee for the recalculation of the base case for a maximum amount of EUR 5 million, with a sublimit for debt service of EUR 1 million from 2011 to 2014. - Triconitex, S.A.- Guarantee for the payment of a finance lease relating to this company, limited to the principal of EUR 1 million at 31 December 2011. - Ecoparc del Mediterrani, S.A.- Guarantee from the shareholders in proportion to their shareholdings, limited to the amount of this company’s credit facility (EUR 2 million at 31 December 2011). - Inagra.- Guarantee limited to the amount of this company’s credit facility (EUR 12 million at 31 December 2011). - UTE Reciclados Daimiel.- Guarantee for the payment of the company's finance lease limited to the principal (EUR 0.14 million at 31 December 2011). - La Selva, Nora.- Guarantee from the shareholders in proportion to their shareholdings, limited to several of this company’s loans (EUR 3 million at 31 December 2011). - Ayora Biogás - Guarantee limited to the amount of this company's credit facility (EUR 0.2 million at 31 December 2011). - Ecocat.- Guarantee from the shareholders in proportion to their shareholdings, limited to several of this company's credit facilities (EUR 5 million drawn down at 31 December 2011). Note: the amounts relating to the guarantees correspond to the Ferrovial Group’s percentage interest in the various projects. Additionally, in some projects and construction work, there are technical guarantees applicable up to the start-up of operations of the project or construction work, which are the standard guarantees demanded from shareholders in the framework of the financing transactions. In the ordinary course of the Group’s activities certain other technical guarantees have been provided, as is standard practice in this market. In the case of the Services Division, Amey has arranged guarantees and letters of credit totalling EUR 13 million for the investment and subordinated debt relating to its infrastructure projects. Contingent assets The Group had not received any significant guarantees from third parties at 31 December 2011 or 2010. Ferrovial, S.A. Consolidated financial statements at 31 December 2011 79
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